RATING RATIONALE

16Mar2026

Naachiketta Papers Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 58.04 Crs. of Naachiketta Papers Ltd.

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	57.64	Long Term	BWR BBB - /Stable Assignment
Non Fund Based	0.40	Short Term	BWR A3 Assignment
Grand Total	58.04	(Rupees Fifty Eight Crores and Four lakhs Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure RATING ACTION / OUTLOOK

Brickwork Ratings (BWR) assigns the bank loan rating of “BWR BBB-/Stable/A3” for bank loan facilities of Rs. 58.04 Crs. availed from the lender. The assignment of the ratings, considering the promoters’ extensive experience, notes that the firm maintains an improvement in the financial profile. The firm has an adequate liquidity position.
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 revenues and profit show sustained improvement, with improvement in debt protection metrics. The rating outlook may be revised to 'Negative' if the revenues go down, profit margins show lower than expected figures or if there is a delay in debt servicing.

For assigning the rating, BWR has relied upon the last 3 years of audited financials till FY25, & projection financials for FY26 & FY27, and publicly available information and clarification provided by management.

KEY RATING DRIVERS

Credit Strengths:

Experienced management and the established track record of the company :
The company’s business risk profile is anchored by the promoters' 30-year tenure in the paper industry, characterized by deep market insights and robust stakeholder relationships. While the promoters provide significant in-house technical expertise, the company is further strengthening its operational core by recruiting a qualified paper technologist and a skilled management team. Moving forward, the primary focus remains on monitoring sustained revenue growth as driven by upcoming capacity expansions.
Financial Risk Profile :
Naachiketta Papers Ltd had a 28.41% growth in revenue in FY25 at Rs. 175.37Crs. The PAT margin also improved from 1.12% in FY24 to 1.62% in FY25. The ISCR stands at 2.82x in FY25. The company is currently expanding its business for the production of High BF Kraft Paper. Even though the gearing will be affected over the medium term, the debt metrics will remain healthy and the revenue from the expansion will be reflected over the medium term.

Credit Risks:

Elongated Conversion Cycle :
Conversion Cycle for fiscal 2025 is at 58 days, primarily driven by receivables of 70 days and payable levels of 52days. As capacity expansion drives revenue growth, the resulting spike in working capital needs will likely increase reliance on external debt. While a 40–60 day credit window from suppliers and available bank limits provide a cushion, the efficient management of this cycle remains a key monitorable
Susceptibility of operating margin to volatility in raw material prices and finished goods :

Raw materials ie.e Waste papers are the primary cost driver, accounting for approximately 70-80% of total revenue. Sourcing from the U.S., Europe, and the Middle East makes it vulnerable to ocean freight spikes and container shortages. In 2026, freight costs for low-value items like waste paper can significantly alter the landed cost.Given the volatile nature of raw material prices, the company's profit margins are vulnerable to fluctuations. Although finished good prices generally move in sync with raw material costs, there's often a time lag. Additionally, finished aluminum prices are highly susceptible to changes driven by global supply and demand dynamics and broader macroeconomic factors.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has considered the standalone approach for the company. BWR has applied its rating methodology as detailed in the rating criteria detailed below (hyperlinks provided at the end of this rationale)

RATING SENSITIVITIES

Going forward, the ability of the company to significantly improve its scale of operations with sustainable profitability, improvement in debt protection metrics and manage its working capital efficiently shall be the key rating sensitivities.

Positive

Satisfactory implementation of Capex and result in growth in TOI above 45% in FY27.

EBITDA margin over 5.5% and net margin above 1.6%.

The gearing and debt protection metrics, and the liquidity level are maintained at a satisfactory level

Negative

Delay in implementation of capex beyond July 2026, resulting in a decline in TOI below Rs. 230Crs. in FY27 might be negative.

Substantial deterioration in gearing, liquidity, and debt protection metrics.

LIQUIDITY INDICATORS - Adequate

The company's adequate liquidity is covering the debt obligations, and has the reasonable Current Ratio. They have cash accruals of Rs.5.03Crs generated in FY24 and Rs.6.33Crs. in FY25 against the CPLTD of Rs.4.79Crs and Rs. 4.94Crs. respectively. For FY26 and FY27, the Net cash accrual is projected at Rs. 6.57Crs. and Rs. 11.10Crs. against the CPLTD of Rs. 5.54Crs. and Rs. 6.23Crs. respectively. The cash & bank balance stands at Rs 0.03Crs in FY24 and at Rs 0.23Crs. in FY25. The cash credit facility has been utilized at the extent of 76%. The liquidity is marked by a healthy Current Ratio of 1.20in FY24 and 1.25 in FY25 which reflects a healthy liquidity position of the company to serve future short term liabilities with the current assets. The DSCR remains comfortable at 1.12 in FY24 and 1.09 in FY25 indicating company's capability to pay off it's short-term obligation. DSCR is projected to improve to 1.12x in FY26 and 1.42x in FY27. The company is in capex mode, the loans has been santioned and repayment is yet to start. So CPLTD and loan repayment will resume in FY27. The company has sufficient headroom to utilize the cash accruals and utilized cash credit limit for its future operational requirements.

