Press Release

August 06, 2026

PANARA CRAFT LLP
Rating Downgraded

Product	Quantum (Rs. Cr) (Other FSR)	Long Term Rating	Short Term Rating	Regulated By
Bank Loan Ratings	87.12	ACUITE BB+ \| Stable \| Downgraded	-	RBI
Bank Loan Ratings	2.50	-	ACUITE A4+ \| Downgraded	RBI
Total Outstanding	89.62	-	-	-
Total Withdrawn	0.00	-	-	-

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

Acuite has downgraded the long-term rating to 'ACUITE BB+' (read as ACUITE double B plus) from ACUITE BBB- (read as ACUITE triple B minus) and the short-term rating to 'ACUITE A4+' (read as ACUITE A four plus) from 'ACUITE A3' (read as ACUITE A three) on the Rs. 89.62 Cr. bank facilities of Panara Craft LLP (PCL). The outlook is 'Stable'.

Rationale for downgrade
The rating downgrade is driven by the continued stretched liquidity position of the firm in FY2026 and FY2025 leading to below unity DSCR. The downgrade also factors in the working capital-intensive operations, modest scale and subdued profitability margins, lower than Acuite’s expectations. Further, rating remains constrained by the average financial risk profile and intensive competition and fragmented nature of industry. The rating however draws support from the experienced management of the firm.

About the Company

Incorporated in 2019, Panara Craft LLP (PCL) is a limited liability partnership owned by Mr. Suresh Panara and Mr. Paresh Panara, engaged into manufacturing of kraft paper since 2021 with an installed capacity of 70,560 metric tonnes per annum (MTPA). PCL has its manufacturing facility in Surat, Gujarat wherein it manufactures kraft paper ranging from 120-350 GSM (grams per square metre) with 18-35 BF (bursting factor); which is broadly used in packing industry for corrugated boxes, mono cartons and other packaging requirements, etc.

Unsupported Rating

Not Applicable

Analytical Approach

Acuité has considered the standalone business and financial risk profiles of Panara Craft LLP (PCL) to arrive at this rating.

Key Rating Drivers

Strengths

Experienced partners
Mr. Paresh Panara is also partner in Spenzzer Craft Private Limited, a kraft paper manufacturing company established in 2017. Additionally, Mr. Ashwin Panara (a partner at Panara Craft LLP) owns Lemosa Tiles LLP, a tile manufacturing firm based in Surat providing digital tiles, wall tiles, ceramic tiles, etc.

Weaknesses

Modest scale of operations
The firm generated a revenue of Rs. 205 - 206 Cr in FY2026 (Est) from Rs. 188.97 Cr in FY2025, driven by growth in sales volumes. However, the overall scale remains modest. Further, the operating profitability of firm declined to ~5.55 percent in FY2026 (Est) from 6.41 percent in FY2025 and 7.30 percent in FY2024. In June 2026, the firm commissioned a 10 MW solar plant for captive consumption, which is expected to improve their operating margins. Further, the firm is currently operating at ~97 percent capacity, and with no plans for capacity addition in the near term, the scale is expected to remain on similar levels, with some fluctuations driven by price realizations.
Going forward, improvement in the operating margin will be a key monitorable.

Average financial risk profile
The financial risk profile of the firm is marked by moderate gearing, low networth and average debt coverage metrics. The networth though growing, stood low at 61.22 Cr on March 31, 2025. Moreover, net worth also remains subject to capital withdrawal considering the constitution of firm. The gearing and TOL/TNW levels stood moderate at 1.03 times (1.14 times in PY) and 1.49 times (1.40 times in PY) in FY2025 respectively. However, the Debt-EBITDA levels stood high at 5.11 times in FY2025 from 4.36 times in FY2026. Further, while the interest coverage ratio (ICR) stood adequate at 2.24 times in FY2025, but debt service coverage ratio (DSCR) stood low at 0.98 times in FY2025. The shortfall was funded through infusion of unsecured loans and partners' capital.
Going forward, improvement in the financial risk profile will be a key monitorable

Working capital intensive operations
The operations of the firm are working capital intensive, with high gross current assets of 178 days in FY2025. These are mainly on account of inventory days of 56, receivable days of 82 and high level of other current assets in FY2025. The creditor days on the other hand stood low at 24 days in FY2025 as the firm makes advance payment for the raw material which is imported and a credit period of 30-45 days is extended by the domestic suppliers. Therefore, the company is highly dependent on bank limits to fund the working capital gap. The average bank limit utilization stood at ~94 percent for the last six months ended June 2026.

Susceptibility to volatility in raw material prices
The major raw material required in kraft paper industry is waste paper, which is highly susceptible to price volatilities given the limited availability of quality fibres and international pricing changes as majority of the waste paper is imported in India. PCL also procures nearly ~80% of the waste paper through imports from USA, Canada, Europe etc. and the remaining is sourced domestically. Therefore, the profitability remains susceptible to raw material price fluctuations, however, the firm protects its margin through pass through of such changes to its customers.

