Crisil reaffirms ratings on Hero group companies

Rating agency Crisil has reaffirmed all the ratings on the Hero group entities following the arrangement finalised by members of the Munjal family.

“Crisil has completed its assessment of the ratings on entities in the Hero group and reaffirmed all the ratings. The reaffirmation factors in the contours of the family arrangement, the performance of each group entity, its business and growth strategies, and management structure,” said a statement from the rating agency.

Crisil believes that despite the family arrangement, the business profiles of the rated entities remain unchanged. Despite being managed by different family groups, all four rated automobile component companies — Rockman Industries Ltd, Munjal Showa Ltd, Highway Industries Ltd and Sunbeam Auto — will remain dependent on Hero Honda Motors for business growth.

The managements of the various factions have assured Crisil that the commercial arrangements between the groups will continue unchanged. Any change in this stance by any of the four family factions will remain a key rating sensitivity, the statement said.

Hero Honda, the flagship company of the group, has been given a rating of AAA/Stable by Crisil for its Rs 125-crore cash credit limit, Rs 15-crore non-convertible debenture programme and fixed deposit programme.

Ratings on the debt programmes and bank facilities of Hero Honda Motors Ltd continue to reflect its strong business risk profile, marked by leadership in the motorcycles market in India and robust financial risk profile, supported by large networth, negligible debt and liquid surpluses, it said.