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Fitch keeps Indian Hi-Tech Gears at A-(ind).

BANKING AND CREDIT NEWS-29 January 2010-Fitch keeps Indian Hi-Tech Gears at A-(ind)(C)1994-2010 M2 COMMUNICATIONS

29 January 2010 - Fitch confirmed Friday the national long-term A-(ind) rating with a "stable" outlook of Indian gears and transmission components maker Hi-Tech Gears Ltd (BOM:522073), or HGL.

At the same time, the agency upheld the A-(ind) rating of the company's long-term INR386.8m (USD8.4m/EUR6m) loans and the A-(ind)'/'F1(ind) ratings on its IRN360m fund-based working capital limits and INR25m non fund-based working capital limits.

The ratings incorporate HGL's track record of profitability and revenue growth and its long established relations with its clients, in particular Hero Honda Motors Limited (BOM:500182), or HHML.

The ratings also factor in the company's sound business association with Getrag Corporation, which sells its products worldwide, as well as HGL's stable EBIDTA margins and consistent revenue growth, even during the slowdown in fiscal 2009.

These strengths are however constrained by the relatively small size of the company's operations and high degree of customer concentration.

Nevertheless, it has consistently been diversifying its customer base, although HGL gets the bulk of its revenues from HHML, and as a result the ratings are positively impacted by the significant reduction in the company's exposure to HHML.

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Publication:M2 Banking & Credit News (BCN)
Date:Jan 29, 2010
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