Tata Tea, Duncans go bullish over tea price hike

MUMBAI: The decision of rising retail tea prices has come as a booster for tea making companies as the stock price of these companies shot up sharply today as retailers eye a rise of Rs.20-40 per kg of tea across all varieties with immediate effect.

The rise, according to traders was inevitable considering the short supply owing to crop failure, insufficient rains, increased domestic consumption and higher exports. The traders had decided to hike the prices by Rs.40 per kg of tea over the next couple of months.

The rise would benefit the companies in terms of higher revenue and increased profitability, which was reflected in company stock movement today on the bourses. Leading tea stocks traded with heavy gains on the Bombay Stock Exchange today.

Tata Tea Ltd gained over 4% during the morning trading session and the stock was trading at Rs.700, while Bombay Bumrah Trading Corporation Ltd was trading at Rs.220.60 up 3%. The sharp buying was seen in Duncans Industries Ltd, which was locked at Rs.8 with gains of close to 6%.

Kolkata based, Jay Shree Tea & Industries Ltd shot up by over 12% at Rs.162.40 on the news of retail price hike. The BK Birla group company specializes in Darjeeling and Assam tea.

All national as well as regional tea marketing companies have come forward to increase tea prices by up to Rs.40 per kg in two phases, with the first hike of Rs.20 per kg to be effective immediately.

Tea industry experts opined that the industry faced a severe shortage due to drought in Siliguri area in West Bengal and Assam, there was a crop failure of about 40%, which caused a situation of supply shortage.

The total tea production in the last fiscal was 891 million kg, which was 35-40 million kg lower than the previous year. Considering the rise in retail prices due to the shortfall, traders have demanded relaxation in tea imports.

Presently, tea imports other than SAARC countries attracted 100% duty, while imports from SAARC nations would have 7.5% duty. The traders have demanded to allow imports of tea at the uniform rate of customs duty at 7.5 per cent from Kenya to avoid further possibility of price hike.