Tata Motors Ltd:Annual Report 2023-24 Analysis

Tata Motors Ltd.: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History:

Tata Motors was established in 1945 as Tata Engineering and Locomotive Company (TELCO). Initially, it focused on manufacturing locomotives. The company ventured into commercial vehicle production in 1954 in collaboration with Daimler-Benz AG.

Headquarters Location and Global Presence:

The headquarters of Tata Motors is located in Mumbai, Maharashtra, India. The company has a global presence, operating in countries across Asia, Africa, the Middle East, Latin America, and Europe. The company also owns Jaguar Land Rover, significantly expanding its global footprint.

Company Vision and Mission:

• Vision: To be a world-class automotive company aspiring to shape the future of mobility.
• Mission: To be passionate in anticipating and providing the best vehicles and experiences that excite our customers globally.

Key Milestones in Their Growth Journey:

• 1945: Established as TELCO.
• 1954: Enters commercial vehicle production with Daimler-Benz.
• 1991: Launches its first passenger car, the Tata Sierra.
• 1998: Launches the Tata Indica, India’s first indigenously developed passenger car.
• 2004: Listed on the New York Stock Exchange (NYSE).
• 2008: Acquires Jaguar Land Rover (JLR) from Ford.
• 2019: Launches Altroz, premium hatchback.
• 2020: Launches Nexon EV, its first electric SUV.
• Present: Focus on electric vehicle (EV) development and sustainable mobility solutions.

Stock Exchange Listing Details and Market Capitalization:

Tata Motors is listed on the Bombay Stock Exchange (BSE: 500570) and the National Stock Exchange (NSE: TATAMOTORS). The market capitalization of Tata Motors fluctuates based on market conditions, but it is consistently a significant component of the Indian stock market. Please note that market capitalization is a dynamic figure and needs to be verified on real-time stock market data sources for accuracy.

Recent Financial Performance Highlights:

• Recent financial performance highlights can vary greatly and fluctuate depending on the current market conditions, economic factors, and the company’s specific results each quarter. It is best to reference the company’s latest quarterly or annual report for detailed information.

Management Team and Leadership Structure:

The leadership team comprises experienced professionals from various fields. The Board of Directors provides strategic oversight. Specific details about key management personnel can be found on the company’s official website.

Any Notable Awards or Recognitions:

• Awards related to design, innovation, sustainability, and manufacturing excellence. Refer to Tata Motors’ official website or press releases for the most up-to-date accolades.

Their Products #

Complete Product Portfolio with Categories:

• Passenger Vehicles (PV): Cars, SUVs, Hatchbacks, and Electric Vehicles (EVs)
• Commercial Vehicles (CV): Trucks, Buses, Vans, and Pickups

Flagship or Signature Product Lines:

• Passenger Vehicles: Nexon, Harrier, Safari, Altroz, Tiago
• Electric Vehicles: Nexon EV, Tiago EV

Key Technological Innovations or Patents:

• Advanced Driver-Assistance Systems (ADAS)
• Electric Vehicle Technology (Ziptron)
• Connectivity Features (iRA)
• Alternative Fuel Technologies (CNG, Hydrogen)

Manufacturing Facilities and Production Capacity:

Tata Motors has manufacturing facilities across India and internationally. Production capacity varies depending on the model and demand. Refer to official sources for specific details regarding individual plants.

Quality Certifications and Standards:

• ISO 9001 (Quality Management)
• ISO 14001 (Environmental Management)
• IATF 16949 (Automotive Quality Management System)

Any Unique Selling Propositions or Technological Advantages:

• Indigenous Engineering: Focusing on developing vehicles suited to the Indian market and conditions.
• Value for Money: Offering competitively priced vehicles with a range of features.
• Safety: Increasing focus on vehicle safety ratings and features.
• Electric Vehicle Technology: Pioneering EV development in India.

Recent Product Launches or R&D Initiatives:

• Launch of new EV models and variants
• Development of advanced battery technology
• Research on alternative fuels and sustainable mobility solutions
• Introduction of new features and technologies in existing models

Primary Customers #

Target Industries and Sectors:

• Passenger Vehicle Segment: Individuals, families, fleet operators
• Commercial Vehicle Segment: Logistics companies, transportation businesses, government agencies, infrastructure projects

Geographic Markets (Domestic vs. International):

• Domestic: India is the primary market.
• International: Key markets include South Asia, Africa, the Middle East, and Southeast Asia. Through Jaguar Land Rover, Tata Motors also has a strong presence in developed markets.

Major Client Segments (agricultural, industrial, residential, etc.):

• Commercial Vehicles: Primarily serve the agricultural, industrial, construction, and transportation sectors.
• Passenger Vehicles: Caters to a wider range of customer segments, including individual buyers, families, and corporate fleets.

Distribution Network and Sales Channels:

Tata Motors has a widespread distribution network across India and in international markets, comprising dealerships, service centers, and authorized distributors.

Major Competitors #

Direct Competitors in India and Globally:

• India: Maruti Suzuki, Hyundai, Mahindra & Mahindra, Ashok Leyland, Eicher Motors
• Globally (through JLR): BMW, Mercedes-Benz, Audi, Land Rover, Volvo

Competitive Advantages and Disadvantages:

• Advantages: Strong brand recognition in India, wide distribution network, value-for-money products, increasing focus on EVs.
• Disadvantages: Challenges in competing with global brands in terms of technology and premium features, dependence on the Indian market.

How They Differentiate from Competitors:

• Price Point: Often offers more affordable options compared to some competitors.
• Indigenous Design: Tailoring products to the specific needs of the Indian market.
• Focus on EVs: Positioning themselves as a leader in the Indian EV market.

Future Outlook #

Expansion Plans or Growth Strategy:

• Focus on expanding the EV portfolio
• Strengthening presence in international markets
• Investing in research and development of advanced technologies
• Improving customer experience and after-sales service

Upcoming Products or Innovations:

• New electric vehicle models across different segments.
• Advancements in battery technology and charging infrastructure.
• Integration of connected car features and digital services.

Sustainability Initiatives or ESG Commitments:

• Commitment to reducing carbon footprint through EV development and sustainable manufacturing practices.
• Focus on resource conservation and waste management.
• Promoting social responsibility through community engagement and ethical business practices.

Industry Trends Affecting Their Business:

• Growing demand for electric vehicles.
• Increasing adoption of connected car technologies.
• Stringent emission norms and safety regulations.
• Rising raw material costs and supply chain disruptions.

Long-Term Vision and Strategic Goals:

To be a leader in the global automotive industry, recognized for its innovation, sustainability, and customer-centric approach. The company aims to play a significant role in shaping the future of mobility, with a focus on electric vehicles and sustainable solutions.

