| Suman Mfg. Works Limited | ||||||
| Ratings Reaffirmed | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its 'CRISIL BB+/Stable/CRISIL A4+' ratings on the bank facilities of Suman Mfg. Works Limited (SMWL; part of the Suman Tea group).
The ratings continue to reflect the promoters’ longstanding presence in the tea industry, diversified customer base and the group’s above-average financial risk profile, as indicated by moderate networth, low gearing and above-average debt protection metrics. These strengths are partially offset by exposure to intense competition in the highly fragmented tea industry and susceptibility of operating margin to volatility in tea prices.
The rating also taken into consideration that, in the first quarter of fiscal 2021, players in the tea industry were impacted by the Covid-19 pandemic, with nationwide lockdown declared by the central government reducing tea production by around 10-12% across the country. Nevertheless, realisations increase to support the loss in volume sales. It is estimated that, tea growers may see a higher margin along with higher realization expected to cover up for production loss.
Further operating performance in fiscal 2022 is likely to be impacted following measures taken by various state governments as well as central government towards containment of COVID-19 which includes temporary closure of non-critical establishments, inter-state transportation etc. along-with severe restrictions on travel and visiting areas of mass gatherings. The supply chain could be temporarily disrupted, and sales volume may be affected. The ability of the business to revert back to operational stability and any relief measures given by the government will be a key monitorable and CRISIL will continue monitoring these events. Any disruption in operations, however, will be supported by the group's healthy financial risk profile. |
Analytical Approach For arriving at the ratings, CRISIL Ratings has combined the business and financial risk profiles of SMWL with New Leaf Tea Plantation Pvt Ltd (NLTPL), Brojendra Plantation Pvt Ltd (BPPL), Mars Tea India Pvt Ltd (MTIPL), Sarodamoni Tea Company Pvt Ltd (STCPL) and Sanyasihat Tea Processing Pvt Ltd (STPPL). This is because all these companies, together referred to as the Suman Tea group, are engaged in the same business and have common promoters.
Please refer Annexure – List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths:
Weakness:
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Liquidity: Adequate The group is estimated to have generated accrual of Rs 14 crore, against maturing debt of Rs 2.9 crore in fiscal 2021. Going forward, the group could achieve accrual of Rs 8-10 crore against maturing debt of Rs 3.3-3.98 crore annually over the medium term. Working capital limit of the group was moderately utilised at around 60% in the 12 months through March 2021. Current ratio is adequate at 1.3 times as on March 31, 2020 and estimated at around similar level in fiscal 2021. In the absence of any large, debt-funded capital expenditure and adequate cushion in bank lines, the liquidity profile is expected to remain adequate. |
Outlook: Stable CRISIL Ratings believes the Suman Tea group will continue to benefit from the extensive experience of its promoters. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Group Suman Tea Group is promoted by the Siliguri-based Bansal family who have been in the tea business for more than three and a half decades. The promoters entered the tea business in 1960 with small-time tea trading, which gradually evolved into wholesale trading. Subsequently, the promoters entered tea blending and packaging operations with the brand, Suman Tea |
Key Financial Indicators (Consolidated)
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Status of non cooperation with previous CRA SMWL has not cooperated with Brickwork Ratings India Pvt Ltd (Brickworks), which has classified it as issuer non-cooperative vide release dated January 06, 2021. The reason provided by Brickworks is non-furnishing of information for monitoring of ratings. |
Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
Annexure - Details of Instrument(s)
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Annexure – List of Entities Consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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* - Issuer did not cooperate; based on best-available information
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| Annexure - Details of various bank facilities | ||||||||||||||||||||||||||||||||||||
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Criteria Details
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