Q1 2024 Tata Motors Limited Earnings Call
China, you can see as is reasonably flat quarter on quarter and the JV within China is making money at PBT of 19 million pounds in the quarter EBITDAR of 15% in EBIT of 4%.
So whilst we understand there are lots of pressures in China, we're still showing a good performance.
Overseas for us remains extremely strong and.
In North America also.
We do have some small challenges in within the U K and Europe . The U K is a specific issue in relation to moving from Q4 to Q1 because in Q4. There was the March registration plates in the U K, which always provides a boost in sales. So there's always a seasonality between Q4 and Q1 within the U K, but there is an underlying.
Issues that we're dealing with in both the UK and Europe , which is we still have some supply shortages that they're not generic in the same way that they work for <unk>, but we still have some constraints within our key <unk>.
Supply system, and the <unk>, particularly on the range Rover, where there is a pure electric range of over 100 kilometers is in extremely high demand and we're still working with our supply base to bring supply up to the level of that small.
So that's the reason why there's slightly more muted performance in the U K and Europe outside of even the seasonality effect within the UK that is also the reason on the right hand side, where if you look at our powertrain mix the percentage, which has been P have down in the bottom right is actually lower than it was last quarter and that is all to do with the <unk>.
Fly constraints that we have in terms of availability.
So as I move to the next chart.
So this shows the walk of PBT from the same quarter last year, where we made a loss of $524 million to this quarter, where they were showing port III following favorable and profit after tax by the way a 323.
So that work is largely.
Volume and mix, but if you look at the split within that is actually more of it which is mix and this is a continued troy to ensure that we're selling strong profitable vehicles. So for example on an annual basis range Rover itself moved from 8% of our mix, 18% and range Rover range Rover sport.
Defendant moved from 45% to 63%.
Even within the P&A business with showing considerable strength, partly that is due to the fact that the same quarter last year in both the shutdown in China, but also the recovery of our volume in recent quarters has created an increase in the size of the car park. The young Carpark in particular, and it's that young Carpark, which we penetrate more.
In terms of P&A sales, so a strong performance from our PMA business.
Generating in total 829 million pounds worth of volume and mix effects.
Pricing for US also remains positive if you look in totality has a benefit of $197 million versus $78 million adverse on costs of 120 million pounds favorable.
And even if you look at that over a two year horizon until the back into the chance before inflation took hold the net of those two will be positive to the tune of around 80 million pounds.
But we need that because some one representation is that we also have inflation within our structural cost base. Both in terms of labor and the utilities and even the interest will be paying our debt, which is slightly related to inflation. So we need to keep that contribution revenue minus contribution cost positive to make sure that the type.
Company level, where even and we believe we are.
Okay.
So within structural costs, we are starting to invest more in terms of F N minus fixed marketing.
That is a long lead effect in terms of lead generation and demand generation at the back end of this year. This stuff is never never incidence in terms of its impact. So we're starting to invest now to ensure that we have the demand in the back end of this year and going into next year.
Admin is largely our transformation. So the biggest impact there is in terms of our digital cost certainty to transformation and engineering I'll talk about in a minute.
FX.
Exactly what you would expect in the course of this as a culture of strengthening Sterling about three points on the dollar.
That leads to an operational FX adverse for us and we we operationally prefer prefer a weaker sterling the UK exports.
But we were circa $60 to 70% hedged on that exposure and therefore, we have.
A.
The hedge pickup that you can see that.
Reevaluation was positive certainly on a quarter by quarter basis, but that's largely because the previous quarter Q Q1, FY2023 sure really big move in Sterling and actually in that quarter. There was a negative rebound of $112 million, which is essentially reversing this time.
So that is what generates our fone hundred 35 million pounds with appropriate bolt actions I mentioned beforehand that turns into 323 million.
Yeah.
Next chart.
Okay.
This shows the walk from pvt to cash.
When you take the PBT net out DNA and other noncash items and take off cash tax you get to a cash profit. After tax of 1135 that is the highest that we can see on record as well and what that does even with 700 million pounds worth of investments is it generates a 450.
Pound free cash flow on that 450 million pounds of free cash flow is without any working capital impact. So this is.
This is strong underlying cash flow not driven by working capital movements.
Next page.
So next page does talk about investment so in total $697 million, which 174 million pounds is capital. The rest is engineering, our engineering capitalization rate, 61% in the quarter up from 53% from the previous quarter. This is natural.
This is part of our cycle plan.
Between 2024 and 2026, we have <unk>, we have new Jaguar and we have MLA Bev coming and the engineers are working hard on those programs and those programs are the ones, which are already past their capitalization case. So this is a natural part of our cycle. It will probably stay at these levels for a few months.
But overall.
If you look at a very smooth position, we would expect 50% to 60% capitalization.
One points I do want to make is that our fixed asset base. This quarter is flat.
Within 7 million quick on a basis of $11 billion. So.
DNA is virtually exactly the same as the amount capitalized we are not driving earnings but building up the balance sheet.
Okay.
Next page.
So if we move into a business update.
So on the left hand side, you can see our wholesale volume.
It is marginally down but on an absolute trend increase.
We still do have.
On other supply constraints I mentioned <unk> had beforehand.
We do expect them to slowly reduce over time, but we're still in the phase where our production systems are flowing but theyre not flowing as fluidly also automatically as we'd like it still requires very active.
Management on our side to make sure that we're looking through our supply base to identify problems.
And we're working for example in the World of AI.
Digital science with a company called Edison to try and look through our supply base much more cleanly through two tier one tier two tier three and tier and to be able to get insights of any problems that are coming.
