Ratings

Instrument Amount Rating
Secured NCD Rs. 300 crore CRISIL AA- (Stable)
Commercial Paper Rs. 1500 crore
Rs. 1500 crore
CRISIL A1+
ICRA A1+
Bank Loan Ratings Rs. 4000 crore CRISIL AA- (Stable)

Rationale

tvs credits investor information

CRISIL has reaffirmed its ‘CRISIL AA-/CRISIL A+/Stable/CRISIL A1+’ ratings on the bank loan facilities and various debt instruments of TVS Credit Services Ltd (TVS Credit; part of the Chennai-based TVS Motor group).

The rating on the perpetual bonds reflects the adequate buffer maintained by TVS Credit over the regulatory capital adequacy requirements, and high financial flexibility enjoyed on account of being a step down subsidiary of TVS Motor Co Ltd (TVS Motor; the flagship company of TVS Motor group). TVS Credit has maintained a cushion of 2-4% over the regulatory minimum capital ratio over the past few years and CRISIL believes that it will maintain adequate cushion.

The ratings continue to factor in the improvement in TVS Credit’s standalone credit risk profile reflected in a significant increase in the scale and diversity of operations, and improvement in profitability, while maintaining adequate capitalisation and sound asset quality. The ratings also continue to factor in the high strategic importance of TVS Credit to TVS Motor as a key financing arm supporting the latter’s vehicle sales. These strengths are partially offset by average, though improving, earnings profile, and exposure to risks related to the inherently weak credit profile of borrowers.

Loan portfolio of TVS Credit doubled to Rs 5002 crore as on March 31, 2017, from Rs 2636 crore as on March 31, 2015. Venturing into tractor and used-car financing has also enhanced product diversity in the loan portfolio. Profitability has also improved as reflected in return on managed assets (RoMA) of 1.7% for fiscal 2017 (up from 1.3% for the previous fiscal). Capitalisation is adequate as reflected in a networth of Rs 703 crore as against loan assets of Rs 5002 crore and gearing (including principal outstanding on off-balance-sheet securitisation and assignment transactions) of 6.5 times, as on March 31, 2017. Capitalisation is supported by regular equity infusion by TVS Motor. Asset quality has also remained under control due to strong process orientation as reflected in 90 days past due (dpd, excluding write-offs) of 1.5% as on March 2017.

The ratings continue to reflect TVS Credit’s strategic importance to, and expectation of strong support from, TVS Motor. The ratings also factor in TVS Credit’s improving scale, and strong process orientation. These strengths are partially offset by average though improving earnings profile, and exposure to risks related to the inherently weak credit profiles of borrowers.

Company Profile

Rating Outlook

tvs credits investor information

TVS Credit performance has been showing consistent growth in disbursement and high collection efficiency. It is expected that the company will continue with its good performance further aided by diversification into financing of tractors and used cars. Going forward, the continued strong operational and financial support of the parent company TVS Motors Ltd., the ability of TVS Credit to withstand competition, improve profit margins and expand its scale of operations, maintain collection efficiency especially in the expanding tractor loan portfolio, and maintain good asset quality would be the key rating sensitivities.

Annual Reports

  • Annual Report 2016-17

  • Annual Report 2015-16

  • Annual Report 2014-15

  • Annual Report 2013-14

  • Annual Report 2012-13

  • Annual Report 2016-17