The company is on an acquisition drive as it buying 60% shares in a tea garden in Rwanda in the coming weeks along with taking over a tea factory in Makum, Tinsukia in Assam beginning next fiscal year.
DP Maheshwari, the managing director of Jay Shree Tea & Industries said, "This year has been good for the tea industry and we are excited on the first major diversification into the agro-commodity field."
MP Chini Industries has a capacity of 4600-tonne crush per day and a power generation capacity of six mega watts. The sugar producing unit located in West Champaran in Bihar.
It has shown good performance with capacity utilization of over 95% in 2006-07 along with base recovery rate of 9% over the past four years. It is expected to earn a profit of Rs 26 crore this fiscal.
The location of the factory is at a large distance from the sea port in Kolkata and thus it is difficult to export sugar or import raw sugar for processing for the unit. The sugar industry in the state of Bihar is expected to grow in the near future. According to some estimates, private players have already invested Rs 4,600 crore in the last one year.
At the agreed price, Jay Shree Tea & Industries will pay close to one-and-a-half times the revenues of the company.
Jay Shree Tea & Industries stock has gained over 270% in the past year which is much greater than the gain made by the benchmark index. However, after the announcement of the acquisition the stocks fell 8% on Monday.