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On May 16, S&P BSE Oil & Gas rose 1.5 percent, followed by the S&P BSE realty that gained 1.3 percent, and the S&P BSE Power that was up 1.3 percent

Indian markets recovered losses of the previous trading session on May 16, but Nifty failed to reclaim 11,300 for the third consecutive day in a row.

The final tally on D-Street – the S&P BSE Sensex rallied 278 points to 37,393 while the Nifty50 rallied 100 points to close at 11,257.

Among sectors, the S&P BSE Oil & Gas rose 1.5 percent, followed by the S&P BSE realty that gained 1.3 percent, and the S&P BSE Power that was up 1.3 percent.

Also, Read- Technical View: Nifty forms bullish candle; short Nifty if it goes below 11,100

We have collated a list of six stocks that remained in focus May 16 trading session:

Amit Gupta, Co-Founder, and CEO, Trading Bells.

Sun Pharma: Stock is in a major downtrend, can see a pullback

Sun Pharma recovered after falling over 7 percent in intraday trade on May 16. The stock is in a major downtrend but the past few days’ price action is indicating that it is making a strong bottom around Rs 390. We can expect a pullback rally towards 50-DMA of Rs 460 but a closing below Rs 390 would change the structure to bearish.

Lupin: Level of Rs 730 is acting as a strong base

Lupin recovered after falling about 6 percent in trade on May 16. The stock has been under pressure since it posted its Q4 results. It looks like Rs 730 level is acting as a strong base for Lupin and there is a very high probability that it can move higher from here.

On the upside, Rs 840-880 is still a strong supply zone; above which it may start a strong bull run.

Bajaj Finance: Stock in a strong uptrend remain invested

Bajaj Finance rallied after Q4 results to reclaim Rs 3,100. It closed with gains of nearly 4 percent and was among the top Nifty gainer.

Bajaj Finance is in a strong uptrend where it is consolidating after a strong bull run. Going forward, a move above the all-time high of Rs 3,160 can lead another 500 points rally while a break below Rs 2,800 could lead to profit taking.

Tata Chemicals: May face resistance around Rs 620-650

Tata Chemicals closed 8 percent higher on merger announcement. The stock has created a strong base at Rs 555. On the upside, it has a strong supply zone at Rs 620-650 band. A close above these levels could take the stock towards the Rs 700-725.

Tata Global Beverage: Stock could hit a target of Rs 280 in the coming week

Tata Global Beverages rallied about 10 percent on the merger announcement. Tata Global is bottoming with a bullish inverse head and shoulder pattern where we can expect a target of Rs 280 in the coming week.

On the upside, Rs 235 would act as an immediate hurdle for the stock while Rs 210 would act as immediate and strong support for the stock.

YES Bank: Stock looking weak on charts; support at Rs 130-120

Yes, Bank fell over 4 percent on May 16. The private sector bank is looking very weak after it witnessed a closing below strong support of Rs 145.

On the downside, Rs 130-120 zone would be the next target for this counter while only a close above Rs 145 can lead to any positive momentum.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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On part 2, we will try to decode the five years that have passed. This is a look at India's foreign policy in the Modi years.

On part 1 of our two-part special 'India and the World,' we focussed largely on the way we were before 2014 and today on part 2, we will try to decode the five years that have passed. This is a look at India's foreign policy in the Modi years.

How we began negotiating with the world

After gaining independence in 1947, foreign policy was an unknown entity for Indians. But then there was in existence a foreign department created by the Indian National Congress, during 1925 to synergize with international supporters.

And over time, government policy emerged under the aegis of the Ministry of External Affairs headed by Prime Minister Jawaharlal Nehru. The Indian Foreign Service also played an important role in representing the country abroad. Nehru was also one of the forces behind Panchsheel or the Five Principles of Peaceful Co-existence.

Our foreign policy was based primarily on internal consolidation in the fifties and gaining international respect for our moral authority as a functioning democracy even though we relied to a great extent on outside assistance for developmental activities. We joined the Commonwealth of Nations and threw our weight behind independence movements in other countries.

