First flush

Calcutta, April 11: Fifteen Andrew Yule & Company (AYC) tea estates, believed to be worth Rs 100 crore, could be put on the block.

The public-sector company with investments in diversified fields has already been listed for divestment. Sources said the government intends to spin off the tea division before selling it to a strategic buyer. It feels the tea business will fetch a good price, unlike some loss-making businesses now under the company.

Over the years, the tea division has been cross-subsidising money-losing divisions like electricals and engineering. Senior government officials said selling Yule as a whole is unlikely to make divestment attractive.

They say merging Yule’s engineering and electrical divisions with other PSUs that have similar businesses is one of the options being considered by the government.

The finance ministry is in favour of spinning off AYC’s tea division into a separate firm. Once that is done, bids will be invited from tea companies and management control turned over to buyers.

Officials did not disclose how far the divestment process had gone, except saying the government will decide on the issue.

Tea industry analysts feel the Yule gardens, which produce 10 million kg, will fetch good prices since they are known for quality.

In the past, Yule’s belting division was spun off into a separate company in which Phoenix of Germany acquired a 74 per cent stake.

The Phoenix-Yule joint venture has since turned around and expanded in India.

Sources say ICICI Winfra has been hired to find out whether AYC should be sold completely or the tea division disposed of separately.

Tea industry officials say some of the top tea firms in the country have evinced interest in Yule’s gardens. “They have made informal queries with the company,” an executive said.

Ten of the Yule’s 15 gardens are in Assam; the rest are spread in Bengal’s Darjeeling and Dooars.

The company has not been able to invest in these gardens over the last few years, which has pulled down production to 80 lakh kg a year. A packet tea division has already been carved under Yule’s tea business.