According to analysts, the the tea industry is expected to close calender year 1998 with more than expected exports to Russia and a huge order from Iraq. As per estimates, an export figure of 205 million kilograms, up from last year's 203 million kg, is likely to be achieved in 1997. Although in absolute numbers, the growth in exports is not much, considering that during the rouble crisis in Septemberexports to Russia were almost negligible, this rise is commendable.

Russia has promised to accord due status to a long-term agreement of lifting 100 million kilograms of tea from India over a six year time frame. This coupled with the seasonal upsurge in domestic demand due to the cold wave conditions prevailing in most parts of northern India.

Some marketmen are also hopeful that the Finance Ministry is likely to withdraw the eight per cent excise duty on branded packaged tea imposed in the budget this year. Experts estimate that the tea production next year will be 5 per cent higher at 8.45 lakh tonnes.

Another factor for the rise in the tea scrips is the good dividend record of most tea companies. This would probably explain the rally in a counter like Harrison Malayalam, which does not have a presence in the export market. The company paid a dividend of 35 per cent for 1997-98 and the scrip is currently trading at Rs 39. Even if the company maintains the dividend payout at the same levels, the yieldworks out to 18 per cent per annum.

Dhunseri Tea paid a dividend of 22 per cent for the year ended December 31, 1997 and the scrip is currently trading at Rs 32. With the holding period being only three months, the yield will be an attractive 25 per cent.