Tata Motors Limited

Yes. Thank you.

Good evening, everyone. Hope all of you and your family members are healthy and safe during these uncertain and unprecedented times.

On behalf of Tata Motors, I warmly welcome you all for our Q4, FY '21 results conference call. Today, we have with us Mr.

Guenter Butschek, MD and CEO, Tata Motors; Mr. Thierry Bollore, CEO, Jaguar Land Rover; Mr.

PB Balaji, Group CFO, Tata Motors; Mr. Adrian Mardell, CFO, Jaguar Land Rover; Mr.

Girish Wagh, President, Commercial Vehicle Business; Mr. Shailesh Chandra, President, Passenger Vehicle and Electric Vehicle Business; and my other colleagues from the Investor Relations teams.

Like always, we will start the session with quick overview of the financial and business performance from the management, and then followed by Q&A. Over to you Balaji.

Thank you. Thanks, Prakash.

Firstly, a warm welcome to all of you. Thanks for taking the time.

As Prakash said earlier, I hope all of you are safe and sound. I intend to -- the presentation has already been uploaded into the Investor portal.

And therefore, I'm presuming all of you had a chance to take a look at it, and also have it in front of you. I’ll refer to the page numbers and move forward with these.

Can we have the next slide please of Safe Harbor statement? Moving to the next one.

Yes, an intense period of product actions as well as company actions that you saw in Jaguar Land Rover. Defender, of course, we're going to talk a lot about Defender today, winning The World Car Design of the Year.

And now almost 12 out of 13 are placed on electrified, and you were there when the Reimagine strategy and the Refocus transformation was announced, and we'll talk about that later as well. We'll be concluding Charge in this quarter.

We generated £6 billion of lifetime savings, one of the most successful projects in the automotive world, I'm very happy with that. Next slide, please.

In Tata Motors, of course, we did see significant product interventions post-BS IV, and at this point in time, what is really happening is customer current experience the product and really giving us excellent feedback, which has now reflected in our market shares, particularly in M&HCV and ILCV. Tata Safari, the legend was reborn.

Of course, it's strong response into the market, and PV has been a standout performer which Shailesh is going to talk about even more. The cost savings target we had indicated 6,000 crores for the year, we ended up at 9,300 crores, so strong performance there as well.

The promoters have completed their funding, the ones remaining outstanding warrants have been exercised. Next slide, from a performance perspective for the quarter, a strong all-round performance despite the pandemic, if you look at the full year.

Full year EBITDA of almost 30,000 crores, but if I look at closer home into Q4, the EBIT numbers that you see of 7.3% is the highest year-to-year as seen in the last many quarters. We ended the year with a strong cash flow for the quarter as well as for the year being a positive free cash flow.

Overall, EBITDA margins have picked up. If you look at the full year number, EBITDA has improved despite a decline in revenue or volume increase, which tells you that the business we're getting intensity is more stronger.

The implication of a strong business, what does it do when revenues come through is seen in Q4. That's why we'd like to see the business today.

Move forward, the numbers are there, but call out the net automotive debt, we had called out the deleverage plan when we announced it in the AGM. Happy to report that for the current year we are lower than what we were closing that of last year, and every quarter we have been reducing our net debt level.

That is something which we are quite happy about. Nest slide, what are the three things that actually -- which are a bit different to the rest of the flow, which is a traditional P&L analysis?

First is JLR, where we called out the Reimagine led changes that we are doing to a strategy, resulting in a one-time non-cash write-down of £0.95 billion, and the restructuring cost of about £0.6 billion. This will impact us in FY '22, but even then we'll deliver a breakeven cash flow.

But this is an important pivot that we have done to the business, and therefore these write-downs that we have taken will actually help us from a strategy perspective to go fully into the electrification mode, and Thierry and Adrian want to talk more about it. This will also give us a credit going forward in terms of lower D&A charge of £150 million per annum, and also the headcount savings, looking at about 2,000 odd headcount that will result in savings of close to about £100 million per annum, sorry.

Despite these write-down, the network continues to be strong at £5.3 billion. So that was the first one of the exceptional items.

In the case of TML PV, there's a sweet news, where the strong performance of the business is a significant improvement even well ahead of our own internal expectations, and outlook remaining strong, thanks to the pandemic and our performance both together. We have reversed the impairment that we’ve taken same period last year of 1,200 crores.

We also had an onerous contract provision for volume from one of vendor that is also being reversed. And therefore, this business is now well and truly performing to the extent that we want.

And of course, more to be achieved as well. PV subsidiarization, we have the shareholders meeting as well as the secured creditors meeting and got approval for that.

We are awaiting the final NCLT approval, which is now scheduled on June 14th, and we are hoping to get their approval from there, and promoters have already talked about this. With this, let me hand it over to Adrian to quickly run us through the key highlights of JLR performance.

Adrian, over to you.

Many thanks, Balaji. Good afternoon, evening to you all on the call.

So same format for us, exactly as Balaji said, first-half was the week half, and we had a strong second-half performance, particularly in Q4. Can everybody hear me?

Thank you. The 7.5%, you see that EBIT in Q4 was mostly and overwhelmingly underlying performance.

So, really pleased with that. You see the PBT £500 million and the big free cash flow as well, £729 million.

Full year results on the right, that you can see dramatic improvement to the previous year, even though FY '20 was impacted partially in quarter four, if you recall. Next slide, please.

Okay, so these are the headlines below that we'll get into revenue details later in the presentation. Balaji has talked about the exceptional item, and we'll go through the walks on cash flow as we normally do.

Next slide, please. An importantly, I want to make unexceptional is because I don't want to repeat what Balaji said was look, our assessment at the end of the year was very close to the preliminary assessment we made on February the 26, £1.5 billion.

And just to remind you, those products MLA made did not fit in to the Reimagine strategy. They would not leapfrog competition and we're all about being the best of the best, not just competing.

So, that's why we took the really difficult and emotional decision to cancel those programs. We are still working through the restructuring costs beyond the headcount 2,000 people, and that's mostly about getting the right positions and the right people into the organization with the right skill sets.

That's management grades, now more people with specialist skills, which is fundamental to success in this environment. Next slide, please.

A busy one, but we wanted to show you several flavors of the retail data. If we look at the chart, full year below, look, you can see the highlights and study it in your own time.

But, a dramatic quarter-over-quarter improvement on China, in part because Q4 FY '20 of course COVID hit China first, and therefore was impacted negatively. But nice year-over-year performance in North America as well, particularly in Q4.

The other regions are starting to build back. There were limited impacts of course, last year.

They are starting now to build back with a huge order demand we have at this point in time, with almost 100,000 customers waiting to drive our vehicles. So very, very healthy order bank going into quarter one.

Next slide, please. This is it by family.

Don't forget we talk a lot about health of sale, quality of sale. And we're playing this back by sales family.

Range Rovers versus last year were a little bit higher, obviously, China is a good piece of that. Take a look at the Defender data.

Balaji said we would talk Defender a little bit, 17,000 units in Q4, a highest quarter so far. We've talked to you several times about 5,000 units a month, we have surpassed that already.

Other data sets for you to focus on this page, 62% of our vehicles were electrified in one form or the other, PHEV, BEV to MHEV. So the pure ICE vehicle content is reducing quarter-by-quarter and that trend will continue, particularly now we brought out 21 model PHEV vehicles that will continue going forward.

More of our vehicles will be electrified going forward. Next slide, please.

Defender, this is really dramatic. I talked about 100,000 orders overall for our families of cars.

More than 22,000 orders now for the Defender family. You see the uptick here towards the right-hand side, as our Defender 90 came on stream at the end of last year.

And the solid line there, that is the retail data, 7,000 cars in March. So, we talked about 5,000 a month, we have now started talking about 6,000 to 7,000 units a month as that supply comes on.

