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The ratings assigned to the Non
Convertible Debenture issues of Mahindra & Mahindra Limited (M&M) has been
upgraded to AAA (pronounced triple A) from AA+ (pronounced double A plus). The
rating assigned to the commercial paper programme has been reaffirmed at P1+ (pronounced P
one plus) (Enhanced from Rs.1500 mn).
The rating revision is on account of the
improvement in the company’s financial risk profile subsequent to the conversion of
the company’s foreign currency convertible bonds, consistently strong market position
in the utility vehicle and tractor businesses, and the beneficial effects of the business
process reengineering exercise on the company’s cost structure. The rating also takes
into account the sluggish volume growth seen in both the tractor and utility vehicle
market over the last 18 months, the increasing competitive pressures seen in the tractor
business and the company’s ongoing efforts to establish its new product development
skills. The rating assumes a consolidation of the company’s present business without
any significant capital expenditure plans beyond the programme that is presently under
execution.
M&M is the largest multi utility
vehicle (MUV) and tractor manufacturer in India and is also engaged in the manufacture and
sale of light commercial vehicles. The company registered a turnover of Rs. 402.51 billion
and achieved a PAT of Rs. 22.86 billion in 1998-99.
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