Shiva Cement Limited - Rating reaffirmed at 'CRISIL A+(CE) / Stable'

CRISIL Ratings has reaffirmed its 'CRISIL A+(CE)/Stable' rating on the long-term bank facilities of Shiva Cement Ltd (SCL).

The rating centrally factors in the unconditional and irrevocable corporate guarantee extended by the company's parent, JSW Cement Ltd (JSWCL; rated 'CRISIL A+/Stable/CRISIL A1'), and the payment mechanism administered by the security trustee.

According to the payment mechanism, if SCL fails to service the debt obligation on the due date, then JSWCL (guarantor) will make the requisite payment either within three business days from the date of receipt of demand notice from the trustee or within three business days from the scheduled due date, whichever is earlier. The guarantee covers the principal, interest as well as any other amount payable under the guaranteed bank loan. Thus, the payment structure is designed in a manner that ensures full payment to the lenders in a time bound manner.

The guarantee will remain unaffected even if SCL faces bankruptcy; in case of dissolution, insolvency or liquidation; or on winding up proceedings initiated by or against the issuer.

The rating continues to factor in the strategic importance of SCL to JSWCL, along with backward integration in terms of captive limestone mines. These strengths are partially offset by exposure to project implementation risk, modest scale of operations and weak financial risk profile.

SCL commissioned its clinker unit of 4,000 tonne per day (TPD) capacity in January 2023, which is under trial run. Ability to stabilise and ramp up the clinker unit, along with securing requisite consent/approval to operate it to full capacity, will be a monitorable.

Shares of SHIVA CEMENT LTD. was last trading in BSE at Rs. 49.26 as compared to the previous close of Rs. 49.61. The total number of shares traded during the day was 74628 in over 411 trades.

The stock hit an intraday high of Rs. 50.30 and intraday low of 49.01. The net turnover during the day was Rs. 3705334.00.

Source : Equity Bulls

Keywords

SHIVACEMENT INE555C01029 JSWCement RatingUpdate