S&P cautious on Tata Motors

At the same time, S&P lowered its issue rating on the company's senior unsecured notes to 'BB-' from 'BB' and also placed the rating on CreditWatch with negative implications.

"We've downgraded Tata Motors and placed the rating on CreditWatch negative because of the faster-than-expected deterioration in the automobile market conditions," said S&P credit analyst Mehul Sukkawala.

In November, Tata Motor's vehicle sales in India declined 30 per cent compared with the same month last year. This was a much higher decline than expected and followed a 20-per-cent fall in sales in the previous month.

In addition, Jaguar and Land Rover (JLR) has seen demand slow rapidly in the United States and Europe, its two key markets.

This is likely to have a material adverse impact on Tata Motors' financial profile, which has been aggressive since its acquisition of JLR in April.

 To resolve the CreditWatch status within the next three months, S&P will seek updated information on Tata Motors' business plan.

This will also help it assess the likely impact on the company's financial position, as the challenging capital-market environment is likely to be sustained for at least the next year.