Tata Motors Ltd (TTM) 2013 Q2 法說會逐字稿

Ladies and gentlemen, good day and welcome to the Tata Motors Q2 FY 2013 Earnings Conference Call, hosted by Macquarie Capital Securities. As a reminder, for the duration of this conference, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions at the end of today's presentation. (Operator Instructions) Please note that this conference is being recorded.

At this time, I would like to hand the conference over to Mr. Amit Mishra, Macquarie Capital Securities. Thank you and over to you, sir.

Thank you, Myron. We welcome you all to Tata Motors Second Quarter FY 2013 results call. This evening we have with us Mr. C. Ramakrishnan, CFO of Tata Motors and along with him the Investor Relations team. I will request Mr. Ramakrishnan to give some brief review for the quarter, and then we will open Q&A.

Thank you and over to you, sir.

Thank you, Amit. Good evening everybody. Thanks for joining us on the call, which is the Q2 results announcement, Tata Motors' consolidated and standalone.

I believe there were some delays in our uploading the presentation, which we made a short while ago. Some of you or many of you may not have had the opportunity to see it. I just thought I will quickly run through some of the selected slides and provide a bit of a context and then we can throw it open for Q&A.

In this quarter, our consolidated net revenue was up 20% at INR43,000 crores compared to INR36,000 crores in the same period last year. EBITDA margin came in at 13.5%, up marginally from 13.3% same period last year.

Profit after tax for the quarter consolidated was INR2,075 crores, up 11% from INR1,800 crores in the same quarter last year. The results, obviously, were substantially boosted, substantially supported by an excellent performance in one more quarter of Jaguar Land Rover in UK.

In Jaguar Land Rover, net revenue was up at GBP3.28 billion compared to GBP2.9 billion in the same quarter last year. EBITDA margin came in stronger at 14.8% compared to 14.4%. Profit after tax was GBP305 million compared to GBP172 million in the same quarter last year. Reflects a net revenue growth of about 13%, improvement in EBITDA margins and 77% growth in profit after tax.

The standalone performance, however, was quite depressed. Net revenue was almost flat, slightly lower at INR12,481 crores compared to INR12,900 crores in the same quarter last year. EBITDA margin saw significant pressure, dropped to 5.9% compared to 7.2% last year.

Profit after tax, however, was substantially helped by dividend that we received from Jaguar Land Rover during this quarter and accounted as other income in Tata Motors. So profit after tax came in at INR867 crores, up from INR102 crores in the same period last year.

In terms of the India performance, commercial vehicles, improvement in this quarter in our market share. In the quarter, our market share stood at 59.7%, slightly up from the previous quarter. In terms of the external environment, market environment, we saw weak macroeconomic outlook, sluggish industrial demand, and a couple of increases in terms of diesel prices and excise increases, which overall impacted them and SCV demand.

Our Ace family of products and small commercial vehicles in general saw significant growth in demand and volumes. We announced certain new product launches in heavy trucks across our traditional platform and Prima range, and launched new services for better customer service.

The improvement in market share and the improvement in volume was, of course, substantially supported by growth in LCVs and ICVs. However, in commercial vehicles, we did see growth and pressure on marketing expenses.

In passenger vehicles, the industry grew modestly at about 3%. The overall growth was subdued compared to some of the earlier years' figures we had seen. There are some selective segments, the UV segment and some of the Micro segment represented by Nano, which saw some robust growth.

We continued to focus improving on the initiatives that we had launched in the last few quarters in terms of market connect, dealer network expansion, product refreshes and so on. The recent launches of Sumo Gold and Nano 2012 model year vehicle and new Vista have grown -- have helped us boost the volumes. Market share in passenger vehicles grew modestly and ended at 12.3% in the quarter.

Our export performance from India saw a decline of about 9%, mainly because of subdued demand and market situation in some of our key markets like Sri Lanka and Bangladesh. And some of the volume growth we saw in other markets like Nepal, Thailand, South Africa, and certain Middle Eastern countries. Overall, the export stood at 15,000 vehicles compared to 16,200 last year.

