The Hindu Business Line : Beeyu Overseas bids for Lankan tea property — Ties up with Colombo-based firm; plans jt venture marketing firm with Tata Coffee

Corporate - Mergers & Acquisitions
Agri-Biz & Commodities - Tea

Beeyu Overseas bids for Lankan tea property — Ties up with Colombo-based firm; plans jt venture marketing firm with Tata Coffee

Kohinoor Mandal
Nilanjan Dey

Kolkata , Sept. 1

THE Bangalore-based Tata Coffee Ltd will soon float a joint venture marketing company with the city-based tea firm, Beeyu Overseas Ltd.

Beeyu is hoping to acquire a Government-owned tea estate and factory in Sri Lanka next month after placing the highest bid.

Mr B.P. Singh, Executive Chairman of Beeyu Overseas, said the agreement with Tata Coffee was likely to be signed in a week. It would be a 50:50 joint venture.

"The draft agreement has been prepared by the two of us. Some minor details would be finalised soon. This joint venture would hold a 10-year exclusive right of marketing Tata Coffee's products in India," Mr Singh told Business Line.

In 2001, Beeyu had entered into an agreement with Tata Coffee and the Russia-based Trading House Grand for setting up an instant coffee producing plant in Russia. Beeyu is slated to hold 15 per cent in that venture.

Mr Singh said this venture had been shelved temporarily but added that the new joint venture had plans to set up a coffee packaging unit in Russia next year.

He is expecting Rs 100 crore worth of sales from the new company in the first year itself.

Meanwhile, Beeyu has bid for a tea property, which includes 2,000 hectares of plantation and four factories, in Sri Lanka. According to Mr Singh, his company has made the highest offer among three bidders.

For the proposed overseas acquisition, Beeyu has tied up with Fern Tea Ltd, a 32-year old listed marketing company in Sri Lanka. In keeping with Sri Lankan law, Beeyu would be holding 49 per cent stake in this venture with Fern Tea.

"The tea property is in a bad shape. We would take it on rent. In the first year the joint venture company would be investing approximately $2 million," he said.

Mr Singh said a formal announcement would be made within a month and he wass confident of success, as his partnership with Fern Tea was the most formidable among the other three bidders.

"Sri Lanka is a world leader in tea exports and 40 per cent of their economy depends on tea. Moreover, the Sri Lankan Government gives lot of incentives to the exporters. We hope to generate a turnover of about $10 million through this venture," he said.

In another development, Beeyu is contemplating acquiring a bought leaf factory at Siliguri in West Bengal. According to Mr Singh, four factories have been identified and a due diligence would be carried out next week.

"The cost of any one of these units would be Rs 3-3.5 crore, out of which Rs 2.5 crore is the outstanding debt of the factory. We would acquire the debt and pay rest of the money," he said.

Beeyu is de-listing from Calcutta, Kochi and Coimbatore stock exchanges. On Monday at BSE, the Beeyu scrip closed at Rs 21.90 after registering a high of Rs 22.25.

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