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Last Updated : Jul 05, 2011 01:20 PM IST | Source: CNBC-TV18

Assam Co expects rise in tea prices on global shortage

Satish Dhall, CEO - Tea Division, Assam Company in an interview with CNBC-TV18 said that he anticipates tea prices to increase from the current levels due to global shortage of tea.


Satish Dhall, CEO - Tea Division, Assam Company in an interview with CNBC-TV18 said that he anticipates tea prices to increase from the current levels due to global shortage of tea.


However, he believes that growth in tea industry will be backed by gap in demand and supply and the rise in price will have positive impact on the performance of the industry particularly, Assam Company.


Highlighting the company's performance he said that the volumes were nearly 36% higher this year as compared to last year. This year (January to December) the production would be close to 16 million tonne.


Also Read: Expecting 8% increase in tea output in FY12 says McLeod Russel


Below is the verbatim transcript of Dhall's interview with Udayan Mukherjee and Mitali Mukherjee of CNBC-TV18. Also watch the accompanying video. 


Q: Could you first start off by lining up how you see the demand supply situation right now both global and local?


A: The demand is going to be good as far as the tea is concerned. This is because most of the major producing tea countries are such as Kenya, Sri Lanka, including India is behind production in a sense there are going to be little shortage of tea. That is one reason.


The second reason is, the major producing countries are also going to have a shortage because their internal demand is on the increase. As a result of that the exportable surplus is going to be much more than the normal.


As far as domestic market is concerned, the rise in price will have positive impact on the performance of the industry particularly, Assam Company. We follow the accounting year and the first, second and the last quarter the results will be much more visible. This is because the large volumes of tea will be sold including the export. I see Indian industry booming.


Q: What is the African crop situation right now and by how much do you see international prices moving up because of the crop shortages that you mentioned?


A: Africa is almost 35 million down at the end of May and the indications are they are going to fall maybe a little more. As a result of that the prices are going to be much better, is going to be firmed up in India which is indicating now. As far as Indian industry is concerned they are almost Rs 10-15 up from last year.


Q: Do you expect prices to harden further? How much do you expect your own realizations to grow this quarter and next quarter?


A: At the moment we are Rs 5-6 up but is likely to go up because when we sell large volume of tea locally as well as export. We have a very large commitment as far as export is concerned, and in our case the prices are likely to be firmed up.


Q: But what is it that prices are going at auction right now and how much do you expect them to move up to per kg?


A: At the moment it is ruling at about Rs 10-50 more than last year. Like I said the indications are there might go up little further.


Q: What would your volumes be like this year compared to last year?

A: As far as industry is concerned, last year there were about 965 million, this year they are going to reach a level of maybe 990 or 995 plus, As far as Assam Company is concerned, we are doing exceedingly well. We are almost 36% up on last years volumes and the production for the year i.e January to December is going to be close to 16 million tonne.



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First Published on Jul 5, 2011 10:01 am
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