Deals Brewing Over A Cuppa In Africa

When the diversified RPG Group — better known for its power, tyre and retail interests — announced last week that it is eyeing gardens in Africa to expand its tea business, it may not have raised many eyebrows among tea barons. The only question could have been that why did it take the business-savvy Goenkas, who own the conglomerate, so long to join the African party.

For an industry where acquisitions in the past decade were few and far between and limited within the country, the last nine months have witnessed a dramatic change. Indian tea companies — flush with cash following a demand-supply mismatch and fired by a new love for Africa — are furiously chasing deals in countries such as Uganda, Rwanda and the like to emerge as bigger and stronger players.

If McLeod Russel — a Williamson Magor Group company and the world's largest tea producer — set the ball rolling with its acquisition of a controlling interest in a tea factory in Rwanda in August 2009, followed by its takeover of six estates in Uganda in January this year, B K Birla-group firm Jayshree Tea & Industries has not been far behind in the deal-making game, snapping up one company in Uganda and two in Rwanda last month.

While the African buys, undertaken through wholly owned subsidiary Borelli Tea Holdings, added 16.7 million kg to McLeod's existing tea capacity raising it to about 100 million kg, Jayshree Tea gained slightly over 5 million kg through its overseas foray. Jayshree Tea produced just over 23 million kg last year through its gardens in India. Both McLeod and Jayshree, however, say that their Africa adventures have only just begun and competition is going to get stiffer from now on.

"There were eight companies vying for the Ugandan firm (Kijura Tea Company) we bought, which just goes to show the level of interest there is in Africa at the moment," Jayshree Tea managing director D P Maheshwari said.

"Uganda, particularly, may see a lot more action going forward." On his part, McLeod Russel MD & Indian Tea Association (ITA) chairman Aditya Khaitan pointed out that just about any market in Africa is up for grabs. "Opportunities are there everywhere — be it in Kenya, Malawi or even Mozambique. It is up to the entrepreneurs to decide where they want to go," he added.

So what is it about Africa that is driving the interest of Indian tea giants? Analysts say it is a combination of climate and costs. As in north India, the weather patterns in different African countries enable them to grow tea of the CTC variety, unlike India's principal rival in south Asia, Sri Lanka, which grows orthodox tea.

African teas also blend nicely with north Indian teas. More importantly, tea companies can be assured of large landholdings in Africa, "getting which is something next to impossible in India at the moment", Khaitan said. "If you consider that the bulk of the costs in a plantation is accounted for by labour, the savings accruing on this front in Africa is quite considerable," Maheshwari explained.

Dhunseri Group chairman and former ITA chief C K Dhanuka, who is also examining the viability of having a presence in Africa, said the other big attraction of that continent is that it is still possible to get gardens at "reasonable prices".

McLeod Russel, for instance, only had to shell out $25 million (excluding the debt takeover) for its acquisition of Rwenzori Tea Investments in Uganda that gave the Indian company access to 15 million kg of tea capacity in Uganda.

For the deal in Rwanda, that added 1.7 million kg to its capacity, McLeod arm Borelli Tea Holdings had to pay $2.75 million.

So is Africa going to be the potential game changer for Indian tea? Khaitan has no doubt in his mind that the continent can only spell good news for his industry even in the short-to-medium term. "The stigma about Africa is no longer there. Africa is now the place to be," he said.

Source: Times of India

Tea exports grow 22.8%

Calcutta, May 22: India’s tea exports rose 22.8 per cent to 47.2 million kg during the first three months of the year from 38.5 million kg during the corresponding period a year ago.

Favourable weather during the last few months of 2009 has boosted the total output by 14.9 per cent during January-March 2010 to 94.1 million kg from 81.9 million kg a year ago.

According to the latest statistics published by both the Tea Board of India and the Indian Tea Association, production rose 9 per cent during March to 49 million kg from 45 million kg a year earlier. Exports increased to 17.96 million kg in March from 14.22 million kg during the same period in 2009.

Output in north India rose more than 2 million kg in March against a shortfall of 2.9 million kg during the first two months of this year. Normally, production in north India drops after the winter season as the leaves are damaged by frost.

Output in the southern states of Tamil Nadu, Kerala and Karnataka also improved to 19.17 million kg from 17.69 million kg. Tea output was lower in Assam, while Dooars, Terai and Darjeeling have reported an increase in production.

