Associates India's NCD gets AAA

THE CREDIT Rating Information Services of India (Crisil) has assigned AAA (triple A) rating to the Rs. 75 crore non- convertible debenture programme of Associates India Financial Services (AIFSL). The AAA ratings assigned to the Rs. 100 crore non-convertible debenture programme and Rs. 25 crore non- convertible debenture programme, the P1 plus rating assigned to the Rs. 250 crore short term debt programme and the AAA (FSO) (Triple A foreign structured obligation) rating assigned to Rs. 50 crore non-convertible debentures programme have been reaffirmed by the rating agency.

The rating factors in the strong parentage of the company and the support extended to it by its promoter, Associates First Capital Corp. (AFCC), of the U.S., which was acquired by Citigroup Inc. in November 2000. The rating also reflects the improving market position of AIFSL in the financing of cars and construction equipment, improved capital adequacy position on account of capital infusion in January 2001 and low cost of resources, though the delinquency levels in the consumer durable and the two-wheeler segments are relatively high since the company believes in aggressively acquiring the customer to build its database.

AIFSL, which started operations in India in October 1997, is now engaged in financing of cars, construction equipment, two- wheelers and consumer durables. In addition, it does portfolio buyouts, loans against house property and personal loans. The company had total outstanding assets of Rs. 1,020 crores as on April 30, 2001.

ITI

The AAA (SO) (triple A structured obligation) rating assigned to the Rs. 150 crore bond programme and the Rs. 50 crore bond programme of ITI have been reaffirmed.

The ratings are solely based on the unconditional and irrevocable guarantee extended by the Union Government for servicing all interest payment and principal repayment obligations on the rated debt. The rating also factors in the strength of the credit enhancement mechanism, whereby, prior to the due date of the payment, ITI would satisfy the trustees to the bondholders that adequate funds are available in the designated account for meeting the interest/ principal repayment obligations on the due date of payment. In the absence of the same, the trustees to the issue will draw down on the guarantee so as to obtain the funds by the due date in order to ensure full and timely payment to the debentureholders.

ITI is a Bangalore based public sector enterprise with multi- locational manufacturing facilities for a wide range of telecom equipment, mainly for the domestic market.

Presently, a major proportion of ITI's revenues are derived from the sale of switching and transmission equipment, primarily to Bharat Sanchar Nigam (the erstwhile Department of Telecommunications - DoT), which is its main customer. For the year ended March 31, 2000, ITI recorded an operating income of Rs. 1,913 crores with a profit after tax of Rs. 45.79 crores.

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