Itc Drags Agro Tech To London Court

ITC Ltd has approached the London Court of International Arbitration (LCIA) against Agro Tech Foods Ltd, a subsidiary of the US-based ConAgra Foods, regarding the lease agreement of ITC's edible oil processing plant located at Mantralayam in Andhra Pradesh. The Mantralayam unit was under lease agreement to Agro Tech Foods Limited, which expired on Wednesday. What happens to the plant in the future is the bone of contention between the two companies.

The plant was originally owned by ITC Agro Tech which was rechristened as Agro Tech Foods Ltd after a controlling stake in it was acquired by ConAgra about three years back. The Mantralayam plant was sold to ITC by Agro Tech Foods at the time of its acquisition by ConAgra. Since then, Agro Tech Foods has been using the facility under a lease agreement.

 

However, Agro Tech Foods came to a conclusion that the Mantralayam plant was no longer economically viable. Agro Tech feels the facility continues to suffer from logistical disadvantages of being located away from ports, resulting in imposition of severe financial penalties in handling imported oils. Coupled with, Agro Tech says, the inadequacy of seed availability in areas around the plant impacted the cost efficiency of the plant.

Agro Tech Foods says that the order of LCIA will be binding on both the parties. Till the award is given by the LCIA, the status of the plant is not known, the company said in a release today.

The employees at the Mantralayam plant will have no option other than either to settle with a voluntary separation scheme or get transferred to other locations, Agro Tech Foods added in the release.