TEXT-Fitch rates Caterpillar India Private Ltd's bank loan fac

(The following statement was released by the rating agency)

Sept 5 - Fitch Ratings has today assigned a National Issuer
rating of 'AAA(ind)' to Caterpillar India Private Limited (CIPL).
At the same time, Fitch has also assigned a rating of 'AAA(ind)'
to the company's long-term bank loan limit aggregating INR300m,
and ratings of 'AAA(ind)'/'F1+(ind)' to its INR3830m cash credit
limits interchangeable with non-fund-based limits. All the debt,
including both long-and short-term, is unconditionally guaranteed
by Caterpillar Inc. for punctual payment of all the obligations.
The Outlook is Stable.

CIPL is an ultimately wholly-owned subsidiary of Caterpillar
Inc. ('A+'/Stable/'F1') and its ratings primarily reflect the
strong demonstrated support from the legal, operational and
strategic linkages with its parent. Most of the major functions
of CIPL including treasury, procurement and marketing have a
direct HKGline to Caterpillar Inc.'s global or regional offices.

CIPL concentrates mainly on final assembly and related
operations, with the engineering design centre providing back
office support to the global design activity and the Asia Pacific
shared services centre providing services such as legal entity
accounting and management of payables and orders for the Asia
Pacific region.

In addition, Fitch notes that Caterpillar Inc. is
increasingly focusing on new markets such as India for growth
opportunities, which is positive. The agency learns that
Caterpilllar Inc. is currently looking to build a manufacturing
hub for trucks in India which will serve the Asia Pacific region
as well as the domestic market at a total cost of around USD200m
over the next four years - a move that Fitch believes underscores
the company's commitment to CIPL. Nevertheless, with CIPL's
ratings being solely derived from the outstanding ratings of its
parent, any major deterioration in the credit profile of
Caterpillar Inc. (beyond two notches) or material weakening of
the linkages between the two could act as a negative rating
trigger.

The company derives strength from its diversified customer
base catering to mining, construction, infrastructure and
manufacturing sectors, which have strong long-term growth
prospects. Demand is also supported by the growth in investments
in the Indian mining and construction sectors over the long term.

Fitch notes that with relatively lower margins, volatile raw
material prices and rising dependence on imported raw materials,
amid a price sensitive market with limited ability to pass on the
raw material price movements, CIPL can face margin pressures with
an already leveraged balance sheet. However, the agency expects
that with CIPL's plan to launch new products with an increasing
focus on trucks, its margins will improve in the medium term.

CIPL has a machines division in Thiruvallur which
manufactures trucks and earth moving equipments, an engines
division that manufactures generator sets and diesel engines near
Hosur and an engineering design centre in Chennai and Asia
Pacific Shared service centre in Bangalore.

In FY08, the revenues increased 16.6% yoy to INR15098m while
the EBITDA margins increased to 5% from 4.6% in FY07. The Net
Debt/EBITDA also increased to 5.6x from 5.1x in FY07 due to an
increase in debt levels to INR4430m from INR3185m in FY07.
Meanwhile, CIPL's free cash flow was a negative INR1781m compared
to INR770m in FY07 owing to capex and higher working capital
requirements.