Tata Motors says growth in H1, FY2014 will remain subdued, awaits infrastructure boost

Tata Motors has said that growth in the first half of 2014-15 is unlikely to be much different from that in the last fiscal as the industrial and services sector is still weak. The company says a stable government at the Centre could take steps to improve investor confidence and thereby lead to an economic  revival in the second half. These comments have been made by the company in its 2014-15 Annual Report.

According to the report, Tata’s M&HCV sales, which fell by 30 percent in the last fiscal, have seen ‘an arrest in the declining trend at the start of the new fiscal’. The report says that infrastructure spending and as well as regulation in areas such as mining will give a positive boost to the Indian economy. This optimism is premised on the new government’s expressed mandate on infrastructure spending that will boost transport and mining.

The report says that while Tata Motors will continue to look to provide products that buyers want, the key part of the strategy will be to improve relationships with customers. Among other things, this would look at making improvements in the brick-and-mortar setups as well as putting in place the right processes and enabling speedy resolutions of buyer problems.

On other issues, the Annual Report suggests that the new government, while approaching FDI in a cautious manner, may take steps to open up the defence sector. At present, the company is enhancing its offerings to move from pure logistics solutions to tactical and combat solutions.

While defence is one opportunity, the Report mentions that leveraging the wealth in rural markets, enhancing educational awareness for customers and providing solutions that are not cyclical, and addressing the needs for LCV buyers are some of the opportunities that Tata Motors hopes to tap.

Tata Motors, which saw its market share in passenger vehicles fall to 16.6 percent in 2013-14 from 22 percent in 2012-13, is all set to launch the Bolt hatchback and Zest sedan later this month.

In the commercial vehicles segment, despite the fall in M&HCV sales, the company was able to enhance its share by 1.6 percent to 54.9 percent helped by launches such as the LX range of truck and tippers.

All eyes will now be on next week’s Union Budget 2014 and its pronouncements that will impact the auto segment. Much is expected in infrastructure, given that the excise duty regime, always eagerly awaited, will not be the icing on the cake thanks to the government’s decision to extend the UPA’s sops till the end of 2014. Any announcement on electric vehicles though will be eagerly awaited.