Mumbai: India’s largest automaker by revenue, Tata Motors Ltd, is “hoping to turn the corner" on its domestic business this fiscal year, chairman N. Chandrasekaran said at the company’s 73rd annual general meeting on Friday, referring to sustained performance at the domestic unit.
“The turnaround is going extremely well. I hope we will turn the corner on the domestic business this fiscal," he said.
Tata Motors has been overhauling the domestic supply chain, product portfolio and organizational structure, as part of a turnaround strategy put in place by managing director and CEO Guenter Butschek in mid-2016 to enhance the company’s revenues and profits.
The strategy bore fruit first in the December quarter of FY18, when Tata Motors posted a quarterly profit (of ₹ 184 crore) after five quarters. The March quarter earnings fell back in the red because of one-time expenses related to undisclosed product development programmes, but the domestic unit ended FY18 with a positive free cash flow (of about ₹ 1,380 crore) after five years.
The India business returned to profitability in the three months ended June, albeit off a low base.
Chandrasekaran is “very bullish" on the company’s commercial vehicle division on the back of new product launches, and expects the passenger vehicle division to corner a larger share of the market and deliver an improved financial performance.
Analysts believe the profitability in the domestic business is sustainable and expect it to be “directionally positive" on the back of a strong product pipeline and the turnaround strategy. India’s underlying economic expansion story will also help, said Mitul Shah, vice president (research) at Reliance Securities Ltd.