In a regulatory filing, the company said that while the plantation business of TCL will be demerged into TCPL’s wholly-owned arm TCPL Beverages & Foods (TBFL), the remaining business of TCL, consisting of its extraction and branded coffee business, will be merged with TCPL.
Tata Coffee Limited's plantation operations will be demerged into TCPL Beverages & Foods (TBFL)
Tata Coffee Limited's remaining operations, including extraction and branded coffee, will be merged with TCPL
The demerger would happen as the first step and the merger as the immediate second step, with both being proposed through a composite scheme of the arrangement, the filing said.
These actions contribute to TCPL's goal of becoming a future-ready organisation and will serve as a stepping stone to further simplification. These will also lead to operational efficiencies, faster decision making and execution, the formation of focused business verticals, and the realisation of potential synergies.
Under the scheme, shareholders of TCL (other than TCPL) will receive an aggregate of 3 equity shares of TCPL for every 10 equity shares held by them in TCL.
This will be carried out through the issuance of 1 equity share of TCPL for every 22 equity shares of TCL in consideration for the demerger.
For the merger, 14 equity shares of TCPL will be issued for every 55 equity shares of TCL, it added.
“Through this transaction, TCL shareholders will get access to multiple growth engines and participation in a larger and fast-growing FMCG business. TCPL shareholders are expected to benefit from better synergies and business efficiencies going forward,” the company said.
The boards of directors of TCPL and TCL, at their respective meetings held on Tuesday, approved the combination of the plantation business of TCL with TBFL, the statement said.
“This will enable the consolidation and 100% ownership of the branded, extractions and plantations business of TCL into TCPL and its wholly-owned subsidiary,” it said.
TCPL further said that it proposes to purchase a minority interest in its UK subsidiary – Tata Consumer Products UK – by way of a share-swap deal, through a preferential issue of its equity shares.
“The transactions will result in TCPL having 100% ownership of the business of TCL and of TCP UK, which will be an enabler for efficient reorganisation initiatives of its international business,” the statement said.
“The restructuring initiative is in line with Tata Consumer Products’ strategic priorities - to unlock synergies and create a future ready organisation. This exercise will enable us to better leverage our supply chain, create customer focused business verticals, and accelerate decision making & execution. This will be a stepping-stone for further simplification initiatives with a view to achieving recurring operational, administrative and financial synergies”, said Sunil D’Souza, MD & CEO at TCPL.
As on December 2021, TCPL holds a 57.48% stake in TCL.
Tata Coffee's Financials
Tata Coffee Ltd posted a 38.42 per cent jump in consolidated net profit at ₹69.46 crore in the three months ended December 2021.Net revenue has increased on a consolidated basis by 17.51 per cent to ₹626.07 crore in the third quarter of this fiscal. In the year-ago period, the same stood at ₹532.76 crore.