Rating Rationale
June 26, 2025 | Mumbai
NCL Industries Limited
Rating outlook revised to 'Stable'; Ratings Reaffirmed
 
Rating Action
Total Bank Loan Facilities RatedRs.561 Crore
Long Term RatingCrisil A/Stable (Outlook revised from 'Positive'; Rating Reaffirmed)
Short Term RatingCrisil A1 (Reaffirmed)
 
Rs.100 Crore Fixed DepositsCrisil A/Stable (Outlook revised from 'Positive'; Rating Reaffirmed)
Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed rationale

Crisil Ratings has revised its outlook on the long-term bank facilities and fixed deposit programme of NCL Industries Ltd (NCL) to ‘Stable’ from ‘Positive’ while reaffirming the rating at ‘Crisil A’. The rating on the short-term bank facilities has been reaffirmed at ‘Crisil A1’.

 

The outlook revision reflects the decline in the business performance of the company in fiscal 2025 on account of lower price realisation and muted demand. Revenue was Rs 1,411 crore in fiscal 2025, as against Rs 1,875 crore in fiscal 2024. The price of cement has increased in the first quarter of fiscal 2026 and hence realisation is expected to improve this fiscal. This, along with commissioning of ongoing cement capacity in Visakhapatnam, Andhra Pradesh, is expected to support volume growth. Reduction in cement prices, impacting performance, will remain a key monitorable.

 

The ratings continue to reflect the established market position of the company in south India, its long track record of operations and a healthy financial risk profile. These strengths are partially offset by susceptibility to volatility in input cost, cyclicality in the cement industry and commoditised nature of the products.

Analytical approach

Crisil Ratings has combined the business and financial risk profiles of NCL and its subsidiary, Tern Distilleries Pvt Ltd (TDPL). Also, NCL has a joint venture (JV), NCL Buildtek & NCL Industries JV, with its group company, NCL Buildtek Ltd. However, the JV has no major business activities. In April 2023, the company acquired Vishwamber Cements Ltd (VCL), which became a wholly owned subsidiary of NCL in fiscal 2024.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key rating drivers and detailed description

Strengths:

  • Established market position in south India: NCL is a strong player in the cement industry with a track record of more than four decades and clinker and cement capacities of 2.6 million tonne per annum (MTPA) and 3.2 MTPA, respectively. An abundance of limestone in its captive mines, adequate captive power of 23.5 MW (solar: 8 MW, hydel: 7.5 MW and waste heat recovery: 8 MW) to meet 30-35% of its requirement and advantageous location of its facilities result in moderate operating efficiency. The company has diversified its product profile by venturing into other building materials, such as ready-mix concrete, cement-bonded particle boards and doors. Its products are marketed under the brands Nagarjuna Cement, Nagarjuna RMC, Bison Panels and NCL doors.
     
  • Healthy financial risk profile: Networth and gearing were healthy at Rs 845 crore and 0.29 time, respectively, as on March 31, 2025. Despite the ongoing capital expenditure for cement capacity expansion in Visakhapatnam, which is being funded through debt of Rs 90 crore, gearing will remain below 0.4 time over the medium term. Supported by expected recovery in profitability, the debt protection metrics will likely remain healthy, with interest coverage ratio expected above 7 times over the medium term.
     
  • Expected improvement in business performance in fiscal 2026: Business performance moderated in fiscal 2025, with revenue falling to Rs 1,411 crore in fiscal 2025 from Rs 1,875 crore in fiscal 2024. The decline is attributed to reduction in realisation coupled with muted demand on account of slow project execution in key operating states. The price of cement has increased in the current fiscal, which will support recovery in realisation and better revenue and profitability. Furthermore, production and sales volumes should improve with commencement of operations in the new cement capacity from the second half of the fiscal.
     

Weaknesses:

  • Exposure to intense competition and volatility in raw material prices: Cement players, including NCL, are susceptible to fluctuations in the prices of coal/petcoke, various raw materials (other than limestone which is captively available), packing material and diesel. Intense competition and limited product differentiation limit the pricing flexibility.
     
  • Susceptibility to risks related to the commoditised nature of products and cyclicality in the cement industry: Capacity additions in the cement industry tend to be sporadic because of long gestation period for setting up new facilities and numerous players adding capacities during the peak of a cycle. This has led to unfavourable price cycles in the past. Cyclical downturns in the industry result in slow offtake, constraining utilisation and ability of players to pass on rise in input costs.

Liquidity: Strong

Bank limit utilisation was low at 9% on average for the 12 months through March 2025. Cash accrual, expected over Rs 125 crore per fiscal, will sufficiently cover yearly term debt obligation of Rs 70 crore over the medium term. In addition, surplus will cushion the liquidity.

Outlook: Stable

Crisil Ratings believes NCL will continue to benefit from its established market position and the extensive experience of its promoters.

