Saturday, July 20, 2024

    Tata Motors is well on track to make JLR debt-free in FY25, says Chairman N Chandrasekaran


    The India automotive business is now debt-free, and the Company is well on track to make JLR debt-free in FY25, Tata Motors Chairman N Chandrasekaran said today. Speaking at the 79th Annual General Meeting of Tata Motors Ltd on 24 June 2024, he emphasized the continuation of critical structural shifts: the irreversible transition to green mobility, the rebalancing of supply chains for resiliency, and the mainstreaming of digital acceleration through Artificial Intelligence and Machine Learining. Tata Motors, he asserted, is well-positioned to embrace these shifts from a position of strength and confidence.

    In the first phase of this ongoing multi-year journey, the company has delivered an excellent performance in FY24. All the three businesses, – Commercial Vehicles (CV), Passenger Vehicles (PV) and JLR, developed and executed on their differentiated strategies to deliver remarkable improvement in performance across metrices – brand health, customer experience, financial, product innovation, and employee engagement. 

    On a consolidated basis, the company delivered several highs across its three primary businesses: Commercial Vehicles (CV), Passenger Vehicles (PV), and Jaguar Land Rover (JLR). The company reported a 7.4% increase in total vehicle sales, reaching over 13.8 lakh units. Consolidated revenues stood at ₹437,900 crore, with an EBITDA of ₹62,800 crore and a net profit of ₹31,800 crore, marking a substantial increase of ₹29,100 crore from the previous year.

    Reflecting this strong performance, the Board has recommended a final dividend of ₹3 per share to ordinary shareholders and ₹3.1 per share to DVR holders, alongside a special dividend of the same amounts, pending shareholder approval.

    The Passenger Vehicles and Electric Vehicle business in India delivered a record performance for the third successive year with sales of over 5.7 lakh units (up 6% vs FY23. The sharp focus on emission-friendly technologies has improved the penetration of CNG and electric vehicles to 29% in the overall portfolio. In EVs, the business continued to lead the way with 70%+ market share. We operationalised the new production facility in Sanand within a year of acquiring it, he said

    Our thrust on safety gained credence with Safari and Harrier becoming the first SUVs in the country to get the coveted 5-star safety certification from Bharat NCAP. I must also mention that just a few days ago, Punch.ev and Nexon.ev too received this certification with the best in class 5-star rating making them the first as well in their segment. Further, the top two SUVs sold during FY24 in India – Nexon & Punch, proudly sported the TATA logo, he added

    The Commercial Vehicle business achieved an annual revenue of ₹78,791 crore in FY24, an 11.3% increase over FY23, and a PBT (before exceptional items) of ₹6,102 crore, nearly double the previous year’s figure. The business continues to expand beyond vehicular sales, focusing on non-vehicular segments like spares and services, smart mobility solutions for cities, and digital solutions for the trucking ecosystem.

    Following three years of supply constraints due to semiconductor shortages, inflation, energy crisis and geopolitical instability, Jaguar Land Rover has firmly re-established its financial stability in FY24 thereby successfully laying the foundations for the next chapter of its Reimagine strategy. It unveiled a new house of brands approach and the new look of the JLR corporate identity to accelerate the delivery of its vision of being the proud creator of modern luxury. The business recorded its highest-ever annual revenues of £29 billion (+27% YoY), PBT (bei) of £2.1 billion and record free cashflows of £2.3 billion in FY24, Chandrasekaran said.

    JLR will continue to double down on its journey to become a premium luxury OEM, focus on enhanced customer love and continue to invest in products and technologies. There is an exciting range of products lined up to be launched over the next 3 years that needs to be delivered successfully. The first electric Range Rover launches later this year, and there are further EVs lined up in the coming years including the all-electric Jaguar. The Company shall continue to invest in products, platforms, electrical & electronic architectures and vehicle software to provide a world class customer experience to our discerning clientele.

    FY24 saw Tata Motors undertake several strategic actions to simplify and strengthen its capital structure. These included delisting its American Depositary Shares from the NYSE, diluting part of its stake in Tata Technologies Ltd through a successful IPO, and securing approval for a capital reduction scheme for DVR shares. The recent merger of Tata Motors Finance with Tata Capital Ltd further exemplifies these efforts, he added

    Looking ahead, Tata Motors aims to sharpen and differentiate strategies across its businesses. The PV business will focus on market-leading growth, technology, and brand leadership, while the EV business will deepen market penetration through new product launches and enhanced charging infrastructure. The CV business will drive technology and brand leadership, expanding into non-vehicular and digital solutions. JLR will continue its journey as a premium luxury OEM, with significant investments in product and technology development.

    To enable sharper execution of their well differentiated strategies and to further empower each business to pursue it purposefully with greater agility and accountability, the Board has proposed the demerger of the Company into two separate listed companies housing A) the Commercial Vehicles business and its related investments in one entity and B) the Passenger Vehicles businesses including PV, EV, JLR and its related investments in another entity. This will also help secure the considerable synergies across PV, EV and JLR particularly in the areas of EVs, autonomous vehicles, and vehicle software. This will lead each company to deliver a superior experience for customers, better growth prospects for employees and, enhanced value for shareholders, Chandrasekaran said

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