FINANCIAL STATEMENT ANALYSIS

Paper No 203

PROJECT REPORT

On

Analysis of Tea Industry

Submitted to

Dr VKVasal

By

Priyanshi Gupta

Roll No 2303

MFC-Part-1

1

Acknowledgement

I would like to pay my sincere thanks to Dr V K Vasal Faculty University of Delhi South

Campus for endowing me with the precious insights needed for working out this Project He

has been very instrumental in communicating the core of this project study and thus without

his direction the very inception of this work would not have been possible

Priyanshi Gupta

2

Objective

The aim of this work is to analyze the financial statements of the four companies in the Tea

Industry of India through a few introductory techniques and hence arrive at some

interpretations about their financial health

The parameters judged are numerous ranging from a firmrsquos short term health to the overall

long term stability

The analysis has been carried out on the Financial Statements of the respective companies so

as to get appraised of the financial state of the whole group involved in the operations

Due attempts have been made to standardize the terms across all the financial statements so

that the analysis gathers more meaning and yields the best possible results in spirit

With the conclusion I endeavor to arrive at the optimal determination of the relatively best

company for financial investment considerations

3

Contents

Introduction

Recent Developments

Current Scenario of Indian Tea Industry

Joonktollee Tea amp Industries Ltd

Jay Shree Tea amp Indutries Ltd

Rossell Tea Ltd

Financial Statement Analysis

Ratio Analysis

Cross sectional Analysis

Trend Analysis

Segmant Reporting

Road Ahead

References

4

Mcleod Russel India Ltd

Introduction

The tea industry in India is about 172 years old It occupies an important place and plays a

very useful part in the national economy The industry combines both agriculture and

industry

Tea plantations in India are mainly located in rural hills and backward areas of North-eastern

and Southern States Major tea growing areas of the country are concentrated in Assam West

Bengal Tamil Nadu and Kerala The other areas where tea is grown to a small extent are

Karnataka Tripura Himachal Pradesh Uttaranchal Arunachal Pradesh Manipur Sikkim

Nagaland Meghalaya Mizoram and Bihar The competitors to India in tea export are Sri

Lanka Kenya China Indonesia and Vietnam

There are basically two types of tea sales in India - through Auctions and Private Sales also

called as ex- garden sales In Auction sales tea is auctioned at auction centers through

brokers to buyers who either sell it to wholesalers retailers or export to overseas markets

Tea is generally placed in the Restricted category of the EXIM policy Through special

Import License tea can be imported by paying import duty Since August 1998 tea is being

freely imported from the SAARC countries Under the EQU EPZ units tea can be imported

for re exports after value addition

The tea plantation industry is strictly guided by various statutory Orders through the Acts of

Parliament like - Tea Act Essential Commodities Act Plantation Labour Act Factories Act

PFA Act Standards of Weights and Measures act etc

Quality control strictly conforms to IS 9723 and Prevention of Food amp Adulteration Act

(PFA) Disposal of tea waste is done through the tea waste control of 1959 Many gardens

are now taking quality certifications under ISO 9002

Some statistical facts about the Indian Tea Industry

The total turnover of the industry is around Rs 10000 crores

5

Since independence tea production has grown over 2505 while land area has grown

by 40

Total net foreign exchange earned per annum is around Rs1847 crores

Industry is labour intensive and employs over 11 million workers and generates

income for 10 million people indirectly Women constitute 50 of the workforce

802 MKgs or about 82 of total production of 981 MKgs of tea went for domestic

consumption

6

Recent developments

Inspite of its importance tea industry of India is going through a crisis phase since 1990rsquos

The industry has witnessed many structural changes during recent years which include ndash

emergence of small tea growers in place of large plantation and introduction of bought leaf

factories (BLF) The present crisis has led to the closure of many tea estates (eg 20 estates

in Kerala 30 in West Bengal about 70 in Assam have close down since the late 1990rsquos) In

early 2005 the tea industry witnessed major companies withdrawing from production and

concentrating on the packaging retailing sector (eg Tata Tea HLL etc in India)

In the market the rising competition at domestic as well as international front has deepened

the crisis of tea industry of India

Shift in the composition of demand for tea in the importing countries has had unfavorable

effects on export earnings from tea in India The international market price of tea has

declined from US $ 209 to US $ 203 per kg in between 2005 and 2006 Though countries

like Sri Lanka Kenya and Indonesia are growing fast in their export and higher price

realization during the same period Export of tea from India to some of the major importing

countries like Russia UK and USA are showing a sharp decline

Although per capita consumption of tea in India is amongst the lowest (64 grams) but in

volume terms India is the largest consumer Since 1970 India has become the largest

absolute consumer of tea after UK Larger domestic demand has given a new direction to the

tea industry in the recent years

Major causes of the crisis

Despite Indiarsquos historical success with the tea industry in recent years the industry has

faced serious competition in the international and national market which has lead to the

present crisis Tea prices in India are being driven down by many factors

a) Decline in demand for Indian tea in the global market

b) Defects in auction system

c) Poor price realization

d) Defective market structure

e) Increase in cost of production

7

Recommendations for improvement

Despite being the largest producer and consumer of tea the Indian plantation sector

lacks appropriate mapping of production and consumption levels Due to absence of

accurate estimates the formulation of long term industry wide action plans have been

affected

India has concentrated more on building up its large estates and has given less

attention to processing and improving the quality by proper blending and marketingndash

for higher price realization of their products

Unlike its key competitors India does not have any powerful brand to support its

promotion drive in the international market

Study done by the United Nations Food and Agriculture Organization (FAO 2001)

has suggested the need for reducing the unit cost of production through productivity

gains capacity building of small growers streamlining marketing channels

improving infrastructure tailoring marketing activities to individual countryrsquos

demand propagating health benefits of tea and promotion of organic tea using the tea

mark This is exactly what the domestic tea companies should do for their long term

survival

Improvement of supply chain management inside the country and global tea

marketing network

The tea industry in India has a legacy of corporate farming right from the day of

British rule The current situation in the sector has given ample reason for a rethink

on whether corporate farming can really boost agriculture

International brands like Liptons Brooke Bond of HUL and Tetly tea of Tata Tea etc

are the market leaders and have great power in price determination in both domestic

and international market This needs to be stopped and proper investigation is needed

to curb the wrong practices in the tea market by introducing new laws to regulate the

price movements

It has been observed that the actual producer of tea has no direct link with the

ultimate consumer Therefore the producers do not understand the market demand

choice of the customer it is very important in todayrsquos market economy for long term

sustainability of the industry With the withdrawal of sales restriction the growers

can directly go to the market by building their own brand As the margin of profit is

8

very high at the present domestic retail market Indian tea growers should invest and

take this opportunity for the promotion of their brand at the retail market

Fresh capital inflow is needed right at this moment for the tea industry of India

Investment in new plantations and production machineries must come immediately to

compete in the international market

one of the most important steps from the government part shall be to introduce a

stronger competition law to curb the misuse of corporate buying power and promote

social objectives at the garden level

9

Current Scenario of the Indian Tea Industry

Tea is normally classified based on the processing leaf size and grade Fermentation is the

major process and creates two major classifications

Price Trend

Recently tea prices showed bouyancy which started from 2006 after depressed prices for

almost a decade since 1999A slump in global output decline in production due to poor

monsoon rains steady increase in domestic demand range-bound export volumes and low

growth in production further drove prices upwards in 2009

However Indiarsquos tea production had picked up in the last quarter of 2009 and initial signs are

pointing to better weather in 2010 signalling a possible change in the price trend Even if

prices do not retrace too much producers may have to live with subdued prices during the

year It does appear that the two-year run of rising tea prices is losing steam

Chart 1 Trend in Domestic Tea Prices (source ICRA Research)

10

Production

(956mkgs)

Green

(106 mkgs)Darjeeling

(117 mkgs)Orthodox

(655 mkgs)

CTC

(8682mkgs)

Production consumption and Exports

A secular increase in domestic consumption on the one hand and muted increase in

production on the other has been the main factor supporting the increase in tea prices from

2006 onwards According to ICRArsquos estimates while the average growth in production

during the period 2003-07 was just 19 or so domestic consumption would have increased

annually at around 35 during the same period The steady increase in domestic demand

range-bound export volumes and low ICRA Rating Feature Indian Tea Industry Outlook

Positive for the Short to Medium Term ICRA Rating Services Page 3 of 8

growth in production absorbed the pipeline stock over the years and left virtually no carry-

forward stock at the end of the 2007 season

Production and consumption of Tea in India

Particulars 200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

2009

PRODUCTION (million

Kg)

854 838 878 893 946 982 945 981 6967

CONSUMPTION

(million kg)

673 693 714 735 757 771 786 802 828(E

)

production from January to Sepetmber - Estimated figure

Chart 2 Trend in Indiarsquos Production Consumption and Exports of Tea

Source ICRA Research

11

Exports

Exports play a vital role in maintaining the overall demand-supply balance in the domestic

market Healthy export realisation is also crucial for domestic realisations as un-remunerative

prices in the export market may lead to exporters dumping the produce in the domestic

market which in turn would exert a downward pressure on domestic prices Tea exports

from India have remained range bound over the period 1997-2008 with some year-to-year

fluctuations seen in between

Export of Tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 19905 183098 9199

2006 21873 200653 9173

2007 17875 181011 10126

2008 20312 239291 11781

2009 1312 177704 13542

Export from January to September

Chart 3 Trend in Indiarsquos Tea Exports

Source ICRA Research

Import of Tea from India

The continuous fall in prices of tea coupled with high cost of production has adversely

12

affected the economy of the tea plantations resulting in some tea gardens being abandoned or

under lock out in various states The teas being imported are not necessarily inferior teas and

the practice of blending with Indian teas often serves the purpose of providing teas as per

customers choice and making them price-competitive in international markets

Import of tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 1676 9851 5879

2006 2381 11941 5015

2007 1599 10460 6543

2008 2028 16197 7990

2009 1582 13209 8350

Export from January to August

Profitability of bulk tea players

An increase of around 28 in tea prices on an average in 2008 has meant considerable

increase in the profitability of bulk tea players in FY2008-09 given that around 65 of their

costs are fixed in nature Chart 6 brings out the positive impact of increasing tea prices on the

aggregate total income and profitability indicators2 of some of the large bulk tea players in

India3 which shows significant improvement over the past few years

Chart 4 Trend in Aggregate Income and Profitability Indicators of Bulk Tea

Companies (Source Bombay Stock Exchange)

13

Demand-Supply Gap

For the Indian tea industry the main driver of demand is the domestic market with domestic

consumption now growing at an estimated 35 annually as against around 25 a decade

earlier At the current growth rate the domestic market would require an incremental 30 Mkg

or so annually going forward

As against that tea supply has been growing at less than 2 pa because it is difficult to

improve garden yield of tea even during favourable climatic conditions and new plantations

need a long gestation period of at least 4-5 years Therefore the demand-supply gap in India

is likely to persist at least over the medium term

14

Industry Outlook

The tea industry has every reason to look ahead in 2010 with great deal of optimism and

confidence according to the Tea Market Annual Report published by J Thomas and

Company Private Limited the worlds oldest and largest tea auctioneers

With virtually no carry forward stock and growing domestic demand to act as buffer against

the uncertainties of the global tea trade price levels are expected to remain attractive the

report observes

Early cropping patterns indicate that demand supply equation is likely to be more balance in

2010 Both Kenya and Sri Lanka production is expected to exceed that of 2009 and

indications are that the March crop in North India will be higher than that of the last year

following some much needed rainfall

While the supply situation may be more comfortable than the previous season it is likely to

be absorbed by the domestic market where quality produce will continue to be in great

demand the reports states

Exports

15

Indian exports at the end of 2009 stood at 1915 million kg compared to 2031 million kg in

2008 a decline of 116 million kgs The strong domestic demand ensured that the exporters

were often out priced particularly in first three quarters

Lower orthodox production in North India was also another factor contributing to the decline

in exports As a result exports out of North India at 988 million kg recorded a decline of

174 million kg while exports out of South India at 927 million kg recorded a rise of 58

million kg The per unit value increased from Rs 11781 in 2008 to Rs 13664 in 2009 a gain

of Rs 1883

Exports to Iraq saw a significant increase during the year with an additional 111 million kgs

over 2008 Shipments to Russia grew by 42 million kg and to Afghanistan by 18 million kg

Exports to Egypt suffered a setback the shortfall being 96 million kg Offtake by Iran UAE

UK and the Continent also declined during the period

Companiesrsquo Overview

1 Joonktollee Tea

Joonktollee Tea Co Ltd Was promoted 134 years back to manage the affairs of a small Tea

Estate in Upper Assam It is today synonymous with premium Black and Green Teas

In the year 1954 the House of Bangurs acquired the managing agency and the Company and

brought them under their fold The name of the Company was changed to ldquoJOONKTOLLEE

TEA amp INDUSTRIES LIMITEDrdquo (JTIL) Since then the company has been under the

management of the Bangurs Over the years the Company has grown in stature and size and is

a leader in producing quality teas and enjoying one of the best Assam CTC Mark in North

IndiaCompanyrsquos Estate now comprises of 186798 acres of land with 120282 acres under

plantation

From a leading mark in the Premium Orthodox teas the Company changing with the times

is now regarded as one of the Best Assam CTC mark and does have an unstinted track record

of the business with the brand Its Green Teas are also one of its kinds

16

The performance on the financial front has also been spectacular The Companyrsquos ordinary

capital of Rs80000- has grown to Rs32336 Lacs The Company has an uninterrupted

dividend record for over 50 years

To have a large capital base and net worth two South India based Plantation Companies viz

The Kalasa Tea Produce Company Limited and Cowcoody Estates Limited belonging to the

House of Bangurs stood merged with this Company wef 1st April 2001 The area of

operation of the Company was enlarged and diversified since apart from tea the transferor

Companies also deal in other plantation crops viz coffee pepper cardamom areca vanilla

With a view to consolidate the resources of the Company and to carry out the agro base

activities more conveniently and advantageously with a larger asset base the Company

entered into Scheme of Arrangement wef 1st October 2006 under which a subsidiary and

six other Companies merged with the Company and certain assets were transferred to other

subsidiary Companies The Honrsquoble High Courts of judicature at Kolkata Chennai and

Guwahati sanctioned the Scheme of Arrangement as per the terms consented by the

shareholders and the financial results of 31st March 2008 were prepared after giving effect

of the aforesaid scheme

On BSE as on 22 April 2010

Dividend Yield () 089

Market Cap (Rs Mn) 54277

PE 1284

EPS (Rs) 1307

Face Value (Rs) 10

Volume 23239

17

Shareholding pattern

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 16

27066

75 837 2693455

Total Promoter 16

27066

75 837 2693455

Non Promoter

Institutions

FIBankInsurance 2

11784

3 364

Other 5 593 002 0

Total Institutions 7

11843

6 366 117843

Non-Institution

Bodies Corporate 82 45592 141 40197

18

NRIsOCBs 8 31256 097 926

Others 2391

33168

8 1025 127041

Total Non-

Institution 2481

40853

6 1263 168164

Total Non

Promoter 2488

52697

2 163 286007

Grand Total 2504

32336

47 100 2979462

2 Jayshree Tea amp Industries Limited

Incorporated as Jay Shree Tea Gardens in Oct45 with two tea estates the company changed

its name to Jay Shree Tea and Industries (JSTI) in 1960 It was promoted by B K Birla

Started with an initial paid-up share capital of Rs 786 lac it was raised to Rs 3905 lac in

1947 and thereafter only a rights equity issue was made during 1960 in the ratio 15

The company manages around 12 tea gardens in Assam West Bengal Tamilnadu and

Kerala It has diversified over the years and manufactures plywood in Andamans and

superphosphates and sulphuric acid in West Bengal and has interest in shipping real estate

development tubes and tyres The company is packing its tea from different tea estates in

polypouches and it is sold under brand names -- Sadabahar Shaandar and Sangam

JSTI also acquired Maitrayee Tea Project at Chopra near Islampur with 192 acres under tea

plantation to increase its presence in the area

During 1999-2000 the company established a new factory named Aryaman Tea Estate in

Jalpaiguri Dist which has commenced production from Sep 1999 The factory has the

capacity of 7 lac kgs made tea per annum In June 2000 the B K Birla groups shareholding

in Jay Shree Tea amp Industries has gone up to 4461 from 4015 following the completion

of the companys buy back offer for 1230 lakh equity shares

The company bought back 1230 lac equity shares of Rs10- each at a price of Rs120-per

19

share in 2001-02 and subsequently the total Share Capital as on March 2002 was Rs1067

crores The tea processing factory which is being set up at LedoAssam has commenced its

commercial production with a annual capacity of around 6 lac kg

As the Supreme Court has banned the falling of trees in Andaman amp Nicobar Islandsthe

companys Plywood Operation is still under suspension The 100 subsidiary company viz

Shivas Group Ltd was amalgamated with the company with the prior approval from the

shareholders wef 25022002

It also proposes to set up an International Outsourced Call centre at Kolkata The company is

proposing to delist its equity shares from Delhi Stock exchange as there is no transactions

On BSE as on 22 April 2010

Dividend Yield

() 101

Market Cap (Rs

Mn) 331263

PE 465

EPS (Rs) 6372

Face Value (Rs) 10

Volume 142257

20

Shareholding Pattern as in September 2009

21

3

Mcleod Russell

McLeod Russel has been growing tea in India since 1869 It is today the largest tea

producing company in the world

It manages 47 tea estates in the Assam Valley and 6 tea estates in the Dooars region of West

Bengal Every year its estates produce over 80 million kilograms of black tea which is

marketed worldwide under the registered Elephant trade mark

The company directly employs around 80000 people a large number of whom a women

Mcleod Russel is the worldrsquos largest tea producer

22

Description ( As On

September 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 14 4498169 4025 3685170

Total Promoter 14 4498169 4025 3685170

Non Promoter

Institutions

Mutual Funds

UTI 12 717585 642 716185

FIBankInsurance 31 381238 341

FII 3 200000 179 200000

Other 0 200000 179 200000

Total Institutions 46 1298823 1162 1271276

Non-Institution

Bodies Corporate 821 1655678 1482 1609689

NRIsOCBs 82 42605 038 40195

Others 9658 3679064 3292 2699777

Total Non-

Institution 10561 5377347 4812 4349661

Total Non

Promoter 10607 6676170 5975 5620937

Grand Total 10621 11174339 100 9306107

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

Acknowledgement

I would like to pay my sincere thanks to Dr V K Vasal Faculty University of Delhi South

Campus for endowing me with the precious insights needed for working out this Project He

has been very instrumental in communicating the core of this project study and thus without

his direction the very inception of this work would not have been possible

Priyanshi Gupta

2

Objective

The aim of this work is to analyze the financial statements of the four companies in the Tea

Industry of India through a few introductory techniques and hence arrive at some

interpretations about their financial health

The parameters judged are numerous ranging from a firmrsquos short term health to the overall

long term stability

The analysis has been carried out on the Financial Statements of the respective companies so

as to get appraised of the financial state of the whole group involved in the operations

Due attempts have been made to standardize the terms across all the financial statements so

that the analysis gathers more meaning and yields the best possible results in spirit

With the conclusion I endeavor to arrive at the optimal determination of the relatively best

company for financial investment considerations

3

Contents

Introduction

Recent Developments

Current Scenario of Indian Tea Industry

Joonktollee Tea amp Industries Ltd

Jay Shree Tea amp Indutries Ltd

Rossell Tea Ltd

Financial Statement Analysis

Ratio Analysis

Cross sectional Analysis

Trend Analysis

Segmant Reporting

Road Ahead

References

4

Mcleod Russel India Ltd

Introduction

The tea industry in India is about 172 years old It occupies an important place and plays a

very useful part in the national economy The industry combines both agriculture and

industry

Tea plantations in India are mainly located in rural hills and backward areas of North-eastern

and Southern States Major tea growing areas of the country are concentrated in Assam West

Bengal Tamil Nadu and Kerala The other areas where tea is grown to a small extent are

Karnataka Tripura Himachal Pradesh Uttaranchal Arunachal Pradesh Manipur Sikkim

Nagaland Meghalaya Mizoram and Bihar The competitors to India in tea export are Sri

Lanka Kenya China Indonesia and Vietnam

There are basically two types of tea sales in India - through Auctions and Private Sales also

called as ex- garden sales In Auction sales tea is auctioned at auction centers through

brokers to buyers who either sell it to wholesalers retailers or export to overseas markets

Tea is generally placed in the Restricted category of the EXIM policy Through special

Import License tea can be imported by paying import duty Since August 1998 tea is being

freely imported from the SAARC countries Under the EQU EPZ units tea can be imported

for re exports after value addition

The tea plantation industry is strictly guided by various statutory Orders through the Acts of

Parliament like - Tea Act Essential Commodities Act Plantation Labour Act Factories Act

PFA Act Standards of Weights and Measures act etc

Quality control strictly conforms to IS 9723 and Prevention of Food amp Adulteration Act

(PFA) Disposal of tea waste is done through the tea waste control of 1959 Many gardens

are now taking quality certifications under ISO 9002

Some statistical facts about the Indian Tea Industry

The total turnover of the industry is around Rs 10000 crores

5

Since independence tea production has grown over 2505 while land area has grown

by 40

Total net foreign exchange earned per annum is around Rs1847 crores

Industry is labour intensive and employs over 11 million workers and generates

income for 10 million people indirectly Women constitute 50 of the workforce

802 MKgs or about 82 of total production of 981 MKgs of tea went for domestic

consumption

6

Recent developments

Inspite of its importance tea industry of India is going through a crisis phase since 1990rsquos

The industry has witnessed many structural changes during recent years which include ndash

emergence of small tea growers in place of large plantation and introduction of bought leaf

factories (BLF) The present crisis has led to the closure of many tea estates (eg 20 estates

in Kerala 30 in West Bengal about 70 in Assam have close down since the late 1990rsquos) In

early 2005 the tea industry witnessed major companies withdrawing from production and

concentrating on the packaging retailing sector (eg Tata Tea HLL etc in India)

In the market the rising competition at domestic as well as international front has deepened

the crisis of tea industry of India

Shift in the composition of demand for tea in the importing countries has had unfavorable

effects on export earnings from tea in India The international market price of tea has

declined from US $ 209 to US $ 203 per kg in between 2005 and 2006 Though countries

like Sri Lanka Kenya and Indonesia are growing fast in their export and higher price

realization during the same period Export of tea from India to some of the major importing

countries like Russia UK and USA are showing a sharp decline

Although per capita consumption of tea in India is amongst the lowest (64 grams) but in

volume terms India is the largest consumer Since 1970 India has become the largest

absolute consumer of tea after UK Larger domestic demand has given a new direction to the

tea industry in the recent years

Major causes of the crisis

Despite Indiarsquos historical success with the tea industry in recent years the industry has

faced serious competition in the international and national market which has lead to the

present crisis Tea prices in India are being driven down by many factors

a) Decline in demand for Indian tea in the global market

b) Defects in auction system

c) Poor price realization

d) Defective market structure

e) Increase in cost of production

7

Recommendations for improvement

Despite being the largest producer and consumer of tea the Indian plantation sector

lacks appropriate mapping of production and consumption levels Due to absence of

accurate estimates the formulation of long term industry wide action plans have been

affected

India has concentrated more on building up its large estates and has given less

attention to processing and improving the quality by proper blending and marketingndash

for higher price realization of their products

Unlike its key competitors India does not have any powerful brand to support its

promotion drive in the international market

Study done by the United Nations Food and Agriculture Organization (FAO 2001)

has suggested the need for reducing the unit cost of production through productivity

gains capacity building of small growers streamlining marketing channels

improving infrastructure tailoring marketing activities to individual countryrsquos

demand propagating health benefits of tea and promotion of organic tea using the tea

mark This is exactly what the domestic tea companies should do for their long term

survival

Improvement of supply chain management inside the country and global tea

marketing network

The tea industry in India has a legacy of corporate farming right from the day of

British rule The current situation in the sector has given ample reason for a rethink

on whether corporate farming can really boost agriculture

International brands like Liptons Brooke Bond of HUL and Tetly tea of Tata Tea etc

are the market leaders and have great power in price determination in both domestic

and international market This needs to be stopped and proper investigation is needed

to curb the wrong practices in the tea market by introducing new laws to regulate the

price movements

It has been observed that the actual producer of tea has no direct link with the

ultimate consumer Therefore the producers do not understand the market demand

choice of the customer it is very important in todayrsquos market economy for long term

sustainability of the industry With the withdrawal of sales restriction the growers

can directly go to the market by building their own brand As the margin of profit is

8

very high at the present domestic retail market Indian tea growers should invest and

take this opportunity for the promotion of their brand at the retail market

Fresh capital inflow is needed right at this moment for the tea industry of India

Investment in new plantations and production machineries must come immediately to

compete in the international market

one of the most important steps from the government part shall be to introduce a

stronger competition law to curb the misuse of corporate buying power and promote

social objectives at the garden level

9

Current Scenario of the Indian Tea Industry

Tea is normally classified based on the processing leaf size and grade Fermentation is the

major process and creates two major classifications

Price Trend

Recently tea prices showed bouyancy which started from 2006 after depressed prices for

almost a decade since 1999A slump in global output decline in production due to poor

monsoon rains steady increase in domestic demand range-bound export volumes and low

growth in production further drove prices upwards in 2009

However Indiarsquos tea production had picked up in the last quarter of 2009 and initial signs are

pointing to better weather in 2010 signalling a possible change in the price trend Even if

prices do not retrace too much producers may have to live with subdued prices during the

year It does appear that the two-year run of rising tea prices is losing steam

Chart 1 Trend in Domestic Tea Prices (source ICRA Research)

10

Production

(956mkgs)

Green

(106 mkgs)Darjeeling

(117 mkgs)Orthodox

(655 mkgs)

CTC

(8682mkgs)

Production consumption and Exports

A secular increase in domestic consumption on the one hand and muted increase in

production on the other has been the main factor supporting the increase in tea prices from

2006 onwards According to ICRArsquos estimates while the average growth in production

during the period 2003-07 was just 19 or so domestic consumption would have increased

annually at around 35 during the same period The steady increase in domestic demand

range-bound export volumes and low ICRA Rating Feature Indian Tea Industry Outlook

Positive for the Short to Medium Term ICRA Rating Services Page 3 of 8

growth in production absorbed the pipeline stock over the years and left virtually no carry-

forward stock at the end of the 2007 season

Production and consumption of Tea in India

Particulars 200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

2009

PRODUCTION (million

Kg)

854 838 878 893 946 982 945 981 6967

CONSUMPTION

(million kg)

673 693 714 735 757 771 786 802 828(E

)

production from January to Sepetmber - Estimated figure

Chart 2 Trend in Indiarsquos Production Consumption and Exports of Tea

Source ICRA Research

11

Exports

Exports play a vital role in maintaining the overall demand-supply balance in the domestic

market Healthy export realisation is also crucial for domestic realisations as un-remunerative

prices in the export market may lead to exporters dumping the produce in the domestic

market which in turn would exert a downward pressure on domestic prices Tea exports

from India have remained range bound over the period 1997-2008 with some year-to-year

fluctuations seen in between

Export of Tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 19905 183098 9199

2006 21873 200653 9173

2007 17875 181011 10126

2008 20312 239291 11781

2009 1312 177704 13542

Export from January to September

Chart 3 Trend in Indiarsquos Tea Exports

Source ICRA Research

Import of Tea from India

The continuous fall in prices of tea coupled with high cost of production has adversely

12

affected the economy of the tea plantations resulting in some tea gardens being abandoned or

under lock out in various states The teas being imported are not necessarily inferior teas and

the practice of blending with Indian teas often serves the purpose of providing teas as per

customers choice and making them price-competitive in international markets

Import of tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 1676 9851 5879

2006 2381 11941 5015

2007 1599 10460 6543

2008 2028 16197 7990

2009 1582 13209 8350

Export from January to August

Profitability of bulk tea players

An increase of around 28 in tea prices on an average in 2008 has meant considerable

increase in the profitability of bulk tea players in FY2008-09 given that around 65 of their

costs are fixed in nature Chart 6 brings out the positive impact of increasing tea prices on the

aggregate total income and profitability indicators2 of some of the large bulk tea players in

India3 which shows significant improvement over the past few years

Chart 4 Trend in Aggregate Income and Profitability Indicators of Bulk Tea

Companies (Source Bombay Stock Exchange)

13

Demand-Supply Gap

For the Indian tea industry the main driver of demand is the domestic market with domestic

consumption now growing at an estimated 35 annually as against around 25 a decade

earlier At the current growth rate the domestic market would require an incremental 30 Mkg

or so annually going forward

As against that tea supply has been growing at less than 2 pa because it is difficult to

improve garden yield of tea even during favourable climatic conditions and new plantations

need a long gestation period of at least 4-5 years Therefore the demand-supply gap in India

is likely to persist at least over the medium term

14

Industry Outlook

The tea industry has every reason to look ahead in 2010 with great deal of optimism and

confidence according to the Tea Market Annual Report published by J Thomas and

Company Private Limited the worlds oldest and largest tea auctioneers

With virtually no carry forward stock and growing domestic demand to act as buffer against

the uncertainties of the global tea trade price levels are expected to remain attractive the

report observes

Early cropping patterns indicate that demand supply equation is likely to be more balance in

2010 Both Kenya and Sri Lanka production is expected to exceed that of 2009 and

indications are that the March crop in North India will be higher than that of the last year

following some much needed rainfall

While the supply situation may be more comfortable than the previous season it is likely to

be absorbed by the domestic market where quality produce will continue to be in great

demand the reports states

Exports

15

Indian exports at the end of 2009 stood at 1915 million kg compared to 2031 million kg in

2008 a decline of 116 million kgs The strong domestic demand ensured that the exporters

were often out priced particularly in first three quarters

Lower orthodox production in North India was also another factor contributing to the decline

in exports As a result exports out of North India at 988 million kg recorded a decline of

174 million kg while exports out of South India at 927 million kg recorded a rise of 58

million kg The per unit value increased from Rs 11781 in 2008 to Rs 13664 in 2009 a gain

of Rs 1883

Exports to Iraq saw a significant increase during the year with an additional 111 million kgs

over 2008 Shipments to Russia grew by 42 million kg and to Afghanistan by 18 million kg

Exports to Egypt suffered a setback the shortfall being 96 million kg Offtake by Iran UAE

UK and the Continent also declined during the period

Companiesrsquo Overview

1 Joonktollee Tea

Joonktollee Tea Co Ltd Was promoted 134 years back to manage the affairs of a small Tea

Estate in Upper Assam It is today synonymous with premium Black and Green Teas

In the year 1954 the House of Bangurs acquired the managing agency and the Company and

brought them under their fold The name of the Company was changed to ldquoJOONKTOLLEE

TEA amp INDUSTRIES LIMITEDrdquo (JTIL) Since then the company has been under the

management of the Bangurs Over the years the Company has grown in stature and size and is

a leader in producing quality teas and enjoying one of the best Assam CTC Mark in North

IndiaCompanyrsquos Estate now comprises of 186798 acres of land with 120282 acres under

plantation

From a leading mark in the Premium Orthodox teas the Company changing with the times

is now regarded as one of the Best Assam CTC mark and does have an unstinted track record

of the business with the brand Its Green Teas are also one of its kinds

16

The performance on the financial front has also been spectacular The Companyrsquos ordinary

capital of Rs80000- has grown to Rs32336 Lacs The Company has an uninterrupted

dividend record for over 50 years

To have a large capital base and net worth two South India based Plantation Companies viz

The Kalasa Tea Produce Company Limited and Cowcoody Estates Limited belonging to the

House of Bangurs stood merged with this Company wef 1st April 2001 The area of

operation of the Company was enlarged and diversified since apart from tea the transferor

Companies also deal in other plantation crops viz coffee pepper cardamom areca vanilla

With a view to consolidate the resources of the Company and to carry out the agro base

activities more conveniently and advantageously with a larger asset base the Company

entered into Scheme of Arrangement wef 1st October 2006 under which a subsidiary and

six other Companies merged with the Company and certain assets were transferred to other

subsidiary Companies The Honrsquoble High Courts of judicature at Kolkata Chennai and

Guwahati sanctioned the Scheme of Arrangement as per the terms consented by the

shareholders and the financial results of 31st March 2008 were prepared after giving effect

of the aforesaid scheme

On BSE as on 22 April 2010

Dividend Yield () 089

Market Cap (Rs Mn) 54277

PE 1284

EPS (Rs) 1307

Face Value (Rs) 10

Volume 23239

17

Shareholding pattern

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 16

27066

75 837 2693455

Total Promoter 16

27066

75 837 2693455

Non Promoter

Institutions

FIBankInsurance 2

11784

3 364

Other 5 593 002 0

Total Institutions 7

11843

6 366 117843

Non-Institution

Bodies Corporate 82 45592 141 40197

18

NRIsOCBs 8 31256 097 926

Others 2391

33168

8 1025 127041

Total Non-

Institution 2481

40853

6 1263 168164

Total Non

Promoter 2488

52697

2 163 286007

Grand Total 2504

32336

47 100 2979462

2 Jayshree Tea amp Industries Limited

Incorporated as Jay Shree Tea Gardens in Oct45 with two tea estates the company changed

its name to Jay Shree Tea and Industries (JSTI) in 1960 It was promoted by B K Birla

Started with an initial paid-up share capital of Rs 786 lac it was raised to Rs 3905 lac in

1947 and thereafter only a rights equity issue was made during 1960 in the ratio 15

The company manages around 12 tea gardens in Assam West Bengal Tamilnadu and

Kerala It has diversified over the years and manufactures plywood in Andamans and

superphosphates and sulphuric acid in West Bengal and has interest in shipping real estate

development tubes and tyres The company is packing its tea from different tea estates in

polypouches and it is sold under brand names -- Sadabahar Shaandar and Sangam

JSTI also acquired Maitrayee Tea Project at Chopra near Islampur with 192 acres under tea

plantation to increase its presence in the area

During 1999-2000 the company established a new factory named Aryaman Tea Estate in

Jalpaiguri Dist which has commenced production from Sep 1999 The factory has the

capacity of 7 lac kgs made tea per annum In June 2000 the B K Birla groups shareholding

in Jay Shree Tea amp Industries has gone up to 4461 from 4015 following the completion

of the companys buy back offer for 1230 lakh equity shares

The company bought back 1230 lac equity shares of Rs10- each at a price of Rs120-per

19

share in 2001-02 and subsequently the total Share Capital as on March 2002 was Rs1067

crores The tea processing factory which is being set up at LedoAssam has commenced its

commercial production with a annual capacity of around 6 lac kg

As the Supreme Court has banned the falling of trees in Andaman amp Nicobar Islandsthe

companys Plywood Operation is still under suspension The 100 subsidiary company viz

Shivas Group Ltd was amalgamated with the company with the prior approval from the

shareholders wef 25022002

It also proposes to set up an International Outsourced Call centre at Kolkata The company is

proposing to delist its equity shares from Delhi Stock exchange as there is no transactions

On BSE as on 22 April 2010

Dividend Yield

() 101

Market Cap (Rs

Mn) 331263

PE 465

EPS (Rs) 6372

Face Value (Rs) 10

Volume 142257

20

Shareholding Pattern as in September 2009

21

3

Mcleod Russell

McLeod Russel has been growing tea in India since 1869 It is today the largest tea

producing company in the world

It manages 47 tea estates in the Assam Valley and 6 tea estates in the Dooars region of West

Bengal Every year its estates produce over 80 million kilograms of black tea which is

marketed worldwide under the registered Elephant trade mark

The company directly employs around 80000 people a large number of whom a women

Mcleod Russel is the worldrsquos largest tea producer

22

Description ( As On

September 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 14 4498169 4025 3685170

Total Promoter 14 4498169 4025 3685170

Non Promoter

Institutions

Mutual Funds

UTI 12 717585 642 716185

FIBankInsurance 31 381238 341

FII 3 200000 179 200000

Other 0 200000 179 200000

Total Institutions 46 1298823 1162 1271276

Non-Institution

Bodies Corporate 821 1655678 1482 1609689

NRIsOCBs 82 42605 038 40195

Others 9658 3679064 3292 2699777

Total Non-

Institution 10561 5377347 4812 4349661

Total Non

Promoter 10607 6676170 5975 5620937

Grand Total 10621 11174339 100 9306107

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

Objective

The aim of this work is to analyze the financial statements of the four companies in the Tea

Industry of India through a few introductory techniques and hence arrive at some

interpretations about their financial health

The parameters judged are numerous ranging from a firmrsquos short term health to the overall

long term stability

The analysis has been carried out on the Financial Statements of the respective companies so

as to get appraised of the financial state of the whole group involved in the operations

Due attempts have been made to standardize the terms across all the financial statements so

that the analysis gathers more meaning and yields the best possible results in spirit

With the conclusion I endeavor to arrive at the optimal determination of the relatively best

company for financial investment considerations

3

Contents

Introduction

Recent Developments

Current Scenario of Indian Tea Industry

Joonktollee Tea amp Industries Ltd

Jay Shree Tea amp Indutries Ltd

Rossell Tea Ltd

Financial Statement Analysis

Ratio Analysis

Cross sectional Analysis

Trend Analysis

Segmant Reporting

Road Ahead

References

4

Mcleod Russel India Ltd

Introduction

The tea industry in India is about 172 years old It occupies an important place and plays a

very useful part in the national economy The industry combines both agriculture and

industry

Tea plantations in India are mainly located in rural hills and backward areas of North-eastern

and Southern States Major tea growing areas of the country are concentrated in Assam West

Bengal Tamil Nadu and Kerala The other areas where tea is grown to a small extent are

Karnataka Tripura Himachal Pradesh Uttaranchal Arunachal Pradesh Manipur Sikkim

Nagaland Meghalaya Mizoram and Bihar The competitors to India in tea export are Sri

Lanka Kenya China Indonesia and Vietnam

There are basically two types of tea sales in India - through Auctions and Private Sales also

called as ex- garden sales In Auction sales tea is auctioned at auction centers through

brokers to buyers who either sell it to wholesalers retailers or export to overseas markets

Tea is generally placed in the Restricted category of the EXIM policy Through special

Import License tea can be imported by paying import duty Since August 1998 tea is being

freely imported from the SAARC countries Under the EQU EPZ units tea can be imported

for re exports after value addition

The tea plantation industry is strictly guided by various statutory Orders through the Acts of

Parliament like - Tea Act Essential Commodities Act Plantation Labour Act Factories Act

PFA Act Standards of Weights and Measures act etc

Quality control strictly conforms to IS 9723 and Prevention of Food amp Adulteration Act

(PFA) Disposal of tea waste is done through the tea waste control of 1959 Many gardens

are now taking quality certifications under ISO 9002

Some statistical facts about the Indian Tea Industry

The total turnover of the industry is around Rs 10000 crores

5

Since independence tea production has grown over 2505 while land area has grown

by 40

Total net foreign exchange earned per annum is around Rs1847 crores

Industry is labour intensive and employs over 11 million workers and generates

income for 10 million people indirectly Women constitute 50 of the workforce

802 MKgs or about 82 of total production of 981 MKgs of tea went for domestic

consumption

6

Recent developments

Inspite of its importance tea industry of India is going through a crisis phase since 1990rsquos

