Tata Global Beverages Rejigs Operations to Focus on Core Business

(TGBL) has moved some of its operations such as global information systems, HR, finance and commercial in various regions including India, the UK and US, Canada and Australia to the managed services of Tata Consultancy Services in Kolkata.

The move is expected to free the company’s business managers to concentrate

TATA GLOBAL

TATA GLOBAL

on core activities, bring in agility and spur faster decision-making, as it seeks to become one of the largest FMCG companies in India with a possible merger with group firm Tata Chemicals.

The transition process is expected to be completed by the end of 2018-19. “The transition will enable our business managers to wholly concentrate on core business activities, growth and expansion,” a TGBL spokesperson said.

“Growth and scale in domestic market are critical and a big focus for us,” Tata Group chairman N Chandrasekaran had stated at the company’s recent annual general meeting. Tata Global Beverages, which sells tea brands like Tata Tea and Tetley , posted a 6.55% fall in consolidated net profit in the April-June quarter after taking restructuring cost. The company will record restructuring and redundancy cost in the current year, say analysts.

TGBL is changing the organisational structure and moving more activities to India in terms of back office and technology-related work. The Indian market contributes 45% to the company’s business.

TGBL’S FUTURE PLANS

TGBL is also looking at more opportunities in the health and wellness space and will be launching more products in this category.

The boards of TGBL and Tata Chemicals are evaluating plans to merge the group’s foods and beverages businesses, top Tata Group executives said. “There are no final plans yet. Building a single consumer vertical is the biggest challenge compared to other verticals,” an executive said, seeking anonymity.

“Tata Global Beverages’ ambitious growth plans require us to operate with greater efficiency, reduce our cost base and fully tap the potential synergies across our businesses that operating on a global scale can bring us. There is also a significant opportunity to better leverage technology in service delivery,” the TGBL spokesperson said in reply to ET’s query.

At the recent AGM, the Tata Group chairman said the company’s focus would be to scale up its businesses within India while exiting loss-making subsidiaries. Domestic growth has been impressive, but in foreign markets, TGBL has been facing headwinds. It has already exited small operations in markets such as China, Russia and Sri Lanka.

Growth in international markets has suffered because of its marginal presence in many countries.

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