World Car Design of the Year, you would have seen that. Last one we got announced was Women's World Car of the Year.

So this is definitely a vehicle that actually gets appeal across all the spectrums and all the genders. It is a brilliant indication of what this organization can and does do.

This is the best of the best and that's what we aspire for. Next slide, please.

You talked to us a lot about shares, so we've added this page, this point. Few things to draw out.

As shares growing quarter-over-quarter, but particularly growing stronger in those families, which we are focusing most on Range Rovers, and Defender. That's health of sale, quality of sale.

We're not competing on total units. We're competing on overall profitability.

And this is shown I think perfectly by this page. Overall, though, you can see in total, our share has grown from 4.4% at the start of the fiscal year to 6%, at the end of the fiscal year.

And again, that's mostly around that Defender family and the growth you there see in the Range Rover. Next slide, please.

So, our traditional walks on profitability, I'm just going to draw few things here. This one is quarter four, last year of course, we recorded a big loss.

Some of that was as a result of those COVID provisions, wearable masks and provisions we put in place as a second hand vehicle market collapsed at the end of that year. And this year, the £534 million.

Things to draw out, we talk about health of sale, quality of sale, you can see a huge increase in mix actually there within the volume and mix almost £200 million within the quarter. And dramatic data on variable marketing.

The other thing about health of sale is of course, you cannot over supply to the marketplace. We haven't been oversupplying.

And our available market is substantially improved because of that. Almost half of that last year number was as a result of the reserves we put in place.

But, I've talked you several times about VME less than 7%. Our underlying number dropped to 4.9% in Q4 with the headline number 4.4%, eliminating reserve adjustments.

The other one I wanted to talk about and call out is warranty. Again, we've talked to you about this almost every quarter, we've been very transparent and very clear about what our intention is, and what's likely to happen.

And we’ve shown in the data here, right 20 model year vehicles are substantially better than previous model years. We said that mature at the end of Q3 and into Q4, and we said, our warranty as a proportion of gross vehicle revenue dropped below 4% towards 3.5%, slightly under that 3.4%.

And I won't repeat all the other pieces, but there was a big favorable year-on-year exchange, sterling depreciated last year, which meant our euro denominated liabilities and the dollar and euro denominated debt was more expensive in sterling that gave us bad news last year. The other way sterling depreciated post-Brexit, again, as we said it would.

And that's given us that optical improvement on revaluation, but great work by the Treasury team in terms of their hedging levels we've had both on commodities, and on currencies, which of course, have helped as well. Next slide, please.

Full year performance, I'd write different things on this one. Volume significantly lower year-over-year 120,000 units, down £1.2 billion, of course, that mix improvement has partially offset that.

You can see the full year numbers for VME and for warranty. I wanted to draw out the engineering D&A here as we've talked about this one a lot as well.

We did say to you, the capitalized engineer would start to fall as our programs mature. And you can see here really for the first time, the amount of capitalization is lower than our amount of our amortization.

That means we're de-supplementing the balance sheet on these programs. And you will see in the backup data substantially less capitalization, particularly over these last few quarters versus previous years.

And that trend will continue, we believe. And then the full year exchange, which are the full year evaluation of the items I mentioned early on revaluation on hedges and on commodities.

Next slide, please. Cash, look at the middle box.

Again, I've been asked, if you to look at the middle box for the last several quarters and see how dramatic our underlying cash position is, almost a £1 billion generated ,investment now within that £2.5 billion range, more than £400 million in the quarter. And we did reverse our working capital losses of quarter one as we went through the year.

So that was behind the £700 million cash flow in the quarter. Next slide, please.

Investment, £2.5 billion was the guidance. We said £600 million a quarter broadly, we came in a bit lower than that.

Our guidance for next year is £2.5 billion. Also, I think it's reasonable for you to assume the plus or minus £100 million over the next years, depending on where those investments finally get deployed and crystallized.

But, we were lower than the target for this year £2.5 billion stays in place going forward. Next slide.

Charge, Balaji said, we've now finished the program. We did exactly again what we committed to do.

So, this is becoming a theme from us. We make commitments and we deliver on those commitments.

We said in April, we will generate £2.5 billion this year and that would take the program up to £6 billion. We did, and it has.

In summary for the program over 2.5-years, we took £1 billion out of inventory. We took almost £3 billion out of our investment, laterally measured on a year-over-year basis, not the notional start point which we started off with.

And we took £2.1 billion out of several areas of strategic costs, the Sapphire program, all the things we talked to you about previously. So again, we did what we said we were going to do.

The program is closed, but the power of the program lives on through refocused which has substantially expanded the scope of the program as well. More in later slides.

Next slide, please. So, I introduced this slide to you at the Investor Day.

I won't repeat it all like I did then. But this is quite dramatic what the program has done.

We've effectively reset the investment and the structural cost base eight years now. Go to the first column, breakeven volumes 425,000 units in FY '14, we wholesale 471 significantly cash generative.

But we invested and we brought more structuring and more people in right through to the start of the Charge program in FY '19, and breakeven cash position was 600,000 units at that point. And even though in that year, we had a wholesale number of the highest in our history, we lost substantial cash.

Charge started to bring that down pre-COVID to 500,000. Obviously we had a dramatic year.

In the year of COVID, as you'd expect, artificially low, including some furlough money there. But the big point here is we now know we've restructured and we've rebalanced to 400,000 units.

So we've reset this organization eight years, and that's before the power of the Reimagine and the Refocus programs kick-in fully. Next slide.

Saying it a different way, first three quarters before the program $2.7 billion in cash loss. Last three quarters of the program $1.7 billion cash gain.

Since Charge started, net cash gain is almost £8 billion. So that's quite a dramatic turnaround as Balaji has mentioned.

Next slide. So those are the core finance slides.

I'd quickly go on to the business update slides. This is the same as last time.

Our electrified portfolio is now in the marketplace. Next slide.

Reimagine strategy, look, we took you through of almost two hours' worth of detail on February the 26 on Reimagine. So I'm literally going to just interview highlights.

Reimagines there, fundamentally to fix the problems that we've designed within this organization. So the first thing clearly comes out from Reimagine is we need to make Jaguar great again.

The power of that brand deserves to be greater and that's our intention to actually do that. It will be a copy and nothing.

Upgrade into modern luxury, so an intent repositioning of this brand, with luxury materials, as well as obviously a luxury external design. All of that is in process.

We've made a lot of progress over the last few months. We'll bring those details to you going forward.

All best Jaguar will be from 2025, let me remind you, and Land Rover will have its first full all-electrical from 2024 onwards. Our estimation is about 20% of our sales will be all electric by 2026 with a commitment for tail-pipe zero by 2036.

That's the intention and the commitments we made on February 26. They will not change going forward.

Next slide, please. So how are we going to do it?

Obviously, the first thing we're going to do is consolidate our architecture, six architectures down to three, and most importantly, two a Land Rover, one Jaguar. That will enable us to design those brand personalities specific to those two brands, no compromise here, no compromise.

So the freedom of the design and the engineering authority discretely within those brands, that's something that other organizations and other OEMs don't do as well as we can do. This as a competitive advantage for us and we are not going to give up that competitive advantage.

Increased collaboration, particularly with our group with Charge announcements will be made on that forthcoming, not today but forthcoming. Very excited about the speed of consolidation and synergy within the broader empire.

And also working with external people collaborating to get the best, we want to be the best of the best. Therefore, you have to work with the best to enable and to actually do that.

And please don't underestimate and many of those companies want to work with us. We are a brilliant profile company for them to wish to work for as well.

So we're very excited about the collaborations we will be able to make in the foreseeable future. And again, when we're ready to announce those, you will hear about it at that point in time.

But we will also take on the other challenges we've created for ourselves, excess capacity. This is our production facilities, obviously, we announced on February the 26.

