Kolkata: McLeod Russel India Ltd on Wednesday said it has reached an agreement with Luxmi Tea Co. Pvt. Ltd for the sale of four tea estates for 141 crore.

McLeod Russel’s own annual production from these four estates is 4 million kg of tea. Including bought leaf, it produces 5 million kg. This implies that these gardens were sold at a valuation of 350 per kg of production.

The sale of these four estates comes a day after McLeod Russel agreed to sell eight tea estates to M.K. Shah Exports Ltd for 331 crore, in what is the biggest sale of tea plantations in India in decades.

Through its asset sale of 12 tea estates spread across Assam, McLeod Russel, the largest plantation company in the world, is going to rake in 472 crore, which it will use to repay debt and buyback shares worth up to 100 crore.

The company is also exploring the sale of four more estates in the Dooars region of West Bengal.

In a regulatory filing, McLeod Russel said it is going to sell Moran Tea Estate, Lepetkatta Tea Estate, Attabarrie Tea Estate and Sepon Tea Estate in Dibrugarh district of Assam.

These gardens were part of the erstwhile Moran Tea Company of the UK-based Moran Holdings Plc, which was acquired by McLeod Russel in 2006.

The price at which the four gardens were sold to Luxmi is slightly higher than the price at which it sold eight gardens to Mumbai-headquartered M.K. Shah, where the company paid 340 per kg of production. The combined annual production of the eight gardens sold to M.K. Shah is 9.7 mkg of tea.

These four estates being sold to Luxmi contributed around 88 crore or 5.6% to McLeod’s annual revenue in 2017-18. The deal is subject to receiving necessary approvals and completion of due diligence of the proposed buyer, McLeod Russel said in its regulatory filing.

The company’s shares on Wednesday closed at 137.20 on BSE, up 2.08%.

Rudra Chatterjee, managing director Luxmi Tea, said that his company focuses on three things: quality, environment and ethics. These gardens which originally belong to Moran Tea, fit the philosophy and culture of Luxmi Tea, he added.

“There are challenges in Assam but we still see value in these estates which date back to late 19th century," said Chatterjee, adding his company has “traditionally been run by planters".

“We are confident that the planters of these estates will be happy to be part of our company," he added.

The company has debt of about 1,000 crore, Baheti had said, adding that the company was looking to bring it down by 500-600 crore by the end of the current financial year.

Akhil Ruia, chief executive officer, James Warren Tea Ltd, said McLeod Russel has set a “benchmark" for the industry. McLeod Russel finalized the deals almost overnight, and their approach was reminiscent of the old days when deals were done with a handshake, courteously, and with a long-term relationship in mind.

“The two deals are examples of how companies should buy and sell tea gardens," Ruia said.

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