Tata Motors Ltd

NSE:TATAMOTORS

Earnings Call Transcript 2023-Q4

[Unidentified Company Representative]

[Abrupt Start] Put the next slide please. And a pretty action-packed quarter both here as well as in JLR. And we are there at the Auto Expo, which we gave a bit of a color on our last results call. And on top of that we also had the launch of the Tiago EV and Shailesh, I'm sure is going to talk about that. We finished the first 10,000 sales of Tiago EV already. And we have also completed the sale of Ford Sanand facility that has been done and the final tranche of INR 3,073 crores has also been received from the TPG monies. And overall on the e-mobility space as well as the zero emission mobility space a lot of work happening and portfolio continue to increase.

Next slide. That's in India into JLR again an equally action-packed quarter where starting point is the announcement of the blockbusters the Range Rover BEV launching in October -- launching next year for which bookings start from October this year. And also we started talking about the Jaguar BEV launches as well which I'm sure Adrian and Richard will talk about.

We also talked about our long-term investment plan under our re-imagine our $15 billion investment over the next five years and the whole electrification road map continues to accelerate. At the same time, a very fundamental call on the house of brands where we will amplify the individual brands; that's the Range Rover, Defender, Discovery and Jaguar in a big way, while continuing to be almost equivalent of an interlink side far as the Land Rover is concerned. And its features I'm sure there'll be a lot of questions on that which we can clear up both today as well as on the Investor Day coming up.

Next slide. It's fair to say that it has been an extremely satisfying quarter. And the reason I say use that word is that nice to see all the auto verticals coming together once again and this time with a lot of intensity as well. So both the alignment of the vectors are there and the magnitude of the vectors are also increasing, which is what has translated into a strong set of numbers for the quarters resulting in a multiple price, and I'll quickly cover that in the coming slides. But we ended the year on a pretty strong note with a revenue of INR 1 lakh crores at an EBITDA of 13.3% and the profit before tax and exceptional item of INR 6,000 crores.

On a full year basis we hit our highest ever revenue at INR 3.5 lakh crores and ended the year with a positive free cash flow of INR 7,800 crores despite a very weak start in Q1 and Q2 which you see in the numbers. The business has been sequentially improving its performance and doing it in significant stretches. So very happy with the way we have ended.

Next slide please. Source of growth. We -- the quarter we grew by about 35% of which volume and mix contributed 24% of the 35% and the price came in at 10.5%. So price is still a very strong variable in our growth agenda. Profitability 3.2% went to 6.8% and all businesses contributing to it and JLR coming at a very large swing there contributing to the 2.8% out of the delta there.

Again debt continues to reduce at INR 43,700 crores and TML India at INR 6,200 crores; JLR £33 billion pounds that's the INR 30,000 crores that we talk about. So the FY 2024 net debt reduction plan we are confirming we'll not be in a position to meet the FY 2024 numbers. But very clearly FY 2025 we want this issue sorted out.

Next slide. A series of headlines. Normally we don't do that but it's fair to just pull back and reflect on what this quarter and the year actually means for the group for us. So each one of us in this call we feel strongly about this, the highest ever revenue in our quarter the highest ever EBITDA in the quarter, one of the strongest PBT that we have delivered and all three auto verticals simultaneously profitable strong in debt reduction. That's all the quarter numbers.

And if you factor in that the first half was a very weak first half we still delivered the highest ever revenue. We have the highest EBITDA since 2015 very strong PBT despite the weak start -- factoring the weak start. And India net debt the lowest in the last 15 years. So it's worthwhile just to mull over it to say the -- I would say that the potential of this business is slowly starting to come out and that's what we would want to build on when it goes into FY 2024. This has basically giving us the impetus to how we want to play FY 2024.

Next slide. This is also something which we are happy about a dividend of INR 2 per share for the ordinary shareholders and INR 2.1 for the DBS shareholders coming after some time. And this will obviously have to be -- the Board has recommended this and this will have to be approved at the NC shareholders' meeting.

And this will result in a cash flow of INR 771 crores as part of the plan of debt is factored into the debt reduction plan in any case. So again very happy to see this. This has been a key demand for retail shareholders and I've always maintained the turnaround is not complete unless we pay dividends and nice to see this number coming through as well.

Next slide. So with this let me hand it over to Richard who will walk you through the numbers and him and Adrian will cover the data section. Richard, over to you.

[Richard Molyneux]

Great. Fine. Can you hear me okay?

[P B Balaji, Chief Financial Officer-Tata Motors Group]

Yes. Can hear you.

[Richard Molyneux]

So Balaji has already explained some of the positive future announcements for JLR. So I get the chance to go through some positive historical financials as well.

So if we go to the next chart left-hand side of this is last year by quarter. So if you look through retail sales I'm very glad to see us back over 100,000 units of retail sales for the quarter. That's up 20% versus Q3, and up 30% year-on-year.

If you look through all of the financial metrics on this chart through revenue, EBIT down to free cash flow that for each and every metric improves in each and every quarter. So we have demonstrated strong consistent growth through the year. In Q4, our revenue $7.1 billion that is the highest revenue that we have seen since FY 2019. EBITDA of 14.6% 6.5% EBIT, strong PBT and £850 million worth of cash in the quarter. In fact, if you look at the second half of the year we generated £1.3 billion worth of cash that also is the strongest H2 cash performance for seven years so it's in FY 2016.

The strong performance in Q4, if you look at the full year, although there is some movement back in retail that's the natural effect of dealers destocking when we had tight supply and restocking now that supply is coming back on stream.

Revenue was £23 billion, we produced 2.4 EBIT for the year. PBT was negative 64% but if you look through that just like the order added game of two halves PBT in the first half of the year was minus £697 million. In the second half of the year it was positive £633 million.

Free cash flow for the year £521 million also the best full year cash flow since FY 2016 and we ended the year with £3.8 billion worth of cash, £5.3 billion worth of liquidity and £3 billion worth of net debt. So we have had, like I said, a strong consistent year. We do exit the year performing well. We also have an order bank which currently stands at 200,000 units to assist us as we go through the start of this year.

Next chart. I won't read through this. This is a risk conversion of most of the comments that I've made. Feel free to read it at your leisure afterwards. So we go again. All right, so this is our wholesale performance. So wholesales for the quarter 95,000 units 19% up on the previous quarter and that's been driven by a much more stable and expanding production system. So our production actually increased from 83,000 units in Q3 to 98,000 units in Q4. So that's also up 18%. And that's what's allowed us to increase our wholesales and meet our customer demand in the period.

The balance of our wholesale remains reasonably consistent. So 50% of them are Range Rover Range Rover Sport Evoque et cetera. Defender is another 25%, so 75%, 76% between those two brands. Full year basis the analysis is the same, 50% Range Rover 25%. And now we're still selling 43,000 Jaguars, we are still making sure that those cars stay current. We've invested in technology on the F-Pace we've invested in special additions to mark the 75th anniversary of Jaguar's sports car manufacturer. So we still are investing in those brands as well. Full year 321,000 wholesales.

