Key Points
Rating agency ICRA has said that the proposed wage hike in the tea estates of West Bengal is likely to see a margin contraction of the bulk tea players by around 500 basis points at a steady state level of realisation...
An analysis of the auction prices during CY2022 indicates that prices of North India (Assam and West Bengal) crush, tear, curl (CTC) teas produced by the top 50 estates, at Rs. 306/ kg, was 59% higher than the overall auction average," said Kaushik Das, Vice President & Co-Group Head - Corporate Ratings, ICRA...
ICRA, in its latest report on bulk tea, has highlighted that the total wage rate per day (including bonus, other cash components, and benefits) for tea estate workers in West Bengal is estimated to increase by 6% w.e.f..
As per ICRA estimates, the proposed wage hike would increase the cost of production by Rs. 9/ kg, resulting in margin pressure for tea producers in West Bengal, which contributes around 37% to the North India production...
Any near-term hike in wages in Assam, a major producer of bulk tea contributing to ~50% of the all-India production and ~60% of the North India production, would materially impact the profitability of all North India-based tea estates unless there is a commensurate increase in tea prices...
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