FROM CED''S DESK
We have performed poorly in 2017, mainly because of crop loss due to pest attacks and bad weather. Fortunately our investment portfolio, with one exception, has performed well, to cover these losses, and keep the company in sound financial health. The exception relates to our investments in Warren Steels.
Our 22% stake in Warren Steels had to be sold at face value to its promoters. This was a poorly managed castings business, which did not have the size or economies of scale to be a viable proposition.
Although 2017 was a bad year we have outperformed our erstwhile parent company by 3.9x cumulatively over the past 5 years. This is to say that our PAT is almost 4 times that of Warren Tea since the High Court approved our demerger in December 2013. I believe that these results are a clear vindication that the demerger was in the best interests of all stakeholders.
This outperformance has come through the shared values illustrated in our motto, Integritateet Industrie. We have also invested heavily over the past 5 years in our plantations. The irrigation, colour sorts and nurseries are all new. We are uprooting and replanting like never seen before.
A few matters still lie unresolved following the demerger. One of the most troubling relates to TDS during 2013 when we were a division of Warren Tea, and lacked autonomy in many matters relating to statutory payments, accounts and technology.
Nevertheless, the past 5 years have seen us increase our exports from virtually nil, increase our Orthodox production to 50% and increase our quality. Whilst all the time improving the Executive team in Kolkata and Assam.
The risk of wages hikes, out of step with prices, is making our outlook uncertain. To mitigate this risk we need to become more operationally efficient, and for this our Unions need to work together with Management. A ridged adherence to labour levels set 50 years ago holds back the industry. Productivity is key, and mechanization has to be the answer.
There is also an imbalance in Assam between the costs of production for small tea growers and organised companies such as ours. Our compliance with the multitude of regulations governing us means that we are not operating on a level playing field. In addition our commitment to quality means that we do not dilute our own leaf with this bought leaf of unknown origins.
A lack of enthusiasm from our banking partners has meant that the benefits of demonitisation have hit a plateau. We need the banks to take this seriously if we are to encourage savings and an end to the poverty trap.
Recently reformed electricity tariffs in Assam have brought us some relief. We now need to turn the attention to gas, where we suffer from low pressure and irrational billing.
Despite these challenges we remain hopeful and optimistic about the future of our company and Assam tea. Many thanks
Akhil Kumar Ruia
Chief Executive Officer