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MUMBAI, Feb. 7

CRISIL on Thursday reaffirmed the outstanding `AAA / FAAA' ratings of Tata Sons Ltd (TSL), `AAA / P1+' of Tata Power and `AA+ / FAAA / P1+' of Tata Steel.

These companies, along with Tata Industries, were named recently as the Tata Group outfits participating in the group's acquisition of a 25-per cent stake in VSNL through an SPV.

``A significant part of this acquisition is proposed to be funded by TSL in the form of equity and guarantees. Notwithstanding these investments, the financial risk profile of TSL is expected to remain comfortable with a marginal increase in its debt level and gearing,'' Crisil's statement said.

According to it, cash flows from Tata Consultancy Services (TCS) have helped TSL maintain a strong financial risk profile, despite making large investments in various group companies over the past 2-3 years.

During 2001-2002, the company has provided support in the form of ICDs and guarantees to Tata Finance Ltd.

TSL also invested an additional about Rs 500 crore mainly in the equity shares of group companies.

Further, TSL has acquired a strategic equity stake in CMC Ltd at an investment of Rs 152 crore.

``There has been a marginal dimunition in the value of investments held by TSL. These, however, are not expected to materially impact the financial risk profile of the company,'' the statement said.

As at March 31, 2001, TSL had equity investments of Rs 3,132 crore, primarily in affiliate and subsidiary companies.

While Crisil noted that Tata Power too would provide significant funding support for the VSNL equity purchase in the form of equity and guarantees, it said on Tata Steel, ``In spite of Tata Steel being an initial promoter of the SPV, its investments in the SPV are expected to be marginal and are not likely to have any impact on the company's financial risk profile.''

Tata Steel's ratings assumed that the company would not invest in the Tata Group's proposed foray in the telecom sector and that only negligible investment would be made (for feasibility studies) in the company's proposed titanium project, it said.

``In future, the ratings could be adversely impacted if the company makes any material investments in the SPV for VSNL acquisition or any unrelated businesses or goes in for inorganic growth through large debt-funded acquisitions,'' the statement said.

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