Fitch affirms ACC rating, India

Fitch Ratings has affirmed India-based ACC’s National Long-Term rating at 'Fitch AAA(ind)'. The outlook is Stable.

The affirmation reflects ACC's pan-India presence with around 10% market share in 2010 and a relatively stronger credit profile compared with other cement manufacturers. The ratings factor in support from the parent - Holcim ('BBB'/Stable) - and the strong integration between Holcim and ACC, given the parent's majority ownership in ACC and management control. The ratings are also supported by ACC's solid capital structure and the absence of any major capex plans.

Fitch expects that continuous increase in input costs in the domestic and international markets coupled with muted demand will further put pressure on margins in 2012.

However, the impact on ACC's cash flows is likely to be limited considering its pan-India presence and limited capex. Also, Fitch expects the company's credit profile to remain strong driven by the strength of its balance sheet indicated by negative net financial leverage at end-December 2010 and end-June 2011.

ACC has recently said it is looking to increase exports to India in the wake of the fall in the value of the Indian rupee over the past six months. ACC has indicated that it is primarily seeking to boost exports to the Maldives, Mauritius and Bangladesh.