So it is working but it's not it's not a perfectly functioning machine as of yet still requires active management.
For Q2.
We expect our production to be lower than Q1, and that's a natural effective we have two weeks of shutdown coming in the first half of August .
So we will have production and cash flow lower than in Q1.
We would expect wholesales and profitability much more in line with recent quarters.
Hi.
Next page.
This is absolutely crucial for us. This is the rate of production of range Rover range Rover sport and Soho.
Being progressive really growing 2300 per week in Q3, 2006 and 2800.
That will stay constant for a little bit of time, but we have a second body shop being installed as we speak in soil, which will increase our capacity by a further 30% in future quarters. So we will be able to take range Rover range Rover sport production over the 3000 units per week area, that's really important for us.
As we try and build down our 195000 order bank, which as we've said on previous calls is very strong but in fact, it's too high because customers are waiting too long for their calls at the moment.
Okay.
Next chart.
We are continuing to invest in our product.
So there's two examples here of what we've been up to this quarter.
24, multi year reign drove revoke an electron sites with a much tighter nita.
Exterior package and new technology. So the <unk> on this call now goes 35 models sort 39 miles on a pure electric charge.
But it's not just X series.
Theories on the right hand side. This is discovery sport.
A massive change on the interior of the car very much in line with our modern luxury vision and the way that we want to take the discovery brand in terms of its focus on family on storage on seating.
And on wellness.
[laughter].
Next chart.
It goes without saying.
The announcement last week.
It was in order for us to have the chairman and Rishi here in Gaydon and it's an honor for us to have a parent that is some is prepared to put such money into a factory in the U K to support J, a law, which is the U K business. It was a fantastic they've taught us a fantastic date the gela.
It is also absolutely is symptomatic of the scopes synergy that we can obtain by being part of the torture ecosystem. Yet we may not have the type of vertical automotive synergies that you get within a VW will.
The scope of the businesses with the path within the tarps and part allow us to access synergies don't know vertically integrated OEM would be able to generate and this is one absolutely perfect example of that.
Thanks Chuck.
So outlook for the rest of this year, we too remain optimistic.
But we do have to actively manage our industrial operation and supply base to make sure. We continue production rates that we got at the moment.
Inflation is starting to moderate.
And that's good news for all business and good news for the economy worldwide.
But we do expect Q2 from our own financial forecast perspective to be a little bit worse in terms of production and cash flow.
Although wholesales and profitability will be more in line with recent quarters, and we will revisit our guidance. After Q2. So it all goes as we expect we might look at revising our P&L guidance upwards at that time.
So our priority as you can read that continue to work on supply availability focus on continuing to drive our brands vehicles, such that that you saw start on that chart. The range Rover sport SP Droid activation, Troy orders and execute our reinvention plan.
Or.
So I'd like to thank you for your time.
And hands back to balance sheet.
Thanks Richard.
Next slide please moving on to commercial vehicles.
Thanks, Mike.
Sorry, just go back to the size of the full range of BS six phase two vehicles that are in the market now and it's been an intense transition for us, but I think it's finally as with ending with next practice.
On the market shares I think the performance was impacted.
Some extent by the availability of the Essex phase two vehicles in the quarter. This started improving from June onwards, and of course, we will and then we intend to build this up as we go forward.
Unfinished agenda on the whole plan towards demand pool, and we're very cognizant of the fact that we do grow both competitively and profitability as we go forward this year slightly.
Overall callout.
And a 15% decline in wholesales and 14, 14% decline in retail and that's something out of it we did signal in the last quarter. When we said there is a fair amount of buildup that has happened because of the successful migration and we expect to see does not normalize for the go forward excellent.
Overall numbers.
Sure.
Despite the decline in wholesales of 14% revenue was up 4% and we deliver a possible PBT before exceptional item of nine under cost and EBITDA was higher by 390 bps.
Close to the double digit that we have been signaling which in a seasonally low quarter is a good starting point for the year and of course a bit <unk>.
<unk> 70 bps, but losing operating leverage because of the revenue decline revenue.
Margin on the growth in revenue that you saw thanks Nicholas.
Our weighted the moneys come from are fundamentally on Williams as well as on realizations is what it is.
It tells you that we are on strategy and that's more or less explains that dialogue next slide please.
Let me hand, it over to Gary to take you through the business highlights.
Yeah. Thanks <unk> so.
I think the wholesale volume once you kind of Blackhawk actually reduced by around 2%.
Or does he see the registration volumes I think they actually declined by around 6%.
According to Gibson.
For Us I think there was good growth in both EBITDA and EBIT margins.
DNP repeat this over Q1 of equate regulatory.
Essentially this happened.
On the back of what the.
Hello, This is <unk>.
As well as cost reduction of which was also used to negate.
It's only do this when we migrated from <unk> group.
As <unk> mentioned I think.
I've shared it factored in Q1.
Of more due to constrained availability.
Because when we migrated to Vuzix is true I think almost entire range. We have changed completely we have upgraded the retirees for power to weight ratios.
The range for value add non service that it isn't.
Activity component and minions will turn cost of operations. So I think as a result of this we had a high amount of change content.
Netflix challenge on availability in terms of production additions as well as ramp ups.
But as we entered the quarter.
And we are back to the required level of production now.
In terms of.
Non retail business I think the revenue grew by 25%.
Over the same quarter in previous years, So we continue to grow it.
A really high rate wells in the third year and we agree.
At a very brisk pace, we continue to improve both our spares and service penetration.
In Idaho, Nicholas capitalize that he doesn't it.
On the CMG price correction with the.
Implementation of period five committee.
