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McLeod Russel to acquire equal stake in Eveready's tea retail arm

World's largest tea producer to foray into tea retail business with JV deal involving Greendale India Ltd

Avishek Rakshit  |  Kolkata 

Amritanshu Khaitan, MD, Eveready Industries
Amritanshu Khaitan, MD, Eveready Industries, at a press meet in Kolkata. (File photo: Subrata Majumder)

In its pursuit of plan to enter the retailing business for the first time, McLeod Russel, the world's largest producer, will be acquiring an equal stake in India Ltd, one of the wholly-owned subsidiaries of Industries India Ltd (EIIL). Both and belong to the Williamson Magor Group, controlled by the

While had kept its focus on batteries and flashlights, its retail division, which owns a few brands, couldn't be used optimally, resulting in the under-utilisation of assets as well as the brand value of the packet The battery major, hence, was on the lookout for a partner which can not only invest in reviving GIL by pumping in capital, but also take the brand forward.

On the other hand, McLeod Russel, another group company, which so far, has been a pure plantation company, was on the lookout to enter the retail business.

Both these had entered into a preliminary agreement to revive the group's retail business.

"We have the strength in distribution and has the expertise in production.

It was thus a natural alliance", EIIL's managing director, Amritanshu Khaitan said.

On Friday, EIIL's board finally decided to give a green signal to the agreement, before it takes its final shape. As per the roadmap, will enter into a share purchase cum shareholders agreement with to operate and manage GIL as a joint venture, with both these WMG entities holding 50 per cent shares each of

currently holds 50,000 equity shares of Rs. 10 each in this subsidiary of which will be picking up 25,000 shares of Rs 10 each which will ensure an equal partnership between the two group

At a later stage, would be investing up to Rs. 20 crore in this subsidiary in tranches.

Incorporated in May 2011, GIL has a paid-up capital of Rs 5-lakh with an authorised capital of Rs 20 lakh. For the year ending on March 31, 2017, it posted a topline of Rs 2.16 crore, which was a momentous jump when compared to the Rs 3.3-lakh revenue this subsidiary earned during 2015-16.

The battery major will also be entering into an asset transfer and assignment agreement with GIL for transfer of the relevant trademarks valued at Rs 20 crore and other identified assets which might be related to the retailing business.

Industry estimates suggest the packet market in India to be worth around Rs 10,000 crore.

During the quarter ending on September 30, 2017, posted a 9 per cent increase in its net profit at Rs 144 crore, despite the net revenue stagnating at Rs 469 crore.

In the similar quarter of the previous financial year, the company's net profit stood at Rs 132 crore with a topline of Rs 472 crore.

First Published: Fri, November 10 2017. 18:21 IST