Warren Tea, Dhunseri vie for Assam Co
Kolkata: India’s oldest surviving and perhaps the most prized tea company (in terms of its assets) is set to go under the hammer. Even before the information memorandum has been circulated, the 179-year old Assam Co. India Ltd has several suitors: MK Shah Exports Ltd, Warren Tea Ltd and the Dhunseri Group to name a few.
Assam Co. has 14 tea estates. “The produce of some of these estates is unique—you cannot produce such tea anywhere else in the world,” said the chairman of a potential bidder, who asked not to be named. There’s going to be “intense competition” for Assam Co., this person added. Assam Co. owes around Rs1,800 crore, including penal interest, to its financial creditors, or lenders, and it is currently going through insolvency resolution under the supervision of the Guwahati bench of the National Company Law Tribunal (NCLT).
Kannan Tiruvengadam, the NCLT-appointed resolution professional, said bids for the company’s asset will be invited by the end of February or early March.
Even Srei Infrastructure Finance Ltd, one of Assam Co.’s creditors, which moved the NCLT last year, is likely to bid for the assets though it does not have any experience in running plantations, according to a person familiar with its plans, who, too, asked not to be named. Asked about Srei’s plans for Assam Co., a spokesperson for the lender declined to comment.
C.K. Dhanuka, chairman of the Dhunseri Group, said he was “very interested” to acquire Assam Co. but would review the opportunity in the light of burgeoning cost of operations for organised sector tea producers. He was referring to the proposal to implement minimum wages in plantation companies over and above the requirements under the Plantation Labour Act.
Vivek Goenka, executive director at Warren Tea, said his company is looking to expand, and that it would bid for the estates of Assam Co. if they are sold at an affordable price. He, too, spoke of the need for clarity over wages, adding that labour compensation accounts for about 60% of cost of production of tea companies in Assam.
Assam Co. has interest in oil exploration as well. Goenka clarified that Warren Tea is unlikely to bid for these assets.
Himanshu Shah, chairman, MK Shah Exports, declined to comment on the acquisition plan. However, a key official, speaking on condition of anonymity, confirmed the firm’s interest in Assam Co., saying it is a “great opportunity if the price is correct”.
Kannan, the resolution professional, said there is a possibility that the estates could be separated from Assam Co.’s other business interests. Looking at the quality of assets, Kannan said he was hopeful that the sale of the company will fetch decent valuation, which will cover most of its outstanding debt.
To keep it running, Assam Co. needs interim financing, according to Kannan. Soon after taking the firm’s reins, Kannan said he distributed a part of the pending bonus among workers. The firm raised Rs10 crore as an interim measure, and distributed it among workers, he said. An additional Rs20-30 crore may be needed over the next two months. It is not immediately clear if the promoters of Assam Co. will make a last ditch effort to keep control of the company. When contacted, Aditya Jajodia, the promoter of Assam Co. said he was looking to take some “effective steps”, but declined to elaborate. Clarity will emerge only towards the end of the stipulated 270-day period for insolvency resolution, he added.