TO THE MEMBERS OF TATA MOTORS LIMITED
The Directors present their Seventieth Annual Report and the Audited Statement of Accounts for Fiscal 2015.
FINANCIAL PERFORMANCE SUMMARY
DIVIDEND
Considering the continued weak operating environment in the standalone business and in view of the losses for the year, no dividend is permitted to be paid to the Members for Fiscal 2015, as per the Companies (Declaration and Payment of Dividend) Rules, 2014.
TRANSFER TO RESERVES
The loss for the Fiscal Year is Rs. 4,738.95 crores. After the appropriation, the balance of Rs. 3,667.96 crores deficit is debited to the Profit and Loss account.
OPERATING RESULTS AND PROFITS
The Global growth remained moderate in Fiscal 2015 with uneven prospects across the major economies. The outlook for advanced economies is improving while growth in emerging market and developing economies is projected to be lower, primarily reflecting weaker prospects for some large emerging market economies and oil & raw material exporting economies. The US economy has been creating jobs resulting in decline in unemployment rate and its housing market as well as stock indicator have moved up demonstrating the continued recovery in the US. Euro zone was in recession for much of 2014, but showed signs of pickup in the fourth quarter and in early 2015. Eurozone is expected to benefit from QE supported by lower oil prices, lower interest rates and weaker Euro. UK grew by 2.6% in 2014, backed by consumer spending on account of lower inflation and higher wage growth. In China the growth rate declined, reflecting a slowdown in the broader economic parameters including in the real estate sector. But government continued to support the economy with several measures including the easing of monetary policy. India's economic growth rate in Fiscal 2015 came at 7.3% (Previous Year 6.9%. (4.7% as per earlier methodology). India's economy was in the midst of a recovery with lower fiscal and current account deficit, slowing inflation, lowering interest rate and weak commodity prices coupled with steep decline in oil price over the previous year. All these led to revival and growth in some sector of the economy. As a result, the domestic auto industry witnessed growth during the fiscal year 2015, after witnessing de-growth in the previous fiscal year. Expectation of higher capital formation, revival in the areas of mining, and quarrying as well as manufacturing initiated the replacement of old vehicles and thus supported the growth for the domestic auto industry.
The Tata Motors Group recorded a 12.6% growth in gross turnover to Rs. 266,345 crores in Fiscal 2015 from Rs. 236,626 crores in the previous year. This is the highest turnover recorded by the Group. The consolidated revenue (net of excise) for Fiscal 2015 of Rs. 262,796 crores grew by 12.9% over last year on the back of strong growth in wholesale volumes across products and richer product mix markets at Jaguar Land Rover and strong M&HCV sales in India (during second half of the year). The consolidated EBITDA margins for Fiscal 2015 stood at 16.0%. Consequently, Profit Before Tax and Profit After Tax were Rs. 21,703 crores and Rs. 13,986 crores respectively.
Tata Motors Limited recorded a gross turnover of Rs. 39,524 crores, 4.7% higher from Rs. 37,758 crores in the previous year. Improved freight availability and improved profitability of truck operators, fleet replacement demand mainly in the high tonnage segment, supported the Company sales growth. However, the need to increase marketing expenses on account of severe competitive intensity and depressed market scenario has impacted EBITDA margins decreasing it from negative 1.4% to negative 2.2% for Fiscal 2015. Loss Before Tax and After Tax for the Fiscal 2015 were lower at Rs. 3,975 crores and Rs. 4,739 crores respectively, as compared to Loss Before Tax of Rs. 1,026 crores and Profit After Tax of Rs. 335 crores, respectively for the corresponding period last year.
The Company is focused on growth and achieving profitability through a superior new product pipeline along with a renewed commitment to enhance quality and customer service and reduce costs. During the year, the Company had launched Zest, Bolt, and Ultra Truck which has received an encouraging response from the customers. As a part of the Horizonext strategy, the Company is committed to introduce new, modified and refreshed products which will improve the Company's revenue. Investment in right products and vehicle platform are being made to ensure a competitive pipeline for the future. Together with forward looking product strategy, the Company is also focusing extensively in right sizing the business and operational improvement through various strategic projects for operational excellence and cost cutting initiatives.
