Jayshree Tea has been in focus on back of rising tea prices. The stock was up in trade early on Tuesday.
Throwing more light on the price trajectory going forward DP Maheshwari, MD and CEO of the company said that prices have firmed up because of short fall in production and more demand.
Exports prices are also doing well because of less crop in Kenya and other African countries, while demand is on the rise.
Tea prices are a factor of demand and supply, said Maheshwari.
Domestically, upto August-end India was ahead of last year's production by 33 million kilogram, which was an all-time record but in September, there was record loss of crop of around 44 million kilogram due to bad weather.
Therefore, we are now behind by 11 million kilogram, he said, adding that October-November put together, production will be behind by around 10 million kilogram. Therefore, overall we will be behind by around 21-25 million kilogram by Nov-end, he added.
Moreover, every year there has been an additional demand of 35 million Kilogram. So by November-end, the factual production will behind by around 60 million kilograms and that is quite a bit. So prices will go up and more so, for quality tea.
For quality tea the prices are expected to go up by around 20 percent. They are already they are up by 5-7 percent, he said.
On the price outlook he said the range varies from state to state and the type of tea, adding that hike in prices has been there for every category of tea.
On production front, he said the produced tea is sold with a lag of around a month and half. On an average 55 percent of the company has been sold and 40 percent is yet to be sold, said Maheshwari. So with hike in prices and 40 percent yet to be sold, it will auger well for the company, he added.
He said, in the last four years, the average price of tea has not increase but the cost of production has gone up by Rs 50-60 per kilo. Therefore, if prices do not go up then industry will faces losses.
There is a hope that prices will go up by around Rs 50/kg during next year, said Maheshwari.
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