Thank you. So let me now quickly move on to questions. I'll probably start with Chandramouli from Goldman Sachs. There are tons of questions that have come on the UK-India market situation. The fact that there is a free trade agreement that has been signed. Questions from all sides? What happens to volumes? What happens to pricing? What happens to the Chennai plant? Let me break this up into three. First of all, if you look at the Range Rover franchise in India, Range Rover, Range Rover Sport, Evoque, Velar, all of them are already localized, manufactured on a CKD operation out of Pune already. And therefore, for these cars, there is no impact as far as this FTA is concerned. Therefore, there won't be changes. All the benefits in terms of CKD operations are already in the price and passed on. So no changes in price expected on any of these at this point in time. However, the future cars that are going to come in, the ability to access these global cars at global prices, that went up significantly because of this decision that has happened. Obviously, we'll have to see the fine print. There are quotas in it. There is also about a reduction over a phased period of time. All this fine print is expected. And until such time, I would only request patience from all of you. Till we see the fine print, we can interpret only if we see the fine print. So do bear with us on that part. Let me then move on to Shailesh. I think this is coming on PV Shailesh. What are some milestones that need to be crossed for the India PV business to reach double -digit EBITDA margin? And maybe you can take all the questions. What are the rough EV mix for meeting CAFE norms? What do you see as a fair market share target? And how do you also see this changes in this FTA agreement with global competition coming in? How do you see it? Can you take all these questions i n one shot, Shailesh?
Tata Motors Passenger Vehicles Limited analyst Q&A
Yeah, thanks, Balaji. So, as far as EBITDA margin is concerned, we were pretty much there in quarter four of FY24. And there's now a gap of about 2%. We exited the year at about 8.2%. Mainly, see, it is going to come from the cost reduction initiatives, which consistently has been delivering about, 2% plus of revenues. And then it's about optimization of pricing and VME, and also the model mix, which is expected to become richer with the new launches. So, all this would be in combination should deliver more than, 3% or so, but it will then get offset with some of the commodity price increases that we might see. Also, with every refresh, every new model launch, we are increasing the tech and feature in the car. So, those would be the offsetting, cost elements. So, net-net, I think we are very much on track towards 10% plus EBITDA. So, that's on question one. What is the rough EV mix, to comply to CAFE 3 norms? I think still this is under discussion, and therefore it will not be fair. But if we have to really go by what the government has been saying so far, or BEE, which is Bureau of Energy Efficiency has proposed, it woul d mean 10% plus EV penetration for a manufacturer like us. And, you already see that we are at 11%. So, we are pretty comfortable with growth coming in for us in future, and penetration aspiratio ns being 30% plus by FY 30. I think we are pretty much on track and safe. Then the question was also on what should be the fair market share in electric market once all the launches of most of the peers come through in the next 12 months? See, we are aspiring to keep our market share above 50% plus. Dhiman mentioned that there will be short -term pressure because whenever a new product gets launched, typically the sales volume are 2x of the steady state volume. So, there will be, most of the launches have happened recently and it will continue. It's a very launch action year for all the OEMs. So, there will be short -term volatility, but our aim with all the actions that we are going to take, and maybe I should elaborate a bit on that. We see broadly four segments in the EV space n ow. One is the entry segment, which is that of city cars, less than Rs. 12 lakhs. I think here we have 75% plus market share with products like Tiago and Punch. We are going to take certain actions in this space here. The requirement would be to come closer to the price parity with ICE , and also range should be comfortable. So , we will overcome some of the barriers that still remain in this segment and expand this segment where we have a very high market share. But there is a mid -segment which is also from 12 to 20 lakh which is seeing intense competition. This is where the whole action is. All the manufacturers are coming with a product in this segment. And therefore intensity will be high. The way of winning the game in this segment, there will be short-term action from us but also more mid -term which is 18 to 24 month action to ensure that we dominate this segment also. Right now market share would be about 30% -33% in this segment but this is the crucial segment where maximum volume would lie. And then th ere is a 20 lakh plus segment which is emerging which is also showing great promise. And two products are going to get launched in this segment so that will be completely additional volumes for us through Harrier EV and Sierra EV. And the fourth segment is actually fleet. Now fleet segment so far we had addressed the issue of total cost of ownership against diesel. But there is a big market of CNG and this is where our focus is to ensure that the value proposition of our fleet product surpasses that of CNG. And therefore this should also help us tap greater volume. So therefore with all these actions in short - term and then renewal of our portfolio with more promising product in the 18 to 24 months, I think this should help us keep our market shares above 50% in mid -term. I think short -term volatility we will not be worried about. So this was on the EV side. This was it, right? Balaji.