One of the most debated and controversial aspects of the domestic and foreign politics has been the continuous clash between India and Pakistan over Kashmir with even the United Nations failing to intervene satisfactorily. Not to mention the wars with both China and Pakistan. As also a significant military operation when India became the second country to recognize Bangladesh as a separate and independent state on 6 December 1971 and helped "liberate" it from West Pakistan in 1971.

The South Asian Association for Regional Cooperation (SAARC) has played a big part in shaping India's relationships with countries like Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Sri Lanka and of course Pakistan in areas like anti-terrorism, narcotics control, agriculture, rural development and more. It is another matter though that the frequent tensions between India and Pakistan have made the synergy sluggish. Recently a scheduled SAARC summit to be held in Islamabad was postponed due to the Uri attack.

In the 1990s, the Kargil war won a major diplomatic victory for India when the United States and the European Union recognized the Pakistani military's role in the conflict and several anti-India militant groups based in Pakistan were labeled as terrorist groups by the United States and European Union.

But that was much later. Even when we were taking a non-aligned stand in the early years as far as global conflicts went, we ended up signing the Indo-Soviet Treaty of Friendship and Cooperation in August 1971 to counter the support Pakistan was getting from US and China. From the late 1980s, India began to synergize with countries other than the Soviet Union and these included the United States among other developed countries and yes, even China. Not to mention the continuous preoccupation with South Asian neighbors like Pakistan, Sri Lanka, and Nepal.

The end of the Cold War, the fragmentation of the Soviet Union led to diplomatic and economic ties not just with the United States, or the European Union trading bloc, but member states of the Association of Southeast Asian Nations (ASEAN), the African Union, the Arab League, and Iran. The Narasimha Rao government in the early nineties has been widely credited for India's 'look east' foreign policy. Subsequently, news reports have quoted Prime Minister Manmohan Singh's take on this change, "It was also a strategic shift in India's vision of the world and India's place in the evolving global economy".

For its security needs, now India relies on its strategic and military equations with different countries like Russia, Israel, and the United States. Significantly, once an ideological ally of Palestine, in 1992, India established formal diplomatic contact with Israel and this relationship has especially strengthened during the spells of the Bharatiya Janata Party (BJP) led governments and also subsequent UPA (United Progressive Alliance) led governments. Russia is at the moment the largest supplier of military equipment to India, followed by Israel and France.

By the 1970s, the country also had the Research and Analysis Wing (RAW)—functioning covertly to gather sensitive information. Over time, it has become indecipherable whether our foreign policy is formulated by the Ministry of External Affairs or the Prime Minister himself. In the little time the Minister of External Affairs, Sushma Swaraj has been accorded by her health and a tenure marked with the showmanship of the Prime Minister, she has displayed an exemplary and proactive concern for the well-being of Indian abroad.

Looking East in the present

At present, the current government has made all the obvious moves to take advantage of the markets waiting to be tapped in ASEAN.

On the military front, there have been defense deals and joint military exercises with US and European nations and a fillip to bilateral trade.

India's candidature for a permanent seat at the UN Security Council is still not a foregone conclusion even though during a state visit to India in November 2010, US President Barack Obama had announced US support for India's bid for permanent membership to UN Security Council as well as India's entry to Nuclear Suppliers Group, Wassenaar Arrangement, Australia Group, and Missile Technology Control Regime. As of January 2018, India has become a member of Wassenaar Arrangement, Australia Group, and Missile Technology Control Regime.

One significant and rather unexpected turn of events has been that the bilateral trade between the two countries surpassed $65 billion by 2015, making China the single largest trading partner of India almost as if the occasional military skirmishes don't matter.

What observers say

On May 7, 2019, Asia Society carried an interview with Bharat Karnad who is a Research Professor in National Security Studies at the Centre for Policy Research, New Delhi. The article tries to understand it, and we quote, the credit for "ushering a bolder and more engaged foreign policy" can be attributed to the current government.

