Hindustan Lever sells Tea Estates to Maxwell

FMCG major exits plantation business, Canara Bank funded acquisition.

Hindustan Lever Ltd (HLL) today sold its wholly-owned subsidiary Tea Estates India to Maxwell Golden, a part of Woodbriar Group, for an undisclosed amount.

The sale marks HLL's exit from the plantation business. In the past one year, the company has sold Rossell Industries and Doom Dooma Tea Company in Assam.

An HLL spokesperson said the company was exiting the plantation business as it's a non-core area of operation. " The process of coming out of this business was initiated some time ago. Today's sale completes the process," he added.

He, however, declined to divulge the sale amount. Canara Bank has funded the acquisition of the Woodbriar group.

Tea Estates India owns eight tea estates and six tea processing factories in the high-yielding belt of Tamil Nadu with an average annual output of 10,500 tonne.

Woodbriar Group has interests in plantation, insurance services and real estate. The group's gardens are spread across the premium tea growing regions in Tamil Nadu and Kerala.

In a notice to the stock exchanges, HLL said the company's management believed that the proposed transfer to Woodbriar Group was in the best interests of the tea plantation business and all its stakeholders.

"Existing terms and conditions of services of all Tea Estates India employees will be fully protected in accordance with applicable laws and terms of their employment, " it added.

The acquisition will bring in synergy benefits to Woodbriar Group, as a large portion of TEIL gardens are contiguous to the existing tea gardens of Woodbriar Group. DSP Merrill Lynch Ltd were financial advisor to HLL.

The HLL stock went up 1.24 per cent on a firm Bombay market today. The stock closed at Rs 244.95 on the BSE.

HLL had transferred its plantations business, comprising both gardens and factories, in Assam and Tamil Nadu to wholly-owned subsidiaries .

At the time of the transfer, the company had said it would be prudent to transfer them into separate subsidiaries with a view to providing clear focus to operations, both in terms of land productivity and manpower productivity to manage costs and restore economic viability.

"This would also enable HLL to explore opportunities for formation of joint ventures with lead industry players, with expertise in international sales and marketing. The company could also consider an outright disposal, if that is considered to be in the best interest of the business and all stakeholders, " it also added.