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Russians brew tea joint venture plans

Calcutta, Nov. 4: Russian tea companies have evinced interest in joint ventures with Indian tea companies.

Golden Elephant Company, a leading tea firm in Russia, has already signed a memorandum of understanding (MoU) with Indian Tea Association for a possible joint venture. The agreement will provide a platform for exchange of regular information between the association and the Russian firm to facilitate trade.

Golden Elephant will also provide detailed company information for prospective joint venture partners in India, the MoU said.

Other Russian tea companies who are also interested include Grant Tea House, Sapsan (a leading distributor), Orimi Trade, May Tea Company and Tea World Company.

Indian tea exports to Russia has dwindled to 21.89 million kg in the first six months of the current year and the price realisation is also down to Rs 62.14 per kg. In the corresponding period of 2002, the Russian exports stood at 27.63 million kg and the price realisation was Rs 64.64 per kg. Total Indian exports in the current year is 71.54 million kg and the unit price realisation is Rs 92.10 per kg.

“Exports will be up in October-March. We expect a better performance on the export front in the current financial year,” Indian Tea Association president C. K. Dhanuka told The Telegraph.

Dhanuka said that Russian importers have pointed out certain areas which need to be addressed immediately.

“There is a need to upgrade import quality. The Indian tea industry will also have to produce orthodox tea which is preferred by Russian importers,” he added. The association had made a recent visit to Russia.

It was clear from the visit that importers were seeking to reach cost and freight terms at St Petersburg which is now an all-weather port given efficient ice breaking facilities. Logistics were, therefore, simple and would not involve any land transfer as far as producer exporters were concerned.

Russian consumers are still origin-sensitive and India will have to undo the damage caused in the mid-90s by cheap and poor quality tea sent to Russia, industry officials added.

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