Q3 2023 Tata Motors Ltd Earnings Call
So this is the breakeven side, while on it just to say we're still at the 290000 level in Q3. It will average eight to around 300000 and full year, we are starting to invest more including our fixed marketing and our commercial digital strategy.
Would increase.
But with the mix strengthening an MLA and defend the units we expect a containment of breakeven over the next two to three quarters or so next slide please.
Okay.
This is the investment number I mentioned it is worth referenced in last year last year.
So $6 22 in total up just over 100 million.
Pretty much all of that more than all of that is in the engineering.
Engineering expense, we are bringing in more engineers of course into the organization to deliver at re imagined strategy an electrified future.
That's starting to impact on our cost base as it needs to do so.
More of that is being capitalized now, 48%, which demonstrates the maturity of those architectures is starting to grow and improve we were down at 26% only earlier in the year. So this is actually a good sign and I do expect investment to continue to increase beyond 650 towards $700 million over the next.
Quarter two.
Slightly.
Okay. The next one.
So our re imagine electrified strategy look there is no change to our electrified strategy I know I'm on record as saying that I thought our dwell.
On the key highlights which is exactly the same as previous highlights you would've seen from an electrified June MLA architecture is out that beautiful car you see that and its range Rover sport. The order banks are being filled by those two product it is.
<unk>, we believe of modern luxury beautiful proportionate to that vehicle and the range Rover sport the minimalist luxury view inside the vehicle, that's a great signature to vehicles and <unk>.
Quality and view of vehicles, we will put forward.
Going forward within two years, we will have a full electrified Bev range Rover. It's just two years away now recognizing our order bank support for that product for the next 12 months also the gap between orders our new electrified vehicles is closing and we will continue to close as we go through 2020.
Three we will then in 'twenty five.
Forward with that first all new electrified Jaguar products.
And then beyond that other.
Other range Rover and other defender products will come along in the next two years within two years most of our vehicles will have full electrified offerings and that will be complete in all models before the end of the decade or estimating 60% of sales by then will be path, but the important point.
We will have offerings across a range over that period of time.
Hi.
We still maintain zero tailpipe emissions by 2036 net.
Low carbon emissions by the end of that decade, so our electrified future continues at pace and the investments. We're now making is going to grow towards that over the next 12 to 18 months at least next slide please.
Okay. So these are our wholesale volumes.
I think the important thing here, we see the gradual improvement, but I like to look at quarter versus last year. So Q2, 'twenty three versus Q2 2002, you can see there about a 15% increase we know Q3 is a 15% increase and that starts to give you an indication of what we should begin to expect.
In quarter four so we are expecting that number to grow in Q4.
And obviously to continue to grow going forward. So we do think we've made a lot of progress on supply, particularly on semiconductors, particularly for this calendar year, but there are still challenges of course Covid in China is a challenge and we talk about that in a few moments, but we are improving our breakeven point.
Stabilizing and therefore, our profitability EBIT revenue and cash will be growing as we go forward next slide.
Okay range Rover and range Rover sport. The MLA architecture are fundamental to the delivery of our business model and our business success and.
And we explained in great detail over the early quarters of last year. It was difficult for us to gain the pods to grow to grow the volumes. We've broke through that in September you can see the average weekly as a grown.
Water over quarter, we will deliver more production units in Q4, it wont be that same size of scale of increased but it will be a sizable 10, 15% improvement in Q4 over.
Q3 also we can maintain our <unk>, 33% to 35% worth of <unk>.
Deliveries on these products and that will maintain our average selling price at the levels <unk> seen as.
As well as a strong favorable profit mix portfolio going forward.
Really is now starting to show through our business results, particularly in Q3 and going forward next slide please.
Okay.
Okay, So what's going to happen to order banks well first point is they did continue to grow in quarter, three and we've helpfully broke out the amount of deliveries we passed over to customers 85000 versus the amount of new orders 95000.
At this level of marketing spend and we are only spending two thirds of the level of marketing we were before semiconductor shortages, but at this level you can expect new awards to grow by 30000 or thereabouts a month.
<unk> fulfilled orders that retailers will start to grow now we're already seeing that in Q4.
In part because of the opening up of China, but I do anticipating waterfall fulfilled orders to be above new orders.
And therefore, our order bank start to taper down towards the level, which is more natural maybe towards the 200000 level over the next three to four months.
Most of them as we've said before in those three nameplates range Rover range Rover sport and defend that we have gone to third shift on defendant.
And therefore, as we come out of a quarter for deliveries in particular and fulfill the orders on defender will grow and then we've also mentioned we expect to build into the 10% to 15% more than the other two also so very confident at retail levels are at fulfilled orders are going to move towards 100000 level over the course of the next.
Months and quarters next slide please.
This is a super important slides, we drove 100 several times, let me remind you. The top piece is a range of retail inventory targets in that dark Blue line is now creeping towards the bottom of the pond, which means the vehicles in the right place and that will trigger incremental retailers in Q4.
As I've mentioned, a couple of times around wholesale stock.
Inventory, we own the button today, you see below.
$13 45000 units, we're still within that band towards the bottom of it but if you add those two numbers together ATT.
Inventory and two and finished vehicles at the end of December that was the highest number we had in inventory for several quarters back to back.
Back to around May 2021, so that's a good healthy sign that we are starting slowly to fill the pipeline, which will trigger more retailers et cetera et cetera.
This really is starting to starting to improve for although there are still.
Issues, we can get on a daily basis in terms of supply mix slightly.
Inflation has been a theme or yet what did we say at the start of the year, We said refocus with offset in place we claims.
Nine months through this period's inflationary claims have been $660 million.
