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Kanan Devan eyes Ethiopia to grow tea

August 28, 2007 11:20 IST

In a giant move, the Kanan Devan Hills Plantations company has decided to invest Rs 375 crore (Rs 3.75 billion) in Ethiopia to develop 10,000 hectares of tea plantation.

KDHP officials said while the new project would have a 70:30 debt equity ratio, some foreign private equity companies have shown interest to participate in the venture.

The participation of Tata Tea, which already holds 20 per cent equity in KDHP, would also be sought.

The debt component would be raised from Ethiopian banks, which have shown interest in the project.

The project was initiated after Ethiopian ambassador visited the tea plantations of KDHP in Munnar, which are among the largest participatory management projects in the world, and asked company officials to explore the possibilities of setting up a similar project in Ethiopia, a traditional coffee country.

A team from KDHP surveyed several potential sites before identifying 10,000 hectares of land in the South Western Oromiya district of Ethiopia for the project.

The aerial survey of the land had been completed and reached KDHP just couple of days back, along with queries on the employment and economic generation potential of the project.

According to KDHP officials, the project would create direct employment for close to 10,000 people and accelerate export and economic development of the region.

The land, which is given on 90-year lease, will command a very nominal rent.

With the nominal rent and low cost of labour, the project should be able to produce 25 million kg of high quality CTC and orthodox teas in 10 years.

Since the country has no history of tea plantations, workers from India will train Ethiopian workers. The suitability of the land is testified by the proximity to Kenya and Tanzania, which are traditional tea growing countries.

The company is in the process of preparing a detailed project report.
Commodity Online