CRISIL has reaffirmed 'AA+/Stable' on the bank facilities and debt instruments of Mahindra and Mahindra Financial Services.

The ratings continue to reflect Mahindra Finance's majority ownership by, and strategic importance to, its parent, Mahindra & Mahindra (M&M; rated 'AA+/Stable/ A1+').  The ratings are also underpinned by Mahindra Finance's strong position in the utility vehicle (UV) and tractor financing business in rural and semi-urban areas, comfortable capital position, and stable resource profile. These rating strengths are partially offset by Mahindra Finance's average asset quality.

The ratings centrally factor in the support that Mahindra Finance derives from M&M. The company is of strategic importance to M&M, as it finances around 28%  of M&M's UV and light commercial vehicle (LCV) sales, and around 33% of its tractor sales; around 47% of Mahindra Finance's disbursements are towards financing M&M products. Mahindra Finance ranks among the larger non-banking financial companies in India with total assets under management of Rs 328.6 billion as on Dec. 31, 2013.

CRISIL believes that Mahindra Finance will benefit from the support it is likely to receive from its parent, M&M, given the majority shareholding of, and Mahindra Finance's strategic importance to, its parent. CRISIL also believes that Mahindra Finance will maintain its strong market position and comfortable capitalization over the medium term. A change in the rating or rating outlook on the debt instruments and bank facilities of M&M will result in a corresponding revision in rating or rating outlook on Mahindra Finance's debt instruments and bank facilities. The outlook may be revised to 'Negative' if Mahindra Finance's asset quality and earnings weaken significantly, resulting in erosion in its net worth or there is a diminution in support from M&M.

Shares of the company declined Rs 5.45, or 1.98%, to trade at Rs 269.95. The total volume of shares traded was 43,019 at the BSE (1.03 p.m., Friday).