Fitch Ratings has affirmed India's Rungta Mines Limited's National Long-Term rating at 'AA(ind)' with a Stable Outlook. The agency has also affirmed the ratings on RML's bank loans, as follows:

1. INR 795.3 million long term loans (enhanced from INR 489.5 million) - 'AA(ind)'

2. INR 5.54 billion fund based loans (enhanced from INR 4.69 billion) - 'F1+(ind)'

3. INR 1 billion non fund based loans - 'F1+(ind)

The affirmations reflect RML's strong financial profile, its market position as one of India's leading private-sector iron ore and manganese ore mining company and its existing proved reserves of around 70MT. RML's revenue is likely to improve in FY11 with the improvement in iron ore prices. In the nine months of the financial year ending March 2011. RML reported revenue of INR 21,950 million with significantly higher EBITDA margins mainly because of higher realizations from iron ores.

In FY10, RML continued the trend of reporting positive free cash flows which is likely to continue in FY11 even after the significant ongoing CAPEX program. The company is increasing its sponge iron capacity to 750,000 tonne per annum from the present 540,000 TPA and setting up a billet division of 400,000 tonne per annum, a TMT bar division of 400,000 TPA and new power capacity of 79 MW with total estimated capital outlay of INR 6.45 billion in the first phase, which is expected to be completed by FYE12. Fitch believes this CAPEX is unlikely to put any substantial pressure on RML's credit metrics because of significant cash reserves.

The ratings may be downgraded if there is any substantial debt-funded acquisitions/CAPEX and a deterioration in leverage, which could affect RML's key credit metrics. As India's mining industry is highly regulated, any regulatory or legal interventions could significantly impact RML.