Our intention to consolidate our nameplate within facilities, and also to repurpose the Castle Bromwich side after we finish building the current range of Jaguar vehicles there. So that's what we intend to do under that modern luxury by design banner, that's what you should judge us by.

Next slide please. Mechanism, how are we going to do it?

That's the Refocus program. Exactly as we told you before six pillars, three enablers across all of those pillars.

Next slide. Let me draw out some of it, because obviously, each time we talk to you we need to build on it a little bit.

I'm going to talk about one of the pillars that wasn't a focus of Charge. This is pillar two.

This is program delivery. And this is where we're really tying in the pillars -- the item seven enabler, agile working.

We've introduced some agile specialists, we're bringing on agile people to add to our workforce. We've rolling this out particularly within the engineering fraternity.

We've already started with hundreds of teams and we will have thousands of people working in those scrums, those teams empowered to fix the problems that we have over the course of the next six to nine months. What do we expect?

We expect to significantly speed up our time to market. You can see there what we're actually committing to a 40% improvement.

And we also expect to improve customer satisfaction. Why?

Because the input into the engineers and designers are coming from several different sources into the individual groups and obviously, the engagement of those workforce. And the speeding up will actually improve the quality of the engineered solution.

And as a result of which we will spend less, less time means less. Less rework means less.

Less iteration means less spend. So we expect a 30% reduction in spend, which of course, will also help deliver those investment targets.

The center one customer market performance, we talked to you in some detail about this two years ago, particularly to the U.S. market.

We've significantly scaled this now, under that in digital side of Refocus, where we brought our analytics team, and our robotics teams together with data solutions, the problems we have in the marketplace. We've also scaled our intention here.

So two years ago, I talked about national sales company work, this is working directly with the dealers. And you can see there, again, the commitments that we're making through that analytics solutions and making sure we're providing the right task to the right market, at the right time, with the right specifications.

They sell quicker and with less marketing support around that we've already proven this out. This is the scaling of those ideas.

Very excited about pillar five. And everything that isn't embedded elsewhere from Charge goes into pillar nine.

So, the 2,000 people coming out of the organization was the first decision we made. But we will continue our work obviously, in terms of real estate consolidation post-COVID.

And a lot of the other side of in digital the robotics team are starting to help our teams become more efficient, taking administrative roles out replacing with robots. So very, very excited about the scaling up of the program in terms of Refocus.

And a fast start here. We've got the momentum of all the whole Charge program into Refocus, which is why we're committing to £1 billion value in FY '22 of this program.

Next slide. Still problems out there.

Of course, none of us will rest until the planet vaccinated against COVID. We know that.

The speed to electrification is enhancing, therefore, we need to make sure that we speed up as well. Pillar two, agile is part of that.

And of course, there's supply concerns, particularly as a result of the semiconductor post-COVID and also the fire in Japan, which other OEMs have talked you about. We're not immune to them also.

But I didn't want to talk about the first-half of FY '22, we'll cover that in terms of our Q&A. From a Q4 perspective, we manage these challenges quite excellently within our results, as you would have seen.

And our intention is to manage them excellently going forward as well. Next slide, please.

Outlook, very similar to what we told you on February 26. Also, revenue will be bigger this year than last year.

So in FY '22, and we’re already seeing that in the first quarter. Of course, despite the headwinds, the challenges, the supply constraints were reconfirming 4% or better EBIT margin for this year.

We're reconfirming investment £2.5 billion. And we're also reconfirming cash positive or better than breakeven, as referenced here, despite the money we’ll need to pay on restructuring the £500 and some million.

All of that will improve through FY '24, because our underlying business is stronger than FY '22. It's those challenges which will hold us back.

And the momentum of that transformation program will clearly build over the next several quarters. We've got some super product offerings, MLA high, Range Rover, Range Rover Sport, Defender 130, coming at us between those two periods as well.

So, we're very, very confident of being able to build not only our EBIT, but reduce and eliminate our debt. And I'll remind you in FY '26 our guidance EBIT margin is 10% or better, not up to 10%.

10% or better, and that's what we intend to do. I think I'm back to you Balaji.

Thanks Adrian. Next slide, please.

Talking about Tata Motors' standalone numbers, you have already seen. A call out I would make here is the spread between EBITDA and EBIT starting to narrow as the revenue start picking up.

But on an overall year, despite the pandemic we grew 2% with revenues up 7% and EBITDA margin improving by almost 380 bps over last year, so that's a good place to be. The profit before tax before exceptional items that is of course we talked about the PV impairment reversal in the exceptional item, but the fact that this quarter was for breakeven PBT.

Full year of course, impacted by the first quarter and the second quarter that we saw. Free cash flow, of course, strong for year, for the third quarter in a row.

And full year also ended on a positive basis as we had guided earlier. Next slide, please.

Same highlights, maybe I'll just pick up one or two items here. I think the question on CV, if I look at the recovery starting to move from M&HCV and ILCV, so it's not those things are starting to fire well.

With higher demand from infra, we're also seeing percentage of M&HCV in our overall portfolio also starting to increase. PV of course, this is the highest sales that we saw in the last 34-quarters doing extremely well.

EV growing at 215%, so that's a whopping growth that we're seeing on the EV side. EBITDA is the highest in the last eight quarters.

And the CV EBITDA within touching distance is a double digit that we talked about in the guidance. And PV EBITDA at 4.9% is well ahead of the breakeven that we indicated, and absolute EBITDA highest in the last 10-years.

So overall, domestic business come through well across all the lines. Next slide, please.

To call out here, I think every line item with volume mix realization starting to grow well. The one that's really a fly in the ointment here is variable cost coming from inflation on commodities that we have seen.

That is of course going to be an issue as we go into Q1 as well, that's coupled with lockdowns. We'll talk a little bit towards the end on that front.

Our fixed costs control continues to be tight, and that's the reason we see a benefit coming as volumes picking up. Overall PBT margin at 3% for the quarter is something that we are quite satisfied with, given the conditions.

Next slide. Similar to JLR, if you watch the central box where I think cash profit after tax well ahead of investments, and even on a full year basis.

So, the decision to actually cut back on investments proven right, and at the same time, we're not being pedantic about it, we did dial up the investments, particularly in PV as we started seeing growth come through. As far as the working capital changes are concerned, most of it from a day's perspective, we are reducing our inventory days.

We are reducing our better days, and we are reducing our creditor days. So, a combination of that despite that we're starting to see working capital negative continue, and the growth is coming through, you're seeing this number really stew cash.

And hygiene point here, as Q1 with the kind of lockdowns that we're seeing, this will unravel for a while until growth comes back again. So that's just the nature of the game that we are currently on to.

Next slide. Investments, you've already seen.

I don't want to spend more time on this other than to say that we are managing our investment quite prudently in current conditions focused on products and technologies. Next one.

This is a 6,000 crore target that we've given ourselves to deliver and against that we have delivered 9,300 crore. You will notice on the investment line we did not meet the target, because we diverted that money for unlocking growth which is what you're seeing on the PV side, and on the working capital side of course, good number there.

Overall market share -- fine, fine. Don't change, go back.

Overall, market shares have been sequentially improving as the year progressed. We did end the quarter at almost 47% share which on a likely basis lands up at 42.4%.

Draw your attention to the M&HCV market share improvement over the last four years. So we've been consistently increasing that share and almost 400 bps added over the last few years.

ILCV also continues to increase its market share momentum as it will forward. Real call out will be on small commercial vehicles, where I think they have a task on hand.

We did end the quarter strong in terms of pick up in numbers, sequentially it isn't improving, but clearly that is a number that is not acceptable to us and we need to ensure that we work on that and deliver against it. But since I wouldn't speak too much about whether salience was completely required, so very little to talk about.