Karnad has written a book, Staggering Forward: Narendra Modi and India’s Global Ambition, in which he describes the current foreign policy as “inept” and “short-sighted.”

We quote, "The book makes the cases that Modi has been anything but bold on the international stage. While Modi’s efforts may have garnered small successes, Karnad believes he has failed in the grander ambition to propel India toward great power status. Instead, Karnad sees Modi’s India as “great power lite,” being stuck for the past five years in “neutral gear.”

The book’s critique of Modi comes from an unexpected angle. While Modi is maligned by the left in India and abroad for his Hindu nationalist, strong-man approach, Staggering Forward is a takedown from the other side of the political spectrum. Karnad, a research professor at the Center for Policy Research who describes himself as “India’s foremost conservative strategist,” faults Modi not for being hawkish but for being diffident."

The article is authored by New York-based Anubhav Gupta, Assistant Director for the Asia Society Policy Institute, and Karnad told him during the course of the interview that the current foreign policy is just a continuation of policies pursued by the previous governments in the new millennium.

Said Karnad, "Based on the long history of the factors that command the respect of China's rulers, I have been advocating for some two decades now and also in this book that India adopt a tit-for-tat approach. For instance, the most obvious way to react to Beijing's very successful initiative to arm Pakistan with nuclear missiles and use that country to contain India would have been for Delhi to transfer like armaments to many more small adversarial states on China's borders to equalize the strategic context. It would have signaled India's intent to respond in kind and equal measure and would have quickly sobered up Beijing and telegraphed to all Asian states India's ability to take on an ambitious and oppressive China. It would have crystallized India as a competing power node to China in Asia. A similar attitude to inform India's trade policy would have prevented the skewed trade and severe balance-of-payments problem India now faces."

About the government's much-publicized victory in the war of perception against Pakistan, Karnad had this to say, "Pakistan, I believe, is Modi's greatest failure. Rather than resorting to covert warfare methods to discreetly drive home the message to Islamabad that two can play at the terrorism game, Modi has sought to make political capital out of forcefully countering actions by Pakistan-sponsored terrorist organizations, such as Jaish-e-Mohammad, that are active in Indian Kashmir. This has a dual purpose of also communally polarizing the Indian society, which the ruling Bharatiya Janata Party (BJP) hopes to benefit from. This is base tactical thinking."

We wonder what the founders of Panchsheel would have to say about this suggestion of playing "terrorism games," but according to Karnad, "a more strategic-minded leader would have used covert means when and where necessary while also seeking to influence the Pakistan government with a spate of economic incentives, such as open access to the vast Indian market, and unilateral military measures, such as demobilizing and reconstituting the Indian Army's three strike corps — which the Pakistan Army most fears — into a single composite corps sufficient for any Pakistan contingency, and withdrawing forwardly deployed nuclear missiles from the border with Pakistan. By such means, India could have and still can reassure Pakistan, preclude it from acting the Chinese cat's paw in the region, and regain for South Asia the unitary strategic space lost in 1947 with the Partition of India."

About the Prime Minister's extensive “personalized diplomacy," Karnad said that if all politics is local, then Modi has been sensitive about actions that fetch him domestic political dividends.

Says he about the government's equation with the Gulf countries, "A large section of Indian society gains from the remittances, estimated by the World Bank in 2018 as some $80 billion annually; sent home by skilled and unskilled Indian labor employed primarily in the Gulf countries. These remittances make for India's healthy hard currency reserves and help sustain the economies of several Indian states, chief among them Kerala, Uttar Pradesh, and Bihar. The remittance beneficiaries also constitute a large voter base, which Modi has kept pleased by cultivating, in the main, Saudi Arabia and the United Arab Emirates (UAE).