Jaguar Land Rover overall volumes up about 14%, 68,000 up to 77,000. It's reflective of the strong demand for our new launches, particularly the Evoque. Range Rover Sport, which we unveiled, has received very good response in the market.

And China region from a geographical mix, China region continues to show strong growth. For the quarter, China represents about 21% of our global sales, North America about 17%, UK about 19%, Europe about 18.9%. China 21% is up from about 15% in the same quarter last year in terms of share of our wholesale mix.

As I said you earlier, EBITDA margin in JLR came in at 14.8% with improved volumes, more favorable geographical mix, favorable exchange rate, commodity costs remaining under check. Operating cash flow for the quarter was about GBP110 million after capital expenditure and product development expenses.

Capital expenditure and product development expenses for the quarter stood at about GBP480 million. In the quarter, and as I said you earlier, Jaguar Land Rover also declared a dividend, inaugural dividend of about GBP150 million, which was paid to Tata Motors during this period.

End of the quarter, cash and bank balances in Jaguar Land Rover stood at a little over GBP2 billion. Several product actions and newer launches on the way in Jaguar Land Rover.

In terms of our other subsidiaries, some of the major ones, Tata Motors Finance, our vehicle financing subsidiary in India, reports a profit of about -- profit after tax of about INR69 crores in this quarter, up from INR52 crores in the same quarter last year. Tata Technologies, our IT and engineering services subsidiary, profit after tax at INR68 crores compared to INR48 crores in the same quarter last year.

TML Drivelines, which is our axles and transmission subsidiary, profit after tax at INR33 crores, down from INR55 crores in the same period last year, reflective of the weaker demand and volume and performance in the medium and heavy commercial vehicle range in our business. Tata Daewoo, our commercial vehicle subsidiary in Korea, saw a relatively flat performance in terms of profit, KRW1 billion, at the same level as last year with a marginal drop in revenues.

Going forward, we expect the external environment for commercial vehicles will remain somewhat challenging in terms of volumes, external market environment, marketing cost pressures. We believe the growth will be driven by smaller commercial vehicles both in the cargo segment and in the passenger segment.

The Company will continue to focus on newer launches unveiling the full range of the Prima and the new LCV, the Ultra range and other variants on the Ace platform. And we will continue to focus on dealer expansion, network expansion, and offering a host of services for our customers.

Passenger cars, similarly, our focus will be to aggressively pursue the several initiatives we had started in the last few quarters; on the product side, regular refreshes; on the customer experience and engagement side in the marketplace, better dealer connectivity and better dealer penetration; and in both the businesses, commercial vehicles and passenger cars, considering the market and volumes, they will of course redouble our efforts on cost reduction and cost containment.

In terms of overall balance sheet, the net automotive debt to equity at a consolidated level was at 0.29-1 at the end of the quarter, at the Tata Motors standalone level was at 0.77-1. Jaguar Land Rover in terms of net debt was negative with their huge cash of over GBP2 billion at the end of the quarter.

I'll stop here and maybe hand it back to Amit for starting the question-and-answer session.

Thank you very much, sir. (Operator Instructions) Pramod Kumar, IDFC Securities.

Thanks a lot for the opportunity, sir. My first question pertains to Jaguar Land Rover where I think on a sequential basis our realizations are down, same is the case with volumes as well. And as we can see from the data, the geographical mix also has weakened to an extent along with product mix.

However, your gross margin performance at JLR seems to be quite opposite [and you've seen] 170 bps gross margin expansion. Just wanted to understand any one-offs in that and if not, how sustainable is this kind of per margin given that you will have new ramp-up in Range Rover, which is supposed to be much more higher margin?

Well, in some of the markets like UK and elsewhere, we do see some seasonal variations and therefore sequentially Q2 and Q1, it becomes a little difficult to compare and explain. And Q2, the business in Jaguar Land Rover in terms of August month, we also see some shutdowns and changeover of production from old models to new models.

So these seasonal factors we need to keep in mind, both in terms of accounting for the volume variations. Having said that, as you rightly mentioned, more favorable geographical mix has definitely helped our margins. The exchange rate has also been better here in comparing with the same period last year.

