INSUBCONTINENT EXCLUSIVE:
SP Global Ratings on Tuesday lowered the credit rating of Indian automaker Tata Motors Ltd and its luxury car unit Jaguar Land Rover
Automotive Plc (JLR), citing weaker-than-expected profitability at JLR
JLR has been hit hard due to trade tensions between China and the United States, low demand for diesel cars in Europe and worries over
SP cut its rating on Tata Motors' issuer credit and senior unsecured notes to 'BB-' from 'BB'
The ratings remain on negative watch, reflecting the uncertainties for JLR from a fast-approaching Brexit deadline, SP said.JLR's higher
presence in the UK exposes it to the fallout of a potential "no-deal" Brexit which could further diminish the likelihood of a turnaround for
the company, the rating firm added.SP also expects Tata Motors' leverage to deteriorate over the next 12-18 months, given its ongoing cash
losses at JLR despite turnaround plans for the unit.In October, Tata Motors logged a loss for the second quarter, and revealed a turnaround
drive for JLR which included cost cuts and plans to improve cash flows by 2.5 billion pounds over 18 months.SP, which considers the
company's cost cut target to be aggressive, forecasts that "JLR will have significant negative free operating cash flows over the next two
years, resulting in weak financial ratios for Tata Motors."Shares in the automobile major closed 0.2 per cent higher at Rs 175.70 on the
BSE, whose benchmark index Sensex finished down 0.3 per cent.
