Tata Motors Ltd (TATAMOTORS) Q4 FY23 Earnings Concall Transcript

Tata Motors Ltd (NSE:TATAMOTORS) Q4 FY23 Earnings Concall dated May. 12, 2023.

Corporate Participants:

Mr. P B Balaji — CFO

Mr. Richard Molyneux — Acting CFO

Mr. Girish Wagh — Executive Director

Mr. Shailesh Chandra — Managing Director, Tata Motors Passenger

Keith Benjamin — Global Legal Director

Mr. Adrian Mardell — Interim CEO,

Presentation:

Operator

Good day and welcome to TATA Motors Q4 and Full-year FY ’23 Results Call. I am joined today by Mr. P B Balaji, group CFO TATA Motors; Mr. Girish Wagh, Executive Director, Tata Motors; Mr. Shailesh Chandra, Managing Director, Tata Motors Passenger Vehicles Limited & Tata Passenger Electric Mobility Limited; Mr. Adrian Mardell, Interim CEO, Jaguar Land Rover and Mr. Richard Molyneux, Acting CFO, Jaguar Land Rover and my colleagues from the Investor Relations team.

Today, we plan to walk you through the results presentation, followed by Q&A. [Operator Instructions]

Now, I’ll request Mr. Balaji to kindly take us through the presentation.

Mr. P B Balaji — CFO

Thank you. Firstly, welcome all of you to the Q4 FY ’23 analyst call. And our intention is to quickly run you through the numbers and any colour that we may want to give.And then spend as much time as possible on the Q&A as normal.

Standard Safe Harbour Statement delta to report this time. Let’s go to the next slide please.

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 in our last results call. And on-top of that, we also had the launch of the Thiago EV, and Shailesh, I’m sure is going to talk about that. We finished the first 10,000 sales of Thiago EV already and we also completed the sale of Ford Sanand facility, that’s been done. And the final tranche of INR3,750 crores has also been received from the TPG monies. And overall, on the E-mobility space, as well as the zero-emission mobility space, lot of work happening and portfolio continuity increased.

Next slide.That’s in India, into JLR. Again, an equally action packed quarter. Where starting point is the announcement of the blockbuster, 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 Reimagine GBP15 billion investment over the next five years. And the whole electrification roadmap 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 Range Rover, Defender, Discovery and Jaguar in a big way, while continuing to be almost equivalent of an Intel Inside as part of the Land Rover is concerned and its features. I’m sure there will be a lot of questions on that, which we can pick up both today as well as on the Investor Day coming up. Next Slide.

Fair to say it’s 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, amd 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 highs and I’ll quickly cover that in the coming slides, but we entered the year on a pretty strong note, with a revenue of INR1 lakh crores and EBITDA of 13.3% and profit before-tax and exceptional item of INR5,000 crores. On a full-year basis, we did our highest ever revenue at INR3.5 lakh crores and ended the year with a positive free-cash flow of INR7,800 crores, despite a very weak start in Q1 and Q2, if you’ve seen 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. In the quarter, we grew by about 35%, of which volume and mix contributed 24% of the 35%, and price came in at 10.50%, so price is still a very strong variable in our growth agenda. Profitability, 3.2% went to 6.8%, and all business is contributing to it. And JLR coming at a very large swing there, contributing to the 2.8% out of that delta there. Again, debt continues to reduce at INR43,700 crores and TML India at INR6,200 crores, JLR GBP33 billion, that’s INR30,000 that we’ll talk about. So the FY ’24, net-debt reduction plan, we are confirming will not be in a position to meet the FY ’24 numbers. But very clearly, FY ’25, we want this issue sorted-out. Next slide.

A series of headlines, normally we don’t do that, but it’s fair to just scroll back and reflect on what this quarter and the year actually means for the group, for us, each one of us on this call, we feel strongly about this, the highest-ever revenue in a quarter, the highest-ever EBITDA in a quarter. One of the strongest PBT that we have delivered and all the auto vertical simultaneously profitable, strong net-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 stock. I mean factoring in the weak stock and India net-debt, lowest in the last 15 years. So it’s worthwhile just to mull over it to say — 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 you go into FY ’24. This is basically giving us the impetus to how we want to play FY ’24. Next slide.

This is also something that we are happy about, a dividend of INR2 per share for the ordinary shareholders and INR2.1 DVR shareholders coming in after some time. And this will obviously have to be — the Board has recommended this and will be approved in the ensuing shareholders’ meeting. And this will result in a cash flow of INR771 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 the retail shareholders and I’ve always maintained, a turnaround is not complete unless we pay dividends and nice to see this number coming through as well. Next slide.