The industry has witnessed many structural changes during recent years which include ndash

emergence of small tea growers in place of large plantation and introduction of bought leaf

factories (BLF) The present crisis has led to the closure of many tea estates (eg 20 estates

in Kerala 30 in West Bengal about 70 in Assam have close down since the late 1990rsquos) In

early 2005 the tea industry witnessed major companies withdrawing from production and

concentrating on the packaging retailing sector (eg Tata Tea HLL etc in India)

In the market the rising competition at domestic as well as international front has deepened

the crisis of tea industry of India

Shift in the composition of demand for tea in the importing countries has had unfavorable

effects on export earnings from tea in India The international market price of tea has

declined from US $ 209 to US $ 203 per kg in between 2005 and 2006 Though countries

like Sri Lanka Kenya and Indonesia are growing fast in their export and higher price

realization during the same period Export of tea from India to some of the major importing

countries like Russia UK and USA are showing a sharp decline

Although per capita consumption of tea in India is amongst the lowest (64 grams) but in

volume terms India is the largest consumer Since 1970 India has become the largest

absolute consumer of tea after UK Larger domestic demand has given a new direction to the

tea industry in the recent years

Major causes of the crisis

Despite Indiarsquos historical success with the tea industry in recent years the industry has

faced serious competition in the international and national market which has lead to the

present crisis Tea prices in India are being driven down by many factors

a) Decline in demand for Indian tea in the global market

b) Defects in auction system

c) Poor price realization

d) Defective market structure

e) Increase in cost of production

7

Recommendations for improvement

Despite being the largest producer and consumer of tea the Indian plantation sector

lacks appropriate mapping of production and consumption levels Due to absence of

accurate estimates the formulation of long term industry wide action plans have been

affected

India has concentrated more on building up its large estates and has given less

attention to processing and improving the quality by proper blending and marketingndash

for higher price realization of their products

Unlike its key competitors India does not have any powerful brand to support its

promotion drive in the international market

Study done by the United Nations Food and Agriculture Organization (FAO 2001)

has suggested the need for reducing the unit cost of production through productivity

gains capacity building of small growers streamlining marketing channels

improving infrastructure tailoring marketing activities to individual countryrsquos

demand propagating health benefits of tea and promotion of organic tea using the tea

mark This is exactly what the domestic tea companies should do for their long term

survival

Improvement of supply chain management inside the country and global tea

marketing network

The tea industry in India has a legacy of corporate farming right from the day of

British rule The current situation in the sector has given ample reason for a rethink

on whether corporate farming can really boost agriculture

International brands like Liptons Brooke Bond of HUL and Tetly tea of Tata Tea etc

are the market leaders and have great power in price determination in both domestic

and international market This needs to be stopped and proper investigation is needed

to curb the wrong practices in the tea market by introducing new laws to regulate the

price movements

It has been observed that the actual producer of tea has no direct link with the

ultimate consumer Therefore the producers do not understand the market demand

choice of the customer it is very important in todayrsquos market economy for long term

sustainability of the industry With the withdrawal of sales restriction the growers

can directly go to the market by building their own brand As the margin of profit is

8

very high at the present domestic retail market Indian tea growers should invest and

take this opportunity for the promotion of their brand at the retail market

Fresh capital inflow is needed right at this moment for the tea industry of India

Investment in new plantations and production machineries must come immediately to

compete in the international market

one of the most important steps from the government part shall be to introduce a

stronger competition law to curb the misuse of corporate buying power and promote

social objectives at the garden level

9

Current Scenario of the Indian Tea Industry

Tea is normally classified based on the processing leaf size and grade Fermentation is the

major process and creates two major classifications

Price Trend

Recently tea prices showed bouyancy which started from 2006 after depressed prices for

almost a decade since 1999A slump in global output decline in production due to poor

monsoon rains steady increase in domestic demand range-bound export volumes and low

growth in production further drove prices upwards in 2009

However Indiarsquos tea production had picked up in the last quarter of 2009 and initial signs are

pointing to better weather in 2010 signalling a possible change in the price trend Even if

prices do not retrace too much producers may have to live with subdued prices during the

year It does appear that the two-year run of rising tea prices is losing steam

Chart 1 Trend in Domestic Tea Prices (source ICRA Research)

10

Production

(956mkgs)

Green

(106 mkgs)Darjeeling

(117 mkgs)Orthodox

(655 mkgs)

CTC

(8682mkgs)

Production consumption and Exports

A secular increase in domestic consumption on the one hand and muted increase in

production on the other has been the main factor supporting the increase in tea prices from

2006 onwards According to ICRArsquos estimates while the average growth in production

during the period 2003-07 was just 19 or so domestic consumption would have increased

annually at around 35 during the same period The steady increase in domestic demand

range-bound export volumes and low ICRA Rating Feature Indian Tea Industry Outlook

Positive for the Short to Medium Term ICRA Rating Services Page 3 of 8

growth in production absorbed the pipeline stock over the years and left virtually no carry-

forward stock at the end of the 2007 season

Production and consumption of Tea in India

Particulars 200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

2009

PRODUCTION (million

Kg)

854 838 878 893 946 982 945 981 6967

CONSUMPTION

(million kg)

673 693 714 735 757 771 786 802 828(E

)

production from January to Sepetmber - Estimated figure

Chart 2 Trend in Indiarsquos Production Consumption and Exports of Tea

Source ICRA Research

11

Exports

Exports play a vital role in maintaining the overall demand-supply balance in the domestic

market Healthy export realisation is also crucial for domestic realisations as un-remunerative

prices in the export market may lead to exporters dumping the produce in the domestic

market which in turn would exert a downward pressure on domestic prices Tea exports

from India have remained range bound over the period 1997-2008 with some year-to-year

fluctuations seen in between

Export of Tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 19905 183098 9199

2006 21873 200653 9173

2007 17875 181011 10126

2008 20312 239291 11781

2009 1312 177704 13542

Export from January to September

Chart 3 Trend in Indiarsquos Tea Exports

Source ICRA Research

Import of Tea from India

The continuous fall in prices of tea coupled with high cost of production has adversely

12

affected the economy of the tea plantations resulting in some tea gardens being abandoned or

under lock out in various states The teas being imported are not necessarily inferior teas and

the practice of blending with Indian teas often serves the purpose of providing teas as per

customers choice and making them price-competitive in international markets

Import of tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 1676 9851 5879

2006 2381 11941 5015

2007 1599 10460 6543

2008 2028 16197 7990

2009 1582 13209 8350

Export from January to August

Profitability of bulk tea players

An increase of around 28 in tea prices on an average in 2008 has meant considerable

increase in the profitability of bulk tea players in FY2008-09 given that around 65 of their

costs are fixed in nature Chart 6 brings out the positive impact of increasing tea prices on the

aggregate total income and profitability indicators2 of some of the large bulk tea players in

India3 which shows significant improvement over the past few years

Chart 4 Trend in Aggregate Income and Profitability Indicators of Bulk Tea

Companies (Source Bombay Stock Exchange)

13

Demand-Supply Gap

For the Indian tea industry the main driver of demand is the domestic market with domestic

consumption now growing at an estimated 35 annually as against around 25 a decade

earlier At the current growth rate the domestic market would require an incremental 30 Mkg

or so annually going forward

As against that tea supply has been growing at less than 2 pa because it is difficult to

improve garden yield of tea even during favourable climatic conditions and new plantations

need a long gestation period of at least 4-5 years Therefore the demand-supply gap in India

is likely to persist at least over the medium term

14

Industry Outlook

The tea industry has every reason to look ahead in 2010 with great deal of optimism and

confidence according to the Tea Market Annual Report published by J Thomas and

Company Private Limited the worlds oldest and largest tea auctioneers

With virtually no carry forward stock and growing domestic demand to act as buffer against

the uncertainties of the global tea trade price levels are expected to remain attractive the

report observes

Early cropping patterns indicate that demand supply equation is likely to be more balance in

2010 Both Kenya and Sri Lanka production is expected to exceed that of 2009 and

indications are that the March crop in North India will be higher than that of the last year

following some much needed rainfall

While the supply situation may be more comfortable than the previous season it is likely to

be absorbed by the domestic market where quality produce will continue to be in great

demand the reports states

Exports

15

Indian exports at the end of 2009 stood at 1915 million kg compared to 2031 million kg in

2008 a decline of 116 million kgs The strong domestic demand ensured that the exporters

were often out priced particularly in first three quarters

Lower orthodox production in North India was also another factor contributing to the decline

in exports As a result exports out of North India at 988 million kg recorded a decline of

174 million kg while exports out of South India at 927 million kg recorded a rise of 58

million kg The per unit value increased from Rs 11781 in 2008 to Rs 13664 in 2009 a gain

of Rs 1883

Exports to Iraq saw a significant increase during the year with an additional 111 million kgs

over 2008 Shipments to Russia grew by 42 million kg and to Afghanistan by 18 million kg

Exports to Egypt suffered a setback the shortfall being 96 million kg Offtake by Iran UAE

UK and the Continent also declined during the period

Companiesrsquo Overview

1 Joonktollee Tea

Joonktollee Tea Co Ltd Was promoted 134 years back to manage the affairs of a small Tea

Estate in Upper Assam It is today synonymous with premium Black and Green Teas

In the year 1954 the House of Bangurs acquired the managing agency and the Company and

brought them under their fold The name of the Company was changed to ldquoJOONKTOLLEE

TEA amp INDUSTRIES LIMITEDrdquo (JTIL) Since then the company has been under the

management of the Bangurs Over the years the Company has grown in stature and size and is

a leader in producing quality teas and enjoying one of the best Assam CTC Mark in North

IndiaCompanyrsquos Estate now comprises of 186798 acres of land with 120282 acres under

plantation

From a leading mark in the Premium Orthodox teas the Company changing with the times

is now regarded as one of the Best Assam CTC mark and does have an unstinted track record

of the business with the brand Its Green Teas are also one of its kinds

16

The performance on the financial front has also been spectacular The Companyrsquos ordinary

capital of Rs80000- has grown to Rs32336 Lacs The Company has an uninterrupted

dividend record for over 50 years

To have a large capital base and net worth two South India based Plantation Companies viz

The Kalasa Tea Produce Company Limited and Cowcoody Estates Limited belonging to the

House of Bangurs stood merged with this Company wef 1st April 2001 The area of

operation of the Company was enlarged and diversified since apart from tea the transferor

Companies also deal in other plantation crops viz coffee pepper cardamom areca vanilla

With a view to consolidate the resources of the Company and to carry out the agro base

activities more conveniently and advantageously with a larger asset base the Company

entered into Scheme of Arrangement wef 1st October 2006 under which a subsidiary and

six other Companies merged with the Company and certain assets were transferred to other

subsidiary Companies The Honrsquoble High Courts of judicature at Kolkata Chennai and

Guwahati sanctioned the Scheme of Arrangement as per the terms consented by the

shareholders and the financial results of 31st March 2008 were prepared after giving effect

of the aforesaid scheme

On BSE as on 22 April 2010

Dividend Yield () 089

Market Cap (Rs Mn) 54277

PE 1284

EPS (Rs) 1307

Face Value (Rs) 10

Volume 23239

17

Shareholding pattern

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 16

27066

75 837 2693455

Total Promoter 16

27066

75 837 2693455

Non Promoter

Institutions

FIBankInsurance 2

11784

3 364

Other 5 593 002 0

Total Institutions 7

11843

6 366 117843

Non-Institution

Bodies Corporate 82 45592 141 40197

18

NRIsOCBs 8 31256 097 926

Others 2391

33168

8 1025 127041

Total Non-

Institution 2481

40853

6 1263 168164

Total Non

Promoter 2488

52697

2 163 286007

Grand Total 2504

32336

47 100 2979462

2 Jayshree Tea amp Industries Limited

Incorporated as Jay Shree Tea Gardens in Oct45 with two tea estates the company changed

its name to Jay Shree Tea and Industries (JSTI) in 1960 It was promoted by B K Birla

Started with an initial paid-up share capital of Rs 786 lac it was raised to Rs 3905 lac in

1947 and thereafter only a rights equity issue was made during 1960 in the ratio 15

The company manages around 12 tea gardens in Assam West Bengal Tamilnadu and

Kerala It has diversified over the years and manufactures plywood in Andamans and

superphosphates and sulphuric acid in West Bengal and has interest in shipping real estate

development tubes and tyres The company is packing its tea from different tea estates in

polypouches and it is sold under brand names -- Sadabahar Shaandar and Sangam

JSTI also acquired Maitrayee Tea Project at Chopra near Islampur with 192 acres under tea

plantation to increase its presence in the area

During 1999-2000 the company established a new factory named Aryaman Tea Estate in

Jalpaiguri Dist which has commenced production from Sep 1999 The factory has the

capacity of 7 lac kgs made tea per annum In June 2000 the B K Birla groups shareholding

in Jay Shree Tea amp Industries has gone up to 4461 from 4015 following the completion

of the companys buy back offer for 1230 lakh equity shares

The company bought back 1230 lac equity shares of Rs10- each at a price of Rs120-per

19

share in 2001-02 and subsequently the total Share Capital as on March 2002 was Rs1067

crores The tea processing factory which is being set up at LedoAssam has commenced its

commercial production with a annual capacity of around 6 lac kg

As the Supreme Court has banned the falling of trees in Andaman amp Nicobar Islandsthe

companys Plywood Operation is still under suspension The 100 subsidiary company viz

Shivas Group Ltd was amalgamated with the company with the prior approval from the

shareholders wef 25022002

It also proposes to set up an International Outsourced Call centre at Kolkata The company is

proposing to delist its equity shares from Delhi Stock exchange as there is no transactions

On BSE as on 22 April 2010

Dividend Yield

() 101

Market Cap (Rs

Mn) 331263

PE 465

EPS (Rs) 6372

Face Value (Rs) 10

Volume 142257

20

Shareholding Pattern as in September 2009

21

3

Mcleod Russell

McLeod Russel has been growing tea in India since 1869 It is today the largest tea

producing company in the world

It manages 47 tea estates in the Assam Valley and 6 tea estates in the Dooars region of West

Bengal Every year its estates produce over 80 million kilograms of black tea which is

marketed worldwide under the registered Elephant trade mark

The company directly employs around 80000 people a large number of whom a women

Mcleod Russel is the worldrsquos largest tea producer

22

Description ( As On

September 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 14 4498169 4025 3685170

Total Promoter 14 4498169 4025 3685170

Non Promoter

Institutions

Mutual Funds

UTI 12 717585 642 716185

FIBankInsurance 31 381238 341

FII 3 200000 179 200000

Other 0 200000 179 200000

Total Institutions 46 1298823 1162 1271276

Non-Institution

Bodies Corporate 821 1655678 1482 1609689

NRIsOCBs 82 42605 038 40195

Others 9658 3679064 3292 2699777

Total Non-

Institution 10561 5377347 4812 4349661

Total Non

Promoter 10607 6676170 5975 5620937

Grand Total 10621 11174339 100 9306107

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

Contents

Introduction

Recent Developments

Current Scenario of Indian Tea Industry

Joonktollee Tea amp Industries Ltd

Jay Shree Tea amp Indutries Ltd

Rossell Tea Ltd

Financial Statement Analysis

Ratio Analysis

Cross sectional Analysis

Trend Analysis

Segmant Reporting

Road Ahead

References

4

Mcleod Russel India Ltd

Introduction

The tea industry in India is about 172 years old It occupies an important place and plays a

very useful part in the national economy The industry combines both agriculture and

industry

Tea plantations in India are mainly located in rural hills and backward areas of North-eastern

and Southern States Major tea growing areas of the country are concentrated in Assam West

Bengal Tamil Nadu and Kerala The other areas where tea is grown to a small extent are

Karnataka Tripura Himachal Pradesh Uttaranchal Arunachal Pradesh Manipur Sikkim

Nagaland Meghalaya Mizoram and Bihar The competitors to India in tea export are Sri

Lanka Kenya China Indonesia and Vietnam

There are basically two types of tea sales in India - through Auctions and Private Sales also

called as ex- garden sales In Auction sales tea is auctioned at auction centers through

brokers to buyers who either sell it to wholesalers retailers or export to overseas markets

Tea is generally placed in the Restricted category of the EXIM policy Through special

Import License tea can be imported by paying import duty Since August 1998 tea is being

freely imported from the SAARC countries Under the EQU EPZ units tea can be imported

for re exports after value addition

The tea plantation industry is strictly guided by various statutory Orders through the Acts of

Parliament like - Tea Act Essential Commodities Act Plantation Labour Act Factories Act

PFA Act Standards of Weights and Measures act etc

Quality control strictly conforms to IS 9723 and Prevention of Food amp Adulteration Act

(PFA) Disposal of tea waste is done through the tea waste control of 1959 Many gardens

are now taking quality certifications under ISO 9002

Some statistical facts about the Indian Tea Industry

The total turnover of the industry is around Rs 10000 crores

5

Since independence tea production has grown over 2505 while land area has grown

by 40

Total net foreign exchange earned per annum is around Rs1847 crores

Industry is labour intensive and employs over 11 million workers and generates

income for 10 million people indirectly Women constitute 50 of the workforce

802 MKgs or about 82 of total production of 981 MKgs of tea went for domestic

consumption

6

Recent developments

Inspite of its importance tea industry of India is going through a crisis phase since 1990rsquos

The industry has witnessed many structural changes during recent years which include ndash

emergence of small tea growers in place of large plantation and introduction of bought leaf

factories (BLF) The present crisis has led to the closure of many tea estates (eg 20 estates

in Kerala 30 in West Bengal about 70 in Assam have close down since the late 1990rsquos) In

early 2005 the tea industry witnessed major companies withdrawing from production and

concentrating on the packaging retailing sector (eg Tata Tea HLL etc in India)

In the market the rising competition at domestic as well as international front has deepened

the crisis of tea industry of India

Shift in the composition of demand for tea in the importing countries has had unfavorable

effects on export earnings from tea in India The international market price of tea has

declined from US $ 209 to US $ 203 per kg in between 2005 and 2006 Though countries

like Sri Lanka Kenya and Indonesia are growing fast in their export and higher price

realization during the same period Export of tea from India to some of the major importing

countries like Russia UK and USA are showing a sharp decline

Although per capita consumption of tea in India is amongst the lowest (64 grams) but in

volume terms India is the largest consumer Since 1970 India has become the largest

absolute consumer of tea after UK Larger domestic demand has given a new direction to the

tea industry in the recent years

Major causes of the crisis

Despite Indiarsquos historical success with the tea industry in recent years the industry has

faced serious competition in the international and national market which has lead to the

present crisis Tea prices in India are being driven down by many factors

a) Decline in demand for Indian tea in the global market

b) Defects in auction system

c) Poor price realization

d) Defective market structure

e) Increase in cost of production

7

Recommendations for improvement

Despite being the largest producer and consumer of tea the Indian plantation sector

lacks appropriate mapping of production and consumption levels Due to absence of

accurate estimates the formulation of long term industry wide action plans have been

affected

India has concentrated more on building up its large estates and has given less

attention to processing and improving the quality by proper blending and marketingndash

for higher price realization of their products

Unlike its key competitors India does not have any powerful brand to support its

promotion drive in the international market

Study done by the United Nations Food and Agriculture Organization (FAO 2001)

has suggested the need for reducing the unit cost of production through productivity

gains capacity building of small growers streamlining marketing channels

improving infrastructure tailoring marketing activities to individual countryrsquos

demand propagating health benefits of tea and promotion of organic tea using the tea

mark This is exactly what the domestic tea companies should do for their long term

survival

Improvement of supply chain management inside the country and global tea

marketing network

The tea industry in India has a legacy of corporate farming right from the day of

British rule The current situation in the sector has given ample reason for a rethink

on whether corporate farming can really boost agriculture

International brands like Liptons Brooke Bond of HUL and Tetly tea of Tata Tea etc

are the market leaders and have great power in price determination in both domestic

and international market This needs to be stopped and proper investigation is needed

to curb the wrong practices in the tea market by introducing new laws to regulate the

price movements

It has been observed that the actual producer of tea has no direct link with the

ultimate consumer Therefore the producers do not understand the market demand

choice of the customer it is very important in todayrsquos market economy for long term

sustainability of the industry With the withdrawal of sales restriction the growers

can directly go to the market by building their own brand As the margin of profit is

8

very high at the present domestic retail market Indian tea growers should invest and

take this opportunity for the promotion of their brand at the retail market

Fresh capital inflow is needed right at this moment for the tea industry of India

Investment in new plantations and production machineries must come immediately to

compete in the international market

one of the most important steps from the government part shall be to introduce a

stronger competition law to curb the misuse of corporate buying power and promote

social objectives at the garden level

9

Current Scenario of the Indian Tea Industry

Tea is normally classified based on the processing leaf size and grade Fermentation is the

major process and creates two major classifications

Price Trend

Recently tea prices showed bouyancy which started from 2006 after depressed prices for

almost a decade since 1999A slump in global output decline in production due to poor

monsoon rains steady increase in domestic demand range-bound export volumes and low

growth in production further drove prices upwards in 2009

However Indiarsquos tea production had picked up in the last quarter of 2009 and initial signs are

pointing to better weather in 2010 signalling a possible change in the price trend Even if

prices do not retrace too much producers may have to live with subdued prices during the

year It does appear that the two-year run of rising tea prices is losing steam

Chart 1 Trend in Domestic Tea Prices (source ICRA Research)

10

Production

(956mkgs)

Green

(106 mkgs)Darjeeling

(117 mkgs)Orthodox

(655 mkgs)

CTC

(8682mkgs)

Production consumption and Exports

A secular increase in domestic consumption on the one hand and muted increase in

production on the other has been the main factor supporting the increase in tea prices from

2006 onwards According to ICRArsquos estimates while the average growth in production

during the period 2003-07 was just 19 or so domestic consumption would have increased

annually at around 35 during the same period The steady increase in domestic demand

range-bound export volumes and low ICRA Rating Feature Indian Tea Industry Outlook

Positive for the Short to Medium Term ICRA Rating Services Page 3 of 8

growth in production absorbed the pipeline stock over the years and left virtually no carry-

forward stock at the end of the 2007 season

Production and consumption of Tea in India

Particulars 200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

2009

PRODUCTION (million

Kg)

854 838 878 893 946 982 945 981 6967

CONSUMPTION

(million kg)

673 693 714 735 757 771 786 802 828(E

)

production from January to Sepetmber - Estimated figure

Chart 2 Trend in Indiarsquos Production Consumption and Exports of Tea

Source ICRA Research

11

Exports

Exports play a vital role in maintaining the overall demand-supply balance in the domestic

market Healthy export realisation is also crucial for domestic realisations as un-remunerative

prices in the export market may lead to exporters dumping the produce in the domestic

market which in turn would exert a downward pressure on domestic prices Tea exports

from India have remained range bound over the period 1997-2008 with some year-to-year

fluctuations seen in between

Export of Tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 19905 183098 9199

2006 21873 200653 9173

2007 17875 181011 10126

2008 20312 239291 11781

2009 1312 177704 13542

Export from January to September

Chart 3 Trend in Indiarsquos Tea Exports

Source ICRA Research

Import of Tea from India

The continuous fall in prices of tea coupled with high cost of production has adversely

12

affected the economy of the tea plantations resulting in some tea gardens being abandoned or

under lock out in various states The teas being imported are not necessarily inferior teas and

the practice of blending with Indian teas often serves the purpose of providing teas as per

customers choice and making them price-competitive in international markets

Import of tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 1676 9851 5879

2006 2381 11941 5015

2007 1599 10460 6543

2008 2028 16197 7990

2009 1582 13209 8350

Export from January to August

Profitability of bulk tea players

An increase of around 28 in tea prices on an average in 2008 has meant considerable

increase in the profitability of bulk tea players in FY2008-09 given that around 65 of their

costs are fixed in nature Chart 6 brings out the positive impact of increasing tea prices on the

aggregate total income and profitability indicators2 of some of the large bulk tea players in

India3 which shows significant improvement over the past few years

Chart 4 Trend in Aggregate Income and Profitability Indicators of Bulk Tea

Companies (Source Bombay Stock Exchange)

13

Demand-Supply Gap

For the Indian tea industry the main driver of demand is the domestic market with domestic

consumption now growing at an estimated 35 annually as against around 25 a decade

earlier At the current growth rate the domestic market would require an incremental 30 Mkg

or so annually going forward

As against that tea supply has been growing at less than 2 pa because it is difficult to

improve garden yield of tea even during favourable climatic conditions and new plantations

need a long gestation period of at least 4-5 years Therefore the demand-supply gap in India

is likely to persist at least over the medium term

14

Industry Outlook

The tea industry has every reason to look ahead in 2010 with great deal of optimism and

confidence according to the Tea Market Annual Report published by J Thomas and

Company Private Limited the worlds oldest and largest tea auctioneers

With virtually no carry forward stock and growing domestic demand to act as buffer against

the uncertainties of the global tea trade price levels are expected to remain attractive the

report observes

Early cropping patterns indicate that demand supply equation is likely to be more balance in

2010 Both Kenya and Sri Lanka production is expected to exceed that of 2009 and

indications are that the March crop in North India will be higher than that of the last year

following some much needed rainfall

While the supply situation may be more comfortable than the previous season it is likely to

be absorbed by the domestic market where quality produce will continue to be in great

demand the reports states

Exports

15

Indian exports at the end of 2009 stood at 1915 million kg compared to 2031 million kg in

2008 a decline of 116 million kgs The strong domestic demand ensured that the exporters

were often out priced particularly in first three quarters

Lower orthodox production in North India was also another factor contributing to the decline

in exports As a result exports out of North India at 988 million kg recorded a decline of

174 million kg while exports out of South India at 927 million kg recorded a rise of 58

million kg The per unit value increased from Rs 11781 in 2008 to Rs 13664 in 2009 a gain

of Rs 1883

Exports to Iraq saw a significant increase during the year with an additional 111 million kgs

over 2008 Shipments to Russia grew by 42 million kg and to Afghanistan by 18 million kg

Exports to Egypt suffered a setback the shortfall being 96 million kg Offtake by Iran UAE

UK and the Continent also declined during the period

Companiesrsquo Overview

1 Joonktollee Tea

Joonktollee Tea Co Ltd Was promoted 134 years back to manage the affairs of a small Tea

Estate in Upper Assam It is today synonymous with premium Black and Green Teas

In the year 1954 the House of Bangurs acquired the managing agency and the Company and

brought them under their fold The name of the Company was changed to ldquoJOONKTOLLEE

TEA amp INDUSTRIES LIMITEDrdquo (JTIL) Since then the company has been under the

management of the Bangurs Over the years the Company has grown in stature and size and is

a leader in producing quality teas and enjoying one of the best Assam CTC Mark in North

IndiaCompanyrsquos Estate now comprises of 186798 acres of land with 120282 acres under

plantation

From a leading mark in the Premium Orthodox teas the Company changing with the times

is now regarded as one of the Best Assam CTC mark and does have an unstinted track record

of the business with the brand Its Green Teas are also one of its kinds

16

The performance on the financial front has also been spectacular The Companyrsquos ordinary

capital of Rs80000- has grown to Rs32336 Lacs The Company has an uninterrupted

dividend record for over 50 years

To have a large capital base and net worth two South India based Plantation Companies viz

The Kalasa Tea Produce Company Limited and Cowcoody Estates Limited belonging to the

House of Bangurs stood merged with this Company wef 1st April 2001 The area of

operation of the Company was enlarged and diversified since apart from tea the transferor

Companies also deal in other plantation crops viz coffee pepper cardamom areca vanilla

With a view to consolidate the resources of the Company and to carry out the agro base

activities more conveniently and advantageously with a larger asset base the Company

entered into Scheme of Arrangement wef 1st October 2006 under which a subsidiary and

six other Companies merged with the Company and certain assets were transferred to other

subsidiary Companies The Honrsquoble High Courts of judicature at Kolkata Chennai and

Guwahati sanctioned the Scheme of Arrangement as per the terms consented by the

shareholders and the financial results of 31st March 2008 were prepared after giving effect

of the aforesaid scheme

On BSE as on 22 April 2010

Dividend Yield () 089

Market Cap (Rs Mn) 54277

PE 1284

EPS (Rs) 1307

Face Value (Rs) 10

Volume 23239

17

Shareholding pattern

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 16

27066

75 837 2693455

Total Promoter 16

27066

75 837 2693455

Non Promoter

Institutions

FIBankInsurance 2

11784

3 364

Other 5 593 002 0

Total Institutions 7

11843

6 366 117843

Non-Institution

Bodies Corporate 82 45592 141 40197

18

NRIsOCBs 8 31256 097 926

Others 2391

33168

8 1025 127041

Total Non-

Institution 2481

40853

6 1263 168164

Total Non

Promoter 2488

52697

2 163 286007

Grand Total 2504

32336

47 100 2979462

2 Jayshree Tea amp Industries Limited

Incorporated as Jay Shree Tea Gardens in Oct45 with two tea estates the company changed

its name to Jay Shree Tea and Industries (JSTI) in 1960 It was promoted by B K Birla

Started with an initial paid-up share capital of Rs 786 lac it was raised to Rs 3905 lac in

1947 and thereafter only a rights equity issue was made during 1960 in the ratio 15

The company manages around 12 tea gardens in Assam West Bengal Tamilnadu and

Kerala It has diversified over the years and manufactures plywood in Andamans and

superphosphates and sulphuric acid in West Bengal and has interest in shipping real estate

development tubes and tyres The company is packing its tea from different tea estates in

polypouches and it is sold under brand names -- Sadabahar Shaandar and Sangam

JSTI also acquired Maitrayee Tea Project at Chopra near Islampur with 192 acres under tea

plantation to increase its presence in the area

During 1999-2000 the company established a new factory named Aryaman Tea Estate in

Jalpaiguri Dist which has commenced production from Sep 1999 The factory has the

capacity of 7 lac kgs made tea per annum In June 2000 the B K Birla groups shareholding

in Jay Shree Tea amp Industries has gone up to 4461 from 4015 following the completion

of the companys buy back offer for 1230 lakh equity shares

The company bought back 1230 lac equity shares of Rs10- each at a price of Rs120-per

19

share in 2001-02 and subsequently the total Share Capital as on March 2002 was Rs1067

crores The tea processing factory which is being set up at LedoAssam has commenced its

commercial production with a annual capacity of around 6 lac kg

As the Supreme Court has banned the falling of trees in Andaman amp Nicobar Islandsthe

companys Plywood Operation is still under suspension The 100 subsidiary company viz

Shivas Group Ltd was amalgamated with the company with the prior approval from the

shareholders wef 25022002

It also proposes to set up an International Outsourced Call centre at Kolkata The company is

proposing to delist its equity shares from Delhi Stock exchange as there is no transactions

On BSE as on 22 April 2010

Dividend Yield

() 101

Market Cap (Rs

Mn) 331263

PE 465

EPS (Rs) 6372

Face Value (Rs) 10

Volume 142257

20

Shareholding Pattern as in September 2009

21

3

Mcleod Russell

McLeod Russel has been growing tea in India since 1869 It is today the largest tea

producing company in the world

It manages 47 tea estates in the Assam Valley and 6 tea estates in the Dooars region of West

Bengal Every year its estates produce over 80 million kilograms of black tea which is

marketed worldwide under the registered Elephant trade mark

The company directly employs around 80000 people a large number of whom a women

Mcleod Russel is the worldrsquos largest tea producer

22

Description ( As On

September 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 14 4498169 4025 3685170

Total Promoter 14 4498169 4025 3685170

Non Promoter

Institutions

Mutual Funds

UTI 12 717585 642 716185

FIBankInsurance 31 381238 341

FII 3 200000 179 200000

Other 0 200000 179 200000

Total Institutions 46 1298823 1162 1271276

Non-Institution

Bodies Corporate 821 1655678 1482 1609689

NRIsOCBs 82 42605 038 40195

Others 9658 3679064 3292 2699777

Total Non-

Institution 10561 5377347 4812 4349661

Total Non

Promoter 10607 6676170 5975 5620937

Grand Total 10621 11174339 100 9306107

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

Introduction

The tea industry in India is about 172 years old It occupies an important place and plays a

very useful part in the national economy The industry combines both agriculture and

industry

Tea plantations in India are mainly located in rural hills and backward areas of North-eastern

and Southern States Major tea growing areas of the country are concentrated in Assam West

Bengal Tamil Nadu and Kerala The other areas where tea is grown to a small extent are

Karnataka Tripura Himachal Pradesh Uttaranchal Arunachal Pradesh Manipur Sikkim

Nagaland Meghalaya Mizoram and Bihar The competitors to India in tea export are Sri

Lanka Kenya China Indonesia and Vietnam

There are basically two types of tea sales in India - through Auctions and Private Sales also

called as ex- garden sales In Auction sales tea is auctioned at auction centers through

brokers to buyers who either sell it to wholesalers retailers or export to overseas markets

Tea is generally placed in the Restricted category of the EXIM policy Through special

Import License tea can be imported by paying import duty Since August 1998 tea is being

freely imported from the SAARC countries Under the EQU EPZ units tea can be imported

for re exports after value addition

The tea plantation industry is strictly guided by various statutory Orders through the Acts of

Parliament like - Tea Act Essential Commodities Act Plantation Labour Act Factories Act

PFA Act Standards of Weights and Measures act etc

Quality control strictly conforms to IS 9723 and Prevention of Food amp Adulteration Act

(PFA) Disposal of tea waste is done through the tea waste control of 1959 Many gardens

are now taking quality certifications under ISO 9002

Some statistical facts about the Indian Tea Industry

The total turnover of the industry is around Rs 10000 crores

5

Since independence tea production has grown over 2505 while land area has grown

by 40

Total net foreign exchange earned per annum is around Rs1847 crores

Industry is labour intensive and employs over 11 million workers and generates

income for 10 million people indirectly Women constitute 50 of the workforce

802 MKgs or about 82 of total production of 981 MKgs of tea went for domestic

consumption

6

Recent developments

Inspite of its importance tea industry of India is going through a crisis phase since 1990rsquos

The industry has witnessed many structural changes during recent years which include ndash

emergence of small tea growers in place of large plantation and introduction of bought leaf

factories (BLF) The present crisis has led to the closure of many tea estates (eg 20 estates

in Kerala 30 in West Bengal about 70 in Assam have close down since the late 1990rsquos) In

early 2005 the tea industry witnessed major companies withdrawing from production and

concentrating on the packaging retailing sector (eg Tata Tea HLL etc in India)

In the market the rising competition at domestic as well as international front has deepened

the crisis of tea industry of India

Shift in the composition of demand for tea in the importing countries has had unfavorable

effects on export earnings from tea in India The international market price of tea has

declined from US $ 209 to US $ 203 per kg in between 2005 and 2006 Though countries

like Sri Lanka Kenya and Indonesia are growing fast in their export and higher price

realization during the same period Export of tea from India to some of the major importing

countries like Russia UK and USA are showing a sharp decline

Although per capita consumption of tea in India is amongst the lowest (64 grams) but in

volume terms India is the largest consumer Since 1970 India has become the largest

absolute consumer of tea after UK Larger domestic demand has given a new direction to the

tea industry in the recent years

Major causes of the crisis

Despite Indiarsquos historical success with the tea industry in recent years the industry has

faced serious competition in the international and national market which has lead to the

present crisis Tea prices in India are being driven down by many factors

a) Decline in demand for Indian tea in the global market

b) Defects in auction system

c) Poor price realization

d) Defective market structure

e) Increase in cost of production

7

Recommendations for improvement

Despite being the largest producer and consumer of tea the Indian plantation sector

lacks appropriate mapping of production and consumption levels Due to absence of

accurate estimates the formulation of long term industry wide action plans have been

affected

India has concentrated more on building up its large estates and has given less

attention to processing and improving the quality by proper blending and marketingndash

for higher price realization of their products

Unlike its key competitors India does not have any powerful brand to support its

promotion drive in the international market

Study done by the United Nations Food and Agriculture Organization (FAO 2001)

has suggested the need for reducing the unit cost of production through productivity

gains capacity building of small growers streamlining marketing channels

improving infrastructure tailoring marketing activities to individual countryrsquos

demand propagating health benefits of tea and promotion of organic tea using the tea

mark This is exactly what the domestic tea companies should do for their long term

survival

Improvement of supply chain management inside the country and global tea

marketing network

The tea industry in India has a legacy of corporate farming right from the day of

British rule The current situation in the sector has given ample reason for a rethink

on whether corporate farming can really boost agriculture

International brands like Liptons Brooke Bond of HUL and Tetly tea of Tata Tea etc

are the market leaders and have great power in price determination in both domestic

and international market This needs to be stopped and proper investigation is needed

to curb the wrong practices in the tea market by introducing new laws to regulate the

price movements

It has been observed that the actual producer of tea has no direct link with the

ultimate consumer Therefore the producers do not understand the market demand

choice of the customer it is very important in todayrsquos market economy for long term

sustainability of the industry With the withdrawal of sales restriction the growers

can directly go to the market by building their own brand As the margin of profit is

8

very high at the present domestic retail market Indian tea growers should invest and

take this opportunity for the promotion of their brand at the retail market

Fresh capital inflow is needed right at this moment for the tea industry of India

Investment in new plantations and production machineries must come immediately to

compete in the international market

one of the most important steps from the government part shall be to introduce a

stronger competition law to curb the misuse of corporate buying power and promote

social objectives at the garden level

9

Current Scenario of the Indian Tea Industry

Tea is normally classified based on the processing leaf size and grade Fermentation is the

major process and creates two major classifications

Price Trend

Recently tea prices showed bouyancy which started from 2006 after depressed prices for

almost a decade since 1999A slump in global output decline in production due to poor

monsoon rains steady increase in domestic demand range-bound export volumes and low

growth in production further drove prices upwards in 2009

However Indiarsquos tea production had picked up in the last quarter of 2009 and initial signs are

pointing to better weather in 2010 signalling a possible change in the price trend Even if

prices do not retrace too much producers may have to live with subdued prices during the

year It does appear that the two-year run of rising tea prices is losing steam

Chart 1 Trend in Domestic Tea Prices (source ICRA Research)

10

Production

(956mkgs)

Green

(106 mkgs)Darjeeling

(117 mkgs)Orthodox

(655 mkgs)

CTC

(8682mkgs)

Production consumption and Exports

A secular increase in domestic consumption on the one hand and muted increase in

production on the other has been the main factor supporting the increase in tea prices from

2006 onwards According to ICRArsquos estimates while the average growth in production

during the period 2003-07 was just 19 or so domestic consumption would have increased

annually at around 35 during the same period The steady increase in domestic demand

range-bound export volumes and low ICRA Rating Feature Indian Tea Industry Outlook

Positive for the Short to Medium Term ICRA Rating Services Page 3 of 8

growth in production absorbed the pipeline stock over the years and left virtually no carry-

forward stock at the end of the 2007 season

Production and consumption of Tea in India

Particulars 200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

2009

PRODUCTION (million

Kg)

854 838 878 893 946 982 945 981 6967

CONSUMPTION

(million kg)

