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Sixty-Seventh Annual Report 2011-2012
MANAGEMENT
DISCUSSIONAND
ANALYSIS
BUSINESS OVERVIEW
Tata Motors Business:
The Indian economy, which recorded a growth rate of 8.6%
during FY 2010-11, started showing softening indicators in second half of FY 2010-11. This
was mainly due to inflationary pressures and continued anti-inflationary monetary stance
taken the by Reserve Bank of India (RBI). During the current year, the inflation continued to
remain at higher levels with headline Wholesale Price Index (WPI) staying at above 9%
during April-November 2011, and moderated to 6.9% by end March 2012. On the foreign
exchange front, higher crude oil prices, lower net capital inflows and lower export growth
in the last six months of the year due to worsening global economic scenario, adversely
affected the Indian currency. The rate of Index of Industrial growth (IIP) decelerated from
8.2% in FY 2010-11 to 2.8% in current year. Due to these factors, India's growth rate is
estimated to be lower at 6.9% during FY 2011-12.
The automotive industry was affected by the overall macro economic factors discussed
above. In particular, the demand was impacted due to higher interest rates and slowing
economy. Further, sharp increases in petrol prices (after deregulation in June 2010) adversely
impacted the demand for petrol vehicles. However, diesel prices did not move in tandem.
This created a gradual shift in demand from petrol cars to diesel cars. There was a spurt in
demand for diesel cars in the last six months of the current year, resulting in supply constraints
on diesel vehicles.
On the above background, the Indian auto industry grew at a moderate rate of 7.2% in FY
2011-12, with 19.2% growth in Commercial Vehicles and 3.6% growth in Passenger Vehicles.
The Company's total domestic sales grew by 10.9% to 8,63,248 vehicles in FY 2011-12.
Commercial Vehicle sales increased by 15.7% to 530,204 units, while Passenger Vehicles
sales grew by 4% to 333,044 units. The competitive scenario intensified as the existing
OEM's launched new variants to protect market share and new entrants sought to gain a
foothold in the market. The Company maintained leadership with a market share of 59.4% in
the Commercial Vehicle segment despite international OEM's entering the market. For
Passenger Vehicles, in a highly competitive environment, the Company was successful in
maintaining its market share of 13.1%. The Company's exports grew by 8.6% to 63,105 units
during the year. The growth was driven by focus on the emerging markets in SAARC, South
Asia and Africa.