Q2 2023 Tata Motors Ltd Earnings Call
As is customary we will try and keep a fair clip in terms of going through the slides and pointing out the key highlights.
And then look forward to taking on the Q&A. After subsequent stage next question. Please.
So this is kind of safe Harbor statement.
Call It call out I would say is the segments automotive segment just to reiterate we have done this no change from last time or just to confirm when you say that our commercial vehicles is all things commercial vehicle instead of a <unk> branded commercial vehicles.
Similarly passenger vehicles, all titer branded passenger vehicles.
We'll land Rover and the financing of the four automotive verticals and of course, others, who do the remaining segments. So these are the segments no change there.
Excellent.
Well again, an intense quarter this year or in India.
The commercial vehicle space saw a flurry of activity.
With multiple launches in the medium heavy and light commercial.
And a whole range of pickups that were launched.
The passenger vehicle sales the big one was the Tiago <unk> launch, which is a blockbuster opening up 10000 vehicles, which I'm sure we'll talk about later.
On the <unk> side, the key more was the stabilization in the ramping up of production of renewable renewal sports.
We are committed to the <unk>.
The bank of course grew to a record 205000 vehicles.
The chip suppliers continue to.
Create trouble for us, but as we start signing more and more partnership agreement. We do expect to see this easing I'm sure Adrian is going to cover that subsequently.
Slightly.
Before I get started I'll key crop protection that was announced today.
<unk> intends to voluntarily billets is American depositary receipts shares from the New York Stock Exchange as objectives. These are all generally listed in 2000 and for no longer relevant.
There is a consistent drop in the participation of the ideas program and it's now less than 5% of the ordinary shares.
And even slightly funnel voluntary delisting of the ABS in Jan 2023, and also terminate the depositary program that we have with Citibank.
And once the ideas have been delisted from NYSE there'll be no over the counter market trading of the Andas in the U S. Due to regulatory restrictions, we have in India under the Indian law.
And therefore, the holders would need to convert their <unk> into underlying ordinary shares, but do you have time to July 2023 to make that happen.
And we expect to file for need administration with ACC in Jan 2024.
12 months after the de listing for seasonality U S reporting obligations.
The whole process is being done with an aim to simplify our financial reporting.
And also reduce administrative burden and there is no cash outflow 40 ml due to this.
Thanks, Leslie and happy to take any questions that you may have on the subsequently.
And overall revenue.
We grew at about 29% of the global wholesale is growing up 33% and profit before tax was a loss of about one 800 calls EBITDA went up 130 bps EBITA of 390 bps, and we had a free cash flow breakeven what pulse on costs in the quarter.
And the volume recovery was and is fundamentally based on a better mix and lower breakeven, even though volumes were lower than planned particularly agenda.
Exactly.
Or where is the growth of 29% come from 28% came from volume and mix.
Reassuringly, a good 8% came from price, which means we are able to take our prices in line with inflation that was there in the market, which is also reflected in the results constellation We lost a fair bet that as the pump Sterling depreciated vis vis the Indian rupee.
And.
From a profitability perspective, all businesses game to include the profits we had a challenge in Tata Motors Finance will talk about later.
And the net debt came in at 59000 members across.
The good part is the the external debt is now down to 32000 plan across almost 20000 cross because of working capital.
Mostly in general are looking better in automotive as well, which we intend to sort out as the growth comes back into the business. So overall for the.
Next client handing it over to Adrian for talking about Gela.
Over to you.
Yes. Many thanks policy next slide if you will.
Okay. So these are our Kpis top left you can see retails did start to improve quarter over quarter up 12% not yet back to last year's levels Bill I'll show you. The inventory build later in the presentation. So we're confident we're going to get there in the second half of the upcoming down the page double digit EBITDA.
For the first time in a few quarters and again, we're confident that's going to continue going forward the revenue a dramatic year over year increase of 36%.
Volumes were only up 17% so what youll see in there is both an increase in volume and a substantial increase in mix of volume as a result of our range Rover and range Rover sport vehicles now being presented to the marketplace. That's driven in EBIT positive in the quarter for the first time in comparison to.
Quarter substantial improvement of more than five percentage points, we were in loss, making obviously all of that was non EBIT and we will take you through the implications of exchange on hand numbers later, and we were close to cash breakeven minus 15 substantially better than the comparative quarters with just 75000.
<unk> sales.
And all of that cash loss and more was actually working capital negative. So we've taken our breakeven underlying 10 to 70000 units again, which was the level of rats at the end of last year that we didn't think we will be able to get back to so there is a lot of positive information underlying within this data.
Next slide please.
Okay. The only things that really haven't called out there is the order book the order Bulks is still very strong more than 200000 units I'll take you through the details of that the breakthrough on range Rover and range Rover sport production now at the end of September up to 2000 units a week.
Let me remind you when I told you in July I was referencing one as new units per week, a substantial increase their average focused program continues to be value generative $300 million in the quarter 550 in the first half of the year.
And then our liquidity is strong $3 7 billion cash plus the revolving credit facility $5 2 billion in total next slide please.
Okay.
Okay. So these are the volume positions I've talked to the top right hand side the increases in the <unk> quarter over quarter and not surprisingly with those range Rovers now coming through all of that increase most of it is actually in the range. Both a brand from a wholesale perspective, we did 75000 wholesale.
<unk>.
Lower than the 90000, we were signaling in July we would be committed on semiconductors in September at an impact both on September <unk> September production and will actually flow into the September and the October wholesale basis that commitment is fixed.
Our long term supply agreement is now in place with that source. So we do not expect further decommitments from that source going forward and again the wholesale numbers you expect given the production increases on range Rover range Rover sport is all in our very rich range Rover brand next slide please.
This is the same data, but by region and as you know us well enough now.
A lot of our range Rovers is sold in North America, and China, Therefore, it's not surprising and corroborative data that the big increases quarter over quarter.
Those two regions.
In the retails and even more so having wholesales of course because.
Unit flow from production to wholesale before retail so again, good corroborative information of that trend to come.
<unk> new range of our products electrification is stable at 65% stable onthe have inbev at 11%.
We need more supply, particularly of those <unk>.
Well actually come on board as we go through the next several quarters next page. Please.
Okay. So our profit bridge had profit walk versus last year I mentioned, a few things here I'll mention them because they are important to this quarter, but that are also important the trends that youre going to see in future quarters. So you will see volumes at a higher level that was worth $120 million versus loss.
First year, you will see a significant improvement to mix just with the value we actually.
Such the markets in Q2 that was $300 million higher than last year admissions was a lost year credit not repeated this year not a negative trend the ship pricing now those vehicles are coming to the marketplace and BMA at very low levels will both continue into the second half.
And obviously they are intended to offset the inflationary costs you see that in materials, which we suffered in the quarter versus last year I'll have a slide on that later.
Comments till then.
The fixed costs are growing but they're growing from historical lows in this.
Can be lower than three years ago. They were left a little bit as we go forward because we do not want to begin to accelerate our transformation programs and commercial and digital and obviously, we are now scaling up our product engineering programs. So you will see these numbers continue going forward the adverse versus loss.
Sure, but still at historical lows I would talk about exchange.
On the next page.
Very complicated exchange at the moment.
