Mumbai: Fitch Ratings, the international rating agency, has assigned a national rating of 'F1(ind)' to the proposed issue of INR150mn commercial paper programme by Gabriel India Limited (GIL).

According to the agency, the rating reflects GIL's consistent improvements in the financial and operating profile characterised by increasing volumes, significant reduction in debt on account of increasing cash accruals and efficient working capital management leading to significant improvements in the debt protection measures.

The rating factors GIL's market position in the technology-oriented ride control products industry, its tier-1 status and established relationships with domestic original equipment manufacturers (OEMs) in passenger cars and two-wheeler segments and access to technology through technical tie-ups with global leaders in ride control products.

The company derives over 50 per cent of its total sales from three auto majors, viz., TVS Motors Limited, Bajaj Auto Limited and Tata Motors Limited.

The operating income for the year ended 31 March 2004 stood at Rs3.68bn (Rs3.29bn during the corresponding period last year). The company experienced declining EBIDTA margins during the period 2000-2004 (13.53 per cent during FY04 against 16.31 per cent during FY00). This is primarily due to its inability to pass on increased raw material costs to domestic automobile companies from whom it derives a major portion of its revenues (82 per cent of net sales during FY04).

Debt / Equity has improved to 0.96 in FY04 from 1.74 in FY00, while Debt / EBDITA improved to 4.39 in FY00 to 2.08 in FY04. Improvement in net margins in FY04 due to lower interest costs and higher non-operating income resulted in interest coverage at 5.59 and cash flow from operations as a percentage of debt at 20.9 per cent for the year ended FY04.

Gabriel India Limited (GIL) is a leading manufacturer of ride control products in India. The Company manufactures shock absorbers, struts, front forks and engine bearings at its facilities spread over nine locations across the country.

For the year ended 31 March 2004, GIL registered revenues of INR3,682m on which it recorded a net profit of INR168m. For the first quarter ended 30 June 2004, GIL recorded net sales of INR874m on which it recorded a net profit of INR23m.