Mcleod Russel Shows Revenue De-Growth; Commodity Prices Are Dropping

Mcleod Russel – which is into manufacturing of tea and owns tea plantations in South and North India. Mcleod has reported a revenue de-growth of 13.32% and had a profit growth of 13.43% . Revenue de-growth was mainly due to lower commodity prices and crop failure in South India. The operating margin declined by 77 basis point to 32.84%
The overall tea production in India was marginally lower in India by 0.05%. Mainly on account of unfavorable weather conditions in South India.
The company sold tea at a average price of 173.82/Kg in current quarter. Where in the average selling price was Rs 182.27/Kg for Q2 previous year. The total sales quantity also declined by 9.4%. The major reason for fall in the commodity prices is due to higher production of tea in Kenya, resulting lowering of international tea prices.
Mcleod Russel has subsidiaries in Vietnam, Uganda and Rwanda.
The overall sales in Vietnam have been flat at 5.9 million tonnes. But the average selling price of tea has declined from USD 1.46/kg to USD 1.34/kg .
On the other hand Sales in Uganda has increased by 6.42% and the commodity also commanded higher price of  USD 1.66/Kg compared to USD 1.53/Kg last year.
Similarly total production in Rwanda was at 10.4 million tonnes (decline 9.5% from previous year). The average selling price currently is at USD 2.50/Kg compared to USD 3.18/Kg last year.
Mcleod Russel in its press release has said, currently tea prices have come down by Rs 6/Kg due to subdued demand domestically and internationally. The demand might see an uptick in rural areas post good monsoons. However the company has stated that, the expenses might increase by 9% due to higher wages and input costs.
Mcleod Russel has received a compensation of Rs 29.15 Crs for its land being acquired by Government of Assam for construction of highway.