With this, I think let me hand it over to Richard, who will walk you through the numbers and between him and Adrian, they’ll cover the JLR section. Richard, over to you.

Mr. Richard Molyneux — Acting CFO

Right. Can you hear me okay?

Mr. P B Balaji — CFO

Yes. Absolutely.

Mr. Richard Molyneux — Acting CFO

Thanks. So, Balaji has already explained some of the positive future announcements for JLR. Also, 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. 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, EBITDA, down to free-cash flow, note 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 GBP7.1 billion, that is the highest revenue that we have seen since FY ’19. EBITDA of 14.6%, 6.5% EBIT, strong PBT and GBP850 million worth of cash in the quarter. In fact, if you look at the second-half of the year, we generated GBP1.3 billion worth of cash, that also is the strongest H2 cash performance for seven years, so since FY ’16. The strong performance in Q4, if you look at the full-year, although there is some movement back in retail, that as the natural effect of dealers destocking when we had tight supply and restocking now that supply is coming back on-stream. Revenue was GBP23 billion. We produced 2.4 EBIT for the year, PBT was negative 64, but if you look-through that, just like the old adage game of two halves, PBT in the first-half of the year was minus GBP197 million in the second-half of the year, it was positive GBP613. Free-cash flow for the year GBP521 million, also the best full-year cash-flow since FY ’16. And we ended the year with GBP8 billion worth of cash, GBP5.3 billion worth of liquidity. And GBP3 billion worth of net-debt.

So we have had, like I say, 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. Okay, next chart.

I won’t read-through this, this is a written version of most of the comments that I’ve made. Feel free-to read this at your leisure afterwards. So we go again.

Albright. 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 wholesales remains reasonably consistent circa 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% Defender. You’ll, 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 as a sports car manufacturer. So we still are investing in those — in those brands as well. Full-year, 321,000 wholesales.

The next chart. So if you look at this on a regional basi, you’ll see reasonably strong through each region in the quarter, the one exception I’d call out and explain is North-America. But that’s not issue of fundamental demand, that’s just our allocation timing. So although it looks like a reduction there, when you look at retails in North-America quarter-on-quarter, it was 23.6k, in Q3 22.3k 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 signal from North-America. It’s just our timing of allocations.

All other regions strong, including China, it’s 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 BEV on the PHEV section at the bottom, from 11% to 17%, that’s the result of our, I would say, increasingly compelling PHEV offers. So we have increased both the range and the performance of several of the PHEVs 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 PHEV vehicles in our wholesales. Next chart.

Okay, so in terms of the financial [Indecipherable] This takes PBT from the same quarter last year, where it was GBP9 million to this quarter, GBP360 million. The biggest variable is volume and mix. And you can see there, actually probably worth-mentioning the 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 — during the past few months and we’ll continue to push. So that mix is driven by Range Rover, Range 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 expect it to happen and I told you would happen when we sat down last quarter. So we’ve moved to a position where our outputs inflation in terms of our pricing is now higher than our input inflation. That wasn’t the case last quarter. Last quarter, pricing was GBP165 million, favorable material cost [Technical issue]. So we’ve flipped that through the quarter. We will intend for that to continue.

Going through to SG&A. Through the care point for 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 digital transformation as a company. Operational FX, did exactly what you would expect it to do on a quarter-by-quarter basis, really has weakened, that helps us from a transactional basis, but does give us a hit in terms of realized FX on unrealized commodities, the weakening of sterling versus the dollar gave us a favorable revaluation of our dollar-denominated loans, which you’d expect.

So, fundamentally, the move-in PBT quarter-to-quarter is volume to mix — volume and mix and we’ve managed to offset input inflation and out inflation. Next chart.

So this looks then at the move of that PBT through to cash. Key here is in the middle section here cash profit-after-tax and investment is a favorable GBP400 million in the quarter. Working capital continues to move in our favor, that is partly natural as our business expands, our payables expand both within our receivables. But also, apart from some deliberate measures and initiatives that we’ve 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 –deliberate efforts on our side. Generated GBP815 million worth of free-cash flow that we reported. The next chart.

In terms of investment. So total investment for the year was just under GBP2.4 billion. That is an increase. The biggest part of that increase is in engineering, which rose from GBP1.3 billion to GBP1.7 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 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 the 60% range.

