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Ambuja Cements Ltd. Regulatory Filings 2021

Jun 4, 2021

59365_rns_2021-06-04_b677355c-d091-46c6-a536-ff4a24bed3d9.pdf

Regulatory Filings

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4th June, 2021

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BSE Limited,
Phiroz Jeejeebhoy Towers,
Dalal Street, Mumbai – 400023
National Stock Exchange of India Ltd.,
Plot No.C/1 'G' Block
Bandra – Kurla Complex, Bandra East,
Mumbai 400051






Deutsche Bank
Trust Company Americas
Winchester House
1 Great Winchester Street
London EC2N 2DB
Ctas Documents
<[email protected]
Societe de la Bourse de Luxembourg,
Avenue de la Porte Neuve
L-2011 Luxembourg,
B.P 165
"Luxembourg Stock Ex-Group ID "
<[email protected]

Dear Sirs,

Sub: Credit Rating - Intimation under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we inform that the credit rating agency - CRISIL has vide their letter dated 3[rd] June, 2021 reaffirmed the credit rating assigned to bank facilities and short-term debt programme of the Company as follows:-

Rating Action

Total Bank Loan Facilities Rated Rs.1200 Crore (Enhanced from Rs.1000
Crore)
Long Term Rating CRISIL AAA/Stable (Reaffirmed)
ShortTerm Rating CRISIL A1+ (Reaffirmed)
Rs.100 Crore Short Term Debt CRISIL A1+ (Reaffirmed)

CRISIL Rating rationale is enclosed for your reference.

Presently, the Company do not have any debt instrument or fixed deposit programme or any scheme or proposal involving mobilization of funds whether in India or abroad.

Kindly take the same on record.

Thanking you Yours faithfully

For AMBUJA CEMENTS LTD

Digitally signed by Rajiv Natwarlal Gandhi DN: c=IN, o=Personal, postalCode=400066, Rajiv st=Maharashtra, 2.5.4.20=3a36db83fd05f407f18fda649feacb1989d8 75e5637db583340b4ecc46796210, Natwarlal pseudonym=9A435294AE7485A6BD242F442CFE17808AE7DAF3, serialNumber=5CEA5EE8CBE3142AACBF25F4A7A9 BED624DB5527F90B86B63752C706E31A3BFA, Gandhi cn=Rajiv Natwarlal Gandhi Date: 2021.06.04 13:44:38 +05'30' RAJIV GANDHI COMPANY SECRETARY Membership No A11263

AMBUJA CEMENTS LIMITED

Elegant Business Park, MIDC Cross Road 'B', Off Andheri Kurla Road, Andheri (E), Mumbai 400059. Tel.: 022- 4066 7000 /6616 7000, Fax: 022 - 6616 7711 /4066 7711 . Website: www.ambujacement.com Regd. Off. : P.O . Ambujanagar, Taluka - Kodinar, Dist. Gir Somnath, Gujarat. CIN: L26942GJ1981PLC004717

6/3/2021

Rating Rationale

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Rating Rationale

June 03, 2021 | Mumbai

Ambuja Cements Limited

Rated amount enhanced

Rating Action

Rating Action
Total Bank Loan Facilities Rated Rs.1200 Crore(Enhanced from Rs.1000 Crore)
Long Term Rating CRISIL AAA/Stable(Reaffirmed)
Short Term Rating CRISIL A1+(Reaffirmed)
Rs.100 Crore Short Term Debt CRISIL A1+(Reaffirmed)

1 crore = 10 million Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL Ratings has reaffirmed its 'CRISIL AAA/Stable/CRISIL A1+' ratings on the bank facilities and short-term debt programme of Ambuja Cements Limited (Ambuja Cements).

The ratings continue to reflect the company’s healthy market position in north and west India, robust operating efficiency and strong financial risk profile because of healthy cash flows. These strengths are partially offset by susceptibility to the commoditised and cyclical nature of the cement industry. Any substantial debt-funded capex or acquisition, which may weaken the financial risk profile, will be a key rating sensitivity factor.

