tata motors: Tata Motors Group businesses are self-sustaining, to attain net zero automotive debt by FY-24, says N Chandrasekaran

In his address to the shareholders in the FY-22 annual report, Chandrasekaran said, “We are committed to restoring the profitability of this business as it returns to competitive growth and inflation stabilizes.”

Tata Motors Group is now operating as three independent business units of Commercial Vehicles, Passenger Vehicles and Jaguar Land Rover, offering differentiated value propositions to their different customer segments whilst leveraging backend and corporate synergies where possible, felt the chairman.

“This has made Tata Motors lean, nimble and customer centric. Each of these businesses are self-sustaining which gives me the confidence that we will get to near zero net automotive debt by FY24. Tata Motors is taking concerted actions to be future ready and create a virtuous cycle of growth and returns for our shareholders,” he said.

The chairman reiterated that the Group is also actively exploring partnerships in battery cell manufacturing in India and Europe to secure our EV supply chain.

Reflecting on the year, Chandrasekaran said FY22 was a “busy year” for the Company as it navigated many challenges to successfully strengthen the fundamentals of the business.

The global wholesales of Tata Motors increased by 20% to 1,086,734 vehicles and revenues stood at `278,454 crore, 11.5% higher as compared to FY21.

Free cash flow (automotive) in the year was negative at `9,472 crore (as compared to positive `5,317 crore in FY21), primarily due to adverse working capital.

Elaborating on the global macro-economic environment, Chandrasekaran highlighted that the recent history has been relentless with the global pandemic, military conflict, growing inequality, supply chain shortages and more, where, “decades of experience has been squeezed into two dizzying years. Businesses have had to cope with this unprecedented sequence of events with speed and agility,” he added.

He stressed that while these changes have had a serious impact on businesses and communities, they have also accelerated some important trends for the future

“The Energy transition is irreversible (and will) move to green mobility, (need for) rebalancing of supply chains to become resilient and the digital transition of Artificial Intelligence and Machine Learning have become mainstream,” said the Chairman.

On the JLR’s performance for FY-22, Chandrasekaran said, the global shortage of semiconductors had a disproportionately adverse impact on Jaguar Land Rover’s production and sales compared to its competitors.

“Even though we took various steps to address the issue, the situation continues to remain challenging. This is a key issue facing Jaguar Land Rover and we are working assiduously to address the same during FY23,” he assured.

He asserted that the company delivered a resilient performance during the year despite a fall in revenues by reducing its breakeven to 320,000 units.

Chandrasekaran showed confidence on the way ahead, “While the near-term outlook is fluid with multiple challenges, the business is taking the right actions to navigate them, and I am confident that we will emerge stronger.”

He highlighted that during the year, Tata Motors entered into a definitive agreement with TPG Rise Climate for them to invest `7,500 crore ($1.0B) in the passenger EV business to secure a 11% – 15% shareholding in this business.

During the year, in the EV space, new records were set every quarter by Tata Motors to register the highest ever annual EV sales of 19,105 units in FY22 (up 353% vs FY21) with penetrations touching 7.4% by Q4 FY22. He expects a penetration of 25% EVs in the next five years.

On the Group’s sustainability roadmap, Chandrasekaran said, the shift to sustainable mobility is “irreversible” and the Tata Motors Group will be amongst the leaders of green mobility globally. “We target Net Zero emissions by 2039 for Jaguar Land Rover 2040 for PVs and 2045 for CV and actions are already underway to deliver the same.”

On its part, the Jaguar brand will become fully electric by 2025 and Land Rover shall have 6 battery electric vehicles by 2026. It expects 60% of Jaguar Land Rover’s volumes will be pure BEV vehicles by 2030.

Back home, In India, Chandrasekaran said, “EV penetration in our portfolio is likely to increase further to 25% in 5 years from 7.4% as of Q4 FY22.”

By 2025 Tata Motors intends to have a portfolio of 10 EVs.