MOSL: ANNUAL REPORT THREADBARE (ART) | TATA MOTORS FY19-Operational weakness, continued capex dent FCF
ANNUAL REPORT THREADBARE (ART) | TATA MOTORS FY19: Operational weakness, continued capex dent FCF
TTMT’s FY19 AR analysis highlighted a weak operating performance. EBITDA declined ~16% YoY to INR256b, despite (a) continued capitalization of product development expenditure by INR169b (80% of cash spent) and (b) lower pension cost recognized in P&L (at INR14b) than cash paid to the pension fund (INR24b). JLR’s underfunded pension liabilities increased from INR40b in FY18 to INR60b in FY19. Earnings continued to be impacted by recognition of derivative losses of INR70b (FY18: INR103b) on hedges, while unrealized hedge loss of INR56b (FY18: loss of INR36b) was outstanding in the hedge reserve. Hedging positions have changed materially YoY, with (a) derivatives to hedge USD/CNY sales declining to GBP4.2b/3.4b (FY18: GBP5.9b/5.6b) due to the change in hedging policy and (b) derivatives to hedge EUR costs increasing to GBP7.5b (FY18: GBP6.5b) due to commencement of plant operations in Europe. FCF post interest declined to -INR230b (FY18: -INR154b), primarily due to the weak operating performance, higher finance cost, higher increase in finance receivable (by INR101b v/s INR64b in FY18) and continued capex. High capital intensity dragged RoCE to 2.1% (FY15: 13.5%). Gross adj. debt (excl. financing business) rose to INR876b (FY18: INR822b) with borrowing cost of 7.2%. Also, cash & investments stood at INR431b (mainly at JLR), generating a yield of 2.5%. This led to a negative carry.
Tata Motors is an automobile company, engaged in the manufacture and sale of commercial and passenger vehicles primarily in India. Co. provides cars, utility vehicles, trucks, buses, and defense vehicles, as well as develops electric and hybrid vehicles for personal and public transportation. In addition, Co. is engaged in the provision of engineering and automotive applications, as well as machine tools and factory automation applications; construction equipment manufacturing; automotive vehicle components manufacturing, among others. Co. markets its vehicles in Europe, Africa, the Middle East, South East Asia, South Asia, and South America.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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