Pakka raises ₹540 cr in private debt, then surrenders its credit rating
A debt raise equal to 132% of its market cap. The nano-cap packaging firm is moving from rated bank loans to unlisted private debentures at steep coupons.
— 2 earlier stories on Pakka Ltd. →What's new
- Board approved a ₹540 cr private placement of secured junior (19.4%) and senior (11.4%) debentures.
- Proceeds will refinance term loans and fund capex; maturities run to 2033-2035.
- Pakka voluntarily withdrew its CARE BBB- and A3 ratings, citing repayment of rated facilities.
Why this matters
Pakka is trading public credit ratings for private-market debt at punishing rates. The junior tranche at 19.4% is a steep price for a company still dealing with Project Jagriti cost overruns. Surrendering the CARE rating removes a layer of transparency from the balance sheet just as it takes on its largest-ever debt load.
What we're watching
- The refinancing's net impact on interest costs, given the high coupons.
- Whether Project Jagriti cost overruns are finally contained.
- Whether the shift to unlisted debt obscures future financial stress.
The full read
Pakka, a nano-cap packaging company, is raising ₹540 crore through a private placement of secured debentures. That is 132% of its ₹407 crore market cap in one shot. The junior tranche carries a 19.4% coupon, the senior 11.4%. The money will refinance existing term loans and fund capex, with maturities out to 2033-2035.
In the same board meeting, Pakka voted to voluntarily withdraw its CARE BBB- and A3 ratings. The stated reason is that the new raise will repay the rated facilities. The practical effect is a shift from rated bank debt to private-market debt at double-digit coupons, while simultaneously dropping a public credit score. That removes a layer of scrutiny from the balance sheet at the exact moment the company is adding its largest-ever debt load. The company has already faced credit downgrades over cost overruns at Project Jagriti.
Questions answered
- How large is this raise relative to Pakka's size?
- The ₹540 crore issuance equals 132% of Pakka's current market capitalisation of ₹407 crore. It is the largest single capital raise in the company's history.
- Why are the coupon rates so high?
- The 19.4% coupon on the junior tranche and 11.4% on the senior reflect the company's stressed credit profile, which followed recent downgrades linked to cost overruns at Project Jagriti.
- What is the significance of withdrawing the CARE rating?
- Pakka is voluntarily surrendering its CARE BBB- and A3 ratings because the new NCD proceeds will repay those rated facilities. This moves its debt from rated bank facilities to unlisted private markets, reducing public disclosure.
- What will the money be used for?
- The board stated the funds will be used for two purposes: refinancing existing term loans and funding capital expenditure. Maturities on the new debentures extend to 2033-2035.
Story so far
All notes on PAKKA →- 26 May 2026 · 4:30 PM IST Pakka raises ₹540 cr in private debt, then surrenders its credit rating
- 1d ago Pakka pauses Guatemala, delays flagship plant, and swaps banks for high-cost debt
- 13d ago Pakka plans NCD issue after equity raise and rating downgrade