Tata Power Company Ltd.

Standard and Poor's (S&P) rating services reaffirmed its 'BB-' long term corporate credit rating on Tata Power and 'BB-' issue rating on the company's senior unsecured notes.

S&P's rating on Tata Power continues to reflect the positive demand outlook for electricity in India, company’s good operating efficiency and the competitive position of the company’s core licensed operations. In S&P's opinion these positives are tempered by the company's aggressive financial risk profile, increasing exposure to competitive generation projects and residual completion risk at Mundra project.

S&P revised the outlook for Tata Power to stable from positive due to rising fuel costs at the company's Mundra project following a change in coal-export regulations in Indonesia. In S&P's view this has reduced the upside for higher dividends to Tata Power on a consolidated basis. As a result, Tata Power's cash Dow and financial risk profile are unlikely to improve as much as S&P had expected. The stable outlook reflects the predictability in Tata Power's operating cash flow due to its licensed businesses, stable operation and capacity that will come on stream in 12-18 months.