Tata Motors is looking to reduce its net debt 'significantly' over a period of three years, the company’s chairman N Chandrasekaran said during the annual general meeting on Tuesday. The company will also unlock its non-core investments.
“We currently have a net automotive debt of Rs 48,000 crore and we are deleveraging this business substantially. We have set a target that the TML group will significantly bring down debt in the next three years,” Chandrasekaran informed the shareholders in a virtual interaction. The Mumbai-based company is already said to have taken steps for generating positive free cash flows from FY2022 onwards. “Overall investments of the group have reduced by 50% during this fiscal year, and we will continue to manage this tightly going forward,” the company chairman added.
According to Chandrasekaran, Tata Motors had over the past two financial years focused on refreshing its portfolio, improving structural efficiencies, and streamlining internal processes. However, in FY2020 this turnaround journey was interrupted, as demand deteriorated sharply. The company’s consolidated revenues stood at Rs 2,61,038 crore with a PBT loss of Rs 10,580 crore. Likewise, the company’s standalone financial results delivered revenues of Rs 43,928 crore with a PBT loss of Rs 7,127 crore.
Talking about the macro environment factors which impacted the global automotive industry, Chandrasekaran continued saying that mounting trade tensions, muted global growth and enhanced regulatory norms have changed the business environment. “Next came the onset of the Covid-19 pandemic in the final quarter of the year, which has ushered in a new reality for industries across the world,” he pointed out.
Attempting debt-free status
All eyes will now surely be on Tata Motors, which is looking to do what the Mukesh Ambani-led Reliance Industries Ltd (RIL) did recently. RIL in June claimed to have turned net debt-free around eight months ahead of its deadline in March 2021. If Tata Motors leadership manages to pull off its plans successfully, it will go a long way in establishing India as an automotive powerhouse.