With the improvement in semiconductor supplies and a robust order pipeline for its passenger vehicles (PVs) and JLR models, Tata Motors has enhanced its investment outlay for the current financial year by 25 percent to Rs 38,000 crore.
The Mumbai-based automaker, which had invested Rs 30,000 crore last year, will be deploying the funds towards new product and platform development for electric vehicles (EVs) and internal combustion engine vehicles (ICEVs), and debottlenecking of capacity.
“The total capex we are spending during the current (financial) year will be almost Rs 38,000 crore, out of which it will be about Rs 30,000 crore or £3 billion in JLR and Rs 8,000 crore in Tata Motors PV division,” revealed PB Balaji, Group Chief Financial Officer (CFO), Tata Motors, while speaking to reporters in a post-Q4 earnings call.
He revealed that last year Tata Motors had spent Rs 30,000 crore, out of which Rs 23,000 crore was earmarked for JLR, and about Rs 7,000 crore for its namesake brand.
When asked to share some details, he added, “For JLR, it will be fundamentally towards fortifying the portfolio, (and for) new products that we're going to launch (along with) new platforms that we need to invest in, as well as any debottlenecking in our factories. In order to take care of this, our investments are future focussed.”
Balaji also asserted that Tata Motors’ long-term aim is to be in a net-zero-debt position by FY25 by when it intends to deliver positive cash flows. The automaker is also planning to bring down the net debt of JLR from £3 billion to £1 billion by the end of the current financial year.
“For the passenger vehicles business, (our) strategy continues (and that is) to ensure that we have cash flows sustainably, and we should continue to plan to invest for the same. Therefore, those strategies have not changed, they remain exactly where they are,” Balaji added. He, however, didn’t divulge any launch pipeline for the current fiscal.
On the paucity of semiconductor chips, Balaji said that the company is not facing any challenges in this regard in the domestic market as all its supplies are “streamlined”. For the JLR business, he said things have improved “quite significantly” compared to the past. As of the end of FY23, the luxury arm of Tata Motors had an order book of two lakh units of both Jaguar and Land Rover brands.
“And particularly with all the tie-ups that we have done, even the availability of specialised chips is starting to improve. That's why you're seeing the production numbers starting to pick up as well. So, we hope that the worst of the semiconductor issue has now been handled for JLR as well,” averred Balaji, adding, “(Going forward), we're not particularly factoring in any major semiconductor crisis.”
However, he acknowledged that he expects a “degree of stabilisation” on the JLR supply chain to happen only in Q1 or Q2 of this financial year.
For the quarter ended March 2023, Tata Motors swung to a consolidated net profit of Rs 5,407.79 crore, against a net loss of Rs 1,032.84 crore in the same quarter last year. Its revenue from operations came in at Rs 1,05,932.35 crore, up 35.05 percent from Rs 78,439.06 crore in the corresponding quarter last year.
While giving an outlook for the ongoing financial year, the CFO of Tata Motors stated that he remains “optimistic on demand”.
In his view, “Despite the near-term uncertainties, while anticipating moderate inflation, we aim to further improve and deliver on the strong performance in FY24 and this momentum is likely to build through the year after factoring in seasonality, stabilisation of JLR supply chain, and post RDE (Real Drive Emissions) impact in India in the early part of the year. So, all in all, it has been a satisfying quarter, and we have to repeat the performance in FY24 as well.”
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