Tata Tea, a Rs 3,500 crore beverages company, today said it would offload 80 per cent of its stake in its NIPO (North India Plantation Operations) to a group of investors and employees. |
Amalgamated Plantations, the company to which the Tatas will transfer its NIPO business, covers the company's 20 plantations in Assam and five in Dooars (West Bengal) covering 24,000 hectares. |
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Amalgamated Plantations, which has been valued at Rs 360 crore by management consultant Ernst & Young, has a turnover of about Rs 250 crore. |
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While Tata Tea will retain 20 per cent stake in the new company, IL&FS and Infrastructure Finance Corporation (IFC), a World Bank subsidiary, will also pick up 20 per cent stake each in the company. |
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The remaining 40 per cent stake will be split among Global Managed Services, a Mumbai-based consultancy, which will work with the company to develop non-tea-based revenue streams, Tata Investment Corporation, Hardeep Singh, former chairman of Cargill India and chairman of the newly formed company, and the plantation employees. |
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Employees are expected to have stake in the range of 15-20 per cent. The debt-equity ratio is yet to be finalised, but it is likely to be pegged at 1:1. This is IFC's first overseas investment in the plantation sector. |
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The move is in line with Tata Tea's vision of focusing on the non-plantation business and becoming a strong player in the branded beverages business. |
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The plan to exit plantations was one of the key steps taken in that direction. Two years ago, the company had carried out a similar exercise in its south India plantations, when it was divested to Kanan Devan Hills Plantations on the similar lines. |
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The new company will be formed effective April 1, 2007, once the required court approvals come through. R K Krishna Kumar, vice-chairman, Tata Tea, said the company had permission to plant non-tea crops in 5 per cent of the area in Assam, where the company had already entered floriculture, vegetable farming, spices and fisheries. |
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Hardeep Singh, chairman, Amalgamated Plantations, said the company would be looking at increasing the proportion of multi-cropping activities once the required permission came in and would then consider exporting certain products such as flowers and spices to other states across India. |
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The Tata Tea scrip today dipped 0.52 per cent to close at Rs 672.85 on the BSE on a day when the Sensex moved up 0.33 per cent. |
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