Rationale

 The ratings reaffirmation for Marelli Motherson Auto Suspension Parts Private Limited (MMAPL) continues to factor in the strong financial, operational and managerial support provided by the promoters, Samvardhana Motherson International Limited (SAMIL; rated [ICRA]A1+) and Marelli Europe SpA (MES; erstwhile Magneti Marelli SpA). The ratings continue to draw support from MMAPL’s status of being a part of SAMIL's core automotive component business operations in the domestic market. Besides, ICRA expects MES to continue to extend technological support to MMAPL, as demonstrated over the years, which would continue to support its business prospects in both domestic as well as export markets. ICRA also expects both the parent companies to extend timely financial support to MMAPL, when required, as demonstrated by timely equity infusions in the past. The ratings, however, remain constrained by the company’s modest scale of operations and weak operating performance in the last two fiscals, wherein it reported net losses on account of issues faced during ramping up of new orders in the gas springs division. While the company has taken steps to contain the same (as reflected in some improvement in the operating profitability in FY2024 vis-à-vis FY2023 level), going forward, its ability to arrest such operational challenges and demonstrate healthy profitability as it scales up its business, remain critical. ICRA also notes that despite the modest scale of operations and weak earnings profile, the company’s capitalisation indicators remain largely comfortable on account of limited dependence on external borrowings. The ratings also factor in the company’s customer concentration risk on account of high dependence on its top customer (50% of total sales in FY2024), along with intense competition in the domestic ride-control component market with well-entrenched global and domestic tier-I suppliers. The Stable outlook factors in ICRA’s expectation that MMAPL would continue to maintain its business and financial risk profiles at comfortable levels, going forward, with support from its promoter entities, as and when required.