So we thought we'd take the opportunity to lay out for you and hopefully kill all the questions. You may have our first big point, our operation exchange is very positive it will be.
Predominantly a U K based manufacturer exporting 80% of those vehicles and obviously for any export sorry fuel in local currency for our Sterling is a low value you do very well. This is a good operational model for us on exchange of course, you also know we protect tests alpha variable.
In downside risk on exchange and therefore, a lot of that protection is coming towards negative versus a weak sterling most of our dollar contracts ran around $1 30, and this will be with us for the next four to five quarters.
And then there was a big movement against Sterling in the quarter. So you see that within the revaluation. It was 100 million tonnes in total versus last year. The dollar effectively move from 102110 to 111, we have a lot of our liabilities on our balance sheet for dollar denominated and Thats, what youre seeing within here, but it's a point to point to.
<unk>, reflecting a very weak sterling at the end of September I think the bottom left is really important. It gives you. The what happens next we have 20 billion pounds worth of hedging contracts you see that we've shown those same three points $20 1 billion at the end of September and if we were to strike those versus the 111.
At the end of September that'd be 2 billion of losses to come through.
Look at the memo below that shifted with Sterling appreciation of just four cents in October and dropped from two but into $1 4 billion and let me remind you again against the top left our operational exchange will be bigger than our loss has gone through our income statement.
The theme that will continue with us.
For the next several quarters, if we stay within this 110 to 115.
Sterling window, which we seem to be intimate moment next slide if you would please.
Okay. So this is the cash position we were cash negative of 15, but just take a look at the working capital. It was $124 15, and therefore again, we were underlying cash positive on just 75000 units with an 18% MLR range Rover range Rover sport mix, which will.
Going forward of course.
Thanks, Kimberly we paid for more units in the quarter than we wholesale to the market at wholesale pipelines are starting to lift which is a signal actually have a better of excess supply flow just look at the brown box, there and working capital negative over the last six quarters has been more than 2 billion pounds.
Volume start to increase and that mix has improved that was slowly start to unwind. The other way. So we are confident we are at the low point on working capital and that will build back over the next six quarters next slide please.
So breakeven look we've taken a breakeven tend to oracle lowest again in part because we've been tough on expenditure, even though we've allowed them to grow in part of course, because volumes are bigger mostly because the mix is turning back to a more normal level of mix, we would actually expect it.
Getting back to mix as we would have had in Q3 last year and that will improve in the second half of the year. We do expect expenditure to increase because we do want to continue with our change programs through to a re imagined strategy, which you are very clear about onshore.
But the mix will help us offset the breakeven point to about 300000 units for years, we feel we're in a really good position in terms of the underlying structure of this organization and the re supply and the improving mix will both move in our favor as we go forward over the next several quarters next slide please.
So this is investment and investment was higher in Q2 than Q1, but still just 526 million <unk> few things to note engineering investment is increasing.
Now bring in more engineers in place to move to our electrified architectures that will continue over the next several quarters. We are now beginning to capitalize more of those engineered because.
Because we've triggered a maturation in our architectures, which enables us to do so in line with our accounting policy, which we've taken some previously overall, we're at 40% engineering capitalization and let me remind you we expect to be between 50 and 60% at some point going forward.
Over the next cycle again im referenced in three to four quarters, often over that period, you will see capitalization increase to those levels again next slide if you would please.
Okay business update let's talk semiconductors next slide that we got a look we're now in a position to do the first phase of what other Oems to do and we've got our.
Our new nameplates out that a range Rover and range Rover sports they are valuable assets, most valuable assets and where we.
We have a position that we can start pulling those chips into our most valuable assets all of our Oems have been doing that over the last 12 months, we've been in project change over over the last 12 months. So it's not surprising the mix is improving in our favor and that will continue so phase one of the management of these challenges we are now in a position to be.
Happy to do phase two we've been working on for a long time actually as engaging directly with the chip manufacturers, putting in place long term supply agreements with them. We've again had breakthroughs over the last three months, including with the chip supplier, which <unk> committed us in September and with <unk>.
Hope for them from those supply sources into calendar year 'twenty three.
Quarter, four we have for ourselves and we continue to work to close as the residual items. We have we do have residual items left to close that there is still a possibility we'll be knocked off course, but month by month month by month by month, we are starting to put in place a more robust are more fit.
For purpose supply chain and the agreements with our sources. So again, we're heading in a good direction slower than we want to be slower than others, but we're heading in a good direction here in next slide please.
And this is really really cold Brian . So this is the new range Rover and range Rover sport. It's weekly production of giving you the trend over the last five months June was the last time, we talked we had the June data I referenced a thousand units you can see we improved as we went through the summer period.
But the real breakthroughs from September and that's continued into October . This is weekly data. So we're now building and shipping more than 2000 cars, a week, which means within a quarter MLA. We'll soon once these cars get to their destinations China and North America in particular, we will soon.
B, posting 30000 wholesales within a quarter into quarter four quarter three some of those costs will be on water, but that will dramatically shift the mix of these units from sub 10% earlier in the year to 18% in quarter two.
Towards 30% can be on for quarter three quarter, four so that page and that profit bridge on both volume and mix will continue to be strongly positive as we go forward over the next several quarters really really big breakthrough for us and my compliments to the team who've worked tirelessly for the last nine months to get us to this.
Position next slide please.
And this is our order book and of course, you'll see straightaway. The breakthrough in supply is now starting to attack.
It is also a very patient clients who've been waiting for these new vehicles for a long time will soon start to receive handover offset vehicles, it's grown over the quarter to 205000 units, it's starting to taper off as our fulfilled orders that handovers to customers are increasing and our new <unk>.
This net of cancellations you asked cancellations within that data there.
Just about the 90000 level, we really haven't marketed these costs or any buyer vehicles over the last 12 months because of supply once supply starts to come through we have several tools several weapons to drive up that new order intake, which we will actually do but obviously keeping orders in.
Place for longer than our clients wish for has been a consideration which is why we've held off on those.
Those marketing campaigns over the last several quarters. This is starting to feel better balanced and healthy and I don't expect all the telcos to explode going forward like they have over the last five quarters next slide please.
Okay. So health of our pipeline expressed with the finished vehicles two data sets here the blue Black line.
Top that's retailer inventory that's vehicles with that retailers are waiting customer pick up you can see the light blue bar at the top that's a normal level of activity. So in normal times that blue line should be within that top block it wasn't until may.
'twenty, one it's fallen away dramatically, but the important point is it steadily lifting from about February it steadily lifting to the point, where we had 44000 vehicles at dealers at the end of September awaiting customer pick up these are sold cost.
Waiting for people to handover, which is why our retail levels as I mentioned earlier will now start to grow.
Our own wholesale stock the stuff that we still own that's in transit to the list is actually in the Gray line in.
And you can see that started to lift and you can see in September following dramatically that was the supply commitment we've mentioned already which did impact dramatically September production also impacted September wholesales, which is volume mid September and October wholesales, but we're now back on track.
<unk>, our production levels, and then working to the level we expected.
And again, we do expect the gray line to be back in that Grey section as we go through quarter, three and quarter. Four so we're getting healthier spend time on this so it's clear that our data starting to turn slower than we want but in several corroborative data points next slide please.
<unk>.
