McLeod Russel engaged with NARCL for debt resolution, eyeing revival: CMD

McLeod Russel CMD Aditya Khaitan said the company is working with NARCL on a debt resolution plan after lenders transferred loans, with hopes of restructuring in the next quarter

With National Asset Reconstruction Company Limited (NARCL) taking over the bulk of its debt, tea producer McLeod Russel India, is working on a resolution plan that could pave the way for restructuring and turnaround.

 

Responding to shareholder queries at the company’s annual general meeting (AGM) on Friday, McLeod Russel Chairman and Managing Director Aditya Khaitan said the company was fortunate NARCL was able to take over the debt from the majority of the banks.

 

“Your company is engaging with them to come up with a resolution so that it can get back on track and then restructure itself. I am hopeful that should happen in the next quarter or maybe four months,” he said.

 

The consortium of lenders of McLeod Russel had assigned the loan accounts/financial assets together with all underlying securities, guarantees, rights, title and interest for all exposures in favour of NARCL jointly, by way of a Joint Assignment Agreement on March 12, 2025.

 

The lenders comprise ICICI Bank Limited, State Bank of India, HDFC Bank Limited, Axis Bank Limited, Punjab National Bank, UCO Bank, Indian Bank and RBL Bank Limited

 

This was under the provisions of Section 5 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

 

Subsequent to the assignment of the financial assets, NARCL has become the lender/secured creditor and all rights, title and interest stands vested with NARCL in respect of the financial assistance extended by the assignors.

 

In the annual report, McLeod mentioned that it was also in process of restructuring its outstanding debt for all other lenders, including JC Flowers Asset Reconstruction Private Limited and IndusInd Bank Limited.

 

McLeod’s debt stood at around ₹1,900 crore.

 

At the AGM, Khaitan spoke about the challenges facing the tea industry. “About 10-15 years ago, the weather patterns were far more consistent. Unfortunately, that is not happening now.”

 

Due to inclement weather, the pest attack on tea bushes is getting more and more resistant to pesticides, he noted. “In order to make compliant teas, we are not using many of the chemicals and pesticides which are actually banned. And we end up losing a lot of the crop.”

 

However, the biggest factor was the wage increase, Khaitan said. “We are coming to a point where the wages are moving up. But we are not getting returns in terms of prices. Something needs to be done seriously at the government level to make the industry sustainable.”