S&P issues credit rating for six Tata Group companies, including Tata Motors, Tata Steel, Tata Power

S&P noted that Tata Sons has a record of supporting group entities in events of stress.

S&P Global Ratings on June 14 placed its ratings on six Tata group entities, including Tata Motors, Tata Steel and Tata Power on CreditWatch with positive implications. The other companies in the Tata Group are Jaguar Land Rover, Tata Power, TML Holdings and ABJA Investment.

The rating actions come ahead of S&P's review of the relationship between the group's holding company, Tata Sons and its subsidiaries. The review will assess whether the potential of extraordinary support for the group entities from Tata Sons is greater than what we previously factored, S&P said in a statement. This is due to increasing operational and management linkages within the group.

S&P noted that Tata Sons has a record of supporting group entities in events of stress. For example, the group provided material extraordinary financial support to entities such as Tata Teleservices Ltd. and Coastal Gujarat Power Ltd., an erstwhile subsidiary of Tata Power, which has now been merged with Tata Power.

"We are also undertaking the review because we believe operational integration between Tata Sons and group entities, as well as between group entities, will continue to increase."

In addition, we note the continued close involvement of Tata Sons in the strategies of group entities. For example, the holding company led negotiations with the U.K. government for setting up the battery plant and securing government support for the restructuring of Tata Steel's U.K. facility.

Tata Sons has a clear imprint on the group's financial strategy, in line with a groupwide focus on managing leverage, the ratings agency noted.