Black tea producer Rossell India Limited has acquired Kharikatia Tea Estate, a relatively large garden at Mariani in Jorhat district of Assam, at an undisclosed sum.

This is Rossell’s second acquisition this fiscal and, fifth acquisition in the last decade, enhancing the total production to 6 million kg (mkg) from seven tea estates.

While the company is tight-lipped on acquisition details in April this year it announced to have stepped up its production from 4.4 mkg to 5.1 mkg by acquiring ‘Namsung’ tea estate (in Assam) from Dhunseri Petroleum and Tea Company at Rs 28.29 crore. The valuation of the asset was pegged at Rs 404 a kg of production.

A back of the envelope calculation, therefore, suggests that the fresh acquisition of nearly 1.9 mkg production should cost the company in excess of Rs 77 crore. Considering that the recent asset valuations in the industry is running up to Rs 450 a kg, there is a possibility that Rossell has paid anything upto Rs 85 crore for acquiring Kharikatia estate.

When contacted, the company secretary N.K. Khurana, denied to divulge the cost of acquisition and other details.

He, however, said that 75 per cent of the acquisition cost of would be funded through bank finance. The rest would be financed through internal accruals.

Known as a quality producer, fetching relatively higher prices for its teas, Rossell posted a consolidated net profit of approximately Rs 19 crore on a turnover of close to Rs 80 crore in 2011-12.

The company’s shares close at Rs 49.50, down by 2.27 per cent, on the BSE on Friday.

While tea contributes nearly 90 per cent of Rossell’s turnover, the company has investments in hospitality sector.

(This article was published on December 7, 2012)
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