Reuters, Bengaluru :
Natarajan Chandrasekaran is splitting Tata Motors from a position of strength. Cars used to be a top headache for the chair of the Indian salt-to-hotels conglomerate but the latest plan to separate the company’s commercial vehicles and its passenger vehicles into two listed entities signals confidence in an important turnaround.
The rejig is underpinned by improvements at Jaguar Land Rover which Tata acquired for $2.3 billion in 2008. Those luxury marques are largely sold outside of India and accounted for 78 percent of the company’s overall EBITDA in the quarter ended December. The passenger cars entity that JLR will anchor includes electric vehicles Tata mostly sells within the South Asian nation. The EV unit counts private equity firm TPG among its investors.
After burning money for years, JLR has generated positive free cash flow for five straight quarters. There is strong demand for its higher-priced Range Rover and Defender sport utility vehicles (SUV), including in China. And following a multi-year effort to cut manufacturing costs, average revenue per car has risen to about 70,000 pounds ($89,614) from over 40,000 pounds between the financial years 2019 and 2023.
