In his speech to the shareholders at the 76th annual general meeting, Tata Motors chairman N Chandrasekharan said the pandemic has resulted in muted consumer demand along with disruptions in production, supply chain and retail networks.
Chandrasekharan said the business improved its EBIT margins by 260bps to Rs 6,471 crore and auto-free cash flows of Rs 5,317 crore despite volumes declining by 10.3 percent to 903K units and revenues declining by 4 percent to Rs 2.5 lakh crore.
Here are the key highlights from Tata Motors AGM:
The pandemic resulted in muted consumer demand along with disruptions in production, supply chain and retail networks. To address this crisis, we put in place a comprehensive Business Continuity Plan. Our agile and ecosystem centric ways of working helped us to absorb the initial shock of total lockdowns and as demand started coming back, we swiftly shifted gears to significantly scale up capacities and moved fast to serve customer demand thereby ending the year on a stronger note.
The business improved its EBIT margins by 260bps to Rs 6,471 crore and auto-free cash flows of Rs 5,317 crore despite volumes declining by 10.3 percent to 903K units and revenues declining by 4 percent to Rs 2.5 lakh crore.
While the overall industry volumes declined by 6.1 percent, our domestic business grew 2 percent by volume, 7 percent by revenues, and improved EBIT margin by 370bps.
The Passenger Vehicles segment was the star performer of the Indian business. A shift to personal mobility over public transport and a rising preference for our ‘New Forever’ range of cars and SUVs, led to the PV business recording its highest-ever annual sales in 8 years and growing its market share to 8.2 percent and now touching double digits. The launch of ‘Altroz i-Turbo’ and the iconic ‘Safari’ in an all-new avatar have been received well. Additionally, the “Reimagine PV” strategy to rejuvenate front-end sales and dealerships while stepping up customer experience has delivered excellent results.
Within PV, the performance of the EV business is particularly noteworthy. We strengthened our market leadership to 71.4 percent led by sales of more than 4,000 Nexon EV units since its launch last year. EV penetration has now doubled to 2 percent of our overall PV volumes. Overall PV volumes grew by a robust 69 percent, even as the overall industry volumes reduced by 2 percent while within that EV volumes grew 218 percent.
CV sales mirror economic growth and the reduction in overall economic activity resulted in CV volumes dropping by 23.4percent this year. Amidst a tough demand scenario, Tata Motor’s CV business posted sequential quarter-on-quarter growth on the back of improved consumer sentiment, buoyancy in e-commerce, firming freight rates and higher infrastructure demand.
We improved our market share in M&HCV to 58.1 percent (+410 bps vs FY 18), ILCV 45.9 percent (+90bps vs FY18). Disappointingly, our SCV market share was 37.5 percent, losing 250bps vs FY18. The company is committed to win in this segment too and is taking concerted actions with a richer product portfolio and by driving smarter engagements with customers.
Tata Motors Finance business also delivered a strong performance despite the pandemic. The Assets Tata Motors Finance business also delivered a strong performance despite the pandemic. The Assets Under Management grew by Rs 5,928 crore to Rs 42,810 crore and it delivered a PBT of Rs 266 crore and a pre-tax ROE of 9.2 percent.
I would like to take this opportunity to thank Guenter Butschek who led the Indian business over the last 5 years for his contributions to the company.
Jaguar LandRover also delivered a resilient performance during the year. Retail sales declined 14 percent for the year with China being the exception growing at a strong 23 percent. The all-new LandRover Defender was a standout performer clocking a robust 45.2K units for the full year as well as winning the 2021 Word Car Design of the Year. Despite a 14 percent drop in revenue to £19.7B, the business improved its EBIT margins by 250bps to 2.6 percent and generated positive free cash flows of £185m.
Jaguar LandRover has now unveiled its Reimagine strategy to make the company a world leader in electrified luxury vehicles, sustainability, manufacturing efficiency and new automotive technologies.
As the impact of the pandemic recedes globally with more people getting vaccinated, we expect demand to remain strong with consumer preferences shifting further towards personal mobility. The supply situation however is expected to be adversely impacted for the next few months due to disruptions from COVID-19 lockdowns in India and semi-conductor shortages worldwide for the auto industry globally which will take time to work through. This will impact production volumes, sales, cash flows and margins.
We expect the situation will start to improve in the second half of FY22 even as the broader underlying structural capacity issues resolve with new capacities coming online over the next 12-18 months. Some level of shortages will therefore continue through to the end of the year and beyond.