Cement Rating

Feb 01, 2011 (LBO) – Sri Lanka’s Tokyo Cement Company (Lanka) Ltd has been rated ‘A’ by Ram Ratings on its strong market position and balance sheet against its dependency on the cyclicality of construction and government price controls. The long term rating has a ‘stable’ outlook. The firm’s short term credit has been rate ‘P2’.

Tokyo has been able to strengthen its market position, supported by its well brand and dealer network.

RAM said Tokyo has managed to maintain its premium pricing due to its strong branding.

Tokyo and Holcim, a unit of a Swiss firm operate local plants in a market where the others are importers.

RAM said domestic manufacturers enjoy some tariff protection and logistical advantage compared to importers, which faced the risk of hardening cement due to the product’s short shelf life.

Cement is classified as an essential commodity by Sri Lanka’s Consumer Affairs Authority of Sri Lanka and approval is required from the CAASL prior to any revision in the retail price.

“Cement suppliers are therefore unable to pass on increasing costs to customers, and are thus exposed to potential margin compression,” RAM Ratings said.

“As such, cement manufacturers are vulnerable to adverse pr