Yes, that's correct. Thanks a lot. Shailesh. Let me pass it on to Girish. Comment on CV . What's your outlook for industry? Multiple people have asked that.
Okay. So before I come to the growth, the few drivers. First is I think the freight rates are holding up. The utilizations are up on a Y-o-Y basis by around 2% to 5% depending upon the segment. Then as I said the sentiment index is stable and in fact gone up for tippers. So largely the macros are also positive. And if we leave aside the event that has been there for last two weeks or so, which has created some challenge in the northwestern states, I think overall we still feel that we should see a single-digit growth across all the segments and within the segments, slightly better growth for heavy commercial vehicles and buses, and slightly lower for ILMCV and SCV pickup. So t hat's how we see the likely growth. Within quarters, I think Q2 should see a better growth on a Y -o-Y basis, one of the reasons being the base effect. But otherwise, on the overall b asis, I think we should see a single digit growth. Balaji?
Thank you, Girish. Richard, coming your way. Raghu from Nuvama Research. Questions on JLR Emission cost increase was at GBP36 million. How much increase is expected ahead? On RR Electric, when is the launch expected, considering the large waiting period? And also, how much will be depreciation post this launch? And could you then also talk, one shot, the entire tariffs for US? How much will be passed on to customers? What about demand scenario? The benefit of cost savings, ho w much can it flow through in FY 26? And what about CJLR volumes , have they reached a trough? Okay, let me have a go. So, emissions cost, for us, this is also an area that is a little bit in flux, particularly in the US, the administration hasn't yet taken any actions there, but we know that they are looking at the California exemption. And some of the states in Maryland, for example, are looking at moving away from their association with those Cali fornia emission standards. There's also legislation expected later this year in terms of the overall EPA levels that are required. So, emissions is also an area in flux. You would naturally expect our expenditure to increase year -over- year as a result of our BEVs being slightly later in the plan, they always were later in the plan. But on the flip side, we know that Europe has taken a few actions to mitigate the level of their penalties. We know the UK have already taken action with the ZEV mandate to also m itigate some of the effects of that legislation. We expect the same thing will happen in the US too over time. So, this is a little bit of a battle between consumer demand and regulations. And in democracies, ultimately, the regulations will probably have to adapt. That will benefit us, but in the first couple of years until the changes have worked through, I would expect our emissions costs to rise. Range Rover Electric, so the development's continuing. We're actually testing it at plus 40 degrees centigrade in the sand dunes of the Middle East and minus 40 degrees centigrade in the ice lakes of the Arctic. So we are really , diligently making sure that this car can do what a Range Rover can do, regardless of whether it's got a BEV powertrain, an ICE powertr ain or any other powertrain. So we're absolutely determined to make that car the best Range Rover it can be. We will expect formal reservations in certain markets, let's say reservation fees, later this year. And the waiting list is currently at 62,000 people. Next one, tariffs. Right, so on tariffs, we really welcome the deal that the UK and the US administrations have done. It provides a good level of relief from the sudden and very steep tariffs applied to the UK auto sector in April. And remember what happ ened on April 3 is suddenly we got a 1000% increase overnight in our tariff bill for selling cars in the US. That's a significant amount. The deal that's being done now between the UK and the US., should bring that down. However, it will still be a 300% price increase or increasing cost of tariffs versus where we were in March. So it's gone from 2.5% to 10%. So we're happy the deal brings the UK auto sector in line with all other UK businesses, which also pay the 10% tariff. Remember, it was automotive steel a nd aluminium that were given special treatment at the 25% tariff level. And we're just awaiting from the UK government some details as to exactly what the terms of the agreement are and when it will be implemented. It did say immediately in the releases, but we're still waiting to hear