- Long and diversified experience of the management
PCL has been engaged in the manufacturing of cement since April 2008. The company was promoted in 2003 by Shri Trilok Chand Agarwal of Kolkata and Shri Prakash Gupta of Guwahati. Later, the company was taken over by Shri Madhur Agarwalla and Shri Subhash Chandra Agarwalla in July 2007, when it was in the project implementation stage. The plant became operational in April 2008. Over the years, the promoters have successfully established the ‘Surya Gold’ and ‘Surya Concretec’ brands in the North-Eastern cement market. The company is currently headed by Mr. Vedant Agarwal (Managing Director), along with Mr. Badal Rabha, Mr. Rukmal Boro, Mr. Dipankar Samanta, and Ms. Ayushi Khaitan as directors. The promoters also have extensive business experience in several industries such as ferro alloys, steel, refractories, and more. In 2007, the management ventured into the cement business by acquiring a majority stake in PCL. Acuité believes that the established track record of over a decade and the multifaceted experience of the promoters will continue to support the business going forward.
- Stable operating performance in FY2025 post moderation in FY2024
The company's operating income declined in FY2024 to Rs.186.16 Cr. from Rs.237.54 Cr. in FY2023, primarily due to reduced production caused by a 3–4-month breakdown in the clinker manufacturing unit. However, the operating income recovered to Rs.200.32 Cr. in FY2025. The operating profit margin also fluctuated over the period—improving to ~7.40% in FY2025 (E) from 5.83% in FY2023, though slightly lower than 8.30% in FY2024. These margin variations are attributed to volatility in input costs, particularly raw materials, which constitute a significant portion of the cost structure. Given the inherent exposure of the business to fluctuations in raw material prices, Acuite believes that the company’s operating income and profitability will remain key monitorable going forward.
- Healthy financial risk profile
The financial risk profile of the company continues to remain healthy with healthy capital structure, debt protection metrics and low gearing levels. The net worth of the company stood at Rs.83.06 Cr. and Rs.92.70 Cr. as on March 31, 2024, and 2023 respectively. The net worth has declined due to the amount utilized on buyback of equity shares of Rs. 14.04 Cr. in FY2024. The gearing of the company stood at 0.03 times as on March 31, 2024, against 0.01 times as on March 31, 2023. The estimated gearing for FY2025 is around 0.03 times. Debt protection metrics – Interest coverage ratio and debt service coverage ratio stood at 24.78 times and 17.38 times as on March 31, 2024, respectively as against 19.79 times and 15.51 times as on March 31, 2023, respectively. The estimated ICR and DSCR for FY2025 is around 24.25 times and 15.73 times. Tol/ TNW stood at 0.52 times as on March 31, 2024, as against 0.47 times as on March 31, 2023. The estimated TOL/TNW for FY2025 is around 0.47 times. The debt to EBITDA of the company stood at 0.14 times as on March 31, 2024, as against 0.04 times as on March 31, 2023 and estimated to be around 0.15 times as on March 31st 2025. Acuité believes that the financial risk profile of the company will continue to remain healthy over the medium term in the absence of any major debt-funded capital expenditure and healthy accruals.
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- Moderately intensive working capital cycle
PCL’s working capital cycle is moderately intensive, marked by Gross Current Assets (GCA) of 147 days in FY2024 compared to 113 days in FY2023. The GCA days are mainly led by inventory days. The receivable days stood at 31 day in FY2024 compared to 28 days in FY2023. Furthermore, the inventory period stood at 98 days in FY2024 compared to 58 days in FY2023. The company offers a credit period of around 20-30 days to its customers and has a policy to maintain inventory for about 1-2 months. For limestone, the company usually maintains a buffer stock for over 3 months. Additionally, the company procures around 40 percent of clinker (one of the major raw materials) from the market for captive consumption, either in cash or against advance payment, leading to a high operating cycle. Acuité believes that the working capital management of the company will remain at similar levels over the medium term.
- Susceptibility to volatility in input cost; cyclicality associated with the cement industry
The cement industry is highly cyclical in nature and largely depends on the economic growth of the country. There is a high degree of correlation between GDP growth and cement consumption. As a cyclical industry, it goes through phases of ups and downs, which accordingly impact unit realizations. Moreover, profitability remains susceptible to volatility in input prices, including raw materials, power, fuel, and freight. Realizations and profitability are also affected by demand, supply, offtake, and other region specific factors. PCL remains exposed to frequent fluctuations in power costs, in addition to the risks of volatile input prices.
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