However, production in Darjeeling and Dooars could be impacted during the coming months because of the lack of rainfall in March, experts said. But lower Assam looks promising after continuous rainfall. Production was also extended in most estates during the lean months of November and December because of high prices.

Source: The Telegraph

Further strengthening of rupee may impact tea exports: ITA

Further strengthening of the rupee against the dollar and euro may adversely impact Indian tea exports, an industry official said.

"Though the price of tea is ruling high internationally, the appreciation of the rupee against the dollar and euro is a matter of concern for exporters. This could have an impact on exports," Indian Tea Association joint secretary Sujit Patra told PTI.

India had produced 979 million kg of tea last year, out of which 200.2 million kg had been exported to about 60-65 countries at an average price of Rs 136.65 per kg.

The rupee is currently being traded at Rs 46.75 against the dollar, down from Rs 47.4 in the previous year. The rupee also appreciated against the euro and was valued at Rs 57.69 as on May 20, 2010, against Rs 65.36 on May 21, 2009.

Fierce competition already exists among exporting nations such as Sri Lanka, Kenya and China to achieve prominence in the global tea market, which is yet to recover from the recession.

"The fall in rupee could impact the margin for Indian tea exporters as the cost of production is highest in the world," Patra said.

In the first three months of the current year, India had exported 47.2 million kg of tea, up 22.8 per cent from the same period a year ago.

‘No plans to revise import duty’

The government has no plans to revise the import duty on tea in the near future, minister of state for commerce and industry Jyotiraditya Scindia said on Wednesday.

A section of the Indian tea industry has been demanding that the import duty on tea currently pegged at 100% should be reviewed in the light of massive influx of cheaper tea varieties from Vietnam and Nepal at the cost of Indian tea. “We have no plans to bring down the duty on tea import. Not currently,” Scindia said during his inaugural address at the 19th Session of Inter-governmental Group (IGG).

Clarifying the government’s stand, the minister added, “Tea production is improving. So are prices. The production is going to touch the threshold of 1 billion kg this season.”

On rebranding of Indian tea to make it more acceptable to foreign customers, the minister said a task force has been set up—of which he is the head—to provide ‘pragmatic solutions’ to the hurdles faced by the sector.

“Making tea suppliers capable of matching the global standards in the domestic and world market is essential,” Scindia said, adding that there is an urgent need to augment domestic production to compete in the world trade .

“There are lots of supply side constraints which we are trying to address through the Special Purpose Tea Fund. We are urging the industry to take up the replantation so that India could regain its number one position,” the minister said.

Scindia also discounted talk that the global economic crisis had any impact on Indian tea exports last year. “Despite the recession, tea export has been consistent and the government congratulates the industry for that,” the minister said.

India is the world's largest tea grower. It produced 960 million kg of tea in 2009-10 and exported close to 200 million kg, up from 190 million kg in 2008-09. “The government has raised the budget allocation for tea sector to Rs 800 crore in the Eleventh Plan from Rs 350 crore,” he added.

Source: Financial Express

Higher output fails to cool tea prices

Despite a higher crop output of 87 million kg in major tea producing countries — Kenya, Sri Lanka and India — prices are constant, as the cumulative deficit stands at 125 million kg.

After last year’s deficit crop, Kenya and Sri Lanka have reported a higher output of 75 million kg during January-March while south India registered an increase of 12 million kg in output for the first three months of the calendar year.

The three countries account for 80 per cent of the black tea production. Yet prices are holding out across the world markets.

Prices in Kenya and Sri Lanka have a strong undertone and are higher by 40-70 cents over last year. In India, markets have surplus plain teas at the moment, but good teas are in short supply. So, prices are higher by Rs 10-20 than the previous year.

Ullas Menon, secretary general of the United Planters Association of South India (Upasi) said, the average price of south Indian tea is Rs 111.93 a kg while last year the price was Rs 94.39 a kg. But Menon thinks it is a temporary blip.

“There is no reason for prices to fall. Kenya and Sri Lanka are seeing a bumper crop, but prices are firm. North India prices are buoyant,” he said.

Aditya Khaitan, chairman, Indian Tea Association (ITA), said prices in India would hold out.

Not just in India, figures indicate that they could hold water for world markets as well. The cumulative deficit of the last five years is to the tune of 200 million kg.

