P.B. Balaji: Thank you, Shailesh. Next slide, please. Overall CV, PV cash flows draw attention to cash profit after tax strong from and therefore more than adequately funding the CapEx that we have and we gradually clawback the working capital that we lost in the first quarter, so that’s what is happening. Next slide please. Investments, you can read for yourself skipping this slide, but just to guide that for the full year, the investment spending will likely to be around INR1,000 crores number no change on that one. Next slide please. Tata Motors spend and I want to take a few minutes on this because this is a disappointment for us this quarter where the GNPA increase that we saw in this portfolio is two reasons. Number one, the restructured book that is actually starting to perform pretty poorly and it’s continuing to do bad and going from bad to worse, and as well as a onetime upgradation one time hit because of the RBI upgradation norms that we had.
So therefore we have started to get further provisions put through in the restructured book. This is now almost 9% of the AUM of INR41,000 crores that we have and there are lot of efforts underway as you would expect to normalize the static restructured book and therefore this work is going to be pretty intense in this quarter as well. The early results are encouraging and the GNPA starting to reduce November, December and January so far has been trending where the maturity efficiencies improving to 102%. The normal book is quite comfortable. We don’t see stress there and capital adequacy also is quite comfortable there. But clearly this is an area where we need to drive a lot of efforts to ensure that we get our collection efforts particularly on the restructured book.
Next slide please. Overall therefore our priorities you can read for yourself, but maybe the only thing I would like to highlight is the view on demand which I’m sure a lot of you are asking as well. We remain cautiously optimistic both in JLRs as well as India and there are enough global uncertainty that we are all aware of, but we still remain optimistic and we can’t be complacent and hence the work both in JLR and in India on the innovation intensity as well as activating the market and ensuring that we win our rightful place here. And of course, chip supplies are likely to improve further and therefore volumes will continue to ramp up steadily, particularly in JLR and commodity prices, we do expect stability and therefore the focus on profitable growth should deliver a strong EBIT and free cash flows in Q4 as well.
So that’s what I have to say. The individual priorities by businesses we have already covered. So let me not go through that. Let me start covering the questions that have come through already. We move to the question section.
A – P.B. Balaji: Okay. So maybe let’s start with — I think Ben this is coming your way, Ben or Adrian, either of you can take it. Could you let us know the terms of the extension of the revolver? How much was undrawn and drawn? Interest rates increased by and additionally given the cash cushion the company enjoys, is there a scope for optimizing the revolver debt balance further? And there’s another question in terms of also about how much of a repayment are you planning given the cash position there? But you want to just wrap this all up with one response Ben.
Bennet Birgbauer: Yes, I can cover that, Balaji. So broadly the terms of the revolver are in terms of covenants and things like that. The documentation is pretty much identical to the prior revolver, the pricing margin did go up 50 basis points to 3.35%, but that’s on a drawn basis and undrawn basis all we do is we pay 35% of the margin. So the annualized cost of £1.5 billion revolver is about £18 million. So it’s from our perspective, it’s the cheapest fire insurance you can possibly have. In terms of — is there scope for optimizing the revolver debt balance? Well just because I think it is low cost liquidity insurance and we actually used to have a higher revolver than that, I don’t really think we’re considering taking down the revolver. We obviously have the net debt target that we’re still working towards. But I don’t really see changing the size of the revolver at this point.
P.B. Balaji: Thank you, Ben. Next question I think is from Chandramouli, Goldman Sachs. I think, Adrian, this is coming your way. On JLR how are we thinking about the demand outlook once we clear out our strong order backlog. Is the current hawkish interest rate environment were to continue into the next year. What is your view on the market and the next I think the same question coming into Girish later on. You take the first one, Adrian.
Adrian Mardell: Yes. Thanks, Balaji. So from our perspective, look our order banks historical highest to pre-supply challenges that double the level and you’ve seen the size of the increases that reduction. So we believe our order banks are going to stay naturally high particularly on the Range Rover but we’ve sold out for more than 12 months now we’re not taking new orders until 24 model year and on the Range Rover Sport. Although we’re rectifying Defender. So we will see a marginal reduction quarter-on-quarter, but I still believe will be this time next year talking about order banks, which are higher than ideal. So at today’s level of known uncertainty in the marketplace on recession and interest rates at the levels we see in front of us going forward today I believe the challenge here continues through ’23 to be supply rather than demand.
We have plenty of opportunity to increase demand and stimulate that given we’re only spending two-thirds of the level on fixed marketing we were 12 months, 18 months ago or so.
P.B. Balaji: Thank you. Thanks Adrian. Girish, just coming your way, same from Chandramouli itself on India’s CVs, however we are thinking about price hikes heading into the stricter emission standards beginning ’24 FY ’24, is it going to be all at once or more phased in nature?
Girish Wagh: So the cost increases for RD are going to be lesser as compared to what we had seen in BSVI phase-1. But even in this BSVI phase-1, I think we had taken all the increases or the price increase in, one go. I think there is only one another factor that we have to keep a watch on which is the commodity increases, which may happen again in Q1 of next financial year. And this is both these things put together we’ll see what is the kind of price increase which has to be passed on. But from the point of your RD, I think it will also vary model-to-model, but mostly it will be passed out in one go.
P.B. Balaji: Just sticking to you, it is from Sonal Gupta, HSBC MF. LCVs, while MHCV is showing strong growth, LCV segment is showing a decline. Can you highlight the reasons?
Girish Wagh: Yes, so I think it is more of ILCV which is showing a decline, which in our parlance is seven to 15 tons, but now it has gone up to seven to 18 tons. So as you rightly pointed out, MHCV is growing because of higher freight availability. I think this year, we’ll see that the freight supply is actually more than the trucks, which are being put into the market and therefore fleet utilization is going up. As far as ILCV is concerned, one of the thing, which is playing out is the base effect, right. So the decline, which had happened in ILCV, was much lower than that of MHCV, number one. And number two, we also see that in ILCV one had seen a significant penetration of CNG where to some extent the diesel vehicles were also underutilized and the last portion of CNG got pushed in or bought in more so.
And I think those are coming back for usage now. So it is more of a base effect. And we do expect that this year while the MHCVs may grow about 45% on a year-on-year basis for the entire year, ILCV may end up growing only 14% to 15%. I don’t know whether in LCV you were also referring to the small vehicles. So let me talk about that also. As far as small vehicles are concerned, even here, I think it is the base effect which is coming in, but this continues to grow. The growth rate is tapering quarter-over-quarter, but still I think it appears that for the entire fiscal we should see a growth rate of more than 20%.
