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Jayanta Mallick

Kolkata , Sept. 15

ASSAM Company Ltd, the nation's first tea company which was now on the threshold of major restructuring, is moving steadily upward on the bourses. Today, as the shareholders of the company at an EGM at Guwahati approved the proposal of stock split, the stock closed with a gain of 2.57 per cent at Rs 279.60 on the BSE.

The broad restructuring proposals entail transferring its fledgling oil and gas division to a separate group company through de-merger and consolidation of tea business by way of amalgamation of a subsidiary with it.

Mr Abhay Chawdhry, CFO of Assam Co told Business Line that the stock split (from Rs 10 each to Re 1 each) and reclassification of authorised capital is the first step in the restructuring exercise. "PricewaterhouseCoopers has been assigned to do the enterprise valuation of the tea and oil & gas businesses separately. The report is expected by the end of September. After that we would place the merger and de-merger schemes before the Guwahati High Court simultaneously for approval".

Regarding the tea subsidiary, he said the profit-making company has about 400 hectares of plantation land in Assam, half of which is currently in use. The consolidated net revenue from tea business was Rs 111.90 crore and net profit was Rs 2.50 crore in 2004.

The oil and gas business would start generating revenues from the third quarter of 2006. Canoro Resources, the company's Canadian partner in exploration and drilling in the development block of Amaguri, and exploration block, AA/ON7, estimated Assam Co's share of recoverable (over next 25 years) oil and gas reserves is around Rs 16,418.80 crore. The company also has obtained three marginal oilfields in Assam from ONGC under service contracts.

Mr Chawdhry said the operation in these three fields was expected to begin in the fourth quarter of 2006. He said the oil and gas business would require around Rs 500 crore in the next three years from the group. As of now, it has invested around Rs 25 crore, out of which Rs 19 crore was through borrowings from Allahabad Bank and the rest from internal accruals. "Now we would take a fresh look at the possibility of raising loan and equity fund for the oil business", he added.

According to Fortis Securities, the oil and gas business may see exponential growth in view of strong demand and higher price levels.

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