McLeod Russel, the world’s largest tea producer with a consolidated turnover of ₹2,447 crore, on Tuesday announced the sale of two more gardens — with a combined capacity of nearly 2.58 million kg (mkg) — for ₹91.29 crore to the Goodricke Group.

This marks the third tranche of sale by the company. Since June, it has sold 12 estates in Assam with a total capacity of 14 mkg for ₹472 crore.

All the assets have been sold at a valuation of ₹350 a kg production capacity, which is reasonably high.

Under the latest deal, McLeod has entered into an agreement with Amgoorie India, a subsidiary of Goodricke, to sell the Bargang tea estate with a capacity of 1.7 mkg. It has also signed an agreement with Goodricke to sell the Harchurah estate with a production capacity of 0.88 mkg.

Use of proceeds

The sale proceeds will be used to pare debt, which was ₹976 crore as on March 31; to acquire overseas assets; and to invest in the packet-tea segment, where it now has a marginal presence.

McLeod Russel has got shareholder approval to sell up to 35 per cent of its assets in India. The company had 52 tea estates in the country producing 67 mkg at the end of the last fiscal. Following the sale of the 12 estates, the company’s own production capacity (it also outsources to small growers) stands at 53 mkg.

The company’s own production of tea is expected to further come down to 50.42 mkg post the sale of these two estates. The decrease in own production will be offset by stepping up outsourcing from small tea growers.

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