Mcleod Russel to sell some tea estates

Sale to help pare debt, fund buyback

The B.M. Khaitan group company Mcleod Russel India Ltd. (MRIL) on Wednesday announced plans to sell some of its tea estates to help rationalise operations. It has received board approval for the exercise, the firm said in a regulatory filing.

A committee has been formed to identify the estates and execute the sale. The firm has 52 tea estates in Assam and West Bengal, and overseas.

‘Own output high’

Among India’s biggest bulk tea producers, MRIL’s crop, totalling 118 million kg in FY18, came from its own gardens, from small tea growers and subsidiaries in Africa and Vietnam.

“The own output segment at 67 million kg is disproportionately heavier [than] the other two segments which require alignment / rationalisation to achieve better results,” the firm said. The proceeds would be used to repay debt and to buy back shares to the tune of ₹100 crore. MRIL’s finance costs stood at ₹170.5 crore in 2017-18 compared with ₹127.6 crore the previous year.

MRIL reported a ₹142-crore loss for the quarter ended March, compared with a ₹107.8 crore loss a year earlier. Income in the period declined marginally at ₹372 crore (₹376 crore).Tea companies typically have no production during this period and have to carry fixed costs.

The year’s revenue for the company rose by 7% on a standalone basis to ₹1,596.3 crore and by 10% on a consolidated basis to ₹2,055.3 crore. Net profit rose 120% to ₹67.3 crore on a standalone basis and by 293% to ₹230.4 crore on consolidated basis.

MRIL has operations in India, Uganda, Rwanda and in Vietnam. It said that the African tea estates were selling well and contributing significantly to the consolidated bottomline.