Rating sensitivity factors

Upward factors:

  • Higher realisation along with healthy utilisation of 90-95% post commencement of additional capacities and improvement in the operating margin to 11-12%
  • Strengthening of the financial risk profile along with improvement in return on capital employed
     

Downward factors:

  • Sharp decline in realisation or utilisation, leading to lower revenue and operating margin below 7%
  • Weakening of the financial risk profile or liquidity on account of crystallisation of contingent liabilities

About the group

NCL, incorporated in 1979 by Late Sri K Ramachandra Raju, manufactures different varieties of cement, cement-bonded particle boards, ready-mix concrete and doors. Mr K Gautam (managing director) currently manages the operations. NCL acquired TDPL in fiscal 2021 and intends to set up a greenfield cement unit in the land owned by the latter in Visakhapatnam. Currently, there are no operations in the subsidiary. In April 2023, NCL acquired VCL for Rs 16.23 crore. VCL became a wholly owned subsidiary of NCL in fiscal 2024. VCL is not operational and has not established any cement plants. It was acquired to convert the limestone mines of 322 acres under its lease into captive mines of NCL.

Key financial indicators [Consolidated]

As on / for the period ended March 31

Unit

2025

2024

Operating income

Rs crore

1411

1875

Reported profit after tax (PAT)

Rs crore

25

93

PAT margin

%

1.79

4.97

Adjusted debt / adjusted networth

Times

0.29

0.26

Interest coverage

Times

5.76

9.09

Status of non-cooperation with previous CRA
NCL has not cooperated with CARE Ratings, which has classified the company as non-cooperative vide release dated August 23, 2022. The reason provided by CARE Ratings is non-furnishing of information for monitoring of ratings.

Any other information: Not applicable

Note on complexity levels of the rated instrument:
Crisil Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

Crisil Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the Crisil Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name Of Instrument Date Of Allotment Coupon Rate (%) Maturity Date Issue Size (Rs.Crore) Complexity Levels Rating Outstanding with Outlook
NA Fixed Deposits NA NA NA 100.00 Simple Crisil A/Stable
NA Cash Credit NA NA NA 180.00 NA Crisil A/Stable
NA Letter of credit & Bank Guarantee NA NA NA 90.00 NA Crisil A1
NA Proposed Term Loan NA NA NA 93.05 NA Crisil A/Stable
NA Term Loan NA NA 31-Mar-26 15.00 NA Crisil A/Stable
NA Term Loan NA NA 31-Mar-26 5.20 NA Crisil A/Stable
NA Term Loan NA NA 31-Mar-28 48.00 NA Crisil A/Stable
NA Term Loan NA NA 30-Jun-27 23.50 NA Crisil A/Stable
NA Term Loan NA NA 31-Mar-28 16.25 NA Crisil A/Stable
NA Term Loan NA NA 31-Mar-32 90.00 NA Crisil A/Stable

Annexure – List of entities consolidated

Names of Entities Consolidated

Extent of Consolidation

Rationale for Consolidation

NCL Industries Ltd

Full

Parent

Tern Distilleries Pvt Ltd

Full

100% subsidiary

Vishwamber Cements Ltd

Full

100% subsidiary
Annexure - Rating History for last 3 Years
  Current 2025 (History) 2024  2023  2022  Start of 2022
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 471.0 Crisil A/Stable   -- 29-06-24 Crisil A/Positive 04-07-23 Crisil A/Stable 20-09-22 Crisil A/Stable Crisil A/Stable
      --   --   -- 21-04-23 Crisil A/Stable 12-09-22 Crisil A/Stable --
      --   --   --   -- 22-06-22 Crisil A/Stable --
Non-Fund Based Facilities ST 90.0 Crisil A1   -- 29-06-24 Crisil A1 04-07-23 Crisil A1 20-09-22 Crisil A1 Crisil A1
      --   --   -- 21-04-23 Crisil A1 12-09-22 Crisil A1 --
      --   --   --   -- 22-06-22 Crisil A1 --
Fixed Deposits LT 100.0 Crisil A/Stable   -- 29-06-24 Crisil A/Positive 04-07-23 Crisil A/Stable 20-09-22 Crisil A/Stable F A+/Stable
      --   --   -- 21-04-23 Crisil A/Stable 12-09-22 Crisil A/Stable --
      --   --   --   -- 22-06-22 Crisil A/Stable --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Cash Credit 75 HDFC Bank Limited Crisil A/Stable
Cash Credit 60 Kotak Mahindra Bank Limited Crisil A/Stable
Cash Credit 20 Axis Bank Limited Crisil A/Stable
Cash Credit 25 State Bank of India Crisil A/Stable
Letter of credit & Bank Guarantee 25 State Bank of India Crisil A1
Letter of credit & Bank Guarantee 25 HDFC Bank Limited Crisil A1
Letter of credit & Bank Guarantee 40 Axis Bank Limited Crisil A1
Proposed Term Loan 93.05 Not Applicable Crisil A/Stable
Term Loan 15 Axis Bank Limited Crisil A/Stable
Term Loan 5.2 HDFC Bank Limited Crisil A/Stable
Term Loan 48 Kotak Mahindra Bank Limited Crisil A/Stable
Term Loan 23.5 Axis Bank Limited Crisil A/Stable
Term Loan 16.25 Axis Bank Limited Crisil A/Stable
Term Loan 90 HDFC Bank Limited Crisil A/Stable
Criteria Details
Links to related criteria
Basics of Ratings (including default recognition, assessing information adequacy)
Criteria for consolidation
Criteria for manufacturing, trading and corporate services sector (including approach for financial ratios)

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