Tata Motors has had a robust FY18-19 which saw it clock an impressive growth of 17.9 per cent, with revenues from operations (including joint operations) of Rs. 69,203 crores compared to Rs. 58,690 crores in FY17-18. Growth in demand of M&HCVs and LCVs, new product offerings in passenger cars and utility vehicles were the key drivers that resulted in increase in its EBITDA margins to 7.4% in FY18-19 as against 4.1% in the previous fiscal.
Mr. N. Chandrasekaran, Non-Executive Director and Chairman, Tata Motors, states in the company’s FY18-19 Annual Report: “At Tata Motors, we had announced a “Turnaround” programme in July 2017. Since then, we have undertaken a series of comprehensive steps to address different aspects of the business. In the CV segment, which is the backbone of the domestic business, the company has maintained its leadership position in the industry with a 45.1% market share in FY2018-19. The business delivered a 17.2% volume growth compared to the previous year.”
Winning decisively in CVs
The success of Tata Motors’ ‘Turnaround 2.0’ initiatives is evident in the CV space, where the company continued to deliver strong margins while upholding the EBITDA margins in challenging market conditions. All the four segments of the company’s CV business – MHCV, ILCV, SCV and PUs, and CV passenger vehicles – saw improved performance driven by all-round execution. Market share was gained across three of the four segments: MHCV at 55%, ILCV at 45.4% and SCV and PUs at 40.1%.
Intensifying turnaround
The turnaround in the CV segment is being further intensified with enhanced sales productivity and market activation. This is driven by Tata Motors’ ‘Dealer Centre of Excellence’ in SCV and ‘Go to Market Excellence’ initiatives. While a slew of focused marketing initiatives is strengthening the brand, there is also an accelerated focus on dealer performance and profitability to become the most attractive franchise. In addition, Tata Motors is undertaking a multitude of actions to improve customer experience, like improving last-mile service networks. The company plans to improve the CV aftermarket share and drive sustainable and profitable growth, particularly in parts and aggregates. Leveraging digital at the front end and delivering impactful products for its customers are some of its other priorities, along with intensified cost reduction efforts and maintaining world-class quality.
CV sales up
Tata Motors’ global CV sales for FY18-19 stood at 5,27,286 vehicles. In the domestic market, the company posted a robust growth of 17.2% with 4,68,788 units sold during the year, giving it a market share of 45.1%.
Segment-wise performance
Tata Motors’ M&HCV volumes grew by 12.3% in FY18-19, buoyed by several new products and variants across the Prima and Signa platforms including LPT 1618 5L Turbotronn – the first 4 cylinder engine offering in M&HCV range, SIGNA 4923.T and 4823.T – India’s first range of 16 wheeler trucks with 49T and 47.5T GVW, the entire range of increased axle load range of products from 18.5T to 55T GVW across trucks, tractors and new range of tippers:- 1913.T and 1918.T, 2818.T, 3518.T, 4223.T, 4623.S, 5523.S, 2823.TK/K, 1918K, 1923K. Tata Motors inched up its market share by 0.7% in this segment, with a growth for the first time after 10 years.
In the ILCV segment, the company registered a strong growth of 23%. Tata Motors reinforced its position through the introduction of the Ultra 1518.T, Ultra 1412, Ultra T.7 with smaller cabin design suitable for intercity operations in domestic and international markets. In addition, the launch of LPT407/27 FE, LPT 1412SLP, LPT 1212CRX, LPT1512 CRX, SFC 909, LPT 909/49 CNG and India’s first 13.8T CNG vehicle LPT1412 CNG in the regular ICV range helped it establish itself as the market leader in the ICV sub-segment. Tata Motors also launched specialized e-commerce containers range with advanced features like surveillance cameras, OTP-based lock, load sensors, etc., during the year. Its market share in the segment went up by 0.5% compared to FY17-18.
Tata Motors’ SCV & pickup volumes grew by 23.9% in the fiscal. The launch of Tata Ace Gold with the legendary facia, popular among the target customer group added to the company’s strength in the Ace family. In this space, the company’s market share was up by 0.7% from last year.
In the CV passenger carrier segment, Tata Motors sales grew by 3.5% in FY18-19. The introduction of 15-seater and 12-seater Winger helped to cater to the ever-increasing tours and travels segment. The year also saw the introduction of the 1623, a 230 HP 12 m bus, typically used for intercity coach applications. In addition, EGR vehicles in the 1515 range and 1212, a bus meant to cater to the higher seating capacity rugged application, very prevalent in the country today were launched. On the other end of the spectrum, a 407 on the smaller wheel base (2900 WB) was introduced as a perfect fit to intra-city congested roads for both school and staff applications.
Reiterating its commitment to greener fuel options, the company started delivery of electric buses to various State transport units during the year.
Tata Motors significantly improved the ability to provide customers with end-to-end support and comfort through enhancing value-added services under an umbrella brand of ‘Sampoorna Seva’. The key elements include six-year six lakh km warranty on its entire range of M&HCVs, Tata Alert breakdown assistance service available across three million kms of Indian roads and Tata Delight Loyalty Program.
Non-vehicle business revenue for the company’s CVBU from spares, prolife and aggregates increased by 21.6% in FY18-19. Tata Motors Genuine Oil launched last year reached 17,000 KL of sale helping to bring down the total cost of ownership for its customers.
Exports
The company exported 53,140 vehicles in the financial year as compared to 52,404 vehicles in FY17-18. Export of Tata CVs marginally increased by 2% in FY18-19 with 51,119 units shipped out compared to 50,106 units the previous year. New regulations and political uncertainty in Sri Lanka, and slump in Middle East, impacted industry volumes in these markets. However, the company’s market share in both these markets improved for CVs. Market share in most of the focused markets, either improved or have been strong and the company successfully bagged several prestigious orders.
Sharing his insights into the future, Mr. Chandrasekaran remarks: “The next few years are going to be decisive for our company. We have to focus on strong operational excellence to deliver positive cashflows while making the right investments to be prepared for the future. We need to transform ourselves to be relevant in the world of future mobility. This will require us to form partnerships, develop mobility solutions and optimise our investment in the process.”