Tata Motors to invest Rs 12k cr

MUMBAI: Tata Motors has planned an investment outlay of Rs 12,000 crore to expand its business over the next three to four years.
The money will be used for the upcoming 1-lakh-car plant in West Bengal, developing a replacement of the decade old Indica and introduction of an all new range of trucks.
In 2008, the company will launch its all new truck with international styling in the Korean market.The new truck, an outcome of the ongoing 'World Truck' project, will be the first of replacement models for Tata's current portfolio of heavy and medium truck.
Spurred by the success of small load carrier Ace, Tata will also introduce a range of new light commercial vehicles.
The investments are key to Tata Motors competitiveness in the coming years. The company, which had a good run with its Indica, is slated to lose its position as the lone small car manufacturer with a diesel engine option.
Maruti has launched the diesel version of its hot selling model Swift while other car companies like GM are bringing in their new small cars.
In commercial vehicles too, Tata Motors need newer models with more powerful engines to transport goods faster along the golden quadilateral road network. It also needs the new vehicles to compete global truck majors like Man, Mercedes, Hyundai and Scania which have all recently entered the Indian market. Says Ravi Kant, MD,"We are revamping the whole range of our products."
Explaining the investment plan, Praveen Kadle, ED said,"About 40% of the total capex is allotted for the passenger car division and a similar quantum will be invested into the commercial vehicle business over the next three-four years. The balance 20% will be utilised for R&D and routine upgradation purposes."
Kadle expects to fund most of the expansion costs from internal accruals. Tata Motors generates an average of Rs 2,500 crore of cash each year, which is expected to grow in the next few years. "Even with all the internal cash generation we will still fall short of our target investment by a couple of thousand crore. This could be raised through other routes like debt or even an international listing. We have already taken the shareholder approval for raising upto Rs 3,000 crore through various instruments," he said.
In 2006-07, the company posted a net profit of Rs 1,913 crore, up 25% from the previous year net profit of Rs 1528 crore. Net income from operations grew 33% at Rs 27,535 crore for the year. For Q4 , better sales reailsations pushed the net profit up by 26% to Rs 576 crore.