Fitch affirms Indian Oiltanking

Fitch Ratings said it affirmed Indian Oiltanking Ltd.'s F1+(ind) short-term debt and commercial paper rating following an increase of the program size to Rs. 300 million from Rs. 200 million.

The enhanced amount is driven by the benefits of size accruing from the company's construction and engineering business, which has a track-record of successful implementation, and the company's relatively steady cash flows from its terminal business, the agency said.

The rating continues to draw significant strength from the company's strong parentage - Indian Oil Corp. Ltd. and Oiltanking GmbH Germany - and the associated benefits of technical expertise, preference in bids and timely equity infusion, Fitch said. In 2005, the company drew around 35% of its terminal revenues and 50% of its construction and engineering revenue from Indian Oiltanking.

The agency said rating concerns emanate from the increase in raw materials prices and aggressive bidding on new projects on account of the relatively smaller size of the company's construction and engineering operations compared to its competitors, which place pressure on the profit margins of the company's construction business.

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