Goodricke Group Ltd has decided to disinvest its entire shareholding in its loss-making wholly owned subsidiary, Tiru Tea Ltd.
Tiru Tea has seven gardens -- all in Darjeeling. The gardens include Castleton, which, industry sources pointed out, produces the highest quality tea and fetches the highest prices at auctions. Tiru produces around 5,50,000 kg of tea a year.
K S David, managing director of Goodricke Group, was not available for comment.
The disinvestment proposal was approved by the board at a meeting held yesterday. Sources said Goodricke is planning to exit from Darjeeling after incurring a Rs 8 crore loss from Darjeeling alone.
Labour trouble, high costs and low returns are some of the reasons which is driving many of the companies to exit Darjeeling.
The Darjeeling tea industry employs around 65,000 workers. Of this, the Goodricke group alone employs around 12,000 workers. The group employs around 35,000 workers spread over Darjeeling, Assam and Dooars.
But, cloning of Darjeeling tea is probably the most significant reason behind the unremunerative prices fetched by the gardens. Darjeeling produces around 9 million kg but around 65 million kg is sold globally by unscrupulous blenders in the name of Darjeeling tea.
However, wages continued to rise by 10-11 per cent every year despite a five per cent inflation. The industry also has to pay a 20 per cent bonus on an average as against 8.33 per cent as stipulated by the Bonus Act.
Moreover, while the average labour cost is Rs 40 per employee, subsidies if taken into consideration, doubles the amount.
The group invested heavily in Darjeeling, buying 11 gardens after 1987 under the umbrella of Tiru India and Dooteriah and Kalej Valley Tea Estates. The group at present has 12 gardens in Dooars and 10 in Assam.
Sometime back, Goodricke was also weighing the option of merging Tiru Tea with itself as part of consolidating its Darjeeling gardens.
For the three months ended September 30, 2001, the company's net sales were at Rs 46 crore against Rs 53 crore in the same period last year.
Net profit was down to Rs 13.99 crore from Rs 18.66 crore. The Goodricke scrip today appreciated 5.16 per cent on the Bombay Stock Exchange before closing at Rs 30.10 and closed at Rs 31.50 on the National Stock Exchange.