Focus has been $850 million of which is in the commercial space. We are doing what we said we would do the investment number because the mentioned earlier, we are accelerating and bringing more engineers.
The future will be the savings going forward and our expectation is the commercial performance. The market performance will actually then begin to offset inflation in Q4 and beyond together with our efficiencies through our agile transformation activities, which we've referenced previously also.
So we are doing and we will do this year exactly what we said we could do some sort of offsetting those high inflationary times next slide please.
You need to mentioned Covid and China, we've all seen the reports and the extent of the contagion.
Within the Chinese population Q3 was.
It was impacted of course by Lockdowns, particularly at the dealers and also some disturbance in terms of.
The units we could build.
Employee absence for a short period was high I'm really pleased to say that more than 90% of our employees are the production facilities and 99% of our employees within our National SaaS Company have now returned to work.
And the retailers definitely opened up for three weeks in January obviously late Chinese new year, Theres, a caf point around.
It happens to the population following that but we do anticipate given the scale of contagion.
In the December period that we will get back to business very quickly in China in the back end of Q4, there was a care point around production facilities in China supplier production facilities that we are monitoring.
We are bringing we are.
Bring information back around that as we close out the results, but it is possible for us to be sculpt within the UK production within Nitra production and within China production as a result of those supplier facilities.
Don't be the scale and the size of the stoppages. We've seen previously we don't believe.
Next slide please.
Outlook year to date.
Out on Q3 here, but this is a summary, so far year to date I won't read it out apart from say, we are now EBIT margin positive across the first nine months.
Investment is lower but growing free.
Free cash flow is just under $300 million.
Shown there hopefully how fully.
What our expectation is for Q4 above 8000 units on wholesale maybe closer to 85000, plus if we continue as we have in the first month.
Revenue will exceed 5 billion close to 6 billion again.
We will be positive on EBIT with that our investment will grow probably around $2 $700 million 600.
And that free cash flow, we believe with those physicals will be more than 400 million positive, which will make us positive free cash for the full year.
The rest of the data you see that what are our priorities, obviously continue to secure chip supplies wound through the strategic types.
But to the excellence of the work of the teams now we really do have excellent teams in place now ensuring we keep our supply lines going continue range Rover range Rover sport ramp up I've mentioned, our expectation that will grow by 10% to 15% in Q4 over Q3.
Improve on the 80000 units we've done in quarter three within quarter four net.
Focus complete.
Including more of those price increases come coming through as we deliver more cost to customers.
And obviously.
That job is to deliver positive data, so EBIT margin and free cash flow in quarter four.
Also for the full year.
I think that's my last slide.
Thank you Andrea.
Let's quickly move on to the commercial vehicle space Division I will take decision.
If you recollect we had.
Signaled earlier, saying that we will be focusing squarely on bond market shares in the registration market shares and shifting to a demand pool business model that did cost a bit of Greece in the month of October since then we've been sequentially improving our market share as our propositions are starting to learn and we're starting to see those in across.
All of the portfolio swim.
Next slide please.
From a.
Finally, I would like to call our give us take a look at the CMG the light Green bar the substantial drop in CMG composition of the prices of CND.
We are inching closer towards the diesel.
And we should expect to see this trend reverse wanted to see in Dubai based on starts to closing them going down so.
We are very much in Miss student CMG, but.
Current.
Played out and the other thing that we can call our care to the whole international business you will notice that the wholesalers have been pretty anemic and the challenge is the international business continues.
Yes.
From a financial performance standpoint.
The demand pull model is constantly seeking to improve profitability of almost five megabits revenues north of 22, 5% pretty strong and EBIT.
549% up six bps next slide please.
Drivers of this particular profitability you would see.
Brian attention to the realizations.
Just sort of against variable costs, you'll notice this number used to be negative in the past I'm sitting at almost 40 80 bps.
Our strategy is starting to play out and.
What do you do see us.
The cost of this advantages that have come through this quarter.
Some of them most of it related to the.
Investments that were making in the new technologies, hence translating into higher product costs in the fourth.
And the business that you have more and more and more money into.
That's joined the number there thanks.
Thanks Ray please let.
Let me give it the glitch to talk about the.
Thanks, Greg.
Great. Thanks, Bob.
The industry grew by around 16%.
Over Q3 of <unk>.
Thank you Joe.
<unk> seen the growth rates have been dropping no it doesn't.
Also due to the base effect.
And Thats, what we will see also the brokerage we put on further.
For Tata Motors.
Since we have been focusing on retail setting.
Wholesales by 6%.
In the quarter gone by and this is also in line.
Our preparation to unwind as the.
Yes for the Rd transition in the month of April .
I think good thing for the industry the commodity prices did soften in Q3.
Then.
So it is remaining in Q4 also known.
And we are keeping track of all of the Skus breath of especially moves feedback within proficient with those rules.
Q1 of next year.
<unk> spoke about.
<unk>, So I think with the CMG benefit went down and also it is the.
The uncertainty in the minds of the customers of both variable it can see new players I think the volumes have come down.
And.
In this either upfront or on.
<unk>.
What percent of the portfolio.
CVV comfort around 40% of the portfolio.
So we used to build the most around 40%.
Oh.
Within the segment that I think you never in heavy commercial vehicles have seen a very good growth almost 50% growth.
Well look the Q3 of last year again due to the benefit.
And he was higher Brooklyn, the passenger overdue passenger segment is back I think the.
This was the worst of 31.
You did enter into over to Billy.
For us the nonrecurring business.
Spare parts I think continues to do pretty well.
Parts and consumables and in fact in the nine months.
Year over year grew more than 30%.
Over the last year.
Penetration also each one individually so the share of the overall market strength.
You will see moving part over to corporates.
On the FERC trend.