Tata Motors Limited: Comprehensive Financial Analysis #

3-Year Trend Analysis of Key Financial Metrics (Consolidated) #

• Revenue: Increased from ₹281,507 crores (FY22) to ₹345,967 crores (FY23) and reached ₹437,928 crores in FY24.
• EBITDA Margin: Improved from 10.7% (FY23) to 14.3% (FY24).
• EBIT Margin: Rose from 3.6% (FY23) to 8.3% (FY24).
• Net Profit/Loss: Reported a loss of ₹11,441 crores in FY22, a profit of ₹2,414.29 crores in FY23, and a profit of ₹31,399.09 crores in FY24.
• Net Automotive Debt: Decreased significantly from ₹43,687 crores (FY23) to ₹16,022 crores (FY24).
• Free Cash Flow (Auto): Increased substantially, from an inflow of ₹7,840 crores (FY23) to an inflow of ₹26,925 crores (FY24).

Business Segment Performance #

Tata Commercial Vehicles #

• Revenue increased by 11.3% year-on-year in FY24, reaching ₹78,791 crores.
• EBIT margin improved significantly to 8.2% in FY24, up from 5.2% in FY23.
• Domestic CV industry (wholesale) volume growth was modest at 2% in FY24, with TML’s market share slightly decreasing.
• Focus on BS VI Phase II transition, with 140+ products and 700+ variants launched.

Tata Passenger Vehicles #

• Record sales for the third consecutive year, with a 6% increase in wholesale units (5,73,541) in FY24.
• Revenue grew by 9.4% to ₹52,353 crores in FY24.
• EBIT margins improved by 100 bps, reaching 2.0% in FY24.
• Market share increased by 40 bps.
• Strong focus on emission-friendly technologies, with CNG and EV penetration reaching 29% of the portfolio.

Tata Passenger Electric Vehicles #

• Wholesale volumes are at 73,844 Units.
• Domestic VAHAN market share stood at 73.1%
• The business became EBITDA positive for the first time ever.

Jaguar Land Rover #

• Record revenue of £29 billion in FY24 (up 27% year-on-year).
• PBT (before exceptional items) of £2.2 billion in FY24.
• Record free cash flow of £2.3 billion in FY24.
• Wholesale volumes (excluding China joint venture) increased by 24.9% year-on-year.
• Adjusted EBITDA margin improved to 15.9%.

Vehicle Financing #

• Assets Under Management (AUM) stood at ₹40,060 Crores.
• Sequential reduction in GNPA.
• Net Income Margins remain range bound at 4.8%.

Tata Technologies #

• Highest ever revenue of INR 5,117 crores in FY24, a growth of 15.9% year over year.
• Operating EBITDA of INR 941 crores, with a robust growth of 29% CAGR over the past three years.
• Total headcount of 12,688 employees.

Major Strategic Initiatives and their Progress #

• Demerger: Proposed demerger into two separate listed companies: Commercial Vehicles & related investments, and Passenger Vehicles (including PV, EV, JLR, & related investments). NCLT order passed.
• Reimagine Strategy (JLR): Focus on becoming a modern luxury business, with a £15 billion investment over five years to transform and electrify brands by 2030.
• Electrification:
  • Commercial Vehicles: Deployment of 2,600+ e-buses, with over 140 million cumulative kilometers covered. Introduction of Hydrogen Fuel-Cell powered buses.
  • Passenger Vehicles: Continued leadership in the EV market with over 70% market share; launch of Punch.ev; introduction of the Tata.ev brand identity.
  • JLR: The range rover EV waiting list opened with over 26,000 clients signed up.
• Sustainability (Project Aalingana): Commitment to net-zero emissions by 2045, focusing on decarbonisation, circular economy, and preserving nature and biodiversity.
• Partnerships: Collaboration with Tata Group companies (Agratas, Tata Technologies, TCS) for battery supply, digital transformation, and platform development.

Risk Landscape Changes #

• Supply Chain Disruptions: Ongoing challenges due to global geopolitical tensions and extreme weather events.
• Commodity Inflation: Inflationary pressures in labor and logistics.
• Theft and Insurance: Challenges related to vehicle thefts and insurance issues in the UK.
• Cybersecurity: Significant risk of business disruption and potential personal safety risks due to increasingly technologically advanced and connected vehicles.

ESG Initiatives and Metrics #

• Net Zero Emissions: Commitment to achieve net-zero emissions by 2045 (CV business) and 2040 (PV business).
• Renewable Energy: Increased use of renewable energy, with a goal of 100% renewable electricity by 2030. 78 MW of RE capacity installed, with plans to add ~300 MW in the next three years.
• Circularity: TATVA 1.0 Circular Economy Framework introduced. Five Re.Wi.Re vehicle scrappage facilities operational.
• Biodiversity: Biodiversity baseline assessment completed across operations.
• Water Neutrality: Dharwad and Lucknow plants are certified as ‘water positive’, and Pantnagar plant is certified as ‘water neutral’.
• Diversity and Inclusion: Efforts to increase gender diversity, with empowHER and Project Samavesh initiatives.
• Scope 1, Scope 2 and Scope 3 emissions: Emissions are as per SBTi glidepath.

Management Outlook #

• Commercial Vehicles: Expects FY25 to be another exciting year due to favorable macroeconomic context. Focus on creating a world-class company, delivering customer value, and enhancing shareholder value.
• Passenger Vehicles: Expects the Indian PV industry to moderate towards a long-term secular growth rate. Plans to continue growth trajectory with new launches and focus on market expansion for EVs.
• JLR: Emerged stronger from recent crises, delivering strategy at pace. Confidence in product desirability, employee skill, and upcoming electric models.

Comparative Analysis with Industry Averages #

• TML is the number 1 CV player in India.
• TML is the number 3 PV player in India.
• TML is the number 1 EV player in India.
• JLR achieved record revenues and profitability.

Detailed Analysis #

Tata Motors Financial Position Analysis #

Three-Year Comparative Analysis (Consolidated) #

(₹ in crores)

Significant Changes in Major Line Items (>10% YoY) #

• Capital Work-in-Progress: Increased significantly (109.5%) from FY23 to FY24, indicating investment.
• Intangible assets under development: Increased significantly by 173.4%
• Other Equity:Increased by 88.9%
• Deferred Tax Assets (Net): Increased significantly (152.7%) from FY23 to FY24, primarily due to the recognition of deferred tax assets on unused tax losses.
• Financial Liabilities: Decreased 6.2%, from FY23 to FY24.

Working Capital Trends #

Decline in specific direct energy consumed and total energy consumption.

Debt Structure and Maturity Profile (Consolidated) #

The document provided shows a decrease in total debt (both short-term and long-term) from ₹1,25,660 crores as at March 31, 2023, to ₹98,500 crores as at March 31, 2024.

Off-Balance Sheet Items (Consolidated) #

• Contingent Liabilities: Income tax matters pending in appeal amounted to ₹803.28 crores as at March 31, 2024. Other claims against the Company, including those related to indirect taxes and other matters, are also disclosed.
• Commitments: The Company disclosed capital commitments of contracts with vendors and contractors for the acquisition of plant, machinery, equipment, and various civil contracts. Intangible assets commitments.
• Guarantees: The Company has given guarantees to banks.

