Amid takeover offer, McLeod Russel pins hopes on debt recast plan

CMD Khaitan says banks have been very supportive and have come to a conclusion on what debt restructuring resolution should be

The McLeod Russel India management is expecting banks to support its debt restructuring plan, which is awaiting clearances from credit rating agencies.

McLeod Russel India Chairman and Managing Director Aditya Khaitan informed shareholders at the company’s annual general meeting (AGM) that the banks have been very supportive and have come to a conclusion in terms of what the debt restructuring resolution should be.

“It is now awaiting the clearances of the rating agencies and I am sure that once we get that, the company will be ready to move on its debt restructuring programme and the banks will be fully supporting us through this difficult period,” he said.

Credit rating agencies would assess the possible rating of the company on implementation of the resolution plan. Khaitan added that with debt restructuring, the company would get stronger financially.

McLeod Russel’s debt restructuring has been in the works for a while. Amid that Carbon Resources, which manufactures inputs for ferro alloys, steel and aluminium industries, approached banks with a non-binding offer to settle outstanding dues and take a controlling stake in the tea producer.

A non-binding offer from M K Shah Exports, one of India’s largest producers of orthodox tea, followed soon after for acquiring select tea gardens of McLeod Russel.

Khaitan did not mention the offers at the AGM, neither did the shareholders.

However, Khaitan told shareholders, “We have managed to navigate through severe turbulence over the last few years only because you all have stood behind us like a rock. And we have the benefit of the vast wealth of loyal and professional experience of the highest quality spanning many decades of experience to see us through this.”

“You may rest assured that we are confident that together we shall overcome other storms too that may come our way in the days ahead,” Khaitan added.

Operations

Khaitan said the company has been working on three main areas to increase its topline and hoped that would result in a better bottomline.

“The only way forward for the company is to go through the quality route for India, increase the orthodox production to take care of the vacuum that has been created due to Sri Lanka. Also with the rupee depreciating, the overseas market is also looking attractive and your company has a good export track record,” he said.

The economic crisis in Sri Lanka has impacted its production providing an opportunity to Indian producers. Consequently, McLeod is expanding capacity to produce more orthodox and would be investing in the machinery.

Responding to shareholder queries on ecotourism opportunities, Khaitan said that it could be a subject matter for the future. Right now, the company is focused on allocating capital in areas that would give a direct benefit in the immediate term, he said.