<unk> seen some improvement in the retail science in small commercial vehicles.
But we believe that as the message goes into the market and customers understand that there's going to be.
More dependability on the reach and the differential between diesel and <unk> I think <unk> should pick up.
In terms of bright spots.
Let me say first of all the sentiment index that we measure every quarter.
It has inched up for the park Central plus boats, so I'm gonna see.
Sentiment index of banner.
The small income to record levels have gone up marginally.
After a few quarters of decline.
But the intermediate in light commercial vehicles still remains.
In the quarter gone by I think we had a book broker Cds by around 3%.
And in the passenger carriers.
Good growth of 11 and off per se. Despite elevated constrained. So I think the passenger market now is back to the pre COVID-19 levels.
In terms of digital.
Contribution of digital lead generation and conversion continue to increase over FY2023.
Thank you.
We have now around 16% of our.
Sales being generated from the recently driven channels.
As I said in time brokerage migrated.
It could be a six years through with lot of improvements in cocoa cost of ownership.
Performance connectivity components and minions.
And this we believe will be a major advantage for us going ahead.
You also followed it up with.
You know first of its kind and influence their testimonials and advocacy bank lending we had more than two influences.
Testing on Waco, Zhang given their positive testimonials.
We've also started field trials of the <unk>.
Which is also a negating a very good performance improvement Orbis Vuzix is one and therefore good customer acceptance.
So going ahead, I think with improved availability in Q2.
We will continue our focus on the realization improvement and retail growth.
Which should drive over one territory.
And towards is we will have will drive the via six years through both product and brand superiority.
In the micro segments end markets.
Given the scale of the use of plays now what on the Es electric vehicle and electric buses I think we have now received certificates have level four on the mainland.
We continue to grow in the downstream.
The consistent growth in the spares and service penetration.
On international markets I think the volumes of fever still remains subdued and focuses on maintaining market shares.
Improving margins and in fact, we have a good margins in the international business.
Ah compared with.
Q1 of last year and also the entire last year.
And we're also improving the channel help as the markets continue to operator lower volumes.
Excellent.
On the new businesses on electric mobility.
As a part of the CSL low standard.
We have now deployed.
More than 100 buses.
<unk> hundred 80 buses that we have deployed in Q1 of the very plentiful.
And we have no more than 600 buses, which are operational the.
Nuvasive that we have deployed within three weeks they recovered almost five kilometers.
And the photo on electric buses are now covered more than 75 million kilometers.
Even in the new buses deployed me Oliver to VIX.
Liquidity of more than 90%.
In the new vehicles.
Overall, we sorted a 600 the electric vehicles in the quarter, that's including is hang the buses.
And I think we had been focusing on developing ecosystems are especially for east.
We have no more than 31 easy support center set up across the country. So they are increasing the number of cities that we will make its E V available.
Ramp up the production capacity and as I mentioned, we now have the theme certification or a little more.
The applications with which really start ramping up the retail.
In addition to this after we signed the agreement with Cummins for formation of a JV actually the new will you own subsidiary was setup.
<unk> Cheddar range of developer and manufacturer of a range of Lauren zero emission powertrains.
As a continuation of agreement that we signed with Cummins.
Coming to the Smart city mobility.
The DTC CSL operations as I said started from Brandon named June are more than 200 buses are going to deploy.
As I said, we have a more than 95% that we already consistently over the past few weeks.
And the Eagles seek other human as well as the new one has cross more than 75 million kilometers in operational revenue in first quarter was around 100 entered St Lukes.
Moving onto their digital businesses. It is now has.
450000 vehicles on the platform.
We also introduced the subscription models, which was very well received by the customers.
We had two options of DC as well as an advanced Glenn.
And equal interest being shown modest subscription models.
We have been consistently improving the engagement time.
The increase in sales that are recorded in our part probably insights. There are also some logistical performance improvement, which the fleet owners are finding millions.
You've got an hour online market is it.
It grew by 100, 250%.
Q1 of FY2023.
So as we increase the number of customers and retailers coming onto this platform. I think this will continue to grow at a really high rate as the board.
So that's the summary of the CV business back to reality.
Thanks Krish.
Next slide please.
Phoebe.
Overall numbers.
Draw your attention to the domestic market share of 14 point Lucas I'm very happy with us.
Consolidating our position in the arms in the face of significant competitor one slot on multiple fronts. So happy to see this number starting to improve from here.
And of course other number to call out is the EV penetration.
<unk> is now 14% of the portfolio and <unk>, 8% of the portfolio, both augur well for the future.
Please.
On the EV side, we ended the quarter at 19000 units are on track now for 100000 kind of volume for the rest of the for the full year basis with the new launches also lineup.
In Gabon market share is maintained at 76% despite significant competitive intervention during the quarter and of course, the infrastructure has continued to strengthen and we'll continue to build on those please.
On the financials.
Volumes grew 7% standpoint, seven revenue at 11% activity.
200, crosswalk, we ended the quarter with an EBITDA margin declining by 80 bps.
As explained one perfect Entre I talk about in a minute and EBIT because of operating leverage increasing by 10 bps and draw your attention to the PV EV financial split that is that if you noticed the PD business. We are continuing to build EBITDA performance on a full year basis.
Eight 5% in the series this quarter was $8 six.
On the EV side, the EBITA margin did go down but a lot of it is also coming from two aspects. One is we had the IPO and the early part of the Arabia Thiago EV on.
Full blast and IPO. It has given us substantial order intake and that will not be there in the second half the year on.
On the second of lithium prices were on the highest side over the last nine months and we are seeing the reduction starting to come through from the current port Romeward.