Tata Motors Limited Financial Analysis: FY24 Performance #

Revenue Breakdown by Segment/Geography with Growth Rates #

Segment Revenue (FY24 vs FY23):

• Tata Commercial Vehicles: Increased by 11.3% (₹78,791 crores vs. ₹70,816 crores).
• Tata Passenger Vehicles: Increased by 9.4% (₹52,353 crores vs. ₹47,868 crores).
• Tata Passenger Electric Mobility: Turnover has increased by 47.5%.
• Jaguar Land Rover: Increased by 35.9% (₹3,02,825 crores vs. ₹2,22,860 crores), 26.9% increase in GBP terms.
• Vehicle Financing: Decreased by 10.8% (₹4,099 crores vs. ₹4,595 crores).
• Others: Increased by 22.2%(₹5,875 crores vs. 4,809 crores).

Geographical Revenue (Consolidated, FY24):

• India: Contributed 68.8% of Tata and other brand vehicle sales.
• North America: Contributed 7.7% of total sales.
• UK: increased by 32.6%
• China: Increased by 17.0%
• Europe: Increased by 9%
• Overseas: Increased by 37%

JLR Wholesale Volumes (FY24 vs FY23, excluding China Joint Venture):

• UK increased by 33%
• North America increased by 29%
• Europe increased by 9%
• China Increased by 17%
• Overseas: Increased by 37%.

Cost Structure Analysis #

Material Costs:

• Increased by 20.4% to ₹2,72,756 crores in FY24 from ₹2,26,470 crores in FY23.
• As a percentage of total revenue: decreased to 62.3% in FY24 from 65.5% in FY23.
• Tata Commercial Vehicles: Increased by 6.0%, decreased as a % of revenue (71.1% vs. 74.6%).
• Tata Passenger Vehicles: Increased by 15.5%, increased as a % of revenue (81.2% vs 76.9%).
• Jaguar Land Rover: Increased by 29.7%, decreased as a % of revenue (58.5% vs. 61%).

Employee Costs:

• Increased by 26.2% to ₹42,487 crore. Remained stable as a % of total revenue (9.7%).

Margin Analysis (Gross, Operating, Net) with Trends #

• Underlying EBITDA Margin: 14.3% in FY24 vs. 10.7% in FY23, a 364 bps. improvement.
• Underlying EBIT Margin: 8.3% in FY24 vs. 3.6% in FY23, a 466 bps improvement.
• Net Profit Margin: Improved to 7.3% from 0.8%.

Segment Level EBIT Margins:

• Tata Commercial Vehicles: 8.2% in FY24 vs 5.2% in FY23 (300 bps improvement).
• Tata Passenger Vehicles: 1.9% in FY24 vs 1.1% in FY23 (100 bps improvement).
• Tata Passenger Electric Mobility: 1.1% (EBITDA margins excluding product development expenses).
• Jaguar Land Rover: 8.4% in FY24 vs. 1.6% in FY23.

Non-Recurring Items #

• Exceptional Items (FY24): Net gain of ₹977.06 crores. (FY23: loss of (₹1,590.53) crore).
  • Includes ₹762.36 provision for employees pension scheme.

GAAP vs. Non-GAAP Reconciliation #

• Definitions for Underlying EBITDA and EBIT are provided (excluding exceptional items, specific gains/losses, and other income).

EPS Analysis (Basic/Diluted) #

• Ordinary Shares:
  • Basic EPS: ₹81.95 (FY24) vs. ₹6.29 (FY23).
  • Diluted EPS: ₹81.88 (FY24) vs. ₹6.29 (FY23).
• ‘A’ Ordinary Shares:
  • Basic EPS: ₹82.05 (FY24) vs. ₹6.39 (FY23).
  • Diluted EPS: ₹81.98 (FY24) vs. ₹6.39 (FY23).

Quarterly Trends #

• JLR breaking revenue records for Q4 and full year, with record sales for Range Rover and Defender in Q4.
• TML CV business recorded its highest-ever quarterly and annual revenue in Q4 and in FY24.
• Consistent growth in digital contributions exceeded targets from January to March 2024.
• Sequential reduction in Gross Non-Performing Assets (GNPA) in all the quarters for TMF.
• Increase of 47.5% in EV sales, to 73,844 EV during the year.

Cash Management: Financial Year 2024 Analysis #

Cash Flow and Liquidity Analysis #

OCF, ICF, FCF Components (Consolidated) #

• OCF: Increased to ₹67,915 crores in FY24 from ₹35,388 crores in FY23.
• ICF: Net outflow of ₹(22,828) crores in FY24, increasing from ₹(16,804) crores in FY23.
• FCF: Positive at ₹26,925 crores in FY24, compared to a positive ₹7,840 crores in FY23, driven by improved cash profits and working capital.

Working Capital Management Efficiency #

• Changes in operating assets and liabilities resulted in a net cash inflow of ₹7,325 in FY24 compared to a net cash outflow of ₹(3,127) crore in FY23.

Capex Analysis by Segment #

• Tata Commercial Vehicles: FY24: ₹2,101 crores; FY23: ₹1,787 crores.
• Tata Passenger Vehicles: FY24: ₹4,237 crores; FY23: ₹3,220 crores.
• Jaguar Land Rover: FY24: ₹24,592 crores; FY23: ₹13,591 crores.
• Others: FY24:₹253 crore, FY23: ₹49 crore.
• Total Investment spending: FY24: ₹42,142 crore, FY23: ₹29,398 crore.

Dividend and Share Buyback #

• Dividend: A final dividend was recommended for FY24: ₹3 per Ordinary Share and ₹3.10 per ‘A’ Ordinary Share, plus a special dividend of ₹3 per Ordinary Share and ₹3.10 per ‘A’ Ordinary Share. The special dividend is due to profit from the partial divestment of the Company’s investment in Tata Technologies Limited (TTL). The total outflow for the proposed dividend, if approved, will be ₹2,310 crores.

Debt Service Coverage #

• The company paid US$349.4 million of bonds and ECB’s, while JLR prepaid US$400 million equivalent long-term bonds in FY24.

Liquidity Position and Cash Conversion Cycle #

• Liquidity Position:
  • Consolidated: The Group liquidity for domestic operations was ₹10,241 crores, JLR had £5.7 billion (including an unutilized credit facility of £1.5 billion) as on March 31, 2024.
• India automotive business is now debt free.
• The Company is on track to become net automotive debt free on consolidated basis in FY25.
• Cash Conversion Cycle: Changes in operating assets and liabilities were positive, indicating an efficient conversion of assets into cash.

Financial Analysis of Tata Motors Limited #

Profitability Ratios (3-Year Trends) #

Tata Commercial Vehicles #

• EBIT Margin: Increased from 5.2% (FY23) to 8.2% (FY24), and was at 5.2% in FY22.

Tata Passenger Vehicles #

• EBIT Margin: Improved from 1.0% (FY23) to 2.0% (FY24), with -2.0% in FY22.

Jaguar Land Rover #

• EBITDA Margin: Increased from 10.7% (FY23) to 14.3% (FY24).
• EBIT Margin: Improved from 3.6% (FY23) to 8.3% (FY24).