No. I'm talking about quarter-on-quarter, sir, because YoY it's fairly clear as to everything has improved. But on a sequential basis, is what I'm looking for?

Yes, primarily geographical mix, but the volume performances also on account of some seasonal variations in some of the select markets.

Okay. And in that sense, I think the gross margin there is enough room for improvement considering that we're going to be ramping up Range Rover as well going forward?

From our internal actions in terms of cost and volumes, et cetera, yes, but I think we need to be watchful. We are cautiously optimistic about the future. We need to be conscious about the external environment, demand and we do see in the last few quarters, some of the expenses on the marketing, variable and fixed marketing, also creeping up. So we have to be watchful on these.

But no one-off on the RM side in terms of any commodity hedges being favorable?

(inaudible).

Okay. And my final question is on the standalone business, sir. Again here we had a significant improvement in the mix on a sequential basis in terms of commercial vehicles going by 17%. However, our gross margins have gone, I think, quite low dramatically in that sense. But just if you can throw some color on that as to what are the reasons for this and how many of those factors you see easing off in the near future?

One of the prime drivers, of course, has been the volume as well as model mix and in both the businesses, commercial vehicles and passenger cars, we have seen significant increase in variable marketing expenses. And in passenger cars, since last few quarters, we have also significantly stepped up our publicity in fixed marketing expenses. These have added to the pressure on the bottom line. A lot would depend on the external environment and how we see the market shaping up in the future.

In general, I would say the market in terms of money market and funds availability, the liquidity remains strong. Expectations are there in terms of reductions in interest rate, particularly for the automotive. If the demand picks up and the policy framework comes across much stronger, possibly the margins accompanied by volume growth can happen over the next few quarters. The external environment, it's difficult for me to predict a precise date for improvement.

And so Pantnagar, sorry on our Ace product, when do we become taxpaying from Pantnagar. We already are paying a higher tax now at Pantnagar?

Yes, income tax, you don't pay separately for Pantnagar and other facilities. Tata Motors is one single legal entity (inaudible). So you pay -- we file our return and pay tax on a consolidated basis. When I say consolidated, I mean for Tata Motors as a company, not location by location.

No, but the tax incentives are there for Pantnagar, right? I think the first five years you had 100% income tax exemption for the plant? I'm referring to that, in that context.

I am also referring to that. The tax incentives available for an assessee in Pantnagar, if you are an assessee with multiple locations and if you are filing a return on a total basis for the Company as a whole, you may or may not get the benefit for one particular location.

Okay. So we haven't benefited so much because of the tax holiday asset? That's what you're indicating.

That's right.

Okay, fair enough, sir. Thanks a lot and best of luck, sir.

Pramod Amthe, CIMB.

Hi, this is again with regard to the margin profile for the parent. It seems to have deteriorated substantially, are there any one-offs and what are the management efforts to bring it back to the normalcy levels?

No, I think it is a -- if you look at our two businesses, I think the commercial vehicle business in terms of volumes we have done better and we have done reasonably well. And in terms of market share we have improved, if you take the performance in a slightly more holistic fashion beyond the financials. Even in a tough market condition and with growing competition, we have marginally improved our market share overall.

The small commercial vehicles are doing quite well and the model mix asset goes more in favor of small commercial vehicles and down in the case of medium and heavy commercial vehicles, you definitely see an impact negatively on the overall margin, number one.

Two, in passenger car, in general, our capacity utilization levels have been quite modest. While we see some traction in volumes and market share, we are at less than 50% in terms of overall capacity utilization in the passenger car business, which is also hurting the overall performance. Combined with these two factors, we have also seen a period where due to intense competition activity in both the businesses, we have seen discounts in variable marketing expenses rise quite sharply. There are no particular one-offs that I can talk about beyond what I have stated just now.

And would you like to share --?

I'm talking, sorry to interrupt -- I'm talking more at the EBITDA level. At the PBT level, our reported profit has been helped substantially by a dividend from Jaguar Land Rover and we have also had to have some write-offs in the case of our another subsidiary company in Spain where we have had to take close to about INR200 crore write-off in this quarter.

