Jaguar Land Rover’s Sales & Distribution
As at March 31, 2018, Jaguar Land Rover distribute its vehicles in 120 markets for Jaguar and 129 markets for Land Rover globally. Sales locations for vehicles are operated as independent franchises. Jaguar Land Rover are represented in its key markets through its National Sales Companies (“NSC’s”) as well as thirdparty importers. Jaguar and Land Rover have regional offices in certain select countries that manage customer relationships and vehicle supplies and provide marketing and sales support to their regional importer markets. The remaining importer markets are managed from the United Kingdom.
Jaguar Land Rover products are sold through a variety of sales channels: through its dealerships for retail sales; for sale to fleet customers, including daily rental car companies; commercial fleet customers; leasing companies; and governments. Jaguar Land Rover do not depend on a single customer or small group of customers to the extent that the loss of such a customer or group of customers would have a material adverse effect on its business.
As at March 31, 2018, Jaguar Land Rover global sales and distribution network comprised 22 NSCs, 79 importers, 2 export partners and 1,571 franchise sales dealers, of which 1,226 are joint Jaguar and Land Rover dealers.
Jaguar Land Rover — Competition
Jaguar Land Rover operates in a globally competitive environment and faces competition from established premium and other vehicle manufacturers who aspire to move into the premium performance car and premium SUV markets, some of which are much larger than they are. Jaguar vehicles compete primarily against other European brands such as Audi, Porsche, BMW and Mercedes Benz. Land Rover and Range Rover vehicles compete largely against SUVs from companies such as Audi, BMW, Infiniti, Lexus, Mercedes Benz, Porsche, Volvo and Volkswagen.
Jaguar Land Rover — Seasonality
Jaguar Land Rover volumes are impacted by the biannual change in age-related registration plates of vehicles in the United Kingdom, where new age-related plate registrations take effect in March and September. This has an impact on the resale value of the vehicles because sales are clustered around the time of the year when the vehicle registration number change occurs. Seasonality in most other markets is driven by introduction of new model year vehicles and derivatives. Furthermore, Western European markets tend to be impacted by summer and winter holidays, and the Chinese market tends to be affected by the Lunar New Year holiday in either January or February, the PRC National Day holiday and the Golden Week holiday in October. The resulting sales profile influences operating results on a quartertoquarter basis.
Other Operations Overview
The Company’s other operations business segment mainly includes information technology services, machine tools and factory automation services. The Company’s revenue from other operations before inter-segment eliminations was Rs.3,252.36 crores in Fiscal 2018, an increase of 2.1% from Rs.3,184.06 crores in Fiscal 2017. Revenues from other operations represented 1.1% and 1.2% of total revenues, before inter-segment eliminations, in Fiscal 2018 and 2017.
OPPORTUNITIES:
In the Budget 2018, Government of India has plans to complete 9,000 km of national highways by Fiscal 2019 and 35,000 km under the Bharatmala project at Rs.5.35 lac crore. With the allocation of funds to improve national highways; people will see value in personal transportation and increase in sentiments towards purchasing new vehicles. Even the commercial vehicle industry will benefit from this increased connectivity.
The Automotive Mission Plan 2016-26 aims at 13% share of automotive industry in GDP, along with implementation of BS6 vehicles effective April 1, 2020 and increase in Value added services. National Electric Mobility Mission, aims at providing 7 million electric cars 2020, along with concession in manufacturing of selected parts for electric cars. Use of Block chain in Supply chain; augmented reality in designing and manufacturing; 3D printing and Four-cylinder supercar. At a global level, increasing levels of environmental regulations adds up the complexity quotient in design, marked by diverging behavior.
Jaguar Land Rover intends to grow its business by diversifying its product range to compete in new segments, for example the Range Rover Velar (on sale since July 2017), the Jaguar E-PACE (on sale since November 2017) and Jaguar Land Rover’s first battery electric vehicle, the I-PACE (now available to order with deliveries commencing this summer) ensures that Jaguar Land Rover competes in new premium segments with class-leading products that further supports their growth plans.
