McLeod in race for 2 Rwanda tea estates

McLeod Russel India Ltd, the world’s biggest tea planter, is getting bigger.

The Kolkata-based company has put in bids for two tea plantation companies in Rwanda, Mulindi Tea Co and Shagasha Tea Co, where the government of this east African country is divesting majority stake.

“Yes, we have put in our bids for Mulindi and Shagasha,” Aditya Khaitan, managing director of McLeod Russel, told DNA Money.
To be sure, the B M Khaitan group company has competition from global peers in this bid.

However, it has a fair chance of winning as it is already present in that country — it had entered the country through a similar privatisation of Gisovu Tea Co a year ago.

The current deal is much bigger in size though.

If McLeod does emerge the winner, the twin acquisitions could give it access to 5.5 million kg of tea, said Khaitan.

In contrast, Gisovu produced just 1.9 million kg during the year ended December and generated sales of $5.1 million with average realisation of $3.40 a kg.

In India, McLeod Russel hopes to produce around 80 million kg of tea this year, compared with 75 million kg in 2010-11.

Add the Vietnam and Africa productions, and this could rise to 102 million kg this year, compared with 96.3 million kg a year ago, said Khaitan.

On the flipside for the bidders, Rwanda has become smarter since it sold Gisovu and has raised the valuation of the gardens significantly on the back of crop shortage, which has pushed up tea prices.

A McLeod official, however, said higher asking bids meant lesser competition as Jay Shree Tea & Industries, a Kolkata-based tea plantation belonging to the BK Birla Group, has decided to opt out of the race.