Credit qual­ity of ce­ment firms im­proves in H1FY18


Credit qual­ity of ce­ment com­pa­nies has im­proved sharply in the first half of FY18 (HIFY18), an anal­y­sis by Care Rat­ings Ltd showed. As the fol­low­ing chart shows, mod­i­fied credit ra­tio (MCR) for the sec­tor has risen steadily over the years. An in­crease in MCR de­notes an in­crease in up­grades vis-àvis down­grades, whereas a de­crease in MCR shows the re­verse. In the said pe­riod, Care Rat­ings has taken rat­ing ac­tions on nearly 25 com­pa­nies op­er­at­ing in ce­ment and re­lated sec­tors.

Af­ter wit­ness­ing a slow­down in de­mand and pro­duc­tion on ac­count of de­mon­e­ti­za­tion dur­ing FY17, the ce­ment sec­tor has started ex­hibit­ing signs of re­vival, with all-in­dia pro­duc­tion wit­ness­ing a year-on-year in­crease of 1.9% for the month of May 2017 vis-à-vis May 2016. On the pric­ing front, although, ce­ment prices wit­nessed a short­lived de­cline post de­mon­e­ti­za­tion, on an an­nual ba­sis, the av­er­age ce­ment prices wit­nessed growth dur­ing FY17 pri­mar­ily on ac­count of in­creased prices in the North­ern mar­kets, it added.

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