ABOUT THE ENTITY

Macro Economic Indicator	Sector	Industry	Basic Industry
Commodities	Forest Materials	Paper, Forest & Jute Products	Paper & Paper Products

Nachiketa Papers Limited , is an established manufacturer specializing in Absorbent Paper and Kraft Board is Promoted by Sh. Vijay Mittal, Sh. Tejwant Rai Jindal, Sh. Harish Jindal, and Sh. Rohit Mittal. The company operates at a robust installed capacity of 77,000 TPA, maintained through a triple-shift schedule over 350 working days per year. Leadership is distributed among its promoters based on their specific expertise: Sh. Vijay Mittal (69), a graduate, provides strategic oversight as the general manager; Sh. Tejwant Rai Jindal (75) directs production; Sh. Harish Jindal (45) manages the procurement and purchase section; and Sh. Rohit Mittal (41) spearheads the unit’s marketing initiatives.

ESG Profile

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

Environmental: Environmental risks are driven by high water usage, waste generation, and reliance on energy-intensive processes, making disclosures on water consumption 13560 m^3/month, waste-management practices, renewable energy share , and emissions levels particularly important.

Social: Social factors hinge on adherence to labour laws, accident prevention frameworks, and human-capital development, with metrics such as workforce mix (184 male and 15 female), safety performance , and training initiatives offering insights into operational resilience.

Governance: Governance assessment focuses on board independence, committee effectiveness, and robustness of compliance systems, supported by readily available disclosures on board structure, audit mechanisms, and risk-management practices.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 22 - 23 (Audited - Annual)	FY 23 - 24 (Audited - Annual)	FY 24 - 25 (Audited - Annual)
Operating Revenue	Rs.Crs.	145.62	136.57	175.37
EBITDA	Rs.Crs.	5.79	8.98	9.98
PAT	Rs.Crs.	1.81	1.53	2.84
Tangible Net Worth	Rs.Crs.	28.00	31.00	34.23
Total Debt / Tangible Net Worth	Times	1.75	1.13	0.88
Current Ratio	Times	1.17	1.20	1.25

KEY COVENANTS OF THE FACILITY RATED

Standard Covenants applicable

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2026)			2025		2024		2023
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	57.64	BWR BBB-/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	0.40	BWR A3 (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		58.04	(Rupees Fifty Eight Crores and Four lakhs Only)

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Srija Das Ratings Analyst srija.das@brickworkratings.com	Sabitha M Nayak Associate Director-Ratings sabitha.nayak@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com	Customer Support \| CustSupport@brickwrokratings.com

Naachiketta Papers Ltd.

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)	Complexity of the Instrument
1	HDFC Bank	Cash Credit - Sanctioned	7.50	_	7.50	Simple##
2	State Bank Of India (SBI)	Cash Credit - Sanctioned	12.00	_	12.00	Simple##
3	State Bank Of India (SBI)	Bank Guarantee - Sanctioned	_	0.40	0.40	Simple##
4	State Bank Of India (SBI)	Term Loan - Sanctioned	6.00	_	6.00	Simple##
5	State Bank Of India (SBI)	Term Loan - Out-standing	8.21	_	8.21	Simple##
6	State Bank Of India (SBI)	Term Loan - Out-standing	0.36	_	0.36	Simple##
7	State Bank Of India (SBI)	Term Loan - Out-standing	3.97	_	3.97	Simple##
8	State Bank Of India (SBI)	Term Loan - Sanctioned	18.00	_	18.00	Simple##
9	State Bank Of India (SBI)	Term Loan - Out-standing	1.60	_	1.60	Simple##
Total			57.64	0.40	58.04
TOTAL (Rupees Fifty Eight Crores and Four lakhs Only)

## BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.

ANNEXURE-II

INSTRUMENT DETAILS

Instrument	Issue Date	Amount (Rs.Crs)	Coupon Rate (%)	Maturity Date	ISIN Particulars	Complexity of the Instrument
Nil	Nil	Nil	Nil	Nil	Nil	Nil

ANNEXURE-III

List of entities consolidated

Name of Entity	% Ownership	Extent of consolidation	Rationale for consolidation
Nil	Nil	Nil	Nil

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Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI], 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, Securitization Products, Municipal Bonds, etc. BWR has rated over 11,560 medium and large corporates and financial institutions’ instruments. BWR has also rated NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations. BWR has Canara Bank, a leading public sector bank, as one of the promoters and strategic partner.

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