Rising costs, falling yield a threat to Indian tea firms: Luxmi Tea’s Rudra Chatterjee
While on a tour of the UK in the summer of 2015, Rudra Chatterjee, who worked with management consulting firm Booz Allen Hamilton before joining his family business, was tempted to buy a bespoke English furniture maker in the upscale neighbourhood of Belgravia in London.
For Chatterjee, 40, whose family controls carpet maker Obeetee Pvt. Ltd, a furniture maker was a “perfect fit” for expansion into a new but related business. He studied the company for months but eventually decided to let the opportunity pass.
“I wasn’t sure about the liabilities,” he says. But Chatterjee didn’t give up the idea of a furniture business and launched his own within a few months, partnering one of the key executives of the business he was looking to acquire. Manor and Mews Ltd, the firm he founded in the UK last January, now has stores in London and New York.
Chatterjee, heir to the Luxmi Tea Co. Ltd, founded by his grandfather in 1912, recently concluded an agreement to develop tea plantations in Rwanda.
Edited excerpts from an interview:
What led you to Rwanda for expansion in tea?
Rising cost and declining yield are threats to Indian tea companies. But we are still interested in expanding in India. Recently, we bought Lengrai tea estate in Upper Assam, which produces 500,000-600,000kg of tea annually. We decided to go to Rwanda because the quality of the crop there is very good. We already produce high quality tea in Assam, Tripura and Darjeeling. Adding Rwanda will create opportunity for us to expand our product offering.
What are the challenges?
The only challenge in Rwanda is to develop and manage plantations. Our core strength is managing plantations. When expanding, you don’t want to take risks that you are not familiar with. All our lives, we have been managing plantations.
Where is Obeetee headed?
Even before we invested in Obeetee back in 1998, it was the sole supplier of carpets to hotels built by the Oberoi Group (EIH Ltd) and to the Rashtrapati Bhawan. We are now trying to build on its legacy by partnering designers such as Tarun Tahliani, Abraham and Thakore and Raghavendra Rathore.
When we tried to hire young graduates from leading fashion design institutes, we found people were not too keen to join a rug maker. So we thought carpets have to be made glamorous. We launched this line called “Proud To Be Indian” partnering Tahiliani to produce rugs made with Indian craftsmanship. Going forward, we will launch more under this label in partnership with Abraham and Thakore and Rathore.
What drove you to start a furniture company?
As a rug maker, furniture is a perfect fit for expansion. I had initially thought of buying an existing furniture maker in Pimlico in central London, but eventually decided against it because I wasn’t sure about the liabilities. Thankfully, David Salmon, a key executive at the company I was looking to take over, agreed to join hands with me. It’s still a small company.
What are your group’s key strengths?
There are uncertainties in the tea business, but we have strong cash flows from the carpet business to tide over bad years. As a group, we clocked around Rs1,000 crore in revenue last year, and we have no debts. And of course, my father Dipankar Chatterjee (chairman, Luxmi Group) is an avid planter. Because he was convinced about Rwanda, we took the plunge.