Tata Motors Finance #

• RoA: Increased from-2.3% to 0.2%.

Consolidated Tata Motors Group #

• EBITDA Margin: Increased from 10.7% (FY23) to 14.3% (FY24).
• EBIT Margin: Increased from 3.6% (FY23) to 8.3% (FY24).
• Net Profit Margin: Increased from 0.8% (FY23) to 7.3% (FY24).
• ROE: increased from 6.29% to 81.88%.

Liquidity Metrics #

Tata Motors Standalone #

• Current Ratio: Decreased from 0.98 (FY23) to 0.97 (FY24).

Efficiency Ratios #

Tata Motors Standalone #

• Inventory Turnover: Improved from 14.61 (FY23) to 16.06 (FY24).

Leverage Metrics #

Tata Motors Standalone #

• Debt-Equity Ratio: Decreased from 2.77 (FY23) to 1.16 (FY24).
• Interest Coverage Ratio: Increased from 1.17 (FY23) to 4.52 (FY24).

Working Capital Ratios #

Tata Motors Standalone #

• Long-term Debt to Working Capital: Decreased from 5.3 (FY23) to 3.56 (FY24).

Tata Motors Financial Analysis: Segment Performance in FY24 #

Tata Commercial Vehicles #

• Revenue: ₹78,791 crore (FY24), an 11.3% increase from ₹70,816 crore (FY23).
• EBIT: ₹6,479 crore, a 77% increase over FY23, with EBIT margin rising to 8.2% from 5.2%.
• India’s largest CV manufacturer, maintaining its number one position.
• Strong demand for heavy trucks and passenger carriers.
• Launched 140+ products and 700+ variants.
• Deployed 1,100+ E-buses under the CESL tender.
• Introduced fuel cell electric buses in partnership with IOCL.
• Fleet Edge (connected vehicle platform) deployed in over 6 lakh trucks.
• Marginal growth in international business, maintaining market share in SAARC, MENA regions.
  • SAARC region experienced a 10% drop due to TIV softening and economic challenges.
  • MENA region saw a 23% year-on-year growth in exports.
• Focus on profitable growth, market share gains, and value-added services.
• Scale-up of VAS (Value Added Services) penetration.
• Continue deployment of E-buses and explore payment security mechanisms and leasing arrangements.
• Investment in R&D to enhance the efficiency of ICEs
• Challenges include managing input cost increases, maintaining market share in a competitive environment, and demand generation in a post-FAME environment.

Tata Passenger Vehicles #

• Revenue: ₹52,353 crore (FY24), a 9.4% increase from ₹47,868 crore (FY23).
• EBIT margin improved by 100 bps.
• Holds the #3 position in the Indian PV market, with a market share increase of 40 bps to 13.9%.
• Nexon and Punch were among the top two selling SUVs in India.
• CNG vehicle sales grew by 120% over FY23, now contributing 16% of total sales.
• Launched Punch.ev.
• Sales and service network expanded by 191 new touchpoints in India.
• Focus on market-beating growth, EBITDA improvement, and positive free cash flows.
• Continued investment in products, platforms, electrical & electronic architectures, and vehicle software.
• Focus on enhancing customer experience and product quality.
• Challenges include high competitive intensity and investing to remain competitive.

Tata Passenger Electric Mobility Limited #

• Revenue ~₹9,300 crore, up from ~₹6,500 crore.
• EBITDA margins excl. PDE, 1.1%.
• Leadership in the EV sector with over 70% market share.
• Domestic VAHAN market share of 73.1%.
• EV sales reached 73,844 units, a 48% growth over FY23, with a cumulative EV production of 150,000 units.
• EV present in 192 cities.
• Drive up EV penetration through multiple product launches, market development, and charging network enhancements.
• Partnership with JLR for the development of the ‘Avinya’ series on JLR’s EMA platform.
• Challenges include the growth of the charging network.

Jaguar Land Rover #

• Revenue: £29 billion (FY24), a 27% increase from £22.8 billion (FY23).
• PBT (before exceptional items): £2.2 billion (FY24) compared to a loss of £64 million (FY23).
• EBITDA margin: 15.9% (FY24), up from 10.7%.
• EBIT margin: 8.3% (FY24) vs 3.6% (FY23).
• Record sales for Range Rover and Defender.
• Range Rover Sport SV Edition One fully reserved before launch.
• Opened waiting list for Range Rover Electric, with over 26,000 sign-ups as of March 31, 2024.
• Wholesale volumes increased in all markets year-on-year: Overseas (37%), UK (33%), North America (29%), China (17%), and Europe (9%).
• UK, China, North America and continental Europe considered “key”
• As part of its plan, is to invest 15 billion over 5 years.
• Continue the ‘Reimagine’ strategy, focusing on becoming a premium luxury OEM.
• Delivery of upcoming electric models, including the all-electric Range Rover and Jaguar models.
• Investment in products, platforms, electrical & electronic architectures, and vehicle software.
• Partnerships with Tata Group companies (Agratas, Tata Technologies, TCS) for battery supply, digital transformation, and ERP.
• Challenges include supply chain disruptions, vehicle thefts and insurance issues (especially in the UK), and geopolitical risks.

Vehicle Financing #

• Revenue: ₹4,099 crores, down from previous year.

Tata Technologies #

• Revenue ₹5,117 crore, an increase of 15.9% over last year.
• Specialization in engineering and R&D.

Risk Assessment of Tata Motors Limited #

Commercial Vehicles (Tata CV) #

Strategic Risks #

• Severity: High. The commercial vehicle industry’s growth is linked to India’s GDP, presenting a multi-decade growth opportunity, yet cyclicality introduces volatility.
• Likelihood: Medium. Economic slowdowns and geopolitical events are frequent. BS VI Phase II emission norm transition impact.
• Trend: Increasing. Growing competition from existing OEMs and new entrants.
• Mitigation Strategies: Focus on non-vehicular business, smart mobility, and digital solutions. Investment in technology and brand leadership.
• Control Effectiveness: Moderate. Downstream business and Fleet Edge platform are gaining momentum, showing 3.8x, respectively, but external factors remain influential.
• Potential Financial Impact: High. Revenue volatility; FY24 revenue was ₹78,791 crore, an 11.3% growth over FY23, but with fluctuations in H1 and H2 due to external factors.

Operational Risks #

• Severity: Medium. Supply chain disruptions and commodity price fluctuations.
• Likelihood: High. Geopolitical tensions and disruptions like those in the Red Sea impacting logistics and lead times.
• Trend: Stable. Semiconductor supply has returned to normalcy but other commodities.
• Mitigation Strategies: Diversifying sourcing, driving localization of critical components, building buffer stock.
• Control Effectiveness: Moderate. Secure 23 and Secure 24 programs for semiconductor supply.
• Potential Financial Impact: Medium. Disruptions can affect production volumes and timelines.

