Mcleod Russel

The company is the world’s biggest tea grower and its performance for Q3FY13 has been a mixed bag. Mixed because, YoY, the numbers looks good but QoQ, it is not so good. But given the seasonal nature of the business, YoY numbers would hold more relevance. So YoY, net sales rose 11% at Rs.434 crore  and net profit was at Rs.123 crore, up 5%. Its operating expenses have soared, up 13%. Interestingly, its biggest expense, like in the IT sector, is on employees. For the current Q3 it was at Rs.120 crore, up 19% and almost 38% of the total operating cost. The company’s interest outgo remains high at Rs.14 crore, which at end of 9MFY13 was at Rs.35 crore, marginally lower than 37 crore in previous corresponding period.

For the 9MFY13, the crop was at 768 lakh kg, down 18 lakh kg on YoY and it also sold 37 lakh kg lesser at 577 lakh kg for the quarter. Yet what helped shore the numbers was the Rs.21/kg rise in selling price at Rs.175.95/kg.  That alone though was not enough to boost up the bottomline, which was down 1% at Rs.373 crore. The company has stated that dry weather conditions during January to May across major black tea producing countries and excessive rains during July and September in North India had negative impact on production up to October. However, there had been some recovery in November. Global shortfall during the  period is estimated to be in excess of 40 million kg as compared to same  period last year. Indian production is estimated to be lower by 5 million kg.  Tea production in Africa and Kenya was down by 20 million kgs in November. Consequently, selling price is expected to rise, by around Rs.19 per kg during the year.