Sure. And with regard to the JLR, the new Range Rover, would you like to share what type of capacities you have created and what will be the outlook on a sustainable basis as a proportion of Land Rover volumes it can form might be one year down the line?

We would definitely hope to sell in terms of volumes more than the current Range Rover model. You have the numbers for the current Range Rover and capacity also has been created at higher levels than the current volume that we have for the current Range Rover. I'm not sure that I would like to give a volume guidance for a model specific in this call.

Sure. And the last, I wanted to get your thoughts on the margin profile for this new product, in the context that you have invested substantially for the new platform. And this is the first time we are going to see top end of the product coming out under the Tata management as compared to Evoque. So how this margin profile will build up for the top end? Will it be a fully pricing power in the initial stages itself or it will still be a operating leverage play as we saw in case of your --?

It's a slightly complex question. It's something which is not very easy to deal with in one go. We have received first of all in terms of launch. You are talking with specific reference to the Range Rover and the new family of products to follow in the next couple of years of the same architecture, sharing similar architecture, the new aluminum architecture.

Sure.

As the new platform and the new architecture lineup unfolds into the future, I think we will see some significant synergies across models, across top ends, across the various top ends of single structure. Of course, in terms of material content and cost, the new Range Rover significantly lighter than the current one and told it's about 400 kgs, 450 kgs lighter in weight compared to the old one.

Okay.

So we should see some improvement in our bottom line performance.

Sure, sir. Thanks and all the best.

Jamshed Dadabhoy, Citigroup.

Yes, thank you for the opportunity. Sir, two questions on your domestic business. One on the Tata Prima, noticed that you'd launched a newer range with a slightly de-contented cabin. What's the rationale behind that?

Second question, on the passenger car side, sir, what's the way forward for this business in terms of positioning, given that most of the market has become diesel, so that niche which Tata Motors occupied on the diesel side is no longer there?

Okay. On the commercial vehicle side, your question was about the Prima. The Prima, as you know, was fairly advanced and futuristic truck offering some of the best features and comfort and performance compared to any other truck in the advanced markets.

And pricing wise, positioned quite high in terms of our conventional product range. The gap being large, we thought we should also have a position somewhere in between, so we will have a three-product positioning strategy, our conventional model, Prima at the top end and as you've called it, a de-contented version of the Prima somewhere in the middle. So we will have a positioning that suits different customer preferences and different customer capabilities to buy and operate. Across these three, we will offer multiple range of products, so the combinations you could get could be quite interesting.

Okay, okay.

As far as the passenger car is concerned, Jamshed, we have talked about it before and also in one-on-one meetings. We believe we have got the right products in the right segments and we do have a position that occupies a significant place in the value and volume segments in the market. I think we need to get our act better in terms of both product refreshes, periodic excitement in the market in terms of newer introductions and better execution capability, both in quality as well as in customer connect.

So several initiatives, as I said, in many of the earlier calls and our interaction, several initiatives internally within the Company are underway. We have begun to see some traction, whether it is the Nano or other models. We have seen some modest improvement in volumes as well as in market share, but I think we have a long way to go.

Sir, do you think there is ever a scenario where you -- where Tata Motors exits the passenger car business?

No, that is not in our mind.

Okay. Thank you, sir.

Govind Chellappa, Jefferies.

Yes, good evening, sir. Hi. My first question was on your dealer profitability in China. We've been hearing a lot about how the extraordinary profitability that the dealers enjoyed has now come off. Would you like to comment on that, are the dealer margins now at what you think at sustainable levels or are they higher or lower than that?

I won't be offhand able to comment on specifically on Jaguar Land Rover dealer profitability, I don't have the numbers or the information readily at hand. But in general, I would say we do see some market behavior from time to time in China, particularly in some of our competition models, we have heard about discounts in different models across competition lines.

We do see some anecdotal stories where earlier we use to hear quite frequently about a customer willing to pay a higher premium for getting a vehicle out of turn or getting quicker than the normal waiting period. Those anecdotal hot stories in the market are lesser and lesser and you hardly hear about them these days. We do see some marketing expenses creeping up particularly at the dealer front, but I don't know that I'll be able to share immediately a number in terms of dealer profitability percentages, but we do see some pressure and some stories on pressure.