Rating Sensitivities

Potential triggers (individual or collective) for an upward rating action:

Improvement in financial risk profile
Growth in scale of operations with generation of net cash accruals higher than Rs. 12 - 15 Cr.

Potential triggers (individual or collective) for a downward rating action:

???? Decline in net cash accruals leading to DSCR remaining below unity
Significant withdrawals by partners affecting the net worth of the firm
Increase in debt levels affecting the financial risk profile and liquidity position of the firm
Deterioration in the operating performance

Liquidity Position

Stretched

The liquidity position of the firm is stretched. The net cash accruals (NCAs) of Rs. 6.84 Cr stood insufficient against arising repayment obligations of Rs. 7.08 Cr in FY2025. The mismatch was funded through infusion of capital and unsecured loans in the business. Further, the NCAs remain insufficient at ~7.26 Cr against repayment obligations of Rs. 8.19 Cr in FY2026 (Est). Going forward net cash accruals are expected to improve to Rs. 9 – 11 Cr, however, remain tight against repayment obligations of 9 – 10 Cr in FY2027 and FY2028. The current ratio stood at 1.47 times in FY2025. The average bank limit utilization stood at ~94 times for the last six months ended June 2026. The unencumbered cash and bank balance stood at 0.30 Cr on March 31, 2025.

Outlook: Stable

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 25 (Actual)	FY 24 (Actual)
Operating Income	Rs. Cr.	188.97	162.56
PAT	Rs. Cr.	3.55	3.32
PAT Margin	(%)	1.88	2.04
Total Debt/Tangible Net Worth	Times	1.03	1.14
PBDIT/Interest	Times	2.24	2.13

Status of non-cooperation with previous CRA (if applicable)

Not Applicable

Any other information

None

Applicable Criteria

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

Note on complexity levels of the rated instrument

In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History

Date	Name of Instruments/Facilities	Term	Amount (Rs. Cr)	Rating/Outlook
08 May 2025	Bank Guarantee (BLR)	Short Term	2.50	ACUITE A3 (Assigned)
	Cash Credit	Long Term	25.00	ACUITE BBB- \| Stable (Assigned)
	Term Loan	Long Term	12.72	ACUITE BBB- \| Stable (Assigned)
	Term Loan	Long Term	6.34	ACUITE BBB- \| Stable (Assigned)
	Term Loan	Long Term	30.72	ACUITE BBB- \| Stable (Assigned)
	Term Loan	Long Term	3.00	ACUITE BBB- \| Stable (Assigned)
	Covid Emergency Line.	Long Term	6.34	ACUITE BBB- \| Stable (Assigned)
	Stand By Line of Credit	Long Term	3.00	ACUITE BBB- \| Stable (Assigned)

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Listing Status	Regulated By	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
State Bank of India	Not avl. / Not appl.	Bank Guarantee (BLR)	Unlisted	RBI	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	2.50	Simple	ACUITE A4+ \| Downgraded ( from ACUITE A3 )
State Bank of India	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 \| Downgraded ( from ACUITE BBB- )
State Bank of India	Not avl. / Not appl.	Covid Emergency Line.	Unlisted	RBI	31 Jan 2022	Not avl. / Not appl.	31 Jan 2027	1.73	Simple	ACUITE BB+ \| Stable \| Downgraded ( from ACUITE BBB- )
Not Applicable	Not avl. / Not appl.	Proposed Long Term Bank Facility	Unlisted	RBI	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	8.65	Simple	ACUITE BB+ \| Stable \| Downgraded ( from ACUITE BBB- )
State Bank of India	Not avl. / Not appl.	Stand By Line of Credit	Unlisted	RBI	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	3.00	Simple	ACUITE BB+ \| Stable \| Downgraded ( from ACUITE BBB- )
State Bank of India	Not avl. / Not appl.	Term Loan	Unlisted	RBI	18 Jan 2020	Not avl. / Not appl.	31 Jan 2028	6.43	Simple	ACUITE BB+ \| Stable \| Downgraded ( from ACUITE BBB- )
State Bank of India	Not avl. / Not appl.	Term Loan	Unlisted	RBI	28 Jul 2023	Not avl. / Not appl.	31 Mar 2030	5.13	Simple	ACUITE BB+ \| Stable \| Downgraded ( from ACUITE BBB- )
State Bank of India	Not avl. / Not appl.	Term Loan	Unlisted	RBI	25 Nov 2024	Not avl. / Not appl.	31 Oct 2034	29.47	Simple	ACUITE BB+ \| Stable \| Downgraded ( from ACUITE BBB- )
State Bank of India	Not avl. / Not appl.	Term Loan	Unlisted	RBI	25 Nov 2024	Not avl. / Not appl.	31 Jan 2032	2.72	Simple	ACUITE BB+ \| Stable \| Downgraded ( from ACUITE BBB- )
State Bank of India	Not avl. / Not appl.	Working Capital Term Loan	Unlisted	RBI	18 May 2026	Not avl. / Not appl.	31 May 2031	4.99	Simple	ACUITE BB+ \| Stable \| Downgraded ( from ACUITE BBB- )

