Credit rating agency India Ratings and Research downgraded Ford India Private Ltd's long-term issuer rating to 'IND A+' from 'IND AA-'.
Credit rating agency India Ratings and Research downgraded Ford India Private Ltd's long-term issuer rating to 'IND A+' from 'IND AA-'.
According to India Ratings, the outlook is 'Stable' for Ford India which has announced its decision to stop car production in India.
"The downgrade reflects the developing implications with respect to the operational and credit metrics of the entity post-restructuring, the quantum of outflows on account of the restructuring, and the agreements with various stakeholders," India Ratings said.
On September 9, 2021, Ford India announced that it will wind down vehicle assembly in Sanand, Gujarat by the fourth quarter of 2021, and vehicle and engine manufacturing in Chennai by the second quarter of 2022.
India Ratings said Ford India's vehicle assembly operations for the domestic market were stopped with immediate effect. The company's vehicle assembly plants in Sanand and Chennai will continue to operate till 4Q21 and 2Q22, respectively, only for exports.
The company is also shutting down its captive engine manufacturing plant in Chennai.
"Resultantly, the restructured FIPL (Ford India Private Ltd) would exist for (i) operating the engine manufacturing plant in Sanand for exports, mainly to Thailand; (ii) after-sales services and sales of parts for existing customers of Ford in India; and (iii) importing FMC's (Ford Motor Company) completely built units for sale in India," India Ratings said.
According to the credit rating agency, with the closure of automotive operations, Ford India's revenue from operations is likely to fall to Rs 2,000-3,000 crore in FY22 from Rs 13,516 crore in FY21.
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