Harrisons Malayalam Ltd

Tea: Tea contributed 43% of HML’s total operating income (TOI) in FY25 compared to 47% in FY24. Sales volumes declined by 27% in FY25 to 10.88 thousand tonnes per annum. However, owing to a drop in tea production across India, HML benefited from a 20% improvement in realisations to ₹169/kg, which helped moderate losses. In H1FY26, yields improved to 1,970 kg/ha from 1,560 kg/ha in H1FY25, supported by favourable weather conditions in April 2025. Improved yields ,

MT, which was offset by an increase in realisation of 14.5% leading to growth in TOI from rubber to ₹297 crore in FY25 (PY: ₹255 1Complete definition of ratings assigned are available at www.careratings.com and other CARE Ratings Limited’s publications. 1 CARE Ratings Ltd. Press Release crore). The company earns tree felling income on selling old rubber trees when they are cut down in replanting, which attracts a higher margin.

HML is a part of the RPG/RP-SG group of companies. The groups are business conglomerates with diverse business activities , including presence in tyres, power transmission, electricity distribution, retail, IT, pharmaceuticals among others, Santosh Kumar and Cherian M George are the company’s current whole -time directors, who each have over 25 years of experience in plantation and allied businesses. Comfortable financial risk profile

The company’s capital structure remains comfortable, with overall gearing at 0.67x as on March 31, 2025, largely stable compa red to 0.68x in the previous year. As on March 31, 2025, HML’s debt comprised ~₹66 crore of term loans and ₹29 crore of working capital borrowings. During FY25, a term loan of Rs. 35 crores were sanctioned, of which Rs. 28.61 crores were availed during the year, while the balance Rs. 6.39 crores is expected to be availed in FY26. ₹25 crore of the sanctioned term loan is e

Mature area in rubber plantation has been reducing over the years where total mature area as a percentage of total area declined from 74.31% in FY21 to 55.7% in H1FY26. Due to litigations, the company was unable to perform replantation activities from 2014 to 2019. Since rubber trees take up to ~7 years to mature, mature area has reduced. Mature area is expected to improve from FY27 onwards. Labour and working capital intensive industry

The company’s operations are highly labour - or human capital-based, which make up ~44% of the company’s total cost through contract cost, salaries and wages, and employee welfare facilities, among others. Increase in wage cost and increase in other production cost has impacted profitability of the tea segment over the years. Exposure to agro-climatic risk and susceptibility to price volatility Tea and rubber are agricultural commodities, exposing HML to agro -climatic and price volatility risks

Tea and rubber are agricultural commodities, exposing HML to agro -climatic and price volatility risks. Moreover, the cost associated in production of tea is primarily fixed, mainly in terms of labour cost, which increases irrespective of production volume. This fixed cost-intensive nature of the industry leads to variability in the company’s profitability and cashflows. Rainfall plays a vital ro le in rubber cropping and tea quality. Erratic rainfall can potentially impact the company’s product