ICRA has upgraded the rating outstanding on the Rs. 45.0 crore fund based facilities (enhanced from Rs. 25.0 crore) and Rs. 31.8 crore term loan facilities (enhanced from Rs. 11.8 crore) of Automotive Axles Limited (“AAL” / “the Company”) from LA (pronounced L A) to LA+ (pronounced L A plus). The outlook on the long term rating is Stable. The rating upgrade takes into account higher than anticipated improvement in the Company's operational performance backed by the strong growth in demand from the Medium & Heavy Commercial Vehicle (M&HCV) industry during the past 12 months. The macro-economic recovery leading to pick-up in industrial activity, increased demand for the freight and improved demand from the end-user segments, resulted in an up-tick for the CV industry in 2009-10. The rating also takes into account AAL's parentage, strong technology support from global automotive axles major-Meritor International, AAL's established customer profile including all major OEMs and its wide product portfolio catering to CVs, tractors-trailers and military vehicles. The Company also has strong financial profile characterised by low gearing and healthy return indicators. Going forward, ICRA expects that, supported by its healthy accruals, AAL will be able to maintain its comfortable capital structure despite the increase in debt levels towards higher working capital requirements and capital expenditure. The rating is however constrained by AAL's high client concentration on Ashok Leyland Limited (ALL) and its high dependence on the cyclical M&HCV industry; though the risk is mitigated to an extent by the Company's recent foray into non-automotive off-highway project.