Okay. So inflation, obviously is the other big thing the big three supply MLA and inflation MLA is in a really nice place. The other two still work in progress it's broadly what we anticipated at the start of the year, we referenced up to a billion pounds. This is first half data 430 million.
And of course, our refocused program is there not only to offset inflation, but to generate bottom line value. It's doing that it generated $550 million in the first half of the year. So we're positive cash $120 million.
Mostly doing that in the commercial space and our.
Pricing lower variable marketing lower wait times, and therefore, a lower discounts going forward. We're also starting to see the agile transformation come through lower head count and people costs and the investment is lower in the first half of the year, how do I expect this to shape I expect inflation to be.
With us we know it's going to be bigger and deeper than we thought six months ago. So this level of inflation feels about right in the second half of the year for us <unk>.
I expect to refocus to continue at this level, we are reconfirming, our premium plus full year, but I expect the market performance to grow the costs labor to be about the same and the investment to fall away as we start to increase our product engineering investments over the second half of the next slide.
Place I think this is my final one X one thank you.
The first half metrics down the left hand side.
What do we expect in the second half of the year, we expect our wholesales at revenue base volumes pay up about 10%.
More in Q <unk> Q4, excuse me in Q3, our supplies coming through and as Emma MLA is still building.
<unk> vehicles have to get to that revenue recognition points, which as you know some of those points is six weeks off to build so that will increase as we progressively go through month by month revenue will be bigger than $10 billion.
We see it today, it's closer to 11% EBIT margin will be positive in the second half in both quarters, We anticipate I've mentioned investment increases our full year guidance around two three and we can get back to cash we didn't we didn't get in the first half of the year. We know it's all working capital we think how it trends the volumes.
Positive and therefore working capital will be positive we demonstrated for the last four quarters, where underlying cash.
Positive anyway. So we believe we can get back to cash we lost in the first half of the year breakeven, we're writing, but if you know us well enough that we wanted to do better than that key priorities of course, it's all about chips chips and chips, it's hard work for us right.
We were behind the clock, it's a bit like turned up to the buffet two weeks late run some of the stuff left and what you want but we're breaking through this working tirelessly and were working in the right direction continue on new range Rover range Rover sport, which we're doing volumes I've mentioned refocus Hock mentioned.
And also our intent to be positive positive kpis EBIT and cash flow I think come back to your balance sheet.
Thank you. Thank you.
Moving quickly onto commercial vehicles.
The change here.
We are moving to the registration Mohan market shares in our reporting.
And.
The other thing you'll also notice on this is traditionally we used to report on it.
Turnover metrics are on medium and heavy commercial vehicles and committed to the small commercial vehicles and pickups and then commercial passenger vehicle. So it used to be.
Now we would love to ensure that it is as transparent and as easily pick up but you can pick it up from the portfolio sale and therefore, we are reporting the vast number of associate as late as even in the splits that out there. So.
We did the from a market share perspective, compared to $44 seven were a loss of about 150 bps. This year so far.
And we are definitely looking at what are the right way to win in this marketplace in terms of shifting to a demand pull business model and I'm sure you're still going to talk more about it in his section as well and the focus is on getting back to double digit EBITDA and profitable growth as soon as possible and you should see that playing out in the coming quarters.
Thanks Leslie.
From an overall mix virtually the only callout here I would say is draw your attention to the <unk> section.
And IFC section thanks to the way the CMG prices are starting to move up.
GAAP between diesel and seniors come off quite sharply and you look to see that in the salient. Therefore, CMG. The auto segment actually come off quite sharply. We believe this is going to be temporary and once distinct domestic geopolitical situations stabilizes the growth in <unk> should be coming back again next slide please.
Overall numbers ways.
Year on year growth of 35%.
Pvt positive at 300 gross EBITDA year on year to 180 bps, but I would draw your attention to the sequential drop that you see this is basically coming out of the residue of commodity inflation.
This is the last of the price increases as we close the contracts.
We went through so we do see reductions coming through from Q3 onwards.
And that is already evident in our numbers in September whereas you see so this is what youll see is a number there.
And EBIT number of close to 60 bps improvement.
Quarter on quarter was more linked to the same number as funded correctly.
Oh shape of the laser drivers came from you don't see volume mix Royal attention to the realizations have starting to inch up about the variable cost increases. So we are seeing numbers coming through.
On a year on year basis, therefore, the increase youll see.
And.
What is also from a from a commodity perspective, we did see a few challenges, particularly on the Forex side.
But the international business.
Significantly coming down because of the global situation, we have to take out of your core competency.
<unk> because of the Orleans and are supporting that goes into some of what you'll see there.
Thanks Leslie.
Chris over to you yeah.
Yes, Thank you <unk>.
<unk>.
Thank you.
I had a healthy growth of around 40%.
The Q2 of previous year.
Of course.
<unk> already factored in anything from Q3 onwards.
With the improvement in the beef, maybe you see normalization of the growth rate to a lower level.
So I'll, let you spoke the big margin was impacted.
The residual impact of commodities, which is to the extent of almost 200 bps.
And also lower export mix.
We were able to offset that back to you with.
Improved pricing and also some cost reduction actions.
Do you see consistent growth in our spares and service penetration, which is a key focus area for us.
In the non retail business revenue grew by almost <unk>.
3% for the entire first half as compared to the H one of last year.
Okay.
But as you spoke about.
<unk> coming down and so on.
Don.
17, and 15% in IC units respectively.
Respectively.
From a level of almost 40, 418% in the same quarter last year.
And this is because the difference between.
We will learn CMV prices, which used to be almost 40% 45 rupees its come down to now.
Within the bright spots I think of course, I think the strong industry growth.
Especially led by minutes PV of both sides of this effect of the last year.
And the good thing is for passenger vehicles, the buses I won't come back pretty strong.
Good demand in schools.
Exclusive employee transportation and there's also some demand coming in from the Skus now.
I think with our consistent focus on.
<unk> communication as well as the discipline for lead generation and I think <unk> seen a consistent gain.
The net promoter score.
The top of the main brand awareness and consideration.
By almost 100, 200, 300 bps respectively.
Now at the highest.
So I think our strategy of therefore.
Increasing the brand solutions.
Is working in the right direction, which is going to support our retail accumulation in Michigan.
We also strengthened our productivity with the launch of more than 30, new production 70 Vivian.
And within that I think in quarter, two we did launch our new range of pickups.
Amazon, So regal smart drugs, including some of the most in the industry safety features.
So semiconductor institution has eased further although it remains on our radar.
And in addition to that we are also keeping track of.
The new semiconductors, which will get introduced and the vehicle when we migrate to use excuse <unk>.
We also saw the electric vehicles that we are going to ramp up the production.
Looking ahead clearly the focus will be on.
Retail retail acceleration and track the one chip.
Which will also therefore help us to maintain the inventory that can be level.
Within the system as we get older.
For the Vlccs to transition.
Our strong focus on margin improvement.
We'll continue.
<unk> sustained market operating price increases so I think what we've been doing is.
Reducing the discount.
Increasingly the market operating growth and not starting the.
<unk> retail price, which is there.
In addition to that I think we also had a very good first half in terms of cost reduction.
It was the best performance ever on cost reduction.
We will.
Continue to engage with the key financials as also that those few quarters.
Especially with the kind of MLP correction that we're taking.
