Tata Tea May Tie Up With Finlay For Lanka Buys

Tea major Tata Tea Ltd is likely to form an association with its former partner, the UK-based James Finlay & Co Ltd, for acquiring tea gardens in Sri Lanka. While the Tata group tea major is planning major acquisitions in Sri Lanka, James Finlay is also eyeing the Sri Lankan tea gardens for quite some time to make a foray in quality tea. Hence, it will be logical for the two companies to enter into an agreement for buying these gardens, sources said yesterday.

James Finlay, which is a large plantation owner in Kenya, also has tea gardens in Bangladesh. Moreover, companies in the UK enjoy protection in Sri Lanka.

 

Tea circles are abuzz with talk of this possibility after Tata Tea's vice chairman R K Krishna Kumar announced at the company's recent annual general meeting (AGM) Tata Tea's major acquisition plans in Sri Lanka as part of its aggressive production and marketing efforts to increase its domestic market share and exports.

"Such a move will make sense for both the companies," industry sources said. With a production base of 6 million kg in Sri Lanka, the company will buy another 21 gardens in the country, Krishna Kumar had declared at the AGM.

Few years ago, Tata Tea has formed a joint venture in Sri Lanka, Estate Management Services (Pvt) Ltd for managing the tea and rubber estates in the country that are now open to private management by virtue of privatisation process initiated by the Sri Lankan government. Later, during 1995-96, Tata Tea bid for a group of 20 estates in Sri Lanka under the managements of Watawala Plantations Ltd. However, if the two firms choose to enter into an agreement, an association will again take place between them after a long separation.

Earlier, the Tatas had a 40 per cent stake in Tata Finlay Ltd, which was incorporated in 1962 as a private limited company and was converted into a public limited company in 1963. The company got engaged in the manufacture, sales and export of instant tea and blended and packet tea. However, the technical and financial collaboration with James Finlay expired in 1971. Subsequently, the overseas company sold all its all equity holdings to Tata Industries in 1982. Consequent to the sale of equity holdings, the name of the company was changed to Tata Tea Ltd during 1983.