Kolkata: McLeod Russel sees its FY11 tea production down 3 million kilograms due to excessive rain and pest attack in Assam, but higher prices would ensure revenues are unaffected, a top official said on Monday.
“During the month of May and June we have lost about 3 million kg of quality tea from Assam, so domestic production by the end of this fiscal would be in region of 77 million kg,” managing director Aditya Khaitan said, while talking to reporters in the sidelines of the annual general meeting of the company.
Earlier in April, the largest orthodox or black tea producer in the country expected a domestic production of 80 million kg in 2010-11.
Apart from India, McLeod Russel also owns tea estates in Vietnam, Uganda and Rwanda and produces around 20 million kg of orthodox tea from these regions, he said.
Similarly it expects exports to be lower by a million kg to 27 million kg he said.
“During May-July, we produce the best quality tea, which is largely exported. Hence this loss in crop will impact our exports as well.”
However, this shortfall in production and exports will not hit McLeod Russel’s revenue on the account of higher prices, Khaitan said.
“This year, the average prices per kg of tea is expected to be around Rs150, compared to 137 rupees during FY10, hence we do not see any hit in our revenues.”
Blending unit in Dubai
McLeod Russel is planning to start a blending unit in Dubai to offer a unique blend of tea from different tea growing regions, Khaitan said.
“Sourcing tea from single line (single region) is getting costlier for the buyers and hence, in a bid to add value and remain cost competitive, we have decided to offer blended tea,” he said.
“The idea is to blend tea from Assam, Dooars, Vietnam and Africa and offer an unique blend at a lower price and stable quality.”
The unit in Dubai would mainly cater to buyers in Middle East and CIS regions, he said.
Shares of McLeod Russel ended up 3.9% at Rs231.15 in a firm Mumbai market which closed 1.2% higher.