Mumbai, Aug. 25: Standard & Poor’s (S&P) has downgraded Tata Power’s credit rating from BB+ to BB-. The rating agency has cited negative implications on the company’s debt structure because of its latest acquisitions of Coastal Gujarat Power and two Indonesian coal firms — PT Kaltim Prima Coal and PT Arutmin Indonesia.

In May, Tata Power acquired Coastal Gujarat Power, a special purpose entity formed to fund the Rs 17,000-crore Mundra power project. The company also acquired a 30 per cent equity in the Indonesian firms for about Rs 4,450 crore.

“S&P’s considers that these outlays, in addition to the company’s expansion plans, will increase Tata Power’s consolidated debt in comparison with its existing operating cash flows,” said analyst Anshukant Taneja.

Major projects in Tata Power’s kitty include the 1,050MW Maithon joint venture project with Damodar Valley Corporation, the 1,600MW power project in coastal Maharashtra, and the 250MW Trombay thermal power plant expansion.