Tata Chemical turns ex-date for spin-off

Tata Chemical, the soda ash maker, witnessed near 8% surge in share price on turning ex-date following the spin-off of its food business.

Tata Chemicals fixed Thursday, March 5, 2020 as the record date, for the purpose of determining the shareholders of the Company to whom equity shares of Tata Consumer Products (TCPL) shall be issued in consideration for the demerger of the consumer products business of the Company into TCPL.

In May 2019, Tata Group decided to demerge consumer business of Tata Chemicals and merge it with Tata Consumer Products (formerly Tata Global Beverages).

Under the scheme, every shareholder of Tata Chemicals will get 1.14 new equity shares of Tata Global Beverages for every one equity share held in Tata Chemicals.

It means that shareholders having 100 shares in Tata Chemicals will receive 114 shares in Tata Global Beverages.

The combination of the two consumer-focused businesses will benefit both sets of shareholders who will be able to participate in a larger business poised to grow their share of the foods & beverages market with a broader exposure to the attractive and fast growing FMCG sector.

Tata Chemicals shareholders will retain their ownership of a focused science-led chemistry solutions and specialty products company with a leading portfolio of products in basic and specialty chemicals and strong cash flows to support future growth.

The strong growth visibility from cathode active material and Tata Chemical’s position in the entire chemistry would put the company in a favourable position in the long run.

Earlier this year, both the companies received approval for the scheme of arrangement from the company regulator – the National Company Law Tribunal (NCLT).

Tata Global is likely to get included in the MSCI, due to the increased market capitalisation of Rs 36,600 lakh crore.

Tata Chemicals gas ventured into the silica and nutraceutical business with a capex of around Rs 500 crore.

The same is anticipated to generate asset turn of 1.5-2x and RoCE of around 15-20%. We expect it to improve the return ratio profile of the overall group in the medium to long run.

Apart from this, strong growth visibility from cathode active material and TCL’s position in the entire chemistry are expected to place the company favorably in the long run

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