Credit rating agency, CARE has assigned BB+ rating to Bengal Tea & Fabric’s long-term bank facilities worth Rs 110.10 crore. The rating agency has also assigned A4+ rating to the company’s short term bank facilities worth Rs 8.50 crore.
The company’s ratings are primarily constrained on account of the adverse performance of the textile division in FY12 due to high volatility in cotton prices leading to cash losses. The ratings are further constrained due to its high leverage, labour intensive operations of its tea division, susceptibility of both divisions to rainfall and weather conditions, and presence in an intensely competitive and cyclical textile industry.
Bengal Tea & Fabrics has interest in the business of Tea and Textiles. The tea estates of the company are situated in Upper Assam and produce about 1.7 million kilograms of quality black tea. The company owns a composite textile mill, namely Asarwa Mills, with an installed capacity of 47,616 spindles and 94 looms.