Tata Motors to integrate new Sanand unit in FY24
3 min read 30 Jun 2023, 11:11 PM ISTThe facility can make 300,000 vehicles, which can be scaled to 420,000
PremiumNew Delhi: Tata Motors secured its position as the second-largest passenger vehicle maker in terms of sales footprint in India, trailing market leader Maruti Suzuki, riding on the success of its aggressive expansion strategy, focussed on targeted micro-markets to capture market share, according to its FY23 annual report.
To meet growing demand, Tata Motors plans to bolster its operations by expanding manufacturing capacity. The facility at Sanand, Gujarat, acquired from Ford, can produce 300,000 vehicles annually, which can be scaled to 420,000 units over time.
“We have successfully completed the onboarding of over 600 employees at the recently acquired Ford plant," it added.
“The strategy to enhance sales through targeting micro-markets worked well... We added 227 outlets in FY23 to 1,410 at the end of the year, becoming the second largest sales network by an OEM in India. Ninety-nine percent of our dealers are profitable vis-à-vis 43% in FY20."
“We expanded our service network to add 150 workshops in FY23, to a total of 855. We continued the thrust on sales enhancement and identified high total industry volumes in urban micro-market and rural areas via nuanced actions. In addition, we will drive focused initiative to drive EV and CNG sales," the company said. It will also expand its sales and service capability in FY24. “We have retained the top SUV company rank for the second year. For FY23, the business posted revenues of ₹47,900 crore."
“It delivered EBITDA and EBIT margins of 6.4% and 1% (improvement of 110 bps and 300 bps over FY 2021-22). With existing capacities nearing saturation, it acquired a state-of-the-art vehicle manufacturing facility in Sanand, Gujarat, adjacent to its existing plant, with capacity scalable to 420,000 units per annum," said N. Chandrasekaran, chairman and non-executive director of Tata Motors.
Tata Motors expects growth in the passenger vehicle market to moderate after achieving record volumes in FY23.
“We expect the industry growth to moderate due to a strong base effect and other macro factors like rising interest rates, inflation, and the cost impact from progressive regulatory norms. The electrification trend is set to strengthen further. We will continue to stay agile, strengthen our portfolio, and “reimagine" the front end while proactively managing the demand and supply situation.
“In FY 2023-24, we aim to continue to deliver market-beating growth, sustain the aggression in driving up EV penetration, consolidate market share gains, drive actions to reach double-digit EBITDA in the coming years and sustain positive free cash flows. We will integrate the new Sanand factory into our industrial footprint and unlock capacity," the automaker said.
In FY23, Tata Motors’ passenger vehicle production increased by 46% to 545,000 units from a year earlier, its highest since its inception.
For FY23, 9% of all vehicles Tata Motors sold were EVs, while 8% were CNG, 16% diesel and 67% petrol. However, it noted that the narrowing difference between CNG and petrol prices in FY23 also led to demand for the vehicles softening.
“During the second half of FY 2022-23, we observed a gradual normalisation of market demand, reaching levels similar to the pre-covid period. This was due to waning of pent up demand. In addition, the demand for Compressed Natural Gas (CNG) slowed down due to a rise in CNG prices. We implemented targeted demand-generation strategies to manage customer demand. These encompassed region-specific and product-specific marketing campaigns, restructuring of incentives, the introduction of tailored consumer schemes, and enhancement of the sales process", the report said.