And then on top of it.
The language here in Ohio, or Tiago Evs.
Certificates have been received and now we're going to the next phase of finding that the ministry.
Quite confident that the second half of the year you should see the EBIT business also coming to add to those numbers. So overall you should take as far as Ebitdas for EV has confirmed only losses, we should be seeing if at all is related to product investments that we're making and nothing else that would be there so quite comfortable with the way that makes us the other way though.
It does just a mix issue that is playing out but.
But the individual portions have their own plants and on strategies make lightly.
Let me.
The same number of playing out if you look at the one that makes realization variable cost all trending in the right direction.
And the investment that we're making in terms of them not additional employees coming on board more effort being put into the <unk> business for IPO about.
Playing out in the numbers that you see.
Excellent.
If you can give it to Chinese, particularly through the business. Thank.
Thank you Andy So let me start with the industry.
Quarter, one FY 'twenty four was strong strong wholesale growth post the two 9% growth versus the same quarter last financial year.
E V wholesale arsino very strong growth two and a half times to what it was in the last two.
Financial year and it has touched nearly 27000 for the first time and this is on the back of several new launches, which have happened in the industry, including Thiago easy for cargo models.
SUV segment has seen a multiple launches by radio spares and consequently, the Syrians has further increased by 6% now touching nearly 47% of course. This has come at the cost of Hutches in Sudan also to some extent going down you can see now hatch segment has come down to political person.
So that's what's been happening in the industry coming to cargo Motors BB&T.
We continue to be a very strong number three player and as Valerie mentioned that doggie have further increased our market share.
<unk> 14.2, despite <unk>.
Several competitive London launch activities that we have been seeing specifically, India sugi space.
We have maintained our number one position in the combat the CV SUV segment, which is combination of excellent and punch.
And number two in the highest series segment, which is heavier than somebody.
After more than a decade I would say we attained number two position in hatch's and this is.
Coming out of the way the multipart Green strategy has unfolded for us.
Thiago UV and Ultra C N G with the twin cylinder technology that we launched has been really taken well in the market in both of these products are doing very good and that has really.
Led us to increase our volumes market share and hatches and of course for them.
As far as Evs are concerned in line with the industry.
We also more than doubled our rooms.
As compared to where we were in the same quarter last financial year.
2019, Cosan plus.
So that has been broadly the highlights of the industry and passenger vehicle an easy business.
Going forward the bright spots that we see that there is a strong booking pipeline in the industry.
Demand is held up already high level.
EV adoption is now growing beyond the top 20 cities I think the bias is now moving to other parts of the country and that's a good sign.
In terms of how the EV sales will grow from here.
Our demand in Sultan risk should step up with the beginning of the festive season.
In the second half of this quarter.
So these are the break spot that we see them this quarter probably.
As far as Tata Motors is concerned outgrows, <unk>, which we launched.
In meat has been very well received and who we have a very strong booking pipeline.
Thiago <unk>.
Also supported by.
IPL and the weirdness that it created for this product.
Has also been seeing very strong bookings.
Have also launches planned.
In the coming months, adding.
Adding additional drilling because we have been really watching in every segment, which are the price points, where the velocity of demand as more and therefore, we have been coming with creative Crimson.
And really help us.
Grow our volumes in a few of them are welcome in this sort of order also.
As far as challenges are concerned we know that already last financial book yield was a high base and therefore that impact is going to come in terms of growth rates.
We also know that of <unk>.
Last year, the festive season was.
In September October , which is now going to be October or November . So therefore, there will be demand, which will be more stronger in quarter, three as compared to a broader group.
Therefore, the channel inventories lately.
Gross sales slightly ahead of the festive season.
Our share of Hudson sedan may come under further pressure with the new launches that have happened recently.
And the industry.
As far as the up and soon will focus one retail momentum in quarter two.
A lot of market actions.
Marketing actions that we have planned for.
As far as our growth is concerned in Hutches Tiago and now draws will be the key focus.
And as you know that there are with EV and <unk>. Both of these products are really doing good and have seen significant growth.
In country, we are seeing in the industry. The hydro's are under pressure, but we have been growing and enhancing our market share.
We are committed to.
Work on the margin gap that we have versus the benchmark and we are driving already studios <unk> cost reduction program in the company for the last two three years.
And every year, we have been getting significant cost structure. This is something which really great.
Even as we have several deal wins from a margin improvement perspective, some of them already mentioned, but there's also.
Laura for a generation new generation aggregates at a lesser cost also that is going to kick in for us and a lot of localization activities, which is also going to add to some of the other tailwind that was mentioned earlier.
So that's the update for my sake, but for urology.
Thanks <unk>.
So overall CD plus phebe.
The quarter.
So our cash outflow of almost 2000 cost almost entirely explained by working capital.
And this is seasonal particularly driven from CD.
Reversing going forward excellent.
On the Capex side, we had guided for 8000 class and we are on track for that.
Excellent.
China Motor Finance, let me take a few minutes on this one.
We are back to profitability at 22 gross not good enough, but as the stock.
A M. Our quarterly 2000 cross and absolute GNP is now reducing on a quarter on quarter basis. It went down further by 191 cross.
And on.
On a year on year basis is down we're almost <unk> that growth and therefore, the focus on product portfolio quality and pricing.
Discipline on new orders versus is definitely yielding results.
And we will continue to be focused on this one and the business is on track to deliver the double digit ROE in the medium term that we had called it out and its focus will be on nims, which are already improving.
Lowering credit losses, which is on track.
Tight controls of costs that continues.
