Chairman's Message
Charting out a disciplined growth path

One of the highlights of the year was the launch of the Tata UniEVerse, an entire electric mobility ecosystem - from charging infrastructure, battery cells, battery packs and electric motors, to financing options, customised for the needs of electric vehicle (EV) ownership.

Dear Shareholders,

It is my privilege to write to you and present the Annual Report for FY20.

I hope this letter finds you safe and in good health.

As you know, the global auto industry has grappled with multiple issues during the year. On one hand, we saw greater clarity emerge on Brexit; yet on the other hand, mounting trade tensions, muted global growth and enhanced regulatory norms have fundamentally changed the contours of the business environment in which we operate. Next came the onset of the COVID-19 pandemic in the final quarter of the year, which has ushered in a new reality for industries across the world.

The Indian auto industry faced an unprecedented year, marked by significant headwinds. Domestic auto sales declined by 18% Y-o-Y in FY20, the lowest since the data series was introduced in 2001. Alongside a broad economic slowdown, regulatory changes—including changed axle load norms and the migration to BSVI emission standards—fuelled uncertainty for both consumers and suppliers. These challenges were further exacerbated in the final quarter of the year by the country’s strict lockdown measures in response to the pandemic.

Against this volatile macro backdrop, your Company is charting out a disciplined path towards a robust and resilient future. I would like to first address the current year’s performance, followed by various transformative initiatives being undertaken.

Tata Motors Limited (TML)

Over the past two financial years, TML focused on refreshing its portfolio, improving structural efficiencies and streamlining internal processes. In doing so, TML turned a corner and delivered improved market shares, profitability, and positive free cash flows. In FY19, we delivered positive net income of `2,021 crore, after making losses for five years. In both FY18 and FY19, TML produced positive free cash flows, following five years in negative territory.

However, in FY20, this turnaround journey has been interrupted, as demand deteriorated sharply on the back of an abruptly slowing economy coupled with the spread of COVID-19.

In the CV segment, overall volumes declined by 34% Y-o-Y, with the Medium and Heavy Commercial Vehicle (MHCV) segment witnessing a steep decline of 50%. However, with improved stakeholder engagement, TML managed to improve market share in both the MHCV and Intermediate and Light Commercial Vehicle (ILCV) segments by 240 bps and 180 bps, respectively, while it lost market share by 210 bps in the Small Commercial Vehicle (SCV) segment. The PV segment witnessed a volume decline of 37% and a loss of market share by 150 bps, as the Company streamlined its supply chain, exited non-core operations and implemented measures to improve ecosystem viability.

During the year, TML successfully transitioned its entire product range to BSVI emission norms, with historically low levels of system inventory. I am optimistic that our BSVI portfolio will provide our customers with superior value, technology, features, and experience, positioning us as leaders in building a green and clean India.

One of the highlights of the year was the launch of the Tata UniEVerse, an entire electric mobility ecosystem—from charging infrastructure, battery cells, battery packs and electric motors, to financing options, customised for the needs of electric vehicle (EV) ownership. Anchoring the ecosystem will be EVs that are aspirational, practical and affordable. TML is a market leader in the EV segment, having launched the Tigor EV and the Nexon EV during the year. And there will be more.

TML will be supported by other key Tata group companies to make this unique and comprehensive solution a reality. In doing so, India has the potential to be a global electric mobility hub.

Jaguar Land Rover (JLR)

Ongoing trade conflicts and the COVID-19 pandemic adversely impacted JLR vehicle sales in FY20, which contracted by 12% y-o-y. A significant part of the volume decline occurred in the fourth quarter of FY19-20. JLR undertook a host of structural initiatives to drive efficiencies so that, despite the decrease in volumes, the business improved its profitability during the year and reduced its cash outflows, compared with previous years. Our turnaround programme in China resulted in six months of continued double-digit Y-o-Y growth.

JLR continues to develop award-winning products that combine outstanding performance and technology. This year, JLR refreshed the Land Rover Discovery Sport, the Jaguar F-Type and the Jaguar XE. The all-electric Jaguar I-Pace won the prestigious Golden Steering Wheel award this past November. JLR had a spate of product launches over the course of the year: Range Rover Evoque and Land Rover Discovery Sport, both premium compact SUVs, are now available with Plug-in Hybrid Electric Vehicle (PHEV) technology.

Added to this, JLR celebrated the official opening of two world-class facilities this year: the Advanced Product Creation Centre in Gaydon and the National Automotive Innovation Centre in Warwick, one of Europe’s largest automotive R&D hubs. Both of these centres will focus on innovation that leads to connected, seamless, integrated and clean mobility.

This year, Chief Executive Officer Dr Ralf Speth will retire after 10 years of dedicated service. I would like to personally thank him for his vision, unfaltering passion and commitment in leading Jaguar Land Rover, delivering new technologies and outstanding products and services.

Looking ahead

As we look ahead over the next two years, we anticipate a tremendous deal of transformation stemming from COVID-19. Consumer behaviour will change in numerous ways, from demanding more integrated digital experiences to prioritising health and safety features across purchasing decisions. The move to ‘slow’ travel and personal (versus public and/or shared) transport may shape future demand for passenger vehicles. Greater scrutiny will be placed on building environmental sustainability and climate resilience into the very core of business models. The Tata Motor Group is well placed to meet the demand opportunities that will arise from these important and fundamental shifts.

I would like to take this opportunity to thank you for your continued trust, confidence, and support as we enter a brave new decade—one that is already rewriting the rules of the past

Best regards,
N Chandrasekaran
Mumbai, June 15, 2020