McLeod Russel Accelerates Debt Reduction with Assam Tea Estate Sales

In a decisive move toward financial recovery, McLeod Russel India has approved the sale of three tea estates in Assam as part of its ongoing debt restructuring plan.

NARCL-backed restructuring gains traction as company monetises assets to stabilise finances

In a decisive move toward financial recovery, McLeod Russel India has approved the sale of three tea estates in Assam as part of its ongoing debt restructuring plan. The transactions are aligned with a resolution framework supported by National Asset Reconstruction Company Limited (NARCL), marking a significant milestone in resolving the company’s long-standing debt challenges.

Strategic Asset Monetisation Underway

The company’s board has cleared the execution of Memoranda of Understanding (MoUs) with prospective buyers to facilitate partial repayment of debt.

Deal Breakdown:

Nya Gogra Tea Estate to Bengal Tea & Fabrics Limited for ₹44.79 crore
Rupajuli Tea Estate to Khona Tea Estate LLP for ₹16.76 crore
Boroi Tea Estate to Jatinga Agro-Tech for ₹27.30 crore

The deals remain subject to regulatory approvals and due diligence but signal a clear intent to unlock value from non-core or underperforming assets.

Timely Execution Ahead of Peak Season

Management is aiming to complete the transactions before the tea production season intensifies, when operational complexity and valuation challenges increase. Early closure is expected to streamline the process and improve execution certainty.

NARCL Deal: Turning Point After Years of Stalemate

The asset sale follows the company’s acceptance of a restructuring proposal from National Asset Reconstruction Company Limited on April 9—effectively ending an eight-year-long deadlock in debt resolution.

Key Elements of the Restructuring Plan:

₹1,050 crore identified as sustainable debt, repayable by February 2029
NARCL to acquire 10% equity stake through conversion of unsustainable debt
Promoter shareholding to be pledged as part of the agreement
Detailed repayment roadmap expected by May-end

NARCL currently represents over 75% of lender exposure, strengthening its influence over restructuring decisions.

Multiple Levers for Balance Sheet Repair

In addition to tea estate sales, McLeod Russel India is exploring several avenues to reduce leverage:

Promoter capital infusion
Rights issue to raise fresh equity
Induction of a strategic investor

The company is also in discussions with lenders such as IndusInd Bank and JC Flowers ARC for broader restructuring alignment.

Operational Footprint Remains Strong

Despite financial challenges, the company maintains a significant presence in the tea industry:

33 tea gardens in India (31 in Assam, 2 in West Bengal)
6 estates in Uganda

This extensive footprint continues to provide operational scale and long-term growth potential.

Background: From Expansion to Debt Stress

The company’s financial troubles date back to 2018, when it accumulated debt while supporting group entity McNally Bharat Engineering. Since then, it has taken several corrective steps:

Raised nearly ₹800 crore through sale of ~18 tea gardens (FY19–FY20)
Divested international operations in Rwanda and Vietnam
Continued efforts to streamline operations and reduce liabilities