For the three months ending March 2021, the standalone sales volume increased around 26% (year-on-year) driven by healthy demand and low base, which was impacted because of the lockdown in the last two weeks of March 2020. During first quarter of 2021 (January to March), EBITDA margin improved to 27.3% from 21.9% in the corresponding quarter of previous year driven by strong growth in volumes and efficiency gains.

Analytical Approach

CRISIL Ratings has combined the business and financial risk profiles of Ambuja Cements and ACC Ltd (ACC; 'CRISIL AAA/Stable/CRISIL A1+'). This is because, post the restructuring between ACC and Ambuja Cements, ACC became a subsidiary of Ambuja Cements. Moreover, both companies have a common line of business, and have entered into master supply agreement, which helps them operate symbiotically, optimising each other's plant capacities and spare inventories, and thus, benefit from operational and financial synergies.

Please refer Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers & Detailed Description Strengths:

*** Healthy market position**

Ambuja Cements had installed capacity of 29.65 million tonne per annum (MTPA) as on March 31, 2021, spread across north and central (around 40%), west (around 37%) and east (around 23%) India. It has large marketing infrastructure, panIndia presence and strong operational linkages with ACC (34.5 MTPA as on March 31, 2021). The companies together have 12-13% capacity share in the Indian cement market. Their nationwide presence shields operations from regional price volatility and demand-supply imbalances.

*** Strong financial risk profile**

Consolidated gearing remained healthy. Also, strong cash flow and low debt levels translate into robust debt protection metrics. Supported by healthy cash accrual and minimal reliance on debt, the debt protection metrics will remain strong over the medium term.

Weaknesses

*** Susceptibility to volatility in input cost and realisations, and cyclicality in the cement industry**

Capacity addition in the cement industry is sporadic because of long gestation period for setting up a facility and large number of players adding capacity during the peak of a cycle This has led to unfavourable price cycles in the past. Moreover, profitability is susceptible to volatility in prices of inputs, including raw material, power, fuel, and freight. Increase in pet coke prices over the past year has impacted the profitability of several cement players. Realisations and profitability are also affected by demand, supply, offtake, and other regional factors.

Liquidity: Superior

Debt primarily consists of interest-free loan from the state government. The company has announced capex of around Rs 2,500 crore to be spent over a period of 2-3 years towards capacity addition, captive power plant, plant maintenance and other infrastructure developments. Cash and cash equivalent stood at Rs 2,717 crore as on December 31, 2020. Unutilised bank lines and healthy cash accrual will sufficiently cover capex and working capital requirement.

https://www.crisil.com/mnt/winshare/Ratings/RatingList/RatingDocs/AmbujaCementsLimited_June 03, 2021_RR_271733.html

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Rating Rationale

Under ACC, liquidity will remain robust in the absence of external debt. Expected capex of around Rs 3,500 crore over the medium term, towards capacity addition and efficiency capex, will be entirely funded through internal accrual. Cash and cash equivalent stood at Rs 5,849 crore as on December 31, 2020. Cash accrual is estimated over Rs 1,900 crore in 2021. Unutilised bank limits and healthy cash accrual will be sufficient to meet capex and working capital requirement.

Outlook: Stable

CRISIL Ratings believes Ambuja Cements will maintain its strong financial risk profile over the medium term supported by healthy cash accrual and low debt.

Rating Sensitivity Factors

Downward Factors

Larger-than-expected capex (organic or inorganic) or high dividend outflow, resulting in net cash less than Rs 1500 crore on a sustained basis

Sustained decline in operating margin to less than 12%

About the Company

Ambuja Cements is one of India's leading cement manufacturers. In January 2006, Holcim Ltd (Holcim) acquired 14.8% stake in Ambuja Cements. Following an open offer in April 2006, Holcim assumed management control of the company. Globally, Holcim and Lafarge SA announced their merger in April 2014. Completed in July 2015, the merged entity was named LafargeHolcim. Post the proposed restructuring between ACC and Ambuja Cements, effective from August 12, 2016, ACC became a subsidiary of Ambuja Cements.