We continue to launch new products.
And for the year, we've launched more than 40, new products as well as 150 plus videos.
And this includes is electric vehicle for which we've already started with deliveries at the beginning of this month.
The new range of the cuts the bottom triangle.
Very very good traction in the market.
And also premium that we refer to charts.
And we also brought the CMG trucks, which have started seeing some traction.
Let me talk was for me, David introduce a comprehensive range and I'm going to speak about that a little later.
Looking ahead even.
Continued move.
The focus on these three things which is.
Retail pool.
The improved the lion's share.
This is the restriction.
And of course, we're doing all of this I think the realization improvement agenda will continue.
To push this agenda, we continue to engage with all the key stakeholders in the ecosystem.
With customers.
Sure.
Also.
I'm trying to get them on board I think we see a very good commitment from all of the stakeholders to the waste.
We're thinking of the revised operating model that you can give.
Are these transition is what curve you're preparing towards migration will happen from the bridge 2023.
And of course, as we did in <unk> six in the crude 'twenty you will know I think we will come up with value enhancement for the customer so it won't be a plain and simple.
Price increase.
With the full execution globally.
<unk> semiconductor.
Less efficient back on or not.
When it was a bit what is some definitive back I think.
Things have improved.
But we will continue to keep this as well as the electric vehicle aggregate some of them are not.
In international markets.
I think.
In most other markets the volumes have dipped significantly more than 50%.
And in this kind of an environment, we are focusing on maintaining our market shares in all the markets.
Margins I think margins have also been doing well.
And also the channels.
We are ensuring that generate the winter at a lower volume.
This is extremely important when the volume to start picking up.
Excellent.
Talking about electric mobility, so as I said that I think.
<unk> completed a very successful trials of the electric vehicle in our customers' operations.
Both of you started with e-commerce players, but you also had.
If MCU players joining the bandwagon as also pulse parcel and courier companies.
And I think the product has done very very well.
Which is leading to even more than pays for the product.
I think you started these deliveries and as you can see the third bullet.
We have also now started pulling material from the supply chain, although we kind of scared I think we will start ramping up the production.
This may cause.
We did focus on most.
Zero emission concepts in.
We don't speak about.
On our smart city mobility solutions.
Business that we have put in place.
Signing the definitive agreement now with the.
Transport Corporation as well as the bank loan for <unk>.
900 is breakeven versus respectively. So thats 90 421.
We also got an order of 200 buses from Jim more extreme weather.
R. E bus fleet now has cumulatively cross more than six floor 60 million kilometers.
With more than 95% uptime.
December .
The revenue generated by this business in the nine months has been 260 crores.
And at this level of revenue I think.
The business is giving good profits.
On the digital businesses I think we continue to grow the.
<unk> penetration.
Our connected platform.
Vehicles crossing 337000.
Could you is that all 135000 customers.
And the usage also has been growing consistently having the down almost 50% of some of those being actively decision dates.
Even come to choose our online marketplace, we used to sell spare parts for this now we are also honored.
Consumables like diesel exhaust fluid and lubricants.
And in addition to that I think we've also started adding.
Some of our retailers as well as mechanics.
So they can also order on this platform and we see a very healthy growth.
Almost financed 65% growth over the previous year.
I spoke about new generation during the last quarter.
And we continue to push this agenda.
In the entire portfolio, we had almost 16% of our sales coming from leads generated through digital means.
You still have a good headroom.
Cause the conversions can improve further from the level that we reached next.
So talking about auto Expo.
I think the whole.
Aqua explore was.
Making a statement on forward.
Jeremy towards net zero greenhouse gas emissions. So we committed by 2045, BBB <unk> zero greenhouse gas emissions.
And as our commitment towards that.
The most positive concepts.
We had the hydrogen propulsion in terms of hydrogen I suppose attractive.
Our hydrogen fuel cell retracted.
And also a hydrogen fuel cell bus.
Which actually we see commercial application from the next quarter. So this is to meet the <unk> order that we had assumed last year.
You also have the five electric retail concepts.
He is of course, the delivery of those started with Star Wars movie, which is already on the board.
So I'll try <unk> nine which is the next big LDC, having good customer interest.
<unk> for the last mile Intercity passenger transportation.
Our primary near term differed we choose a good option to Decarbonize the closed loop.
Usage of deferred is especially Miami.
We also introduced two new fuel agnostic architectures.
Which addresses our entire range from 755 tons.
And these two architectures can take any powertrain.
So ice.
As well as electric and electric battery electric and hydrogen fuel cell electric has leveraged ways.
Firstly revenue.
The <unk> and intra biofuel.
You kind of available for sale no commercial sale.
<unk> LNG differ.
Which is also ready for commercial sale and we are working with few customers.
And of course.
The premium version of our vendor in addition to this we.
Also had good interactive exhibits.
Who will explain our fleet age.
Electric truck platform.
We'll assume obviously the field services as also EBIT neutral I'm sorry, Patrick.
Pension.
I think this was already holistic display off.
Just kind of commitment towards net zero greenhouse gas emissions, but also hope.
What we are driving.
Some of the cutting edge products and services.
<unk>.
Thank you thank you krish.
Exploring on the passenger vehicles.
Okay.
Excellent.
The callout is the consistent improvement in market shares and a strong growth market, beating growth that continues here.
Third call out the CMG plus eds, now almost 17% of the portfolio.
Thanks Clayton and.
That could improve further once our newest engine not just comment a little bit Thiago EV launches as well.
<unk> continues to be on a level, we have surpassed the milestone offsetting 50000 EV vehicles the stock.
Sure.
Canada delivered solid almost articulate thinking almost one of us in the form of a market share of us in Evs.
