Rating Rationale
Brickwork Ratings reaffirms ‘BWR BB+’ & ‘BWR A4’ rating with a Stable
Outlook for bank loan facilities of Sujali Tea & Industries Ltd; amounting
to ₹35.49 Crores. (Enhanced from ₹26.67 Crs)
Brickwork Ratings has reaffirmed the Ratings1 for the enhanced Bank Loan facilities
amounting to ₹ 35.49 Crores of Sujali Tea & Industries Ltd. (STIL or the ‘Company’) as
follows:
Facility
Previous
Limits
(₹ Cr)
Present
Limits
(₹ Cr)
Tenure
Fund
Based:
CC
SLC
TL
Non Fund
Based:
LC
BG
Total
Previous
Ratings
Present
Ratings
BWR BB+
Reaffirmed at
BWR BB+
(Pronounced
19.55
1.62
25.00
2.55
1.44
Long
Term
BWR Double
B Plus)
(Outlook:
Stable)
BWR A4
5.00
0.50
6.00
0.50
Short
Term
(Pronounced
BWR A
Four)
26.67
35.49
(Pronounced
BWR Double B
Plus)
(Outlook:
Stable)
Re-affirmed at
BWR A4
(Pronounced
BWR A Four)
(INR Thirty Five Crores and Forty Nine
Lakhs Only)
BWR has relied upon the audited results of the Company for three years up to FY14, projected
financials for FY15 and FY16, information/clarification provided by the Company and available
from public sources.
The ratings assigned to the bank facilities of Sujali Tea & Industries Ltd. factors primarily the
growth registered in turnover, experience of the promoters in the tea business, established
relationship with its suppliers, and strategic location advantage of the manufacturing unit.
However, the rating is constrained by low profitability margins and working-capital intensive
nature of operations and susceptibility in terms of raw material availability, and high level of
competition from other players in the state.
1
Please refer to www.brickworkratings.com for definition of the Ratings
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Background
Sujali Tea & Industries Ltd (STIL) was incorporated in 31st August 2001, promoted by Kolkata
based Poddar Family. Mr Gopal Prasad Poddar is the Managing Director of the Company. The
Company is mainly engaged in manufacturing of Black Tea and Green Tea. Currently the
company has increased its tea manufacturing capacity from 30 lacs kgpa to 35 lacs kgpa by
installing another additional green tea unit. Apart from this, STIL is also involved in blending
and trading of tea. 90% of the revenue is generated from tea trading activities.
Management Profile
The ownership stake is concentrated within the family. The management of STIL is handled by
experienced promoters, Mr. Gopal Prasad Poddar (Aged about 63 years) and his brothers Mr.
Shankar Poddar (61) and Mr. Subhash Kr. Poddar (52). Mr. G P Poddar is an M.Com; L. L. B is
having More than three decades of experience in Tea Industry as Blender, Dealer, Taster and
Exporter. Mr. Shankar Poddar (61 yrs.) has 32 years’ experience in Tea Industry. He is looking
after the technical and operational aspects of Tea Processing factories situated in the States of
Tamilnadu, West Bengal and Assam. Mr. Subhash Kr Poddar (52 yrs.) has around 03 decades of
experience in the tea industry and he is looking after the domestic marketing aspects of the
Group Companies.
STIL is a part of the Kolkata based Limtex group, has different business activities encompassing,
tea, biscuits, and information technology. The group started its activities in 1977.
Business Operations
The Company is having a factory with a capacity of 35.00 Lakh kgs per annum of Tea at
Islampur, West Dinajpur, and West Bengal. The state of the art Tea Processing Unit is spread
over 4 Acres of land. As on 31st March 2014 the capacity utilization was remained same at 85%,
with the additional manufacturing unit of green tea. STIL enjoys the locational advantage as
there are a number of small and big tea gardens surrounding the factory unit. Around 15-20%
raw material is procured from its own group company.
Financial Performance
STIL has reported a turnover of ₹ 136.19 Crores against ₹ 115.53 Crores registering a 15.16%
growth during FY14 over the previous year. Profit margin in trading business is small, and the
Company’s PAT in FY14 was at around ₹ 1.21 Crores against ₹ 1.50 Crs in FY13; showing a
marginal decline. The Net worth has improved with equity infusion, quasi capital (to the tune of
₹ 1.75 Crs) cash accruals and retained profit total amounting to ₹ 23.75 Crores as of FY14.Overall
gearing ratios as on FY14 has improved to 1.42 times from 1.55 times in FY13. The Debt Service
Coverage Ratio was at 1.42 x against 1.50x in FY13 showing a marginal decline. Interest
Coverage Ratio also declined to 1.89 x in FY14 from 2.17x in FY13. The liquidity profile of STIL
was moderately comfortable marked by marginal cash accruals, healthy current ratio and high
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level of working capital borrowings. As on October 31st 2014 STIL has achieved a turnover of ₹
90.00 Crs which is in line with the projected turnover for FY15.
Rating Outlook
The company’s outlook for next year is stable. The ability of STIL to profitably scale up its
operations in the light of the competitive nature of the industry, achieve projected turnover and
profitability, further improve the net worth and margins and efficiently manage its working
capital will be the key rating sensitivities.
Analyst Contact
Relationship Contact
[email protected]
[email protected]
Phone
Media Contact
1-860-425-2742
[email protected]
Disclaimer: Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources,
which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or
completeness of the information obtained. And hence, the information in this report is presented “as is” without any express or implied warranty
of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR
should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses
incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any
reasons.
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17 Nov 2014