Jaguar Land Rover likely to invest Rs 23,300 crore in FY14

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Tata firm to speed up development of products in new segments

Tata Motors-owned Jaguar Land Rover is expecting to invest around £2.75 billion (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 during the current financial year.

“...We expect that our capital spending could increase to be in the region of £2.75 billion in financial year 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 financial year 2013, we continue to estimate total capital spending will be in the region of £2.0 billion,” 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 financial year 2014, free cash flow could be negative. We expect that our strong balance sheet and liquidity (£2,176.5 million of total liquidity and £795.0 million of undrawn committed credit lines with two and four years remaining as of September 30, 2012) as well as proven access to funding from capital markets and banks would also support our investment plans as required,” it added. JLR had earlier said it would roll out 40 new products in the next four-five years.

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