Rating Rationale
June 02, 2023 | Mumbai
Tata Industries Limited
Rating reaffirmed at 'CRISIL AAA/Stable'; Short term debt Withdrawn
 
Rating Action
Rs.750 Crore (Reduced from Rs.6000 Crore) Non Convertible DebenturesCRISIL AAA/Stable (Reaffirmed)
Rs.50 Crore Short Term DebtCRISIL A1+ (Withdrawn)
Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL Ratings has reaffirmed its ‘CRISIL AAA/Stable' rating on the non-convertible debentures (NCD) of Tata Industries Limited (TIL), and has withdrawn its ratings on the short-term debt facilities of Rs 50 crore and proposed non-convertible debentures of Rs 5,250 at the company’s request as both the facilities are unutilised. This is in line with the CRISIL Ratings policy for withdrawal of ratings.

 

The rating continues to reflect the strong parentage of TIL and its high strategic importance to the parent, Tata Sons Pvt Ltd (Tata Sons; ‘CRISIL AAA/Stable/CRISIL A1+’). The rating also factors in the outstanding track record of need-based support extended by Tata Sons to group companies, along with its articulation to support TIL in debt servicing.

 

TIL operates as an investment-holding company of the Tata group, and incubates new business ventures. Tata Sons holds a dominant stake of 53.62% (directly and through subsidiaries) in TIL.

 

The strong support from the parent is demonstrated through articulation of its intention to (i) maintain dominant shareholding in TIL and (ii) assist TIL in meeting its obligations to all lenders and debt holders in full and in a timely manner.

 

The ratings also consider adequate financial flexibility of TIL, supported by its significant investments in various flagship companies of the Tata group, such as Tata Motors Ltd (‘CRISIL AA/Stable/CRISIL A1+’) and some of the other listed Tata Companies which have healthy credit risk profiles. The ratings also reflect the strong expertise of the management in incubating new businesses. These strengths are partially offset by exposure to volatility in returns from incipient business ventures and their inherent risks.

Analytical Approach

CRISIL Ratings has applied its parent notch-up framework to factor in the support available to TIL from Tata Sons, given the company’s strategic importance to the parent.

Key Rating Drivers & Detailed Description

Strengths

Strong parentage and high strategic importance to Tata Sons, and expectation of parent support

As the vehicle for strategic investments of the Tata group in new and high-technology areas, TIL complements the investment philosophy of Tata Sons. TIL has played a key role in the group’s entry into several new business areas and provides advisory services through its division Tata Strategic Management Group, apart from Data Analytics services through its division Tata iQ to group companies. Tata Sons has articulated its intent to maintain a dominant shareholding in TIL and assist TIL in meetings its debt obligations. Tata Sons has an excellent track record of extending need-based support to subsidiaries and group companies. Given the strategic significance of TIL and the parent’s articulation of support, the company will continue to receive need-based support from the parent.

 

Successful track record in incubating business ventures

TIL has successfully incubated several businesses, including auto ancillaries (Tata Autocomp Systems Ltd [‘CRISIL AA/Stable/CRISIL A1+’]), telecom, logistics and supply chain solutions. TIL is also incubating/managing businesses in healthcare, education, management consulting and analytics. The board of TIL comprises senior members from other group entities, lending high management strength.

 

Once a venture becomes self-reliant, TIL offers the entity support to sustain its growth. In some cases, partnerships are forged with separate verticals within the group. Ventures that do not scale up or lack a strategic fit are considered for sale/divestment. In fiscal 2023, TIL sold its entire stake in Tata Unistore Ltd, a retail e-commerce portal that operates under the brand of Tata CLiQ, to a group entity, Tata Digital Pvt Ltd, which operates the super-app, Tata Neu. The proceeds from divestment are usually invested in new ventures and ongoing businesses such as education vertical and technology.

 

A prudent investment approach, combined with timely divestment in incubated businesses, has enabled TIL to operate with limited debt over the past decade. During fiscal 2023, TIL raised external borrowing to support its joint ventures/subsidiaries and/ or to fund losses from its investments, resulting in debt increasing to Rs 1,619 crore as on March 31, 2023, from Rs 1,141 crore as on March 31, 2022.

