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Mumbai , Nov. 17

STANDARD & Poor's Ratings Services today affirmed its `BB' long-term foreign currency ratings on Tata Power Co Ltd, as the company's credit quality has remained within the current rating parameters. The outlook is negative.

"One of the main risks affecting Tata Power's credit quality arises from the expected change in electricity legislation, which will eventually expose the company to higher price and market competition," said Standard & Poor's credit analyst Mr Sharad Jain, Director, Standard & Poor's Corporate and Infrastructure Ratings Group.

He added: "However, in the next two to three years, significant changes are not expected in its Mumbai licensee businessFurther, the newer plants' advantage of lower variable costs is likely to be offset by their higher fixed costs than that of Tata Power," said a press release issued by the agency in Singapore.

Tata Power's business and financial profiles have also been affected by its investments in the telecommunications sector, as well as in its electricity generation and retail businesses outside Mumbai.

These businesses are subject to substantially higher business and financial risk than its main business, which is protected by regulation.

As on March 31, 2003, Tata Power's equity and debt in these riskier businesses were high at about 25 per cent of the group's total assets.

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