In India, Dhunseri produced 10.07 million kg (mkg) of tea in the 2017-18 fiscal year from 10 estates in Assam, and 8.70 mkg from its African operations from only two estates. At Rs 110.07 crore in the 2017-18 fiscal year, African operations accounted for over 34 per cent of Dhunseri’s annual earnings.
Over the past four years, Dhunseri’s average price realisations from packet tea have been improving by just over two per cent. In the 2017-18 fiscal year, the average price realisation from this business stood at Rs 217.29 a kilo.
On how the proceeds from this sale would be used, Dhanuka said, “The board will take a call on this. Personally, I am not closed to the idea of entering a new business.”
With the sale, Dhunseri has also assured TGBL steady supply of tea for these two 25-year-old brands.
Sources had earlier said Dhunseri had been eyeing McLeod Russel’s tea estates in Africa but failed to strike a deal.
The company was also aggressively eyeing the assets of Assam Company Ltd, which was undergoing insolvency proceedings. Here it lost out to Abu Dhabi-based BRS Ventures which paid a staggering Rs 1,214 crore.
However, Dhanuka is more focused in acquisition on tea estates in Africa now as production costs have scaled to new highs in Assam and the presence of numerous small tea growers in Assam has been resulting in the larger tea estates losing its cost competitiveness.
In TGBL’s last annual general meeting (AGM), its chairman N Chandrasekaran had told shareholders that TGBL’s progression in India would be via a mix of organic and inorganic growth and capture the growth in the Indian market.
“Though, in volume terms, we continue to be No. 1 in the Indian market, we can’t say the same thing in value terms. So, there will be focus to bring growth in the Indian market by a combination of focusing on market share as well as a number of new product launches,” Chandrasekaran had said in that AGM.
In separate filings with the BSE, both TGBL and Dhunseri said that the proposed acquisition shall be subject to due-diligence, signing of definitive binding agreements and applicable shareholder, statutory, regulatory and other third-party approvals as may be applicable.