Treasury Today Country Profiles in association with Citi

Mahindra & Mahindra

Mahindra & Mahindra, Highly Commended, Judges’ Choice

Nikhil Sohoni, Mahindra & Mahindra and Aman Singh Chadha, Citi

This submission relates to Mahindra Group’s debut rating and emphasises the importance of planning, preparation and presentation. It also reinforces the cross-functional team aspect of the process with participation from the business, strategy and accountancy teams. The ratings obtained from Standard & Poor’s and Moody’s are testament to the approach they took.

Photo of Nikhil Sohoni, Mahindra & Mahindra and Aman Singh Chadha, Citi.

Nikhil Sohoni

Senior Vice President

Mahindra & Mahindra Limited (M&M) is a US$17.8bn Indian Federation headquartered in Mumbai, Maharashtra, India, with a presence in more than 100 countries and employing over 200,000 people. Their operations span 20 key industries that form the foundation of every modern economy.

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The challenge

Mahindra Group has experienced exponential growth over the past few decades. The Group top line has grown six times and the number of group companies has doubled in the last decade. The group now aspires to be one amongst the top 50 most admired global brands.

As Nikhil Sohoni, Senior Vice President explains, “Recognition of the brand ‘Mahindra’ in the international finance community is a step in tune with our group aspirations.”

The solution

This was the debut international rating for the Mahindra Group and therefore understanding the methodology and process was a key imperative.

Considering the business diversity of the group they had to deploy all the best practices for this type of mammoth exercise. The cross-functional team with participation from the business, strategy and accounting was formed. The team evaluated the rating methodology adopted by the international rating agencies, understood the underlying drivers and linked it to the groups’ businesses.

The process also involved evaluating ratings of other industries and peers which could be helpful to demonstrate the group strength. The unique federated structure of the group was explained to the rating agencies, which helped to minimise the business risk whilst at the same time underlining financial flexibility. M&M’s large domestic dependence and small size compared to its global peers, posed challenges to the team. However, innovative showcasing of business leadership in domestic markets, along with healthy financial metrics, helped mitigate these risks. Thus M&M deployed the three P’s best practice of plan, prepare and present, which helped them to achieve ratings which are today on par with sovereign ratings from both the leading rating agencies. Mahindra group was assigned BBB- and Baa3 by Standard & Poor’s and Moody’s respectively.

Best practice and innovation

This was the debut international rating for Mahindra Group, and they were assigned investment grade (coincidently, even the sovereign rating is at the same level) by both reputed international credit rating agencies.

Sohoni comments, “The investment grade rating places us on par with selected companies in India and is also the rating enjoyed by the Sovereign eg India. The treasury team worked meticulously on the methodology and gathered the required data to demonstrate  the federated group profile. Citi guided us through the process and enhanced our level of preparedness by practicing a shadow rating exercise.

Business diversification and financial flexibility were the most important elements and contributed to achieving the sovereign rating. Thus, a deep understanding and detailed preparation and elaborate presentation on the strengths of the group, helped the treasury team to achieve the desired result of investment grade rating.”

M&M has already been assigned the highest credit rating of AAA by all four leading domestic credit rating agencies, CRISIL, India Ratings, ICRA and CARE. The investment grade rating assigned by International Credit Rating Agencies further reposes the faith on the credit profile of the company.

Anand Mahindra, Chairman, Mahindra Group, said that rating is an important event in M&M’s 70-year history. Investment grade ratings from S&P and Moody’s demonstrates a unanimous vote of confidence in M&M’s diversified business model, stellar credit profile and high standards of corporate governance practices. This certainly is a worthy milestone in M&M group’s global aspirations.

Key benefits

  • An enabler, to approach international debt market and global investor base.

  • Provides further assurance to M&M stakeholders and investors.

  • Enhances M&M prestige in international capital markets.

  • Validates management vision of a clear path of excellence.

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