Surge in crop during quality months helpful: McLeod Russel

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Surge in crop during quality months helpful: McLeod Russel

Managing director of McLeod Russel Aditya Khaitan tells CNBC-TV18 that the surge in crop during the early months of the year helped raise their cumulative numbers for the past nine months.

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Excerpts from Markets Midday on CNBC-TV18 Watch the full show » ALSO READ See latest News about Mcleod Rus See previous management interviews See what other Experts & Brokerages are saying about Mcleod Rus Mcleod BSE | NSE 01/06/12 Are Mutual Funds betting on Mcleod?

Managing director of McLeod Russel Aditya Khaitan tells CNBC-TV18 that the surge in crop during the early months of the year helped raise their cumulative numbers for the past nine months. "We were actually ahead by around 8 million up to October," said Khaitan, adding that they lost crop in November and December due to early winter.

However, this loss in crop is beneficial for the company. Khaitan explains "less crop in November and December depletes the stock position and the inventory position of lower quality crop during the cold months of December-March and therefore our opening levels in the month of April again looks to be very strong into the new season."

Up to December, the company has 80 million of crop as compared to 72 million the previous year.

Below is an edited transcript of his interview with Latha Venkatesh and Ekta Batra. Also watch the accompanying video.

Q: There was a sales growth as well as a pricing growth in the quarter. We understand volumes went up 4.5% and realizations about 2.5% yet margins were under pressure, will that continue?

A: Basically we have a seasonal business from April to December and good part this year was that we got our surge in crop during the quality months of May, June and July. We were actually ahead by around 8 million up to October but we ended up losing crop in November and December due to early winter which in a way is also better for us because the quality of tea that gets produced in Assam in the month of November and December is of a much lower quality.

Therefore, for us to get the crop in the earlier part of the year was beneficial and that is has really got reflected if you see our nine months results where our cumulative numbers are much higher and that is really the way we would look at it. The second good part that has happened is because of less crop being made in November and December of lower quality, the stock position and the inventory position during the cold months of December-March gets depleted and therefore our opening levels in the month of April again looks to be very strong into the new season.

Q: This season is more or less over so could you tell us what the production has been for McLeod Russell and what is the amount of inventory that you are carrying?

A: Basically we have shut shop for the year and we are opening in the month or maybe March if the rains come in on time. We have ended up with around 6.5 million ahead over last year in crop and our total crop up to December would be around 80 million compared to 72 million of last year. We are looking at around Rs 6 in pricing higher than last year, as you know that January, February, March has no production.