673 693 714 735 757 771 786 802 828(E

)

production from January to Sepetmber - Estimated figure

Chart 2 Trend in Indiarsquos Production Consumption and Exports of Tea

Source ICRA Research

11

Exports

Exports play a vital role in maintaining the overall demand-supply balance in the domestic

market Healthy export realisation is also crucial for domestic realisations as un-remunerative

prices in the export market may lead to exporters dumping the produce in the domestic

market which in turn would exert a downward pressure on domestic prices Tea exports

from India have remained range bound over the period 1997-2008 with some year-to-year

fluctuations seen in between

Export of Tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 19905 183098 9199

2006 21873 200653 9173

2007 17875 181011 10126

2008 20312 239291 11781

2009 1312 177704 13542

Export from January to September

Chart 3 Trend in Indiarsquos Tea Exports

Source ICRA Research

Import of Tea from India

The continuous fall in prices of tea coupled with high cost of production has adversely

12

affected the economy of the tea plantations resulting in some tea gardens being abandoned or

under lock out in various states The teas being imported are not necessarily inferior teas and

the practice of blending with Indian teas often serves the purpose of providing teas as per

customers choice and making them price-competitive in international markets

Import of tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 1676 9851 5879

2006 2381 11941 5015

2007 1599 10460 6543

2008 2028 16197 7990

2009 1582 13209 8350

Export from January to August

Profitability of bulk tea players

An increase of around 28 in tea prices on an average in 2008 has meant considerable

increase in the profitability of bulk tea players in FY2008-09 given that around 65 of their

costs are fixed in nature Chart 6 brings out the positive impact of increasing tea prices on the

aggregate total income and profitability indicators2 of some of the large bulk tea players in

India3 which shows significant improvement over the past few years

Chart 4 Trend in Aggregate Income and Profitability Indicators of Bulk Tea

Companies (Source Bombay Stock Exchange)

13

Demand-Supply Gap

For the Indian tea industry the main driver of demand is the domestic market with domestic

consumption now growing at an estimated 35 annually as against around 25 a decade

earlier At the current growth rate the domestic market would require an incremental 30 Mkg

or so annually going forward

As against that tea supply has been growing at less than 2 pa because it is difficult to

improve garden yield of tea even during favourable climatic conditions and new plantations

need a long gestation period of at least 4-5 years Therefore the demand-supply gap in India

is likely to persist at least over the medium term

14

Industry Outlook

The tea industry has every reason to look ahead in 2010 with great deal of optimism and

confidence according to the Tea Market Annual Report published by J Thomas and

Company Private Limited the worlds oldest and largest tea auctioneers

With virtually no carry forward stock and growing domestic demand to act as buffer against

the uncertainties of the global tea trade price levels are expected to remain attractive the

report observes

Early cropping patterns indicate that demand supply equation is likely to be more balance in

2010 Both Kenya and Sri Lanka production is expected to exceed that of 2009 and

indications are that the March crop in North India will be higher than that of the last year

following some much needed rainfall

While the supply situation may be more comfortable than the previous season it is likely to

be absorbed by the domestic market where quality produce will continue to be in great

demand the reports states

Exports

15

Indian exports at the end of 2009 stood at 1915 million kg compared to 2031 million kg in

2008 a decline of 116 million kgs The strong domestic demand ensured that the exporters

were often out priced particularly in first three quarters

Lower orthodox production in North India was also another factor contributing to the decline

in exports As a result exports out of North India at 988 million kg recorded a decline of

174 million kg while exports out of South India at 927 million kg recorded a rise of 58

million kg The per unit value increased from Rs 11781 in 2008 to Rs 13664 in 2009 a gain

of Rs 1883

Exports to Iraq saw a significant increase during the year with an additional 111 million kgs

over 2008 Shipments to Russia grew by 42 million kg and to Afghanistan by 18 million kg

Exports to Egypt suffered a setback the shortfall being 96 million kg Offtake by Iran UAE

UK and the Continent also declined during the period

Companiesrsquo Overview

1 Joonktollee Tea

Joonktollee Tea Co Ltd Was promoted 134 years back to manage the affairs of a small Tea

Estate in Upper Assam It is today synonymous with premium Black and Green Teas

In the year 1954 the House of Bangurs acquired the managing agency and the Company and

brought them under their fold The name of the Company was changed to ldquoJOONKTOLLEE

TEA amp INDUSTRIES LIMITEDrdquo (JTIL) Since then the company has been under the

management of the Bangurs Over the years the Company has grown in stature and size and is

a leader in producing quality teas and enjoying one of the best Assam CTC Mark in North

IndiaCompanyrsquos Estate now comprises of 186798 acres of land with 120282 acres under

plantation

From a leading mark in the Premium Orthodox teas the Company changing with the times

is now regarded as one of the Best Assam CTC mark and does have an unstinted track record

of the business with the brand Its Green Teas are also one of its kinds

16

The performance on the financial front has also been spectacular The Companyrsquos ordinary

capital of Rs80000- has grown to Rs32336 Lacs The Company has an uninterrupted

dividend record for over 50 years

To have a large capital base and net worth two South India based Plantation Companies viz

The Kalasa Tea Produce Company Limited and Cowcoody Estates Limited belonging to the

House of Bangurs stood merged with this Company wef 1st April 2001 The area of

operation of the Company was enlarged and diversified since apart from tea the transferor

Companies also deal in other plantation crops viz coffee pepper cardamom areca vanilla

With a view to consolidate the resources of the Company and to carry out the agro base

activities more conveniently and advantageously with a larger asset base the Company

entered into Scheme of Arrangement wef 1st October 2006 under which a subsidiary and

six other Companies merged with the Company and certain assets were transferred to other

subsidiary Companies The Honrsquoble High Courts of judicature at Kolkata Chennai and

Guwahati sanctioned the Scheme of Arrangement as per the terms consented by the

shareholders and the financial results of 31st March 2008 were prepared after giving effect

of the aforesaid scheme

On BSE as on 22 April 2010

Dividend Yield () 089

Market Cap (Rs Mn) 54277

PE 1284

EPS (Rs) 1307

Face Value (Rs) 10

Volume 23239

17

Shareholding pattern

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 16

27066

75 837 2693455

Total Promoter 16

27066

75 837 2693455

Non Promoter

Institutions

FIBankInsurance 2

11784

3 364

Other 5 593 002 0

Total Institutions 7

11843

6 366 117843

Non-Institution

Bodies Corporate 82 45592 141 40197

18

NRIsOCBs 8 31256 097 926

Others 2391

33168

8 1025 127041

Total Non-

Institution 2481

40853

6 1263 168164

Total Non

Promoter 2488

52697

2 163 286007

Grand Total 2504

32336

47 100 2979462

2 Jayshree Tea amp Industries Limited

Incorporated as Jay Shree Tea Gardens in Oct45 with two tea estates the company changed

its name to Jay Shree Tea and Industries (JSTI) in 1960 It was promoted by B K Birla

Started with an initial paid-up share capital of Rs 786 lac it was raised to Rs 3905 lac in

1947 and thereafter only a rights equity issue was made during 1960 in the ratio 15

The company manages around 12 tea gardens in Assam West Bengal Tamilnadu and

Kerala It has diversified over the years and manufactures plywood in Andamans and

superphosphates and sulphuric acid in West Bengal and has interest in shipping real estate

development tubes and tyres The company is packing its tea from different tea estates in

polypouches and it is sold under brand names -- Sadabahar Shaandar and Sangam

JSTI also acquired Maitrayee Tea Project at Chopra near Islampur with 192 acres under tea

plantation to increase its presence in the area

During 1999-2000 the company established a new factory named Aryaman Tea Estate in

Jalpaiguri Dist which has commenced production from Sep 1999 The factory has the

capacity of 7 lac kgs made tea per annum In June 2000 the B K Birla groups shareholding

in Jay Shree Tea amp Industries has gone up to 4461 from 4015 following the completion

of the companys buy back offer for 1230 lakh equity shares

The company bought back 1230 lac equity shares of Rs10- each at a price of Rs120-per

19

share in 2001-02 and subsequently the total Share Capital as on March 2002 was Rs1067

crores The tea processing factory which is being set up at LedoAssam has commenced its

commercial production with a annual capacity of around 6 lac kg

As the Supreme Court has banned the falling of trees in Andaman amp Nicobar Islandsthe

companys Plywood Operation is still under suspension The 100 subsidiary company viz

Shivas Group Ltd was amalgamated with the company with the prior approval from the

shareholders wef 25022002

It also proposes to set up an International Outsourced Call centre at Kolkata The company is

proposing to delist its equity shares from Delhi Stock exchange as there is no transactions

On BSE as on 22 April 2010

Dividend Yield

() 101

Market Cap (Rs

Mn) 331263

PE 465

EPS (Rs) 6372

Face Value (Rs) 10

Volume 142257

20

Shareholding Pattern as in September 2009

21

3

Mcleod Russell

McLeod Russel has been growing tea in India since 1869 It is today the largest tea

producing company in the world

It manages 47 tea estates in the Assam Valley and 6 tea estates in the Dooars region of West

Bengal Every year its estates produce over 80 million kilograms of black tea which is

marketed worldwide under the registered Elephant trade mark

The company directly employs around 80000 people a large number of whom a women

Mcleod Russel is the worldrsquos largest tea producer

22

Description ( As On

September 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 14 4498169 4025 3685170

Total Promoter 14 4498169 4025 3685170

Non Promoter

Institutions

Mutual Funds

UTI 12 717585 642 716185

FIBankInsurance 31 381238 341

FII 3 200000 179 200000

Other 0 200000 179 200000

Total Institutions 46 1298823 1162 1271276

Non-Institution

Bodies Corporate 821 1655678 1482 1609689

NRIsOCBs 82 42605 038 40195

Others 9658 3679064 3292 2699777

Total Non-

Institution 10561 5377347 4812 4349661

Total Non

Promoter 10607 6676170 5975 5620937

Grand Total 10621 11174339 100 9306107

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

Since independence tea production has grown over 2505 while land area has grown

by 40

Total net foreign exchange earned per annum is around Rs1847 crores

Industry is labour intensive and employs over 11 million workers and generates

income for 10 million people indirectly Women constitute 50 of the workforce

802 MKgs or about 82 of total production of 981 MKgs of tea went for domestic

consumption

6

Recent developments

Inspite of its importance tea industry of India is going through a crisis phase since 1990rsquos

The industry has witnessed many structural changes during recent years which include ndash

emergence of small tea growers in place of large plantation and introduction of bought leaf

factories (BLF) The present crisis has led to the closure of many tea estates (eg 20 estates

in Kerala 30 in West Bengal about 70 in Assam have close down since the late 1990rsquos) In

early 2005 the tea industry witnessed major companies withdrawing from production and

concentrating on the packaging retailing sector (eg Tata Tea HLL etc in India)

In the market the rising competition at domestic as well as international front has deepened

the crisis of tea industry of India

Shift in the composition of demand for tea in the importing countries has had unfavorable

effects on export earnings from tea in India The international market price of tea has

declined from US $ 209 to US $ 203 per kg in between 2005 and 2006 Though countries

like Sri Lanka Kenya and Indonesia are growing fast in their export and higher price

realization during the same period Export of tea from India to some of the major importing

countries like Russia UK and USA are showing a sharp decline

Although per capita consumption of tea in India is amongst the lowest (64 grams) but in

volume terms India is the largest consumer Since 1970 India has become the largest

absolute consumer of tea after UK Larger domestic demand has given a new direction to the

tea industry in the recent years

Major causes of the crisis

Despite Indiarsquos historical success with the tea industry in recent years the industry has

faced serious competition in the international and national market which has lead to the

present crisis Tea prices in India are being driven down by many factors

a) Decline in demand for Indian tea in the global market

b) Defects in auction system

c) Poor price realization

d) Defective market structure

e) Increase in cost of production

7

Recommendations for improvement

Despite being the largest producer and consumer of tea the Indian plantation sector

lacks appropriate mapping of production and consumption levels Due to absence of

accurate estimates the formulation of long term industry wide action plans have been

affected

India has concentrated more on building up its large estates and has given less

attention to processing and improving the quality by proper blending and marketingndash

for higher price realization of their products

Unlike its key competitors India does not have any powerful brand to support its

promotion drive in the international market

Study done by the United Nations Food and Agriculture Organization (FAO 2001)

has suggested the need for reducing the unit cost of production through productivity

gains capacity building of small growers streamlining marketing channels

improving infrastructure tailoring marketing activities to individual countryrsquos

demand propagating health benefits of tea and promotion of organic tea using the tea

mark This is exactly what the domestic tea companies should do for their long term

survival

Improvement of supply chain management inside the country and global tea

marketing network

The tea industry in India has a legacy of corporate farming right from the day of

British rule The current situation in the sector has given ample reason for a rethink

on whether corporate farming can really boost agriculture

International brands like Liptons Brooke Bond of HUL and Tetly tea of Tata Tea etc

are the market leaders and have great power in price determination in both domestic

and international market This needs to be stopped and proper investigation is needed

to curb the wrong practices in the tea market by introducing new laws to regulate the

price movements

It has been observed that the actual producer of tea has no direct link with the

ultimate consumer Therefore the producers do not understand the market demand

choice of the customer it is very important in todayrsquos market economy for long term

sustainability of the industry With the withdrawal of sales restriction the growers

can directly go to the market by building their own brand As the margin of profit is

8

very high at the present domestic retail market Indian tea growers should invest and

take this opportunity for the promotion of their brand at the retail market

Fresh capital inflow is needed right at this moment for the tea industry of India

Investment in new plantations and production machineries must come immediately to

compete in the international market

one of the most important steps from the government part shall be to introduce a

stronger competition law to curb the misuse of corporate buying power and promote

social objectives at the garden level

9

Current Scenario of the Indian Tea Industry

Tea is normally classified based on the processing leaf size and grade Fermentation is the

major process and creates two major classifications

Price Trend

Recently tea prices showed bouyancy which started from 2006 after depressed prices for

almost a decade since 1999A slump in global output decline in production due to poor

monsoon rains steady increase in domestic demand range-bound export volumes and low

growth in production further drove prices upwards in 2009

However Indiarsquos tea production had picked up in the last quarter of 2009 and initial signs are

pointing to better weather in 2010 signalling a possible change in the price trend Even if

prices do not retrace too much producers may have to live with subdued prices during the

year It does appear that the two-year run of rising tea prices is losing steam

Chart 1 Trend in Domestic Tea Prices (source ICRA Research)

10

Production

(956mkgs)

Green

(106 mkgs)Darjeeling

(117 mkgs)Orthodox

(655 mkgs)

CTC

(8682mkgs)

Production consumption and Exports

A secular increase in domestic consumption on the one hand and muted increase in

production on the other has been the main factor supporting the increase in tea prices from

2006 onwards According to ICRArsquos estimates while the average growth in production

during the period 2003-07 was just 19 or so domestic consumption would have increased

annually at around 35 during the same period The steady increase in domestic demand

range-bound export volumes and low ICRA Rating Feature Indian Tea Industry Outlook

Positive for the Short to Medium Term ICRA Rating Services Page 3 of 8

growth in production absorbed the pipeline stock over the years and left virtually no carry-

forward stock at the end of the 2007 season

Production and consumption of Tea in India

Particulars 200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

2009

PRODUCTION (million

Kg)

854 838 878 893 946 982 945 981 6967

CONSUMPTION

(million kg)

673 693 714 735 757 771 786 802 828(E

)

production from January to Sepetmber - Estimated figure

Chart 2 Trend in Indiarsquos Production Consumption and Exports of Tea

Source ICRA Research

11

Exports

Exports play a vital role in maintaining the overall demand-supply balance in the domestic

market Healthy export realisation is also crucial for domestic realisations as un-remunerative

prices in the export market may lead to exporters dumping the produce in the domestic

market which in turn would exert a downward pressure on domestic prices Tea exports

from India have remained range bound over the period 1997-2008 with some year-to-year

fluctuations seen in between

Export of Tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 19905 183098 9199

2006 21873 200653 9173

2007 17875 181011 10126

2008 20312 239291 11781

2009 1312 177704 13542

Export from January to September

Chart 3 Trend in Indiarsquos Tea Exports

Source ICRA Research

Import of Tea from India

The continuous fall in prices of tea coupled with high cost of production has adversely

12

affected the economy of the tea plantations resulting in some tea gardens being abandoned or

under lock out in various states The teas being imported are not necessarily inferior teas and

the practice of blending with Indian teas often serves the purpose of providing teas as per

customers choice and making them price-competitive in international markets

Import of tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 1676 9851 5879

2006 2381 11941 5015

2007 1599 10460 6543

2008 2028 16197 7990

2009 1582 13209 8350

Export from January to August

Profitability of bulk tea players

An increase of around 28 in tea prices on an average in 2008 has meant considerable

increase in the profitability of bulk tea players in FY2008-09 given that around 65 of their

costs are fixed in nature Chart 6 brings out the positive impact of increasing tea prices on the

aggregate total income and profitability indicators2 of some of the large bulk tea players in

India3 which shows significant improvement over the past few years

Chart 4 Trend in Aggregate Income and Profitability Indicators of Bulk Tea

Companies (Source Bombay Stock Exchange)

13

Demand-Supply Gap

For the Indian tea industry the main driver of demand is the domestic market with domestic

consumption now growing at an estimated 35 annually as against around 25 a decade

earlier At the current growth rate the domestic market would require an incremental 30 Mkg

or so annually going forward

As against that tea supply has been growing at less than 2 pa because it is difficult to

improve garden yield of tea even during favourable climatic conditions and new plantations

need a long gestation period of at least 4-5 years Therefore the demand-supply gap in India

is likely to persist at least over the medium term

14

Industry Outlook

The tea industry has every reason to look ahead in 2010 with great deal of optimism and

confidence according to the Tea Market Annual Report published by J Thomas and

Company Private Limited the worlds oldest and largest tea auctioneers

With virtually no carry forward stock and growing domestic demand to act as buffer against

the uncertainties of the global tea trade price levels are expected to remain attractive the

report observes

Early cropping patterns indicate that demand supply equation is likely to be more balance in

2010 Both Kenya and Sri Lanka production is expected to exceed that of 2009 and

indications are that the March crop in North India will be higher than that of the last year

following some much needed rainfall

While the supply situation may be more comfortable than the previous season it is likely to

be absorbed by the domestic market where quality produce will continue to be in great

demand the reports states

Exports

15

Indian exports at the end of 2009 stood at 1915 million kg compared to 2031 million kg in

2008 a decline of 116 million kgs The strong domestic demand ensured that the exporters

were often out priced particularly in first three quarters

Lower orthodox production in North India was also another factor contributing to the decline

in exports As a result exports out of North India at 988 million kg recorded a decline of

174 million kg while exports out of South India at 927 million kg recorded a rise of 58

million kg The per unit value increased from Rs 11781 in 2008 to Rs 13664 in 2009 a gain

of Rs 1883

Exports to Iraq saw a significant increase during the year with an additional 111 million kgs

over 2008 Shipments to Russia grew by 42 million kg and to Afghanistan by 18 million kg

Exports to Egypt suffered a setback the shortfall being 96 million kg Offtake by Iran UAE

UK and the Continent also declined during the period

Companiesrsquo Overview

1 Joonktollee Tea

Joonktollee Tea Co Ltd Was promoted 134 years back to manage the affairs of a small Tea

Estate in Upper Assam It is today synonymous with premium Black and Green Teas

In the year 1954 the House of Bangurs acquired the managing agency and the Company and

brought them under their fold The name of the Company was changed to ldquoJOONKTOLLEE

TEA amp INDUSTRIES LIMITEDrdquo (JTIL) Since then the company has been under the

management of the Bangurs Over the years the Company has grown in stature and size and is

a leader in producing quality teas and enjoying one of the best Assam CTC Mark in North

IndiaCompanyrsquos Estate now comprises of 186798 acres of land with 120282 acres under

plantation

From a leading mark in the Premium Orthodox teas the Company changing with the times

is now regarded as one of the Best Assam CTC mark and does have an unstinted track record

of the business with the brand Its Green Teas are also one of its kinds

16

The performance on the financial front has also been spectacular The Companyrsquos ordinary

capital of Rs80000- has grown to Rs32336 Lacs The Company has an uninterrupted

dividend record for over 50 years

To have a large capital base and net worth two South India based Plantation Companies viz

The Kalasa Tea Produce Company Limited and Cowcoody Estates Limited belonging to the

House of Bangurs stood merged with this Company wef 1st April 2001 The area of

operation of the Company was enlarged and diversified since apart from tea the transferor

Companies also deal in other plantation crops viz coffee pepper cardamom areca vanilla

With a view to consolidate the resources of the Company and to carry out the agro base

activities more conveniently and advantageously with a larger asset base the Company

entered into Scheme of Arrangement wef 1st October 2006 under which a subsidiary and

six other Companies merged with the Company and certain assets were transferred to other

subsidiary Companies The Honrsquoble High Courts of judicature at Kolkata Chennai and

Guwahati sanctioned the Scheme of Arrangement as per the terms consented by the

shareholders and the financial results of 31st March 2008 were prepared after giving effect

of the aforesaid scheme

On BSE as on 22 April 2010

Dividend Yield () 089

Market Cap (Rs Mn) 54277

PE 1284

EPS (Rs) 1307

Face Value (Rs) 10

Volume 23239

17

Shareholding pattern

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 16

27066

75 837 2693455

Total Promoter 16

27066

75 837 2693455

Non Promoter

Institutions

FIBankInsurance 2

11784

3 364

Other 5 593 002 0

Total Institutions 7

11843

6 366 117843

Non-Institution

Bodies Corporate 82 45592 141 40197

18

NRIsOCBs 8 31256 097 926

Others 2391

33168

8 1025 127041

Total Non-

Institution 2481

40853

6 1263 168164

Total Non

Promoter 2488

52697

2 163 286007

Grand Total 2504

32336

47 100 2979462

2 Jayshree Tea amp Industries Limited

Incorporated as Jay Shree Tea Gardens in Oct45 with two tea estates the company changed

its name to Jay Shree Tea and Industries (JSTI) in 1960 It was promoted by B K Birla

Started with an initial paid-up share capital of Rs 786 lac it was raised to Rs 3905 lac in

1947 and thereafter only a rights equity issue was made during 1960 in the ratio 15

The company manages around 12 tea gardens in Assam West Bengal Tamilnadu and

Kerala It has diversified over the years and manufactures plywood in Andamans and

superphosphates and sulphuric acid in West Bengal and has interest in shipping real estate

development tubes and tyres The company is packing its tea from different tea estates in

polypouches and it is sold under brand names -- Sadabahar Shaandar and Sangam

JSTI also acquired Maitrayee Tea Project at Chopra near Islampur with 192 acres under tea

plantation to increase its presence in the area

During 1999-2000 the company established a new factory named Aryaman Tea Estate in

Jalpaiguri Dist which has commenced production from Sep 1999 The factory has the

capacity of 7 lac kgs made tea per annum In June 2000 the B K Birla groups shareholding

in Jay Shree Tea amp Industries has gone up to 4461 from 4015 following the completion

of the companys buy back offer for 1230 lakh equity shares

The company bought back 1230 lac equity shares of Rs10- each at a price of Rs120-per

19

share in 2001-02 and subsequently the total Share Capital as on March 2002 was Rs1067

crores The tea processing factory which is being set up at LedoAssam has commenced its

commercial production with a annual capacity of around 6 lac kg

As the Supreme Court has banned the falling of trees in Andaman amp Nicobar Islandsthe

companys Plywood Operation is still under suspension The 100 subsidiary company viz

Shivas Group Ltd was amalgamated with the company with the prior approval from the

shareholders wef 25022002

It also proposes to set up an International Outsourced Call centre at Kolkata The company is

proposing to delist its equity shares from Delhi Stock exchange as there is no transactions

On BSE as on 22 April 2010

Dividend Yield

() 101

Market Cap (Rs

Mn) 331263

PE 465

EPS (Rs) 6372

Face Value (Rs) 10

Volume 142257

20

Shareholding Pattern as in September 2009

21

3

Mcleod Russell

McLeod Russel has been growing tea in India since 1869 It is today the largest tea

producing company in the world

It manages 47 tea estates in the Assam Valley and 6 tea estates in the Dooars region of West

Bengal Every year its estates produce over 80 million kilograms of black tea which is

marketed worldwide under the registered Elephant trade mark

The company directly employs around 80000 people a large number of whom a women

Mcleod Russel is the worldrsquos largest tea producer

22

Description ( As On

September 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 14 4498169 4025 3685170

Total Promoter 14 4498169 4025 3685170

Non Promoter

Institutions

Mutual Funds

UTI 12 717585 642 716185

FIBankInsurance 31 381238 341

FII 3 200000 179 200000

Other 0 200000 179 200000

Total Institutions 46 1298823 1162 1271276

Non-Institution

Bodies Corporate 821 1655678 1482 1609689

NRIsOCBs 82 42605 038 40195

Others 9658 3679064 3292 2699777

Total Non-

Institution 10561 5377347 4812 4349661

Total Non

Promoter 10607 6676170 5975 5620937

Grand Total 10621 11174339 100 9306107

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

Recent developments

Inspite of its importance tea industry of India is going through a crisis phase since 1990rsquos

The industry has witnessed many structural changes during recent years which include ndash

emergence of small tea growers in place of large plantation and introduction of bought leaf

factories (BLF) The present crisis has led to the closure of many tea estates (eg 20 estates

in Kerala 30 in West Bengal about 70 in Assam have close down since the late 1990rsquos) In

early 2005 the tea industry witnessed major companies withdrawing from production and

concentrating on the packaging retailing sector (eg Tata Tea HLL etc in India)

In the market the rising competition at domestic as well as international front has deepened

the crisis of tea industry of India

Shift in the composition of demand for tea in the importing countries has had unfavorable

effects on export earnings from tea in India The international market price of tea has

declined from US $ 209 to US $ 203 per kg in between 2005 and 2006 Though countries

like Sri Lanka Kenya and Indonesia are growing fast in their export and higher price

realization during the same period Export of tea from India to some of the major importing

countries like Russia UK and USA are showing a sharp decline

Although per capita consumption of tea in India is amongst the lowest (64 grams) but in

volume terms India is the largest consumer Since 1970 India has become the largest

absolute consumer of tea after UK Larger domestic demand has given a new direction to the

tea industry in the recent years

Major causes of the crisis

Despite Indiarsquos historical success with the tea industry in recent years the industry has

faced serious competition in the international and national market which has lead to the

present crisis Tea prices in India are being driven down by many factors

a) Decline in demand for Indian tea in the global market

b) Defects in auction system

c) Poor price realization

d) Defective market structure

e) Increase in cost of production

7

Recommendations for improvement

Despite being the largest producer and consumer of tea the Indian plantation sector

lacks appropriate mapping of production and consumption levels Due to absence of

accurate estimates the formulation of long term industry wide action plans have been

affected

India has concentrated more on building up its large estates and has given less

attention to processing and improving the quality by proper blending and marketingndash

for higher price realization of their products

Unlike its key competitors India does not have any powerful brand to support its

promotion drive in the international market

Study done by the United Nations Food and Agriculture Organization (FAO 2001)

has suggested the need for reducing the unit cost of production through productivity

gains capacity building of small growers streamlining marketing channels

improving infrastructure tailoring marketing activities to individual countryrsquos

demand propagating health benefits of tea and promotion of organic tea using the tea

mark This is exactly what the domestic tea companies should do for their long term

survival

Improvement of supply chain management inside the country and global tea

marketing network

The tea industry in India has a legacy of corporate farming right from the day of

British rule The current situation in the sector has given ample reason for a rethink

on whether corporate farming can really boost agriculture

International brands like Liptons Brooke Bond of HUL and Tetly tea of Tata Tea etc

are the market leaders and have great power in price determination in both domestic

and international market This needs to be stopped and proper investigation is needed

to curb the wrong practices in the tea market by introducing new laws to regulate the

price movements

It has been observed that the actual producer of tea has no direct link with the

ultimate consumer Therefore the producers do not understand the market demand

choice of the customer it is very important in todayrsquos market economy for long term

sustainability of the industry With the withdrawal of sales restriction the growers

can directly go to the market by building their own brand As the margin of profit is

8

very high at the present domestic retail market Indian tea growers should invest and

take this opportunity for the promotion of their brand at the retail market

Fresh capital inflow is needed right at this moment for the tea industry of India

Investment in new plantations and production machineries must come immediately to

compete in the international market

one of the most important steps from the government part shall be to introduce a

stronger competition law to curb the misuse of corporate buying power and promote

social objectives at the garden level

9

Current Scenario of the Indian Tea Industry

Tea is normally classified based on the processing leaf size and grade Fermentation is the

major process and creates two major classifications

Price Trend

Recently tea prices showed bouyancy which started from 2006 after depressed prices for

almost a decade since 1999A slump in global output decline in production due to poor

monsoon rains steady increase in domestic demand range-bound export volumes and low

growth in production further drove prices upwards in 2009

However Indiarsquos tea production had picked up in the last quarter of 2009 and initial signs are

pointing to better weather in 2010 signalling a possible change in the price trend Even if

prices do not retrace too much producers may have to live with subdued prices during the

year It does appear that the two-year run of rising tea prices is losing steam

Chart 1 Trend in Domestic Tea Prices (source ICRA Research)

10

Production

(956mkgs)

Green

(106 mkgs)Darjeeling

(117 mkgs)Orthodox

(655 mkgs)

CTC

(8682mkgs)

Production consumption and Exports

A secular increase in domestic consumption on the one hand and muted increase in

production on the other has been the main factor supporting the increase in tea prices from

2006 onwards According to ICRArsquos estimates while the average growth in production

during the period 2003-07 was just 19 or so domestic consumption would have increased

annually at around 35 during the same period The steady increase in domestic demand

range-bound export volumes and low ICRA Rating Feature Indian Tea Industry Outlook

Positive for the Short to Medium Term ICRA Rating Services Page 3 of 8

growth in production absorbed the pipeline stock over the years and left virtually no carry-

forward stock at the end of the 2007 season

Production and consumption of Tea in India

Particulars 200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

2009

PRODUCTION (million

Kg)

854 838 878 893 946 982 945 981 6967

CONSUMPTION

(million kg)

673 693 714 735 757 771 786 802 828(E

)

production from January to Sepetmber - Estimated figure

Chart 2 Trend in Indiarsquos Production Consumption and Exports of Tea

Source ICRA Research

11

Exports

Exports play a vital role in maintaining the overall demand-supply balance in the domestic

market Healthy export realisation is also crucial for domestic realisations as un-remunerative

prices in the export market may lead to exporters dumping the produce in the domestic

market which in turn would exert a downward pressure on domestic prices Tea exports

from India have remained range bound over the period 1997-2008 with some year-to-year

fluctuations seen in between

Export of Tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 19905 183098 9199

2006 21873 200653 9173

2007 17875 181011 10126

2008 20312 239291 11781

2009 1312 177704 13542

Export from January to September

Chart 3 Trend in Indiarsquos Tea Exports

Source ICRA Research

Import of Tea from India

The continuous fall in prices of tea coupled with high cost of production has adversely

12

affected the economy of the tea plantations resulting in some tea gardens being abandoned or

under lock out in various states The teas being imported are not necessarily inferior teas and

the practice of blending with Indian teas often serves the purpose of providing teas as per

customers choice and making them price-competitive in international markets

Import of tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 1676 9851 5879

2006 2381 11941 5015

2007 1599 10460 6543

2008 2028 16197 7990

2009 1582 13209 8350

Export from January to August

Profitability of bulk tea players

An increase of around 28 in tea prices on an average in 2008 has meant considerable

increase in the profitability of bulk tea players in FY2008-09 given that around 65 of their

costs are fixed in nature Chart 6 brings out the positive impact of increasing tea prices on the

aggregate total income and profitability indicators2 of some of the large bulk tea players in

India3 which shows significant improvement over the past few years

Chart 4 Trend in Aggregate Income and Profitability Indicators of Bulk Tea

Companies (Source Bombay Stock Exchange)

13

Demand-Supply Gap

For the Indian tea industry the main driver of demand is the domestic market with domestic

consumption now growing at an estimated 35 annually as against around 25 a decade

earlier At the current growth rate the domestic market would require an incremental 30 Mkg

or so annually going forward

As against that tea supply has been growing at less than 2 pa because it is difficult to

improve garden yield of tea even during favourable climatic conditions and new plantations

need a long gestation period of at least 4-5 years Therefore the demand-supply gap in India

is likely to persist at least over the medium term

14

Industry Outlook

The tea industry has every reason to look ahead in 2010 with great deal of optimism and

confidence according to the Tea Market Annual Report published by J Thomas and

Company Private Limited the worlds oldest and largest tea auctioneers

With virtually no carry forward stock and growing domestic demand to act as buffer against

the uncertainties of the global tea trade price levels are expected to remain attractive the

report observes

Early cropping patterns indicate that demand supply equation is likely to be more balance in

2010 Both Kenya and Sri Lanka production is expected to exceed that of 2009 and

indications are that the March crop in North India will be higher than that of the last year

following some much needed rainfall

While the supply situation may be more comfortable than the previous season it is likely to

be absorbed by the domestic market where quality produce will continue to be in great

demand the reports states

Exports

15

Indian exports at the end of 2009 stood at 1915 million kg compared to 2031 million kg in

2008 a decline of 116 million kgs The strong domestic demand ensured that the exporters

were often out priced particularly in first three quarters

Lower orthodox production in North India was also another factor contributing to the decline

in exports As a result exports out of North India at 988 million kg recorded a decline of

174 million kg while exports out of South India at 927 million kg recorded a rise of 58

million kg The per unit value increased from Rs 11781 in 2008 to Rs 13664 in 2009 a gain

of Rs 1883

Exports to Iraq saw a significant increase during the year with an additional 111 million kgs

over 2008 Shipments to Russia grew by 42 million kg and to Afghanistan by 18 million kg

Exports to Egypt suffered a setback the shortfall being 96 million kg Offtake by Iran UAE

UK and the Continent also declined during the period

Companiesrsquo Overview

1 Joonktollee Tea

Joonktollee Tea Co Ltd Was promoted 134 years back to manage the affairs of a small Tea

Estate in Upper Assam It is today synonymous with premium Black and Green Teas

In the year 1954 the House of Bangurs acquired the managing agency and the Company and

brought them under their fold The name of the Company was changed to ldquoJOONKTOLLEE

TEA amp INDUSTRIES LIMITEDrdquo (JTIL) Since then the company has been under the

management of the Bangurs Over the years the Company has grown in stature and size and is

a leader in producing quality teas and enjoying one of the best Assam CTC Mark in North

IndiaCompanyrsquos Estate now comprises of 186798 acres of land with 120282 acres under

plantation

From a leading mark in the Premium Orthodox teas the Company changing with the times

is now regarded as one of the Best Assam CTC mark and does have an unstinted track record

of the business with the brand Its Green Teas are also one of its kinds

16

The performance on the financial front has also been spectacular The Companyrsquos ordinary

capital of Rs80000- has grown to Rs32336 Lacs The Company has an uninterrupted

dividend record for over 50 years

To have a large capital base and net worth two South India based Plantation Companies viz

The Kalasa Tea Produce Company Limited and Cowcoody Estates Limited belonging to the

House of Bangurs stood merged with this Company wef 1st April 2001 The area of

operation of the Company was enlarged and diversified since apart from tea the transferor

Companies also deal in other plantation crops viz coffee pepper cardamom areca vanilla

With a view to consolidate the resources of the Company and to carry out the agro base

activities more conveniently and advantageously with a larger asset base the Company

entered into Scheme of Arrangement wef 1st October 2006 under which a subsidiary and

six other Companies merged with the Company and certain assets were transferred to other

subsidiary Companies The Honrsquoble High Courts of judicature at Kolkata Chennai and

Guwahati sanctioned the Scheme of Arrangement as per the terms consented by the

shareholders and the financial results of 31st March 2008 were prepared after giving effect

of the aforesaid scheme

On BSE as on 22 April 2010

Dividend Yield () 089

Market Cap (Rs Mn) 54277

PE 1284

EPS (Rs) 1307

Face Value (Rs) 10

Volume 23239

17

Shareholding pattern

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 16

27066

75 837 2693455

Total Promoter 16

27066

75 837 2693455

Non Promoter

Institutions

FIBankInsurance 2

11784

3 364

Other 5 593 002 0

Total Institutions 7

11843

6 366 117843

Non-Institution

Bodies Corporate 82 45592 141 40197

18

NRIsOCBs 8 31256 097 926

Others 2391

33168

8 1025 127041

Total Non-

Institution 2481

40853

6 1263 168164

Total Non

Promoter 2488

52697

2 163 286007

Grand Total 2504

32336

47 100 2979462

2 Jayshree Tea amp Industries Limited

Incorporated as Jay Shree Tea Gardens in Oct45 with two tea estates the company changed

its name to Jay Shree Tea and Industries (JSTI) in 1960 It was promoted by B K Birla

Started with an initial paid-up share capital of Rs 786 lac it was raised to Rs 3905 lac in

1947 and thereafter only a rights equity issue was made during 1960 in the ratio 15

The company manages around 12 tea gardens in Assam West Bengal Tamilnadu and

Kerala It has diversified over the years and manufactures plywood in Andamans and

superphosphates and sulphuric acid in West Bengal and has interest in shipping real estate

development tubes and tyres The company is packing its tea from different tea estates in

polypouches and it is sold under brand names -- Sadabahar Shaandar and Sangam

JSTI also acquired Maitrayee Tea Project at Chopra near Islampur with 192 acres under tea

plantation to increase its presence in the area

During 1999-2000 the company established a new factory named Aryaman Tea Estate in

Jalpaiguri Dist which has commenced production from Sep 1999 The factory has the

capacity of 7 lac kgs made tea per annum In June 2000 the B K Birla groups shareholding

in Jay Shree Tea amp Industries has gone up to 4461 from 4015 following the completion

of the companys buy back offer for 1230 lakh equity shares

The company bought back 1230 lac equity shares of Rs10- each at a price of Rs120-per

19

share in 2001-02 and subsequently the total Share Capital as on March 2002 was Rs1067

crores The tea processing factory which is being set up at LedoAssam has commenced its

commercial production with a annual capacity of around 6 lac kg

As the Supreme Court has banned the falling of trees in Andaman amp Nicobar Islandsthe

companys Plywood Operation is still under suspension The 100 subsidiary company viz

Shivas Group Ltd was amalgamated with the company with the prior approval from the

shareholders wef 25022002

It also proposes to set up an International Outsourced Call centre at Kolkata The company is

proposing to delist its equity shares from Delhi Stock exchange as there is no transactions

On BSE as on 22 April 2010

Dividend Yield

() 101

Market Cap (Rs

Mn) 331263

PE 465

EPS (Rs) 6372

Face Value (Rs) 10

Volume 142257

20

Shareholding Pattern as in September 2009

21

3

Mcleod Russell

McLeod Russel has been growing tea in India since 1869 It is today the largest tea

producing company in the world

It manages 47 tea estates in the Assam Valley and 6 tea estates in the Dooars region of West

