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Riding on the back of higher volume growth in sales, McLeod Russel India Ltd saw its losses narrowing to Rs 1.66 crore for the quarter ended June 30, 2017, down from Rs 17.34 crore during corresponding period last year.
According to KK Baheti, chief financial officer, McLeod, volume sales grew by nearly 11 per cent at 11.1 million kg (mkg) during the quarter under review.
Total production during the quarter also went up to 24.1 mkg (21.8 mkg). While production from the company’s own leaf was higher by 2.2 mkg for the quarter, that from small grower’s leaf increased by 0.1 mkg.
“The losses have narrowed because our production has been better and we have sold a higher quantity during this April-June 2017 quarter,” he told Business Line.
Revenue from operations grew by almost eight per cent to Rs 193 crore.
This is despite the company earning a lower price on its product. The average selling price was down by Rs 2.69 a kg to Rs 168.35 a kg during the period under review.
“The price is on the sale of the old season tea and not on our present production,” Baheti clarified.
Firm Prices
McLeod expects better prices on its produce this year on the back of a steady demand in Indian market and higher exports due to a drop in production in Africa. Increase in prices could start reflecting from the second quarter onwards, said a press statement issued by the company.
The decrease in production in Kenya has had a positive impact on prices at Mombasa auctions, with African teas fetching a price of $2.81 a kg ($2.26 a kg) upto June this year, as compared to the year ago period.
“The prices are likely to improve further during the second half of the year as demand grows from Middle East and Pakistan,” the release said.
There has been an improvement in tea prices in the auction on a week-on-week basis so far this year compared to last year. The gap is further set to increase particularly for North Indian teas as demand for exports improves and on expectation of growth in rural demand post normal monsoons, the release said.
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