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CRISIL Accredited Mahindra's Performance
Normally AA credit is awarded for high degree safety in financial terms. Meanwhile, Mahindra has secured P1+ for its short-term facilities and commercial paper schemes. P1+ stands for credibility of repayment of any borrowings as Mahindra is in possession of Rs50 crore long-term working capital demand loans in addition to short term commercial paper scheme and other bank guarantee for Rs1000 crore. Mahindra gets this status after it converted the bonds to equity shares last month relieving from risk profile in capital structure.
CRISIL views Mahindra's financial stability on long term amidst its debt -funded projects like Ssangyong acquisition. Mahindra has improved its operating performance too in the last fiscal and continued the stint till 2H of 2010-11. Cash accrual too remain stable in medium term though M&M has to face a fall in its operating margins caused by rise in material cost. M&M had just succeeded in closing the bid for acquisition of a major stake in Ssangyong- 70%. CRISIL commented that the rating indicates Mshindra's continued leadership in the industry by delivering all sorts of vehicles. M&M is able to balance the market value with its financial stability. For the first six months of this fiscal, M&M has secured a double-digit growth in the domestic market and UV segment. M&M could retain its operating margin at 15.8% though the price of raw material had been on the rise.
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