Tata Global Beverages Ltd (TGBL) on Thursday said it has entered into an agreement with Skhodnya Grand Ltd of Russia to "transfer ownership and operational responsibility of its Russian business unit".
"TGBL has entered into an agreement to transfer ownership and operational responsibility of its Russian business unit to Skodnya Grand and to grant, post completion of the transaction, a five-year renewable license agreement for its Russian brands to Tea Trade LLC," a company spokesperson said.
The company, however, will continue to retain ownership of its brands in Russia.
"The new owner will continue to manufacture and sell TGBL's existing brands and products, for which we will receive royalties," the spokesperson said.
The Tata Group company has undertaken a strategic review of its Russian business unit. As a result, it is "restructuring its presence in the Russian market to improve financial performance".
"The company's overseas subsidiary and its co-shareholder European Bank for Reconstruction and Development (EBRD) have undertaken a strategic review of their Russian business unit and the subsidiary is restructuring its operating model in the Russian coffee and tea market," it said in a regulatory filing.
According to the agreement, the new owner will take over all existing assets and operating liabilities, including employees, customer and supplier contracts.
The transaction, which is subject to completion of condition precedents including regulatory approvals, is expected to close over 3-4 months.
The Russian business generated a sales turnover of Rs 266 crore for the year 2016-17 and a loss after tax of Rs29 crore for 2016-17, it added.
--IANS
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