By Aditya Raghunath
Investing.com -- Tata Motors Ltd (NS: TAMO ) JLR (Jaguar Land Rover) will write off £1.5 billion (Rs 15,412 crore), including cash and non-cash, as part of a restructuring exercise under its ‘Reimagine’ strategy.
JLR said, “Exceptional one-time non-cash write down of c. £1 billion for higher previous spending and certain planned products that will not be completed.” The cash write off of £500 million will be offset by positive cash flow in FY22.
This the second biggest write-off that the Tata Motors subsidiary is undertaking after it wrote off £3.1 billion in December 2019 due to a slowdown because of China and Brexit.
“JLR expects to be cashflow positive by FY23 and generate net cash from FY25,” added Ardian Mardell, Chief Financial Officer, JLR.
Under Reimagine, JLR is focusing on increasing its market share in the fast-growing luxury segment. It will cut annual spending by £2.5 billion and aims to increase EBIT (earnings before interest and taxes) from the current 4% to over 10% by FY26.
Mardell said that the company is prioritizing profit over market share and volumes. JLR is expecting 300 basis points of margin improvement as a result of refocusing its product portfolio and the balance to come in from new platforms.
Tata Motors stock is trading Rs 325.05 at the time of this report, up 0.65%.
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