March 17, 2015
Mumbai
Larsen and Toubro Infotech Limited
 
Ratings Reaffirmed
 
Total Bank Loan Facilities Rated Rs.7000 Million
Long Term Rating CRISIL AA+/Stable (Reaffirmed)
Short Term Rating CRISIL A1+ (Reaffirmed)
(Refer to Annexure 1 for Facility-wise details)

CRISIL's ratings on the bank facilities of Larsen and Toubro Infotech Ltd (L&T Infotech) continue to reflect L&T Infotech's established market position in the banking, financial services, insurance, and manufacturing segments. The ratings also factor in the company's strong financial risk profile, marked by low gearing, strong debt protection metrics, and healthy liquidity, and the benefits that it derives from the positive long-term prospects for the information technology (IT) services industry in India. Additionally, the ratings reflect the support that L&T Infotech receives from its parent, Larsen & Toubro Ltd (L&T; rated 'CRISIL AAA/FAAA/Stable/CRISIL A1+'), and the strength of the L&T brand. These rating strengths are partially offset by customer and geographic concentration in L&T Infotech's revenue profile, and the company's exposure to risks related to intense competition in the IT industry in India.

Outlook: Stable

CRISIL believes that L&T Infotech will maintain a healthy business risk profile over the medium term, supported by steady revenue growth and stable operating efficiencies. Additionally, the company's financial risk profile is expected to remain strong over this period, with healthy cash accruals and the absence of any debt-funded capital expenditure (capex) plans. The outlook may be revised to 'Positive' if L&T Infotech strengthens its business risk profile, driven by an improvement in scale of operations, coupled with increasing revenue diversity, and higher-than-expected operating profitability, while it maintains its financial risk profile. Conversely, the outlook may be revised to 'Negative' in case of low revenue growth or profitability, or sizeable debt-funded capex, leading to weakening of the company's debt protection metrics. Any reduction of support from L&T may also result in a 'Negative' outlook.

About the Company

L&T Infotech, headquartered in Mumbai, was incorporated on December 23, 1996; the company is a wholly owned subsidiary of L&T. L&T Infotech provides IT services, including application, development, and maintenance. It also offers software package implementation, embedded system and software, enterprise resource planning (SAP, Oracle, JD Edwards, and Peoplesoft), infrastructure management, and software-testing services. In January, 2014, L&T Infotech transferred their product engineering services (PES) division to a group company, L&T Technology Services Ltd (rated 'CRISIL AA+/Stable/CRISIL A1+').
 
L&T Infotech has offshore delivery centres in Mumbai, Pune (Maharashtra), Bengaluru, Chennai, and Hyderabad; global development centres in the US, Canada, Europe, South Africa, the Middle East and Singapore; and business development offices in Australia, Japan and Korea. The company has ISO 9001:2008 and People Capability Maturity Model Level 5 certifications.
 
For 2013-14 (refers to financial year, April 1 to March 31), L&T Infotech, on a consolidated basis, reported a profit after tax (PAT) of Rs.10 billion (Rs.5.6 billion for 2012-13) on an operating income of Rs.49.2 billion (Rs.38.5 billion). In 2013-14, PAT includes Rs.3.5 billion from profit on sale of the PES division.

Annexure 1 - Details of various bank facilities
Current facilities Previous facilities
Facility Amount (Rs.Million) Rating Facility Amount (Rs.Million) Rating
Bank Guarantee 1130 CRISIL A1+ Bank Guarantee 1130 CRISIL A1+
Cash Credit^ 200 CRISIL AA+/Stable Cash Credit^ 200 CRISIL AA+/Stable
Packing Credit 4260 CRISIL A1+ Packing Credit 4260 CRISIL A1+
Proposed Bank Guarantee 370 CRISIL A1+ Proposed Bank Guarantee 370 CRISIL A1+
Proposed Cash Credit Limit^ 300 CRISIL AA+/Stable Proposed Cash Credit Limit^ 300 CRISIL AA+/Stable
Proposed Packing Credit 740 CRISIL A1+ Proposed Packing Credit 740 CRISIL A1+
Total 7000 -- Total 7000 --
^Interchangeable with working capital demand loan
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About CRISIL Ratings
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March 17, 2015

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