In the Meanwhile, the demerger of the N BSD business of Tata Motors Finance into Tata Motors Finance solution has been completed and therefore, all the lending activities have now been consolidated into one entity and one in BSD license will be standard in the coming days.
Excellent.
Credit ratings continue to improve.
So we have seen all the information on this and we hope to continue the strength in the coming days and would be engaging with the agencies.
Excellent.
Overall looking ahead I think.
We remain optimistic on the demand despite near term uncertainties and the inflation, we do expect to be moderate.
And this momentum will build through the year as we factor in seasonality and good suppliers or the impact on the new PV launch has not changed from what we called our last time and therefore, we do aim to sustain in on this performance and deliver a strong performance on a full year basis. So the priorities for the respective businesses are clear and we intend to execute them.
Lastly, and this is this quarter is one of just executing what we said we will do and it is our intention to keep repeating that in the coming quarters as well so.
So with that let me open up questions, which is a fair number of them that have already come up and let me start I think there's a lots of questions coming to your weight.
Richard and Andrea.
Let me start.
Posters.
Question related to the.
Depreciation expense on a quarter on quarter basis, any reason why that's coming down.
And secondly, how are the demand trends that are there for the various segments.
And.
And he has talk about that.
Okay. So, yes, depreciation down by 30 to 40 million pounds quarter over quarter.
That's the natural effect of the wind down to be in pads that we took a couple of years ago.
<unk> <unk> natural.
And the demand.
<unk> actually been steady proportionately the overall the overall device falling as we said it would.
Since in Q1 with the fall in Q4, so no change there the order bank is still a 76% of the big three which is exactly the same as last quarter as well.
We're pretty much stay in the ongoing trend we call that six months ago, and we will continue over the next six months for sure.
Thanks Sarah.
I think question Chinese you all were reasons for the sharp decline in <unk> segment profitability I thought we've covered this in my section, but do you just want to ask of the letter biology, I think you pretty much covered I think a major increase came from the sale prices.
The second half of last financial year, continuing till the last quarter and this was really a 45% jump that we've seen but it is now moderating and the good news is that it.
In the H two this is going to lease significant.
A margin benefit.
It has already seen a sharp recovery to the numbers that we were seeing in the H one off FY2023 or the second reason biology again mentioned.
Roughly a 200 bps impact that we bought because of the frontloading of fixed marketing expenses due to the IPO.
And yes, we also are seeing costs coming from Sun, two which is the full plan that we had acquired.
I N T P M.
All of these are for the right reasons right.
Tailwind so on the external factors, which are impacting the profitability is going to.
Now kind of hub.
Help us in going forward. So this has been the reasons, but not of concern because tailwind in.
In favor of EV segment, and a lot of cost reductions also on top of that that we have been working one through localization and also going into generation to aggregates, which Eric lesser costs. Thanks.
Actually I think see a garish next set of questions coming out of it as a series of questions are on two themes. One is demand and how do you see demand coming through.
Number two as you are losing market shares as Tata Motors water, we're going to do with respect to restoring market share and having everything are already wanted to.
Think about profitability versus market share.
Some time on the outlook.
Yes so.
I think first of all on the on the demand environment.
If I recall, you make myself to the second quarter.
So we do expect the.
Second quarter demand to be more than that.
Q2 of last year.
And depending upon the segment I think you'd agree that ebrahim.
No FICO 10 per se.
The Island CV segment, the global East.
And the passenger segment will grow the maximum.
We have right now.
We are also expecting the HCV segue into heavy commercial vehicle segment.
To grow in double digits. So that's what we're looking at currently.
I think there is also a suspicion here by letting award delay. So delay is traditionally a low month those are aimed those factored in.
Every year and specifically in this year I think it's all of the states have seen.
The higher amount of rain, but that will be seen in the demand, but I think as the audience subside, we will see a good pickup in demand.
Now as far as the market share with the market share versus profitability.
As we have communicated earlier also we are going to grow profitably.
That is the target that we've set for ourselves.
And how do we get our market share back.
By delivering value.
<unk> through superior product. So I think we are focusing squarely on.
Delivering higher value to the customers.
As I mentioned in my.
Stock earlier in the presentation I think we have upgraded the entire range.
Bumper to bumper from the smallest records the biggest rectal so lot of improvement is done in the total cost of ownership.
<unk> done a lot of value and answers in the product the tool that will deliver value to the customer. So maybe it's squarely focused on delivering better value to the customer.
And followed by then communicating this value.
We're communicating the value we are focusing on a lot of EPL as well as brand building activities.
Followed by a very unique set of instruments that are lukas even there we had a huge number of influencers.
Who actually drove the vehicle and getting very positive reviews about the rentals.
This region, followed by a rope vitriol activation.
But when you get this to individual customers and a lot of back to back trials to prove the benefits.
And.
Also we have started using our fleet age.
We actually include a delivered benefit on ground right.
Fleet age insights, helping customers, who actually achieve better.
Fuel economy or fuel efficiency.
And this coupled with artisan policy well service package and then we will deliver a peace of mind to the customer.
And with this VB focus on profitable growth.
Fundamental approaches to deliver more value to the customer and once that value is experienced by the customer then one in Cleveland position. The way we have done right wrong beginning of Q3 over the last year.
Thanks.
Rich rich.
Richard This is coming your way, let me summarize a few teams that are coming up one as Q2 in particular.
Delivery of the this quarter, we delivered 93, our volumes likely to be there and RV is it strong enough for you to deliver the 400 gig plus back dated in the S. One set of questions.
Second I think linked to margins.
With your support briefly with a lot of curiosity around rich, saying that first of all we do there.
