Jay Shree sees sugar, tea output rising 8%

Jay Shree Tea and Industries expects 8% growth in its tea crop and sugar production this fiscal, its managing director DP Maheswari said.

“Tea production till now is higher by one million kg and I think the crop would be higher by 2 million kg by the year-end. Last year production was 24.1 million kg and it should be around 25.5-26 million kg in 2011-12,” Maheswari told reporters on the sidelines of the annual general meeting of the company.

Production of sugar, a sector into which Jay Shree diversified a year back by buying a Bihar-based sugar mill, M P Chini Industries, would also post same growth on the back of increased cane availability from the 1,000 acre plantation that came with the acquisition.

“In view of the dull market and high sugarcane prices, the company has taken steps to improve productivity and reduce costs. Hopefully, cane availability would be higher this year and the mill is likely to produce 42,000 tonne of white sugar this season. There would also be improvement in recovery from 9% to 9.5%,” vice-chairperson Jayashree Mohta told shareholders.

The company produced 38,662 tonne of white
sugar in 2010-11 against 25,053 tonne in the previous year.
“As soon as we acquired the mill, we deputed a number of scientific experts to suggest ways to increase productivity and that is taking place now. We have planted cane of improved clonal variety, which is of better quality,” Maheswari said.
Jay Shree is now looking at newer export markets for its tea as there has been a sharp drop in shipments to some traditional markets.

“Despite Indian tea prices being lowest in the world, export is down mainly due to recent problem in Egypt and payment crisis in Iran. There have been talks with the commerce secretary last evening in Kolkata and we were assured that the Iran payment issue would get sorted out very soon,” Maheswari said.
“We trying to enter US and Australia and have started supplying CTC tea to China.”

Indian tea prices are now lowest in the world as many of global suppliers are now facing production crunch. “The Indian crop till July is higher by about 29 million kg while world crop is down by 24 million kg. The major contributors to this lower crop is Kenya where output is down by 33 million kg; Uganda which produced 14 million kg less while production in Sri Lanka is lower by five million kg,” Mohta told shareholders.

Maheswari expressed disappointment over prospect of tea prices.
“Prices are not doing well. There are number of factors. Among them there is now a very peculiar phenomenon that is happening in the industry. In four months we are producing almost 65% of production. Against an average production of, say, 70 million kg a month industry is producing 140-150 million kg, and this is depressing prices.”

According to Maheswari, an understanding among industry players to even out monthly production during the tea season is difficult as the industry is too fragmented.