Tea imports down 10.85% at 9.2 mn kg in Jan-June

Tea imports to India fell by 10.85 per cent to 9.2 million kg in the first six months of the current year.

The country imported 10.32 million kg of tea in the April-June period last year, the Tea Board said in a statement.

Though the maximum quantum of tea came from neighbouring Nepal, its exports, however, were down when compared with the corresponding period last year. Nepal exported 2.35 million kg of tea during April-June, 2010, as against 3.04 million kg in the same period last year.

On the other hand, Vietnamese tea imports improved to 1.96 million kg in the first six months of this year from 1.92 million kg in the year-ago period.

Iran also increased its shipments to India by 1 million kg during the January-June period to 1.18 million kg, compared to the same period last year.

India, the world's largest consumer of tea, mainly imports tea from 18 countries around the world, including Papua New Guinea.

The imported tea, however, is hardly used for domestic consumption and is mainly re-exported to Iraq. A fall in the number of contracts with that country have impacted the shipments, an industry official said.

Tea production in India, the second biggest producer of tea in the world, was 979 million kg last year.

India accounts for about 28 per cent of world tea production and 14 per cent of trade. There are about 1,600 tea estates in India. The industry employs more than two million people.

Source: PTI

Positive on Tata Global Beverages: Rajesh Jain

ajesh Jain, Market Strategist, speaks to ET Now about Tata Global Beverages.

What are your reasons for liking Tata Global Beverages your target on it and why do you like it?

Tata Global Beverages is a very strong play on the tea sector. We discuss this a couple of weeks ago on the same show when I had given a set of 4 food processing stocks, 3 in the multinational space and Tata Global was a fourth one. Tata Global currently enjoys the benefit of improving tea prices thanks to the crop problems that have besieged the East India plantations. So that should really help in better realisations and Tata Tea being an integrated tea company would be able to lock into some stock profits and hence there is an opportunistic profit gain for the company there. In terms of the overall business model what is exciting is what it will be doing with Himalaya since it has acquired Mount Everest and then it has this tie up with Pepsico for affordable water as well as ready to drink health beverages. Recently they have announced the foray into foods again on the wellness platform and it would be interesting what are the kind of launches to be seen there but both the affordable water, the Himalaya drinking water as well as the food segment will take some time to acquire critical mass and start contributing to the top line and the bottom line.

I think the exciting potential in Tata Global Beverages apart from tea, team mind you was 85% of the company even today and it has a lot of sales overseas. It recently has decided to garner greater than 10% share in Sri Lankan and Pakistan markets. It already straddles a lot of the western markets. The upside in Tata Global Beverages or Tata Tea as it was known has to be the coffee business. Today it is a commodity supplier but there is tremendous upside from branding out there. We already have two very large brands in the country and I do not think there is a room for a local brand to really shake the packing order there but I think in the export market Tata Tea is already working very aggressively and I think that can give you over a 2 to 3 year time frame the big kicker in the stock. In the near term 12 to 18 months I hope the stock should be able to give a 150 which is a fair return from the current levels.

Source: ET

Pest attacks may eat into India's tea production this year

New Delhi, Aug 24 (PTI) India''s tea production may be slightly less this year year because of lower production in Assam due to excess rain and pest attacks.
"Tea production is set to fall slightly. But, it is difficult to peg the decline now," an industry official said.

Quoting the Tea Board data, the official said that during the first five months of the current year ending May, domestic tea output increased by 8.8 per cent to 234.93 million kg against 215.84 million kg in same period last year.
However, production started falling soon after. The June output was lower by 11.8 per cent to 104 million kg narrowing the first five month''s gains of 19 million kgs down to just 4-5 million kgs over the same period last year, he said.
Indian Tea Association has already mentioned production in Assam, the largest producing state, is likely to fall by two million kgs in July as all the major tea groups operating there reporting significantly lower output.

"It is apprehended that with this decline and with the outlook in August also reportedly uneven - with poor weather persisting in several parts - it would be difficult to make up the already significant decline of 10 million kgs which has been registered to date in North India," it added.

World''s largest tea producer McLeod Russel, however, said that India''s production is likely to remain stable at 975-980 million kgs in current year against 979 million kgs last year.

"North India may produce 15-20 million kg less tea during the year over the last year. However, South India is likely to fill in the gap with a better production than last year," its Chief Financial Officer Kamal Baheti said.

Baheti said that the North Indian production would dip as a result of excess rains and pest attacks, while South India would gain from favourable weather conditions.
Tea Board had earlier said that the production is likely to touch one trillion kg this year.

Source: PTI

Starbucks in talks to sell Darjeeling tea

KOLKATA: Starbucks, the world’s largest coffeehouse chain, may soon be serving Darjeeling tea in its more than 17,000 outlets across 49 countries.

The Seattle-based coffee retailer has approached the Tea Board for a licence to import and sell premium Darjeeling tea, Tea Board chairman Basudeb Banerjee told ET.

“They have initiated correspondence with us and have sought some clarification on the present CTM (Certification of Trade Mark) licence,” said Mr Banerjee.

Certification of Trade Mark from the Tea Board is a mandatory for all producers, manufacturers, packagers, blenders, exporters, and traders who wish to sell tea labelled as Darjeeling tea.

The certification is awarded only for teas produced by the 87 authorised Darjeeling estates or gardens and sold as single source or blended Darjeeling teas. The board gets an annual licence fee from all licence holders.

Starbucks, which bought Tazo Tea for $8.1 million to enter tea business in 1999, subsequently teamed up with McLeod Russel India (MRIL), Apeejay Tea, Warren Tea and Chamong Tee Exports to sources teas for the international market.

