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Despite tea prices in the international market ruling lower in dollar this year, exporters of Assam tea are likely to end up with a net gain this year, riding on rupee depreciation.
The Indian currency has depreciated by 12 per cent since April this year. The gains may reflect in the balance sheet of exporters in the peak seasons of second and third quarter of this fiscal.
“In dollar terms, the international prices may have come down a little bit but, in rupee terms, it is not so,” said Kamal Baheti, Chief Financial Officer of McLeod Russel Ltd. Baheti, however, restricted his argument mostly to quality Assam tea in an interview to Business Line .
The world’s largest tea producer is targeting to increase its exports to 27 million kg from 25 million kg last fiscal.
According to him, higher production in Kenya has affected the demand for CTC tea. This apart, Egypt, which is a big tea consumer, has not been active so far this year due to civil disturbances.
Demand for CTC tea is slightly subdued. However, demand for quality tea from Assam has not been impacted. Any exports of quality tea from India should be in line with last year. Exports of orthodox tea will increase because of demand from West Asia and shipments to Iran through resumed rupee trade, Baheti said.
Interestingly, Baheti expects global tea prices to firm up during the residual part of the fiscal to end at the same level as last year, or slightly higher. The move is anticipated to be driven by recovery in Kenyan tea during the later parts of the year.
During the January-May 2013 period, tea production in Kenya was up 52 per cent at 195.1 million kg compared with 128 million kg during the same period last year.
During January-March 2013, exports were higher by 15 million kg. “Though we are yet to see the April-June figures, it is likely that the total exports will be higher during the first half of 2013,” an official with the Indian Tea Association said.
He confirmed that the despite the overall softening of global prices, quality teas are earning handsome returns.
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