ISSN: 1391 - 0531
Sunday, October 15, 2006
Vol. 41 - No 20
Financial Times

Tata Tea may divest stake in Sri Lankan plantation

The Tata Tea is trying to relinquish its 50 percent stake in Estate Management Services Limited which owns Watawala Plantations Ltd in keeping with the Indian giant’s policy to move away from plantation holdings globally.

“However they will concentrate more on their brands and our joint venture with Tata Tea of India in the brands category will continue,” G. Sathasivam, Chairman Watawala Plantations Limited told The Sunday Times FT.

“Watawala is not being sold. What is considered for sale by Tata is Estate Management Services Private Limited (EMSPL) owned 50 percent each by Sunshine Holidays and Tata Tea of India. Tata is considering selling their holding and the due diligence of this process will begin soon,” he further explained. Tata had invested in Sri Lanka through a joint venture with Watawala Plantations, which sells Ceylon tea under the brand names of Zesta and Watawala.

Richard Pieris and Company, amidst wide speculation that the company may be keen, is not interested in the EMSPL stake because the ‘price is not right’, a company source said.

Tea industry players are speculating that the buyer could be either James Finlays or Watawala’s next largest shareholder Mouldex Ltd which has a 20.26 percent stake.

Despite market rumours that Sunshine Holdings will buy Tata’s 50 percent, Watawala company sources said that it is not possible due to restrictions in the joint venture that the two companies have entered into.

Watawala Plantations is spread over an area of 12,442.13 ha (hectares) out of which 41 percent is tea, 18 percent is rubber and eight percent is under palm oil cultivation.

Last year, Tata’s sold its Indian plantations by transferring tea estates to an employee-owned private company.

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Copyright 2006 Wijeya Newspapers Ltd.Colombo. Sri Lanka.