HLL scouts for tea plantations

HLL scouts for tea plantations
DEV CHATTERJEE

MUMBAI, FEB 23: After the takeover of Rossel Industries by its HLL's parent firm Unilever, the company is now on the prowl for more tea plantations in India. ``We are looking at the option of acquiring more tea plantations as competition from Tata Tea would increase substantially after the Tetley takeover,'' M K Sharma, Director, HLL said here today.

In the coming years, a tea company will have to integrate both plantation operations along with packaging and blending as buying tea from auction increases cost by over 6 to 7 per cent, Sharma said. ``Hence, we are looking at the option of buying tea plantations all over the country as long as the price is right,'' he added.

With Tata Tea takeover of Tetley, the tea industry in the country will go through a major consolidation period with a single company owning both plantations and well-established brands. HLL plans to follow the same strategy, he added. ``Though, we have not fixed any war chest for acquisitions... funds will not be a problem,'' he added.

``At the time of Rossel acquisition, HLL did not get into picture as we thought that the government would not have cleared remitting over Rs 180 crore as foreign exchange to buy foreign shareholding. With Unilever in picture, 37 per cent of the equity changed hands without any government or market regulations in picture as the contract was signed between two parties in a foreign country,'' he said.

The government would clear the deal as soon as the group of minister consisting of Commerce Minister Murosoli Maran and Finance Minister Yashwant Sinha meet on the issue of a foreign company picking up a stake in plantations. ``We hope that in a libralised atmosphere... the Rossell acquisition will not face any problem from the FIPB,'' he said.

The packet tea industry has gone through a difficult period as the government levied a 8 per cent excise duty on packaged tea. HLL's tea volumes fell by 16 per cent due to faulty excise policies which has been rectified by the government now.