JORHAT, Assam
Tea plantation worker. Photo credit: Thinkstockphotos.com
The Assam Company, the world’s first tea company and perhaps the most prized tea company (in terms of its assets), is going under the hammer. The company owes around INRs 1,800 crore (US $270 million), including penal interest, to its financial creditors, or lenders.
The Guwahati Assam bench of the National Company Law Tribunal (NCLT) initiated corporate resolution proceedings against the company in October 2017 after it turned insolvent due to losses in its oil business.
On April 11, 2017, the NCLT called for expression of interest for resolution plan. The company had promoted an oil and gas company in India’s Gujarat state that had made losses and was a guarantor. Assam Company has 14 tea estates in Assam; the produce of some of these estates is unique and industry leaders claim that such teas can not be produced anywhere else in the world.
The company was set up in 1839 by a deed of the British Parliament and became Assam Company India Limited in 1977. All powers are now vested with resolution professional Tiruvengadam Kannan, an independent person appointed by the NCLT. The expression of interest issued by Kannan says any private or public limited company interested in the bid should have a minimum tangible net worth of at least INRs 400 crore ($60.1 million) and a minimum surplus fund of INRs 50 crore ($7.5 million) in cash as of March 31, 2018. In case of a mutual fund/non-banking financial company or similar entity, it should have had assets of INRs 4,000 crore ($601 million) in the past three years and committed funds of INRs 2,000 crore ($300.5 million) as of March 31.
Those wishing to participate in the bidding must deposit a nonrefundable process participation fee of INRs 10 lakh ($15,000) plus applicable taxes, and will have to pay INRs 5 crore ($750,000) for buying information memorandum containing details of the company, including balance sheets of the last 10 years. It will also have to report on its experience in the relevant sector.
Assam red on gray India map. Image credit: Thinkstockphotos.com
The last date for submission of expression of interest is April 26. The 179-year old Assam Co. India Ltd has several suitors: MK Shah Exports Ltd, Warren Tea Ltd, and the Dhunseri Group to name a few. C.K. Dhanuka, chairman of the Dhunseri Group, told Livemint he was “very interested” in acquiring the Assam Company but would review the opportunity in the light of burgeoning operations costs for organized sector tea producers. He was referring to the proposal to implement minimum wages in plantation companies over and above the requirements under the Plantation Labour Act.
Vivek Goenka, executive director at Warren Tea, was quoted in Livemint as saying that his company is looking to expand, and that it would bid for the estates of Assam Company if they are sold at an affordable price. He, too, spoke of the need for clarity over wages, adding that labor compensation accounts for about 60 percent of production costs for tea companies in Assam.
Himanshu Shah, chairman, MK Shah Exports, declined to comment on the acquisition plan. However, a key official, speaking on condition of anonymity, confirmed the firm’s interest in Assam Company, saying it is a “great opportunity if the price is correct.”
Kannan, the resolution professional, said there is a possibility that the estates could be separated from Assam Company’s other business interests. Looking at the quality of assets, Kannan said he was hopeful that the sale of the company will fetch decent valuation, which will cover most of its outstanding debt.
Soon after taking the firm’s reins, Kannan told Livemint that he distributed a part of the pending bonus among workers. The firm raised INRs 10 crore ($1.5 million) as an interim measure, and distributed it among workers, he said.
Source: Livemint
Assam Company India Ltd:
First tea company in the world (established 1839) as set up by a deed of the British Parliament
First company to be awarded the Royal Charter (by Queen Victoria in 1845)
First company in the world to establish tea gardens
First tea company to brand premium blends
First company to export tea
First company to create Tea Seeds Gardens
First company to transact electronic tea sales (U.K.)
