Aaradhya Disposal Industries

• Aaradhya Disposal Industries is coming out with an initial public offering (IPO) of 38,88,000 equity shares in a price band Rs 110-116 per equity share.
• The issue will open on August 4, 2025 and will close on August 6, 2025.
• The shares will be listed on SME Platform of NSE.
• The face value of the share is Rs 10 and is priced 11.00 times of its face value on the lower side and 11.60 times on the higher side.
• Book running lead manager to the issue is Khambatta Securities.
• Compliance Officer for the issue is Surabhi Modi.

Profile of the company

Aaradhya Disposal Industries specializes in the manufacturing of paper products that cater to a wide range of industries, both domestically and internationally. With over a decade of expertise, it offers an extensive range of paper-based solutions that are engineered for performance, sustainability, and versatility.

The company specializes in the manufacturing of paper products that cater to a wide range of industries, both domestically and internationally. With over a decade of expertise, it offers an extensive range of paper-based solutions that are engineered for performance, sustainability, and versatility.

Manufacturing Unit of the company with an installation capacity of 15,000 metric tonnes per annum spread over an area of 52,151 square feet is situated at Dewas, near Indore, Madhya Pradesh. It is outfitted with the latest and advanced machinery that helps it in meeting the bulk requirements of its clients.

Proceed is being used for:

• Meeting the working capital requirements of the company
• Funding the expansion plan of the company i.e. Capital expenditure towards purchase of plant and machinery and civil work
• Prepayment of term loans to banks
• General corporate purpose

Industry Overview

The Indian paper industry accounts for about 5% of the world’s production of paper. The estimated turnover of the industry is over Rs 70,000 crore with domestic market size estimated at Rs 800 billion and its contribution to the exchequer is around Rs 50 billion. Paper is a labour - intensive industry in India. The industry provides direct employment to 0.5 million persons, and indirectly to around 1.5 million. India is the 15th largest paper producer in the world. The country has emerged as the fastest growing market when it comes to consumption. The per capita paper consumption in India at around 19 kg. The domestic market of paper is over 16 million tons per annum (MTPA), with over 2 MTPA being imported. Paper consumption is likely to witness 6-7% annual growth and will reach 30 million tonnes by FY 2026-27, largely driven by emphasis on education and literacy.

The demand of paper cub stocks is dependent on the disposable cups demand in the market and the evolution of disposable paper cups and glasses in India traces its origins to modest beginnings, when the concept of single-use tableware was relatively novel. In a country where street-side tea stalls, bustling cafés, and food vendors have always held a central place in the social and cultural fabric, the introduction of disposable cups offered a convenient and hygienic alternative. Initially limited in usage, these cups gained popularity as the demand for quick-service solutions rose, driven by both consumer preferences and market dynamics.

Further, India's paper and packaging import sector has experienced substantial growth over the past five fiscal years, driven by increasing domestic demand for both raw and finished paper products. In FY 2020, imports were valued at Rs 0.7 billion with a volume of 419.0 million tonnes. This initial figure quickly escalated in FY 2021, with import value soaring to Rs 1.9 billion and volume rising sharply to 1,188.4 million tonnes. This trend continued in FY 2022, as imports reached Rs 3.4 billion in value and 1,407.8 million tonnes in volume, reflecting strong domestic consumption and possible shortages of domestically produced paper and packaging materials.

Pros and strengths

Advanced technology machineries: The company has made significant investments in its machineries, primarily procured from leading countries such as China and Germany, to ensure the quality and efficiency. What sets its machinery apart is that it is customized based on its own research and development efforts. Its machinery enables a distinctive manufacturing process that allows it to apply coatings at an optimized temperature of 200 Decree Celsius to 300 Decree Celsius, resulting in a perfect fusion between the paper and coating. The key advantage of this process is that the coating bonds seamlessly with the paper, making it difficult to detect or separate the two. This innovation ensures the quality and durability of its products, setting it apart in a market where quality and performance are crucial.

