CRISIL has revised its rating outlook on the non-convertible debentures of Shree Cement (SCL) to 'Positive' from 'Stable', while reaffirming the rating at 'AA+'.

The outlook revision reflects CRISIL's expectation of SCL strengthening its market position further after commissioning its new capacity and reducing its geographical concentration. SCL had a combined manufacturing capacity of around 16 million tons per annum (mtpa) as on Mar. 31, 2014, across five plants in Rajasthan and one plant in Uttarakhand.

The company is expanding its capacity by 8 mtpa in Rajasthan and 4 mtpa in Bihar and Chhattisgarh taking its total capacity to 21.5 mtpa by 2014-15 (refers to financial year, July 1 to June 30). CRISIL believes that SCL's enhanced scale and improved geographical access to central and eastern markets will strengthen its business profile over the medium term.

The positive outlook reflects CRISIL's expectation of the strengthening of SCL's business risk profile driven by the increasing scale of operations and a geographical diversified revenue profile. The ratings may be upgraded if the company is able to successfully stabilize its new capacity resulting in a geographical diversified revenue profile while maintaining healthy operating efficiency and strong debt protection metrics.

On the other hand, the outlook may be revised to 'Stable' if SCL undertakes a large, debt-funded capex programme, or faces profitability pressures because of more-than-expected decline in realizations.

Shares of the company declined Rs 5.45, or 0.09%, to trade at Rs 5,735. The total volume of shares traded was 151 at the BSE (12.52 p.m., Tuesday).