And also with the rising interest rate need to ensure that we provide all the right solutions for our customers both retail as well as.
The key accounts.
Within this four <unk>, there is real world driving 8%.
Because that will be key in the local cost within the organization and we remain on track for this transition from April 23.
As <unk> mentioned in many international markets I think are the.
Total industry volume has declined sharply.
And I think our focus has been clear on maintaining market shares.
Margins as well as the $10 million I.
I think within this we have seen a sharp decline in Sri Lanka.
Barring the Bob Evans Banalization also sub Saharan Africa has declined by around 10%.
Thanks.
Let me to add.
Future business a bit on the electric mobility.
I think we have been able to complete the.
In market towns of electric vehicle with our leading ecommerce system co locations in the country I think.
The product has delivered very well in terms of reentering the Nordic temporary.
And then seems to have a significant competitive advantage over the current solutions I think we should be starting.
Sure deliveries within this quarter.
You are also getting up noninterest operations. We're also supply chain for the new set of orders that we have on.
Electric buses also this is I'm referring to the.
CSL phase one tender.
301, borrower on $3 600 numbers.
There's a bit of a change in that likely to happen, but otherwise we are gearing up for the start of supply of Infosys from Q1 of next year.
In terms of Smart city mobility solutions.
In the last quarter, we completed delivery of 100 more electric buses to the <unk> Corporation.
And with this now the quarterly EBIT slick.
Or.
More than 51 million kilometers cumulative.
We as I said, we received a letter of.
<unk> from four 3600 buses.
The leak Elcotel, Bangalore as a part of the fields were tendered.
The character that one is being reviewed.
Our review in light of the recent.
Of all BARDA, which has come in this regard.
In addition to this we there was a new tender, which was floated by Jammu and Kashmir Deepa.
E buses.
For ornella brick and mortar.
Which would be one.
Even this.
Buses delivery of these vessels will start doing during the next year. So we have a healthy order pipeline.
Not just from the tenders from the government, but also overall private sector, especially for <unk>.
Employee transportation in corporates.
I think amongst the fleet <unk> been able to deliver more than 96% uptime.
Across the business, which is better.
Better than what we have committed in the contracts.
The total revenue from this business in Ashland has now crossed 200 growth. So that's where we are in terms of revenue from this new business line.
On particular trend I think the fleet age continues to do pretty well now we have more than 290000 trucks connector.
Connected trucks on the road.
And within that you're seeing more than almost 80% active users now the goods.
During the day.
During the last quarter, we launched the minimum viable product pool on fleet age, which included a lot of new features and reports.
For the customers.
And the fleet owners as well as their workshop managers and they see a lot of value coming in from from these reports and insight, which will help them to improve.
Cost of operation.
Lastly, <unk>, which is our online the spare parts marketplace.
Has been going pretty well in fact in each one the revenue has grown three times.
From what we had achieved in each one of your favorite nickel.
So I think we continue to build the backend.
And.
Then have more and more customers coming on onto this.
Which will help us to grow this revenue.
So thats about CV back to urology. Thanks Krish.
Moving on passenger vehicles.
A pretty strong quarter coming through with the 7% retail growth and domestic market share subsidiary.
8% and 8% TV penetration, 10% C&D penetration those are the key highlights.
EV side I think the fast.
<unk> strongest quarter that we've had.
In our almost 88% market share.
<unk>.
More than that the penetration in our country to increase charging interest continuing to increase so we do expect to see this continuing to drive penetration of <unk>.
Excellent.
On the financials.
71% revenue growth pvt breakeven again.
EBITDA was down 70 bps, but lot of it at the same two reasons here on a sequential drop one is the residue of commodity inflation there.
And the other was a one off that was taken in this quarter.
With <unk> with some correct in the subsequent quarters. So no major concern there will continue to keep them.
The sculpsure being poorly.
EBITDA of 200 bps improvement.
Let me hand, it over to <unk> for.
On the financials is what I just referred to I think on a year on year basis volume realizations.
Continuing to increase the stills poker products can we just go through a pricing in the first.
November .
And of course from a.
Overall.
The one that I haven't drawn at Royal it into is the depreciation and amortization.
Given the we're taking more into the P&L then to the balance sheet.
And on the commodities.
Hedges are paying off at this point in time as the currency depreciates.
Oh excellent.
Krish.
Let me start with the key highlights of the industry post.
In quarter, two the industry wholesale reach too.
So.
Crossing one within months, because any illegal to date of 38% year on year.
As we noted last year the base was low because of semiconductor issues that the industry was facing.
Segmental trends.
<unk> grew strongly in favor of Suvs, So sue's further.
This <expletive> in the quarter Dav.
Or is it just continuing to see significant decline.
As far as starter Motors is concerned we further strengthened our market shares Mitchell.
$14, one posted does compare to pinpoint one in the <unk> group.
<unk>.
In <unk> the business grew by 84% and 371 plus interest it could be.
It was of course, the highest pivotal speak for us.
In quarter two.
Maintained on the move on the SUV physician.
<unk> also retained its nimbleness unique position.
Among the 40, plus assuming more than that we have in the industry.
EV also Australia its highest quarter.
OTC rentals and for us.
The market share of 87%.
But as you talked about.
Launch of <unk> in a very strong response that we've gotten before Steve.
Yes.
Opening the opportunity for students in the phosphate sale.
So far we have received very very healthy bookings for <unk>.
And when the customers and more discipline in the past so many many encouraging response.
<unk>.
Talking about the bright spot that we will see in quarter three.
We believe that industry will sustain.
But the momentum what we have been seeing the bus orders.
Our focus in this quarter for the industry would be retail.
Attrition in off peak hours.
Overseas would make to reduce the chairman.
Our approach in the.
At the end of year end.
Also.
And you can look to some place.
<unk> strong and seamless, but reason why last quarter there was one.
Millions of place in the industry and this quarter was so we can see immediate issue.
Because of semiconductor suppliers.
So let us start our motive is consumed.
So the margins we are seeing the demand.
The remaining strong because of our strong customer appeal.
For our products.
There has been consistency in some place in Europe .
Quarter after quarter, you sequenced completeness of place.
Deepwater makes some of the capacities in our existing plants switches.
We're going to support the demand.
And we did see strong growth trajectory as far as <unk> is concerned.
Challenges in the industry would be nor preparing towards.
Transitioning to the commission.
Commission loans.
From April 2023, so the wolfman start from now.
And market growth has been phenomenal and as I mentioned, especially in this quarter as the effort will be to reduce the challenge.
Great.
So how we are planning to welcome the challenge I think.
So as demand is concerned we continue sustained initiatives at <unk>.
Market globally.
Print products.
The.
Also start trends.
<unk>.
From quarter three indexes.
And hopefully quarter food will be a seamless transition for us.
There is a clear glide path that we have.
We are good for our profitability improvement using nine levels.
And that is also pretty much on track and visibility strong regardless, whether its institutional this is.
Thank.
Thank you Melissa.
Thank you thanks guys.
Next slide overall, CV and PV on the cash site.
Cash profit after tax from investments very well funded out of the business is generating the cash needs to invest and you can see the working capital changes flow through as growth comes up is what I would expect to see in <unk> as well as growth comes back. So they still have a way to go to knock off 2600 gross on a full year basis and I'm sure as the.
