6th August 2014 at Kala Kunj at 3.00 p.m.
Good afternoon Ladies and Gentlemen. It is my pleasure to welcome you all to the 20th Anniversary / AGM today. The year 2013 – 14 was a landmark year for your Company not only for its financials but also for the diversification drive that we have undertaken. The highlight of our working was that we continued to invest in businesses of the future with the objective of broad basing our revenues, addressing larger opportunities and de-risking our business model from an excessive dependence on any one segment. I shall now address our areas of business individually.
Tea
The Directors view with great satisfaction your Company’s performance for the year under review. The Tea Division, on the back of good weather and well distributed rainfall earlier in fiscal 2013 – 14, produced a record crop of 5.56 million kgs. 27.67% higher than in the previous year. The price averages continued to be the highest in the industry for Assam teas. The average for the year under review was Rs.220.70 per kg against Rs.210.22 per kg in 2012-13 and Rs.171.52 per kg. in 2011-12. Significantly the all in average for Assam teas in 2013-14 was Rs.149.67 per kg. Once again 2013-14 further reinforced Rossell Tea’s position as quality benchmark and its ability to outperform the market year and year on.
The year 2013-14 began on a sluggish note and quickly settled down as heavier harvests came in. Demand for CTC teas was slow to gain ground, whilst orthodox teas came to a buoyant market due to good as also early demand from Iran. The LC trade with this country was also efficiently managed. This in turn led to higher production of orthodox teas out of Assam by 28 million kgs. over 2012-13. Unlike the previous year, the orthodox market was strong and the additional quantity produced was easily absorbed. Your Company’s product in this scenario was absorbed by the market at attractive prices, averaging Rs.247.07 per kg. against Rs.234.85 per kg. the previous year. The Assam average was at a record high of Rs.200.61 per kg. CTC averages for Assam in 2013 – 14 was Rs.143.99 per kg. Your Company’s average was Rs.186.17 per kg. In a defining performance, yet again Rossell Tea out performed the market.
Exports
The Division’s exports were robust and grew to 1.24 million kgs. as against 1.02 million kgs. in 2012-13. In volume terms this represents a growth of 21.70%, and in value per kg. realization was higher by 35.02%. This is on the back of an outstanding performance in fiscal 2012-13.
Quality
Your Company’s commitment to consistent quality in all its areas of operation has paid handsome dividends by way of continual enhanced recognition of its brand equity. Rossell is seen as a responsible and ethical producer of quality teas; we recognize tea as a food product and are committed to meet the highest safety norms in the industry. To ensure this we are in the process of completing the FSSC : 22000, the world’s highest certification for food processing units.
Whilst we are extremely positive of the Division’s continual and aggressive growth both in the quality and quantity segments, we must recognize the existing concerns which are omnipresent. The acceleration in cost of production despite improved productivity indices is one of them. Manpower migration continues unabated across the north eastern tea belt and your Company is similarly affected; with worker outturn being lower than the previous year on some estates. Mechanical harvesting experiments continue at Nagrijuli T.E. Climate change and its impact witnessed over the last few years has affected production estimates repeatedly.
Development
Modernization and upgradation of assets continue at Rossell. The well defined policy of uprooting and replanting on the Company’s estates is progressing well. In a significant move, given the climate change aberrations, it was decided to introduce irrigation facilities at Dikom, Namsang, Kharikatia and Romai T.Es. These will be further augmented in 2014-15. The Company is committed to improving the workers’ housing and sanitary framework and this was further improved in fiscal 2013-14. Workers appreciation has been forthcoming, which is gratifying. Rossell has a long-term perspective in all areas of development; this is not only continuing but is being reinforced further.
International crop situation
Across the major black tea producing countries till June there is a deficit of 37 million kgs. of which India’s contribution to this deficit is 31 million kgs. Bangladesh is (-)7.3 million kgs., Kenya and Sri Lanka are negative with (-)2.0 million kgs. each.
Prospects
As mentioned earlier, the very dry conditions pertaining since November 2013 into May 2014, have resulted in a very severe drought into the new season. This has affected harvests severely and crops have declined sharply in April and May, whilst June and July have shown marginal declines over last year. It is hoped that cropping from hereon will be normal.
It has been a difficult start as the second flush production was truncated and quality was affected due to a delay in its onset in June, 2014. Your Company is clear that quality will pay in this scenario as evidenced by the segmentation of the quality, which is being well rewarded both in the CTC and orthodox categories. Price-wise the latter category has been impacted due to high stocks in Iran and slow export enquiry. However we are optimistic that the situation will improve from hereon and better returns will be forthcoming. Briefly quality will continue to be rewarded. Our prudent cost management regime will, I am sure, stand us in good stead.
The Tea Division’s performance in 2013 – 14 was exemplary and outstanding. This has been the result of incisive planning, action and implementation. We continue to build on our core competence with great success.
Outlook
Going ahead, the Company intends to counter climatic changes, rising fertilizer costs and wage increases through sustainable agricultural practices leading to enhanced quality, productivity, revenues and profits. Since consistent growth has been its driving force the Company is on the lookout for acquisitions. To conclude on the Tea Division, the prospects of the Indian tea industry, despite a poor start this year, are bright for some pertinent reasons: a growing national population, an established tea drinking tradition, low per capital consumption that is expected to rise in line with enhanced incomes, and finally increased preference for quality. Whilst tea is a cyclical industry, in the medium term the industry will remain demand driven and hence remunerative.
Aerotech Services
I would like to inform you that Aerotech Services is in its ninth year of providing product support services for Original Equipment Manufacturers (OEMs). During the year your company has continued to fulfill its commitments towards the highest level of satisfaction of both the OEM and the customer.
Your company is continuing to enhance the quality of product support for the equipment fitted on various Indian platforms in the three services.
Based on your company’s performance we are in advance stages of signing more contracts with other OEMs.
Rossell Techsys
Rossell Hospitality
I am pleased to inform you that your company’s division Rossell Hospitality is going from strength to strength. I am happy to inform all the Members that today ‘Kebab Xpress’ has 8 operational outlets in strategic locations across NCR.
The brand has decent presence and is looked at as a strong and vibrant Indian QSR. The Same Store Sales have seen a good double digit growth and the entire team is steering the format for enduring business growth.
The business development team is aggressively identifying good potential sites in high streets, office complexes and food courts to achieve the target of opening 20 outlets by the end of current financial year 2014-15.
To achieve our objective of taking Kebab Xpress pan India, next year we intend to open 10 outlets in a new city.
New product launches, ‘new centralized delivery’ and existing interior design concepts will boost sales and enrich our customer’s eating out experience. In this ever challenging environment the company has been able to competitively manage it costs through dynamic supply chain and maintain a low attrition rate compared to the industry.
Conclusion
To conclude, we are optimistic of our prospects as each of our new businesses are perched at the bottom-end of a long industry curve, while our mature tea business continues to report profitable growth.
As a growth-driven corporate, we will continue focusing on enhancing our profitability in our existing businesses with the objective to accelerate momentum and enhance stakeholder value.
Going ahead, I am confident that our performance will validate our business strategy to enter relatively unconnected businesses in response to overarching national and sectoral opportunities.
Thank you,