Tata Motors Finance Limited and Net Debt & Others
FOCUS ON FINANCING AND MANAGING DEBT
One of the key value-driving aspects of Tata Motors is Tata Motors Finance. Facilitating the financing process for customers and enabling the sales process, Tata Motors Finance plays a crucial role in supporting the sales of Tata Motors’ vehicles.
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TATA MOTORS FINANCE
TMF Holdings Limited (TMFHL) became the holding company for the financial services business under the TML umbrella. Tata Motors Finance Limited (TMFL) undertakes the new vehicle financing business and is the captive financier for TML's vehicles. On the other hand, Tata Motors Finance Solutions Limited (TMFSL) is engaged in used vehicle financing business that has strong operational linkages with TML's pre-owned vehicles. TMFSL is also actively engaged in corporate lending wherein it provides both short-term and long-term financing to dealers and suppliers of TML.
Tata Motors Finance focuses on two major segments of vehicle financing: new vehicles and used vehicles. Leveraging the familiarity with the Tata Motors ecosystem, Tata Motors Finance is in a position to mitigate any risks effectively and enjoys 26% market share in Tata Motors’ volumes.
By 2024, Tata Motors Finance targets to have Assets Under Management (AUM) worth Rs.75,000 crore and a Return On Equity (ROE) of 20%, while maintaining Gross Non-Performing Assets (GNPA) at 2.5%. Moving towards this target, it has identified a few action areas which include reducing collection delays and enhancing disbursals
Rs.38K crore
AUM (AS ON MARCH 31, 2019)
37% Y-O-Y GROWTH
2.6%
GNPA (REDUCED FROM
4.0% IN FY 2017-18)
Key action areas
While focusing on enhancing disbursals, Tata Motors Finance is improving its collection strategy in light of the implementation of Ind-AS. It is also widening its liability franchise to manage its cost of borrowings.
Tata Motors Finance is focused on growing its AUM, which recorded a sharp 37% increase in FY 2018-19 from FY 2017-18 levels. Meanwhile, GNPA fell from 4% in FY 2017-18 to 2.6% in FY 2018-19.
NET DEBT & OTHERS
The Tata Motors Group is focused on reducing net debt. The Group's focus is on bringing down the gross debt to EBITDA ratio, improving business performance and reducing the debt through focused and identified divestments.
Key capital trade-offs and interlinkages for Tata Motors Finance
Improved Social and Relationship capital, in terms of customer relationships and reduced collection delays had a direct impact on financial capital.
Rs.21,993 crore
DISBURSED IN FY 2018-19 (+43%)
+38% NEW VEHICLES DISBURSALS |
      | +86% USED VEHICLES FINANCING |
2.3
JLR'S DEBT TO
EBITDA RATIO
3.3
TML'S DEBT TO
EBITDA RATIO
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Outlook
GEARED FOR THE FUTURE
As we move ahead with our turnaround plans, we will continue enhancing our value with the six cylinders— our key value drivers. Based on the challenges and opportunities globally, we have charted our medium- to long-term plans.
OUTLOOK – MEDIUM TO LONG TERM
We remain committed to Competitive, Consistent and Cash-accretive growth over the medium to long term. For our key businesses, TML and JLR, we have set targets around volume growth, EBIT and cash flow for FY 2020-21 and beyond.
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FY 2020-21
3-4%
EBIT
> PREMIUM SEGMENT
VOLUME GROWTH
NEGATIVE, IMPROVING
FCF
UP-TO GBP 4 BN
INVESTMENT SPENDING
FY 2022-23
4-6%
EBIT
> PREMIUM SEGMENT
VOLUME GROWTH
POSITIVE
FCF
UP-TO GBP 4 BN
INVESTMENT SPENDING
BEYOND
7-9%
EBIT
> PREMIUM SEGMENT
VOLUME GROWTH
POSITIVE
FCF
11-13% OF REVENUE
INVESTMENT SPENDING
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FY 2020-21
4-6%
EBIT
> MARKET
VOLUME GROWTH
POSITIVE
FCF
BEYOND
5-7%
EBIT
> MARKET
VOLUME GROWTH
POSITIVE
FCF
 
COMMITTED TO COMPETITIVE, CONSISTENT AND CASH-ACCRETIVE GROWTH OVER THE MEDIUM TO LONG TERM