Jayshree Tea aims exports worth Rs 80cr this yr

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In an interview with CNBC-TV18, DP Maheshwari, Managing Director of Jayshree Tea , spoke about the latest development in his company.

Here is a verbatim transcript of an exclusive interview with DP Maheshwari on CNBC-TV18. Also watch the accompanying video.

Q: The domestic tea output has been fairly decent in the past few months. However, to countervail that the global tea output has been bad. Give us an idea of what it will mean to Jayshree Tea. What kind of realization will you make in the remaining months of the year? What kind of volumes you will be able to push?
A: The Indian production ending September is lagging by 10 billion kilogram. However, we might not have the same production in October, November and December. Hence, overall, we might be lagging by 5-10 million kg. Internationally, Sri Lanka is lagging by almost 40 million kg and Kenya by 29 million kg. So all this put together, there is lot of pressure on demand.

As I have been maintainig right from the beginning, our sale average for the year should be ahead by around Rs 20 per kg more than last year and the cost would go up by Rs 5 per kg. Hence, Rs 15 margin should increase for every kg produced.

Q: What do you think your revenues could be in the second half?
A: The second half will be good. Prices are going to be good but our production season is about to end by mid December. Next three months there is no production. Whatever production has to come will come now and prices will maintain at Rs 20 more than last year. We will maintain it till the end.

Q: With respect to your company, what was your production as compared to last year? What was the price you charged for your variety of tea this year as compared to last year? What percentage more exports did you do this year compared to last year?

A: As far as my company is concerned, last year we produced around 22 million kg tea and this year it is going to be more by 1 million kg. Hence, the total production will be 23 million kg. Last year we exported around Rs 65-70 crore worth of tea and this year it is going to be Rs 80 crore. As far as profitability is concerned, my second quarter profit is Rs 46 crore. Hence, it should go up in line with the industry.

Q: Tea traders and tea tasters say it is not like mixing water. If you buy Kenyan tea, it is Kenyan tea and if you buy Sri Lankan its Sri Lankan tea and one cannot just go about mixing this tea. While we say that we have a bumper crop, do you think that can really translate into exports? I am looking at September numbers and exports are actually down 14% rather than being up?
A: This is because India's production is also lagging. Our demand is healthy. We are consuming almost 30 million kg every year. Internal prices were quite decent.

Coming to whether one tea can be used, yes it definitely makes a difference. Of course, Orthodox has to be made up Orthodox and CTC by CTC. However, less production in Kenya will definitely have some impact on India's exports also.