McLeod looking for new growth avenues

Jayanta Mallick Kolkata | Updated on July 23, 2014


McLeod Russel, the world's largest tea planter, is looking for new avenue for growth. Currently it is growing in volumes through partnership with out-growers in Assam.

Aditya Khaitan, MD of the BM Khaitan Group flagship, told reporters after its AGM here that the company invited some consulting firms to suggest a future growth roadmap.

“We have not spelt out the possible avenues to restrict flow of ideas. In the next three-four months we expect to have suggestions on the table to ponder upon,” he explained.

“The growth route through acquisitions has slimmed both in the domestic as well as overseas market as asset price and return ratio has become unfavourable. In the past few years we have been engaging ourselves more and more with other tea growers to have quality bought leaves. Currently, we buy 25 million kg (mkg) leaves from out growers in Assam and 65 mkg is produced by our gardens”, he said.

In the next four years, the company plans to add 20 –25 mkg of tea leaves from the out growers. Though this route gives lower fixed margin, it helps the company in leading the volume game.

The company as a diversification road had earlier chosen jatropa cultivation and a bio diesel project. “It bombed because of Government’s ethanol policy ambiguity. We had once also thought of getting into rubber plantation but dropped the idea. That is why we are now looking for a new workable long term growth plan remaining within our domain expertise or in the related areas,” Khaitan added.

Regarding branded tea business, Khaitan said the company was open with the idea.

Meanwhile, to hedge against weather vagaries and deficient rain problems, the company has taken up irrigation and water conservation projects in its gardens in Assam. “We have been doing it for the past three years. In another three years, we may establish a network that at least would provide/ save crop in case of deficient rain situation,” McLeod Russel MD said.

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Published on July 23, 2014
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