Duncans eyes realty as tea turns sour

Tea and fertiliser maker Duncans Industries is planning to diversify into the real estate development business and is, accordingly, in the process of changing its memorandum of association.

The special resolution will be placed at the company's annual general meeting on September 14 for shareholders' approval.

Both residential and commercial options will be explored for the alternative use of land.

Gouri Prasad Goenka, chairman, Duncans Industries, said, Duncans, to begin with, was considering converting one tea estate land for commercial or residential development.

He said the land identified at the north Bengal tea estate was not suitable for growing tea in the estate.

Duncans has 10 estates in the Dooars and Terai region spread over 6,108 hectares and two in Darjeeling over 468.49 hectares.

Goenka made it clear that the development would not be a tourism project. There could be other real estate development initiatives within the group under different companies.

The group has set up a team to evaluate the prospects of the real estate development business and the idle properties in the group's portfolio.

Industry sources said rising labour costs and declining yields had made Indian tea uncompetitive in the world market.

The lower prices had rendered many tea plantations in Assam and north Bengal, accounting for more than half of the domestic tea production, unremunerative.

Duncans hopes to get a fresh lease of life on the back its foray into the real estate business.

The delay in disbursement of subsidy for the production period during 2005-06, coupled with the steep increase in naphtha prices, resulted in acute shortage of capital, and so, production was suspended.

Moreover, the 15-day strike during the peak season in the north Bengal gardens led to a huge shortfall in production in the company's tea gardens.

On whether the entire real estate development in the group would be spearheaded by Duncans Industries, Goenka said each company now stood on its own.

The group has surplus land in Kolkata and Mumbai. While the group has 15 acres in north Kolkata, it has 10 acres in south Kolkata. In Mumbai, the group has two plots of land "� one of 5-7 acres and the other 20 acres. The plots were under different investment companies.

NRC, a group company, entered into a memorandum of understanding earlier this year for sale of a part of the company's land at Kalyan for a sum of Rs 167 crore.