Charting a disciplined path for the future
The year gone by: The previous year has been amongst the most challenging to-date withthe COVID-19 pandemic causing a scale of suffering that is hard to comprehend. In someparts of the world including India the situation has deteriorated further in recentmonths.
The swiftness and intensity of the second and third waves have overwhelmed healthsystems devastated lives and livelihoods.
It is a health crisis of the kind we have not seen in generations. My heart goes out toeveryone out there who has suffered the loss of loved ones. Given the scientific progresswe have made over the past year I am confident we will eventually get the pandemic undercontrol. Until then I urge you to stay safe follow Covid discipline and get vaccinatedif you are eligible.
For your Company Tata Motors too it was a challenging year. The pandemic resulted inmuted consumer demand along with disruptions in production supply chain and retailnetworks. I mentioned in my last year's report that against this volatile backdrop yourCompany is charting out a disciplined path towards a robust and resilient future.Accordingly the Company's key focus areas were:- securing the safety of our people; theviability of the ecosystem; and securing the health of the business through a laser focuson cash flows. This helped us navigate the crisis well. Gradually as demand startedcoming back from the second quarter of last year the company swiftly shifted gearsignificantly ratcheted up capacities moved fast to serve customer demand and ended theyear on a strong note.
The resilient performance of the company is reflected in the business improving itsEBIT margins by 260bps to ' 6471crore and Auto Free Cash Flows of ' 5317crore despiteits volumes declining by 10.3% to 902648 units and revenues declining by 4% to '249795crore.
India business: The domestic business of Tata Motors scaled up capacity by proactivelyaddressing several supply chain bottlenecks while maintaining the health safety andwellbeing of our employees as well as the supporting ecosystem. As a result the domesticbusiness grew volumes by 2% revenues by 7% and improved its EBIT margins by 370bps with astrong cash flow of ' 2730crore.
Our Passenger Vehicles segment was the standout performer during the year. The shift topersonal mobility and preference for our 'New Forever' range of cars and SUVs led to thePV business recording its highest ever annual sales in 8 years and growing its marketshare to 8.2%. The "Reimagine PV" strategy to rejuvenate front-end sales and theretailer network network as well as customer engagement has delivered excellent results.Within this the performance of the EV business is noteworthy. We strengthened our marketleadership to 71.4% led by sales of more than 4000 Nexon EV units since its launch lastyear.
The CV business posted sequential quarter on quarter growth on the back of improvedconsumer sentiment buoyancy in E-Commerce firming freight rates and higherinfrastructure demand. The new BS VI range of vehicles have been well accepted in themarket. We continue to improve our market shares in M&HCV to 58.1% (+410 bps vs FY18) ILCV 45.9% (+90bps vs FY 18). Disappointingly our SCV market shares was 37.5%losing 250bps vs FY 18. We are committed to get back to winning in this segment and aretaking concerted actions on this front. The launch of Tata Intra Yodha BS VI Ace Petrolare steps in this direction.
JLR: Jaguar Land Rover also delivered a resilient performance during the year. Despitea 14% drop in revenue to 19.7billion the business improved its EBIT margins by 250bpsto 2.6% and generated positive free cash flows of 185m. Retail sales declined 14% forthe year with China being the exception growing at a strong 23%. The all new Land RoverDefender was a standout performer clocking a robust 45.2K units for the full year as wellas winning the 2021 Word Car Design of the Year. Its financial and market performancenotwithstanding Jaguar Land Rover made a critical contribution to the Tata Group'sworldwide efforts to help our communities and our people by producing protective visorsfor the frontline health care workers loaning JLR vehicles to the Red Cross and RedCrescent to aid the COVID efforts and many more.
During the year we had a smooth CEO transition during which Mr Thierry Bollore tookover as the CEO of Jaguar Land Rover from Professor Sir Ralf Speth. I would like to thankRalf for his invaluable contributions to the company over the last decade. Under hisleadership Jaguar Land Rover has become a differentiated luxury OEM with iconic brandslike Jaguar Land Rover and Range Rover a talent base that is world class and a set ofskills and capabilities that will serve us well for the future. Under Thierry'sleadership Jaguar Land Rover has now unveiled its Reimagine strategy to make the companya world leader in electrified luxury vehicles sustainability manufacturing efficiencyand new automotive technologies.
Outlook and Our plans: In the near term the impact of the pandemic is expected togradually recede as more people get vaccinated. We expect demand to remain strong withconsumer preferences shifting further towards personal mobility. However the supplysituation is expected to be adversely impacted for the next few months due to disruptionsfrom COVID-19 lockdowns in India and semi-conductor shortages worldwide. Due to this weanticipate a gradual improvement in performance during the year. The business hasdemonstrated steadfast resilience in the face of adversity last year and has strengthenedits fundamentals. This track record gives me the confidence that the business willcontinue to build on its turnaround last year and deliver an even stronger performance inthe coming years.
Over the longer term we anticipate significant changes in consumer behaviour from demanding more integrated digital experiences to prioritising health and safetyfeatures across purchasing decisions. The urge to break free and have the freedom to movewithout fear or restrictions will shape future demand for passenger vehicles. Globallygreater emphasis and scrutiny will be placed on building environmental sustainability andclimate resilience into the very core of business models.
To address and leverage these mega trends we plan to make sustainable business modelsa bedrock of our strategy. At the Tata Group we would like to be amongst the world-leaderson sustainability. As a large and diverse conglomerate based in India but with a globalfootprint we are uniquely positioned for this leadership. Our companies are present in150 countries we employ over 750000 people and touch the lives of 650 million consumers.I will be the first to say that we have a long journey ahead of us. But we are clear thatthis is the right journey we must undertake and have begun with pushing targets forward.
Tata Motors Group is in the process of pivoting its underlying business model towardssustainable mobility. Jaguar Land Rover is targeting 100% zero tail pipe emissions for theportfolio it sells by 2036. Jaguar will become fully electric by 2025. 60% of Jaguar LandRover's volumes will be pure BEV vehicles by 2030. In India EV penetration in ourportfolio has now doubled to 2% this year and we expect penetration to increaseexponentially in the coming years. Tata Motors will lead this change in the Indian market.By 2025
Tata Motors will have 10 new BEV vehicles and as a Group we will invest proactively toset up charging infrastructure across the country. In addition the Tata Group is activelyexploring partnerships in cell and battery manufacturing in India and Europe to secure oursupplies of batteries. We are also evaluating an automotive software and engineeringvertical within the Group that will help us lead in a new world of connected andautonomous vehicles. We are clear that this shift to sustainable mobility is an idea whosetime has come and the Tata Group will move forward with speed and scale to seize this andproactively drive the change in consumer behaviour in India and beyond.
In summary: With these moves Tata Motors will be well placed to meet the opportunitiesthat arise from these fundamental shifts. Your company will be the torch-bearer for greenmobility in the automotive world and create a virtuous cycle of growth and returns for ourshareholders too. This exciting journey opens a new frontier and I would like to welcomeyou on this journey.
Before I end I would like to take this opportunity to thank all our employees andtheir families for their profound contributions in these trying times. I would also liketo thank you shareholders for your continued trust confidence and support in the comingyears.
Mumbai May 18 2021