But we’ve also said, Balaji repeated this earlier on, that — so this investment number will increase. We’re expecting it to be around GBP3 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. Okay, next chart.

Right, now we move on to a business update. Okay,can we move forward? This chart, which shows our average revenue per unit is, it’s really important and part of the demonstration of our journey towards modern luxury. So we managed to increase our average revenue consistently over the last five years in FY ’23, it moved up from GBP62,000 to GBP71,000, so about 15%. Parts of that it 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 October 21, already got 6,100 orders, at an average transaction price of GBP180,000. We’ve even been testing the water, lot of that, we did a special additional lands down, in addition to the Range Rover SV, which transacted at around GBP250,000. 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 semiconductor, I think people have mentioned this a lot, my summary, I think is probably three things. We are seeing fewer issues now. They’ve 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, but 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 or in a stable manner, bringing our supply up to — continue to build our order bank down to meet our customers’ expectations with 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 Solihull, it’s 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. We do have considerable headwinds, we’ve shown them here as GBP850 million for the year, of which about 40% are commodity prices and about 1/3rd is 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 refocused savings, and can proudly say that we’ve offset that, more than that in terms of our refocused 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 considerable work done on the cost side, on the investment side and on the inventory side. So in total, we delivered GBP1.1 billion savings through the refocus programs and that did offset the inbound inflation that we — that we saw during the year. Next chart.

So China. We’re really proud of the results of our China JV, these are 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 are also relatively stable. So, look, we know that market is really fast-moving really dynamic in sections that we’re 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 profits from our P&A operation our after sales operation. If you look purely at vehicle average sales per unit fully-imported volume, it is up 8% Year-over-Year.

From a profitability standpoint, we were PBT positive in the quarter. 13% EBITDA, 2% EBIT. And on a full-year basis, we were also PBT positive and EBIT and EBITDA were both 5% higher that FY ’22, so very good consistent progress within our China JV, best financial year for five years. Next chart.

Right, fun pictures. We’re continuing to develop our product range. If you look at the ’24 model the Velar, On the right-hand side, that is — that’s as close to a flawless execution of our modern day design language as 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 have now has a 20% higher range than they did before and it goes 40 miles WLTP without charge. And on the interior, there are all sorts of upgrades. So, that vehicle is upgraded. And on the right is 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 or started taking orders for this one yet. Next chart.

So looking ahead, we are optimistic. So we exited FY ’23 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 ’24 is going to be a good year for us. In reality, the first-half, maybe 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 are looking for and we will have a good year. Our priority 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. GBP2 billion free-cash flow after investment, which means our net debt will reduce from GBP3 billion at the end-of-the financial year just finished to circa GBP1 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.

Mr. P B Balaji — CFO

Thank you. Thanks, Richard. So quickly moving on to commercial vehicles. Next slide please. The registration market shares after a correction to the approach to demand pull strategy are now starting the recur. Q3 — Q4 better than Q3, barring one, which is the — what used to be intermediate light commercial vehicles, and [Indecipherable] is where we still need to get some further impetus on that, very much part of the plan, the [Indecipherable] team are working towards, but everywhere, everything else starting to sequentially start improving. next slide.

On the overall volumes, the callout here here is the powertrain mix that you’ll see. With the CNG prices now coming under policy and therefore expecting some stabilization and so the delta is between that and diesel, one would expect to see the the CNG numbers starting to changes as well. Next slide.

Overall revenue, happy that we ended the quarter with a double-digit EBITDA, something that we said we want to get to as soon as possible and the business entered the year pretty strong with revenue of INR21,000 crores and an EBITDA of 10.1%. And clearly, with market-share starting to inch up as well as profitability starting to improve, the business is on the right track. Further distance to go, but very much on-track. Next slide.

The source of money that you’re seeing where the profitability came from, volume mix, realizations, savings, all coming through quite nicely, and we intend to keep it this way as we go-forward.

The other big one is the consumer facing metrics, which is a very-very important on a demand — demand pull strategy to ensure that the brand is in a strong [Indecipherable]. Very happy with the way things are starting to move, the brand is, with the interventions coming through — the brand power, the consideration top box, the top-of-mind awareness, all trending in the right direction and some very good numbers even at a geographical level as well. And of course, the customer satisfaction — the dealer satisfaction as well as the composite satisfaction score doing pretty well.

