Rating agency CRISIL upgraded the auto major Mahindra & Mahindra's credit facilities with banks to stable, on account of improvement of the company's financial profile. CRISIL has upgraded its rating on long-term bank facilities of Mahindra & Mahindra Ltd to 'AA+/Stable' from 'AA/Positive'. The ratings were revised up despite expected debt burden on the company for acquiring controlling stake in South Korea's Ssangyong Motor. An 'AA' long-term rating symbolises instruments offering a high degree of safety with regard to timely payment of financial obligations. CRISIL also retained the rating on the short-term facilities and commercial paper programme of M&M at 'P1+'  'P1+' indicates that repayment of these borrowings is quite safe.

M&M has Rs 50 crore long-term working capital demand loans, besides a combined Rs 1,000 crore of short-term commercial paper programme, short-term loan and bank guarantee and letter of credit.

The upgrade has been driven by significant improvement in M&M's financial risk profile, particularly capital structure after conversion of its convertible bonds to equity shares in October 2010. M&M's financial risk profile will remain healthy over the medium term despite its debt- -funded investment plans, including acquisition of South Korea's Ssangyong Motor Company.

Furthermore, M&M's operating performance, which improved significantly in 2009-10, remained strong in the first half of 2010-11. CRISIL believes that M&M's cash accruals will remain robust over the medium term, despite some decline in operating margins because of increase in raw material prices.