Six for the quarter like I said there are some one offs. There what are these one offs youre seeing underlying seven five or does that math work out and we want to.
Number three this is the kind of number one how do you then look at 6% EBIT margins or are we going to up your margins thereafter.
Talk about the street.
Yes, absolutely so the.
First as you all are we comfortable on 400000 for the full year.
Yes, we are.
So we are.
Q2 will be similar to previous quarters.
And that was 95000 units in Q4 last year and 93000 units this quarter.
But we've already built up.
<unk> production actuals last quarter of 103000 units were already putting some inventory in the system to allow us to sell higher volume in the back end of the year and I also mentioned that we have a second body shop coming on stream.
Our MLA range Rover range Rover sport that will impact us in the back end of the year. So yes, we are still in line with the 400000 unit.
Commitment for the full year.
Terms of the second question in terms of the one offs.
The effective building 10000 units moving your wholesale is that a proportion of our manufacturing cost gets absorbed on to the balance sheet.
During the quarter was 60 million pounds, that's by far the biggest of the one off and Thats what drives.
The reported EBIT of $8 six down to special partisan underlying of around seven Paul Paul.
And then in terms of guiding.
Guidance, but what we've said is we'll review it in three months time and.
If we.
If the if the world progresses as we as we expect it to.
<unk> will review it and certainly on the P&L the EBIT side of things. So it wouldn't be impossible that we would replace it at that time.
<unk>.
Africa agenda, that's probably it for you.
The demand again, China growth expectations is improving as further industry experts our auto book in China, How's It looking and elsewhere I saw another question can you just talk about demand situation in your various markets to give us a sense of how that playing out.
So China will boost.
Some more units in China this fiscal year.
Then last fiscal year again, our big three products.
Range Rover range Rover sport and defender are selling very well in China.
We expect they will continue to do so.
The balance of the quarters, certainly through calendar year 'twenty.
TSA order Bankstown, they would in China quite like they would do in UK and Europe .
The way the customers do like stuff on the ground. So to some extent we are actually see the ongoing.
The ongoing order banking in China be fed by more prototypes have been put into the marketplace and Richard mentioned.
Richard mentioned that we are putting more product onto the water to enable that in the second half of the year. The actual order bank number for China that symmetry Xiaomi just over 10000 units.
You all device in China does that Biogen has a wide reach into other regions of a 40 or 50.
So Adam can.
Can you repeat your second half of the question balance sheet. Mr. I'm, sorry, I think your line of let's say the rest of your demand in various parts of the world How are you seeing it.
Develop.
Okay. Thank you yeah. So.
So we do see demand increase in the second half of the year are effectively as we supply more units, we will increase retails with more fulfillment with particularly strong at the moment around those three products and the biggest regions that really are pulling demand for those three projects in North America Middle East and in retrospect.
China comment as well, so, particularly strong on our big three products in those three regions and from what we can say that will continue for the balance of the shown by the way we should all of a sudden say add variable marketing stimulation on those products are very very low less than 1% sent in all of those places.
Our fixed marketing of those products in those regions also.
So should we get to the point at the end of the year that it starts to tail off we.
Particularly on fixed marketing, which would always be a preference we have the ability to stimulate that all of us by marketing bucket remains.
Got it.
Let me flip it to Girish on costs.
On item costs, what kind of production do you expect in Q2, considering the recent drop in precious metals and base metals.
Do you see the inflation there.
And the second one is coming up GRM BLA, how do you intend to do.
Treat those benefits.
So on the first one.
<unk> currently has a bigger impact in commercial vacancies.
Steve.
Both flat and long.
And I think the.
Okay.
Is that.
Yes, more or less will go back to the level of Q4 of last year. So from Q4 to Q1.
Increasing the steel prices.
As we get from Q1 to Q2.
Prices will go back to Q4 levels. So you can imagine the kind of.
Benefit that won't be there.
In addition to this we're also seeing really.
The reduction in the prices of batteries for electric vehicles.
That's an additional <unk> <unk>.
So this overview regarding the BLA I think the other four score Ford window manufacturer to have finally application.
The certification agency in the coming months, we believe that our ASP for the new <unk> that has been released by <unk>, we should be able to.
To get the benefit so hoped hoping that in the second half of the year, we should start realizing the benefit.
Regarding how we are going to treat this in terms of pricing actions.
You would have realized that a part of it is already factored in our strategic pricing and some of our markets.
And going forward, depending on how the oil comparative landscapes, and so we'll take questions.
Sure. Thanks Felicia.
At the same inflation point, Richard coming your way.
Are you seeing the decline in raw materials as we get into the second half of the year.
We are seeing likewise, some favorable particularly in aluminium and some other metals.
It takes a while to feed through obviously, we're significantly hedged on many of those materials, but we do expect it net of hedging to play through into the second half of the year. We thought we sort of expect the dynamic in the second half of the year to be slightly lower material costs down very slightly increasing <unk> as well so sort of all.
Setting within margin.
Thank you I think there is one question on the battery pack, maybe I'll take that.
The Capex for next year in jail or does it include any.
The new battery blocking and has been made by Tucker District.
Just to clarify more gela and Tata Motors are not Investees as this company is a dirty.
Only on subsidiary of fast accurate as is 100% owned by tariff funds. So we are both anchor customers here as both Tata Motors and Guevara for the India plant data models will be the anchor customer for the UK plant gain out of that anchor customer. So there's no cash outflow stroke investment being made by these companies into our group.
Thanks.
Oh.
One thing on R&D capitalization, Richard at your end went to 61%.
But our flavor around it and what do you see it be a stable number.
