ledo tea company ltd share price Management discussions

LEDO TEA COMPANY LIMITED ANNUAL REPORT 2009-2010 MANAGEMENT DISCUSSION AND ANALYSIS PERFORMANCE HIGHLIGHT: Your company produced 10.28 lac kgs. of tea for the year under review as against 9.85 lacs kgs. in the previous year and achieved a net turnover of Rs. 976.85 lacs by selling 9.83 lacs Kgs. of tea as compared to Rs. 827.27 lacs by selling 9.22 lacs Kgs. of tea in the previous year. The operation of the Company during the year under review has resulted in a profit of Rs.99.56 lacs before Interest, Depreciation and Taxes in comparison to Rs.54.82 lacs in the previous year. Your company achieved a net profit of Rs.42.01 lacs as against net profit of Rs. 19.34 lacs in the previous year. The industry is highly labour intensive and is subject to stringent labour laws. There has been an increase of approx. 15% in salary, wages and social cost in addition to rise in other input costs during the year under review. Shortage of labour during peak season is a cause of concern. Your company has received notifications during the year from the Government to surrender 126 bighas of prime planted land as they are constructing a by-pass road on NH-38 passing through our garden to shorten the distance between Tinsukia and Arunachal border. This by-pass is of national importance in order to protect our country from neighbouring countries. After various correspondence and persuasion, they allowed us some time to take necessary measures for safeguarding our garden. Accordingly, your company took necessary steps for land preservation, realignment of internal garden roads & pathways, relocation of existing drain outlets, shifting of electrical installations, main boundary fencing etc. The Tirap Colliery adjacent to our tea estate has also intensified open cast mining in a big way and they dump the overburden on roads adjacent to our garden boundary and the entire area gets slippery and full of mud. Water mixed with sulphur content is entering into garden through many areas for which lot of protection work has to be done to save our plantation. MODERNISATION & EXPANSION Your Company has continued its policy of uprooting and replanting along with infilling programmes in a phased manner in order to increase the yield of the Tea Estate. Your Company Replanted and Rejuvenated 21.40 Hects. of Land and uprooted 11.77 Hects. of Land which will make valuable addition to crop in forthcoming years. Further, your company has invested Rs.52.90 lacs for Modernization of the factory and Rs. 10.80 Lacs for procurement of Garden Vehicles. FUTURE PROSPECT There has been noticeable change in the climatic conditions with erratic rainfall distribution. These are possibly the result of global warming and would play an important role in tea cultivation, the effect of which is being seen with erratic weather conditions and severe infestation of Helopeltis affecting the tea crop adversely in the current year. The demand scenario is also not very encouraging due to huge stock of plainer varieties tea lying with whole-sellers and agents. However, there is good demand for quality tea Your company is making all efforts to produce good quality tea in order to fetch better realisation. We are hopeful that we will be able to show better results in the current year.