Bengal Every year its estates produce over 80 million kilograms of black tea which is

marketed worldwide under the registered Elephant trade mark

The company directly employs around 80000 people a large number of whom a women

Mcleod Russel is the worldrsquos largest tea producer

22

Description ( As On

September 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 14 4498169 4025 3685170

Total Promoter 14 4498169 4025 3685170

Non Promoter

Institutions

Mutual Funds

UTI 12 717585 642 716185

FIBankInsurance 31 381238 341

FII 3 200000 179 200000

Other 0 200000 179 200000

Total Institutions 46 1298823 1162 1271276

Non-Institution

Bodies Corporate 821 1655678 1482 1609689

NRIsOCBs 82 42605 038 40195

Others 9658 3679064 3292 2699777

Total Non-

Institution 10561 5377347 4812 4349661

Total Non

Promoter 10607 6676170 5975 5620937

Grand Total 10621 11174339 100 9306107

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

Recommendations for improvement

Despite being the largest producer and consumer of tea the Indian plantation sector

lacks appropriate mapping of production and consumption levels Due to absence of

accurate estimates the formulation of long term industry wide action plans have been

affected

India has concentrated more on building up its large estates and has given less

attention to processing and improving the quality by proper blending and marketingndash

for higher price realization of their products

Unlike its key competitors India does not have any powerful brand to support its

promotion drive in the international market

Study done by the United Nations Food and Agriculture Organization (FAO 2001)

has suggested the need for reducing the unit cost of production through productivity

gains capacity building of small growers streamlining marketing channels

improving infrastructure tailoring marketing activities to individual countryrsquos

demand propagating health benefits of tea and promotion of organic tea using the tea

mark This is exactly what the domestic tea companies should do for their long term

survival

Improvement of supply chain management inside the country and global tea

marketing network

The tea industry in India has a legacy of corporate farming right from the day of

British rule The current situation in the sector has given ample reason for a rethink

on whether corporate farming can really boost agriculture

International brands like Liptons Brooke Bond of HUL and Tetly tea of Tata Tea etc

are the market leaders and have great power in price determination in both domestic

and international market This needs to be stopped and proper investigation is needed

to curb the wrong practices in the tea market by introducing new laws to regulate the

price movements

It has been observed that the actual producer of tea has no direct link with the

ultimate consumer Therefore the producers do not understand the market demand

choice of the customer it is very important in todayrsquos market economy for long term

sustainability of the industry With the withdrawal of sales restriction the growers

can directly go to the market by building their own brand As the margin of profit is

8

very high at the present domestic retail market Indian tea growers should invest and

take this opportunity for the promotion of their brand at the retail market

Fresh capital inflow is needed right at this moment for the tea industry of India

Investment in new plantations and production machineries must come immediately to

compete in the international market

one of the most important steps from the government part shall be to introduce a

stronger competition law to curb the misuse of corporate buying power and promote

social objectives at the garden level

9

Current Scenario of the Indian Tea Industry

Tea is normally classified based on the processing leaf size and grade Fermentation is the

major process and creates two major classifications

Price Trend

Recently tea prices showed bouyancy which started from 2006 after depressed prices for

almost a decade since 1999A slump in global output decline in production due to poor

monsoon rains steady increase in domestic demand range-bound export volumes and low

growth in production further drove prices upwards in 2009

However Indiarsquos tea production had picked up in the last quarter of 2009 and initial signs are

pointing to better weather in 2010 signalling a possible change in the price trend Even if

prices do not retrace too much producers may have to live with subdued prices during the

year It does appear that the two-year run of rising tea prices is losing steam

Chart 1 Trend in Domestic Tea Prices (source ICRA Research)

10

Production

(956mkgs)

Green

(106 mkgs)Darjeeling

(117 mkgs)Orthodox

(655 mkgs)

CTC

(8682mkgs)

Production consumption and Exports

A secular increase in domestic consumption on the one hand and muted increase in

production on the other has been the main factor supporting the increase in tea prices from

2006 onwards According to ICRArsquos estimates while the average growth in production

during the period 2003-07 was just 19 or so domestic consumption would have increased

annually at around 35 during the same period The steady increase in domestic demand

range-bound export volumes and low ICRA Rating Feature Indian Tea Industry Outlook

Positive for the Short to Medium Term ICRA Rating Services Page 3 of 8

growth in production absorbed the pipeline stock over the years and left virtually no carry-

forward stock at the end of the 2007 season

Production and consumption of Tea in India

Particulars 200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

2009

PRODUCTION (million

Kg)

854 838 878 893 946 982 945 981 6967

CONSUMPTION

(million kg)

673 693 714 735 757 771 786 802 828(E

)

production from January to Sepetmber - Estimated figure

Chart 2 Trend in Indiarsquos Production Consumption and Exports of Tea

Source ICRA Research

11

Exports

Exports play a vital role in maintaining the overall demand-supply balance in the domestic

market Healthy export realisation is also crucial for domestic realisations as un-remunerative

prices in the export market may lead to exporters dumping the produce in the domestic

market which in turn would exert a downward pressure on domestic prices Tea exports

from India have remained range bound over the period 1997-2008 with some year-to-year

fluctuations seen in between

Export of Tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 19905 183098 9199

2006 21873 200653 9173

2007 17875 181011 10126

2008 20312 239291 11781

2009 1312 177704 13542

Export from January to September

Chart 3 Trend in Indiarsquos Tea Exports

Source ICRA Research

Import of Tea from India

The continuous fall in prices of tea coupled with high cost of production has adversely

12

affected the economy of the tea plantations resulting in some tea gardens being abandoned or

under lock out in various states The teas being imported are not necessarily inferior teas and

the practice of blending with Indian teas often serves the purpose of providing teas as per

customers choice and making them price-competitive in international markets

Import of tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 1676 9851 5879

2006 2381 11941 5015

2007 1599 10460 6543

2008 2028 16197 7990

2009 1582 13209 8350

Export from January to August

Profitability of bulk tea players

An increase of around 28 in tea prices on an average in 2008 has meant considerable

increase in the profitability of bulk tea players in FY2008-09 given that around 65 of their

costs are fixed in nature Chart 6 brings out the positive impact of increasing tea prices on the

aggregate total income and profitability indicators2 of some of the large bulk tea players in

India3 which shows significant improvement over the past few years

Chart 4 Trend in Aggregate Income and Profitability Indicators of Bulk Tea

Companies (Source Bombay Stock Exchange)

13

Demand-Supply Gap

For the Indian tea industry the main driver of demand is the domestic market with domestic

consumption now growing at an estimated 35 annually as against around 25 a decade

earlier At the current growth rate the domestic market would require an incremental 30 Mkg

or so annually going forward

As against that tea supply has been growing at less than 2 pa because it is difficult to

improve garden yield of tea even during favourable climatic conditions and new plantations

need a long gestation period of at least 4-5 years Therefore the demand-supply gap in India

is likely to persist at least over the medium term

14

Industry Outlook

The tea industry has every reason to look ahead in 2010 with great deal of optimism and

confidence according to the Tea Market Annual Report published by J Thomas and

Company Private Limited the worlds oldest and largest tea auctioneers

With virtually no carry forward stock and growing domestic demand to act as buffer against

the uncertainties of the global tea trade price levels are expected to remain attractive the

report observes

Early cropping patterns indicate that demand supply equation is likely to be more balance in

2010 Both Kenya and Sri Lanka production is expected to exceed that of 2009 and

indications are that the March crop in North India will be higher than that of the last year

following some much needed rainfall

While the supply situation may be more comfortable than the previous season it is likely to

be absorbed by the domestic market where quality produce will continue to be in great

demand the reports states

Exports

15

Indian exports at the end of 2009 stood at 1915 million kg compared to 2031 million kg in

2008 a decline of 116 million kgs The strong domestic demand ensured that the exporters

were often out priced particularly in first three quarters

Lower orthodox production in North India was also another factor contributing to the decline

in exports As a result exports out of North India at 988 million kg recorded a decline of

174 million kg while exports out of South India at 927 million kg recorded a rise of 58

million kg The per unit value increased from Rs 11781 in 2008 to Rs 13664 in 2009 a gain

of Rs 1883

Exports to Iraq saw a significant increase during the year with an additional 111 million kgs

over 2008 Shipments to Russia grew by 42 million kg and to Afghanistan by 18 million kg

Exports to Egypt suffered a setback the shortfall being 96 million kg Offtake by Iran UAE

UK and the Continent also declined during the period

Companiesrsquo Overview

1 Joonktollee Tea

Joonktollee Tea Co Ltd Was promoted 134 years back to manage the affairs of a small Tea

Estate in Upper Assam It is today synonymous with premium Black and Green Teas

In the year 1954 the House of Bangurs acquired the managing agency and the Company and

brought them under their fold The name of the Company was changed to ldquoJOONKTOLLEE

TEA amp INDUSTRIES LIMITEDrdquo (JTIL) Since then the company has been under the

management of the Bangurs Over the years the Company has grown in stature and size and is

a leader in producing quality teas and enjoying one of the best Assam CTC Mark in North

IndiaCompanyrsquos Estate now comprises of 186798 acres of land with 120282 acres under

plantation

From a leading mark in the Premium Orthodox teas the Company changing with the times

is now regarded as one of the Best Assam CTC mark and does have an unstinted track record

of the business with the brand Its Green Teas are also one of its kinds

16

The performance on the financial front has also been spectacular The Companyrsquos ordinary

capital of Rs80000- has grown to Rs32336 Lacs The Company has an uninterrupted

dividend record for over 50 years

To have a large capital base and net worth two South India based Plantation Companies viz

The Kalasa Tea Produce Company Limited and Cowcoody Estates Limited belonging to the

House of Bangurs stood merged with this Company wef 1st April 2001 The area of

operation of the Company was enlarged and diversified since apart from tea the transferor

Companies also deal in other plantation crops viz coffee pepper cardamom areca vanilla

With a view to consolidate the resources of the Company and to carry out the agro base

activities more conveniently and advantageously with a larger asset base the Company

entered into Scheme of Arrangement wef 1st October 2006 under which a subsidiary and

six other Companies merged with the Company and certain assets were transferred to other

subsidiary Companies The Honrsquoble High Courts of judicature at Kolkata Chennai and

Guwahati sanctioned the Scheme of Arrangement as per the terms consented by the

shareholders and the financial results of 31st March 2008 were prepared after giving effect

of the aforesaid scheme

On BSE as on 22 April 2010

Dividend Yield () 089

Market Cap (Rs Mn) 54277

PE 1284

EPS (Rs) 1307

Face Value (Rs) 10

Volume 23239

17

Shareholding pattern

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 16

27066

75 837 2693455

Total Promoter 16

27066

75 837 2693455

Non Promoter

Institutions

FIBankInsurance 2

11784

3 364

Other 5 593 002 0

Total Institutions 7

11843

6 366 117843

Non-Institution

Bodies Corporate 82 45592 141 40197

18

NRIsOCBs 8 31256 097 926

Others 2391

33168

8 1025 127041

Total Non-

Institution 2481

40853

6 1263 168164

Total Non

Promoter 2488

52697

2 163 286007

Grand Total 2504

32336

47 100 2979462

2 Jayshree Tea amp Industries Limited

Incorporated as Jay Shree Tea Gardens in Oct45 with two tea estates the company changed

its name to Jay Shree Tea and Industries (JSTI) in 1960 It was promoted by B K Birla

Started with an initial paid-up share capital of Rs 786 lac it was raised to Rs 3905 lac in

1947 and thereafter only a rights equity issue was made during 1960 in the ratio 15

The company manages around 12 tea gardens in Assam West Bengal Tamilnadu and

Kerala It has diversified over the years and manufactures plywood in Andamans and

superphosphates and sulphuric acid in West Bengal and has interest in shipping real estate

development tubes and tyres The company is packing its tea from different tea estates in

polypouches and it is sold under brand names -- Sadabahar Shaandar and Sangam

JSTI also acquired Maitrayee Tea Project at Chopra near Islampur with 192 acres under tea

plantation to increase its presence in the area

During 1999-2000 the company established a new factory named Aryaman Tea Estate in

Jalpaiguri Dist which has commenced production from Sep 1999 The factory has the

capacity of 7 lac kgs made tea per annum In June 2000 the B K Birla groups shareholding

in Jay Shree Tea amp Industries has gone up to 4461 from 4015 following the completion

of the companys buy back offer for 1230 lakh equity shares

The company bought back 1230 lac equity shares of Rs10- each at a price of Rs120-per

19

share in 2001-02 and subsequently the total Share Capital as on March 2002 was Rs1067

crores The tea processing factory which is being set up at LedoAssam has commenced its

commercial production with a annual capacity of around 6 lac kg

As the Supreme Court has banned the falling of trees in Andaman amp Nicobar Islandsthe

companys Plywood Operation is still under suspension The 100 subsidiary company viz

Shivas Group Ltd was amalgamated with the company with the prior approval from the

shareholders wef 25022002

It also proposes to set up an International Outsourced Call centre at Kolkata The company is

proposing to delist its equity shares from Delhi Stock exchange as there is no transactions

On BSE as on 22 April 2010

Dividend Yield

() 101

Market Cap (Rs

Mn) 331263

PE 465

EPS (Rs) 6372

Face Value (Rs) 10

Volume 142257

20

Shareholding Pattern as in September 2009

21

3

Mcleod Russell

McLeod Russel has been growing tea in India since 1869 It is today the largest tea

producing company in the world

It manages 47 tea estates in the Assam Valley and 6 tea estates in the Dooars region of West

Bengal Every year its estates produce over 80 million kilograms of black tea which is

marketed worldwide under the registered Elephant trade mark

The company directly employs around 80000 people a large number of whom a women

Mcleod Russel is the worldrsquos largest tea producer

22

Description ( As On

September 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 14 4498169 4025 3685170

Total Promoter 14 4498169 4025 3685170

Non Promoter

Institutions

Mutual Funds

UTI 12 717585 642 716185

FIBankInsurance 31 381238 341

FII 3 200000 179 200000

Other 0 200000 179 200000

Total Institutions 46 1298823 1162 1271276

Non-Institution

Bodies Corporate 821 1655678 1482 1609689

NRIsOCBs 82 42605 038 40195

Others 9658 3679064 3292 2699777

Total Non-

Institution 10561 5377347 4812 4349661

Total Non

Promoter 10607 6676170 5975 5620937

Grand Total 10621 11174339 100 9306107

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

very high at the present domestic retail market Indian tea growers should invest and

take this opportunity for the promotion of their brand at the retail market

Fresh capital inflow is needed right at this moment for the tea industry of India

Investment in new plantations and production machineries must come immediately to

compete in the international market

one of the most important steps from the government part shall be to introduce a

stronger competition law to curb the misuse of corporate buying power and promote

social objectives at the garden level

9

Current Scenario of the Indian Tea Industry

Tea is normally classified based on the processing leaf size and grade Fermentation is the

major process and creates two major classifications

Price Trend

Recently tea prices showed bouyancy which started from 2006 after depressed prices for

almost a decade since 1999A slump in global output decline in production due to poor

monsoon rains steady increase in domestic demand range-bound export volumes and low

growth in production further drove prices upwards in 2009

However Indiarsquos tea production had picked up in the last quarter of 2009 and initial signs are

pointing to better weather in 2010 signalling a possible change in the price trend Even if

prices do not retrace too much producers may have to live with subdued prices during the

year It does appear that the two-year run of rising tea prices is losing steam

Chart 1 Trend in Domestic Tea Prices (source ICRA Research)

10

Production

(956mkgs)

Green

(106 mkgs)Darjeeling

(117 mkgs)Orthodox

(655 mkgs)

CTC

(8682mkgs)

Production consumption and Exports

A secular increase in domestic consumption on the one hand and muted increase in

production on the other has been the main factor supporting the increase in tea prices from

2006 onwards According to ICRArsquos estimates while the average growth in production

during the period 2003-07 was just 19 or so domestic consumption would have increased

annually at around 35 during the same period The steady increase in domestic demand

range-bound export volumes and low ICRA Rating Feature Indian Tea Industry Outlook

Positive for the Short to Medium Term ICRA Rating Services Page 3 of 8

growth in production absorbed the pipeline stock over the years and left virtually no carry-

forward stock at the end of the 2007 season

Production and consumption of Tea in India

Particulars 200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

2009

PRODUCTION (million

Kg)

854 838 878 893 946 982 945 981 6967

CONSUMPTION

(million kg)

673 693 714 735 757 771 786 802 828(E

)

production from January to Sepetmber - Estimated figure

Chart 2 Trend in Indiarsquos Production Consumption and Exports of Tea

Source ICRA Research

11

Exports

Exports play a vital role in maintaining the overall demand-supply balance in the domestic

market Healthy export realisation is also crucial for domestic realisations as un-remunerative

prices in the export market may lead to exporters dumping the produce in the domestic

market which in turn would exert a downward pressure on domestic prices Tea exports

from India have remained range bound over the period 1997-2008 with some year-to-year

fluctuations seen in between

Export of Tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 19905 183098 9199

2006 21873 200653 9173

2007 17875 181011 10126

2008 20312 239291 11781

2009 1312 177704 13542

Export from January to September

Chart 3 Trend in Indiarsquos Tea Exports

Source ICRA Research

Import of Tea from India

The continuous fall in prices of tea coupled with high cost of production has adversely

12

affected the economy of the tea plantations resulting in some tea gardens being abandoned or

under lock out in various states The teas being imported are not necessarily inferior teas and

the practice of blending with Indian teas often serves the purpose of providing teas as per

customers choice and making them price-competitive in international markets

Import of tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 1676 9851 5879

2006 2381 11941 5015

2007 1599 10460 6543

2008 2028 16197 7990

2009 1582 13209 8350

Export from January to August

Profitability of bulk tea players

An increase of around 28 in tea prices on an average in 2008 has meant considerable

increase in the profitability of bulk tea players in FY2008-09 given that around 65 of their

costs are fixed in nature Chart 6 brings out the positive impact of increasing tea prices on the

aggregate total income and profitability indicators2 of some of the large bulk tea players in

India3 which shows significant improvement over the past few years

Chart 4 Trend in Aggregate Income and Profitability Indicators of Bulk Tea

Companies (Source Bombay Stock Exchange)

13

Demand-Supply Gap

For the Indian tea industry the main driver of demand is the domestic market with domestic

consumption now growing at an estimated 35 annually as against around 25 a decade

earlier At the current growth rate the domestic market would require an incremental 30 Mkg

or so annually going forward

As against that tea supply has been growing at less than 2 pa because it is difficult to

improve garden yield of tea even during favourable climatic conditions and new plantations

need a long gestation period of at least 4-5 years Therefore the demand-supply gap in India

is likely to persist at least over the medium term

14

Industry Outlook

The tea industry has every reason to look ahead in 2010 with great deal of optimism and

confidence according to the Tea Market Annual Report published by J Thomas and

Company Private Limited the worlds oldest and largest tea auctioneers

With virtually no carry forward stock and growing domestic demand to act as buffer against

the uncertainties of the global tea trade price levels are expected to remain attractive the

report observes

Early cropping patterns indicate that demand supply equation is likely to be more balance in

2010 Both Kenya and Sri Lanka production is expected to exceed that of 2009 and

indications are that the March crop in North India will be higher than that of the last year

following some much needed rainfall

While the supply situation may be more comfortable than the previous season it is likely to

be absorbed by the domestic market where quality produce will continue to be in great

demand the reports states

Exports

15

Indian exports at the end of 2009 stood at 1915 million kg compared to 2031 million kg in

2008 a decline of 116 million kgs The strong domestic demand ensured that the exporters

were often out priced particularly in first three quarters

Lower orthodox production in North India was also another factor contributing to the decline

in exports As a result exports out of North India at 988 million kg recorded a decline of

174 million kg while exports out of South India at 927 million kg recorded a rise of 58

million kg The per unit value increased from Rs 11781 in 2008 to Rs 13664 in 2009 a gain

of Rs 1883

Exports to Iraq saw a significant increase during the year with an additional 111 million kgs

over 2008 Shipments to Russia grew by 42 million kg and to Afghanistan by 18 million kg

Exports to Egypt suffered a setback the shortfall being 96 million kg Offtake by Iran UAE

UK and the Continent also declined during the period

Companiesrsquo Overview

1 Joonktollee Tea

Joonktollee Tea Co Ltd Was promoted 134 years back to manage the affairs of a small Tea

Estate in Upper Assam It is today synonymous with premium Black and Green Teas

In the year 1954 the House of Bangurs acquired the managing agency and the Company and

brought them under their fold The name of the Company was changed to ldquoJOONKTOLLEE

TEA amp INDUSTRIES LIMITEDrdquo (JTIL) Since then the company has been under the

management of the Bangurs Over the years the Company has grown in stature and size and is

a leader in producing quality teas and enjoying one of the best Assam CTC Mark in North

IndiaCompanyrsquos Estate now comprises of 186798 acres of land with 120282 acres under

plantation

From a leading mark in the Premium Orthodox teas the Company changing with the times

is now regarded as one of the Best Assam CTC mark and does have an unstinted track record

of the business with the brand Its Green Teas are also one of its kinds

16

The performance on the financial front has also been spectacular The Companyrsquos ordinary

capital of Rs80000- has grown to Rs32336 Lacs The Company has an uninterrupted

dividend record for over 50 years

To have a large capital base and net worth two South India based Plantation Companies viz

The Kalasa Tea Produce Company Limited and Cowcoody Estates Limited belonging to the

House of Bangurs stood merged with this Company wef 1st April 2001 The area of

operation of the Company was enlarged and diversified since apart from tea the transferor

Companies also deal in other plantation crops viz coffee pepper cardamom areca vanilla

With a view to consolidate the resources of the Company and to carry out the agro base

activities more conveniently and advantageously with a larger asset base the Company

entered into Scheme of Arrangement wef 1st October 2006 under which a subsidiary and

six other Companies merged with the Company and certain assets were transferred to other

subsidiary Companies The Honrsquoble High Courts of judicature at Kolkata Chennai and

Guwahati sanctioned the Scheme of Arrangement as per the terms consented by the

shareholders and the financial results of 31st March 2008 were prepared after giving effect

of the aforesaid scheme

On BSE as on 22 April 2010

Dividend Yield () 089

Market Cap (Rs Mn) 54277

PE 1284

EPS (Rs) 1307

Face Value (Rs) 10

Volume 23239

17

Shareholding pattern

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 16

27066

75 837 2693455

Total Promoter 16

27066

75 837 2693455

Non Promoter

Institutions

FIBankInsurance 2

11784

3 364

Other 5 593 002 0

Total Institutions 7

11843

6 366 117843

Non-Institution

Bodies Corporate 82 45592 141 40197

18

NRIsOCBs 8 31256 097 926

Others 2391

33168

8 1025 127041

Total Non-

Institution 2481

40853

6 1263 168164

Total Non

Promoter 2488

52697

2 163 286007

Grand Total 2504

32336

47 100 2979462

2 Jayshree Tea amp Industries Limited

Incorporated as Jay Shree Tea Gardens in Oct45 with two tea estates the company changed

its name to Jay Shree Tea and Industries (JSTI) in 1960 It was promoted by B K Birla

Started with an initial paid-up share capital of Rs 786 lac it was raised to Rs 3905 lac in

1947 and thereafter only a rights equity issue was made during 1960 in the ratio 15

The company manages around 12 tea gardens in Assam West Bengal Tamilnadu and

Kerala It has diversified over the years and manufactures plywood in Andamans and

superphosphates and sulphuric acid in West Bengal and has interest in shipping real estate

development tubes and tyres The company is packing its tea from different tea estates in

polypouches and it is sold under brand names -- Sadabahar Shaandar and Sangam

JSTI also acquired Maitrayee Tea Project at Chopra near Islampur with 192 acres under tea

plantation to increase its presence in the area

During 1999-2000 the company established a new factory named Aryaman Tea Estate in

Jalpaiguri Dist which has commenced production from Sep 1999 The factory has the

capacity of 7 lac kgs made tea per annum In June 2000 the B K Birla groups shareholding

in Jay Shree Tea amp Industries has gone up to 4461 from 4015 following the completion

of the companys buy back offer for 1230 lakh equity shares

The company bought back 1230 lac equity shares of Rs10- each at a price of Rs120-per

19

share in 2001-02 and subsequently the total Share Capital as on March 2002 was Rs1067

crores The tea processing factory which is being set up at LedoAssam has commenced its

commercial production with a annual capacity of around 6 lac kg

As the Supreme Court has banned the falling of trees in Andaman amp Nicobar Islandsthe

companys Plywood Operation is still under suspension The 100 subsidiary company viz

Shivas Group Ltd was amalgamated with the company with the prior approval from the

shareholders wef 25022002

It also proposes to set up an International Outsourced Call centre at Kolkata The company is

proposing to delist its equity shares from Delhi Stock exchange as there is no transactions

On BSE as on 22 April 2010

Dividend Yield

() 101

Market Cap (Rs

Mn) 331263

PE 465

EPS (Rs) 6372

Face Value (Rs) 10

Volume 142257

20

Shareholding Pattern as in September 2009

21

3

Mcleod Russell

McLeod Russel has been growing tea in India since 1869 It is today the largest tea

producing company in the world

It manages 47 tea estates in the Assam Valley and 6 tea estates in the Dooars region of West

Bengal Every year its estates produce over 80 million kilograms of black tea which is

marketed worldwide under the registered Elephant trade mark

The company directly employs around 80000 people a large number of whom a women

Mcleod Russel is the worldrsquos largest tea producer

22

Description ( As On

September 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 14 4498169 4025 3685170

Total Promoter 14 4498169 4025 3685170

Non Promoter

Institutions

Mutual Funds

UTI 12 717585 642 716185

FIBankInsurance 31 381238 341

FII 3 200000 179 200000

Other 0 200000 179 200000

Total Institutions 46 1298823 1162 1271276

Non-Institution

Bodies Corporate 821 1655678 1482 1609689

NRIsOCBs 82 42605 038 40195

Others 9658 3679064 3292 2699777

Total Non-

Institution 10561 5377347 4812 4349661

Total Non

Promoter 10607 6676170 5975 5620937

Grand Total 10621 11174339 100 9306107

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

Current Scenario of the Indian Tea Industry

Tea is normally classified based on the processing leaf size and grade Fermentation is the

major process and creates two major classifications

Price Trend

Recently tea prices showed bouyancy which started from 2006 after depressed prices for

almost a decade since 1999A slump in global output decline in production due to poor

monsoon rains steady increase in domestic demand range-bound export volumes and low

growth in production further drove prices upwards in 2009

However Indiarsquos tea production had picked up in the last quarter of 2009 and initial signs are

pointing to better weather in 2010 signalling a possible change in the price trend Even if

prices do not retrace too much producers may have to live with subdued prices during the

year It does appear that the two-year run of rising tea prices is losing steam

Chart 1 Trend in Domestic Tea Prices (source ICRA Research)

10

Production

(956mkgs)

Green

(106 mkgs)Darjeeling

(117 mkgs)Orthodox

(655 mkgs)

CTC

(8682mkgs)

Production consumption and Exports

A secular increase in domestic consumption on the one hand and muted increase in

production on the other has been the main factor supporting the increase in tea prices from

2006 onwards According to ICRArsquos estimates while the average growth in production

during the period 2003-07 was just 19 or so domestic consumption would have increased

annually at around 35 during the same period The steady increase in domestic demand

range-bound export volumes and low ICRA Rating Feature Indian Tea Industry Outlook

Positive for the Short to Medium Term ICRA Rating Services Page 3 of 8

growth in production absorbed the pipeline stock over the years and left virtually no carry-

forward stock at the end of the 2007 season

Production and consumption of Tea in India

Particulars 200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

2009

PRODUCTION (million

Kg)

854 838 878 893 946 982 945 981 6967

CONSUMPTION

(million kg)

673 693 714 735 757 771 786 802 828(E

)

production from January to Sepetmber - Estimated figure

Chart 2 Trend in Indiarsquos Production Consumption and Exports of Tea

Source ICRA Research

11

Exports

Exports play a vital role in maintaining the overall demand-supply balance in the domestic

market Healthy export realisation is also crucial for domestic realisations as un-remunerative

prices in the export market may lead to exporters dumping the produce in the domestic

market which in turn would exert a downward pressure on domestic prices Tea exports

from India have remained range bound over the period 1997-2008 with some year-to-year

fluctuations seen in between

Export of Tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 19905 183098 9199

2006 21873 200653 9173

2007 17875 181011 10126

2008 20312 239291 11781

2009 1312 177704 13542

Export from January to September

Chart 3 Trend in Indiarsquos Tea Exports

Source ICRA Research

Import of Tea from India

The continuous fall in prices of tea coupled with high cost of production has adversely

12

affected the economy of the tea plantations resulting in some tea gardens being abandoned or

under lock out in various states The teas being imported are not necessarily inferior teas and

the practice of blending with Indian teas often serves the purpose of providing teas as per

customers choice and making them price-competitive in international markets

Import of tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 1676 9851 5879

2006 2381 11941 5015

2007 1599 10460 6543

2008 2028 16197 7990

2009 1582 13209 8350

Export from January to August

Profitability of bulk tea players

An increase of around 28 in tea prices on an average in 2008 has meant considerable

increase in the profitability of bulk tea players in FY2008-09 given that around 65 of their

costs are fixed in nature Chart 6 brings out the positive impact of increasing tea prices on the

aggregate total income and profitability indicators2 of some of the large bulk tea players in

India3 which shows significant improvement over the past few years

Chart 4 Trend in Aggregate Income and Profitability Indicators of Bulk Tea

Companies (Source Bombay Stock Exchange)

13

Demand-Supply Gap

For the Indian tea industry the main driver of demand is the domestic market with domestic

consumption now growing at an estimated 35 annually as against around 25 a decade

earlier At the current growth rate the domestic market would require an incremental 30 Mkg

or so annually going forward

As against that tea supply has been growing at less than 2 pa because it is difficult to

improve garden yield of tea even during favourable climatic conditions and new plantations

need a long gestation period of at least 4-5 years Therefore the demand-supply gap in India

is likely to persist at least over the medium term

14

Industry Outlook

The tea industry has every reason to look ahead in 2010 with great deal of optimism and

confidence according to the Tea Market Annual Report published by J Thomas and

Company Private Limited the worlds oldest and largest tea auctioneers

With virtually no carry forward stock and growing domestic demand to act as buffer against

the uncertainties of the global tea trade price levels are expected to remain attractive the

report observes

Early cropping patterns indicate that demand supply equation is likely to be more balance in

2010 Both Kenya and Sri Lanka production is expected to exceed that of 2009 and

indications are that the March crop in North India will be higher than that of the last year

following some much needed rainfall

While the supply situation may be more comfortable than the previous season it is likely to

be absorbed by the domestic market where quality produce will continue to be in great

demand the reports states

Exports

15

Indian exports at the end of 2009 stood at 1915 million kg compared to 2031 million kg in

2008 a decline of 116 million kgs The strong domestic demand ensured that the exporters

were often out priced particularly in first three quarters

Lower orthodox production in North India was also another factor contributing to the decline

in exports As a result exports out of North India at 988 million kg recorded a decline of

174 million kg while exports out of South India at 927 million kg recorded a rise of 58

million kg The per unit value increased from Rs 11781 in 2008 to Rs 13664 in 2009 a gain

of Rs 1883

Exports to Iraq saw a significant increase during the year with an additional 111 million kgs

over 2008 Shipments to Russia grew by 42 million kg and to Afghanistan by 18 million kg

Exports to Egypt suffered a setback the shortfall being 96 million kg Offtake by Iran UAE

UK and the Continent also declined during the period

Companiesrsquo Overview

1 Joonktollee Tea

Joonktollee Tea Co Ltd Was promoted 134 years back to manage the affairs of a small Tea

Estate in Upper Assam It is today synonymous with premium Black and Green Teas

In the year 1954 the House of Bangurs acquired the managing agency and the Company and

brought them under their fold The name of the Company was changed to ldquoJOONKTOLLEE

TEA amp INDUSTRIES LIMITEDrdquo (JTIL) Since then the company has been under the

management of the Bangurs Over the years the Company has grown in stature and size and is

a leader in producing quality teas and enjoying one of the best Assam CTC Mark in North

IndiaCompanyrsquos Estate now comprises of 186798 acres of land with 120282 acres under

plantation

From a leading mark in the Premium Orthodox teas the Company changing with the times

is now regarded as one of the Best Assam CTC mark and does have an unstinted track record

of the business with the brand Its Green Teas are also one of its kinds

16

The performance on the financial front has also been spectacular The Companyrsquos ordinary

capital of Rs80000- has grown to Rs32336 Lacs The Company has an uninterrupted

dividend record for over 50 years

To have a large capital base and net worth two South India based Plantation Companies viz

The Kalasa Tea Produce Company Limited and Cowcoody Estates Limited belonging to the

House of Bangurs stood merged with this Company wef 1st April 2001 The area of

operation of the Company was enlarged and diversified since apart from tea the transferor

Companies also deal in other plantation crops viz coffee pepper cardamom areca vanilla

With a view to consolidate the resources of the Company and to carry out the agro base

activities more conveniently and advantageously with a larger asset base the Company

entered into Scheme of Arrangement wef 1st October 2006 under which a subsidiary and

six other Companies merged with the Company and certain assets were transferred to other

subsidiary Companies The Honrsquoble High Courts of judicature at Kolkata Chennai and

Guwahati sanctioned the Scheme of Arrangement as per the terms consented by the

shareholders and the financial results of 31st March 2008 were prepared after giving effect

of the aforesaid scheme

On BSE as on 22 April 2010

Dividend Yield () 089

Market Cap (Rs Mn) 54277

PE 1284

EPS (Rs) 1307

Face Value (Rs) 10

Volume 23239

17

Shareholding pattern

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 16

27066

75 837 2693455

Total Promoter 16

27066

75 837 2693455

Non Promoter

Institutions

FIBankInsurance 2

11784

3 364

Other 5 593 002 0

Total Institutions 7

11843

6 366 117843

Non-Institution

Bodies Corporate 82 45592 141 40197

18

NRIsOCBs 8 31256 097 926

Others 2391

33168

8 1025 127041

Total Non-

Institution 2481

40853

6 1263 168164

Total Non

Promoter 2488

52697

2 163 286007

Grand Total 2504

32336

47 100 2979462

2 Jayshree Tea amp Industries Limited

Incorporated as Jay Shree Tea Gardens in Oct45 with two tea estates the company changed

its name to Jay Shree Tea and Industries (JSTI) in 1960 It was promoted by B K Birla

Started with an initial paid-up share capital of Rs 786 lac it was raised to Rs 3905 lac in

1947 and thereafter only a rights equity issue was made during 1960 in the ratio 15

The company manages around 12 tea gardens in Assam West Bengal Tamilnadu and

Kerala It has diversified over the years and manufactures plywood in Andamans and

superphosphates and sulphuric acid in West Bengal and has interest in shipping real estate

development tubes and tyres The company is packing its tea from different tea estates in

polypouches and it is sold under brand names -- Sadabahar Shaandar and Sangam

JSTI also acquired Maitrayee Tea Project at Chopra near Islampur with 192 acres under tea

plantation to increase its presence in the area

During 1999-2000 the company established a new factory named Aryaman Tea Estate in

Jalpaiguri Dist which has commenced production from Sep 1999 The factory has the

capacity of 7 lac kgs made tea per annum In June 2000 the B K Birla groups shareholding

in Jay Shree Tea amp Industries has gone up to 4461 from 4015 following the completion

of the companys buy back offer for 1230 lakh equity shares

The company bought back 1230 lac equity shares of Rs10- each at a price of Rs120-per

19

share in 2001-02 and subsequently the total Share Capital as on March 2002 was Rs1067

crores The tea processing factory which is being set up at LedoAssam has commenced its

commercial production with a annual capacity of around 6 lac kg

As the Supreme Court has banned the falling of trees in Andaman amp Nicobar Islandsthe

companys Plywood Operation is still under suspension The 100 subsidiary company viz

Shivas Group Ltd was amalgamated with the company with the prior approval from the

shareholders wef 25022002

It also proposes to set up an International Outsourced Call centre at Kolkata The company is

proposing to delist its equity shares from Delhi Stock exchange as there is no transactions

On BSE as on 22 April 2010

Dividend Yield

() 101

Market Cap (Rs

Mn) 331263

PE 465

EPS (Rs) 6372

Face Value (Rs) 10

Volume 142257

20

Shareholding Pattern as in September 2009

21

3

Mcleod Russell

McLeod Russel has been growing tea in India since 1869 It is today the largest tea

producing company in the world

It manages 47 tea estates in the Assam Valley and 6 tea estates in the Dooars region of West

Bengal Every year its estates produce over 80 million kilograms of black tea which is

marketed worldwide under the registered Elephant trade mark

The company directly employs around 80000 people a large number of whom a women

Mcleod Russel is the worldrsquos largest tea producer

22

Description ( As On

September 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 14 4498169 4025 3685170

Total Promoter 14 4498169 4025 3685170

Non Promoter

Institutions

Mutual Funds

UTI 12 717585 642 716185

FIBankInsurance 31 381238 341

FII 3 200000 179 200000

Other 0 200000 179 200000

Total Institutions 46 1298823 1162 1271276

Non-Institution

Bodies Corporate 821 1655678 1482 1609689

NRIsOCBs 82 42605 038 40195

Others 9658 3679064 3292 2699777

Total Non-

Institution 10561 5377347 4812 4349661

Total Non

Promoter 10607 6676170 5975 5620937

Grand Total 10621 11174339 100 9306107

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

Production consumption and Exports

A secular increase in domestic consumption on the one hand and muted increase in

production on the other has been the main factor supporting the increase in tea prices from

2006 onwards According to ICRArsquos estimates while the average growth in production

during the period 2003-07 was just 19 or so domestic consumption would have increased

annually at around 35 during the same period The steady increase in domestic demand

range-bound export volumes and low ICRA Rating Feature Indian Tea Industry Outlook

Positive for the Short to Medium Term ICRA Rating Services Page 3 of 8

growth in production absorbed the pipeline stock over the years and left virtually no carry-

forward stock at the end of the 2007 season

Production and consumption of Tea in India

Particulars 200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

2009

PRODUCTION (million

Kg)

854 838 878 893 946 982 945 981 6967

CONSUMPTION

(million kg)

673 693 714 735 757 771 786 802 828(E

)

production from January to Sepetmber - Estimated figure

Chart 2 Trend in Indiarsquos Production Consumption and Exports of Tea

Source ICRA Research

11

Exports

Exports play a vital role in maintaining the overall demand-supply balance in the domestic

market Healthy export realisation is also crucial for domestic realisations as un-remunerative

prices in the export market may lead to exporters dumping the produce in the domestic

market which in turn would exert a downward pressure on domestic prices Tea exports

from India have remained range bound over the period 1997-2008 with some year-to-year

fluctuations seen in between

Export of Tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 19905 183098 9199

2006 21873 200653 9173

2007 17875 181011 10126

2008 20312 239291 11781

2009 1312 177704 13542

Export from January to September

Chart 3 Trend in Indiarsquos Tea Exports

Source ICRA Research

Import of Tea from India

The continuous fall in prices of tea coupled with high cost of production has adversely

