Jay Shree Tea to acquire three firms in Africa

KOLKATA: BK Birla-controlled Jay Shree Tea & Industries (JTIL) is snapping up tea companies in the dark continent. It will soon acquire 100% ownership in Uganda-based Kijura Tea through its investment arm, Birla Holdings, Dubai.

It will also buy 60% in Rwanda-based Mata Tea and Gisakura Tea through Tea Group Investment, a 50:50 JV between Rwanda Mountain Tea-SARL and Birla Holdings, Dubai.

Rwanda Mountain Tea is a privately-owned tea company headquartered in Kigali. It has two estates within its fold, Nyabihu and Rubaya. Today, the tea sector in Rwanda consists of six state-owned production units, Gisovu, Kitabi, Mata, Mulindi, Shagasha, Gisakura and four private owned production units, Cyohoha (SORWATHE), Pfunda (Pfunda Tea Company), Nyabihu and Rubaya (Rwanda Mountain Tea).

Nshili-Kivu is another privately-owned production unit with a factory still under construction. Jay Shree Tea on Monday informed BSE about its overseas acquisition plans for which a board meeting has been called on April 28.

Incidentally, ET had reported in its April 20 edition that JTIL was poised to acquire tea estates in Rwanda and Uganda and that a board meeting would be convened on April 28 to approve these overseas acquisitions.

JTIL will be the second-largest India tea company to acquire estates in Africa. In December 2009, BM Khaitan-controlled McLeod Russel India had acquired six tea estates in Uganda with a production of 15 million kg for Rs 140 crore. The twin acquisitions are likely to lift production capacity of Jay Shree Tea to nearly 29 million kg in 2010-11 from 23.5 million kg now.

DP Maheshwari, managing director of JTIL, said: “We have already signed an agreement to acquire Kijura Tea. It will come within JTIL’s fold from May 1. We will soon sign agreements with Rwandan tea estates. The Rwandan cabinet had approved our proposal only three days ago. The total cost of acquisition will be around Rs 30 crore.”

In its notice to BSE, Jay Shree Tea said it will also consider a stock-split option at the board meeting. The notice says: “To consider and recommend sub-division (stock-split) of the present face value of the equity shares of Rs 10 each of the company into smaller denomination as the board may deem fit, subject to the approval of the members of the company and to incorporate the resolution(s) for the said sub-division and amendment in the capital clause of the memorandum of association of the company in the agenda of the ensuing AGM of the company.”

The scrip rose 5.90% to Rs 307.45 BSE after the company said its board would meet on Wednesday to consider the African acquisitions.

Source: The Economic Times