Intimacy with these Sunni majority states also balances India's ties with the Shia majority Iran, giving India a role in the ongoing Shia-Sunni tussle in West Asia. More generally, close ties with Islamic nations symbolizes the fact that India has the second largest Muslim population in the world (after Indonesia), and is a counterpoise to India's deep relations with Israel, on the one hand, and on the other hand, limits Pakistan's influence in the Islamic world."

Inner divisions, outer cracks

Karnad also states that this tenure has exacerbated “tensions in society along caste and religious lines" and these could prove detrimental to India's image abroad. He explains why that is and we quote, "India has long projected itself, successfully, as an inclusive democratic country suffused with liberal values and exemplifying secular ideals. This image cannot but be hurt when domestic politics are communalized. India's recent downgrading by the U.S. Commission on International Religious Freedom, for instance, will have repercussions in that many countries may be influenced by its findings, and the Modi government's desire for India to be seen as a bastion of liberal thought and democratic action will take a hit. Further, anti-Muslim rhetoric will begin to impact India's interactions with the Islamic world, alienate Muslim states, and cumulatively affect India's quest for great power."

He also believes that the BJP may return to power with a thin majority with the current PM being replaced by someone like the Transportation Minister Nitin Gadkari, who has distinguished himself as a conciliator.

The Diplomat published a piece by Krzysztof Iwanek on April 27, 2019, that asked categorically, "How did Hindu nationalism affect India’s foreign relations?" And if as the piece said, "The spirit of nationalist ideology remained trapped in the body of the country’s pragmatic needs."

The article states that regardless of the Rashtriya Swayamsevak Sangh's (RSS), intimacy with the current government, the foreign policy did not divert much from previous pathways.

Despite proving to be bolder in dealings with Pakistan in the second half of its tenure (2016-2019), the government, says the piece, also showed a much more conciliatory stance toward Islamabad at the beginning of the tenure (2014-2015). Neither has the government fulfilled its promise of facilitating the comeback of Kashmiri Pandits through the airstrike on Balakot in 2019 can be considered a firm punitive operation against a radical Pakistani organization and a reply to an earlier terrorist attack in Kashmir.

Another important aspect of the new foreign policy was the visit to Israel. PM Modi became the first Indian prime minister to visit that country and this marked the firm sidelining of the Palestine issue although the PM stopped by in Palestine for three hours in 2017 and expressed his government support for a two-state solution and an “independent” Palestine.

As we said before, this government has courted crucial partners among the Arab nations as well with the Prime Minister visiting Qatar, the United Arab Emirates, and Saudi Arabia.

As the piece says, "It would seem that the spirit of ideology was once again locked in the body of India’s everyday needs, as some of the Muslim Arab states house a significant number of Indian workers and export their energy resources to India. Contrary to the most vehement votaries of the free market that declare that money has no nationality, nationalists often declare it does. Both streams of thought are to be found within the coteries of the ruling BJP. Both the party and much more the nationalist organization behind it, the RSS, have been promoting the idea of swadeshi — the promotion of Indian companies and their products and services. But this has hardly translated into any policies under Narendra Modi, himself a major supporter of foreign investment. While in opposition Modi and the BJP had criticized allowing FDI in retail and, yes, they have not overturned this decision once in power. The current government’s flagship 'Make in India' program was in reality all about rolling out a red carpet for foreign investors and not protecting the Indian industries. Even some sections of the RSS took a different stand from the BJP government and had at times scolded Modi’s cabinet for its free market-oriented economic policies."

Religious diplomacy?

An important point the writer makes is that this government has increasingly begun to use religious diplomacy, for instance, as a strategic tool for a variety of ends.

We quote, "The Hindu nationalists perceive Hindu religious identity as the bedrock of Indian national identity and hence perceive any conversion from Hinduism as a threat to national unity. They have been always suspicious – and sometimes even violent – toward Christian missionaries working in India. In this regard, Modi’s policy has followed the nationalist spirit by canceling the licenses of certain foreign Christian NGOs and restricting their activities, although this cannot be considered as part of direct relation to any state.

