Land Rover Defender automobiles move down the inspection line at Tata Motors Ltd.’s Jaguar Land Rover vehicle manufacturing plant in Solihull, U.K. (Photographer: Simon Dawson/Bloomberg)

Tata Motors Seeks Higher Dividend From JLR

Tata Motors Ltd., the flagship automobile arm of Tata Sons Ltd., has its work cut out.

Through its ‘Turnaround 2.0’ strategy for the passenger vehicles segment, the company is focused on driving market share and profitability, Managing Director and Chief Executive Officer Guenter Butschek said at an event to announce fourth quarter earnings.

The company today posted its first positive free cash flow in five years. And its cash position is poised to improve further as it looks to enhance market share in the commercial vehicles segment. Tata Motors improved market share by 50 basis points (100 bps = 1 percent) to 45.1 percent as of March 2018. More importantly, it arrested the fall in market share through introduction of new models and heavy discounting. The company’s share in the passenger vehicles segment too rose by 50 bps to 5.7 percent.

Dividend Policy

Tata Motors hasn’t given dividend to its shareholders in nearly two years — the last being 20 paisa per share in July 2016. “Our focus is to improve profitability and cash flows,” said PB Balaji, group chief financial officer of Tata Motors Ltd.

Also read: Q4 Results: Tata Motors Profit Declines 50% In March Quarter, Missing Lowest Analyst Estimate

More Dividend From JLR

To increase the dividend payout by Jaguar Land Rover to the parent company, Tata Motors has effected a change in the dividend policy of its U.K.-based subsidiary.

While JLR has been paying £150 million as dividend so far, the new dividend policy will now require the unit to pay 20 percent of its profit after tax, or £225 million, as dividend for the year ended March 2018. This dividend ratio will rise to 25 percent of profit after tax from the financial year 2018-19, Balaji said.

Also read: Tata Motors Shares Slide After Jaguar Owner Misses Estimates

No Listing Of JLR

The company has no plans to list the luxury-car unit for now. Planned investments in JLR over the next two years could result in a 100 bps hit to its earnings before interest, tax and depreciation in the long run, Tata Motors said.

Electric Vehicle Ambitions

The company aims to sell all electrified cars by 2020. Its recent deal with Waymo for 20,000 cars will bring in £1 billion in revenue from 2020, Balaji said.

Sale Of Non-Core Assets

Tata Motors is also looking to exit Tata Technologies and the Tata Hitachi JV. Both these companies are being now held for sale in the balance sheet and has a book value of Rs 2,500 crore.