Progress is going to get back those numbers as well.
Exactly.
Our investment spending to be up to 6000, gross and <unk> still remain positive thats the broad message here.
Okay.
We will take a minute on Tata Motors finance.
We had an AGM of 46000 program do draw your attention to the GNP airline of eight 5% before the to commence walnuts TNF and de emphasize that <unk> is a classic credit middle layer by MBA.
Yes.
The process to demand the NYSE business will combine the two automotive finance the dominoes finance solution. It will consolidate and simplify the group very similar message to the ADR message as I said earlier, so that's on the corporate side, but the main one of the central line, which is the.
Client related for the shock slippage is that we've seen in the restructured portfolio over linked stuff that is that the underlying portfolio is pretty healthy regarding to do well, but the restructured portfolio is something that has seen a sharp slippage and therefore, we will be monitoring this closely and that's why you see the loss this quarter as well. So this is something that.
Does concern us.
And we will aim to therefore tweak some of the approaches into automotive finance, but focused squarely on improving both sourcing quality and underlying business to offset some of this and also stepping up the targeted collections that we have there so but at the same time capital adequacy as fine a debt equity ratio to find liquidity in <unk>. So we just have to ensure that the X.
<unk> on the ground in Tata Motors Finance further and the team is on message to get that done.
Thanks Ludwig.
So overall the outlook.
Pause there, particularly on the top line demand remained strong for us.
And will remain a key monitor because of geopolitical uncertainties are pretty large and wouldn't want to be complacent, thus far as demand is concerned at.
At the same time, nor what to use at this point in time, so we will be running more folks.
Chip suppliers that he is Adrian indicated earlier will improve further in debit launch vehicles.
And therefore, the volumes will continue to ramp up steadily.
In India definitely in general as well falling commodity prices will aid improvement in underlying margin.
And we do expect to deliver strong improvement in EBIT and free cash flows in history.
Jana, we already talked about coming to automotive priorities.
Definitely delivering market leading revenue growth.
Innovation service quality and the new demand for model is going to be a very important one.
Jacques improvement in realization and EBITDA margins for the business is focused on and we are already starting to see the first successes of that.
And we will deliver.
Our Cvs confirm market, beating growth and continuing the steady improvement in profitability and cash flows and as far as Evs are all driving penetration.
As well we have to see.
The slower plenty of questions that have already landed up.
Let me try and lump them together, because it's going to be will be a fair amount of a reputation as a broad set of themes Adrian coming your way.
One related to chip's uplifts in the theme of <unk>.
Under global Chip suppliers are actually starting to ease why are we doing long term contracts. So that's one kind of questions about their <unk>.
Second is now that we have secured chip suppliers Avi the ATK 160, K production for second half wholesale per second optical signal is another contributor site.
And thirdly will that also mean that the margins that we're also putting out there is on the conservative side. So these are I think there's one theme around semicon further dicey.
If you could pick that in the Meanwhile, let me try and summarize all the questions.
Yes, sure Jerry will answer the semiconductors, and then I'll go into the profitability stuff afterwards.
Yes.
Good afternoon, good morning, everyone.
I think this chip suppliers, absolutely fundamental to understand.
We have almost finalized all our long term supply agreements, but it is very clear that if you Miss one it's enough to create the problem that we have had and that aggregate explained.
September the good news is that now we have finalized all of our supply agreements and but let's take the example of the last one that we could.
<unk> signed it's going to be effective by calendar year 'twenty, two 'twenty, three which means that we can see already very positive signs in the way we are dealing with our work.
<unk>.
In the FMT manner. That's why we are very confident of our ramp up but the full effect of this long term agreement is going to come into action gradually.
The global supply base and with our tier one so thats the reason why.
It's a gradual improvement and we should not also forget that.
The crisis supply in terms of chips is really in.
In crisis in our sector. So we can see improvements, but it's going to continue when I'm discussing with this use of all the industry is going to continue in the coming years. It is not that much.
Much of months or quarters, but it is going to be a matter of yours before we come back to a situation, which is much more normal that's what we can see today.
And if you let me build from that theme into the second half of the year.
Something.
Said this with more certain of supply from January than we are from October I told you earlier in the presentation that we will de committed in September and that carried through into our production in wholesales into October which is this quarter.
Reasonable for you to assume 160000 in the second half of the year, we've guided to be stronger volume in quarter four from January and in quarter three what we're seeing from an overall volume position in quarter, three is a little bit better than Q2, but not dramatic.
Improvement.
However, our mix because of the.
Because of the units, we are now able to fit within <unk>.
Three and starting all will improve and therefore total units in Q3 will be modestly increased but average.
Average selling price.
And average revenue per unit will increase a lot above.
Above the 70000 per unit level, which we started to see towards the end of September So thats, what youll come to see over the next three months with then an increase in supply in our quarter four.
The balance is that to the 160000 units don't forget we don't want to put a number out there that we're having to explain why we didn't see that.
So a part of this is learning from our Q2 experience.
<unk> other advisers at that point in time, you can <unk> committed outside of your expectations and it just takes one part for us not to be able to complete and ship a vehicle. So thats why the guidance Youll see it in the second half of the year and the intent behind what we're trying to do here and there.
The complexity of Astellas for ourselves and for everybody else in the automotive industry by the way.
Thanks, Andrea I think Leslie.
Pardon me to take the other two questions also coming your way.
So the next logical question, saying that.
What are the reduction in production and cash flow.
Guidance and Jay a lot of meaningful our FY 'twenty guidance of becoming debt free and how do you see the revised guidance, let me take that I think the.
At this point in time, the net debt near net debt free target remains Africa and are changing it simply because you don't want updated.
As you know.
But we do understand the stress that is there in trying to get there. So obviously, we will look at I look at all options and satisfying to see how close we can get to that I think the better time to do this discussion would be at the end of the financial year.
As we are able to see us Adrian and Gary talked about.
Q3.
The transition period, and then Q4, then the full calendar year benefits come through is that that will give us the better.
A better time in terms of just off the market. So we are aware of the challenges to get there.
At the same time, we didn't want to run ahead of ourselves in terms of putting a number out there.
So that's on the net debt.
Related point on this.
In terms of your funding.
Adrian.
Does it also mean that you may be coming to the bond market sooner rather than later in terms of taking care of this $1 billion that is currently in market.
Thank you apologies Ben good morning thoughts, yes, no I'm happy to pick that one up so we did.
Quarter at three 7 billion pounds of cash net does include buffer for unforeseen cash requirements or to cover maturities. We don't want to go to the market at the time.
We already gave guidance.
Be significantly cash flow positive in the second half of the year, when we have about 800 million pounds of bonds.
Turing in February March and basically.
The guidance that was put on the page you saw with $750 million. So that would about cover it and so you really wouldn't be eating into the buffer.
We could we could do scenario planning and say what would happen if that didn't happen, but I think that what would happen is we just use some of the buffer.
I think we are in a situation where yes.
Over time, we'll always want to maintain that buffer and maintain good liquidity.
Rates in the market right now are not very attractive and I think we do have flexibility for the reasons that I just said to wait until we see rates that are more attractive to us to issue at.
Okay.
<unk>.
Let me turn to India I think the.
Questions coming through on the profitability of the Indian business.
The Indian business margins I think that comes from backup.
