Tata Global Beverages to sell its Russian business to Skodnya Grand
The Dollar Business Bureau
Indian multinational Tata Global Beverages Ltd (TGBL) said on Thursday that it will sell its Russian business to a local company as part of its strategy to restructure operations in Russia. The amount of the deal has not been disclosed by the company.
TGBL, a Tata Group subsidiary, has signed an agreement to transfer operational responsibilities and ownership of its business unit in Russia to Skodnya Grand Ltd, TGBL said in a statement.
The deal also includes granting a 5-year renewable license pact for its brands in Russia to Tea Trade LLC, after the transaction has been completed, it added.
The deal is likely to be concluded with the next in 3-4 months, subjected to the regulatory approvals, the company said in a regulatory filing.
As part of the deal, TGBL said, “It will transfer ownership and operational responsibility of the Russian business unit and grant a five year license agreement for all its Russian brands to Tea Trade LLC after completion of the transaction.”
The agreement include taking over of all the existing assets and operational liabilities, including supplier contracts, and employees, as well as, continuing to produce and sell TGBL’s existing products and brands, it added.
Without disclosing the amount of the deal, TGBL said its Russian subsidiary will get a consideration in lieu of transferring the existing assets and operational liabilities and a license fee for using the brand.
Explaining the basis behind such development, TGBL said, “Given the sustained macro-economic and other challenges in the market place and the performance in recent years post currency devaluation, the company believes that a change in the operating model is warranted.”
TGBL’s Russian business unit had recorded a sales turnover of Rs.226 crore in the financial year 2016-17, with a loss of Rs.29 crore after tax.