RATING RATIONALE

30Mar2026

Disha Industries Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 115.43 Crs. of Disha Industries Pvt. Ltd.

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	103.43	Long Term	BWR BBB /Stable Assignment
Non Fund Based	12.00	Short Term	BWR A3 + Assignment
Grand Total	115.43	(Rupees One Hundred Fifteen Crores and Forty Three 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 has assigned a long-term rating of BWR BBB/Stable and a short-term rating of BWR A3+ to the bank loan facilities of Rs.115.43 Cr of Disha Industries Private Limited.

The rating factors in the directors’ extensive industry experience, growth in the scale of operations with enhanced manufacturing unit capacity, moderate financial risk profile, and the growing demand for kraft paper. However, the rating is constrained by intense industry competition, volatility in waste paper prices, and the intensive nature of working capital operations. Going forward, the company’s ability to improve its revenue profile and strengthen its financial risk profile will remain the key rating sensitivities.

The rating outlook has been assigned as "Stable" as BWR believes that Disha Industries Private Limited's business 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.

KEY RATING DRIVERS

Credit Strengths:

Moderate Financial Profile :
The company’s financial risk profile is characterized by a strengthening operational scale and a robust equity base. During FY2025, the company achieved a significant milestone by recording an Operating Income of Rs. 207.15 Cr and an OPBDIT of Rs. 16.21 Cr, reflecting both top-line growth and enhanced operational efficiency. This performance is underpinned by a Tangible Net Worth of Rs. 40.45 Cr, which provides a solid capital cushion and reflects a strong equity position.

Furthermore, the company’s ability to service its financial obligations has seen a marked improvement, with ISCR improving from 2.82x in FY2024 to 3.43x in FY2025. And DSCR stood at 1.31x. Liquidity remains stable, with a current ratio of 1.23x, ensuring the company is well-positioned to manage its short-term obligations.
Management Experience :
The company is led by a well-qualified and experienced board of directors with a diverse range of expertise in manufacturing, marketing, and technical operations. Mr. Ram Avtar Mittal, a veteran industrialist with over 30 years of experience, provides high-level strategic guidance and overall supervision. He is supported by Mr. Manoj Gupta, who brings 22 years of experience in marketing and business development, playing a vital role in the company's market expansion.

Additionally, the day-to-day operations are managed by Mr. Karan Swarup, a B.Tech (Electrical Engineer) with 15 years of industry-specific experience. His technical background and focus on production management ensure operational efficiency. The collective experience of the management team across multiple industrial ventures provides the company with a strong competitive edge and professional administrative stability.
Growing Demand for Kraft Paper :
The Indian kraft paper market is experiencing significant growth driven by the increasing adoption of sustainable packaging materials across industries. Businesses are transitioning from plastic to recyclable kraft paper solutions to reduce environmental impact and meet consumer expectations for eco-friendly products. The rapid expansion of e-commerce platforms and digital retail channels is creating unprecedented demand for protective packaging materials. Online retailers require durable, lightweight, and cost-effective packaging solutions that ensure product safety during transit while maintaining brand appeal. Kraft paper-based corrugated boxes, mailers, and protective wrapping materials are increasingly preferred for their excellent cushioning properties and recyclability.

Credit Risks:

Intense Competition in the paper industry segment :
Intense Competition in the Industrial paper segment (which accounts for the bulk of the paper industry) persists due to low entry barriers and unfavourable government policies. Competition from large and established players is intense in the fragmented packaging industry. Consequently, players have limited pricing flexibility. Moreover, end users of packaging paper are also price sensitive. This situation is expected to continue over the medium-to-long term, as consolidation is unlikely because of unviable capacities. Industry is also cyclical in nature, with small players shutting down capacities during downturns and recommencing operations when the economy revives. This prevents established players from generating large profits even during periods of good economic growth. The business risk profile may remain constrained over the medium term by susceptibility to risks related to the above-mentioned factors.
Profitability is susceptible to volatility in wastepaper prices :
Operating margin is susceptible due to volatile raw material prices, which are directly linked to international prices and, coupled with volatility in final product prices, impact the profitability. While the recently commenced new product line (by modernization of existing line) is expected to generate good margins supported by higher realizations from the new product, however the degree of improvement and sustenance will remain a key rating sensitivity factor.
Working capital-intensive nature of operations :
The company's operations are highly dependent on working capital. Manufacturing kraft paper requires substantial working capital, which poses risks such as chronic cash flow shortages, high interest costs from debt-financed operations, and potential production halts due to fluctuations in raw material prices. To ensure continuous production, mills must maintain large inventories of bulky raw materials (such as wood chips and waste paper) and finished goods. This practice ties up cash and increases storage and handling costs. Additionally, kraft paper producers often supply packaging converters and large buyers, which can result in extended payment terms (ranging from 60 to over 90 days). This further heightens the risk of bad debt and reduces liquidity.

