June 19, 2015
Mumbai
Ambadi Investments Private Limited
 
Rating Reaffirmed
 
 
Rs.250 Million Non Convertible Debentures CRISIL AA/Stable (Withdrawal)
Rs.170 Million Commercial Paper CRISIL A1+(Reaffirmed)

CRISIL has reaffirmed its rating on commercial paper programme of Ambadi Investments Pvt Ltd (AIPL) at 'CRISIL A1+' while withdrawing its ratings on Rs. 250 million non-convertible debentures (NCDs), as there is no amount outstanding.

CRISIL's rating on debt programme of AIPL continues to reflect AIPL's healthy financial flexibility, derived from its direct and indirect equity stakes in key operating companies of the Murugappa group ' EID Parry (India) Ltd (EID; rated 'CRISIL AA-/Stable/CRISIL A1+'), Carborundum Universal Ltd (CUMI; 'CRISIL AA+/Stable/CRISIL A1+'), Tube Investments of India Ltd (TI; 'CRISIL AA/Stable/CRISIL A1+') and Cholamandalam Investment and Finance Company Ltd (CIFCO; 'CRISIL AA-/Positive/CRISIL A1+'). The rating is also underpinned by the steady dividend inflows from the Murugappa group's key operating companies to AIPL, and the group's strong reputation. These rating strengths are partially offset by AIPL's exposure to market-related risks and its average financial risk profile.
 
CRISIL has followed the holding company approach for analysing the credit risk profile of AIPL. For arriving at the rating, CRISIL has combined the business and financial risk profiles of AIPL and its key subsidiary, Murugappa Holdings Ltd (MHL; 'CRISIL AA/Stable/CRISIL A1+'), AIPL owns 77.82 per cent of the equity shares of MHL, which is the largest shareholder in the key operating companies of the Murugappa group: EID, CUMI, and TI. Both AIPL and MHL primarily operate as investment vehicles for the group's operating companies.

AIPL's healthy financial flexibility stems from the market value of its investments in EID (5.30 per cent shareholding), TI (3.01 per cent), CUMI (1.66 per cent), and CIFCO (5.02 per cent). The company also has a 77.82 per cent equity stake in MHL, which is the majority stakeholder in EID (33.41 per cent shareholding), TI (34.23 per cent), and CUMI (29.46 per cent). The market value of AIPL's direct shareholding in the aforementioned companies amounted to Rs.8.1 billion, and the market value of investments through MHL to Rs.39.5 billion, as on June 16, 2015. This provides healthy cover for AIPL's rated debt programme. CRISIL believes that AIPL will maintain its shareholding in all these operating companies except for the sake of retirement of the rated debt.
 
AIPL is likely to receive steady dividend inflows from its direct shareholding in the Murugappa group's operating companies as well as from MHL. The dividend inflow is expected to be sufficient to meet its interest obligations and part of its principal payment obligations. The rating also factors in the diversification in AIPL's investment portfolio, the strong credit profiles of CIFCO, CUMI, EID, and TI, as well as the healthy reputation of the Murugappa group.
 
However, CRISIL believes that AIPL will remain susceptible to market-related risks, as the company's financial flexibility, in terms of cover available, will, to some extent, depend on prevailing market sentiments and the share prices of the key operating companies it has equity stakes in. Any increase in systemic risks, leading to a sharp fall in the share prices of CIFCO, CUMI, EID, and TI, will act as a key risk to the rating on AIPL's NCDs. Furthermore, AIPL has an average financial risk profile, and is largely dependent on dividend inflows from the key operating companies to service its debt.
 
CRISIL has noted SEBI's recent order where it is investigating into alleged insider trading charges levied against Mr. A Vellayan, promoter Director of the Murugappa group and three others. CRISIL understands that the SEBI order is interim in nature. CRISIL has also noted that Mr. A Vellayan has resigned from the Chairmanship of the Murugappa Corporate Board, EID Parry and CIL, until the matter is resolved, while he will continue to be a director on the board of these entities.

CRISIL believes that the current order of SEBI will not have any material impact on the credit quality of the CRISIL rated Murugappa Group companies including AIPL. This is because operations are not expected to be affected by the order and the financial risk profile will be unaffected. CRISIL will continue to monitor the developments in this regard and await the final order.

