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Sunday, Oct 02, 2005

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Agri-Biz & Commodities - Tea

Four cos in race to buy HLL's Doom Dooma Tea

Kohinoor Mandal

Kolkata , Oct. 1

LEADING tea companies, Apeejay Surrendra Group, Dhunseri, Warren Tea and MK Shah Exports are in the fray to acquire Hindustan Lever's wholly owned subsidiary Doom Dooma Tea Co Ltd for around Rs 50-55 crore.

Sources said that the apart from these four companies one more may be in the fray.

However, the proposed deal is tilted either in favour of Apeejay Surrendra or the Dhunseri group.

The Assam-based Doom Dooma Tea Co was earlier the Tea Plantation Division (Assam) of Hindustan Lever. In April, this year, the FMCG major announced the demerger of this division. Subsequently, it was made a wholly-owned subsidiary.

The purpose of that move, as declared by HLL, was to hive it off because the company had already planned to move out of the plantation business and focus more on the marketing of tea. Sources said that the nitty-gritty of the deal is being prepared along with the selection of the partner. "Probably, within the next 10-15 days, the formal announcement will be made," sources said. Doom Dooma consists of seven tea estates in Tinsukia district of Assam. Its total plantation area is approximately 3,100 hectares. It has three tea-processing factories and the employee strength is about 6,100.

In the last three years, the division produced 17,100 tonnes of tea but incurred operating losses primarily due to adverse weather conditions, excess supply leading to low prices at the auctions and high social costs. In 2002, the Doom Dooma division reported an operating loss of Rs 6.7 crore in 2002, followed by Rs 21.9 crore in 2003 and Rs 7.6 crore in 2004.

When contacted by Business Line, the spokesperson of HLL said: "As a company policy we do not comment on speculations."

Meanwhile, representatives of two out of the four competing companies neither confirmed nor denied the report.

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