New Delhi: After considerably reducing the net debt last year, auto major Tata Motors’ domestic business is now debt free. In the year ended March 2024, the Group delivered its highest-ever revenues, profits, and free cash flows.
“The India business is now debt free, and we are on track to become net automotive debt free on a consolidated basis in FY25. The businesses are executing well on their distinct strategies and therefore, we are confident of sustaining this strong performance in the coming years,” PB Balaji, Group Chief Financial Officer, Tata Motors told the reporters during a post-earnings conference call.
In FY23, its Indian business delivered a net debt that touched its lowest in the last 15 years at INR 6,200 crore.
By the end of March 2024, its net automotive debt ended up at INR 15,000 crore. Last year, ETAuto reported about Tata Motors’ target to deliver positive cash flows and net zero debt by FY25.
For FY24, Tata Motors consolidated net profit was up at INR 31,806.75 crore, when compared to INR 2,689.87 crore in FY23. Total consolidated revenue from operations stood at INR 4,37,927.77 crore as against INR 3,45,966.97 crore in FY23.
In March, the automaker announced its plan to demerge its passenger vehicles and commercial vehicles businesses into two separately listed entities.
Talking about it, Balaji said currently internal teams are drawing a plan. The next step would be putting up a scheme of arrangement to the board for approval, which should be completed by the next 1-2 months. Thereafter, another 8-9 months could take for the incentives process to complete. “By April- July next year, we should try and get this concluded.”
Passenger Vehicles
Tata Motors, which offers petrol, CNG and EV powertrains, expects both CNG and EVs to grow faster owing to “upcoming launches” and “feeding off the ICE portfolio”.
Last year, ETAuto reported about Tata Motors product launch plan. The automaker is set to launch the much awaited Curvv EV in the upcoming months.
Talking about the market demand for EVs, Balaji said the company is seeing the “early adopters” phase of customers getting over and a new set of customers starting to come in. These new customers will need “much more reassurance in terms of charging infrastructure, TCO (total cost of ownership) economics, residual value, variety, choice of models and various use cases”. For this, the automaker plans to entirely focus this year on the market development including charging infrastructure because it will also give “excellent returns as EV barriers are resolved”.
The maker of Nexon has partnered with various charge point operators (CPOs) to set up public EV chargers. It is also working with solar rooftop companies “to ensure that we are able to put a simple storyline, which says ‘as long as you have a rooftop solar, an EV makes sense for you’.”
In FY24, the automaker missed out on its target of selling 1 lakh units of passenger electric vehicles, but in FY25 it “definitely wants to exceed the 1,00,000 units”, and is “confident of doing so”.
Commercial Vehicles
The market leader in the Indian CV segment, Tata Motors expects that with a promising GDP growth outlook, incentives from the government to improve productivity in both manufacturing and agriculture sectors, and continuing focus on infra, demand for CVs is expected to improve from H2 FY25.
According to Girish Wagh, Executive Director, Tata Motors, “The Indian CV industry grew by a modest 2% in volumes during FY24, impacted by a high base effect of FY23, elections held across 5 states and the announcement of general elections.”
The automaker remains “cautiously optimistic about domestic demand while keeping a close watch on geopolitical developments, interest rates, fuel prices and inflation.”
JLR Business
For the company’s British luxury car unit Jaguar Land Rover (JLR), revenues for FY24 stood at GBP 29 billion, its highest-ever full-year revenue and up 27% compared to the prior year, while PAT for FY24 was GBP 2.6 billion.
Adrian Mardell, JLR Chief Executive Officer, said this has been a year of “great strategic progress” as it has reduced net debt to GBP 0.7 billion. This was driven by “sustained global demand for our modern luxury vehicles, led by our Range Rover and Defender brands and operational improvement”.
The automaker expects EBIT margins in FY25 to be around the FY24 level. It is anticipating a modest 6% increase in investment spend to GBP 3.5 billion, from GBP 3.3 billion currently.
Outlook
Tata Motors remains “cautiously optimistic” on domestic demand over the full year and expects H1 to be relatively weaker. It believes that the premium luxury segment demand is likely to remain resilient despite emerging concerns on overall demand.
For the PV segment, it expects a moderate expansion of the market with an overall single digit growth. The second half of the year is likely to be far more competitive owing to festive season, post elections and a new budget.
