Having mopped up a total of ₹795 crore through the sale of 20 tea estates, bulk tea producer McLeod Russel is putting an end to its asset sale plan for now.
This follows the sale of six tea estates in Assam and Dooars to two Kolkata-based non-tea firms for ₹232.32 crore on Saturday.
McLeod Russel already sold 14 estates in Assam with a total production capacity of 16.58 million kg (mkg) for ₹563.29 crore since June this year.
The company has entered into agreement with Saffron Enclave Private Ltd for the sale of four estates — Addabarie, Dirai, Mahakali and Rajmai in Assam with a total capacity of 5.07 mkg for a consideration of ₹180.70 crore, it said in a notification to the bourses. This translates into an average value of ₹356 a kg.
It has also entered into an agreement with Civil Engineers Enterprises for sale of two estates — Chuapara and Jainti in Dooars with a combined capacity of 2.5 mkg for ₹51.62 crore, fetching an average value of around ₹207 a kg.
As on March 31, 2018, McLeod Russel had a total debt of around ₹976 crore.
Paring debt
The company had decided to prune down some gardens to help lower its debt and also enhance investments in some of its existing gardens as well as channelising it towards the packet tea business, where it currently has a small presence.
According to KK Baheti, Chief Financial Officer, this marks the last round of sale by the company. Incidentally, McLeod had got shareholders’ approval to sell up to 35 per cent of its assets in India. The company had 52 tea estates in India, producing 67 mkg, at the end of the last fiscal.
Following the sale of the 20 estates, McLeod Russel’s own production capacity (the company also outsources to small growers) will come down to 42.85 mkg.
“While we have not touched the ceiling of 35 per cent yet, internally we had a target to raise close to ₹750-800 crore and we have achieved that. So we will not look at any further sale,” Baheti told BusinessLine .
“We expect the debt to come down to nearly ₹500 crore by the end of this fiscal,” Baheti said.