Product Quantum (Rs. Cr) Long Term Rating Short Term Rating
Bank Loan Ratings 55.00 ACUITE A- | Stable | Reaffirmed -
Total Outstanding 55.00 - -
Total Withdrawn 0.00 - -
 
Rating Rationale

­Acuité has reaffirmed its long-term rating of 'ACUITE A-’ (read as ACUITE A minus) on the Rs. 55.00 crore bank facilities of Kherani Paper Mills Private Limited (KPMPL). The outlook remains 'Stable'.

Rationale for reaffirmation

The rating reaffirmation takes into account the stable growth in the operating revenue and profitability margins of the group. The improving financial risk profile and adequate liquidity position of the group also provide comfort to the rating. The rating is however constrained on account of working capital intensive operations of the group and su
sceptibility of profitability to volatile raw material prices, global realisations and demand.


About the Company

Mumbai based Kherani Paper Mills Private Limited (KPMPL) was originally incorporated in 1988 and subsequently takenover by the present management i.e. G.N. Agarwal Group in the year 1992. It is engaged in the manufacturing of duplex board in different grammages ranging from 180 GSM to 550 GSM. Its factory is situated at Vapi, Gujarat  with a  manufacturing capacity of the plant is 48,000 MTPA. The present directors of the company are Mr. Gajendra Nagin Agarwal, Ms. Meena Gajendra Agrawal and Ms. Tanisha Nikhar Agarwal.

 
About the Group

­Gayatrishakti Paper and Boards Limited
Mumbai based, Gayatrishakti Paper and Boards Limited was founded in 1996 as a public limited company and is promoted by the G.N. Agarwal group. The company manufactures premium coated paper boards (duplex board) & kraft paper. It's duplex unit is located in Gujarat Industrial Development Corporation (GIDC) at Vapi and kraft paper unit at Sarigam. The present directors of the company are Mr. Gajendra Nagin Agarwal, Ms. Meena Gajendra Agrawal, Mr. Mahesh Narottam Jalan, Mr. Nikhar Gajendra Agarwal, Mr. Arun Kumar Lahoti, Mr. Pralhad Mansing Aher, Mr. Vinay Doulat Parashar, Mr. Mahesh Shyamnarayan Dwivedi and Ms. Suman Agarwal.

Gayatrishakti Tissue Private Limited (GTPL)
Incorporated in 2022, GTPL is a subsidiary of GPBL, engaged in manufacturing of virgin and non-virgin tissue papers. Situated in Vapi, the plant has a manufacturing capacity of 36,000 MTPA. The company is promoted by Mr. Gajendra Nagin Agarwal and Ms. Meena Gajendra Agrawal.

 
Unsupported Rating
­Not Applicable
 
Analytical Approach

Extent of Consolidation
•Full Consolidation
Rationale for Consolidation or Parent / Group / Govt. Support

To arrive at the rating, Acuité has consolidated the business and financial risk profiles of Gayatrishakti Paper and Boards Limited (GPBL), Kherani paper Mills Private Limited (KPMPL) and Gayatrishakti Tissue Private Limited (GTPL), hereinafter referred to as G.N. Agarwal group. The consolidation is on account of common management, significant crossholdings, similar line of business and significant financial linkages among the three entities.

Key Rating Drivers

Strengths

Established track record of operations and experienced management

The chairman and managing director of the company, Mr. G. N. Agarwal, has been associated with the paper industry for more than three decades. The extensive experience of the promoters and the management has helped the company build a strong presence in the market thereby establishing healthy relationships with its consumers. The group has an established track record with a large distribution network of dealers providing access to a wide range of packaging industries such as food products, personal care, FMCG products, oral care and hygiene products and the e-commerce industry, among others. Acuité believes that the group will continue to benefit from its extensive experience in the paper industry and established market presence through a healthy network of dealers and distributors.

