Mcleod Russel India Ltd has decided to sell its remaining stake in a Rwandan tea estate, as the plantation company continues to divest tea gardens as part a business strategy to pare costs and improve profitability.
The Kolkata-based company said in a stock-exchange filing it will sell its 45% stake in Pfunda Tea Company Ltd to Scotland-registered Rwanda Tea Investments Ltd for Rs 54.65 crore ($7.88 million).
Rwanda Tea counts Kolkata-based Luxmi Tea Company Pvt. Ltd and The Wood Foundation Africa among its shareholders. Luxmi Tea has 19 tea gardens in northeast India and also has a presence in the African nation. Luxmi Tea Company owns the Makaibari brand and owns 75% of Rwanda Tea while The Wood Foundation holds the remaining.
The transaction comes after Mcleod Russel agreed to sell a 45% stake in Pfunda in February.
McLeod Russel had bought a 90% stake in Pfunda Tea Ltd for $19.5 million (about Rs 120 crore) in late 2014.
Mcleod Russel, which has presence in India, Uganda, Vietnam and Rwanda, has been selling its tea estates for the past year in order to trim its debt. In September 2018, it decided to sell two estates and related assets, adding to the dozen properties it agreed to divest in June.
The company had said previously that it would dispose certain tea estates to optimise its operational performance and that it would use to sale proceeds to repay high-interest debts as well as for buying back its shares to the tune of Rs 100 crore.
Mcleod’s debt as on September stood around Rs 1,500 crore, according to media reports.
In Rwanda, Mcleod Russel had previously invested in 2011 when it acquired Gisovu Tea Co. Ltd, whose plantations are located in the country's western province.