McLeod Russel India Ltd on Monday said Borelli Tea Holdings Ltd, UK, its wholly owned subsidiary, finally completed the acquisition of the controlling stake of 60 per cent in Gisovu Tea Company of Rwanda for $2.4 million.

It has further invested another $1.8 million since the initial takeover in February, taking the total to $4.2 million so far.

Mr Aditya Khaitan, MD of McLeod Russel, said here that the company decided to invest another $4 million in the Rwandan tea garden, which currently produced 1.7 million kg of tea a year.

Borelli provisionally took over the management control through an MoU on February 23. The Rwandan Government through the Rwanda Development Board and Rwanda Tea Authority hold 30 per cent in the company. Growers' cooperative has 10 per cent.

“During 2011-12, we would invest $2.5 million on Gisovu. In Ugandan subsidiary, Borelli would invest $2 million for upgradation of its third factory. For the Vietnam subsidiary, which broke even in 2010-11, we haven't planned any fresh investment this fiscal,” said Mr Khaitan.

He said McLeod Russel planned to reduce its term loans to zero this year.

“We project to have an improved debt equity ratio by the end of FY 2012. Only the working capital will form the debt element in the balance sheet,” MD said. The current consolidated debt stands at Rs 316 crore, after repayment of Rs 86 crore in FY2011.

The world's largest tea company would require additional working capital of around $3 million a year for the new blending operation this year through Dubai Tea Trading Company, an Emirate government outfit.

The standalone net profit of the company for 2010-11 stood at Rs 232.23 crore, down 3 per cent.

But the consolidated profit was higher at Rs 246.47 crore (Rs 230.92 crore). “Crop loss owing to bad weather here was the principal reason for the lower profitability,” Mr Khaitan explained.

It recommended a 100 per cent or Rs 5 dividend.

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