The Hindu Business Line : Jay Shree Tea: Divergent show by fertiliser, tea divisions

JAY Shree Tea & Industries Ltd, a B.K. Birla Group company, with interests in fertilisers and teas, has witnessed conflicting developments over the last few months.

The fertiliser business was boosted with the Union Government's decision to hike the subsidy for super phosphates manufacturers by 42 per cent to Rs 925 per tonne.

However, the tea division, which has decided to merge its subsidiary North Tukvar Tea Co Ltd, has been hit by poor prices. In packet teas, it has introduced a new Assam CTC brand.

As a result of these two opposite developments, the company is apprehensive that it might end 2005-06, at around the same levels as 2004-05.

Though the earnings from the fertiliser business are likely to increase, it may still be negated because of poor tea prices. Moreover, a weak rupee has inflated the company's import bill.

Tea business: After several years of consideration, Jay Shree Tea is finally merging its subsidiary North Tukvar Tea Co. According to a senior company, the merger will be effective from April 1, 2006.

"We have decided to close the books of accounts for the current fiscal, 2005-06, in the existing manner. After that we would start the merger activities. We hope that in 2006-07 the subsidiary would be integrated into Jay Shree Tea," the official said.

Earlier, similar moves were dropped because of high salami rates in West Bengal.

No decision on Darjeeling: The management of Jay Shree is yet to take a decision on the acquisition of M.K. Bajoria's Darjeeling Consolidated Tea Co Ltd, which has two gardens namely Singbuli and Balasona.

Management control of these two gardens is with Jay Shree Tea but financial acquisition is postponed because the Balasona garden is yet to turn around.

The two gardens produce 4.75 lakh kg per annum. In fact, Jay Shree Tea produces approximately 12 per cent of the total Darjeeling tea production. While Singbuli entered the Jay Shree fold in October 2003, Balasona came a year later.

In 2004-05, Jay Shree Tea sold one out of its three tea estates in South India. The official ruled out any possibility of selling the rest two because "these are well managed and profit-making".

New brand: In the packet tea sector, Jay Shree has introduced a new brand in Rajasthan. It is called Gorbandh and this brand will be used under the Birla Tea umbrella brand. "We are planning to enter Uttar Pradesh this year," he said.

In 2004-05, Jay Shree Tea sold 35 lakh kg under the Birla Tea brand name. The product is available in Punjab, Haryana and Delhi.

Fertiliser Business: After several requests, the Union Government has decided to increase the subsidy for the super phosphate manufacturers to Rs 925 per tonne from Rs 650 per tonne. This has come to effect from September 1, this year.

The decision was expected to leave a positive impact on the finances of Jay Shree Tea. However, the situation changed with the weakening of the Indian rupee against the dollar in the last few weeks.

"As a result of it, the cost of import of raw materials has increased," the official said.

Jay Shree Tea imports sulphur and rock phosphate for the production of super phosphate at its unit at Kardah in West Bengal.

Earlier, it used produce super phosphate in Haryana plant too but it has been discontinued since 2003. This plant is currently producing only sulphuric acid.

The share price of Jay Shree Tea at BSE remained almost stagnant on Tuesday. It opened at Rs 104 and registered a high of Rs 105.80. Volumes were also low.

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