Tata Global Beverages seeks to scale up, become consumer products firm

“In the FMCG segment, we need a large portfolio. We cannot just be a single tea player and depend on it to attain scale. Tea, water - these things are good but they are not going to give scale. The company has to gain scale by wide range of products,” company Chairman N Chandrasekaran told shareholders at the company’s Annual General Meeting here.

The company will have to “pay attention to improve its financial performance in terms of return ratio”, he said, adding the amount of capital deployed in the company has been quite significant.

“We want to build a very high-class, premium consumer products company by leveraging the large consumer base in India. That is the goal that we are working towards,” Chandrasekaran said.

TGBL and Tata Chemicals Limited (TCL) have recently announced the de-merger of the consumer products business of the latter into the former.

“We want to gain scale and focus on India market as we announced the combination of food business of Tata Chemicals and our business to create broader consumer product company so that we can significantly leverage consumers in terms of more products and reach,” he said.

Chandrasekaran said the company’s “branded tea performance has been very good” which essentially means that the company “needs to be moving up the value-added products in terms of new launches in order to meaningfully grow in the tea segment.

TGBL also recently announced it has entered into a non-binding term sheet to acquire the branded tea business of Dhunseri Tea & Industries Limited, for an aggregate consideration of up to Rs 101 crore.

Dhunseri’s branded tea business currently has “Lalghoda” and “Kalaghoda” brands, which are among the leading local brands in Rajasthan, a market dominated by local players. This move is in line with TGBL’s ambition to grow its branded tea business in India, it said.