<unk> if I heard it go the Indian business margins have declined sequentially in both segments. Despite price hikes in better operating leverage how should the span out ahead, what sort of metrics.
Meadow corrections tailwind, we expected second half if you can quantify I think let me take that question I think so if I see BV and CV individually close to about.
70 bps of residual inflation came through in this current quarter.
And our overall profitability, which we expect to actually neutralize them done and actually go forward start giving credits in Q3 and beyond.
We do as I said earlier itself. The intention is for the TV business to get to as close to a double digit EBITDA at the earliest.
PD will continue to have a steady improvement in profitability going forward part of it is commodities is one of the legal but it's fair to say that the operating leverage from a BD perspective is now due to the limit and we would want to not see the contribution margin the mix continuing to play.
And keep improving and there is enough and more opportunities on that so thats, what we see from our improvement perspective other thing on the PD, we should keep in mind I think we've lost more at loss I think that we have taken a charge of one off charge of almost <unk>. The order books this quarter.
On a related to SKU SKU optimism of issues that are out there.
Dose setting.
Sitting in the underlying business.
They are one offs and should not repeat going forward. So.
So thats on the profitability side.
This one coming your way.
I think.
When you see CD module.
They are very weak despite industrial volumes, because it's part of an industry. That's been very weak. So again CLEC business margin reached double digits or they're closer to double digit like let's say, 9% kind of.
Close to double digit there how do you see the profitability of the industry.
Yes so.
I think.
But as you mentioned.
<unk> is a market leader.
<unk> taken upon ourselves.
To improve the realization from the markets.
And that's a big change that we've done and what's going on.
Second half of Q2.
And we have been increasing our market operating prices.
Which we will see.
The margin should improve earnings but.
But as you mentioned I think our target we remain to get to double digit margin and mix it up.
And then I think the good thing right now is.
The transport of sentiment index, we do see remains quite positive which is good.
The demand is going to be there.
We also see that the future closings are good freighter.
Rhetoric subtle and sort of good levels, who despite the increases in diesel prices.
And the way compressors at affordable levels.
Structural profitability is intact. So this should help us too.
Some of the realizations as we go here.
And with commodities tapering off and our cost reduction actions I think nishu.
Getting towards our double digit EBITDA target.
Thank you a question to both Chinese and English in terms of BS six phase two what kind of cost inflation can we expect.
So.
I can say at this juncture back the cost increases.
For the <unk> phase two are going to be lower than what we had seen in the <unk> transition.
So in terms of price increases therefore, it may be lower than what you had to compete.
From <unk> I think it depends upon the technology also but the statement that I'm, making.
It is applicable to most part of the diesel portfolio.
That's where that's where we are I think you obviously youre really late on gasoline there is only one product in gasoline, but gasoline anyway will have.
Much lower.
Cost effect.
That's where we are in terms of cost impact due to our D migration.
But a similar similar response I think given the transition that we are exceeding our deal from BS four to abuse fix it was double digit because of an increase so the space was concerned youre not going to see that kind of a price increase.
And at this time and.
Diesel specifically talk about diesel because that gets impacted the most.
But you will see different kind of.
Cost increases for the three manufacturers, depending on the technology selection code.
So that's what we don't see going forward, but it will be a significant increase as we had seen for <unk>.
Six.
Thanks Rich.
Adrian is coming your way.
Given that larger cash outflows coming out of working capital.
Fact that you are now guiding to a 160 volume with semiconductor having picked up is that number conservative number one material I've answered.
Got it.
Its implication on cash flows.
Because given that working capital Rewind should give you a better benefits going forward are you being conservative on the cash flow.
Yeah, Okay. Thanks, Pat.
So our main concern during the cash flows this two or three things happening.
Into the second half of the year within one is an oral form of back to you referenced on the call, but put to play it back in terms of the data here one is.
We will be building more cost and therefore working capital will start to turn in our favor ultimately dependent on M&A cost we built in the last six weeks of the year of course.
So, but our assumption is we will build more over the end of Q4 that we're building at the end of Q2. Therefore, there will be a working capital turn in our favor in the second half of the year.
As a mixed improvement so even though volumes aren't as high as some people have waste mix improvement in the in the value per unit and the average selling price will grow as well all of those things will be positive.
I've also said to you on the call is we expect investments to increase in the second half year, two or three places.
One of which is the optical investment number which the guidance. We've given you is 200 million higher in the second half of year than the first half of the year.
With the supply starting to improve we're also anticipating improving other investments like cap fixed marketing to generate more orders, which were deliberate deliberately.
Not generating today, because the size of the order bank and we will also allow expenditures to grow in other places alongside had digital transformation. So allow us spend will grow.
Cash receipts will grow and or net add to the flavor of the 750, you see that.
<unk> consciously and deliberately being conservative, although we're being very balanced and is possible to overachieve those numbers should we get more supply or more value units to end destination before the end of March.
Thank you.
And then one more coming your way this is on the order inflow.
Q2 seems to be around 90% lower than the 100 K plus that you are reporting in the previous quarter.
Broader question, that's coming through is this because of a demand slowdown because the long wait periods.
Whats, causing this throughput rate to come down and therefore, how are we seeing the cancellation rates as well as the overall demand environment.
Yes, Okay. So we are about 10000 units lower than we were by quarter earlier earlier in the year.
Obviously, a part of that is the reasons I've just said, we're not stimulating new demand, but what you're also seeing in the absence of that stimulation bond is the aggressive increases in orders for new range. Both for example are starting to flatten off.
And we're building more of those units as well so that's what you're seeing youre seeing youre seeing up.
The original Spike launch of new range for our net starting to flatten out that's been no marketing spend behind that vehicle at all advertising or indeed variable marketing. So there's plenty of opportunities for stimulate that demand. The other thing you're seeing with starting as the range Rover sport is becoming visible in the marketplace.
You actually see the database increase range Rover sport orders as we go month by month in the second half of the year. So we're waiting and watching to see whether it naturally because of that second reason gets to 100000 or whether we actually need to start to stimulate some of that demand and a fourth reason is that we know dealers are holding back on some of them.
Orders at this point, because we don't have delivery times for them. So when you put a flavor together biology, we are super confident tweaking stimulate orders more than 100000 go forward once we get the supply.
Thank you I will leave you with a teaser on pension that water coming our way, but let me before that move to Australia.
Question is on <unk> in particular one.
The value proposition of <unk>, how is it better than hybrids. So that's one and second EV margins the impact of EV and the overall margins of the can you talk about this too.
So as far as <unk> is concerned.
And with the ramp up we have seen in terms of demand of Evs in DIY as one Big example.
<unk>, England Kings.
We have never seen this kind of response even towards.
Some of our very successful <unk> cuts clearly shows that it has been well understood.
On the strength of the value proposition in local currency.
Currency versus normalized <unk>.
The biggest proposition is the low operating cost and the new operating closest.
Translating into big benefits in terms of annual savings and therefore, the justification for the premium.
To pay for Evs.
It is a very smooth automatic transmission link.
In time.
So to speak and appreciated.
And also in terms of performance.
Drivability pressure it is proving to be more strategic.
And of course, there is a change in mindset.
Greetings.
Brito a trend of younger.
