Sidharth Papers Pvt. Ltd. (erstwhile Sidharth Papers Ltd.)

Brickwork Ratings upgrades the ratings for the Bank Loan Facilities of Rs.216.49 Crs to BWR BBB+Stable /BWR A2 and assigns ratings of BWR BBB+(Stable) for Non Fund based facilities of Rs 1.25 Crs of Sidharth Papers Pvt. Ltd. (erstwhile Sidharth Papers Ltd.) and removes the ratings from Issuer Not Cooperating category

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (25 Apr 2025)	Present
Fund Based	125.00	197.99	Long Term	BWR B /Stable Continues to be in ISSUER NOT COOPERATING* category/Downgraded	BWR BBB + /Stable Upgrade and Removed from the ISSUER NOT COOPERATING* category
Non Fund Based	0.00	1.25	Long Term		BWR BBB + Assignment
Non Fund Based	14.75	18.50	Short Term	BWR A4 Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed	BWR A2 Upgrade and Removed from the ISSUER NOT COOPERATING* category
Grand Total	139.75	217.74	(Rupees Two Hundred Seventeen Crores and Seventy 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 upgrades the ratings for the Bank Loan Facilities of Rs.216.49 Crs to BWR BBB+Stable /BWR A2 and assigns ratings of BWR BBB+(Stable) for Non Fund based facilities of Rs 1.25 Crs of Sidharth Papers Pvt. Ltd. (erstwhile Sidharth Papers Ltd.) . BWR removes the ratings from Issuer Not Cooperating category as company has submitted all necessary information for review.

The rating upgrade to BWR BBB+/Stable A2 and assignment of BWR BBB+Stable is due to established market position , supported by extensive experience of the promoters, Comfortable financial risk profile , favourable long term demand prospects for paper industry from end-user industries, Comfortable scale of operations albeit, Total Operating income and profitability following declining trend however strenghth are mitigated by risk factors such as profitability exposed to volatility in wastepaper prices , intense competition in paper industry, exposed to changes in wastepaper related regulations.

BWR also notes that company is in process of completing capex of Rs 44 Crs in FY27 (Refuse-Derived Fuel) which is expected to reduce power cost in medium term. Timely completion of capex will be key rating moniterable.

KEY RATING DRIVERS

Credit Strengths:

Established market position, supported by extensive experience of the promoters :
SPPL is a prominent player in the Paper industry. The market position is supported by the more-than-decade-long relations with customers and suppliers . SPPL has been manufacturing kraft paper since 1986, which has enabled the company to establish strong relationships with both customers and suppliers. Mr. Sushil Bansal is Managing Director and he is currently mnaging the operations of the company.
Favourable long term demand prospects for paper industry from end-user industries :
The long -term demand prospects for kraft paper and duplex board paper are expected to be healthy, supported by growing demand for packaging from ecommerce, food and food products, FMCG, textiles, automobiles and pharmaceutical sectors. Key demand drivers for kraft paper and duplex boards include the rapid expansion of e-commerce, growing at a CAGR of 15%. Food, pharma, and FMCG together account for around 47% of total usage, while industrial and general-purpose applications contribute an additional 29%, supported by growth in manufacturing and logistics. In FY26, the Indian kraft paper industry is entering a critical turnaround,after facing significant margin pressures and a decline in domestic production through FY25,the sector is projected to rebound due to stabilizing raw material costs and a massive shift toward sustainable packaging. The market size for kraft paper in India is projected to reach approximately $11.8-12.5 million tons in FY26, with the broader paper packaging market estimated at $ 22.73 billion.
Comfortable financial risk profile :
The company has adequate Networth of Rs 159.99 crore on March 31, 2025 and limited exposure to external borrowing, result in gearing and total outside liabilities to total networth ratios of 0.59 times and 0.91 times, respectively. Debt protection metrics were adequate with interest coverage of 2.18 times as on March 31, 2025. Improvement in scale and steady profitability will be crucial for sustenance of financial risk profile over the medium term. The completion of capex in FY 26 and expected completion in FY 27 is expected to improve cost efficiency and expected to improve operating profit margins in medium term

Credit Risks:

Comfortable scale of operations albeit,Total Operating income and Profitability following declining trend: :
The company’s operating scale has moderated, with Total Operating Income declining from Rs709.53 Cr in FY23 to Rs 586.07 Cr in FY24, and remaining largely stable at Rs 585.24 Cr in FY25. While the topline has stabilized in FY25, the overall revenue base remains lower than FY23 levels, indicating contraction in volumes and pricing pressure. Profitability has witnessed sustained weakening over the last three years, with OPBDIT declining sharply from Rs 33.84 Cr (FY23) to Rs 16.17 Cr (FY25). Consequently, operating margin reduced to 2.76% in FY25 (from 4.77% in FY23), reflecting margin pressure on account of higher operating costs and/or limited pricing flexibility. Net profitability also moderated with PAT declining to Rs 4.62 Cr in FY25 and net margin reducing to 0.79%, highlighting weakened earnings resilience. However , currently in 9MFY25 company registered Total Operating income of Rs 438.48 Crs , EBITDA of Rs 14.06 Crs and PAT of Rs 3.4 Crs. Consequently reporting operating profit margin of 3.21% in 9MFY26 due to improvement in price realization and capex of Refuse-Derived Fuel of Rs 55 Crs being completed in Nov 2025.
Profitability exposed to volatility in wastepaper prices and decline in price realisations due to intense competition in paper industry :
SPPL’s profitability remains exposed to sharp fluctuations in raw material prices, primarily wastepaper and coal. A moderate portion of wastepaper is imported which is ~28% while realisations remain exposed to domestic demand - supply dynamics. The margins were impacted in FY2025 due to lower contribution margin as contraction in realisations was sharper than decline in raw material prices. Elevated fuel prices has impacted the company’s margins over the years as the company was unable to pass on the cost escalation to its end customers. Further, the company uses imported wastepaper, making it vulnerable to movements in forex rates as it has not adopted forex hedging.
Exposed to changes in wastepaper related regulations :
SPPL’s profit margins remain vulnerable to regulatory changes in the paper industry. The paper manufacturing industry is exposed to environmental risks as its production causes air, water and land pollution. Discarded paper and paperboards also make up a sizeable portion of solid municipal waste. Thus, the entity remains exposed to the risks associated with changes in wastepaper - related regulations on availability and usage of water and other inputs in the manufacturing process.

