MUNNAR:Kanan Devan Hills Plantations Company Pvt Ltd (KDHP), South India’s largest tea plantation company, posted a net loss of Rs10.5 crore in FY25 despite generating an operating income of Rs510.5 crore, up from Rs445.9 crore in the previous year.
The loss at Kanan Devan was primarily driven by a sharp drop in own tea production and a higher reliance on bought-leaf tea, which carries significantly lower margins.
KDHP’s operating profit declined sharply to Rs7.9 crore in FY25 from Rs16.6 crore in FY24. While Kanan Devan companyincreased its bought-leaf intake to offset the loss of around 3 million kg of own production, the lower profitability from this segment weighed heavily on margins.
This shift in production dynamics led to the company closing the year in the red, after managing small profits of Rs3.1 crore in FY23 and Rs9 lakh in FY24.
However, signs of recovery have emerged in FY26. In the first quarter, KDHP reported a profit before tax (PBT) of Rs10 crore, reversing a loss of Rs20 crore in the same period last year.
The rebound came on the back of improved own tea production – up by 1.7 million kg—and stronger realisations, which rose by Rs 16 per kg.
“The sustenance of higher production and firm realisations will be critical to maintaining this recovery,” ratings agency ICRA said in its latest review, which reaffirmed the company’s credit rating while noting the improvement prospects for the current fiscal.
More challenges
KDHP’s challenges have not been limited to tea alone. The company also continues to face structural pressures tied to its fixed cost-heavy business model, geographic concentration in Munnar, and aging plantations – 75 per cejnt of its bushes are over 80 years old. Labour costs further increased following a Rs41 per man-day wage hike effective from January 2023, pushing up production costs by around Rs 8 per kg.
Notably, the non-tea segments of Kanan Devan – spanning tourism, spices, medicinal and aromatic products – have played a key role in cushioning the overall financial performance. These high-margin businesses are expected to grow steadily and continue supporting profitability in FY26.
KDHP also benefits from strong operational and financial linkages with Tata Consumer Products Ltd (TCPL), which owns a 28.5 per cent equity stake in the company and provides long-term lease access to its plantation land. Around 19 per cent of KDHP’s tea output is sold to TCPL, which has also extended unsecured loans and payment flexibility when needed.
KDHP operates seven tea estates across about 9,000 hectares in Munnar, with 16 factories producing both CTC and orthodox teas. The company is one of South India’s largest tea exporters and also markets its Ripple brand in Kerala, which contributed 11 per cent to its volume sales in FY25.
While FY25 exposed the vulnerabilities of KDHP’s production model, the company is now banking on increased own output and firm market realisations to turn around its fortunes in the current fiscal.
