Moody’s gives Tata Motors notes Ba2

Moody's Investors Service said it assigned provisional Ba2 ratings to the proposed issue of senior unsecured notes by Tata Motors Ltd.

The outlook is stable.

Tata Motors, the group, comprises four main parts: (a) The issuer, Tata Motors, which in addition to holding investments in the group companies, contains the operating assets of the commercial and passenger vehicle businesses in India; (b) the UK-based Jaguar Land Rover (JLR) business, Jaguar Land Rover Automotive plc (Ba2 positive): (c) the captive vehicle finance subsidiary Tata Motors Finance Ltd. (unrated) in India; and (d) Tata Technologies Ltd. (unrated), a 72%-owned subsidiary providing engineering, automation and IT business services to the automotive sector.

Jaguar Land Rover contributed over 90% of group reported EBITDA in the year ended March 31, 2014. Jaguar Land Rover’s reported EBITDA margin of 18.5% compares to the -1.4% margin of Tata Motors’ standalone car and commercial vehicle business in India. Although Jaguar Land Rover expects to invest £3.5 billion to £3.7 billion in new models and facilities in FY 2015, its very strong cash generation and liquid balance sheet means that it can pay its current dividend of £150 million to Tata Motors’ and potentially significantly more.

"The phenomenal success of JLR continues to buy time for TML's weak Indian operations to turn around, and these are now showing some improvement," Moody's vice president and senior credit officer Alan Greene said in a news release.

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