Come March and the century-old system of delivery of teas to buyers on credit at auctions will give way to what is known as a cash-n-carry system, where deliveries will be made only after the auctioneer gets his cheque.

Even as discontent brews over the new buy and sell system, hundreds of tea buyers lifting almost 400 million kg of tea will have to shed their habit of working on a credit line. The move was prompted largely by the recent default of payments to tea sellers by Carritt Moran, one of the leading tea auctioneers in India.

Requesting anonymity, a top official managing tea sales at auction houses, said, "In the new system, the auctioneer will release the delivery order for teas once his payment is realised from the buyer. Earlier, the buyer of tea would take deliveries and could pay on the fourteenth day and enjoy a credit period."

Manik Mehra, a small buyer, wasn't too happy about the new set-up. "With direct buyers being asked to give cheques before taking deliveries from now on, I, as a buyer, will be affected. I will have to rework my payment system," Mehra said.

On the condition of anonymity, an official at the Calcutta Tea Trading Association said big buyers such as Hindustan Unilever and Tata Tea won't be impacted much as credit wasn't an issue with them. "But smaller players and a host of players who sold tea to other states and extended credit to other buyers will be affected to an extent," the official added.

The rule will be implemented at all the three auction centres in Kolkata, Guwahati and Siliguri, which together handle over 380 million kg of tea on an annual basis. Interestingly, the three auction centres in south India at Kochi, Coonoor and Coimbatore, which handle about 120-130 million kg of tea, have always gone by the cash payment system.

Nandini Goswami/ DNA-Daily News & Analysis Source: 3D Syndication