Growth in Commercial Vehicles to drive Financial Revival of Tata Motors
Watching for a recovery on the sales margin, the president of the company stated that the higher sales, focusing on the sales of medium and heavy-duty trucks would offer the major come back in the ground.
The comeback is majorly dependent on the cost-cutting factor ensured from the past one and a half year stated the companies president Mr. Girish Wagh.
“Looking at the balance between the headwinds and tailwinds, it does appear that we will end up having a growth in the industry next year, around mid to high 30% because this is on a low base," Wagh said. “We had more than 30% decline last year and 25% this year. We are sitting on a low base this year and on that, having this kind of an increase still means we are a distance away from the earlier peak," he said, referring to record commercial vehicle sales of FY19.
The president is highly considered about the uplift of the oil prices as well as the increase in the input costs of the commodities like copper and steel. The concern has also been overlapping the lack of semiconductor-based parts and the reach towards the suppliers.
Tata Motors' business vehicle deals fell 41% from a year prior in the nine months to 31st December to 142,292 units. This was for the most part because of the lockdown in the June quarter, which prompted a stop in plant and display area activities just as a monetary plunge. In FY20, it recorded a 34% drop in deals to 310,855 vehicles.
The companies major boost in profit is concerned with the focus of the truck and bus business sales.
The comeback strategy has an output focus of the future 3 years in achieving the desired goal.
The automaker saw its vehicle deals improve in the December quarter in the midst of a pickup in the assembling and development areas.
“As far as fixed cost is concerned, right from the previous year when we knew we were entering a downturn, a lot of efforts were started to revisit every fixed cost element and almost to zero-based budgeting. This year we further accelerated our efforts," he said.
“So, this will help keep the fixed cost in check, although volumes will go up. Therefore, with all in place, with much lower volumes we were able to see operational profit before tax (PBT) in Q3 and as the volumes pick up this should help us; operational leverage should kick in, and we should see better financials."