FINANCIAL PERFORMANCE ON A CONSOLIDATED BASIS
The financial information discussed in this section is derived from the Company’s Audited Consolidated Financial Statements
Overview
The Company income from operations including finance revenues increased by 7.6% to Rs.295,409.34 crores in Fiscal 2018 from Rs.274,492.12 crores in Fiscal 2017. The increase is attributable to better sales volumes of the Company’s India business and Jaguar Land Rover, offset by Rs.3,192 crores due to unfavorable currency translation from GB£ to INR. Overall, earnings before other income, interest and tax, were Rs.11,787.51 crores in Fiscal 2018 compared to Rs.15,593.80 crores in Fiscal 2017, a decrease of 24.4%. The decrease in net income was primarily driven by higher depreciation and amortization, fixed marketing expenses/selling costs at Jaguar Land Rover business. The Company’s net income (attributable to shareholders of the Company) was Rs.8,988.91 crores in Fiscal 2018 as compared to Rs.7,454.36 crores in Fiscal 2017.
The Company has pursued a strategy of increasing exports of Tata and other brand vehicles to new and existing markets. However, in Fiscal 2018, the revenue of the Company’s subsidiary in South Korea, TDCV, has been lower due to lower industry volumes and aggressive marketing strategy from the competitors. Similarly for TTL, its specialized subsidiary engaged in engineering, design and information technology services, had reported lower revenue and profits due to adverse movement in exchange rates of major currencies as average rate of US$/INR declined by 3.9% in Fiscal 2018 compared to Fiscal 2017, while average rate of GBP/INR declined by 2.5% during the above period. TTL also suffered decline in revenue in Europe and North America mainly due to completion of vehicle programs with its key clients and delayed start of new programs due to client plan changes. The decline in Europe and North America were partially offset by growth in revenue in Asia Pacific region. Improved market sentiment in certain countries to which the Company exports and the strong sales performance of Jaguar Land Rover has enabled the Company to increase its sales in these international markets in Fiscal 2018. However, due to unfavorable currency translation from GB£ to INR and also growth in revenue in India in Fiscal 2018, the proportion of the Company’s net sales earned from markets outside of India decreased to 79.8% in Fiscal 2018 from 82.5% in Fiscal 2017. The following table sets forth the Company’s revenues from its key geographical markets and the percentage of total revenues that each key geographical market contributes for the periods indicated:
The Company’s operations is divided into automotive operations and other operations as described further below. The table below sets forth the breakdown in revenues between the Company automotive operations and other operations in Fiscal 2018 and 2017 and the percentage change from period to period.
Automotive operations
Automotive operations is the Company’s most significant segment, accounting for 99.3% of the Company’s total revenues in Fiscal 2018 and Fiscal 2017. In Fiscal 2018, revenue from automotive operations before inter-segment eliminations was Rs.293,453.33 crores as compared to Rs.272,692.41 crores in Fiscal 2017, an increase of 7.6%.
The following table sets forth selected data regarding the Company’s automotive operations for the periods indicated, and the percentage change from period to period (before inter-segment eliminations).
The Company’s automotive operations segment is further divided into Tata and other brand vehicles (including vehicle financing) and Jaguar Land Rover. In Fiscal 2018, Jaguar Land Rover contributed 77.3% of the Company’s total automotive revenue compared to 79.4% in Fiscal 2017 and the remaining 22.7% was contributed by Tata and other brand vehicles in Fiscal 2018 compared to 20.6% in Fiscal 2017.
The Company’s revenue from Tata and other brand vehicles (including vehicle financing) and Jaguar Land Rover in Fiscals 2018 and 2017 and the percentage change from period to period (before intra-segment eliminations) is set forth in the table below.
Other operations
The following table sets forth selected data regarding the Company’s other operations for the periods indicated and the percentage change from period to period (before inter-segment eliminations).
The other operations business segment includes information technology, machine tools and factory automation solutions. The reduction in Earning before other income, interest and tax is mainly due to Tata Technologies Ltd.