Finally, it is perhaps the policy toward refugees where Hindu nationalism surfaced most strongly, as Modi’s government admitted openly that it is unwilling to accept Muslim refugees or to grant citizenship to Muslims of foreign origins. The BJP’s election manifesto of 2014 declared that under its rule “India shall remain a natural home for persecuted Hindus and they shall be welcome to seek refuge here.”

Modi’s government, according to the piece, was clearly unhappy to accept the (predominantly Muslim) Rohingya refugees from Myanmar once they started to be persecuted again in 2017 and started to flee to nearby countries, including India.

We quote again, "The BJP’s decision-makers also ignited a controversy by tabling the Citizenship (Amendment) Bill in 2016 and eventually voting it through the lower house of Parliament. The piece of legislation stipulated that after seven years of residence Indian citizenship would be given to any person who had come from Pakistan, Bangladesh, and Afghanistan provided that she or he would profess any other religion other than Islam. The bill was criticized for a few reasons — as many found it too liberal — but any rate its goal of granting citizenship based on religious denominations was clear. All of this was capped by the declarations of BJP party president, Amit Shah, during the 2019 election campaign, when he stated that “We will remove every single infiltrator except Buddha (sic), Hindus, and Sikh.”

As the writer opines in conclusion, "to sum up, the BJP’s foreign policy took a predictable and rather realistic trajectory. The shades of ideology within the spectrum of its actions and declarations were less visible whenever it came to dealing with the realm of hard power (in aspects such as security and economy) and in relations with stronger nations. They were, however, more apparent whenever domestic politics called for it, and also within the area of soft power (such as culture promotion), as well as in relation to non-state actors and weaker groups (such as Christian NGOs and Muslim refugees)."

With Time now publishing a cover on the Indian Prime Minister with a controversial headline, it will be interesting to see how his own base will regard his domestic and international legacy.

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Nifty can witness a pullback towards 11,400. Going forward a sustained trade above 11,400 may induce further rally towards 11,570.

Rupak De

The Nifty has been consolidating after a sharp fall from the recent high of 11,789. During the day, the Nifty has erased all the gain it made on Tuesday.

However, the bearish trend has already started to weaken, at least for the very short term. In addition, the index is seen to have found initial support at a historical swing high on the daily chart.

On a Heiken Ashi plotting, the chart has been consolidating on the daily frame. All these indicate a short term pullback.

On the higher end, the Nifty can witness a pullback towards 11,400. Going forward, a sustained trade above 11,400 may induce a further rally towards 11,570.

On the flip side, the market may resume its southwards journey on a breakdown below 11,100. A close below 11,100 could take the index towards 10,900-10,700 levels.

Here is a list of top three stocks which could give 7-8 percent return in the short term:

Ujjivan Financial Services: Buy| CMP: Rs.317.30| Target: Rs 344|Stop Loss: Rs 307|Upside 8 percent

The stock recorded a falling wedge breakout on the daily chart, which suggests a reversal of the previous weak trend. In addition, the stock is seen to have found support above the historical peak on the daily chart.

The daily RSI (14) has entered in a bullish crossover. Traders can accumulate the stock in the range of Rs 315-320 for the target of Rs 344 and a stop loss below Rs 307.

Axis Bank: Sell| CMP: Rs.721.95| Target: Rs 670|Stop Loss: Rs.741|Upside 7 percent

The stock on the daily chart has fallen below a rising channel pattern, which suggests the end of the previous uptrend and start of a downtrend.

The weekly Heiken Ashi has started to reverse, which suggests a reversal of the bull trend. The momentum oscillators like RSI (14) and MACD are in the bearish crossover.

Traders can sell the stock in the range of Rs 717-725 for the target of Rs 670, and a stop loss above Rs 741.

HDFC: Sell| CMP: Rs 1944.95| Target: Rs 1,847|Stop Loss: Rs 1,993|Upside 7 percent

On the daily chart, the stock has been moving with a lower-top lower-bottom formation, which is a bearish setup. In addition, the price has reversed from the 61.8 percent retracement level of the previous fall on the daily chart from Rs 2,037 to Rs 1,901.

