JCR-VIS Reaffirms Entity Ratings of Century Paper & Board Mills Ltd

November 26, 2018 (MLN): JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Century Paper & Board Mills Limited (CPBM) at ‘A+/A-1’ (Single A Plus/A-One). Outlook on the rating is ‘Stable’.

According to the rating agency, the assigned ratings incorporate CPBM’s market leadership position in the coated paperboard segment with the Company catering to over 35% of total Coated Paperboard and over 50% of the quality segment domestic market demand.

Ratings also reflect favorable industry dynamics for the Coated Paperboard Segment and improving financial risk profile, and draw support from strong sponsor profile of CPBM with majority shares held by Lakson Group of Companies.

In order to cater to growing demand and capture market share of imported paperboard, CPBM is in the process of increasing its capacity of Coated Paperboard by 130,000 MT per year. Commencement of operations is targeted 2 years from financial close.

During FY18, slowdown in imports on dumped prices from China has been noted as its capacity for recycled materials based Coated Paperboard products has been curtailed in compliance of environmental policies of Chinese government. This has improved competitiveness of local players.

Going forward, impact of higher finance cost & overheads on profitability is expected to be offset by improvement in margins and increase in topline. While impact of expansion on the financial profile of CPBM has not been factored in the ratings, JCR-VIS expects leverage indicators to remain elevated over the rating horizon.

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