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TEA INDUSTRY IN INDIA

COMPREHENSIVE PROJECT-1
GHPIBM, SP UNIVERSITY
NOVEMBER 2015
SUBMITTED BY:
AAGAM SHAH (14M01)
MOHAMMADALI SURTI (14M17)
MONAL SOLANKI (14F18)
RIYA LALCHETA (14F33)

Objective Of The Study


To analyze the Competitive scenario of the

tea industry.
To study Factors affecting the tea industry.
To study Environmental impact on the tea
industry.
To study futuristic scenario of the tea
industry.

Source Of Data
This study is mainly based on information

gathered from secondary data. Relevant


books, business magazines, business
dailies and websites have been the source
of our information.
For applying theories into practical
scenario, we have referred our basic text
on financial management.

KNOWING THE TEA


Tea is one of the most popular and widely consumed

hot beverage worldwide.


Scientific name: Camellia Sinesis.
After

water, tea is the most widely consumed


beverage in the world.

It has a slightly bitter, and astringent flavor that

many people enjoy.


Tea is consumed in both hot & cold ways

HISTORY
Tea was likely originated in Yunnan, China during the Shang

Dynasty (1500 BC1046 BC) as a medicinal drink.


Tea was first introduced to Portuguese priests and merchants
in China during the 16th century.
Drinking tea became popular in Britain during the 17th
century.
The British introduced tea to India, in order to compete with
the Chinese monopoly on tea.

INDIAN TEA SCENARIO


More than 30 countries grow tea.
Indian Tea Industry is about 172 years old.
The market size of tea is estimated to be approx. `10,000

Crore with a penetration of more than 90% in the domestic


market.
India is the second largest producer of tea in the world,

fourth largest exporter accounting 30% of the world


production.
India, lost its first position as tea producer to China for the

first time, in the last 110 years.

INDIAN TEA SCENARIO


Despite its fluctuating position in the world market,

India is a key source for tea as well as the largest


market.
Tea trading in the domestic market is done in two

ways- Auction and Private Selling.


Packaged tea market is 213 million kg in volumes &

valued at Rs.60 billion. Urban-Rural split of tea


consumption is 56:44.

Global Beverage Market

Indias production
Consumption of Tea in india
760

860

881

903

2010

2011

2012

(M.Kg)
926

945

2013

2014

798

650

1998

2005

2007

MAJOR TEA PRODUCING STATES


Climatic

conditions keeps the


production of tea confined to
certain areas.

Major tea producing states in the

country are Assam, West Bengal,


Tamil Nadu & Kerala.
75% of the total tea produced in

India is accounted by Assam and


West Bengal together.

Product profile

BLACK TEA
GREEN TEA
OOLONG TEA
WHITE TEA

POLICY
Under the 12th plan `200 crore has been earmarked for the

development of small tea growers sector


Wide benefits/subsidies including re-plantation and rejuvenation

subsidy on the production of orthodox tea and setting aside a


part of the profits with National Bank for Agriculture and Rural
Development (NABARD) to reduce tax liabilities
Also the companies which are engaged in bulk tea

manufacturing receive monetary benefits under the Videsh


Krishi and Gram Udyog Yojana (VKGUY) scheme and duty
drawback scheme for the volume of exports undertaken which
adds to their income and profits.

Marketing Strategy Analysis


Tea Board was having responsibility to oversee and regulate

production and trading including exports, is already withdrawing


from the controls and regulation.
Focused efforts at developing and promoting an Indian Tea

Logo and assistance in brand-building approaches of major


players.
Geographical diversification of markets and consolidation of
existing primary markets.
A comprehensive exporter rating and reliability management
programme.
Comprehensive product quality up-gradation programme.

Issues and Trends In Tea Industr


Demographic changes
Climate change
Competition for land and productivity
Availability of labour and mechanization
Balance of power across the supply chain
Consumer attitudes to food value

SEGMENTATION
The global tea market, by product type is

segmented into leaf tea and CTC tea


(crush, curl and tear). Leaf tea is further
categorized into black tea, green tea and
oolong tea. CTC constitute 80 percent of
the tea market followed by others like
green tea, black tea and oolong tea.
The Tea is consumed in two forms 1)

Packaged Tea. 2) Loose Tea. Packaged Tea


constituting 55 percent of the total sales of
tea and remaining 45% from Loose Tea,
demand of which is majorly from the rural
markets of India.