exactly, either retrospectively or prospectively, when it will apply, what the impacts on parts are, whether there's any rules of origin requirements, etc. CJLR had a difficult year because the vehicles that it is producing are coming to the end of their cycle. So for example, production in China of the Jaguar XF, XE and E-Pace will come to an end in September this year. Now that's deliberate because you'll remember we signed a license agreement with Cherry for the production of vehicles of the CJLR architecture, but with the Freelander brand name. And those vehicles will start production in our Changshu plant in the CJLR joint venture next year. Those vehicles are offered Chinese architecture with Chinese attributes and Chinese costs. So they're perfectly aligned to Chinese requirements. They will have the capability of being exported globally at stage in the future, but they are initially for the China market only. So production of Freelander will start in the plant as the run out of our legacy vehicles comes to an end, so it'll be synchronous and should allow JLR to benefit not only from license fees it will get from the Freelander brand and our helps and efforts in designing the vehicles, but also the 50% share of profits that th e JV will make going forward. So it's a very good deal for JL R.
Thanks, Richard. Maybe one final one, which I missed. Apologies for that. How much of these benefits and cost savings you are expecting to see in FY26?
We'll cover that at Investor Day.
Cool. Thank you. Girish, coming to you, a question again from Raghu Nuwama. Questions. How do you see the domestic M&HCV outlook for FY 25 freight utilization? How is it happening for transporters? Also, impact of DFC? There's a question that keeps coming every now and then. And AC regulation, there's another one more query somewhere else in terms of the cost of this AC regulation. How is it going to be?
So I think as far as M&HCV outlook is concerned, I hav e already answered this question in response to a question earlier. So we will have around single-digit growth happening for the entire year. Within quarters, I think quarter two will see a slightly higher growth. The second one is about fleet utilization. So I would say the fleet utilization is around 2% to 5% higher compared to the same period last year. And this is based on 800,000 vehicles that we track. So this is that we see there is a 2% to 5% growth on a Y -o-Y basis. As far as Western DFC impact, I th ink as we've been saying in the past, the Western Dedicated Freight Corridor will carry a lot of export -import traffic freight. So a lot of container traffic, therefore, is likely to move to this. And this may impact to some extent the tractor -trailer market, which is essentially the 40-46 ton trailers, tractor-trailers. But at the same time, I think we need to keep two things in mind that still, on a point -to-point basis, the road sector will be better as compared to rail. And even if there is a movement happening of containers from hub-to-hub basis, we certainly need the tractor trailersfor hub to spoke as well as the first and last mile movement, especially on the ports. I think in a nutshell, therefore, net-net, I do not see much of an impact as we are here today. Coming to AC regulation, Balaji, there is another question also, so I will address it comprehensively. So, as far as cost increase is concerned, see the cost increase in percentage terms will be lower or minimal for heavy commercial vehicles because the base cost is more there. So, the cost impact on the biggest vehicle could be somewhere around 0.5% to 0.6%. So, the cost impact for a, say, intermediate light commercial vehicle will be slightly higher, could be in the range of 1% to 1.2%. But as a company, I think as we have been saying that we do not just comply to the regulations, but we always come up with some value enhancements and therefore, the product makes sense for the customer. Beyond this, I think there is another question by Amin, which i s about what is the likely impact on the fuel efficiency. So, by physics and engineering, yes, I think when you run the AC, the compressor will consume some power, so there will be some impact. But I am sure, I think like all OEMs, we will be working towards ensuring that this impact gets minimized. And the question whether this will turn out to be headwind, no, because I think in terms of price increase, it will be in the range of 1% to 1.5%. So, the fuel efficiency impact will be lower single digits and as a company, we will ensure that there is a value enhancement being delivered to the customers.