Stable operating performance

While the volumes of the paper business have declined marginally due to cheap imports, the operating revenue of group improved to Rs. 1,152.04 Cr. in FY2025 (Prov.) as against Rs. 1,049.59 Cr. in FY2024, majorly on account of commencement of commercial operations of GTPL’s tissue plant in November 2024. The operating margin also improved to 11.49 percent in FY2025 (Prov.) from 10.59 percent in FY2024 due to decline in material and power costs and better realisations (especially in the tissue business). The PAT margin stood at 3.31 percent in FY2025 (Prov.) as against 2.34 percent in FY2024.
Going forward, the operating revenues and margins are expected to improve significantly in FY2026 with full year operations of the tissue business and continued stable operations of the paper business.

Improving financial risk profile

The tangible networth of the group improved to Rs. 346.00 Cr. on March 31, 2025 (Prov.) from Rs. 257.41 Cr. on March 31, 2024 on account of equity infusion in GPBL and GTPL (~Rs. 26.52 Cr.) and accretion of profits. This increase in networth has led to a marginal decline in the gearing which stood at 1.93 times on March 31, 2025 (Prov.) as against 1.99 times on March 31, 2024 (Prov.). The TOL/TNW levels also stood improved at 2.70 times as against 3.09 times on March 31, 2024. However, the debt protection metrics stood moderate with Debt-EBITDA levels of 4.96 times on March 31, 2025 (Prov.) (4.57 times on March 31, 2024), interest coverage ratio (ICR) of 2.45 times in FY2025 (Prov.) (2.43 times in FY2024) and debt service coverage ratio (DSCR) of 1.06 times in FY2025 (Prov.) (0.96 times in FY2024) respectively. Moreover, in April 2025, GPBL raised NCDs of Rs 315 Cr. with an elongated maturity period upto 2033 to refinance its existing debt and utilise for working capital requirements.
Therefore, with increasing accruals and elongation of the repayment period through NCDs, the overall financial risk profile of the group is expected to improve further.


Weaknesses

Working capital intensive operations
The operations of the group are working capital intensive, as evident from GCA (gross current assets) of 138 days on March 31, 2025 (Prov.) as against 114 days on March 31, 2024. The GCA are majorly driven by high inventory and debtor days which stood at 60 days each on March 31, 2025 (Prov.) (51 days and 56 days respectively on March 31, 2024) to maintain the requisite stock and customer relations. Further, the overall bank limit utilisation stood at 81.39 percent for the last six months ended March 2025. The current ratio of the group stood at 1.36 times on March 31, 2025 (Prov.).
Going forward, restriction in elongation of the working capital cycle will be a key rating sensitivity.


Susceptibility of margins to fluctuations in raw material prices and competition from global markets
The paper manufacturers in India are exposed to the risk of volatility in wastepaper prices, given the limited availability of quality fibres and international pricing changes as majority of the waste paper is imported in India. Therefore, the profitability remains susceptible to raw material price fluctuations, however, the group protects its margin through pass through of such changes to its customers. Further, the domestic paper industry is also exposed to intense competition from global players with cheap imports from countries like Indonesia, China, Chile, etc. which affect their sales volumes and price realizations.

ESG Factors Relevant for Rating

On the environment front, group has restored to clean sources of energy like solar power for running its plants to save power emissions. In its new tissue manufacturing facility, the group has installed a waste to energy boiler, which uses plastic waste to generate steam. Further, the group has an effluent treatment plant system for treatment of water. On the social front, the group has developed healthy employment practices such as insurance benefits, health and safety policies, corporate social responsibility programs for upskilling, vocational training, gender equality and rural development. It also promotes gender diversity and inclusivity.
On the governance front, the group has adopted requirement of corporate governance from provision of Companies Act 2013. The board of directors comprises of professionals having expertise and experience in the industry with one executive director, two non-executive directors and two of independent directors. Further, the group has constituted an audit committee and developed whistleblower policy to ensure a healthy governance mechanism.

 
Rating Sensitivities
  • Significant growth in operating revenue while sustaining profitability margins.
  • Improved cash accrual generation and absence of any significant debt raise leading to improvement in the coverage indicators
  • Elongation in the working capital cycle affecting the liquidity of the group
 
Liquidity Position
Adequate

­­The adequate liquidity position of the group is supported by the generation of net cash accruals (NCAs) of Rs. 70.91 Cr. against maturing repayment obligations of Rs. 64.03 Cr. in FY2025 (Prov.). Going forward, the NCAs are expected to remain in the range of Rs. 80 – 95 Cr. with maturing repayments in the range of Rs. 18 – 34 Cr. for FY2026 and FY2027. Further, the group had a cash and bank balance of Rs. 19.64 Cr. on March 31, 2025 (Prov.).

