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-Fitch lifts Gangakhed Sugar and Energy's rating to BB-(ind).

M2 EQUITYBITES-January 3, 2011--Fitch lifts Gangakhed Sugar and Energy's rating to BB-(ind)(C)2011 M2 COMMUNICATIONS http://www.m2.com

3 January 2011 - Fitch revised up on Monday to BB-(ind) from B+(ind) the national long-term rating of Indian cane crushing company Gangakhed Sugar and Energy Ltd (GSEL).

At the same time, the agency upgraded to BB-(ind) from B+(ind) the rating on the company's INR3.043bn (USD68m/EUR51.1m) loans and assigned a BB-(ind) rating to its INR512m cash credit limit.

The revision takes into account the successful completion of GSEL's integrated cane processing plant, which comprises a sugar plant, a distillery unit and a co-generation facility, the agency said. The move is also grounded on Fitch's projection of an improvement in GSEL's financial and credit profiles in 2011 on the back of the positive cash flows from the sugar, co-generation and distillery plants, the agency said.

These strengths are constrained by GSEL's lack of experience in the sugar industry, its modest scale of operations and revenue dependency on sugar, which makes its financial and credit metrics susceptible to the sector's volatility, the analysts noted

The ratings could be affected by lower-than-anticipated revenues and margins, as well as by a debt/EBITDA of more than 5x on a sustained basis.

On the other hand, a sustained improvement in the company's financial profile would be considered a positive rating driver.

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Publication:M2 EquityBites (EQB)
Date:Jan 3, 2011
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