For the three months ended March 31, 2021, Ambuja Cement’s consolidated profit after tax (PAT) was Rs 1,228 crore on operating income of Rs 7,715 crore, compared with PAT of Rs 743 crore on operating income of Rs 6,250 crore for the corresponding period last year.

For the three months through March 2021, Ambuja Cement reported standalone PAT of Rs 665 crore on operating income of Rs 3,621 crore, compared with PAT of Rs 399 crore on operating income of Rs 2,828 crore for the corresponding period last year.

Key Financial Indicators* (Consolidated^)

Key Financial Indicators
* (Consolidated^)


Particulars
Unit 2020 2019
Revenue Rs.Crore 24,516 27,103
Profit After Tax(PAT) Rs.Crore 3,107 2,783
PAT Margin % 12.7 10.3
Adjusted debt/adjusted networth Times 0.00 0.00
Interest coverage Times 47.3 39.9

*as per CRISIL analytical adjustment

^Financials for the year ended December 31; includes consolidated numbers of ACC Ltd

Any other information: Not applicable

Note on complexity levels of the rated instrument:

CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name of
Instrument
Date of
Allotment
Coupon
Rate (%)
Maturity
Date
Issue Size
(Rs.Crore)
Complexity
Level
Rating Assigned
with Outlook
NA Short Term
Debt
NA NA 7-365
days
100 Simple CRISIL A1+
NA Cash Credit
& Working
Capital
Demand Loan
NA NA NA 75 NA CRISIL AAA/Stable
NA Cash Credit
& Working
Capital
Demand Loan*
NA NA NA 25 NA CRISIL AAA/Stable
NA Letter of credit
& Bank
Guarantee#
NA NA NA 635 NA CRISIL A1+
NA Letter of credit
& Bank
Guarantee
NA NA NA 300 NA CRISIL A1+
NA Proposed
Working
Capital Facility
NA NA NA 10 NA CRISIL AAA/Stable
NA Letter of credit^ NA NA NA 155 NA CRISIL A1+

https://www.crisil.com/mnt/winshare/Ratings/RatingList/RatingDocs/AmbujaCementsLimited_June 03, 2021_RR_271733.html

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*Interchangeable with bank guarantee / letter of credit #Fully interchangeable with bank guarantee ^Upto Rs 80 crore interchangeable with bank guarantee.

Annexure - List of Entities Consolidated

Names of Entities Consolidated Extent of Consolidation Rationale for Consolidation
ACC Ltd Full consolidation Post the restructuring between ACC and Ambuja
Cements, ACC has now become a subsidiary of
Ambuja Cements. Moreover, both companies
have a common line of business, and have
entered into master supply agreement, which
helps them operate symbiotically, optimising each
other's plant capacities and spare inventories,
and thus, benefit from operational and financial
synergies.
M.G.T Cements Private Ltd Full consolidation
Chemical Limes Mundwa Private Ltd Full consolidation
Dang Cement Industries Private Ltd Full consolidation
Dirk India Private Ltd Full consolidation
OneIndia BSC Private Ltd Full consolidation
ACC Mineral Resources Ltd* Full consolidation
Bulk Cement Corporation(India)Ltd* Full consolidation
LuckyMinmat Ltd* Full consolidation
National Limestone Company Private
Ltd*#
Full consolidation
Singhania Minerals Private Ltd* Full consolidation
Counto Microfine Products Private Ltd Equitymethod JV/Associate
Aakaash Manufacturing Company
Private Ltd^
Equity method JV/Associate
Alcon Cement CompanyPrivate Ltd^ Equitymethod JV/Associate
Asian Concretes and Cements Private
Ltd ^
Equity method JV/Associate

*Subsidiaries of ACC Ltd| ^Associates of ACC Ltd

#ceased to be a subsidiary w.e.f. 18th November 2020.