Next chart. So if you look at this on a regional basis, you'll see reasonably strong through each region in the quarter. The one exception I'll call out and explain is North America. That's not an issue of fundamental demand that's just our allocation and timing. So although, it looks like a reduction there when you look at retails in North America quarter-on-quarter, it was 23,600 in Q3 22,300 in Q4, so hardly changed. And our customer order bank in North America is flat quarter-on-quarter. So that isn't a fundamental change in the demand seen from North America it's just our timing of allocations.

All other regions strong including China we progressed in Q4 as well. Full year very similar picture, I won't go through that, worth saying on the right-hand side that the proportion of our electrified vehicle is increasing. If you look at the beta in the PF section of volume from 11% to 17% that's the result of our -- I'd say increasingly compelling PHEV offers.

So we have increased both the range and the performance of several that we have in the range and that is starting to show through in the market along with the removal of some supply constraints that have impacted that. So we have had a significant increase in the share of our PHEV vehicles in our wholesales.

Next chart. Okay. So in terms of the financial walk this takes PBT from the same quarter last year where it was £9 million to this quarter £360 million. The biggest variable is volume and mix. And you can see that actually probably worth mentioning that mix is a higher effect than volume. And this comes back to some of the issues around quality of sales that we've been pushing during the past few months and will continue to push. So that mix is driven by Ranger Rover, Ranger Rover Sport, but it is also driven by trim mix within our ranges and making sure that we are continuing to allocate those chips and components that we have to the vehicles which are most favorable for them.

So volume and mix very favorable. If you look at pricing and material cost together, this is the picture that I expected to happen and that I told you would happen when we sat down last quarter. So we've moved to a position where our output inflation in terms of our pricing is now higher than our input inflation. That wasn't the case last quarter. Last quarter pricing of the £165 million favorable material cost was [indiscernible]. So we have flipped that through the quarter and we would intend for that to continue.

Going through to SG&A. The care point there for us SG&A is increasing. That is partly marketing as we start to move to a scenario where we do want to trigger some more demand at the back end of this coming year and also partly the investments in our transformation particularly in terms of our digital transformation as a company.

Operational FX did exactly what you would expect it to do, on a quarter-by-quarter basis sterling has weakened. That helps us from a transactional basis, but does give us a hit in terms of realized FX and unrealized commodities. The weakening of sterling versus the dollar gave us a favorable revaluation of our dollar-denominated loans which you also expect. So fundamentally the move in PBT quarter-to-quarter is volume and mix and we've managed to offset input inflation on our output inflation.

Next chart. So this looks then at the move of that PBT through to cash. Key here is in the middle section of here, cash profit after tax and investment is favorable £400 million in the quarter. Working capital continues to move in our favor. That is partly natural as our business expands, our payables expand faster than our receivables but also apart from some deliberate measures and initiatives that we put in place using fairly advanced digital techniques for example to reduce our component inventory during the period. So that's partly natural and partly from some deliberate efforts on our side generated the £815 million worth of free cash flow that we reported.

Next chart. In terms of investment so total investment for the year was just under £

$2.4 billion. That is an increase the biggest part of that increase is in engineering which rose from £1.3 billion to £1.7 billion. That's a natural part of our product cycle. You know that we have a large series of launches coming between the end of next year and 2026. Well, those are at the high point of the engineering at the moment. So that's what's driving that expense up a bit.

What you also see is that as those programs go through their various gateways and start to move to production they get more capitalized. So our capitalization ratio is slowly increasing. It was 53% in the quarter versus 48% last quarter. And for the full year, it was 45% versus -- sorry 43% versus 35% last year. We would expect that capitalization to continue to increase probably to around a 60% range. But we've also said Balaji repeated this earlier on that this investment number will increase. We're expecting it to be around £ 3 billion a year for the next five years as we continue to invest in both our electrified vehicles, the electrified powertrains themselves and the electrical systems that support them.

Next chart. All right. Now I move on to a business update. If we move forward. This chart which shows our average revenue per unit is really important and part of the demonstration of our journey towards model luxury. So we've managed to increase our average revenue consistently over the last five years. In FY 2023 it moved up from £62,000 to £71,000 so up by 15%. Part of that is the increased production of Range Rover Range Rover Sport. But even within the vehicle lines we have continued to increase our focus on the high-level trends including for example SV.

So the Range Rover SV which was only launched in October 21 already got 6100 orders on an average transaction price of £180,000. And we've even been testing the water lot of that. We did a special additional lands now, the addition of the Range Rover SV which transacted at around £250,000. So there is room for us to operate in this space if we continue with diligence our modern luxury journey.

Next page. In terms of semiconductors, I think people have mentioned this a lot. My summary I think is probably three things, we are seeing fewer issues now. They're not completely disappeared, but we are seeing fewer of them. Our ability to see them in advance is improving due to our relationships with the chip manufacturers and with our suppliers. And when we do spot them, the number of tools at our disposal to solve those problems is increasing.

So, they are proving less of a -- I'm going to say nuisance that's probably an understatement than they were last year and they could still come back to bite us but it is considerably improving.

Next chart. Okay. Key for us is to make sure that we are progressively in a stable manner bringing our supply up -- to continue to build our order bank down. We have to meet our customers' expectations for the arrival of their vehicles that they've ordered.

We are showing good progress in terms of getting Range Rover and Range Rover Sport through our facility in Soho went up to 2,600 units per week during Q4 and we expect that rise to continue progressively as we go through next year pushing north of 3,000 units per week during the year.

Next chart. Inflation is still an issue for us. But we do have considerable headwinds. We've shown them here to £850 million for the year of which about 40% of commodity prices and about a third was semiconductors. The rest is energy and labor costs both with us and with our supply base.

So, we knew these were coming and we spent a large portion of last year doubling down on our Refocus team and I can proudly say that we've offset that and more than offset that in terms of our Refocus savings during the year.

A lot of that was very detailed work in terms of making sure that we allocated those chips that we had for the vehicles that we wanted to sell. But there was also a considerable work done on the cost side, on the investment side, and on the inventory side. So, in total, we delivered £1.1 billion savings through the Refocus programs and that did offset the inbound inflation that we saw during the year.

Next chart. So, China. Look we're really proud of the results of our China JV. It's the best financial results for five years. And if you look at the left-hand side look segments of the market that we're operating in are relatively stable and our share of those segments is also relatively stable.

So, look we know that market is really fast moving really dynamic in sections that we are operating in, we are maintaining our share. If you look at the financials on the right-hand side, it looks a little bit as if imports average revenue per unit isn't increasing as much as the global. That's a little bit of a misconception. There's some profit from our P&A operation our after sales operation. If you look purely at vehicle average sales per unit for the imported volume it is up 8% year-over-year.

From a profitability standpoint, we were PBT positive in the quarter 13% EBITDA 2% EBIT. On a full year basis we were also PBT positive. And EBIT and EBITDA were both 5% higher than FY 2022. So, very good consistent progress within our China JV, best financial year for five years.

