Day after Fitch Ratings downgraded the long-term issuer default rating (IDR) of Tata Motors, the global auto major rejected the move as ‘unsolicited.’ The firm has no formal engagement with Fitch, Tata Motors said in a regulatory filing. This is an unsolicited rating and hence we have no comments to offer,” it added. On Thursday, the global rating agency marked down the IDR of the automobile company after it yet again posted weak earnings.
The default rating was marked down to BB – from BB with a negative outlook on account of rise in the risks in the Indian operations and its fully owned UK-based subsidiary Jaguar Land Rover (JLR). Even the previous Rating Watch Negative (RWN) status was also removed by Fitch as the outlook has changed to negative on the worries over Tata Motor’s profitability and free cash flow over the coming years.
In Q1FY20, Tata Motors doubled its consolidated net loss, largely on account of concerns at Jaguar Land Rover (JLR) unit and muted demand in automobile industry in India. A net loss of Rs 3,680 crore was posted by the company in the first quarter of FY20 as against a loss of Rs 1,863 crore in the corresponding period of the last year. The consolidated revenue from operations dropped 8 per cent on year and 29 per cent sequentially to Rs 60,830 crore.
A bigger fall was seen in the commercial vehicle (CV) and passenger vehicle (PV) businesses put together. The CV and PV businesses recorded in the first quarter of fiscal 2020 revenue of Rs 14,309 crore, falling from Rs 17,290 crore a year earlier.
