Jay Shree Tea goes on a buyout drive

Jay Shree Tea & Industries, a BK Birla group company, is on an acquisition drive. While it has announced deal to buy out MP Chini Industries in Bihar for Rs 112.5 crore, the tea major is close to buying 60% shares in a tea garden in Rwanda within 10-15 days.
Back home, the company is taking over a tea factory in Makum, Tinsukia in Assam from the new fiscal.

DP Maheshwari, managing director, Jay Shree, told DNA, “This year has been good for the tea industry and we are excited on the first major diversification into the agro-commodity field. We believe that the sugar industry would do well for the next few years. The plant has a cane crushing capacity of 4,600 tonnes a day.”

Maheshwari said funds would not be a problem.

“We will decide at the board meeting but roughly the acquisition would be funded 50% by internal accruals and debt each.” The company is estimated to make tidy cash accretion of Rs 70-80 crore by the year-end with average tea prices for it being higher by 20 per kg. A part of this would definitely go for funding the acquisition, sources said.

Jay Shree is also in talks with a Ugandan company which produces 4 million tonnes of tea.

“We are in talks and it is early to comment on Uganda. In Rwanda, however, we are hopeful of clinching a deal in the next two weeks or so. We along with our JV partner in Rwanda are proposing to buy 60% in a government tea company. The Rwandan government, which is privatising its tea gardens, have offered us two gardens,” the MD said.

If the Rwandan deal is clinched, it would be Jay Shree’s first overseas foray with around 4 million of tea crop.

“We would end this year with a production of 23 million kg and next year we estimate it to be 26 million kg. We would be taking over the production of Makum tea factory from April 1. The deal consideration is Rs 3.25 crore. We are also managing Longai and Ishabheel of the Assam Tea Corporation. All the three properties would help us enhance the crop amount,” Maheshwari said.