Financial Daily from THE HINDU group of publications
Tuesday, Feb 14, 2006
Financial Daily from THE HINDU group of publications Tuesday, Feb 14, 2006 |
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Coffee Corporate - Restructuring Agri-Biz & Commodities - Mergers & Acquisitions Many suitors for Bombay Burmah's coffee plantation business — Deal may cost Rs 85 crore Kohinoor Mandal
Kolkata , Feb. 13 BOMBAY Burmah Trading Corporation Ltd, a Nusli Wadia Group company, has many suitors for its coffee plantation business in Karnataka but the company says the business is not up for sale. Mr Ashok Punjwani, Managing Director, told Business Line that the company had been receiving several proposals from a number of companies. "This does not mean that we are selling off our assets", Mr Punjwani said. Sources, however, say the company is likely to strike a deal at a price of Rs 80-85 crore and it would mean a big gain for it as the coffee business was generating around Rs 7-8 crore of revenue every year. The Bombay Burmah share has been rising in the last few trading sessions. At the BSE on Monday, the share jumped 15 per cent from Rs 250.80 to Rs 289.20. The share has gained 26 per cent in the last six trading sessions moving up from Rs 229. Bombay Burmah operates in the sector through its Elk Hill Coffee Plantation, where it owns eight estates. It is located at Coorg in Karnataka and it is spread over 927 hectares, of which 320 hectares is arabica crop and the rest 607 hectares is robusta crop. Its total annual clean coffee production is about 1,000 tonnes. Low business: "Earnings from the coffee business are meagre, probably Rs 7-8 crore. Compared to it, if the company manages to sell it off at Rs 80 crore, then the financial returns are more attractive. The deal would substantially improve the PE ratio of the company," sources said. The company's annual report on the Web site does not specify the earnings or the profitability of the coffee business. For the year ended March 31, 2005, its net sales were Rs 145.77 crore and plantation business' share was Rs 53.62 crore. The Wadias hold approximately 64 per cent in Bombay Burmah. Financial institutions' holding is less than three per cent and the rest is with public. Bombay Burmah, set up in 1863, has a diverse range of businesses. Apart from coffee, it owns tea gardens in the South spread over 2,822 hectares. The company is also present in the orthopaedic and ophthalmic equipment, automobile springs, horticulture items and other laminates segments. Well-known laminate brands such as Sunmica and Formica are owned by Bombay Burmah in India.
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