Yes. And has there been any instance of your incentivizing any car in China in the last quarter or last couple of quarters?

Not that I'm aware of.

Okay.

So if at all I would think it is not significant enough that I have noticed.

Okay. I mean you've refused to answer this question in the past, but I'll still try my luck. Your margins on the JLR side, at least for me I don't know about others on this call, I found it impossible to forecast. There is just too many variables, especially on the currency side. BMW has guided to 8% to 10% as their target sustainable EBIT margins, not for the next quarter, but generally going forward. Is there any such number that you have in mind that you can help us with?

Govind, as you know, I'm hardly a consistent person, so my answer would also be consistent. I don't want to give a guidance on profit margin, whether it is for Jaguar Land Rover or for Tata Motors or at any consolidated level.

Okay, okay. I'm afraid I'll have to be consistent and ask you this question again in the next quarter. Thank you, sir.

Kapil Singh, Nomura Securities.

Good evening, sir. I've got a couple of questions. Firstly, on the MHCV side, we have seen quite weak numbers especially in October. Have you been running down inventory or are the retails and wholesales in line, how do you see the inventory position for this segment?

The inventories are fairly under control. Nothing on the M&HCV side. You're talking specifically with reference to M&HCV, right?

Yes, so basically retails and wholesales have been in line even in October?

Can you give me a moment, please?

Sure.

No, nothing significant to report. The retail had been generally tracking the wholesale.

Okay. That's great. And secondly on the CapEx side, I believe you're planning somewhere around INR3,000 crores to INR3,500 crores CapEx in the standalone business. Could you give us a split between the passenger vehicle business and commercial vehicle business, and any guidance you have for next year?

I think my guidance was around INR3,000 crores. I doubt whether it will exceed. I would say directionally for the next four, five years, I would say it will be on an average annually about INR3,000 crores in that region. That's my directional indication for this year as well as for the future.

In one year it may be slightly up and one year it may be slightly down because of the product timing sequence and some of the expenses being incurred in lump, but generally in that direction. As far as split between the commercial vehicles and passenger cars is concerned, I would think more than half of it, slightly more than half of it will be passenger cars, and commercial vehicles in terms of capital spend will be slightly less.

Okay. And can you also give us a split like, how much of this is for capacity expansion and how much is for R&D or is it largely for R&D because you have enough capacity?

If you look at it, again your question is on the India business.

Correct.

If you look at in terms of just, as I said you earlier in the call, in terms of passenger cars across all our product lines, we are running approximately around 50% or in that region in terms of capacity utilization. So we have sufficient headroom for growth in volumes without having to invest in capacity substantially in our passenger car business.

In commercial vehicles, I would say in round numbers, we are running at about 70%, 75% in terms of capacity utilization across most of our products, in terms of medium and heavy commercial vehicles as well as light commercial vehicles. So beyond a certain point, we may have to invest in capacity, but into the future.

As far as small commercial vehicles are concerned, as I mentioned last year in the call, we were practically fuller on capacities in our Pantnagar plant. So we had to create one more capacity, particularly focused on the passenger versions in Dharwad in Karnataka. That is going [around steam] right now.

And over the next year, couple of years, we will fill that capacity to match what we have in Pantnagar, so that will be a major investment in capacity. Having said this, I should also say that as you introduce newer models, as you introduce bigger variants, you also have to invest in not so much in capacity to manufacture, but you will also have to invest in flexibility and capability to manufacture in terms of handling multiple product lines and multiple variants and executions. So even if you didn't have increase in absolute volume through capacity, you may still have to invest in manufacturing to handle newer products.

Thanks. So, sir, just to understand more clearly, broadly how much of this INR3,000 crores will be in R&D?

I would think a good part of it will be in product development and research and development and I would think if you take the hard assets like plant and machinery, whether it is for refurbishing or replacing our existing older plants and facilities or for capacities, combined I would say the investment in plant and machinery and facilities will be not more than 25%, 30%.

Thank you, sir. That's very helpful.

Jinesh Gandhi, Motilal Oswal.

Hi, sir. My question pertains to a domestic business. Given the pricing environment which you are witnessing in both our M&HCV business as well as passenger vehicle business, have you taken any price increases recently?

