Kolkata: Indian tea prices are expected fall by 10% over the next three months on seasonality factor, said a senior industry official on Tuesday.
“The three-month period from July produces nearly 60% of the total crop. So during this period the tea prices should come down by around 10 percent,” said Aditya Khaitan, managing director, McLeod Russel India Ltd on the sidelines of the company’s annual general meeting.
McLeod Russel is one of India’s largest tea exporters and owns 58 tea gardens.
The Indian tea industry has seen a stiff price rise from April on the account of severe drought in growing regions and a crop shortage in Sri Lanka and Kenya.
In the current fiscal, tea prices rose by 25-30% compared to last fiscal, he said.
However overall, Khaitan added, tea prices would be higher by 20% this year on an average.
“After October, usually there is no production in the areas like Assam, so again by the end of the year, prices would rise.”
“We started the season with 25 million kg shortage in the pipeline, and next year it would go up to 75 million kg, so tea prices would be on the higher side going forward and it is good for the industry,” he added.
McLeod Russel is also looking to acquire a tea garden with capacity of around 5 million kg in Kenya, Khaitan said.
“As a company we are looking to acquire gardens abroad. In the next 3-5 years, 25-30% of our tptal production should come from gardens based outside India,” he said.
A tea garden with annual capacity of 5 million kg would cost around $10 million in Kenya, he added.
McLeod’s total capacity is 80 million kg of which 4.5 million kg is produced in Vietnam, where it acquired a garden last year.
Earlier In June, the company said its capacity would go up to 84.4 million kg in FY10 from 75 million kg last year, and with tea prices seen higher this year, revenue is expected to rise 20% over Rs2.08 billion reported in the last fiscal
Shares in McLeod ended up 1.28% at Rs138.50 in the Bombay Stock Exchange.