CARE Ratings has reaffirmed its assessment of Tata Motors across bank facilities and non-convertible debentures and commercial paper issues. The credit rating agency has cited the company's established track record along with robust backing of Tata Group. The long-term and short-term bank facilities were reaffirmed by CARE AA- (negative outlook) and CARE A1+, respectively. Non-convertible debentures were reaffirmed CARE AA- with a negative outlook and commercial papers were reaffirmed CARE A1+.
"The ratings assigned to the bank facilities, Non-convertible Debentures and Commercial Paper issue of Tata Motors Limited (TML) continue to factor in the established track record of TML as one of India's largest automobile Original Equipment Manufacturers (OEMs) coupled with its strong market share in domestic Commercial Vehicle (CV) industry, its strong product portfolio under Jaguar Land Rover (JLR)," CARE Ratings said on Wednesday.
"TML enjoys immense financial flexibility by virtue of being part of Tata Group and has various fund-raising avenues available with company both at JLR and TML standalone level," it added.
Tata Motors has a liquidity buffer of Rs 11,043 crore on a standalone basis and 2.58 billion pounds at Jaguar Land Rover level. Further, the committed funds infusion by Tata Sons Private Limited (Tata Sons) to the tune of Rs 6,494 crore of which nearly Rs 3,892 crore already received in FY20 provides comfort to the ratings.
"The rating strengths are constrained by substantial volume decline in JLR as well as India business [bothCV and Passenger Vehicles; (PV)]due to slowdown in the global automotive sector which was further exacerbated by COVID-19 and deterioration in financial performance and debt coverage indicators for FY20 and Q1FY21," rating agency said.
Meanwhile, Tata Motors recorded a loss for the second straight quarter in Q1FY21 as the coronavirus lockdowns negatively hit its sales in India and overseas. The loss during the first quarter ended June 30, 2020, stood at Rs 8,438 crore, as opposed to Rs 3,698.34 crore loss recorded in Q1FY20 and Rs 9,863.75 crore loss in Q4FY20. Total revenue from operations slumped 48 per cent to Rs 31,983.06 crore during the quarter under review against Rs 61,466.99 crore in the same period last year as lockdowns impacted sales at Jaguar Land Rover, company's luxury car unit.