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 theyear. On one hand we saw greater clarity emerge on Brexit; yet on the other handmounting trade tensions muted global growth and enhanced regulatory norms havefundamentally changed the contours of the business environment in which we operate. Nextcame the onset of the COVID-19 pandemic in the final quarter of the year which hasushered 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 wasintroduced in 2001. Alongside a broad economic slowdown regulatory changesincludingchanged axle load norms and the migration to BSVI emission standardsfuelleduncertainty for both consumers and suppliers. These challenges were further exacerbated inthe final quarter of the year by the country's strict lockdown measures in response to thepandemic.
Against this volatile macro backdrop your Company is charting out a disciplined pathtowards a robust and resilient future.
I would like to first address the current year's performance followed by varioustransformative initiatives being undertaken.
Tata Motors Limited (TML)
Over the past two financial years
TML focused on refreshing its portfolio improving structural efficiencies andstreamlining internal processes. In doing so TML turned a corner and delivered improvedmarket shares profitability and positive free cash flows. In FY19 we delivered positivenet income of Rs 2021 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 deterioratedsharply 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 HeavyCommercial Vehicle (MHCV) segment witnessing a steep decline of 50%. However withimproved stakeholder engagement TML managed to improve market share in both the MHCV andIntermediate and Light Commercial Vehicle (ILCV) segments by 240 bps and 180 bpsrespectively 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 by150 bps as the Company streamlined its supply chain exited non-core operations andimplemented measures to improve ecosystem viability.
During the year TML successfully transitioned its entire product range to BSVIemission norms with historically low levels of system inventory. I am optimistic that ourBSVI portfolio will provide our customers with superior value technology features andexperience 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 entireelectric mobility ecosystemfrom charging infrastructure battery cells batterypacks and electric motors to financing options customised for the needs of electricvehicle (EV) ownership. Anchoring the ecosystem will be EVs that are aspirationalpractical and affordable. TML is a market leader in the EV segment having launched theTigor 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 andcomprehensive solution a reality. In doing so India has the potential to be a globalelectric mobility hub.
Jaguar Land Rover (JLR)
Ongoing trade conflicts and the COVID-19 pandemic adversely impacted JLR vehicle salesin FY20 which contracted by 12% y-o-y. A significant part of the volume decline occurredin the fourth quarter of FY19-20. JLR undertook a host of structural initiatives to driveefficiencies so that despite the decrease in volumes the business improved itsprofitability 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-Ygrowth.
JLR continues to develop award-winning products that combine outstanding performanceand technology. This year JLR refreshed the Land Rover Discovery Sport the Jaguar F-Typeand the Jaguar XE. The all-electric Jaguar I-Pace won the prestigious Golden SteeringWheel award this past November. JLR had a spate of product launches over the course of theyear:
Range Rover Evoque and Land Rover Discovery Sport both premium compact SUVs are nowavailable with Plug-in Hybrid Electric Vehicle (PHEV) technology.
Added to this JLR celebrated the official opening of two world-class facilities thisyear: the Advanced Product Creation Centre in Gaydon and the National AutomotiveInnovation Centre in Warwick one of Europe's largest automotive R&D hubs. Both ofthese centres will focus on innovation that leads to connected seamless integrated andclean mobility.
This year Chief Executive Officer Dr Ralf Speth will retire after 10 years ofdedicated service. I would like to personally thank him for his vision unfalteringpassion and commitment in leading Jaguar Land Rover delivering new technologies andoutstanding products and services.
As we look ahead over the next two years we anticipate a tremendous deal oftransformation stemming from COVID-19. Consumer behaviour will change in numerous waysfrom demanding more integrated digital experiences to prioritising health and safetyfeatures across purchasing decisions. The move to 'slow' travel and personal (versuspublic and/or shared) transport may shape future demand for passenger vehicles. Greaterscrutiny will be placed on building environmental sustainability and climate resilienceinto the very core of business models. The Tata Motor Group is well placed to meet thedemand opportunities that will arise from these important and fundamental shifts.
I would like to take this opportunity to thank you for your continued trustconfidence and support as we enter a brave new decadeone that is already rewritingthe rules of the past
Mumbai June 15 2020