Press Release March 17, 2025 SAIFCO CEMENTS PRIVATE LIMITED Rating Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	121.00	ACUITE BBB- | Reaffirmed | Rating Watch with Positive Implications	-
Total Outstanding	121.00	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

­Acuite has reaffirmed its long term rating of 'ACUITE BBB-' (read as ACUITE triple B minus) on the Rs.121.00 Crore bank facilities of Saifco Cements Private Limited (SCPL). The ratings have been placed under 'Rating watch with Positive Implications’. Rationale for Rating The reaffirmation of the ratings takes into account of established track record of operations of the company along with improvement in overall profitability of the company. The company has reported operating margin of 21.38% in FY24 against 12.51% in FY23. These strengths are however, partly offset by moderate financial risk profile, working capital intensive operations and highly competitive nature of industry. Acuite notes that the J K Cements Limited is set to acquire 60% stake in Saifco Cements Limited as per their disclosure of third quarter results on stock exchange dated 25th January 2025. and will remain a key monitorable. The Company is expected to benefit from the synergies and benefits derived from such take over.

About the Company

­Based in Jammu & Kashmir, Saifco Cements Private Limited is engaged in manufacturing cement and cement products. The company was incorporated in 1997. Currently the company is managed by Mr. Manzoor Ahmad Guna, Mr. Altaf Ahmad Guna, Mr. Suhail Manzoor Guna, Mr. Mohammad Khalil Guna, Mr. Ghulam Hassan Baba, Mr. Hilal Ahmad Bhat, Mr. Mumtaz Banoo, Mr. Ishfaq Trumboo and Mr. Tahir Ahmad Trumboo.

Unsupported Rating

­Not Applicable

Analytical Approach

­Acuité has considered the standalone business and financial risk profile of Saifco Cements Private Limited to arrive at this rating.

Key Rating Drivers

Strengths

­Experienced Management and established presence in Cement industry The management of SCPL has an experience of more than three decade of experience in the cement industry. The directors of the company are Manzoor Ahmad Guna, Altaf Ahmad Guna, Suhail Manzoor Guna, Mohammad Khalil Guna, Ghulam Hassan Baba, Mumtaz Banoo, Ruhail Manzoor Guna, Dawood Altaf Guna, Parveez Ahmad Guna, Amir Manzoor Guna. Also, post take over by JK Cements Ltd,  the Company is expected to benefit over the long term and the same will remain a monitorable. Acuite believes that SCPL will continue to benefit from its extensive experience of promoters and it will help company to flourish in near to medium term. ­Decline in Revenue albeit improved Profitability The company have achieved the turnover of Rs.96.35 Cr. in FY24 against Rs.109.71 Cr. in FY23. This dip in top line of the company is because of reduction in the price realisation and volume sales due to lower demand in J&K valley and expects to generate lower sales on y-o-y basis. Also, SCPL has recorded revenue of Rs.71.35 Cr. in 9MFY25 due to election year at State and Central level. However, the EBITDA Margins of the company stood at 21.38% in FY24 against 12.51% in FY23 the improvement has been established because of easing of coal prices which constitutes almost ~50% of the cost of raw material. The PAT margins of the company stood at 9.44% in FY24 against 2.21% in FY23. In current year, on the account of lower demand in Jammu & Kashmir region the turnover has been impacted. Going forward it is expected to be improved in near to medium term.

