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In a significant development, Tata Motors Ltd.’s India arm announced achieving a net-debt free status in the previous fiscal year, as disclosed in an investor presentation on Tuesday. The company is now setting its sights on replicating this feat for its prestigious brand, Jaguar Land Rover, by the end of the ongoing fiscal year.
This milestone underscores Tata Motors’ strategic efforts to trim debt levels, a concerted initiative that has been gaining momentum over recent quarters. Key to this achievement has been the company’s strategic streamlining of operations and value-unlocking measures, exemplified by deals such as the TPG agreement and divestment of Tata Technologies Ltd.
The transition towards a simplified corporate structure has played a pivotal role, enabling Tata Motors to optimize resource allocation and fortify its financial standing. Noteworthy is the impending demerger of the commercial vehicle and passenger vehicle segments, signaling a strategic realignment aimed at bolstering the resilience and focus of each business vertical.
Over the past years, Tata Motors has charted an impressive trajectory of financial improvement, characterized by a notable surge in consolidated revenue and margins. This upward momentum has been supported by substantial investments, positive free cash flow, and a commendable return on capital employed.
In fiscal 2024, Tata Motors reported a remarkable surge in revenue to Rs 43,800 crore from Rs 26,100 crore in fiscal 2020, coupled with an enhancement in EBIT margins to 8.3% from a flat margin in 2019-20. Moreover, the company’s investment outlays soared to Rs 42,000 crore, propelled by a fivefold increase in free cash flow from pandemic lows.
The remarkable achievement of an 18% return on capital employed (ROCE) underscores Tata Motors’ unwavering commitment to delivering sustainable value to its stakeholders, marking a resurgence to levels last seen in fiscal year 2015.
