💰 Financial Performance

Revenue Growth by Segment

In FY25, Cement revenue fell 4.08% to INR 93.94 Cr (from INR 97.93 Cr), Solar Power revenue dropped 10.69% to INR 17.76 Cr (from INR 19.88 Cr), while Petrol/Diesel revenue grew 12.83% to INR 9.74 Cr. By Q2 FY26, total income surged 42.81% YoY to INR 36.22 Cr, driven by higher cement dispatches.

Geographic Revenue Split

The company generates revenue primarily from North Karnataka, Coastal Karnataka, Goa, and parts of Maharashtra. Specific percentage splits per state are not disclosed, but these regions form the core market for the 'Jyoti Power' brand.

Profitability Margins

FY25 saw a significant decline with Net Profit Margin at -5.08% compared to 7.22% in FY24. However, H1 FY26 showed recovery with a PAT of INR 3.78 Cr compared to a loss in H1 FY25, as the new kiln stabilized and improved operational leverage.

EBITDA Margin

EBITDA margin for Q2 FY26 improved significantly to 23.65%, up 1122 bps from 12.44% in Q2 FY25. Core profitability was bolstered by a 175.11% YoY increase in EBITDA to INR 8.38 Cr due to better realizations and cost efficiencies from renewable energy.

Capital Expenditure

The company completed a major CAPEX to expand cement production capacity from 0.36 Mn MT to 1.0 Mn MT by Q3 FY25. This expansion was funded through term loans (TL 5) and preferential allotments, with bank facilities totaling INR 223.59 Cr.

Credit Rating & Borrowing

The credit rating was upgraded to IVR BBB-/Stable from IVR BB+/Positive in October 2024. Borrowing costs remain a factor, with finance costs for Q2 FY26 at INR 4.46 Cr, reflecting the debt taken for the solar plant and cement expansion.

⚙️ Operational Drivers

Raw Materials

Raw materials for cement production (primarily limestone and additives) accounted for INR 19.73 Cr in Q2 FY26, representing approximately 55.7% of revenue from operations.

Import Sources

Sourcing is primarily domestic, centered around the manufacturing facilities in Bagalkot, Karnataka, to minimize logistics costs. Specific state-wise sourcing percentages are not disclosed.

Key Suppliers

Not specifically named in the provided documents; however, the company maintains a network of vendors and dealers for its cement and petroleum segments.

Capacity Expansion

Current cement capacity reached 1.0 Mn MTPA in Q3 FY25, a significant increase from the previous 0.36 Mn MTPA. Production has scaled from 20 tons/day to 800 tons/day through strategic kiln enhancements.

Raw Material Costs

Raw material costs increased to INR 19.73 Cr in Q2 FY26 from INR 16.17 Cr in Q2 FY25. The company manages costs by leveraging its strategic location to keep procurement and logistics expenses lower than larger competitors.

Manufacturing Efficiency

Efficiency is driven by the stabilization of the new kiln and high levels of automation. The Return on Capital Employed (ROCE) was 4.97% in FY25, down from 9.98% in FY24 due to lower cement realizations during the expansion phase.

Logistics & Distribution

Distribution is a key competitive advantage due to the strategic location of the Bagalkot plant, which reduces transit times and costs to North Karnataka and Goa markets.

📈 Strategic Growth

Expected Growth Rate

37-43%

Growth Strategy

Growth will be achieved by utilizing the newly expanded 1 Mn MTPA capacity to increase market share. The strategy focuses on deepening penetration in North Karnataka and Goa, leveraging the 'Jyoti Power' brand, and maintaining cost leadership through 100% renewable energy usage.

Products & Services

The company sells cement bags (OPC and PPC), generates and distributes solar power, and operates a petroleum division selling petrol and diesel.

Brand Portfolio

Jyoti Power

New Products/Services

The focus is currently on scaling the existing 1 Mn MTPA cement capacity rather than launching entirely new product lines. Expected revenue contribution is tied to the 42.81% growth seen in recent quarterly total income.

Market Expansion

Targeting increased reach in Maharashtra and Coastal Karnataka. The company is working on expanding volumes and improving supply chain efficiencies to capitalize on infrastructure and housing demand.

Market Share & Ranking

The company is a prominent regional player in the North Karnataka cement market, though its specific percentage of the total Indian market is not provided.

Strategic Alliances

The company has not disclosed specific joint ventures, but the management indicated openness to strategic opportunities or acquisitions if they align with shareholder interests.

🌍 External Factors

Industry Trends

The industry is seeing a shift toward green energy and capacity consolidation. SKCIL is positioned well with its 100% renewable energy backing, which aligns with the industry's evolving sustainability standards.

Competitive Landscape

Faces intense competition from large-scale national cement manufacturers who have greater pricing power and deeper pockets for marketing.

Competitive Moat

The moat consists of energy self-sufficiency (solar power) and a strong regional brand ('Jyoti Power'). This is sustainable because it provides a permanent cost floor advantage over competitors relying on grid power or thermal plants.

Macro Economic Sensitivity

Highly sensitive to government infrastructure spending and interest rate cycles. A reduction in infrastructure budget would directly impact cement demand and revenue growth.

Consumer Behavior

Demand is driven by the housing and commercial construction sectors in Tier 2 and Tier 3 cities of Karnataka and Goa.

Geopolitical Risks

Minimal direct exposure, though global supply chain issues could indirectly affect the costs of machinery or specialized spares for the cement plants.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to environmental pollution norms for cement manufacturing and SEBI/BSE listing regulations. The company maintains compliance with Secretarial Standards issued by the ICSI.

Environmental Compliance

The company focuses on 'Conservation of Energy' and 'Technology Absorption' as per Section 134(3)(m) of the Companies Act, utilizing solar power to meet environmental standards.

Taxation Policy Impact

The company reported a tax expense of INR 4.47 Cr in FY25 despite a PBT loss, likely due to deferred tax adjustments or minimum alternate tax requirements.

Legal Contingencies

No pending applications under the Insolvency and Bankruptcy Code (IBC) were reported in the 2024-25 annual report. Secretarial audit reports confirm compliance with applicable laws.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the volatility of cement prices (realizations). A 10% drop in market prices could significantly impact the ability to service the high debt load (Debt-Equity 2.43x).

Geographic Concentration Risk

High concentration risk as nearly 100% of revenue is derived from the Karnataka, Goa, and Maharashtra regions.

Third Party Dependencies

Dependent on power grid connectivity for solar distribution and a network of regional dealers for cement sales.

Technology Obsolescence Risk

The company mitigates this through recent kiln upgrades and high levels of automation in production and quality control.

Credit & Counterparty Risk

Trade receivables turnover ratio was 21.19x in FY25. The company reports no overdue pending from customers, indicating healthy receivable quality.