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M. Ramesh

The new company will have worker shareholders, holding about 15-20 per cent

Chennai , Sept. 16

IFC, Washington, the equity investment arm of the World Bank, intends to pick up a 19 per cent stake in North East India Plantations Company, investing $7.8 million (Rs 35 crore) for that purpose.

North East India Plantations Company is the name of the entity that would be set up by Tata Tea Ltd, to takeover the 24 tea plantations located in Assam and West Bengal, over an area of about 24,000 hectares.

The new company will have worker-shareholders, holding about 15-20 per cent. Tata Tea will continue to hold 19 per cent stake in the company. This is the second time that Tata Tea is adopting this worker-shareholder model.

In April 2005, the company spun off plantations in South India into a new company called Kannan Devan Hills Plantations Company Pvt Ltd.

The majority stake in the company was transferred to the 13,000 workers of the company, while Tata Tea continues to hold 19 per cent stake.

The idea behind the model is to derive greater land and labour productivity through more efficient cultivation, improved capacity utilisation of processing operations, alternative crop cultivation and exploiting the tourism potential in the locations, according to IFC.

North East India Plantations Company will spend $87 million (Rs 390 crore) between 2007 and 2009 on various capital projects in the plantations.

This is also the second involvement of IFC with Tata Tea Ltd. IFC, through its South Asia Enterprise Development Facility, has been assisting Tata Tea in the introduction of alternative crops in its plantations in Assam.

Related Stories:
Tata Tea registers 60% growth in exports
Tata Tea keeps its options open on plantations

More Stories on : Plantations | Mergers & Acquisitions | Tea | Tata Tea Ltd

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