Financial Daily from THE HINDU group of publications
Thursday, May 06, 2004
Agri-Biz & Commodities - Tea
Jay Shree Tea turns around Singbuli estate
Kolkata , May 5
JAY Shree Tea & Industries Ltd, a B.K. Birla Group Company, has succeeded in reducing the losses of the ailing Darjeeling garden, Singbuli Tea Estate, but is yet to take a decision on its acquisition.
The Singbuli estate, which belonged to the city-based Mr M.K. Bajoria, was registering losses for many years.
In October 2003, Jay Shree Tea took over management control of the garden.
Soon after taking control of the estate, the company announced that it could acquire the garden only if it succeeded in turning it around.
The management of Jay Shree Tea fixed March 31, 2004, as the deadline to take the decision.
After running the garden for a little over six months, Jay Shree Tea was able to reduce the losses of Singuli Tea Estate to around Rs 36 lakh.
Though the deadline is long over, a senior company official told Business Line that a final decision on the acquisition was yet to be taken. Meanwhile, industry sources said Jay Shree Tea was lobbying hard with the banks and financial institutions for restructuring the finances of Singbuli estate and make its operations financially feasible.
For the year ended March 31, 2004, Jay Shree Tea's net sales increased to Rs 178.06 crore from Rs 162.43 crore. The net profit, however, dropped to to Rs 3.18 crore from Rs 8 crore. A dividend of 17.5 per cent was also announced.
The Singbuli estate has a capacity to produce 2 lakh kg of tea per annum. It employs around 900 people. In the last year or two, the promoter failed to pay the workers regularly and, hence, there was a huge backlog of workers' payment, including their statutory dues.
Jay Shree Tea is also upbeat about the prospects of tea business in the current financial year. According to the official, the prices of Darjeeling tea has improved by almost Rs 20 per kg compared to the previous year.
"Similarly for Assam tea, the prices are firming up by approximately Rs 1-3 per kg. Moreover, there are reports of drought in the South and floods in Assam. This may result in a drop in production during 2004," the official said.
Meanwhile, the company, which exports tea to the UK, Germany and Japan, has just opened its office in the US. It was learnt that Jay Shree Tea is trying aggressively to get a hold in the American market.
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