McLeod Russel reports Rs142 crore loss in Q4, looking to sell tea estates to cut debt
McLeod Russel is looking to raise Rs400-500 crore from the sale of tea estates, says chief financial officer Kamal Baheti
Kolkata: Williamson Magor Group’s McLeod Russel India Ltd, the world’s largest tea plantation company, on Wednesday announced that it had formed a committee to explore the sale of multiple tea estates to cut down its debt and to optimise operational efficiency.
The company is looking to raise Rs400-500 crore from the sale of estates, according to Kamal Baheti, McLeod Russel’s chief financial officer.
McLeod Russel on Wednesday also announced that it will buy back shares, spending up to Rs100 crore. McLeod Russel said it will be paying up to Rs210 a share under the buy-back. The company’s shares on Wednesday closed at Rs154.05 each on BSE, up 1.38%, in a weak market.
Mint had reported on 18 May that McLeod Russel had signed non-disclosure agreements with potential buyers to explore the possibility of selling some of its estates.
The company said it produces 67 million kgs of tea a year from its own estates in India. The board is of the view that this is “disproportionately” high and that this should be brought down to make the operations more efficient, McLeod Russel said in its statement.
McLeod Russel is looking to sell 8-10 tea estates in Assam with a combined yield of around 10 million kgs, according to a person familiar with the plans. McLeod Russel has received expressions of interest from multiple potential buyers, this person said, asking not to be named.
McLeod Russel expects a valuation of at least Rs400 per kg of production for its estates in Assam, according to this person.
Asked which the company is looking to sell tea estates in Assam, Baheti declined to comment. He, however, said McLeod Russel is looking to sell its four estates in the Dooars region of West Bengal.
Last year, the company sold one of its estates in the Dooars. But it is likely to keep its blending unit in the Dooars, Baheti added.
McLeod Russel currently has around Rs1,000 crore of debt, according to Baheti. By the end of the current financial year, the company is looking to bring it down by Rs500-600 crore, he said. Proceeds of the sale are also going to be used to launch a packet tea business through a joint venture with Eveready Industries India Ltd, McLeod Russel said in its statement.
Meanwhile, the company on Wednesday reported a standalone net loss of Rs142.09 crore in the March quarter, as compared with a net loss of Rs107.83 crore in the same period previous year as expenses surged.
Revenue for the quarter at Rs530.37 crore was up 10.09% over last year.
For the full fiscal year, consolidated net profit jumped to Rs230.39 crore from Rs58.57 crore thanks to higher contribution from overseas tea estates. Consolidated revenue for the full year rose 10% to Rs2,055.29. During the year, McLeod Russel combined with its overseas units sold 122 million kgs of tea compared with 114.1 million kgs last year—a growth of 7%.
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