Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
Rating Rationale
Acuité has reaffirmed its long-term rating of ‘ACUITEBB'(readasACUITEdoubleB) and its short-term rating of ‘ACUITEA4+’(readasACUITEAfourplus) on the Rs.38.00 crore bank facilities of Akshera Papers (AP). The outlook is 'Stable'.
Rationale for Rating The rating reaffirmation factors in the stable operating performance albeit moderated profitability. The rating also factors in the extensive experience of the promoters along with long track record of operations. However, the rating is constrained on account of moderate financial risk profile and moderate working capital operations of the firm along with volatile in raw material prices and competitive industry.
About the Company
Established in 2001, Akshera Papers is an Erode (Tamil Nadu) based partnership firm, promoted by Mr. K. Ramesh Krishnan and Mrs. Uma Maheshwari. The firm is engaged in the manufacturing of Kraft paper in the range of 12 to 30 burst factor with grams per square meter (GSM) of 150 to 300 GSM. The firm has two manufacturing units with a total installed capacity of 54,750 metric tons per annum.
Unsupported Rating
Not Applicable
Analytical Approach
Acuité has considered the standalone business and financial risk profiles of the Akshera Papers (AP) to arrive at the rating.
Key Rating Drivers
Strengths
Longtrackrecordofoperationsandexperiencedmanagement Established in 2001, firm manufactures kraft paper, which is primarily used in the production of corrugated boxes and paperboards. The promoters of the firm, Mr. K. Ramesh Krishnan and Mrs. Uma Maheshwari, have more than 2 decades of experience in the paper industry. The extensive experience of the management and long-standing relationship with its customers ensuring repeated orders.
Improvement in revenue albeit moderation in profitability The revenue of the firm improved and stood at Rs.96.76 crore in FY2025 as against Rs.77.40 crore in FY2024. The improvement in the revenue is on the account of improved demand in the market. Furthermore, the firm has clocked a revenue in similar range with revenue of Rs.98.44 crore in FY2026 (Est.). The profitability of the firm has declined with EBITDA margin of 4.85 per cent in FY2025 as against 8.11 per cent in FY2024 and the PAT margin of 0.39 per cent in FY2025 as against 2.54 per cent in FY2024. The decline in profitability is on the account of fluctuation in the input costs which increased to 64.44 per cent of revenue in FY2025 as against 56.92 per cent in FY2024. However, the firm’s strategic capex in captive power generation (solar plant, biogas utilization, and turbine modernization with Unit II recommissioning) is expected to result in annual cost savings leading to improvement in margins from FY27 onwards.
Weaknesses
Moderate working capital operations The firm’s working capital operations are moderate marked by its gross current assets (GCA) of 119 days as on March 31, 2025 (134 days as on March 31, 2024). The debtor realization cycle is around 45-50 days. The raw material inventory that firm maintains is of 7-10 days which is locally sourced. However, the imported raw materials are maintained for almost 1 month and are used to produce higher quality papers. The raw material creditors are paid around 25-30 days whereas the creditors for coal are paid around 50 days. Therefore, the fund based limits are highly utilised with average utilisation of 99.20 per cent for last 12 months ended December 2025. Acuite believes that working capital management of the firm will remain moderate intensive over the medium term.
Moderate financial risk profile The financial risk profile of the firm stood moderate marked by moderate net worth, moderate gearing and moderate debt protection metrics. The net worth of the firm stood at Rs.25.96 crore in FY2025 as against Rs.25.93 crore in FY2024, increase in net worth is on the account of accretion of profits. Gearing of the firm increased to 1.00 times in FY2025 as against 0.94 times in FY2024 on account of increase in debt. The debt protection metrics also moderated with interest coverage ratio (ICR) of 2.12 times in FY2025 as against 2.99 times in FY2024 while debt service coverage ratio (DSCR) stood at 1.24 times in FY2025 as against 1.74 times in FY2024. Going forward, the financial risk profile of the firm is expected to improve on account of gradual repayment and reduction in debt levels along with no major debt funded capex plan in near to medium terms.
