Long queue for Assam Company

At least seven entities, including Apeejay, Dhunseri, Luxmi and Warren, have submitted expressions of interest for tea producer Assam Company India Ltd (ACIL), which has been put on the block by creditors through a corporate resolution insolvency process because of a loan default.

By Sambit Saha in Calcutta
  • Published 27.04.18
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Calcutta: At least seven entities, including Apeejay, Dhunseri, Luxmi and Warren, have submitted expressions of interest for tea producer Assam Company India Ltd (ACIL), which has been put on the block by creditors through a corporate resolution insolvency process because of a loan default.

The list of resolution applicants also has a surprise entry in the form of The Chatterjee Group (TCG), led by one of Bengal's most successful entrepreneurs Purnendu Chatterjee and the owner of Haldia Petrochemicals Ltd (HPL), among others. Two asset reconstruction companies are also understood to have put in their EoIs.

ACIL, now owned by Aditya Kumar Jajodia, has 14 gardens in Assam with a production capacity of over 10 million kg a year. Moreover, it has an oil and gas block in Amguri, besides two spreading across Nagaland and Assam.

The company, which has a corporate office in Calcutta and a registered office in Guwahati, has a rich history. Incorporated by a deed of British Parliament in 1839, it was the first tea plantation company in the world to be awarded a Royal Charter by Queen Victoria. Prince Dwarkanath Tagore, one of the first Bengali industrialists, and Babu Motilal Seal were among its eminent founder directors.

The list of suitors suggests that ACIL is being fancied for the tea gardens rather than its oil and gas assets. Four of the applicants have strong presence in Assam and appear to be keen to expand their footprint despite the challenges of rising wages and crop losses because of climate change. Only TCG has a strong presence in the hydrocarbon business through HPL and Materials Chemicals and Performance Intermediaries Pvt Ltd (formerly MCC PTA India Corp).

Chandra Kant Dhanuka, managing director of Dhunseri Tea, confirmed his interest in ACIL. Dhanuka told The Telegraph, "I'm into tea and I'm a buyer. I am keen to expand." Dhunseri produces 10 million kg of tea in Assam, apart from another 10 million kg in Malawi, Africa.

S. K. Ghosh, managing director of Warren Tea, also confirmed, saying the challenges faced by the industry would not deter its ambition. "This is an opportunity for expansion and consolidation," he said. Warren produces 7.5 million kg in Assam.

Rudra Chatterjee, executive director of Luxmi Tea, which produces over 10 million kg in Assam and also owns the famous Makaibari tea estate in Darjeeling, could not be reached for comment.

Karan Paul, chairman of Apeejay Tea, which produces 23 million kg in Assam and packet 20 million kg, did not comment.

A text message sent to Purnendu Chatterjee did not elicit any response.

Industry observers opined that the National Company Law Tribunal-led insolvency process may provide a bargain deal for the applicants. "Some of the gardens are in a bad shape but can be turned around with investment and management intervention," they said.

For established corporate players, who have to bear the social cost of the garden workers apart from the wages, a consolidation could strengthen their position against the relentless onslaught of the bought leaf sector.

"Over the last twenty years, the share of large planters in the total production in north India has witnessed a steady decline. This is an opportunity to consolidate and gain economy of scale," they added.

Mounting debt

Resolution professional to ACIL, Kannan Tiruvengadam, admitted claims of Rs 1,359.18 crore from financial creditors and Rs 149.02 crore from operational creditors.

The SBI has the largest share in the debt and highest voting share in the committee of creditors, followed by Srei Infrastructure, Indian Overseas Bank and Bank of Baroda.