McLeod topline to cross Rs 1,000 cr on firm tea prices

Kolkata: McLeod Russel, the Kolkata-based single-largest tea company in the world, is reaping gains from the string of acquisitions it made in the last few years.

Thanks to higher tea prices, the B M Khaitan group company is set to cross the Rs 1,000 crore turnover mark in 2009-10 from Rs 829 crore in the last fiscal and is also trimming its debt by a neat Rs 100 crore.

McLeod with its latest acquisition in Uganda in January this year has an overall production of 100 million kilograms, with 77 million kg being produced in India alone.

K K Baheti, director, McLeod Russel, told DNA Money, “We will cross the Rs 1,000 crore turnover mark in 2009-10. For a tea plantation company to be of this size...is almost a dream come true. It’s true that we have been able to double our production largely through the acquisitions that we have made over the last five years.”

McLeod in 2009-10 will be able to reduce its debt component to around Rs 315 crore from Rs 415 crore in 2008-09.

Out of Rs 315 crore, Rs 200 crore comprises the debt component, while the rest is working capital.

“There has been a cash accretion that has helped us, but I would say that the benefit of higher prices on a higher crop component that has grown through acquisitions has paid off very well. The Ebita is likely to be higher by Rs 140-150 crore this year, which would be around Rs 350 crore,” Baheti said.

Industry analysts said the company on the back of higher prices of tea in the current year has made cash accretion of Rs 200 crore, a part of which will be used to bring down the debt component. Average prices of McLeod Russel teas have increased by Rs 25 this year.

According to Baheti, the company would be able to take a call on the full year prices in June-July, after the peak season.

“We feel prices will go up, but costs have gone up as well. About $10-15 million of Ebita would come in from the Uganda acquisition, which is around Rs 40-50 crore in 2010-11,” he said.

McLeod Russel in the last two years has gone in for two acquisitions — one in Vietnam followed by an acquisition of 60% shares in Gisovu Tea Company in Rwanda.

Source: DNA