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Bulk tea companies face pressure

Bulk tea companies are expected to continue to face margin pressure in FY 2020, despite marginal improvement in financial performance in the first half of the fiscal year. As concluded by ratings agency ICRA, this is due to tepid tea price movement for these companies. During the first eight months of FY2020, tea auction prices in North India (NI) remained flat, due to continued pressure on CTC tea
prices. Firm orthodox tea prices provided some respite, their impact was low due to limited volumes in total NI production. Also, while CTC tea prices for the organised segment witnessed an improvement (around 5-6%) during August-October 2019, this appears to have tapered down in November 2019.