Just overall number actually has got impacted by the small commercial vehicles salience disproportionately increasing the first-half of the year. And therefore that is what you're seeing as number.

No excuses, it is just the nature of the game. And therefore we need to do a better job of picking up the salience from commercial vehicle share, which we are committed to.

Next slide. Financials, commercial vehicles, clearly the revenue numbers going at 90% for the quarter, even on a sequential basis, the numbers starting to increase, which is good news.

EBITDA at 9.1%, we talked about and the gap between EBITDA and EBIT starting to narrow funds. Overall, on a full year basis, EBIT was breakeven, despite the mayhem that was there in the first-half of the year, as we've seen those numbers there.

Let me hand it over to Girish in terms of how we see the current quarter and what has happened in the last quarter. Girish, over to you.

Next slide, please.

Yes. Thanks, Balaji.

So [quickly summarize the key points in last quarter. So, I think most of the end use sectors showed a strong recovery, of course, prior to the onset of the second wave of COVID.

I think our BS VI product superiority and value added services continue to be well received by the customers. And as a result, not only did we see sequential market share growth, but also our net promoter score increased for third year consecutively and has now moved from 65 to 68.

So, at a high level and continues to grow. We also did well in the non-vehicle business, so we were able to improve our spare parts penetration by almost 500 basis points during the year, which also therefore increase its contribution to the revenue.

We also increased the penetration of Fleet Edge, our connected truck platform. I think we have now a penetration of upwards of 90% in medium and heavy trucks.

So, those were the highlights and of course, we were able to reduce the EBIT breakeven by 25% during the year gone by. Coming to the current quarter, of course, I think we are now challenged with the second wave of COVID.

And there, we are focusing on ensuring the dealer health. So, we have provided the support to the dealers through various initiatives, especially in the area of liquidity, so ensuring that the claims are settled.

We are also giving whenever required support on interest on the stock to provide a P&L support. We are supplying vehicles to those geographies and segments where the demand is not yet impacted much, and continue to monitor our pipeline on a daily basis.

In terms of customer connect, that continues to be on a digital basis completely now. So all virtual engagement with the customers across all the segments.

We've also formulated new set of standard operating procedures and communicated those to all the channel partners. In terms of demand fulfillment, so we are aligning our production to retail.

So, whatever has been retail and one has seen a drop in the retail and if you see some of the highlights, I think one has seen drop in diesel consumption, one has seen a drop in the FASTags, we've also seen a drop in the Vahan registration of the vehicles. Overall, I think the market has dipped and we have immediately aligned our production to retail, starting from the month of April 2nd fortnight.

And we are doing so even in this month. And even this month, I think the production is lower than that of April.

So, we are ensuring that we are able to break the chain effectively in all the plants by having sufficient shutdowns and even on the days we are working, we are having just 50% of the manpower. We are, of course, looking at fulfilling the spare parts and international business orders, which continue to be good.

But of course in some of our international markets also there have been COVID-driven lockdowns. We started maintaining strategic inventory of critical parts and especially electronic items, which have been in shortfall throughout the last year and therefore looking at those.

We also have formed a task force which is monitoring the vendors, vendor site operation and health and also their operational requirements. In terms of cost reduction and cash conservation, we carried forward the learnings from the business continuity plan that we had last year.

Direct material cost reductions are being expedited and pulled towards Q1. We have deferred CapEx as regards our earlier budget or plan, we deferred by almost 30%.

All the fixed expense reduction that we had done during the previous year has been put into action again, so that we are able to sustain all the benefits. And the capital allocation has been revised for products.

A large part of it now going for BS IV Phase 2 programs. I think that's what we have done.

And we align ourselves continuously with the changing market environment through the business agility plan. Back to you Balaji.

Excellent, Girish. Moving on the passenger vehicles, next slide, please.

Two call outs here, to draw your attention to the growth numbers. Industry declined 2%, we grew by 69% in Tata Motors PV.

And the EV business within that grew 218%. So, significant shift in numbers there.

Market share of 8.2%, we talked about. Also, draw your attention to the penetration of EVs in our portfolio, which was 0.2% is now up to 2%, and likely to increase further as we go forward.

So, therefore, we do see significant change happening in the consumer segment. And we are very clear at Tata Motors we will lead the EV disruption as far as India is concerned.

Next slide, please. Financials, delighted to see the EBITDA numbers consistently improving in the PV business, as volume are starting to come through, mix is improving and EBIT margins starting to come down as operating leverage improve rather, as operating leverage kicks in.

We believe this trend is now fundamental, coming from the fact that the consumer is clearly looking to break free. And this is a shift towards personal mobility that we have seen.

And within that, our New Forever portfolio is really firing all cylinders. So the consistency and growth that you're seeing is likely to continue.

What's happening in Q1 this year is a different discussion, which we'll come to in a short while. So I’ll ask Shailesh to talk about it.

Shailesh, over to you.

Thank you, Balaji. So second wave of COVID has, of course, adversely impacted both demand and supply side.

But the good thing for EV business is that we started the quarter with a very low inventory, and a very strong booking pipeline for ourselves. And therefore, while quarter one looks a bit on a decline, we have therefore articulated an operationalized the business agility plan to navigate effectively in this uncertain period.

And actions have been developed in three areas which is on demand creation, fulfillment as well as profitability. On demand creation, you have seen that because of progressive lockdown in the country since middle of April, it has really impacted the demand side.

While in April, the retail and bookings dropped in the range of nearly 40% to 45%. But in May, it is trending at a much steeper drop with only, I would say less than 20% of showrooms which are operational.

Therefore, demand is expected to be significantly subdued in the quarter one. As far as actions are concern, on the demand creation side we are closely tracking the regional and segmental changes if any, on the demand side.

And keeping our off-take and production completely aligned to that. We are using digital given the lockdown situation this is what had helped us last year also, leveraging it through platforms like Click to Drive and hyperlocal marketing initiative, to ensure that even in the lockdown period we are able to keep getting the flow of the bookings.

Since we have less than 10-days of inventory at the start of the quarter, and this was due to demand being more than our supply rate. And therefore, we are using this month to increase the stock in the channel and bring down the waiting period for our customers, which were a pretty high, and therefore this is an opportunity for us.

On the demand fulfillment side, the supply side got impacted primarily due to the lockdown in all the major auto clusters, especially in Maharashtra, I would say. Latest one are Nasik and Kolhapur cluster which has badly got impacted.

And most of the suppliers are operating at 50% manpower or less, and also semiconductor supply has further deteriorated is what we have seen in this quarter, while it was a concern in Q4 also, but this quarter it is further deteriorated and a matter of concern for the coming months. Therefore, we are trying to maximize production to fulfill the demand and build strategic inventory.

So, we are continuing with the production in all our three plants. We had taken shutdown for the first four or five days, mainly in that enhancing our capacity further for supporting the growth that we have planned for this year and also, some of the preventive maintenance actions.

On the profitability front, it's going to be impacted by the lower operating leverage and the commodity inflation that we have seen. And therefore, we have an initiated tight controls on fixed costs and also accelerated the structural cost reduction effort, which is now pretty much an institutionalized and ongoing initiative for us.

We have also taken price increase which is in line with the industry, but we are the only place we have also given the price protection for our customers. And that basically has helped us in avoiding any cancellations to the strong booking pipeline that we have.

So, that's from my side. Balaji, back to you.

Thanks, Shailesh. Next slide, please.

A quick peep into Tata Motors finance. They ended the year pretty strong.

Market share 33%, PBT of 266 crores, significantly better than last year, and return on equity, which is the metric that they are going after of 9.2%. GNPA is also below 5% and NNPA is below 4%.

The key one is the cost income ratio has been tightly controlled, at the same time, focus on collections where we reached at almost 105% in March. But, I would really would love to draw your attention to the last two lines out there, where next few months, we do expect to see a challenge.

