In the late summer of 1873, coffee merchants and plantation owners Patrick Grant, John Grant and John Fraser, travelled to Inverness to meet with Colonel Hugh Inglis, a director of the Caledonian Bank, Charles Waterston, the Manager of the Caledonian, and Charles Stewart, the senior partner in a firm of Inverness solicitors, to discuss the possibility of establishing a joint stock company. Their intention was to transfer ownership of their properties in Travancore, southern India, to a newly formed limited liability company. An agreement was ultimately reached between these men, which outlined the formation of the company. According to the agreement dated 20 August and 8 September, Inglis and his partners agreed to purchase the coffee plantations and estates belonging to Messrs Patrick Grant and Co. for the sum of £81,500. Grant and Co., in turn, would transfer these funds to a company registered under limited liability. It was further agreed that the coffee produced on the estates would be consigned to the firm of Messrs Patrick Grant and Co. to be sold by them on behalf of the new company for a period of ten years at a commission of 2½%, and that John Grant and John Fraser were to be appointed managers with authority to purchase property and borrow funds on behalf of the company. The new company was to be called the Scottish Indian Coffee Company Limited. Its first directors were to be Patrick Grant, Hugh Inglis, Charles Stewart and Charles Waterston. Ownership of the Indian estates was to be officially transferred to the new company as of 30 June 1874, with Grant and Co. running the estates at their own expense until that time.
The first recorded meeting of the Scottish Indian Coffee Company was subsequently held on 8 September 1873. Present were the directors Inglis, Waterston and Stewart, and the managers John Grant and John Fraser. At this first meeting, it was resolved that Colonel Inglis should be appointed Chairman, that the company should be registered as a limited liability company, and that articles of association be prepared. The Scottish Indian Coffee Company Limited was duly registered on 12 November 1873, with its head office located at 1 Bank Lane, Inverness. However, the early directors' meetings were generally held at the Caledonian Bank's head office.
The early business of the company focussed on the selling of stock and the purchase of coffee estates in India. The company's capital stock of £120,000 was to be divided into 1,200 shares of £100 each, and by the end of November there were already 27 shareholders holding some 920 shares. Indeed, the shares were eagerly taken up despite the fact that the company did not issue a prospectus. By the time of the first General Meeting, held on 5 March 1874 at the Station Hotel in Inverness, 1,110 shares had been allotted, while the total amount called up in the first year amounted to £16,880.
At the next directors' meeting John Grant was authorised to purchase some 10,000 acres of forest and cultivated land in the Ashamboo Hills, Travancore, southern India on behalf of the company. Acting as purchasing agent in India, John Fraser acquired several established coffee estates from Thomas and W.B. Millar over the course of the next several months. An estate at Travancore, already in coffee cultivation, was purchased for £26,500, a part ownership in the coffee curing works, lands and buildings at Colachel [Kolachel] was bought for £500, as were the estates of Eglinton (£6,500) Kilburnie (£6,500) Glenlee ($4,500) Grangevale (£1,600) and Hillside (£7,000). These estates were in addition to the properties already owned by Grant and Co. which had been transferred to the ownership of the Scottish Indian Coffee Company in 1873, namely: Mahendragherry, Great Valley & Ponanputta, Belford, Athreemallay, Cottoon and Glenbrittle. By 1877, a total of £150,500 had been expended on the purchase of lands and estates.
While a limited number of additional shares were sold to offset these expenses, the balance of payment for this property was to be met by securing a loan from the Caledonian Bank. An agreement had been reached in January 1874, whereby the Caledonian agreed to loan the company money for land purchases. The company also applied for a £20,000 cash account in early December 1874. At the first Annual General Meeting, held 28 October 1875, the shareholders further empowered the directors to borrow up to £25,000.
The new company, however, did not get off to a good start. Drought and leaf-disease greatly reduced productivity, and the returns on crops for 1874 to 1877 were disappointing. Nor was this lack of profitability entirely the result of natural causes. An enquiry launched in 1877 into the disappointing returns concluded that several of the coffee 'estates' were little more than uncultivated jungle at the time of purchase in 1873, and that Patrick Grant and his associates has misled their partners as to the actual amount of land under coffee cultivation, greatly over-estimating the potential coffee harvest. While Grant and Co. had predicted returns of 5,500 cwt per annum, actual returns for 1875 through 1877 were 2,281 cwt, 1,664 cwt, and 2,586 cwt respectively. Profits which had been forecast as high as £11,000 per annum - estimates which were no doubt responsible for the rapid taking up of shares in the company - were far less: £4,178 for 1875, and £2,385 for 1876. Profits for 1877 were only £1,274, and that year saw 5 estates worked at a considerable loss. In other words, over the first three years of operation, the estates realised fully less than one quarter of their expected profitability. Indeed, the company never did manage to become a profitable venture, and shareholders never received any returns on their investments.
Adding to the company's woes, John Grant became ill in the autumn of 1874, and died en route home at Mentone on 11 April 1875. John Fraser was appointed sole Manager in his place, a position he held until autumn 1876 when his cousin, James Grant, succeeded him.
By 1879, the debt owed by the company to the Caledonian Bank exceeded £45,000, and though the issue of 12% debentures in February 1881 managed to reduce this by some £28,000, fresh advances made to 'keep the company from collapsing' soon raised the debt to former levels. In 1883 the company drastically reduced staff numbers, and by this time it had become clear that coffee production was doomed. Following the example of estates in Ceylon, a shift towards tea production was initiated. To this end, the Comorin Tea Company was established as a subsidiary, though in a few short years this company had failed. Other crops such as cinchona and cocoa were also experimented with, though with little success.
In 1896, falling tea prices resulted in an inability to pay the wages at the Senekali estate which, as a result, was abandoned. This loss spelled the end for the Scottish Indian Coffee Company and it prepared to go into liquidation. In his review of the company's history, prepared at the request of the Caledonian Bank's Manager, the former Secretary, William Dingwall, put the blame for the company's collapse partly on the coffee blight of the early 1870s, and partly on indecisive management. However, most to blame, were the early expenses incurred on properties which led to massive indebtedness: 'Expenditure at the beginning was on a princely scale and no doubt there was tremendous waste on the estates.' Several large advances were also made to planters, notably to Dr. Hamilton Ross, whose estates were mortgaged to the company.
In order to manage the company in liquidation, the New East Union Syndicate Limited was established in September 1896, and the assets and properties of the company were eventually transferred to this new entity. The Syndicate also assumed the debts of the company owing to the Caledonian Bank in exchange for a bill for £30,000. The Scottish Indian Coffee Company was wound up voluntarily after liquidation resolutions were passed at an extraordinary general meeting held on 14 October 1897, where it was decided to accept the offer made by the New East Syndicate in December 1896, and where W.M. Dingwall was appointed liquidator. The official date of the Company's liquidation was 30 October 1897. The New East Union Syndicate was to act as an intermediary between the old company and a new venture to be known as the Travancore Planters and Traders Company Limited. While this new company was duly registered in May, 1899, the offer made by the New East Union Syndicate to assume the Bank's old debt was never fully implemented, and so the deal ultimately collapsed. The estates in India continued to be worked by agents officially representing the Travancore Company, though no conveyance was ever formally completed, and all profits went towards the outstanding debt owed to the Caledonian Bank. The venture continued to be a drain on the Bank's reserves however, and ultimately the £30,000 had to be written off as a total loss. This failure contributed to the decision of the Caledonian Bank to merge with Bank of Scotland in 1907.
