McLeod Russel sells Bhatpara Tea Estate for Rs13.20 crore
Kolkata: McLeod Russel India Ltd, the world’s largest tea producer, has started to restructure its portfolio of gardens with the sale of Bhatpara Tea Estate in the Dooars region of West Bengal. The Williamson Magor Group company said in a regulatory filing that it had concluded a deal to sell the estate for Rs13.2 crore.
Kamal K. Baheti, chief financial officer and whole-time director, said McLeod Russel was looking to cash out of “marginal tea estates” with low contribution to the company’s revenue and profit. For instance, the contribution of Bhatpara was only Rs15.5 crore in 2016-17, or about 1.1% of the total revenue, he said.
There are a few more estates in Assam and Darjeeling, which are small both in terms of output and profitability, according to Baheti. McLeod Russel is looking to rationalise its portfolio by seeking investors for estates with “low contribution”, he said, adding that there is, however, no board approval immediately for sale of more gardens.
McLeod Russel’s shares closed on the BSE at Rs177.30, down 0.08% in a flat market.
Asked if the company was looking to get out of the Dooars region, which only produces the CTC (crush-tear-curl) variant of tea, Baheti clarified that McLeod Russel was looking to exit from marginal estates, and not from the region as a whole. Apart from Bhatpara, the company owns four other gardens in West Bengal, some of which are loss making, he added.
Bhatpara is to be taken over by Voom Food Industries Pvt. Ltd of the Chandanbari Group, which has been producing, processing and marketing tea for over three decades. The group will invest in the garden to scale up production and make it viable, McLeod Russel said in its statement.
Outside India, McLeod Russel has estates in Uganda, Rwanda and Vietnam. The company produces over 100 million kg of black tea every year from estates spread over 39,770 hectares. In 2016-17, McLeod Russel clocked revenue of Rs1,776.43 crore and a net profit of Rs64.45 crore.