Kolkata, April 8 - Tea plantation firm Goodricke Group expects tea prices to remain firm in 2008/09 on rising consumption in India, even as input costs limit realisations, a senior official said.
The firm sees input costs rising between 5 percent and 7 percent during the year, A.N. Singh, chief executive officer, told Reuters on Tuesday.
Labour costs comprise 60 percent of the output cost of the firm, he said. "Rising labour, coal, diesel and fertiliser costs are limiting realisations."
India's tea output in 2007 fell 1.18 percent to 944.70 million kg, according to state-run Tea Board.
But tea consumption is seen rising by as much as 3.5 percent in 2008, from 780 million kilograms a year ago, Basudeb Banerjee, chairman, Tea Board, told Reuters.
"Rising consumption will create demand on a year of lower tea stock from last year," Singh said, adding this will help improve profits.
Goodricke will also spend 110 million rupees during the fiscal to uproot old tea bushes and modernise units in India.
The investments will be funded through internal accruals and term loans, he said. The firm has tea plantations spread over 10,000 hectares in India.
Domestic tea auction prices have risen to nearly 80 rupees for a kilogram, industry officials said.
Goodricke sees average rise of 5 rupees per kilogram for different tea varieties in the near term, Singh said.
Goodricke's total crop rose by about 10 per cent to 21.2 million kg in 2007.