Peria Karamalai Tea estimates adverse impact on FY21 financials

Delays in realization of sale of tea from the customers have liquidity impact in working capital circle and increase in finance cost.

Aug 07, 2020 12:08 IST India Infoline News Service

Peria Karamalai Tea & Produce Co. Ltd (PK Tea) informed the exchanges Friday that as per their assessment at this stage there will be an impact on the working capital and financial resources. The production also affected drastically at this present situation and it may vary in future based on relaxation and restrictions by the Central and State Government.

Most of the workers are from surrounding areas and they were moved to their native place due to Covid-19 pandemic which drastically affects the company’s production. They may return to work place once the normalcy happens in the Country. Till such a time the company is struggling for workers and labourers which results reduction in harvesting of tea leaves.

In view of the above, the profitability of the company for the financial year 2020- 21 would have definite adverse impact. Delays in realization of sale of tea from the customers have liquidity impact in working capital circle and increase in finance cost.

Due to outbreak of Covid-19 pandemic and the complete lockdown imposed by the Central and State Government since March 24, 2020, the company had adverse impact on the business of the company.

“The Governments across the globe had imposed lockdown and they were implemented social distancing norms as one of the tools for the containment of pandemic as a result workers were reluctant to work in the field due to which plucking of tea leaves was drastically reduced.
Post resumption of the operations at our factories, it could not be fully operational due to non availability of tea leaves, skilled labours and transportation. Our tea gardens are mostly relying on migrant worker from surround areas,” company said.

The availability of chemicals and fertilizers were affected due to non availability of logistics and stocks in their godown. Although the Central and the State Government had allowed to work with full, declared and classified company’s product as essential commodity and easing of restriction imposed from second week of April onwards, the company has suffered production loss.

The estimated annual production also has fallen sharply and marketing of tea also affected due to lock down of auction centres in Cochin and Coimbatore during March 20 and April 20. The Government permitted to deploy only 50% of labour force until May 18, 2020 and later on permitted with 100% full labour force.

“In south India the maximum crop was achieved during the first quarter itself fortunately the pre monsoon summer shower was also sufficient to enhance the growth. Our expected production during the first quarter was 13 Lakhs but we have actually produced only 11.1 lakhs because of purely lack of nutrition.

South west monsoon this current year commenced during last week of May 20, however due to outbreak of Covid -19 there was huge shortage of weedicide chemical and NK Based fertilizer which affects our cropping pattern,” company added.

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