Firstly, may I thank you most sincerely for your continued trust In
For HML, 2010-11 has been a period of struggle. While Tea prices were
going up In the rest of the world, South India was the only geography
In the world where Tea prices actually came down. In Rubber also, while
price realization was good, production was not satisfactory, mainly due
to excess rains during the peak cropping period.
Indian agriculture is witnessing a new problem of non-availability of
workers and steep increase in wages.
Wages continued to spiral up, while production, productivity and prices
lagged behind. There was an overall increase in the prices of
agricultural produce leading to increase in food inflation, but it has
still not been able to cover the increase in costs. Government''s
monetary and fiscal measures to control inflation have made borrowing
more costly, affecting investment and growth.
India''s total tea production came down by 2 % to 966 million kg, while
Sri Lanka and Kenya, reported substantial increases. Also Tea prices
that had gone up by about Rs 25/- per kg in the previous year,
witnessed in 2010-11 a downward trend, resulting in prices coming down
by about Rs. 10 per Kg in South India. This was unlike the global trend
where prices went up. Poor demand for lesser-quality tea also led to a
fall in prices. However, there was a good market for high-quality tea,
which resulted in higher price realization. From January 2011 onwards,
tea prices started improving in South India. This trend is expected to
continue during the current year as well.
During FY2011, HMLs tea production dropped by about 9% mainly due to
the reduction in cropping area, as the Company had undertaken
substantial area under uprooting and replanting in tea gardens. Also,
there was a drop in productivity on account of adverse weather and old
age of its Tea bushes. HML has been focusing on the developmental work
in its plantations and would continue to undertake uprooting and
replanting of its gardens in a major way for the next few years. This
rejuvenation is essential for improving its land productivity in
During FY2011 approximately 35 lakh plants were used for Infilling and
Replanting in our tea gardens. Factory manufacturing efficiencies and
factory capacity utilization were improved by enhancing bought-leaf
intake. HML tea factories were upgraded, reducing manufacturing cost
and improving quality. HMLs auctions sale average was comparable to the
South Indian average.
In natural rubber, mainly due to higher consumption from the Tyre
industry, demand was good and was mostly ahead of increase in supplies.
Prices fluctuated during most part of the year. They varied from a
level of about Rs 165 per Kg to about Rs 240 per Kg and settled mostly
in the range of about Rs 210-230 per Kg. Of late, Natural Rubber prices
have come down slightly to about Rs. 200-210 levels. They are expected
to remain range-bound and should follow the development in automobile
During FY 2011 HML continued with its major drive towards replanting
and undertook a large area for rubber replantation. We are in the
closing phase of completing the accelerated replanting, as FY 2012 is
expected to be the last of the increased replanting years. From FY 2013
we shall be back to normal annual replanting of about 3-3.5% area under
rubber plantation. The benefits of accelerated replanting should be
visible from FY 2013 onwards. We expect a substantial jump in
production and productivity from FY 2013 onwards.
HML continues to focus on Fruit, Spices and other Crops (FSO) Division.
That is currently in the developmental phase. We continue to invest in
this Division by undertaking increased planting of Pineapple, Fuel
crops, Pepper, Cardamom and Cocoa either as intercrop or main crop
wherever possible. During FY 2011, HML planted 55000 pepper vines, 1.5
lakh plants under fuel and shade trees and approximately 50000 Cocoa
plants. In another 3-4 years, FSO should start contributing to the
profitability of the company and become a strong factor in stabilizing
the bottom line.
Your Company continues to focus on Recruitment and Training of fresh
managerial talent to ensure quality and continuity of the Management
team. We already have a strong group in place to manage future growth.
I am glad that your company registered a growth of 12 % defying various
constraints. I am confident, profitability will improve substantially
from next year. While market forces would dictate commodity prices,
improved efficiency and higher land and labour productivity should
contribute significantly to the growth in Profits..
I wish to acknowledge and appreciate the commitment and contribution of
the HML team in making our Company stronger and taking it to greater