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

Mr. Girish Wagh — Executive Director

Yeah, thanks, Balaji. So 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 24%. 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 the highest annual and quarterly revenue for FY ’23 and Q4 of FY ’23. 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, the 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 last three years now.

With all this, the EBIT improved sequentially and is now highest in 21 quarters, which most of it coming from discount pulling back, part of it from cost-reduction and also commodities 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 the 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 has seen a very good growth finally, in the year gone by. I think as 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 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 BS6 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 Edge, 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 the reduction in the CNG 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 has led to drop in CNG volumes significantly. So with this new pricing guideline, not only the CNG prices have dropped but we do also getting pegged with diesel, which will gradually start bringing in good certainty in the minds of the customers, that we will be see the CNG penetration increase. Towards this, I think we have a very strong CNG portfolio, both in ILCVs as well as the NCDs. 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 ’24, I think we will continue our focus on the retail now. And registration share is what will driver us. And we will continue the realization improvement journey.

As I said, I think the BS6 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 to other stakeholders, who play a very important role in decision-making. And therefore, there will be a lot of influencer advocacy as as well as actual in-field trials.

Getting into this year, I think, we will now start scaling up EV supplies with the supply-chain being resolved, FAME certification clarity being there. And both on the 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 or grow market shares, ensure that the margin and channel health is protected. And we will also see some of the new markets which we get entire 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 ACE electric vehicles in the fourth-quarter. And year-on, we can start ramping-up significantly, as I said earlier, the clarity on supply-chain, as well as the FAME certificate. 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 and Kashmir for 200 buses.

I think now, our e-bus fleet has crossed more than seven crore or 70 million kilometers, and we have been able to maintain more than 95% of time in FY ’23, so 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 ’23. 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, it 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 have been 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’ve 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. The benefits being experienced by the fleet owners, as well as the drivers. E-Dukan, which is our online spare parts marketplace, 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-Dukan 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, which has led to improved brand health and it therefore, bodes very well for the future. So that’s the what we’ve been doing in the commercial vehicle business.

Balaji, back to you for PV.

Mr. P B Balaji — CFO

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

I think again, on the registration market-shares EVs growing to 84%, network now increasing to 165 cities and 250 dealerships, charging infra again, increasing to 5,300 today. Next slide.

Overall, financials, we ended the quarter at 7.3% EBITDA, with a PBT of INR200 crores. On a full-year basis, the business of 6.4% EBITDA at a PBT of INR700 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 this 6.4%. At the same time, EBITDA-positive, EBIT-positive, PBT-positive and cash-positive.

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

On the revenues, this business is now making a EBITDA loss of about INR350 crores, out of the INR350-odd crores, that’s a 4.6% negative that you see there. Out of the 350 crores, 300 crores is product development costs that are being charged-off, and therefore, this 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’s being accrued. So this is underlying profit — profitability I am referring to. A $1billion business, roughly $1billion business with a broadly neutral EBITDA, that is where we are on an underlying basis. Next slide.

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

Let me give it Shailesh.

Mr. Shailesh Chandra — Managing Director, Tata Motors Passenger

Thank you, Balaji. So let me start with the key highlights of the industry first. So FY ’23 for the industry was the highest ever since last highest ever, which was in FY ’19, which was INR3.4 million. This year ended at INR3.9 million, which was nearly 27% growth versus FY ’22. SUVs continue to increase in terms of share, increase by 300 bps, to 43%. And EVs, the industry saw a phenomenal growth of 170%,. with 70 new launches and increasing acceptance of EV among customers.

As far as Tata Motors PV and new business is concerned, this was our highest ever wholesale year, which was nearly 5.4 lakh, with a vahan market-share of 13.5. This is nearly 45% growth as compared to FY ’22, which was, if just compare 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. We already mentioned that in PV business, we grew by 45% as compared to FY ’22. But it was a growth of 150% in the EV business for us. We were the number-one SUV manufacturer in FY ’23 and Nexon was the number-one product in the SUV segment.

Going forward, what is 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 pickup. 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’ve transitioned to BS6 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 #dark version has been receiving very good response, we recently announced it. This month, we are also launching the twin-cylinder technology in Altroz, which is Altroz iCNG, which repaves 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 are a few players in certain segments — 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, mainly the entry side of the PV industry, which is hatches and sedan, is — has been under pressure for some time. Channel inventory as compared to where we started in the last financial year, in FY ’22, is at a higher-level. Pent-up demand clearly has gone down, barring certain new launches in few popular SUVs. And recently, price increase has been taken by OEMs to basically offset the cost increases which have happened because of VRDE transition. So this might — we have to watch the impact of this. From Tata Motors side, they 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 internal nomenclature, nine frame — nine-box framework. So both on margin as well as demand generation, we have clear action plans laid out. Back to you, Balaji.

