Tata Motors plans to cut consolidated debt to zero in three years

• Tata Motors Chairperson N Chandrasekaran said the company would be debt-free in the next coming three years.
• Tata Motors shares saw a sudden spike and climbed up to 5% at 2:10 pm on August 25.
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At the virtual annual general meeting (AGM) today, Tata Motors chairman N Chandrasekaran told shareholders that the company is aiming to become debt-free in the next coming three years.

“Currently the TML group has a net automotive debt of ₹48,000 crore, and currently we are deleveraging this business substantially. The target is to bring it to near zero debt levels in the next three years. Towards this, the company has already taken steps. This includes making the company free cash flow positive by FY22,” Chandrasekaran said.

The forward-looking outlook boosted shareholders' enthusiasm, and the Tata Motors shares saw a sudden spike and climbed up to 5% at 2:10 pm on August 25.

The management also said that its premium business segment JLR would also be cash positive this year onwards.

These are the key takeaways from the Tata Motors AGM:

• The global auto industry has grappled with many issues in the last 12 months. Then COVID came, which ushered in the new reality and has changed the demand pattern. Indian auto industry too faced several headwinds. Domestic auto sales were down 18%, the most the industry has ever seen since we started recording data. The broad economic slowdown, regulatory challenges like BS6 transition, lockdown measures were a huge challenge
• We have also set a target for the Tata Motors group to generate positive free cash flow from FY22 onwards
• Already the investment of the group has reduced by 50% this FY and will continue to manage this very tightly going forward
• We are also aiming to unlock new non-core investments for Tata Motors Limited.

Tata Motors to be debt-free and PV segment to be a new entity

• Tata Motors would be debt-free from the net automotive debt of ₹48000 crore in the next three years.
• The Indian passenger vehicle business will be subsidiaries to a new legal entity, said company’s CFO PB Balaji. The new legal entity has been filed with NCLT and should be formed within the next 6-9 months.
• Focus on passenger vehicles will be entirely on the front-end, said Balaji.
• Tata Motors generated the highest ever profitability in FY19, which got impacted by COVID-19.

JLR to turn profitable for Tata Motors

• The ongoing trade conflicts have impacted JLR sales across the globe.
• Capex in JLR being pruned significantly to £2.5 billion.
• JLR will be cash positive this year onwards.

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Tata Motors sees its India loss widen by nearly 22 times as sales fall to one for every five units a year earlier