It is reported that a fresh round of consolidation is in the offing at the TATA group. India’s largest private conglomerate is looking to integrate some of its smaller businesses with their respective flagship companies with a view to leveraging the value of the entities and increase cost efficiency.
Two executives familiar with the development said that the earliest of the consolidation could be the merger of TATA Coffee and Mount Everest Mineral Water with TATA Tea; Rallis with TATA Chemicals; TATA Teleservices of Maharashtra with TATA Teleservices and TATA Sponge Iron with TATA Steel.
The executives said that the idea has been discussed in at least two recent board meetings of TATA Sons the holding company of the group and also at the individual company level. The executives added that “The group is looking to appoint external agencies to study the possibilities of mergers or consolidation.”
Asked about the consolidation process a TATA group spokesman said that "TATA Sons does not wish to comment on such speculation."
The fresh round of consolidation would be the second such exercise after Ratan Tata took over chairmanship in 1991. Though the exercise saw the number of companies fall to 96 from over 250, the group still has over 300 subsidiaries in 40 businesses spread across various parts of the globe.
Another source outside the company said that “The consolidation is intended to ring fence businesses from economic instabilities. At the peak of the downturn, the smaller businesses had struggled and many of them posted losses. The new merger initiative will help the major TATA companies scale up operations and enhance bargaining power.”
(Sourced from http://www.steelguru.com/news/index/2009/10/26/MTE3NjQx/TATA_group_set_for_consolidation_again.html)
Monday, October 26, 2009
TATA group set for consolidation again
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