Strong production capabilities: The company’s machinery also enables it to manufacture a wide range of paper products with grammage flexibility, from 30 GSM to 500 GSM, all on a single machine. This versatility is a major advantage, as it allows it to efficiently produce both lightweight and heavy-duty paper products without the need for multiple machines or production lines. This streamlined production process not only increases operational efficiency but also reduces costs, providing it with a competitive edge in terms of pricing and product availability.

In-house designing team: The company possess an in-house designing team, which plays a crucial role in bringing creativity and innovation to its product offerings. The team is led by Saloni Maheshwari, a graphic designer and the daughter of its Managing Director, who is also a member of the promoter group. Maheshwari has completed a two-year graphic designing course from the Naba University in Milan, Italy, and brings international expertise and a fresh, creative perspective to its designs. 

Risks and concerns

Maximum revenue comes from limited customers: The company derived 56.69%, 55.17% and 42.73% of its total revenue from top 10 customers in FY25, FY24 and FY23 respectively. The loss of any of its key customers for any reason (including delay in fulfilling existing orders; adverse changes in the financial condition of its customers, such as possible bankruptcy or liquidation or other financial hardship) could adversely affect its business, results of operations, cash flows and financial condition.

Geographical constrain: The company generates 82.42%, 77.98% and 59.24% of its total revenue from two states i.e. Madhya Pradesh and Gujarat. This concentration of its business in these states are subjects it to various risks, including but not limited to: regional slowdown in manufacturing activities; vulnerability to change of policies, laws and regulations or the political and economic environment of States; constraint on its ability to diversify across states etc. Any such adverse development affecting continuing operations at its manufacturing facility could result in significant loss due to an inability to meet customer contracts and production schedules, which could materially affect its business reputation within the industry.

Business is working capital intensive: The company requires a significant amount towards working capital requirements which is based on certain assumptions, and accordingly, any change of such assumptions would result in changes to its working capital requirements. A significant amount of working capital is required to finance the purchase of raw materials and trade receivables. As a result, it may continue to avail debt in the future to satisfy its working capital requirements. Its working capital requirements may increase if it undertakes larger or additional order from its customers or if payment terms do not include advance payments or such contracts have payment schedules that shift payments toward the end of a project or otherwise increase its working capital burden.

Outlook

Aaradhya Disposal Industries is engaged in the manufacturing and exporting of paper products, which encompass paper cup blanks, ripple paper, and coated paper rolls. The company has biodegradable and environment-friendly products. The company provides a diverse product portfolio to meet customer needs. On the concern side, the company derives a significant portion of its revenue from its top 5 & top 10 customers. The loss of one or more such customers, the deterioration of their financial condition or prospects, or a reduction in their demand for its products could adversely affect its business, results of operations, financial condition and cash flows. Moreover, the company procures more than 85% of its total raw material requirements mainly from five suppliers, any dispute with them or any delay/ disruption/ strike/ lock-outs in their business operation could have a material adverse effect on its business, production, sales and financial condition.

The company is coming out with a maiden IPO of 38,88,000 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 110-116 per equity share. The aggregate size of the offer is around Rs 42.77 crore to Rs 45.10 crore based on lower and upper price band respectively. On performance front, the company’s revenue from operations increased by  54.77%, to Rs 11,306.80 lakh in Fiscal 2025, compared to Rs 7,305.51 lakh in Fiscal 2024. Moreover, net profit increased by 157.76% to Rs. 1,027.39 lakh for Fiscal 2025 as compared to Rs 398.59 lakh for Fiscal 2024.

With increasing global demand for eco-friendly products, it prioritizes sustainability in both its products and manufacturing processes. It is committed to reducing the environmental impact of its operations by using non-toxic coatings, minimizing waste, and ensuring energy-efficient production. Its PLA-coated, barrier coated and vegetable parchment papers cater to the growing demand for sustainable alternatives in the foodservice and packaging industries. By aligning with global trends toward sustainability, it is able to tap into new markets and attract environmentally conscious customers, both domestically and internationally.