Yes, we have taken price increase during the year. We took a price increase on April 1 in both the businesses, but -- and we also took a price increase in November 1.

November 1 (inaudible).

So November 1 would be what kind of price increase?

(inaudible). Yes, November 1 actually we have taken price increase in M&HCV bus models around 1%.

Around 1%.

Around 1%. But we are clearly seeing heightened discounts on M&HCV side. Do we see that changing over next six months considering that demand environment remains weak, at least for time being it remains weak, we expect discounts to come off?

We are seeking at a point when we have typically in any year, the first two quarters tend to be somewhat subdued both in terms of demand and overall volumes for the industry.

Sure.

And we do see pickup in volume and activity in the second half of the year, but more noticeably in January, March.

Right.

As we are in November, I'm trying to talk about the next six months, one would hope the trend we have seen in the past also continues in this year with a stronger second half performance from an overall market point of view.

Okay.

But beyond that this year since we have seen a quite significant increase in marketing and discount cost, I would think it'll continue to remain under pressure, but I don't know whether it will deepen further. I think it will start gradually coming down.

Right. And second coming to our RM cost, we have seen it, as a percentage of sales, it has been pretty volatile, but are we seeing similar volatility on basic commodity cost or it's just to do with the discounting and mix?

That's a good analysis. It's not so much the commodity pressure that is driving the percentage. It's more to do with the numerator, the net sales realization.

Okay, okay, right, right, right. And, sir, lastly tax rate, we have been guiding for about 18% to 20%, are we looking to change that considering first half has been about 15%?

I'm sorry, can you repeat the question?

The tax rate for standalone entity?

Yes.

In the past, you have indicated it to be in range of 18% to 20%.

Yes.

Do we -- considering that first half was about 15% average, do we still maintain 18% to 20% or it could be lower than that?

I think it will remain 18% to 20%, I don't see a substantial change in that.

Okay, sir. And, sir, lastly what would be the net automotive debt, absolute number?

At a consolidated level?

Yes.

Net automotive debt stood at about INR12,000 crores.

INR12,000 crores. Okay, sir, thanks and all the best.

Srinivas Rao, Deutsche Bank.

Yes. Sir, thank you very much. Sir, my question pertains to your car business. Just wanted to clarify there were some news reports on -- I mean there are some write-offs having been taken in the joint venture you have with Fiat, so if you can confirm on that?

And secondly, the management changes which have happened in terms of Mr. Ravi Kant stepping down, any commentary around that? And finally, the car business as you mentioned is something which obviously Tata Motors wants to make a success out of it. But [what is again a] three, four-year plan, we have heard Mr. Karl Slym make some statements around the business in the news and media. So if you could through some light as to where the car business you would like to see it in about three years' time?

Okay. I note the questions are not so much about the quarter financial results, but let me try and respond as much as possible. Your first question was on the Fiat joint venture, there have been no write-offs in the Fiat joint venture.

Okay.

We have gone through a period of discussions with Fiat in terms of looking at the business model in which we both operate. Fiat are taking direct control and responsibility for the marketing and distribution of Fiat cars in India, which earlier -- till recently was done by Tata Motors as a distributor. So Fiat is forming a separate company. They are in the process of forming a separate company, 100% Fiat company, which will buy the cars from the joint venture and distribute and sell it in the market and the distribution and sale can happen through Tata Motors dealers as well.

Okay.

As far as the joint venture is concerned, we will continue to be partners in the joint venture, which will be a manufacturing joint venture, and we will share capacity. And the joint venture will manufacture the cars and give it to Tata Motors in terms of Tata branded cars and to the Fiat new company, distribution company, in the case of Fiat cars. So the relationship and the joint venture for our manufacturing continue.

There have been no write-offs in the joint venture. Even though it has underperformed in terms of volumes and has incurred losses, there have been no write-offs in the joint venture. Your second question, if I recall, was relating to you said management changes.

Yes, sir.

And you referred to Mr. Ravi Kant stepping down. Mr. Ravi Kant stepped down from the executive position in Tata Motors sometime ago, about four years?

