TML CEO and MD’s Message
Building a profitable roadmap

Dear Shareholders,

I hope this letter finds you in good health.

FY20 was perhaps the most unpredictable year of the decade for the Indian automotive industry – entry of new OEMs, slew of launches from established OEMs, continuing pressure on liquidity, high fuel prices, revised axle load norms, mandatory transition to BSVI norms, plus weak consumer sentiments that prevailed throughout the year.

Cognisant of the possible rough road ahead, we started our FY20 journey with a clear objective to take our turnaround to the next level by enriching our product portfolio, accelerating retail sales, enhancing customer experience and being even more prudent in managing liquidity and costs.

Building a future-ready product portfolio

Going beyond the necessary technology upgrade required for the mandatory transition to BSVI, we unveiled a comprehensive future-ready product portfolio. This included the Altroz, India’s first Global New Car Assessment Programme (Global NCAP) 5-star safety-rated car (a premium hatchback built on the Alfa platform); refreshed BSVI Tiago, Tigor, Nexon and Harrier; and new launches such as the Intra to 55-tonne Prima in the CV space, with 140+ type approvals and ~19 engines.

Accelerating retail with ‘Mission Zero’

The mandatory transition to BSVI norms, effective April 1, 2020, necessitated a meticulously planned strategy to minimise BSIV inventory carryover. Our early and conscious focus on retail sales, against the industry norm of wholesale, helped us achieve the target of zero BSIV vehicle stock, with the retail business recording a 13% jump over wholesale in PV and 16% in CV.

Delivering superior customer experience

In PV, the upward trend in Net Promotor Score (NPS) consolidated reiterating an improved perception of our brand amongst stakeholders. With the launch of Tata UniEVerse, a collaboration among Tata group companies, the EV business unlocked tremendous underlying potential by bringing forth the unique strength of each company to co-create India’s most comprehensive e-mobility ecosystem.

Prudently managing liquidity and costs

Contribution margins were successfully maintained despite a change in revenue mix and overall lower revenues via a rigorous cost reduction programme. All opportunities to unlock working capital, capex and receivables were intensively captured to support free cash flows.

While we made good progress on the above, it wasn’t enough to mitigate the overall impact of the macro environment on our market and financial performance, further exacerbated during the last quarter with disruptions induced by the COVID-19 pandemic.

During the year, we announced strategic initiatives to make the organisation more resilient, agile and future-ready. Subsidiarisation of the PV business enables the realisation of its full potential with mutually beneficial strategic alliances and better access to products, architectures, powertrains, new-age technologies and capital. Reimagining its front end will drive superior customer experience and improve market performance. A novel, digital-led stakeholder engagement programme underlines the CV business’ endeavour towards redefining transportation with our new range of vehicles offering improved total cost of ownership.

For the immediate, we remain focused on executing a senior leadership led comprehensive Business Continuity Plan (BCP) to manage an effective restart and ensure the early revival of our ecosystem. With the safety and well-being of our employees, customers and partners as the utmost priority, we have resumed operations at all our plants after taking the requisite precautions. We intend to scale in a graded manner as the entire enabling support system of suppliers, dealers and customers comes up to speed.

The demand scenario is expected to remain uncertain in the aftermath of the COVID-19 pandemic even as the need for safe personal mobility evolves into a new area of focus. Accordingly, we continue to build agility to respond dynamically to the changing consumer behaviour through closer connect with our customers.

We are building a profitable roadmap by reducing the break-evens, improving cash generation and deleveraging the business. A cash improvement programme of ₹6,000 crore (including a cost savings programme of ₹1,500 crore) has been called out. Our refreshed BSVI product portfolio with customised offerings and enhanced customer experience will help us improve our market share. We expect to end FY21 with positive free cash flows.

Thank you for your continued trust and commitment to Tata Motors Group.

Best regards,
Guenter Butschek
Ramsau am Dachstein, Austria, June 15, 2020