Board fights will have no impact on Tata Group, Moody's says

Kaustubh Chaubal, a Moody's Vice President and Senior Analyst said, "We expect that Tata Sons can continue to extend support to its key operating companies, should the need arise, owing to its substantial cash holdings and the significant value of its listed equity investments, and despite an ongoing boardroom reshuffle."

Moody's said that the ongoing board battle within the Tata Group will have no impact on ratings of its group companies. Photo: Reuters

Moody's on Wednesday said that the ongoing board battle within the Tata Group will have no impact on ratings of its group companies.

Kaustubh Chaubal, a Moody's Vice President and Senior Analyst said, "We expect that Tata Sons can continue to extend support to its key operating companies, should the need arise, owing to its substantial cash holdings and the significant value of its listed equity investments, and despite an ongoing boardroom reshuffle."

Ratings of the four companies are - Tata Motors (Ba1 stable), Tata Chemicals (Ba1 stable), Tata Steel Ltd. (Ba3 negative) and Tata Power (Ba3 negative). These ratings are expected to continue including a one notch uplift, based on Moody's assessment of support for the companies from Tata Sons, in times of need.

Meanwhile, Tata Consultancy Services which has A3 stable outlook, reflects Tata Group's intrinsic credit strength.

As per Moody's, it is business as usual at the rated Tata companies, which are listed entities, in spite of the leadership change. Moody's does not expect any change in the operating and long-term strategy of the Tata companies.

Chaubal adds, "Nonetheless, any change in group strategy or in the strategy of the operating companies — which in our view increases their risk appetite — could exert pressure on the Tata companies' ratings."

Presently, Tata Sons is seeking removal of Mistry from the group companies and independent director, Nusli Wadia, from the boards of three rated group companies.

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