Weaknesses

Moderate ­Financial Risk Profile The financial risk profile of the company is moderate marked by net worth of Rs. (24.16) Crore as on 31st March 2024 against Rs. (33.26) Crore as on 31st March 2023. The weakening in tangible net worth is mainly due to erosion of net worth due to accumulation of losses incurred in previous years. However, the net worth of the company is improving on account of Profit accretion. Further, the total debt of the company stood at Rs.121.71 Crore as on 31st March 2024 against Rs.128.59 Crore as on 31st March 2023. Further, the gearing of the company stood at (-5.04) times as on 31st March 2024 against (3.87) times as on 31st March 2023 due to negative net-worth. The TOL/TNW ratio of the company stood at (6.13) times as on 31st March 2024 against (4.63) times as on 31st March 2023. The Interest coverage ratio and Debt service coverage ratio of the company stood at 1.92 times and 1.20 times respectively as on 31st March 2024 against 1.32 times and 0.99 times respectively as on 31st March 2023. Acuité believes that going forward the financial risk profile of the company will remain moderate. Intensive Working Capital Operations The working capital operations of the company stood at 382 days as on 31st March 2024 against 325 days as on 31st March 2023. The GCA days are higher on the back of debtor days which stood at 102 days as on 31st March 2024 against 94 days as on 31st March 2023. Also, the inventory days the company stood at 179 days as on 31st March 2024 against 106 days as on 31st March 2023. During year end, the inventory of the company remains on the higher side since raw material are high largely as Company has to mine and keep limestone reserves for usage throughout the year, as snowfall renders any mining activity non-operational during winter season. As a result, the company stock inventory in advance. Also, due to low demand the company had finished good inventory as a result the creditor days of the company also elongated at 170 days as on 31st March 2024 against 81 days as on 31st March 2023. Acuité believes that going forward the working capital operations of the company will improve in near to medium term.

Rating Sensitivities

­Movement of scale of operations Movement in working capital operations Acquisition of 60% stake by JK Cements Ltd,

Liquidity Position

Stretched

The liquidity profile of the company is stretched due to the elongated working capital cycle leading  to dependency on bank lines for funding the same as the average bank limit utilization of fund based bank facilities stood at 100.99% in last six months ending January 2025 , overutilization of CC account is there on an account of the interest component is added on the month end and the account get regularised within a week. However, the company has generated net cash accruals of Rs.9.94 Crore as on 31st March 2024 against the debt repayment obligations of Rs.6.47 Crore in the same period. The current ratio of the company stood at 1.65 times as on 31st March 2024 against 1.58 times as on 31st March 2023. Acuité believes that going forward the liquidity profile of the company will improve in near to medium term if JK Cements Ltd acquires stake in company leading to influx of funds.

Outlook: Not Applicable

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Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 24 (Actual)	FY 23 (Actual)
Operating Income	Rs. Cr.	96.35	109.71
PAT	Rs. Cr.	9.09	2.43
PAT Margin	(%)	9.44	2.21
Total Debt/Tangible Net Worth	Times	(5.04)	(3.87)
PBDIT/Interest	Times	1.92	1.32

Status of non-cooperation with previous CRA (if applicable)

­Not applicable

Interaction with Audit Committee anytime in the last 12 months (applicable for rated-listed / proposed to be listed debt securities being reviewed by Acuite)

Not applicable

Any other information

­None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm

Note on complexity levels of the rated instrument

­In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook 18 Dec 2023 Term Loan Long Term 48.62 ACUITE BBB- | Stable (Assigned) Funded Interest Term Loan Long Term 47.38 ACUITE BBB- | Stable (Assigned) Cash Credit Long Term 25.00 ACUITE BBB- | Stable (Assigned)

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Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating The Jammu and Kashmir Bank Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 25.00 Simple ACUITE BBB- | Reaffirmed | Rating Watch with Positive Implications The Jammu and Kashmir Bank Not avl. / Not appl. Funded Interest Term Loan Not avl. / Not appl. Not avl. / Not appl. 30 Sep 2033 46.88 Simple ACUITE BBB- | Reaffirmed | Rating Watch with Positive Implications Not Applicable Not avl. / Not appl. Proposed Long Term Bank Facility Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 3.57 Simple ACUITE BBB- | Reaffirmed | Rating Watch with Positive Implications The Jammu and Kashmir Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 30 Sep 2033 45.55 Simple ACUITE BBB- | Reaffirmed | Rating Watch with Positive Implications

Contacts

Mohit Jain Senior Vice President - Rating Operations Siddharth Garg Associate Analyst - Rating Operations	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai. Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating. Note: None of the Directors on the Board of Acuité Ratings & Research Limited are members of any rating committee and therefore do not participate in discussions regarding the rating of any entity.