Mr. P B Balaji — CFO

Thank you, Shailesh. Next slide please.

[Technical issue]

So moving on to the overall CV plus PV. Investments, we ended the year with INR6,400 crores of investment spending and this is likely to increase to INR8,000 crores next year, as we step-up the whole electrification investments both in CV and PV. That’s the main thrust of this delta that is coming through. Next Slide.

On the cash flow, overall, the operating — the cash profit after tax and capex, I see in the questions, what are some of the doubts lingering in terms of — as how do we treat capex? Let me be clear, for us, what we call out as free-cash flows is operating cash less capex, less working capital, and the changes and financial expenses that we incur, so it’s the entirety of it. So this is the free cash-flow after all these investments This year we ended at INR3,800 crores of free cash flows for this quarter. And then the full-year, we ended at INR2,400 crores of free-cash flows after all these investments, and hearteningly, all the capex is funded by the cash profit after tax, so it’s a extremely self-sustaining business that we have.

On a full-year basis, the working capital in Q4 normally reverses, full-year basis, no impact at all, it’s working capital, so what we are seeing as INR2,400 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 in 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 6.2% 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 lowering the credit losses and very tight control on fixed-cost. So business is being run for ROA or ROE as the case may be. Next slide.

Just from a credit rating perspective, we had S&P grade up by a notch and domestically, ICRA has also revised our outlook to positive and we will be engaging with the results, for the other as well. Next slide please.

We do invite you for the Investor Day, both in Tata Motors and in JLR. In India, it is on June 7th in Mumbai, and in JLR, it’s on June 12th, [Indecipherable] the new 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 uncertainty that could be there and inflation is expected to be moderate. As far as FY ’24 is concerned, as I said earlier, it’s an year of where we have to deliver. We are squarely focused on putting our heads-down and executing this plan and ensuring we make this — make it count for the full year. As far as the momentum is concerned. It will build through the year, the industry are remaining strong. So that’s a good news, the demand has not dropped. Of course, you know, there are certain segments, especially the entry segment, which I mentioned, is under pressure, interest rates now also impacting the vehicle financing, interest rates will have some impact on definitely the entry segment.

As far as EVs are concerned, there is 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 is a growing acceptance of EVs among the consumers and that is continuing to help, we are seeing every quarter, the industry has grown big in size. In fact, if you really see the monthly rate or sales of EVs has grown to 8,500 to 9,000 per month for the industry, which is very-high, just one week back it would have been 4,000 or so. So I believe that the EV industry will have all these tailwinds, apart from you know though various states which are also coming up with really progressive policies. In all, I think the environment is very favourable for EVs.

Questions and Answers:

Mr. P B Balaji — CFO

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? This is coming from Kapil. You’re currently at 6.5%, guidance is 6% plus, how does this work out? Some color would be helpful.

Mr. Richard Molyneux — Acting CFO

Yes, of course, 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 utility rates starting to show signs of coming off peaks. On the other side, we — at the moment, we have foreign-exchange rates that 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 — I saw some questions on that later on, we do expect VME to increase. But we expect that to be accretive rather than a leap, so we are not going to get into mass discounting of cars, we’re a modern car, we’re a modern luxury player, but we do expect VME to creep up. So I’d say FX, marketing and VME a little bit adverse, volume and supply, inflation a little bit favorable.

Mr. P B Balaji — CFO

Thanks, Richard. Richard there is a series of questions coming from Chandramouli at Goldman. We’ve guided to a 6% EBIT margin and a GBP2 billion cash-flow this year. Last year, we started in a similar way, at 5% EBIT and GBP1 billion FCF. What gives — what is giving you the confidence that this time around, things will be different? One.

Second, the order bank and I also saw another question somewhere else, order bank at 200 and if you net out sales and arrive, the number seems to be much lower in terms of new orders coming in, can you give us some color there? Second point.

