Over the last seven years, McLeod Russel India Ltd (MRIL) has made quite a few acquisitions within the country. Kamal Baheti the CFO of the company says he is quite keen to make further acquisitions in India and in overseas locations like Africa.
As the largest tea producing company in the world, the company now plans to increase its production through further acquisitions.
McLeod Russel manages 47 tea estates in the Assam Valley and six tea estates in the Dooars region of West Bengal, three factories in Vietnam and six estates in Uganda. The company is now working towards upping its production from these existing facilities.
“We are looking at increasing our production from our existing plantations which should be up by around 4-5% to around 110 million kg,” says Baheti.
The company produces approximately 103 million kilos of high quality tea a year from their tea estates.
Below is an edited transcript of his interview on CNBC-TV18. Watch the accompanying video for more.
Q: There have been better and better prices coming in at tea auctions. Give us an idea of what kind of an increase in realisations tea companies like yourself can see in this season?
A: It started from the last quarter of the last season itself when we talked about an early winter and loss of crop in November and December. That had an impact on the prices in the month of January and February and we had another weather problem in the month of March so we lost maybe around 8-9 million kg in the month of March.
The opening in any case was expected to be much higher but it opened Rs 50 higher to the surprise of everybody including us. I don’t think it can remain there but as we come into the peak season we believe that the prices would settle down Rs 20-25 higher than last year which should not only take care of the prices but should increase the margins as well.
Q: You have been aggressive on the inorganic side. What are your plans there? Are there any acquisitions on the anvil or will consolidation help you improve your production this year? What are the targets?
A: We are looking at increasing our production from our existing plantations which should be up by around 4-5% compared to around 110 million kg against 103 million kg in the previous year. Acquisitions are something which we have been doing over the last six-seven years and we continue to look for opportunities both in India and overseas, particularly, in Africa.
Our target is to reach at least 30-40% increase in our own production, another 20-30% through the Borelli Tea segment and touch 140-150 million kg in two-three years time but it will depend on the kind of opportunities we get but as a company our strategy is to look for acquisitions both in India and overseas.