Contacts

Mohit Jain
Chief Analytical Officer - Rating Operations

Kruti Patel
Associate Analyst - Rating Operations

Contact details exclusively for investors and lenders

Mob: +91 8591310146
Email ID: analyticalsupport@acuite.in

List of instruments and names of regulators of the instruments

As required by SEBI Circular (SEBI/HO/DDHS/DDHS-PoD-2/I/4685/2026) dated February 10, 2026, a list of activities or instruments falling under the purview of various Financial Sector Regulators (FSRs), along with the names of respective FSRs, is being disclosed below:

A. Rating Activity:

Sr. No.	Instrument / activity Name	Regulator of the instrument
1	Listed/Proposed to be listed Bonds/Debentures/Preference Shares (all securities)	SEBI
2	Unlisted/Proposed to be unlisted Bonds/Debentures/ Preference share (all securities)	MCA
3	Listed PTCs / Securitisation Notes (originated by entities regulated by RBI)¹	SEBI
4	Listed PTCs / Securitisation Notes (originated by entities not regulated by RBI)¹	SEBI
5	Unlisted PTCs / Securitisation Notes (originated by entities regulated by RBI)¹	RBI
6	Listed Commercial Paper and NCDs with original maturity less than 1 year	RBI
7	Unlisted Commercial Paper and NCDs with original maturity less than 1 year	RBI
8	Loan Facilities (Fund/Non-Fund Based) from Bank / NBFCs/ NHB/ FIs ²	RBI
9	External Commercial Borrowings and other similar borrowings	RBI
10	Certificates of Deposit	RBI
11	Fixed Deposits raised by NBFCs, Banks, HFCs, FIs	RBI
12	Fixed Deposits raised by corporates other than NBFCs, Banks, HFCs, FIs	MCA
13	Inter Corporate Deposits/Loans extended by Corporates	MCA
14	Borrowing programme ³	-
15	Issuer Ratings ⁴	-
16	Credit Ratings for Capital Protection Oriented Schemes (by Mutal Funds and AIFs)	SEBI
17	Credit quality ratings (CQRs) for Mutual Fund Schemes and Schemes of AIFs	SEBI
18	Listed Security Receipts	SEBI
19	Unlisted Security Receipts	RBI
20	Independent Credit Evaluation (ICE)	RBI
21	Expected Loss Ratings (For Loan Facilities [Fund/Non-Fund based] from Banks/NBFCs/NHB/FIs)	RBI
22	Expected Loss Ratings (Listed / Proposed to be listed Bonds / Debentures / Preference Shares (all securities))	SEBI
23	Expected Loss Ratings (Unlisted / Proposed to be unlisted Bonds/ Debentures / Preference Shares (all securities))	MCA
24	Unlisted PTCs / Securitisation Notes (originated by entities not regulated by RBI) ¹	Investor-side Regulator such as IRDAI, PFRDA ⁵

¹Includes securitisation transactions involving assignee payout, acquirer's payout.

² Includes bank facilities such as liquidity facility, second loss facility that are part of securitisation transactions.
³The rated instrument may involve issuance of different instruments such as debt securities (listed or otherwise), bank loans, commercial paper (listed or otherwise), etc. The regulator of the instrument may accordingly be SEBI, RBI or MCA and can only be determined upon issuance. In Press Release(s) subsequent to issuance(s), Acuite shall separately capture the rated quantum details along with names of respective regulators.
⁴ There is no instrument being rated and hence, Regulator of the Instrument is not applicable. The rating scale and definitions are being followed as stipulated in SEBI Master Circular for CRAs.
⁵ These ratings were assigned during regulatory regime prior to the introduction of SEBI CRA Circular dated Feb 10, 2026 and accordingly, investor side regulators have been included.

B. Other activities:

Sr. No.	Activity Name	Regulator of the activity
1	Monitoring Agency	SEBI
2	Research activities, incidental to rating, such as research for Economy, Industries and Companies ⁶	Not applicable

⁶ permitted by SEBI vide SEBI Master Circular for CRAs.

Disclosure on instruments / activities and names of regulators:

A list of products/activities or ratings of instruments falling under the purview of various financial sector regulators (FSRs) along with the names of respective FSRs has also been duly disclosed by Acuite on its website. A link to the same has been provided below for ready reference:

https://acuite.in/Activities-and-Regulators.html

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai.

Disclaimer:

An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating.

Note: None of the Directors on the Board of Acuité Ratings & Research Limited are members of any rating committee and therefore do not participate in discussions regarding the rating of any entity.