Tata Tea Ltd has planned to divest its controlling stake in the company’s north India plantation operations. The stake would go to a new company, International Finance Corporation.
At the same time, Tata Tea will have 20 per cent equity in the IFC, a subsidiary of the World Bank. Further, the IL&FS would have 20 per cent each in the new company.
Apart from the three principal shareholders, the Globally Managed Services (GMS) will control the fieldwork from non-tea operations. It will also get a minority stake. The plantation employees will also be benefited with some minority stakes.
The new venture would take control of all the 20 Tata tea gardens in Assam and five in West Bengal. The total land holding would be about 20,000 hectares in total in both states.
The enterprise value of this transfer is estimated about Rs 360 crore. The new company will be named as Amalgamated Plantations Ltd. It will take the control over plantation operations from April 1, 2007.
In the same pattern, Tata Tea had carried out similar re-structuring process of its plantation business in south India as well. Tata Tea is focusing to sharpen the branded and specialty tea business.
Vice-Chairman of Tata Tea, R.K. Krishna Kumar, said;
The new company will be pursuing crop diversification and will move into Agri-products business. The target is to ensure that the tea operations to reach a new level of stable productivity.
The main reason behind this decision is the Assam government’s new notification on the tea plantation business. The Government has given permission to the company to use 5 per cent of the total land holdings in the State under tea plantations to pursue multi-crop cultivation.
The company is now all set to use the 5 per cent land holdings for other agri-foods such as fishery, horticulture and floriculture projects. Later, it may also go in hatchery and other projects.