Armed with a significant war chest, Tata Consumer Products Ltd (TCPL) is drawing up ambitious growth plans by moving heft into the home and personal care space through an acquisitions-led strategy, top executives close to the development said.
The company, which has operated primarily in the foods and beverages space, will now get into categories such detergents, home cleaners, body washes and creams and will bank on acquisitions to implement the plan.
Having focused on organisational simplification and over the past one year, Tata Consumer will now chase scale by expanding its portfolio, an executive said.
The management team has a mandate to get aggressive and play big in categories where it can be among the top three players, with an M&A plan funded by Tata Sons and sizeable cash (around Rs 3,000 crore) on its balance sheet, officials said. The company’s M&A team is already scouting markets for acquisition opportunities, executives said. “The kind of heft the Tata brand has in the minds of consumers is clearly an opportunity to tap well in the country. We already have strong brand equity in foods and it will be harnessed in the home and personal care space too,” one of them said.
Tata Consumer did not comment.
The company has been scouting for categories in the FMCG space where it can make an impact through scale, executives said. Even in the food space, it may get into branded dry fruits, a space seen as a commodity with no branded players.
Tata Consumer has put in place a completely new executive management team focussed on execution, headed by chief executive Sunil D’Souza who was hired in April 2020. Chief operating officer Ajit Krishnakumar, who was appointed in January 2020, is in charge of the backend integration which includes supply chain, logistics, integration of associate companies and handling the overall operational functions. Almost half the company’s talent in the sales and marketing teams are external hires today, with a clear focus on execution, the executives said.
“The mandate is to build a giant FMCG company which is also agile and nimble in the marketplace. A new culture that befits an agile FMCG company is being built that focuses on productivity, efficiency and growth … (and) that taps into the growth opportunities in India’s huge consumption market and creating shareholder returns,” said a top company executive, seeking anonymity.
The FMCG company had appointed Deepika Bhan as president of its packaged foods business in April 2022. Bhan had stints with Hindustan Unilever as the global brand director of haircare for the South Asia market and with PepsiCo and Tata Motors. Punit Gupta joined Tata Consumer in April 2021 and leads strategy and M&A.
Tata Consumer had also appointed Gharry Eccles as president of its international business in January 2022 to replace Adil Ahmad, who retires this month.
In March 2022, as part of a second major restructuring of its foods and beverages play, the Tatas announced the merger of Tata Coffee with Tata Consumer. Earlier, it had merged the salt and branded lentils business of Tata Chemicals with Tata Consumer.
The Tata Consumer stock has surged 27% in the last one year, compared with a 12.3% gain by the Nifty FMCG index and a 16.4% rally by the broader Nifty50 index. Ever since Tata Consumer was included in the highly tracked Nifty50 index in April last year by the National Stock Exchange, the stock has outperformed all the consumer goods stocks barring ITC. With a market capitalisation of nearly Rs 75,000 crore, the Tata Group firm is India’s seventh biggest consumer goods company.
“The reorganisation of Tata Consumer’s India and overseas business will enable the company to leverage supply chain better, create customer-focused business verticals and accelerate decision-making and execution. It will create a single listed entity capturing the full value of the TCPL group,” Edelweiss said in a report.
The company’s portfolio of products includes tea, coffee, water, salt, pulses, spices, ready-to-cook offerings, breakfast cereals, snacks and mini meals. The company has an annual turnover of about Rs 12,500 crore with operations in India and international markets.