About the Company

AIPL (formerly, New Ambadi Estates Pvt Ltd) is the ultimate holding company for the Chennai-based Rs.243-billion Murugappa group. The group has a presence in diverse businesses such as engineering, abrasives, finance, general insurance, cycles, sugar, farm inputs, fertilisers, plantations, bio-products and nutraceuticals. AIPL is entirely owned by its promoter family.
 
For 2014-15 (refers to financial year, April 1 to March 31), AIPL reported a net profit of about Rs.87 million on a net income of about Rs.108 million, against a net profit of about Rs.275 million on a net income of about Rs.297 million for 2013-14.

Media Contacts
 Analytical Contacts
 Customer Service Helpdesk
Tanuja Abhinandan
Media Relations
CRISIL Limited
Phone: +91 22 3342 1818
Email:tanuja.abhinandan@crisil.com

Jyoti Parmar
Media Relations
CRISIL Limited
Phone: +91 22 3342 1835
E-mail: jyoti.parmar@crisil.com
Pawan Agrawal
Senior Director - CRISIL Ratings
Phone:+91 22 3342 3301
Email: pawan.agrawal@crisil.com

Manish Kumar Gupta
Director - CRISIL Ratings
Phone:+91 124 672 2000
Email: manish.gupta@crisil.com 		Timings: 10.00 am TO 7.00 pm
Toll free Number:1800 267 1301
Email: CRISILratingdesk@crisil.com

 

Note:
This rating rationale is transmitted to you for the sole purpose of dissemination through your newspaper / magazine / agency. The rating rationale may be used by you in full or in part without changing the meaning or context thereof but with due credit to CRISIL. However, CRISIL alone has the sole right of distribution of its rationales for consideration or otherwise through any media including websites, portals etc.

Crisil complexity levels are assigned to various types of financial instruments. The crisil complexity levels are available on www.crisil.com/complexity-levels.investors are advised to refer to the crisil complexity levels for instruments that they desire to invest in. Investors may also call the Customer Service Helpdesk with queries on specific instruments.


About CRISIL LIMITED
CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services. We are India's leading ratings agency. We are also the foremost provider of high-end research to the world's largest banks and leading corporations.

About CRISIL Ratings
CRISIL Ratings is India's leading rating agency. We pioneered the concept of credit rating in India in 1987. With a tradition of independence, analytical rigour and innovation, we have a leadership position. We have rated over 75,000 entities, by far the largest number in India. We are a full-service rating agency. We rate the entire range of debt instruments: bank loans, certificates of deposit, commercial paper, non-convertible debentures, bank hybrid capital instruments, asset-backed securities, mortgage-backed securities, perpetual bonds, and partial guarantees. CRISIL sets the standards in every aspect of the credit rating business. We have instituted several innovations in India including rating municipal bonds, partially guaranteed instruments and microfinance institutions. We pioneered a globally unique and affordable rating service for Small and Medium Enterprises (SMEs).This has significantly expanded the market for ratings and is improving SMEs' access to affordable finance. We have an active outreach programme with issuers, investors and regulators to maintain a high level of transparency regarding our rating criteria and to disseminate our analytical insights and knowledge.

CRISIL PRIVACY NOTICE
CRISIL respects your privacy. We use your contact information, such as your name, address, and email id, to fulfil your request and service your account and to provide you with additional information from CRISIL and other parts of McGraw Hill Financial you may find of interest.
For further information, or to let us know your preferences with respect to receiving marketing materials, please visit www.crisil.com/privacy. You can view McGraw Hill Financial's Customer Privacy Policy at http://www.mhfi.com/privacy.
Last updated: August, 2014

Disclaimer:A CRISIL rating reflects CRISIL's current opinion on the likelihood of timely payment of the obligations under the rated instrument and does not constitute an audit of the rated entity by CRISIL. CRISIL ratings are based on information provided by the issuer or obtained by CRISIL from sources it considers reliable. CRISIL does not guarantee the completeness or accuracy of the information on which the rating is based. A CRISIL rating is not a recommendation to buy, sell, or hold the rated instrument; it does not comment on the market price or suitability for a particular investor. All CRISIL ratings are under surveillance. Ratings are revised as and when circumstances so warrant. CRISIL is not responsible for any errors and especially states that it has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this product. CRISIL Ratings rating criteria are available without charge to the public on the CRISIL web site, www.crisil.com. For the latest rating information on any instrument of any company rated by CRISIL, please contact CRISIL RATING DESK at CRISILratingdesk@crisil.com, or at (+91 22) 3342 3000.

June 19, 2015

http://www.crisil.com