Okay.
From a performance perspective.
But 7% revenue growth.
300, gross almost of profits EBITDA by 9%.
We're also promote ADR lift that you've seen there.
We're talking about one 5%. So strong performance continues in the profitability extended we should continue to see a steady improvement on this fall.
Yes.
In terms of drivers here again, you can see the renovations and variable cost is now starting to improve further so the underlying contribution margin of the business is starting to improve.
Investments fundamentally in the EV business with the employees building up the team that has worked as CEO .
And products is what you see as Daniel said, it's also.
So the two things Thats brought down the fixed cost line.
Excellent.
Okay.
Let me hand, it over to cherish to give you a sense of the business. Thank you melody.
Start with the key pillars of the industry.
Well one thing was really.
The equal they would see in the industry. These trips.
Yes.
More than 10 points, mainly economics.
Wholesale also grew by 23% tons compared to the quarter three of last financial year.
The industry has continued to show strong growth year on year.
Versus last quarter, one of our people.
Primarily innovator dominance.
Andrews.
It is notable to see now some interviewed which was spread equally through the industry.
<unk> three.
As compared to some of it around 2019 than it was at Q1 and Q2 dollars 4 million liver.
Chuck I would see it.
23% growth as compared to when you look at <unk> one as.
Just wanted to start on Moody's is concerned.
We have been around 14% market share.
Consistently one presidential year.
BV lending businesses.
<unk> delivered.
And industry, leading growth of 23% for PV annuity.
Hi.
The EV on suites.
<unk> also the highest single quarterly review at 139000.
For the calendar year 'twenty.
Even the Oems across the fiber landmark.
And.
We also as <unk> mentioned during the last quarter, we crossed the 50%.
Milestones with Evs since its inception.
In the last calendar year discrete why don't you didn't look at.
It was actually 40 foot hosted nearly 44000 Skus that you did for <unk> in the last couple of years.
We maintained our number one position.
European deep.
Excellent and punch.
Among the top three.
In the 40 plus model Suvs.
The market.
Sweaters EDI sales year to date is concerned for the explanation.
Sure.
Four units with a market share of 85%.
Going forward the bright spots.
Given that the inventory in the.
John and his team there are new product launches that you've seen recently in the industry.
Our improved supply is quarter four should be stronger from this one seamless consumed in this country to quarter three.
And as far as EBIT growth has consumed a lot of Steve schooner amongst cognizant meaningful disease.
That should support that.
The most important.
I just want to start a motive is concerned.
Good evening deliveries have commenced.
Money.
The strong momentum we had.
Ex tinder in the introductory pricing sort of post 'twenty cogent customers.
Rich we have already cross in terms of bookings.
We.
We will have showcased at <unk>.
It has strength Duncan the soon to be launched in this.
<unk>.
As soon as we have <unk> two transition is concerned it is on track.
<unk>.
On 10 January .
The acquisition of Fluke, London Salmon.
And we saw really strong response to the product and user deleverage Couldnt talk about mixed right.
And going forward as soon as challenges are concerned.
And even after long duration or supply driven.
Industrial.
The situation there is some tightness in <unk> Malaysia.
Just meeting the demand for <unk> modules.
Except for some popular modules, which is too high and we can do.
Yes.
Whoa enquiry complete everything has introduced for the industry.
You see between the signal loss macro for the GEC among the customer that includes our place.
And price increase boost use excuse too.
C U E.
In fact on the demand.
Simply the most hopeful.
In terms of actions of year willing to move probably focused.
Focused demand generation issue to speak of in certain segments as well as clinical markets.
And as far as margin is consuming things absolutely closer to Q2s.
And we continue to drive other levels of margin improvement.
Thanks Lee.
Giving a quick overview.
What did we showcase.
Auto Expo.
The team for this want to explore was moving into your forward from Stifel smartphones and greet new acres and.
And we had about 12 showcases.
Morten <unk> saved.
We showcased with Thiago you need which we already launched.
Clearly we must also showcased.
The dilution to turn up for us.
Yeah.
Speaking of we launched <unk> central kits.
<unk> beauty.
Okay.
So you won't see it could be months may end up going it really play these units new products that we showcased.
On the ice portfolio site already talked about which are used by the fashion instrument.
Ddos and then some of the bigger infotainment screen.
This gets lost in this quarterly statement.
It was a big disruption.
As well.
Showcased edr and we explore CMG twin cylinder technology I think this segment has always offered with the handicap of having good space because.
He paid basis.
Given that this is Richard.
The idea of having the screening of itch relief.
It releases in the space.
Greetings and they'll be the boot space, which was otherwise speeds that took place this evening.
This will come in the first half of next year.
And sugar.
And we also showcase the ice motion of quota.
You remember in April it really it really couldnt be which reduces the itochu.
Along with this program.
<unk>.
<unk> one <unk>.
<unk> thousand liter.
Which will help us.
And coming with our docs, which would trigger the next will be driven by ice space.
And this was received very well.
I appreciate that.
Thank you Tristan.
Next slide please.
Overall, CV PV cash flows Brian attention to cash profit after tax strong and therefore more than adequately funding the capex that we have.
Please call back the working capital that we lost in the first product so that's water company.
Great.
Right.
Investments it can refill skipping the cyber district.
Earlier, the investment spending is likely to be around the 6000 gross number no change on backlog.
<unk>.
I don't want to stand as I want to take a few minutes on this device.
Appointment for us this quarter.
The GNP increase that we saw in this.
And this portfolio is.
Two reasons number one the restructured book, that's actually starting to fall off pretty poorly and it's continuing to do better than going from bad to us.
And as well as a one time obligation on one pass.
Because of the <unk> acquisition marks that we had.