 

Weakness:

Susceptibility to inherent risks in incipient business ventures

TIL is a core investment company, engaged in incubating early-stage business ventures involving a high degree of financial, commercial, technological, and regulatory risk. Hence, returns from these investments may be volatile. For instance, TIL incurred a loss of Rs 2,043 crore in fiscal 2023 on sale of stake in Tata Unistore Ltd to Tata Digital Pvt Ltd. Nonetheless, these risks are partially offset by the strong parentage, access to capital, a well-qualified management and an effective risk management framework.

Liquidity: Superior

TIL has holdings in listed entities of the Tata group, with market value of over Rs 4,067 crore as on May 18, 2023, a major portion of which is in Tata Motors. The company had cash and equivalents of about Rs 188 crore and debt of Rs 1,619 crore as on March 31, 2023. TIL also benefits from the strong financial flexibility of its parent, Tata Sons, stemming from its significant liquid investments in listed entities of the Tata group.

Outlook: Stable

TIL will remain strategically important to Tata Sons, and the strong parentage should mitigate the risks associated with TIL's investments.

Rating Sensitivity factors

Downward factors

  • Change in the strategic view of Tata Sons on TIL
  • Shareholding (direct and through subsidiaries) of Tata Sons in TIL dropping below 51%
  • Rating downgrade or revision in the rating outlook on Tata Sons

About the Company

As a key investment vehicle of the Tata group, TIL spearheads investments in new business areas. The current focus areas are technology-intensive sectors and consumer-facing businesses such as e-commerce, healthcare, life sciences, and food technology. The company has an advisory services division, Tata Strategic Management Group, and a data analytics division, Tata Insights and Quants.

Key Financial Indicators (standalone)

Year Ended Mar 31   2023 2022
Revenue Rs crore 258 140
Profit after tax (PAT) Rs crore -2071 ** -717*
Reported PAT margin % NM NM
Adjusted gearing Times 0.39 0.18
Interest cover Times NM NM

NM: Not meaningful

* Includes exceptional loss of Rs 452 crore for impairment in subsidiary

** Includes loss of Rs 2,043 crore on sale of investments in Tata Unistore Ltd

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

CRISIL Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the CRISIL Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name of instrument Date of
allotment		 Coupon
rate (%)		 Maturity
date		 Issue size
(Rs crore)		 Complexity 
levels		 Rating assigned
with outlook
INE760E08166 NCD 18-Jan-21 Zero Coupon 16-Jan-26 250 Simple CRISIL AAA/Stable
INE760E08174 NCD 26-Jul-21 7.15% 26-Jul-24 500 Simple CRISIL AAA/Stable

 

Annexure- Details of rating withdrawn

ISIN Name of instrument Date of
allotment		 Coupon
rate (%)		 Maturity
date		 Issue size
(Rs crore)		 Complexity 
levels		 Rating assigned
with outlook
NA Short term debt NA NA 7- 365 days 50 Simple Withdrawn
NA NCD* NA NA NA 5250 Simple Withdrawn

*Yet to be raised

Annexure - Rating History for last 3 Years
  Current 2023 (History) 2022  2021  2020  Start of 2020
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Commercial Paper ST   --   --   --   -- 14-07-20 Withdrawn CRISIL A1+
      --   --   --   -- 28-02-20 CRISIL A1+ --
Non Convertible Debentures LT 750.0 CRISIL AAA/Stable   -- 04-07-22 CRISIL AAA/Stable 12-07-21 CRISIL AAA/Stable 14-07-20 CRISIL AAA/Stable CRISIL AAA/Stable
      --   --   --   -- 28-02-20 CRISIL AAA/Stable --
Short Term Debt ST 50.0 Withdrawn   -- 04-07-22 CRISIL A1+ 12-07-21 CRISIL A1+ 14-07-20 CRISIL A1+ CRISIL A1+
      --   --   --   -- 28-02-20 CRISIL A1+ --
All amounts are in Rs.Cr.

