The country's largest bulk tea producer McLeod Russel India (MRIL) today announced the acquisition of Uganda's Rwenzori Tea Investments for about $30 million (nearly Rs 140 crore), inching closer to becoming a 100-million kg company.
"We have acquired a 15-million kg black tea company in Uganda through our UK-based subsidary Borelli Tea Holdings," MRIL Managing Director Aditya Khaitan said here today.
This is the second acquisition in Africa after Rwanda. The group also has interests in Vietnam. McLeod Russel's turnover will jump with addition of Rwenzori's tea estates.
The company expects $30 million turnover and a profit of $5-7 million for 2009 from Rwenzori that has six tea estates with production of 15-million kg per annum, he said.
Also, this "acquisition would give Mcleod Russel India a presence in Uganda which could lead to possible expansion of production in future", the company said in a Bombay Stock Exchange (BSE) filing.
The company will have to pay another $0.5 million to the vendors. The entire funding will be through internal accurals, Khaitan said. With this, the total global capacity of the company has spurted to 96 million kg.
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Borelli will sign a share purchase agreement with James Finlay and James Finlay International Holdings of UK for acquisition of Rwenzori Tea for a consideration of $25 million.
The deal, signed between Borelli Tea Holdings and the UK- based James Finlay and James Finlay International Holdings, is expected to be completed by January 15, 2010.
"We hope to increase production of this company to 20 million kg in the next five years by way of efficient management.
Khaitan said the next year the global shortfall of tea will be about 150-160 million kg considering the present situation in Sri Lanka, Kenya and India.
Shares of Mcleod Russel India today closed at Rs 261.10 on the BSE, up 1.56 per cent from previous close.