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The semiconductor shortage issue is easing and expect it to improve further with every passing month, Tata Motors Group CFO PB Balaji said on Wednesday.
Tata Motors has reported a consolidated net loss of Rs 4,951 crore in the June quarter as chip shortage and COVID-19 lockdown in China impacted Jaguar Land Rover sales.
In a conference call, Balaji said, “As far as chip shortage is concerned, we do see things starting to ease off. Domestically in particular, we are not planning for any substantial chip-related challenges”.
He further said, “Obviously there’s still a lot of running around, fire fighting and midnight working that’s there but it is nowhere at a scale of the challenge that we had even three months back. That’s in India”.
Similarly, for JLR he said there is “much more visibility coming through” compared to what was there a few months back.
“So, there is a clear relaxation starting to happen and we only expect this to continue with every passing month because there is very clearly a slowdown in global demand of white goods, mobile phones…,” Balaji added.
“We expect to see the semiconductor situation ease off every passing month.”
On the company’s electric vehicle demand in India, he said it continues to be robust and “we do expect this penetration to continue to keep increasing and would not be surprised if it crosses double digits by end of the year”.
In the first quarter ended June 30, 2022, the company had sold the highest 9,300 units of passenger electric vehicles, accounting for 7 per cent of its total passenger vehicle sales.
“Therefore, we remain quite bullish with respect to our game plan on EV. The recent launch of Nexon EV Max has just proven the point even further that the consumer is ready and willing to migrate. It’s a question of how much we are able to supply. So, the challenge is more supply rather than demand,” he added.
When asked about the deal for acquiring Ford’s Sanand plant, he said the parties are in the final stages of the definitive agreements.
“It’s our intention to complete the definitive documents in the coming weeks and closure (of the acquisition) by the end of this financial year.”
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For the quarter, net profit from joint ventures and associates amounted to INR 36 crore compared with a loss of INR 130 crore in Q1 FY22. During the quarter under review, free cash flow (automotive) was negative at INR 9800 crore as compared to negative INR 1820 crore in Q1 FY 22), primarily due to working capital impact of INR 8900 crore.
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