Tata Group to expand foods business, consolidate other operations

Tata Group will leverage the `Tata' brand to enter new areas of businesses like ready-to-eat foods while consolidating its loosely-held businesses into leaner and better focused units, chairman and chief executive officer N Chandrasekaran has said.

Addressing group chief executive officers at the annual 'JRD Tata Memorial' function, he called for a collaborative action by group companies so as to 'leverage the 'Tata' brand.

Chandrasekaran will kick off consolidation at the Tata Group by clustering all defence businesses under one company as it looks to tap into the opportunity that the country's growing defence spending offered.

Similarly the group will also bring all of its financial services businesses engaged in corporate and retail lending as also mutual funds and insurance businesses into a single unit.

Besides, Chandrasekharan proposes to create a larger infrastructure vertical by bringing all related companies under one arm. This may include units like Tata Realty and Infrastructure and consultant Tata Projects.

The Tata Group is reported to have begun product-testing for its foray into the ready-to-eat (RTE) foods segment. The group, which already has a presence in foods and beverages segment through group companies like Tata Chemicals and Tata Global Beverages, has over the last few weeks introduced a range of RTE products in the Pune market.

Under the defence vertical, which is currently dispersed among multiple units, including Tata Advanced Systems, Tata Advanced Materials and Tata Industrial Services are likely to be brought under the standalone defence and aerospace businesses.

These businesses together clocked revenues of Rs2,650 crore

Tata Advanced Systems, Tata Advanced Materials and Tata Industrial Services are standalone defence and aerospace businesses.

The rest are part of companies such as Tata Power, Tata Motors, TAL Manufacturing Solutions, Tata Technologies, Tata Consultancy Services, Tata Steel, Tata Elxsi and Titan.

Tata's defence businesses clocked in a revenue of Rs 2,650 crore in fiscal 2016, an increase of 7.5 per cent from the year earlier. In the last five years, the group's revenue from defence and aerospace has grown at a CAGR of 18 per cent.

"All companies working in security and defence will be brought under one umbrella. The thought has been there for three years. It is now finally moving ahead," said a person familiar with the matter. "This will help them big for larger defence projects with a higher net worth."

Initially, all unlisted units may be merged with listed companies before consolidation of bigger units start.

Chandrasekharan is reported to have equipped the board with several investment bankers soon after he took over in February, which pointed to merger and acquisition possibilities.

The Tatas are planning to expand their defence business in a big way, by bringing all group companies together besides creating strategic partnerships and joint ventures in line with the government's `Make In India' policy.