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McLeod stirs growth brew

McLeod chairman B.M. Khaitan (left) with managing director Aditya Khaitan in Calcutta on Wednesday. Picture by Kishor Roy Chowdhury

Calcutta, July 23: Tea producer McLeod Russel India Ltd is planning to diversify its business to fuel growth and hedge its tea business against constant price fluctuations and inclement weather.

The company has initiated discussions with consultants to chalk out strategies. It is likely to consider entering the branded tea segment.

McLeod Russel today said it intended to shore up the contribution of bought leaf to its total tea production. The target is to almost double the share by adding 25 million kg more in four years. Of the 87 million kg produced by the company in India, about 65 million kg comprises leaf from its own estates, while the rest is bought.

“We believe if we take tea as one block, and look at McLeod Russel twenty years from now, what is the second or third alternative if something happens to tea, so that each one hedges itself? Acquisitions in the years to come are going to be expensive. We are working on only things that are going to get worse in the years to come,” managing director Aditya Khaitan said.

He was speaking on the sidelines of the company’s 16th annual general meeting here today.

Earlier, the company had considered diversifying into bio-fuel, rubber and rice. Khaitan today said the company would look at tea or agriculture-related domains.

McLeod Russel has suffered a net loss of Rs 32 crore for the quarter ended June against a net profit of Rs 26.21 crore during the same period a year ago. Dry weather conditions have hit production for the major part of the year.

The shares of McLeod Russel today closed at Rs 280.95, down 2.26 per cent from its previous close on the Bombay Stock Exchange.

 
 
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