What’s brewing at tea major Duncans?

PRATIM RANJAN BOSE ABHISHEK LAW Kolkata | Updated on January 22, 2018 Published on November 04, 2015

Operations have been halted at most estates, and company has defaulted on payments

Can one of the nation’s largest tea companies, with no less than 19,500 people on its payroll, pull down the shutters without any public notice? GP Goenka’s Duncans Industries Ltd appears to have almost done that.

The listed company has 12 tea estates — all in West Bengal — with a capacity to produce nearly 12 million kg (mkg) of tea.

Two of these are in Darjeeling hills. While one of them (Marybong) is operated by some other group, Duncans virtually controls 11 gardens.

Market reports suggest since July, except in Darjeeling, operations have come to a halt in all the other estates.

Production was also cut in the Darjeeling garden well before Durga Puja in October.

The only hint of an official confirmation was available through a stock market notification issued on November 2 that sought “extension of time for holding AGM” citing “temporary disruption of operations” at “some of its estates”.

No activity at auctions

But enquiries at auction centres in Kolkata and Siliguri reveal that the company’s offerings from north Bengal gardens have trickled down to near zero since July. “In 2014, they sold nearly 10 mkg (CTC) in Siliguri. From January to October this year, the arrivals were down to barely 2 mkg.

“There was no Duncans lot for sale in the last three weeks,” a source said.

In Kolkata, the company sold 1 mkg of CTC varieties and 1.31 lakh kg Darjeeling tea (Runglee Rungliot) in 2014.

This year there hasn’t been any CTC offerings since July and offerings from Darjeeling have also trickled down.

That’s not all. Duncans is also a major buyer from auction centres through group outfit Duncans Tea Ltd for packaging and blending purposes. In 2014, it purchased 2.3 mkg from the Kolkata auction.

In the first 10 months of this year, the company purchased only 95,000 kg from the Kolkata auction, a source said.

“The overgrown bushes suggest they must have stopped plucking for months,” said an industry insider based out of the tea growing region in north Bengal.

Payment defaults

Efforts to contact Goenka and his son Shrivardhan over the last two days remained unsuccessful. The Indian Tea Association (ITA) also has no information to share on Duncans. The company’s membership was delisted after it defaulted in paying subscriptions. A close scrutiny reveals the company was in the habit of defaulting payment of almost all statutory dues.

Provident Fund dues, as recorded by the auditors, were ₹20.41 crore as on September 30, 2014. PF authorities also attached the company’s bank account for non-payment of instalments in June this year. The Calcutta High Court stayed the PF action.

Duncans was reported to the BIFR in 2006 due to sickness arising out of its non-operating fertiliser facility in Kanpur that the company acquired from ICI in 1993. The plant was operational for merely one-and-a-half months in 2005.

As per BIFR’s recommendation, Duncans sold the fertiliser facility in 2010. The restructuring saw the tea division earning a profit in 2009-10, “after four years of continuous loss”, a BIFR report says.

In 2011-12, Duncans ended up with a net profit of nearly ₹681 crore riding on the restructuring proceeds. The timing was also favourable for the tea industry — it recorded a steady increase in prices since 2008-09.

Yet, Duncans slipped into the red soon after. The company is making losses since 2012-13.

And, in 2013-14, it reported that accumulated losses had crossed more than 50 per cent of the net-worth.

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Published on November 04, 2015
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