The Zambia Privatization Agency (ZPA) is pleased to announce that the Minister of Finance Honourable R D S Penza has signed the Sales Agreement with Metal Distributors (UK) Limited and Hemant Jalan for the sale of 100% shares in Kawambwa Tea Company Limited.
Tea production in Kawambwa began in 1964 as a Government sponsored project which indicated that production was feasible in that area. Large scale production started in 1968 and Kawambwa Tea Company Limited was incorporated in 1974 as a wholly owned state enterprise.
The tea estates are situated 27 km from Kawambwa on the Mporokoso Road in the Luapula Province. It covers a total area of 2,671 hectares of which 507 hectares are cleared for tea production.
The Members of the Agency and Cabinet had approved that KTC be sold on a competitive bid basis.
Kawambwa Tea Company Limited was extensively advertised for sale in two instances. The first advertisement received four bids from Management Buy-Out Team, Metal Distributors (UK) Limited and Hemant Jalan, Zambezi Paper Mills and Uneximp Limited.
The ZPA Secretariat evaluated and rejected the bids from Management Buy-Out Team and Zambezi Paper Mills. Negotiations were commenced with Metal Distributors (UK) Limited and Hemant Jalan, and Uneximp Limited but failed.
The second advertisement received a response of five bids from Management Buy-Out Team et al, Metal Distributors (UK) Limited and Hemant Jalan, Bwendo Mulengela et al, Sandy P. Mwila, and African Plantations Corporation.
The ZPA Secretariat evaluated and rejected the bids from Management Buy-Out Team et al and African Plantations Corporation. Negotiations were carried out with the top three bidders, Metal Distributors (UK) Limited and Hemant Jalan, Bwendo Mulengela et al, and Sandy P. Mwila. Negotiations were successfully concluded with Metal Distributors (UK) Limited and Hemant Jalan.
Metal Distributors (UK) Limited is based in the United Kingdom and is involved in a variety of business activities including buying and selling of non-ferrous metals, mineral, ores and concentrates. Metal Distributors (UK) Ltd is a unit of the Binani group of Companies which comprise the following other units:-
Binani Metals - trading in metals and indenting on non-ferrous metals based in India
Binani Zinc - involved in the manufacture of electrolytic zinc, and now in cement and glass fibre.
Mr Hemant Jalan is a Director of Dooars Plantations (Tea) Limited of Calcutta, India, a subsidiary of the Warren Group of Companies. Warren Group owns 13 tea estates in upper Assam (India).
The Group was established as far back as in 1850, and today the Assam tea estates are among the best managed and quality tea yielding plantations in the world. The Group's 13 tea factories are managed by Warren Industries Limited, which was initially formed to undertake an expansion and modernisation programme of Warren's tea estates, under the constant and expert supervision of the group's professionals.
The Industrial unit of the Group has now emerged as the quality manufacturers in tea machinery to other tea estates. The Group also provides technical services to the tea industry from the concept to its implementation, including supply, installation and complete execution of tea factories on turn-key basis. The services of the group are available at an international competitive level, and successful tea factory installations include factories at Sri Lanka, Vietnam, and Uzbekistan.
Metal Distributors (UK) Limited and Hemant Jalan have purchased 100% of the shares in Kawambwa Tea Company Limited for a total consideration of K4.660 billion. This consideration comprises:
| K'000 | |
|---|---|
| Cash payment for the 100% shares | 400,000 |
| Capital expenditure investments over 6 years | 3,800,000 |
| Total liabilities taken over | 460,000 |
| Total investment package | 4,660,000 |
30% on signing the sale agreement and the balance on completion within ninety days.
Metal Distributors (UK) Limited and Hemant Jalan have undertaken that there will be no major redundancies as a direct result of this privatization and that they will implement a manpower policy that will ensure that employee development programmes are put in place as stated in the business plan.
The transaction was negotiated by an independent negotiating team composed of Mr Charles Sichangwa as the team Chairman and Mr Elias Chipimo Jr as the team Lawyer, both individuals of high integrity appointed by the ZPA Board.
The acquisition by Metal Distributors (UK) Limited and Hemant Jalan, of Kawambwa Tea Company Limited, is yet another demonstration of continued growth of foreign investor interest in Zambia and such foreign investment is expected to boost Zambia's competitive edge on the international markets and thus enhance exports and foreign exchange earnings potential.
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