Rating Rationale

Brickwork Ratings assigns the long-term ratings at "BWR BB-/Stable" and short-term ratings at "BWR A4+" for the Bank Loan Facilities of Rs. 30.74  Crs. of Budlapara Tea LLP.

The ratings reflect the experience of the partners in the industry, along with a growing scale of operations. The firm is equipped with both CTC and Orthodox tea varieties, allowing operational flexibility to balance high-volume domestic supply with premium export demand. However, the ratings remain constrained by rising debt levels, tight liquidity buffers, and exposure to foreign exchange and currency risks. The rating outlook has been assigned as "Stable" as BWR believes that  Budlapara Tea LLP business risk and financial risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case the revenue and profitability margins show sustained improvement. The rating outlook may be revised to 'Negative' if the financial risk profile goes down.

An Unsecured loan of Rs.6.50 Cr to be considered as Quasi Equity should be maintained during the currency of the loan and cannot be withdrawn. The other terms of sanction include covenants normally stipulated for such facilities.

• Locational Advantage and Dual Manufacturing Capabilities :

  Operating in the Udalguri district, Assam, places Budlapara Tea LLP in the heart of India's premier tea-growing belt, famous for producing high-demand, rich-bodied teas. The manufacturing unit is equipped to process both crushed, torn, and curled (CTC) and traditional whole-leaf (Orthodox) teas. The CTC capability supplies high-volume domestic consumption channels, while the Orthodox capacity allows the firm to capture premium export demand.

• Experienced Management :

  Mr. Mohit Agarwal and Mr. Pravesh Agarwal are the partners of Budlapara Tea LLP, with Mr. Pravesh holding his stake through his company, Maasis Interfashion Private Limited. and Mr. Mohit Agarwal is the key Director and promoter of Asian Tea Company Private Limited—the group’s flagship trading arm that acts as the primary marketing and export engine for the firm's manufactured bulk tea. Both the partners have more than two decades of industry experience.

• Revenue from Operations :

  The total operating income of the firm has doubled to Rs. 67.51 Crs as per provisionals for FY25-26 from Rs. 31.32 Crs in FY24-25 This rapid top-line expansion is primarily driven by the launch of export operations in June 2025. This diversification into overseas markets significantly enhances the firm's revenue base while reducing reliance on domestic auction channels.

• Market and Climate Risk :

  The primary source of revenue for the firm is from the production of green leaf at the Budlapara estate, which is exposed to changes in raw material prices due to supply-demand scenarios, leading to fluctuations in operational margins. As tea is a seasonal product, its yield depends on weather conditions. Production could be hampered significantly in case of any variation in rain, humidity, or temperature.

• Rigid Fixed-Cost Structure :

  Bulk tea manufacturing is heavily dependent on manual labor for plucking and estate maintenance. Wages and employee benefits account for 30% to 40% of total operating costs. Under mandatory statutory requirements like the Plantations Labor Act fixed overheads remain high even during low-yield or non-harvesting months. Furthermore, the firm sells 80 to 90% of its raw produced tea in open auctions making it a pure price-taker in the open auction market.

• Partnership Constitution :

  As a partnership firm, Budlapara Tea LLP is exposed to risks associated with capital withdrawal by partners. This could impair financial and operational stability. Additionally, the firm is vulnerable to risks stemming from dissolution or changes in the partnership due to events like death or retirement of partners.

Positive Factors

• An increase in revenue of more than Rs.80 Crs and Profitability growth of 35%.

• Significant strengthening of debt protection metrics and capital structure

Negative Factors

• Fall in revenue resulting in net cash accrual below Rs 4.00 crore.

• A significant weakening of debt protection coverages and liquidity buffers from the current level

The firm has stretched liquidity marked by the current ratio which stands at 0.42 as on March 2026.  Meanwhile, cash and bank balances remained stagnant at Rs. 0.25 Cr. in FY26, matching the previous year's level (FY25). Additionally, the leverage profile remains heavily strained, as reflected in a TOL/TNW ratio of 7.09 times and TOL/Adjusted TNW ratio of 4.16 times, the total debt/TNW ratio stands at 6.38 times and total debt/Adjusted TNW stands at 3.13 times. Compounding these liquidity pressures, the firm's bank limit utilization stands near full capacity at 94.06%, leaving minimal buffer for contingent cash requirements. The promoters are likely to extend support in the form of equity and unsecured loans to meet its working capital requirements and repayment obligations as and when required.