And this time it is different, because it's not just about the transportation business that is getting affected, the collection infrastructure in terms of people who are going out there and getting collecting, we have almost 900 people who have been impacted by COVID, who were people who have feet on the street. Unfortunately, we have lost six of seven Tata Motors Finance, and therefore, we are wanting to be very careful with the safety of people.

And that will definitely have impact on collection efficiencies. We're already seeing it come down quite significantly to almost 80% level last month, and therefore it's not an easy time out there in the field.

We are working closely with our teams, our customers, our people to ensure that we alleviate the stress, but it is fair to expect that Q1 is going to be a significant pain and we are having a resolution into all the powers that be to find ways to alleviate the stress. So, this is going to be a critical quarter for all of us from that perspective.

Last slide. Outlook, I think you can see it, but Q1, FY '22 will be adversely impacted by lockdowns.

You heard Adrian talked, Girish, Shailesh and myself talked. Clearly, impacted by lockdown semiconductor shortage.

We have cup of woes that's quite full. So, a strong end to the year is something that is we were very happy with.

But then of course, Q1 we need to deal with the stress, but we will come through strong. The fundamentals of the business as you have seen are very strong.

And therefore, this makes it even more resilient in terms of performance and we will get there. We are not changing any of our plans in JLR or TML, because what we need now is agility and therefore that is what we are focused on.

So, with this, let me stop here and hand it back to you guys for questions that you may have.

Thank you, Balaji. We will now start the Q&A session.

We’ll wait for a minute.

So, do you want to quickly explain Prakash the process?

Yes. Sure, Balaji.

So, all the participants on the webcast can use the chat box option appearing at the bottom of their screen to submit their questions to the speakers. We'll wait for a moment while the queue assembles.

Yes, right. Okay, let's get started.

First question is from Ruchit Mehta, SBI Mutual Funds. Adrian, this is for you.

For JLR, the Q4 implied ASP seems to be lower by £500 quarter-on-quarter. Could you walk us through the costs for the same?

Yes. Okay.

So let me go back to a couple of the points I've made in previous presentations. Now, different markets have different peak periods, different times of the year.

Quarter three, actually, that's the peak selling period for China. And therefore, there was a disproportionate value within our China business in Q3.

And don't forget, that means SUV4 and SUV5 vehicles, so the highest transacting price vehicles that we sell. Q4 is different.

Q4 has a peak selling period in the UK and not such a peak selling period in China. And of course, UK is about SUV2 and SUV3 vehicles, lower transaction prices, lower gross vehicle revenue and lower margins as well.

So you really need to start to look in plot where our peak sales periods are for our peak regions, which will give you a heads up that our average selling price in Q3, unless there's something extreme happening will always be higher than Q4.

Thank you, Adrian. Second is from Prateek Poddar, and I will take this question.

Tata Motors has been very clear that the equity fundraise would be the last resort, despite such a good performance on both JLR and TML standalone or the rationale of thinking for fundraise. Prateek, you're absolutely right.

It remains the last option, there's no change in that particular front. And also just to hasten to add that, the board has deferred this decision to a subsequent board meeting.

And the reason we had, we had an AGM coming up and from a flexibility perspective, we want to keep all the options open. And that is why we have not been clear in terms of what are the instrument that we will raise and how much will we raise.

That was something that was part of the discussions today. And therefore the board has decided we'll defer it to a later point in time, given the performance that we have right here.

And at the same time, we shouldn't forget that we are in the midst of COVID. There are a fair number of challenges that we have outlined.

And the reason we want to keep our options open was this, because it's an AGM coming up, and therefore those enabling resolution if you notice -- if you read the notice carefully you respectively put it as an enabling resolution. And that then gives us a good one year of -- not want -- not having to go back to those shareholders.

But that is of course now subsequently on the board, we have decided to defer it. So therefore, that's the background thinking to it.

Next question is from Yogesh Aggarwal, HSBC. JLR volume growth guidance of better than FY '21 seems very conservative, considering the base effect in FY '21.

Can you please provide more flavor? Would it be a 20% plus kind of growth?

So yes, you're absolutely right. It is very conservative.

And the answer is yes, it will be better than 20% higher than last year.

Kapil Singh, Nomura. On JLR guidance of FY '22 forecast, the company has been reporting JLR EBIT margin of around 7% for the last two quarters.

Plus, you will get the benefit of nearly 100 bps on restructuring costs taken in FY '21. So why is the guidance so low at 4% plus EBIT margin?

What are the key factors that can take the margins down to focus? Was there any reversal in residual values for JLR?

And maybe that's a separate question. Maybe we'll answer this one first, Adrian, and then the next piece.

Sure. Yes.

So let me take you back to half two FY '21 to answer the piece. Let me remind you what we've told you so far.

We've told you Q4 underlying is about 7%. Q4 is always our best quarter, that volumes were 123,000 units.

So, it's closer to an indicator of a normal quarter. But Q4 is normally stronger.

Q3 don't forget what I told you, we were 6.7%. But we had a lot of reversals of residual values and VME in Q3.

And the result of that our underlying was a couple of points lower. So, I think it's reasonable for you to assume based of what we've already told you that our second-half performance was close to about 6%.

So why 4% plus? Well, a number of factors come in going forward.

We don't yet know the level and the scale of impact from the semiconductor challenges that the whole industry faces. Other OEMs have told you specific numbers, we're not going to do that.

And the reason why we're not going to do that is because we haven't given up on it. We are working tirelessly to enhance our position, every week, every day, every week and every month.

So we don't actually know where we will end up from a volume perspective in quarter one. What I do know is we're optimizing everything we possibly can.

Now last year, in quarter one, we lost 13.5% EBIT margin, we could be EBIT loss in this quarter as well, but be very, very small if we are. So, it will impact the full year.

Here's a key point here. Our Q1 will impact the full year.

However, depending on the speed and the bands of the industry response to the semiconductor build, I don't know how much of that we will then get back in Q2, Q3, and Q4. What I do know is, if we can overcome those challenges, we will be stronger than the 4%, that's why we said higher.

So, the speed of recovery for those challenges and whether we can catch back units are the two unknowns today. And I really don't want to mislead you.

So, I've given you a baseline of 4% or better. And depending on how the industry can respond to semiconductors, the better will get bigger.

So Balaji?

Thanks, Adrian. Second question for you again, was there any reversal and residual values for JLR in USA in Q4?

Do you see more coming through in Q1?

So, we did reverse some of the residual values in the U.S. survey.

We've made all of those reversals actually within quarter four. So no more to come.

However, we did book some reserves in Germany. So the net reversal in Q4 was very low about 0.2%.

That's all. So most of it is done.

And we think also with the changes we made in Germany, we've contained and trapped those losses as well. So, overwhelmingly, we do not expect VME to be driven by residual value improvements -- reductions going forward.

What we do expect in this lean market of undersupplied and significant demand is our underlying VME to be better than we've actually previously communicated. That was 6% or lower.

So, we do expect that to continue, particularly with supply shortages. It'd be close to 5% over the first-half is my estimate.

Thanks. Again, question back to you again.

This is from Satyam Thakur Credit Suisse. Could you help understand the moving parts behind the gross margins of JLR sequentially quarter-on-quarter?

Fourth quarter versus third quarter? How much was the impact of higher raw material costs?

And what all went into offsetting that, if you could quantify please?

Yes. So I'd refer to the response to the first question.

Actually, the overwhelming issue is the mix of the vehicles we sell SUV4, 5 Q3, SUV2, 3 quarter four. So even though volume would have increased, we would naturally expect gross margin to fall quarter four over quarter three, for those reasons.

Mix of vehicles and regional strength. We know that commodity prices are increasing.

It is not yet having a significant impact on our numbers on our margins. In fact, Q4 from an overall material cost perspective was lower as a proportion of gross vehicle revenue than quarter, in quarter three.

