Billion Dollar Abu Dhabi Debt Imbroglio Might have Massive Impact on Assam Tea Industry
GUWAHATI: NMC Healthcare is the largest private sector health service provider in the UAE, and has 194 medical facilities across 19 countries. Recently, the company, which is listed on the London Stock Exchange, has been placed under the supervision of a United Kingdom court.
This came as a reaction to an appeal filed by Abu Dhabi Commercial Bank (ADCB), Dubai against the health giants against a debt of 6.6 billion dollars. And the ADCB is only one of the 80 major regional and international financial institutions that had extended credit to the NMC Group.
The financial crisis came to light after NMC uncovered over four billion dollars of its previously undisclosed debts amid other announcements in February this year.
The India angle
Indian-born billionaire businessman, Bavaguthu Raghuram Shetty is the founder of NMC Health and also the UAE Exchange House. Both these entities are now under investigation. Reportedly, ADCB has filed a criminal complaint against BR Shetty and five others.
After the allegations against NMC Health came to light and the company went into administration due to its insolvency, Shetty had to resign from his position as Director. Allegedly, due to sharp drop in prices at which the former director had to pledge his shares for the debt incurred, it is said that his net worth had fallen significantly from the earlier estimate of 3.5 billion dollars.
Fearing legal procedure the founding member has reportedly absconded from the UAE and is currently residing in India.
How does the Middle East scam impact Assam?
On 18th October 2018, BR Shetty’s BRS Investment bought the then 179-year old Assam Company (India) Limited (ACIL), at more than Rs 700 crores after an extended period of financial uncertainty for the tea grower. The bid was significantly higher than the next highest bid of around Rs 500 crores. Even then, many eyebrows were raised at the significantly high difference in the bidding amount.
The Assam Company (India) Limited is engaged in tea plantation, oil and gas exploration as well as in infrastructure development. In Assam, apart from exploring the discovered oil fields, the company operates the original Assam Tea company.
The Assam Tea Company was founded on 12th February, 1839 by Dwarakanath Tagore, grandfather of noble laureate, Rabindranath Tagore, and it is the world’s first tea company.
The ACIL now operates all 15 tea estates of the original company which expands across 14,000 hectares of land in Assam. It also has 14 state-of–the-art factories, and the current market value of its tea segment is reportedly Rs 3,210 million.
In October 2019, BR Shetty unveiled plans to shift the tea company’s office to Barbaruah, Dibrugarh and to introduce Artificial Intelligence, Big Data and blockchain to help increase the output of the company’s tea production five-fold. He set a target of 50 million kilograms of tea within the next five years.
However, given his involvement in the billion dollar imbroglio and the subsequent significant deduction in his net worth, the tea sector of Assam is speculating about its impact on the Assam Tea Company.
Sources inside the industry told to G Plus that members of the various tea associations had been thinking upon the matter but are not yet sure of the circumstances. However, if Shetty gets arrested or any untoward situation occurs, it might impact his tea gardens in the state. Until then nothing can be commented.
G Plus has been reporting about the downfall and losses of the great tea sector of Assam for the last two years.
Given the scenario, it can only be imagined for now what lies in hand for the recently revived 180 year old tea company that not just contributes a significant percentage to the state’s tea production (given its large tea estates) but also employs around 32,000 workers.
Tea industry facing steep losses due to 21-day lockdown
G Plus has earlier reported that the tea sector of Assam might incur large losses given the extended lockdown period. After the initial phase of the nationwide lockdown of 21 days, the tea gardens have been permitted to resume operations with 50 percent of the workforce and following COVID-19 protocols.
G Plus tried to enquire about the actual amount of losses during this period. It has to be mentioned that the main flushing season of the gardens starts from March. As such the first flush was under way when the lockdown happened, and the second flush is about to start soon.
The manufacturing of tea is a continuous process and the best produce that is usually exported is of the season. However, due to the lockdown and as the industry was not exempted gardens could not pluck the buds or further process them as required.
Dipanjol Deka said, “The gardens producing the best and high quality products have suffered the most. Although overall analysis has not yet been done, we have calculated a loss of 25 to 30 percent of the year’s produce for these gardens.”
The comparison is made with the losses incurred by these estates when bandhs are called by associations for around two weeks under normal circumstances. A two-week closure in operation leads to losses of 15 to 20 percent. As such, three week lockdown losses would be even higher.
“But there are many small gardens which do not have any permanent workforce. They are dependent on daily wage ‘coolies’ and do not care much about quality issues. These gardens have been reportedly operating in spite of lockdown and have stocked their flushes. They are also ready with the skiffing process for the second flush. For them the losses might be none to a maximum of 7 percent,” added Deka.
It has to be mentioned that the major issue faced by the tea industry in this crisis is not the losses in production but the non-availability of finance as the products could not be auctioned or sold due to the sudden lockdown.
Even after the auction centres are permitted to operate after 20th April, officials worry about the sale of tea due to non-availability of transportation and couriers services. Samples of the products are usually couriered to the buyers before they are auctioned. Without the sampling process, the auction centre either needs to wait further or find other means to monetize the products.
- Tea industry of Assam
- NMC Healthcare
- Abu Dhabi
- Abu Dhabi Commercial Bank (ADCB)
- Middle East scam
- Assam Company (India) Limited (ACIL)