Tata Motors' reliance on debt funds rising: ICRA
Rating agency ICRA has said that the country's top automaker Tata Motors' dependence on debts has increased as its internal cash generation has been significantly impacted by falling commercial vehicle sales.autos Updated: Mar 02, 2009 20:51 IST
Rating agency ICRA has said that the country's top automaker Tata Motors' dependence on debts has increased as its internal cash generation has been significantly impacted by falling commercial vehicle sales.
Tata Motors' earlier plan of fund infusion through the equity and equity related instruments has been delayed by weak market conditions, the rating agency said, while downgrading its rating for some debt programmes of the company.
"With sharp decline in domestic commercial vehicle volumes in the recent months, TML's internal cash flow generating ability has been significantly impacted, increasing further reliance on debt funds," the rating agency said.
It further said that the company's business and financial risk profile has undergone significant changes following its acquisition of JLR business.
TML has traditionally been a CV manufacturer, but expanded into passenger car business in 1998-99.
ICRA has downgraded the company's Rs 3,000 crore short-term debt rating and Rs 2,000 crore rating from A1+ to A1.
It has also assigned short-term rating of A1 each to the proposed Rs 4,000 crore non-fund based facilities and the Rs 1,500 crore short-term debt of the company.
A1 is the highest credit rating to short-term instruments, while A1+ indicates one notch higher than A1.
Tata Motors has a dominant position in the CV segment in India with a market share of around 60 per cent.