So, limited to-date. We have a hedging strategy in place, it will increasingly hit as we go forward and those hedges roll off over the course of the next six to 12-months.

If it becomes a particular impact on the data we'll call out at that point in time, not in the data today.

Thank you. The next one is from Jinesh Gandhi Motilal Oswal.

Question for India, I picked it up. Can you discuss your fundraising plans with [Indiscernible]?

Was it including equity? Considering the sustained sharp improvement in both JLR in India, why do we need any fundraising?

The first question, I think Jinesh, I’ve answered that. It was an enabling provision that we took -- we face in this environment.

COVID based to this, too many things coming at us. So we want to be sure that we have the options with us.

It was an enabling provision. And at this point then the board of have deferred it.

Obviously, the strong performance thus helped there. And we will revisit it if required.

So that's the way we're looking at it. Of the 9,300 gross cash saving, how much was the actual cost savings?

We have referred to it in Slide 37, Jinesh. Cost and profits of 2,200 crores out of that.

How much of this is sustainable? We are seeing it sustainable, because take Girish has mentioned on breakeven reduction.

We’re down by almost 25% for the commercial vehicles. Passenger vehicles EBITDA improvement also includes savings that are coming through here.

But do keep in mind going forward, we need to take a look at this vis-à-vis the commodity inflation that's coming at us. These become the source of money to manage that inflation that is coming at us.

Can you throw a light on the product pipeline post-Hornbill? What new model can we expect post-Hornbill?

Clearly, there's something that we wouldn't want to discuss it. The right forum for that will be the Auto Expo.

Once we have made up our mind as to what is going to show up there. So we will definitely share it with you.

Next question is from Stephanie Wills [ph] in from JPMorgan. How much is the semiconductor and raw material issues respectively hitting the FY '22 guidance?

Adrian, do you want to pick that?

Yes, I think I have actually already, Balaji, within my 4% or better question which I covered semiconductors and within the margin question which I've covered the raw materials. So nothing to add to previous questions.

Okay. Second is from -- the next one is from Basudeb Banerjee from AMBIT Capital.

Why it is saying led by one off restructuring cost of £500 million to £550 million? JLR will be FCF neutral?

I'm too confident of maintaining operating cash flows and CapEx of £2.5 billion at last couple of quarter levels. The next one is on India.

So, Adrian do you want to pick this one up?

Yes, I'll pick that one up. So, yes, we are actually confident, but unless I'd say this and I have to give you a different set of numbers.

So the bottom line is our commitment is to reduce net debt and we won't go backwards. We will have a challenge in quarter one for the reasons already discussed, but we'll get that back over the balance of the year.

And net debt was £1.9 billion at the end of March, and we expect at the end of March next year to be slightly lower. But for the moment our guidance with the uncertainties we've already mentioned is maintained as cash flow positive or better than breakeven, despite the £500 some million restructuring costs.

You take that away, it'd been £500 plus million cash flow.

The question is for India. India CapEx outlook for FY '22, it seems higher than outlined in proposals dated earlier.

Plan for the year is more like 3,000 to 3,500 crores, the 1,800 crores for FY '21 in the midst of a pandemic, where we're firing a business continuity plan. Having seen three quarters of performance, we're very clearly seeing that once the time the maxes out, the lockdowns are out, there's definitely a demand for resurgence that happens.

And therefore, this time, it's not a business continuity plan, it's a business agility plan. And therefore, we want to be as flexible as we can.

Obviously, situation dramatically alters and we will not hesitate to go back to the drawing board on this. But at this point in time, we see the current issues are temporary and therefore we intend to generate positive cash flows despite those CapEx investments there.

And they are going towards products and technologies which are going to 8 crores. So, we will not be pedantic about putting a number of there, we are watching it and moving it dynamically in line with demand out there.

That's how we see it. Next question is from Rakesh Kumar, BNP Paribas.

Profitability continuous to improve at JLR, is there a possibility that we could increase our CapEx plan to accelerate the Reimagine strategy timelines? And what share of sales comes from lease sales in U.S.

and Europe? And what are the peak share of leases we've seen historically?

Adrian?

Yes. Okay.

So my answer to the first one is unlikely, we've got a real clear plan was setting out. We were making sure that every element of that plan is fundamental to the success of this organization.

We don't actually think we've missed anything. Throwing money at this doesn't necessarily speed you up actually.

So the agile approach the scrums, the sprints, the impairment, the making sure people are responsible to fixing things first time, so that will speed us up. And we've made a commitment actually, that overall, in time, we will be 40% faster than we are today.

That's a huge improvement, a huge commitment and that's what we maintain. At the point in time as we go forward, as we eliminate our debt, just as the Investor Day as we eliminate our debt, and then decide what we wish to do with the cash flow positions, TML friends, at Tata Sons friends, and our Board will discuss what we wish to do.

But the current plan stands, the investment guidance stands as well.

Lease sales, Adrian. What share of lease sales come from lease sales on U.S.

and Europe. And what are the peak share?

Yes. Well, again, we're overwhelmingly consistent with the rest of the marketplace.

So U.S. is our highest lease market, as you would know followed by UK and markets in Europe, mostly Germany.

I do have some data in front of me which suggest it's about 80% in North America, but that's consistent with the marketplace.

Okay. Next one is from Ronak Sarda from Systematix.

Let's take the JLR pieces first and I'll do the PBTs later. For JLR, will lower D&A and employee benefits start reflecting from Q1?

We have in a way gone back to the Pre-Jag XE phase. Should we expect JLR will focus mainly on profitable models, second question?

And the last one on JLR, that's the easy one, I'll fix it up. For JLR, can we have an EBIT waterfall instead of a PBT, you already have that in the slide.

The bottom line has that so you can use that. In case you need more clarification, do reach out to us.

Back to you Adrian for the first two pieces?

Okay. So let me take D&A, first of all.

D&A over the next few quarters will be similar to the second-half last year. Don't forget, the MLA mid-vehicles were not available to be introduced in the first-half of this year.

At the point we would have introduced them 12-18 months' time, that's when the reduction in the D&A would have kicked in of course. D&A will next actually change when we introduce our new models, Range Rover and Range Rover Sport in 12 to 18 months' time.

Employee benefits, as we release those 2,000 people over the course of the next three to six months then yes, the costs of people will actually start to fall as well. £100 million a year we believe, but in a particular quarter that filters down to £20 million or £25 million.

So, I don't anticipate that to dramatically impact the in quarter data you will see.

Then on I think the profitable model piece part of Reimagine has been explicitly called out that we are looking at profitable growth here and that's how it will be done. So no change in strategy there.

Then on PV impairment, yes, these are non-cash costs. The question is, are these non-cash costs?

Are these reversals non-cash? Absolutely, yes, they are.

Moving to the next slide the next topic, Amyn Pirani, CLSA. Given the first Land Rover BEV come in 2024, do you think it may pose a risk in model such as Evoque and Disco Sport?

Competition is already in the process of launching BEV?

Look, we have great Evoque and a great Disco Sport under our AMA platform shortly afterwards. So if it were to the time to new vehicle delivery is quite short.

So that wouldn't be a concern for us.

Okay. Again on JLR, this is from Jinesh once again, Motilal.

JLR realization declined sharply quarter-on-quarter by 9%, what are the key reasons behind it? I think we've already explained it extensively in the previous question.

Therefore, maybe we'll take it as a given. Order book of 100k units for JLR.

Can you give some flavor on which models region and make about this order book? Is this due to supply side impact?

Are we done with the write-offs to streamline the new normal on the business? Finally one effective tax rate question as well for FY '22.

Okay. Let me take them as you've asked them.

So the order book 100,000 units of latest been grown about 2,000 units a month. The phenomenon in our business that most of those order in process that in UK and Europe, and that's where 60% of the order book is, less in China, and less in North America.

