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-Fitch keeps Balmer Lawrie's commercial paper/short-term debenture programme at F1+(ind).

M2 EQUITYBITES-November 4, 2010--Fitch keeps Balmer Lawrie's commercial paper/short-term debenture programme at F1+(ind)(C)2010 M2 COMMUNICATIONS

4 November 2010 - Fitch confirmed on Thursday the F1+(ind) rating assigned to the INR250m (USD5.6m/EUR4m) commercial paper/non-convertible debenture programme of Indian diversified group Balmer Lawrie & Company Ltd (BOM:523319), or BLCL.

The rating is based on the company's consistent profitability and its diversified activities, from industrial packaging to travel and tours, Fitch explained.

The diversified nature of the company's operations partly protects it from the cyclicality of individual strategic business units (SBUs). BLCL continues to enjoy a leading market position in its industrial packaging, industrial lubricants segment of greases and lubricants, synthetic fat liquors segment of leather chemical and tours & travel (TT) SBUs, the agency added.

The rating also incorporates BLCL's proven capacity to sustain its conservative financial profile with high cash balances, its ability to maintain its operating margins at 6.76% during fiscal 2010.

The rating further draws comfort from the ongoing business support from the Government of India (GoI), a majority shareholder, as well as from other public sector undertakings (PSUs) as BLCL provides services to the GoI and PSUs through its logistics infrastructure and services and TT SBUs.

The ratings could be affected by a considerable deterioration in BLCL's EBITDA margin coupled with any sufficient debt-led capital expenditure plan, which would lead to a gross debt/EBITDA of above 1.25x on a sustained basis.

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Publication:M2 EquityBites (EQB)
Geographic Code:9INDI
Date:Nov 4, 2010
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