Next chart. Right some pictures. We're continuing to develop our product range. If you look at the 24 modular Velar on the right-hand side, that's as close to a flawless execution of our modest design language you're going to get. It's just beautiful.

We have made some tweaks to the exterior. We've made some technology upgrades. For example the PHEV now has a 20% higher range than it did before and it goes for 40 miles WLTP without charge. And on the interior there are also some upgrades. So, that vehicle is upgraded.

And on the right it's the Range Rover Sport SV, you will want one. They are going to be phenomenal and as I've mentioned before and we're extremely proud of the success of our Range Rover SV and we've received 6,100 orders for that. We haven't even announced we'll start taking orders for this one yet.

Next chart. So, looking ahead, we are optimistic, so we exited FY 2023 in a much stronger position than we started it. So, we're on the right trajectory and we have had strong and consistent progress. So, we think FY 2024 is going to be a good year for us.

In reality, the first half may be a little bit slower. So, I expect the second half of the year to be stronger than the first half, but we do have the momentum that we're looking for and we will have a good year.

Our priorities is to continue to build our supply availability our robustness, the accuracy with which we give our suppliers our forecasts. We'll continue to focus on brand activation. There is a lead-time with that. We have to start doing some of that now to activate orders towards the back end of the year. We're going to execute our plans.

And from a financial perspective, we're saying we're going to deliver 6% plus EBIT. £2 billion free cash flow after investment, which means our net debt will reduce from £3 billion at the end of the financial year just finished to circa £1 billion 12 months from now.

That's it from my side. I'm sure we'll take some questions afterwards but thanks very much for the meantime.

[P B Balaji, Chief Financial Officer-Tata Motors Group]

Thank you. Thanks Richard. So, quickly moving on to commercial vehicles, MGVs. The registration market shares after the correction to the approach to a demand pool strategy is now starting to record, Q3 -- Q4 better than Q3 paring one, which is the -- what used to be called intermediate and light commercial vehicles. MGVs is where we still need to get some further impetus on that, very much part of the plan that Girish and team are working towards. But everything else, starting to sequentially start improving.

Next slide. On the overall volumes, the call out here is the powertrain mix that you see with the CNG prices now coming under a policy and therefore, expecting some stabilization in terms of delta between that end. Diesel one would expect to see the CD number -- sorry, CNG number starting to change as well.

Next slide. Overall revenues, happy that we ended the quarter with a double-digit EBITDA, something that we said we want to get to ourselves if possible. And the business ended the year pretty strong with a revenue of INR 21,000 crores and an EBITDA of 10.1%. And clearly with market share starting to inch up as well as profitability for April, the business is on the right track. Further distance to go, but very much on track.

Next slide. The source of monies that you're seeing where the profitability came from volume mix realizations, savings all come into quite nicely and we intend to keep it this way as we go forward.

So the other big one is the consumer-facing metrics, which is a very, very important demand pull strategy to ensure that the brand is in a strong book it. Very happy with the way things are starting to move.

The brand is with the interventions coming through, with the power of the -- the brand power, the consideration top box, top of mind awareness, all trending in the right direction with some very good numbers even at a geographical level as well. And of course, the customer -- the dealer satisfaction as well as the composite satisfactions are doing pretty well.

Right. So let me give it to Girish to give an overall update on the business. Girish?

[Girish Wagh, Executive Director-Tata Motors Limited]

Yes. Thanks, Balaji. I think the industry continued its growth in volumes and one saw a growth of 22% over the same quarter last year and in annual terms a growth of almost 34%. And during the year we launched more than 40 new products and 150 variants in addition to what we had unveiled in the Auto Expo.

As Balaji mentioned, we had our biggest annual and quarterly revenue for FY 2023 and Q4 of FY 2023. And I think as we started our discount reduction strategy from Q3 and as we continued ahead, we were able to grow our VAHAN share, registration share in Q4 versus Q3 with focus on continuously improving the product and service competitiveness as well as our communication to the customer.

I think the non-vehicle business, which has been a significant area of focus, grew by almost 33%. And both spares and service penetration has been continuously improving for the last three years now. With all this the EBIT improved sequentially and is now highest in 21 quarters, which are -- most of it coming from discount pullback, part of it from cost reduction and also commodity softening, which happened in H2.

While the entire industry grew by 22% and 34% over the last year, I think the good part was significant growth in medium and heavy commercial vehicles, almost 52% over the last year. And the passenger segment, especially the buses, which were almost down and out during COVID have seen a very good growth finally in the year gone by.

I think as the Balaji showed some metrics, our continuous focus to improve the brand health through judicious mix of ATL communication, digital communication and also a lot of influencer advocacy has actually led to a good improvement in Net Promoter Score. And in fact Net Promoter Score has reached the highest ever level now to 71. And the brand power also grew by 170 bps. So I think both at very good levels.

We have transitioned the entire portfolio to BS VI Phase 2 and in line with our philosophy once again, we have gone beyond near compliance to the regulations. And across the range in each and every product, we have further strengthened the superiority in terms of total cost of ownership, comfort and convenience connectivity in terms of fleet age as well as the safety features, which have been added especially in the trucks.

On the CNG, interestingly, I think with the new guideline, apart from reduction in the C&G prices, I think the biggest uncertainty which was in the minds of the customers was about the difference in CNG prices with respect to diesel and for that matter even petrol. And this uncertainty had led to drop in CNG volumes significantly. So with this new pricing guideline, not only the CNG prices have dropped but it is also getting pen with diesel, which will gradually start bringing in good certainty in the minds of the customer that we will see the C&G penetration increase.

Towards this, I think we have a very strong CNG portfolio both in IL series as well as M series. And last year we launched our CNG vehicles and heavy trucks, as also our Intra portfolio. So I think we have CNG presence across the portfolio now.

Going ahead for this quarter, as well as FY 2024, I think we will continue our focus on the retail now and registration share is what will drive us. And we will continue the realization improvement journey.

As I said I think the BS VI Phase II products have come up with a lot of value enhancements, features and performance improvement and there will be a lot of efforts to communicate this not just to the customers, but also other stakeholders who play a very important role in decision making. And, therefore, there will be a lot of influencer advocacy as well as actual in-fee trials.

Heading into this year, I think we will now start scaling up EV supplies with the supply chain being resolved, same certification clarity being there and both on ACV as well as the electric buses, which are meant for the CSL tender. Downstream business will continue to grow being a focus area for us and in international markets, we will continue to play safe. We will maintain our grow market shares ensure that the margin and channel health is protected, and we will also see some of the new markets, which we can enter during the year.

Next slide. Coming to the electric mobility. So I think we have completed all our e-bus, electric bus deliveries meant to be done to Delhi Transport Corporation and Nagpur City. In addition to that, we already started delivery of the CSL first tender with the Delhi Transport Corporation buses. And in addition to that also a few retail customers or orders that we have received.

We have delivered more than 300 electric vehicles in the fourth quarter. And, hereon, we can start ramping up significantly as I said earlier the clarity on supply chain as well as the same certification.