So therefore, you're starting to get.
Further provisions put through in the restructured book there is no almost 90% of the AGM of cardio and those of course that we have.
And there are a lot of efforts underway as you would expect to normalize those tactics restructured book.
And.
This book is going to be pretty intense in this quarter as well.
The early results are encouraging and the GNP is starting to reduce November December and January so far have been trending wherever the mature deficiencies cooling to 102%.
The normal book is quite comfortable we don't see stress there and capital adequacy also is quite comfortable there, but clearly.
Clearly.
This is an area, where we need to.
Drive a lot of efforts to ensure that we get our collection efforts, particularly on the restructured book next slide please.
Overall, therefore, our priorities even retail sales, but maybe the only thing I would like to highlight highlight is the you on demand, particularly a lot of you are asking as well we remain cautiously optimistic.
<unk> as well as India.
And there are enough global uncertainty.
Aware off but we still remain optimistic.
And we can't be complacent.
The work both in general and in India on the inhibition and density as well as activating the market and ensuring that we will not place yet and of course chip suppliers are likely to improve further and therefore volumes will continue to ramp up steadily particularly in China.
A moderate very quickly do we expect stability and therefore, the focus on profitable growth should deliver strong EBITDA and free cash flows in Q4 as well.
So that's why I had to say they can do their priorities by business as we've already covered so let me now calls for that.
Let me start.
Covering the questions that have come through already and one of them.
Excellent.
Okay, So maybe let's start with.
I think vendors is coming your way or better agent I don't know if we can take it could you let us know that films of the extension of the revolver.
How much was undrawn and drawn interest rates increased by an additionally, given the cash portion of the company enjoys is there a scope for optimizing that of all of our debt balance further and there is another question in terms of also about how much of a repayment of your planning given the cash position that you want to go to wrap this all up in one restaurants.
Yeah, I can cover that apologies.
So broadly the terms of the revolver are.
In terms of covenants and things like that the documentation is.
Pretty much identical to.
The prior revolver or the pricing margin did go up 50 basis points to 335%.
But.
That's on the draw basis.
None drawn basis, all we do which we pay 35%.
The margin so the annualized cost of a one 5 billion revolver is about 18 million pounds. So from our perspective, it's the cheapest fire insurance you can possibly have.
In terms of.
Is there scope for optimizing the revolver debt balance while just because I think it is low cost liquidity insurance.
And we actually used to have a higher revolver than that I don't really think we're considering it.
Taking down the revolver, we obviously have.
The net debt target will still work, we're working towards but I don't really see changing changing the size of the revolver at this point.
Thank you Matt.
Thanks Christian.
Remotely.
Thanks.
I think again this coming your way on Gina or are we thinking about the demand outlook once we clear out our strong order backlog.
Current market interest rate environment.
Continuing to the next year.
One of your view on the market in the next I think the same question coming into <unk>.
Traditionally a truck.
Yes.
Great. Thanks policies, so from our perspective look our order banks to historical highs.
Add to pre.
Supply LNG is that doubled the level and you've seen that the size of the increase to start reductions that we believe our order banks are going to stay on naturally high particularly.
The range Rover.
So would have for more than 12 months now we are not taking new orders until 'twenty for model year and on the range Rover sport.
Our rectify and defend so we will see a marginal reduction quarter on quarter, but I still believe we will be this time next year talking about order banks, which are higher than ideal so.
Today's level of known uncertainty in the marketplace on recession and interest rates at the levels, we see in front of us going forward today I believe the challenge. It continues through 'twenty three to be supply rather than demand, we have plenty of opportunity to increase demand and steamed.
Late that given we're only spending two thirds of the level of fixed marketing. We were 12 months 18 months ago also.
Thanks, David.
This is coming your way.
Same from children, one itself on India, Cvs powered we're thinking about price hikes heading into the stricter emission standards, beginning 2040, <unk> quite ready for is it going to be all at once or more phased in nature.
So the cost increases for Rd.
We want to be lesser as.
As compared to what we had seen in phase one.
But even in this new <unk> I think the higher.
Take them all the goodness of the price increase in one go.
There is only one another factor that we have to keep a watch on niches.
The commodity increases, which may happen again in Q1 of next financial year.
And this is both of these things put together, we see or does the vendor price increases can be passed on.
From the point of view of R&D I think it will also vary Marty good morning.
Steve can be passed Darden Oswald in one go.
Sticking to you following the passage of the CMA.
LCD.
While <unk> showing strong growth LTV segment is showing a decline.
Like for reasons.
So.
I think it is more of LCD, which is showing a decline which in our islanders seven to 15 tons.
Now it has gone up to seven to 18 tonnes.
So as you rightly pointed out diminishing use growing because of it.
Higher freight availability I think this year, we see that.
The rig supply is actually more than that.
The trucks, which are being put into the market and therefore fleet utilization is going up as.
As far as the LCD is concern.
One other thing, which is playing out as the base effect alright.
The decline in <unk> was much lower than that of <unk>.
Number one and number two we also see that <unk>.
TV, one has seen a significant penetration of CND.
Sure.
Some extent Yolanda diesel vehicles little start mitigating when the last portion of <unk>.
Our marketing more so and I think those are coming back or usage not so it is more of a <unk> effect.
We expect that this year.
Well, we I mean, Suvs may grow above 45% on a year on year basis for the entire year ICD may end up growing when you're 14% to 15%.
I don't know visiting HCV Youre also referring to the small vehicle. So let me talk about that also is very small because of concerns even here I think it is the <unk> coming in but this continues to grow the growth rate is tapering the quarter over quarter, but still I think it appears therefore, they're tough to scale.
You should see a growth rate of more than 20%.
