Rating agency Crisil today upgraded its rating of Tata Motors' bank facilities and short term debt programme, citing improved financial performance of the automaker's international brands Jaguar and Land Rover.
Crisil has raised the rating on the company's bank facilities and short-term debt programme to 'A+/Stable/P1+' from 'A/Stable/P1'.
'A+' reflects adequate and slightly higher financial strength to meet policyholder obligations while 'P1+' indicates the degree of safety is more strong, with regard to timely payment on the instrument.
In a statement, Crisil said it has assigned 'A+/Stable' rating to the company's fund-based facilities and 'P1+' to the non fund-based facilities. The rating on secured, guaranteed, low-coupon, premium redemption debentures, guaranteed by the State Bank, has also been re-affirmed.
Crisil said the upgrade is based on the belief that the improved performance of JLR, during the this fiscal, is likely to sustain over the medium-term on the back of product launches and ongoing efforts to reduce costs.
"This improvement, coupled with the continued buoyancy in Tata Motors' domestic business, is likely to drive improvement in the company's profitability and increase in cash accruals over the medium term," the statement added.
According to Crisil, the JLR would continue to benefit from its association with the Tata Group.
The leading rating agency Crisil believes that the likely infusion of over Rs 1,200 crore into Tata Motors would reduce the pressure the company's capital structure.
The British marque brands JLR accounted for more than 50 per cent of Tata Motors' consolidated revenues in the December quarter.
"The improvement in JLR's performance has been backed by new launches and product refreshes, improved realisations arising from a favourable product mix, and lower dealer discounts," the statement said.
JLR would continue to report higher sales volumes, and increase in realisations, over the medium term, it added.
