Saying that it is making an "earnest effort to turn profitable" after India's largest truckmaker posted standalone losses for four straight quarters, Tata Motors Chairman N Chandrasekaran said on Tuesday that the domestic business, particularly the CV segment has suffered due to a challenging environment as also the company's sub-optimal execution and market misses.
An Economic Times (ET) report said on Tuesday that Chandrasekaran, who was addressing shareholders of the company at a AGM for the first time after taking over as chairman, expressed regret over the company's inability to pay dividends due to losses incurred by its domestic business and said it is working "with tremendous urgency" to deal with the matter.
"I know that from a shareholder's perspective it is disappointing that the company has been unable to pay a dividend in light of its significant losses in the standalone business," Chandrasekaran said. Tata Motors is working with "tremendous urgency" to remedy the situation, he said, while trying to reassure the shareholders, the financial website Moneycontrol.com reported on Tuesday.
"Looking ahead, we expect the business environment to remain dynamic and unpredictable. Our clear focus is the turnaround of the domestic business," he said at Tata Motors' Annual General Meeting here today.
"I am optimistic about the future – it may be challenging but at the same time, it offers many positive opportunities for both Tata Motors and Jaguar Land Rover," Chandrasekaran said.
Moneycontrol noted that Chandrasekaran's comments were along the lines of a roadmap laid out by the automobile maker's management. Tata Motors Managing Director and Chief Executive Officer Guenter Butschek had said on Monday that the company planned to cut costs, focus on new launches and improve supply chain in order to turn the standalone business profitable in the current financial year.
Chandrasekaran said that in 2016-17, Tata Motors' standalone gross revenues was at Rs 49,100 crore, up 3.6 per cent from the previous year. The loss after tax, on a standalone basis, was Rs 2,480 crore compared to Rs 62 crore in the previous year.
Challenging prospects for CV business
The ET report said that Chandrasekaran pointed out reasons for the dismal performance of the company's domestic business. The commercial vehicles (CV) business faced a challenging and uncertain environment due to changeover to the GST regime, demonetisation and "unexpected Supreme Court ruling on BS 3 to BS 4 migration", he was reported as saying.
"On the other hand, the company's performance also suffered due to sub-optimal execution and market misses. We have continued to lose market share in the commercial vehicles business, reaching 44.4 per cent in March this year from a high of nearly 60 per cent, five years back," he said in the ET report.
Chandrasekaran noted that Tata Motors' CV volumes have remained more or less constant at around 3,20,000 vehicles, over the past three years, while the operating costs have gone up over time. This had impacted the performance of the company this year.
On plans to reverse the situation, Chandrasekaran was quoted by ET as saying, "In CV, we are focused on ensuring that all product launches happen within our laid down timelines without any delay, changing the trajectory of our market share curve and start gaining market share, and serious cost improvement plan."
The management team is working on these on a priority basis, he said, adding that the team led by Guenter Butschek is working together to deliver a strong execution led operating performance.
On the passenger vehicles segment, he was quoted as saying that the company has improved its domestic market share but costs have been going up due to investments in current and future portfolios.
"We are excited by the prospects of Nexon, which we will launch in September this year," Chandrasekaran said.