Credit Rating- Others

N R AGARWAL INDUSTRIES LTD July 17, 2026 To, To, The General Manager Asst. Vice President, BSE Limited National Stock Exchange of India Ltd. Phiroze Jeejeebhoy Towers Exchange Plaza, C-1, Block G, Bandra Dalal Street Kurla Complex, Bandra (E), Mumbai - 400 001 Mumbai - 400051 BSE Scrip Code: 516082 NSE Symbol: NRAIL Subject: Re-affirmation in Rating and enhancement in Credit Facilities Reference: Regulation 30 of the Securities and Exchange Board of India (“SEBI”) (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”). Dear Sir/ Ma’am, Pursuant to Regulation 30 and other applicable provisions of SEBI Listing Regulations, this is to inform that ICRA Limited has reaffirmed the long-term rating of [ICRA]A- Stable (pronounced ICRA A minus Stable) and short-term rating of [ICRA]A2+ (pronounced ICRA A2 plus) with increase in rated amount from 955.64 Crores to 1137.57 Crores. The rating rationale is enclosed. Thanking you, Yours faithfully, For N R Agarwal Industries Limited, Pooja Daftary Company Secretary & Compliance Officer Encl.: As stated above email: admin@nrail.com, website: www.nrail.com CIN: L22210MH1993PLC133365 REGD. OFF.: 502-A/501-B, FORTUNE TERRACES, 5TH FLOOR, OPP. CITY MALL, NEW LINK ROAD, ANDHERI (W), MUMBAI – 400 053. TEL: +91 22 67317500, FAX: +91 22 26730227 July 16, 2026 N R Agarwal Industries Limited: Ratings reaffirmed; rated amount enhanced Summary of rating action Previous rated Current rated Financial Sector Instrument* amount amount Rating action Regulators# (Rs. crore) (Rs. crore) [ICRA]A- (Stable); reaffirmed and Long-term fund-based – Cash credit 288.00 328.62 RBI assigned for enhanced amount [ICRA]A- (Stable); reaffirmed and Long-term fund-based – Term loan 590.64 666.05 RBI assigned for enhanced amount [ICRA]A2+; reaffirmed and Short-term non-fund based 77.00 142.90 RBI assigned for enhanced amount Total 955.64 1,137.57 *Instrument details are provided in Annexure II #SEBI’s grievance redressal/dispute resolution and SEBI investor protection mechanisms such as SCORES and ODR shall not be available for activities and instruments that fall under the regulatory purview of Financial Sector Regulators other than SEBI. Rationale The rating reaffirmation of N R Agarwal Industries Limited (NRAIL) continues to consider the established track record of its promoters (more than 30 years in the paper industry), its large scale of operations, and a strong presence in western India. The company reported a healthy improvement in operating performance in FY2026, with revenue growth of 29% supported by ramp-up in utilisation of incremental capacity, leading to higher sales volumes. Operating profitability also improved, with margins expanding to around 8.1% in FY2026 from 6.7% in FY2025, driven by better absorption of fixed costs, improvement in realisations in H2 FY2026 and gradual stabilisation of its incremental capacity. Despite the improvement, the operating margins remain below historical levels. However, going forward, the operating margins are expected to improve further, supported by increasing share of value-added/premium products positively impacting realisations and contribution levels, benefits of operating leverage and initiatives to reduce raw material cost by modifying the input mix while maintaining adequate quality of finished products. ICRA also expects NRAIL’s revenue and earnings performance to remain supported by stable demand, its strong distribution network and healthy capacity utilisation levels. The company has further enhanced the capacity of its new duplex board plant from 725 tonne per day (TPD) to 900 TPD in January 2026, increasing its overall annual installed production capacity to around 5 lakh tonne per annum (TPA) from around 4.4 lakh TPA. This is expected to result in scale expansion in the near term. The ratings, however, remain constrained by the vulnerability of revenues and margins to fluctuation in realisation of paper, as a fragmented industry structure restricts pricing flexibility, along with susceptibility of margins to volatility in wastepaper prices, which also depends on foreign exchange (forex) rates due to significant imports. For FY2026, around 59% of the company’s raw material requirements were met through imports. While NRAIL derives around 13% of its revenues through exports, which provides a natural hedge to a large extent, a sharp volatility in forex rates in the absence of any firm hedging mechanism may impact the company’s profitability. ICRA notes that the capital structure of the company remains comfortable, despite growth in its gearing to 1.0 times as on March 31, 2026 from 0.8 times as on March 31, 2025 owing to a rise in debt levels. However, the total debt/OPBITDA remained elevated at 4.7 times (5.8 times in FY2025) and the interest coverage remained moderate at 2.7 times (1.8 times in FY2025) in FY2026. In FY2027, the coverage metrics are likely to improve with ramp-up in capacity utilisation and expected improvement in profitability. Nevertheless, a major debt-funded capex plan is likely to keep the credit metrics and liquidity under check. ICRA notes that the company has announced a sizeable capex for setting up a new multilayer board plant (Unit VI project) with www.icra.in Sensitivity Label : Public Page a production capacity of around 1,500 TPD (increased from 1,000 TPD) at an estimated cost of Rs. 1,500 crore (increased from Rs. 1,200 crore envisaged earlier), to be largely implemented over FY2028-FY2030, of which around Rs. 227 crore has already been incurred in FY2026 towards land and an old machine procured from China, while around Rs. 23 crore is likely to be incurred in FY2027. The project is expected to be funded through a mix of internal accruals and debt, which, along with incremental working capital requirements for the expanded operations, could exert pressure on the company’s capital structure and debt coverage indicators over the medium term and will remain a key rating sensitivity. The Stable outlook reflects ICRA’s expectation that NRAIL’s credit profile will be supported by ramp-up of production from the recent capacity addition, increasing contribution from value-added products and cost reduction initiatives. The company’s established position in the recycled paperboard segment, strong customer relationships and healthy demand for its products are likely to mitigate offtake risks for the planned capacity addition, thereby resulting in improved revenues and earnings in the medium term, supporting its credit metrics despite the increasing debt level. Key rating drivers and their description Credit strengths Established track record in the paper industry; good distribution network – NRAIL has been manufacturing paper products since 1993 and has developed an established presence and distribution network over the past three decades. Its operations are managed by Mr. RN Agarwal, Chairman and Managing Director, who has an extensive experience of more than three decades in the paper industry. NRAIL operates through an established network of agents and dealers with focus on sales in western India. The agents have tie-ups with printing and designing companies who make boxes as per the specifications of various end-user industries such as pharmaceuticals and FMCG. Further, NRAIL’s customer base remains moderately diversified. Healthy capacity utilisation and captive power plants support the cost structure – NRAIL currently operates three manufacturing facilities at Vapi and Sarigam, Gujarat, with an aggregate installed production capacity of around 5.0 lakh MTPA as on March 31, 2026. The company commissioned a new duplex board plant with a capacity of 2,40,000 MTPA in April 2024 and subsequently enhanced the capacity of the machine from 725 TPD to 900 TPD in January 2026, increasing its overall installed capacity and supporting volume growth. The new plant has largely stabilised, resulting in improved utilisation levels, [Showing first 8,000 characters — download PDF for full document]