Pune, Nov 26: Sterling Tree Magnum (STM) will diversify into tea plantations, export fruit and vegetables for niche markets and possibly diversify into the lucrative high-growth information technology (IT) industry through a sister concern.

STM's entry into the tea market will be through a 14 per cent stake in Orissa Tea Plantations Ltd (OTPL), a joint venture between OTPL and Ipicol, the Orissa government's investment promotion council. While STM has taken over OTPL's stake and operational charge of the company, the final formalities would be over by December, said STM president G Rajan. STM's move to widen its base from teak will also centre around Orissa, where by December 1998, it hopes to acquire 10,000 acres for teak plantations and other timber products, Rajan said. He added that research is currently under way to find an alternative to teak.

While STM put its other diversification moves on hold due to depressed market conditions, which included making furniture, the company's proposal to go public has been adversely affected by the subdued primary market, Rajan added.

STM's investment in OTPL would be around Rs 9 crore over a 16 month period of which Rs 30 lakh has already been pumped in. Tea plantation is part of STM's programme to grow tea in non-traditional areas. At present, a long leaf, Darjeeling-type tea is grown on 2,200 acres, which has been sold at prices below those of Darjeeling tea at the Calcutta auctions. Rajan said STM would eventually put up a CTC unit there.

The foray into exports of agri-produce has been undertaken by Sterling Agri Specialities (SAS) which exported gherkins worth $150,000 during the three month period, August-October, 1997. Rajan stressed that agri-exports would be for niche markets and SAS would also export fruits. Gherkins are exported to European countries, although SAS received inquiries from South America.STM Management Services Ltd, a company formed by STM to service the requirements of its 2.50 lakh investor base, could become the Sterling group's entry vehicle into the IT sector. Rajan admitted that this was a diversification and it could export as well as work on the MIS for other corporates.

Rajan welcomed the proposal to regulate plantation companies and pointed out that STM had been pushing for such a move since 1993. Among the proposals it has put forward are that the promoter hold at least 50 per cent of the equity and the company have a paid up capital of at least Rs 3 crore.

While he highlighted the insurance cover extended to STM's investors, through a specially designed vehicle by United India Insurance Co. Ltd, this cover comes into effect from the fourth year and guarantees a minimum ban rate of interest to the investor should the plantation fail. STM's other investor protection measure, of depositing the title deeds of the land with a custodian, in this case, with UCO bank to prevent tampering by anyone, was also touched upon.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.