Congo venture for tea major
MK Shah Exports Ltd, which has 12 tea gardens in Assam and Bengal, has become the first Indian company to buy gardens in the Democratic Republic of Congo in Africa.
The company, through its African subsidiary — Great Lakes Plantations — has bought M’bayo and Madaga tea estates in Congo recently.
“We are the first Indian company to enter the Congo. The acquisition includes 1,500 hectares of land, as well as two tea-manufacturing factories. The area includes a tea plantation, timber plantation and cinchona tree plantation, from the bark of which the anti-malarial drug quinine is extracted,” Jaydeep H. Shah, the director of Great Lakes Plantations — the African unit of MK Shah Exports Ltd — told The Telegraph.
Both the properties are in Bukavu, which is only 35km from neighbouring Rwanda. This is the company’s first acquisition in Africa.
MK Shah Exports Ltd, which started as a tea-trading firm, carried out backward integration by way of purchase of tea estates in Assam.
Shah said Congo offers much better soil and climatic conditions for the manufacture of high quality tea leaf than Uganda.
“Rwanda has many government controls/regulations, which plantations owners need to adhere to whereas in Congo these regulations are far less stringent,” he said.
A Belgian company originally planted the estates and before the purchase, a local company owned it.
“The purchase was taken care of by our internal accruals. We continue to remain a debt-free company,” he said.
He said with this acquisition, MK Shah Exports Ltd consolidates its position as India’s largest orthodox tea manufacturer.
“The foray into Africa helps us to diversify our base as well as our offerings to our clients. We can now provide top class CTC and orthodox teas to our clients abroad,” he said.
Of late, a couple of Indian companies have bought gardens in Africa.
“Africa has many inherent advantages such as an abundant supply of manpower, good terrain and climatic conditions, a relatively stable cropping pattern when compared to that of India — all of which makes it an attractive destination to invest in. However, one thing is certain for us as far as making any investment decision is concerned — we invest only in quality properties,” he said.
The company produces 13 million kg from its gardens in India and the crop from the two new gardens in Africa will be 3.5 million kg.
“Our estate is just across the Rwandan border and thus, shares most of the characteristics of Rwandan teas. Being situated at approximately 6,000 to 6,200 feet above sea level ensures that the teas manufactured there posses a unique flavour and aroma,” he said.
Production has started and a team of managers who were earlier stationed at plantations in Assam are looking after the property.
“There are multiple villages surrounding the periphery of our property from where our workers come,” he said.
On the mode of selling its teas from Africa, he said the plan is to sell privately to its customers in Europe and US.
“A part of these may be sold at Mombassa auctions,” he added.