Okay. Thanks.
Yes.
Hey, James This is coming your way this origination there.
In terms of Gela.
Talked about higher inflation and supplier claims largely related to constrained volumes.
Can you talk about the quantum of these two to work production level would view after compensated vendors.
Related question also chip related cost inflation is expected to start modeling moderating and seaway twin to treat our suppliers our suppliers improve.
Is that a fair assessment and you also talked about increased SG&A spend what are the targeted levels to reach you want increase SG&A expense. So maybe three distinct questions there.
Yes, Okay. So let me let me talk them in order of they've asked some of the inflation claims and the reason for supply claims there's multiple reasons.
Below that and in terms of the level that we expect to be normal. If you go back to FY 'twenty one on a previous call high preferred to FY 'twenty one our laws.
Before supply constraints.
Normal level for us we still believe will be the 120000 units plus a quarter 40000, plus a month 500 SaaS in the year.
And once we get towards that level will be clear around much more we can push it beyond that so.
So for a normal environment and our suppliers are setup for a normal environment.
We would need to build wholesale.
Wholesale 40000, plus units a month and with just above 26 27000 at the moment said Theres a long way from today to normal.
But we do believe that increasingly quarter over quarter, we will in calendar year 'twenty three move towards that normal level.
Until we get fully to that level.
A number of the reasons for the claims.
In particular, the utilization of supplier factories, which fit within this number will still be there.
Once we get to that level.
If we have no <unk>.
Troll requirements.
So by parts outside of normal channels.
<unk> eliminated then again, we will eliminate another costco debt now.
Newpage saw chip supply from that.
From the from the vendors to the brokers that will be eliminated as well.
We will still be left with commodity prices at the moment, they're looking to be heading more aggressive against us and they will still be that in a lot of our contracts with suppliers have to pass on commodity costs. So there will be some level. That's the only problem. We have we probably won't be talking about it by the way.
It's wrapped up within that 200 plus million a month, including some more on utility is lower than it was and including the wage the wage demands, which hopefully will come down.
With the with the interest rate pressures that are going to be called out.
From an SG&A perspective, we will increase spend but revenue will increase as well so think about SG&A, increasing commensurate with improvements in revenue.
Just about 9% of revenue today, maybe.
A shade over think about that being a broad guideline going forward on SG&A. So we won't be spending above our entitlement to spend but as revenue grows we will need to stimulate some of that demand both of those datasets would increase.
Thank you.
I understand some of my questions.
Muscle they'll try and low 11 best increase in high volume.
Next question comes from Rakesh Kumar.
Back to you again with <unk> incentives coming down in Europe , do you see a risk to <unk> compliance with cafe targets.
And given the DNS etsy of generation in third quarter, and seasonally strong fourth quarter as the scf breakeven outlook pipeline fee escalators.
And then separately pick up the battery manufacturing plants in Europe .
Okay.
Okay. So if I take the <unk> have won before look we've been very consistent jumpy have volumes over the last several quarters around 11%.
We'll obviously monitor this really carefully.
When I look at the order bank that we've referenced the Pf orders in that order bank actually slightly richer than that at the moment.
14%. So there is no indication at this point in time any customer incentive changes on <unk>.
I was having a sizeable impact on the orders that we actually receiving nothing at this point in time, So I would say.
What we see today no to the first one is no impact on PFS and we don't expect it to be noncompliance in Europe over this next phase either.
The strong get our cash flow in the third quarter I think if we go back to the page that we talked to earlier, we are expecting a strong cash flow in quarter four the underlying cash should be broadly at the level that we saw in Q3, maybe around the $200 million I'm hopeful cash from operations.
That increase a bit with the increased volume.
Investments are going to increase as well as we've said so maybe those two will balance out we're only three weeks into the quarter that 10 weeks to get all our supply obviously still being fragile things can change, but thats, what I see today broadly speaking underlying cash being similar if not.
<unk> higher in Q4 over Q3, the working capital was a big build back this quarter 300 million that probably is going to fall a little it really depends on how many units we actually billed in the March the mid February and March period, but it's likely to be less than the 306 million. So we see we see.
In total the total cash should be slightly lower in Q4, even though the volumes are higher because of that working capital.
But we do believe that's going to drive us through breakeven maybe up to $100 million in total for the full year.
Thanks, Adrian on the battery plants.
I think as we had mentioned earlier as well.
This will be it.
<unk> entity that we are investing.
<unk> and Tata Motors as two anchor customers.
And locations.
In Europe .
This fleet at this point and that is all that I can share and as and when we are ready to announce what we would talk about that.
Okay. This question is actually coming on popular demand and therefore, it's finished.
Considering the strong EV order book all of the rationale for the price cut in next one variant that we saw in the back.
And what's your take on the brand impact of a price cut and is supported by cost reductions multiple people have opted in different ways, but just questions on store showed you.
So the call on price cost has been taken after.
Our holistic consideration taking into account multiple factors.
One is there.
We have a future growth aspiration.
Next one is concerned with the improving capacity and disciplines. I think this was one big concentration.
Also the visibility of underlying structural costs.
Which we have been able to.
You saw the last two three years of total flow equaling authorization that we have been working on.
There is also an hydrogen that could also mean Nathan.
<unk> benefits.
Also the legal carrier related price positioning of other equally important.
And most importantly, do you think the value proposition you'll see strong.
Is the change in control with Bernstein.
So these are the full five factors they will see that has really one bearing this upside as Baroness concerned I think next one brand enjoys a very strong referral from its large customer base of 40% plus notes.
And those of its value proposition. It is the best in terms of compelling mix of best Tech features premium cable experience multiple range options.
I think the revised pricing actions, which include Greenfield mix it.
