By Swaraj Baggonkar

TML Holdings, a 100% subsidiary of Tata Motors, has proposed to raise £375 million (Rs 3,550 crore) in syndicated term loan for which it met bankers recently.

Singapore-based TML Holdings holds 100% of Jaguar Land Rover Automotive and is also the holding company of Tata Daewoo Commercial Vehicles and a few other subsidiaries. Last financial year the Tata Motors subsidiary had raised $425 million (over Rs 3,100 crore) in unsecured notes.

This new fund raising would not push up the overall debt of Tata Motors, as the company clarified that it is a refinancing of existing debt. As of the end of June 30, 2022, the Mumbai-based company had a net debt of Rs 60,700 crore, including external debt of Rs 34,800 crore. This is significantly higher than the Rs 40,900 crore recorded by the end of FY21 at the consolidated level.

Tata Motors chairman N Chandrasekaran has promised to restore profitability of the company and get to near zero net debt by FY24. During FY22, Tata Motors net loss stood at Rs 11,441 crore as a result of poor sales of British luxury brands Jaguar and Land Rover.

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JLR is sitting on a record order bank of 200,000 units. New Range Rover, New Range Rover Sport and Defender account for over 60% of the order bank. While the two brands were struggling to increase production because of a shortage of semiconductors for several months, they now claim to have improved visibility of chip supply.

Tata Motors is targeting 90,000 wholesale volumes at JLR in the September quarter as against 71,815 clocked in the June quarter. “Improved visibility of chip supply through senior supplier engagement, including partnership agreements combined with ramp up of new Range Rover and new Range Rover Sport,” JLR said with regards to outlook for FY23.

The presentation made to the bankers include the commitment made by the company of near zero debt in FY24 and doubling of Ebit margin to double digits by FY26. For FY23, JLR is looking to achieve 5% Ebit margin and £1 billion positive free cash flow.