Goenka: Cautious

Calcutta, June 21: Duncans Industries will take a fresh look at its tea business after it reopens the fertiliser factory at Panki, Kanpur. The plant was shut down in March 2002.

The company will approach lenders with any specific proposal to sell its brands or gardens after reviewing its plans. “The lenders, led by State Bank of India, will soon disburse Rs 62 crore as part of the corporate debt restructuring exercise. We expect to reopen the Panki factory in July. Once that happens, we will review our tea operations and if we have any specific proposal for selling our brands/gardens we will approach the lenders,” chairman G. P. Goenka told The Telegraph.

Duncans needs the approval of SBI and other lenders before it can sell its brands or gardens. The company was in talks with Twinings for selling its brands. London-based Twinings, which has opened an office in New Delhi, is keen to enter the Indian market. Twinings is a company owned by Associated British Foods plc.

There are three companies in India which have national brands ? Hindustan Lever, Tata Tea and Duncans. HLL and Tata Tea are focussed on marketing of tea and, therefore, are not keen to sell their brands. The obvious choice is Duncans, which has some of the strongest brands like Runglee Rungliot, Double Diamond and Sargam.

“We had discussions with Twinings. But there is no concrete plan as yet,” he added.

Tea industry sources say Twinings is carrying out a due diligence on the Duncans brand for the last four months and the entire thing now hinges on valuation and subsequent pricing of the brands. Goenka is quoting higher at Rs 100 crore, while Twinings is ready to pay Rs 75-80 crore, they added.

Goenka, however, rules out any such thing. “The negotiations have not reached a point where we can talk about pricing. It is premature to talk about this.”

The Duncan group has formed two special business units for its tea business ? one SBU handles production, while the other is engaged in marketing of tea.

“Both divisions run independently. Duncan Tea, which handles the group’s branded tea business, does not buy tea from our own gardens. It is bought from auctions. The units can be divested without hurting each other,” he said.