­For arriving at the rating, Acuité has taken a consolidated view on the business and financial risk profile of Wheel Flexible Packaging Private Limited (WFPPL) and Wheel Flexible Packaging (WFP) collectively referred to as the Wheel Group (group). The consolidation is in view of the entities' similar business model, common management, operational and financial synergies.

­Experienced management and established track record of operations
The Wheel group was established by Mr. Balachandran Kammaran Nambiar, who has an experience of more than five decades in the flexible packing industry. Further, the group has an operational track record of over two decades, which coupled with the management's experience has helped the group diversify its customer base in the domestic market and international markets like UK, USA, UAE, Peru, Jordan etc.

Improving operating performance
The operating revenue of the group improved by ~11 percent to Rs. 240.60 Cr. in FY2026 (Prov.) from Rs. 215.80 Cr. in FY2025, aided by increase in the sales volumes and realization prices. Despite improvement in the topline, the EBITDA margins moderated marginally to 8.12 percent in FY2026 (Prov.) from 9.19 percent in FY2025 due to increase in input cost, however, remain healthy. The PAT margin stood at 2.05 percent in FY2026 (Prov.) as against 1.90 percent in FY2025.

Improving financial risk profile
The financial risk profile of the group has been gradually improving over the last few years. The gearing improved to 1.59 times in FY2026 (Prov.) from previous high of 2.54 times in FY2023. Similarly, TOL/TNW improved to 2.63 times in FY2026 (Prov.) from 4.14 times in FY2023. Debt-EBITDA though improved from 5.76 times in FY2023 to 4.45 times in FY2026 (Prov.), continue to remain high. The coverage indicators stood adequate with interest coverage ratio (ICR) at 2.20 times and debt service coverage ratio (DSCR) at 1.06 times in FY2026 (Prov.)
Going forward, decline in the Debt-EBITDA levels and overall improvement in the financial risk profile will be a key rating sensitivity.

­Intensive working capital operations
The operations of the group are intensive, marked by improved but high gross current assets of 227 days in FY2026 (Prov.). The GCA are driven by high inventory levels of 162 days in FY2026 (Prov.). However, since the production is based on the demand forecast provided by the consumers, the group is required to maintain adequate stock levels. The debtor days stood similar at 69 days in FY2026 (Prov.) and FY2025. The GCA days are also driven by the high cash and bank balance during the year end. The creditor days on the other hand stood at 77 days in FY2026 (Prov.) as against 92 days in FY2025. The bank limit utilization for the group stood high at ~100 percent for the last six months ended March 2026.

Competitive nature of industry along with susceptibility in raw material pricing trends
The group operates in a highly price sensitive domestic market that is largely fragmented with the presence of several smaller players, which restricts its pricing flexibility. Further, the major raw material for the group is polypropylene plastic granules which is a crude oil derivative. Therefore, any changes in the crude oil prices affects the pricing of the raw material which pressurizes the margins. However, given the reputed clientele base of the group, the group has been able to pass on the increase in material prices due to the presence of price escalation clause in the work orders. This is expected to protect the margins of the group against material price fluctuations.

• Improvement in operating performance with revenues reaching above Rs. 350-400 Cr at stable operating margins
• Improvement in financial risk profile

• Decline in operating performance
• Significant increase in debt levels, leading to Debt-EBITDA levels higher than 4.5 times