Thank you Girish. So, final point on - post-demerger, will Tata Capital stake be part of CV business? The answer is yes. Question on Net worth and profit of Tata Capital, will take it offline. Okay, moving to Rakesh Kumar, BNP Paribas, we have already answered the question on US tariffs, I will leave that out. Let me get into the FCF, his point was, in FCF of FY25 working capital did play a big part, how do you see working capital trendin g in FY26?
Okay, so working capital is very seasonal for us, so Q4 is always very strong. That's partly because simply from a calendar basis, our production levels are higher in Q4 and therefore our payables are higher. So, you would expect that to come back in Q1. For the full -year, you would also expect that to come back a little bit, although we will keep the diligence on receivables, we will keep the diligence on inventory levels, so we will continue to drive it down. Over the last two years, I think working capital has been about GBP1.35 billion favora ble. In the prior two years, FY22 and FY 23, it was GBP1.35 billion negative. So I would n't expect massive moves, but during the course of the year, there will be normal seasonal movements in working capital.
Yeah, just to add one additional color on that, it obviously depends on how the total demand plays out in the year progressin g that, so let's watch the space is what I would say, just to add to what Richard just said. Richard, staying with you, this is Aditya Jhawar, from Investec. Update on the Chinese market, let's talk about that. Macro outlook, dealership consolidation, lau nch of EVs, Jaguar and RR, how do you see that?
Okay, so I'll do the second one first. Launch of EVs, I think I've already mentioned that we'll start taking reservations for Range Rover BEV this year. In relation to Jaguar, so you've seen the Type 00, which is the design vision for Jaguar. We'll unveil the first actual car, the four -door GT Jaguar, later this year, before that car goes on sale in 2026. Remember , Gerry does say that he doesn't just do concept cars so you can expect the production car to be sufficiently similar, let me say. So that's the timing of Jaguar and Range Rover electric. Look, the China market, it is tough. It's tough for everybody. We are seeing at least a slowdown in the rate of dealers leaving the premium western segments and are actually now moving to the scenario where we are looking to fill distribution holes. So that trend, I think, is reaching or will reach relatively shortly a flex point. We are focused very much on making sure we do not overstock the retailers in China. As I mentioned beforehand, we've kept days of supply at the retailers at the end of this year, it was lower than both at the end of Q3 and at the end of FY24. So we will manage it very carefully.
Yeah. Thank you, Richard. Maybe moving on to the VME question, Tariffs you've already covered extensively, so I don’t want to repeat that. Let's talk about VME, there is a step up in VME this quarter as well, about 80 odd bps. Can you throw some light on how we should think about VME going forward?
Yes, that's one also where we will need to look at what is going on globally in the industry. We've already mentioned, I think Balaji you mentioned, that one of the ways that we would expect some of our competitors in the US., to react to tariffs will be to reduce their levels of VME. It is easier and quicker to do than changing price. So that may happen, that may not happen. I think globally we're still in a position where VME levels are on a trend rise, but it isn't dramatic and I think we will learn quite a lot from what happens over the US., in the next couple of months.
Thank you, Richard. Sorry, I'm going to continue with you for a while. So this is from Gunjan, Bank of America, can you talk about region-wise growth? You did cover about it, but maybe you may want to give a little bit more flavor there. And how should we look at warranty cost trends? And while we wait for the margin update for the Investor Day, can you also talk us through the various levers you're looking at to drive your EBIT mar gins? Electric - launch time, we've already talked about.
