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CARE assigns rating to Duncans Industries’ long and short term bank facilities

14 Dec 2012 Evaluate

CARE has assigned ‘B-‘and ‘A4’ rating to Duncans Industries’ (DIL) Rs 70.8 crore long-term bank facilities and Rs 15.0 crore short-term bank facilities respectively. The ratings are primarily constrained by Duncans Industries being registered as a sick industrial company with the Board for Industrial and Financial Reconstruction (BIFR) under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA).

The ratings are further constrained by DIL’s negative net worth, weak financial risk profile, stretched liquidity position, highly labour-intensive nature of the tea industry, underperforming investments in the past, and susceptibility to the vagaries of nature. The ratings also factor in vast experience of the promoter, satisfactory yield & recovery rate, and stable outlook for the tea industry with favourable price trend. The ability to turnaround the tea business and timely exit from BIFR are the key rating sensitivities.

Duncans Industries (DIL), belonging to the Kolkata-based Duncan Goenka group, was formed by merging the tea business of Duncans Agro Industries Ltd. (over 150 years old) with the urea business of Chand Chhap Fertilizers & Chemicals.

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