asked the Minister for Industry and Commerce if he will explain the entry in the trading and profit and loss account of Tea Importers, Limited, for the year ended 31st March, 1956, which indicates that a loss of £68,403 16s. 0d. resulted from a reduction in sales following the increase of 2/- per lb. in selling prices on 1st October, 1955.
Ceisteanna—Questions. Oral Answers. - Tea Importers, Limited—Profit and Loss Account.
Mr. Lemass
Following the increase in the issue price of tea from the 1st October, 1955, sales of tea by Tea Importers, Limited for some months were substantially below normal level, presumably because traders, caterers, institutions and other consumers were drawing upon their reserve stocks of tea. The reduced sales involved the company in the cost of financing and warehousing the resultant increase in their stocks in the period to March 1956. This factor, in addition to higher rates of bank charges for overdraft and bill accommodation, resulted in the trading loss of £68,403 16s. 0d. for the half-year to 31st March, 1956.
Mr. Lemass
Can the Minister make it clear to the House how it came about that a reduction in sales, accompanied by an increase in price, involved an actual loss? The statement in the published report of Tea Importers, Limited, certainly does not make the position clear.
As I explained in my reply, the loss occurred because of the fact that the company found a diminished demand for tea because caterers, wholesalers and other institutions have large stocks of tea. Tea Importers, Limited therefore, did not clear the tea with sufficient acceleration. So long as Tea Importers, Limited had to carry the stocks, they had to finance them and pay warehouse charges on them.
Mr. Lemass
They always had to do that.
Not so much and not for so long.
Mr. Lemass
The charges for interest and warehousing appear as separate items in the accounts of Tea Importers, Limited. Why is this part of their business taken out and shown separately?
If the Deputy makes inquiries from Tea Importers, Limited, as I hope he will, he will see their explanation of the thing is that they had to pay warehouse charges. They had to hold tea which was financed by overdraft for a longer period than contemplated. That will be evident when I tell the Deputy that in October 1955, approximately 2,500,000 lb. of tea were purchased. That fell progressively until March when the stocks were 948,000 lb. of tea. In April it went up to 1,500,000 lb. of tea and in September tea was back to the normal consumption of 2.4 million lb.
Mr. Lemass
Do not these figures suggest that some notification of Government intentions reached the trade?
That is a very civil kind of observation.