McLeod Russel hopes to become debt-free in three years

Kolkata, July 29 : Bulk tea producer McLeod Russel India hopes to become a debt-free company in two to three years, a top company official said here Tuesday.

"We have a total debt of Rs.450 crore (Rs.4.5 billion), out of which Rs.200 crore (Rs.2 billion) has already been paid back. We expect to become a debt-free company in another two to three years," said McLeod Russel managing director Aditya Khaitan at the company's annual general meeting.

"At present, the company has a debt equity ratio of 0.5:1," he said.

McLeod Russel expects to produce 75 million kilograms of tea in the current fiscal, up from 74 million kilograms last fiscal, Khaitan said.

But he predicted there will be industry shortage of 50 million kilograms by end of this year.

"Taking into account the consumption growth, more export and slight drop in production, supply is going down," he said.

The company has sought an approval to raise their existing foreign institutional investment (FII) limit from 22 percent to 40 percent from the Foreign Investment Promotion Board (FIPB).

Khaitan said approval is expected to come through by next month.

McLeod Russel has acquired three companies in the last three years: Williamson Tea Assam from the London-based Magors in 2005, Hindustan Unilever's entire stake in the Doomdooma Tea Co the same year, and UK's Moran Holdings, which owned four gardens in Assam, in 2007.

The cost of tea has gone up by Rs.15-18 per kilogram in the first quarter of the current fiscal from what reigned in the corresponding quarter last fiscal, he said.

McLeod Russel posted a net profit Rs.472.1 million last fiscal, compared to Rs.474.7 million the year before.

--IANS