McLeod Russel lenders meet tomorrow

McLeod Russel’s lenders are meeting to decide on the fate of the company’s debt resolution on Friday, people aware of the matter said.
The Kolkata-based company that once ranked amongst the largest tea producers in the world owes some ₹4,000 crore, including interest, to lenders.

It has been unable to repay the dues due to intra-group issues. The company belongs to the Brij Mohan Khaitan family that also owns cell-maker Eveready and engineering company McNally Bharat.

“There are two options on the table. There is a resolution proposed by the promoters. The other option is to continue to push for admission into bankruptcy proceedings,” an executive aware of the matter said.

In FY20, the company had posted a net profit of ₹12 crore on sales of ₹950 crore.

The group of lenders includes a combination of private and public-sector banks, such as Axis Bank, UCO Bank, Allahabad Bank, Indusind Bank and ICICI Bank.

McLeod Russel managing director Aditya Khaitan was unavailable for comment. He had taken over reins of the company from his father in April 2019. Yes Bank had filed for bankruptcy proceedings against McLeod Russel two years ago, but held back because the promoters proposed a resolution. The lenders then decided to engage SBI Caps to work on a resolution plan.

The Khaitan family’s business interests are housed in the Williamson Magor Group, a sort of holding company that traces its roots back to the mid-19th century. The holding company owns shares in various group entities.

The Khaitans have roped in the Burman family of Dabur group to rescue Eveready after their holding fell due to shares pledged with lenders.

McLeod Russel operates in the UK, Vietnam and the Middle East, apart from India.

McLeod Russel produced 419 lakh kg of tea in the financial year 2019-20. This was after its production was hit by almost 40 per cent compared to the previous year due to an abnormal rainfall pattern.

It sold assets of 14 tea estates in Assam as part of a monetisation plan in the past 12 months. The company at one point owned more than 45 tea estates.

Nearly 60,000 tea plantation workers are associated with the company. They had lodged an application at National Company Law Tribunal to block insolvency proceedings. However, that application has been rejected.