Mumbai: Harrisons Malayalam Ltd, the largest tea producer in south India, expects tea exports to drop 29% in FY10 due to a production shortfall and firm domestic demand, a top official said.
“Last year we touched about 170 million kgs. This year we are expecting a figure of 120-130 million kgs because, simply put, quantities are not there and plus demand internally is good,” managing director Pankaj Kapoor said.
A production shortfall due to severe drought in the major growing regions of the country is expected to hit tea output severely, he said in a telephone interview.
In April-June, the company produced 3,300 tonnes compared to 4,100 tonnes the same period last year.
“In the first four months our production is down by about 20%. For the year, we were expecting to do 10% better but given the current conditions I am expecting that at the best case scenario we can be at par with last year,” Kapoor said.
However, good local demand and a supply shortage is helping the company get better realisations due to high prices, he said.
“For us current prices are in a range of Rs90 (per kg) in bulk. At the same time last year it was Rs70 (per kg). We are getting more for our orthodox teas,” he said.
Orthodox tea is a premium quality tea and fetches a better price than the CTC (crush, tear, curl) variety.
Harrisons Malayalam is also spending Rs160 million in the next four years on tea replantation, out of which Rs50 million will be spent in the current fiscal.
To increase exports, it has set up two new factories for manufacturing orthodox tea, taking its capacity to 60% from 40%, up by 85-90 tonnes per day, Kapoor said.
The company, which is also the country’s largest rubber producer, is planning to spend Rs320 million in the next three years on rubber replantation in 1,700-1,800 hectares.
Rubber prices, which are currently on the higher side due to a production shortfall, are expected to fall by 15-20% in coming months as demand in overseas markets is low, Kapoor said.
Prices of the most-traded RSS-4 (ribbed smoked sheet) variety are in the range of Rs98-100 and they should come down to Rs85-90, he added.