That's just a buying phenomenon and a logistics phenomenon. Vehicles have to be there in place because of the pipeline to get them there is so long.

So mostly UK and Europe, particular emphasis on PHEV vehicles, they have had a dramatic impact in the marketplace. Some of those vehicles in some markets in Europe have up to a 12-month waiting list for.

So clearly, those customers are going to have to be super patient for us. So ultimately, yes.

The answer is, it is a result of the supply side. And as we work through some of those supply issues, let me just reference for the moment semiconductors, but there are also PHEV issues.

Then we would expect those order books to actually start to normalize in six, nine or 12-months' time. We are dealing with write-offs to streamline the new normal a business, we believe so.

We don't have anything left that we're aware of. We really think we've had a strong six months review of what our strategy is and we think we've communicated that to you.

And we think we've actually made the adjustments we need to make. And as you would know, our external auditors have been working alongside us for three months and they agree with us.

So, I don't expect any additional write-offs for any of the elements that we have actually communicated as a part of Reimagine. To-date, effective tax rate is baked in FY '22 obviously, the tax rates been pretty damn weird over the last 12-months or so because of losses and non-allowance of deferred tax assets.

As we become more profitable, obviously, that deferred tax position will change. And we'll be left with a couple of phenomenon.

We will be left with a phenomenon quarter overseas. We expect obviously, the tax rate will now become unprofitable overseas.

So we will be paying tax, as you would have seen this time around. And we would expect the deferred tax asset to start to normalize the effective tax rate also.

I suspect that will happen later this year as our profitability grows in H2.

Got it. So next one from Aditya Makharia, HDFC Securities.

Congrats on the market share gains with Land Rover. What are the impact that Tesla is having on the luxury market as the volumes are now 500k?

Can you give some color on the same?

Maybe I can take this one Balaji. Thierry speaking.

I think that even if we don't talk very often about competitors in this type of session, the reality, if you look at Tesla today is that they are not really in the luxury markets. And more and more they are less to a certain extent.

They started with the high-end premium. And now if you look carefully to the rental cars and associated volumes, you will notice that it's more and more going to the midpoint which is giving us a huge space.

Okay. Thanks, Thierry.

A question from [indiscernible] again. Can you share an update on what's happening with the BMW partnership on EDUs?

Thierry was quoting last week, where Reuters were saying that JLR is exploring with BMW ongoing also [ph] with the partnership. Can you share anything that is on these areas?

We continue to work with BMW and as such we are currently exploring new opportunities concerning, of course, renewable car version. I mean we use -- it's of course include.

But it's clear that we have stopped also our ex-J BEV, although we returned the IP on our joint partnership.

Thank you. A question from Pramod Kumar, Goldman Sachs.

Given the acceleration in pure EV demand led by competition launches and regulatory push, are you comfortable with your EV business? And is there a risk of JLR losing out on demand and customer mindshare on EVs?

Well, I think what is key and Adrian answered in that spirit as well for one of the previous questions, is to be on time against the real demand from our customers. And today, the real demand of our customers is very much on TOs [ph] as you understood.

So we are glad about that. And at the same time, we are glad to see that the BEV starts really to take off worldwide, and that's why we are fine with our timeline.

For sure, we are clearly -- and we enjoyed the fact that with our Refocus plan we can see an acceleration of our processes in the company to seamlessly and excellently deliver what we promised, and we are going to make the best use of that.

Thank you, Thierry. A question, maybe this is for Girish and Shailesh.

In terms of -- can you please guide for India's CV and PV growth outlook? How do you see it given COVID second wave impact on semi urban and rural?

Girish, you want to go first and then Shailesh you want to take it up next?

Yes, Balaji. So, in the last analyst call, I think we had indicated the TIV of almost 750,000 to 800,000 for FY '22 in which we had predicted Q1 being at around 170,000.

And I think, at the end of March and more so in the month of April, we have come across this COVID second wave, which has indeed created a slowdown in the demand. And as we got into me, I think the slowdown has been even more as many states have gone into lockdown.

And in April, we have seen that the total industry volume has been just 40,000. So, I think to give a clear projection for the entire year, we need to see how the states unlock, which is something that we are monitoring on almost on a daily basis.

So, as the states unlock and the freight starts moving in the country and get back to the pre-COVID levels, I think we should be in a position to indicate what's likely to happen. So, at this juncture, it is very difficult to provide a firm outlook, although there could be some scenarios as to when the economy gets back to the pre-COVID levels.

But as we stand here now, appears difficult that we are able to -- we'll be able to get this 35%, 37% total industry volume growth that we had indicated. For the exact number maybe we'll have to wait for the next analyst call.

Balaji?

Yes. Shailesh?

Yes, I'll just take this. Typically in PV business, the rural to urban ratio has been 40% rural and 60% urban.

Last year, it was slightly tilted towards rural where it gained the share by 1% or 2%. So far in this year, we have seen that April is only month where we saw that rural was actually higher and that was primarily on account of the lockdown enforcement being a bit weaker in rural areas as compared to urban.

But the jury is out in terms of how this whole ratio is going to play out, as far as rural is concerned, but clearly, we would expect that rural would stabilize around 40% only this financial year also, as far as overall projection for PV industry is concerned, was supposed to be in the range of 3.2% to 3.4% as per the earlier estimate, before we were aware of the COVID second wave. This might decrease by 250,000 to 300,000 as a one scenario that is being projected, but if the pent-up demand, which is getting built in these two three months, as well as one is seen that, the shift towards personal mobility might become even more stronger given that the customers are expecting multiple waves of COVID, and therefore, there is greater concern about the well-being and therefore, there might be bigger personal mobility shift phenomenon that one might see.

And therefore, one can still imagine that this can be recovered whatever losses that we are going to see in Q1. But as far as rural is concerned, we would still think that rural will remain around 40% of whatever demand we see in the PV industry.

As far as Tata Motors is concerned, since last year, our mix is more favoring towards urban, given that the young and urban customers are getting more kind of excited with the expressive design and the safety aspect, this is being more appreciated in urban centers. So that has been as far as the Tata Motors PV business is concerned.

Back to you Balaji.

Excellent. And the final question is from Pramod is on any timeline you can share on your CV plan for the India car business?

So far no decision has been taken on this Pramod, as and when something comes up, we'll definitely share it with you. A question, this is on chip shortage.

Can you give some of color on the chip shortage? How long would this last?

How do we plan to mitigate the same? And also does this affect our key rollout plans?

And is it easy for our rollout plans in the future? Thierry, do you want to pick this up?

Yes, I can take that one. Of course, I will not repeat the comment from Adrian, which were clear enough, I believe on the shortage in terms of impact.

I think it's important to say that, during the first part of this crisis, the team did an incredible job to mitigate that risk to the extent that the impact, I think, on the Q4 of last fiscal year was about 7,000 units, which was quite limited without big consequences on our strong figures as you could see. But from a crisis, you’ll always learn, and you'll find opportunities.

And first, what I'm learning and with the team is about our Tier 2 and Tier 3, our microprocessors suppliers and the way they work, the way they operate. And at the end of the day, what's happening is that we need a change in the way we are operating our supply chain with them.

And it's exactly what we are preparing at the moment to have a structural fix to this problem.

Thank you. Guenter, would you want to just give us color on the implication of that?

Balaji, my pleasure. As already mentioned earlier by Girish and Shailesh, in the first quarter because of the dedication and commitment of the teams in PV and CV, although we had certain shortages.

We could actually prevent supply impacting our delivery position, in order to give us the chance to actually meet the strong demand as already highlighted. As we expected that it couldn't get worse and felt pretty comfortable having the situation to a certain extent under control.

