DNA Money on September 6 was first to report that McLeod Russel is in talks with Goodricke Group to sell at least two gardens with a production of about three million kg.
Williamson Magor Group plantation company McLeod Russel India has reached an agreement to sell two tea estates in Assam to Goodricke Group and one of its subsidiary companies for a combined Rs 91.29 crore.
In a regulatory filing on BSE on Monday, McLeod Russel has said that it has decided to "dispose of the estates and bearer plants and other assets" of Harchurah Tea Estate to UK-based Camellia Plc-owned Goodricke Group and Bargang Tea Estate to Amgoorie India Ltd, a subsidiary of Goodricke Group.
The announcements were made after the market hours on Monday. Shares of Goodricke on Tuesday closed at Rs 326 per scrip, up 1.18% the previous close, while shares of McLeod Russel closed at Rs 156.75 apiece, down0.92% the previous close.
DNA Money on September 6 was first to report that McLeod Russel is in talks with Goodricke Group to sell at least two gardens with a production of about three million kg.
Atul Asthana, managing director and chief executive of Goodricke Group, said the total combined yield of the two gardens is 2.5 million kg. Harchurah, which is the smaller of the two with an average annual production of 0.8 million kg, was sold at a valuation of Rs 360 per kg, while Bargang was valued at Rs 350 per kg, Asthana said, adding that the gardens are in "good condition". The deal would also see around 3,500 workers adding to the Goodricke Group.
The Kolkata-headquartered plantation company, with assets in Dooars, Darjeeling and Assam, was looking to acquire one or two gardens in Assam for long but the prices were not "viable".
McLeod Russel, on the other hand, is keen to trim down assets in Assam and Dooars, with the vice-chairman and managing director Aditya Khaitan saying during its annual general meeting last month that the company may exit 10-20 million kg in terms of tea gardens, where the yield is low.
The contribution of Bargang tea estate to McLeod's total turnover in the last fiscal was Rs 35 crore, or 2.21%, while the same for Harchurah was Rs 24 crore, or 1.52%.
"Instead of investing more in such gardens to raise their yield, which is increasingly turning difficult due to the weather turning adverse, we have decided to get out of those," Khaitan had said.
By the end of the current financial year, McLeod Russel was looking to bring down its debt by Rs 500-600 crore, which was Rs 1,000 crore, through sale of its assets.
However, two persons familiar with the development at McLeod Russel said that the company was approached by a number of tea companies in the past three years.
The Williamson Magor group has been looking to sell some of its core and non-core asset to revive the group's engineering company McNally Bharat Engineering, which is under insolvency process.
"Had it not been for the engineering company, Magors would have not sold their tea assets," one of the person quoted above said.
With the third tranche of asset sale, McLeod Russel will be able to raise a total of Rs 563.29 crore. It has earlier sold eight estates in the Doom Dooma region to M K Shah Exports Ltd for Rs 331 crore and four estates in Moran region to Luxmi Tea Co Pvt Ltd for Rs 141 crore. The company has been trying to dispose of its Dooars assets for a long time without success.
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