| fading flavour
Calcutta, Aug. 14: The Rampurias of Assambrook Limited have decided to pull out of tea production in the south.
The company will sell its four gardens in Kerala to prune a debt burden of Rs 40 crore.
In a notice to the Bombay Stock Exchange, Assambrook said it was entering into an agreement to sell four tea estates in Kerala Cherakara, Talapoya, Jessie and Tatamala.
The total production in these four gardens is 1.9 million kgs. and they employ around 2,000 people.
Senior officials of the company said, We are currently in negotiations to sell our gardens. The details of the agreement will be decided at a board meeting next week.
The company is tight-lipped about the price at which the gardens are being sold. They even refused to divulge the names of the buyers. We cannot do so until the deal is clinched. This may affect our negotiations, the officials added.
Assambrook has two gardens in Assam (Dhulli and Tinkharia). The total production in these two gardens is 2.8 million kgs.
The company suffered a loss in the last financial year on a turnover of Rs 40 crore. It has plans to scale up tea production in north India through acquisition of gardens or increasing production at its existing gardens. The idea is to increase production of quality tea.
In 2000, the company had drawn up plans to bring an additional 300 acres under tea cultivation in the next two years to increase production from its tea gardens.
The company had decided to invest Rs 7 crore to enhance the production by four lakh kgs.
Assambrook, like all tea companies, is passing through a bad phase. This is the fourth consecutive year that the tea industry is facing a financial crisis due to spiralling costs and low price realisation.
Industrywise, input costs had gone up by Rs 12.25 a kg of tea produced even as the average all-India selling price had fallen by Rs 14 per kg.
South Indian tea has been affected adversely. The cost of production of south Indian tea has gone up to Rs 60 per kg whereas it is selling at Rs 40 per kg.
The tea industry is also facing tough times due to a slump in the export markets. Exports to Russia have suffered with exports dwindling to 53 million kgs from a level of 100 million kgs few years back.