AA plus rating for M & M Fin. Services

AA plus (double A plus) rating has been assigned to the Rs. 75 crore proposed non-convertible debenture programme of Mahindra and Mahindra Financial Services (MMFSL). The rating of MMFSL's fixed deposit programme has been retained at FAA plus (F double A plus). The P1 plus (P one plus) rating assigned to the company's Rs. 50 crore short-term debenture programme has been reaffirmed. The P1 plus rating assigned to the Rs. 60 crore (enhanced from Rs. 25 crore) commercial paper programme has also been reaffirmed.

The ratings assigned reflect the advantages enjoyed by MMFSL on account of it being a subsidiary of Mahindra and Mahindra (M&M) and its increasing strategic importance to M&M due to its ability to provide financial services to M&M's dealers and retail customers. The rating takes into account the increased shareholding of M&M (96 per cent) through regular equity infusion in MMFSL, and the backup agreement with M&M for support in case of abnormal future losses incurred by MMFSL. These factors significantly offset the company's moderate profitability levels and its relatively unseasoned utility vehicle portfolio arising from a significant growth in disbursements over the past three years.

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Section  : Business
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