Tata Motors Group businesses are self-sustaining, to attain net zero automotive debt by FY-24, says N Chandrasekaran

In his address to the shareholders in the FY-22 annual report, Chandrasekaran said, “We are committed to restoring the profitability of this business as it returns to competitive growth and inflation stabilizes.”

Tata Motors Group is now operating as three independent business units of Commercial Vehicles, Passenger Vehicles and Jaguar Land Rover. This offers differentiated value propositions to their different customer segments whilst leveraging backend and corporate synergies wherever possible, the Chairman said in his letter to shareholders.

“This has made Tata Motors lean, nimble and customer-centric. Each of these businesses is self-sustaining, which gives me the confidence that we will get to near-zero net automotive debt by FY24. Tata Motors is taking concerted actions to be future-ready and create a virtuous cycle of growth and returns for our shareholders,” he said.

The Chairman reiterated that the Group is also actively exploring partnerships in battery cell manufacturing in India and Europe to secure our EV supply chain.

Reflecting on the year, Chandrasekaran said FY22 was a “busy year” for the Company as it navigated many challenges to successfully strengthen the business’s fundamentals.

The global wholesales of Tata Motors increased by 20% to 1,086,734 vehicles, and revenues stood at Rs 278,454 crore, 11.5% higher as compared to FY21.

The year’s free cash flow (automotive) was negative at Rs 9,472 crore (compared to positive Rs 5,317 crore in FY21). Chandrasekaran attributed this primarily to adverse working capital.

Elaborating on the global macro-economic environment, Chandrasekaran highlighted that the recent history has been relentless with the global pandemic, military conflict, growing inequality, supply chain shortages and more, where “decades of experience has been squeezed into two dizzying years. Businesses have had to cope with this unprecedented sequence of events with speed and agility,” he added.

He stressed that while these changes have had a severe impact on businesses and communities, they have also accelerated some important trends for the future.

“The Energy transition is irreversible (and will) move to green mobility, (need for) rebalancing of supply chains to become resilient, and the digital transition of Artificial Intelligence and Machine Learning have become mainstream,” said the Chairman.

On the JLR’s performance for FY-22, Chandrasekaran said, the global shortage of semiconductors had a disproportionately adverse impact on Jaguar Land Rover’s production and sales compared to its competitors.

“Even though we took various steps to address the issue, the situation remains challenging. This is a key issue facing Jaguar Land Rover and we are working assiduously to address the same during FY23,” he assured.

He asserted that the Company delivered a resilient performance during the year despite a revenue fall by reducing its breakeven to 320,000 units.

Chandrasekaran showed confidence in the way ahead, “While the near-term outlook is fluid with multiple challenges, the business is taking the right actions to navigate them, and I am confident that we will emerge stronger.”

He highlighted that during the year, Tata Motors entered into a definitive agreement with TPG Rise Climate for them to invest Rs 7,500 crore ($1.0B) in the passenger EV business to secure an 11% – 15% shareholding in this business.

During the year, in the EV space, new records were set every quarter by Tata Motors to register the highest ever annual EV sales of 19,105 units in FY22 (up 353% vs FY21), with penetrations touching 7.4% by Q4 FY22. He expects penetration of 25% EVs in the next five years.

On the Group’s sustainability roadmap, Chandrasekaran said that the shift to sustainable mobility is “irreversible” and that the Tata Motors Group will be among the leaders of green mobility globally. “We target Net Zero emissions by 2039 for Jaguar Land Rover, 2040 for PVs and 2045 for CV, and actions are already underway to deliver the same.”

On its part, the Jaguar brand will become fully electric by 2025, and Land Rover shall have six battery electric vehicles by 2026. It expects 60% of Jaguar Land Rover’s volumes will be pure BEV vehicles by 2030.

Back home, In India, Chandrasekaran said, “EV penetration in our portfolio is likely to increase further to 25% in 5 years from 7.4% as of Q4 FY22.”

By 2025 Tata Motors intends to have a portfolio of 10 EVs.