2010VP05 Bengal Tea & Fabrics Ltd

Bengal Tea & Fabrics Limited (BSE 532230), belonging to the B D Kanoria Group was incorporated in the year 1983 and later on, in the year 1985, it took over the whole undertakings of Bengal Tea & Industries Limited, earlier known as Bengal Tea Company Limited. 

At present the Company has interest in the business of Tea & Textiles, with a turnover of about Rs 127 crore and Net Profit Rs 1.41 crore  (2008-09) and the Revenue mix was 80 %  and 20% from Textile and Tea respectively.

The Company owns following three tea estates (Ananda Tea Estate,Pathalipam Tea Estate, Bordeobam Tea Estate) with an annual production of about 1.6 Million kgs of Tea, having planted area of 626 hectares, situated in North Lakhimpur in Upper Assam, 35 Kilometers from North Lakhimpur Town and about 240 Kilometers from Tezpur.The Company processes the Green Tea Leaves at its own factory situated at Ananda Tea Estate. 

Asarwa Mills, a Composite Textile Mill, is situated in the Heart of Ahmedabad in the State of Gujarat having an installed capacity of 47616 spindles and 94 loomswas set-up in the year 1900 and is one of the oldest mills in India. The present management has modernized the Mill in a phased manner to transform the same in a State-of-art, tech-savvy Mill. 

The promotor holds 6564358 shares ie 72.9% of 9005985 issued by company and the paid up capital is only 9.01 crore

Operating Margin of the company has increased in leap and bound over the HALF YEAR ENDED Sep 09 when compared to full year 2008-09 as detailed below

Particulars 2008-09 Sep09   T12M
SALES         126.5       69.05   136.1
OP                    2.3          10.6       7.8
OPM               1.8%        15.3%  5.73%
NP                     1.4          5.4       3.2
NPM                1.1%        5.1%    2.35%

EPS                   1.56        6.0        3.56

Operating Profit Margin from Tea which was 33% OPM for 2008-09 has tripled to 80%  and Operating Profit Margin from Textiles which was ( -) 2% improved to 2% for the first half of 2009-10. with the result that the net OPM improved to 15.3%.

For the second half of 2009-10 it is expected that the company shall be able to maintain an OPM of 11.5% as against the negative net OPM for second half of 2008-09.

The Revenue expectation for second half of 2009-10 and for full year 2009-10 is as follows

Particulars  Mar10   Sep09      2009-10

SALES            74.5       69.05     143.55
OP                    8.5        10.6           19.1
OPM              11.5%     15.3%       13.3%
NP                   3.35        5.4            8.75
NPM                4.5%      5.1%          6.1%

EPS                   3.7          6.0         9.7

At CMP of 66 the share trades 6.8x the expected EPS of 9.7 

considering the performance and business mix one may hold with a target of Rs. 95

Please evaluate independantly before investing