N Chandrasekaran, Chairman – The Hindu
Supply chain issues, commodity inflation impact margins
Tata Motors’ consolidated loss widened to ₹4,441.57 crore in the September quarter compared to ₹314.45-crore loss reported in the same quarter of FY21.
On a standalone basis, Tata Motors reported a decrease in loss from ₹1,212.45 crore in Q2FY21 to ₹659.33 crore in Q2FY22.
Free cash inflow
Jaguar Land Rover was worse hit by the ongoing silicon scarcity, with the second quarter for this fiscal seeing the worst shortage. Wholesales to dealers in the quarter were 64,032 vehicles, down 12.8 per cent year-on-year, and retail sales (including the China Joint Venture) were 92,710 vehicles, down 18.4 per cent, reflecting the semiconductor shortage and lower retailer inventories. “For Q2 FY22, revenue was £3.9 billion with a pre-tax loss of £302 million (EBIT margin -4.7 per cent). Free cash outflow was £664 million, this was significantly better than prior guidance for a £1 billion free cash outflow, reflecting prioritised production of higher-margin products and cost controls to reduce the cash break-even point further,” according to the company’s financial report.
According to PB Balaji, Group CFO, Tata Motors, India operations showed significant improvement compared to the September quarter a year ago.
However, supply chain issues and commodity inflation impacted the margins. As a result, TML reported an EBIT loss of 1.6 per cent and a pre-tax loss of ₹800 crore for Q2 FY22. PV business continued its turnaround journey and strengthened its double-digit market share with decade-high quarterly sales.
The EV business recorded nearly three-fold growth and recorded the highest monthly and quarterly sales of 1,078 units and 2,704 units, respectively.
The commercial vehicle segment continued to show muted recovery, with CV EBITDA at 3.1 per cent, a decline of 0.1 per cent year on year due to commodity inflation despite improvement in volumes and mix. CV retails were at 77,300 up 102 per cent, with the market share at 44.6 per cent.
Tata Motors sees the business scenario continuing to show gradual improvement. However, there are significant challenges on the supply side, including semiconductor issues and sharp commodity inflation. “Sequential improvement in overall performance is expected to continue and we target to be EBIT and free cash flow positive in H2 FY22. We continue with our efforts to unlock the supply bottlenecks by working proactively with our vendor partners,” the company said stated.
In commercial vehicles, the focus will remain on growing market share, particularly in small commercial vehicles, and protecting margins amidst an inflationary environment