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Flying cement operates with one manufacturing unit, having capacity of 1.4mln tpa, in the North region. The Company had completed BMR which resulted in improved margins in FY19 but in 1HFY20, company's bottom line turned red. Furthermore, planned Waste Heat Recovery plant is expected to add the efficiency side. The Company announced cement capacity expansion plan in FY16 but delayed it due to a number of announced capacities by majority cement players. Cement sector achieved second phase of expansion (18 mln tpa).
However, slow local demand and expanded capacity resulted in depressed cement prices (especially in north region). Local capacity utilization already recorded dip to 65% in 1HFY20 (FY19: 68%). This will be further impacted amid COVID-19 outbreak and country wide lock down observed. Though construction sector began operations but low demand has been seen. Curtailed key policy rate will provide much needed breathing space to the sector.
During 1HFY20,
Further equity strengthening is planned and remains vital for upholding financial risk profile. Rating watch incorporates deterioration witnessed in business profile in 1HFY20 and pressure on financial risk matrix. Going forward, improved margins and cash flows remains crucial to the ratings. In cognizance thereof, sponsors have decided to inject a substantial amount in the company as equity till
For more information, contact:Analyst,
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