About The Scottish Assam (India) Limited Unlisted Shares

The Company was incorporated in the year 1977 with a garden named 'Heeleakah Tea Estate' of about 950 Hectares. Heeleakah is also the brand name of the tea produced by the company and became a popular brand among the upper Assam teas. In the year 2012 Company started manufacturing teas from bought leaf marked as 'Dhopatbari', which is also doing well since then. The Company's shares are listed at Calcutta Stock Exchange. The Company is run by the management having rich experience in the tea industry. Quality is the main focus of the company and the management has a very strong philosophy to maintain the quality of teas which is very essential in building an everlasting relationship with the consumers. The Company also gets the support of a team of highly dedicated and experienced staff, who lend their expertise to the company to achieve its goals.

FY19-20 Analysis

a) Global Trends The global tea market reached a volume of 6.4 Million Tons in 2019. Currently, Asia-Pacific is the largest market for tea consumption, with robust economic growth in a number of developing countries such as China, India, and Russia, which has created a large middle class with a preference for premium tea blends and brands, often upgrading their purchases from unpackaged tea to packed and bagged specialty varieties. The global Tea market size is estimated to grow at a CAGR of 5% with Revenue USD 13.24 BN during the forecast period 2020-2025.

b) Indian Tea Industry

1. India is one of the several major tea producing centers of the world with tea produced in the country being one of the finest in the world.

2. The tea market in India is being driven by the healthy production and consumption of the beverage.

3. In 2019, nearly 1.10 million tons of tea was consumed in the country. The market in the country is projected to witness further growth in the forecast period of 2020-2025.

4. The tea industry generates income and livelihood directly and indirectly, for more than 10 million people, over and above its own workforce. Women constitute 50% of the workforce.

c) Tea production in India

1. Production of tea was 1389.70 million kg (MKg) in 2019 showing an increase of 51.07 Mkg over 2018.

2. Assam contribute to top the country's production at 715.79 Mkg up 23.88 Mkg from last year.

3. Tea cultivation is one of the premier industries of Assam. It plays a vital role in the economy of the state. Large numbers of workers of Assam are engaged in the tea industry. The total area under tea cultivation in Assam accounts for more than half of the country's total area under tea.

d) Competition

1. Competition from Kenya will be stronger in years to come as plantations in these regions are comparatively young, hence yield is much higher. Moreover, Kenya enjoys round the year favorable growing conditions whereas tea production in India is highly seasonal.

2. Two other African countries such as Rwanda and Burundi are capable of producing very good tea throughout the year. Such round the year availability of quality teas helps the global packers to manage the inventories efficiently.

3. SriLanka, on the other hand has emerged as the largest producer of orthodox teas. Domestic consumption in this country is negligible, Sri Lanka has been aggressively promoting their teas predominantly in the high consuming Middle East markets backed by the strong support from their Government.

e) Opportunities and Threats

1. India is the biggest consumer of tea, but has more potential, as per capita consumption of tea is still lower than other tea consuming countries. Thus there is an opportunity for the tea industry to exploit a huge domestic market.

2. The key challenges facing the industry are the pricing not keeping pace with rising costs, climate change, and outdated legislative frameworks. Climate changes such as ill-timed rainfall, low rainfall, no rainfall in the crop season, prolonged dry spell, floods, increase in temperature are the major challenges in all the tea gardens.

3. The wages and the salary component constitute over 65% of the total cost of production. The escalation of wages and salary and other input costs such as electricity, pesticides, fuel, and fertilizer makes Indian tea uncompetitive in the International market.