Shivam Cements Limited (SHIVM), one of Nepal’s leading cement manufacturers, has received a renewed credit rating from ICRA Nepal Limited for its existing bank borrowing facilities. The rating agency reaffirmed the company’s ‘ICRANP LA+’ rating for long-term borrowing and ‘ICRANP A1’ for short-term borrowing, maintaining the previous assessment without any change.

The renewed rating covers a total bank credit exposure of Rs. 3.10 Arba, including Rs. 2.16 crore in long-term facilities and Rs. 3.09 Arba in short-term borrowing limits.

Profitability Improves Despite Revenue Pressure

According to ICRA Nepal, one of the main reasons behind maintaining the rating was the company’s noticeable improvement in profitability during the first nine months of fiscal year 2082/83. Although revenue experienced some pressure during the review period, higher average cement realization per metric ton helped improve margins.

Shivam Cements’ operating profit margin (OPM) increased to around 15%, compared to 8.4% during the same period of the previous fiscal year, indicating stronger operational efficiency.

Strong Balance Sheet and Very Low Debt

The report highlighted Shivam’s conservative capital structure as another major strength. As of mid-April 2026, the company’s total debt-to-net-worth ratio stood at only 0.03 times, reflecting very low dependence on borrowing.

Similarly, the ratio of total debt to operating profit remained low at 0.28 times, indicating strong debt servicing capacity. Lower interest rates in recent quarters have also strengthened the company’s ability to manage financing costs.

Healthy Liquidity Position

ICRA noted that the company’s liquidity remains comfortable. Around 79% of approved credit limits — equivalent to nearly Rs. 1 Arba — remained unutilized as of mid-April 2026. Additionally, the company maintained approximately Rs. 27.9 crore in cash reserves, providing financial flexibility.

The agency also cited the backing of experienced promoter groups and management teams associated with major Nepali business houses, including Lucky Group, Goyal Group, Sharda Group, Bhimsaria Group, Maru Group, and Mundhada Group.

Shivam’s established market position in the Ordinary Portland Cement (OPC) segment and long-term infrastructure demand outlook in Nepal were identified as supportive factors for future growth.

Contribution from Hongshi Shivam

Shivam Cements also benefits from its indirect ownership in Hongshi Shivam Cement Pvt. Ltd. through its subsidiary structure. The company holds approximately 26% indirect ownership, and recurring dividend income from this investment has contributed positively to overall profitability and business stability.

Key Risks Remain

Despite strong fundamentals, ICRA Nepal identified several risks.

One major concern remains the ongoing dispute with the Nepal Electricity Authority over trunk and dedicated transmission line charges. Shivam has already made provisions of approximately Rs. 1.30 Arba for potential liabilities.

Additionally, NEA reportedly issued another claim of Rs. 66.9 crore in October 2024. If the final legal outcome requires significant payments, the company’s liquidity could come under pressure.

Working capital intensity has also increased significantly, reaching 27% during the first nine months of the current fiscal year, compared with 8% in the previous year, mainly due to longer receivable cycles and higher inventory buildup ahead of the monsoon season.

Current collection periods have stretched to around 173 days, while inventory holding periods have increased to approximately 59 days.

Competitive Market Environment

ICRA also noted that Nepal’s cement sector remains highly competitive and cyclical, with demand closely linked to construction activity and overall economic conditions. A slowdown in infrastructure and real estate development may continue to pressure revenue growth.

For fiscal year 2081/82, Shivam Cements reported Rs. 7.76 Arba in operating revenue and Rs. 79.8 crore in net profit. During the first nine months of fiscal year 2082/83, the company generated Rs. 4.95 Arba in operating income and Rs. 61.9 crore in net profit.

Going forward, ICRA Nepal noted that sustaining profitability, protecting market share, and managing working capital efficiently will remain key factors influencing Shivam Cements’ future credit profile.

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