The situation has already as mentioned by Shailesh under one slide has worsened to the extent that we see across the board significant constraints, where we are now working with the team based on the database established in the fourth quarter, more or less on a daily way on the mitigation of the impact on production. What does it mean?

We have actually looked deep into the easy use, we’ll have to understand which kind of chips for which kind of supplier would actually use by our Tier 2 -- second tier, first tier suppliers. And in order to see whenever there is a constraint which of these use and therefore which kind of components or modules could be impacted.

We started to establish direct contact with the two suppliers, although we are not contractually linked with them. But since we have established relationships from the past, it also helped to ensure that our demand got prioritized got met and parts were made available solely by the chip suppliers to our second and first tier suppliers, in order to have transparency in the first instance and to a large extent to the largest possible extent, also full control of the situation.

Nevertheless, as already indicated by Thierry, the situation of Tata Motors is no different to the one at JLR. It's a daily struggle.

And it requires lots of detailed review work effectively on a daily basis by the teams, in order to keep the supply chain going to limit the impact. Nevertheless, we expect the situation as mentioned will get worse in the first quarter.

We expect some kind of an improvement in the second quarter. But it's also because of the fact that mentioned by Girish and Shailesh, that we have started to actually build some stock, because some of the shutdown days we have experienced in the last couple of days, because of the COVID situation in India.

So that we hope that we can actually get back to full production in the moment we get out of the lockdown. And we echo what is generally the expectation of the industry, that as of the second-half of the fiscal year, we are going to see a gradual improvement of the situation.

To what extent? I think it would be too early and would be too much of a kind of crystal ball approach to say as of October, we are going to be safe.

But we expect at least gradual relaxation of the situation on the way forward.

Thank you. Thanks, Guenter.

A question from Chirag Shah Edelweiss. JLR commodity costs, how does commodity contract work, annual semi-annual?

Also how does the commodity hedging differ from revenue hedging? And if you break raw material costs into commodities and value add, how much will the commodities percentage will be of the total RMC?

Adrian?

Balaji, it’s Ben Birgbauer, the Treasurer of Jaguar Land Rover. So I'll pick that question up.

So I think on the first piece of it, how does the commodity contract work? So I think it's different across different commodities.

And so it's really difficult to answer that question in the context of this event. I think, on the second question around, how is commodity hedging different?

I think one thing I'd say is generally the horizon is shorter. So on FX, we go out four to five years, in practice with commodities, we really only going out about two years and in quite a bit reduced percentage in the second year.

I think the other thing that's worth mentioning is the hedge accounting is different. So we have hedge accounting for the FX.

So essentially, both the P&L impact of the hedge and the cash flow both occur when the hedge matures. In the case of commodities, actually, there's not hedge accounting.

So there's an immediate mark to market which comes to our P&L. And that's why you tend to see that number in our profit bridges.

But then the cash only flows when the contract actually matures. So there is a difference between the timing of the cash flow and the profit.

And then, I think on the last one, just what is raw material costs as a percentage of RMC. I don't have that number at the tips of my fingertips.

But what I'd generally say is, it's a second order kind of number. I think that the commodities is a total value of components that we buy is smaller than you would think.

Just for an example, in Q4 year-over-year commodities was worth £19 million unfavorable, despite the significant move in commodities that you've seen.

Thank you, Ben. And I think the second part of the question is can we assume from here on there won't be any extraordinary charges?

I think, Adrian has already answered. Let me take a question from Pramod Infra [ph] Capital.

JLR VME is reduced by 250 bps year-on-year, can you sustain it, considering RR changeovers in the coming quarters? How demand will help you here?

Second for Tata Motors I’ll pick it up. Adrian?

Yes, of course. So with the help of sale approach with our taking out deliberately reducing dealer stocks, I think we took you a lot through that detail through the previous two presentations.

That continues to be our intent. We were surprised by the scale of the impact of the marketplace and the speed of that impact.

And it's certain that when we have more supply concerns and demand concerns today VMA over that period of time will be at levels lower than I previously indicated. Hence, why I've said earlier, expect in the first-half a number close to 5% rather than the 6% on the line we were at previous to that.

As we grow that demand, then we'll see how the marketplace responds later in the year. But in the first-half of this year, it will be certainly lower than the 6% guidance I've previously given for sure.

Thanks, Adrian. Second, I'll take it.

This is on collections and Tata Motors finance. There are two questions, the two people have asked the same question.

How's it performing post the COVID? As we said -- as I recall -- as I said in the presentation, we ended the March quarter at 105% kind of collection efficiency.

This has obviously come down to more like about 82%, 83% in the month of April and we're expecting to this to go down even further. So it will be a painful quarter for Tata Motors Finance as they navigate this, because the issue is not about just cash flows, it's also about feet on street and infrastructure.

So we are working through this and as it comes back on track at the earlier, obviously ensuring safety of our people. The second question is on growth of CV which I think Girish has already answered.

Let me collection -- second question are answered. Girish, the question is more to you and Shailesh price increases taken in CV and PV so far this year, how much of that RM impact is likely in Q1?

Do you want to pick it up Girish and Shailesh?

Yes, Balaji. So, we have already taken a price increase of around 1% to 1.5% on 1st January of this calendar year, which is Q4 of FY '21.

And then on 1st April, we took another increase of 2.5% across all the models, which is this quarter. So that's the kind of price increase we've already taken.

In terms of raw material impact for first quarter, I think it can be divided into two groups. One is the precious metals, which goes into after treatment.

So that is more internationally linked. And therefore, that is kind of going up and we have six monthly contracts there.

The second one, of course, is the steel, which is although linked to the international prices is also dependent on domestic consumption. And as of now with the auto demand going down, we are ready to have any dialogue in terms of the steel price increase.

So that's the situation on the commodity costs in this quarter. Shailesh?

Yes, so I think the second part of the question the response would be the same for PV. As far as the price increase is concerned, in Q4 of FY '21, we have taken about 1.6% weighted average price increase.

And then in April, sorry, in May we have taken additional 1.8% weighted average price increase. Back to you Balaji.

Thank you. Maybe there is time for one last question.

This is from Nishant Waaz [ph], Adrian coming your way. Can you shed some light on the CJLR business improvement plan?

What's the timeline for EBIT breakeven for that business?

Yes. Of course, Balaji.

I mean, if you look at the data, and in fact, the charts, I should have called it out actually. The year-over-year chart to show quite a dramatic improvement, last year, over the previous year.

I think the number is £99 million improvement, you'll see that. So my first response is, it's already happening.

It's already happening, the health of CJLR is starting to improve. It's nowhere near where we wish it to be.

What the semiconductor shortages in CJLR would teach us a lot of things, because a lot of our turnaround model in the import business actually was a result of deliberately constraining the pipeline, a huge improvement in transaction values, reduced VME and gross margin. Some of that may be enforced on us over the next few months.

We'll see how the market responds. We hope the market respond favorably there.

And the other side of this is the Charge program, which we talked about, as well, last time to you. We now introduced the Charge program formally to CJLR working alongside our Chery partners and colleagues.

And we'll just be tougher on spend. We'll just be tougher on spend, because there's still opportunities for structural cost reduction in CJLR.

So you think about how we've applied Charge within Jaguar Land Rover, a resetting of eight years of our structural cost base. We haven't done that yet within CJLR.

So there's lots of opportunity. It takes a bit more time because we have to bring our partners along with us, of course.

But I do expect us going forward to find ways to actually improve our viability, profitability in CGLR. But it was a dramatic turnaround in the previous 12-months, so please, we shouldn't pass that point by.

Thank you. So with this, I think we are on the dot, 8 o'clock here.

So thanks everybody from TML and JLR side, and more importantly thanks everybody who attended the call, taking the time to attend the session and understand our results. Much appreciated.

Please stay safe and sound. And I wish you all the very best to you and your families in the coming days.

Thank you and look forward to speaking to you next time.