| Chadha Papers Limited | ||||||
| Ratings reaffirmed at 'Crisil BB+/Stable/Crisil A4+'; Rated amount enhanced for Bank Debt | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has reaffirmed its ‘Crisil BB+/Stable/Crisil A4+’ ratings on the bank facilities of Chadha Papers Limited (CPL).
The ratings continue to reflect the extensive experience of the promoters in the paper industry and healthy scale of operations. These strengths are partially offset by moderate operating profitability. |
Analytical Approach Preference shares (Rs 35.82 crore estimated as on March 31, 2025) have been treated as debt as these shares have been repaid in the past and are likely to be repaid over the medium term as well. |
Key Rating Drivers & Detailed Description Strengths: Extensive experience of the promoters: Established in 1990, CPL is promoted by the owners of the Wave group, which is a leading business conglomerate that operates across diverse sectors. The key promoter is Mr Rajinder Chadha, son of Mr Kulwant Singh Chadha (founder of the Wave group). The company’s business is run by an experienced management team that has more than a decade of experience in the paper and related industries. Expertise of the promoters, their strong understanding of market dynamics and healthy relationships with customers and suppliers should continue to support the business.
Healthy scale of operations: Despite the cyclicality in paper prices, the company reported healthy scale of operations in terms of volume and realisation over the years, while fulfilling its commitments towards customers on a timely basis. The company recorded a revenue of Rs. 385 crores in fiscal 2025 (till Dec-2024) and is estimated to close the fiscal at around Rs 500-510 crores. The revenue shall further grow by 8-10% in fiscal 2026 backed by volumetric growth and high demand owing to reprinting of school books with new syllabus as per the New Education Policy of the government.
Weakness: Moderate operating profitability: The operating profitability declined in fiscal 2025 on account of increasing prices of kraft paper, which could not be passed on to customers entirely, along with lower absorption of fixed costs amid production shut down for around two months. The margin is estimated at 5.0-5.5% for fiscal 2025 (as against 13.8% in fiscal 2024) and shall increase to 8.0-8.5% in fiscal 2026 supported by higher focus on value-added products such as paper bags as well as better efficiencies from the use of new machinery. Fiscal 2027 is expected to witness further improvement on account of reduction in power and fuel costs, backed by installation of new turbines and boiler; however, this will remain a key monitorable. |
Liquidity: Stretched Bank limit utilisation was about 72% for the 12 months through April 2025, with over 90% utilisation in multiple months. Liquidity is supported by an expected net cash accrual of Rs 25-26 crore in fiscal 2026, which will support liquidity and cushion the strategic investments and capital expenditure (capex). The company has deferred the capex on boiler and turbine for some months and shall take up the same in the current fiscal, with the same to be funded through a mix of debt and internal cash accrual. Current ratio is estimated at 1.5-1.6 times as on March 31, 2025. Liquidity will be further supported by unsecured loans and security deposits from the promoters and group companies. |
Outlook: Stable CPL will continue to benefit from the extensive experience of the promoters and their established relationship with clients. |
Rating sensitivity factors Upward factors
Downward factors
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About the Company Established in 1990, CPL is a Uttar Pradesh-based company promoted by Mr Kulwant Singh Chadha and his family members. The company is a part of the Wave group, which is a leading business conglomerate that operates across diverse sectors. CPL manufactures different kinds of papers such as kraft, absorbent kraft, writing and printing papers and newsprint. |
Key Financial Indicators
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Status of non cooperation with previous CRA CPL did not cooperate with Infomerics Valuation and Rating Private Limited, which classified it as 'Issuer not cooperative' vide release dated March 3, 2025. The reason provided by Infomerics is non-furnishing of information for monitoring of ratings. |
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||
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Criteria Details
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