In an interview with CNBC-TV18, Kamal Baheti, CFO of Mcleod Russel<http://www.moneycontrol.com/india/stockpricequote/plantations-teacoffee/mcleod-russel-%28india%29/MRI02>said that trying to sustain last year's 28% margin would be a challenge since tea is a seasonal industry. He is confident, however, to see margins touch 33-35%, a jump of around 4-5% due to higher production and prices.
Lower domestic production coupled with production cuts in the African continent, especially, from countries like Kenya which has seen a drop in output of 37 million kg, has led to price rises in India. <http://www.moneycontrol.com/video/business/positive-margins-will-touch-33-35-this-year-mcleod-russel_577305.html?utm_source=Article_Vid> Mcleod Russel produces around 80 million kg in India. “We are targeting to do around 25-27 million kg of exports this year,” said Baheti. *Below is a verbatim transcript of his interview with CNBC-TV18’s Ekta Batra and Reema Tendulkar. For complete details watch the accompanying video.* *Q: In the first quarter you saw your margins double close to about 30% at an operating level. Are these margins sustainable? Are you seeing that kind of an improvement in your realizations and exports?* A: Last year also for the full year we did a margin of around 28%. Tea being a seasonal industry it is very difficult to grow quarter on quarter but we are expecting margins for this year to be in the range of around 33-35%, a jump of around 4-5% because of higher production and higher prices. *Q: How is the export market doing for you currently in terms of realizations and total quantity in terms of exports? We understand that Africa has some production cuts?* A: Africa is already down by around 40 million kg in their production since January till date and there had been a very strong demand. We did a total export of 21 million kg last year. This year we expect it to be around 25-26 million kg, Rs 15 higher than last year. So both on prices and higher quantities we should be doing at least 20% higher as compared to last year. *Q: Out of total amount of sales how much are exports?* A: We produce around 80 million kg in India. We are targeting to do around 25-27 million kg of exports this year. *Q: You had earlier indicated that you are likely to get a tax wavier from Uganda which would be close to about USD 3-4 million. When are you likely to hear on that front?* A: We have already got the certificate for the tax exemption. For the earlier two years, we will get a refund of around USD 3-3.5 million, but going forward every year there will be a saving of around USD 2.5 million for a period up to 2017. In a way it is a big benefit which has been given. This benefit is available for companies which export 90% of their total produce. We export almost 100% of our total production out of Uganda. -- EQUITY BULL -- You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en.
