INDIA – Williamson Magor Group (WMG) companies Eveready Industries India and McLeod Russel on Friday entered into a ‘share purchase cum shareholders agreement’ to jointly manage the group’s packet tea business.
The group plans to trasnform EIIL’s wholly owned subsidiary Greendale India Ltd (GIL) into a 50:50 JV with both EIIL and McLeod Russel holding 50% shares each.
As per the agreement, McLeod Russel will acquire 50 % stake in GIL.
Presently, EIIL holds 50,000 equity shares of Rs 10 each in this subsidiary.
Incorporated in May 2011, GIL has a paid-up capital of Rs 5 lakh with an authorised capital of Rs 20 lakh.
The battery major will also be entering into an asset transfer and assignment agreement with GIL for transfer of the relevant trademarks valued at Rs 20 crore and other identified assets which might be related to the tea retailing business, the company media statement stated.
While EIIL had kept its focus on batteries and flashlights, its tea retail division, which owns a few brands, couldn’t be used optimally, resulting in the under-utilisation of assets as well as the brand value of the packet tea.
The battery major, hence, was on the lookout for a partner which can not only invest in reviving GIL by pumping in capital, but also take the brand forward.
On the other hand, group company McLeod Russel, which so far, has been a pure plantation company, was on the lookout to enter the tea retail business.
Both these companies had entered into a preliminary agreement to revive the group’s retail tea business.
“We have the strength in distribution and McLeod Russel has the expertise in production. It was thus a natural alliance”, EIIL’s managing director, Amritanshu Khaitan said.
On Friday, EIIL’s board finally decided to give a green signal to the agreement, before it takes its final shape.
Industry estimates suggest the packet tea market in India to be worth around Rs 10,000 crore.