Mcleod tea holdings acquire Pfunda tea

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McLeod Russel India’s Borelli Tea Holdings

McLeod Russel India’s Borelli Tea Holdings will acquire a majority stake in Pfunda Tea Company for $19.5 million

LAB International Ltd, UK, currently holds the 90 per cent stake in Pfunda, which Borelli will acquire.

The company has entered into an in-principle agreement on the share purchase.

Pfunda is engaged in tea plantation and manufacturing activities. Following the completion of the deal, it will become a step-down subsidiary of McLeod Russel.

“Pfunda Tea produces around 2.4 million kg of tea. It also has close to 70 hectares that can be planted. We can look at a production of around 3.5 million kg in three to five years,” said Kamal Baheti, wholetime director of McLeod Russel.

The garden is situated at an elevation of 4,500-7,000 feet and produces good quality crush, tear, curl (CTC) variety. It fetches close to $3 per kg.

McLeod Russel will fund the transaction through debt.

McLeod Russel now has one garden in Rwanda that was acquired in 2011. Gisovu Tea Company, Rwanda, in which Borelli has a 60 per cent stake, produced 1.47 million kg during the nine months ended September against 1.5 million kg in the same period last year.

McLeod Russel’s standalone net profit has declined 9.77 per cent to Rs 221.50 crore for the quarter ended September from Rs 245.49 crore in the same period of the previous fiscal.

Total income from operations stood at Rs 495.29 crore against Rs 501.51 crore a year ago. Total expenses were higher at Rs 265.94 crore against Rs 247.73 crore.

The company said domestic output continued to be lower up to August because of unfavorable weather. Operating profit before depreciation was marginally lower at Rs 252 crore against Rs 263 crore last year.

For the six months ended September, profit stood at Rs 189.50 crore against Rs 271.70 crore in the year-ago period.

Shares of McLeod Russel today settled at Rs 248.60 on the BSE, down 1.35 per cent over the previous close.

Though the company had managed to offset the impact of a loss of 2 million kg of crop through an increase in prices, sales during the quarter were lower by 2.2 million kg on account of lower production.

Prices of tea in India for north Indian teas were higher by Rs 15 per kilo upto September due to crop loss.

MRIL also highlighted that depreciation during the quarter was higher by Rs 11.4 crore due to changes according to the Schedule II of Company’s Act, 2013.

 

 

About the author

Olive Ndaka is the Junior Editor for RwandaEye. An investor and young entrepreneur, she is a quick learner and has contributed many articles for RwandaEye in Kinyarwanda.

More posts by | Visit the site of Ndaka

 

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