12

affected the economy of the tea plantations resulting in some tea gardens being abandoned or

under lock out in various states The teas being imported are not necessarily inferior teas and

the practice of blending with Indian teas often serves the purpose of providing teas as per

customers choice and making them price-competitive in international markets

Import of tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 1676 9851 5879

2006 2381 11941 5015

2007 1599 10460 6543

2008 2028 16197 7990

2009 1582 13209 8350

Export from January to August

Profitability of bulk tea players

An increase of around 28 in tea prices on an average in 2008 has meant considerable

increase in the profitability of bulk tea players in FY2008-09 given that around 65 of their

costs are fixed in nature Chart 6 brings out the positive impact of increasing tea prices on the

aggregate total income and profitability indicators2 of some of the large bulk tea players in

India3 which shows significant improvement over the past few years

Chart 4 Trend in Aggregate Income and Profitability Indicators of Bulk Tea

Companies (Source Bombay Stock Exchange)

13

Demand-Supply Gap

For the Indian tea industry the main driver of demand is the domestic market with domestic

consumption now growing at an estimated 35 annually as against around 25 a decade

earlier At the current growth rate the domestic market would require an incremental 30 Mkg

or so annually going forward

As against that tea supply has been growing at less than 2 pa because it is difficult to

improve garden yield of tea even during favourable climatic conditions and new plantations

need a long gestation period of at least 4-5 years Therefore the demand-supply gap in India

is likely to persist at least over the medium term

14

Industry Outlook

The tea industry has every reason to look ahead in 2010 with great deal of optimism and

confidence according to the Tea Market Annual Report published by J Thomas and

Company Private Limited the worlds oldest and largest tea auctioneers

With virtually no carry forward stock and growing domestic demand to act as buffer against

the uncertainties of the global tea trade price levels are expected to remain attractive the

report observes

Early cropping patterns indicate that demand supply equation is likely to be more balance in

2010 Both Kenya and Sri Lanka production is expected to exceed that of 2009 and

indications are that the March crop in North India will be higher than that of the last year

following some much needed rainfall

While the supply situation may be more comfortable than the previous season it is likely to

be absorbed by the domestic market where quality produce will continue to be in great

demand the reports states

Exports

15

Indian exports at the end of 2009 stood at 1915 million kg compared to 2031 million kg in

2008 a decline of 116 million kgs The strong domestic demand ensured that the exporters

were often out priced particularly in first three quarters

Lower orthodox production in North India was also another factor contributing to the decline

in exports As a result exports out of North India at 988 million kg recorded a decline of

174 million kg while exports out of South India at 927 million kg recorded a rise of 58

million kg The per unit value increased from Rs 11781 in 2008 to Rs 13664 in 2009 a gain

of Rs 1883

Exports to Iraq saw a significant increase during the year with an additional 111 million kgs

over 2008 Shipments to Russia grew by 42 million kg and to Afghanistan by 18 million kg

Exports to Egypt suffered a setback the shortfall being 96 million kg Offtake by Iran UAE

UK and the Continent also declined during the period

Companiesrsquo Overview

1 Joonktollee Tea

Joonktollee Tea Co Ltd Was promoted 134 years back to manage the affairs of a small Tea

Estate in Upper Assam It is today synonymous with premium Black and Green Teas

In the year 1954 the House of Bangurs acquired the managing agency and the Company and

brought them under their fold The name of the Company was changed to ldquoJOONKTOLLEE

TEA amp INDUSTRIES LIMITEDrdquo (JTIL) Since then the company has been under the

management of the Bangurs Over the years the Company has grown in stature and size and is

a leader in producing quality teas and enjoying one of the best Assam CTC Mark in North

IndiaCompanyrsquos Estate now comprises of 186798 acres of land with 120282 acres under

plantation

From a leading mark in the Premium Orthodox teas the Company changing with the times

is now regarded as one of the Best Assam CTC mark and does have an unstinted track record

of the business with the brand Its Green Teas are also one of its kinds

16

The performance on the financial front has also been spectacular The Companyrsquos ordinary

capital of Rs80000- has grown to Rs32336 Lacs The Company has an uninterrupted

dividend record for over 50 years

To have a large capital base and net worth two South India based Plantation Companies viz

The Kalasa Tea Produce Company Limited and Cowcoody Estates Limited belonging to the

House of Bangurs stood merged with this Company wef 1st April 2001 The area of

operation of the Company was enlarged and diversified since apart from tea the transferor

Companies also deal in other plantation crops viz coffee pepper cardamom areca vanilla

With a view to consolidate the resources of the Company and to carry out the agro base

activities more conveniently and advantageously with a larger asset base the Company

entered into Scheme of Arrangement wef 1st October 2006 under which a subsidiary and

six other Companies merged with the Company and certain assets were transferred to other

subsidiary Companies The Honrsquoble High Courts of judicature at Kolkata Chennai and

Guwahati sanctioned the Scheme of Arrangement as per the terms consented by the

shareholders and the financial results of 31st March 2008 were prepared after giving effect

of the aforesaid scheme

On BSE as on 22 April 2010

Dividend Yield () 089

Market Cap (Rs Mn) 54277

PE 1284

EPS (Rs) 1307

Face Value (Rs) 10

Volume 23239

17

Shareholding pattern

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 16

27066

75 837 2693455

Total Promoter 16

27066

75 837 2693455

Non Promoter

Institutions

FIBankInsurance 2

11784

3 364

Other 5 593 002 0

Total Institutions 7

11843

6 366 117843

Non-Institution

Bodies Corporate 82 45592 141 40197

18

NRIsOCBs 8 31256 097 926

Others 2391

33168

8 1025 127041

Total Non-

Institution 2481

40853

6 1263 168164

Total Non

Promoter 2488

52697

2 163 286007

Grand Total 2504

32336

47 100 2979462

2 Jayshree Tea amp Industries Limited

Incorporated as Jay Shree Tea Gardens in Oct45 with two tea estates the company changed

its name to Jay Shree Tea and Industries (JSTI) in 1960 It was promoted by B K Birla

Started with an initial paid-up share capital of Rs 786 lac it was raised to Rs 3905 lac in

1947 and thereafter only a rights equity issue was made during 1960 in the ratio 15

The company manages around 12 tea gardens in Assam West Bengal Tamilnadu and

Kerala It has diversified over the years and manufactures plywood in Andamans and

superphosphates and sulphuric acid in West Bengal and has interest in shipping real estate

development tubes and tyres The company is packing its tea from different tea estates in

polypouches and it is sold under brand names -- Sadabahar Shaandar and Sangam

JSTI also acquired Maitrayee Tea Project at Chopra near Islampur with 192 acres under tea

plantation to increase its presence in the area

During 1999-2000 the company established a new factory named Aryaman Tea Estate in

Jalpaiguri Dist which has commenced production from Sep 1999 The factory has the

capacity of 7 lac kgs made tea per annum In June 2000 the B K Birla groups shareholding

in Jay Shree Tea amp Industries has gone up to 4461 from 4015 following the completion

of the companys buy back offer for 1230 lakh equity shares

The company bought back 1230 lac equity shares of Rs10- each at a price of Rs120-per

19

share in 2001-02 and subsequently the total Share Capital as on March 2002 was Rs1067

crores The tea processing factory which is being set up at LedoAssam has commenced its

commercial production with a annual capacity of around 6 lac kg

As the Supreme Court has banned the falling of trees in Andaman amp Nicobar Islandsthe

companys Plywood Operation is still under suspension The 100 subsidiary company viz

Shivas Group Ltd was amalgamated with the company with the prior approval from the

shareholders wef 25022002

It also proposes to set up an International Outsourced Call centre at Kolkata The company is

proposing to delist its equity shares from Delhi Stock exchange as there is no transactions

On BSE as on 22 April 2010

Dividend Yield

() 101

Market Cap (Rs

Mn) 331263

PE 465

EPS (Rs) 6372

Face Value (Rs) 10

Volume 142257

20

Shareholding Pattern as in September 2009

21

3

Mcleod Russell

McLeod Russel has been growing tea in India since 1869 It is today the largest tea

producing company in the world

It manages 47 tea estates in the Assam Valley and 6 tea estates in the Dooars region of West

Bengal Every year its estates produce over 80 million kilograms of black tea which is

marketed worldwide under the registered Elephant trade mark

The company directly employs around 80000 people a large number of whom a women

Mcleod Russel is the worldrsquos largest tea producer

22

Description ( As On

September 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 14 4498169 4025 3685170

Total Promoter 14 4498169 4025 3685170

Non Promoter

Institutions

Mutual Funds

UTI 12 717585 642 716185

FIBankInsurance 31 381238 341

FII 3 200000 179 200000

Other 0 200000 179 200000

Total Institutions 46 1298823 1162 1271276

Non-Institution

Bodies Corporate 821 1655678 1482 1609689

NRIsOCBs 82 42605 038 40195

Others 9658 3679064 3292 2699777

Total Non-

Institution 10561 5377347 4812 4349661

Total Non

Promoter 10607 6676170 5975 5620937

Grand Total 10621 11174339 100 9306107

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

Exports

Exports play a vital role in maintaining the overall demand-supply balance in the domestic

market Healthy export realisation is also crucial for domestic realisations as un-remunerative

prices in the export market may lead to exporters dumping the produce in the domestic

market which in turn would exert a downward pressure on domestic prices Tea exports

from India have remained range bound over the period 1997-2008 with some year-to-year

fluctuations seen in between

Export of Tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 19905 183098 9199

2006 21873 200653 9173

2007 17875 181011 10126

2008 20312 239291 11781

2009 1312 177704 13542

Export from January to September

Chart 3 Trend in Indiarsquos Tea Exports

Source ICRA Research

Import of Tea from India

The continuous fall in prices of tea coupled with high cost of production has adversely

12

affected the economy of the tea plantations resulting in some tea gardens being abandoned or

under lock out in various states The teas being imported are not necessarily inferior teas and

the practice of blending with Indian teas often serves the purpose of providing teas as per

customers choice and making them price-competitive in international markets

Import of tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 1676 9851 5879

2006 2381 11941 5015

2007 1599 10460 6543

2008 2028 16197 7990

2009 1582 13209 8350

Export from January to August

Profitability of bulk tea players

An increase of around 28 in tea prices on an average in 2008 has meant considerable

increase in the profitability of bulk tea players in FY2008-09 given that around 65 of their

costs are fixed in nature Chart 6 brings out the positive impact of increasing tea prices on the

aggregate total income and profitability indicators2 of some of the large bulk tea players in

India3 which shows significant improvement over the past few years

Chart 4 Trend in Aggregate Income and Profitability Indicators of Bulk Tea

Companies (Source Bombay Stock Exchange)

13

Demand-Supply Gap

For the Indian tea industry the main driver of demand is the domestic market with domestic

consumption now growing at an estimated 35 annually as against around 25 a decade

earlier At the current growth rate the domestic market would require an incremental 30 Mkg

or so annually going forward

As against that tea supply has been growing at less than 2 pa because it is difficult to

improve garden yield of tea even during favourable climatic conditions and new plantations

need a long gestation period of at least 4-5 years Therefore the demand-supply gap in India

is likely to persist at least over the medium term

14

Industry Outlook

The tea industry has every reason to look ahead in 2010 with great deal of optimism and

confidence according to the Tea Market Annual Report published by J Thomas and

Company Private Limited the worlds oldest and largest tea auctioneers

With virtually no carry forward stock and growing domestic demand to act as buffer against

the uncertainties of the global tea trade price levels are expected to remain attractive the

report observes

Early cropping patterns indicate that demand supply equation is likely to be more balance in

2010 Both Kenya and Sri Lanka production is expected to exceed that of 2009 and

indications are that the March crop in North India will be higher than that of the last year

following some much needed rainfall

While the supply situation may be more comfortable than the previous season it is likely to

be absorbed by the domestic market where quality produce will continue to be in great

demand the reports states

Exports

15

Indian exports at the end of 2009 stood at 1915 million kg compared to 2031 million kg in

2008 a decline of 116 million kgs The strong domestic demand ensured that the exporters

were often out priced particularly in first three quarters

Lower orthodox production in North India was also another factor contributing to the decline

in exports As a result exports out of North India at 988 million kg recorded a decline of

174 million kg while exports out of South India at 927 million kg recorded a rise of 58

million kg The per unit value increased from Rs 11781 in 2008 to Rs 13664 in 2009 a gain

of Rs 1883

Exports to Iraq saw a significant increase during the year with an additional 111 million kgs

over 2008 Shipments to Russia grew by 42 million kg and to Afghanistan by 18 million kg

Exports to Egypt suffered a setback the shortfall being 96 million kg Offtake by Iran UAE

UK and the Continent also declined during the period

Companiesrsquo Overview

1 Joonktollee Tea

Joonktollee Tea Co Ltd Was promoted 134 years back to manage the affairs of a small Tea

Estate in Upper Assam It is today synonymous with premium Black and Green Teas

In the year 1954 the House of Bangurs acquired the managing agency and the Company and

brought them under their fold The name of the Company was changed to ldquoJOONKTOLLEE

TEA amp INDUSTRIES LIMITEDrdquo (JTIL) Since then the company has been under the

management of the Bangurs Over the years the Company has grown in stature and size and is

a leader in producing quality teas and enjoying one of the best Assam CTC Mark in North

IndiaCompanyrsquos Estate now comprises of 186798 acres of land with 120282 acres under

plantation

From a leading mark in the Premium Orthodox teas the Company changing with the times

is now regarded as one of the Best Assam CTC mark and does have an unstinted track record

of the business with the brand Its Green Teas are also one of its kinds

16

The performance on the financial front has also been spectacular The Companyrsquos ordinary

capital of Rs80000- has grown to Rs32336 Lacs The Company has an uninterrupted

dividend record for over 50 years

To have a large capital base and net worth two South India based Plantation Companies viz

The Kalasa Tea Produce Company Limited and Cowcoody Estates Limited belonging to the

House of Bangurs stood merged with this Company wef 1st April 2001 The area of

operation of the Company was enlarged and diversified since apart from tea the transferor

Companies also deal in other plantation crops viz coffee pepper cardamom areca vanilla

With a view to consolidate the resources of the Company and to carry out the agro base

activities more conveniently and advantageously with a larger asset base the Company

entered into Scheme of Arrangement wef 1st October 2006 under which a subsidiary and

six other Companies merged with the Company and certain assets were transferred to other

subsidiary Companies The Honrsquoble High Courts of judicature at Kolkata Chennai and

Guwahati sanctioned the Scheme of Arrangement as per the terms consented by the

shareholders and the financial results of 31st March 2008 were prepared after giving effect

of the aforesaid scheme

On BSE as on 22 April 2010

Dividend Yield () 089

Market Cap (Rs Mn) 54277

PE 1284

EPS (Rs) 1307

Face Value (Rs) 10

Volume 23239

17

Shareholding pattern

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 16

27066

75 837 2693455

Total Promoter 16

27066

75 837 2693455

Non Promoter

Institutions

FIBankInsurance 2

11784

3 364

Other 5 593 002 0

Total Institutions 7

11843

6 366 117843

Non-Institution

Bodies Corporate 82 45592 141 40197

18

NRIsOCBs 8 31256 097 926

Others 2391

33168

8 1025 127041

Total Non-

Institution 2481

40853

6 1263 168164

Total Non

Promoter 2488

52697

2 163 286007

Grand Total 2504

32336

47 100 2979462

2 Jayshree Tea amp Industries Limited

Incorporated as Jay Shree Tea Gardens in Oct45 with two tea estates the company changed

its name to Jay Shree Tea and Industries (JSTI) in 1960 It was promoted by B K Birla

Started with an initial paid-up share capital of Rs 786 lac it was raised to Rs 3905 lac in

1947 and thereafter only a rights equity issue was made during 1960 in the ratio 15

The company manages around 12 tea gardens in Assam West Bengal Tamilnadu and

Kerala It has diversified over the years and manufactures plywood in Andamans and

superphosphates and sulphuric acid in West Bengal and has interest in shipping real estate

development tubes and tyres The company is packing its tea from different tea estates in

polypouches and it is sold under brand names -- Sadabahar Shaandar and Sangam

JSTI also acquired Maitrayee Tea Project at Chopra near Islampur with 192 acres under tea

plantation to increase its presence in the area

During 1999-2000 the company established a new factory named Aryaman Tea Estate in

Jalpaiguri Dist which has commenced production from Sep 1999 The factory has the

capacity of 7 lac kgs made tea per annum In June 2000 the B K Birla groups shareholding

in Jay Shree Tea amp Industries has gone up to 4461 from 4015 following the completion

of the companys buy back offer for 1230 lakh equity shares

The company bought back 1230 lac equity shares of Rs10- each at a price of Rs120-per

19

share in 2001-02 and subsequently the total Share Capital as on March 2002 was Rs1067

crores The tea processing factory which is being set up at LedoAssam has commenced its

commercial production with a annual capacity of around 6 lac kg

As the Supreme Court has banned the falling of trees in Andaman amp Nicobar Islandsthe

companys Plywood Operation is still under suspension The 100 subsidiary company viz

Shivas Group Ltd was amalgamated with the company with the prior approval from the

shareholders wef 25022002

It also proposes to set up an International Outsourced Call centre at Kolkata The company is

proposing to delist its equity shares from Delhi Stock exchange as there is no transactions

On BSE as on 22 April 2010

Dividend Yield

() 101

Market Cap (Rs

Mn) 331263

PE 465

EPS (Rs) 6372

Face Value (Rs) 10

Volume 142257

20

Shareholding Pattern as in September 2009

21

3

Mcleod Russell

McLeod Russel has been growing tea in India since 1869 It is today the largest tea

producing company in the world

It manages 47 tea estates in the Assam Valley and 6 tea estates in the Dooars region of West

Bengal Every year its estates produce over 80 million kilograms of black tea which is

marketed worldwide under the registered Elephant trade mark

The company directly employs around 80000 people a large number of whom a women

Mcleod Russel is the worldrsquos largest tea producer

22

Description ( As On

September 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 14 4498169 4025 3685170

Total Promoter 14 4498169 4025 3685170

Non Promoter

Institutions

Mutual Funds

UTI 12 717585 642 716185

FIBankInsurance 31 381238 341

FII 3 200000 179 200000

Other 0 200000 179 200000

Total Institutions 46 1298823 1162 1271276

Non-Institution

Bodies Corporate 821 1655678 1482 1609689

NRIsOCBs 82 42605 038 40195

Others 9658 3679064 3292 2699777

Total Non-

Institution 10561 5377347 4812 4349661

Total Non

Promoter 10607 6676170 5975 5620937

Grand Total 10621 11174339 100 9306107

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

affected the economy of the tea plantations resulting in some tea gardens being abandoned or

under lock out in various states The teas being imported are not necessarily inferior teas and

the practice of blending with Indian teas often serves the purpose of providing teas as per

customers choice and making them price-competitive in international markets

Import of tea from India

YEAR QUANTITY (Million Kg) Value (Rs Crores) UNIT PRICE (Rskg)

2005 1676 9851 5879

2006 2381 11941 5015

2007 1599 10460 6543

2008 2028 16197 7990

2009 1582 13209 8350

Export from January to August

Profitability of bulk tea players

An increase of around 28 in tea prices on an average in 2008 has meant considerable

increase in the profitability of bulk tea players in FY2008-09 given that around 65 of their

costs are fixed in nature Chart 6 brings out the positive impact of increasing tea prices on the

aggregate total income and profitability indicators2 of some of the large bulk tea players in

India3 which shows significant improvement over the past few years

Chart 4 Trend in Aggregate Income and Profitability Indicators of Bulk Tea

Companies (Source Bombay Stock Exchange)

13

Demand-Supply Gap

For the Indian tea industry the main driver of demand is the domestic market with domestic

consumption now growing at an estimated 35 annually as against around 25 a decade

earlier At the current growth rate the domestic market would require an incremental 30 Mkg

or so annually going forward

As against that tea supply has been growing at less than 2 pa because it is difficult to

improve garden yield of tea even during favourable climatic conditions and new plantations

need a long gestation period of at least 4-5 years Therefore the demand-supply gap in India

is likely to persist at least over the medium term

14

Industry Outlook

The tea industry has every reason to look ahead in 2010 with great deal of optimism and

confidence according to the Tea Market Annual Report published by J Thomas and

Company Private Limited the worlds oldest and largest tea auctioneers

With virtually no carry forward stock and growing domestic demand to act as buffer against

the uncertainties of the global tea trade price levels are expected to remain attractive the

report observes

Early cropping patterns indicate that demand supply equation is likely to be more balance in

2010 Both Kenya and Sri Lanka production is expected to exceed that of 2009 and

indications are that the March crop in North India will be higher than that of the last year

following some much needed rainfall

While the supply situation may be more comfortable than the previous season it is likely to

be absorbed by the domestic market where quality produce will continue to be in great

demand the reports states

Exports

15

Indian exports at the end of 2009 stood at 1915 million kg compared to 2031 million kg in

2008 a decline of 116 million kgs The strong domestic demand ensured that the exporters

were often out priced particularly in first three quarters

Lower orthodox production in North India was also another factor contributing to the decline

in exports As a result exports out of North India at 988 million kg recorded a decline of

174 million kg while exports out of South India at 927 million kg recorded a rise of 58

million kg The per unit value increased from Rs 11781 in 2008 to Rs 13664 in 2009 a gain

of Rs 1883

Exports to Iraq saw a significant increase during the year with an additional 111 million kgs

over 2008 Shipments to Russia grew by 42 million kg and to Afghanistan by 18 million kg

Exports to Egypt suffered a setback the shortfall being 96 million kg Offtake by Iran UAE

UK and the Continent also declined during the period

Companiesrsquo Overview

1 Joonktollee Tea

Joonktollee Tea Co Ltd Was promoted 134 years back to manage the affairs of a small Tea

Estate in Upper Assam It is today synonymous with premium Black and Green Teas

In the year 1954 the House of Bangurs acquired the managing agency and the Company and

brought them under their fold The name of the Company was changed to ldquoJOONKTOLLEE

TEA amp INDUSTRIES LIMITEDrdquo (JTIL) Since then the company has been under the

management of the Bangurs Over the years the Company has grown in stature and size and is

a leader in producing quality teas and enjoying one of the best Assam CTC Mark in North

IndiaCompanyrsquos Estate now comprises of 186798 acres of land with 120282 acres under

plantation

From a leading mark in the Premium Orthodox teas the Company changing with the times

is now regarded as one of the Best Assam CTC mark and does have an unstinted track record

of the business with the brand Its Green Teas are also one of its kinds

16

The performance on the financial front has also been spectacular The Companyrsquos ordinary

capital of Rs80000- has grown to Rs32336 Lacs The Company has an uninterrupted

dividend record for over 50 years

To have a large capital base and net worth two South India based Plantation Companies viz

The Kalasa Tea Produce Company Limited and Cowcoody Estates Limited belonging to the

House of Bangurs stood merged with this Company wef 1st April 2001 The area of

operation of the Company was enlarged and diversified since apart from tea the transferor

Companies also deal in other plantation crops viz coffee pepper cardamom areca vanilla

With a view to consolidate the resources of the Company and to carry out the agro base

activities more conveniently and advantageously with a larger asset base the Company

entered into Scheme of Arrangement wef 1st October 2006 under which a subsidiary and

six other Companies merged with the Company and certain assets were transferred to other

subsidiary Companies The Honrsquoble High Courts of judicature at Kolkata Chennai and

Guwahati sanctioned the Scheme of Arrangement as per the terms consented by the

shareholders and the financial results of 31st March 2008 were prepared after giving effect

of the aforesaid scheme

On BSE as on 22 April 2010

Dividend Yield () 089

Market Cap (Rs Mn) 54277

PE 1284

EPS (Rs) 1307

Face Value (Rs) 10

Volume 23239

17

Shareholding pattern

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 16

27066

75 837 2693455

Total Promoter 16

27066

75 837 2693455

Non Promoter

Institutions

FIBankInsurance 2

11784

3 364

Other 5 593 002 0

Total Institutions 7

11843

6 366 117843

Non-Institution

Bodies Corporate 82 45592 141 40197

18

NRIsOCBs 8 31256 097 926

Others 2391

33168

8 1025 127041

Total Non-

Institution 2481

40853

6 1263 168164

Total Non

Promoter 2488

52697

2 163 286007

Grand Total 2504

32336

47 100 2979462

2 Jayshree Tea amp Industries Limited

Incorporated as Jay Shree Tea Gardens in Oct45 with two tea estates the company changed

its name to Jay Shree Tea and Industries (JSTI) in 1960 It was promoted by B K Birla

Started with an initial paid-up share capital of Rs 786 lac it was raised to Rs 3905 lac in

1947 and thereafter only a rights equity issue was made during 1960 in the ratio 15

The company manages around 12 tea gardens in Assam West Bengal Tamilnadu and

Kerala It has diversified over the years and manufactures plywood in Andamans and

superphosphates and sulphuric acid in West Bengal and has interest in shipping real estate

development tubes and tyres The company is packing its tea from different tea estates in

polypouches and it is sold under brand names -- Sadabahar Shaandar and Sangam

JSTI also acquired Maitrayee Tea Project at Chopra near Islampur with 192 acres under tea

plantation to increase its presence in the area

During 1999-2000 the company established a new factory named Aryaman Tea Estate in

Jalpaiguri Dist which has commenced production from Sep 1999 The factory has the

capacity of 7 lac kgs made tea per annum In June 2000 the B K Birla groups shareholding

in Jay Shree Tea amp Industries has gone up to 4461 from 4015 following the completion

of the companys buy back offer for 1230 lakh equity shares

The company bought back 1230 lac equity shares of Rs10- each at a price of Rs120-per

19

share in 2001-02 and subsequently the total Share Capital as on March 2002 was Rs1067

crores The tea processing factory which is being set up at LedoAssam has commenced its

commercial production with a annual capacity of around 6 lac kg

As the Supreme Court has banned the falling of trees in Andaman amp Nicobar Islandsthe

companys Plywood Operation is still under suspension The 100 subsidiary company viz

Shivas Group Ltd was amalgamated with the company with the prior approval from the

shareholders wef 25022002

It also proposes to set up an International Outsourced Call centre at Kolkata The company is

proposing to delist its equity shares from Delhi Stock exchange as there is no transactions

On BSE as on 22 April 2010

Dividend Yield

() 101

Market Cap (Rs

Mn) 331263

PE 465

EPS (Rs) 6372

Face Value (Rs) 10

Volume 142257

20

Shareholding Pattern as in September 2009

21

3

Mcleod Russell

McLeod Russel has been growing tea in India since 1869 It is today the largest tea

producing company in the world

It manages 47 tea estates in the Assam Valley and 6 tea estates in the Dooars region of West

Bengal Every year its estates produce over 80 million kilograms of black tea which is

marketed worldwide under the registered Elephant trade mark

The company directly employs around 80000 people a large number of whom a women

Mcleod Russel is the worldrsquos largest tea producer

22

Description ( As On

September 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 14 4498169 4025 3685170

Total Promoter 14 4498169 4025 3685170

Non Promoter

Institutions

Mutual Funds

UTI 12 717585 642 716185

FIBankInsurance 31 381238 341

FII 3 200000 179 200000

Other 0 200000 179 200000

Total Institutions 46 1298823 1162 1271276

Non-Institution

Bodies Corporate 821 1655678 1482 1609689

NRIsOCBs 82 42605 038 40195

Others 9658 3679064 3292 2699777

Total Non-

Institution 10561 5377347 4812 4349661

Total Non

Promoter 10607 6676170 5975 5620937

Grand Total 10621 11174339 100 9306107

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

Demand-Supply Gap

For the Indian tea industry the main driver of demand is the domestic market with domestic

consumption now growing at an estimated 35 annually as against around 25 a decade

earlier At the current growth rate the domestic market would require an incremental 30 Mkg

or so annually going forward

As against that tea supply has been growing at less than 2 pa because it is difficult to

improve garden yield of tea even during favourable climatic conditions and new plantations

need a long gestation period of at least 4-5 years Therefore the demand-supply gap in India

is likely to persist at least over the medium term

14

Industry Outlook

The tea industry has every reason to look ahead in 2010 with great deal of optimism and

confidence according to the Tea Market Annual Report published by J Thomas and

Company Private Limited the worlds oldest and largest tea auctioneers

With virtually no carry forward stock and growing domestic demand to act as buffer against

the uncertainties of the global tea trade price levels are expected to remain attractive the

report observes

Early cropping patterns indicate that demand supply equation is likely to be more balance in

2010 Both Kenya and Sri Lanka production is expected to exceed that of 2009 and

indications are that the March crop in North India will be higher than that of the last year

following some much needed rainfall

While the supply situation may be more comfortable than the previous season it is likely to

be absorbed by the domestic market where quality produce will continue to be in great

demand the reports states

Exports

15

Indian exports at the end of 2009 stood at 1915 million kg compared to 2031 million kg in

2008 a decline of 116 million kgs The strong domestic demand ensured that the exporters

were often out priced particularly in first three quarters

Lower orthodox production in North India was also another factor contributing to the decline

in exports As a result exports out of North India at 988 million kg recorded a decline of

174 million kg while exports out of South India at 927 million kg recorded a rise of 58

million kg The per unit value increased from Rs 11781 in 2008 to Rs 13664 in 2009 a gain

of Rs 1883

Exports to Iraq saw a significant increase during the year with an additional 111 million kgs

over 2008 Shipments to Russia grew by 42 million kg and to Afghanistan by 18 million kg

Exports to Egypt suffered a setback the shortfall being 96 million kg Offtake by Iran UAE

UK and the Continent also declined during the period

Companiesrsquo Overview

1 Joonktollee Tea

Joonktollee Tea Co Ltd Was promoted 134 years back to manage the affairs of a small Tea

Estate in Upper Assam It is today synonymous with premium Black and Green Teas

In the year 1954 the House of Bangurs acquired the managing agency and the Company and

brought them under their fold The name of the Company was changed to ldquoJOONKTOLLEE

TEA amp INDUSTRIES LIMITEDrdquo (JTIL) Since then the company has been under the

management of the Bangurs Over the years the Company has grown in stature and size and is

a leader in producing quality teas and enjoying one of the best Assam CTC Mark in North

IndiaCompanyrsquos Estate now comprises of 186798 acres of land with 120282 acres under

plantation

From a leading mark in the Premium Orthodox teas the Company changing with the times

is now regarded as one of the Best Assam CTC mark and does have an unstinted track record

of the business with the brand Its Green Teas are also one of its kinds

16

The performance on the financial front has also been spectacular The Companyrsquos ordinary

capital of Rs80000- has grown to Rs32336 Lacs The Company has an uninterrupted

dividend record for over 50 years

To have a large capital base and net worth two South India based Plantation Companies viz

The Kalasa Tea Produce Company Limited and Cowcoody Estates Limited belonging to the

House of Bangurs stood merged with this Company wef 1st April 2001 The area of

operation of the Company was enlarged and diversified since apart from tea the transferor

Companies also deal in other plantation crops viz coffee pepper cardamom areca vanilla

With a view to consolidate the resources of the Company and to carry out the agro base

activities more conveniently and advantageously with a larger asset base the Company

entered into Scheme of Arrangement wef 1st October 2006 under which a subsidiary and

six other Companies merged with the Company and certain assets were transferred to other

subsidiary Companies The Honrsquoble High Courts of judicature at Kolkata Chennai and

Guwahati sanctioned the Scheme of Arrangement as per the terms consented by the

shareholders and the financial results of 31st March 2008 were prepared after giving effect

of the aforesaid scheme

On BSE as on 22 April 2010

Dividend Yield () 089

Market Cap (Rs Mn) 54277

PE 1284

EPS (Rs) 1307

Face Value (Rs) 10

Volume 23239

17

Shareholding pattern

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 16

27066

75 837 2693455

Total Promoter 16

27066

75 837 2693455

Non Promoter

Institutions

FIBankInsurance 2

11784

3 364

Other 5 593 002 0

Total Institutions 7

11843

6 366 117843

Non-Institution

Bodies Corporate 82 45592 141 40197

18

NRIsOCBs 8 31256 097 926

Others 2391

33168

8 1025 127041

Total Non-

Institution 2481

40853

6 1263 168164

Total Non

Promoter 2488

52697

2 163 286007

Grand Total 2504

32336

47 100 2979462

2 Jayshree Tea amp Industries Limited

Incorporated as Jay Shree Tea Gardens in Oct45 with two tea estates the company changed

its name to Jay Shree Tea and Industries (JSTI) in 1960 It was promoted by B K Birla

Started with an initial paid-up share capital of Rs 786 lac it was raised to Rs 3905 lac in

1947 and thereafter only a rights equity issue was made during 1960 in the ratio 15

The company manages around 12 tea gardens in Assam West Bengal Tamilnadu and

Kerala It has diversified over the years and manufactures plywood in Andamans and

superphosphates and sulphuric acid in West Bengal and has interest in shipping real estate

development tubes and tyres The company is packing its tea from different tea estates in

polypouches and it is sold under brand names -- Sadabahar Shaandar and Sangam

JSTI also acquired Maitrayee Tea Project at Chopra near Islampur with 192 acres under tea

plantation to increase its presence in the area

During 1999-2000 the company established a new factory named Aryaman Tea Estate in

Jalpaiguri Dist which has commenced production from Sep 1999 The factory has the

capacity of 7 lac kgs made tea per annum In June 2000 the B K Birla groups shareholding

in Jay Shree Tea amp Industries has gone up to 4461 from 4015 following the completion

of the companys buy back offer for 1230 lakh equity shares

The company bought back 1230 lac equity shares of Rs10- each at a price of Rs120-per

19

share in 2001-02 and subsequently the total Share Capital as on March 2002 was Rs1067

crores The tea processing factory which is being set up at LedoAssam has commenced its

commercial production with a annual capacity of around 6 lac kg

As the Supreme Court has banned the falling of trees in Andaman amp Nicobar Islandsthe

companys Plywood Operation is still under suspension The 100 subsidiary company viz

Shivas Group Ltd was amalgamated with the company with the prior approval from the

shareholders wef 25022002

It also proposes to set up an International Outsourced Call centre at Kolkata The company is

proposing to delist its equity shares from Delhi Stock exchange as there is no transactions

On BSE as on 22 April 2010

Dividend Yield

() 101

Market Cap (Rs

Mn) 331263

PE 465

EPS (Rs) 6372

Face Value (Rs) 10

Volume 142257

20

Shareholding Pattern as in September 2009

21

3

Mcleod Russell

McLeod Russel has been growing tea in India since 1869 It is today the largest tea

producing company in the world

It manages 47 tea estates in the Assam Valley and 6 tea estates in the Dooars region of West

Bengal Every year its estates produce over 80 million kilograms of black tea which is

marketed worldwide under the registered Elephant trade mark

The company directly employs around 80000 people a large number of whom a women

Mcleod Russel is the worldrsquos largest tea producer

22

Description ( As On

September 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 14 4498169 4025 3685170

Total Promoter 14 4498169 4025 3685170

Non Promoter

Institutions

Mutual Funds

UTI 12 717585 642 716185

FIBankInsurance 31 381238 341

FII 3 200000 179 200000

Other 0 200000 179 200000

Total Institutions 46 1298823 1162 1271276

Non-Institution

Bodies Corporate 821 1655678 1482 1609689

NRIsOCBs 82 42605 038 40195

Others 9658 3679064 3292 2699777

Total Non-

Institution 10561 5377347 4812 4349661

Total Non

Promoter 10607 6676170 5975 5620937

Grand Total 10621 11174339 100 9306107

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

Industry Outlook

The tea industry has every reason to look ahead in 2010 with great deal of optimism and

confidence according to the Tea Market Annual Report published by J Thomas and

Company Private Limited the worlds oldest and largest tea auctioneers

With virtually no carry forward stock and growing domestic demand to act as buffer against

the uncertainties of the global tea trade price levels are expected to remain attractive the

report observes

Early cropping patterns indicate that demand supply equation is likely to be more balance in

2010 Both Kenya and Sri Lanka production is expected to exceed that of 2009 and

indications are that the March crop in North India will be higher than that of the last year

following some much needed rainfall

While the supply situation may be more comfortable than the previous season it is likely to

be absorbed by the domestic market where quality produce will continue to be in great

demand the reports states

Exports

15

Indian exports at the end of 2009 stood at 1915 million kg compared to 2031 million kg in

2008 a decline of 116 million kgs The strong domestic demand ensured that the exporters

were often out priced particularly in first three quarters

Lower orthodox production in North India was also another factor contributing to the decline

in exports As a result exports out of North India at 988 million kg recorded a decline of

174 million kg while exports out of South India at 927 million kg recorded a rise of 58

million kg The per unit value increased from Rs 11781 in 2008 to Rs 13664 in 2009 a gain

of Rs 1883

Exports to Iraq saw a significant increase during the year with an additional 111 million kgs

over 2008 Shipments to Russia grew by 42 million kg and to Afghanistan by 18 million kg

Exports to Egypt suffered a setback the shortfall being 96 million kg Offtake by Iran UAE

UK and the Continent also declined during the period

Companiesrsquo Overview

1 Joonktollee Tea

Joonktollee Tea Co Ltd Was promoted 134 years back to manage the affairs of a small Tea

Estate in Upper Assam It is today synonymous with premium Black and Green Teas

In the year 1954 the House of Bangurs acquired the managing agency and the Company and

brought them under their fold The name of the Company was changed to ldquoJOONKTOLLEE

TEA amp INDUSTRIES LIMITEDrdquo (JTIL) Since then the company has been under the

management of the Bangurs Over the years the Company has grown in stature and size and is

a leader in producing quality teas and enjoying one of the best Assam CTC Mark in North

IndiaCompanyrsquos Estate now comprises of 186798 acres of land with 120282 acres under

plantation

From a leading mark in the Premium Orthodox teas the Company changing with the times

is now regarded as one of the Best Assam CTC mark and does have an unstinted track record

of the business with the brand Its Green Teas are also one of its kinds

16

The performance on the financial front has also been spectacular The Companyrsquos ordinary

capital of Rs80000- has grown to Rs32336 Lacs The Company has an uninterrupted

dividend record for over 50 years

To have a large capital base and net worth two South India based Plantation Companies viz

The Kalasa Tea Produce Company Limited and Cowcoody Estates Limited belonging to the

House of Bangurs stood merged with this Company wef 1st April 2001 The area of

operation of the Company was enlarged and diversified since apart from tea the transferor

Companies also deal in other plantation crops viz coffee pepper cardamom areca vanilla

With a view to consolidate the resources of the Company and to carry out the agro base

activities more conveniently and advantageously with a larger asset base the Company

entered into Scheme of Arrangement wef 1st October 2006 under which a subsidiary and

six other Companies merged with the Company and certain assets were transferred to other

subsidiary Companies The Honrsquoble High Courts of judicature at Kolkata Chennai and

