Tata Global Beverages on Wednesday said it might sell its loss-making China subsidiary. The company's Chinese subsidiary, called Zhejiang Tata Tea Extraction Company, reported a net loss of Rs. 15 crore in the previous financial year.
"For China, we are exploring different options, which could be restructuring or a sale," Cyrus Mistry, the Tata Group Chairman, said at Tata Global Beverage's (TGB) annual shareholder meeting in Kolkata on Wednesday.
The Indian non-alcoholic beverage company holds 81 percent in Zhejiang Tata Tea Extraction (ZTTECL). According to TGBL's balance sheet, the Chinese subsidiary reported losses of over Rs. 100 crore in the financial year that ended on Dec. 31 Dec, 2015.
"We continue to have those challenges and will take a call on the business there in the coming year. It is significantly a B2B business over there. It is not a consumer business. That's not the reason that business is getting impacted. The reason is more from a productive prospective," Mistry added.
Various options have been considered for "restructuring" the Chinese business. The joint venture recorded liabilities of Rs. 115.54 crore and loss after tax was pegged at Rs. 15.34 crore as of December 31, 2015, according to TGBL's annual report.
"Delays continue in stabilisation of the China business. While prospective customers have shown interest in our instant tea products, the final conversion to orders will be dependent on meeting the product profile requirements. Going forward, stabilising the production process and establishing a pipeline of external customers and successful scaling of technology will be key to the success of the project," the annual report said.
The joint venture between Zhejiang Tata Tea Extraction and TGBL was inked in 2007. TGBL holds 70 percent stake while ZTTECL holds the rest.
The TGBL stock was trading at Rs. 141.75 at around 2.31 p.m. on Thursday, up 1 percent from its previous close on the Bombay Stock Exchange.