Financial Risks #

• Severity: Medium.
• Likelihood: Low
• Trend: Decreasing. Focus on maintaining market share, margins and channel health in the international markets.
• Mitigation Strategies: Driving improvement in realization, growing VAHAN share.
• Control Effectiveness: High. EBIT margin up 300 bps in FY24.
• Potential Financial Impact: Medium.

Compliance/Regulatory Risks #

• Severity: High. The shift to BS VI Phase II emission norms, EV adoption, and sustainability standards.
• Likelihood: High. Ongoing regulatory changes in emission norms and safety standards.
• Trend: Increasing. Focus on achieving net zero emissions by 2045.
• Mitigation Strategies: Proactive transition to BS VI Phase II. Investment in R&D for electric and hydrogen-powered vehicles.
• Control Effectiveness: High. Received FAME and PLI certifications for Ace EV and 12m E-bus models.
• Potential Financial Impact: High. Requires significant investment in R&D and new technologies.

Emerging Risks #

• Severity: High.
• Likelihood: Medium.
• Trend: Increasing.
• Mitigation Strategies: Launch of TML Smart City Mobility Solutions successfully deployed 1,100+ E-buses, and a strategic investment in ‘Freight Tiger’.
• Control Effectiveness: Moderate.
• Potential Financial Impact: Medium.

Passenger Vehicles (Tata PV + Tata EV) #

Strategic Risks #

• Severity: High. Intense competition in the PV segment, especially with increasing preference for SUVs and greener powertrains.
• Likelihood: High. Market share consolidation.
• Trend: Increasing. Growing consumer preference for safer, smarter, and greener vehicles.
• Mitigation Strategies: Focus on market-beating growth, enhanced customer experience, and technology leadership. Investment in new products, platforms, and software.
• Control Effectiveness: Moderate. Market share improved by 40 bps in FY24.
• Potential Financial Impact: High. Requires continuous investment to maintain competitiveness.

Operational Risks #

• Severity: Medium. Capacity scaling and production efficiency.
• Likelihood: Medium. Operationalized new Sanand facility, but capacity constraints may exist.
• Trend: Stable.
• Mitigation Strategies: Operationalized newly acquired facility in Sanand; capacity expansion to 1 million units annually.
• Control Effectiveness: High. Achieved highest-ever production volume of over 5,74,000 vehicles.
• Potential Financial Impact: Medium. Capacity expansion mitigates some operational risks.

Financial Risks #

• Severity: Medium.
• Likelihood: Low
• Trend: Improving.
• Mitigation Strategies: Focus on profitable growth, structural cost reduction.
• Control Effectiveness: High. EBIT margins improved by 100 bps, with the business being free cash flow positive.
• Potential Financial Impact: Medium.

Compliance/Regulatory Risks #

• Severity: High. Growing regulatory support for EVs and emission-friendly vehicles.
• Likelihood: High. Ongoing changes in emission norms and safety standards.
• Trend: Increasing.
• Mitigation Strategies: Focus on emission-friendly technologies, with CNG and EV penetration at 29% of the portfolio.
• Control Effectiveness: High. 5-star Bharat NCAP safety certification for Harrier and Safari.
• Potential Financial Impact: High. Requires investment in compliance, but also presents opportunities for growth.

Emerging Risks #

• Severity: High.
• Likelihood: High.
• Trend: Increasing.
• Mitigation Strategies: Introduced a new customer-facing brand identity for EVs - Tata.ev and inaugurated EV- only stores, and signed MoUs with several CPOs and Oil Marketing Companies.
• Control Effectiveness: Moderate.
• Potential Financial Impact: Medium.

Jaguar Land Rover (JLR) #

Strategic Risks #

• Severity: High. Transition to electrification and maintaining competitiveness in the luxury market.
• Likelihood: High. Ongoing shift towards electric vehicles.
• Trend: Increasing.
• Mitigation Strategies: £15 billion investment over the next five years for electrification. Reconfiguration of production facilities.
• Control Effectiveness: Moderate. Waiting list for Range Rover Electric opened; JLR to be Agratas’s anchor customer for battery supply.
• Potential Financial Impact: High. Requires substantial investment and successful execution of the Reimagine strategy.

Operational Risks #

• Severity: Medium. Supply chain disruptions, vehicle thefts, and geopolitical instability.
• Likelihood: High. Ongoing supply chain challenges and geopolitical tensions.
• Trend: Stable.
• Mitigation Strategies: Implementation of risk scanning solutions, partnerships with Tata Technologies and NVIDIA for supply chain resilience.
• Control Effectiveness: Moderate. Supply constraints eased in FY24, but geopolitical risks remain.
• Potential Financial Impact: Medium. Disruptions can impact production and delivery timelines.

Financial Risks #

• Severity: Medium. Inflationary pressures, interest rate exposure, and maintaining financial stability.
• Likelihood: Medium.
• Trend: Improving.
• Mitigation Strategies: Refocus 2.0 programme to support delivery of Reimagine objectives. Hedging against interest rate exposure.
• Control Effectiveness: High. Delivered record revenue, PBT, and free cash flow in FY24. Reduced debt significantly.
• Potential Financial Impact: Medium.

Compliance/Regulatory Risks #

• Severity: High. Achieving net-zero carbon emissions by 2039 and meeting carbon reduction targets.
• Likelihood: High.
• Trend: Increasing.
• Mitigation Strategies: Electrification of brands, investment in renewable energy, and partnerships for sustainability.
• Control Effectiveness: Moderate. Progress on SBTi targets, but ongoing efforts required.
• Potential Financial Impact: High. Requires significant investment and compliance with evolving regulations.

Emerging Risks #

• Severity: High.
• Likelihood: Medium.
• Trend: Increasing.
• Mitigation Strategies: Partnering with companies such as NVIDIA, Tata Consultancy Services and Agratas.
• Control Effectiveness: Moderate.
• Potential Financial Impact: Medium.

Vehicle Financing (Tata Motors Finance) #

Strategic Risks #

• Severity: Medium. Maintaining asset quality and managing credit costs.
• Likelihood: Medium.
• Trend: Improving.
• Mitigation Strategies: Implementing risk-based pricing, adjusting product mix, and targeted collection strategies.
• Control Effectiveness: Moderate. Sequential reduction in GNPA in all quarters of FY24.
• Potential Financial Impact: Medium.

Operational Risks #

• Severity: Medium. Cost control and operational efficiency.
• Likelihood: Medium.
• Trend: Stable.
• Mitigation Strategies: Implementing technology and digital initiatives to improve efficiency and customer experience.
• Control Effectiveness: Moderate.
• Potential Financial Impact: Medium.

Financial Risks #

• Severity: High. Funding costs and net interest margin (NIM) expansion.
• Likelihood: High. Inflation and interest rate fluctuations.
• Trend: Stable.
• Mitigation Strategies: Enhancing portfolio yield, improving product mix, and implementing better risk-based pricing.
• Control Effectiveness: Moderate. NIM expansion efforts underway, but external factors remain influential.
• Potential Financial Impact: High.

