Tea companies increasingly opting for loan moratorium to improve cash flows

Usually, during May-July, tea companies need a higher cash flow to ready the bushes for the second flush. This harvest is the most important in Assam and the second-most important in West Bengal

Anticipating a higher requirement of cash in wake of the second flush, the stressed tea companies are increasingly opting for the loan moratorium offered by the RBI, which they believe will help improve cash flow.

The requirement arose after plantation companies lost an estimated 110 million kg (mkg) of tea during March-May, which is around 85 per cent of the usual produce during this timeframe. The production loss led to a loss of revenue at a time when the harvesting season in north India started and which direly affected the cash flow of companies.

“We need considerable cash at hand