Paul Merchants credit ratings downgraded and withdrawn by Infomerics

Paul Merchants Limited has informed the stock exchange that its credit ratings have been downgraded and simultaneously withdrawn by Infomerics Valuation and Rating Limited. The company made the disclosure under Regulation 30 of the SEBI Listing Obligations and Disclosure Requirements Regulations, 2015.

The intimation was submitted to BSE Limited on 20 February 2026. According to the filing, the rating action took place on 19 February 2026 at 7.08 pm. The development relates to ratings assigned to certain bank facilities of the company.

The disclosure was issued by the Corporate Relations Department of Paul Merchants Limited and signed by the Company Secretary and Compliance Officer, Hardam Singh.

Regulatory background of the disclosure

Under Regulation 30 of SEBI LODR Regulations, listed companies are required to disclose material events or information that may impact investors. Changes in credit ratings, including upgrades, downgrades or withdrawals, fall within the scope of mandatory disclosure.

The company stated that the disclosure was made pursuant to Regulation 30(2) read with Para A (3) of Part A of Schedule III of SEBI LODR Regulations, 2015. It also referred to Para A (3) of Part A of Annexure 18 of a SEBI circular dated January 30, 2026.

Such detailed reference to regulatory provisions indicates adherence to compliance norms and ensures transparency for shareholders and stakeholders.

Details of the rating action

Infomerics Valuation and Rating Limited had earlier assigned ratings to certain fund based and non fund based bank facilities of Paul Merchants Limited. Following the company’s request and receipt of no objection certificates from the concerned banks, the rating agency downgraded and withdrew the ratings with immediate effect.

The summary of the rating action covers four categories of facilities.

First, fund based long term bank facilities amounting to Rs 8 crore were rated IVR Triple B with negative outlook earlier. The rating has now been downgraded, the outlook revised, and subsequently withdrawn.

Second, fund based long term bank facilities amounting to Rs 0 crore have been marked as rating withdrawn.

Third, non fund based short term bank facilities amounting to Rs 2 crore were rated IVR A3. These ratings have been downgraded and withdrawn.

Fourth, proposed bank guarantees and long term or short term loans amounting to Rs 0 crore have also been marked as rating withdrawn.

Thus, the total rated exposure mentioned in the filing includes Rs 8 crore of long term fund based facilities and Rs 2 crore of short term non fund based facilities.

Reason cited for downgrade and withdrawal

Interestingly, the rating agency has not assigned any specific operational or financial reason for the downward revision in ratings. The filing clearly mentions that no reason has been assigned by the rating agency for downgrading the rating.

Instead, the rating agency stated that the action was taken at the request of Paul Merchants Limited and after receiving no objection certificates from the banks that had extended the rated facilities. The agency further clarified that the action is in line with its policy on withdrawal of ratings.

This indicates that the downgrade and withdrawal may not necessarily be linked to a deterioration in the company’s financial performance. Rather, it appears to be procedural in nature following the company’s request.

Understanding rating withdrawal

Credit rating withdrawal typically happens when a company repays the rated debt, closes the facility, or no longer requires the rating. In some cases, companies may seek withdrawal if they plan to restructure funding arrangements or discontinue certain facilities.

Rating agencies have defined policies governing withdrawal of ratings. Usually, withdrawal requires confirmation from lenders and adherence to specific procedural requirements.

In this case, the mention of no objection certificates from the banks suggests that lenders agreed to the withdrawal of ratings.

However, since the rating was first downgraded and then withdrawn, it indicates that the rating agency updated its assessment before closing the rating.

Impact on investors

For equity investors, rating withdrawal of relatively small bank facilities may not have a major direct impact unless it reflects deeper financial stress. The total exposure mentioned in the filing is modest at Rs 10 crore combined.

However, rating changes are closely monitored by market participants as they provide insight into a company’s creditworthiness and financial discipline.

Since the rating agency did not cite any operational or financial deterioration as the reason, and explicitly mentioned that the action was based on the company’s request, the market reaction may depend on further clarification or company commentary.

About the rated facilities

Fund based facilities typically include term loans and working capital loans where funds are directly disbursed to the borrower. Non fund based facilities include instruments such as bank guarantees and letters of credit, where banks provide financial backing without immediate cash outflow.

Ratings assigned to such facilities help lenders assess risk and determine interest rates or security requirements.

Withdrawal of ratings may indicate that the facilities are no longer active or required to be rated.

Compliance and communication

The company has requested the stock exchange to take the information on record. The formal tone of the communication and timely disclosure demonstrate compliance with SEBI norms.

The filing was addressed to the Corporate Relations Department of BSE Limited and included the scrip code 539113 for reference.

The document was signed by the Company Secretary and Compliance Officer, reinforcing its official nature.

Broader context

In recent years, SEBI has strengthened disclosure norms for listed entities, particularly in relation to credit ratings. Rating downgrades or withdrawals can influence borrowing costs, investor perception and stock price movement.

Therefore, prompt disclosure ensures that all investors receive the information simultaneously, reducing the risk of selective disclosure.

For companies operating in regulated sectors or with banking relationships, maintaining transparent communication with credit rating agencies and lenders is essential.

Conclusion

Paul Merchants Limited has informed BSE that Infomerics Valuation and Rating Limited has downgraded and withdrawn credit ratings assigned to certain bank facilities, following the company’s request and receipt of no objection certificates from lenders.

The rating agency has not assigned any specific reason for the downgrade, stating that the action is in line with its withdrawal policy. The affected facilities include Rs 8 crore of long term fund based facilities and Rs 2 crore of short term non fund based facilities.

While the withdrawal appears procedural, investors and stakeholders may watch future disclosures to understand the company’s funding strategy and financial position.

The development underscores the importance of regulatory compliance, transparency and structured communication in India’s corporate and financial ecosystem.

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