I think in Auto Expo, we made a clear statement on our future road map in terms of net-zero greenhouse gas emissions and the decarbonization plan with the display of 14 product concepts. On the smart city mobility as I said I think the concession agreements have been signed with Delhi Transport Corporation for 1,500 buses. The supply has already been initiated, which will be followed by Bangalore for more than 900 buses and then Jammu Kashmir for 200 buses.

I think now our e-bus fleet has crossed more than INR7 crore or 70 million kilometers and we have been able to maintain more than 95% uptime in FY 2023. So we have been delivering better than the contractual conditions. The operational revenue has also been ahead of our own internal budget doing well at around INR500 crores.

Coming to the digital businesses. So Fleet Edge continues to do very well. Now with more than 390,000 connected trucks towards the end of FY 2023. On the monthly active usage is continuously increasing. And the customers are seeing a lot of value in terms of improvement in vehicle uptime, asset utilization is also helping them for better tracking and optimizing the usage and driving habits leading to improvement in the total cost of ownership. So I think the clear benefits, which are being seen as a result of which I think the penetration is continuously increasing.

And in fact I'm happy to share that from 1st April, we also introduced the subscription model for the Fleet Edge. And we have seen a very good encouraging response to this model. As I said the engagement time has been improving consistently with the benefits being experienced by the fleet owners as well as the drivers.

e-Dukaan, which is our online spare parts marketplace and grew better than what we had targeted. In fact it grew 2.8 times, although on a lower base but doing pretty well and we also extended e-Dukaan for diesel exhaust fluid as well as lubricants. So this will help us to grow these two business lines also. I think digital lead generation has been a focus area for us and this has helped us not just to generate leads, but also communicate our brand message, product competitiveness and other aspects. This has led to improved brand health -- and it therefore, augurs very well for the future. So, that's what we've been doing in the commercial vehicle business. Balaji, back to you for PV.

[P B Balaji, Chief Financial Officer-Tata Motors Group]

Yes. Thanks, Girish. Moving on to the PV numbers next slide, please. Call out here is the -- in PV we are now going to report only Vahan registration market shares. We find that to be a far more reliable and closer to the external metric. And the powertrain mix, is another call out there where we're seeing penetration of EVs rising to 9%, and we see CNG sitting at 8% there.

Next slide. Here again on the registration market share of EVs going to 84%, network now increasing to 165 cities and 250 dealerships, charging Infra again increasing to 5,300 there.

Next slide. Overall financials we ended the quarter at 7.3% EBITDA, with a PBT of INR 200 crores. On a full year basis, the business was 6.4% EBITDA at a PBT of INR 700 crores. And therefore, this business is now strongly profitable in terms of EBITDA. We still got a distance to go to cover the 10%, but happy to see from where we have come to the 6.4%. At the same time, EBITDA positive EBIT positive PBT positive and cash positive.

One additional data point, which you pulled in this time is the ED financials where there's been a lot of queries that you have been asking. I also see your question saying that, if I add EV plus PV it doesn't add up to this one. There are some intercompany that need to be cancelled off as well as part of consolidation.

On the revenues, this business is now making an EBITDA loss of about INR 350-odd crores. Out of the 30-odd, that's a 4.6% negative that you see there. Out of the INR 350 crores, INR 300 crores is product development costs that are being charged off. And therefore, the business is almost EBITDA neutral and this needs to be seen in the context of a runaway increases in lithium prices.

The reason I bring it out is that we believe the EV, from a sustainable profitability perspective is on the right track. This does not include any PLI credits or anything that is being accrued. So this is underlying profitability, I'm referring to. The $1 billion business, roughly $1 billion business with a broadly neutral EBITDA that is where we are on an underlying basis.

Next slide. These are obvious the only thing, why is the structure of fixed cost going up there substantial increase in FME as you see the brand building up. There's also an element of IPL phasing that will be there, as we go ahead of that. Employee cost is basically, investments that are happening in the EV business and D&A expenses again as the product investments pick up there. So, all these are good investments that are happening for the long-term viability of the business.

Next slide. Let me give it to Shailesh.

[Shailesh Chandra]

Thank you, Balaji. So let me start with the key highlights of the industry first. So FY 2023 for the industry was the highest ever, since last highest ever which was in FY 2019, which was $3.4 million. This year ended at $3.9 million, which was nearly 27% growth versus FY 2022. SUVs continue to increase in terms of share, increased by 300 bps to 43%. And EVs industry saw a phenomenal growth of 170%, with several new launches and increasing acceptance of EV among customers.

As far as Tata Motors PV and business is concerned, this was our highest-ever wholesale year, which was nearly 5.4 lakh, with a market share of 14.5%. This is nearly 45% growth as compared to FY 2022, which was if you had just compared with industry growth, which was 27%. EV sales crossed a major milestone of 50,000. This includes about 2,200 volumes that we did in international business.

Vahan market share was around 84%, despite increasing competition. I already mentioned that in EV business, we grew by 45% as compared to FY 2022, but it was a growth of 150% in the EV business for us. We were the number one SUV manufacturer in FY 2023 and Nexon was the number one product in the SUV segment.

Going forward, what are the bright spots? We clearly, see that there are several new launches happening in the SUV space, which will augur well for the growth in this financial year. CNG demand with the prices coming down is also expected to pick up, and several new launches happening in the EV space and increasing acceptance of EVs, I think this will also augur well for the EV segment.

For Tata Motors, very happy to see that we transitioned to BS VI Phase II, early February itself and that has really helped us to ensure a very smooth transition. Several new launches, which are going to drive demand Nexon EV MAX, in hastag version has been received very good response. We recently announced it. This month, we are also launching the twin cylinder technology in Altroz, which is Altroz iCNG, which retails the entire boot space in the CNG, which is first of its kind very innovative concept.

And of course this year, we'll see some of our products going through the mid-cycle enhancement. We have a few players in certain -- we are only one player in at least one segment, where we are still in diesel segment, and that should also help us improve our sales in the diesel side.

Talking about some of the challenges or headwinds, clearly the entry side of the PV industry, which is hatches and sedans has been under pressure for some time. Channel inventory as compared to where we started the last financial year in FY 2022 is at a higher level. Pent-up demand clearly has gone down buying certain new launches and few popular SUVs. And recently price increase has been taken by OEMs to basically offset the cost increases, which have happened because of the RDE transition. So this might -- we have watched the impact of this.

From Tata Motors side, the way we are preparing ourselves is to focus on demand generation through micro-market focus and actions to improve the conversion rates. We are growing our portfolio both on CNG and EV. Both are expected to see good growth this year. And therefore we should be the beneficiary of that. And of course, we are driving margin improvement through an institutionalized cost reduction initiative as well as what we have as an internal 9-box framework. So both on margin as well as demand generation we have two action plans laid out. Back to you, Balaji.

[P B Balaji, Chief Financial Officer-Tata Motors Group]

Thank you, Shailesh. Next slide please. [indiscernible] Okay. I hope you can hear us. Apologies so that we had a network outage here, which we have just got connected back again. Yes, people can hear us. Let me keep moving assuming we’ll get a minute to say. Give us a minute just confirming that you're able to hear us. I can. Okay, perfect.

