Eveready Industries on Friday said it is set to enter into an agreement with tea producer McLeod Russel India to "operate and manage" Greendale India Ltd as a joint venture company to carry out the packet tea business.
Greendale India is currently a wholly-owned subsidiary of Eveready, which has for some time felt that its packet tea business was not receiving adequate attention and focus due to the its other priorities.
Towards this, a need was felt to rejuvenate this business - perhaps jointly with a strategic partner. Accordingly, the board of the company had authorised initiation of discussions with McLeod for participating in a joint venture as a strategic business partner for development of the packet tea business through a separate entity.
"At its meeting today, the board approved that the company enter into a share purchase cum shareholders agreement with McLeod to operate and manage Greendale India Ltd as a joint venture, with both the company (Eveready) and McLeod holding 50 per cent shares each of Greendale, to carry out the packet tea business," a statement said.
Eveready and McLeod belong to the Williamson Magor Group and the strategic alliance is subject to all necessary approvals.
Both the companies would put Rs 20 crore each in Greendale in one or more tranches.
Eveready currently holds 50,000 equity shares in Greendale and initially it is proposed that McLeod will purchase 25,000 equity shares at par from the company.
"The board has also approved that the company enters into an asset transfer/assignment Agreement with Greendale for transfer of the relevant trademarks (valued at Rs 20 crore) and other identified assets, if any relating to the packet tea business, to Greendale," the statement said.
It is envisaged that with this measure, both companies will bring their respective skills of marketing and distribution and tea plantation knowledge to develop the packet tea business to a higher level.
McLeod is the one of the world's largest tea plantation company in the private sector and this would enable the tea planter to have direct access to the Rs 10,000 crore packet tea market.
On the other hand, Eveready is a consumer goods company with a large distribution reach. This alliance will enable it to upscale its FMCG operation.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)