The Hindu Business Line : Restrained buying at Coonoor tea auctions

Coonoor March 9 In keeping with Thursday's leaf grade sales, nearly 60 per cent of the dust grades offered at the Coonoor Tea Trade Association (CTTA) auctions went unsold on Friday.

The unsold portion of the last two weeks was offered for sale on Friday. It is estimated that some 3.44 lakh kg remained unsold in the previous auctions. "Some of them had been sold out lot. Some have gone to Kochi. So, the exact volume sold and the price fetched would be known only later," an auctioneer said.

More buyers

As dust grades were being sold more buyers for Tamil Nadu markets operated on Friday. The buyers for inter-state sales were selective as they are facing the 4 per cent VAT against the 2 per cent CST so far. On an average, teas lost Rs 3 a kg over the previous sale.

Exporters refrained from buying today also.

"We see no merit in paying 4 per cent VAT and buying for export here, when we can purchase at nil tax at Kochi auctions. We reckon that it would be around two months before we could get refund on the VAT given the laborious paper work and the lethargic attitude of the officials.

"Also, most of our operations are in Kochi, but if we transfer the tea bought here to our Kochi unit, we cannot claim refund of VAT. Nearly 40 per cent of the tea exporters in Coimbatore are 100 per cent EOUs, who also find it difficult to entertain refund operation of VAT. Most of us prefer to buy in Coonoor if only the export purchase is exempt from tax as it was until now," a leading exporter told Business Line.

Insufficient orders

But, exporters are lying low for another reason as well — they do not have enough orders on hand. "Last year, we did a lot of buying for Kenya because the crop was down there and they needed tea for re-export to Pakistan, Egypt, Dubai etc. Now, the crop has picked up there. So, they are scouting for only cheap teas elsewhere. They are asking dust grades for around Rs 40 a kg, but the required quality cannot be bought for less than Rs 46 at the auctions itself," an exporter explained.

The buyers for Russia also said they could wait for some time, as strong orders are yet to come. "There is, however, demand for quality orthodox teas, but the volume of such teas available here is low. We cannot even make out a full container of such preferred orthodox teas in the present supply situation," the exporter said.

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