Population also to move towards more Philo vehicles, and then there'll be response would be the equivalent of all of these trends will make it a very strong share position.
And you've clearly seen doctrines you keep in mind.
So this is.
Answer to the first question. The second question was on margin.
I would say that the margin of Evs is not very different than what we see floating about.
This segment can be.
And then the orders trended from next financial year as the Bofa benefits will start coming in.
Okay.
Maybe a stagger there for a minute.
In terms of TR.
Volume outlook for domestic BV.
Now the pent up demand is more or less metal semiconductor situations normalize obviously part question and second in terms of.
How do you expect to gain market share going forward on the PD business.
So as far as you know <unk>.
<unk> is concerned.
Simple very strong and we saw nearly $1.
9 million vehicles, which caused sort initial typically you would see of 48 to 53 point of the ratio between niche within its true. This time youre going to see nearly 50 50 kind of ratio.
Excluding <unk> to be a very strong yield highest stable industry volume is what we have witnessed in this financial year, possibly going up to three point is.
Given plus.
And therefore.
Therefore, I don't see right now the demand.
Really going down.
Except that you will see moderation on offtake this quarter in the neutral again pick up in the next quarter not to the full extent I would say because of the transition from BS six phase one to phase two but still it will be good enough to do similar kind of volume as we have seen Florida.
Each one.
Definitely then the question will be in FY 'twenty four whether you will have similar kind of growth I would not expect that because a lot of pent up has got released already niche one and therefore, it will be more to go through the new launches.
And there will be segments, which might get impacted which would be mostly the increase segment has.
Some.
Price increases coming because of some regulations, which are going on here, which is one of the phase III.
And the safety regulations, which will also not probably to a degree.
So I think.
FY 'twenty four I would just hold my.
Come in place, which was <unk>.
We are also then frankly based on work predictions, we are going to seats from various agencies what was the second question, but.
TV margins.
Yes.
Yes.
Let me take the comment.
And then coming your way or Jada pension liability situation of the provision needed due to the bond yield changes.
We want to be yet.
So apology Adrian asked me to pick this one up so I think this question is relating to the X.
Extreme volatility we saw in fuel price in gilt yields.
Following the many budget that was announced in the U K in late September .
That did cause liquidity challenges for pension plans in the UK because they have interest rate hedging arrangements and they had to post collateral against.
Against those interest rate hedging arrangements and <unk> was no different we did see increased collateral requirements in the pension plan related to our hedging arrangements and we did take action in the pension plan.
The hedging levels and sell assets to cover those collateral requirements. So we acted very very quickly when that came up so the pension plan remained remains liquid throughout the issue rich have of course normalized now they had risen by two percentage points to something like five 5% and they are back now.
<unk> down into the mid threes again.
I think an important point here is that it was always a liquidity issue only not a funding your solvency issue and the ironic thing is is that actually the pension plans of <unk>.
The accounted based accounting basis surplus actually rose from the end of Q1 to the end of Q2, so the accountants surpluses actually over 1 billion pounds at the end of September and it was slightly under 1 billion pounds at the end of June .
Yes, Thanks, Matt.
One more question under the Taylor side.
Other expenses for sales are flat quarter on quarter, not seeing any leverage gains.
Key drivers for that agent.
No not really look I mean, the even though we've broken through on.
On the MLA, we still only at 13500.
<unk> drove a range Rover sport wholesales within quarter. Two it was just 18% of the total volumes that we will be stronger and better than that in the second half optically is incredibly powerful with that $300 million year over year, but were not punching at full rates yet by any means on MRI and <unk>.
Actually it would actually increase the average revenue per unit on the total revenue in Q3, and therefore, you may see a change as a counterweight to that I think I've already said, we are going to start to lift some of those costs and some of those expenditures and of course.
The inflationary pressures in the second half of the year, particularly on an employee settlements will start to come in place to lift the cost as well so I see a revenue less lift ICF cost lift and broadly speaking the balance between the two will be will be reasonably close going forward as we sit today.
One additional question on the <unk> do you see any pressure in China.
On the <unk> portfolio.
One other portfolio.
No no I mean, particularly on the west as we bias tab products towards the higher end of the business. The discounting at the higher end of the business is lower.
And therefore again it will be a part of the marching improvements, which will start to day in the second half of the year once pre supply comes through and we start to build greater quantities of the smaller vehicles. The SUV freeze that's when I expect it to be more competitive and that's why I expect PMA to start increasing as an average.
And as a percentage of testing revenue.
Okay and one more question.
For a more back of the CD.
Yes.
The revised bid settlement agenda hasn't been reflected in this quarter's results.
<unk> two <unk>.
Online for the debt repayment of the $1 7 billion.
Bonds.
Yes, so the wage settlement is effective from Q3 so.
There is no impact earlier in the year on this reported per that will kick in in the second half of the owners are part of the explanation, even though I recognize.
Some of that will go into the margin rather than other expenses. It was a part of our last explanation, but that's in front of us rather than behind us and the profiling of the that kicks in in February in between February and June as.
153, and in Sterling equivalent we payback.
Okay.
Second is coming back into India finish Yahweh.
Customer profile of the Thiago EDA bookings versus nexon any interesting anecdotes, there and the first time by us or that makes first got in the second half.
We would not have.
Picture of Dr. Goldberg on Exxon.
I won't have the split of <unk> card.
We've only gotten primary card.
It is nearly 70%.
Which has grown significantly.
It used to be it used to be to any type of city otherwise it was generally a second car.
People, who are now using the excellent media buyers.
Using it is the only cloud or primary causes butanol.
65% to 70%.
On EV.
The only regional kind of a mix. It was really strong you have seen in states like Kerala.
That's a good start.
NCR.
Just on <unk> basis and delivered on that.
I would see a similar kind of states, where we had been selling but also.
Some of those states East have also started showing interest in <unk>.
Thats, what we have Super information again.
Thank you I think there is one question that is coming back again and again.
What are the reason for lower profitability of CDN wheat, despite better one year.
I think there is and I know it is all of our questions into how much of the commodity impact for the current quarter holds it likely to change the next quarter I think let me grab the problematic to I've got a CD is concerned the main reason that we have the residual.
A moderate increase of the last lap offered.
Negotiations close or flow into July August and those are not settled and completed and we should see the decrease coming from Q3 onwards, that's under negotiation.
Additionally, on top of it and CD going forward you start to see realizations increased as the move towards the bundle strategy. So therefore also keep increasing the profitability and therefore, we would expect Q3 this business to ramp up in terms of profitability and indebtedness to get as close to double digit EBITDA as soon as possible. So that is the plan there.
Coming to PV, yes, the residual impact is also there is that but on top of that also one offs, which are taken with respect obsolescence that we have the right.
And that's what most of the bps of write offs that were taken there so.
Those are the two reasons why the profitability came down.
And both of them are behind Us and therefore that's.
Thats something that we should expect to see those things changing.
So pulling into a set of questions that are coming in terms of area of DBS, basically, saying that if you're a simplified structures.
So Adidas thing the avs what are the plans on DVS at this point are evident in our plants and as and when there is something coming up we'll definitely share it with you.
Oh.
In terms of Capex in India.
First half of the year, we have spent about 15 billion, but youre guiding for about $16 billion.
What is the current plan I think this is up to US. It's been 60 billion of what we have said 6000 gross and we do have plans to adopt.
