Good rains, clarity on subsidy to boost sales: Jayshree Tea

DP Maheshwari, managing director of Jayshree Tea says that the tea business of the company has done well as compared to sugar and chemical counterparts in Q1FY14. Assam Tea has done well but Cachar and Dooars (types of tea) have been undersold as compared to last year, he says. 

The company reported a 20 percent fall in its total income at Rs 110 crore. The margins were at 1 percent for the quarter ended in June. He expects the sugar sales to pick up in the coming quarters on the back of reduced prices. Confusion created over chemical subsidy and pricing led to sales fall in this segment. He clarified that the company had sold a land worth Rs 30 crore, out of which a profit of around Rs 26 crore was reported which was declared under ‘other income’. Also read: Expect hardening of Arabica & Robusta prices: Tata Coffee Below is the edited transcript of his interview to CNBC-TV18. Q: Your operational numbers look very disturbing, the total income is down about 20 percent to Rs 110 crore, your margins are down to next to nothing about 1 percent compared to 9.4 percent. Only other income seems to have had a positive impact. Can you take us through the details of this? Was there trouble in the operational business? A: No, there is no trouble in the operational business. If you see the segmental results, tea has done quite well looking to the conditions. This year, there is a typical scenario that Upper Assam tea is selling better but Cachar, Dooars are selling much lower than last year. South India is doing quite alright but almost whatever quantity we have sold, 75 percent belongs to these areas. Assam we have done quite well. Second point was that in April and May, my production was slightly down which was made up in June. So June quantity, I am carrying six lakh crore on additional stock. So that gives the explanation of about tea. As far as sugar is concerned, there is a loss in sugar both for the quarter. There is no production and whatever stock we carry forward, there also there is a drop in prices which I believe will be made up in the coming months because last year also we had almost same type of scenario. In chemicals also, unfortunately the subsidy amount was declared very late sometimes in the month of May. And government then further wanted us to reduce our maximum retail price (MRP) which the industry has not agreed. So on that count, for the time being for this quarter, the numbers are a bit upset but overall already one month is passed. In July itself the results have completely changed. I am sure in the coming quarters, all our operation results will be much better. Totally overall results will be better than what was last year. As regard, the other income we have sold a piece of land for Rs 30 crore and there is a profit of around Rs 26.6 crore. Q: What about the chemicals and fertiliser business? The topline itself is down 50 percent; the sales over there have halved? A: Because of this subsidiary confusion and also what MRP to fix, the sales did not pick up. However, I am very happy that with the onset of the monsoon, now July the sales are quite alright. At the end of Q2 itself, things will change completely. Tea has done alright. Sugar and chemicals for the quarter results are not all that good but the reasons are there. There is nothing wrong with the working that I want to assure you.