<div>Standard & Poor’s (S&P) lowered its outlook on Tata Motors following a slowdown in Chinese economy and resulting likely dip in demand for its Jaguar Land Rover vehicles. Also the continued expenditure by JLR will likely result in negative free operating cash flow for Tata Motors.</div><div> </div><div>Both the factors will result in Tata Motors’ ratio of funds from operations to debt to decline to about 20 per cent compared with its earlier expectation of more than 30 per cent.</div><div> </div><div>"The slowdown in Chinese demand-- the key driver for growth for JLR and other luxury carmakers in the past few years -- will result in weaker operating performance and lower margins for Tata Motors than we had previously anticipated,’’ said S&P credit analyst Abhishek Dangra. While global new model launches can support growth in fiscal 2017, Dangra said he expects fiscal 2016 ebitda to be weaker.</div><div> </div><div>S&P said it may raise Tata Motors rating if an uptick in JLR’s operating performance partly offsets the increase in capital expenditure, and helps the company increase ratio of its funds from operations to debt to more than 30 per cent.</div><div> </div><div>It may however lower the rating if S&P believes that weaker operating performance could result in ratio of funds from operations to debt of lower than 20 percent on a sustained basis. This may happen due to a sharper slowdown in China or new product launches that are less successful than current expectations, while capital expenditures remain elevated, S&P today said.</div><div> </div>
