Stagnant tea prices, steep wages and climate change have prompted Kanan Devan Hills Plantations Company (KDHP) to step up efforts for value addition, both in the domestic and export markets, to boost its income.
The largest tea company in southern India and an associate company of Tata Global BeveragesNSE 1.37 % Ltd, KDHP is revamping its retail store network and is in the process of trying to brand Kerala tea in the manner of Darjeeling, Assam and Nilgiris teas.
After converting to a modern format, its retail outlets have been branded as Ripple tea Chai Bazaar after its own brand. There are five such outlets in Munnar in Kerala where the entire tea plantation of KDHP is concentrated over 8,500 hectares with seven estates and 17 factories.
“Last year we earned Rs 20 crore through it and we have targeted Rs 35 crore for the current year,’’ said Mathew Abraham, managing director, KDHP.
“We plan to increase production of orthodox variety of tea, which is mostly exported, from the present 8.5 million to 10 million kg this year,’’ said Abraham.
E-commerce is another area of focus for the company. “We would like to convert our retail customers to online platform,’’ said Abraham.
The company earned a net profit of Rs 3.8 crore on a turnover of Rs 358 crore in 2018-19 despite flood and frost affecting plantations. The turnover showed only a marginal rise from Rs 340 crore but the profit increased manifold from Rs 48 lakh in the previous year.
Elaborating on the need to beef up other revenue stream, Abraham said the share of companies in the total tea production has been shrinking every year with increasing presence of small tea growers. Besides, he said, the disproportionate growth in wages and prices has hit companies, which are still carrying a heavy burden of social costs. “While the wages have risen at a CAGR of 14%, tea prices have increased only 6% over a ten-year period,’’ he said.