The Hindu Business Line : Coonoor tea prices fall; volume low

Coonoor March 28 Prices dropped around Rs 2 a kg on the average at the Coonoor Tea Trade Association auctions here last week despite the volume being low as the demand was inadequate to absorb the offer at higher bids.

The volume of 5.44 lakh kg was the lowest so far for the year but buyers said more teas were available in the market outside as volumes had been withdrawn in the last one month with the exporter refraining to buy and the upcountry dealers holding doubts on the adjustability of CST (central sales tax) against VAT (value added tax).

`VAT-only' auctions

For the first time since the auctions were declared to be under "VAT-only" a month ago, some export purchases were noticed last week. The purchases were said to be for Russian market and the bids ranged from Rs 41 to Rs 46 a kg.

Auctioneers said exporters who operated on the CTC leaf grades were keen to adjust the bids against VAT. But, some purchases took place because of the commitment made by the exporters. "We expected some purchases for Pakistani market, but this was noticeably absent," an auctioneer told Business Line.

On the corporate buying front, Hindustan Lever Ltd bought good medium grades.

Upcountry buyers had their own inability in some cases because of reduced orders arising from uncompetitive edge after paying 4 per cent VAT. Many dealers said the year-end cash crunch also slowed purchases.