Pakka's bank debt is downgraded to junk as CARE stops getting answers.
A two-notch downgrade on ₹618 crore of loans leaves the nano-cap in the 'Issuer Not Cooperating' category. The rating agency couldn't verify the company's finances.
— 4 earlier stories on Pakka Ltd. →What's new
- CARE Ratings cut Pakka's long-term bank debt by two notches to BB+ and put it in 'Issuer Not Cooperating'.
- The agency said it couldn't get the information it needed from Pakka, despite repeated requests.
- Short-term facilities were also downgraded to A4+ from A3.
Why this matters
A sub-investment-grade rating on ₹618 crore of debt for a company with a ₹365 crore market cap is a stark imbalance. It signals lenders may demand higher interest or pull facilities altogether. Pakka's claim that it had already started the withdrawal process doesn't change the fact that CARE's downgrade and 'Issuer Not Cooperating' label are now on the public record.
What we're watching
- How other lenders and credit agencies react to the 'Issuer Not Cooperating' label.
- Whether Pakka's response to the information request changes the narrative.
- The company's upcoming debt servicing record on its NCDs and bank loans.
The full read
Pakka Ltd now carries a BB+ rating on ₹618.42 crore of bank debt. That's two notches lower and officially below investment grade. CARE Ratings placed the company in its 'Issuer Not Cooperating' category, meaning it couldn't verify Pakka's finances despite asking repeatedly. For a nano-cap with a market value of just ₹365 crore, having nearly double its equity value in now-junk-rated debt is a severe imbalance. Pakka says it had already started the process to withdraw its ratings from CARE and insists all debt payments are current. That may be true, but the public record now shows a rating agency giving up on getting answers. The downgrade layers onto a tougher year: cost overruns at Project Jagriti, falling revenue and profit, and a ₹540 crore high-cost NCD issuance to refinance old debt. The 'Issuer Not Cooperating' label is the real problem. It makes every future financing conversation harder.
Questions answered
- Why did CARE Ratings downgrade Pakka Ltd?
- CARE stated that Pakka failed to provide required information for its review, despite repeated requests. The agency placed the company in the 'Issuer Not Cooperating' category as a result.
- How much debt is affected by this downgrade?
- The downgrade covers ₹618.42 crore in long-term bank facilities and ₹12.52 crore in short-term facilities. The long-term rating was cut two notches to BB+, which is below investment grade.
- What is Pakka's explanation for the situation?
- Pakka said it had already initiated a process to withdraw its ratings from CARE before this action. The company also stated it continues to meet all debt servicing obligations on time.
- What financial pressures is the company facing?
- The news summary cites cost overruns at Project Jagriti, a sharp drop in FY26 revenue and profit, and a ₹540 crore high-cost NCD issuance used to refinance existing debt.
- What does 'Issuer Not Cooperating' mean for investors?
- It means the rating agency cannot validate the company's financial health. The label is a major red flag for lenders and equity investors, as it suggests information opacity at a time of visible financial stress.
- Does the downgrade affect both short-term and long-term debt?
- Yes. The short-term rating was also cut to A4+ from A3, indicating weaker near-term repayment capacity. Both moves increase the company's borrowing costs and risk perception.
Story so far
All notes on PAKKA →- 10 Jun 2026 · 4:03 AM IST Pakka's bank debt is downgraded to junk as CARE stops getting answers.
- 1d ago Pakka's promoter pledged 28% of the company to secure a ₹540 cr NCD.
- 8d ago Pakka pauses Guatemala, delays flagship plant, and swaps banks for high-cost debt
- 15d ago Pakka raises ₹540 cr in private debt, then surrenders its credit rating
- 20d ago Pakka plans NCD issue after equity raise and rating downgrade