Brij Mohan Khaitan family-promoted McLeod Russel India Ltd has reached an understanding with National Asset Reconstruction Co Ltd (NARCL) to restructure three-fourths of its outstanding debt, capping seven years of effort to streamline the failing finances of India’s largest bulk tea producer.
According to the sanction letter issued by the public sector banks-backed asset reconstruction company, McLeod has to pay ₹1,050 crore to NARCL on or before February 15, 2029, allowing the tea producer to plan out its repayment programme over a period.
In addition, as part of the restructuring package, NARCL will receive 10 per cent fresh equity shares of the company by conversion of unsustainable debt on a fully diluted basis.
The public sector ARC had taken over the outstanding debt of eight scheduled commercial banks worth ₹1,033.03 crore in March 2025, bringing down the number of McLeod’s debtors to only three. Since then NARCL and the McLeod management, led by chairman and managing director Aditya Khaitan, the younger son of late B.M. Khaitan, had been in talks to thrash out a debt restructuring plan.
In the following weeks, a detailed agreement between the two entities will be signed, specifically outlining the repayment schedule. The debt being restructured with NARCL represents 75.02 per cent in value of the total lenders as on December 31, 2025. “We are in discussions with the remaining lenders representing 24.98 per cent for restructuring/settlement,” McLeod said in a regulatory filing.
Apart from NARCL, the other two outstanding debtors of McLeod are JC Flower ARC and IndusInd Bank, which, according to the company’s calculations, have around ₹350 crore exposure to the tea producer. When banks assigned their loan to NARCL last year, IndusInd did not join them.
Repayment plan
Industry sources suggested McLeod would look at three options to raise funds to pay off debtors: promoters bringing fresh equity in the company, the sale of tea gardens and cash flow from operations.
The company has 34 gardens — two in Bengal and 32 in Assam — in India producing about 38 million kilograms of tea. Moreover, it has five gardens in Uganda, producing 17 million kg more.
Sources said the management would take a call on selling gardens in India or Africa, depending on offers from buyers. According to one tea industry insider, McLeod is already in talks with potential buyers to sell five gardens in Assam and one in Dooars in Bengal. The proceeds from the sale could allow the management to garner funds for the initial payment to debtors.
Ebb and flow
McLoed Russel, which used to be the world’s largest bulk tea producer, had presented four restructuring proposals to lenders since 2019 without success, primarily due to a lack of unanimity among creditors.
The proposals also included a sensational one-time settlement (OTS), backed by Calcutta-based electrode paste maker Carbon Resources Pvt Ltd, which had offered to buy roughly half of McLeod’s gardens for upfront cash in 2022.
However, the Jalan family-backed Carbon, an outsider to Calcutta’s tea business circle, backed out of the deal in 2023.
McLeod’s debt woes are linked to loans and advances made by it to group firm McNally Bharat Engineering Co Ltd, which has since gone bankrupt. The bet on McNally led to the unravelling of the storied Williamson Magor Group, with another family business jewel, the zinc-carbon battery maker Eveready Industries India Ltd, changing hands. Depressed prices of teas amidst rising input costs also put stress on the balance sheet of McLeod.