The company demonstrates a Adequate ESG profile based on its environmental, social, and governance practices.

Environmental: In the environmental side, the firm emphasizes environmental sustainability through eco-conscious tea cultivation at its estate in Udalguri, Assam, focusing on sustainable agricultural practices

Social: Social factors hinge on adherence to labour laws, accident prevention frameworks, safety performance, and training initiatives offering insights into operational resilience.

Governance: The firm maintains regulatory compliance under statutory authorities like the Food Safety and Standards Authority of India (FSSAI), ensuring strict adherence to product safety, periodic quality testing, structured partner/management oversight,

Budlapara Tea LLP (LLPIN: ABZ-0382) was incorporated in November 2022 and is engaged in the business of cultivation, manufacturing, and trading of tea, operating primarily out of the Budlapara Tea Estate in Dimakuchi, Udalguri district, Assam. The manufacturing unit is equipped to produce both CTC and Orthodox teas. The business is supported by the Asian Tea Group's established marketing and export network, enabling the entity to cater to both domestic buyers and international customers. Mr. Mohit Agarwal and Mr. Pravesh Agarwal are the partners of the firm.

The Complexity Indicator refers to the ease with which the returns associated with the rated instrument could be estimated. It does not indicate the risk related to the timely payments on the instrument, which is rather indicated by the instrument's credit rating. It also does not indicate the complexity associated with analysing an entity's financial, business, industry risks or complexity related to the structural,transactional or legal aspects. Details on the complexity levels of the instruments are available on BWR's website Complexity Levels.

Not Applicable

BWR Board of Directors have no influence over rating decisions, nor do they sit on the rating committee or review, discuss or evaluate any credit rating during the Board meetings.

Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI]. BWR is the 5th agency to get a credit rating registration in India in 2009 and its corporate office in Bengaluru. It has a country-wide presence with representatives in 150+ locations. Canara Bank is our institutional investor.

Brickwork offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitisation Products, Municipal Bonds, etc. BWR has also rated NGOs, Educational Institutions, Hospitals, Urban Local Bodies and Municipal Corporations.

Nature of Ratings & Information: BWR ratings are opinions on the relative ability of an entity/instrument to meet its financial obligations and are based on information obtained from issuers and other sources believed to be reliable. BWR does not conduct audits, due diligence, or independent verification of such information and does not guarantee its accuracy, adequacy, or completeness.Ratings are current only as of the date of publication and may be revised based on new or unavailable information.

No Advice or Recommendation: Ratings, reports, and related communications are not investment advice and do not constitute recommendations to buy, sell, or hold securities, or to sanction, renew, or disburse credit facilities. They do not represent offers or solicitations for any transaction. Users must rely on their own independent judgment and professional advice. Access to or use of these materials does not create any client relationship with BWR.

Liability, Usage & Regulatory Framework: This content is published for the purpose of dissemination of information as required under applicable laws and regulations. BWR holds exclusive copyright over the content. It may be used with appropriate credit to BWR, provided that the content is not altered or modified in any way that could change its meaning or intent. BWR retains the exclusive right to distribute or share its rating rationales, directly or indirectly, through any print, digital, or electronic media. All reports are provided on an "as is" basis without warranties of any kind, express or implied, including but not limited to merchantability, fitness for a particular purpose, or non-infringement. BWR and its affiliates shall not be liable for any direct, indirect, incidental, or consequential losses or damages arising from the use of these reports. Ratings are subject to continuous surveillance and may be revised, suspended, or withdrawn at any time without notice. These reports are intended for use within India only. BWR operates under SEBI Regulations and Code of Conduct.

For more information on policies and ratings, please visit our www.brickworkratings.com