McLeod Russel India, the bulk tea producer of Williamson Magor group, posted a consolidated pre-tax loss before exceptional items of Rs 94.90 crore in the June quarter due to crop loss and nationwide lockdown to contain the Covid-19 pandemic.
In the same period last year pre-tax loss before exceptional items was at Rs 101.56 crore. Total income for the quarter was at Rs 196.40 crore, down by 28 per while net loss stood at Rs 90.52 crore as against a loss of Rs 11.64 crore crore in the corresponding period of last year.
The tea industry faced significant loss of crop due to the lockdown in March and April. Tea prices, thereafter, surged on account of supply mismatch and was expected to reflect in the next two quarters. McLeod said that though the operational performance had improved over the period, the financial position continued to be under stress.
It continued to face challenges with the inter-corporate deposits (ICDs). The company’s notes to accounts mentioned that ICDs given to various group companies to provide them funds for strategic reasons for meeting their various obligations along with interest were outstanding as on date.
These have resulted in mismatch of McLeod’s current resources vis-a-vis its commitments and obligations and liquidity constraints, causing hardship in servicing the short term and long-term debts and meeting other obligations, it said. Auditors, too, flagged ICDs aggregating Rs 2,868.81 crore as on June 30,2020 and mentioned that they were doubtful of recovery.
The company, however, also mentioned in its notes that a draft resolution plan as per the Reserve Bank of India’s (RBI’s) June 7, 2019, circular was pending before lenders for consideration and decision.