Hero Honda Motors Ltd

• Commercial paper programme - Rs. 16 crore Rating : P1+
• Fixed deposit programme Rating : FAAA (reaffirmed)
• Non convertible debenture - Rs. 15 crore Rating : AAA

A ‘AAA’ (pronounced triple A) rating has been assigned to the proposed Non Convertible Debenture issue of Hero Honda Motors Limited (HHML). A ‘P1+’ (pronounced P one plus) rating has been assigned to the company’s commercial paper programme. The ‘FAAA’ (pronounced F triple A) rating assigned to the company’s Fixed Deposit programme has been reaffirmed.

The above ratings are based on the company’s strong financial position characterised by conservative gearing levels (as measured by Total Debt/Networth) and favourable interest cover (as measured by PBDIT/Interest and Finance charges), its increasing market share in the growing motorcycle market and its access to product technology from Honda Motor Company (HMC), over the short to medium term. The ratings also factor in the long term effects on HHML of HMCs decision to set up a 100% subsidiary for 2 wheeler manufacture in India and the increased competition in the 4 stroke Indo Japanese motorcycle market.

HHML is engaged in the manufacture and sale of motorcycles. It reported a PAT of Rs. 1.21 billion on net sales of Rs. 15.29 billion in 1998-99.