Standard & Poor's Ratings Services said today it revised its rating outlook on India's Tata Power Co. Ltd. (Tata Power) to negative from stable. At the same time, Standard & Poor's affirmed its 'BB+' long-term foreign and local currency corporate credit ratings on Tata Power

"The outlook revision reflects concerns on rising debt levels and increased exposure to project completion and stabilization risks," said Standard & Poor's credit analyst Anshukant Taneja. "The ratings on Tata Power are constrained by its high sensitivity to regulatory action in the Mumbai license area, its exposure to riskier investments  and increasing competition, and the aggressive expansion plans of the company,"Mr Taneja said.                                                                          

At the same time, the ratings reflect the regulatory protection available to the company for the Mumbai license, its improved operating efficiency and competitive position, and the acceptable financial profile of its bulk customers

"Standard & Poor's expects the company's credit protection measures to weaken, as it  mobilizes additional debt for funding its ambitious expansion plans," Mr. Taneja noted. These plans include the Re40 billion, 1,000-megawatt (MW) Maithon project in eastern India, for which project-work has started. It is also simultaneously assessing investments in two separate 1,000 MW projects in north and western India and is bidding for the 4,000 MW ultra-mega projects announced by the government of India. Tata Power intends to fund these projects with a debt-to-equity mix of 70:30.  

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