It is my privilege to write to you and present the Annual Report for2018-19.
The global automotive industry is witnessing disruptive innovations.The technological changes are leading to new products and business models including sharedmobility autonomous and connected vehicles. Concerns about sustainability are leading thegovernments across the world to push for reduction in the carbon footprint encouragingthe adoption of electric vehicles. These changes coupled with geo-political tradesituation uncertainty around Brexit and slow-down in China have led to a period ofuncertainty for the global auto industry.
In the Indian context the automotive industry is expected to emerge asthe world's third largest passenger vehicle market by 2021 driven by the underlyingeconomic growth increasing consumption demand and mass urbanisation. However in theshort to medium term the sector faces some challenges due to the ongoing credit crunchlow consumer spending and the transition from BS IV to BS VI emission norms by April 12020. The growth in the commercial vehicle market is likely to pick-up driven by increasedinfrastructure spending growth of new-age industries like E-Commerce and further progressin the hub and spoke model of distribution.
In this backdrop I would like to share with you the performancestatus and future direction of your company.
Tata Motors Limited (India Market)
At Tata Motors Limited - India we had announced a "Turnaround'programme in July 2017. Since then your company has undertaken a series of comprehensivesteps to address different aspects of the business. I am happy to share with you that theresult of these initiatives has been visible in your company's strong operational andfinancial performance.
In the commercial vehicles segment which is the back-bone of thedomestic business the company has maintained its leadership position in the industry witha 45.1% market share in FY 2018-19. The business delivered a 17.2% volume growth comparedto the previous year. This is a strong performance in the background of a weaker secondhalf of the year driven by increased axle load norms liquidity crunch and lower demand.
In the passenger vehicles segment your company delivered a credibleperformance by growing its volumes at 13.9% compared to the industry growth rate of 2.8%in FY 2018-19 and achieved the highest unit sales and market share over the past fiveyears. Your company launched a portfolio of successful products including Nexon which isthe only car in India with a "5-star" safety rating from GNCAP and the secondmost selling SUV in India. The Tata Harrier was Launched in January 2019 to anoverwhelmingly positive customer reaction.
While your company continues to make significant progress by no meansthe work is done. In the CV segment your company needs to grow and secure the sustainablecashflow from the business and ensure smooth transition to BS VI emission norms. In the PVsegment your company needs to enhance its sales and service offering which is a key togrowth in volumes and execute its plan to achieve profitability at PBT level.
On Electric Vehicles your company's strong belief is that this is anecessary initiative for India. Your company is committed to take the lead in thistransition and work with other companies in the Tata ecosystem to help create a viableenvironment to drive adoption of electric vehicles. However this transition has to bewell planned. The government and industry need to work together to ensure that ecosystemis developed incentives are provided to stimulate demand and sustainability goals areachieved by implementing emission norms across the value chain.
Jaguar Land Rover
JLR is making significant investments to develop next generationproducts. Over the past year the company has continued to develop award-winning productsthat combine outstanding performance quality and technology. The all electric JaguarI-Pace has been awarded the 2019 World Car of the Year 2019 World Car Design of the Yearand the 2019 World Green Car being the first car ever to win three World Car titlesalong with being awarded the Car of the Year at the European Car of the Year Awards 2019.This is a gratifying testament for the superior next generation car portfolio of JLR.
From an operational performance perspective the last twelve monthshave been challenging for JLR. These have resulted in the business reporting a revenuedecline this year and an operating loss. Our sales from China declined by 34.1% this yearcompared to the previous year. The company faced headwinds from external factors includingslowdown of sales in China and Europe along with internal factors of high fixed coststructures dealer network profitability and high investment leading to cash outflows.
JLR is taking steps to cut costs while taking a calibrated approachtowards future investment in the product portfolio. The company is actively looking atpartnerships and prioritising its investments while ensuring that it is not compromisingits future. These are critical interventions and JLR is committed to deliver cost and cashimprovements.
The next few years are going to be decisive for our Company.
We have to focus on strong operational excellence to deliver positivecashflows while making the right investments to be prepared for the future. We need totransform ourselves to be relevant in the world of future mobility. This will require usto form partnerships develop mobility solutions and optimise our investment in theprocess.
I am aware that it has not been an easy journey and I would like tothank our employees management team dealers customers suppliers and all otherstakeholders for their hard work and commitment at this important time of the company'sjourney.
I would also like to thank you for your continued trust confidence andsupport as we turn this business around and deliver the results that we all look forwardto.
Mumbai May 202019