MUMBAI (Commodity Online): A slump in the tea prices is in the offing as the India’s largest tea maker Tata Global Beverages Ltd (BOM: 500800), formerly Tata Tea Ltd, hinted at a softening of domestic raw tea prices in coming months due to the sale of second flush tea from Assam.

Raw tea prices had peaked up by Rs.15-20 per 1 kilogram in last couple of months due to adverse weather and pest attack in the plantation area in Assam led by lower production in May.

“Within two weeks this trend will reverse and go the other way. So the slight hump we are getting in commodity prices is let off from the sale of second flush quality tea from Assam,” Percy Siganporia, deputy chief executive officer of Tata Global Beverages Ltd said.

Globally too tea prices are seen falling due to better crop in tea-growing regions like Africa and Sri Lanka, he added.

“There is a definite downward swing which has taken place in all Africa origin teas and that has been triggered by significantly higher crop in the region compared to preceding year. In Sri Lanka, they have had a 35% enhancement in crop in the period,” he said.

Commenting about company’s ongoing talks with global cola major, Pepsico over a possible joint venture in the non-carbonated soft drinks space, the official maintained that the talks have been positive and the two companies are closer to signing a deal.

The Tata-group entity had in April, said that the two companies had signed a memorandum of understanding to explore the possibility of a joint venture.

“The talks continue in a very cooperative and a positive manner by both team members. We will comment (more) on it once the joint venture is signed, which I think is not too far away in terms of time horizon,” Siganporia told reporters.

On Thursday, the company announced its first quarter financial results for which the company had reported a consolidated net profit of Rs 455.6 million for Apr-Jun compared with net loss of Rs 195.7 million in the year-ago quarter.

Excluding exceptional foreign exchange loss of Rs 1.86 billion in the year-ago quarter, Tata Global Beverages' profit was down 30% year-on-year. The company's raw material expenses were up 15% year-on-year at Rs 5.23 billion in the three-month period.

The company stocks traded with gains of 1.07% from the previous close on the Bombay Stock Exchange (BSE).

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