Tata Motors to reduce stand-alone capex by 10% to Rs 4,500 crore
The reduction in capex for Tata Motors follows a similar reduction for Jaguar Land Rover earlier in the year.
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Tata Motors, India's fourth largest car maker, will slash capital expenditure (capex) by 10 percent to Rs 4,500 crore this year at the standalone level, even though it needs to invest for its transition to BS-VI norms next year.
The reduction in capex for Tata Motors follows a similar reduction for Jaguar Land Rover earlier in the year. From 4 billion pounds for FY20, the capex earmarked for JLR now stands revised at 3.8 billion pounds.
Speaking to analysts PB Balaji, chief financial officer, Tata Motors, said: "We will be (re)calibrating our total capex this year to close about Rs 4,500 crores compared to the Rs 5,000 crore that we had originally planned."
Tata Motors has lined up a few new model launches that have to be commercially introduced before the end of the financial year. These include a fully electric Nexon, Altroz premium hatchback and the seven-seater version of the Harrier.
The company also has to upgrade most of its passenger and commercial vehicles to BS-VI before the deadline of April 1, 2020, which is when the new emission norms kick-in. The company did not specify the investment required for the upgradation to BS-VI.
Tata Motors is pursuing an aggressive cost-cutting exercise that started a year back. Called 'Project Charge' Tata Motors aims to deliver 2.5 billion pounds cash and cost savings in 18 months, which started in the third quarter of last year.
On the sidelines of announcing its Q2 results in October, the company additionally announced plans of raising nearly Rs 6,500 crore allotment of equity share and warrants on a preferential basis to promoters Tata Sons.
The funds raised would be used primarily to retire debt at the stand-alone level, which as of September 30, 2019, stood at Rs 26,815 crore. At the consolidated level, the company's net automotive debt stands at Rs 50,000 crore.
Original Source: https://www.moneycontrol.com/news/technology/auto/tata-motors-to-reduce-stand-alone-capex-by-10-to-rs-4500-crore-4630291.html