ANALYTICAL APPROACH - Standalone

BWR Ratings has evaluated the standalone business and financial risk profiles of SPPL.

RATING SENSITIVITIES

Positive: The rating may be upgraded in case of sustained improvement in Total operating income, Operating profit margins above 6 % on sustained basis, improvement of debt protection metrics with DSCR >2x on sustained basis , coupled with sustained improvement in working capital management and leverage (Gross Debt/EBITDA <5.0x)

Negative: The rating may be downgraded in case of sustained decline in Total Operating income, Operating profit margins below 4%on sustained basis, worsening of the working capital cycle, large debt funded capex, debt coverage ratios with DSCR <1.2, TOL/TNW exceeding 1.50 x on sustained basis.

LIQUIDITY INDICATORS - Adequate

Adequate liquidity characterized by sufficient cushion in cash accruals of Rs 10.46 Crs in FY 26 vis-a-vis repayment obligations of Rs 1.40Crs in FY 26 and moderate cash balance of Rs 11.98 Crs . The company has growth capex in range of Rs 55 Crs in FY26 which it has alreday completed and Rs 44 Crs in FY27. Its bank limits are utilized to the extent of ~62% for last ten months ending Jan 2026, supported by the current ratio of 1.83 x in FY 25.The company’s adequate liquidity position is supported by its undrawn (vis-à-vis Drawing power) working capital facilities over the year, averaging 38 % for the 12-month period ended in Jan 2025. Company's liquidity position also remains supported by unsecured loans infused by the promoters on need basis.

ABOUT THE ENTITY

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

Incorporated in 1986, Sidharth Papers Pvt Ltd (SPPL) is engaged in the manufacturing of Duplex Boards and Kraft Papers from waste paper. SPPL has two manufacturing units located in adjacent plots at Kashipur in the state of Uttarakhand. Unit 1 started its commercial production in 1988 which manufactures Kraft Paper, and Unit II was commissioned in 2007 which manufactures duplex boards. The entity has installed capacity of 1,25000 MT/year of duplex board and 42000 MT/year of Kraft paper and capacity utilization of ~98% and ~100% respectively. Operations are managed by Ms Usha Rani, Mr Sushil Kumar Bansal, Mr Muneesh Bansal and Mr Vineet Kumar Sangal.

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.	709.53	586.07	585.24
EBITDA	Rs.Crs.	33.84	25.14	16.17
PAT	Rs.Crs.	12.75	7.24	4.62
Tangible Net Worth	Rs.Crs.	148.13	155.37	159.99
Total Debt / Tangible Net Worth	Times	0.61	0.61	0.59
Current Ratio	Times	1.73	1.80	1.83

KEY COVENANTS OF THE FACILITY RATED

There are standard covenants as per sanction letter

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

ANY OTHER INFORMATION

RATING HISTORY FOR THE PREVIOUS 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	197.99	BWR BBB+/Stable (Upgrade and Removed from the ISSUER NOT COOPERATING* category)	25Apr2025	BWR B Stable (Continues to be in ISSUER NOT COOPERATING* category/Downgraded)	02Feb2024	BWR B+ Stable (Continues to be in ISSUER NOT COOPERATING* category/Downgraded)	NA	NA
Non Fund Based	LT	1.25	BWR BBB+ (Assignment)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	18.50	BWR A2 (Upgrade and Removed from the ISSUER NOT COOPERATING* category)	25Apr2025	BWR A4 (Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed)	02Feb2024	BWR A4 (Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed)	NA	NA
Grand Total		217.74	(Rupees Two Hundred Seventeen Crores and Seventy Four lakhs Only)

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Karan Ahluwalia Ratings Analyst karan.ahluwalia@brickworkratings.com	Ravi Rashmi Dhar Director - Ratings ravi.d@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com	Customer Support \| CustSupport@brickwrokratings.com

Sidharth Papers Pvt. Ltd. (erstwhile Sidharth 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	20.00	_	20.00	Simple##
2	HDFC Bank	ILC/FLC - Sanctioned	_	5.00	5.00	Simple##
3	Punjab National Bank	ILC/FLC - Sanctioned	_	9.00	9.00	Simple##
4	Punjab National Bank	Bank Guarantee - Sanctioned	1.25	_	1.25	Simple##
5	Punjab National Bank	Term Loan - Sanctioned	42.99	_	42.99	Simple##
6	Punjab National Bank	Cash Credit - Sanctioned	50.00	_	50.00	Simple##
7	State Bank Of India (SBI)	Cash Credit - Sanctioned	50.00	_	50.00	Simple##
8	State Bank Of India (SBI)	Term Loan - Sanctioned	35.00	_	35.00	Simple##
9	State Bank Of India (SBI)	ILC/FLC - Sanctioned	_	4.50	4.50	Simple##
Total			199.24	18.50	217.74
TOTAL (Rupees Two Hundred Seventeen Crores and Seventy 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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