The Hindu Business Line : Kolkata tea auctions may be disrupted

Fallout
Rates increased ad valoren to 0.3 per cent in Kolkata; 0.22 per cent in Guwahati & 0.2 per cent in Siliguri.
Tea board has obtained a caveat from Kolkata High Court.
Buyers have come up with a new proposal.

Kolkata , April 11

Tea auctions in Kolkata are likely to be disrupted from next week as the buyers are unhappy over a recent Tea Board directive increasing their brokerage.

Auction House sources said the Tea Board, through a directive issued on Friday evening, has changed the buyers' brokerage from a flat rate of Rs 5 per 100 kg to an ad valorem one.

NEW RATES

As per the directive, effective from April 17, the new rates are 0.3 per cent in Kolkata, 0.22 per cent in Guwahati and 0.2 per cent in Siliguri.

The buying community said the Tea Board did not discuss the matter with them before taking a decision. Brokers, on the other hand, said they had been urging the Tea Board for quite some time to hike their buying brokerage.

"Yes, they were pressing for it, but were suggesting that the flat rate be increased to Rs 0.55 per kg from the existing Rs 0.05 per kg. On ad valorem basis, we would have to pay a higher brokerage," a buyer said.

GETS CAVEAT

Apprehending the displeasure of the buyers, the Tea Board had got a caveat issued by the Kolkata High Court through their legal firm, Fox & Mandal.

Mr Basudev Banerjee, Chairman of Tea Board, told Business Line that a directive had been issued and he was meeting the buyers on Wednesday to dispel their misgivings. "Since 1999, the matter has been discussed with the buyers. After all you will have to take a decision and carry on," he added.

NEW PROPOSAL

Meanwhile, buyers, it is learnt, may forward a new proposal as a replacement for the Tea Board's directive and which would be in line with the practice followed in South Indian auction centres.

In South India, buyers' brokerage is only Rs 2 per lot. However, the brokers there do not deliver the DOs (delivery orders) and samples to the buyers' office. The brokers also give a 15-day credit to buyers in North India.

"Big buyers do not need this service from the brokers. Moreover, there are buyers who are non-sample holders. They are the biggest losers. Tea Board also needs to look after the interests of this section," sources said.

AUTHORITY QUESTIONED

A leading corporate tea buyer questioned the authority of the Tea Board.

It is felt that the Tea Board does not have powers to issue such a directive under the Tea Marketing Control Order (TMCO).

When asked, Mr Banerjee said, "I think I have the powers to issue the directive as otherwise I would not have done it."