India's Largest Tea Producer McLeod Russel Faces Bankruptcy, A BIG Blow to Assam's Tea Industry

GUWAHATI: In what could be termed as doomsday for the Assam Tea Industry as India's largest bulk tea producer McLeod Russel India Ltd (MRIL) is facing bankruptcy.

According to reports, the National Company Law Tribunal (NCLT), New Delhi Bench, on Friday, admitted an application for initiating a corporate insolvency resolution process (CIRP) against McLeod Russel India, the largest bulk tea producer in the country.

Notably, MRIL- the company promoted by the Khaitan family of Calcutta, operates 31 tea gardens in Assam and two gardens in Alipurduar, Bengal. Further, it has gardens in Africa and Vietnam. The company employs over 73,000 people across tea estates and produces about 73 million kg of tea every year.

In a stock exchange filing, the company said that an application had been filed by Techno Electric & Engineering Company against it before the NCLT under Section 7 of the Insolvency and Bankruptcy Code (IBC), and the matter was admitted in an order dated August 6, 2021. By the order, Kanchan Dutta had been appointed as the interim resolution professional (IRP) under the provisions of the IBC, the filing mentioned.

The trigger for the application by Techno was a loan agreement with McLeod that dates back to 2018.

Further, Techno's is not the only application to be filed against McLeod under IBC. A bank had also filed an application earlier.

McLeod further ran into a debt of nearly Rs 2,000 crore as it extended support to a group company, McNally Bharat Engineering. To pare debt, the company sold a clutch of tea gardens after a board decision in May 2018.

It is to be mentioned here that, between the year ending March 31, 2019, and March 31, 2020, McLeod disposed of about 17 estates for around Rs 764 crore. In the process, it lost its crown as the world's largest tea producer.

Earlier, Mcleod Russel sold three more gardens in Assam as the debt-ridden company disposed of altogether of 12 tea estates in Assam.

The gardens are Mahakali, Addabarie, and Diroi were sold at an approximate price of Rs 150 crores to Luxmi Tea company limited. The Mahakali garden is also located in upper Assam, in the Tinsukia district, where on average 1.3 million kg of tea is produced from its own leaf.

McLeod Russel has been pruning down gardens to help lower its debt and enhance investments in some of its existing gardens as well as channelizing it towards the packet tea business, where it currently has a small presence.

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