Guwahati sanctioned the Scheme of Arrangement as per the terms consented by the

shareholders and the financial results of 31st March 2008 were prepared after giving effect

of the aforesaid scheme

On BSE as on 22 April 2010

Dividend Yield () 089

Market Cap (Rs Mn) 54277

PE 1284

EPS (Rs) 1307

Face Value (Rs) 10

Volume 23239

17

Shareholding pattern

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 16

27066

75 837 2693455

Total Promoter 16

27066

75 837 2693455

Non Promoter

Institutions

FIBankInsurance 2

11784

3 364

Other 5 593 002 0

Total Institutions 7

11843

6 366 117843

Non-Institution

Bodies Corporate 82 45592 141 40197

18

NRIsOCBs 8 31256 097 926

Others 2391

33168

8 1025 127041

Total Non-

Institution 2481

40853

6 1263 168164

Total Non

Promoter 2488

52697

2 163 286007

Grand Total 2504

32336

47 100 2979462

2 Jayshree Tea amp Industries Limited

Incorporated as Jay Shree Tea Gardens in Oct45 with two tea estates the company changed

its name to Jay Shree Tea and Industries (JSTI) in 1960 It was promoted by B K Birla

Started with an initial paid-up share capital of Rs 786 lac it was raised to Rs 3905 lac in

1947 and thereafter only a rights equity issue was made during 1960 in the ratio 15

The company manages around 12 tea gardens in Assam West Bengal Tamilnadu and

Kerala It has diversified over the years and manufactures plywood in Andamans and

superphosphates and sulphuric acid in West Bengal and has interest in shipping real estate

development tubes and tyres The company is packing its tea from different tea estates in

polypouches and it is sold under brand names -- Sadabahar Shaandar and Sangam

JSTI also acquired Maitrayee Tea Project at Chopra near Islampur with 192 acres under tea

plantation to increase its presence in the area

During 1999-2000 the company established a new factory named Aryaman Tea Estate in

Jalpaiguri Dist which has commenced production from Sep 1999 The factory has the

capacity of 7 lac kgs made tea per annum In June 2000 the B K Birla groups shareholding

in Jay Shree Tea amp Industries has gone up to 4461 from 4015 following the completion

of the companys buy back offer for 1230 lakh equity shares

The company bought back 1230 lac equity shares of Rs10- each at a price of Rs120-per

19

share in 2001-02 and subsequently the total Share Capital as on March 2002 was Rs1067

crores The tea processing factory which is being set up at LedoAssam has commenced its

commercial production with a annual capacity of around 6 lac kg

As the Supreme Court has banned the falling of trees in Andaman amp Nicobar Islandsthe

companys Plywood Operation is still under suspension The 100 subsidiary company viz

Shivas Group Ltd was amalgamated with the company with the prior approval from the

shareholders wef 25022002

It also proposes to set up an International Outsourced Call centre at Kolkata The company is

proposing to delist its equity shares from Delhi Stock exchange as there is no transactions

On BSE as on 22 April 2010

Dividend Yield

() 101

Market Cap (Rs

Mn) 331263

PE 465

EPS (Rs) 6372

Face Value (Rs) 10

Volume 142257

20

Shareholding Pattern as in September 2009

21

3

Mcleod Russell

McLeod Russel has been growing tea in India since 1869 It is today the largest tea

producing company in the world

It manages 47 tea estates in the Assam Valley and 6 tea estates in the Dooars region of West

Bengal Every year its estates produce over 80 million kilograms of black tea which is

marketed worldwide under the registered Elephant trade mark

The company directly employs around 80000 people a large number of whom a women

Mcleod Russel is the worldrsquos largest tea producer

22

Description ( As On

September 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 14 4498169 4025 3685170

Total Promoter 14 4498169 4025 3685170

Non Promoter

Institutions

Mutual Funds

UTI 12 717585 642 716185

FIBankInsurance 31 381238 341

FII 3 200000 179 200000

Other 0 200000 179 200000

Total Institutions 46 1298823 1162 1271276

Non-Institution

Bodies Corporate 821 1655678 1482 1609689

NRIsOCBs 82 42605 038 40195

Others 9658 3679064 3292 2699777

Total Non-

Institution 10561 5377347 4812 4349661

Total Non

Promoter 10607 6676170 5975 5620937

Grand Total 10621 11174339 100 9306107

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

Indian exports at the end of 2009 stood at 1915 million kg compared to 2031 million kg in

2008 a decline of 116 million kgs The strong domestic demand ensured that the exporters

were often out priced particularly in first three quarters

Lower orthodox production in North India was also another factor contributing to the decline

in exports As a result exports out of North India at 988 million kg recorded a decline of

174 million kg while exports out of South India at 927 million kg recorded a rise of 58

million kg The per unit value increased from Rs 11781 in 2008 to Rs 13664 in 2009 a gain

of Rs 1883

Exports to Iraq saw a significant increase during the year with an additional 111 million kgs

over 2008 Shipments to Russia grew by 42 million kg and to Afghanistan by 18 million kg

Exports to Egypt suffered a setback the shortfall being 96 million kg Offtake by Iran UAE

UK and the Continent also declined during the period

Companiesrsquo Overview

1 Joonktollee Tea

Joonktollee Tea Co Ltd Was promoted 134 years back to manage the affairs of a small Tea

Estate in Upper Assam It is today synonymous with premium Black and Green Teas

In the year 1954 the House of Bangurs acquired the managing agency and the Company and

brought them under their fold The name of the Company was changed to ldquoJOONKTOLLEE

TEA amp INDUSTRIES LIMITEDrdquo (JTIL) Since then the company has been under the

management of the Bangurs Over the years the Company has grown in stature and size and is

a leader in producing quality teas and enjoying one of the best Assam CTC Mark in North

IndiaCompanyrsquos Estate now comprises of 186798 acres of land with 120282 acres under

plantation

From a leading mark in the Premium Orthodox teas the Company changing with the times

is now regarded as one of the Best Assam CTC mark and does have an unstinted track record

of the business with the brand Its Green Teas are also one of its kinds

16

The performance on the financial front has also been spectacular The Companyrsquos ordinary

capital of Rs80000- has grown to Rs32336 Lacs The Company has an uninterrupted

dividend record for over 50 years

To have a large capital base and net worth two South India based Plantation Companies viz

The Kalasa Tea Produce Company Limited and Cowcoody Estates Limited belonging to the

House of Bangurs stood merged with this Company wef 1st April 2001 The area of

operation of the Company was enlarged and diversified since apart from tea the transferor

Companies also deal in other plantation crops viz coffee pepper cardamom areca vanilla

With a view to consolidate the resources of the Company and to carry out the agro base

activities more conveniently and advantageously with a larger asset base the Company

entered into Scheme of Arrangement wef 1st October 2006 under which a subsidiary and

six other Companies merged with the Company and certain assets were transferred to other

subsidiary Companies The Honrsquoble High Courts of judicature at Kolkata Chennai and

Guwahati sanctioned the Scheme of Arrangement as per the terms consented by the

shareholders and the financial results of 31st March 2008 were prepared after giving effect

of the aforesaid scheme

On BSE as on 22 April 2010

Dividend Yield () 089

Market Cap (Rs Mn) 54277

PE 1284

EPS (Rs) 1307

Face Value (Rs) 10

Volume 23239

17

Shareholding pattern

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 16

27066

75 837 2693455

Total Promoter 16

27066

75 837 2693455

Non Promoter

Institutions

FIBankInsurance 2

11784

3 364

Other 5 593 002 0

Total Institutions 7

11843

6 366 117843

Non-Institution

Bodies Corporate 82 45592 141 40197

18

NRIsOCBs 8 31256 097 926

Others 2391

33168

8 1025 127041

Total Non-

Institution 2481

40853

6 1263 168164

Total Non

Promoter 2488

52697

2 163 286007

Grand Total 2504

32336

47 100 2979462

2 Jayshree Tea amp Industries Limited

Incorporated as Jay Shree Tea Gardens in Oct45 with two tea estates the company changed

its name to Jay Shree Tea and Industries (JSTI) in 1960 It was promoted by B K Birla

Started with an initial paid-up share capital of Rs 786 lac it was raised to Rs 3905 lac in

1947 and thereafter only a rights equity issue was made during 1960 in the ratio 15

The company manages around 12 tea gardens in Assam West Bengal Tamilnadu and

Kerala It has diversified over the years and manufactures plywood in Andamans and

superphosphates and sulphuric acid in West Bengal and has interest in shipping real estate

development tubes and tyres The company is packing its tea from different tea estates in

polypouches and it is sold under brand names -- Sadabahar Shaandar and Sangam

JSTI also acquired Maitrayee Tea Project at Chopra near Islampur with 192 acres under tea

plantation to increase its presence in the area

During 1999-2000 the company established a new factory named Aryaman Tea Estate in

Jalpaiguri Dist which has commenced production from Sep 1999 The factory has the

capacity of 7 lac kgs made tea per annum In June 2000 the B K Birla groups shareholding

in Jay Shree Tea amp Industries has gone up to 4461 from 4015 following the completion

of the companys buy back offer for 1230 lakh equity shares

The company bought back 1230 lac equity shares of Rs10- each at a price of Rs120-per

19

share in 2001-02 and subsequently the total Share Capital as on March 2002 was Rs1067

crores The tea processing factory which is being set up at LedoAssam has commenced its

commercial production with a annual capacity of around 6 lac kg

As the Supreme Court has banned the falling of trees in Andaman amp Nicobar Islandsthe

companys Plywood Operation is still under suspension The 100 subsidiary company viz

Shivas Group Ltd was amalgamated with the company with the prior approval from the

shareholders wef 25022002

It also proposes to set up an International Outsourced Call centre at Kolkata The company is

proposing to delist its equity shares from Delhi Stock exchange as there is no transactions

On BSE as on 22 April 2010

Dividend Yield

() 101

Market Cap (Rs

Mn) 331263

PE 465

EPS (Rs) 6372

Face Value (Rs) 10

Volume 142257

20

Shareholding Pattern as in September 2009

21

3

Mcleod Russell

McLeod Russel has been growing tea in India since 1869 It is today the largest tea

producing company in the world

It manages 47 tea estates in the Assam Valley and 6 tea estates in the Dooars region of West

Bengal Every year its estates produce over 80 million kilograms of black tea which is

marketed worldwide under the registered Elephant trade mark

The company directly employs around 80000 people a large number of whom a women

Mcleod Russel is the worldrsquos largest tea producer

22

Description ( As On

September 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 14 4498169 4025 3685170

Total Promoter 14 4498169 4025 3685170

Non Promoter

Institutions

Mutual Funds

UTI 12 717585 642 716185

FIBankInsurance 31 381238 341

FII 3 200000 179 200000

Other 0 200000 179 200000

Total Institutions 46 1298823 1162 1271276

Non-Institution

Bodies Corporate 821 1655678 1482 1609689

NRIsOCBs 82 42605 038 40195

Others 9658 3679064 3292 2699777

Total Non-

Institution 10561 5377347 4812 4349661

Total Non

Promoter 10607 6676170 5975 5620937

Grand Total 10621 11174339 100 9306107

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

The performance on the financial front has also been spectacular The Companyrsquos ordinary

capital of Rs80000- has grown to Rs32336 Lacs The Company has an uninterrupted

dividend record for over 50 years

To have a large capital base and net worth two South India based Plantation Companies viz

The Kalasa Tea Produce Company Limited and Cowcoody Estates Limited belonging to the

House of Bangurs stood merged with this Company wef 1st April 2001 The area of

operation of the Company was enlarged and diversified since apart from tea the transferor

Companies also deal in other plantation crops viz coffee pepper cardamom areca vanilla

With a view to consolidate the resources of the Company and to carry out the agro base

activities more conveniently and advantageously with a larger asset base the Company

entered into Scheme of Arrangement wef 1st October 2006 under which a subsidiary and

six other Companies merged with the Company and certain assets were transferred to other

subsidiary Companies The Honrsquoble High Courts of judicature at Kolkata Chennai and

Guwahati sanctioned the Scheme of Arrangement as per the terms consented by the

shareholders and the financial results of 31st March 2008 were prepared after giving effect

of the aforesaid scheme

On BSE as on 22 April 2010

Dividend Yield () 089

Market Cap (Rs Mn) 54277

PE 1284

EPS (Rs) 1307

Face Value (Rs) 10

Volume 23239

17

Shareholding pattern

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 16

27066

75 837 2693455

Total Promoter 16

27066

75 837 2693455

Non Promoter

Institutions

FIBankInsurance 2

11784

3 364

Other 5 593 002 0

Total Institutions 7

11843

6 366 117843

Non-Institution

Bodies Corporate 82 45592 141 40197

18

NRIsOCBs 8 31256 097 926

Others 2391

33168

8 1025 127041

Total Non-

Institution 2481

40853

6 1263 168164

Total Non

Promoter 2488

52697

2 163 286007

Grand Total 2504

32336

47 100 2979462

2 Jayshree Tea amp Industries Limited

Incorporated as Jay Shree Tea Gardens in Oct45 with two tea estates the company changed

its name to Jay Shree Tea and Industries (JSTI) in 1960 It was promoted by B K Birla

Started with an initial paid-up share capital of Rs 786 lac it was raised to Rs 3905 lac in

1947 and thereafter only a rights equity issue was made during 1960 in the ratio 15

The company manages around 12 tea gardens in Assam West Bengal Tamilnadu and

Kerala It has diversified over the years and manufactures plywood in Andamans and

superphosphates and sulphuric acid in West Bengal and has interest in shipping real estate

development tubes and tyres The company is packing its tea from different tea estates in

polypouches and it is sold under brand names -- Sadabahar Shaandar and Sangam

JSTI also acquired Maitrayee Tea Project at Chopra near Islampur with 192 acres under tea

plantation to increase its presence in the area

During 1999-2000 the company established a new factory named Aryaman Tea Estate in

Jalpaiguri Dist which has commenced production from Sep 1999 The factory has the

capacity of 7 lac kgs made tea per annum In June 2000 the B K Birla groups shareholding

in Jay Shree Tea amp Industries has gone up to 4461 from 4015 following the completion

of the companys buy back offer for 1230 lakh equity shares

The company bought back 1230 lac equity shares of Rs10- each at a price of Rs120-per

19

share in 2001-02 and subsequently the total Share Capital as on March 2002 was Rs1067

crores The tea processing factory which is being set up at LedoAssam has commenced its

commercial production with a annual capacity of around 6 lac kg

As the Supreme Court has banned the falling of trees in Andaman amp Nicobar Islandsthe

companys Plywood Operation is still under suspension The 100 subsidiary company viz

Shivas Group Ltd was amalgamated with the company with the prior approval from the

shareholders wef 25022002

It also proposes to set up an International Outsourced Call centre at Kolkata The company is

proposing to delist its equity shares from Delhi Stock exchange as there is no transactions

On BSE as on 22 April 2010

Dividend Yield

() 101

Market Cap (Rs

Mn) 331263

PE 465

EPS (Rs) 6372

Face Value (Rs) 10

Volume 142257

20

Shareholding Pattern as in September 2009

21

3

Mcleod Russell

McLeod Russel has been growing tea in India since 1869 It is today the largest tea

producing company in the world

It manages 47 tea estates in the Assam Valley and 6 tea estates in the Dooars region of West

Bengal Every year its estates produce over 80 million kilograms of black tea which is

marketed worldwide under the registered Elephant trade mark

The company directly employs around 80000 people a large number of whom a women

Mcleod Russel is the worldrsquos largest tea producer

22

Description ( As On

September 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 14 4498169 4025 3685170

Total Promoter 14 4498169 4025 3685170

Non Promoter

Institutions

Mutual Funds

UTI 12 717585 642 716185

FIBankInsurance 31 381238 341

FII 3 200000 179 200000

Other 0 200000 179 200000

Total Institutions 46 1298823 1162 1271276

Non-Institution

Bodies Corporate 821 1655678 1482 1609689

NRIsOCBs 82 42605 038 40195

Others 9658 3679064 3292 2699777

Total Non-

Institution 10561 5377347 4812 4349661

Total Non

Promoter 10607 6676170 5975 5620937

Grand Total 10621 11174339 100 9306107

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

Shareholding pattern

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 16

27066

75 837 2693455

Total Promoter 16

27066

75 837 2693455

Non Promoter

Institutions

FIBankInsurance 2

11784

3 364

Other 5 593 002 0

Total Institutions 7

11843

6 366 117843

Non-Institution

Bodies Corporate 82 45592 141 40197

18

NRIsOCBs 8 31256 097 926

Others 2391

33168

8 1025 127041

Total Non-

Institution 2481

40853

6 1263 168164

Total Non

Promoter 2488

52697

2 163 286007

Grand Total 2504

32336

47 100 2979462

2 Jayshree Tea amp Industries Limited

Incorporated as Jay Shree Tea Gardens in Oct45 with two tea estates the company changed

its name to Jay Shree Tea and Industries (JSTI) in 1960 It was promoted by B K Birla

Started with an initial paid-up share capital of Rs 786 lac it was raised to Rs 3905 lac in

1947 and thereafter only a rights equity issue was made during 1960 in the ratio 15

The company manages around 12 tea gardens in Assam West Bengal Tamilnadu and

Kerala It has diversified over the years and manufactures plywood in Andamans and

superphosphates and sulphuric acid in West Bengal and has interest in shipping real estate

development tubes and tyres The company is packing its tea from different tea estates in

polypouches and it is sold under brand names -- Sadabahar Shaandar and Sangam

JSTI also acquired Maitrayee Tea Project at Chopra near Islampur with 192 acres under tea

plantation to increase its presence in the area

During 1999-2000 the company established a new factory named Aryaman Tea Estate in

Jalpaiguri Dist which has commenced production from Sep 1999 The factory has the

capacity of 7 lac kgs made tea per annum In June 2000 the B K Birla groups shareholding

in Jay Shree Tea amp Industries has gone up to 4461 from 4015 following the completion

of the companys buy back offer for 1230 lakh equity shares

The company bought back 1230 lac equity shares of Rs10- each at a price of Rs120-per

19

share in 2001-02 and subsequently the total Share Capital as on March 2002 was Rs1067

crores The tea processing factory which is being set up at LedoAssam has commenced its

commercial production with a annual capacity of around 6 lac kg

As the Supreme Court has banned the falling of trees in Andaman amp Nicobar Islandsthe

companys Plywood Operation is still under suspension The 100 subsidiary company viz

Shivas Group Ltd was amalgamated with the company with the prior approval from the

shareholders wef 25022002

It also proposes to set up an International Outsourced Call centre at Kolkata The company is

proposing to delist its equity shares from Delhi Stock exchange as there is no transactions

On BSE as on 22 April 2010

Dividend Yield

() 101

Market Cap (Rs

Mn) 331263

PE 465

EPS (Rs) 6372

Face Value (Rs) 10

Volume 142257

20

Shareholding Pattern as in September 2009

21

3

Mcleod Russell

McLeod Russel has been growing tea in India since 1869 It is today the largest tea

producing company in the world

It manages 47 tea estates in the Assam Valley and 6 tea estates in the Dooars region of West

Bengal Every year its estates produce over 80 million kilograms of black tea which is

marketed worldwide under the registered Elephant trade mark

The company directly employs around 80000 people a large number of whom a women

Mcleod Russel is the worldrsquos largest tea producer

22

Description ( As On

September 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 14 4498169 4025 3685170

Total Promoter 14 4498169 4025 3685170

Non Promoter

Institutions

Mutual Funds

UTI 12 717585 642 716185

FIBankInsurance 31 381238 341

FII 3 200000 179 200000

Other 0 200000 179 200000

Total Institutions 46 1298823 1162 1271276

Non-Institution

Bodies Corporate 821 1655678 1482 1609689

NRIsOCBs 82 42605 038 40195

Others 9658 3679064 3292 2699777

Total Non-

Institution 10561 5377347 4812 4349661

Total Non

Promoter 10607 6676170 5975 5620937

Grand Total 10621 11174339 100 9306107

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

NRIsOCBs 8 31256 097 926

Others 2391

33168

8 1025 127041

Total Non-

Institution 2481

40853

6 1263 168164

Total Non

Promoter 2488

52697

2 163 286007

Grand Total 2504

32336

47 100 2979462

2 Jayshree Tea amp Industries Limited

Incorporated as Jay Shree Tea Gardens in Oct45 with two tea estates the company changed

its name to Jay Shree Tea and Industries (JSTI) in 1960 It was promoted by B K Birla

Started with an initial paid-up share capital of Rs 786 lac it was raised to Rs 3905 lac in

1947 and thereafter only a rights equity issue was made during 1960 in the ratio 15

The company manages around 12 tea gardens in Assam West Bengal Tamilnadu and

Kerala It has diversified over the years and manufactures plywood in Andamans and

superphosphates and sulphuric acid in West Bengal and has interest in shipping real estate

development tubes and tyres The company is packing its tea from different tea estates in

polypouches and it is sold under brand names -- Sadabahar Shaandar and Sangam

JSTI also acquired Maitrayee Tea Project at Chopra near Islampur with 192 acres under tea

plantation to increase its presence in the area

During 1999-2000 the company established a new factory named Aryaman Tea Estate in

Jalpaiguri Dist which has commenced production from Sep 1999 The factory has the

capacity of 7 lac kgs made tea per annum In June 2000 the B K Birla groups shareholding

in Jay Shree Tea amp Industries has gone up to 4461 from 4015 following the completion

of the companys buy back offer for 1230 lakh equity shares

The company bought back 1230 lac equity shares of Rs10- each at a price of Rs120-per

19

share in 2001-02 and subsequently the total Share Capital as on March 2002 was Rs1067

crores The tea processing factory which is being set up at LedoAssam has commenced its

commercial production with a annual capacity of around 6 lac kg

As the Supreme Court has banned the falling of trees in Andaman amp Nicobar Islandsthe

companys Plywood Operation is still under suspension The 100 subsidiary company viz

Shivas Group Ltd was amalgamated with the company with the prior approval from the

shareholders wef 25022002

It also proposes to set up an International Outsourced Call centre at Kolkata The company is

proposing to delist its equity shares from Delhi Stock exchange as there is no transactions

On BSE as on 22 April 2010

Dividend Yield

() 101

Market Cap (Rs

Mn) 331263

PE 465

EPS (Rs) 6372

Face Value (Rs) 10

Volume 142257

20

Shareholding Pattern as in September 2009

21

3

Mcleod Russell

McLeod Russel has been growing tea in India since 1869 It is today the largest tea

producing company in the world

It manages 47 tea estates in the Assam Valley and 6 tea estates in the Dooars region of West

Bengal Every year its estates produce over 80 million kilograms of black tea which is

marketed worldwide under the registered Elephant trade mark

The company directly employs around 80000 people a large number of whom a women

Mcleod Russel is the worldrsquos largest tea producer

22

Description ( As On

September 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 14 4498169 4025 3685170

Total Promoter 14 4498169 4025 3685170

Non Promoter

Institutions

Mutual Funds

UTI 12 717585 642 716185

FIBankInsurance 31 381238 341

FII 3 200000 179 200000

Other 0 200000 179 200000

Total Institutions 46 1298823 1162 1271276

Non-Institution

Bodies Corporate 821 1655678 1482 1609689

NRIsOCBs 82 42605 038 40195

Others 9658 3679064 3292 2699777

Total Non-

Institution 10561 5377347 4812 4349661

Total Non

Promoter 10607 6676170 5975 5620937

Grand Total 10621 11174339 100 9306107

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

share in 2001-02 and subsequently the total Share Capital as on March 2002 was Rs1067

crores The tea processing factory which is being set up at LedoAssam has commenced its

commercial production with a annual capacity of around 6 lac kg

As the Supreme Court has banned the falling of trees in Andaman amp Nicobar Islandsthe

companys Plywood Operation is still under suspension The 100 subsidiary company viz

Shivas Group Ltd was amalgamated with the company with the prior approval from the

shareholders wef 25022002

It also proposes to set up an International Outsourced Call centre at Kolkata The company is

proposing to delist its equity shares from Delhi Stock exchange as there is no transactions

On BSE as on 22 April 2010

Dividend Yield

() 101

Market Cap (Rs

Mn) 331263

PE 465

EPS (Rs) 6372

Face Value (Rs) 10

Volume 142257

20

Shareholding Pattern as in September 2009

21

3

Mcleod Russell

McLeod Russel has been growing tea in India since 1869 It is today the largest tea

producing company in the world

It manages 47 tea estates in the Assam Valley and 6 tea estates in the Dooars region of West

Bengal Every year its estates produce over 80 million kilograms of black tea which is

marketed worldwide under the registered Elephant trade mark

The company directly employs around 80000 people a large number of whom a women

Mcleod Russel is the worldrsquos largest tea producer

22

Description ( As On

September 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 14 4498169 4025 3685170

Total Promoter 14 4498169 4025 3685170

Non Promoter

Institutions

Mutual Funds

UTI 12 717585 642 716185

FIBankInsurance 31 381238 341

FII 3 200000 179 200000

Other 0 200000 179 200000

Total Institutions 46 1298823 1162 1271276

Non-Institution

Bodies Corporate 821 1655678 1482 1609689

NRIsOCBs 82 42605 038 40195

Others 9658 3679064 3292 2699777

Total Non-

Institution 10561 5377347 4812 4349661

Total Non

Promoter 10607 6676170 5975 5620937

Grand Total 10621 11174339 100 9306107

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

Shareholding Pattern as in September 2009

21

3

Mcleod Russell

McLeod Russel has been growing tea in India since 1869 It is today the largest tea

producing company in the world

It manages 47 tea estates in the Assam Valley and 6 tea estates in the Dooars region of West

Bengal Every year its estates produce over 80 million kilograms of black tea which is

marketed worldwide under the registered Elephant trade mark

The company directly employs around 80000 people a large number of whom a women

Mcleod Russel is the worldrsquos largest tea producer

22

Description ( As On

September 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 14 4498169 4025 3685170

Total Promoter 14 4498169 4025 3685170

Non Promoter

Institutions

Mutual Funds

UTI 12 717585 642 716185

FIBankInsurance 31 381238 341

FII 3 200000 179 200000

Other 0 200000 179 200000

Total Institutions 46 1298823 1162 1271276

Non-Institution

Bodies Corporate 821 1655678 1482 1609689

NRIsOCBs 82 42605 038 40195

Others 9658 3679064 3292 2699777

Total Non-

Institution 10561 5377347 4812 4349661

Total Non

Promoter 10607 6676170 5975 5620937

Grand Total 10621 11174339 100 9306107

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

3

Mcleod Russell

McLeod Russel has been growing tea in India since 1869 It is today the largest tea

producing company in the world

It manages 47 tea estates in the Assam Valley and 6 tea estates in the Dooars region of West

Bengal Every year its estates produce over 80 million kilograms of black tea which is

marketed worldwide under the registered Elephant trade mark

The company directly employs around 80000 people a large number of whom a women

Mcleod Russel is the worldrsquos largest tea producer

22

Description ( As On

September 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 14 4498169 4025 3685170

Total Promoter 14 4498169 4025 3685170

Non Promoter

Institutions

Mutual Funds

UTI 12 717585 642 716185

FIBankInsurance 31 381238 341

FII 3 200000 179 200000

Other 0 200000 179 200000

Total Institutions 46 1298823 1162 1271276

Non-Institution

Bodies Corporate 821 1655678 1482 1609689

NRIsOCBs 82 42605 038 40195

Others 9658 3679064 3292 2699777

Total Non-

Institution 10561 5377347 4812 4349661

Total Non

Promoter 10607 6676170 5975 5620937

Grand Total 10621 11174339 100 9306107

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

As the largest Indian tea exporter we maintain strong connections with buyers in Europe the

Middle East and North America We have always enjoyed an excellent reputation for the

quality of our product and the integrity and reliability of our marketing and delivery systems

McLeod Russel has a number of internationally recognised accreditations and certifications

including Fairtrade Rainforest Alliance and HACCP Its modern blending facility provides

the clients with both unique as well as bespoke bulk blended teas

On BSEas on 22 April 2010

Dividend Yield

() 08

Market Cap (Rs

Mn) 2727637

PE 10

EPS (Rs) 2491

Face Value (Rs) 5

Volume 174807

Shareholding Pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolder

s

No of

Shares

of

Share Demat

Promoter

Indian Promoter 24 22583056 2063 22497684

Foreign Promoter 1 27067500 2473 27067500

Total Promoter 25 49650556 4536 49565184

Non Promoter

23

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

Institutions

Mutual Funds

UTI 41 8624962 788 8621239

FIBankInsurance 6 4231733 387

Govt 1 112

FII 70 27637288 2525 27637288

Other 97 28011747 2559 27969054

Total Institutions 215 40868554 3734 40820326

Non-Institution

Bodies Corporate 1416 4941880 451 4854379

NRIsOCBs 601 360122 033 226601

Others 58658 13634623 1246 10341710

Total Non-

Institution 60675 18936625 173 15422690

Total Non

Promoter 60890 59805179 5464 56243016

Grand Total 60915 109455735 100 105808200

4 Rossell Tea Ltd

Rossell Tea Ltd (The Company) espouses the cause of long-term success in all areas of its

business and commits itself to achieve this through excellence in productivity quality and

performance The company will continue to evolve learn and adapt for the common good of

its stakeholders The Company is further committed to the well being of all employees in

particular and the society at large in general

24

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

The Company immediately after taking over the management of Dikom Nokhroy and Borahi

TEs took effective steps for upgrading the quality further and at present all the Tea Estates

are well established quality marks in overseas markets The saleable production at the time of

takeover was 27 Million Kgs of Black Tea which after recent corporate restructuring and

three successive acquisitions is around 50 Million Kgs of Black Tea At present the

Company owns Dikom Nokhroy Nagrijuli Bokakhat and Romai TEs all located in

Assam After corporate restructuring Borahi TE was demerged and transferred to another

Company viz Jyoti Holdings Pvt Ltd which Company is no more under the management of

Rossell Tea Limited

The present Share Capital of Rossell Tea Ltd is Rs6314 Million divided into 6314 Million

Equity Shares of Rs10 each Out of 6314 Million Equity Shares 4653 Million Equity

Shares representing 7367 of the Equity Share Capital is held by the Holding Company

BMG Enterprises Ltd Delhi The Equity Shares of the Company are quoted at Calcutta and

Guwahati Stock Exchanges

On BSEas on 22 April 2010

Dividend Yield () 057

Market Cap (Rs Mn) 192767

PE 2769

EPS (Rs) 949

Face Value (Rs) 10

Volume 141

Shareholding pattern as on September 2009

Description ( As On

December 2009 )

No of

ShareHolders

No of

Shares

of

Share Demat

Promoter

Indian Promoter 6 5494245 7486 5494245

Total Promoter 6 5494245 7486

25

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

5494245

Non Promoter

Institutions

Mutual Funds

UTI 2 30002 041 30002

FIBankInsurance 16 48263 065 29651

Govt 1 30 0 0

FII 2 1025000 1397 1025000

Other 1 1135000 1547 1025000

Total Institutions 22 1213295 1653 1084653

Non-Institution

Bodies Corporate 72 25579 035 5918

NRIsOCBs 9 240 0 180

Others 5660 605936 826 125316

Total Non-

Institution 5741 631755 861 131414

Total Non

Promoter 5763 1845050 2514 1216067

Grand Total 5769 7339295 100 6710312

FINANCIAL STATEMENTS ANALYSIS

Financial Statement analysis means analysis and regrouping of data contained in historical

financial statements It serves the essential function of converting accounting data contained

in financial statements in to useful information which is always in scarce supply After

analysis of financial statements interpretation of analyzed information is done by decision

maker to forecast future profitability financial strength and liquidity position of the business

26

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

TYPES OF ANALYSIS

Financial statements are analysed to establish certain crucial relationships which help us to

take sound decisions Accounts for the year 2003-2004 and 2004-2005 have been studied in

this report

Analysis consists of

Financial Ratio Analysis

Common Size Statement

Time Series Analysis

FINANCIAL RATIO ANALYSIS

Ratio analysis is a very popular tool of financial analysis Under this system of analysis

financial statements have been analyzed by computing accounting ratios Ratios indicate how

a business is performing and provide indications of trends and patterns They can be

compared to the same ratios in previous years accounts and the accounts of other businesses

operating in a similar environment The ratios can be looked at from three perspectives

- Creditors

- Investors

- Shareholders

There are various parameters upon which various types of different analysis is done They

include

1 Liquidity Analysis

2 Profitability Analysis

3 Solvency Analysis

4 Efficiency Analysis

LIQUIDITY RATIOS

27

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

Liquidity is the ability to convert assets into cash or to obtain cash It is important from the

point of view of meeting the firmrsquos short term obligations

Current Ratio

It is the ratio of the current assets to current liabilities of the company It is calculated to test

the short term solvency of a business and its ability to meet its short term commitments

Besides measuring liquidity it also measures the margin of safety available in case of

uncertainty of flow of funds

It provides a measure of degree to which current assets cover current liabilities The excess

of current assets over current liabilities provides a measure of safety margin available against

uncertainty in realization of current assets and flow of funds

Quick ratio

An indicator of a companys short-term liquidity The quick ratio measures a

companys ability to meet its short-term obligations with its most liquid assets The higher the

quick ratio the better the position of the company

Quick Ratio= (Cash + Marketable securities + accounts receivable)Current Liabilities

Liquidity Ratios Joonktollee tea

Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09

Mar-

08 Mar-09 Mar-08 Mar-09

Mar-

08

Mar-

09

Mar-

08

Current

AssetsCurrent

Liabilities 182 62 176 361 103 084 044 046

Quick AssetsCurrent

Liabilities 077 488 071 094 048 036 017 017

Analysis

Current Ratio We notice that in case of Current Ratio Joonktollee Tea and Jay Shree Tea

have a high current ratio whereas McLeod Russels and Rossell have a low ratio

High ratio indicates that

28

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

the company may be high amount of receivable and large amount inventory piled up

which is a bad sign

whereas it may also suggest that the company receives its payments well before the

expiry of the credit period as such indicating a strong credit policy of the company

Thus a right proportion of current assets and current liabilities are required and the ideal

ratio is said to be 21

Quick Ratio Sometimes a company could be carrying heavy inventory as part of its current

assets which might be obsolete or slow moving Thus eliminating inventory from current

assets and then doing the liquidity test is measured by this ratio The ratio is regarded as an

acid test of liquidity for a company It expresses the true working capital relationship of its

cash accounts receivables prepaid and notes receivables available to meet the companys

current obligations Again when we look at the acid test ratio it indicates the actual indicator

of the current position Again here we see that in McLeod Russels and Rossell maximum of

cash is held up in inventory

PROFITABILITY RATIOS

Profitability ratios are probably the most important ratios studied by any analyst They are

able to give a good overall picture of a company with respect to its peers The most important

objectives for the business and arguably therefore the most important ratios are those

concerned with profitability

Net profit margin

Net profit margin divided by net revenues often expressed as a percentage This number is

an indication of how effective a company is at cost control The higher the net profit margin

is the more effective the company is at converting revenue into actual profit The net profit

margin is a good way of comparing companies in the same industry since such companies

are generally subject to similar business conditions However the net profit margins are also

a good way to to compare companies in different industries in order to gauge which

industries are relatively more profitable also called net margin

Net Profit Margin =Net Profit

=Profit before Interest and Taxation

Turnover Turnover

29

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

Return on Capital Employed Net After Tax Profit divided by Net Worth this is the final

measure of profitability to evaluate overall return This ratio measures return relative to

investment in the company Put another way Return on Net Worth indicates how well a

company leverages the investment in it May appear higher for startups and sole

proprietorships due to owner compensation draws accounted as net profit

Joonktollee tea Ltd

Jayshree Tea

Limited McLeod russells

Rossels Tea

Company

Mar-09 Mar-08 Mar-09

Mar-

08 Mar-09 Mar-08

Mar-

09

Mar-

08

Return on Total

Capital Employed 001 0006 0055 0014 0056 0013 0055

009

1

Return on Assets

0002 0002 0011 0003 0012 0003 0014

002

8

NP Ratio

0023 0019 0042 0016 0108 0032 0132

020

1

Analysis

Net Profit Margin The Profit Margin of a company determines its ability to withstand

competition and adverse conditions like rising costs falling prices or declining sales in the

future The ratio measures the percentage of profits earned per dollar of sales and thus is a

measure of efficiency of the company Thus we see to it that Rossell Tea has been able to

withstand maximum competition and thus its income after tax is on a higher proportion than

any other company

Return on Assets The Return on Assets of a company determines its ability to utitize the

Assets employed in the company efficiently and effectively to earn a good return The ratio

measures the percentage of profits earned per dollar of Asset and thus is a measure of

efficiency of the company in generating profits on its Assets Thus when we compare the

various data we find that the best utilisation of assets is being done by Rossell Tea

ROCE is almost same Jayshree McLeod and Rossels

LEVERAGE RATIOS

30

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

These ratios determine the financial leverage enjoyed by the firm and also look at the short

term solvency of the firm in terms of its interest paying capacity Long Term Debt Equity

ratios provide insight into the extent to which nonequity capital is used to finance the assets

of the firm

Ratio = long term liabilities shareholders equity

The higher is the ratio the higher the proportion of assets financed by non-shareholder

parties Which components to include in the numerator or denominator of the ratios depend

on how one defines liabilities and shareholders equity

Financial Leverage

ratios

Joonktollee

Tea Ltd

Jayshree Tea

Limited

McLeod

russells

Rossels Tea

Company

Mar-

08

Mar-

07

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Total Debts to Assets

0296 0331 0581 0529 0354 0026 0206 0205

Capitalization Ratio 0245 0295 0482 0481 0145 0176 0156 0141

Debt-Equity Ratio 0325 0418 0929 0926 0354 041 0184 0164

Interest Coverage Ratio 1761 2033 2516 2953 2564 242 5996 18178

ANALYSIS

Rossell Tea Company is the least leveraged company with the lowest debt equity ratio while

jay Shree Limited would fall on the higher end

TURNOVER RATIOS

Fixed asset turnover is the ratio of sales (on the Profit and loss account) to the value of fixed

assets (on the balance sheet) It indicates how well the business is using its fixed assets to

generate sales

31

Generally speaking the higher the ratio the better because a high ratio indicates the business

has less money tied up in fixed assets for each dollar of sales revenue A declining ratio may

indicate that the business is over-invested in plant equipment or other fixed assets

Efficiency Ratio Joonktolle tea Jayshree Tea

Limited

McLeod Russel Rossels Tea

Company

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-

08

Cash Turnover

449

3 208 14348 1049 2698 13608 7281 140

Total Assets Turnover 038 029 098 073 043 035 039 042

Accounts Receivable

Turnover

145

5 1388 609 95 3246 2316 10458 6045

Analysis

Rossell Tea has the highest debtor turnover ratio indicating less chances of bad debt and

more liquid the nature of asset (debtor) This ratio is least in case of Jay Shree Tea which is

also below the industry average this inefficiency increases the chance of default by the

debtors

Inventory turnover ratio of both Biocon amp Cipla are below the industry average This

indicates low inventory liquidity and high inventory carry cost This may also indicate that

the company might have over bought or the value of the stock is overstated

32

CROSS SECTIONAL ANALYSIS

In this analysis the different financial variables of different companies have been compared

over a period of time of two years viz 2006-2007 and 2007-2008 As such it helps us to get

some sort of trend of various financial factors in the financial statements of a company

