Tata Consumer Products Limited (TCPL) has initiated a postal ballot to seek shareholder approval for material related party transactions with its subsidiary, Capital Foods Private Limited (CFPL). The proposed transactions, valued at up to ₹1,650.00 crores, encompass a range of operational and financial activities.

Transaction Details

The proposed transactions include:

• Purchase of goods: Up to ₹1,300.00 crores
• Inter-corporate deposits/loans: Up to ₹350.00 crores
• Contract manufacturing services
• Reimbursement of related expenses

These transactions represent 9.37% of TCPL's annual consolidated turnover and 221.66% of Capital Foods' standalone annual turnover.

Strategic Rationale

TCPL holds a 75% equity stake in Capital Foods, which manufactures and sells packaged food and condiments under popular brands like 'Ching's Secret' and 'Smith & Jones'. The proposed transactions aim to capitalize on Capital Foods' strong brand portfolio and unlock operational synergies across distribution, supply chain, and export channels.

Approval Process

The Audit Committee, comprising all Independent Directors, has reviewed and approved the proposed transactions. The Committee has determined that these transactions will be conducted at arm's length and in the ordinary course of business. The Board of Directors has also voluntarily approved these Related Party Transactions (RPTs).

Shareholder Voting

TCPL will conduct remote e-voting for shareholders from September 24 to October 23. The results of the postal ballot are expected to be announced by October 27.

Financial Implications

Key terms for the inter-corporate deposits include:

Corporate Governance

To ensure transparency and fairness, TCPL has engaged a reputed external independent chartered accountants firm to evaluate the proposed RPTs. The firm has confirmed that the transactions meet arm's length criteria.

Management Commentary

While specific management quotes are not provided, the company's actions suggest a strategic move to strengthen its position in the fast-growing packaged foods segment. By leveraging Capital Foods' capabilities, TCPL aims to accelerate innovation, expand its reach in non-Indian cuisines, and enhance overall value creation within its food business.

Shareholders are encouraged to review the detailed information provided in the postal ballot notice and cast their votes through the remote e-voting system. The outcome of this vote will be crucial in determining TCPL's ability to proceed with these significant related party transactions.

Tata Consumer Products Limited (TCPL) has taken a significant step towards promoting tribal-produced coffee and expanding its market reach. The company has signed a Memorandum of Understanding (MoU) with the Girijan Cooperative Corporation to broaden the distribution of the organic Araku Coffee brand in both domestic and global markets.

Starbucks to Serve Araku Coffee

In a notable development, the agreement paves the way for Araku Coffee, produced by tribal communities in Andhra Pradesh's Araku Valley, to be served at Starbucks coffee chains. This move is expected to provide substantial exposure to the locally-produced coffee on an international platform.

Part of Larger Initiative

The MoU was one among 21 agreements signed during World Tribal Day, aimed at developing tribal communities and enhancing their livelihoods. These initiatives span various sectors and involve multiple corporate entities.

Expanding Araku Coffee's Presence

As part of the efforts to promote Araku Coffee, the Mission for Elimination of Poverty in Municipal Areas plans to establish Araku Coffee kiosks across Andhra Pradesh. This initiative is expected to create additional outlets for the coffee and potentially boost local employment.

Other Corporate Partnerships

Several other companies have also committed to supporting coffee cultivation in tribal areas:

• ITC has pledged to add 1,600 hectares to its existing 4,010 hectares of coffee plantations in Paderu.
• Subko will collaborate with tribal farmers in Chintapalli for red cherry processing.
• The Coffee Board has signed agreements to expand coffee cultivation in tribal regions.

Beyond Coffee: Comprehensive Tribal Development

The series of MoUs signed during World Tribal Day extend beyond coffee production. They encompass various aspects of tribal development, including:

• Tourism development in tribal areas
• Expansion of turmeric cultivation
• Marketing support for a wide range of tribal products

This comprehensive approach aims to create diverse economic opportunities for tribal communities and promote their traditional products in broader markets.

The partnership between Tata Consumer Products and the Girijan Cooperative Corporation, along with the involvement of global brands like Starbucks, marks a significant step towards recognizing and promoting tribal-produced coffee. It not only opens new avenues for market expansion but also contributes to the socio-economic development of tribal communities in Andhra Pradesh.