Country's second largest tea producer, Jay Shree Tea feels that the tea industry as a whole looks good and the company itself is on the right track. Company's Managing Director, DP Maheshwari in talks with The Pioneer said that the company is on a look out for acquiring new tea gardens.
Talking about new acquisitions Maheshwari said, "We are scouting for tea gardens specifically in Africa. My aim is to acquire a tea garden which has the production capacity of 5 million kilogram but as of now I haven't found one. As far as funding the deal goes, we have nearly Rs150 crore of assets comprising mutual funds, tax free bonds etc. We will monetize all these assets the moment we find an appropriate estate and go forward with the purchase."
The company also announced its first quarter results on Monday. They registered a fall of nearly 20 per cent on total revenue front which was 109.9 crore in the first quarter while the net profit rose sharply by 250 per cent from 4.86 crore in Q1 FY13 to 17.02 crore this quarter. Commenting to the Q1 numbers he said, "My tea business is now doing alright but the major impact is coming from our sugar business. Due to a decline of Rs3 to 4 per kilogram in sugar prices there has been pressure. As far as our chemical business is concerned, the sales have again starting to pick up."
But going forward, Maheshwari feels the picture is going to drastically improve for the company. The company has a total of Rs 424 crore of debt on it and the management feels there is no major pressure due to it on the balance sheet. "We have taken some money at an interest of roughly 9 per cent but we have allocated this money in such a way that as of now we are receiving an average return around 14 per cent. Apart from that we are also planning to reduce the debt and are hopeful to pay off around Rs50 to 60 crore by the end of this fiscal year," he added.
The company has kept its plan to raise Rs60 crore through QIP on a hold. "We have an enabling resolution to raise Rs100 crore through QIP but we have kept it on a hold due to the volatile condition of the stock markets. We will resume this once the markets start to improve," he further added.
DP Maheshwari is quite confident of the company's performance going forward and feels the company's turnover at the end of this fiscal will be nearly 5- 6 per cent higher than the last fiscal. As far as tea prices goes he added, "The price is bound to go up this year. We expect the prices of our products will rise nearly by Rs10 per kilogram during this financial year."