Moody''s Cuts Tata Power Rating To Ba3

Mumbai: Moody''s Investors Service has downgraded the corporate family rating of Tata Power Company (TPC) to Ba3 from Ba1, on account of TPC''s aggressive capital expenditure plan for its ultra mega-projects. Moody''s has also downgraded its senior unsecured bond rating to B1 from Ba2, and the ratings outlook is negative. The downgrade reflects TPC''s aggressive capital expenditure plan in coming years to more than triple generation capacity from 2,323 MW to over 7,500 MW. Such an aggressive plan will mop up materially the company''s overall business and financial risk profile. By end 2008-09, consolidated debt of TPC is hoped to be over two and half times that at the end of 2006-07 and this is before the bulk of capital expenditure for Mundra ultra mega power project is needed. TPC''s business profile would gradually shift from its core predictable earnings stream from its Mumbai business to a less certain return from its new power investments.