Tata Motors Ltd. is basking in the success of the highly anticipated listing of Tata Technologies Ltd., a group company. The company’s chief financial officer has clarified that there are no imminent plans for further unlocking of value at India’s leading automaker as part of its strategy to reduce debt.
PB Balaji, Chief Financial Officer of the Tata Motors Group, expressed confidence in the company’s financial position during the Tata Technologies’ listing event at the Bombay Stock Exchange. Balaji emphasized the importance of the core business performance in achieving the goal of becoming nearly debt-free for the Indian operations by March 2024 and for Jaguar Land Rover by the subsequent fiscal year.
By September 30, the automaker had reduced its net automotive debt to Rs 38,700 crore from Rs 43,687 crore in FY23, primarily due to improved free cash flows. The successful Tata Technologies IPO generated net proceeds of Rs 2,314 crore for Tata Motors, representing a remarkable 68 times return on their initial investment for a controlling stake acquired in 1996.
Despite the substantial IPO success, Tata Motors remains committed as the majority stakeholder in Tata Technologies, owning 53.39% of the company.
Balaji outlined three strategies for achieving debt reduction: prioritizing underlying business performance, monetizing non-core investments such as the Tata Technologies IPO, and considering a capital raise, which currently isn’t deemed necessary.
“We are comfortable and focused on the underlying business performance at Tata Tech, JLR, and across our PV, EV, and CV businesses,” Balaji affirmed. “Thankfully, all these sectors are performing well, and our aim is to sustain this momentum.”
Regarding the recent market debut of Tata Technologies, Balaji expressed gratitude for the confidence investors have shown in the Tata brand and the company itself. He acknowledged the responsibility to meet the high expectations set by investors.
A month before the IPO, Tata Motors sold a portion of its shareholding in Tata Tech to TPG Rise Climate SF Pte and the Ratan Tata Endowment Foundation. Balaji clarified that the strategic stake sale was part of a well-thought-out plan, providing a benchmark for the IPO pricing.
Looking forward, Tata Motors is directing its attention towards expanding its electric vehicle (EV) portfolio. Shailesh Chandra, Managing Director of Tata Passenger Electric Mobility, recently mentioned that by 2030, EVs are expected to constitute 50% of Tata Motors’ sales. Despite anticipated competition from rivals like Mahindra and Mahindra Ltd. and reports of Tesla Inc. entering the Indian market, Tata Motors remains steadfast in maintaining its leadership in the EV segment.
“We are focused on growing the EV market share and not just on competition,” Balaji emphasized. “Competition will keep us on our toes, and we welcome it. Our goal is to boost EV penetration for long-term success.”
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