Standard & Poor's would assess the financial impact of these projects later, as the company's future plans on project scheduling and means of financing take shape.
The company's policy of restraining from any material increase in its exposure to the telecom sector has also been factored in this rating
Tata Power's main business is electricity generation and bulk supply in the Mumbai metropolitan area.For the fiscal year ended March 31, 2006, Tata Power recorded revenues of Indian rupee (Re) 57 billion (US$1.3 billion) and net profit of Re7billion.
The proposed expansion plans potentially weaken the company's credit-protectionratios and increase its exposure to project-completion-related risks. However, the overall credit profile of the company is expected to remain consistent with its 'BB' rating category. Tata Power's competitive position, adequate liquidity, favorable debt maturity profile, and good access to financial resources mitigate some of the downward pressure on the ratings.
"An improvement in the financial profile of the company, accompanied by timely completion of new projects and stable regulatory environment can translate into an improvement in the outlook or the ratings," said Mr. Taneja. However, delays inproject completion, higher-than-anticipated debt levels from the ambitious expansion plans of the company, and adverse regulatory action in the core businesses of thecompany could place downward pressure on the ratings