Jaguar Land Rover (JLR) recorded revenue of GB£21,866 million for Fiscal 2015, up by 12.8% from GB£19,386 million compared to the previous year. JLR had a successful year of continued growth in the majority of markets with wholesale volumes for the full year up by 9.5%, reflecting the continued success of the Range Rover, Range Rover Sport and the Jaguar F-TYPE. More established models have also been performing well, such as the Land Rover Discovery and the Range Rover Evoque. Consolidated EBITDA for Fiscal 2015 was a record GB£4,132 million, up by 21.8% as compared to Fiscal 2014. The EBITDA improvement comprises increased wholesale volumes and revenues, as well as a favourable product and market mix. Profit Before Tax (PBT) for Fiscal 2015 was GB£2,614 million, an increase of GB£113 million (4.5%) compared to the previous year.
JLR also incurred one off costs of GB£77 million for the successful partial redemption of the higher coupon GB£500 million 2020 Notes and the US$410 million 2021 Notes (with respective 8.250% and 8.125% coupons). The bond redemptions were pre-financed by the successful issuances of GB£400 million 3.875% 2023 Notes and US$500 million 3.500% 2020 Notes, to reduce the Company's overall cost of debt in line with a stronger credit status. In Fiscal 2014, JLR incurred this one off cost of GB£56 million for prepayment of higher coupon GB£500 million and US$ 410 million Notes (at 8.125% and 7.75% coupon, respectively) (Jaguar Land Rover's figures as per IFRS).
Tata Motors Finance Limited (TMFL) (consolidated) the Company's captive financing subsidiary, registered a decline in revenues by 9.6% to Rs. 2,743 crores (previous year: Rs. 3,034 crores) and reported a Loss After Tax of Rs. 611 crores in Fiscal 2015, as compared to Profit after Tax of Rs. 101 crores in Fiscal 2014. TMFL's inclusive strategy for channel financing customer and insurance support in conjuction with the Company has led to improved market share and deeper connect with customers whilst benefiting the customers through reduced turnaround time and higher satisfaction levels.
Tata Daewoo Commercial Vehicle Company Limited (TDCV), South Korea registered revenues of KRW 988 billion (Rs. 5,563 crores), a growth of 11.8% over the previous year. The positive impact of higher volume, various cost control initiative, productivity improvement initiatives and reversal of provisions pertaining to ordinary wage lawsuit (KRW 24 billion) in view of favourable judgment by the High court helped TDCV to achieve profit after tax of KRW 54 billion (Rs. 304 crores) in Fiscal 2015 as against profit of KRW 24 billion (Rs. 132 crores) of previous year. (TDCV figures as per Korean GAAP).
VEHICLE SALES AND MARKET SHARES
The Tata Motors Group sales for the year stood at 997,550 vehicles, lower by 2.3% as compared to Fiscal 2014. Global sales of all Commercial Vehicles were 377,193 vehicles, while sales of Passenger Vehicles were at 620,357 vehicles.
TATA MOTORS
Tata Motors recorded sales of 504,369 vehicles, a decline of 11.5% over Fiscal 2014. Industry grew during the year by 2.4%. However, the Company's market share decreased to 14.1% in the Indian automotive industry from 16.5% in the previous year. The Company exported 49,936 vehicles.
Commercial Vehicles
Within the domestic market, the Company sold 317,780 Commercial Vehicles (CV), a decline of 15.9% from Fiscal 2014 primarily due to the decline in the LCV segment. However the critical M&HCV truck segment has grown by 27% and the Company has been able to retain a stong Market share of 58% in this category. Even under these difficult conditions, the Company has been able to sustain market share in the critical M&HCV segment.
Some of the highlights for the year were:
- Launched the new Intermediate and Light Commercial Vehicle (ILCV) range of trucks christened 'ULTRA', which offers superior technology and design that ensures lowest total cost of ownership through higher uptime because of increased driver comfort, superior aggregates and customized requirements. The PRIMA LX range of trucks were extended with the launch of the Multi-axle truck variants – 2523.T & 3123.T. The Company launched a new pickup – Super Ace Mint with 1.4 L DiCOR engine. With its unmatchable combination of performance, ruggedness, comfort, superior ride & handling, style and best-in-class cost of ownership, the Tata Super ACE Mint will maximise revenues for its owners and will meet requirements of intra and intercity transport.
