The Hindu Business Line : McLeod Russel's acquisitions to boost tea exports

The recent acquisitions of tea companies by the McLeod Russel India Ltd, now the world's largest tea producer, will boost exports, according to a spokesman for the company. "The future acquisitions being planned in Assam and Kenya too will help fulfil our ambitious export targets", the spokesman toldBusiness Line here recently.

Buying spree

It might be noted that for the past 18 months or so, McLeod Russel has been on acquisition spree, first buying Williamson Tea (Assam) Ltd, having a production of 22 million kg in June 2005, followed by the acquisition of Doom Dooma Tea, a Hindustan Lever outfit with a production of six million kg in January 2006 and only recently signing an MoU for acquiring Moran Tea with a production of 4.3 million kg.

These acquisitions have boosted McLeod's production capacity from around 42 million kg to around 74/75 million kg annuallyand with it the exports. McLeod's exports doubled to 22 million kg following acquisition of Williamson tea (Assam) Ltd and further to 24 million kgwith Doom Dooma. The finalisation of the process of acquisition of Moran Tea by February next year is expected to boost exports by another one million kg to reach the level of 25 million kg annually.

To add to capacity

In another two years, McLeod Russel proposes to go for more acquisitions both within and outside the country and thus hopes to add to its production capacity by another 25 million kg or so to reach the level of 100 million kg annually. The proposed acquisitions, when materialises, are expected give further boost the company's exports. The spokesman, however, declined to indicate the probable rise in exports as a sequel to acquisitions in Kenya and Assam, as and when they take place. Much would depend on the type of acquisitions, he pointed out.

For example, any acquisition in Kenya, it was felt, would almost entirely go to meet the requirement of the world market as the country's domestic market was small. The same might not be true about acquisitions in Assam. With a production of about 328 million kg annually, mainly CTC tea, Kenya supplied substantial quantities to Pakistan, Egypt etc.

The spokesman sounded bullish about tea prices in the coming years, both in domestic and international markets. There was already a shortfall in domestic availability to the tune of 17 million kg while the demand was rising by more than three per cent. Internationally also, the market was on the upswing, thanks to crop failures in some tea producing countries, notably Kenya.

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