   

Criteria Details
Links to related criteria
CRISILs Approach to Financial Ratios
Criteria for rating holding companies (including debt backed by pledge of shares)
CRISILs Criteria for rating short term debt
Understanding CRISILs Ratings and Rating Scales
Criteria for Notching up Stand Alone Ratings of Companies based on Parent Support
CRISILs Approach to Recognising Default

Media Relations
Analytical Contacts
Customer Service Helpdesk

Aveek Datta
Media Relations
CRISIL Limited
M: +91 99204 93912
B: +91 22 3342 3000
AVEEK.DATTA@crisil.com

Prakruti Jani
Media Relations
CRISIL Limited
M: +91 98678 68976
B: +91 22 3342 3000
PRAKRUTI.JANI@crisil.com

Rutuja Gaikwad 
Media Relations
CRISIL Limited
B: +91 22 3342 3000
Rutuja.Gaikwad@ext-crisil.com


Manish Kumar Gupta
Senior Director
CRISIL Ratings Limited
B:+91 124 672 2000
manish.gupta@crisil.com

Naveen Vaidyanathan
Director
CRISIL Ratings Limited
B:+91 44 6656 3100
naveen.vaidyanathan@crisil.com

Sumant Mulkalwar
Rating Analyst
CRISIL Ratings Limited
B:+91 22 3342 3000
Sumant.Mulkalwar@crisil.com		Timings: 10.00 am to 7.00 pm
Toll free Number:1800 267 1301

For a copy of Rationales / Rating Reports:
CRISILratingdesk@crisil.com
 
For Analytical queries:
ratingsinvestordesk@crisil.com

 

Note for Media:
This rating rationale is transmitted to you for the sole purpose of dissemination through your newspaper/magazine/agency. The rating rationale may be used by you in full or in part without changing the meaning or context thereof but with due credit to CRISIL Ratings. However, CRISIL Ratings alone has the sole right of distribution (whether directly or indirectly) of its rationales for consideration or otherwise through any media including websites and portals.


About CRISIL Ratings Limited (A subsidiary of CRISIL Limited, an S&P Global Company)

CRISIL Ratings pioneered the concept of credit rating in India in 1987. With a tradition of independence, analytical rigour and innovation, we set the standards in the credit rating business. We rate the entire range of debt instruments, such as bank loans, certificates of deposit, commercial paper, non-convertible/convertible/partially convertible bonds and debentures, perpetual bonds, bank hybrid capital instruments, asset-backed and mortgage-backed securities, partial guarantees and other structured debt instruments. We have rated over 33,000 large and mid-scale corporates and financial institutions. We have also instituted several innovations in India in the rating business, including ratings for municipal bonds, partially guaranteed instruments and infrastructure investment trusts (InvITs).
 
CRISIL Ratings Limited ('CRISIL Ratings') is a wholly-owned subsidiary of CRISIL Limited ('CRISIL'). CRISIL Ratings Limited is registered in India as a credit rating agency with the Securities and Exchange Board of India ("SEBI").
 
For more information, visit www.crisilratings.com 
 



About CRISIL Limited

CRISIL is a leading, agile and innovative global analytics company driven by its mission of making markets function better. 

It is India’s foremost provider of ratings, data, research, analytics and solutions with a strong track record of growth, culture of innovation, and global footprint.

It has delivered independent opinions, actionable insights, and efficient solutions to over 100,000 customers through businesses that operate from India, the US, the UK, Argentina, Poland, China, Hong Kong and Singapore.

It is majority owned by S&P Global Inc, a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.

For more information, visit www.crisil.com

Connect with us: TWITTER | LINKEDIN | YOUTUBE | FACEBOOK

CRISIL PRIVACY NOTICE
 
CRISIL respects your privacy. We may use your contact information, such as your name, address and email id to fulfil your request and service your account and to provide you with additional information from CRISIL. For further information on CRISIL's privacy policy please visit www.crisil.com.



