Date:14/12/2005 URL: http://www.thehindu.com/2005/12/14/stories/2005121403531800.htm

Business

McLeod Russel buys Doom Dooma from HLL

Special Correspondent

The deal is valued at Rs. 69 cr. plus net current assets

Third acquisition by BM Khaitan group
Scope for boosting exports to Germany

To emerge as biggest bulk tea producer

KOLKATA: McLeod Russel India Ltd (MRIL) on Tuesday announced the acquisition of Doom Dooma Tea Company Ltd (DDTCL) from Hindustan Lever Ltd (HLL), saying that it hoped to complete the deal by January 2006.

The buyout of 100 per cent shareholding of HLL in Doom Dooma is for an agreed consideration of Rs. 69 crore plus net current assets as on December 31, 2005. This is the second acquisition by MRIL this year after Williamson Tea Assam and the third by the B. M. Khaitan group, which bought BPL's battery business. The Doom Dooma estates, in Tinsukia in Assam, are close to MRIL's gardens.

Talking to reporters from Mumbai, MRIL Vice-Chairman, Deepak Khaitan, said with the acquisition of the seven estates of Doom Dooma, which produce six million kg annually, MRIL had taken another step towards becoming a 100-million kg output tea company. The two acquisitions, together with MRIL's own production of 28 million kg had already made the B. M. Khaitan-company, the world's biggest bulk tea producer with exports of about 20 million kg.

With the acquisition of the chemical-free gardens of Doom Dooma, exports to countries such as Germany are expected to be boosted. On financing of the Doom Dooma deal, Mr. Khaitan said this would be through a mix of debt and equity. He indicated that the company was exploring alternative means of reducing its debt burden of about Rs. 400 crores, including reducing the 60 per cent promoter's holding, selling the two or three weak gardens in North Bengal (if revival efforts failed) and liquidating some of MRIL's investment portfolios.

Our Mumbai correspondent writes:

The existing terms and conditions of services of all DDTCL employees will be fully protected in accordance with applicable laws and terms of their employment. HLL believes that the proposed transfer is in the best interest of all its stakeholders. Earlier, following a scheme of arrangement approved by the High Court, Bombay, HLL had transferred its tea plantation business in the state of Assam to DDTCL with effect from April 1, 2005.