Common Size Profit and Loss Account

Joonktollee Tea

Ltd

Jayshree

Tea Limited

McLeod

russells

Rossels Tea

Company

Year Mar-09 Mar-

08

Mar-

09

Mar-

08

Mar-

09

Mar-08 Mar-

09

Mar

-08

Share Capital 367 345 354 347 345 348 531 536

Reserves amp

Surplus 7178 6706 4829 4845 7039 6742 7914

805

7

Net Worth

7545 7052 5183 5192 7384 709 8445

859

2

Secured Loans 217 209 4119 3963 2427 1955 1194 492

Unsecured Loans 284 858 698 845 189 955 361 915

Total Debt

2455 2948 4817 4808 2616 291 1555

140

8

Total Liabilities 100 100 100 100 100 100 100 100

Gross Block

4169 3893 7649 7269

1147

5 11391 8595 984

Less Accum

Depreciation 1876 1659 2676 2572 2438 2295 779 793

Net Block

2293 2234 4974 4697 9037 9096 7816

904

7

Capital Work in

Progress 101 036 084 064 087 052 036 042

Investments 645 4879 3191 3077 1292 1244 1644 666

Current Assets 0 0

33

Loans amp

Advances

Inventories 501 461 1609 1217 402 28 155 183

Sundry Debtors 281 222 2159 915 16 18 04 075

Cash and Bank

Balance 091 1481 092 828 193 031 057 032

Loans and

Advances 1028 123 113 884 828 877 872 644

Less Current

Liab amp Prov 0 0

Current Liabilities 48 349 219 82 734 584 502 676

Provisions 259 194 771 701 935 86 132 126

Net Current

Assets 1162 2851 2029 2323 -086 -077 489 131

Miscellaneous

Expenses not wo 0 0 0 0 0 0 0 0

Total Assets 100 100 100 100 100 100 100 100

Analysis

The percentage of debt to total assets for Rossell Tea is lowest (1555) as compared to

other companies On the other hand JayShree Tea has the highest debt percentage in its

capital structure ie4817 as the company is in expansion mode so its been raising debt

from the market

The net current assets for McLeod Russel is the in negative because of which the company

can have problems in meeting its short term obligationsHence this company is not a good a

bet for short term creditors

For Jay Shree Tea the inventory as a percentage of total assets is highest among all the

companies which shows cautious and conservative approach

COMMON SIZE INCOME STATEMENT

34

Joonktolle Tea

amp Ltd

Jayshree Tea

Limited

McLeod russells Rossels Tea

Company

Year Mar-

09

Mar-

08

Mar-09 Mar-

08

Mar-09 Mar-08 Mar-09 Mar-

08

INCOME

Sales Turnover 100 100 100 100 100 100 100 100

Excise Duty 028 035 167 225 028 035 0 0

Other Income 347 798 395 84 409 937 398 2857

Stock Adjustments -092 -214 38 -067 055 -054 -003 -09

Total Income 10228 10549 10607 10548 10436 10847 10395 12767

EXPENDITURE

Raw Materials 2297 2075 4473 323 524 425 03 147

Power amp Fuel Cost 683 777 579 752 1071 1295 687 788

Other Mfgr Expenses 3102 337 2276 3076 3839 4463 3766 4024

Employee Cost 913 1174 745 928 1041 1285 1636 1143

Selling amp Admn

Expenses 979 114

727 1022 1185 1281 1087 1177

Miscellaneous

Expenses 533 335

841 531 201 182 803 295

PBDIT 172 1678 965 101 2574 1916 2387 5194

Interest amp Financial

Charges 977 825

384 342 1004 792 398 286

Depreciation 458 587 16 253 314 333 238 256

Profit Before Tax 286 266 421 414 1256 791 1751 4652

Tax 033 014 002 022 122 023 322 385

Fringe benefit tax 017 017 0 0 027 019 023 017

Deferred Tax 014 0 09 -026 036 029 196 306

Extra ordinary items -011 048 -083 26 -01 403 -113 1938

Profit after tax 233 186 412 158 1081 317 1323 2006

Analysis

35

The selling and administration expenses for McLeod Russel though they are lower than the

previous year

The net profit is the highest for Rossell Ltd as compared to others in the Industry The

depreciation charged is also highest for Joonktolle tea (458) followed by McLeod Russel

(314 of Net Sales) The relative tax expense is highest for Rossell Ltd for the 2008-09 and

lowest for Jay Shree Ltd

Trend Analysis

36

This is a time series analysis whereby a study is done in order to interpret what has changed

in the company over a year This can be done by comparing the balancesheet and profit and

loss statement of the company for two years

Balance Sheet

Joonktolle

Tea amp

Ltd

Jayshree

Tea Ltd

McLeod

Russel

Rossell

SOURCES OF FUNDS

Share Capital -0003 0047 0 16323

Reserves Total 0004 0022 5536 15342

Total Shareholders Funds 0003 0024 5264 15404

Secured Loans -0026 0066 25516 184828

Unsecured Loans -0689 -0153 -80 -53711

Total Debt -0219 0028 -9116 29735

Total Liabilities -0062 0026 108 17421

APPLICATION OF FUNDS

Gross Block 0004 0079 1827 2571

Less Accumulated

Depreciation 006 0067

7353

15418

Net Block -0037 0086 0432 1445

Capital Work in Progress 1618 0352 68659 0

Investments 024 0064 4948 189682

Current Assets Loans amp

Advances

Inventories 0021 0356 45268 -0465

Sundry Debtors 0188 1421 -9716 -375

Cash and Bank -0942 -0887 538125 107895

Loans and Advances -0217 0312 -454 59103

Less Current Liabilities and

Provisions

37

Current Liabilities 0291 174 27042 -12688

Provisions 0253 0128 9978 22819

Net Current Assets -0618 -0104 12676 338961

Miscellaneous Expenses not

written off

Total Assets -0062 0026 108 17421

Income Statement

38

39

Diana

Tea

Company

Jayshree

Tea

Limited

McLeod

Russel

Rossell

INCOME

Sales Turnover 24448 54197 2645 812

Excise Duty 0 14797 0866

Other Income -45887 -27502 -44747 -84934

Stock Adjustments -46774 -970652 -227247 -95833

Total Income 20655 55066 21657 -1197

EXPENDITURE

Raw Materials 3777 113514 55994 -78205

Power amp Fuel Cost 9333 18823 4534 -5728

Employee Cost 14549 14123 8775 1168

Other Manufacturing

Expenses -3235 23789

2458 5477

Selling and Administration

Expenses 697 9696

16982 -016

Miscellaneous Expenses 97938 144521 39816 194268

Operating Profit 27572 47447 69894 -50308

Interest 4728 73048 60378 50658

Depreciation -2941 -2453 1934 0735

Profit Before Tax 33766 5684 100675 -59313

Tax 200 -83333 563399 -9756

Fringe Benefit tax 73228 44444

Deferred Tax -626389 58824 -30675

Extraordinary Items -128571 -149157 -103103 -106305

Adjusted Net Profit 55556 301386 331232 -28679

Segment reporting

The objective of this segment is to establish principles for reporting financial information

about the different types of products and services an enterprise produces and the different

geographical areas in which it operates Such information helps users of financial statements

(a) Better understand the performance of the enterprise

(b) Better assess the risks and returns of the enterprise and

(c) Make more informed judgements about the enterprise as a whole

Many enterprises provide groups of products and services or operate in geographical areas

that are subject to differing rates of profitability opportunities for growth future prospects

and risks Information about different types of products and services of an enterprise and its

operations in different geographical areas - often called segment information - is relevant to

assessing the risks and returns of a diversified or multi-locational enterprise but may not be

determinable from the aggregated data Therefore reporting of segment information is

widely regarded as necessary for meeting the needs of users of financial statements

A JOONKTOLLEE TEA COMPANY LIMITED

No disclosure regarding segment reporting

B JAY SHREE TEA amp INDUSTRIES LIMITED

Based on the guiding principles given in Accounting Standards on ldquoSegment Reportingrdquo

(AS-17) as prescribed by the Companies Accounting Standard Rules 2006 the Companyrsquos

primary business segments are tea chemicals amp fertilisers business

40

Segment wise Information for the year

ended 31st March 2009

(A) PRIMARY

SEGMENT

(Rs in lsquo000)

1 Segment Revenue (Net

SalesIncome from each

segment)

31032009 31032008

Tea 2811082 2039941

Chemicals amp Fertilisers 1361419 659261

Infotech ndash 10305

Others 28160 24097

Less Inter-segmental Revenue 8695 6446

Total 4191966 2727158

2 Segment Results Profit

(Loss) before Tax amp Interest

a) Tea 423765 57395

b) Chemicals amp

Fertilisers

(31192) 58630

c) Infotech ndash (11109)

d) Others 10096 6081

Total 402669 110997

Less Interest (Net) 103751 75431

Add Unallocable Income net

of unallocable expenditure

(132310) 63887

Total Profit (Loss)

before Tax

166608 99453

3 Segment Assets (Including revaluation reserve)

amp Segment Liabilities

Assets Liabilities Assets Liabilities

a) Tea 1923575 312460 1605759 298639

b) Chemicals amp 677027 496214 335988 95623

41

Fertilisers

c) Infotech ndash ndash 48507 4844

d) Others 11939 6169 11112 5735

e) Unallocable 1565935 211987 1601683 118707

Total 4178476 1026830 3603049 523548

4 Capital expenditure including capital work-in-progress and depreciation (excluding on

revaluation reserve) for the year

Capital Exp

Depreciation

Capital Exp

Depreciation

a) Tea 109378 55558 117128 56138

b) Chemicals amp

Fertilisers

4117 5090 4580 4867

c) Infotech ndash ndash 1301 4909

d) Others 535 167 ndash 131

e) Unallocable 28031 7358 13126 6728

Total 142061 68173 136135 72773

(B) Secondary Segment Domestic Export Total

Segment Revenue 3502255 689711 4191966

(2185718) (541440) (2727158)

Segment Assets

4143913 34563 4178476

(3567672) (35377) (3603049)

Capital Expenditure 142061 ndash 142061

Note (136135) (ndash) (136135)

i) The company has disclosed business segment as the Primary Segment

Segment Revenue includes other income pertaining to the relevant

42

C MCLEOD RUSSELS

No disclosure regarding segment reporting

D ROSSEL TEA LIMITED

No disclosure regarding segment reporting

Conclusion

Though there has been a recovery in the prices of tea and exports have also started looking

up with the emerging trends in the globalized economy markets can no longer be protected

The high cost of production is still a matter of concern for the Indian tea

industry The Indian tea industry would have to gear itself up to counter the new forces

unleashed by globalization

Budget 2010-11 gave the extension of concessional import duty on imported plantation

machinery like tea bagging machines till March 31 2011 will help the industry in value

adding and hiking exports in the long run The finance minister has also increased weighted

deduction on payments made to national laboratories research associations universities and

other institutions for scientific research from 125 to 175 This will help organisations like

43

the Tea Research Association to take up better research and development activities resulting

in production of better quality tea saplings

With cyclical crisis in the Indian tea industry erasing fast the current need was to shift from

a production oriented strategy and subsidy approach to market oriented strategic framework

with market economy outlook There is a need to liberate the mindset of the industry from its

earlier mindset of disposal of tea was changing to a new one --marketing of tea which

implied a shift from subsidy to capacity building approach

Multinational tea companies are increasingly contracting with larger agro-processing

firmswho were able to effectively coordinate deliveries and quality standards from small

farmers through effective supply chain management as in South India and Indonesia

Sharma said

Oversupply of tea and less demand has contributed to market imbalance in India Strategies

have to be devised to improve the demand side as so much effort has been put in improving

supply efficiency in the past

Only financially sound tea producers would perhaps be able to take the risk of delayed

marketing and avail any possible opportunity arising out of future upward price movement in

the marketWhile productivity and quality have received some attention cost reduction

value addition and risk manageent needed a new focus

References

Joonktollee Tea amp Industries Ltd Annual Report 08-09

Mcleod Russel India Ltd Annual Report 08-09

Rossell Tea Ltd Annual Report 08-09

Jay Shree tea amp Industries Ltd Annual Report 08-09

Foster G Financial Statement Analysis Second Edition Prentice Hall NJ 1986

wwwmoneylivemintcom

wwwbseindiacom

wwwmoneycontrolcom

44

Loans amp

Advances

Inventories 501 461 1609 1217 402 28 155 183

Sundry Debtors 281 222 2159 915 16 18 04 075

Cash and Bank

Balance 091 1481 092 828 193 031 057 032

Loans and

Advances 1028 123 113 884 828 877 872 644

Less Current

Liab amp Prov 0 0

Current Liabilities 48 349 219 82 734 584 502 676

Provisions 259 194 771 701 935 86 132 126

Net Current

Assets 1162 2851 2029 2323 -086 -077 489 131

Miscellaneous

Expenses not wo 0 0 0 0 0 0 0 0

Total Assets 100 100 100 100 100 100 100 100

Analysis

The percentage of debt to total assets for Rossell Tea is lowest (1555) as compared to

other companies On the other hand JayShree Tea has the highest debt percentage in its

capital structure ie4817 as the company is in expansion mode so its been raising debt

from the market

The net current assets for McLeod Russel is the in negative because of which the company

can have problems in meeting its short term obligationsHence this company is not a good a

bet for short term creditors

For Jay Shree Tea the inventory as a percentage of total assets is highest among all the

companies which shows cautious and conservative approach

COMMON SIZE INCOME STATEMENT

34

Joonktolle Tea

amp Ltd

Jayshree Tea

Limited

McLeod russells Rossels Tea

Company

Year Mar-

09

Mar-

08

Mar-09 Mar-

08

Mar-09 Mar-08 Mar-09 Mar-

08

INCOME

Sales Turnover 100 100 100 100 100 100 100 100

Excise Duty 028 035 167 225 028 035 0 0

Other Income 347 798 395 84 409 937 398 2857

Stock Adjustments -092 -214 38 -067 055 -054 -003 -09

Total Income 10228 10549 10607 10548 10436 10847 10395 12767

EXPENDITURE

Raw Materials 2297 2075 4473 323 524 425 03 147

Power amp Fuel Cost 683 777 579 752 1071 1295 687 788

Other Mfgr Expenses 3102 337 2276 3076 3839 4463 3766 4024

Employee Cost 913 1174 745 928 1041 1285 1636 1143

Selling amp Admn

Expenses 979 114

727 1022 1185 1281 1087 1177

Miscellaneous

Expenses 533 335

841 531 201 182 803 295

PBDIT 172 1678 965 101 2574 1916 2387 5194

Interest amp Financial

Charges 977 825

384 342 1004 792 398 286

Depreciation 458 587 16 253 314 333 238 256

Profit Before Tax 286 266 421 414 1256 791 1751 4652

Tax 033 014 002 022 122 023 322 385

Fringe benefit tax 017 017 0 0 027 019 023 017

Deferred Tax 014 0 09 -026 036 029 196 306

Extra ordinary items -011 048 -083 26 -01 403 -113 1938

Profit after tax 233 186 412 158 1081 317 1323 2006

Analysis

35

The selling and administration expenses for McLeod Russel though they are lower than the

previous year

The net profit is the highest for Rossell Ltd as compared to others in the Industry The

depreciation charged is also highest for Joonktolle tea (458) followed by McLeod Russel

(314 of Net Sales) The relative tax expense is highest for Rossell Ltd for the 2008-09 and

lowest for Jay Shree Ltd

Trend Analysis

36

This is a time series analysis whereby a study is done in order to interpret what has changed

in the company over a year This can be done by comparing the balancesheet and profit and

loss statement of the company for two years

Balance Sheet

Joonktolle

Tea amp

Ltd

Jayshree

Tea Ltd

McLeod

Russel

Rossell

SOURCES OF FUNDS

Share Capital -0003 0047 0 16323

Reserves Total 0004 0022 5536 15342

Total Shareholders Funds 0003 0024 5264 15404

Secured Loans -0026 0066 25516 184828

Unsecured Loans -0689 -0153 -80 -53711

Total Debt -0219 0028 -9116 29735

Total Liabilities -0062 0026 108 17421

APPLICATION OF FUNDS

Gross Block 0004 0079 1827 2571

Less Accumulated

Depreciation 006 0067

7353

15418

Net Block -0037 0086 0432 1445

Capital Work in Progress 1618 0352 68659 0

Investments 024 0064 4948 189682

Current Assets Loans amp

Advances

Inventories 0021 0356 45268 -0465

Sundry Debtors 0188 1421 -9716 -375

Cash and Bank -0942 -0887 538125 107895

Loans and Advances -0217 0312 -454 59103

Less Current Liabilities and

Provisions

37

Current Liabilities 0291 174 27042 -12688

Provisions 0253 0128 9978 22819

Net Current Assets -0618 -0104 12676 338961

Miscellaneous Expenses not

written off

Total Assets -0062 0026 108 17421

Income Statement

38

39

Diana

Tea

Company

Jayshree

Tea

Limited

McLeod

Russel

Rossell

INCOME

Sales Turnover 24448 54197 2645 812

Excise Duty 0 14797 0866

Other Income -45887 -27502 -44747 -84934

Stock Adjustments -46774 -970652 -227247 -95833

Total Income 20655 55066 21657 -1197

EXPENDITURE

Raw Materials 3777 113514 55994 -78205

Power amp Fuel Cost 9333 18823 4534 -5728

Employee Cost 14549 14123 8775 1168

Other Manufacturing

Expenses -3235 23789

2458 5477

Selling and Administration

Expenses 697 9696

16982 -016

Miscellaneous Expenses 97938 144521 39816 194268

Operating Profit 27572 47447 69894 -50308

Interest 4728 73048 60378 50658

Depreciation -2941 -2453 1934 0735

Profit Before Tax 33766 5684 100675 -59313

Tax 200 -83333 563399 -9756

Fringe Benefit tax 73228 44444

Deferred Tax -626389 58824 -30675

Extraordinary Items -128571 -149157 -103103 -106305

Adjusted Net Profit 55556 301386 331232 -28679

Segment reporting

The objective of this segment is to establish principles for reporting financial information

about the different types of products and services an enterprise produces and the different

geographical areas in which it operates Such information helps users of financial statements

(a) Better understand the performance of the enterprise

(b) Better assess the risks and returns of the enterprise and

(c) Make more informed judgements about the enterprise as a whole

Many enterprises provide groups of products and services or operate in geographical areas

that are subject to differing rates of profitability opportunities for growth future prospects

and risks Information about different types of products and services of an enterprise and its

operations in different geographical areas - often called segment information - is relevant to

assessing the risks and returns of a diversified or multi-locational enterprise but may not be

determinable from the aggregated data Therefore reporting of segment information is

widely regarded as necessary for meeting the needs of users of financial statements

A JOONKTOLLEE TEA COMPANY LIMITED

No disclosure regarding segment reporting

B JAY SHREE TEA amp INDUSTRIES LIMITED

Based on the guiding principles given in Accounting Standards on ldquoSegment Reportingrdquo

(AS-17) as prescribed by the Companies Accounting Standard Rules 2006 the Companyrsquos

primary business segments are tea chemicals amp fertilisers business

40

Segment wise Information for the year

ended 31st March 2009

(A) PRIMARY

SEGMENT

(Rs in lsquo000)

1 Segment Revenue (Net

SalesIncome from each

segment)

31032009 31032008

Tea 2811082 2039941

Chemicals amp Fertilisers 1361419 659261

Infotech ndash 10305

Others 28160 24097

Less Inter-segmental Revenue 8695 6446

Total 4191966 2727158

2 Segment Results Profit

(Loss) before Tax amp Interest

a) Tea 423765 57395

b) Chemicals amp

Fertilisers

(31192) 58630

c) Infotech ndash (11109)

d) Others 10096 6081

Total 402669 110997

Less Interest (Net) 103751 75431

Add Unallocable Income net

of unallocable expenditure

(132310) 63887

Total Profit (Loss)

before Tax

166608 99453

3 Segment Assets (Including revaluation reserve)

amp Segment Liabilities

Assets Liabilities Assets Liabilities

a) Tea 1923575 312460 1605759 298639

b) Chemicals amp 677027 496214 335988 95623

41

Fertilisers

c) Infotech ndash ndash 48507 4844

d) Others 11939 6169 11112 5735

e) Unallocable 1565935 211987 1601683 118707

Total 4178476 1026830 3603049 523548

4 Capital expenditure including capital work-in-progress and depreciation (excluding on

revaluation reserve) for the year

Capital Exp

Depreciation

Capital Exp

Depreciation

a) Tea 109378 55558 117128 56138

b) Chemicals amp

Fertilisers

4117 5090 4580 4867

c) Infotech ndash ndash 1301 4909

d) Others 535 167 ndash 131

e) Unallocable 28031 7358 13126 6728

Total 142061 68173 136135 72773

(B) Secondary Segment Domestic Export Total

Segment Revenue 3502255 689711 4191966

(2185718) (541440) (2727158)

Segment Assets

4143913 34563 4178476

(3567672) (35377) (3603049)

Capital Expenditure 142061 ndash 142061

Note (136135) (ndash) (136135)

i) The company has disclosed business segment as the Primary Segment

Segment Revenue includes other income pertaining to the relevant

42

C MCLEOD RUSSELS

No disclosure regarding segment reporting

D ROSSEL TEA LIMITED

No disclosure regarding segment reporting

Conclusion

Though there has been a recovery in the prices of tea and exports have also started looking

up with the emerging trends in the globalized economy markets can no longer be protected

The high cost of production is still a matter of concern for the Indian tea

industry The Indian tea industry would have to gear itself up to counter the new forces

unleashed by globalization

Budget 2010-11 gave the extension of concessional import duty on imported plantation

machinery like tea bagging machines till March 31 2011 will help the industry in value

adding and hiking exports in the long run The finance minister has also increased weighted

deduction on payments made to national laboratories research associations universities and

other institutions for scientific research from 125 to 175 This will help organisations like

43

the Tea Research Association to take up better research and development activities resulting

in production of better quality tea saplings

With cyclical crisis in the Indian tea industry erasing fast the current need was to shift from

a production oriented strategy and subsidy approach to market oriented strategic framework

with market economy outlook There is a need to liberate the mindset of the industry from its

earlier mindset of disposal of tea was changing to a new one --marketing of tea which

implied a shift from subsidy to capacity building approach

Multinational tea companies are increasingly contracting with larger agro-processing

firmswho were able to effectively coordinate deliveries and quality standards from small

farmers through effective supply chain management as in South India and Indonesia

Sharma said

Oversupply of tea and less demand has contributed to market imbalance in India Strategies

have to be devised to improve the demand side as so much effort has been put in improving

supply efficiency in the past

Only financially sound tea producers would perhaps be able to take the risk of delayed

marketing and avail any possible opportunity arising out of future upward price movement in

the marketWhile productivity and quality have received some attention cost reduction

value addition and risk manageent needed a new focus

References

Joonktollee Tea amp Industries Ltd Annual Report 08-09

Mcleod Russel India Ltd Annual Report 08-09

Rossell Tea Ltd Annual Report 08-09

Jay Shree tea amp Industries Ltd Annual Report 08-09

Foster G Financial Statement Analysis Second Edition Prentice Hall NJ 1986

wwwmoneylivemintcom

wwwbseindiacom

wwwmoneycontrolcom

44

Joonktolle Tea

amp Ltd

Jayshree Tea

Limited

McLeod russells Rossels Tea

Company

Year Mar-

09

Mar-

08

Mar-09 Mar-

08

Mar-09 Mar-08 Mar-09 Mar-

08

INCOME

Sales Turnover 100 100 100 100 100 100 100 100

Excise Duty 028 035 167 225 028 035 0 0

Other Income 347 798 395 84 409 937 398 2857

Stock Adjustments -092 -214 38 -067 055 -054 -003 -09

Total Income 10228 10549 10607 10548 10436 10847 10395 12767

EXPENDITURE

Raw Materials 2297 2075 4473 323 524 425 03 147

Power amp Fuel Cost 683 777 579 752 1071 1295 687 788

Other Mfgr Expenses 3102 337 2276 3076 3839 4463 3766 4024

Employee Cost 913 1174 745 928 1041 1285 1636 1143

Selling amp Admn

Expenses 979 114

727 1022 1185 1281 1087 1177

Miscellaneous

Expenses 533 335

841 531 201 182 803 295

PBDIT 172 1678 965 101 2574 1916 2387 5194

Interest amp Financial

Charges 977 825

384 342 1004 792 398 286

Depreciation 458 587 16 253 314 333 238 256

Profit Before Tax 286 266 421 414 1256 791 1751 4652

Tax 033 014 002 022 122 023 322 385

Fringe benefit tax 017 017 0 0 027 019 023 017

Deferred Tax 014 0 09 -026 036 029 196 306

Extra ordinary items -011 048 -083 26 -01 403 -113 1938

Profit after tax 233 186 412 158 1081 317 1323 2006

Analysis

35

The selling and administration expenses for McLeod Russel though they are lower than the

previous year

The net profit is the highest for Rossell Ltd as compared to others in the Industry The

depreciation charged is also highest for Joonktolle tea (458) followed by McLeod Russel

(314 of Net Sales) The relative tax expense is highest for Rossell Ltd for the 2008-09 and

lowest for Jay Shree Ltd

Trend Analysis

36

This is a time series analysis whereby a study is done in order to interpret what has changed

in the company over a year This can be done by comparing the balancesheet and profit and

loss statement of the company for two years

Balance Sheet

Joonktolle

Tea amp

Ltd

Jayshree

Tea Ltd

McLeod

Russel

Rossell

SOURCES OF FUNDS

Share Capital -0003 0047 0 16323

Reserves Total 0004 0022 5536 15342

Total Shareholders Funds 0003 0024 5264 15404

Secured Loans -0026 0066 25516 184828

Unsecured Loans -0689 -0153 -80 -53711

Total Debt -0219 0028 -9116 29735

Total Liabilities -0062 0026 108 17421

APPLICATION OF FUNDS

Gross Block 0004 0079 1827 2571

Less Accumulated

Depreciation 006 0067

7353

15418

Net Block -0037 0086 0432 1445

Capital Work in Progress 1618 0352 68659 0

Investments 024 0064 4948 189682

Current Assets Loans amp

Advances

Inventories 0021 0356 45268 -0465

Sundry Debtors 0188 1421 -9716 -375

Cash and Bank -0942 -0887 538125 107895

Loans and Advances -0217 0312 -454 59103

Less Current Liabilities and

Provisions

37

Current Liabilities 0291 174 27042 -12688

Provisions 0253 0128 9978 22819

Net Current Assets -0618 -0104 12676 338961

Miscellaneous Expenses not

written off

Total Assets -0062 0026 108 17421

Income Statement

38

39

Diana

Tea

Company

Jayshree

Tea

Limited

McLeod

Russel

Rossell

INCOME

Sales Turnover 24448 54197 2645 812

Excise Duty 0 14797 0866

Other Income -45887 -27502 -44747 -84934

Stock Adjustments -46774 -970652 -227247 -95833

Total Income 20655 55066 21657 -1197

EXPENDITURE

Raw Materials 3777 113514 55994 -78205

Power amp Fuel Cost 9333 18823 4534 -5728

Employee Cost 14549 14123 8775 1168

Other Manufacturing

Expenses -3235 23789

2458 5477

Selling and Administration

Expenses 697 9696

16982 -016

Miscellaneous Expenses 97938 144521 39816 194268

Operating Profit 27572 47447 69894 -50308

Interest 4728 73048 60378 50658

Depreciation -2941 -2453 1934 0735

Profit Before Tax 33766 5684 100675 -59313

Tax 200 -83333 563399 -9756

Fringe Benefit tax 73228 44444

Deferred Tax -626389 58824 -30675

Extraordinary Items -128571 -149157 -103103 -106305

Adjusted Net Profit 55556 301386 331232 -28679

Segment reporting

The objective of this segment is to establish principles for reporting financial information

about the different types of products and services an enterprise produces and the different

geographical areas in which it operates Such information helps users of financial statements

(a) Better understand the performance of the enterprise

(b) Better assess the risks and returns of the enterprise and

(c) Make more informed judgements about the enterprise as a whole

Many enterprises provide groups of products and services or operate in geographical areas

that are subject to differing rates of profitability opportunities for growth future prospects

and risks Information about different types of products and services of an enterprise and its

operations in different geographical areas - often called segment information - is relevant to

assessing the risks and returns of a diversified or multi-locational enterprise but may not be

determinable from the aggregated data Therefore reporting of segment information is

widely regarded as necessary for meeting the needs of users of financial statements

A JOONKTOLLEE TEA COMPANY LIMITED

No disclosure regarding segment reporting

B JAY SHREE TEA amp INDUSTRIES LIMITED

Based on the guiding principles given in Accounting Standards on ldquoSegment Reportingrdquo

(AS-17) as prescribed by the Companies Accounting Standard Rules 2006 the Companyrsquos

primary business segments are tea chemicals amp fertilisers business

40

Segment wise Information for the year

ended 31st March 2009

(A) PRIMARY

SEGMENT

(Rs in lsquo000)

1 Segment Revenue (Net

SalesIncome from each

segment)

31032009 31032008

Tea 2811082 2039941

Chemicals amp Fertilisers 1361419 659261

Infotech ndash 10305

Others 28160 24097

Less Inter-segmental Revenue 8695 6446

Total 4191966 2727158

2 Segment Results Profit

(Loss) before Tax amp Interest

a) Tea 423765 57395

b) Chemicals amp

Fertilisers

(31192) 58630

c) Infotech ndash (11109)

d) Others 10096 6081

Total 402669 110997

Less Interest (Net) 103751 75431

Add Unallocable Income net

of unallocable expenditure

(132310) 63887

Total Profit (Loss)

before Tax

166608 99453

3 Segment Assets (Including revaluation reserve)

amp Segment Liabilities

Assets Liabilities Assets Liabilities

a) Tea 1923575 312460 1605759 298639

b) Chemicals amp 677027 496214 335988 95623

41

Fertilisers

c) Infotech ndash ndash 48507 4844

d) Others 11939 6169 11112 5735

e) Unallocable 1565935 211987 1601683 118707

Total 4178476 1026830 3603049 523548

4 Capital expenditure including capital work-in-progress and depreciation (excluding on

revaluation reserve) for the year

Capital Exp

Depreciation

Capital Exp

Depreciation

a) Tea 109378 55558 117128 56138

b) Chemicals amp

Fertilisers

4117 5090 4580 4867

c) Infotech ndash ndash 1301 4909

d) Others 535 167 ndash 131

e) Unallocable 28031 7358 13126 6728

Total 142061 68173 136135 72773

(B) Secondary Segment Domestic Export Total

Segment Revenue 3502255 689711 4191966

(2185718) (541440) (2727158)

Segment Assets

4143913 34563 4178476

(3567672) (35377) (3603049)

Capital Expenditure 142061 ndash 142061

Note (136135) (ndash) (136135)

i) The company has disclosed business segment as the Primary Segment

Segment Revenue includes other income pertaining to the relevant

42

C MCLEOD RUSSELS

No disclosure regarding segment reporting

D ROSSEL TEA LIMITED

No disclosure regarding segment reporting

Conclusion

Though there has been a recovery in the prices of tea and exports have also started looking

up with the emerging trends in the globalized economy markets can no longer be protected

The high cost of production is still a matter of concern for the Indian tea

industry The Indian tea industry would have to gear itself up to counter the new forces

unleashed by globalization

Budget 2010-11 gave the extension of concessional import duty on imported plantation

machinery like tea bagging machines till March 31 2011 will help the industry in value

adding and hiking exports in the long run The finance minister has also increased weighted

deduction on payments made to national laboratories research associations universities and

other institutions for scientific research from 125 to 175 This will help organisations like

43

the Tea Research Association to take up better research and development activities resulting

in production of better quality tea saplings

With cyclical crisis in the Indian tea industry erasing fast the current need was to shift from

a production oriented strategy and subsidy approach to market oriented strategic framework

with market economy outlook There is a need to liberate the mindset of the industry from its

earlier mindset of disposal of tea was changing to a new one --marketing of tea which

implied a shift from subsidy to capacity building approach

Multinational tea companies are increasingly contracting with larger agro-processing

firmswho were able to effectively coordinate deliveries and quality standards from small

farmers through effective supply chain management as in South India and Indonesia

Sharma said

Oversupply of tea and less demand has contributed to market imbalance in India Strategies

have to be devised to improve the demand side as so much effort has been put in improving

supply efficiency in the past

Only financially sound tea producers would perhaps be able to take the risk of delayed

marketing and avail any possible opportunity arising out of future upward price movement in

the marketWhile productivity and quality have received some attention cost reduction

value addition and risk manageent needed a new focus

References

Joonktollee Tea amp Industries Ltd Annual Report 08-09

Mcleod Russel India Ltd Annual Report 08-09

Rossell Tea Ltd Annual Report 08-09

Jay Shree tea amp Industries Ltd Annual Report 08-09

Foster G Financial Statement Analysis Second Edition Prentice Hall NJ 1986

wwwmoneylivemintcom

wwwbseindiacom

wwwmoneycontrolcom

44

The selling and administration expenses for McLeod Russel though they are lower than the

previous year

The net profit is the highest for Rossell Ltd as compared to others in the Industry The

depreciation charged is also highest for Joonktolle tea (458) followed by McLeod Russel

(314 of Net Sales) The relative tax expense is highest for Rossell Ltd for the 2008-09 and

lowest for Jay Shree Ltd

Trend Analysis

36

This is a time series analysis whereby a study is done in order to interpret what has changed

in the company over a year This can be done by comparing the balancesheet and profit and

loss statement of the company for two years

Balance Sheet

Joonktolle

Tea amp

Ltd

Jayshree

Tea Ltd

McLeod

Russel

Rossell

SOURCES OF FUNDS

Share Capital -0003 0047 0 16323

Reserves Total 0004 0022 5536 15342

Total Shareholders Funds 0003 0024 5264 15404

Secured Loans -0026 0066 25516 184828

Unsecured Loans -0689 -0153 -80 -53711

Total Debt -0219 0028 -9116 29735

Total Liabilities -0062 0026 108 17421

APPLICATION OF FUNDS

Gross Block 0004 0079 1827 2571

Less Accumulated

Depreciation 006 0067

7353

15418

Net Block -0037 0086 0432 1445

Capital Work in Progress 1618 0352 68659 0

Investments 024 0064 4948 189682

Current Assets Loans amp

Advances

Inventories 0021 0356 45268 -0465

Sundry Debtors 0188 1421 -9716 -375

Cash and Bank -0942 -0887 538125 107895

Loans and Advances -0217 0312 -454 59103

Less Current Liabilities and

Provisions

37

Current Liabilities 0291 174 27042 -12688

Provisions 0253 0128 9978 22819

Net Current Assets -0618 -0104 12676 338961

Miscellaneous Expenses not

written off

Total Assets -0062 0026 108 17421

Income Statement

38

39

Diana

Tea

Company

Jayshree

Tea

Limited

McLeod

Russel

Rossell

INCOME

Sales Turnover 24448 54197 2645 812

Excise Duty 0 14797 0866

Other Income -45887 -27502 -44747 -84934

Stock Adjustments -46774 -970652 -227247 -95833

Total Income 20655 55066 21657 -1197

EXPENDITURE

Raw Materials 3777 113514 55994 -78205

Power amp Fuel Cost 9333 18823 4534 -5728

Employee Cost 14549 14123 8775 1168

Other Manufacturing

Expenses -3235 23789

2458 5477

Selling and Administration

Expenses 697 9696

16982 -016

Miscellaneous Expenses 97938 144521 39816 194268

Operating Profit 27572 47447 69894 -50308

Interest 4728 73048 60378 50658

Depreciation -2941 -2453 1934 0735

Profit Before Tax 33766 5684 100675 -59313

Tax 200 -83333 563399 -9756

Fringe Benefit tax 73228 44444

Deferred Tax -626389 58824 -30675

Extraordinary Items -128571 -149157 -103103 -106305

Adjusted Net Profit 55556 301386 331232 -28679

Segment reporting

The objective of this segment is to establish principles for reporting financial information

about the different types of products and services an enterprise produces and the different

geographical areas in which it operates Such information helps users of financial statements

(a) Better understand the performance of the enterprise

(b) Better assess the risks and returns of the enterprise and

(c) Make more informed judgements about the enterprise as a whole

Many enterprises provide groups of products and services or operate in geographical areas

that are subject to differing rates of profitability opportunities for growth future prospects

and risks Information about different types of products and services of an enterprise and its

operations in different geographical areas - often called segment information - is relevant to

assessing the risks and returns of a diversified or multi-locational enterprise but may not be

determinable from the aggregated data Therefore reporting of segment information is

widely regarded as necessary for meeting the needs of users of financial statements

A JOONKTOLLEE TEA COMPANY LIMITED

No disclosure regarding segment reporting

B JAY SHREE TEA amp INDUSTRIES LIMITED

Based on the guiding principles given in Accounting Standards on ldquoSegment Reportingrdquo

(AS-17) as prescribed by the Companies Accounting Standard Rules 2006 the Companyrsquos

primary business segments are tea chemicals amp fertilisers business

40

Segment wise Information for the year

ended 31st March 2009

(A) PRIMARY

SEGMENT

(Rs in lsquo000)

1 Segment Revenue (Net

SalesIncome from each

segment)

31032009 31032008

Tea 2811082 2039941

Chemicals amp Fertilisers 1361419 659261

Infotech ndash 10305

Others 28160 24097

Less Inter-segmental Revenue 8695 6446

Total 4191966 2727158

2 Segment Results Profit

(Loss) before Tax amp Interest

a) Tea 423765 57395

b) Chemicals amp

Fertilisers

(31192) 58630

c) Infotech ndash (11109)

d) Others 10096 6081

Total 402669 110997

Less Interest (Net) 103751 75431

Add Unallocable Income net

of unallocable expenditure

(132310) 63887

Total Profit (Loss)

before Tax

166608 99453

3 Segment Assets (Including revaluation reserve)

amp Segment Liabilities

Assets Liabilities Assets Liabilities

a) Tea 1923575 312460 1605759 298639

b) Chemicals amp 677027 496214 335988 95623

41

Fertilisers

c) Infotech ndash ndash 48507 4844

d) Others 11939 6169 11112 5735

e) Unallocable 1565935 211987 1601683 118707

Total 4178476 1026830 3603049 523548

4 Capital expenditure including capital work-in-progress and depreciation (excluding on

revaluation reserve) for the year

Capital Exp

Depreciation

Capital Exp

Depreciation

a) Tea 109378 55558 117128 56138

b) Chemicals amp

Fertilisers

4117 5090 4580 4867

c) Infotech ndash ndash 1301 4909

d) Others 535 167 ndash 131

e) Unallocable 28031 7358 13126 6728

Total 142061 68173 136135 72773

(B) Secondary Segment Domestic Export Total

Segment Revenue 3502255 689711 4191966

(2185718) (541440) (2727158)

Segment Assets

4143913 34563 4178476

(3567672) (35377) (3603049)

Capital Expenditure 142061 ndash 142061

Note (136135) (ndash) (136135)

i) The company has disclosed business segment as the Primary Segment

Segment Revenue includes other income pertaining to the relevant

42

C MCLEOD RUSSELS

No disclosure regarding segment reporting

D ROSSEL TEA LIMITED

No disclosure regarding segment reporting

Conclusion

Though there has been a recovery in the prices of tea and exports have also started looking

up with the emerging trends in the globalized economy markets can no longer be protected

