INDIA – Tata Global Beverages, multinational non-alcoholic beverages company in India has agreed to acquire the branded tea business of Dhunseri Tea & Industries Ltd (TGBL) for US$14.45 million (₹101 crore).
Economic Times reports that the transaction includes Dhunseri’s brands ‘Lal Ghora’ and ‘Kala Ghora’ in an all-cash deal.
According to people familiar with the matter, the deal does not however, include Dhunseri Tea’s smaller brands ‘Chhote Lal’ and ‘Dhunseri Gold’, since the two brands have no commercial value.
In a notification to the stock exchanges, TGBL said the move is in line with its ambition to grow its branded tea business in India.
The proposed acquisition is subject to due diligence, the signing of definitive binding agreements and applicable shareholder, statutory or regulatory and other third-party approvals.
“Both my brands are strong and can easily grow into a 300-crore brand with TGBL’s marketing and distribution strength,” said CK Dhanuka, the owner of Dhunseri Tea & Industries to ET.
Dhunseri Tea operates in the branded tea business under the Lalghoda and Kalaghoda brands, which are some of the leading local brands in Rajasthan.
According to CK Dhanuka, the company’s branded tea business accounted for nearly ₹70 crore (US$10.01 million) of its overall turnover of ₹177 crore (US$25.33 million) as of March 2018.
In a statement to Business Line, Dhanuka noted that the company looks to focus on scaling up its plantation business.
“It is difficult to grow the packaged tea business, so we are looking to exit it. The idea is to concentrate more on plantation,” said Dhanuka.
According to one of the persons cited earlier, Dhanuka had entered into a “non-binding term sheet” with TGBL as he wanted to exit from the branded packet tea business, not having achieved his ambition of turning them into a Rs 300-crore (US$42.94 million) brand.
Kolkata-based Dhanuka has been in the branded packet tea business for 27 years and is a dominant player in Rajasthan.
For the quarter ended March 31, 2019, TGBL’s consolidated revenue from operations is said to have grown nearly 5% to US$251.21 million (₹1,755 crore), compared to US$241.62 million (₹1,688 crore) in the same period last year.
