Detailed Rationale

Crisil Ratings has upgraded its rating on long-term bank facilities of TCPL Packaging Limited (TCPL) at ‘Crisil A+/Stable’ from ‘Crisil A/Positive’. The short-term rating is reaffirmed at 'Crisil A1'.

 

The upgrade in the rating reflects the improvement in overall credit risk profile of TCPL marked by steady growth in scale of operations and stable profitability, along with strong financial profile. Revenues have increased to around Rs 1769 crores in fiscal 2025 from Rs 1540 crores in fiscal 2024, driven by healthy demand, continuous customer addition along with geographical expansion backed by regular capex incurred by the company. This will help TCPL to sustain its growth over the medium term as reflected by revenues of Rs 425 crore in the first quarter of fiscal 2026. The operating margins have also improved and sustained at around 16.5-17% over the past three fiscals through fiscal 2025 from 14% historically due to improved gross margins as well as backward integration measures implemented by the company.

 

The rating action also incorporates the strong financial risk profile marked by networth of Rs 627 crore as on March 31, 2025. Despite the continued debt funded capex; capital structure continues to remain comfortable with total outside liabilities to adjusted networth of 1.5 times. Further with improving operating margins and moderate leverage the interest coverage has improved to 5.3 times in fiscal 2025 from 4.6 times in fiscal 2024. Financial risk profile will continue to remain strong despite continued dividend payouts, and moderate debt funded capex due to steady accretion to reserves and continued healthy margins. Liquidity remains strong with high cash accrual against moderate debt repayment obligation, cushion in bank limits and strong cash and bank balance.

 

The ratings reflect the strong financial risk profile, strong market position of TCPL in the domestic packaging industry, established customer relationship and diversified end-user industry base. These strengths are partially offset by exposure to intense competition, and large working capital requirement.

Analytical Approach

For arriving at the ratings, Crisil Ratings has consolidated the business and financial risk profiles of TCPL,, its 3 subsidiaries- Accura Technik Pvt. Ltd, TCPL Middle East FZE and Creative Offset Printers Pvt Ltd, which are strategically important to, and have a significant degree of operational integration with TCPL. Crisil Ratings considers these entities as being strategic to TCPL in view of their strong integration with TCPL’s operations.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers & Detailed Description

Strengths:

• Strong market position in the packaging industry: Presence of three decades in the folding cartons business has enabled the promoters to gain a strong understanding of market dynamics and build healthy relationships with customers and suppliers. Revenues have increased to around Rs 1769 crore in fiscal 2025 from Rs 1540 crore in fiscal 2024, driven by healthy demand, continuous customer addition, geographical expansion and continuous capex incurred by the company. The company has further achieved revenues of Rs 425 crore in the first quarter of fiscal 2026 and is expected to sustain its growth. The operating margins have also improved to around 16.5-17% over the past three fiscals through fiscal 2025 from 14% historically due to improved gross margins as well as backward integration measures implemented by the company. The operating margins continues to remain stable in the first quarter of fiscal 2026 and are expected to remain steady at around 17% over the medium term. The business profile is expected to be supported by continuous capacity addition, addition of new customers, geographical expansion and continued healthy demand in the industry.

 

• Established customer relationships and wide end-user industry base: TCPL benefits from its long-standing relationships with its reputed clientele which supports steady growth and repeat business. The company has a wide customer base including some large players in the industry with no single customer accounting for more than 15% of its total sales. In addition, TCPL’s products are widely used for packaging by various end-user industries such as  fast-moving consumer goods (FMCG), food and beverages, cosmetics, toiletries, cigarettes, liquor and pharmaceuticals. This further supports the business and allows the company to overcome the risk of slowdown in any particular industry segment.

 

• Strong financial risk profile: Networth has increased to around Rs 627 crore as on March 31, 2025, as compared to Rs. 512 crore a year ago backed by healthy accretion to reserves. Despite continued debt funded capex, capital structure has remained comfortable marked by gearing and total outside liabilities to adjusted networth (TOLANW) at around 0.94 time and 1.5 times respectively as on March 31, 2025 (as compared to 0.95 and 1.6 times respectively a year ago). Debt protection metrics are also robust as reflected in interest coverage ratio and net cash accrual to total debt ratio of around 5.3 times and 0.3 times respectively for fiscal 2025 (4.7 times and 0.3 times for fiscal 2024).  The metrics will remain stable over the medium term owing to healthy profitability.

 

Weaknesses:

• Exposure to intense competition: The packaging industry has many players in the market leading to intense competition. While large, organized players offer products at competitive rates because of economies of scale and access to advanced technology, small players cater to local, price-sensitive customers. Although high customisation partially limits threat from imports, intense competition may continue to constrain scalability, pricing power and profitability.

 

• Large working capital requirement: Working capital requirement of the company is large as reflected in expected gross current assets of 151 days as on March 31, 2025 and is expected to remain at similar range over the medium term. This is driven by debtors and inventory of around 98 days and 53 days as on March 31, 2025. The working capital requirement is partially supported by creditors of around 71 days while the rest through reliance on external debt leading to moderate bank limit utilization. Working capital cycle is expected to remain large over the medium term.

Liquidity: Strong

Expected annual cash accrual of over Rs 185-200 crore will be sufficient to meet debt obligation of Rs 70-80 crore in fiscals 2026 and 2027, respectively. Fund-based limit was utilised 76% on average over the 12 months through June 2025. Cash and bank balance stood at around Rs 27 crore as on March 31, 2025.  Crisil Ratings believe that internal accrual and unutilised bank limit will be sufficient to meet debt obligation as well as incremental working capital requirement.

Outlook: Stable

TCPL will continue to benefit from its strong market position and comfortable financial risk profile over the medium term.

Rating sensitivity factors

Upward factors:

• Significant increase in the scale of operations along with sustenance of operating margins leading to higher cash accruals and improved debt protection metrics
• Improvement in the financial performance in the absence of any larger than expected debt funded capex with TOLANW below 1 time on a sustained basis

 

Downward factors:

• Decline in revenue or fall in operating margin below 15%, leading to lower-than-expected cash accruals
• Stretched working capital cycle or large, debt-funded capex weakening liquidity

About the Group

TCPL was incorporated as Twenty First Century Printers Ltd in 1987 by Kanoria family and was renamed TCPL in 2008. It manufactures folding cartons, printed blanks and outers, litho lamination, blister packs and flexible packaging products used in the food, FMCG, cigarette, liquor, pharmaceutical, pesticide and stationery segments. It has four manufacturing units in Silvassa, two in Haridwar (Uttarakhand), and one each in Goa and Guwahati (Assam). The company is listed on the Bombay Stock Exchange and the National Stock Exchange.

 

Incorporated in 2002, COPPL was initially promoted by Mr Rohit Khanna and Mr Gazal Dhillon. On December 4, 2021, TCPL bought majority stake in COPPL and currently owns 100% stake in the company, while the remaining is with erstwhile promoters. COPPL manufactures printed rigid boxes and leaflets for the mobile phone and consumer electronics industries. It has a unit in Noida, Uttar Pradesh.

 

Incorporated in 2025, Accura Technik Private Limited is engaged in manufacturing plant for engraved printing and embossing cylinders in Silvassa. The commercial production is expected to commence from fiscal 2026.

Any other information: Not applicable