Tata Global Beverages Limited (TGNL), in line with its strategy of scaling up the domestic business and focusing on select overseas markets, has embarked on a consolidation drive.
The consumer arm of the Tata Group is charting out a strategy to exit non-core international businesses and simplify the overall subsidiary structure, sources told CNBC-TV18. The company is planning to exit international markets where operations are non-scalable.
TGBL may look to exit businesses in Poland and Czech Republic where the businesses operate under Tata Global Beverages Polska and Tata Global Beverages Czech Republic respectively. These two markets are a very small part of the larger international portfolio. In 2018, the company restructured its international operations to increase business effectiveness. TGBL merged the erstwhile EMEA (the UK, Europe, Middle East and Africa) and CAA (Canada, Australia, and Americas) units into a single unit called the International Business Division last year. It also restructured its operating model in Russia, divested its stake in plantations in Sri Lanka, and exited its joint venture business in China. TGBL gets 53 percent of its branded business revenue from domestic markets and the remaining from overseas markets.
In response to a CNBC-TV18 query, TGBL said, “International business is an integral part of TGBL and continues to remain a key focus area. We have increased focus on key markets i.e. the US, the UK and Canada and have exited marginal operations in some of the other countries like Russia and China. While we cannot comment on specific markets, as part of our strategy we constantly review our businesses, keeping in mind our strategy and growth ambition. This will be an ongoing process. We are focused on making the overall profile of our business more profitable.”
TGBL is also working on simplifying the overall subsidiary structure and bringing down the number of subsidiaries, the sources say. The company is working to further reduce the number of subsidiaries by 5-10 over the next 2-3 years. TGBL had a total of 39 subsidiaries at the end of FY19. In response to a query on this, the company said: “We will seek to simplify the structure and improve profitability of our overall portfolio through further rationalisation.”