UAE group takes control of Assam Co, the oldest tea company

BR Shetty group of UAE, which has a strong presence in India, has taken control of country’s oldest tea planter, Assam Co, through the insolvency process by infusion of initial capital of Rs 600 crore in cash.

But hurdles remain for the new owner that has investments like UAE Exchange, Remit2India and Narayana Hospital.

Market regulator Securities and Exchange Board of India has objected to the delisting proposal as approved in the resolution plan claiming Assam Co is under investigation for being a shell company.

The case in now being heard at National Company Law Appellate Tribunal (NCLAT) and hearing is continuing.

In absence of clearance for the delisting proposal, the resolution scheme is now being implemented without this aspect of the plan, and only the promoters’ shares are being extinguished with the infusion of Rs 600 crore of upfront payment.

The Income Tax Department, meanwhile, has been asked by NCLAT to approach the company with outstanding tax demand after rejecting plea of tax authorities to stall the insolvency process.

“Pursuant to the (resolution) plan, the successful resolution applicant has taken control the affairs of the company and also made payment of the first tranche amount to Rs 600 crore,” the company said, adding that the entire promoters’ capital of 12.78 crore shares would now get extinguished as per the resolution plan.

The extinguishment of shares of public shareholders would have to wait till the decision on the case filed by Sebi with NCLAT, which has given an interim order to hold back the delisting, and the next hearing has been fixed for December 11.

As part of its clampdown on an initial list of 331 alleged shell companies in 2017, the market regulator in December that year ordered forensic audit of the books of Assam Co.

During the earlier hearings, Sebi deposed before NCLAT that “an investigation is underway and it has passed an interim order on December 8, 2017, directing appointment of an independent forensic auditor to verify financial irregularities and misuse of funds”.

Even as Assam Co awaits the order on delisting plan, the I-T Department is likely to knock its doors with a Rs 2.30 crore demand for dues for the period 2005-09.

The resolution marks the exit of the UK-based Jajodias and entry of BRS Group of Abu Dhabi, a powerful conglomerate of UAE as the new promoters of Assam Co, which was set up in 1839 by a royal charter of Queen Victoria to introduce tea plantation in India.