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CRISIL Ratings - Rating Action :L&T Case Equipment Pvt Limited

September 02, 2008
Mumbai

CRISIL ‘AA-’ and ‘P1+’ for L&T CASE EQUIPMENT’s bank facilities

Rs.300 Million Term Loan Facilities	AA-/Stable(Assigned)
Rs.150 Million Cash Credit Facilities	AA-/Stable(Assigned)
Rs.650 Million Working Capital Demand Loan Facilities	AA-/Stable(Assigned)
Rs.300 Million Bill Discounting Facilities	P1+(Assigned)
Rs.200 Million Letter of Credit	P1+(Assigned)
Rs.150 Million Bank Guarantee	P1+(Assigned)

CRISIL has assigned its bank loan ratings of ‘AA-/Stable/P1+’ to the various bank facilities of L&T Case Equipment Pvt Ltd (LCEPL). The ratings reflect the sustained growth in LCEPL’s revenue, the company’s strong market position in vibratory-compactors, support received from parent Larsen & Toubro Ltd (L&T) and technology joint venture (JV) partner CNH Global NV, and an improved financial profile. These rating strengths are partially offset by LCEPL’s presence in a highly competitive industry, susceptibility of its operating margins to fluctuation in input price (primarily steel), and strong correlation of growth in the industry to investment in infrastructure in the country.

Outlook: Stable
CRISIL believes that LCEPL will be able to sustain its current operating performance, which, in turn, will reflect in an improved financial profile and operating margins. The outlook may be revised to ‘Positive’ in case of a significant and sustained improvement in the company’s financial profile. Conversely, it may be revised to ‘Negative’ if the company plans more-than-expected debt-funded capital expenditure or if its debt protection measures worsen considerably.

About the Company
L&T started its Pithampur (Madhya Pradesh) unit in 1989 in technical collaboration with J. I. Case Company, US, for manufacturing loader backhoes. In 1999, the unit was converted into an equal JV with CNH Global NV, US (CNH; a merged company of Case Corporation and New Holland) and named LCEPL. CNH is among the world leaders in the agricultural and construction equipment businesses. At present, the Pithampur unit manufactures wheeled-tractor loader backhoes, and vibratory compactors, which are extensively used in the construction industry. The company is adding to its manufacturing capacity, so as to meet the expected increase in demand for its products.

For the year ended March 31, 2008, LCEPL reported a net profit of Rs.0.36 billion on net sales of Rs.4.6 billion, as against a net profit of Rs.0.15 billion on net sales of Rs.3.2 billion in the preceding financial year.

Media Contact	Analytical Contacts	CRISIL Rating Desk
Ramya Krishnan Anil Head, Market Development & Communications CRISIL Phone: +91-22-6758-8051 Mobile: +91 98203 42671 Facsimile: +91-22-6758-8088 Email: RamyaKA@crisil.com	Pawan Agrawal Director, Corporate and Government Ratings – CRISIL Ratings Tel: +91-22-6691 3301 Email: pagrawal@crisil.com Amod Khanorkar Head, Corporate and Goverment Ratings - CRISIL Ratings Tel: +91-22-6691 3068 Email: akhanorkar@crisil.com

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September 02, 2008	http://www.crisil.com