Company update: Tata Motors

Company update: Tata Motors

The Tata Motors-owned Jaguar Land Rover (JLR) unveiled a new business plan for the next decade, under which it will invest substantially in a new range of eco-friendly vehicles.

The plan is designed to increase global competitiveness, drive growth and to sustain profitability, and envisages an investment of £800 million (over Rs6,200 crore) on environmental innovation alone, partly supported by the European Investment Bank.

The plan also includes the shutting down of one of its plants, in a bid to cut costs and to improve its financial health. Tata Motors has decided to close down either its Castle Bromwich facility or its plant in Solihull in West Midlands by 2015, as part of its new business plan that would enable JLR to get back on its feet.

It intends to transfer the entire production to one site in West Midlands. Considering the sharp run-up in its stock price, we recommend a NEUTRAL rating on Tata Motors.