In India, production is expected at the same level as last year’s 979 million kg. Menon said since in April there was a dry spell, the crop would be at the same level as last year, even though it was significantly higher till March.

If the output remains at the same level, the season would again end with a deficit. “Each year, consumption in India grows by 30-35 million kg,” Khaitan said. Last year, there was a deficit of around 40 million kg.

Source: Business Standard

Tea production may touch one billion kg: Board

India's tea production may touch the one billion kg mark this year with the meteorological department predicting a normal monsoon, a highly-placed Tea Board of India official said here today.

"With the prediction of a normal monsoon, the production of tea during the year is likely to be in the region 990 million to one billion kg," Tea Board Chairman Basudeb Banerjee said.

Banerjee, however, said that it was difficult to predict the actual output since different regions of India receives varied degree of rainfall.

"As IMD predicts normal monsoon, the production is likely to be normal this year. However, you can't really predict since the distribution of rainfall is generally not even in India," he said.

Source: PTI

India's tea output up 9% in March

NEW DELHI: Tea production in India, the world's largest grower, rose by nine per cent to 49 million kg in March, 2010, as against 45 million kg in the corresponding month last year, the Tea Board said today.

Similarly, tea exports increased to 17.96 million kg in March from 14.22 million kg in the same period of 2009, it said.

"Production has started picking up in the northeastern region from March. We expect good output in the coming months, as small growers are focusing on plantation," an official with the Tea Board said.

There has been a slight increase in output both in North and South India, he said.

According to official data, tea production in the plains of West Bengal and Assam, which harvest the best quality tea leaves in the world, increased to 29.82 million kg in March from 27.34 million kg in the same month last year.

Output in the southern states of Tamil Nadu, Kerala and Karnataka also improved to 19.17 million kg from 17.69 million kg in the review period, it said.

Cumulative production of tea in the first three months of 2010 rose by 16 per cent to 94 million kg against 81 million kg a year ago, it added.

In the 2009 calendar year, India's tea output stood at 979 million kg, against 981 million kg in the previous year.

Tea production is an annual cycle. The country has 5,79,000 hectares of land under tea cultivation, of which 1.53 lakh hectares is handled by small growers.

According to the Tea Board, the country is estimated to have shipped 200 million kg in the 2009-10 fiscal, against 190 million kg in the previous year.

Source: PTI

Change in name for Tata Tea

Tata Tea has announced that it has been renamed as Tata Global Beverages Ltd, effective today, in keeping with its earlier-stated plans to diversify its product portfolio. The company said, the move “demonstrates our intent to build a new and strong global brand”.

Tata Global Beverages will consolidate all of the Tata Group’s various drinks units, retaining the existing brand names for now. The company has been looking to distinguish itself as more than just a tea company, and has been moving into the bottled water and fruit juices business.

Jay Shree Tea to acquire three firms in Africa

KOLKATA: BK Birla-controlled Jay Shree Tea & Industries (JTIL) is snapping up tea companies in the dark continent. It will soon acquire 100% ownership in Uganda-based Kijura Tea through its investment arm, Birla Holdings, Dubai.

It will also buy 60% in Rwanda-based Mata Tea and Gisakura Tea through Tea Group Investment, a 50:50 JV between Rwanda Mountain Tea-SARL and Birla Holdings, Dubai.

Rwanda Mountain Tea is a privately-owned tea company headquartered in Kigali. It has two estates within its fold, Nyabihu and Rubaya. Today, the tea sector in Rwanda consists of six state-owned production units, Gisovu, Kitabi, Mata, Mulindi, Shagasha, Gisakura and four private owned production units, Cyohoha (SORWATHE), Pfunda (Pfunda Tea Company), Nyabihu and Rubaya (Rwanda Mountain Tea).

Nshili-Kivu is another privately-owned production unit with a factory still under construction. Jay Shree Tea on Monday informed BSE about its overseas acquisition plans for which a board meeting has been called on April 28.

Incidentally, ET had reported in its April 20 edition that JTIL was poised to acquire tea estates in Rwanda and Uganda and that a board meeting would be convened on April 28 to approve these overseas acquisitions.

