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Tata chairman N Chandrasekaran says in talks with partners for JLR

Speaking to shareholders at the 74th annual general meeting (AGM) N Chandrasekaran, chairman, Tata Motors said that the company is evaluating proposals for a tie-up.

July 30, 2019 / 07:04 PM IST
 
 
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British automotive brands Jaguar Land Rover will have to scout for partners to fund its massive appetite of capital expenditure (capex), which was cut down by nearly a fifth by parent company Tata Motors during the last 12-18 months.

Speaking to shareholders at the 74th annual general meeting (AGM), N Chandrasekaran, chairman, Tata Motors, said that the company is evaluating proposals for a tie-up.

“The only way to handle the need for capex, additional investments is through partnerships. Because we want to spread investments across larger volumes, and there are many discussions from tactical to strategic, these opportunities keep coming and we keep evaluating them. As long as this is in the interest of Tata Motors, we will keep looking at partnership to address capex,” said Chandrasekaran.

During 12-18 months, Tata Motors cut down capex from 4.5 billion pounds to 3.8-3.9 billion pounds last year. “We are working to cut it down further. We cannot take a drastic cut beyond the certain level because it will affect the future,” added Chandrasekaran.

Tata Motors joined hands with German automotive giant and rival BMW recently for a collaboration for manufacturing electric vehicles for Jaguar Land Rover. When asked if the BMW partnership will later go on to include engines and products company at the company's June quarter results' media conference call, the CFO declined to state anything specific.

International media reports have speculated that the PSA Group (owner of Peugeot and Citroen brands) is talking to Tata Motors for a partnership for JLR.

Chandrasekaran pointed to three main issues concerning JLR’s immediate future. One was its internal cost structure, which as per Chadrasekaran, is ‘very high’. During the 2010-2019 period, revenue of JLR grew four times, while its volumes grew three times.

The two brands invested in several costly projects during the past several years without any assurance of sustained demand. A major portion of volumes from these projects was to come from China alone. However volumes of JLR in China have slumped to half forcing the company to cut back on many projects.

But China, which was once the largest market for JLR in the world, as per Chandrasekaran, has started to show green shoots. “We met with all the dealers in China and their numbers have been improving every month. The numbers for June and July were than May. July's numbers were better on a year-on-year basis,” said Chandrasekaran.

Jaguar Land Rover sales during last year closed at 578,915 units, down by five percent compared to 2017-18. Tata Motors took an impairment hit of Rs 27,838 crore mainly due to weak sales and profitability at JLR.

In his opening address to shareholders, Chandrasekaran expressed his disappointment for not being able to provide any dividend yet again.

“It is disappointing to know the company has not been able to pay dividend for a number of years. This is despite a profit of Rs 2,021 crore. Unfortunately the accumulated loss on a stand-alone basis is high, and it does not allow us to announce a dividend,” added Chandrasekaran.

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Swaraj Baggonkar
Swaraj Baggonkar
first published: Jul 30, 2019 05:26 pm

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