| Shree Digvijay Cement Co. Limited | ||||||
| Ratings reaffirmed at 'Crisil A/Negative/Crisil A1' | ||||||
| Rating Action | ||||||
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| 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 reaffirmed its ratings on the bank facilities and corporate credit rating of Shree Digvijay Cement Co. Limited (SDCCL) at ‘Crisil A/Negative/Crisil A1’.
The rating outlook continuous to remains negative as the operating margins remains subdued in FY2025 at 7.90% due to lower demand and subdued realization. Although there is improvement in the operating margin to 12% for Q1 FY2025, still it is lower than the historical margin. Company reported revenue of Rs 725 cr in FY2025 (reduced from Rs 792 cr in FY2024) and Rs 196 cr in Q1 FY2026. Financial profile of the company remains healthy with gearing of 0.30 times for FY2025. Crisil Ratings also factor the announcement that company has got into the exclusive usage, supply and distributorship agreement with the Hi-Bond Cement (India) Pvt Ltd (HIBOND) for next 10 years with an option to acquire 100% equity shares of HIBOND from it’s shareholders. The track record of sustained improvements in the revenue and operating margin would remain a key monitorable. However, the operating profit margin softness may lead to deterioration in business profile of the company.
The ratings also factor in the announcement by the company regarding the share purchase agreement (SPA) between True North Fund VI LLP (the promoter of the company) and India Resurgence Fund (IRF) for sale of up to 7,42,71,009 equity shares, representing 50.10% of the company. As a result of the SPA transaction, the purchaser (IRF) has to make mandatory tender offer to the public shareholders of the company. Crisil Ratings will continue to monitor the progress of the SPA and distribution agreement.
The ratings continue to reflect SDCCL’s established market position in the cement industry in Western India and improved scale of operations, comfortable operating efficiencies, and healthy financial risk profile even though debt-funded capital expenditure (capex) is planned. These strengths are partially offset by large working capital requirement, exposure to intense competition and risks related to volatility in raw material prices, susceptibility to risks related to the commoditised nature of products and cyclicality in the cement industry. |
Analytical approach: Crisil Ratings has consolidated the business and financial risk profiles of SDCCL and its wholly owned subsidiary, SDCCL Logistics Ltd.
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 western India and improved scale of operations: The company is an established player in the cement industry, with a long track record of more than five decades and installed capacity of 3.0 MTPA. It manufactures cement of various kinds, including ordinary portland cement (OPC), portland pozzolana cement (PPC), sulphate resisting portland cement (SRPC), oil well cement (OWC) and other special cements. The products are marketed under the brand, Kamal.
Consolidated revenue degrew 8% on-year to Rs 725 crore in fiscal 2025 backed by marginal decrease in volume and average sales realisation. The demand scenario remained strong in the first three months of fiscal 2026 and the average realisation and the operating margin improved. The group estimates revenue of ~Rs 196 crore and operating margin of 12% during this time. Though timely improvement in realisation of cement prices will help to improve performance in the coming quarters, any prolonged cost pressures resulting in subdued operating margin may weaken the credit risk profile.
There is abundant availability of limestone in the captive mines, along with waste heat recovery (WHR) system of 4.5 megawatt (MW), which is adequate to meet 25–30% of the requirement. The company also has hybrid power contract for capacity of 8.10 MW hybrid wind and solar power with Continuum Energy. Hence, the WHR system and hybrid power contracts would constitute over 65% of the power needs of the company.
Healthy financial risk profile, despite debt-funded capex: Networth remains healthy at Rs 363.98 crore as on March 31, 2025. The gearing was low at 0.30 time as on March 31, 2025. Strong profitability led to robust debt protection metrics, with interest coverage ratio of 24.24 times for fiscal 2025.
Weaknesses: Large working capital requirement: Gross current assets were at 129 days as on March 31, 2025 (124 days as on March 31, 2024), due to sizeable inventory of 69 days and receivables of 10 days, (75 days and 15 days, respectively). The working capital cycle was partly supported by payables, which are likely to remain at similar levels over the medium term. Any improvement in the working capital cycle will remain monitorable.
Exposure to intense competition, risks related to volatility in raw material prices, the commoditised nature of products and cyclicality in the cement industry: Cement players, including SDCCL, are susceptible to fluctuations in the prices of coal/petcoke, various raw materials (other than limestone which is captively available), packing materials and diesel. Against this, exposure to intense competition and limited product differentiation limits the pricing flexibility of players.
Capacity additions in the commoditised cement industry tend to be sporadic because of long gestation periods associated with setting up of new facilities and numerous players adding capacities during the peak of a cycle. This led to unfavourable price cycles for the sector in the past. Cyclical downturns in the industry result in slow offtake, constraining the operating rate and the ability of players to pass on any rise in input costs. |
Liquidity: Strong Bank limit utilisation was low at 19.66% on average for the 12 months through November 2024. Annual cash accrual is expected to be over Rs 54 crore against no term debt obligation, and will cushion liquidity. The current ratio was healthy at 2.01 times as on March 31, 2025. |
Outlook: Negative |
Rating sensitivity factors Upwards factors:
Downward factors:
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About the company Incorporated in November 1944, SDCCL manufactures cement at the coastal township of Digvijaygram (Sikka) in Jamnagar district of Gujarat. The company has an installed capacity of 3.0 MTPA. The company is listed on the NSE and BSE. |
Key financial indicators
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Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||
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Criteria Details
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