So moving on to the overall CV plus PV. Investments, we ended the year with about INR 6,400 crores of investment spending and this is likely to increase to INR 8,000 crores next year, as we step up the whole electrification investments both in CV and PV that's the main thrust of the delta that is coming through.

Next slide. On the cash flows overall the operating the cash profit after tax and CapEx, I see in the questions one of some of the doubts lingering in terms of how do we treat CapEx.

Let me be clear. For us, what we call out as free cash flow is operating cash less CapEx less working capital changes and any finance expenses that we incurred. So it's the entirety of it. So this is free cash flow after all these investments. This year we ended at INR 3,800 crores of free cash flows and for this quarter. And then the full year we ended at INR 2,400 crores of free cash flows after all these investments. And partly all the CapEx is funded by the cash profit after tax. So it's extremely self-sustaining business that we have.

On a full year basis, working capital in Q4, normally reverses full year basis no impact at all of working capital. So what we are seeing as INR 2,400 crores is completely cash profit after tax less CapEx less finance expenses.

Next slide. Tata Motors Finance, we did signal that this business the entire restructured portfolio we want to have a very, very close watch on it. And two things have happened this quarter. One is we have taken a hard look at the restructured book and taken adequate provisions to ensure that this book now completely is taken care of. And we started off the concerted collection efforts. And that has ensured that the GNPA is now starting to sharply trend down. We did 2.6% in this quarter. And the absolute numbers of GNPA are also starting to come down sharply and we intend to maintain that.

And the capital adequacy remains comfortable even at these levels. And the business is now pivoting squarely to quality focusing on delivering double-digit ROE in the medium term with a focus on improving NIMs lowering the credit losses and very tight control on fixed costs. So business is being around for our ROE as the case may be.

Next slide. Just from a credit rating perspective, we had S&P upgrades by a notch. And domestically, ICRA also revised our outlook to positive and we will be engaging with them after the results and the others as well.

Next slide. We do invite you for the Investor Day, both in Tata Motors and in JLR. In India, it is on June 7, in Mumbai. And in JLR, it's on June 12, at Gaydon, the new head headquarters of JLR.

Next slide. The overall outlook, how do we see it? I think on the demand side, we remain optimistic, despite some near-term uncertainties that could be there and inflation expected to be moderate. As far as FY '24 is concerned, as I said earlier, it's a year of where we have to deliver. So, we are squarely focused on putting our heads down and executing this plan and ensuring we make this -- make account for the full year.

As far as the momentum is concerned, it will build through the year. Keeping in mind there is an element of seasonality. JLR is stabilizing its supply chain from where it has come. So, we want to stabilize it. And of course there is a post RDE impact in India. That's the only reason we were calling this out as the momentum building through the year, so we don't get carried away. At the same time, the plans of JLR continuing to -- which Richard just talked about, CV ensures the demand pool strategy continues, double-digit EBITDA to be delivered and profitable growth in all the business verticals that we have that Girish talked about, that's an important priority for us. And PV EVs the plans continue to remain aggressive.

With this, let me end the talk from our side and move it on to Q&A. And we already have a fair number of questions that has come through. Let me pick them up one by one in the order in which they actually appeared.

[P B Balaji, Chief Financial Officer-Tata Motors Group]

So, firstly it's coming from Binay, talking about EV financials. And I think I covered Binay, the PV plus ICE revenues, why they are more than PV business. TMETC TRILIX, we don't want to comment on the smaller subsidiary that rather they are design centers. They don't materially move a need. They should be treated as part of the design cost that we income. And PLI not considered government grants, nothing as far as the EV business nothing has been considered that are there. And headwind statements, let me give it on to Charles to talk about whether it's also coming through and one other question as well.

[Shailesh Chandra]

Sure. So, as far as -- let me talk first about the ICE segment. As far as scale wins are concerned, I think what is really going to support growth are going to be the new launches, refreshes that will be launched by the various OEMs in this financial year. We are still seeing the demand in terms of openings of the industry are remaining strong. So that's a good news that demand has not dropped. Of course, there are certain segments, especially the entry segment, which I mentioned is under pressuring and a bit of interest rates also impacting the vehicle financing interest rates and all will have some impact or definitely a gain on the entry segment.

As far as EVs are concerned, there's hardly any headwind that I see I only see the tailwinds. There are several launches which are going to happen in this space and that is going to expand the market. There's a growing acceptance of EVs among the consumers and that is continuing to help. We are seeing every quarter the industry is growing big in size. In fact, if you really see the monthly rate of sales of EVs has grown to 8,500 to 9,000 per month for the industry, which is very high. Just one year back it would have been 4,000 or so. So, I believe that EV industry will have all these tailwinds apart from the various states which are also coming with very progressive policies. [indiscernible] and all I think the environment is very favorable for us.

[P B Balaji, Chief Financial Officer-Tata Motors Group]

Thank you, Shailesh. Richard, first question coming to you and then Adrian, something coming your way as well. Can you give us a push-pull factors for margins next year that's coming from Kapil, you're currently at 6.5% guidance is 6% plus. How does this work out, some color would be helpful.

[Richard Molyneux]

Yes of course. So we're expecting volumes next year to be circa £400,000, so a little bit higher than our Q4 run rate. On the positive side, we're also expecting supplier inflation to start to reduce. Some of it will become embedded in terms of their labor rates, some of it in terms of commodity rates and the utility rates is starting to show signs of coming off the peaks. On the other side, we -- at the moment, we have foreign exchange rates that are slightly less favorable than we had during the course of Q4. And we will need to start investing in marketing to secure the order intake that we need towards the back end of the year.

Finally, I think the other negative is we do expect and I saw some questions on that later on. We do expect VME to increase, but we expect that to be a creep rather than a leap. So we are not going to get into mass discounting of cars motors. We're a model luxury player, but we do expect VME to creep up. So, I'd say FX marketing and VME a little bit adverse volume and supplier inflation a little bit favorable.

[P B Balaji, Chief Financial Officer-Tata Motors Group]

Thanks, Richard. Adrian, there's a series of questions coming from Chandramouli Goldman. We have guided to a 6% EBIT margin and a $2 billion cash flow this year. Last year, we started in a similar 5% EBIT and $1 billion SCF. What is giving you the confidence that this time around things would be different, one? Second, order bank you also saw another question somewhere else. Order bank at 200. And if you net out sales and our average the number seems to be much lower in terms of new orders coming in can you get us some color there second point.

Third, a very interesting question on what's behind the thinking of the JLR rebranding? Is it just corporate action, or there's something happening on the ground which is triggered the stuff.

[Adrian Mardell]

Yes. Thanks Balaji. I'll take them in the order that they've been asked. Look for the last 12 months we've been optimistic about breaking through on supply. And the truth is for the first six months that we were too optimistic.

