McLeod Russel India declared that it’s selling its Vietnam unit, the Phu Ben Tea Company (PBTCL) for $2.15 million.
TLK to Acquire Unit of Vietnam’s Largest Tea Producer
On Thursday, Vietnam’s largest tea producer, McLeod Russel India announced the sale of its unit, the Phu Ben Tea Company. The wholly-owned subsidiary Borelli Tea Holdings (BTHL) would sell 100% of the capital contribution in PBTCL to TLK Agriculture Joint Stock Company at $2.15 million. This is according to the stock exchange filing under the Capital Contribution Agreement executed on October 25, 2023, between BTHL, PBTCL, and TLK.
Upon sale completion, PBTCL will no longer be a BTHL subsidiary and McLeod Russel’s step-down subsidiary. The expected completion of the sale is on December 24, 2023.
Based on McLeod Russel’s yearly report for 2022-2023, Phu Ben Tea Company’s performance continues to drop. Moreover, BTHL had completely ruined its investments in PBTCL taking into account the operating losses incurred during the present and previous reporting years. This resulted in the deterioration of its whole net worth.
In 2021, PBTCL lost $4.51 million including pre-tax and post-tax. And in 2022, acquired a loss of $2.91 million, including pre-tax and post-tax.
Phu Ben Tea Company manufactures and cultivates tea. In 2021, it produced 3.24 million kilograms of tea. However, it only produced 0.63 million kilograms of tea last year, which is a 2.61 million kilogram deficit.
Focusing on Core Business
According to McLeod Russels’ annual report, PBTCL’s performance continues to decline despite measures for improvement. It embarked on tea stock monetisation and bank loan repayments. McLeod Russel, on the other hand, concentrates on debt resolution and is in talks with banks for a one-time settlement.
Selling PBTCL is one of McLeod Russel’s approaches to focus on its core business in India. The company has been dealing with financial challenges in the past years and selling non-core assets. In August, it sold 15 tea estates in Assam to an electrode paste maker, Carbon Resources at about Rs 700 crore in a deal to help pay debt.