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CRISIL gives A/P1 to Megha Technical's bank facilities.

BANKING AND CREDIT NEWS-3 February 2010-CRISIL gives A/P1 to Megha Technical's bank facilities(C)1994-2010 M2 COMMUNICATIONS

3 February 2010 - Indian credit rating agency CRISIL gave A with a "stable" outlook and P1 to various bank facilities of local cement maker Megha Technical & Engineers Pvt Ltd.

As part of this rating exercise, CRISIL has combined the business and financial profiles of Megha Technical, its owner, Cement Manufacturing Company Ltd, and Star Cement Meghalaya Ltd, also a subsidiary of Cement Manufacturing. This is because all companies (together referred to as the CMCL group) have a common management and inter-company transactions.

The ratings reflect the established market position of Megha Technical's Star Cement brand in northeastern India, the benefits that the company derives from the strong demand for cement and the fiscal incentives offered to players in northeastern India, and its healthy financial risk profile. These strengths are partially offset by the company's exposure to risks relating to cyclicality in the cement industry and to project implementation.

CRISIL believes that the CMCL group will maintain a stable credit risk profile despite large capital expenditure (capex) plans for the medium-term, because of high net cash accruals. The agency may revise the outlook to "positive" if the group diversifies its operations. Conversely, it may revise it to "negative" if the group undertakes a larger-than-expected, debt-funded capex programme.

Cement Manufacturing is a subsidiary of Indian wood products maker Century Plyboard (I) Ltd (BOM:532548).

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Publication:M2 Banking & Credit News (BCN)
Date:Feb 3, 2010
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