Crisil Downgrades Kotak Mahindra Primus NCDs, FD

Mumbai, November 27: | Updated: Nov 28 2002, 05:30am hrs
The Credit Rating Information Services of India Ltd (Crisil) on Wednesday downgraded Kotak Mahindra Primus Ltds (KMPL) nine non-convertible debentures (NCD) aggregating Rs 213.40 crore and fixed deposit (FD) issue and removed them from watch with developing implications. The NCDs were downgraded to AA- from AA while the FD issue was scaled down to FAA from FAA+, Crisil said.

KMPLs ratings were placed on watch following its majority owner, KMFLs decision to convert itself into a bank.

KMPLs ratings derived support from its majority ownership by KMFL and the expectation of support from the parent in the event of any distress. Therefore, the impact of KMFLs conversion on KMPL was a key input in evaluating the latters credit risk profile.

The ratings also reflect the improvement in KMPLs profitability. KMPLs ability to maintain and enhance its market position and profitability in the face of intense competition in the car finance business continues to remain a key rating sensitivity, it added.

Meanwhile, Crisil has reaffirmed Kotak Mahindra Finance Ltds (KMFL) FD issue and short term debt programme and removed these from rating watch with developing implications. KMFLs ratings were placed on watch pending a detailed business plan for the conversion, Crisil said.

Referring to KMFL, Crisil said that KMFLs conversion into a bank would provide comfort to its existing fixed deposit holders.

KMFLs overall credit risk profile was, however, negatively affected by the uncertainties associated with the successful implementation of its business plan.