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.

RATING SENSITIVITIES

Going forward, the company’s ability to improve its revenue profile and strengthen its financial risk profile will remain the key rating sensitivities.

Positive:

Improvement in operating income by 25%, with an operating margin improving to 8.5% or more, along with enhanced cash accruals and a stronger cash and cash equivalent position.
Maintaining satisfactory debt protection metrics, with ISCR and DSCR at comfortable levels.

Negative:

A decline of 15% or more in revenue, and the PAT margin falling below the 2.50%.
Decline in the current ratio below 1.00x and DSCR falling below 1.25x.

LIQUIDITY INDICATORS - Adequate

Adequate liquidity characterised by a sufficient cushion in accruals vis-a-vis repayment obligations and a moderate net cash accruals of Rs. 10.24 Crore. Its capex requirements are modular and expected to be funded using debt of Rs. 60.00 Crore, for which it has sufficient headroom. Its bank limits are utilised to the extent of around 96% and has sought enhancement in bank lines, supported by the above unity current ratio.

The company had net cash accruals of Rs. 10.24 Cr as against a CPLTD of Rs. 2.48 Cr in FY2025. It projects net cash accruals of Rs. 14.92 Cr, with CPLTD of Rs. 3.12 Cr in FY2026. The tangible net worth (TNW) was Rs. 40.45 Cr in FY2025. And the Total Debt/TNW ratio stood at 1.63 times. ISCR and DSCR stood at 4.01 times and 2.31 times, respectively, in FY2025, indicating the company’s strong capacity to meet its interest and debt obligations. The current ratio stood at 1.01 times in FY2025, indicating sufficient short-term liquidity to meet its obligations. And it is projected to improve to 1.42 times in FY2026.

ABOUT THE ENTITY

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

Disha Industries Private Limited was incorporated on 04 December 1995 and registered with the Registrar of Companies, Delhi & Haryana. Mr. Manoj Gupta, Mr.Ram Avtar Mittal, Mrs.Sapna Kumar, and Mr. Karan Swarup are the directors of the company.

The company is engaged in the manufacturing of high-quality waste paper–based Kraft Paper, primarily used in the production of corrugated boxes and industrial packaging materials. The manufacturing unit is located at 9th KM Stone, Jolly Road, Muzaffarnagar, Uttar Pradesh. The plant is presently operating at an installed capacity of 90,000 MT per annum.

ESG Profile

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

Environmental: Environmental risks are primarily driven by high water consumption, waste generation, and energy-intensive operations. Consequently, disclosures regarding water usage, waste management practices, the share of renewable energy, and emission levels are critical for assessing sustainability.

Social: Social factors center on strict adherence to labor laws, robust accident prevention frameworks, and human capital development. Key metrics, including gender diversity (workforce mix), safety performance, and training initiatives, serve as vital indicators of the company’s 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.	221.04	163.19	207.15
EBITDA	Rs.Crs.	9.37	9.79	16.21
PAT	Rs.Crs.	3.49	4.31	1.17
Tangible Net Worth	Rs.Crs.	34.97	39.28	40.45
Total Debt / Tangible Net Worth	Times	1.01	1.28	1.63
Current Ratio	Times	1.25	1.18	1.23

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include covenants normaly stipulated for such facilities.

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	103.43	BWR BBB/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	12.00	BWR A3+ (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		115.43	(Rupees One Hundred Fifteen Crores and Forty Three lakhs Only)

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Krishnappa Murugesh Ratings Analyst krishnappa.m@brickworkratings.com	Sabitha M Nayak Associate Director-Ratings sabitha.nayak@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com	Customer Support \| CustSupport@brickwrokratings.com

Disha Industries Pvt. 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	Indian Bank	Term Loan - Sanctioned	60.00	_	60.00	Simple##
2	Indian Bank	Term Loan - Out-standing	8.51	_	8.51	Simple##
3	Indian Bank	Cash Credit - Sanctioned	33.75	_	33.75	Simple##
4	Indian Bank	Letter of Credit - Sanctioned	_	12.00	12.00	Simple##
5	Indian Bank	GECL - Out-standing	1.17	_	1.17	Simple##
Total			103.43	12.00	115.43
TOTAL (Rupees One Hundred Fifteen Crores and Forty Three 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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