Bengal’s tea gardens begin to shed sick tag

Bengal’s tea gardens begin to shed sick tag
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First Published: Thu, Nov 19 2009. 10 00 PM IST

Bullish view: Ambootia Tea’s Sanjay Bansal is confident of recovering his investments within two-three years if tea prices remain firm. Indranil Bhoumik / Mint
Bullish view: Ambootia Tea’s Sanjay Bansal is confident of recovering his investments within two-three years if tea prices remain firm. Indranil Bhoumik / Mint
Updated: Thu, Nov 19 2009. 10 00 PM IST
Kolkata: Samsing tea estate in Dooars, in the Himalayan foothills in West Bengal, is the last of the 11 sick gardens that Sanjay Bansal’s Ambootia Tea Group—one of the top tea producers in India—has snapped up in the past five years.
The 3,200-acre garden was closed for five years until it was reopened in August. Bansal, who has so far turned around more than a dozen sick tea gardens, is confident of reviving Samsing, which, according to him, was “almost written off as unviable”.
The garden, which has some 2,000 workers, could at one point produce up to 2 million kg of tea a year. But such is the state of the tea bushes in Samsing that Bansal might have to be content with annual production of 700,000-800,000 kg initially. Yet he is confident of recovering his investments within two-three years if tea prices remain firm.
Bullish view: Ambootia Tea’s Sanjay Bansal is confident of recovering his investments within two-three years if tea prices remain firm. Indranil Bhoumik / Mint
Bansal says his company has so far spent Rs3-4 crore on refurbishing the tea leaf processing facility at Samsing, but refuses to reveal the garden’s outstanding liabilities.
Most of these gardens have huge liabilities such as provident fund dues and back wages. Under a rehabilitation scheme for 33 sick tea gardens introduced by the Union government two-and-a-half years ago, several incentives were offered for reopening the gardens.
Under the scheme, outstanding bank loans amounting to Rs184 crore were rescheduled and new owners of these gardens were offered a five-year moratorium on payment of both principal and interest. But it wasn’t until last year when tea prices started heading north that people reopened sick gardens.
At least four closed plantations in West Bengal — Chamurchi, Raipur, Samsing and Chinchula—have been reopened since July, according to industry regulator Tea Board of India.
“There are about a dozen closed gardens in India now, and the number hasn’t increased lately,” says Roshni Sen, the Tea Board’s deputy chairman. “The reason surely is firm tea prices.”
Till September, the average price of tea, all grades and auction centres combined, had gone up by Rs17.75 a kg from last year to Rs101.41 a kg, according to the board.
Production at some 20 sick tea gardens across India have restarted in the past couple of years. There’s excitement everywhere, says G. Boriah, a director at the Tea Board. “In Kerala, a group took over and reopened six gardens two years ago, and it is now eyeing at least three more,” he adds.
Over the past couple of years, a number of new companies have entered the business hoping to profit from rocketing tea prices.
Merico Hotels and Resorts Pvt. Ltd, a firm that runs a hotel in Puri in Orissa and is planning to build another in Kolkata, bought the 2,100-acre Chinchula tea estate in West Bengal’s Jalpaiguri district and reopened it in July.
“We got into the business because tea prices were rising and hope to start profiting within three years,” says Merico’s managing director Surajit Bakshi. “Once tea production stabilizes, we will surely consider expanding into tea tourism as well using the unused space in the garden.”
Merico, which is planning to spend up to Rs10 crore over the next few years to shore up tea production, could set up a hotel at Chinchula, according to Bakshi.
Despite firm tea prices, top tea companies such as McLeod Russel India Ltd and Goodricke Group Ltd are sceptical about acquiring sick plantations.
“The gardens being reopened now are only viable at current tea prices,” says Aditya Khaitan, managing director of McLeod Russel. “These are short-sighted steps... You can’t expect tea prices to remain firm forever, and if they fall again, many of these tea gardens might be shut.”
Goodricke buys only quality tea estates, says Arun N. Singh, the company’s managing director and chief executive officer. “We don’t believe in expansion through mindless acquisitions. Instead we have been spending heavily on our factories to make them state-of-the-art production facilities,” he adds.
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First Published: Thu, Nov 19 2009. 10 00 PM IST