So invariably happens as a proposal is clear.
We will keep a close watch on it and we'll spend the assets.
Rest assured we are not counting on investments and the intention is to keep supporting the groups there.
I think one question coming our way.
Engine Euro six emissions.
Sure.
Are there any additional expenses that we have to undergo to meet the new emission norms.
Yes.
Six legislation is behind this balance sheets. So I think we're looking ahead towards euro seven at this point in time, which I'm told is delayed by 24 hours announcements until later this week.
Okay.
The <unk> seven one to the ones, we're looking forward to.
If they can't confirmed in the timeline and then there will be additional expenditures, which will be contained within our investment targets. We keep you going forward.
Okay. So.
Ben one coming your way of given the pound depreciation against INR option, there via an exceptional gain hitting the P&L due to that on the agenda.
Is it again and others.
With <unk> of USD that you're referring to the <unk> assets that.
You will see what you also see is that the transformation impact of that.
Piano and Thats part of the Orca is concerned we do see it's in the OCI N.
In Gela.
Anything further you want to add assuming the question is VW USD.
Yes.
I think it's harder for me to answer the question relative to INR I guess, all I can say is that.
Back to the slide that we looked at earlier that showed exchange and basically it showed that.
Thanks.
The exposure benefit net of hedges was favorable about 55 million pounds.
For the quarter compared to a year ago, when we did.
Revaluation on the debt and the end of the day that is largely hedged.
Either by derivatives.
Foreign currency cash holdings or in some instances designated against future revenue. So we don't really I really think about foreign exchange revaluation on net debt, including hedges and that is broadly neutral. We just don't have about 90 million pounds of balance sheet revaluation for other non sterling.
<unk> that showed up in the income statement, it's all on that slide that we looked at.
Earlier.
Okay.
One question to you April in terms of an announcement from another OEM related that the high inflation in Europe could result in moderation of demand next year.
As you are there and is that a list of volume or pricing given discount and currently that are part of law.
Yes, Okay, I think I touched on this actually when I talk to the PMA explanation.
Alright.
For the larger vehicles the range Rover range Rover sports coming through we're not seeing any discounting were not seeing any falloff in demand or is a flatlining of new orders, but now all the way of new orders in the flat line is absolutely consistent with the profile that we have in that demand books order books, we have in place.
Once supply starts to free up for us above the level of way currently indicating in the second half of the year. Then we will be building more of the units, let me say in the SUV.
Segments I think those segments are more competitive always.
From a support VNA perspective from a aggressive net of supply of other OEM actions. So I do expect higher P. M. A C.
Point in time on those nameplates.
Clearly, we need the supply to fill them at the moment the ones, where we will be building up in the next six months in time I don't see this as a risk at all.
Okay I.
I think this question from Juan.
Slightly different question, but again linked to the higher R&D costs.
Is there a risk of shortage of confidence due to gas shortage of any high energy costs from vendors.
No we're not seeing any of that at the moment.
Seeing cost increases flow through of cost.
Just to give you a sense of that AD based LNG builds around 200 million tons, a year and therefore.
Certainly increasing its in part in our first half year and it will be a reason I told to inflation earlier.
I'd say, the number's broadly going to be the same and if you put together the two responses, we've given the balance sheet.
The.
The commodity is going to start to fall, although the cost categories, including utility has done including pay awards will start to kick in which is why I am.
I'm, saying over all of the costs were broadly the same in the second half of the <unk> just come out to different places, we don't see risk of supply at this point in time.
Obviously as a nation, we're less reliance on supplies from Russia of course, most of our supplies come from other places like Norway. We do have alternative supplies, particularly for the for the buildings outside of our processes production processes like paint shops that we have other alternate.
For other sources.
Don't have cash storage, if you wanted again to gas storage, we know al facilities.
Europe and our governments in Europe do have.
Gas storage, which will get them through most version of stimulated have a winter. So we're not actually expecting shortages of supply to impact production facilities over the second half of the year, we haven't seen it yet, but we are expecting cost increase this is <unk>.
Summary of where we are going to be on gas in the second half of the year.
Yeah. Thanks, I think a question.
Question on the Ford plant acquisition shall ish whenever you're going to see production out of the four plants that gave us.
Sorry, just to clarify we're not yet acquired.
We will close the transaction the intention is to have closer by end of this financial year or early into next year by end of this calendar year or early in the new year.
Everything points to that kind of timeline.
All systems go on that one production yes.
So we are right now in the process of government approvals.
Final stages of.
Finalizing the model location mix.
With changes now because there will be opportunities.
The other factories are going to relocate to some extent to this factory.
And the new EV models, which are going to come in.
<unk> Foods is where you will see some talk about the activity in the later part of its liquidity pool.
Is that correct.
What was the estimate of when we'd be able to rebuild this plant.
For the new models.
For the models that we have legal shift.
To this factory.
Some of the new Evs, which are going to be muted.
Okay.
There is a question on the.
This morning, I'll take it or how important is jr to Tata motors and the wider groups north strategy and what level of support of the former emphasize going forward I think it's absolutely categorically, we made that many statements.
Furthermore, <unk> is absolutely core to Tata Motors.
Enjoys.
Is that as much.
Other than the other companies and therefore within the group, but it is a conduit and we will keep it that way.
In terms of an interesting question, but post the launch of Thiago <unk> do you see any pressure on the <unk>.
Kevin.
We will use a very different product segment with very new customers and so we don't see any any impact from the nexon EV demand.
Thank you so maybe.
The last question unless there's something comes up now lumped into motor finance, how much of the incremental formation is dependent on automotive PVC. The E part of the plant and food operations automotive Spinouts I think let me take a few minutes to explain the spot. There are few things that we're working with that amount of financial one is that the underlying business is running portfolios.
Quality there is no concern on the lending portfolio.
I'd like to step it up further in terms of reducing the level of GNP.
And ensure that we step up the quantity of sourcing.
Thereafter of course in parallel we are also looking to tighten the collections infrastructure.
And you should see this playing out in the coming quarters.
It's an independently managed company autocar.
Automotive net amount of 100 lots to keep it at.
From a physician framework separate but of course, Aspen synergy as possible this should drive.
Intention is to ensure that all divisions on credit and decided when I walk the fine.
Their portfolio from a newly two perspectives and Tom you've talked a motors, but used vehicle portfolio does have sourcing from weather.
Oems.
That's the market so we get our fair share of our market of the vehicle.
On the debt.
So this is clearly.
Our task for the team there and Im sure given.
The commitment that they will they will come back on targets with only the restructured portfolio that are giving us the pain and that is completely related to the pandemic and the fact that we are back to back pandemic, but two years in a row of Amazon.
Particularly small commercial vehicles <unk> series <unk> series those individual fleet operators have been stressed so we will need to deal with this and we.
We are committed to being the best I can bring this business back into the picture it needs to get to a double digit return business auto business and we will be there.
So I think.
<unk>.
This is more or less done for the day. So thanks, everybody. We have no further questions. So thanks everybody for.
For attending the session and also thanks to the team around the table as well as Ngls or a lively Q&A session and the response there and.
And in case, you do have any further questions don't hesitate to reach out to us and trying to respond to the best of our abilities. Thank you and have a good day take care Bye bye.