Compliance/Regulatory Risks #

• Severity: High. Regulatory measures impacting bank lending to NBFCs.
• Likelihood: Medium.
• Trend: Increasing.
• Mitigation Strategies: Maintaining adequate capital and asset provision coverage.
• Control Effectiveness: Moderate.
• Potential Financial Impact: High.

Emerging Risks #

• Severity: Medium
• Likelihood: Medium
• Trend:: Decreasing
• Mitigation Strategies: Prudent sourcing and focused collection.
• Control Effectivenss: Moderate
• Potential Financial Impact::Medium.

Tata Technologies #

Strategic Risk #

• Severity: High
• Likelihood: Medium
• Trend: Increasing
• Mitigation: Expansion beyond automotive into aerospace and industrial heavy machinery.
• Control Effectiveness: High (ranked #1 India-based, global automotive ER&D service provider).
• Potential Financial Impact: High (dependent on diversification success and market demand).

Operational Risk #

• Severity: Medium.
• Likelihood: Low.
• Trend: Stable
• Mitigation: Comprehensive IT service offerings and consulting.
• Control Effectiveness: High (strong performance in service delivery).
• Potential Financial Impact: Medium (potential disruptions in service delivery can impact client relationships).

Financial Risk #

• Severity: Low
• Likelihood: Low
• Trend: Improving
• Mitigation: Focus on both services and technology solutions.
• Control Effectiveness: High. (Highest-ever revenue in FY24, strong revenue and EBITDA growth)
• Potential Financial Impact: Low

Compliance/Regulatory Risk #

• Severity: Medium
• Likelihood: Low
• Trend: Stable
• Mitigation: Adherence to global standards and regulations (Zinnov Zones).
• Control Effectiveness: High (consistent top ranking since 2019)
• Potential Financial Impact: Medium (potential fines/penalties for non-compliance).

Emerging Risks #

• Severity: High.
• Likelihood: High
• Trend: Increasing
• Mitigation Strategies: Focused on offering engineering and R&D services, PLM services, consulting and Enterprise IT solutions.
• Control Effectiveness: Moderate.
• Potential Financial Impact: High.

Strategic and Management Analysis #

Commercial Vehicles (Tata CV) #

Long-Term Strategic Goals and Progress #

• Aims for net-zero emissions by 2045, aligned with the Science Based Targets initiative (SBTi) framework.
• Focuses on growing non-vehicular business (spares, service), smart mobility (EV solutions for cities), and digital business.
• Strategic investment in ‘Freight Tiger’ to enhance logistics solutions.
• Operationalized five Re.Wi.Re vehicle scrappage facilities.
• Achieved RE100 before end of this decade.

Competitive Advantages and Market Positioning #

• India’s largest CV manufacturer, holding the #1 position.
• Offers a comprehensive product and service portfolio.
• Transitioned the entire portfolio to BS VI Phase II with improved competitiveness.
• Fleet Edge, connected vehicle platform, is deployed in over six lakh trucks.
• Maintained market share in key international markets (SAARC, MENA) despite a subdued environment.
• Achieved the highest-ever NPS of 72.

Innovation Initiatives and R&D Effectiveness #

• Launched 140+ products and 700+ variants.
• Deployed 1,100+ E-buses, with over 2,600 e-buses operational.
• Received the first auto PLI certificate for Ace EV (N1 category) and 12m E-bus (M3 category).
• Launched Tata Ace EV in Nepal.
• Unveiled two state-of-the-art R&D facilities for hydrogen internal combustion engine.
• Launched India’s first Prima Truck fitted with Collision Mitigation System, Lane Departure Warning System, Electronic Stability Control and Driver Motoring System.

M&A Strategy and Execution #

• Acquired 26.79% stake in ‘Freight Tiger’ to drive effectiveness in the truck and freight ecosystem.

Management’s Track Record in Execution #

• Realignment of the CV business into eight business verticals.
• Highest ever quartely and annually revenue.
• Recorded highest-ever annual revenue of ₹78,791 crore (11.3% growth vs FY23) and a PBT (bei) of ₹6,102 crore (90% growth).
• EBIT growth by a healthy 77% over FY23.
• Successfully transitioned to BS VI Phase II emission norms.

Capital Allocation Strategy #

• Focus on achieving RE100.
• Investments in R&D for alternative fuel vehicles (electric, hydrogen).
• Invested in upgrading plants to use renewable energy.

Organizational Changes and Their Impact #

• Realignment into eight business verticals has matured, with an enhanced financial focus.

Passenger Vehicles (Tata PV) #

Long-Term Strategic Goals and Progress #

• Aims for net-zero emissions by 2040, aligned with the SBTi framework.
• Plan to launch 10 EV models by FY26.
• Operationalized the newly acquired facility in Sanand, augmenting capacity.

Competitive Advantages and Market Positioning #

• Consolidated position as the #3 player in the Indian automobile industry.
• Achieved #1 or #2 position in almost every addressable segment.
• Top two SUVs sold in India (Nexon & Punch).
• Increased penetration of CNG and EVs to 29% of the overall portfolio.
• VAHAN market share increased by 40 bps.
• Improved NPS score to 48, ranking as the #2 brand in India.

Innovation Initiatives and R&D Effectiveness #

• Launched new avatars of Nexon, Nexon.ev, Harrier, and Safari.
• Introduced the twin-cylinder CNG range (industry first).
• Harrier and Safari received a 5-star Bharat NCAP safety rating.
• Unveiled the Nexon iCNG at the Bharat Mobility Show.

M&A Strategy and Execution #

• Acquired and operationalized a new manufacturing facility in Sanand.

Management’s Track Record in Execution #

• Achieved the highest-ever sales volume for the third consecutive year, with 5,73,541 units (6% growth vs FY23).
• Recorded highest-ever turnover with annual revenue of ₹52,353 crore (9.4% growth).
• Improved EBIT margins by 100 bps.
• Expanded sales and service network.
• Operationalized the new Sanand facility within a year of acquisition.

Capital Allocation Strategy #

• Investments were made in expanding capacity and organizational capability.

Organizational Changes and Their Impact #

• Shift to a VAHAN-centric sales process, driving an 8.4% growth in VAHAN volumes.

Electric Vehicles (Tata EV) #

Long-Term Strategic Goals and Progress #

• Aim to drive the growth of the EV ecosystem.
• Partnered with JLR for development of Avinya on JLR’s EMA platform.

Competitive Advantages and Market Positioning #

• Maintained market leadership with over 70% share (73%+ VAHAN market share).
• Widest and most accessible EV portfolio in India.
• Crossed 1.5 lakh cumulative EV production.
• EV business turned EBITDA positive (excluding Product Development Expenses) in Q4 FY24.

Innovation Initiatives and R&D Effectiveness #

• Launched Punch.ev, the first EV in a Sub-Compact SUV body style.
• Introduced a new customer-facing brand identity for EVs - Tata.ev.
• Introduced acti.ev, an advanced Pure EV architecture.
• Unveiled Nexon.ev #Dark

M&A Strategy and Execution #

• None evident from the provided text.

