Tata Motors’ FY2022 annual report highlights (i) weak performance with an 18.8% decline in Ebitda to Rs 248 bn, led by JLR; (ii) rising working capital requirements leading to a 51% decline in reported operating cash flows to Rs 143 bn despite a Rs 19 bn support from increased acceptances, including vendor financing from related party; (iii) JLR’s pension plan turning overfunded, with cash contribution continuing to exceed expenses recognised; (iv) decline in the capitalisation of product development to 39%; and (v) an increase in hedges for JLR’s CNY-denominated revenues and decline in hedges for EURO-denominated costs.
FCF declines; rising acceptances/vendor financing support reported cash flows TAMO’s reported operating cash flows for FY2022 fell to Rs 143 bn from Rs 290 bn in FY2021, primarily due to JLR’s (i) weak operating performance; and (ii) an increase in working capital requirements as the negative cash conversion cycle led to cash outflows amid a decline in revenues. The cash flows were supported by an increase in acceptances by Rs 19 bn, which included higher vendor financing from Tata Capital, a related party. Adjusted for the increase in finance receivables and acceptances, free cash flow after interest declined to -ve Rs 118 bn (FY2021: -ve Rs 41 bn) despite a lower capex of Rs 149 bn versus Rs 199 bn in FY2021.
Tata CV/PV performance improves Consolidated revenue grew by 11.5% to Rs 2,785 bn, primarily driven by an increase in CV (revenue up 58.0% y-o-y to Rs 523 bn) and PV volumes (revenue up 89.8% y-o-y to `315 bn) and favourable currency translation from the GBP to the INR. This was partially offset by lower sales volumes at JLR (revenue declined by 7.1% to GBP18.3 bn) due to the global chip shortage.