Our breakeven has been in place. It's been in place for more than 12 months at the 300,000 units. And simply put we had to build more than 25,000 cars per month of course. And we really didn't get to that point to Q3. And you can see as soon as we have got to that point it was a mixture of overall supply with semiconductors and the MLA products don't forget they're super crucial to our business model. They started to come through in proportions we need from about November last year.

So, it's those two things which really moved us from a loss-making to a quite an aggressive and significant profit-making business. Breakeven is still the same. We know the supply is higher with new semiconductor supply we secured from January and we know our MLA production units as Richard showed in the presentation they've grown to that 2,600 plus a week.

So, the two critical things we're waiting for happened in quarter three, continued pace in quarter four, and we believe will continue now into FY 2024. We can see it in the data we've seen in the first six weeks. So, not only have we broken through, but we can see the continuation of that into the first half of this year and beyond.

From an order bank perspective, 200,000 units, look, it's still too high. I think that's the first point we have to make here, right? We don't have an expectation and aspiration for 200,000 units of orders. It's two reasons. It's a symptom of supply being too low and production being too low. And it's a symptom of the appeal for our vehicles that people have been prepared to wait for as long as they actually have.

But the reality is a healthier order bank is a lower order bank than 200,000 units. So, my anticipation is it will continue to fall by about the 5000 units per month over the first half of this year.

And to Richard's point, if that continues to happen and our supply increases at that time we expect it to do so, then we will be stimulating further orders. But if you look at any of our websites, particularly, on the most sought after vehicle, the Range Rover, a lot of those order types are now 12 to 18 months. We're not stimulating orders beyond 12 to 18 months at this point.

So, the proportional share point, which is in the question 200,000 orders at the end of March, 76% of them were Range Rover, Range Rover Sport, and Defender. So, it's still very skewed towards our three most modern most luxurious nameplates today.

And in terms of the brand question, the point there number three, I'll reiterate what I actually said and was quoted within the media Land Rover is the trust mark for three brands. And when you think about it the characteristics of those individual brands Range Rover Defender and Discovery are different. And if we're truly good -- they're underpinned by the trust mark, so the off-road capability, the versatility of the vehicle, the safety within the vehicle, the technologies are in all of the brands. But if we're really going to grow our business in model luxury, we absolutely have to focus on the distinct characterizations within those brands.

Look we know Range Rovers about luxury, quietness, serenity. We know Defender's about utility, go anywhere. We know Discovery is about a family size and the utility of being able to in the broadest sense use this as a family traveler vehicle. We understand those things we have for a long time, but we have to deepen the understanding and the characteristics of vehicles because clients will be attracted to individually those brands not just to Land Rover going forward.

That's already cleared in most of our biggest markets China, USA, Middle East. So, that's why we've actually elevated those sub-brands about the Trustmark called Land Rover. And that's what we're going to keep working through and working on going forward. Thank you, Balaji.

[P B Balaji, Chief Financial Officer-Tata Motors Group]

Thank you. Thanks Adrian. This is coming from Gemma, JPMorgan. I think this question has picked up by someone else as well, saying that can we give color on the free cash flow guidance and the net debt reduction for next year? How much of it is due to working capital? And how much of it is due to underlying cash flows? One kind of a question.

Second part of your question within that you are increasing CapEx to $3 billion, but still guiding for debt going down to $1 billion. Richard can you reconcile the two for us?

[Richard Molyneux]

Yes sure. So, we are going to increase our investment from, I think it was £2.35 billion this year to £3 billion next year. And even considering that increase of £600 million of investment, we are anticipating and expect to generate beyond that £2 billion worth of cash to take our net debt position down from £3 billion to £1 billion.

In terms of the proportion of that cash generation that is operational and working capital. But I'd say certainly for the first half of the year the majority of it will be operational working capital a little bit more in the second half of the year. But if you -- you only need to look at our cash flow generation in the last six months £1.3 billion after about £1.3 billion worth of investment in the last six months.

So we are a strong cash-generating business when we are functioning at the type of levels that we're talking about. Adrian has mentioned several times, our breakeven volume is around 300,000 units. I've mentioned that, next year we should be operating at 400,000 units. That's where we get our both EBIT and cash returns from.

[P B Balaji, Chief Financial Officer-Tata Motors Group]

Thank you. Thanks Richard. One question, if Ben's there. Do you intend to come to the bond market and will you do some senior secured debt. The second latter part, I can answer a clear answer, no. First part Ben, over to you.

[Ben Birgbauer, Treasurer - Jaguar Land Rover]

Sure. So I think that at some point we will come back to the bond market. We've been a regular issuer. But I think we'll just keep monitoring the market for the right time. I think part of it is our financial performance is improving, as we've talked about here today. And there's potentially some benefit to continuing to wait as we expect that to continue.

But on the other hand there are plenty of uncertainties. In terms of needing to go to the market I don't think there is any need. As has been explained, we expect significant positive cash flow in the year, and that is after significant investment spending. So we don't need to fund investment spending. I think it would be more a matter of managing our liabilities.

[P B Balaji, Chief Financial Officer-Tata Motors Group]

Thank you. Thanks Ben. A question to Richard and then another one to Shailesh, the same thing in Shares on Rakesh, BNP Paribas. JLR's investment of $15 billion, can you give us a rough idea of how much of this is going into R&D EV product development how is going into ICE?

[Richard Molyneux]

Yeah. So look this year our total engineering went up by £400 million to £1.69 billion. I would expect that to continue to increase a little bit next years. However, the majority of the increase over the next couple of years is going to be in capital as we industrialize all of our 2024, 2025 and 2026 car lines into Solihull which is where we'll be producing Jaguar and we will be producing the Range Rover and into Halewood which is where we'll be producing EMA.

So in the short-term it will be partly increase engineering in the next 18 month to two years capital will be the primary part of the increase.

[P B Balaji, Chief Financial Officer-Tata Motors Group]

In terms of…

[Richard Molyneux]

…okay. Go ahead.

[P B Balaji, Chief Financial Officer-Tata Motors Group]

Go ahead, Richard. Over to you.

[Richard Molyneux]

No. I was just going to say look in terms of EV and ICE look we are going to have to continue to invest in ICE to meet the Euro 7 regulations that came through. However, obviously the vast balance of our efforts is in the EV space as the majority of the launches that we have post now are EVs.

[P B Balaji, Chief Financial Officer-Tata Motors Group]

Thank you. Question to Shailesh. In terms of -- in the domestic PV market competition is obviously picking up especially with clear head-on competition to Nexon and Punch. Any I guess how you're preparing to defend your volume and market share?

[Shailesh Chandra]

Yeah. So see we have seen in the past also and last year also we have seen that in the SUV segments. Whenever there is a new model which gets launched typically the segment expands. And this expands because it is channelizing flow from adjusted segments into the SUV segment.

This has been at the cost of Hatch is going down or Sedans going down. So I think that phenomena is going to continue, despite Nexon segment you have already seen that this segment has seen every year addition of new models and only the segment has expanded. And we as a company have been seeing increasing volumes of Nexon.

