The Hindu Business Line : Jaswantspeak adds pep to tea stocks

FOR the tea industry that is dogged by falling prices and sluggish exports, the announcements made by the Union Finance Minister, Mr Jaswant Singh, in his interim budget, offered some reprieve.

Market sources said the proposed special tea term loan, as part of the revival package for the industry was the main trigger for tea company stocks to gain momentum today.

The subsidy of Rs 8 per kg of made-tea (CTC or orthodox) for a period of four months to growers provided a further shot in the arm. "This would mean that a small grower would receive a subsidy of Rs 2 per kg of green leaf over and above the current market price he is paid per kg of leaf," Mr Bhojarajan, President of the Nilgiris Small Growers Association and Vice-Chairman, Tea Board, told Business Line.

Four kg of green leaf make up one kg of made-tea.

However, industry sources were quick to clarify that the subsidy was a onetime assistance only. "Three years ago, the growers had been offered a subsidy of 50 paise per kg of green leaf, with a subsidy of Rs 2 per kg of made tea. The recent announcement provides them a lot more support. Now they should make the best possible use of this assistance," sources said.

Industry sources maintain that the special tea term loan would benefit the industry as a whole given that most tea companies have huge debt exposures today.

Thus tea stocks from the likes of Bombay Burmah, Warren Tea, Goodricke Group, George Williamson, Dhunseri Tea and AFT Industries moved up on sustained buying interest. "The special term loan to small growers will help the 1.3 lakh growers in various states in India, including the 65,000 small tea growers in the Nilgiris," Mr Bhojarajan added.

According to him, the announcement of a fresh loan of Rs 2 lakh to the small tea growers by banks at 9 per cent interest would help the small tea growers improve and maintain their field. "Consequently, they may be in a position to harvest good quality green tea leaf which would fetch them more remunerative prices," he added.

Mr Bhojarajan, however, mooted that what would benefit the industry even more is if at this juncture, the Tea Board could subsidise the interest to the extent of four per cent as is done by Coffee Board.

All India tea production for 2003 has been pegged at around Rs 856-857 million kg (mkg), while tea exports are expected to end the year at around 155-160 mkg. George Williamson ended the day at Rs 88.65 up 5.41 per cent (BSE), while Jayshree Tea closed at Rs 62.25, up 9.98 per cent. Bombay Burmah closed at Rs 66, up 6.02 per cent, while Dhunseri Tea closed at Rs 27.90, up 8.14 per cent, and AFT Industries ended at 69.30, up 8.28 per cent