PAKKA Limited has received formal approval from the Uttar Pradesh Cabinet for its Jagriti Project incentive package, with the company filing an official regulatory disclosure under SEBI regulations. The approval represents a significant milestone in the company's industrial expansion plans in Uttar Pradesh.

Regulatory Filing Details

The company submitted its regulatory filing to both NSE and BSE, providing comprehensive details about the incentive approval:

Official Ceremony and Recognition

The Certificate of Award of Letter of Comfort was formally distributed during the Launch Event of Nivesh Mitra 3.0 and Subsidy Disbursement ceremony. The event took place at Lok Bhawan Auditorium, Lucknow, with Hon'ble Chief Minister Shri Yogi Adityanath ji presiding over the ceremony on March 24, 2026.

The certificate was issued by Deepak Kumar, Infrastructure and Industrial Development Commissioner, and Nand Gopal Gupta 'Nandi', Minister of Industrial Development, Export Promotion, NRI and Investment Promotion, Government of Uttar Pradesh.

Strategic Investment Framework

The Letter of Comfort provides formal assurance for the fiscal incentive disbursement over a 15-year period, commencing from the date of commercial production of the Jagriti Project. This structured approach ensures sustained financial support throughout the project's operational phase, enhancing project economics and implementation strategies.

The approval under the Uttar Pradesh Industrial Investment & Employment Promotion Policy, 2022 demonstrates the state government's commitment to supporting industrial development and reflects alignment between PAKKA Limited's expansion objectives and regional development priorities.

Pakka Limited has received a credit rating downgrade from CARE Ratings Limited, reflecting ongoing challenges with its major expansion project and operational performance. The rating agency announced the revision on March 6, 2026, citing specific concerns about Project Jagriti's execution timeline and financial implications.

Rating Revision Details

CARE Ratings has implemented significant downgrades across Pakka Limited's banking facilities:

The rating agency emphasized that the downgrade primarily factors time and cost overruns and pending approvals for extension of the commercial operation date (COD) and additional term loans related to the ongoing capex under Project Jagriti, along with moderation in the company's operational and financial performance during 9MFY26.

Project Jagriti Challenges

Project Jagriti, Pakka Limited's ambitious expansion initiative, has encountered significant obstacles that prompted the rating revision. The project involves a substantial capex of ₹676.26 crore, equivalent to 1.38x of the company's tangible net worth as of March 31, 2025. The expansion aims to increase production capacity from 130 MTPD to 246 MTPD through multiple enhancements.

Cost Escalation and Timeline Extension

The cost escalation stems from delays in financial closure, firming up PM4-related redesigning aspects, and adverse forex movements. The company has approached consortium lenders seeking a nine-month extension to January 1, 2027, to maintain a prudent buffer for project completion.

Operational Performance Impact

The company's financial performance during 9MFY26 reflected the challenges from planned operational shutdowns and project-related disruptions. As part of Project Jagriti's phased rollout, Pakka Limited undertook a planned shutdown from June 16, 2025, to July 24, 2025, significantly impacting revenue generation.

Operations normalized in Q3FY26, though the overall nine-month performance showed substantial declines compared to the previous year period.

Financial Position and Liquidity

Despite the challenges, CARE Ratings noted that Pakka Limited maintains certain financial strengths. The company's capital structure remains comfortable with an adjusted net worth base of ₹425.47 crore as of March 31, 2025, and overall gearing of 0.42x, improved from 0.69x in the previous year.

Project Funding Status

Rating Outlook and Sensitivities

CARE Ratings has assigned a negative outlook, revised from stable, due to uncertainty around the timely commissioning of Project Jagriti. The outlook may be revised to stable once the company obtains required approvals for means of finance and achieves stabilization of operations of PM3 and PM4.

The rating agency identified several factors that could influence future rating actions, including improvement in scale of operations to approximately ₹600.00 crore and maintenance of PBILDT margin above 20% on a sustained basis. Conversely, any further delays in Project Jagriti's COD or lower-than-envisaged cash flows could adversely affect the company's liquidity position.

CARE Ratings emphasized that stabilization of the existing paper machinery and the new machinery under Project Jagriti post commissioning will remain critical for supporting the company's future growth trajectory and cash flow generation.

Source: None/Company/INE551D01018/e925f9e5-7060-4bbb-9050-24afce7d73ec.pdf