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

Mr. Richard Molyneux — Acting CFO

Yeah, 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 one supply. And the truth is, for the first-six months that we were too optimistic. That breakeven has been in-place, has been in-place for more than 12 months, 300,000 units. 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’re starting to come through in proportion 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 that supply is higher with new semiconductor, and 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, continue to pace in quarter four and we believe will continue now into FY ’24, 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, the 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 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 gives a lower order bank than 200,000 units. So my anticipation is it will continue to fall by about 5,000 units per month over the first-half of this year. And to Richard’s point, if that continues to happen and supply increases is at that time we expected to do so and we will be stimulating further orders. But if you look at any of our websites, particularly on the the most sought-after vehicle, the Range Rover, a lot of those order types and 12 to 18 months. We’re not stimulating orders beyond 12 to 18 months at this 0.2 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. Now, I’ll reiterate what I actually said was quoted within the media Land drove is the Trustmark four three brands. And when you think about the characteristics of those individual brands Range Rover defender and Discovery our difference. And if we truly are underpinned by the Trustmark. 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 modern luxury. We absolutely have to focus on the distinct characterizations within those brands. Look, we know Range Rovers about luxury quietness serenity. We know defenders about utility go anywhere. We know Discovery is about family size and the utility of being after been able to in the broader sense, use this as a family travel vehicle. We understand those things we have for a long-time, but we have to deepen the understanding and the characteristics vehicles because clients will be attracted to individually those brands not just to Land Rover going-forward that’s already clear in most of our biggest markets, China, USA, Middle-East. So that’s why we’ve actually elevated those sub-brands about the Trustmark to cold Land Rover and that’s what we’re going to keep working through and working on-going forward. Back to you, Balaji. Thank you.

Mr. P B Balaji — CFO

Thanks. Adrian. This is coming from Jim, JP Morgan. I think this question has picked-up by someone else as well. Saying that, can we give color on the free-cash flow guidance. On 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 question second kind of question within that you’re increasing capex GBP3 billion. We’re still guiding for debt going down to GBP1billion. Richard, can you reconcile the two for us?

Mr. Richard Molyneux — Acting CFO

Yes, sure. So we are going to increase our investment from GBP2.35 billion this year to GBP3 billion next year. And even considering that increase of GRP650,000, a GBP1 billion of investment, we are anticipating and expect to generate beyond that GBP2 billion worth of cash. So you take our net-debt position down from GBP3 billion to GBP1 billion in terms of the proportion of that cash generation that is operational on 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, GBP1.3 billion after about GBP1.3 billion worth of investments 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 managing our liabilities. 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 the cash returns from.

Mr. P B Balaji — CFO

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

Keith Benjamin — Global Legal Director

Sure, so, I think that at some point 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 potentially, some benefit to continuing to wait as we can — 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 as a matter of managing our liabilities.

Mr. P B Balaji — CFO

Thank you. Thanks Ben. Question to Richard and then another one to [Indecipherable] the same thing to Shailesh, this is from Rakesh via BNP Paribas. JLR’s investment of GBP15 billion. Can you give us a rough idea of how much of this is going into R&D, EV product development, how much is is going to ICE?

Mr. Richard Molyneux — Acting CFO

Yes, so look, this year, our total engineering went up GBP400 million pounds to GBP1.69 billion. I would expect that to continue to increase a little bit next year. However, the majority of the increase over the next couple of years us going to be in capital as we industrialize all of our 2024, ’25 and ‘6 car lines into Solihull, which is where we’ll be producing Jaguar and where we’ll be producing the Range Rover BEV, having to Halewood, which is where we’ll will be producing EMA. So in the short-term, it will be partly an increase in engineering, in the next 18 months, two years, capital will be the primary part of the increase.

In terms of EV and ICE, look we are going to have to continue to invest in ICE to meet the euro seven regulations that came through. However, obviously, the vast balance of our efforts in the EV space as the majority of the launches that we have post now are EVs.

Mr. P B Balaji — CFO

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 ideas on how are you preparing to defend your volume and market-share?

Mr. Shailesh Chandra — Managing Director, Tata Motors Passenger

Yes, so see you know, we have seen in the past also, 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 it generalizing flow from existing segments to include the SUV segment. This has been at the cost of hatches going or sedans going down. So I think that phenomena is going to continue, despite — and 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 are seeing increasing volumes of Nexon. Similar thing in Punch. So this is one, that there will be channelized — volumes will get channelized from other adjacent 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 interventions we keep on bringing.

Recently, we got the #Dark, Punch we came with CAMO. But also at the same time, let’s say for example Punch, we are going to bring CNG variant here with the twin-cylinder technology and this is going to be unique in the market. We are also planning to bring EV, we are very confident that in these two products, we will be able to sustain the volumes.

