Fast moving consumer goods major Hindustan Lever Ltd (HLL) is planning to tap markets in the UK, Poland and Germany to export south Indian tea. The initiative is aimed at overcoming the present crisis of oversupply and declining prices.

S K Dhall, plantation chief executive of the Tea Estates India division and Doom Dooma India division of the company, said, "It is a question of survival and not profitability. Major markets for HLL's south Indian tea were Russia and Kerala. However, with limited Russian buying, the company has no option but to look for opportunities elsewhere."

India exports around 20 million kg to the UK, 5 million kg to Germany and 10 million kg to Poland.

The price of CTC in south India is oscillating between Rs 30 and Rs 35 per kg, and that of orthodox in the Rs 50-55 a kilo range. Prices are generally down by around Rs 15-16 from last year's for the same grade of tea.

"It is almost impossible to recover the cost of production. For every kg sold we are incurring a loss of about Rs 15," Dhall pointed out.

HLL is laying emphasis on quality upgradation as part of its effort to make south Indian tea acceptable in the target markets.

"We would like to bring it to the level of Assam type of teas in terms of quality to sell it anywhere in the world," said Dhall.

The company also plans to reduce the cost of production by increasing bush productivity and workers' productivity. Plans for mechanisation of plucking and pruning are also on the anvil.

Dhall, however, clarified that the mechanisation would not lead to any reduction in workforce.

"Increase in bush productivity would require more people," he said. To retain buyers in the domestic market, HLL has cut and rationalised its packet tea prices in the lower segment to avoid losing market to low priced loose tea.

The company is set to introduce different variants of tea in the coming months in order to widen the market. It is also planning to roll out iced-tea nationally after test marketing in cities such as Bangalore and Hyderabad.

Business Standard -India (13/12/2000)

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