- Launched a new trucking concept of 'TRUCK WORLD': Advanced Trucking Expo' showcasing the Company's extensive offering from its' medium and heavy commercial vehicles business, all under one roof along with the Company's own service related brands like Tata Genuine Parts, Tata Delight and Tata FleetMan.
- Announced partnership with UK based Microlise for advanced Telematics and Fleet management services ushering in the latest technology in this segment.
- Conducted the Prima Truck Racing Championship Season 2 witnessed by over 45,000 spectators at India's F1 track, the Buddh International Circuit.
- Celebrated 60 years of truck manufacturing at its first manufacturing and engineering facility in Jamshedpur.
- Participated strongly in the JnNURM Phase II bagging over 3500 orders and have developed new Bus models for JnNURM including the Articulated and Hybrid buses.
- The flagship program of the Company 'Humare Bus Ki Baat Hain' won several accolades this year and over 15,000 school bus staffs were trained on school bus safety under the program.
- Launched the 'Tata SKOOLMAN', a telematics based tracking solution, aimed at addressing pressing concerns over student safety as a standard fitment on the Tata Ultra range of school buses.
- Celebrated the roll-out of 100,000th Tata ACE ZIP at the Dharwad facility in Karnataka.
Passenger Vehicles
The domestic passenger vehicle industry grew by 5.5% during Fiscal 2015. Correction in fuel prices and easing financing cost has resulted in lower operating cost, which should further aid domestic PV growth in near to medium term. During the year, the Company's Passenger Vehicles sales were lower by 3.7% at 136,653 vehicles, registering a 5.3% market share. However, the premium and luxury segment of the Company grew by 11.5% compared to last year. The Company sold 111,094 cars (growth of 1.7%) and 25,559 utility vehicles and vans, (lower by 21.5%), the Company's sales in the Utility Vehicle segment suffered as competitive activity intensified with multiple new launches mainly in the soft-roader category in this segment. The Company has taken various initiatives to improve its performances such as product refreshes/launch programs, operational efficiency, dealer effectiveness, working capital management and restructuring customer facing functions.
The Company sold 2,827 vehicles of Jaguar Land Rover brands during Fiscal 2015, a growth of 0.8%. Jaguar sales grew by 11.5% in Fiscal 2015. The market share remained unchanged at 9.5% in Fiscal 2015.
Some of the highlights of this year's performance were:
- Product Launches/Refreshes continued under the Horizonext Strategy.
- Zest, Compact Sedan was launched in the growing entry sedan segment, which helped the Company in recovering market share in the passenger car segment.
- The all-new 1.2 ltr Revotron engine was well received in the market and helped the Company penetrating the lucrative petrol segment.
- Bolt premium hatchback was launched in January 2015.
- Nano Twist launched last year with electronic power steering, continued to take the Nano Brand closer to the youth. GenX-Nano range was launched in May 2015, with latest technological advancements and design engineering.
- Tata Hexa SUV Concept was unveiled at the Geneva Motor Show.
- The above new/refreshed product launches were in-line with the Company's objective of taking the brand to a higher level, while making it relevant for the younger buyer. The Company continued to focus on building brand strengths, refreshing products and enhancing sales and service experience. The Company expanded it's new look, stylish, tech savy best in class flagship Passenger Vehicle showrooms, for superior customer experience.
Exports
The Company exported 49,936 vehicles (Fiscal 2014: 49,922 vehicles, comprising 46,416 units of Commercial Vehicles and 3,520 units of Passenger Vehicles during Fiscal 2015.
