Drink up, tea produce likely up 35 million kg: Jayshree Tea

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Drink up, tea produce likely up 35 million kg: Jayshree Tea

Let’s dig up the old debate... you like a hot cuppa or would you rather stick with the traditional tea? While coffee prices are seeing an uptick globally, tea prices too are seen rising on the back of strong demand.

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Let's dig up the old debate... you like a hot cuppa or would you rather stick with the traditional tea? While coffee prices are seeing an uptick globally, tea prices too are seen rising on the back of strong demand.

DP Maheshwari, managing director of Jayshree Tea joins CNBC-TV18 to give an outlook of his business and highlight the way forward.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: Can you take us through what situation is currently looking like on the production front?

A: On production front till August, India's production was ahead of last year by around 33 million kg, mainly from Assam and Dooars in North East India. South India is running behind, but despite that, the demand is quite strong and prices are picking up.

Early information what we have got about September is that production is going to be slightly lower in the month. So overall, production will be high by around 30-35 million kg and we might cross the overall 1,000 million mark soon.

Q: What the impact has been on account of the US sanctions on Iran because Iran is a major market for exports with respect to Indian tea?

A: Because of the sanctions in Iran, we cannot get the payment. There is a good demand for Indian tea in Iran, especially, orthodox tea what we are producing now under a subsidy from government. Iran was a good market, but because of this sanction, there is lot of problem in receiving the payments inspite of the buyer being ready to pay.

Q: What is the payment which is due?

A: I cannot give you the exact figure, but quite some quantity has been dispatched. The most important thing is how do we commit further quantity when we are not sure how we are going to receive our payment? That has impacted the export to Iran but we have been informed by the government authorities that they have worked out a solution. Maybe they will announce it very soon and once that comes into force, exports will pickup again.

Q: In Q1, you had a strong EBIT growth in your tea segment which was up 90% to 19 crore. What can we expect in terms of FY12?

A: Second and third quarter are always the best for tea industry which is having main interest in North East India. In Q2, expect our results to be quite good and in line with industry expectations. Our production is up, and ending September, we are up by around 1 million kg. So that should add value and profit should be good.

Q: Your chemicals and fertiliser segment was down in Q1. How exactly is that segment panning out for you though it's a small part of revenue?

A: The overall turnover from fertiliser might not be very high but profitability levels will be maintained. We will be almost on par with last year as well as where profits are concerned. Prices are low because of a number of things; our total overall revenue is low but our profits will be as good as what they were last year, and now, sugar has also been included.

Q: Coming back to the Iran issue, how much does Iran contribute to revenues and with respect to how it will show up in your financials where you have despatched the products but not receive the money. Is that going to be a dip in your quarterly revenues?

A: As far as my company is concerned, fortunately, all payments are through and exports are around 14% of our revenue. We export around Rs 95-100 crore worth of tea and Iran is also one of our main buyer. I don't have any payment problem in Iran. What I told you was about the industry in general that overall exports will go up. My company, my exports are higher than last year even as it is, and if Iran things become easy, it will be higher. I don't have any payment problem.