Now further actions where we will further growth from where we are, both in terms of volume and market-share. We are going to have new nameplates, and we have showcased that in Auto Expo, Cove, Sierra, these are new nameplates which are going to get launched. There’s going to be a steeper 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 as well as our market-share.

Mr. P B Balaji — CFO

Thanks, Shailesh. Next is from Gunjan. I think the JLR side, the questions have all been answered, so let me move to the PV side. I think there’s also coming from Ashish later on as well. India PV. The volumes are at 540k, and at this level, Capacity utilization is extremely high, 65% SUV share. From here on, what is therefore, the margin improvement drivers and why did they — and why the margin is still not as strong as others who are there in the market, and your plans for the same.

Mr. Shailesh Chandra — Managing Director, Tata Motors Passenger

You know one thing I would like to see 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 a contribution level has been increasing. Of course, alongside we are also seeing a steep growth of EV business. There is a margins, I think, Balaji very well explained that it is underlying margins are strong, but there is a huge product development expense which also gets charged, so it will have an impact. But there are plans in terms of how we are going to strengthen the margins for EVs. And also as the battery prices had gone up significantly by 35%, cell prices had gone up.. There was a huge semiconductor open-market purchase which was being done, and all these are factors which are factors which we reclaimed 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 it has a deep localization that we are doing, which will further bring down the cost. There are a lot of actions on the EV side, which is going 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 in margin. I’m not talking even both PLI and all, because we have a clear pathway to bring this to see at a contribution level into the margin closer to where we are in PV. 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, tearing it down, tearing it down at a component level. So all actions I’m sure that we are going to do in order to improve on the margins.

Mr. P B Balaji — CFO

Thanks. I think there’s another question which Ashish had asked, it was on 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 his drivers from same.

Question to both Shailesh and Girish, the industry growth, both in India — India for CV and PV, given that the demanding base is there, how do you want to do it? You what you want to start with CV?

Mr. Girish Wagh — Executive Director

Yeah. Okay, so. I think, while the industry has grown pretty well in FY ’23 over the previous year, I think we have to keep in mind that the industry volumes are still below the previous peak of FY ’19, that’s point number-one.

Point number two is, I think generally, in the pre-election year, that is the general election — year before the 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 by 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 a good growth in the medium and heavy commercials.

It appears that the ILCVs may remain flat compared with last year. And the small commercial vehicles may grow a bit. In terms of timing, it appears that the first-quarter may degrow a bit y-o-y, now, because of some pre-buy effect, has also the transition into the BS-6 phase-II and the price increase which has happened, but after that, one will see growth in Q2, Q3 and as well as Q4. So, I think that’s how we see how the markets will grow. Overall, it appears that we see a single-digit growth at the industry volume level.

Mr. P B Balaji — CFO

Thanks.

Mr. Shailesh Chandra — Managing Director, Tata Motors Passenger

So on the PV side, we are very clear that the secular trend of growth of the industry is going to remaining intact, because of the underlying drivers that drove penetrations, enables and — also given that now the market is having a lot of upgrade customers, so, who are wanting to upgrade their vehicles, and that is the phenomena that we have be 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’ve had at the start of FY ’22, sorry FY ’23, I think that helped driving this kind of growth, which was 27%. Otherwise, [indecipherable] 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 can say.

Mr. P B Balaji — CFO

Thank you, Shailesh. A question from a couple on EV margins is already covered, but I think there’s a question on PLI that is there in various places, where do we stand-on PLI? Shailesh, do you want to pick that?

Mr. Shailesh Chandra — Managing Director, Tata Motors Passenger

Yes, so as far as PLI is concerned, there have been a lot of engagement with the Ministry of heavy industries on this topic, and the discussions have revolved around the domestic value additions. And MHI has been very receptive of the inputs from our side. There have been several inputs that has been given. And of course, the requirement of for — the 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 now practical, and we are going to be working on that and hopefully, the first model is what we are going to submit, with a DVA status very soon. From there on, we will likely secure the PLI eligibility for all our models. Most all the models that we are selling today as per our estimates cross the DVA requirement. But going-forward we are very confident of availing the PLI.

Mr. P B Balaji — CFO

Thanks, Shailesh. Two questions from Kapil Singh, I think, Girish, coming your way. April volumes much weaker than industry for Tata Motors, what’s happening? And when do you expect growth to return? And trucking conditions, how is that trending? And how are dealer inventories?