Are you alarmed consideration and motors that are good for our customers. So I think the hawkinson.
Welcome to the Columbia use.
Yes.
Yes.
Finish.
There's a question on <unk>, if you talk to the extent that we can just pick it out why white intermodal decided to delist ABS cost of compliant versus pressure on shares on a condo shareholder Ron wants us.
Mr Clean India management thoughts, we had explained that the.
The original purpose, but areas where listed I think is probably now not relevant anymore and with the Indian market getting deeper and wider.
There is no constraint on foundries and also all our bond issuances anyway, we don't need the avs could be listed there to do that and at the same time compliances.
We are getting more complicated and therefore, we've just decided that the risk reward equation, one look better than makes sense for us to continue as part of simplification, we are not at all.
I can answer it may extend delisted as of yesterday.
What is another net auto de leveraging timeline with automotive I thought I already covered it maybe just talk about the second line or out of the listing of <unk> technologies and towards that we have.
Our so our intention is to know what other technologies board position and therefore, we will be working with them closely.
Question from Goldman.
Talk about the impact of Rd for both CV and PV I think Moshe good issue already covered that.
Also an update on the discounting trends in the CBD industry.
Update on the Tiago <unk> challenge.
And you already talked about the price cutting next Paul why don't you finish that and then I'll go to jail out onto the <unk> trend.
Yes so.
I think on the discounting as we have been.
Speaking about it.
The medium and heavies and the intermediate term light commercial vehicles, we have.
So I think they are pulling back the discounts.
On the months.
So timber.
We see a good impact of that flowing into our results for Q3.
And we will continue to be on the spot.
Even in two book.
Who bring longer this phone can also bring more transparency in the <unk>.
Whereas the small commercial vehicles are a concern.
I think this discount reduction Jeremy you started you end of the year.
From Q1 of this year.
So we will continue that as well.
To ensure that I finally can do it helps us build margins in each of the product mix.
Terrific.
As far as Sergio glue.
The order book is concerned already mentioned of unit growth strategy Posen.
Which was the dose.
Size material.
The prepays.
So that is the status as of now as far as the annuity is concerned we've struggled with deliveries.
Starting with a place I would say last month et cetera.
And this month, we are ramping up.
I think.
The target that we should or risky.
The waiting.
<unk> reviewed within six months.
The pension.
We have.
Yes.
The level of flexibility.
Electric vehicle models that VITAS score, we will be able to improve them.
Ensure director.
I think Peter it's Kipp.
Within the period in which is acceptable to the questions.
Thank you Adrian.
Third point is coming your way.
In Gela, how do we see the Vienna trending given the macro and aggressive pricing from EV Oems I think Morgan Stanley also have a question on the stock.
Yes, thanks balance sheet look we're not seeing any signs at this point in time.
<unk>, even though I can understand.
Stand the sentiment behind the question I think in the environment we're in.
We still have that.
Demand and orders increasing above supply that want to continue to be the place that BMD is mixed by region and by nameplate of course.
And with the bias that we have and the customer orders, we have on range Rover range Rover sport defend.
North America, and China, There is a big bias is within the data today.
<unk> zero percent zero zero percent zero percent in zero percent so with this level.
Order intake and the buyers for those products on a instability within the production and supply pipelines.
We'll continue to be very at very low there will be appointed in time will that start will start to lessen so another questioner asked about what normal is.
If not almost 40000 units a month plus for us, which likely is I think it's reasonable to assume at this point will be possibly more but theres non big three units to the other regions and then PMA will start to gradually lift to 2% two 5% level at some point, we would not see.
Seeing any sign of that within the data we have today.
Thank you.
Our next question I want to Revlon in Suriname.
It is.
The other questions have been answered, but the one that is new which is on the <unk> subsidiary from Ben when Youll get BLA scheme benefits and now you're currently accounting how are you.
These incentive.
As far as the Pls benefits itself is concerned the key is to ensure that the domestic value addition, nossa <unk> and.
And we're getting out of the of the accordingly certified.
And at this point and we will have to find one of the financial year is over then you filed for P&I benefits syndicated subsequently given the fluidity of the situation at this point in time, and we're going through the process and the first time that we'll be filing. This year. Currently no approval is being done on these incentives and once we get one round of things coming to them.
We're in a position to review on that one.
Okay.
And you already explained a fund.
<unk>.
Capacity I think it is <unk> CLSA what are the domestic passenger vehicle capacity currently and when is the port capacity coming on stream.
Yes, so as far as capacity is concerned we have been now at around 50000 per month.
We have the ability to be bought medco pizza mode to clients, which is in <unk>.
Concerning.
This is the existing facility north of 41.
Our initial 10% to 15%.
And we are targeting to operational news.
Launching <unk>.
Yes.
Thank you.
I think there's a question from John inch on.
Passenger vehicles, a sharp drop in other expenses on a quarter on quarter basis was there any one offs I think most of it linked to just cost phasing across quarters. So nothing to read and then beyond.
Hurricane stocks there.
Then the other one is in terms of when can you expect to see these exciting products that were displayed on opex.
So none of these products work concepts these are products.
Coming from previous Penguin.
We already mentioned about the tabular he's going to come into an equally for Sierra and <unk> will come in 2020 fives.
These are the three electric vehicle product stickier <unk> already launched that was the Portland.
As far as ice products are concerned Cove is also going to come into an equally floor.
Then the CMG models, which were.
Vincent and the model of funding our growth.
Already mentioned, our view is that it's going to come in the first half of the next Pheno instruments.
<unk>.
Yes. Thank you Ben the next question is from.
Jimmy.
On <unk> can you confirm if you still be looking to use cash to repay the 2023 maturities versus refinancing through the markets.
