Crisil downgrades M&M

Crisil downgrades M&M
ENS ECONOMIC BUREAU

Mumbai, Mar 14: Credit Rating Information Services of India Ltd (Crisil) has downgraded four non-convertible debenture (NCD) issues of Mahindra & Mahindra Ltd (M&M) from `AAA' to `AA+' indicating high safety.

The rating agency has downgraded the ratings for NCD programme of Rs 300 crore, Rs 120 crore and two issues of Rs 100 crore each, Crisil said in a release here today.

The rating revision for M&M's was on account of increased business side risks in both the tractor and utility vehicle (uv) businesses due to heightened competitive pressures arising out of volume contraction in the overall tractor industry and rural segment of MUV sector, Crisil said.

These pressures have manifested themselves in a decline in the M&M's operating profits and profitability and are likely to continue over the short to medium term. Crisil said the ratings also factor in the advantages arising out of M&M'S Continuing market leadership in both MUV and tractor businesses and its strategies to mitigate the effects of ongoing market pressures, the benefits of operational synergies across both these businessess, the company's comfortable gearing levels and its efforts to establish its new product development skills.

Crisil said the rating assumes a consolidation of M&M's present business without any significant capital expenditure plans beyond the programme that was presently under execution. Meanwhile, the rating of the Rs 100 crore CP of M&M was reaffirmed at `P1+' indicating highest safety, it said.

Crisil also downgraded two NCD issues (Rs 15 crore and Rs 12.75 crore) and Rs 15 crore commerical paper (CP) programme of Thirumalai Chemicals Ltd (TCL).