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Tata Tea forms new company for plantation business
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Saturday, 03 March, 2007, 08 : 00 AM [IST]
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nded tea operation, Tata Tea last week announced the structure of a new company which will take over the operation of its North India Plantation Operation (NIPO). The new company named as Amalgamated Plantation Pvt. Ltd will take over the operation with effect from April 1, 2007. Hardeep Singh, until recently the chairman of Cargill will be the chairman of the new company.
Apart from tea plantation, the new company will significantly diversify into production of other agri crops like horticulture, floriculture, vegetables and spices.
Tata Tea, a Rs 3500-crore beverage group, two years ago undertook a similar re-structuring of its plantation business in south India at Munar now known as Kanan Devan Hills Plantations (KDHP). Like KDHP, the management of the new company will be vested with the workers who have been given equity shares of 15-20%.
Announcing the formation of the new company at a press conference in Mumbai last week, R K Krishna Kumar, vice-chairman, Tata Tea Ltd, informed, "The intention behind the move is to scale up the non-tea business in Assam especially to make it self-sufficient in other food produces like fruits, vegetables and fish."
Significantly, the Assam government has permitted the company to use 5% of the total land holdings in the state under tea plantations to pursue multi-crop cultivation. The company is awaiting a similar approval from the West Bengal and Tamil Nadu governments.
NIPO business includes the company's 20 plantations in Assam and five in Dooars (West Bengal) covering 24,000 hectares. While Tata Tea will hold 20% equity in the new company, International Finance Corporation, a subsidiary of the World Bank, and Infrastructure Leasing & Financial Service Limited (IL&FS) will hold 20% each. In addition to the three principal shareholders, Globally Managed Services (GMS), which is engaged in field work from non-tea operations, will also hold a minority stake, along with plantation employees.
Ranjit Barthakur, chairman, GMS, who will be assisting the new company in non-tea operation, said, "We have been sucessfully experimenting non-tea crops in Assam which includes horticulture, floriculture, vegetables, spices and even fishery. The resultant self sufficiency will provide a new hope to Assam." Later the company will also take up a hatchery project and value addition of agri produce.
Explaning the future plans, Hardeep Singh said, "We are going to build a mutiple revenue stream by scaling up operation in non-tea, organic products, developing appropriate value-added products, progressively increasing areas under alternative crops, capitalising on and leveraging back-end capability through supply chain partnership, value sharing with organised retails and agri-product exports."
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