DISCLAIMER

This disclaimer is part of and applies to each credit rating report and/or credit rating rationale ('report') that is provided by CRISIL Ratings Limited ('CRISIL Ratings'). To avoid doubt, the term 'report' includes the information, ratings and other content forming part of the report. The report is intended for the jurisdiction of India only. This report does not constitute an offer of services. Without limiting the generality of the foregoing, nothing in the report is to be construed as CRISIL Ratings providing or intending to provide any services in jurisdictions where CRISIL Ratings does not have the necessary licenses and/or registration to carry out its business activities referred to above. Access or use of this report does not create a client relationship between CRISIL Ratings and the user.

We are not aware that any user intends to rely on the report or of the manner in which a user intends to use the report. In preparing our report we have not taken into consideration the objectives or particular needs of any particular user. It is made abundantly clear that the report is not intended to and does not constitute an investment advice. The report is not an offer to sell or an offer to purchase or subscribe for any investment in any securities, instruments, facilities or solicitation of any kind to enter into any deal or transaction with the entity to which the report pertains. The report should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in the US).

Ratings from CRISIL Ratings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold or sell any securities/instruments or to make any investment decisions. Any opinions expressed here are in good faith, are subject to change without notice, and are only current as of the stated date of their issue. CRISIL Ratings assumes no obligation to update its opinions following publication in any form or format although CRISIL Ratings may disseminate its opinions and analysis. The rating contained in the report is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment or other business decisions. The recipients of the report should rely on their own judgment and take their own professional advice before acting on the report in any way. CRISIL Ratings or its associates may have other commercial transactions with the entity to which the report pertains.

Neither CRISIL Ratings nor its affiliates, third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively, 'CRISIL Ratings Parties') guarantee the accuracy, completeness or adequacy of the report, and no CRISIL Ratings Party shall have any liability for any errors, omissions or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the report. EACH CRISIL RATINGS PARTY DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall any CRISIL Ratings Party be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the report even if advised of the possibility of such damages.

CRISIL Ratings may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of the instruments, facilities, securities or from obligors. Public ratings and analysis by CRISIL Ratings, as are required to be disclosed under the regulations of the Securities and Exchange Board of India (and other applicable regulations, if any), are made available on its website, www.crisilratings.com (free of charge). Reports with more detail and additional information may be available for subscription at a fee - more details about ratings by CRISIL Ratings are available here: www.crisilratings.com.

CRISIL Ratings and its affiliates do not act as a fiduciary. While CRISIL Ratings has obtained information from sources it believes to be reliable, CRISIL Ratings does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives and/or relies on in its reports. CRISIL Ratings has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. CRISIL Ratings has in place a ratings code of conduct and policies for managing conflict of interest. For details please refer to: https://www.crisil.com/en/home/our-businesses/ratings/regulatory-disclosures/highlighted-policies.html.

Rating criteria by CRISIL Ratings are generally available without charge to the public on the CRISIL Ratings public website, www.crisilratings.com. For latest rating information on any instrument of any company rated by CRISIL Ratings, you may contact the CRISIL Ratings desk at crisilratingdesk@crisil.com, or at (0091) 1800 267 1301.

This report should not be reproduced or redistributed to any other person or in any form without prior written consent from CRISIL Ratings.

All rights reserved @ CRISIL Ratings Limited. CRISIL Ratings is a wholly owned subsidiary of CRISIL Limited.
 

 

CRISIL Ratings uses the prefix 'PP-MLD' for the ratings of principal-protected market-linked debentures (PPMLD) with effect from November 1, 2011, to comply with the SEBI circular, "Guidelines for Issue and Listing of Structured Products/Market Linked Debentures". The revision in rating symbols for PPMLDs should not be construed as a change in the rating of the subject instrument. For details on CRISIL Ratings' use of 'PP-MLD' please refer to the notes to Rating scale for Debt Instruments and Structured Finance Instruments at the following link: https://www.crisil.com/en/home/our-businesses/ratings/credit-ratings-scale.html