Crisil upgrades Tata Motors, Leyland

Mumbai: Crisil has upgraded the ratings of Tata Motors and Ashok Leyland. The rating upgrade, Crisil said, is driven by significant improvement in Tata Motors Ltd's financial risk profile, which it is expected to sustain in the medium term.

This improvement is aided by the stronger-than-expected performance of the commercial vehicle industry in 2004-05 and 2005-06 and the company's successful placement of its $400 million foreign currency convertible bond issue.

"The FCCB issue enhances Tata Motors's financial flexibility and provides it with significant low-cost funds, part of which has a high probability of being converted into equity (about $100 million)," Crisil said in a news release.

Crisil has upgraded the rating on Ashok Leyland Limited's non-convertible debenture programme because of the significant improvement in its financial risk profile, which it is likely to sustain over the next few years.

The company's foreign currency convertible bond issue of $100 million significantly enhances Ashok Leyland's financial flexibility as it provides it with extremely low-cost funds, which it can use to fund its capital expenditure plans and acquisitions, if any.