And the breakeven guidance implies $300 million next year for the last quarter, but I think it really has already addressed that.
So Ben can you take the first piece.
On the refinancing so I think the default or base plan is that.
We had an expectation of.
Circa $750 million 800 million pounds of cash flow in the second half, which Adrian already talked about and that would be sufficient to cover.
The two bonds, we have maturing in February and March for 800 million barrels equivalent.
Also worth mentioning that.
In June of this year, we had a 600 million pound equivalent China bank loan due to mature it actually we signed an agreement in January two.
Extend that for three years from January of this year. So maturing the facility would end in January 2026 through our annual review so.
<unk> pushed out the maturity until January of 2024.
Yeah.
Thanks, Matt.
Next set of questions coming in from a couple of things.
First one for you guys finished Thiago <unk>.
Whats the percentage of first time buyers that you are seeing in the order book.
First time buyers.
325% to 40% is what youll see.
We're buying a car for the first time that substantial electric fleet.
Mostly the people hard both combined as a signaling of the cold cuts, although a high percentage was using this.
As the only cord.
Also the primary thought.
<unk>, we have seen significant.
Sorry, it's.
Yes.
And a related question is this gross margin dilutive for the TV business as the initial serious yes, but after that it will start trending towards the margins of the main medical would be making for that for a period of time, but as part of the planning that we have for the overall portfolio.
Finished sentiment index Girish, what's your latest tablet and shipping records.
I think in the <unk>.
<unk> cargo.
<unk> seen some softening.
But I can probably attribute that to.
15 season dropping threat.
So.
Future expectations still remains strong.
Okay.
Sentiment index has improved marginally.
As also expected because the previous one was during monsoon.
This is low.
LCD dependents.
Great.
Sure.
Again because of <unk>.
All season <unk> season.
And for small commercial because that remains quite stable.
Yes.
And linked to that.
In terms of Australia in.
In the medium term hold the coolest mix change.
And as far as the euro opinion between CMG EV adoption buses Icbms, because how does it how should one think about it.
No.
I think as we go ahead.
The pathways were too deep <unk>.
Our LNG.
Firstly in your penetration is concerned.
<unk> therapy.
I think the bigger anxiety is the volatility in <unk> prices with the senior prices actually went up very fast.
So that is a bigger anxiety in the minds of the customers.
With actions that the government has taken then once the CMG presence will stabilize at this level or lower level.
The CMG vehicles do have any another <unk> advantage, so one will see.
Third we took penetration happening again in <unk> and <unk> segments.
As far as the.
Long range is concerned yes, I think.
New customers will start coming in because I think the Oems have addressed the range issue. So we have some trucks, which we launched which can run for other collaborators on <unk>.
As far as LNG is concerned I think it depends on.
Liberty of filling infrastructure.
Otherwise I think we are really with the product.
In terms of EV I think when we clearly see higher penetration in buses first.
Cause of the government push.
And when we will also see a good penetration happening in the last mile distribution due to the pull from.
Companies.
Who are having their own net zero greenhouse gas emission commitments.
I think thats, how we would see economic but EV penetration happening more in buses in small commercial.
And this.
Okay.
Yes.
My view is that if we have to do.
Take a view by the end of this decade.
The mix.
Lou.
Around 25% to 40% plus <unk> <unk> and risks would be.
Gasoline, but the timing of fixtures.
That is the direction of investing simply feasible significantly come down below 5%.
So thats part B deals look.
Thank you.
Question from Vanessa Morgan Stanley .
Do you think price cuts in <unk> in China, and other regions do you see that as a risk to ice pricing for the entry of entry level costs.
Instead of any partner.
GNL months of Adidas another angle.
Sorry about that.
I think with the price gaps that we are seeing in China do you see that as a risk to the ice pricing for Jaguar entry in mid of last.
And EBIT profitability of JNR launches of <unk> and 'twenty to April .
Now we're down to this point actually record recognized net of all of our small units smaller value transaction price units.
In China are generated within China within the joint venture, we don't see any risk at this point in time or any evidence of this weakness.
This is for any of our imported model is in fact the way.
I may reference back to the previous question the average BMA last quarter, which will be the first sign of that we took.
The average BMA last quarter was as low as 0.8% across all units imported into China. So we're seeing very very low levels and strong demand at this point.
Yes. Thanks.
BB side, we already answered the question on the price cuts that are happening, but there's another angle to it.
<unk>.
Raw material cost index, not coming down how do you see the EBIT profitability going forward.
I think.
You need to keep in mind that.
One there is a related premiums or the customer is ready to pay for the east versus ice.
And there is about 25% to 30%.
Ice prices are going to go up so therefore to support the higher price for Evs.
The secular trend of the competence for Evs will keep on coming down there has been a.
Temporary volatility that we have seen in the battery prices, which was very steep last calendar year, but they are also restocking moderating.
This year as we Havent, even more long term view.
The battery prices rest of the company.
Coming down also as the scheme is increasing so there will be short term pressure on the cost because of these two <unk> what are the duties, but we have to focus on training the steel because that is what he is doing to bring down the cost.
And then as we are driving deeper localization you also need to remember there. The next three four years.
Will be the benefit of P&I also between to continue so I think keeping all these in mind.
It is going to be in Midtown.
Beneficial from a mix perspective.
Thank you. Thanks, Shirley I think with that we're done with all the questions that have been asked.
In terms of just the team rather than the names. So does anything else that you want us to answer.
So this growth reach out with Investor relations team and will be more than happy to respond to you. So thanks, a lot for that.
Taking the tanker and efficient we hope you found it informative.
And look forward to catching up with you soon.
Thank you.
Punishing. Thank you. Thank you.