Tata Motors has shelved its ambitious sports car project, RaceMo, which was unveiled with much fanfare at the Geneva International Motor Show last year.
The RaceMo is among the projects in Tata Motors’ passenger and commercial vehicles segments where the company has pulled the plug after reviewing its capital policy on product development.
The automaker has “introduced a new capitalisation gateway in our product approval process on affordability”, according to Tata Motors Group CFO PB Balaji. That means it “even though if there's a business case that is valid, we'll take it forward only if it meets the affordability gateway,” Balaji told analysts.
The company has made an impairment provision of Rs 1,641.38 crore for quarter ended March 31, 2018 related to under development and capital work-in-progress after reviewing its various product programmes.
Balaji said some of it were exceptional in nature because these projects were not going to be taken forward at all, and some of it were "just asset write-offs that had to be taken because these are restructuring projects that we have also taken to save cash”.
All products or categories that we are not intending to continue further have all been taken in exceptional (items) for Tata MotorsPB Balaji, Group CFO, Tata Motors
When asked about details of the shelved projects, a Tata Motors spokesperson said, “The projects are both in CV and PV and include projects like RaceMo in the case of PV, launch of new products in other export markets which we don't intend to proceed further and write-offs taken to release assets that will be redeployed to save cash flows.”
Balaji also stated if Tata Motors could get a good buyer who could invest money in the RaceMo project, the company would consider working together.
When it was unveiled in Geneva last year in March, Tata Motors had planned to sell the RaceMo sports car under TAMO badge. It was proposed to be powered by a rear-mounted 1.2 litre petrol engine delivering 190 PS of power.
Things, however, did not go as planned for the RaceMo when the company under the stewardship of new Tata Group Chairman N Chandrasekaran started reviewing projects with a focus on turning around the ailing domestic business.