NEW DELHI: Tata Motors-owned Jaguar Land Rover (JLR) has said that it will take a one-time write off of 1.5 billion pounds (including cash and non-cash components) during the ongoing the March quarter, as part of its one-time restructuring exercise under the “Reimagine” strategy.
“An exceptional one-time non-cash write down of c. £1 billion for higher previous spending and certain planned products that will not be completed... The cash write-off of 500 million GBP will be offset by positive cash flow in FY22,” the company said in an investor presentation. “JLR expects to be cashflow positive by FY23 and generate net cash from FY25,” added Ardian Mardell, Chief Financial Officer, JLR.
This is not the first time that JLR has taken a large write-off. Tata, in February 2019, had announced a write off of 3.10 billion pounds for JLR on account of slowing sales in China, technology disruptions and also the rising cost of debt.Under Tata Motor’s new Reimagine strategy, JLR has plans to increase its market share in the fast growing luxury segments, cut annual spending to about 2.5 billion pounds, and substantially increase its EBIT margins from 4 per cent to more than 10 per cent by FY26.
Earlier this month, the UK-based carmaker had said that it would launch six electric variants of Land Rover SUVs in the next five years while the Jaguar brand of cars is expected to be fully electric by the end of this decade. JLR had also said that it would invest about 2.5 billion pounds ($3.5 billion) a year into electrification and related technologies.
According to the Mardell’s presentation, the company will prioritise profitability over market share and volumes, and only those models that were margin accretive will be brought to the market. As for its planned margin improvement, the carmaker is expecting 300 basis points of margin improvement to come due to refocusing its product portfolio. The rest is expected to come from the new platforms. The luxury carmaker is currently working on rationalising vehicle architechture across its product portfolio.