United Nilgiri Tea Estates Company Ltd Management Discussions

Industry Structure and Developments

Indian tea industry showed positive performance during 2025-26, supported by higher exports and growing global demand for orthodox premium teas. India achieved all-time high exports of 280.40 million kg of tea in 2025 while domestic production was 1370 million kg, a 5% rise from 2024. Tea imports rose significantly in 2025, especially low-cost imports from countries like Kenya, affecting domestic price realization.

Improved quality and increased production of primary grade teas have led to a very good demand for our teas with satisfactory export orders on hand.

The ongoing conflict in West Asia is a major concern for the tea industry as Gulf countries are the major buyers of south Indian orthodox teas. If the conflict continues, it may severely affect export logistics, payments, freight economics and market confidence.

The total quantity of tea manufactured during the year under review was 30.26 lakhs kgs as against 30.43 lakhs kgs during the previous year. Sale of teas during the year under review was 29.97 lakhs kgs (previous year 34.25 lakhs kgs). The total exports during the year were 17.07 lakhs kgs as against 18.23 lakhs kgs during the previous year. The average price realized for the year was, however, higher than the previous year. Profit before tax for the year was Rs.2,593.12 lakhs as against Rs.2,130.13 lakhs during the previous year.

Income from commercial building during the financial year 2025-26 generated a revenue of Rs. 654.86 lakhs as against previous years revenue of Rs.638.22 lakhs.

In the current year, due to unfavourable weather conditions, the crop harvested was lower in April and May compared to previous year. The focus, however is on enhancing production of high-quality teas, and productivity in terms of area coverage. With the introduction of cost control measures like control of man-days and cost savings in terms of sustainable energy usage, the outlook appears to be encouraging.

Your Company is dependent on weather conditions for production of green leaf, which is a major risk factor for the business. Extreme weather conditions may affect yields, leaf quality and production cycles. The market demand and potential competition in both domestic and international markets have significant impact on the results. Introduction of new Labour Codes is a major transformation in India. Tea plantations being labour intensive, any dilution of welfare measures could seriously affect the livelihood and social security of the workers which will have major impact on operations. Since export of teas is substantial, foreign exchange risk is incidental to the Companys operations.

Your Company has adequate internal control systems in place which are further strengthened by an internal audit function carried out by an external audit firm. With the statutory auditors operating at the apex level, in the opinion of the Board of Directors, these systems are adequate for the size and nature of the Companys business.

Revenue from operations achieved during the year was Rs. 83.35 crores as against Rs.89.79 crores in the previous year. Profit before tax for the year was Rs. 25.93 crores as against Rs.21.30 crores during the previous year. The performance of the Company improved due to better sales realization and also increase in fair value gain from financial assets during the year under review.

The labour relations in the estates during the year were cordial. The estate managements continue to implement various measures relating to safety and welfare of the employees beyond what is stipulated by the prevailing laws and regulations. The total number of permanent employees on the rolls of the Company as on 31st March, 2026 was 1062.

Key financial ratios are given under Note 31 of the attached financial statements.