| Nissan Renault Financial Services India Private Limited | ||
| Rating Reaffirmed | ||
| Rating Action | ||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||
| 1 crore = 10 million | ||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its 'CRISIL A1+' rating on the Rs.400 crore commercial paper programme of Nissan Renault Financial Services India Private Limited (NRFSI).
The rating continues to factor in NRFSI’s strategic importance to its ultimate parent, Nissan Motor Company Limited (NMCL; rated BB+/Stable/B by S&P Global Ratings) and its strong moral obligation to support the Indian subsidiary, both on an ongoing basis and in the event of distress. The expectation of support is based on majority ownership in NRFSI, the shared brand, and strong operational linkages. The ratings also factor in the adequate liquidity policy and comfortable capitalisation. These strengths are partially constrained by small scale of operations with limited track record of operations. |
Analytical Approach For arriving at the rating, CRISIL Ratings has factored in the support that NRFSI is expected to receive from its ultimate parent, NMC. |
Key Rating Drivers & Detailed Description Strengths: Strategic importance to, and expectation of strong support from, ultimate parent, NMCL NRFSI, a joint venture between Nissan International Holdings B.V, a wholly owned subsidiary of NMCL and RCI Banque, a wholly owned subsidiary of Renault S.A. (Renault). NMC and Renault also have an alliance at the global level. NMCL ultimately holds 70% and Renault ultimately holds the remaining 30% in NRFSI. NMC and Renault have infused equity capital of Rs 497 crore and Rs 213 crore in NRFSI so far and will likely infuse further capital to support NRFSI’s growth plans as and when required. NMCL, being the majority shareholder, controls the day-to-day operations of NRFSI while Renault participates in strategic decision making. Being the captive financier of Nissan, -, and Renault vehicles in India, NRFSI receives significant financial, operational and managerial support from NMCL, given the strategic role it plays in strengthening Nissan and Renault’s market share and sales in India. NMCL views India as a key market, as reflected in its presence across manufacturing, sales and marketing and financing in the country. NRFSI’s risk management policies, systems, and processes are in line with those globally approved by NMCL. NRFSI also benefits from NMCL’s global linkages with foreign banks operating in India Nissan group companies have also invested in NRFSI Long Term Funds (Group Loans)-. CRISIL Ratings believes that the ownership, shared brand, and strong operational integration lead to a high moral obligation on NMCL to support NRFSI.
Comfortable capitalisation Capitalisation remains comfortable, with a net worth of Rs 1069.6 crore as on December 31, 2022. The shareholders have infused Rs 710 crore so far and will likely infuse further capital over the medium term to support NRFSI’s growth. Gearing was 2.7 times as on December 31, 2022 (2.3 times as on March 31, 2022) and is expected to increase over the medium term as the portfolio grows, albeit stay under 3 times.
Weaknesses: Relatively small player in the overall finance market, with limited track record of operations NRFSI’s portfolio consists of vehicle loans, with a majority to self-employed customers in retail portfolio along with providing funding to dealers. NRFSI is a relatively small player in the overall vehicle finance market. It started its operations in Oct 2014. Its loan portfolio stood at around Rs 3,873 crore as on December 31, 2022 (around Rs. 3,467 crore as on March 31, 2022). Over 90% of the portfolio continued to comprise of new car financing and the remaining was largely dealer financing, personal loans to the group employees and used car loans.
NRFSI gross non-performing assets (NPAs) remained broadly stable at 1.6% as on December 31, 2022 as against 2.2% as on March 31, 2022. The company has managed to receive recoveries majorly from the dealer finance portfolio while the retail portfolio broadly remained stable. Nevertheless, asset quality metrics are susceptible to economic risks and therefore, the ability of the company to maintain asset quality as the company scales up its operations would be demonstrated only over a longer term. |
Liquidity: Strong NRFSI has strong liquidity profile driven by expectation from Nissan Motor Company to provide need-based and on-going support, in case of any exigencies. On standalone basis, as on September 30, 2022, NRFSI has cumulative negative gap in 0–7-day bucket. The same is due to the line of credit committed to other institution. As on February 28, 2023, the company had cash and cash equivalents of Rs 163 crore and unutilised CC/WCDL and term loan lines of Rs 1221 crore, against this it had debt repayments of Rs 976.5 crore for the next six months. |
Rating Sensitivity Factors Downward factors
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About the Company NRFSI is a joint venture between Nissan International Holdings B.V, a wholly owned subsidiary of Nissan Motor Company Limited and RCI Banque S.A, a wholly owned subsidiary of Renault S.A. The company was incorporated in October 2013 and received its NBFC licence in July 2014. NRFSI finances Nissan and Renault - branded vehicles in India by extending retail credit, dealer financing and Insurance & Services.
Nissan Motor Company Limited, headquartered in Japan, is a leading international automaker with a presence in over 160 countries. Nissan reported a consolidated net profit of JPY131 billion on net sales of JPY7.4 trillion during nine months ended December 31, 2022. |
Key Financial Indicators
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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