JTIL will be the second-largest India tea company to acquire estates in Africa. In December 2009, BM Khaitan-controlled McLeod Russel India had acquired six tea estates in Uganda with a production of 15 million kg for Rs 140 crore. The twin acquisitions are likely to lift production capacity of Jay Shree Tea to nearly 29 million kg in 2010-11 from 23.5 million kg now.

DP Maheshwari, managing director of JTIL, said: “We have already signed an agreement to acquire Kijura Tea. It will come within JTIL’s fold from May 1. We will soon sign agreements with Rwandan tea estates. The Rwandan cabinet had approved our proposal only three days ago. The total cost of acquisition will be around Rs 30 crore.”

In its notice to BSE, Jay Shree Tea said it will also consider a stock-split option at the board meeting. The notice says: “To consider and recommend sub-division (stock-split) of the present face value of the equity shares of Rs 10 each of the company into smaller denomination as the board may deem fit, subject to the approval of the members of the company and to incorporate the resolution(s) for the said sub-division and amendment in the capital clause of the memorandum of association of the company in the agenda of the ensuing AGM of the company.”

The scrip rose 5.90% to Rs 307.45 BSE after the company said its board would meet on Wednesday to consider the African acquisitions.

Source: The Economic Times

Your time, my time

For years, they have been waking up early and starting late. But India's northeast, which sees sunrise almost two hours before Mumbai, has decided it's time to set the clock right. The region's demand for a separate time zone has never been more vociferous

April is usually the cruelest month for India's northeastern states. Cyclonic storms lash the region with vengeance and rip apart homes and hopes. But in all this, the stoic people find things that keep them together and going, their famous fortitude in place.

This April, it is the loud revival of an issue that has always united the Seven Sisters. Amid the deafening thunder and incessant, deluging rains, people here are whipping up a different storm as they try to turn into a mass movement the debate for a separate time zone, something that was kicked off in the beginning of the millennium by a few scientists, academicians and media persons.

And from all accounts — with film personalities, students, engineers, even housewives and common folks joining in — the storm is gathering force and the movement gaining heavy momentum. "We are trying our best to make ourselves heard," says Samujjal Kumar Bhattacharya, president, Northeast Students' Organisation (NESO). "We hope our voices will reach the deaf ears of the mainland people."

Chipping in, Bakul Saikia, a student of the prestigious Cotton College in Guwahati, says, "The Central government has to understand the need for more than one time zone in India. Separate time zones don't divide the country or its people."

He has a point. If the sun rises in Kohima at 4 am, it rises in Mumbai two hours later. "But this two-hour time gap is completely overlooked," says R K Barman of the Assam Science Technology and Environment Council (ASTEC). "Office starts in the northeast six hours after daybreak as against four in the rest of India. Working and sleeping hours get postponed. The real clock differs from the official clock. Daylight hours are wasted, leading to higher power consumption."

The British knew better, though. The colonial rulers had set local time one hour ahead of IST for tea gardens, coal mines and the oil industry of Assam. Some of the tea gardens still follow the bagaan (garden) time.

People from the northeast have been demanding creation of a separate time zone for the seven states of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura so that there is optimum utilisation of daylight. This, in turn, would result in conservation of energy. As the sun rises much earlier in this region than in the rest of the country, votaries here say it is only fair that they ask for the clock to be advanced by at least one-and-ahalf hours.

Internationally acclaimed filmmaker and former ISRO scientist Jahnu Barua says, "We are disadvantaged as far as the availability and usability of daylight and dark hours are concerned. We have gone behind by more than a decade in productivity since independence. Moreover, the total wastage of electricity at homes and offices of the region since Independence due to this is to the tune of Rs 94,900 crore."

Barua is not alone in his anxiety. It seems the entire region has woken up to the time zone call, organising a whirlwind of seminars, meetings and public addresses to drum up support for it.

In one such seminar recently in Aizawl, Mizoram chief minister Lal Thanhawla said the region suffers economically from sharing IST with the rest of the country. He added that the appeal should not be interpreted as a separatist move. "If India considers the northeast people as Indians, it must set an eastern time for the region."

Assam, too, is serious about this. Its state science and technology ministry has vowed the state will take up the issue with the Central government. The Centre, in turn, has set up a committee chaired by Ajay Mathur, the director-general of the Bureau of Energy Efficiency (BEE), to examine the implications of another time zone in India. "The panel will primarily report on energy savings for which various options are being considered. Another time zone for the country is one of them. The report is expected to come out by January 2011," he says.

