Tea Commodity Market Prices Kenya and India

Here is information about tea commodity market in Kenya and India, factors increasing tea price and tea supply 2012.

Q: We understand that on account of the drought in Kenya, there will be a shortage in terms of the global supply and that will aid tea prices. Could you tell us what is the expected industry shortfall and how much of a price increase can we see in India?

A: Frankly with or without a drought in Kenya, there is going to be a world shortage of tea. I am reasonably bullish on tea prices and the Kenyan drought is an icing. But weather conditions may be bad one month and they get back to square one in the following month. So that is really a very temporary phenomenon.

Q: As of now what is your expected production shortfall for India maybe and how much can the prices go up from here, where do they currently stand?

A: I think prices of good tea will continue to be reasonably bullish in the year 2011. If the shortfall is close to about 50-60 million kilos, the world supply, there is no way in which we can stop tea prices from going up.

Q: In Q3, your revenue from tea was around Rs 50.6 crore, what is your expectation going forward in terms of revenue potential, once this situation in Kenya possibly fructifies?

A: Tea being an agricultural product and since the crop varies from month to month and particularly in North India almost 75-80% of production is during the July-October period, so it's really very deceptive. The quarterly results and the quarterly prices don't really reflect that you multiply that by four and that is the annual output. That doesn't happen.

Q: Can you give us an update on the demerger of the fertiliser business and where the entire deal was expected to be completed probably by January to February?

A: I think the thing is on course. Bureau of Industrial and Financial Reconstruction (BIFR) has to approve this Draft Rehabilitation Scheme (DRS) which is still with them. I expect now that thing to be completed by end of March. There has been some delay in BIFR, but hopefully the deal should get completed by end of March.

Q: Are these some short of procedural delays?

A: Yes, they are all procedural delays because in fact all the lenders have given their consent. It is now just a procedural delay.

Q: And there will be no change, earlier when we spoke to you, you said the entire debt will get transferred to the subsidiary, so no change in that?

A: Absolutely that is being transferred, will be paid off by the investor.

Q: Could you help us with quick estimate of how you are hoping to end the year with in terms of revenue and also at an operating level, the margin performance?

A: The figure for FY10-11 will depend on when the scheme gets approved; the balance sheet will be reflected. If it gets approved by March 31, there will one set of figures. If it is approved in April, there will be another figures.

Q: Just purely for your tea business?

A: It will be purely for tea business, but if BIFR order comes in by April, it will again reflect some of the fertiliser backlog.

Category: india tea consumption, kenya tea trading, Tea, tea commodity, tea market 2012, tea prices