Harrisons Malayalam to ink Africa deal in 3-4 months

Mumbai: Tea and rubber producer Harrisons Malayalam , an RPG Group company, is planning to announce a plantation deal in Africa in three-four months, a top official said on Thursday.

Harrisons, which is India’s largest rubber producer and south India’s biggest tea maker, plans to acquire about 10,000 hectares of land and invest ₹ 400-500 crore in the deal.

“We are in the due diligence process. We are assessing the political risk which is what is taking a bit of time but in the next 3-4 months, we will make the announcement,” Pankaj Kapoor, managing director, said on the sidelines of the Centrum Investor Conference.

The plantation land will be used for rubber, tea and oil palm, Kapoor added.

In India, Harrison has invested about ₹ 70-75 crore in replantation over the past three-four years. It expects its replanted rubber plantations to yield its first crop in 2012.

“From next year, we expect to see a rise in production. Every year we hope our crop will grow by about 1,000 metric tonnes,” Kapoor said.

It also sees the first flush from its replanted tea crop, starting in 2011.

Outlook

The company’s tea exports are set to rise in the current fiscal year owing to strong internal demand and a shortfall in Kenyan tea production by 6 million tonnes so far.

“Tea exports are expected to pick up this year. We compete with Kenya in CTC (crush, tear, curl) and are looking to fill in the Kenyan gap in the international market,” Kapoor said.

Harrisons expects its tea exports to rise 56% to 5,000 tonnes in FY12 and expects its tea production to go up by 12%.

It does, however, expect an impact on exports due to the unrest in the Middle East in the first quarter.

The company sees tea prices, which have risen 15% in 2011, to remain buoyant through the year, after a steady decline in 2010.

India competes with Kenya in the CTC variety and with Sri Lanka in the orthodox tea variety space.

Harrisons Malayalam posted a 12% jump in turnover to ₹ 370 crore in FY11 on the back of robust rubber prices and improved tea prices in the last quarter.

Its net profit, however, fell to ₹ 5.25 crore from ₹ 11.47 crore as tea prices had declined in the first six months of last year recovering only towards the last quarter.

It, however, sees its rubber production to remain stable this year, but expects the prices to remain high.

Shares of the firm ended at ₹ 77.45, down 0.45% in the Bombay Stock Exchange, which ended flat.