CALCUTTA, June 11: The Goodricke group is planning to merge its subsidiary Tiru Tea into itself. Goodricke chairman PA Leggatt told reporters after the company's 21st annual general meeting that a decision on this would be taken either in the current year or next year.

"It is mainly to make it more convenient for us to manage," said Leggatt.Tiru Tea has seven tea gardens, all in Darjeeling, including Castleton, which produces tea of the highest quality.

For the year to December 12, 1996, Tiru made a net loss of around Rs 46 lakh as against a loss of Rs 75.6 lakh in the previous year. With the merger of its subsidiary, the Goodricke group will be among the larger tea companies in the country with 24 gardens under it.

Goodricke managing director SK Bhasin, referring to the instant tea plant at Aibheel in north Bengal, said that one of the reasons why it had done poorly in the first year was the high price of the product. "We are being priced out of the market," he said.

But Goodricke will have to continue selling at its present rate if it has to maintain its quality and keep pace with the costs of production.

Leggatt said the company had received better enquiries this year.

During the year under review, Goodricke was plagued by a rise in major input costs, which, along with an increase in wages, rose steeply by 14 per cent over the previous year.

Commenting on the world market, Leggatt said the intial crop trend in 1997 had shown a downward trend. Kenyan production had gone down by 35 million kg up to the end of April 1997, while the world crop had declined by 50m kg.This has pushed up prices at auctions. The London auction prices, which were not remunerative in 1996, are now about 20 per cent above that level. Indian companies are banking on higher prices at auctions to shore up their bottomlines in the current financial year.

Leggatt said that in the Indian context with rising domestic consumption and better export prospects, "there will be barely sufficient quantity of tea left for internal consumption".

With quality tea in short supply producers can be assured of their teas fetching higher prices than in the previous year. On the other side, with coffee prices going up, it is expected that consumption of tea will go up, as it will offer a cheaper alternative, company sources said.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.