CALCUTTA, February 23: The Goodricke group could have garnered more profits but for the funds locked up owing to the delay in the recovery of loans from Poland.The tea major had made certain claims alleging a breach of contract on the part of a Polish importer some years ago for which legal proceedings are continuing in both Poland and India. A senior company official told The Financial Express that the company had made provisions for Rs 5.1 crore out of a total amount of Rs 6.6 crore and a favourable outcome would have boosted the company's bottomlines further this year by an additional profit of over Rs 1 crore.
A long-drawn legal tussle had prompted the tea major to make a provision of over Rs 5 crore in its accounts for the year 1997. Although a final outcome in the company's favour is almost certain, it was always a better option to make provisions for a larger chunk of the loans. Possibility of non-recovery would then preclude any impact on the bottomlines, the official said.
Goodricke hadalso claimed a waiver on interest charges of Rs 3.3 crore from West Bengal's account of rural employment cess with effect from April 1, 1981, and primary education cess from April 1, 1984. According to the official, the current year is expected to reap good profits with better auction prices and export prospects for the company. Goodricke's turnover has jumped by over 21 per cent to Rs 146 crore in 1997 from Rs 120 crore in the previous year. It posted a net profit of Rs 11 crore for the year ended December 31, 1997.
The tea major produced about 17.5 million kg of crop in 1997 from its 17 gardens spread over north Bengal and Assam. About 74 per cent of company's share capital is held by its overseas principal, Lawrie Group Plc of the United Kingdom. According to the official, the company is making efforts to reduce its dependence on banks, especially with regard to the high interest charges which was at Rs 9.8 crore in 1997. However, it is estimated that the debt-equity ratio is much more attractive due tolower borrowings and a reduced interest burden this year.
Goodricke saw a slight drop in production of tea in the first half of 1997 due to drought conditions. Moreover, the Darjeeling gardens were affected as the first flush got decimated and the second flush reduced. This was coupled with losses of almost Rs 2 lakh from its Orangajuli and Nonaipara gardens in Assam which were situated at the heart at Mangaldari district, a stronghold of the Bodo militants. Exports remained firm at Rs 23 crore in 1997, a 60 per cent rise from Rs 14 crore last year. Export earnings were essentially from hard currency areas and from quality conscious buyers in Germany, UK and west-Asia. 1997 witnessed higher turnover in packet tea sales at Rs 54 crore.
In bid to acquire Nepal Tea gardens
The Goodricke group, along with Hindustan Lever Ltd, Tata Tea and others, is keen to acquire five gardens of Nepal Tea Development Corporation (NTDC). All these tea majors were vying for these gardens following the Nepalgovernment's intention to go in for privatisation.
None of them have yet clinched the deal and the date for its finalisation has not been fixed.Goodricke already has a presence in Nepal through its existing 50:50 joint venture company Himalaya Goodricke Pvt Ltd. This, according to Bhasin, has recorded increased production and sales and its future seems promising.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
