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-CRISIL keeps Blue Star Diamonds ratings at BBB-/stable.

BANKING AND CREDIT NEWS-October 11, 2010--CRISIL keeps Blue Star Diamonds ratings at BBB-/stable(C)2010 M2 COMMUNICATIONS

11 October 2010 - CRISIL said Friday it had assigned BBB-/stable rating to the long-term bank facilities of Blue Star Diamonds Pvt Ltd, part of the Blue Star group.

These facilities were earlier short-term facilities, which were rated P3 by CRISIL.

The rating continues to reflect the Blue Star group's healthy operational efficiencies owing to assured supply of rough diamonds because of its sightholder status with various suppliers, its comfortable net worth, and the extensive experience of its promoters in the diamond industry. These strengths are partially offset by the working-capital-intensive nature of the Blue Star group's operations, and its below-average debt protection metrics.

For arriving at the rating, CRISIL has combined the business and financial risk profiles of Blue Star and Aurostar Jewellery India Pvt Ltd (Aurostar), together referred to as the Blue Star group. This is because the two companies share operational and business synergies, and have a common line of business and the same promoters. Furthermore, the promoters plan to merge Aurostar with Blue Star in 2010-11.

CRISIL believes that the Blue Star group's credit risk profile will remain stable over the medium term on the back of its established market position and healthy operational efficiencies. The outlook may be revised to "positive" in case of an improvement in the group's working capital management. Conversely, the outlook may be revised to "negative" in case of further pressure on the Blue Star group's profitability, and further deterioration in its debt protection metrics.

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Publication:M2 Banking & Credit News (BCN)
Date:Oct 11, 2010
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