“It is already present in the Assam tea space. But for selling pure Darjeeling tea in their outlets they need a CTM licence,” said Mr Banerjee.

Nobody is entitled to use the word Darjeeling on packets of tea without a CTM licence, even if the teas originate from the authorised estates.

Source: ET

Tea fund gains momentum as banks pitch in

KOLKATA | COIMBATORE: The replantation and rejuvenation of the country’s ageing tea bushes under the special purpose tea fund (SPTF) scheme has gathered momentum as a consortium of four banks led by Kolkata-based Uco Bank has come forward to help the tea industry. The replanting of ageing tea bushes is the need of the hour as the domestic consumption of tea is increasing at a rate of 3-3.5%.

Estates in north India (Assam and West Bengal) are more pro-active in availing SPTF. According to a senior Tea Board official, 1,686 tea estates have availed SPTF, of which 616 are from north India. The rest 85 estates are from south India. According to the SPTF scheme, 50% of funds will come as a loan from banks, 25% will be provided by the central government as subsidy, and the rest 25% will be borne by the borrowers.

G. Boriah, director (tea development) of Tea Board told ET: “Till date, `71.74 crore has been disbursed as subsidy while `28.80 crore has been disbursed as loan. Initially, there was some problem in getting loan from banks under SPTF. But we had a discussion with Indian Banks’ Association (IBA) and things were sorted out. Now the banks are showing interest to help the tea industry under the SPTF scheme.”

Interestingly, since the financial condition of the tea sector has improved in last two years, tea companies are taking much lower amount as loans. “Sometimes it is said that SPTF has not picked up the way as was expected. Actually in the last two years, the domestic demand for tea has picked up which has resulted in price rise. The tea companies were not keen to uproot tea bushes as this would have resulted in crop loss.

Prices of tea had recovered after a gap of almost 9 years and, therefore, the tea companies were not willing to lose this opportunity. However, the replantation and rejuvenation is gradually picking up. From Tea Board we are also organising roadshows to popularise the scheme,” Mr Boriah added.

However, SPTF take-off in southern tea estates has not been encouraging. The difficult terrain, labour shortage, and region specific issues like ban on earth moving equipment in Nilgiris and certain parts falling under the disputed areas of Nilgiris-Wayanad region are the major roadblocks to make full use of the special purpose fund. The target of 2.5% per annum could not be achieved in south India due to these factors.

Source: Economic Times

Rain, pests cause more than a storm in tea industry's cup

Heavy rain, coupled with pest attacks, pulled down the bottomline of the tea industry in the first quarter.

Financial performance of tea companies – bulk and branded – together showed revenues from tea increased three per cent to Rs 1,417.33 crore while operating profit dropped 38.51 per cent to Rs 151.94 crore. Margins on tea sales declined 40.28 per cent.

“Though the first quarter is not indicative for the industry, financial performance was affected due to crop loss,” Aditya Khaitan, managing director of the world’s largest bulk tea producer, McLeod Russel India, said.

The industry has seen substantial crop loss in North Bengal and Assam. Assam saw a production decline over two successive months—May and June—in 2010. While during May, the region witnessed a three million kg loss in crop against the corresponding period of last year, June has seen the maximum loss in crop in both Assam and West Bengal.

In the first quarter, average of North Bengal and Assam tea prices was at Rs 119.12 a kg, compared to Rs 129.18 a kg. In South India, however, crop was higher than the corresponding period, which translated to a steeper drop in prices. The average price of South Indian tea during April to June stood at Rs 66.36 as against Rs 86.23 a kg. Branded tea company, Tata Global Beverages, faced severe erosion in margins as the bulk tea market made a strong opening beginning of the season.

Even as the first quarter performance looks gloomy, prices are likely to increase in the coming months on crop loss.

Stagnant production in India, shortfall in production in the quality belt of Assam and carry forward shortage should lead to firmer prices in India, said an industry representative.

“The crop situation particularly in Upper Assam (concentrated in the Doom Dooma area) has again been severely affected with nearly all the major tea groups operating in that region namely Apeejay Tea, Assam Co, M K Shah Exports, McLeod Russel and Warren Tea reporting significantly lower production,” the Indian Tea Association (ITA) said.

According to ITA estimates, July showed a further decline of two million kg of crop for the association’s members. “Even though South India was higher, the overall production in India is likely to be lower than last year,” Khaitan said.


TEA TROUBLE
Company
Margins
 
on tea
sales
 Growth in %
Tea
revenue
Total
revenue
Net
profit
Jun ‘09 Jun ‘10 Jun ‘10 Jun ‘10 Jun ‘10
Tata Global Beverages 16.06 9.24 4.15 7.75
LTP
Mcleod Russel 25.81 15.39 1.36 1.36 -39.54
Goodricke Group 18.37 13.62 2.95 3.14 -25.53
Jay Shree Tea 27.18 18.40 -10.98 23.18 -8.20
Warren Tea 21.9 14.52 16.99 16.99 -14.84
Harrisons Malayalam 16.84 -20.91 -17.74 10.90
PTL
Assam Company India 32.54 42.78 3.55 13.78 14.68
Bombay Burmah 19.5 22.18 0.52 16.12 44.57
Asian Tea 3.07 2.62 13.48 13.48 44.00
Rossell Tea 29.92 24.71 14.72 21.19 4.83
Total for industry 17.95 10.72 2.93 8.56 79.95
LTP; Loss to profit  PTL; profit to loss *

With only five months of tea production left with the tail-end of November and December, the industry expects the year to close with a shortfall of 40 million kg, which implies that pipeline shortage at the beginning of next season would be to the tune of 90 million kg.

Source: Business Standard