Similar thing in funds, so this is one that there will be channelized -- the volumes would get channelized from other existing segments to this. So the segment is going to expand. From our perspective, we will keep the excitement in these two products high through several interventions new forever intervention on bringing.

Recently we got the Hashtags dark, Punch V, we came with CAMO. But also at the same time, let's take for example a Punch, we are going to bring CNG variant here with the win similar technology and this is going to be unique in the market.

We are also planning to bring e-lease. So we are very confident that in these two products we'll be able to sustain the volumes. Further actions, how we will further grow from where we are and both in terms of volume and market share we are going to add new name plates and we have showcased that in to Expo, Cove, Sierra.

These are new nameplates which are going to get launched -- there's going to be a steep increase in the EV volumes. We are expanding our portfolio in the CNG segment. So I think we have several levers which are going to increase our volumes so these manage.

[P B Balaji, Chief Financial Officer-Tata Motors Group]

Thanks Shailesh. Next is from Gunjar [ph]. I think the JLR sides of the questions have all been answered. So let me move to the PV side. I think that's also coming to Kashish later on as well. India PV, volumes are 540,000. And at this level capacity utilization extremely high 65% SUV share. From here on, what is therefore the margin improvement driver? And why do we why is the margin still not as strong as others who are there in the market and your plans for the same?

[Shailesh Chandra]

So one thing, I would like to say that, last year if you see the EBIT has increased by 300 bps. So it is an improving trend and significantly improving trend. The whole benefit of operating leverage has been fully realized. The margins at the contribution level has been increasing. Of course, alongside we are also seeing a steep growth of EV business. There the margins, I think Balaji very well explained that, it is -- underlying margins are strong but there is a huge current development expense, which also gets charged off.

So it will have an impact. But there are plans in terms of how we're going to strengthen the margins for EVs. And also, as the battery prices have gone up significantly by 35% the sale prices have gone up. There was huge semiconductor open market purchase, which was being and all these are factors which we reclaim back. Battery prices are going down semiconductor open market buys have come down.

So these are all positive things which are going to favorably influence the contribution for EVs. Also, there's a deep localization that we are doing which is going to further bring down the cost. So there are a lot of actions on the EV side which is gone to improve the margin, including the new models which we are going to launch is going to be in the SUV -- higher SUV segments which will be more better than margin. I'm not talking even about PLI because -- and we have a clear pathway to bring this to say at a contribution revenue to a double-digit margin closer to where we PVs.

And on top of that, of course we are going to have the PLI benefit and all. On the PV side, I think again a richer mix is what we are expecting in the coming years, which is going to strongly support. There's a institutionalized cost reduction plan with a very aggressive plan that we are taking benchmarking clearing it down tearing down at a component level. So all these actions are I'm sure that we are going to continue to improve on the margins.

[P B Balaji, Chief Financial Officer-Tata Motors Group]

I think there's another question which Ashish asked as a guidance for a 10% margin in PV just to correct that is the EBITDA margin we are referring to. That is what we want to reach and Shailesh has already explained as drivers for the same. Question about Shailesh and Girish industry growth both in India, or India for CV and PV given that the demanding base is there. How do you want to do it? Do you want to start with CV?

[Girish Wagh, Executive Director-Tata Motors Limited]

Yeah. Okay. So I think while the industry has grown pretty well in FY 2023 over the previous year I think we have to keep in mind that the industry volumes are still below the previous peak of FY 2019. That's point number one. Point number two is, I think generally in the pre-election year that is the general election year before general elections market has always grown, especially because of the government spending. And I think this year in the budget we are looking at almost record spending on infrastructure with the government. I think these are good tailwinds for the industry. And as a result, I think the industry should grow further during this year, although it may be in single digits. And the growth may vary across the year as well as across various segments.

One would see highest growth happening probably in buses, because the buses still are at a lower level, followed by good growth in the medium and heavy commercials. It appears that the ILCVs may remain flat compared with the last year. And the small commercial vehicles may grow a bit.

In terms of timing it appears that the first quarter may de-grow a bit Y-o-Y because of some pre-buy effect as also the transition into the BS VI Phase II and the price increase which has happened. But after that one would see growth in Q2, Q3 as well as Q4. So I think that's how we see how the markets will grow. Overall, it appears that we will see a single-digit growth at the industry volume level.

[Shailesh Chandra]

So on the PV side, I would say that, we are very clear that the secular trend of growth of the industry is going to remain intact, because of the underlying drivers went penetration levels. And also given that now the market is having a lot of upgrade customers so who are wanting to upgrade the vehicles and that is the phenomena that we have been seeing when it comes to SUV growth. And therefore going forward, while there was a very steep growth of 27% in the last financial year also thanks to the pent-up demand, and low inventory levels that we had at the start of FY 2022 -- sorry FY 2023, I think that helped in driving this kind of growth which was 27%.

Otherwise, it would have been much lower I would say. So therefore, this year would be growth would be slightly moderate in the zone of 5% to 7%. But I'm sure that, beyond this financial year the growth will come back to double-digit number is what I would say

[P B Balaji, Chief Financial Officer-Tata Motors Group]

Thank you Shailesh. A question from a couple of EV margins is already covered. I think there's a question on PLI that is there in various places where do we stand on PLI Shailesh you want to keep it there?

[Shailesh Chandra]

Yes. So as far as PLI is concerned there have been a lot of engagement with the Ministry of the Industries on this topic and the discussions have recorded around the domestic value additions. And MHI has been very receptive of the inputs from our side. There have been several inputs that have been given. And, of course, the requirement of a requirement from the MHI to establish the extent of DVA that any OEM has attained was a bit stringent, which has been brought to a level which is not practical. And we are going to be working on that. And hopefully the first model is what we are going to sell it with the DVA status very soon. From there on we will try to secured the PLI eligibilities for all our models. Most -- all the models that we are selling today as per our estimates across the DVA requirement. Going forward we are very confident of operating the PLI.

[P B Balaji, Chief Financial Officer-Tata Motors Group]

Thanks, Shailesh. Two questions from Kapil, I think, Girish coming your way. April volumes much weaker than industry for automotive what's happening? And when do you expect growth to return and tracking conditions how is it trending? And how are dealer inventories?

[Girish Wagh, Executive Director-Tata Motors Limited]

All right. So Kapil, first of all, on the volumes I think the first point is because it is aligned to the retail. And I think the retail volumes in April have dropped, after the pre-buy effect in the month of March. So as we said we will align our production and uptake to retail I think that's the first thing.

Second, of course, as I mentioned earlier when we have transitioned to BS VI Phase II I think there is a significant change which has been done in the entire product portfolio. Every product in the portfolio one has seen significant improvement in terms of power-to-weight ratio, total cost of ownership, comfort and convenience safety. And as a result there were some supply chain issues also in April month of April which will get addressed from this month of May.

Finally, as I already answered I think Q1 we see that there would be a degrowth in retail registration volumes because of the pre-buy effect, but the growth will come back from Q2. As far as tracking sentiment index is concerned for the tippers it has gone up which was expected. I think for other segments, which is trucks ILCVs, small commercial vehicles they have dipped marginally and that was also expected after a strong Q4.

