Tata Motors Cuts Jobs At JLR, Defers Investments To Pare Debt
Tata Motors Ltd. will cut 1,100 more jobs at Jaguar Land Rover and defer or cancel investments at both its domestic business and its luxury arm as it looks to pare debt amid a collapse in demand during the Covid-19 pandemic.
There’s a “clear call” from the Tata Group that Tata Motors and JLR must form a strong deleveraging plan, according to PB Balaji, chief financial officer of Tata Group. Tangible actions will follow, Balaji told reporters during a webinar to announce the automaker’s earnings for the quarter ended March, without elaborating further.
That comes as the automaker reported a consolidated net loss of Rs 9,894.2 crore in the three months through March compared with a profit of Rs 1,117 crore profit a year ago, as a lockdown across its markets ravaged sales.
Tata Motors, which has a consolidated net debt of Rs 48,000 crore as of March, seeks to turn JLR, its luxury car arm, and its passenger vehicle business cash positive on a sustainable basis from FY22 and FY23, respectively. It also announced a cost-savings programme that would free up nearly Rs 1,500 crore by the end of the ongoing fiscal, and a cash improvement programme that would save nearly Rs 6,000 crore in the years ahead.
The company has also deferred or cancelled lower margin and non-critical investment and has pared capex spending by 65% to Rs 1,500 crore for FY21.
That apart, JLR will further cut 1,100 contract workers engaged in manufacturing across various factories to help hold down costs, Bloomberg reported. JLR has also deferred or cancelled lower margin and non-critical investment and is targeting investment spending of 2.5 billion pounds in FY21, lower than 3.3 billion pounds in FY20, it said in a statement.
“Focus will be to ensure all projects that are regulatory compliant gets priority; projects at advance stage of landing will get priority,” Balaji said, adding that some “low-yielding projects as well as projects that we believe have to be pushed out given the current demand scenario will be pushed out”.
“We’re not hesitating in taking those calls because the demand environment is fundamentally altered,” he said.
The Mumbai-headquartered company is also in the middle of hiving off its passenger vehicle and electric vehicle businesses into a subsidiary. For that, Balaji said they’re in talks over bringing in a strategic partner and are in discussions with “several OEMs” (original equipment makers).
The firm is also seeing the beginnings of recovery in China sales, followed by recovery in the U.S. and European markets, except U.K. which it expects to recover in the coming days.