‘Sales may recover in H2 of FY21’
MUMBAI: Tata Motors Ltd on Wednesday entered the growing premium hatchback segment with the Altroz model, to take on Maruti Suzuki India Ltd’s Baleno and Hyundai Motor India Ltd’s i20 models. In an interview, managing director and chief executive Guenter Butschek disclosed the company’s plans to introduce as many as 12-14 passenger vehicle models over the next 3-5 years, while it prepares for a recovery in sales in the domestic market in the second half of FY21. Edited excerpts:
How is Tata Motors planning to turnaround its passenger vehicle (PV) business?
We will leverage our investments in two architectures— Alfa and Omega. We have 6-7% market share on the basis of 50% market coverage (presence across PV categories). Along those lines, if we cover 100% of the market, then we would have 14% share.
Until today, I could not tap the demand in 50% of the market because I did not have products like Altroz. So, the launch of Altroz is a huge step forward, because premium hatchback comprises 26% of the overall hatchback segment in India.
How do you define capex prioritisation in tough market conditions?
It is a naked reality that you need to align your investments according to your revenue profile in order to maintain control on your cash profile. We are going to take Tata Motors as a cash-accretive business, which includes consolidated as well as different individual business units. In order to do so, when you get into a crisis such as what we have seen in the last 12-18 months now, when your revenue is not as per your initial plan, you need to adjust your spending profile, but in a very conscious way. So, I would say, we did not cut any investment but controlled the investments. On one side, we drive strong focus on receivables and, on the other side, we practice full control on the spends.
How will the company ensure healthy cash flows in CVS?
The backbone of any business, specifically in automotive, is what we call as SNOP process, which stands for supply and order planning. As it is the backbone, we need to pay attention, particularly during a crisis, to keep the organization well-calibrated, to maintain certain balance between supply and demand, which has three elements— volumes, product mix and stock. For stock, you have seen our actions such as block closures. However, the new line of command at TML is that retail triggers wholesale, which triggers production. It is important to produce what moves. And do not produce what will actually create a burden either on your own stock and working capital or on the same of the dealers.
Is the worst behind us?
I don’t know. I would wish, but I don’t know how the remaining quarter is going to pan out. This is a question of demand and how strong the pre-buy of BS-IV vehicles will be as we get ready for the BS-VI norms. However, the stronger the pre-buy, the stronger the impact of the BS-VI in Q1 FY21. That’s the reason why I said that I am somewhat positive for H2 FY21, starting with the festive season. In CVS, Q1 and Q2 will be impacted by the transition from BS-IV to BS-VI.