Mr. Girish Wagh — Executive Director

Hi, so, Kapil, First of all, on the volumes, I think, 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 you said, that we will align our production and optic[Phonetic] to retail, I think that is the first thing.

Second, of course, as I mentioned earlier, when we have transitioned to BS-6 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 a 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 the month of April. It will get addressed from this month of May. Finally, as I already answered. I think, Q1, we see that there would be a de-growth in retail registration volumes because of the pre-buy effect, but the growth will come back from Q2.

As far as trucking sentiment index is concerned, for the tippers, it has gone up. which was expected, I think for other segment, which is trucks ILCVs, small commercial vehicles, they have dipped marginally, and that also expected after a stronger Q4. But as I said, I think, equation between 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’m very happy that the inventory continue to be healthy. Especially after 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 a good level.

Balaji, I will take the next question also?

Mr. P B Balaji — CFO

Yes, let’s quickly cover that, for people are not seeing the questionnaire. This is on the entire EV buses GCC model. Are EV busses viable without FAME subsidy? First basic question. And will you participate in future MSRTC orders, given that you have not participated in the recent CESL tender.

Mr. Girish Wagh — Executive Director

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 opox model and not a capex model, right? So even if the FAME 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 we’ll 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 net-zero goal for greenhouse gas emissions and therefore, they would 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 II 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 didn’t 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?

Mr. P B Balaji — CFO

Ginesh, you’ve asked a series of questions, a lot of details, my suggestion, we will take it offline with you. So these numbers, they can supply to you offline. So, kindly, pardon me, for this is going to take a long-time to go through all your questions there.

Moving on to Joseph IIFL. This is the order flow conversation, I think it has already been covered. And therefore, similarly the working capital piece has also been covered. The additional new questions coming up is activation of Sanand plant, will it bring a negative operating leverage and how do you intend to deal with it?

In fact there is some cost is coming in with on the revenue, but it’s part of the long-term capacity planning, therefore this part of the overall mix that we play with. So our guidance for getting to the double-digit EBITDA include these stuff, but that’s how volume is going to come. So I’m not concerned about that.

Coming on to our Ashish, I think is on battery, which is a newer area. Let’s talk about that. That are comments in the media on the battery plants in India and can you give some color on this?

All we can say at this point in time is conversations are underway. With the — with 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 that you can understand everything related to that.

Supply chain volume guidance we don’t give. I think everything we had to say, we have already said, so further guidances, we don’t intend to give. Initial talking about India FCF generation? Fair point, we’ve talked about JLR. India will also be positive in free cash flows and it will be integral — one more contributor to the net-debt reduction that we have in sight, despite the INR8,000 crores spend that we have on the capex.

Second, Adrian coming your way, from Stephanie. Under the House of Brands, Jaguar intends to launch a premium GT, with pricing of — given the recent recent price cuts that have come from competition, are you concerned about it?

Mr. Adrian Mardell — Interim CEO,

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

Mr. P B Balaji — CFO

Thank you. The second one related — a different question is does JLR intend to reinstate the dividend is cash-flow exceeds expectations in FY ’24?

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. Q1, as the base, volume, it will keep rising, will it lead to some adverse mix and commodity benefits are they likely to flow in?

And JLR, let me — Richard, do you want to take that, then I’ll come to CV here?

Mr. Richard Molyneux — Acting CFO

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 Sport and Defender, and those are the orders that will be fulfilling during that period, largely.

In terms of commodity benefits, yes, we do expect, as I mentioned beforehand, 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 some downside in terms of our supply costs, but we expect the the rates that I showed you in terms of outbound inflation exceeding inbound inflation to continue.

Mr. P B Balaji — CFO

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

Mr. Girish Wagh — Executive Director

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, no, 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 values, so it would be a mix of communication, whether it is ETL, influencer 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, I would say, a function of customer perceived value, and that too how does the 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 BS-6 phase-II, we have been able to do a step-change because that opportunity was available during product development. Balaji?

Mr. P B Balaji — CFO

Thank you. Thanks Girish. There’s a question on PV outlook seems to change significantly in the quarter, I think Girish — Shailesh has already covered as to how he sees the industry scenario going-forward. So, we’ll stick to that.

A clarification on TPE, 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 Private Limited. So that has already been created. So it’ll come through that company.

So I think with this, we have come to the end of the session. I really like to thank you for taking the time and the probing question that you have been asking us. Do 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.