Tata Motors' India Business Achieved Net-Debt Free Status In FY24

Tata Motors Ltd.'s India business became net-debt free in the previous financial year, according to an investor presentation on Tuesday. The company also guided that its brand, Jaguar Land Rover, will be net-debt free by the end of the current fiscal.

The development came after the company had been alerting investors about its aim to become net debt-free over the past few quarters, after seeing a steady fall in its debt.

Historically, the company has been bogged down by high debt and interest levels, with investments not being driven by independent cash flow. The presentation showed that all businesses are self-sustaining and investment spends are well funded.

Simpler structure and multiple measures, like value unlocking in the electric vehicle company through the TPG deal and successful divestment of Tata Technologies Ltd., helped the company achieve the net-debt-free status, it said.

The next big step is the demerger of the commercial vehicle and passenger vehicle business, signalling the strength of each vertical. In the past, cash flow from commercial vehicles was used to fund investments in passenger vehicles. The demerger and progress over the past few years has helped change that.

The company has seen recovery in consolidated revenue and margins, led by investment over the past three to four years. This has been driven by positive free cash flow and return on capital employed.

Revenue jumped to Rs 43,800 crore in fiscal 2024, from Rs 26,100 crore in fiscal 2020. EBIT margins also stood at 8.3% during the last fiscal, as against flat margin in 2019-20.

Investment spends have risen to Rs 42,000 crore, backed by strong free cash flow growing five times from pandemic lows. The ROCE has been strong at 18%, a level last seen in fiscal year 2015.