Grob Tea Co. Exits LED Business to Refocus on Core Tea Operations

Grob Tea Company Ltd has officially announced the discontinuation of its LED lights business following a board resolution passed on May 22, 2025. The decision marks a strategic pivot by the century-old tea manufacturer to concentrate on its core operations in tea cultivation and processing. The LED segment, which was introduced as a diversification initiative, failed to deliver sustainable returns and had been underperforming for several quarters.

 

This move is expected to streamline the company’s operational focus, improve margin visibility, and align resources with its historically strong tea business. The board’s approval comes alongside the release of audited financial results for FY25, which showed a marked improvement in profitability from tea operations despite continued drag from the LED segment.

 

Key Highlights from the Board Decision

- Grob Tea Co. Ltd has approved the discontinuation of its LED lights business  

- The LED segment had been contributing marginally to revenue and was incurring losses  

- The company will now focus exclusively on tea cultivation, manufacturing, and sales  

- The decision was formalized during the board meeting held on May 22, 2025  

 

Background and Strategic Rationale

1. Underperformance of LED Segment  

   - The LED division contributed less than 5 percent to total revenue in FY25  

   - Operating margins were consistently negative, with high inventory and distribution costs  

   - The company faced stiff competition from established players and lacked scale advantages  

 

2. Refocus on Core Tea Business  

   - Grob Tea owns six tea gardens across Assam, with over 2,600 hectares under cultivation  

   - The company specializes in CTC (crush, tear, curl) black tea, sold via auctions and private channels  

   - Tea operations delivered a profit of Rs 10 crore in FY25, up from Rs 1 crore in FY24  

 

3. Financial Implications  

   - Discontinuation will reduce overheads and improve EBITDA margins  

   - The company expects a one-time write-off of Rs 1.5 crore related to LED inventory and assets  

   - Future capex will be directed toward mechanization and yield improvement in tea gardens  

 

Operational Restructuring and Future Plans

Grob Tea has outlined a phased exit strategy for the LED business:

 

- Existing inventory will be liquidated over the next two quarters through bulk sales  

- Vendor contracts and distribution agreements will be terminated by Q3 FY26  

- Employees associated with the LED division will be redeployed or offered severance packages  

 

Looking ahead, the company plans to:

 

- Expand its premium tea offerings for export markets  

- Invest in sustainable farming practices and rainwater harvesting across estates  

- Explore direct-to-consumer channels to improve brand visibility and margins  

 

Leadership Commentary

Managing Director Mukesh Kumar Agarwal emphasized that the decision reflects the company’s commitment to long-term value creation and operational discipline. He noted that while diversification was a necessary experiment, the company’s strength lies in its legacy tea business, which continues to show resilience and growth potential.

 

Conclusion

The board-approved exit from the LED lights business marks a decisive shift for Grob Tea Co. Ltd toward its core competencies. With renewed focus on tea cultivation and manufacturing, the company is poised to consolidate its position in the premium tea segment while improving financial performance. The move is expected to enhance shareholder value and operational efficiency in the coming quarters.

 

Sources: Reuters, Screener.in, Grob Tea Company Board Meeting Outcome Document, TradeBrains Portal