Yes look our capitalization varies across our cycle, a few quarters ago. It was as low as 28% and 53% now 61%.
It's because we have a fairly concentrated product cadence in 2024 to 2026. So a lot of our engineers are now working on programs at quite late stage in their development cycle and it's those programs at the late stage of cycle it tends to get capitalized.
So it is it's something that there is through a cycle.
We believe that some of the long term average given given where we are is more in the 50% to 60% range and we would expect to stay sort of at the type of levels that we all know for the next few quarters.
Thank you Chuck.
I think it is an interesting question coming in we have not seen much success of traditional global luxury car Oems.
These.
So far.
What's your assessment of what's not working for them and how will <unk> be different.
Yes, thanks balance sheet now so I think the observation behind that question is correct.
And you have to segment the question. Thank you.
Failure to which different breach and some time to do that.
She come into focus.
On the China region, which is probably the most.
The important changes.
<unk>, which is F N P F over the course of the last Heartlands.
Pretty clear at the moment that industry in China.
F F.
F N b.
It's really focused and concentrated around 400000 RMB in Poland.
That's where the industry is taking off from the bottom of the product range that makes sense and it's pretty clear the data says above those levels with EEP.
Daimler with Eric <unk>, So BMW with their IX above those levels.
They are selling much stronger than traditional ice.
And.
<unk> at this point in time.
It doesn't mean to say that those manufacturers are losing share overall.
But it does show that that transition above those transacting price points outside of on the plasma RMB again.
Really taken off as yet now for us.
Our first launches of all Beth as you know.
We'll be MLA.
Which will go on sale order later this year and on sale later next year and into China in 2025.
No I think the most important things for us is that we launch.
A brilliant modern luxury product, which we voted.
We will continue with our EIS offerings P have actually hasn't taken off in China at these levels and we will also electrified that product too.
Many years down the line I think it's very difficult to predict exactly what the take up rate will be.
Confidence along as we pass the crowd chair of it Ian brilliantly refined modern luxury let's look salaries offering.
And in time, the transition from ice to that will actually happen.
Confident with our product offer and we're good with the timeline people told us for a long time with two light never believed that and I think it's starting to show itself a little bit that we think we have a complement of powertrain.
Most.
<unk> products. So we feel good about our product plan and the introduction of those perhaps at this point in time.
Thank you Adrian.
Paresh this coming your way internal aten backlog for your <unk> portfolio.
And what should be the industry via me given the kind of moderation in demand that you are starting to see.
So as far as order backlog for both the visa nice in general It is debating Peter observed in the range of three weeks to 12 weeks, depending on the model and Varian.
As far as a V need is concerned the industry has kind of tale of two cities.
That is the entry segment, which is facing demand pressure in.
For certain manufacturers that inventory levels are high.
So there is definitely a <unk> ratio, which is building up.
Especially on the interest rate while on the other hand.
As she leaves us going very strong with very less need for nvme. Fortunately for us in Hutches as I said that we are doing well because of a multi parter uncertainty.
So as soon as we opened solar via knee has been kept under tight control scale and.
As and when the competitive situation.
The bonds that we need to do.
Certain things so further accretion of demand we would group.
Thanks Paresh.
I think Andrew this is Don.
Another interesting question coming in or are you concerned around <unk> cost competitiveness, given the combination of high inflation and stronger GDP in the UK.
Yes, thanks balance sheet.
No, but I think there's opportunities for us.
Our own cost.
I think we're on record previously say over the next phase.
Supply starts to increase in balance with demand, which will happen I mean, that's going to happen maybe three four quarters stand around.
Then cut the rack things, we expect to happen.
One we do expect marketing costs on our vehicles, which are historical lows as points to actually increase.
Our preference would be increasing fixed marketing, but it's certain on some of our nameplate style remark to increase its bob not back to previous levels by the way. It was lumpy I will knock 10, 45, and even 6% which is why we were.
At a point in time, the forecast, but it will increase maybe in total those costs will increase two or three percentage points and I think we are.
We still have the opportunity now let not for that two or three percentage points to hurt us actually.
They're generating stimulate high demand, but we do think theres an opportunity on variable cost where you pledged its one biggest of which is material cost for the inflationary items, which you just mentioned and referenced earlier.
But we also think as we build more cars, which will do in the second half of the year that will help with our clients' manufacturing efficiencies as well as the supply costs and we also think there's a little bit more to go in terms of improvements.
Perfect quality and warranty costs just file so our intention will be to offset those two to three percentage points on marketing with cost reductions with two to three percentage points across those three areas of study.
Thanks, Thanks address China ish, I think there's still a lot of.
Clarification, the sort on the <unk> margins and just go through it once again.
The blood is coming from the quarter one result.
And lets clarify yogurt.
The outlook of margins of EV is really when it can be very strong and let me. Let me just call out some of the tail winds, which are very clear what the sale prices are recovering from the levels, where it was in each one.
And the impact should start being felt from this quarter itself number one now.
As I said, the BLA is going to be a big.
Addition to the margin and we are confident that we.
We're adhering to all the requirements to support via <unk> eligibility as has been laid down by the Ministry of home Affairs. So that is going to be a big one.
Does the localization that we have been working on for last two years.
And that is going to yield a significant benefits from a cost reduction perspective.
As I said, there are new generation aggregates, which are also going to come in this financial year with charter at significantly lower costs.
And therefore.
I'm very confident that in the medium term within this year I would say with all the combination of all these factors outlook for margin of your business is going to be very strong.
To that to a few questions on the ecosystem of TV loading service technicians et cetera dealerships charging network in his petrochemicals.
So <unk> today, we have.