Annexure - Rating History for last 3 Years

Current Current Current 2021 (History) 2021 (History) 2020 2020 2019 2019 2018 2018 Start of
2018
Instrument Type Outstanding
Amount
Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based
Facilities
LT 110.0 CRISIL
AAA/Stable
-- 23-11-20 CRISIL
AAA/Stable
06-12-19 CRISIL
AAA/Stable
25-01-18 CRISIL
AAA/Stable
CRISIL
AAA/Stable
-- -- -- 30-01-19 CRISIL
AAA/Stable
-- --
Non-Fund
Based
Facilities
ST 1090.0 CRISIL
A1+
-- 23-11-20 CRISIL
A1+
06-12-19 CRISIL
A1+
25-01-18 CRISIL
A1+
CRISIL
A1+
-- -- -- 30-01-19 CRISIL
A1+
-- --
Short Term
Debt
ST 100.0 CRISIL
A1+
-- 23-11-20 CRISIL
A1+
06-12-19 CRISIL
A1+
25-01-18 CRISIL
A1+
CRISIL
A1+
-- -- -- 30-01-19 CRISIL
A1+
-- --

All amounts are in Rs.Cr.

Annexure - Details of various bank facilities

Annexure - Details of various bank facilities Annexure - Details of various bank facilities Annexure - Details of various bank facilities
Current facilities Previous facilities
Facility Amount
(Rs.Crore)
Rating Facility Amount
(Rs.Crore)
Rating
Cash Credit & Working
Capital Demand Loan
75 CRISIL
AAA/Stable
Cash Credit% 100 CRISIL
AAA/Stable
Cash Credit & Working
Capital Demand Loan*
25 CRISIL
AAA/Stable
Letter of Credit^ 155 CRISIL A1+
Letter of Credit^ 155 CRISIL A1+ Letter of credit & Bank
Guarantee$
725 CRISIL A1+
Letter of credit & Bank
Guarantee#
635 CRISIL A1+ Proposed Working
Capital Facility
20 CRISIL
AAA/Stable
Letter of credit & Bank
Guarantee
300 CRISIL A1+ - 0 -
ps://www.crisil.com/mnt/winshare/R atings/RatingList/R atingDocs/AmbujaC ementsLimited_June 03, 2021_RR _271733.html 3

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Rating Rationale
/2021
Rating Rationale
/2021
Rating Rationale
/2021
Rating Rationale
/2021
Rating Rationale
/2021
Rating Rationale
Proposed Working
Capital Facility
10
CRISIL
AAA/Stable

-
0 -
Total 1200 - Total 1000 -

*Interchangeable with bank guarantee/letter of credit

#Fully interchangeable with bank guarantee

^ Upto Rs 80 crore interchangeable with bank guarantee

%Interchangeable with bank guarantee/letter of credit to the extent of Rs 25 crore

  • $Fully interchangeable with bank guarantee to the extent of Rs 425 crore

Criteria Details

Links to related criteria

CRISILs Approach to Financial Ratios

Rating criteria for manufaturing and service sector companies - CRISILs Bank Loan Ratings process, scale and default recognition Rating Criteria for Cement Industry CRISILs Criteria for rating short term debt CRISILs Criteria for Consolidation

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Rating Rationale

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the SEBI circular, "Guidelines for Issue and Listing of Structured Products/Market Linked Debentures". The revision in rating symbols for PPMLDs should not be construed as a change in the rating of the subject instrument. For details on CRISIL Ratiings' use of 'PP-MLD' please refer to the notes to Rating scale for Debt Instruments and Structured Finance Instruments at the following link: www.crisil.com/ratings/credit-rating-scale.html

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