Pakka Limited targets January PM4 output after December start-up

Pakka Limited is targeting commercial production from Paper Machine 4, or PM4, in January 2027 after shifting start-up and testing from October to December 2026, while more than 500 tonnes of outsourced FlexC Base has already been sold. Management said the revised timing allows detailed testing before the machine begins its production ramp.

What is Pakka's revised PM4 production schedule?

Pakka is aiming for PM4 commercial production in January 2027, after an expected December 2026 start-up. On its 3 November 2026 earnings call, management said PM4 was ready and trials were under way. The project also includes a recovery boiler, a 15-megawatt power plant, and a pulp-mill upgrade under Project Jagriti.

The pulp-mill upgrade had been completed by the call date, while the recovery boiler and 15-megawatt turbine had started and were being stabilised. Management distinguished this work from PM4's December start-up and its January commercial-production target. It also said the larger FlexC Base launch was planned for January, following a soft launch with partners.

The revised sequence puts trials before start-up and commercial production before a full utilisation level. Management did not say PM4 would operate at full capacity in January 2027. Instead, it described January as the point at which commercial production is targeted after the December testing and start-up process.

Why did Pakka move PM4 start-up to December?

Pakka said it moved PM4 start-up and testing from October 2026 to December 2026 so every component could be checked thoroughly before operations begin. Management said it sought to avoid mistakes at start-up that could cost more operating time after the machine is switched on.

Management cited the recovery boiler and turbine as examples of the preparation it wanted for PM4. It said both units could be run in a single go because testing and checking had been detailed. The company described a one- or two-month change on a large project as less significant than achieving what management called a vertical start-up.

The update creates a gap between PM4 being described as ready in November 2026 and its targeted commercial production in January 2027. That interval is intended for trials, testing and initial operating work. It is not a disclosed forecast for PM4 output, revenue or profit during December 2026.

How is Pakka building demand for FlexC Base?

Pakka said it had already sold more than 500 tonnes of FlexC Base produced through outsourcing before PM4 begins making the product internally. Management said this represented roughly one-sixth of the paper expected to be produced on PM4, although the call did not disclose the machine's total capacity in tonnes.

The company completed laboratory and pilot trials in Europe, where a senior colleague spent more than one month on testing. Management described the trials as successful and said they provided product insights. Pakka also held a soft launch at its site with partners immediately before the 3 November 2026 call.

Management said partners expressed confidence after seeing the PM4 facility and believed they could sell the product once production begins. That statement is management's assessment, not a disclosed order book or contracted sales volume. The more-than-500-tonne figure relates to outsourced FlexC Base, rather than output from PM4 before its December 2026 start-up target.

What utilisation path did Pakka disclose for PM4?

Pakka said PM4 would ramp gradually through 30% to 40% utilisation and then 50% to 60%, rather than start at 100% capacity. The supplied earnings-call transcript does not disclose a 75% utilisation target for financial year 2027-28, or FY28, despite the topic's reference to that level.

Management linked a 60% to 70% capacity level to EBITDA, or earnings before interest, tax, depreciation and amortisation, of nearly Rs 150 crore. This was a management indication during the call, not earnings guidance. The company did not provide a date for reaching either the 60% to 70% range or any higher utilisation level.

The gradual ramp means the January 2027 production objective and the eventual operating level are separate milestones. The disclosed sequence is December 2026 start-up, January 2027 commercial production, then movement through the 30% to 40% and 50% to 60% stages. No FY28 volume, revenue or utilisation schedule was supplied.

How does PM4's ramp fit Pakka's financing timetable?

Pakka said the Neo special-situations loan has no principal repayment for 24 months from its June 2026 drawdown, with term-loan principal repayment beginning only after June 2028. This gives PM4's early ramp a period without scheduled principal repayment, according to management.

Management said Pakka pays 12% interest instead of roughly 16.9% to 17%, while the difference of about 4.9% on borrowing expected to be close to Rs 25 crore will be paid in eight instalments. Those payments are scheduled to start in October 2027 at about Rs 3 crore per quarter.

For refinancing, management said the existing plant would need an EBITDA run-rate of nearly Rs 100 crore to Rs 110 crore. It said it was internally targeting refinancing within 18 months, around December 2027. Separately, management said Neo lending would reach about Rs 500 crore at peak, while borrowings stood at about Rs 400 crore to Rs 420 crore at the time of the call.

Conclusion

Pakka has moved PM4's expected start-up and testing from October 2026 to December 2026, while retaining a January 2027 commercial-production target. Its initial market preparation includes more than 500 tonnes of outsourced FlexC Base sales and European pilot trials, but PM4's stated operating path remains a staged ramp through 30% to 40% and then 50% to 60% utilisation.

The next disclosed milestones are PM4's December 2026 start-up and the larger FlexC Base launch planned for January 2027. Management's subsequent targets include refinancing around December 2027, differential loan payments beginning in October 2027, and principal repayment only after June 2028. The transcript does not set a 75% PM4 utilisation target for FY28.