Tata Global Beverages has merged its operations across international geographies into a single unit. The company has identified backoffice processes in human resources, finance and operations, for outsourcing to Tata Consultancy Services.
TGB has already exited its joint venture in China, recast its Russian model, and divested stake in its plantation in Sri Lanka. These measures will unlock business synergies, enable cost savings, allowing managers to focus on core business activities, the company said in a regulatory filing. Managing Director and CEO Ajoy Misra said that this recast would help the company focus better on core markets and leverage growth opportunities.
TGB focuses on natural beverages like tea, coffee and water, evolving from a predominantly plantation-based Indian company to a global entity brand. Its brands are now sold in the U.S., Canada, Europe, Russia, West Asia, Africa, South Asia and Australia. TGB’s branded sales stood at ₹6,038 crore out of a total revenue of ₹6,815 crore in 2017-18.
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It has now decided to merge its U.K., Europe, Middle East and Africa (erstwhile EMEA) and Canada, Australia and Americas (CAA) under a single unit — International Business Division, which would be headed by Adil Ahmad, formerly chief marketing officer.
The filing also mentioned TGB’s exit from “non-core and sub-scale markets in order to better focus on its core markets.”
In Russia, the company has recast its operating model, while it has exited its joint venture business in China. It has also divested its stake in plantations in Sri Lanka.
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Two years ago, TGB had announced its exit from loss-making geographies like Russia and China. “Russia is a large tea-drinking market, but we had a negligible share.. so we exited and handed over the assets to a Russian company from whom we will get royalties,” Mr. Misra had said. He said that TGB was maintaining its mass market products while focussing on premiumisation.
On its plans to outsource backoffice processes, TGB said that it has identified these jobs in human resources, finance and operations and outsourced their management to Tata Consultancy Services, which will now be handled from the TCS Development centre in Kolkata. “This will result in cost-savings, increase in business efficiency and build digital capability”.
At TGB’s 2017-18 annual general meeting, Chairman N. Chandrasekaran had emphasised on the need to scale up operations in certain areas at a time when black-tea segment is under stress. He also said that the thrust would be on growing the Indian markets through a combination of focussing on market share and a number of new products, at a time when some of the international markets have de-grown.
TGB management had told analysts at a recent investor conference, that declining black tea consumption in developed markets and competitive headwinds amid high commodity costs were challenges in India.