Tata Consumer Products added 0.51% to Rs 566.65 after Earth Rules, the company's step-down Australian subsidiary, entered into an agreement to sell MAP Coffee business to Australia-based Buccheri Group.
Buccheri Group is engaged in coffee manufacturing. Earth Rules will receive a total consideration of AUD 1.25 million (Rs 6.74 crore) in tranches by 28 February 2021, as per terms of the asset sale and purchase agreement dated 5 December 2020. The sale is expected to be completed by 7 December 2021.
The transaction is a slump sale of assets by an overseas step-down subsidiary, where the business assets of such subsidiary is being sold along with the contracts, assets and brands for a consolidated consideration to be received in cash.
Map Coffee joined the Tata Consumer Products family in 2014. Map Coffee was established back in 2002 and supplied Australian caf, restaurants and bars with a range of Italian and locally roasted coffee. It then expanded into servicing the coffee needs of business offices across Australia, and, in 2009, moved into capsule machines and capsules outside the Grocery channel, followed by entry into the Grocery channel in 2014.
Tata Consumer said that it continually evaluates its businesses across geographies in line with its strategy and business objectives. It further said that the divestment does not impact Tata Consumer Products' existing branded tea business in Australia.
The move is consistent with the company's focus on consolidating its businesses and enhancing profitability and business effectiveness. It would also help bring greater focus to the company's core branded tea and coffee businesses in international markets.
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Sunil D'Souza, managing director & chief executive officer, Tata Consumer Products, said, In line with our strategy of driving structural simplification and focusing on core businesses where we see profitable growth, we have exited the out of home coffee business in Australia. While it was a small part of our overall business, the divestment will help us further consolidate our International footprint and better focus on our core brands.
Tata Consumer Products is a food and beverages (F&B) focused consumer products company. The company's portfolio of products includes tea, coffee, water, salt, pulses, spices, and ready-to-cook offerings.
The company reported a 33% rise in consolidated net profit to Rs 257.06 crore on 18.5% increase in net sales to Rs 2,781.34 crore in Q2 FY21 over Q2 FY20.
On a year-to-date (YTD) basis, the stock has gained 77.08% while the benchmark S&P BSE Sensex has added 9.52% during the same period.
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