Under insolvency process, ACIL may get bids form Dhunseri Tea, Warren Tea

Both these firms are apparently only interested in ACIL's tea business and not its oil vertical

Even as the expression of interest for Assam Company India Ltd (ACIL), which is facing the insolvency resolution process under the National Company Law Tribunal (NCLT), is yet to commence, at least two tea companies have expressed an interest in bidding for the firm.  

Both of these firms -- Dhunseri Tea & Industries Ltd (DTIL) and Warren Tea -- have been on the lookout for acquiring tea gardens in Assam and may place bids if offered the right valuation. 

DTIL Managing Director C K Dhanuka, who directly holds 1.14 per cent stake in the company, told Business Standard: "I am personally interested in ACIL's tea estates but the board needs to approve before we can place any bids." 

On the other hand, Vivek Goenka, executive director at Warren Tea, told this newspaper: "ACIL has some of the most premium gardens in its possession and we would be interested to bid provided the valuation of the gardens is right."

Industry officials suggested that the acquisition cost for such premium gardens works out to anywhere between Rs 450-550 a kilo.

At this given cost of acquisition, it is estimated that ACIL's 14 gardens in Assam can fetch anywhere between Rs 4.5-6 billion -- way too short of the total outstanding debt of Rs 14.10 billion to the financial and operational creditors. 

According to T Kannan, insolvency professional with LSI Resolution, who has been appointed as the resolution professional for ACIL, the first information memorandum will be coming up in the next 2-3 weeks with the expression of interest commencing not later than February-end. By April 25 this year, the bidding process is projected to be over. 

DTIL owns 10 gardens in Assam while Warren Tea owns seven estates. 

However, both these firms are apparently interested in only the tea business of ACIL and not the oil vertical, which may prove a difficult sale. 

A tea industry official said that although ACIL's tea business looks attractive for a takeover, the oil business can be a drag as most of the major tea companies either don't have an existing line of oil business or aren't interested to enter the segment. DTIL, however, has a foreign subsidiary, Dhunseri Petrochem & Tea Pte. Ltd.

Kannan said that based on talks with the interested parties, he might opt to put ACIL's oil and tea businesses on block separately. 

"However, it's too early and we are analysing the situation currently on how attractive bids can be invited," he said.

ACIL entered the oil business in 2010 in a 40:60 partnership with Canoro Resources Limited in the Amguri oilfield in Assam. However, soon, the central government terminated the partnership. Thereafter, a legal tussle ensued, which was finally resolved in February last year after the Arbitral Tribunal Board declared ACIL as the sole owner of the oilfield besides ordering monetary compensation. 

Nevertheless, operations in the oilfield didn't commence, leaving the tea business as the only revenue generator for ACIL.

Sources said industry biggies like McLeod Russel, Goodricke India or Tata Global Beverages, who are currently prioritising retail sales, may not be interested in bidding.

In October 2017, Srei Infrastructure, one of ACIL's 12 financial creditors, dragged the firm to the NCLT asking for insolvency resolution process, which was admitted by the Guwahati Bench. 

Kannan said Srei Infrastructure had given a Rs 1 billion loan to Gujarat Hydrocarbons and Power SEZ, an ACIL subsidiary with ACIL being the guarantor. Upon non-payment of the total outstanding, now amounting to Rs 5.95 billion, ACIL was dragged to the NCLT.

Set up in 1839, ACIL is India's first tea plantations company and also the pioneer in oil exploration in Assam way back in 1889.  


Snapshot of companies

	Assam Company India Ltd	Dhunseri Tea & Industries Ltd	Warren Tea Ltd
Total gardens	14	12	7
Total cultivable area (in hectare)	6,600	7,200	4,000
Total production (in million kg)	9.9	10.36	6.09
Total employees	25,000	5,000	8,800
Income (in Rs. million)	2,164.77	1,877.20	1,123.12
Net profit/loss (in Rs. million)	- 707.80	101.11	- 151.69