The Hindu Business Line : Godfrey Philips tea exports dip on EU export norms

GODFREY Philips India Ltd (GPI) has registered 20-25 per cent dip in tea exports during the first half of this year because of stringent pesticide-residue norms introduced by Germany and the rest of the European Union.

Better known for its cigarette business, GPI is a merchant-exporter of tea and has a considerable presence in the `mid-premium plus' packet tea segment in Uttar Pradesh, Punjab, Haryana and Jammu and Kashmir.

Company sources said a lack of guarantee on the part of producers and stringent tests done on arrival of consignments by the importing nations had made tea exports to high value markets such as Germany and a few other European nations somewhat risky.

Sources said tea producers were not prepared to share the risks involved in such exports. Consequently, "we have decided to lie low insofar as exports are concerned till there is enough infrastructure available at home to guarantee the quality of a particular produce before it is exported," the sources added.

The beating on the export front notwithstanding, GPI has chalked out a growth plan on the domestic front. "Though we have been present in the tea sector for quite some time, it is only since last year that we have decided to pursue a growth plan in tea," sources said.

The business grew by 30 per cent in volume terms and roughly 32 per cent in value during last year. In 2004-05, 45 per cent growth was registered in volume terms and 47 per cent in value as against the targeted growth of 40 per cent for the entire year."

The company is targeting further consolidation of its presence in UP, Punjab, Haryana and J&K coupled with a test launch in Madhya Pradesh during the year.

"As a company our strength lies in distribution," the sources said. "Though the cigarette business has a strong network in the north Indian markets, including the major three tea consuming states of Madhya Pradesh, Gujarat and Rajasthan, so far we have not leverage it for the growth of our tea business," they added.

Taking a wider canvas, tea exports from India during the January-August have been on the way up. According to statistics available from Indian Tea Association (ITA), exports during this period rose 16.6 per cent to 107.7 million kg against 92.4 million kg in the corresponding period of 2003.

ITA sources said Indian exporters, in general, were faring well in European markets. Though they had registered a gain in the traditional market of the UK, exports had suffered a minor setback in Germany.

Tea exports to the UK during January-July 2004 went up to 6.23 million kg against 5.71 million kg in 2003. However, exports to Germany dropped to 2.62 m kg from 2.83 mkg.

Average price realisation for Indian exporters in all European countries declined. In the UK it dropped to Rs 82.74 per kg from Rs 99.70 per kg and in Germany to Rs 188.74 per kg from Rs 217.35 per kg. However, in the Polish market prices improved to Rs 66.71 per kg from Rs 55.16 per kg.

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