But as I said I think equation between headwinds and tailwinds, I think, the tailwind should prevail after some time. And therefore one would still see growth happening from Q2. In terms of dealer inventories I mean very happy that the inventories continue to be healthy, especially, after a very good retail that happened in Q4. And we will continue at this level and because we are matching retail offtake production in that sequence, I think,this will remain at good level. Balaji, I will take the next question also.

[P B Balaji, Chief Financial Officer-Tata Motors Group]

Let me quickly cover that for people who are not seeing the question that you're taking here. This is on the entire EV buses GCC model. Are EV buses viable without same subsidy this basic question? And will you participate in future MSRTC orders given that you have not participated in the recent CESL tender?

[Girish Wagh, Executive Director-Tata Motors Limited]

Okay. So let me take the first one. See as far as the electric buses bulk of those are being consumed today by the government. And most of those are now also being consumed in the own operate maintain model, which is an OpEx model and not a CapEx model, right? So even if the same subsidies are not there finally it will lead to some increase in the OpEx that is the charge per kilometer and that will be part of the bids that all the OEMs will give and will then get translated into the ticketing or the ticket rates which will be there. So I don't think this should have an impact especially on the gross cost contract model.

As far as private customers retail models are concerned the -- retail customers are concerned there is an increasing interest because many of the corporates would also like to start moving towards their next zero goal for greenhouse gas emissions. And therefore, they would like to move for -- move towards electric buses for their employee transportation. So this should also continue.

And lastly, I think the 5,000 MSRTC order or any other order I think let me once again clarify we did stay away from the second tender of CSL because we had requested for a payment security mechanism to the government and the government agencies which didn't get implemented in tender two and therefore we stayed away. The third tender was also released by CSL in which there was only one player who bid other -- all other players did bid because this payment security mechanism wasn't there. And therefore, that tender will be rebid. And we will continue to engage with the government to craft the payment security mechanism which will make the whole model bankable. Once that is done I think we will be very much into this game. Balaji?

[P B Balaji, Chief Financial Officer-Tata Motors Group]

Thank you. Thank, Girish. Jinesh you've asked a series of questions a lot of details. My suggestion we will take it off-line with you. So these numbers they can supply to you offline. So kindly pardon me for this it's going to take a long time to go through all your questions there. Going on to Joseph IFS. This is an order flow conversation which I think has already been covered. And therefore, similarly the working capital piece has also been covered.

The additional new questions coming up is activation of Sanan plant. Will it bring in negative operating leverage? And how do you intend to deal with it. It's fair to say some cost is coming in with all the revenue, but it's part of the long-term capacity planning therefore it is part of the overall mix that we play with. So our guidance on getting to the double-digit EBITDA includes these stuff, but that's how volume is going to come. So I'm not concerned about that.

Coming on to Ashish, I think it's on battery which is new area let's talk about that. There are comments in the media on battery plants in India and EU, can you give some color on this? All we can say at this point in time is conversations are underway with it both in India as well as in Europe. And we intend to come to a conclusion sooner rather than later. And when we do that we will take you through it in greater detail. So if you can understand everything related to that.

Supply chain volume guidance, we don't give. I think everything we had to say we already set some further guidances we don't intend to give. Initial talking about India FCF generation FairPoint. We talked about JLA. India will also be positive in free cash flows and it will be integrate one more contributor to the net debt reduction that we have in it despite the INR 8,000 crores spend that we have on the CapEx. Second, this Adrian coming your way from Stephanie. Under the house of brands Jaguar intends to launch a premium GT with a pricing of -- given the recent price cuts that have come from competition are you concerned about it?

[Adrian Mardell]

There's work to do for sure, but we're very clear on the positioning of this brand going forward. We've announced that the pricing of this will be more than 100,000 units position as a very low breakeven for -- so work to do not concerned at this point no.

[P B Balaji, Chief Financial Officer-Tata Motors Group]

The second one related the different question is does JLR intend to reinstate the dividend if cash flow exceeds expectations in FY 2024. The dividend policy has been approved by the Board for JLR and the Board at an appropriate time will take a look at it and it will be as per the dividend policy.

Next question from Chirag. Volumes Q1 is a base volume and it keep rising, will it lead to some adverse mix and commodity benefits are they likely to flow in. And let me -- Richard do you want to take that then I'll come to CV.

[Richard Molyneux]

Yes, sure. So the 94,000 that we sold in Q4, I think, I said, we expect the first half of the year to be sort of around that type of level. Will it lead to some adverse mix? No. It won't. We mentioned we have an order bank of 200,000. 76% of those are Range Rover, Range Rover Sports and Defender and those are the orders that we'll be fulfilling during that period largely.

In terms of commodity benefits, yes, we do expect as I mentioned before and some of the inflationary pressures at the suppliers start to come down. Commodity rates being part of that utilities as well whereas some of the inflationary impacts on our suppliers particularly in terms of their labor costs are going to be embedded and will probably continue to grow. So there are some upsides and downsides in terms of our supply costs, but we expect the rates that I showed you in terms of outbound inflation exceeding inbound inflation to continue.

[P B Balaji, Chief Financial Officer-Tata Motors Group]

Thanks, Richard. Question, Girish, you way and also there's a question below that has the same thing, discount pullback in Q4? Was it driven by pre-buy or is it a new normal? And then can you give a rough sense of how much discount have you pulled off?

[Girish Wagh, Executive Director-Tata Motors Limited]

So, I think the quantification of discount pullback Balaji has already shown in his presentation, there was a clear reconciliation in the slide. Now coming to this discount pullback, I mean, I would rather like to say that it is about customer value perception. So what we have been focusing on two, three things. One is continuously increasing the customer value. And second is taking a lot of efforts on communicating that value and ensuring that the customer experiences that value.

So it would be a mix of communication whether it is ATL intense advocacy or in-market trials. A lot of work has been done and we have been consistently increasing that customer value basis, which we are able to increase the market operating prices. So, it is I would say a function of customer ran that to how does the customer compare it with the competitive offers that he or she has.

So I think our focus has been to continuously improve that. And I can say that when you transition to BS VI Phase II, we've been able to do a step change, because that opportunity was available levering product development. Balaji?

[P B Balaji, Chief Financial Officer-Tata Motors Group]

Thank you. Thanks Girish. So a question on PV outlook seems to have changed significantly in the quarter. I think Girish and Shailesh has already covered as to how we see the industry scenario going forward. So we'll stick to that.

Clarification on TD, whether will Tata Motors incur battery CapEx? No, that will be done by Tata Sons company. The company has already been set up under the name of Agritas [ph] Private Limited. So that has already been created. So it will come through that company.

So I think, with this, we have come to the end of the session, I'd really like to thank you for taking the time and the probing questions that you have been asking us. So feel free to reach out to our team in case you need further clarifications and specific details that you require.

Thank you and look forward to speaking to you in the next quarter. Bye-bye. Thanks guys. Thank you.