Okay, so region -wise growth outlook for JLR, we do have a fairly balanced global spread of sales between our six regions. So I'm not anticipating a massive change in that. I do think that overseas is an area for us that has further growth potential. I mentioned that we sold 70,000 vehicles there this year. We sold 51,000 in FY22. So we're on a strong trajectory, and I think there is more that we can do there. China and the US, I've mentioned, the UK is recovering, and Europe, particularly Germany actually is quite strong for us at the moment. So I don't see a major split, a major change in our global sales mix. But I think if anything's going to rise, it's probably overseas, UK, and China is still one we're looking at. Warranty costs, can I look at trends on warranty costs? It is, I mentioned it beforehand, it is one of the key missions that we have set ourselves to get on top of vehicle quality, and the time it takes us to respond to quality slips when we find them, and the amount of money that we get back from suppliers when it is their responsibility. I'm not going to anticipate at this point any major continued increase in our warranty costs. I think we're, we're aiming to try and get them capped and then to bring them slowly down.
Yeah. Thank you.
Was that the end of that question section?
That's right. Thanks, Richard. So again, sticking with you. I know we don't normally talk short immediate quarter, but given all the chaos that's happening, how should we see the first quarter? This is from Kapil Singh Nomura.
So I mentioned working capital. That will definitely swing back in Q1. So a lot by a material amount. In terms of volumes, we pushed really hard in Q4 to make sure that we met our commitments to you and everybody else and that we get cash out of EBIT, so Q1 probably will not be as strong. We did also, as I've mentioned, deliberately push more vehicles through the import structure in the US to get them to the dealers before any tariff effects came in. So that was a bit of an acceleration from sales that we would normally have done this quarter into Q4 last year. So, it certainly will not be as strong in terms of sales, as we did last quarter.
Yeah. Thank you. Also, when will legacy Jaguar Wholesales drop to zero?
Good question. So, we have already, ceased production of the Jaguar XE and XF, from and F-TYPE in Castle Bromwich, that was in May '24. In December '24 we ceased production of the I -PACE and the E -PACE in Graz, and we're also going to cease the production of the Jaguars in China that I mentioned before in September '25. So that will mean the last Jaguar that's getting produced is the F-PACE. That is produced at our Solihull plant in the UK, so that will go through the end of this year. That will be the last Jaguar vehicle that is offered for sale before we take Jaguar out completely and launch the four door GT, based off Type 00, which we showed earlier on.
Thanks, Richard. A few questions sort of why other expenses have dropped so much this quarter. Were there any one offs in that? As as well as, the depreciation line is continuing to trend down. This is from Gunjan. So how how should we see this again?
Other expenses dropped quarter -on-quarter, it’s largely warranty. The warranty is also one of the reasons why other expenses year -over-year is significantly up. So there's a bit of a timing effect as to warranty accruals to certain one -off campaigns. Sorry, the questions have just disappeared.
Yes. So you covered that, perfect. So let me move to, again, staying with you, I think Jay Kale is asking this question, right? Yes, we will update you in terms of guidance at the Investor Day . What are the developments you are watching for? And how are you looking into this whole space in preparation for the Investor Day? Can you just give us a bit of color on that?
Yes, and you've covered some of the points there. So one is, what is the implementation date of the deal with the U K? And will there be a EU -US., trade deal? And if so, what form and shape and dates will it take? So we're already six weeks into, in fact, coming up to seven weeks, into FY26 for us. So getting some of these issues sorted is going to be really important for us to make sure that we understand where the full year position is.
Also, again, from Kapil, in terms of emissions, so will a delay in emission targets be positive for JLR overall, or you will need to step up investments in ICE platforms?
We are going to extend the availability of ICE solutions versus our previous plans, simply because consumer demand for those vehicles is there. Ultimately, this whole thi ng has to be driven by consumer demand. Governments cannot regulate you to do it, certainly in democracies. So we will meet the consumer demands. There is a large number of people in many different regions in the world that are desperate for BEVs. We will g ive them BEVs. There are some markets, for example, the Middle East, which will want ICE vehicles for quite some time in the future. That is the market that we are going into. It is no longer one car or one powertrain for the world. There are different sectors of the market globally that will require different solutions, and we have to adjust to give those customers in those segments the solutions that they want. So yes, we are going to invest more in keeping our ICE powertrains going, but we are also investing really significant money in making sure that our BEV vehicles get launched. I've covered off Range Rover BEV and Jaguar BEV already.
