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ICRA reaffirms LAA+ rating to TML's Rs 450 cr debenture prog

Written by: Staff

New Delhi, Apr 25 (UNI) Credit rating agency ICRA has re-affirmed the LAA+ rating to the Rs 450 crore Non-Convertible Debenture (NCD) Programme of Tata Motors Limited (TML).

ICRA has also re-affirmed the LAA+ rating for the Rs 250 crore NCD programme of TML, indicating high credit quality.

The rating for TML's Rs 1200 crore Short-Term Debt Programme has been retained at A1+ indicating highest-credit-quality in the short term.

The rating re-affirmations take into account TML's market leadership status in the domestic commercial vehicle (CV) segment, its strong position in the domestic passenger car segment, besides its favourable cost structure, strong working capital management and comfortable capital structure.

With healthy operating cash flows, the company has generated positive free cash flows, in spite of its large capital expenditures.

The rating also factors in the cyclical nature of the commercial vehicle and passenger car business, the increasing competitive environment in the domestic commercial vehicle business, and TML's relatively narrow product range (single platform) in the passenger car segment.

To offset the impact of domestic business cycles, TML is seeking to increase its global footprints through concerted investments on product and market development. In line with its overall growth plans, TML plans to invest around Rs 5000 crore (approximately evenly in passenger car and CV business) in capacity expansion and product development during 2005-08. With strong cash flow generation and equity infusion through FCCB conversion, the capital structure is expected to remain comfortable in the medium term.


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