Management’s Track Record in Execution #

• Wholesale volumes of 73,844 units.
• Signed MoUs with charge point operators and oil marketing companies to install over 22,000 public chargers.
• Expanded EV dealer network to 293, covering 192 cities.

Capital Allocation Strategy #

• Collaboration with charging ecosystem providers and partnered with several charge point operators to expand charging networks.

Organizational Changes and Their Impact #

• Inaugurated first EV-exclusive stores in Gurgaon.

Jaguar Land Rover (JLR) #

Long-Term Strategic Goals and Progress #

• Aims for net-zero carbon emissions across supply chain, products, and operations by 2039.
• Reimagine strategy focusing on electrification of brands by 2030.
• Reconfiguring production facilities for electrification.
• Partnered with Agratas for UK gigafactory, securing battery supply.
• Opened a £250 million Future Energy Lab in Coventry.

Competitive Advantages and Market Positioning #

• Transitioning to a house of four distinct brands: Range Rover, Defender, Discovery, and Jaguar.
• Range Rover and Defender proved strong demand.
• Opened waiting list for Range Rover Electric.
• Jaguar to become all-electric in 2025.

Innovation Initiatives and R&D Effectiveness #

• Launched Range Rover Sport SV Edition One.
• Refreshed Range Rover Velar, Evoque, Defender, and Discovery Sport.
• Strategic partnership with NVIDIA for automated driving systems.
• Developing a digital twin of the supply chain with NVIDIA.
• Collaborating with Wykes Engineering Ltd for second-life Jaguar I-PACE batteries.

M&A Strategy and Execution #

• None evident from the provided text.

Management’s Track Record in Execution #

• Delivered a strong first half of FY24.
• Achieved highest-ever annual revenue of £29 billion (27% growth).
• Delivered record sales for Range Rover and Defender.
• Revised upwards profitability expectations from 6% to 8%.
• Reduced debt.

Capital Allocation Strategy #

• Investing £15 billion over the next five years to transform the business and electrify brands.
• Reconfiguring Solihull to produce pure electric MLA models and later, electric Jaguars

Organizational Changes and Their Impact #

• Announced a ‘House of Brands’ approach and a new JLR corporate identity.
• Appointed Richard Molyneux as permanent CFO.

Tata Motors Finance (TMF) #

Long-Term Strategic Goals and Progress #

• Focusing on improving Return on Assets (RoA).

Competitive Advantages and Market Positioning #

• One of India’s leading automotive financiers.
• Strong footprint across India with 350+ branch networks.

Innovation Initiatives and R&D Effectiveness #

• Implementing technology and digital initiatives to increase operational efficiency

M&A Strategy and Execution #

• None evident from the provided text.

Management’s Track Record in Execution #

• Began to build back Assets Under Management (AUM) prudently.
• Healthy early delinquency and roll-forward rates delivered a sequential reduction in GNPA.

Capital Allocation Strategy #

• Working to expand net interest margin (NIM) through product and customer segment mix, risk-based pricing, and efficient borrowing mix.

Tata Technologies (TTL) #

Competitive Advantages and Market Positioning #

• Consistently held the top position among India-based automotive ER&D service providers since 2019.
• Among the top 2 global engineering service providers in electrification.

Innovation Initiatives and R&D Effectiveness #

• Specializes in automotive, aerospace, and industrial heavy machinery sectors.
• Offers comprehensive services from design and testing to full product development.
• Utilizes PLM software to create digital twins.

M&A Strategy and Execution #

• None evident from the provided text

Management’s Track Record in Execution #

• Achieved highest-ever revenue of ₹5,117 crore (15.9% increase vs FY23).
• Operating EBITDA of ₹941 crore.
• Strong revenue CAGR of 29% and operating EBITDA CAGR of 35% over the past three years.
• Successful IPO, marking the first Tata Group IPO in nearly two decades.

ESG Analysis of Tata Motors Limited (2023-24) #

Environmental Metrics and Targets #

• Commercial Vehicles:

  • Committed to achieving net-zero emissions by 2045.
  • Reduced Scope 1+2 emissions intensity by 44% in the last 3 years.
  • Aiming for 100% renewable electricity usage by 2030, with plans to add approximately 300 MW of renewable energy capacity over the next three years.
  • Dharwad, Lucknow, and Pantnagar plants attained water-positive/neutral status.
  • Launched multiple new models, including CNG and LNG ranges in heavy commercial vehicles.

• Passenger Vehicles:

  • Committed to achieving net-zero emissions by 2040.
  • Increased the use of energy from renewable sources in operations.
  • Reduced Scope 1 and 2 emissions as per SBTi glidepath.

• JLR:

  • Aims for net-zero carbon emissions across its supply chain, products, and operations by 2039.
  • Targets 46% reduction in Scope 1 & 2 emissions by 2030.
  • Targets to reduce greenhouse gas emissions by 54% per vehicle across the entire value chain.
  • Plans for all brands to offer pure-electric options by 2030.
  • Plans for a new £250 million Future Energy Lab in Coventry for EV testing.

• Consolidated:

  • 26% Share of renewable energy in total energy consumed.
  • 12% reduction in specific operational waste generated.
  • 3% Reduction on specific scope 1 emissions.
  • 21% Reduction on specific scope 2 emissions.

Social Responsibility Programs #

• Commercial Vehicles:

  • Established seven Institute for Driving & Traffic Research (IDTR) centers, training over 600,000 individuals.
  • Launched the ‘Samarth Programme’ to support CV driver well-being in areas like wellness, finance, education, and life insurance.

• Consolidated:

  • ₹21.59 crore CSR spend in FY24.
  • 1.17 lakh hours volunteered by employees.
  • Reached over one million underserved community members.
  • 44% of CSR beneficiaries belong to the Affirmative Action community.
  • Programs focused on health (Aarogya), education (Vidyadhanam), employability (Kaushalya), environment (Vasundhara), and rural development.

• JLR:

  • Partnered with the British Red Cross, International Federation of the Red Cross, and Disaster Relief Alliance for global disaster preparedness and response.
  • Supported Community Resilience Teams in Australia and youth engagement in Nepal.
  • Partnered with The Amos Bursary (UK) and Toré Institute (Brazil) for educational programs.
  • Over 700 colleagues are STEM ambassador volunteers for youth development.

Governance Structure and Effectiveness #

• Board Structure:

  • Board of Directors supervises and guides the Company’s value creation.
  • Includes Committees like Audit, Nomination and Remuneration, Stakeholders’ Relationship, Technology, Corporate Social Responsibility, Risk Management, and Safety, Health and Sustainability.
  • 75% Independent Directors and 38% Board gender diversity as on March 31, 2024.

• Governance Frameworks:

  • Adheres to the Tata Code of Conduct (TCoC), ensuring ethical standards.
  • Has a Whistle-Blower Policy for reporting non-compliances.
  • Implements a Risk Management framework to manage key risks.
  • Annual performance evaluation of individual Directors, the Board, and its Committees.
  • 15 POSH complaints were filed during FY24. 4 were pending resolution.

