Kolkata: In the biggest sale of tea plantations in India in decades, McLeod Russel India Ltd on Tuesday announced it has reached an agreement to sell eight tea estates to M.K. Shah Exports Ltd, another tea producer, for 331 crore.

The combined annual production of these estates is 10.5 million kg. It implies that gardens were sold at a valuation of 315 per kg of production.

In a regulatory filing, McLeod Russel said it is going to sell Beesakopie Tea Estate, Raidang Tea Estate, Daimukhia Tea Estate, Samdang Tea Estate, Baghjan Tea Estate, Bordubi Tea Estate, Koomsong Tea Estate and Phillobari Tea Estate in the Doom Dooma district of Assam. The firm is exploring sale of other estates with other buyers, according to people familiar with the plan.

The company’s shares on Tuesday closed at 134.40 on BSE, down 4.85%.

Kamal Baheti, chief financial officer of McLeod Russel had earlier said the firm was looking to sell its four estates in West Bengal’s Dooars region. Last week, McLeod Russel had said it is looking to liquidate some of its plantations in Assam to service its debt.

The company was looking to generate 400-500 crore from the sale of its estates. McLeod Russel had earlier said that the share of its own estates in the total production of processed tea was “disproportionately" high and the sale of the gardens was aimed at improving operational efficiency.

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

In a press statement, M.K.Shah Exports said the deal is expected to conclude soon once all necessary approvals are in place.

The contribution of these estates to McLeod’s total turnover in 2017-18 was 192.76 crore or 12.33% of its total revenue.

The combined grant area at these eight estates is 9,350 hectares and the areas under tea is 5,700 hectares. The combined workforce of these gardens is 11,000 workers, M.K. Shah Exports said in its statement.

Currently, the company produces 7.5 million kg of tea from its tea estates in Assam and Congo. Post acquisition, the company’s combined annual production will be 18 million kg with a workforce of above 17,000 workers.

Raj Berry, executive director, M.K. Shah Exports said: “There is a high level of synergy between our existing properties and properties we are acquiring in Doom Dooma region."

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