The momentum oscillators like RSI (14) and MACD are in the bearish crossover. Traders can sell the stock in the range of Rs 1,940 -1,950 for the target of Rs 1,847 and a stop loss above Rs 1,993.

(The author is a Technical Research Analyst at Bonanza Portfolio Ltd.)

Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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The total income in the quarter stood at Rs 3,076.14 crore. It was Rs 2,813.6 crore in the corresponding period last year, Nestle India said in a BSE filing.

Brokerage firms remain mixed on Nestle India after the FMCG major reported a 9.25 percent rise in profit to Rs 463.28 crore for the first quarter ended on March 31, 2019, but high commodity prices impacted margins.

The company, which follows a January-December financial year, had posted a profit of Rs 424.03 crore in the same period a year ago.

Nestle also announced plans to launch organic food products in the category “milk products and nutrition” in the coming months.

The total income in the quarter stood at Rs 3,076.14 crore. It was Rs 2,813.6 crore in the corresponding period last year, Nestle India said in a BSE filing. Export sales during the quarter dropped by 8.9 percent due to lower coffee exports to Turkey, it added.

Here’s what brokerages recommended on Nestle India post-March quarter results:

Morgan Stanley: Underweight| Target: Rs 8,400

Morgan Stanley maintained its underweight rating on Nestle India post-March quarter results with a target price of Rs 8,400.

Revenue, Operating Profit and Adjusted PAT were up 9 percent, 5 percent and 9 percent respectively compared to estimates of 12 percent, 9 percent, and 12 percent.

Margin contracted by 80 bps which was largely in-line with the estimate. Higher commodity prices affected gross margin, and higher other income drove adjusted the profit growth by 9 percent on a YoY basis.

Jefferies: Buy| Target: Rs 12,000

Jefferies maintained its buy rating on Nestle India post-March quarter results with a target price of Rs 12,000. The product launch and entry into new categories will help sustain growth, said the note.

The urban-heavy company is better-placed to navigate near-term headwinds. The recent stock price correction makes it risk-reward favorable for investors.

CLSA: Outperform| Target Rs 11,750

CLSA maintained its outperform rating on Nestle India with a target price of Rs 11,750. The company reported a decent domestic growth but weak margins. The domestic revenue growth of 10 percent was good amid weak macro.

The gross margin stood at a six-quarter low signaling input cost pressure. And, a weaker margin led EBITDA to miss estimates.

Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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For the entire 2018-19, the bank reported a net loss of Rs 2,922.35 crore on a consolidated basis, as against Rs 5,212.47 crore loss in 2017-18.

Most brokerage firms retained their rating, but Credit Suisse and CLSA slashed their respective target price and earnings estimates for Union Bank of India after its net loss widened to Rs 3,370 crore in the fourth quarter of 2018-19 mainly on account of higher provisioning.

The company registered a net loss of Rs 2,583.38 crore in the same quarter of the preceding fiscal. However, the bank posted a net profit of Rs 153.21 crore in the third quarter of 2018-19.

The asset quality of the bank remained poor with the gross non-performing assets (NPAs) standing at 14.98 percent of gross advances at the March-end 2019 against 15.73 percent as of March 31, 2018.

The high level of bad asset ratio compelled the bank to make higher provisioning of Rs 5,783.09 crore for the March quarter, compared to Rs 5,638.57 crore in the year-ago period.

The bank’s provision coverage ratio as on March 31, 2019, stood at 66.24 percent, as against 57.16 percent a year ago.

For the entire 2018-19, the bank reported a net loss of Rs 2,922.35 crore on a consolidated basis, as against Rs 5,212.47 crore loss in 2017-18. Income during the year stood at Rs 39,355.38 crore, up from Rs 38,413.65 crore a year earlier.

Reacting to the news, shares of Union Bank of India plunged over 6 percent in morning trade.

