Tata Motors on course to zero net debt by FY24: Chairman N Chandrasekaran

Tata Motors was on course to achieve its previously stated target of becoming a zero net-debt company by FY24 despite the business impact of the pandemic, chairman N Chandrasekaran said Friday at the company's annual general meeting (AGM).
"Last year, due to the internal cash flows and tight management, we were able to reduce the debt by over 7,500 crores. And we are very much on our path and stay committed to meet our target of FY24," Chandrasekaran said at Tata Motors’ 76th AGM.

The company had a net automotive debt of Rs 40,900 crore at the end of FY21. Debt went up to Rs 61,300 crore at the end of the June quarter, mainly due to the impact of change in working capital requirements, the company informed in an investor presentation.

“The business improved its EBIT margins by 260 basis points to Rs 6,471 crore and auto free cash flows of Rs 5,317 crore despite volumes declining by 10.3% to 903,000 units and revenues declining by 4% to Rs 2.5 lakh crore,” the chairman said. EBIT is earnings before interest and tax. One basis point is equal to 0.01%.

On business outlook, he said that all the three businesses of Tata Motors - Jaguar Land Rover and the domestic passenger vehicles (PV) and commercial vehicles (CV) business units - were on the path to recovery with PV being the star performer in FY21.

“As the impact of the pandemic recedes globally with more people getting vaccinated, we expect demand to remain strong with consumer preferences shifting further towards personal mobility,” he told shareholders.

The company achieved 10% share of the domestic PV market during the June quarter and it is targeting a share of 15%.

Tata Motors expects the business impact due to shortage of semiconductors to subside by the latter half of this year but it predicted that it would be 12-18 months before the situation completely returned to normal.

In the CV segment, the company had a market share of over 42% but it lost share in the small commercial vehicles (SCV) sub-segment.

“We were disappointed with the SCV performance, where our market shares went down by 250 basis points to 37.5%,” Chandrasekaran said.