Taking advantage of the ongoing rally in shares of tea companies, McLeod Russel, the world’s largest producer, offloaded 9.14 percent of its stakes in the open market.
It raised over Rs 200 crore in a day’s trade and the money is to be used for reducing its current debt burden of Rs 791 crore.
The company’s promoters, comprising the Khaitan family and its associated investment and financial arms, held 49.89 percent stake in the company as on end-September. Of the promoter shareholding, Borelli Tea Holdings (BTHL), one of the subsidiary companies, accounted for 24.73 percent. Kamal Kishore Baheti, director, held those shares in his capacity as trustee of BTHL.
On Thursday, as tea stocks rallied past eight percent in intra-day trade, the company decided to offload 10 million shares of BTHL of its 27 mn shares. Stake was said to have been sold to both institutional investors and the public.
Baheti said McLeod Russel had been thinking of taking such a move to reduce the debt burden. “We had decided to offload stakes previously but the investors also had to be interested. Now, with confidence again returning to tea stocks, we felt it is a good time to do it,” he said.
On investor expectations of rising tea prices, which would pull up the revenue of producers, stocks of McLeod Russel, Goodricke Group, Warren Tea, Rossell India and others in the segment have been surging. In Thursday’s trade, scrips of McLeod rose 7.1 percent to close at Rs 234.60; Goodricke saw a 6.2 percent jump to Rs 510.50 at the end of trade. Rossell India rose 2.8 percent to close at Rs 132.1.
In August this year, McLeod sold off loss-making Bhatpara Tea Estate to reduce its debt burden. The sale fetched it Rs 13.2 crore.
Source: Business-Standard 