Tata Motors said it will reduce the capital expenditure (capex) at Jaguar Land Rover, focus on improving retails in the domestic market and become a full-range electric vehicles player in India.
The reduced capex guidance for the two British brands JLR now stands at 3.8 billion pounds for FY20 from four billion pounds declared earlier and much lower than the 4.5 billion pounds it spent in earlier years. The Mumbai-headquartered company announced its Q1 earnings on July 25.
PB Balaji, Chief Financial Officer, Tata Motors said, “The good news is that China has started to stabilize at JLR. There was a significant improvement in cash delivery in China which is part of ‘Project Charge’ delivery as well. We see growth from here on in that market.”
Under ‘Project Charge’ Tata Motors aims to deliver 2.5 billion pounds cash and cost savings in 18 months which started in the third quarter of last year. The company claims to have reached 1.7 billion pounds till date and is on track to achieve its target by end of this financial year.
Despite a negative EBIT (earnings before interest and tax) of 2.5 percent during the April-June quarter at the consolidated level, Balaji said he is confident of delivering the 3-4 percent targeted for the year.
“We are confident of delivering EBIT margin of 3-4 percent for the year. We should be able to significantly improve our cash outflows which are negative at the moment,” added Balaji.
The company listed new product interventions, continued cost reduction programs, festive season and consumer pre-buying because of BS-VI onset by the year-end as factors that could boost sales. However, Balaji also mentioned that he is yet to see any green shoots at the ground level and that discounts continue to be very high especially in the commercial vehicle segment.
“Q1 was probably the worst for market demand. From a retail perspective, we expect the situation to improve as liquidity improves in the market. The focus will be on retail from here on,” added Balaji.
Meanwhile, Tata Motors has quietly launched the electric variant of the Tigor sedan in the market. Priced at around Rs 10 lakh, the compact sedan, which has a claimed range of 140 km, is sold in five cities currently. Tigor EV was part of the government order of 10,000 units that Tata Motors and Mahindra & Mahindra had won. However, the car was not sold to the retail buyer.
“We have opened the Tigor to the fleet segment in five cities. It is still a little too premature to talk about our EV plans. But this is an area of intense activities because both our new (vehicle) architectures Alfa and Omega come package protected to have electric of various options,” added Balaji.
“Our ability to introduce EVs is quite significant and we intend to leverage them to the hilt particularly after the clarity that has emerged after the overall thrust of the government on EVs. We want to be a full-service EV player,” added Balaji.
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