CRISIL has assigned its ‘BB/Stable/P4+’ ratings to Pinax Paper Mills Pvt Ltd’s (PPMPL’s) bank facilities. The ratings reflect PPMPL’s below-average financial risk profile, marked by low net worth and high gearing, and exposure to risks related to the limited track record of its promoters in the paper industry. These rating weaknesses are partially offset by geographical advantages for PPMPL.

Outlook: Stable
CRISIL believes that PPMPL will maintain a stable business and financial risk profile, on the back of high demand for industrial paper, especially kraft paper, in the company’s region of operation. The outlook may be revised to ‘Positive’ in case PPMPL reports significantly higher-than-expected revenues and cash accruals, and significant improvement in gearing over the near to medium term. Conversely, the outlook may be revised to ‘Negative’ if the company undertakes a significantly high debt-funded capital expenditure programme, or lower-than-expected improvement in the debt protection indicators.

About the Company
Promoted by Mr. Sanjay Khemka and Mr. Vivek Banka, PPMPL manufactures kraft paper with burst factor in the range of 14 to 20. The company currently has a kraft paper manufacturing capacity of 100 tonnes per day. The company has commenced operations in July 2009.

Mr. Khemka had incorporated Adi Shakti Ispat Pvt Ltd in April 2004 for manufacturing ingots and billets. In 2004-05, Mr. Khemka changed his plans and decided to venture into kraft paper manufacturing. Accordingly, the objects and the name clause were amended and the company was renamed as Pinax Paper Mills Pvt Ltd. Mr. Khemka and his brother-in-law, Mr. Vivek Banka, handle the day-to-day operations of the company along with a team of professionals.

Mr. Khemka has substantial business interests in the iron and steel industry. The Khemka family owns and operates Pinax Steel Industries Pvt Ltd. rated ‘BB+/Stable/P4+’ by CRISIL, which is into manufacturing of ingots, billets and structurals.