Boiling Tea-Tags Lend Goodricke The Lift

City-based tea major Goodricke registered an improved performance for the first half of current fiscal ended June 30. Operating profit was higher by 119 per cent.

Sales increased by 21 per cent largely due to the high prices of the commodity in the domestic market.

The average price was more than Rs 91 per kg in January which declined to Rs 84 in April as compared with Rs 75 during the whole of last year.

The company recorded a profit of Rs 3.59 crore for the first half against a loss of Rs 3.11 crore the previous year.

Goodricke could improve its performance due to better interest and cost management. Interest burden declined by more than 42 per cent while depreciation fell three per cent.

 

Last year the company's turnover increased by 23 per cent compared with four per cent in 1996.

The company also performed well in the international markets last year.

Export earnings increased by more than 54 per cent compared with a four per cent decline in 1996.

All these were reflected in the bottomline of the company. During 1997, profit before tax increased by more than 171 per cent while profit after tax recorded a whopping growth of nearly 248 per cent.

Earnings per share (EPS) increased to Rs 5.28 from Rs 1.51 the previous year, while net profit margin increased from 2.99 per cent to 8.45 per cent, return on net worth rose from 6.44 per cent to 19.93 per cent and return on capital employed climbed from 14.88 per cent to 22.14 per cent.

But it is unlikely that the company's goodrun will continue in the current fiscal.

The eight per cent excise duty levy on branded, packaged tea and the fall in domestic and international prices will have an adverse impact on the company's bottomline.

Last year's price boom was mainly due to a crop failure in Kenya and Sri Lanka.

Further a lock-out has been declared at one of its Chalsa tea gardens in Dooars with effect from January 7. Tiru Tea, a loss-making unit from 1993, was converted into a fully owned subsidiary of Goodricke.

The tea company plans to acquire some gardens through its joint venture, Himalaya Goodricke, in Nepal.