Tata Chemicals and Tata Global Beverages surge on demerger plan

Tata Chemicals has approved demerger of its consumer products business into another Tata Group firm Tata Global Beverages, which has ended prolonged speculation. The turnover of the demerged division is around Rs. 1,847 crore, which accounts for nearly 16 per cent of the overall sales of Tata Chemicals on a consolidated basis.

Under this scheme of arrangement, all the key consumer-centric brands such as Tata Salt, Tata Tea, Tata Sampann and Tetley will be brought under a single entity – Tata Global Beverages, which would later be renamed as Tata Consumer Products. Tata Global Beverage would be entitled to the sourcing, packaging, marketing, distribution and sales of edible common salt, spices, protein foods and certain other food and other products. Tata Chemicals would continue to keep the salt manufacturing facility, basic chemistry products and specialty products businesses, which are not proposed to be transferred to the acquiring company.

Tata Global Beverages will acquire Tata Chemicals’ all food brand through stock swap transaction. Every investor who is holding 100 shares of Tata Chemicals will be entitled to receive 114 equity shares of Tata Global Beverages. According to Tata Global Beverages, the company will get benefit of Rs. 150-200 crore over the next 18-24 months.

With this scheme of arrangement, Tata Chemicals will get exposure to both businesses (consumer-centric businesses along with existing manufacturing business i.e. basic chemistry products and specialty products).

With this development, the stock of Tata Chemicals gained nearly 9 per cent and made an intra-day high of Rs 606.20 on the BSE. Also, the stock of Tata Global Beverages surged nearly 12 per cent and made an intra-day high of Rs. 222 on the BSE.