Export of Commercial Vehicles grew by 7.7% over Fiscal 2014. South Asia, our traditional market showed a strong growth of 18% over previous year with all the countries – Bangladesh, Nepal, Sri Lanka, Myanmar contributing to this growth. Middle East has grown by 41% on the back of a strong growth in volumes in Saudi Arabia and other markets like UAE and Qatar. In Africa, the new Auto policy of Nigeria coupled with the adverse impact of oil prices, commodity industry political and civil unrest in many countries impacted the CV industry which recorded around 40% lower volumes over last year. Continued political strife and economic slowdown in some of the other countries such as Ukraine, Russia, Thailand, has impacted the industry and Company's volumes. The Company was able to grow its market share in key markets and segments of focus, including Bangladesh, Kenya, Middle East (Buses), Tanzania, Congo, Indonesia, Sri Lanka. The Company successfully bagged and executed an order for 520 Defence vehicles aggregating US$ 35 million for the UN Mission in Africa as also a repeat order for 400 Xenon troop carriers for the Myanmar Army.
Export of Passenger Vehicles at 3,520 were 48.5% lower than Fiscal 2014, mainly due to lower sales in the units in the South African and Algerian markets. Aggressive efforts made through a flanking strategy, with the Indigo, Xeta and the Nano Twist led to 40% and 232% growth in exports to Bangladesh and Sri Lanka, respectively. Indigo, Nano and Sumo have found favorable acceptance in these export markets. Launch of the Zest in Nepal has been received very well with promising sales and is likely to be launched this year in our traditional markets.
JAGUAR LAND ROVER
JLR had another successful year of continued growth in the majority of markets with retail sales in China, its largest market, of 115,969 units up 12.5% compared to last year. Retail volumes in Fiscal 2015 also increased in the UK (13.1%), North America (3.6%), Europe (6.0%) and Asia Pacific (16.8%) to 86,750, 78,372, 87,863 and 26,619 respectively, compared to the same period last year. Volumes in Overseas markets were down by 9% to 66,636 units as economic sanctions and low energy prices continued to impact Russia and slowing growth in Brazil affected consumer spending.
Wholesale volumes for Fiscal 2015 were 470,523 units (including the volume of the Chery JLR joint venture in China), an increase of 9.5% compared to Fiscal 2014. At a brand level, Jaguar wholesale volumes were 76,496 units (down 3.5%) and Land Rover wholesale volumes were 394,027 (up 12.4%).
Some of the highlights of this year were:
- The opening of Jaguar Land Rover's new Engine Manufacturing Centre (EMC) in the UK in October 2014, which produces the new family of Ingenium engines.
- The opening of Jaguar Land Rover's inaugural overseas manufacturing facility in China with its joint venture partner, Chery Automobile Company Ltd. In October 2014.
- The start of construction of Jaguar Land Rover's R$750m (Brazilian Real) manufacturing facility in the state of Rio de Janeiro in December 2014.
- Significant investment in UK manufacturing facilities to support the launch of new products such as the all new Land Rover Discovery Sport in Halewood, the Jaguar XF in Castle Bromwich and the Jaguar XE and F-Pace in Solihull.
- The beginning of Jaguar Land Rover's Special Operations division in June 2014, comprising Special Vehicle Operations, Heritage, Personalisation and Branded Goods divisions.
- The beginning of sales of the F-TYPE coupe in April 2014 as well as all-wheel drive variants that were launched during the year.
- The launch of the long wheel base diesel hybrid Range Rover at the Beijing Motor Show in April 2014 followed by a Range Rover Sport Diesel Hybrid shortly after.
- The launch of the Range Rover Sport SVR (from the new Special Operations division), the fastest, most agile and most responsive Land Rover produced to date.
- The locally produced Range Rover Evoque from JLR's manufacturing joint venture with Chery Automotive Ltd., in China went on retail sale in February 2015.
- Land Rovers all new Discovery Sport went on retail sale in February 2015.
- Jaguar's all-new sports sedan, the Jaguar XE, was revealed to the public in September 2014 and went on retail sale in May 2015. The XE is also the first Jaguar Land Rover product to take the new Ingenium diesel engine built at the EMC.
- Jaguars all new performance crossover, the F-PACE, was introduced at the Detroit Motor Show in January 2015 and goes on sale in 2016.
- A refreshed 16MY Range Rover Evoque and a convertible derivative were announced in the final quarter of Fiscal 2015 and go on sale later in Fiscal 2016.
- The all new lightweight Jaguar XF was revealed to the public in March 2015 and goes on sale in 2016.