Mumbai: India’s largest auto maker by sales, Tata Motors Ltd, will invest around Rs3,000 crore every year for the next three years, chairman Ratan Tata told shareholders at the company’s annual general meeting on Wednesday.
The money will be spent on product development, expansion and research, and development initiatives, said Tata, who is also chairman of the Tata group holding company Tata Sons Ltd.
Analysts tracking the company noted that Tata Motors has been investing larger amounts in recent years. Going by its annual report for 2009-10, it had invested Rs12,697.38 crore since fiscal 2008, making for an average of at least Rs4,200 crore in each of the past three years.
If the past trend is any indication, the company may end up spending a higher amount to boost growth, said Mahantesh Sabarad, analyst at Fortune Equity Brokers Pvt. Ltd. Tata Motors’ sales grew 34% in fiscal 2010.
On 28 June, in a note to the Bombay Stock Exchange, Tata Motors had disclosed plans to raise Rs.4,700 crore through a combination of debentures, ordinary shares, convertible bonds and other equity-linked instruments in the domestic and international markets in one or more portions.
Its Jaguar-Land Rover (JLR) business swept past forecasts with a fourth straight quarterly profit in the June quarter, driven by strong demand.
“I had conveyed to you how convinced I was with the capabilities of Jaguar-Land Rover; the current year’s performance of the company has vindicated that confidence,” the chairman said.
Over the next few years, JLR will be working on entry-level Jaguars that can garner larger volumes and focus on developing lightweight technology and hybrid vehicles.
Tata Motors is, meanwhile, engaged in a detailed investigation to determine the reasons of yet another Nano, the world’s cheapest car, going up in flames, which raised safety concerns.
Tata played down the concerns. Tata Motors has sold 50,000 Nanos so far and “four or five such cases doesn't mean there’s a problem in the car”, he said.
Tata Motors plans to export the Nano to countries in South Asia and Latin America. Its factory in Sanand, Gujarat, is expected to reach the installed capacity of 250,000 per annum by fiscal 2012.
“As soon as we reach the rated capacity, we will be profitable,” the chairman said at the meeting.