McLeod Russel to sell 3 estates in Assam to Luxmi Tea for Rs. 150 cr.

Bulk tea producer McLeod Russel has entered into an agreement with Luxmi Tea Company for the sale of three of its estates in Assam for an estimated value of around Rs. 150 crore.

In a notification to the stock exchanges on Monday, McLeod Russel said it has executed an agreement for the sale of specified assets of Addabarie Tea Estate, Mahakali Tea Estate and Dirai Tea Estate. The sale is subject to approval from appropriate authorities. The three estates together contributed close to Rs. 77 crore to the company’s turnover in FY18.

McLeod Russel had, in September last year, entered into an agreement with Saffron Enclave Pvt Ltd for the sale of four estates — Addabarie, Dirai, Mahakali and Rajmai — in Assam with a total capacity of 5.07 mkg for Rs. 180.70 crore.

Earlier deal falls through

However, since the non-binding term sheet with Saffron expired on March 31 this year, it entered into an agreement with Luxmi Tea.

“The company had entered into a non-binding term sheet with Saffron Enclave inter alia for the sale of specified assets of the aforesaid three estates, which has expired on 31st March, 2019,” the company said in the notification.

McLeod Russel has been selling off gardens to help lower its debt and enhance investments in some of its existing gardens as well as channelising it towards the packet tea business, where it currently has a small presence.

As of September 2018, its debt stood at around Rs. 1,500 crore. This is expected to come down to around Rs. 900 crore by March 2019, KK Baheti, Chief Financial Officer, McLeod Russel, had told BusinessLine earlier.

HBL