Sustainability Investments and ROI #

• R&D and Innovation:

  • FY24: 333 patents granted and 145 design applications for India business.
  • FY24: JLR granted 337 patents and 279 design applications.
  • Investment in R&D to enhance the efficiency of ICEs.
  • Developed new low-carbon and sustainable materials.

• JLR:

  • Investing £15 billion over the next five years to transform and electrify its brands.
  • £250 million investment in the Future Energy Lab, an EV test facility.
  • Partnered with Agratas for battery cell supply, a £4 billion investment.

ESG Ratings and Peer Comparison #

• DJSI:

  • Continued membership in the DJSI Emerging Markets Index.

• Sustainalytics:

  • ‘Low Risk’ ESG Risk Rating, ranking third out of 78 companies in the Automotive Sub-Industry.

Regulatory Compliance and Future Preparations #

• Emissions Compliance:

  • Transitioned to BS VI Phase II emission norms in India.
  • Received FAME and PLI certifications for Ace EV and 12m E-bus models.
  • Launched India’s first Prima Truck fitted with advanced driver assistance systems (ADAS).

• Data Management and Cybersecurity:

  • Information risk managed strategically and operationally through a comprehensive program.
  • Maintains 21 Information Security Management System (ISMS) policies.

• JLR:

  • Working with NVIDIA on a digital twin of supply chain.
  • Partnering with Tata Technologies for Enterprise Resource Planning (ERP) transformation.

• Legal and Compliance

  • Company confirms dedication to legal and regulatory adherence, with specialist teams monitoring developments and establishing compliance standards.

Financial Outlook and Strategic Analysis #

Management Guidance and Assumptions #

• Overall: Aim to achieve net automotive debt-free status on a consolidated basis in FY25.
• Commercial Vehicles (CV): Focus on revenue growth, improving EBITDA, strong free cash flows, strong Return on Capital Employed, technology, and brand leadership.
• Passenger Vehicles (PV): Prioritize market-beating growth, improving EBITDA, positive free cash flows, enhanced customer experience, technology, and brand leadership. The EV business will focus on driving up penetration through multiple product launches, market development, and charging network enhancements.
• Jaguar Land Rover (JLR): Focus on delivering strong revenue growth, improving profitability, driving positive free cash flows, and continue investing in products and technologies.
• Demerger: Proposed demerger into two separate listed companies: A) Commercial Vehicles Business and B) Passenger Vehicles Business.

Market Growth Forecasts #

• India (CV): Growth linked to India’s GDP growth.
• India (PV): Market expected to exceed 5 million vehicle sales in the next few years.
• India (EV): Growing customer consideration and widening charging network.
• JLR: The premium luxury market is strong and resilient.

Planned Strategic Initiatives #

• CV: Focus on growing non-vehicular business (spares, service), incubating Smart Mobility (EV mobility solutions for cities), and digital business (digital solutions for the truck and trip ecosystem). Strategic investment in ‘Freight Tiger’.
• PV: Investment in products, platforms, electrical & electronic architectures, and vehicle software. Focus on improving customer experience and product quality. New manufacturing facility at Sanand is operational.
• EV: Market expansion, building preference and increasing EV penetration.
• JLR: ‘Reimagine’ strategy focusing on electrification. Investment of £15 billion over the next five years. Reconfiguration of production facilities for electrification. ‘House of Brands’ approach and new JLR corporate identity. Partnership with Tata Technologies for Enterprise Resource Planning (ERP). Collaboration with NVIDIA for automated driving systems.
• TMF: Growing a diversified book. Implementing risk-based pricing. Employing targeted collection strategies.
• Tata Technologies: Specializes in automotive, aerospace and industrial heavy machinery sectors.

Capital Expenditure Plans #

• JLR: £15 billion investment over the next five years, including reconfiguring Solihull for pure electric MLA models and later electric Jaguars, converting Halewood to an all-electric facility, and updating the Wolverhampton Electric Propulsion Manufacturing Centre and the plant in Nitra, Slovakia. A new £250 million Future Energy Lab in Coventry, UK, was unveiled.
• Tata Motors: Operationalized a newly acquired facility in Sanand in one year of acquisition. Investment spending of ₹42,142 crores for the Group.

Efficiency Improvement Targets #

• CV: Implementation of TATVA 1.0 (Circularity Framework) will improve resource efficiency.
• PV: Structural cost reduction through innovative sourcing strategies, vendor park footprint, value engineering, and scale-based negotiations.
• JLR: ‘Refocus 2.0’ program aims for operational transformation. Enterprise Resource Planning (ERP) infrastructure transformation with Tata Technologies. Digital infrastructure transformation with Tata Consultancy Services (TCS).
• TMF: Technology and digital initiatives to increase operational efficiency and improve customer experience.

Potential Challenges and Opportunities #

• Challenges:

  • Supply Chain: Geopolitical tensions and extreme weather events are leading to disruptions in logistics and increased production costs. Supply constraints in premium segment exist, along with theft and related insurance issues in the UK.
  • Inflation: Inflationary pressures in labor and logistics, commodity price rises due to geopolitical tensions.
  • Competition: Intensified competition from existing OEMs and new disruptive entrants, especially in the EV segment.
  • IT Systems and Data Security: Risks associated with legacy IT systems, system migration projects, and safeguarding information assets.

• Opportunities:

  • India’s Economic Growth: Strong GDP growth, increased government capex spending on infrastructure, and a growing working-age population.
  • Shifting Consumer Preferences: Rising demand for SUVs and high-end variants, with a preference for safer, smarter, and greener vehicles.
  • Electrification: JLR’s ‘Reimagine’ strategy is centered on the rapid electrification of Jaguar and Land Rover. Tata Motors is leading India’s EV transition.
  • Tata Ecosystem: Leveraging synergies within the Tata Group (Agratas, Tata Technologies, Tata Consultancy Services).
  • Artificial Inteligence: Harnessing the power of AI to protect and strenthen our supply chain.

Scenario Analysis and Sensitivity to Key Assumptions #

• JLR: Sensitivity analysis shows that significant changes in terminal value or discount rate (which are not considered reasonably possible) would be needed for recoverable amount to equal carrying amount. Scope 3 emission sensitivity per vehicle KM is down 3.2% from FY23.
• Interest Rate Sensitivity: A 100 basis point increase/decrease in interest rates would decrease/increase pre-tax profit by approximately ₹427.19 crores.
• Foreign Exchange Sensitivity: A 10% appreciation/depreciation would result in decrease/increase in net profit/(loss) and equity before tax by approximately ₹44.39 crores and ₹391.66 crores.
• Commodity Price Sensitivity: A 10% appreciation/depreciation would result in a pre-tax gain/(loss) of approximately ₹946.85 crores.
• Defined Benefit Obligation Sensitivity: A 1% increase/decrease in the discount rate would decrease/increase obligations by ₹221.10 crores/₹255.87 crores.
• Credit Risk: Impairment loss is subject to management estimates, judgements, and the application of the ECL model.