Tata Capital Limited

Rating History Amount Outstanding Dec-10 Rs. 500 crore Non-Convertible Debenture programme Rs. 750 crore Non-Convertible Debenture programme Rs. 2000 crore Non-Convertible Debenture programme Rs. 5333 crore Long Term Loans* (enhanced from Rs,. 3445 crore) Rs. 4610 crore Cash Credit* (enhanced from Rs. 3530 crore) Rs. 1000 crore Short Term Loans Rs. 1000 crore Subordinated Debt programme 495 Maturity Date Rating Outstanding Aug-11 [ICRA]AA+ (Stable) [ICRA]AA+ (Stable) [ICRA]AA+ (Stable) [ICRA]AA+ (Stable) [ICRA]AA+ (Stable) [ICRA]A1+ [ICRA]AA+ (Stable) Previous Ratings Mar-11 Jan11 LAA+ LAA+ (Stable (Stabl ) e) LAA+ LAA+ (Stable (Stabl ) e) LAA+ LAA+ (Stable (Stabl ) e) LAA+ LAA+ (Stable (Stabl ) e) LAA+ LAA+ (Stable (Stabl ) e) A1+ A1+ LAA+ LAA+ (Stable (Stabl ) e) A1+ A1+

750

1500

905

Rs. 5500 crore Short term Debt 2069 [ICRA]A1+ programme *- includes limits amounting Rs. 1000 crore which are interchangeable between Long Term Loan and Cash Credit limits ICRA has an rating outstanding of [ICRA]AA+(pronounced ICRA double A plus) with stable outlook on the Rs. 3250 crore Non Convertible Debenture programme, Rs. 1000 crore subordinate debt programme and Rs. 8943 crore long term bank lines of Tata Capital Limited (TCL) . ICRA also has a rating outstanding of [ICRA]A1+ (pronounced ICRA A one plus) on the Rs. 5500 crore Commercial Paper/Short Term Debt programme and Rs. 1000 crore Short term bank lines of the company. ICRA has taken note of TCLs application to the Reserve Bank of India (RBI) for a change in its registration to a Core Investment Company (CIC) and also the companys has filed a petition to the High Court of Bombay for a demerger of a part of its operations and corresponding part of liabilities to its 100% step down subsidiary Tata Capital Financial Services Limited (TCFSL). Such a transfer of assets is subject to TCL getting permission from its creditors and lenders and a subsequent court approval. Under the proposed structure TCL would become a holding company for the various operating companies of the group engaged in the financial services segment; TCLs existing lending operations would get demerged to TCFSL, while the investments in subsidiaries, strategic and private equity investments would continue to remain on TCLs balance sheet. A significant portion of the debt would move also move to TCFSL, while a small part of short term debt could be retained in TCL. ICRA has taken a note of these developments and would assign the ratings to TCFSLs debt once the restructuring is complete. As earlier, the rating opinion would factor in the strategic importance of the finance vertical for ultimate parent Tata Sons Limited as well as the credit profile of its ultimate parent For Complete rating scale and definitions please refer to ICRAs Website www.icra.in or ICRA Rating Publications

