Homegrown carmaker Tata Motors has increased its capital expenditure or capex by 30 per cent to Rs 32,000 crore in FY23 as against Rs 23,000 crore in FY22. The automaker plans to use this capex to accelerate its shift toward electric vehicles (EV) across all its – commercial vehicle (CV), passenger vehicles (PV) segments and its subsidiary Jaguar Land Rover.
The automaker will be making its highest ever domestic investment of up to Rs 6,000 crore for the expansion of its portfolio capacity. On the other hand, Jaguar Land Rover would be getting around Rs 26,000 crore or 2.6 billion pounds.
Tata Motors had also planned to launch around ten new EVs over the next five years. The company’s annual report revealed that its domestic PV business would continue to step-up new product launches and enhance capacities to cater to increasing demand. Despite a significant step-up in investments, the PV business is expected to remain self-sustaining whilst the EV business investments are well funded with the capital infusion.
Shailesh Chandra, managing director of Tata Motors Passenger Vehicles Ltd & Tata Passenger Electric Mobility Limited, said in the company’s annual report “in a challenging year disrupted by Covid, semi-conductor crisis and steep increase in commodity prices, Tata Motors set several new records in passenger and electric vehicles to make FY22 a landmark year.”
Tata Motors has managed to dethrone South Korean automotive brand Hyundai and has become the best-selling sport utility vehicle (SUV) maker in India in FY22. As of now, Tata Motors is also leading the EV space in India with over 70 per cent of the market share and its Nexon EV being the best-selling electric car in the country.
Chandra said, “We also operationalised two subsidiaries- Tata Motors Passenger Vehicles Ltd. focusing on passenger vehicles powered by IC engines and Tata Passenger Electric Mobility Limited to accelerate the development of the passenger EV business and its enabling ecosystem with TPG Rise Climate as an investor. Going forward, the demand for our ‘New Forever’ range continues to remain strong even as the semi-conductor situation and supply-side challenges remain uncertain.”
Interestingly, Tata Motors already has cash flows worth around Rs 9,504 crore for the FY23, both for JLR and domestic operations - despite the increased capital expenditure spending.
Earlier, during the unveiling of the electric mini truck Ace EV, Tata Group Chairman N Chandrasekaran had said that sustainable mobility is an imperative as well as a global megatrend that is irreversible. ”At the Tata Group, Tata Motors, in particular, we have embraced this fully and made a business model that integrates sustainability as one of the key pillars. Whether it is in passenger cars, our commercial vehicles, or in general Jaguar Land Rover, we are committed to making this transition and are accelerating it every day."
JLR’s capital expenditure limit for FY22 was 2.5 billion pounds, however, it curbed 500 million pounds due to a drop in volume amid global chip shortages. JLR’s Capex ratio was 11 per cent in FY22.
Thierry Bolloré, Jaguar Land Rover’s chief executive officer, said: “The environment remains difficult in light of the global chip shortage and other challenges. However, I’m encouraged by the continuing strong customer demand for our products, highlighted by a record order book. And we are continuing to execute our Reimagine Strategy with exciting new products like the Defender, New Range Rover and just announced New Range Rover Sport while we are rapidly progressing our plans for a new generation of electric vehicles with our all-electric Jaguar strategy and BEV first EMA platform for new Land Rover products.”
Tata Motors' domestic PV and CV businesses had spent Rs 2,202 crore on research and development (R&D) and had received Rs 1,462 crore on capital investment in FY22 taking total investment to Rs 3,664 crore for the full fiscal.
Tata Motors also plans to progressively increase the proportion of capital expenditure towards electrifying its commercial vehicles. The company has invested up to Rs 2,000 crore in each of the last five years as capex in its commercial vehicle business.
Girish Wagh, executive director of Tata Motors Ltd, said, “The Indian Commercial Vehicles sector, deeply impacted for two successive years, showed promising signs of growth in FY22 supported by a steady recovery in the economy, rising industrial activity and reopening of markets. At Tata Motors, the early adoption of a holistic ‘Business Agility Plan’ enabled us to protect and serve the interests of our customers, dealers and suppliers as well as smartly manage supply-related challenges including the global shortage of critical electronic parts.”
“Looking ahead, we see significant opportunities to leverage the megatrends shaping the Indian automotive industry. We are keeping a close watch on geopolitical developments, fuel inflation and semiconductor shortage and remain optimistic whilst continuing to work closely with our customers and ecosystem partners to mitigate risks and manage uncertainties,” Wagh added.
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