MCLEODRUSS - Mcleod Russel

📊 NSE: MCLEODRUSS 🏢 Tea 📅 Last Updated: 12/14/2025 9:43

💰 Financial Performance

Revenue Growth by Segment

Not disclosed in available documents. However, the consolidated Net Profit Before Tax declined by 121.97% YoY, moving from a profit of INR 6,473 Lakhs in H1 FY25 to a loss of INR 1,422 Lakhs in H1 FY26.

Geographic Revenue Split

Not disclosed in percentage terms. The group operates through subsidiaries in India, Borelli Tea Holding Limited (UK), McLeod Russel Uganda Limited (Uganda), McLeod Russel Africa Limited (Kenya), and McLeod Russel Middle East DMCC (Dubai).

Profitability Margins

Net Profit Margin improved by 33.37% from -0.29 in FY24 to -0.19 in FY25, though it remains negative. Operating Margin improved from -0.13 in FY24 to 0.86 in FY25. Profitability is severely impacted by high finance costs of INR 9,262 Lakhs in H1 FY26.

EBITDA Margin

EBITDA for H1 FY26 was INR 10,838 Lakhs, representing a 43.45% decrease compared to INR 19,167 Lakhs in H1 FY25. This decline is driven by a shift from profit to loss before tax despite a 4.16% reduction in finance costs.

Credit Rating & Borrowing

Not disclosed in available documents. However, the company has current borrowings of INR 1,81,203 Lakhs and is currently undergoing a debt resolution process with lenders.

⚙️ Operational Drivers

Raw Materials

Green leaf purchased from external sources represents the primary raw material cost. Specific percentage of total cost is not disclosed.

Import Sources

India, Uganda, and Kenya, where the company and its subsidiaries operate tea plantations and sourcing units.

Key Suppliers

External green leaf growers and small tea enterprises (Micro and Small Enterprises dues of INR 1,374 Lakhs reported).

Raw Material Costs

Not disclosed as a percentage of revenue. The company relies on external green leaf purchases to supplement its own production.

📈 Strategic Growth

Growth Strategy

The company aims to achieve stability through a debt resolution plan with lenders. Growth will be supported by rationalizing operational costs and leveraging its global footprint in India, Africa, and the Middle East to manage supply and distribution.

Products & Services

Bulk tea and value-added tea products produced from plantations in India and Africa.

Brand Portfolio

McLeod Russel.

Strategic Alliances

D1 Williamson Bio Fuel Limited (Associate, though carrying value is currently Nil).

🌍 External Factors

Industry Trends

The tea industry is facing sluggish demand in certain international markets. The company is positioning itself for a turnaround by focusing on debt restructuring and cost control.

Competitive Moat

The company's moat is its position as one of the world's largest tea producers with a diversified geographic footprint across India and Africa, providing a hedge against regional crop failures.

Macro Economic Sensitivity

Sensitive to global tea prices and sluggish market conditions in East Africa, which led to losses in the Uganda subsidiary.

Geopolitical Risks

Operations in Uganda, Kenya, and Dubai expose the company to regional economic volatility and trade barrier risks in the tea export market.

⚖️ Regulatory & Governance

Industry Regulations

The company is subject to the Companies Act, 2013, with specific concerns raised by auditors regarding Section 185 compliance related to Inter-Corporate Deposits.

Taxation Policy Impact

Current tax liability (net) stood at INR 2,770 Lakhs as of September 30, 2025.

Legal Contingencies

Pending resolution of Inter-Corporate Deposits (ICDs) given to group companies. Predecessor auditors issued an adverse opinion in FY19 regarding the nature of these book entries and potential non-compliance with Section 185.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the successful resolution of the parent company's debt and the potential impairment of investments in the Uganda subsidiary (MRUL), which has negative working capital.