The company is looking forward to a better business environment this fiscal year, even though the shortage of chips still makes it difficult to meet increased demand.
The car company also cited rising commodity prices as a significant factor that could affect its profitability in the current fiscal year.
“Speaking of fiscal year 23, about the forecasts we’ve seen from various agencies estimating volumes regarding the possibility that the industry will surpass the peak we’ve seen in the 3.4 million (units) we’ve seen in 3, 4 million (units), which we saw in the 2019 financial year “, – managing director of Tata Motors Passenger car and electric cars Shailesh Chandra said in an analyst call.
The basis for optimism is that in the first quarter of the last two fiscal years, the industry lost volume due to massive COVID-related disruptions, and so far the situation looks better in the current fiscal, he added.
“We hope that this year there will be no violations of this nature, and the situation with semiconductors can be alleviated, and this is based on this assumption,” said Chandra.
Commenting on the current situation, he noted that the supply of chips remains uncertain and limits the automotive firm to fully exploit the demand potential.
“As for Tata Motors, some electronic components will remain a problem, but we are taking many actions to mitigate this risk in terms of creating alternatives, additional resources, close coordination with semiconductor suppliers and sometimes open market prices,” he said.
Chandra said the company is also taking significant steps to reduce cost structures across the organization.
“We will continue to innovate, focus on value development, and we have identified nine levers to increase profitability in the next fiscal year,” he noted.
Chandra said the demand for electric cars (EV) and CNG models are growing rapidly in the domestic market due to rising fuel costs.
“We are already seeing increased interest from buyers to these two power units, in the first place, I would say, rising gasoline prices,” – he said.
Chandra said the carmaker is also going to take some steps to close bottlenecks to further unlock the next phase of growth scheduled for this year.
Due to the fact that the demand for EVs remains very strong, the company is rapidly increasing supplies, he added.
“Over the last six months, we have already increased supplies by almost 3.5 times,” Chandra said. The company plans to launch 10 EVs over the next five years, he added.
Chandra also noted that the company currently has a generally very reliable booking channel.
“The percentage of booking generation is growing. The inventory of canals was low for 9-10 days throughout the financial year, and we see that the level of stocks remains low, ”Chandra said.
Tata Motors CEO Girish Vagh, speaking in more detail about the commercial vehicle business, said: “As for supply constraints, semiconductors are still a concern in some products, in some of our diesel cars, and in JV-powered cars. “But I think we’ve handled it pretty well. We’ve dropped bottlenecks by looking at different levers, different options, and creating some strategic inventory.”
He also said: “And we believe that by the end of the first half of this year, it seems we should be able to address this largely.”
Responding to a query related to the fact that there are more CNG options in the CV business, Wag said: “We are certainly considering some applications even in medium and heavy commercial vehicles where it makes sense to switch to CNG … and you will see some actions on our part during this year ”.
The company is well aware that this move towards alternative fuels will remain because it makes sense for both customers and the country as a whole, he added.