Jay Shree Tea & Industries Ltd, primarily a tea plantation company of the BK Birla Group, has decided to spawn a new investment outfit, which would be turned into a non-banking finance company (NBFC).

Mr D. P. Maheshwari, MD of the company, told Business Line that in a three-stage process, scheduled to be completed by March 31, its subsidiary Parvati Tea Co Ltd, would first be merged with itself, and then de-merged to create a new entity which would take care of the Jay Shree Tea's current investment portfolio. “Eventually, the new entity would function as an NBFC. The Jay Shree Tea board on Monday took a formal decision in this regard”, he added.

Parvati Tea currently handles Jay Shree's overseas tea business. “We would be able to complete the first two legs of the transformation process by the end of this fiscal”, Mr Maheshwari said.

Sugar subsidiary

Jay Shree Tea is also merging its sugar manufacturing subsidiary — M P Chini Industries Ltd. Mr Maheshwari said that Jay Shree's bottom-line additions, of around Rs 18-20 crore, could be a reality in the current quarter (January-March) from these two businesses.

Fall in Q3 net

Jay Shree reported a sharp fall in net profit at Rs 19.79 crore in the third quarter to December 31, 2010, against Rs 33.22 crore in the corresponding quarter of the previous fiscal. “This is because of lower-than-last year's tea price realisations from our gardens in South and North (Cachar and Dooars) India. The comparative negative average price differentials during the present season are Rs 15, Rs 12 and Rs 5.50 respectively for South India, Cachar and Dooars”, he explained.

The tea production drop in October also affected Q3 sales. “Though we recovered substantially in November and December, the increased output did not materialise in sales during the quarter. Further, effect of instalment of wage revision also increased expenditure during the quarter,” he added.

The revenue from the tea business, declined to Rs 104.93 crore (Rs 125.03) causing overall operational income to drop to Rs 126.89 (Rs 141.10 crore).

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