EXPORT OF TEA TO RUSSIA

PRESENTED TO-PROF. SHRIDHAR CHARI

PRESENTED BY-GAURAV TAKKARROHIT GOYALRAMANDEEP KAURRUPINDER KAUR

2

International Business

RUSSIATarget

Major Tea Producers in India

• • Godrej Tea Limited• • Hindustan Unilever Limited• • Tata Tea Limited• • Badireddy Global Private Limited• • Guru Sharnam Overseas• • Hanumatey Exports Private Limited• • Jay Shree Tea & Industries Ltd• • Kirti Enterprises• • Krishna Agrotech Ltd

RANK COUNTRYEXPORT VALUE 1000

US$

1 Sri lanka 1,476,881

2 China, mainland 965,080

3 India 867,143

4 Kenya 858,250

5 United Kingdom 262,959

RANK COUNTRYEXPORT VALUE 1000

US$

1 Sri lanka 1,476,881

2 China, mainland 965,080

3 India 867,143

4 Kenya 858,250

5 United Kingdom 262,959

World ranking: Tea, by Production (tones) 2012

WORLD TOP 3: HIGHEST TEA EXPORTS IN THE WORLD 2012

 

Why Go GLOBAL?

To increase sales, revenues, and

profits

Competitive advantages in new

markets

Excess capacity

Limited or declining home

market

Domestic competition

entering international

markets. “Competitive

response.” Eg: Tata Tea’s entry in to the U.S., China, and other global

markets; J.V. Gokal’s entry in to

the Russian market.

Global consumers' tastes are

converging. Easier to offer a globally standardized product.

Lower costs and higher prices -

opportunities for profit

70% of Russians' income is

disposable vs. around 40% in the

West

Russia: top location for global

retail

Why RUSSIA?

Surging Econom

yReal GDP

Growth ↑ 8.1% to $1.3 trillion

The fastest

growing economy in the

G8 group

of industrialized

nations

Investors

pouring money

into improv

ed storage facilitie

s, infrastructure,

and logistics

Improving

financial

services, rule of

law, and

banking infrastructure

Opportunities for Indian Tea Companies inthe Russian Tea Market

Opportunities

Total value of Russian tea imports in 2012

was $308.97 million, which is nearly 14% of the global market

Largest importer of tea in the

worldLarge market and growing quickly

No Issue Aspect

1 The Opportunity •Largest importer of tea in the world•Russia is among the global leaders in terms of tea consumption (ranking fifth after India, China, Turkey, and the UK).•Tea consumed by more than 90% of consumers on a daily basis.•Russia grows less than 1% of the tea it consumes.•Tea production in Russia has shrunk by almost 30% since the 2008 crisis.

2 Competition The largest importer in value terms in 2011 was the company “Ahmad Tea Inc.”, which had 6.6% of the total volume of tea imports in Russia. The second place was taken by “Girnar Food & Beverages Pvt. Ltd” with a share of 5.3%. “Akbar Brothers Ltd.” were on the third place with 4.2%.

3 The Economic-Geographic environment

Demand: Russian people are well-known for drinking two things: vodka and tea.Tea is an extremely significant part of Russian culture. Tea in Russia is not just a beverage – it’s a social activity with a long-reaching tradition behind it.

PLANNING

3 The Economic-Geographic environment

Supply: •According to Tea Board chairman Mr Bhanu, the share of small tea growers in the national production has been rising.•The overall Indian tea production in 2013 is expected to touch 1,190 million kg, a jump of around 65-70 million kg over 2012• Darjeeling, Assam, Nilgiri are household words in markets abroad

4 The Politico-Legal environment The political and legal environments of the Russian govt is very friendly with the indian companies and worldwide exporters of agro based products.

5 The Socio-Cultural Environment Demographics. Consumer attitudes and behaviour. Consumer buying behaviour.

No Issue Aspect

1 Financing Sources 1.Bank Borrowings : Pre-shipment options:Overdrafts, Term Loan and Leasing/Hire Purchase2.Trade Credit3.Venture capitalist 4.Relatives.

Govt allows subsidy if we use our money in the business. No equity.

2 The HR Dimension Employing tea experts to check the quality and management trainees to excel in the competition.

3 Risk assessment Slowdown in growthBudget and current balances are very dependent on oil pricesWeak private banking sector Weak infrastructures

ORGANIGING

No Issue Aspect

1 Supply Side Time , quality , good margin and supply to suppliers.High qualty and nominal price because it is healthy then coffee.

On the production front, according to Tea Board statistics, in india output rose 9 per cent in April-December of the current financial year to 1,116.98 million kg on account of higher output in Assam.

2 Demand Side Russia is a potential market.Russia pays close to $5 a kg for such tea, while the average cost of the CTC and orthodox tea imported from India could be $3-3.5 a kg.

Russians are becoming increasingly health-conscious everyday and tea is being considered and accepted as a health drink.

3 Financial Control It is expected that with Russia’s recent accession to WTO, the customs duty will be reduced from 20 percent to 12.5 percent by 2017, which will be an additional advantage for Indian tea exports to Russia.

IMPLEMENTATION

No Issue Aspect

1 Control Systems The Tea Board of India has decided to simplify its export licensing norms. Export licences are given under Tea Distribution and Export Control Order, and a tea-exporter has to hold a valid licence from the Tea Board. Licences come in two categories — temporary and permanent.

2 Growth It is expected that with Russia’s recent accession to WTO, the customs duty will be reduced from 20 percent to 12.5 percent by 2017, which will be an additional advantage for Indian tea exports to Russia.

3 Strategy •Gain competitive intelligence about market leaders•Track key industry trends, opportunities and threats•Inform your marketing, brand, strategy and market development, sales and supply functions

GROWTH

Conclusion

•Business relation between Russia and India are better.

•India tea industry have a great opportunities to enter in russian market.

•Benefited of world largest importer country.

THANK YOU

Never fight for wining , fight for pride and try to become the toughest competetor of your rival ever