But it's not a conundrum easily solved. "There are complications and confusions involved in the process," says panel member A K Bhatnagar, who's also additional director general, India Meteorological Department. "We also have to consider the costs of implementation, changing of records and various other factors."

Ever since Independence, India has set its standard time based on its mean longitude of 82.5°E, which is five-and-a-half hours ahead of Coordinated Universal Time (abbreviated as UTC and sometimes written as Universal Time Coordinated, formerly and still widely called GMT). The IST longitude divides India into two parts, the eastern (comprising the seven states of the northeast, Sikkim, Bihar, West Bengal, Orissa and Jharkhand ) and the western part (rest of the country).

Politically, too, it is a hot potato. All said and done, a separate time zone may carry with it implications of a separate identity. With various separatist movements going on in the northeast for decades, some believe that if the region succeeds in getting a separate time zone, many could take it as a victory for their secessionist movements. Besides, a different time zone may further alienate an already alienated people from the rest of the country.

The National Physical Laboratory of India (NPL) also has reservations. P Banerjee, a senior scientist with NPL, rejected the feasibility of advancing the clock. "Instead of a separate time zone, we can advance office timings that are convenient to the (seven) states," he says. "The introduction of a Daylight Saving Time (DST) scheme for the country would solve the entire problem. Also, a separate time zone cannot be introduced arbitrarily against international conventions. Plus, there are logistical problems like keeping pace with national railway and airlines timings with two time zones."

Not that there has been no thought on the subject. In 2001, the Central government, following a PIL on the matter, set up a committee to examine the issue. While maintaining there was no need for a different time zone for the northeast, it recommended advancing office timings by a couple of hours.

In 2007, the Parliamentary Standing Committee on Energy reopened debate on the need for more than one time zone in India when it mentioned the proposal in the context of saving power consumption in northeastern states. The government, those in the know say, has not shut off the issue from its mind.

The demand got a fresh impetus in the northeast when Bangladesh advanced its time by one hour in 2009, making it one-and-a-half-hours ahead of IST. The people of the region were shocked to realise that even as officegoers in the northeast reach the workplace at 10 am IST, their counterparts in Bangladesh have already completed 90 minutes of work. And Bangladesh is behind the northeast in getting daylight.

Back in 1784, when Benjamin Franklin, during his time as an American envoy to France, asked Parisians to economise on candles by waking up early to make optimum use of sunlight, it went on to become an axiom of practical wisdom and a lifestyle choice for many. More than 225 years later, the entire northeast of India is crying hoarse to make the Central government understand the meaning of Franklin's proverbial advice."

With the clamour growing, the region may just catch up on lost time.


Have you ever wondered why different cities have different sunrise and sunset times? Well, because apart from revolving around the sun, the earth is also rotating on its axis, and a place located in the east will see the sun earlier than one in the west. Earlier, time standards were local and most cities had a central clock tower which was set to noon when the sun appeared directly overhead and the shadow was the shortest. With the development of trade, the importance of standardisation of time was realised.

British railways took the first step and started using the local mean time of Greenwich as the standard time. Soon Greenwich Mean Time (GMT) became a universal standard. The earth is divided into 360 longitudes — imaginary lines running from north to south. The longitudes are distributed 180 eastward and 180 westward of Greenwich. As the earth roughly completes one rotation in 24 hours, the sun will be over each of the longitudes by turn every four minutes. In simple terms, when it is 12:00 noon at Greenwich, it will be 12:04 GMT at the 1°E longitude, because the sun has passed this longitude four minutes before Greenwich. Similarly, for a place 15°E of Greenwich, the local time will be GMT+one hour (15x4=60 minutes) and so on.

In common practice, standard time zones are defined at longitudes that are multiples of 15. As a result, the typical difference between two time zones is an hour. However, across the world, the adoption of time zones depends on various factors because standardising time, in effect, means people have to change their basic habits, which are normally in sync with the local time. Most nations maintain a balance between the economic and social implications of time standardisation as a country with a large east-west expanse will have remarkable differences in local times. For instance, India's longitudinal expanse results in a difference of 29.3° — almost two hours. To deal with this, countries like Russia, Canada and the US have multiple time zones.

Source: Times of India