According to Mr. Natarajan Chandrasekaran, Chairman of Tata Sons Pvt Ltd, the Tata Motors Group is looking to be a near-zero debt vehicle manufacturer by shedding its debt of 48,000 crore rupees in the next three years.
The overall investments in the group were reduced by 50% during this fiscal year and the company expects to manage this tightly going forward. Tata Motors is working on a strategic deleverage plan to implement aggressive cost control measures, turn cash positive, and cut debt in the next two years. The business units of Tata Motors include British luxury car subsidiary Jaguar Land Rover Plc (JLR), commercial and passenger vehicle divisions in India.
Tata Motors has already taken steps to achieve its goals and to generate free positive cash flows from FY22 onwards. Tata Motors Limited will look to unlock its non-core investments, according to Mr. Chandrasekaran, who spoke in the company`s 75th Annual General Meeting in Mumbai. The company has reduced its overall investments by 50% during the fiscal year and will continue to manage this tightly going forward.
The stock of Tata Motors rose 5.5% on the Bombay Stock Exchange following the chairman’s commitments at the Annual General Meeting. The stocks closed at 127.05 rupees, which was 5% higher than the previous close. The company, by implementing the aggressive cost-cutting measures, plans to achieve a cumulative savings of 6 billion British Pound Sterling at the Jaguar Land Rover and 6,000 crore rupees cash savings from its domestic business by end FY 2021.
The rollback of CAPEX investments to 2.5 billion British Pound Sterling (from 4 billion earlier) at Jaguar Land Rover and to 1,500 crore rupees (from 4,500 crores earlier) at its domestic business, is also included in the aggressive cost-cutting measures in this fiscal.
The management expects JLR to turn cash positive by FY22 and Tata Motors is expected to turn cash positive by FY23 as a result of these measures. The steps which are taken to reduce cash outflows would ensure business in India to become cash positive by end FY21. The company has invested heavily in the passenger vehicle business and momentum in the commercial vehicle business can be seen after the economy bounces back.
