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03. December 2008

India - Fitch downgrades Hinduja Foundries’ debt scheme

NEW DELHI: Global rating agency Fitch on Wednesday downgraded rating of Rs 20-crore debt programme of Hinduja Foundries Ltd (HFL), an iron and aluminium casting manufacturer, due to slowdown in the auto industry.

The agency revised down the company's national short-term rating of its commercial paper programme to F2 from F1 and simultaneously withdrew the rating. “The downgrade reflects the impact of the auto industry slowdown on HFL's revenues and cash flows and the likely impact that HFL's current Rs 300 crore capex plan will have on its financial leverage,'' Fitch said in a release.

It said that there is no outstanding instrument under the ratings and it will no longer provide analytical coverage on HFL. It further said that the slowdown in the auto industry in FY'09 is likely to lead to low capacity utilisation for HFL, further im pacting its profitability and cash flows.

HFL is part of the Hinduja Group and has been in the casting business for over four decades. The company manufactures iron and aluminium casting catering mainly to the automotive segment.

HFL's major customer is Ashok Leyland, sales of whom contributed about 50 per cent in FY'08, resulting in concentration risk, Fitch said.

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