JLR expects over Rs 23,300 cr capital spending in FY14

Tags: JLR, Cars
Tata Motors-owned Jaguar Land Rover is expecting to invest around 2.75 billion pounds (over Rs 23,300 crore) during 2013-14 financial year on development of new products, expand Chinese business and explore production bases in new markets among others.

The British auto major is looking to invest around 2 billion pounds during the current financial year.

"...we expect that our capital spending could increase to be in the region of 2.75 billion pounds in fiscal 2014," Jaguar Land Rover (JLR) said in an investor presentation.

The company plans to continue increasing and accelerating capital spending to develop new products in new and segments, invest in new powertrains and technologies to meet customer and regulatory requirements, grow its manufacturing footprint in China and explore manufacturing opportunities in other markets, it added.

"In fiscal 2013, we continue to estimate total capital spending will be in the region of 2.0 billion pound," JLR said, adding out of this about 50 per cent will be for R&D and 50 per cent will be for expenditure on tangible fixed assets such as facilities, tools and equipment.

"We continue to have a longer term capital spending target of 10-12 per cent of revenue, which we believe is in line with other premium competitors, but in the near and medium term, we expect our capital spending to be a greater percentage of revenue in order to realise the present opportunities we see for growth," the company said.

Talking about its source of funding, JLR said it continue to target doing most of its capital spending out of operating cash flows.

"After capital spending in the region of 2.75 billion pounds in fiscal 2014, free cash flow could be negative.

"We expect that our strong balance sheet and liquidity (2,176.5 million pound of total liquidity and 795.0 million pound of undrawn committed credit lines with two and four years remaining as at 30 September 2012) as well as proven access to funding from capital markets and banks would also support our investment plans as required," it added.

Yesterday, JLR had said it will raise USD 400 million (over Rs 2,100 crore) through issue of bonds to support its operational costs and future growth plans.

JLR had earlier said it would roll out 40 new products in the next 4-5 years. Besides, in April 2011, it had said it would invest 1.5 billion pound each year for the following five years, mainly on product development as it looked to catch up with global luxury car makers and position itself as a top premium brand.

For the quarter ended December 31, 2012, JLR's wholesale sales were 94,828 units, up from the previous two quarters, the presentation said.


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