Lafarge put under rating watch

Lafarge put under rating watch
ENS ECONOMIC BUREAU

MUMBAI, JAN 10: Rating agency Crisil has put Lafarge India Ltd's (LIL) non-covertible debenture issues "under watch with negative implications" following a takeover bid by its parent to acquire Blue Circle plc.

LIL derives significant support, both operational and financial, from its parent Lafarge SA and deterioration in in the latter's credit profile could therefore impact rating of Indian subsidiary, Crisil said in a statement here today.

Following Lafarge's friendly bid to acquire Blue Circle Plc, another cement company in Europe, global rating firm S&P had similarly placed its long term capital credit rating of `A-' on "watch with negative implications", it added.

LIL's two NCD issues of Rs 250 crore and Rs 40 crore carry a rating of `AA+' based on support from Lafarge SA.

It is learnt that if the parent firm in France succeeds in acquiring Blue Circle, the Indian subsidiary may not get enough funds for its activities. It may be recalled that Lafarge had acquired the cement division of Raymond. It also acquired the cement division of Tata Steel.

Meanwhile, financial institutions are unhappy over the practice of multinational companies to raise funds from the Indian market to fund their takeovers in India. "MNCs should bring funds from abroad to finance their takeovers in India. Why should MNCs be allowed to raise funds from India and take over Indian companies?" said an official of a leading institution.