SEGMENTATION
On the basis of geography based

segmentation, tea can be classified as


follows:
Darjeeling
Assam
Dooars and Terai
Kangra
Nilgiri
Karnataka
Travancore

DISTRIBUTION CHANNEL

Retailer

COMPETITIVE ANALYSIS

Financial Analysis

High Cost of Production is keeping the Margins Low

EBITDA/NET Profit
25
20

15.26

15
10
5

6.41

0
2015

-2.74
2014

2013

2012

2011

2010

2009

2008

2007

2006

-5
-10

11.12

-15
EBITDA margin

NET profit margin

Low Returns generated by Small Tea growing


Companies

10.39
7.57
2015

2014

-1.76
2013

2012

2011

2010

2009

2008

2007

2006

20.44
Return on Investment

Return on Equity

Low dependence on Borrowed Funds


Debt-Equity Ratio
1.47

1.6
1.4
1.2
1

Debt-Equity Ratio
Percentage

0.8
0.6

0.41
0.4
0.2
0
2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

Satisfactory Interest Coverage Ratio


Interest Coverage Ratio
7

3.28
Percentages

Interest Coverage Ratio

0
2015
-1

2014

2013

2012

2011

2010

2009

2008

2007

2006

-0.44

Efficient Working Capital Management

80

70

60

50

Receivable days
Inventory Days
Payable days

40

30

20

10

0
2015

2014

2013

2012

2011

Sales growth
Net Sales Growth(%)
30

25

20

14.26
Percentages

Net Sales Growth(%)

15

10.7
10

0
2014

2013

2012

2011

2010

2009

2008

2007

2006

SWOT Analysis
STRENGTH

WEAKNESS

STRENGTH

1) Strong research backed by well established


1)High cost of production
research institutes.
Strong
Diminishing
availability of workforce
research backed 2)
by
well established
2) Strong domestic market.
3) Unorganized nature of small growers.
research
institutes.
3) Second
consistent supplier
after China.

Strong domestic market.

SWOT
Second consistent supplier after China.
Analysis
WEAKNESS
OPPORTUNITIES

Highcostofproduction

THREATS

1)An exclusive forum for resolving their differen


Diminishing
ces over common issues.
availabilityofworkforce
Low cost of production of teas in other countries
2)Narrowing down of the gap between supply an
theyear production in other countries.
Unorganized
nature ofRound
small
growers
d demand.
3) Good awareness at world level.

PESTEL
POLITICAL :

Such as Government of India regulate the production of


tea, improve the quality of tea, promote cooperative
efforts among manufacturers of tea, secure better
working conditions etc.
ECONOMICAL :

Generally the market is being segmented on the basis


of income. We can classify the tea market in to three
segments premium, popular, and economical.
SOCIAL :

Changing demographics in terms of urbanization,


health conscious behavior, and increasing aged population
affecting the world total consumption.

PESTEL
TECHNOLOGICAL:

Tea industry is not an industry where overnight changes


have to be made due to new technology. Being highly
labour intensive technological factors is least affecting the
tea industry.
ENVIRONMENTAL:

To maintain the ecological balance, intensive use of


fertilizers is needed to protect the plants against pest
infestation and to enhance productivity.
LEGAL:

Employment, Competitive, Health and safety, Product


regulations are in relation to consumption and production
of tea.

FUTURE OUTLOOK
Climate changes have been resulted in the

fluctuation in the production


Lack of re-plantation of old bushes have not

been picked growth in Indias productivity.


Tea industry is labour intensive and labour

cost is quit high which is affecting Assam


teas competitiveness in the global market.

FUTURE OUTLOOK

Demand for Kenyan teas is increasing due


to relatively younger bushes which are of
higher
quality
which
Increase
the
competition in the Global Tea Market

Coffee is emerging as near perfect


substitute and is posing greater challenge
to tea industry.

CONCLUSION
Quality standards are very primary need.
Indias poor performance is responsible
because of high input costs, the old age of
the bushes, unskilled labour, lack of
infrastructure outdated machinery, high fixed
and labour cost etc.

THANK YOU

REFERENCES
Onicra. (2014). The Indian Tea Industry. Onicra.
Gorkhaland. (2008). Gorkhaland | My Gorkhaland.

Retrieved from
https://mygorkhaland.wordpress.com/category/gorkhal
and/page/4/
ibef.org. (2014). Tea Production, Exports, Area under
cultivation. Retrieved November 6, 2015, from
teacoffeespiceofindia.com:
http://www.teacoffeespiceofindia.com/tea/tea-statistics
ibef.org. (n.d.). Different types of teas, TEA VARIETIES.
Retrieved November 6, 2015, from INDIA BRAND
EQUITY FOUNDATION:
http://www.teacoffeespiceofindia.com/tea/tea-varieties

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