Tata Motors Ltd.’s commercial vehicle unit will invest a major chunk of its planned Rs 1,500-crore capital expenditure towards new product launches as the company tries to turn around its loss-making Indian business.
“Bulk of this Rs 1,500 crore will be getting into new products, for its development and tooling that's required in manufacturing”, Girish Wagh, head of Tata Motors’ commercial vehicle business, told BloombergQuint. “Some amount of investment will go towards sustenance in (manufacturing) plants”, he added.
India’s largest truckmaker, Tata Motors, had seen a Rs 467-crore loss in its standalone business in the June-ended quarter. Disruptions due to stricter emission guidelines, and destocking by dealers ahead of the Goods and Services Tax had pulled down MHCV sales by 34.8 percent over last year between April-June. Commercial vehicle sales, though, have bounced back since GST was implemented.
The company, in order to turn around its Indian business, will rely on cost reductions and a more customer-focussed approach along with the launch of new products, Wagh added.
Around 30-35 percent of Tata Motors’ unsold inventory due to the shift to newer Bharat Stage IV emission norms has been addressed, Wagh said. He added that part of the unsold vehicles will be modified and sold internationally, while some will be refitted with BS-IV compliant engines and sold domestically.