The high cost of production is still a matter of concern for the Indian tea

industry The Indian tea industry would have to gear itself up to counter the new forces

unleashed by globalization

Budget 2010-11 gave the extension of concessional import duty on imported plantation

machinery like tea bagging machines till March 31 2011 will help the industry in value

adding and hiking exports in the long run The finance minister has also increased weighted

deduction on payments made to national laboratories research associations universities and

other institutions for scientific research from 125 to 175 This will help organisations like

43

the Tea Research Association to take up better research and development activities resulting

in production of better quality tea saplings

With cyclical crisis in the Indian tea industry erasing fast the current need was to shift from

a production oriented strategy and subsidy approach to market oriented strategic framework

with market economy outlook There is a need to liberate the mindset of the industry from its

earlier mindset of disposal of tea was changing to a new one --marketing of tea which

implied a shift from subsidy to capacity building approach

Multinational tea companies are increasingly contracting with larger agro-processing

firmswho were able to effectively coordinate deliveries and quality standards from small

farmers through effective supply chain management as in South India and Indonesia

Sharma said

Oversupply of tea and less demand has contributed to market imbalance in India Strategies

have to be devised to improve the demand side as so much effort has been put in improving

supply efficiency in the past

Only financially sound tea producers would perhaps be able to take the risk of delayed

marketing and avail any possible opportunity arising out of future upward price movement in

the marketWhile productivity and quality have received some attention cost reduction

value addition and risk manageent needed a new focus

References

Joonktollee Tea amp Industries Ltd Annual Report 08-09

Mcleod Russel India Ltd Annual Report 08-09

Rossell Tea Ltd Annual Report 08-09

Jay Shree tea amp Industries Ltd Annual Report 08-09

Foster G Financial Statement Analysis Second Edition Prentice Hall NJ 1986

wwwmoneylivemintcom

wwwbseindiacom

wwwmoneycontrolcom

44

This is a time series analysis whereby a study is done in order to interpret what has changed

in the company over a year This can be done by comparing the balancesheet and profit and

loss statement of the company for two years

Balance Sheet

Joonktolle

Tea amp

Ltd

Jayshree

Tea Ltd

McLeod

Russel

Rossell

SOURCES OF FUNDS

Share Capital -0003 0047 0 16323

Reserves Total 0004 0022 5536 15342

Total Shareholders Funds 0003 0024 5264 15404

Secured Loans -0026 0066 25516 184828

Unsecured Loans -0689 -0153 -80 -53711

Total Debt -0219 0028 -9116 29735

Total Liabilities -0062 0026 108 17421

APPLICATION OF FUNDS

Gross Block 0004 0079 1827 2571

Less Accumulated

Depreciation 006 0067

7353

15418

Net Block -0037 0086 0432 1445

Capital Work in Progress 1618 0352 68659 0

Investments 024 0064 4948 189682

Current Assets Loans amp

Advances

Inventories 0021 0356 45268 -0465

Sundry Debtors 0188 1421 -9716 -375

Cash and Bank -0942 -0887 538125 107895

Loans and Advances -0217 0312 -454 59103

Less Current Liabilities and

Provisions

37

Current Liabilities 0291 174 27042 -12688

Provisions 0253 0128 9978 22819

Net Current Assets -0618 -0104 12676 338961

Miscellaneous Expenses not

written off

Total Assets -0062 0026 108 17421

Income Statement

38

39

Diana

Tea

Company

Jayshree

Tea

Limited

McLeod

Russel

Rossell

INCOME

Sales Turnover 24448 54197 2645 812

Excise Duty 0 14797 0866

Other Income -45887 -27502 -44747 -84934

Stock Adjustments -46774 -970652 -227247 -95833

Total Income 20655 55066 21657 -1197

EXPENDITURE

Raw Materials 3777 113514 55994 -78205

Power amp Fuel Cost 9333 18823 4534 -5728

Employee Cost 14549 14123 8775 1168

Other Manufacturing

Expenses -3235 23789

2458 5477

Selling and Administration

Expenses 697 9696

16982 -016

Miscellaneous Expenses 97938 144521 39816 194268

Operating Profit 27572 47447 69894 -50308

Interest 4728 73048 60378 50658

Depreciation -2941 -2453 1934 0735

Profit Before Tax 33766 5684 100675 -59313

Tax 200 -83333 563399 -9756

Fringe Benefit tax 73228 44444

Deferred Tax -626389 58824 -30675

Extraordinary Items -128571 -149157 -103103 -106305

Adjusted Net Profit 55556 301386 331232 -28679

Segment reporting

The objective of this segment is to establish principles for reporting financial information

about the different types of products and services an enterprise produces and the different

geographical areas in which it operates Such information helps users of financial statements

(a) Better understand the performance of the enterprise

(b) Better assess the risks and returns of the enterprise and

(c) Make more informed judgements about the enterprise as a whole

Many enterprises provide groups of products and services or operate in geographical areas

that are subject to differing rates of profitability opportunities for growth future prospects

and risks Information about different types of products and services of an enterprise and its

operations in different geographical areas - often called segment information - is relevant to

assessing the risks and returns of a diversified or multi-locational enterprise but may not be

determinable from the aggregated data Therefore reporting of segment information is

widely regarded as necessary for meeting the needs of users of financial statements

A JOONKTOLLEE TEA COMPANY LIMITED

No disclosure regarding segment reporting

B JAY SHREE TEA amp INDUSTRIES LIMITED

Based on the guiding principles given in Accounting Standards on ldquoSegment Reportingrdquo

(AS-17) as prescribed by the Companies Accounting Standard Rules 2006 the Companyrsquos

primary business segments are tea chemicals amp fertilisers business

40

Segment wise Information for the year

ended 31st March 2009

(A) PRIMARY

SEGMENT

(Rs in lsquo000)

1 Segment Revenue (Net

SalesIncome from each

segment)

31032009 31032008

Tea 2811082 2039941

Chemicals amp Fertilisers 1361419 659261

Infotech ndash 10305

Others 28160 24097

Less Inter-segmental Revenue 8695 6446

Total 4191966 2727158

2 Segment Results Profit

(Loss) before Tax amp Interest

a) Tea 423765 57395

b) Chemicals amp

Fertilisers

(31192) 58630

c) Infotech ndash (11109)

d) Others 10096 6081

Total 402669 110997

Less Interest (Net) 103751 75431

Add Unallocable Income net

of unallocable expenditure

(132310) 63887

Total Profit (Loss)

before Tax

166608 99453

3 Segment Assets (Including revaluation reserve)

amp Segment Liabilities

Assets Liabilities Assets Liabilities

a) Tea 1923575 312460 1605759 298639

b) Chemicals amp 677027 496214 335988 95623

41

Fertilisers

c) Infotech ndash ndash 48507 4844

d) Others 11939 6169 11112 5735

e) Unallocable 1565935 211987 1601683 118707

Total 4178476 1026830 3603049 523548

4 Capital expenditure including capital work-in-progress and depreciation (excluding on

revaluation reserve) for the year

Capital Exp

Depreciation

Capital Exp

Depreciation

a) Tea 109378 55558 117128 56138

b) Chemicals amp

Fertilisers

4117 5090 4580 4867

c) Infotech ndash ndash 1301 4909

d) Others 535 167 ndash 131

e) Unallocable 28031 7358 13126 6728

Total 142061 68173 136135 72773

(B) Secondary Segment Domestic Export Total

Segment Revenue 3502255 689711 4191966

(2185718) (541440) (2727158)

Segment Assets

4143913 34563 4178476

(3567672) (35377) (3603049)

Capital Expenditure 142061 ndash 142061

Note (136135) (ndash) (136135)

i) The company has disclosed business segment as the Primary Segment

Segment Revenue includes other income pertaining to the relevant

42

C MCLEOD RUSSELS

No disclosure regarding segment reporting

D ROSSEL TEA LIMITED

No disclosure regarding segment reporting

Conclusion

Though there has been a recovery in the prices of tea and exports have also started looking

up with the emerging trends in the globalized economy markets can no longer be protected

The high cost of production is still a matter of concern for the Indian tea

industry The Indian tea industry would have to gear itself up to counter the new forces

unleashed by globalization

Budget 2010-11 gave the extension of concessional import duty on imported plantation

machinery like tea bagging machines till March 31 2011 will help the industry in value

adding and hiking exports in the long run The finance minister has also increased weighted

deduction on payments made to national laboratories research associations universities and

other institutions for scientific research from 125 to 175 This will help organisations like

43

the Tea Research Association to take up better research and development activities resulting

in production of better quality tea saplings

With cyclical crisis in the Indian tea industry erasing fast the current need was to shift from

a production oriented strategy and subsidy approach to market oriented strategic framework

with market economy outlook There is a need to liberate the mindset of the industry from its

earlier mindset of disposal of tea was changing to a new one --marketing of tea which

implied a shift from subsidy to capacity building approach

Multinational tea companies are increasingly contracting with larger agro-processing

firmswho were able to effectively coordinate deliveries and quality standards from small

farmers through effective supply chain management as in South India and Indonesia

Sharma said

Oversupply of tea and less demand has contributed to market imbalance in India Strategies

have to be devised to improve the demand side as so much effort has been put in improving

supply efficiency in the past

Only financially sound tea producers would perhaps be able to take the risk of delayed

marketing and avail any possible opportunity arising out of future upward price movement in

the marketWhile productivity and quality have received some attention cost reduction

value addition and risk manageent needed a new focus

References

Joonktollee Tea amp Industries Ltd Annual Report 08-09

Mcleod Russel India Ltd Annual Report 08-09

Rossell Tea Ltd Annual Report 08-09

Jay Shree tea amp Industries Ltd Annual Report 08-09

Foster G Financial Statement Analysis Second Edition Prentice Hall NJ 1986

wwwmoneylivemintcom

wwwbseindiacom

wwwmoneycontrolcom

44

Current Liabilities 0291 174 27042 -12688

Provisions 0253 0128 9978 22819

Net Current Assets -0618 -0104 12676 338961

Miscellaneous Expenses not

written off

Total Assets -0062 0026 108 17421

Income Statement

38

39

Diana

Tea

Company

Jayshree

Tea

Limited

McLeod

Russel

Rossell

INCOME

Sales Turnover 24448 54197 2645 812

Excise Duty 0 14797 0866

Other Income -45887 -27502 -44747 -84934

Stock Adjustments -46774 -970652 -227247 -95833

Total Income 20655 55066 21657 -1197

EXPENDITURE

Raw Materials 3777 113514 55994 -78205

Power amp Fuel Cost 9333 18823 4534 -5728

Employee Cost 14549 14123 8775 1168

Other Manufacturing

Expenses -3235 23789

2458 5477

Selling and Administration

Expenses 697 9696

16982 -016

Miscellaneous Expenses 97938 144521 39816 194268

Operating Profit 27572 47447 69894 -50308

Interest 4728 73048 60378 50658

Depreciation -2941 -2453 1934 0735

Profit Before Tax 33766 5684 100675 -59313

Tax 200 -83333 563399 -9756

Fringe Benefit tax 73228 44444

Deferred Tax -626389 58824 -30675

Extraordinary Items -128571 -149157 -103103 -106305

Adjusted Net Profit 55556 301386 331232 -28679

Segment reporting

The objective of this segment is to establish principles for reporting financial information

about the different types of products and services an enterprise produces and the different

geographical areas in which it operates Such information helps users of financial statements

(a) Better understand the performance of the enterprise

(b) Better assess the risks and returns of the enterprise and

(c) Make more informed judgements about the enterprise as a whole

Many enterprises provide groups of products and services or operate in geographical areas

that are subject to differing rates of profitability opportunities for growth future prospects

and risks Information about different types of products and services of an enterprise and its

operations in different geographical areas - often called segment information - is relevant to

assessing the risks and returns of a diversified or multi-locational enterprise but may not be

determinable from the aggregated data Therefore reporting of segment information is

widely regarded as necessary for meeting the needs of users of financial statements

A JOONKTOLLEE TEA COMPANY LIMITED

No disclosure regarding segment reporting

B JAY SHREE TEA amp INDUSTRIES LIMITED

Based on the guiding principles given in Accounting Standards on ldquoSegment Reportingrdquo

(AS-17) as prescribed by the Companies Accounting Standard Rules 2006 the Companyrsquos

primary business segments are tea chemicals amp fertilisers business

40

Segment wise Information for the year

ended 31st March 2009

(A) PRIMARY

SEGMENT

(Rs in lsquo000)

1 Segment Revenue (Net

SalesIncome from each

segment)

31032009 31032008

Tea 2811082 2039941

Chemicals amp Fertilisers 1361419 659261

Infotech ndash 10305

Others 28160 24097

Less Inter-segmental Revenue 8695 6446

Total 4191966 2727158

2 Segment Results Profit

(Loss) before Tax amp Interest

a) Tea 423765 57395

b) Chemicals amp

Fertilisers

(31192) 58630

c) Infotech ndash (11109)

d) Others 10096 6081

Total 402669 110997

Less Interest (Net) 103751 75431

Add Unallocable Income net

of unallocable expenditure

(132310) 63887

Total Profit (Loss)

before Tax

166608 99453

3 Segment Assets (Including revaluation reserve)

amp Segment Liabilities

Assets Liabilities Assets Liabilities

a) Tea 1923575 312460 1605759 298639

b) Chemicals amp 677027 496214 335988 95623

41

Fertilisers

c) Infotech ndash ndash 48507 4844

d) Others 11939 6169 11112 5735

e) Unallocable 1565935 211987 1601683 118707

Total 4178476 1026830 3603049 523548

4 Capital expenditure including capital work-in-progress and depreciation (excluding on

revaluation reserve) for the year

Capital Exp

Depreciation

Capital Exp

Depreciation

a) Tea 109378 55558 117128 56138

b) Chemicals amp

Fertilisers

4117 5090 4580 4867

c) Infotech ndash ndash 1301 4909

d) Others 535 167 ndash 131

e) Unallocable 28031 7358 13126 6728

Total 142061 68173 136135 72773

(B) Secondary Segment Domestic Export Total

Segment Revenue 3502255 689711 4191966

(2185718) (541440) (2727158)

Segment Assets

4143913 34563 4178476

(3567672) (35377) (3603049)

Capital Expenditure 142061 ndash 142061

Note (136135) (ndash) (136135)

i) The company has disclosed business segment as the Primary Segment

Segment Revenue includes other income pertaining to the relevant

42

C MCLEOD RUSSELS

No disclosure regarding segment reporting

D ROSSEL TEA LIMITED

No disclosure regarding segment reporting

Conclusion

Though there has been a recovery in the prices of tea and exports have also started looking

up with the emerging trends in the globalized economy markets can no longer be protected

The high cost of production is still a matter of concern for the Indian tea

industry The Indian tea industry would have to gear itself up to counter the new forces

unleashed by globalization

Budget 2010-11 gave the extension of concessional import duty on imported plantation

machinery like tea bagging machines till March 31 2011 will help the industry in value

adding and hiking exports in the long run The finance minister has also increased weighted

deduction on payments made to national laboratories research associations universities and

other institutions for scientific research from 125 to 175 This will help organisations like

43

the Tea Research Association to take up better research and development activities resulting

in production of better quality tea saplings

With cyclical crisis in the Indian tea industry erasing fast the current need was to shift from

a production oriented strategy and subsidy approach to market oriented strategic framework

with market economy outlook There is a need to liberate the mindset of the industry from its

earlier mindset of disposal of tea was changing to a new one --marketing of tea which

implied a shift from subsidy to capacity building approach

Multinational tea companies are increasingly contracting with larger agro-processing

firmswho were able to effectively coordinate deliveries and quality standards from small

farmers through effective supply chain management as in South India and Indonesia

Sharma said

Oversupply of tea and less demand has contributed to market imbalance in India Strategies

have to be devised to improve the demand side as so much effort has been put in improving

supply efficiency in the past

Only financially sound tea producers would perhaps be able to take the risk of delayed

marketing and avail any possible opportunity arising out of future upward price movement in

the marketWhile productivity and quality have received some attention cost reduction

value addition and risk manageent needed a new focus

References

Joonktollee Tea amp Industries Ltd Annual Report 08-09

Mcleod Russel India Ltd Annual Report 08-09

Rossell Tea Ltd Annual Report 08-09

Jay Shree tea amp Industries Ltd Annual Report 08-09

Foster G Financial Statement Analysis Second Edition Prentice Hall NJ 1986

wwwmoneylivemintcom

wwwbseindiacom

wwwmoneycontrolcom

44

39

Diana

Tea

Company

Jayshree

Tea

Limited

McLeod

Russel

Rossell

INCOME

Sales Turnover 24448 54197 2645 812

Excise Duty 0 14797 0866

Other Income -45887 -27502 -44747 -84934

Stock Adjustments -46774 -970652 -227247 -95833

Total Income 20655 55066 21657 -1197

EXPENDITURE

Raw Materials 3777 113514 55994 -78205

Power amp Fuel Cost 9333 18823 4534 -5728

Employee Cost 14549 14123 8775 1168

Other Manufacturing

Expenses -3235 23789

2458 5477

Selling and Administration

Expenses 697 9696

16982 -016

Miscellaneous Expenses 97938 144521 39816 194268

Operating Profit 27572 47447 69894 -50308

Interest 4728 73048 60378 50658

Depreciation -2941 -2453 1934 0735

Profit Before Tax 33766 5684 100675 -59313

Tax 200 -83333 563399 -9756

Fringe Benefit tax 73228 44444

Deferred Tax -626389 58824 -30675

Extraordinary Items -128571 -149157 -103103 -106305

Adjusted Net Profit 55556 301386 331232 -28679

Segment reporting

The objective of this segment is to establish principles for reporting financial information

about the different types of products and services an enterprise produces and the different

geographical areas in which it operates Such information helps users of financial statements

(a) Better understand the performance of the enterprise

(b) Better assess the risks and returns of the enterprise and

(c) Make more informed judgements about the enterprise as a whole

Many enterprises provide groups of products and services or operate in geographical areas

that are subject to differing rates of profitability opportunities for growth future prospects

and risks Information about different types of products and services of an enterprise and its

operations in different geographical areas - often called segment information - is relevant to

assessing the risks and returns of a diversified or multi-locational enterprise but may not be

determinable from the aggregated data Therefore reporting of segment information is

widely regarded as necessary for meeting the needs of users of financial statements

A JOONKTOLLEE TEA COMPANY LIMITED

No disclosure regarding segment reporting

B JAY SHREE TEA amp INDUSTRIES LIMITED

Based on the guiding principles given in Accounting Standards on ldquoSegment Reportingrdquo

(AS-17) as prescribed by the Companies Accounting Standard Rules 2006 the Companyrsquos

primary business segments are tea chemicals amp fertilisers business

40

Segment wise Information for the year

ended 31st March 2009

(A) PRIMARY

SEGMENT

(Rs in lsquo000)

1 Segment Revenue (Net

SalesIncome from each

segment)

31032009 31032008

Tea 2811082 2039941

Chemicals amp Fertilisers 1361419 659261

Infotech ndash 10305

Others 28160 24097

Less Inter-segmental Revenue 8695 6446

Total 4191966 2727158

2 Segment Results Profit

(Loss) before Tax amp Interest

a) Tea 423765 57395

b) Chemicals amp

Fertilisers

(31192) 58630

c) Infotech ndash (11109)

d) Others 10096 6081

Total 402669 110997

Less Interest (Net) 103751 75431

Add Unallocable Income net

of unallocable expenditure

(132310) 63887

Total Profit (Loss)

before Tax

166608 99453

3 Segment Assets (Including revaluation reserve)

amp Segment Liabilities

Assets Liabilities Assets Liabilities

a) Tea 1923575 312460 1605759 298639

b) Chemicals amp 677027 496214 335988 95623

41

Fertilisers

c) Infotech ndash ndash 48507 4844

d) Others 11939 6169 11112 5735

e) Unallocable 1565935 211987 1601683 118707

Total 4178476 1026830 3603049 523548

4 Capital expenditure including capital work-in-progress and depreciation (excluding on

revaluation reserve) for the year

Capital Exp

Depreciation

Capital Exp

Depreciation

a) Tea 109378 55558 117128 56138

b) Chemicals amp

Fertilisers

4117 5090 4580 4867

c) Infotech ndash ndash 1301 4909

d) Others 535 167 ndash 131

e) Unallocable 28031 7358 13126 6728

Total 142061 68173 136135 72773

(B) Secondary Segment Domestic Export Total

Segment Revenue 3502255 689711 4191966

(2185718) (541440) (2727158)

Segment Assets

4143913 34563 4178476

(3567672) (35377) (3603049)

Capital Expenditure 142061 ndash 142061

Note (136135) (ndash) (136135)

i) The company has disclosed business segment as the Primary Segment

Segment Revenue includes other income pertaining to the relevant

42

C MCLEOD RUSSELS

No disclosure regarding segment reporting

D ROSSEL TEA LIMITED

No disclosure regarding segment reporting

Conclusion

Though there has been a recovery in the prices of tea and exports have also started looking

up with the emerging trends in the globalized economy markets can no longer be protected

The high cost of production is still a matter of concern for the Indian tea

industry The Indian tea industry would have to gear itself up to counter the new forces

unleashed by globalization

Budget 2010-11 gave the extension of concessional import duty on imported plantation

machinery like tea bagging machines till March 31 2011 will help the industry in value

adding and hiking exports in the long run The finance minister has also increased weighted

deduction on payments made to national laboratories research associations universities and

other institutions for scientific research from 125 to 175 This will help organisations like

43

the Tea Research Association to take up better research and development activities resulting

in production of better quality tea saplings

With cyclical crisis in the Indian tea industry erasing fast the current need was to shift from

a production oriented strategy and subsidy approach to market oriented strategic framework

with market economy outlook There is a need to liberate the mindset of the industry from its

earlier mindset of disposal of tea was changing to a new one --marketing of tea which

implied a shift from subsidy to capacity building approach

Multinational tea companies are increasingly contracting with larger agro-processing

firmswho were able to effectively coordinate deliveries and quality standards from small

farmers through effective supply chain management as in South India and Indonesia

Sharma said

Oversupply of tea and less demand has contributed to market imbalance in India Strategies

have to be devised to improve the demand side as so much effort has been put in improving

supply efficiency in the past

Only financially sound tea producers would perhaps be able to take the risk of delayed

marketing and avail any possible opportunity arising out of future upward price movement in

the marketWhile productivity and quality have received some attention cost reduction

value addition and risk manageent needed a new focus

References

Joonktollee Tea amp Industries Ltd Annual Report 08-09

Mcleod Russel India Ltd Annual Report 08-09

Rossell Tea Ltd Annual Report 08-09

Jay Shree tea amp Industries Ltd Annual Report 08-09

Foster G Financial Statement Analysis Second Edition Prentice Hall NJ 1986

wwwmoneylivemintcom

wwwbseindiacom

wwwmoneycontrolcom

44

Segment reporting

The objective of this segment is to establish principles for reporting financial information

about the different types of products and services an enterprise produces and the different

geographical areas in which it operates Such information helps users of financial statements

(a) Better understand the performance of the enterprise

(b) Better assess the risks and returns of the enterprise and

(c) Make more informed judgements about the enterprise as a whole

Many enterprises provide groups of products and services or operate in geographical areas

that are subject to differing rates of profitability opportunities for growth future prospects

and risks Information about different types of products and services of an enterprise and its

operations in different geographical areas - often called segment information - is relevant to

assessing the risks and returns of a diversified or multi-locational enterprise but may not be

determinable from the aggregated data Therefore reporting of segment information is

widely regarded as necessary for meeting the needs of users of financial statements

A JOONKTOLLEE TEA COMPANY LIMITED

No disclosure regarding segment reporting

B JAY SHREE TEA amp INDUSTRIES LIMITED

Based on the guiding principles given in Accounting Standards on ldquoSegment Reportingrdquo

(AS-17) as prescribed by the Companies Accounting Standard Rules 2006 the Companyrsquos

primary business segments are tea chemicals amp fertilisers business

40

Segment wise Information for the year

ended 31st March 2009

(A) PRIMARY

SEGMENT

(Rs in lsquo000)

1 Segment Revenue (Net

SalesIncome from each

segment)

31032009 31032008

Tea 2811082 2039941

Chemicals amp Fertilisers 1361419 659261

Infotech ndash 10305

Others 28160 24097

Less Inter-segmental Revenue 8695 6446

Total 4191966 2727158

2 Segment Results Profit

(Loss) before Tax amp Interest

a) Tea 423765 57395

b) Chemicals amp

Fertilisers

(31192) 58630

c) Infotech ndash (11109)

d) Others 10096 6081

Total 402669 110997

Less Interest (Net) 103751 75431

Add Unallocable Income net

of unallocable expenditure

(132310) 63887

Total Profit (Loss)

before Tax

166608 99453

3 Segment Assets (Including revaluation reserve)

amp Segment Liabilities

Assets Liabilities Assets Liabilities

a) Tea 1923575 312460 1605759 298639

b) Chemicals amp 677027 496214 335988 95623

41

Fertilisers

c) Infotech ndash ndash 48507 4844

d) Others 11939 6169 11112 5735

e) Unallocable 1565935 211987 1601683 118707

Total 4178476 1026830 3603049 523548

4 Capital expenditure including capital work-in-progress and depreciation (excluding on

revaluation reserve) for the year

Capital Exp

Depreciation

Capital Exp

Depreciation

a) Tea 109378 55558 117128 56138

b) Chemicals amp

Fertilisers

4117 5090 4580 4867

c) Infotech ndash ndash 1301 4909

d) Others 535 167 ndash 131

e) Unallocable 28031 7358 13126 6728

Total 142061 68173 136135 72773

(B) Secondary Segment Domestic Export Total

Segment Revenue 3502255 689711 4191966

(2185718) (541440) (2727158)

Segment Assets

4143913 34563 4178476

(3567672) (35377) (3603049)

Capital Expenditure 142061 ndash 142061

Note (136135) (ndash) (136135)

i) The company has disclosed business segment as the Primary Segment

Segment Revenue includes other income pertaining to the relevant

42

C MCLEOD RUSSELS

No disclosure regarding segment reporting

D ROSSEL TEA LIMITED

No disclosure regarding segment reporting

Conclusion

Though there has been a recovery in the prices of tea and exports have also started looking

up with the emerging trends in the globalized economy markets can no longer be protected

The high cost of production is still a matter of concern for the Indian tea

industry The Indian tea industry would have to gear itself up to counter the new forces

unleashed by globalization

Budget 2010-11 gave the extension of concessional import duty on imported plantation

machinery like tea bagging machines till March 31 2011 will help the industry in value

adding and hiking exports in the long run The finance minister has also increased weighted

deduction on payments made to national laboratories research associations universities and

other institutions for scientific research from 125 to 175 This will help organisations like

43

the Tea Research Association to take up better research and development activities resulting

in production of better quality tea saplings

With cyclical crisis in the Indian tea industry erasing fast the current need was to shift from

a production oriented strategy and subsidy approach to market oriented strategic framework

with market economy outlook There is a need to liberate the mindset of the industry from its

earlier mindset of disposal of tea was changing to a new one --marketing of tea which

implied a shift from subsidy to capacity building approach

Multinational tea companies are increasingly contracting with larger agro-processing

firmswho were able to effectively coordinate deliveries and quality standards from small

farmers through effective supply chain management as in South India and Indonesia

Sharma said

Oversupply of tea and less demand has contributed to market imbalance in India Strategies

have to be devised to improve the demand side as so much effort has been put in improving

supply efficiency in the past

Only financially sound tea producers would perhaps be able to take the risk of delayed

marketing and avail any possible opportunity arising out of future upward price movement in

the marketWhile productivity and quality have received some attention cost reduction

value addition and risk manageent needed a new focus

References

Joonktollee Tea amp Industries Ltd Annual Report 08-09

Mcleod Russel India Ltd Annual Report 08-09

Rossell Tea Ltd Annual Report 08-09

Jay Shree tea amp Industries Ltd Annual Report 08-09

Foster G Financial Statement Analysis Second Edition Prentice Hall NJ 1986

wwwmoneylivemintcom

wwwbseindiacom

wwwmoneycontrolcom

44

Segment wise Information for the year

ended 31st March 2009

(A) PRIMARY

SEGMENT

(Rs in lsquo000)

1 Segment Revenue (Net

SalesIncome from each

segment)

31032009 31032008

Tea 2811082 2039941

Chemicals amp Fertilisers 1361419 659261

Infotech ndash 10305

Others 28160 24097

Less Inter-segmental Revenue 8695 6446

Total 4191966 2727158

2 Segment Results Profit

(Loss) before Tax amp Interest

a) Tea 423765 57395

b) Chemicals amp

Fertilisers

(31192) 58630

c) Infotech ndash (11109)

d) Others 10096 6081

Total 402669 110997

Less Interest (Net) 103751 75431

Add Unallocable Income net

of unallocable expenditure

(132310) 63887

Total Profit (Loss)

before Tax

166608 99453

3 Segment Assets (Including revaluation reserve)

amp Segment Liabilities

Assets Liabilities Assets Liabilities

a) Tea 1923575 312460 1605759 298639

b) Chemicals amp 677027 496214 335988 95623

41

Fertilisers

c) Infotech ndash ndash 48507 4844

d) Others 11939 6169 11112 5735

e) Unallocable 1565935 211987 1601683 118707

Total 4178476 1026830 3603049 523548

4 Capital expenditure including capital work-in-progress and depreciation (excluding on

revaluation reserve) for the year

Capital Exp

Depreciation

Capital Exp

Depreciation

a) Tea 109378 55558 117128 56138

b) Chemicals amp

Fertilisers

4117 5090 4580 4867

c) Infotech ndash ndash 1301 4909

d) Others 535 167 ndash 131

e) Unallocable 28031 7358 13126 6728

Total 142061 68173 136135 72773

(B) Secondary Segment Domestic Export Total

Segment Revenue 3502255 689711 4191966

(2185718) (541440) (2727158)

Segment Assets

4143913 34563 4178476

(3567672) (35377) (3603049)

Capital Expenditure 142061 ndash 142061

Note (136135) (ndash) (136135)

i) The company has disclosed business segment as the Primary Segment

Segment Revenue includes other income pertaining to the relevant

42

C MCLEOD RUSSELS

No disclosure regarding segment reporting

D ROSSEL TEA LIMITED

No disclosure regarding segment reporting

Conclusion

Though there has been a recovery in the prices of tea and exports have also started looking

up with the emerging trends in the globalized economy markets can no longer be protected

The high cost of production is still a matter of concern for the Indian tea

industry The Indian tea industry would have to gear itself up to counter the new forces

unleashed by globalization

Budget 2010-11 gave the extension of concessional import duty on imported plantation

machinery like tea bagging machines till March 31 2011 will help the industry in value

adding and hiking exports in the long run The finance minister has also increased weighted

deduction on payments made to national laboratories research associations universities and

other institutions for scientific research from 125 to 175 This will help organisations like

43

the Tea Research Association to take up better research and development activities resulting

in production of better quality tea saplings

With cyclical crisis in the Indian tea industry erasing fast the current need was to shift from

a production oriented strategy and subsidy approach to market oriented strategic framework

with market economy outlook There is a need to liberate the mindset of the industry from its

earlier mindset of disposal of tea was changing to a new one --marketing of tea which

implied a shift from subsidy to capacity building approach

Multinational tea companies are increasingly contracting with larger agro-processing

firmswho were able to effectively coordinate deliveries and quality standards from small

farmers through effective supply chain management as in South India and Indonesia

Sharma said

Oversupply of tea and less demand has contributed to market imbalance in India Strategies

have to be devised to improve the demand side as so much effort has been put in improving

supply efficiency in the past

Only financially sound tea producers would perhaps be able to take the risk of delayed

marketing and avail any possible opportunity arising out of future upward price movement in

the marketWhile productivity and quality have received some attention cost reduction

value addition and risk manageent needed a new focus

References

Joonktollee Tea amp Industries Ltd Annual Report 08-09

Mcleod Russel India Ltd Annual Report 08-09

Rossell Tea Ltd Annual Report 08-09

Jay Shree tea amp Industries Ltd Annual Report 08-09

Foster G Financial Statement Analysis Second Edition Prentice Hall NJ 1986

wwwmoneylivemintcom

wwwbseindiacom

wwwmoneycontrolcom

44

Fertilisers

c) Infotech ndash ndash 48507 4844

d) Others 11939 6169 11112 5735

e) Unallocable 1565935 211987 1601683 118707

Total 4178476 1026830 3603049 523548

4 Capital expenditure including capital work-in-progress and depreciation (excluding on

revaluation reserve) for the year

Capital Exp

Depreciation

Capital Exp

Depreciation

a) Tea 109378 55558 117128 56138

b) Chemicals amp

Fertilisers

4117 5090 4580 4867

c) Infotech ndash ndash 1301 4909

d) Others 535 167 ndash 131

e) Unallocable 28031 7358 13126 6728

Total 142061 68173 136135 72773

(B) Secondary Segment Domestic Export Total

Segment Revenue 3502255 689711 4191966

(2185718) (541440) (2727158)

Segment Assets

4143913 34563 4178476

(3567672) (35377) (3603049)

Capital Expenditure 142061 ndash 142061

Note (136135) (ndash) (136135)

i) The company has disclosed business segment as the Primary Segment

Segment Revenue includes other income pertaining to the relevant

42

C MCLEOD RUSSELS

No disclosure regarding segment reporting

D ROSSEL TEA LIMITED

No disclosure regarding segment reporting

Conclusion

Though there has been a recovery in the prices of tea and exports have also started looking

up with the emerging trends in the globalized economy markets can no longer be protected

The high cost of production is still a matter of concern for the Indian tea

industry The Indian tea industry would have to gear itself up to counter the new forces

unleashed by globalization

Budget 2010-11 gave the extension of concessional import duty on imported plantation

machinery like tea bagging machines till March 31 2011 will help the industry in value

adding and hiking exports in the long run The finance minister has also increased weighted

deduction on payments made to national laboratories research associations universities and

other institutions for scientific research from 125 to 175 This will help organisations like

43

the Tea Research Association to take up better research and development activities resulting

in production of better quality tea saplings

With cyclical crisis in the Indian tea industry erasing fast the current need was to shift from

a production oriented strategy and subsidy approach to market oriented strategic framework

with market economy outlook There is a need to liberate the mindset of the industry from its

earlier mindset of disposal of tea was changing to a new one --marketing of tea which

implied a shift from subsidy to capacity building approach

Multinational tea companies are increasingly contracting with larger agro-processing

firmswho were able to effectively coordinate deliveries and quality standards from small

farmers through effective supply chain management as in South India and Indonesia

Sharma said

Oversupply of tea and less demand has contributed to market imbalance in India Strategies

have to be devised to improve the demand side as so much effort has been put in improving

supply efficiency in the past

Only financially sound tea producers would perhaps be able to take the risk of delayed

marketing and avail any possible opportunity arising out of future upward price movement in

the marketWhile productivity and quality have received some attention cost reduction

value addition and risk manageent needed a new focus

References

Joonktollee Tea amp Industries Ltd Annual Report 08-09

Mcleod Russel India Ltd Annual Report 08-09

Rossell Tea Ltd Annual Report 08-09

Jay Shree tea amp Industries Ltd Annual Report 08-09

Foster G Financial Statement Analysis Second Edition Prentice Hall NJ 1986

wwwmoneylivemintcom

wwwbseindiacom

wwwmoneycontrolcom

44

C MCLEOD RUSSELS

No disclosure regarding segment reporting

D ROSSEL TEA LIMITED

No disclosure regarding segment reporting

Conclusion

Though there has been a recovery in the prices of tea and exports have also started looking

up with the emerging trends in the globalized economy markets can no longer be protected

The high cost of production is still a matter of concern for the Indian tea

industry The Indian tea industry would have to gear itself up to counter the new forces

unleashed by globalization

Budget 2010-11 gave the extension of concessional import duty on imported plantation

machinery like tea bagging machines till March 31 2011 will help the industry in value

adding and hiking exports in the long run The finance minister has also increased weighted

deduction on payments made to national laboratories research associations universities and

other institutions for scientific research from 125 to 175 This will help organisations like

43

the Tea Research Association to take up better research and development activities resulting

in production of better quality tea saplings

With cyclical crisis in the Indian tea industry erasing fast the current need was to shift from

a production oriented strategy and subsidy approach to market oriented strategic framework

with market economy outlook There is a need to liberate the mindset of the industry from its

earlier mindset of disposal of tea was changing to a new one --marketing of tea which

implied a shift from subsidy to capacity building approach

Multinational tea companies are increasingly contracting with larger agro-processing

firmswho were able to effectively coordinate deliveries and quality standards from small

farmers through effective supply chain management as in South India and Indonesia

Sharma said

Oversupply of tea and less demand has contributed to market imbalance in India Strategies

have to be devised to improve the demand side as so much effort has been put in improving

supply efficiency in the past

Only financially sound tea producers would perhaps be able to take the risk of delayed

marketing and avail any possible opportunity arising out of future upward price movement in

the marketWhile productivity and quality have received some attention cost reduction

value addition and risk manageent needed a new focus

References

Joonktollee Tea amp Industries Ltd Annual Report 08-09

Mcleod Russel India Ltd Annual Report 08-09

Rossell Tea Ltd Annual Report 08-09

Jay Shree tea amp Industries Ltd Annual Report 08-09

Foster G Financial Statement Analysis Second Edition Prentice Hall NJ 1986

wwwmoneylivemintcom

wwwbseindiacom

wwwmoneycontrolcom

44

the Tea Research Association to take up better research and development activities resulting

in production of better quality tea saplings

With cyclical crisis in the Indian tea industry erasing fast the current need was to shift from

a production oriented strategy and subsidy approach to market oriented strategic framework

with market economy outlook There is a need to liberate the mindset of the industry from its

earlier mindset of disposal of tea was changing to a new one --marketing of tea which

implied a shift from subsidy to capacity building approach

Multinational tea companies are increasingly contracting with larger agro-processing

firmswho were able to effectively coordinate deliveries and quality standards from small

farmers through effective supply chain management as in South India and Indonesia

Sharma said

Oversupply of tea and less demand has contributed to market imbalance in India Strategies

have to be devised to improve the demand side as so much effort has been put in improving

supply efficiency in the past

Only financially sound tea producers would perhaps be able to take the risk of delayed

marketing and avail any possible opportunity arising out of future upward price movement in

the marketWhile productivity and quality have received some attention cost reduction

value addition and risk manageent needed a new focus

References

Joonktollee Tea amp Industries Ltd Annual Report 08-09

Mcleod Russel India Ltd Annual Report 08-09

Rossell Tea Ltd Annual Report 08-09

Jay Shree tea amp Industries Ltd Annual Report 08-09

Foster G Financial Statement Analysis Second Edition Prentice Hall NJ 1986

wwwmoneylivemintcom

wwwbseindiacom

wwwmoneycontrolcom

44

wwwcapitalinecom

45

46

• References

46

• References