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Tea maker Mcleod Russel looks to move up value chain


Tea producer Mcleod Russel said on Monday it is drawing up a 10-year roadmap for its business and is exploring how it can move up the value chain.

Tea maker Mcleod Russel looks to move up value chain
The company is drawing up a 10-year roadmap in a bid to understand the ways in which tea will be drunk in the future

The company is trying to understand the ways tea will be drunk in the future. “We are studying it,” said Vice Chairman and Managing Director Aditya Khaitan.

“We have discussed with consultants and we are waiting for them to come back to us with some thought processes,” he said on the sidelines of Mcleod Russel’s annual general meeting.

The company on Monday reported a loss of Rs 17.34 crore in the quarter ended June 30, as compared with a loss of Rs 28.71 crore in the year-ago period. Net sales in the quarter stood at Rs 171.32 crore as against Rs 166.64 crore in the corresponding period last year.

He said the company has done what was required to be done in the last 10 years.

“We achieved goals set in the roadmap (for a 10 year period) that was chalked out in 2005. Now, the next 10 years’ roadmap is being put in place,” he said.

“We are going to start thinking about value addition,” he said, but did not specify whether that is likely to be done through brand or through a tie-up of supply.

“In March, we had seen a good weather and production. But after that, it turned out to be very wet, leading to a huge drop in production, which mitigated some of surge in production that we had in March,” he said.

“On calendar year basis, we are ahead in crop (production) as compared to last year and on quarter-to quarter (April-June), the production was down. We still expect, in terms of production, we will be better off in the current season as compared to last year,” he added.

Indian production for the calendar year up to May is lower by 9 million kg as compared to last year mainly due to loss of production in South India on adverse weather conditions.

August-September production in the last year was down.

“The problem that the industry is facing is the price of tea is not moving in tandem with the cost,” he said.

Exports, as of now, have been down.

“Africa is running strong in crop. Global markets remain subdued because of oversupply. People are tending to buy from African markets and due to heavy rains, the entire industry had to spray chemicals to protect crops,” he said.

Tea production in African region has been higher by 60 million kg as compared to last year on normal weather conditions as compared with dry weather last year.