Tata Sons Limited. Tata Sons is rated at [ICRA] AAA (Stable) by ICRA and as per ICRAs interactions with Tata Capital and its parent Tata Sons, such an organizational restructuring would not result in any dilution in its support to Tata Capital and its subsidiaries. In light of this, ICRA is likely to maintain its [ICRA] AA+ ratings on the demerged entity i.e. TCFSL, should the demerger process go through. As on March 31, 2011 TCL had a total asset base of Rs.16,906 crore, of which the major components are the advance book at 74%, rated pools (primarily rated at highest credit quality) at 6%, debt investments at 11%, equity investments at 8% and the other at 2%. During FY 2011 TCL registered a credit portfolio growth of 39% to Rs. 15,271 crore, which includes retail and corporate loans, investments in corporate debt and investments in rated pools. Around 54% of TCLs total credit exposures was deployed in the larger ticket sized corporate (including debt investments) and project finance loans, while 39% was in the retail segment and 6% in rated pools. Going forward TCLs is expected to maintain a majority of its total credit exposure in the corporate and project finance segment. In terms of asset quality TCL during 2010-11 TCL was also able to bring down its gross NPA% to 1.39% in Mar-11 against 2.35% in Mar-10 has the company was able to reduce delinquencies in the Construction Equipment (CE) segment, while maintaining stable asset quality in other segments. In 2010-11 Tata Sons infused Rs. 420 crore of fresh equity into TCL, and as on March 31, 2011 the companys leveraging level was at a moderate 5.55 times Going forward the lending operations of TCL could get transferred to TCFSL, which a step down subsidiary of TCL. Immediately upon the proposed demerger it is expected that TCFSL would have a net worth of around Rs. 2000 crore. For the financial year ended March 31, 2011 TCL reported a 39% growth in Profit after Tax (PAT) of Rs. 71.4 crore on an asset base of Rs. 16,906 crore against a profit of Rs. 51.3 crore on asset base of Rs. 12,360 crore in the previous financial year. As on March 31, 2011 TCL had a net worth of Rs. 2,536 crore Overall operating profits of the company registered growth of 39% to Rs. 108 crore in FY 2011 on the back of higher Net Interest Income (NII) and fee income. While credit provisions & writeoffs of the company declined by 19% on the back of a reduction in total NPAs from Rs. 185 crore as on Mar-11 against Rs. 239 crore in the previous financial, overall credit provisioning level rose 15% as the company made Rs. 32 crore of standard asset provisioning in line with RBIs requirement of 0.25% of standard assets. Going forward the systemic rise in interest rates could result in some compression in the gross interest spreads of the company; however ICRA expects these to remain at a moderate level. About the company Tata Capital Limited Primal Investments and Finance Limited was established in March 1991 and the name was changed to Tata Capital Limited in May 2007. TCL is a subsidiary of Tata Sons Limited and as on Mar-11 TSL had a 92.99% shareholding in TCL. TCL offers a plethora of financial services, fund based and non- fund based, including auto finance for non-Tata vehicles, finance of construction equipment, working capital finance for Corporate/SMEs and unsecured retail finance. The non-fund based products offered by the company / its subsidiaries include distribution of mutual funds and insurance products, stock broking and investment banking. TCL is registered as non-deposit accepting NBFC with the RBI. For the financial year ended March 31, 2011 TCL reported a Profit after Tax (PAT) of Rs. 71.4 crore on an asset base of Rs. 16,906 crore and a net worth of Rs.2,536 crore. Reported Capital adequacy of the company as on Mar-11 was 17.72% (Tier 1 % of 11.91%). Tata Sons Limited Tata Sons Limited (Tata Sons), founded in 1917 by the Tata Groups founder, Shri J N Tata, is the principal holding company for the Tata group and owner of the Tata brand and associated Tata trademark. Charitable trusts including those endowed by the late Sir Dorabji Tata own majority of Tata Sons shareholding at 66%. While income from dividends and profit generated on sale of investments constitute the principal revenue source for the company, it also includes royalty fees earned from

group companies for using the Tata brand. Such fees however are largely spent on the management of the brand. Tata Sons also provides certain group level services to the Tata companies, key amongst them being financial advisory (through Tata Financial Services), facilitating Business Excellence within the Tata Group by conducting training programme (through Tata Quality Management Services), legal assistance and HR services. Tata Consultancy Services division (TCS, one of the largest software companies in India and the highest contributor to Tata Sons in terms of revenues and profits) was spun-off as a separate entity during 2004-05. Currently, Tata Sons equity investments are spread across seven major industry segments and include investments in flagship concerns like Tata Consultancy Services Limited, Tata Steel Limited, Tata Power Company Limited, Tata Motors Limited, Tata Chemicals Limited, Tata Teleservices Limited, Tata Global Beverages Limited and so on. Recent Results For the twelve months ending March 31, 2011, Tata Sons reported profit after tax (PAT) of Rs. 3,246.9 crore on an operating income of Rs. 4,851.3 crore as against a PAT of Rs. 1,621.1 crore on an operating income of Rs. 2,970.7 crore for the twelve months ending March 31, 2010.

August 2011

For further details please contact: Analyst Contacts: Ms. Vibha Batra, (Tel. No. +91-11-4545 302) vibha@icraindia.com Relationship Contacts: Mr. L. Shivakumar (Tel. No. +91 22 3047 0005) shivakumar@icraindia.com

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