Tata Motors, Ashok Leyland ratings downgradedJanuary 28th, 2009 - 7:00 pm ICT by IANS
New Delhi, Jan 28 (IANS) Credit rating and market research firm Crisil Wednesday downgraded the ratings of Tata Motors and Ashok Leylands debt due to the increased risk in the finances and business environment of the two commercial vehicle manufacturers.“In case of Tata Motors, the downgrade reflects the significant impact of the weakening business environment on the company’s global and Indian operations, and the resultant strain on its financial risk profile,” Crisil said in a statement.
“The weak demand for automobiles in the US and Europe - the key markets for Jaguar and Land Rover’s (JLR’s) operations - and the shift in consumer preference away from sport utility vehicles in these markets, is expected to result in a sharp decline in JLR’s revenues and profitability,” Crisil said in a statement citing reasons for revision in Tata’s ratings.
JLR’s sales declined 15 percent in the year ended Dec 31, 2008, as compared to the previous year. JLR accounts for almost two-thirds of Tata Motor’s revenue. Crisil said that the slowdown in JLR’s sales are expected to continue till 2010.
Tata Motors, which acquired JLR from Ford Motor Co last year, declined to comment.
Crisil attributed the downgrade in Ashok Leyland’s rating to the company’s business and financial risk because of the expectation of continued weak demand for medium and heavy commercial vehicles, coupled with its ongoing debt-funded capital expenditure.
“The rating may be revised downwards in the event of a further, and greater than expected, weakening the company’s financial risk profile. Conversely, the outlook may be revised to ‘Stable’ if there is a significant revival in MHCV (medium and heavy commercial vehicles) sales,” Crisil said.
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