Here’s what brokerages recommended on Union Bank of India post-March quarter results:

Credit Suisse: Neutral| Slash target to Rs 75 from Rs 78 earlier

Credit Suisse maintained its neutral rating on Union Bank of India post-March quarter results but slashed its target price to Rs 75 from Rs 78 earlier.

The Q4 results were weak as slippages remain elevated and growth moderated. The deposit growth remains muted, but the CASA growth was slightly better.

With weak pre-provision profitability, the bank would continue to need capital for growth. Credit Suisse slashed EPS by 13 percent.

CLSA: Buy| Target cut to Rs 96 from Rs 105

CLSA retained its buy rating on Union Bank of India post-March quarter results but slashed its target price to Rs 96 from Rs 105 earlier.

The global investment bank retained its buy rating as valuations remain reasonable. The larger-than-expected loss was largely on account of high credit costs.

The global investment bank was disappointed with high slippages at about 4.2 percent of the past-year loan. Even adjusted for IL&FS, the delinquency is high and broad-based.

Given lower capital adequacy, the bank will need capital support. The global investment bank raised earnings for FY20-21 but slashed target price.

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TGBL will be renamed as Tata Consumer Products Limited and expects the combined entity to reach over 200 million households.

Tata Chemicals (TCL) said it will transfer its consumer products business to Tata Global Beverages (TGBL), according to a May 15 release filed with the exchanges.

The release also noted that TGBL will be renamed as Tata Consumer Products Limited, and expects the combined entity to reach over 200 million households.

"The proposed transaction will create a focused Consumer Products Company with a combined turnover and EBITDA of Rs. 9,099 crore and Rs. 1,154 crore respectively, for the twelve months period ended March 31, 2019, on a proforma basis," said the release.

According to the scheme, each shareholder of TCL will get 1.14 new equity shares of TGBL for every 1 equity share held in TCL, meaning that a shareholder holding 100 shares in TCL will receive 114 shares in TGBL.

The company cited revenue benefits and cost synergies, supply chain opportunities, operational improvements, and the alignment of its logistics infrastructure as the rationale for the transfer. The transfer also aimed at leveraging distribution networks and bringing about economies of scale.

“The scheme enhances the financial profile with higher growth, margin expansion and increased cash flows that will provide further headroom for inorganic growth opportunities in India and abroad,” it said.

The release also noted that the Tata Chemicals' consumer products business includes the sourcing, packaging, marketing, distribution and sales of vacuum evaporated edible common salt for human consumption, spices, protein foods, and other foods and products. The transfer is also expected to combine key brands such as Tata Salt, Tata Tea, Tata Sampann and Tetley under a single umbrella.

Brand experts say

N Chandramouli, CEO of Trust Advisory Research, a brand insights company, says, “The move of moving the Tata Chemicals' consumer products under a single umbrella under Tata Global Beverages makes sense principally from a marketing and brand point-of-view as the organizational thinking and learning becomes more consumer-centric bringing synergies of a common F&B category.”

He further said the merger was long overdue, as some Tata Chemicals' products were actually looking as misfits under the company before the transition.

“There are also profitability objectives that would get enhanced due to similar logistics and distribution efficiency of the F&B category. Also, with a lot of sales also going the e-commerce way, the brands will find a better consumer connect,” he added.

Harish Bijoor, brand Guru and Founder, Harish Bijoor Consults Inc said the demerger and merger in one is a move to define businesses with greater clarity and focus.

“N Chandrasekaran's vision is all about defining competencies and making companies specialize in those competencies,” he added.

According to Bijoor, the competence of Tata Chemicals is defined to be chemistry, science, and manufacturing.

The competence if TGBL and the new entity TCPL is defined to be sales, distribution marketing, branding, and consumer innovation.

Analysts are of the view the merger has opened up a larger canvas for the merged company in terms of positioning in the FMCG universe.

The merger will also help in product extension, and scope for being a full-fledged consumer company

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