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At CMP of 140, the co is trading at a Market Cap of about 255 Cr. Now first lets look at

the assets of the company:

Harrisons Malayalam Limited (HML) has huge tea and rubber plantations spanningacross 23,417 hectares i.e.. approx 57,800 acres. HML is the single largest producer of

Rubber in the country with 18,300 acres under cultivation. It is also the largest growerof tea in South India having plantations spread across 15,000 acres. It is also one of thelargest farmer of Pineapples in the region. Over the last few years, the company hasalso been a major processor of other agricultural produce from neighbouring

farmlands.

HML through its 100% subsidiary Harrison Financial, holds investments worth more

than 225 Cr of group companies like CES, KEC International, Ceat etc.

HML also has a small projects division. They won a 50 Cr KRCTC contract in January,

2010.

Though in the past the company hasnt created value and has had a slow growth, but

things seem to be changing and major positives are there for the company.

1. All time high Rubber prices:

The rubber prices have risen from about Rs 90/Kg to Rs 180/Kg.

2. Tea prices have been firming over last several months.

3. Management focussing on growth:

There was an article in Business Today magazine on HML, titled Entering unchartered

waters. As per the article, the company is doing the following to improve theperformance:

a. Moving away from selling produce as a commodity. HML is trying to sell branded

tea rather than selling it in auctions.

b. Upping land productivity (through re-planting old tea bushes and rubber trees with newhigh-yielding varieties and inter-cropping pineapples, bananas and other crops with

rubber).

c. Upping labour productivity. (Mechanisation has increased to 50% in 2009 from 20% in

2008).

4. Demerger to unlock value:

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HML had announced the demerger plans on 29th January, 2010. As per the details, the

company is demerging the investment undertaking into Sentil Tea & Exports Ltd

(STEL). The shareholder of HML will receive new shares of STEL in the ratio of 1:1.

The investments are worth 225 Cr+ and the equity capital of the new company would be

18.46 Cr. Even if STEL lists at 50% discount to value of investments, the listing pricewould be Rs 60+.

If one is to consider the replacement value of the huge plantations HML has, the value isunbelievable. Such huge assets cant be created again. At such low Market Cap, the

potential is huge.

: Harrisons Malayalam

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