Exposure to volatile raw material prices and highly fragmented and competitive industry The operating margins of the firm remain susceptible to volatile in raw material (wastepaper) prices. Any adverse fluctuation in raw material prices can impact profitability. Kraft paper is used for tertiary packaging; thus, offtake depends on industrial production and other macroeconomic factors. The recycling industry is highly intense competition and the highly fragmented industrial paper industry constrains scalability, pricing power, and product differentiation.
Rating Sensitivities
Potential triggers (individual or collective) for an upward rating action:
Consistent improvement in operating income with revenue above Rs.150 crores along with improved margins.
Improvement in working capital intensity
Potential triggers (individual or collective) for a downward rating action:
Deterioration in operating performance with decline in revenues and profitability with revenue falling below Rs.70 crores or lowering of profitability
Deterioration in financial risk profile
Elongation in the working capital cycle
Liquidity Position
Stretched
While the firm generated cash accruals of Rs.2.52 crores in FY25, sufficient against debt repayment obligations of Rs.1.60 crore for the same period, however, owing to working capital intensity, the current ratio remains low at 0.97times as on March 31, 2025. Further, the bank limit utilisation also remains high at an average of ~99.20 percent, over the past 12 months ending December, 2025 thereby creating a liquidity stretch. Further to this the firm’s unencumbered cash and bank balances stood low at Rs.0.09 crore as on March 31, 2025. Going forward, the cash accruals of the firm are expected to be in the range of Rs.2.00- 8.00 crores during FY2026-FY2027 against repayment obligation of Rs.1.00- 2.00 crores during the same period.
Outlook: Stable
Other Factors affecting Rating
None
Particulars
Unit
FY 25 (Actual)
FY 24 (Actual)
Operating Income
Rs. Cr.
96.76
77.40
PAT
Rs. Cr.
0.38
1.97
PAT Margin
(%)
0.39
2.54
Total Debt/Tangible Net Worth
Times
1.00
0.94
PBDIT/Interest
Times
2.12
2.99
Status of non-cooperation with previous CRA (if applicable)
ACUITE BB | Stable
(Downgraded from ACUITE BB+ | Stable)
Proposed Long Term Bank Facility
Long Term
11.45
ACUITE BB | Stable
(Downgraded from ACUITE BB+ | Stable)
Working Capital Term Loan
Long Term
2.35
ACUITE BB | Stable
(Downgraded from ACUITE BB+ | Stable)
Cash Credit
Long Term
16.50
ACUITE BB | Stable
(Downgraded from ACUITE BB+ | Stable)
Lender’s Name
ISIN
Facilities
Listing Status
Regulated By
Date Of Issuance
Coupon Rate
Maturity Date
Quantum (Rs. Cr.)
Complexity Level
Rating
Federal Bank Limited
Not avl. / Not appl.
Cash Credit
Unlisted
RBI
Not avl. / Not appl.
Not avl. / Not appl.
Not avl. / Not appl.
25.00
Simple
ACUITE BB | Stable | Reaffirmed
Federal Bank Limited
Not avl. / Not appl.
Credit Exposure Limit (FCNR)
Unlisted
RBI
Not avl. / Not appl.
Not avl. / Not appl.
Not avl. / Not appl.
1.00
Simple
ACUITE BB | Stable | Reaffirmed
Not Applicable
Not avl. / Not appl.
Proposed Short Term Bank Facility
Unlisted
RBI
Not avl. / Not appl.
Not avl. / Not appl.
Not avl. / Not appl.
2.96
Simple
ACUITE A4+ | Reaffirmed
Federal Bank Limited
Not avl. / Not appl.
Term Loan
Unlisted
RBI
24 Dec 2024
Not avl. / Not appl.
27 Jun 2030
4.04
Simple
ACUITE BB | Stable | Reaffirmed
Federal Bank Limited
Not avl. / Not appl.
Term Loan
Unlisted
RBI
24 Jul 2025
Not avl. / Not appl.
23 Jul 2031
5.00
Simple
ACUITE BB | Stable | Reaffirmed
Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
Contacts
List of instruments and names of regulators of the instruments
