ICRA has upgraded the long term ratings assigned to Rs 162.98 crore term loans and Rs 75.0 crore fund based limits of NCL Industries from ‘LB’ to ‘BB-‘ . The outlook on the long-term rating is Stable. The credit rating agency has also reaffirmed the short term rating assigned to the Rs 5.0 crore non-fund based limits of the company at 'A4'.
The upgrade in the long term rating reflects the improvement in the company’s financials post completion of expansions and stabilization of cement prices in Andhra Pradesh which have helped improve cement realizations over last 2-3 quarters.
The ratings however, continue to remain constrained by the uncertain demand scenario within the state, possibility of pricing pressures with 10.0 million tons of fresh cement capacity coming up in the state by end of 2012, shortage of linkage coal resulting in dependence on costlier open market coal thereby impacting profitability, higher cost of production with increase in proportion of OPC in overall product mix, limited market acceptance of cement boards in the north resulting in low capacity utilization in the plant at Paotasahib and the highly stretched capital structure and liquidity position of the company.
NCL Industries is in the business of manufacturing cement, cement boards, prefabrication shelters and in hydroelectricity generation.