 
Outlook: Stable
­
 
Other Factors affecting Rating
­None
 

Particulars Unit FY 25 (Provisional) FY 24 (Actual)
Operating Income Rs. Cr. 1152.04 1049.59
PAT Rs. Cr. 38.14 24.56
PAT Margin (%) 3.31 2.34
Total Debt/Tangible Net Worth Times 1.93 1.99
PBDIT/Interest Times 2.45 2.43
Status of non-cooperation with previous CRA (if applicable)
­Not Applicable
 
Interaction with Audit Committee anytime in the last 12 months (applicable for rated-listed / proposed to be listed debt securities being reviewed by Acuite)
Not applicable
Any Other Information

None

 
Applicable Criteria
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm
• Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm
• Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm
• Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm

Note on complexity levels of the rated instrument

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook
05 Jul 2024 Proposed Long Term Bank Facility Long Term 5.64 ACUITE A- | Stable (Reaffirmed)
Cash Credit Long Term 25.00 ACUITE A- | Stable (Reaffirmed)
Term Loan Long Term 7.46 ACUITE A- | Stable (Reaffirmed)
Term Loan Long Term 16.90 ACUITE A- | Stable (Reaffirmed)
02 Jun 2023 Cash Credit Long Term 25.00 ACUITE A- | Stable (Reaffirmed)
Term Loan Long Term 9.62 ACUITE A- | Stable (Reaffirmed)
Term Loan Long Term 20.25 ACUITE A- | Stable (Reaffirmed)
Proposed Long Term Bank Facility Long Term 0.13 ACUITE A- | Stable (Reaffirmed)
28 Sep 2022 Cash Credit Long Term 25.00 ACUITE A- | Stable (Upgraded from ACUITE BBB+ | Stable)
Term Loan Long Term 7.75 ACUITE A- | Stable (Upgraded from ACUITE BBB+ | Stable)
Term Loan Long Term 15.50 ACUITE A- | Stable (Upgraded from ACUITE BBB+ | Stable)
Proposed Long Term Bank Facility Long Term 6.75 ACUITE A- | Stable (Upgraded from ACUITE BBB+ | Stable)
19 Sep 2022 Cash Credit Long Term 25.00 ACUITE BBB+ | Stable (Downgraded from ACUITE A- | Stable)
Term Loan Long Term 7.75 ACUITE BBB+ | Stable (Downgraded from ACUITE A- | Stable)
Term Loan Long Term 15.50 ACUITE BBB+ | Stable (Downgraded from ACUITE A- | Stable)
Proposed Long Term Bank Facility Long Term 6.75 ACUITE BBB+ | Stable (Downgraded from ACUITE A- | Stable)
­

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum
(Rs. Cr.)
Complexity Level Rating
Axis Bank Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 25.00 Simple ACUITE A- | Stable | Reaffirmed
Not Applicable Not avl. / Not appl. Proposed Long Term Bank Facility Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 11.51 Simple ACUITE A- | Stable | Reaffirmed
Aditya Birla Finance Limited Not avl. / Not appl. Term Loan 31 Mar 2023 Not avl. / Not appl. 31 Mar 2028 5.95 Simple ACUITE A- | Stable | Reaffirmed
HDFC Bank Ltd Not avl. / Not appl. Term Loan 12 Sep 2022 Not avl. / Not appl. 31 Dec 2026 5.29 Simple ACUITE A- | Stable | Reaffirmed
Aditya Birla Finance Limited Not avl. / Not appl. Term Loan 26 Dec 2019 Not avl. / Not appl. 31 Dec 2026 7.25 Simple ACUITE A- | Stable | Reaffirmed
*Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support)
­
Sr. No.   Company Name
1   Gayatrishakti Paper and Boards Limited 
2   Kherani Paper Mills Private Limited
3   Gayatrishakti Tissue Private Limited
 

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