Assam Co jacks up borrowing limit

The Assam Company Ltd of the Duncan Macneill group is likely to raise a further $75 million in addition to around $41 million (Rs 188 crore) to be raised from three foreign institutional investors.

Chief financial officer Abhay Chawdhry said the combined valuation of tea and oil business of the company was Rs 1,120 crore.

The ACL stock hit the upper circuit at Rs 25 on Monday. PwC has valued the oil and gas division in the range of Rs 720 crore to Rs 850 crore.

The net worth of the ACL tea division is estimated to be in the range of Rs 330 crore to Rs 360 crore. Chawdhry said the group was not going to demerge its oil business into Assam Oil & Natural Gas Ltd immediately.

"We want the oil division to mature further. The valuation of the division too is likely to increase with new finds," he said.

Assam Company has already tied up Rs 188 crore for investing in oil exploration activities. Three foreign institutional investors are investing Rs 63 crore each in the company. These were Investment India (Mauritius) Ltd, Lotus Global Investment Ltd and Mavi Investment Fund Ltd.

"We are issuing 2.7 crore warrant to each of the FIIs at Rs 23.25. The fund raised through this will be used mainly in oil exploration activities which require lot of investments," he said.

Chawdhry claimed that the commercial production from its Amguri field would start from the first quarter of 2006 (January to December fiscal). The company said it expected Rs 20 crore profit before tax in the first year from the oil business.