Shop in shop concept in the existing dealers in the chart that you had shown in the presentation earlier assures that with the launch of Thiago <unk>.
There has been a shift in them in terms of micro markets.
More than 49% of the sales of <unk>.
Thiago you'd be kind of a carcass coming from.
Other than the top 20 cities and therefore, we have taken that opportunity to really start expanding on.
<unk> work in those smaller cities to a shop in shop concept and going forward. We also want to separate.
Ice as well as the EV.
Showroom, so as and when we see the volumes in certain cities, which goes to a certain level.
Separate channel becomes viable.
As far as.
As we are expanding in these cities. We are also therefore building the service capability from <unk> perspective, as well and also training the service engineers.
For those service station. So that is also an ongoing process.
I believe I've covered both the <unk> six inhibitor.
Thank you and.
The agenda is coming your way in terms of the order book.
185000 that you called out.
The drop from 200 to 185, but at the same time that the percentage of range Rover and Eurosport is remains constant at 76 can you throw some color on that.
One and maybe I'll ask the second question is with the.
The land Rover brand and you confirm how much of this of the sales are actually coming from existing customers and as has been any material change there or anything to read there.
Yes, okay.
So on your first question Colin and the lights on that look we're starting we have for it.
<unk> seen.
Beyond the three vehicle lines with the banks.
Other vehicles I haven't in mind, we've been building.
Not very many at all the other banks the other vehicles to start to fall over the last 12 18 months I'll give you a data point.
When we had pre.
Pre COVID-19, we would have added about 50 to 60000 outside of the Big three orders is now down to 40 has been set.
Total or the banks for those non free range Rover range Rover sport and defend that have consistently dropped over the last nine to 12 months, one because we haven't.
Build.
And two because.
And two by the way because we have refreshed the vehicles discovery sport.
And devote also.
So that's what's been happening in terms of the existing order book in terms of the loyalty.
Just give you a data reference because I don't have all of that base.
<unk>, rather have the highest loyalty in any brand along with 41% actually of our existing.
Existing existing vehicle on this and I'm going to buy.
The range of our products.
The range Rover itself is higher loyalty rates in our other burns.
Got it.
And what would be the effective tax rate that we should assume for gela.
Thanks rate this quarter is 26%.
We have.
Deferred tax asset that's not on the balance sheet UK long term tax rate of 27.
I think theres another question that I, probably I will take it in terms of.
Are there any obstacles that stopping us from actually stepping up our guidance are changing our guidance or what are we thinking about the guidance piece there I didn't the mainly reflected on it is simple.
Just three months have passed in the quarter, we would just want to wait for more clarity on the year before we are able to touch on guidance you know that from a delivery perspective planets. The strategy Hasnt changed the execution hasn't changed we want to keep executing it in the numbers I think once we have a better handle on the <unk>.
We can talk about it although it can be a bit premature.
Yes.
Krish. This is coming your way just on the BS six phase II transition, having now fully transition how should we view the performance of the segment.
From a volume and market share perspective.
I think I gave some color on this so this year of transition during that portfolio review since sales too.
And why I believe so.
We did make a lot of changes in the bagel.
Fueling the platform the power to weight ratios.
New technologies being others as also sold a new value to an unstated aggregated the readiness product.
The basic.
But it was behind doing this is to include the value that we've been able to deliver.
While the Missouri transitioning clients, which near <unk>.
So at these levels.
If we look now going ahead as I said, we will leverage.
The higher value being delivered will communicate that value, we will establish that value on the ground.
Which we be used towards the realization improvement.
Someone is going to go to add value and I think risks.
This kind of product superiority, we want to be able to get our market shares back. So that's the plan going there.
Yes. Thank you.
And Richard this is coming your way there are a few questions around that particularly the 110 bps that we've called out as one off in saying the underlying is more like seven 5% implication off.
Inventory of inland translation of cost onto the balance sheet can you just spent give some clarity on that.
Yes, sure. So I've mentioned beforehand, we produced 103000 units in quarter. We wholesale 93000. So we have stopped going up by 10000 units that stock is valued on the balance sheet as material costs, plus some proportion of manufacturing costs.
So that manufacturing cost for those vehicles sits on the balance sheet not in the P&L.
That's what gives us a positive in the quarter when those vehicles are sold that will reverse back out.
So it's a timing impact.
The stock buildup that we have explained.
Explains it.
Okay.
Yes, I think golf.
Now coming to the end of the question that I wanted to pick up some of those one is a question on cash saying that we are having 4 billion pounds of cash at <unk> and 8000, Golar Catherine domestic Dogey thing as a company are holding higher levels of cash.
I think our plan is to go to net debt free and therefore, we will look at all opportunities to see what are the best way to handle this cash. So we will keep working on that and again our standpoint on net debt do you believe that.
Given your future cash flow generation do you think you'll be net debt free earlier.
Repeat the same answer let's wait for another quarter or so before they are able to confirm that we have just started the year with wanted to pay for few more quarters before we do it.
I mean, I think with this we are now more or less done with a question that is they are not able to see anything that is new that is coming or maybe there's one question on Tara technologies, IPO, saying that what's the timing that you have for that.
We just got the approval from the <unk> perspective from SEBI They are worth.
Through the points that I'm, there and at an appropriate time, we'll let you know.
So I think with US we have done with any questions anything on whatsapp for enhanced capital nothing right. So thanks, a lot Aussie. Thanks, a lot for my colleagues and Gina <unk>.
You can see around the room as well as people who have joined on the call.
Really appreciate it youre probing questions and thanks, a lot for your support and look forward to speaking with you again.
Thank you.