Yes, four years, yes.

So he was not an executive or in a managerial capacity in the Company or in Jaguar Land Rover for the last four years. So I'm not sure whether you're referring to that as management change. Mr. Ravi Kant continues to be Vice Chairman of Tata Motors. He continues on our Board. He was also a Director on the Board of Jaguar Land Rover.

Yes, that's -- yes.

He has stepped down from that.

Okay.

It's not a management change, because he was not holding an executive position in either of the companies anyway. I'm sure we will -- as Director on the Tata Motors Board, we will continue to benefit from this counsel and oversight.

Your third question was about passenger car business over the next three years. I'm not sure I can do adequate justice to this in this call, but as I said you earlier, we know we have a long way to go. We do believe -- as we have established in the past I think we do have capabilities and ability to do well in that business as we have shown in many of our products to you earlier starting with Sumo in mid-1990s or Indica in late-1990s or segment creating, path-breaking product Nano more recently. Many of these products have also been financially successful and has been rewarding for the Company.

I think we need to get our act better, as we said you earlier, in many aspects in terms of product refreshes, product launches, look at more opportunistic segments that we can occupy, take the execution in terms of marketplace, servicing, quality, et cetera, to much, much higher levels than we have done in the past.

We do recognize it's a long way to go. We have identified the actions, the team is in place. Hopefully, we should be able to demonstrate through actual results as we go forward into the future. I'm not sure in terms of specific steps and actions I can elaborate on this call.

[No, no, that's] --

Maybe we can have a separate chat one of these days.

That will be helpful, sir. Thank you so much.

Thanks.

Akshay Saxena, Credit Suisse.

Yes, hi, sir. This is Jatin from Credit Suisse. Just wanted to get a sense on the tax rate at JLR. I think the guidance was that it would be between 20% to 25%, given that we have some benefits on R&D. But in the first half it seems to be more on -- in the range of 29% and that's kind of pulled up the consolidated tax rate as well. So just wanted to get a sense on that.

There are two elements of tax. Let me talk about tax accounting. Two elements of tax accounting in JLR. As far as JLR profits are concerned, part of the profits, particularly China, et cetera, part of the profits remain outside of UK in the various national sales companies where you're -- because they are independent legal entities and operating in different tax domains and jurisdictions, they are subjected to tax according to the local tax rates in those respective jurisdictions. So this taxation will continue as it was in the past.

All right.

No change in that. As far as UK tax is concerned, we introduced the deferred tax accounting and recognized a deferred tax asset as of March 31 of last year. Once you do that between the two lines, cash tax, current tax and deferred tax, you will invariably end up with almost near equivalent to the marginal tax rate in terms of your overall tax charge in the P&L account. One quarter it may move by a few percentage points because of some specific tax credits or whatever adjustments in the quarter, but it'll be in the range of 25% to 29%.

But we have some benefits related to R&D spend, right?

Yes, we do have.

And should that not mean given that -- I don't know what's the exact benefit in the UK, but should it not mean that the tax rate would be lower than the marginal tax rate?

It should be. It's also a function of the mix between UK profits and profits elsewhere. So quarter to quarter, it will be difficult to put a percentage. I would say it will range between 25% to 29%, if you add up both the deferred tax charge and the current tax charge in Jaguar Land Rover.

All right. Thank you.

Hitesh Goel, Kotak.

Sir, can you tell us the deferred tax charge in this quarter on JLR so that we have a better sense then on tax rate.

Sorry, can you repeat the question?

Sir, I wanted to get a sense on what is the deferred tax charge in this quarter on JLR. What is the actual tax rate, actually cash tax rate in JLR in this quarter?

Okay. I don't have the precise number split in my hand right now, but I'll be able to send it to you later.

Okay. Okay, sir. Thank you.

Thank you. I would now like to hand the conference over to Mr. Amit Mishra for closing comments.

Thank you, and thank you everyone for your participation. Have a good evening. Thank you, Mr. Ramakrishnan and thank you all. Thanks.

Thank you very much, Amit, for hosting the call. Thanks everybody for joining us at this time.

Thank you, sir. On behalf of Macquarie Capital Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.