Yeah, thanks. I'll probably come to you, Girish, because the rest are covered in the question from Raghavendra Goyal Ambit. Shailesh talked about the PV margins. Can you talk about your drivers for margin improvement in CV, positive, negative, both sides?
Okay. So let me talk of the headwinds first. The headwinds I think commodity is after two years we see some headwind on commodity and this is coming from steel safeguarding duty. There is likelihood of some increase in copper and precious metals is something that we keep a watch on. So therefore, some minor headwinds I would say in commodity. AC regulation also we spoke what is the kind of cost impact which will be there only in trucks and lastly I think employee cost, similar kind of impact that we have seen in FY25. So these are the headwinds. I think on tailwinds or positives, I think we will continue to work on cost reduction. We have been able to get a good cost reduction delivery over the last two years and our aim is to continue with that. So net-net I think we are targeting to have cost reduction which is going to be more than the increases that we will see during the year. I think that is where we are. Finally I would also like to say that we will continue to increase the value being delivered to the customers whether it is through product improvements, product enhancements and also a larg e service portfolio that we now have including our digital services. So with this we will continue to deliver better value to the customers which will also help us to improve the realization.
Thanks Girish. Kapil is saying on CapEx plan can you give us a plan for FY26? Kapil, It will be broadly in line with what is there this year. JLR is about GBP3.8 billion this year, it will be broadly in that zone. PV, CV together we did about Rs. 8,400 crore, that also will be broadly in that zone. But as we had clarified earlier also all of this will be funded by operating cash flows. So next one is f or Dhiman, I will probably give it to you, PV PLI has seen a sharp increase in fourth quarter. Anything to do with prior year, prior quarter volumes? What was the sustainable run rate for this?
So it has largely been flat, in Q3 -- the PLI accrual was about Rs. 180 crore, Rs.100 crore of that was pertaining to FY2 4 and Rs. 80 crore was pertaining to the first 9 months for two products. This quarter the PLI versus last quarter was flat at about Rs. 170 crore, so I am not sure whether we are doing right comparison on this number. This quarter out of this about Rs. 30 -40 crores was pertaining to punch, pertaining to last quarter. For the full quarter it was about Rs. 120-130 crores and we should see that run rate continue for the subsequent quarters. We will have Nexon TCA certified also in Q2 when it's going to see a jump and then obviously Harrier.ev probably in Q3. So it is going to ramp up through the year.
Got it. So Ashish, in case any clarification do reach out to the IR team, they'll be happy to clarify. Richard, this is probably coming to you from Nishit Jalan. What do you mean by protect EBIT? Does this mean that despite tariff impact, we are looking to protect absolute EBIT through price increases and cost reduction efforts? My immediate response is Nishit, just hold your fire till June 16, but Richard, feel free to add anything on top of it.
No, that's fair. I mentioned beforehand, as it stands today, we have 1000% increase in our tariffs from Slovakia through to the US and assuming the government deal was immediate, when it says immediate, we still have a 300% increase on our tariffs from the UK to the US . So we do have to protect our bottom line delivery. And that's exactly what we mean there.
Got it. So I think with this, we are coming to the end of all the rest of the questions. There's a lot of repetition that we see in that. So we think we believe we've covered all the key angles that are there. So therefore, if there's anything that critical question that we believe we have missed, feel free to reach out with the Investor Relations team. Once again, thanks all of you for your patient listening. And of course, you're probing questions. We are wanting to end this session by confirming that it's been a solid delivery this year. The fundamentals are in a very good place in all the businesses. And as the actions start kicking in this year, be it product launches, be it on the cost effective measures that are there, as well as what we've delivered last year. I think we're quite confident with how the external situation, despite it being challenging, we believe we have what it takes to actually navigate this well. So thank you for all that. And look forward to speaking to you soon in the Investor Days, both here and in Gaydon. See you there. And thanks to the team, both at JLR and here in the room. Thank you guys and good night and see you soon. Bye bye.