Tata Motors Limited

But the idea or the argument that banks are not at a loss, so therefore they should continue giving this for free, for me, that argument does not make sense.

I mean, you know, Tata Motors is not at a loss, so should they give a car... for free, right? I mean, at some point that argument breaks down because banks are now subsidizing this with a whole bunch of other services that they offer for profit.

Right.

And they have to channel that money into all of this.

Uh, they, they are-- They, they were doing pretty well till the last financial year.

But from April onwards, we have seen that they have been under a bit of a pressure because of, uh, competition from Tata Motors and Mahindra and Mahindra.

Right.

And also partly due to capacity constraints that they have been facing.

JSW is extremely ambitious when it comes to automotive.

In a nutshell, can we say that JSW is, uh, you know, a- ambitions can be sort of summed up by saying they can ...

They want to take on a Maruti or a Tata Motors.

Is, is that where the ambition is?

There's a corporate example from India that adds an important nuance.

When Tata Motors acquired JLR from Ford in 2008, the decision itself was bold.

Tata paid about $2.3 billion for the businesses in a transaction completed just as the global financial environment was becoming extraordinarily difficult.

But what is interesting for our purposes is what happened after the decisive act.

A later case analysis of the acquisition argued that Tata resisted the common temptation to extract synergies as quickly as possible.

Instead, it continued investing in JLR's core capabilities and took a longer-term approach, with the researchers explicitly identifying patience as one ingredient in the eventual success of the acquisition.

Now, JLR's story has continued to evolve, and like any large acquisition, it has had difficult periods.

Jaguar Land Rover currently sources its cells from AESC in China, and the inverters for Wolverhampton are purchased from external suppliers.

Not sure who make those, but, uh, JLR plans to source its cells next year from its parent company, Tata, and their battery business called Agratas, and they're developing a new battery facility in Somerset.

All right, we'll take a break.

We'll come back and we'll talk charging in the US and a big new site.

Don't worry, if you're past third row, I have no idea who you are.

So now let's talk about Tata Motors.

So in the Deutsche Valuation, you're going to see my 5.4% growth rate and you've seen my justification.

Here I don't want to use the dividend discount model, why? Because dividends are when you're desperate, right? I can estimate cash flows.

So rather than trust you to tell me when I don't pay dividends, I'm reinvesting the money, I can see what you actually reinvest.

So in Tata Motors, I looked at the reinvestment rate, where I took the capex and the change in working capital.

And I looked at what percentage of the net income you put back into the business.

And for Tata Motors, if you look at the numbers, now do you see why I want to average things out of a company like Tata Motors? In 2008 and 9, they actually had a negative reinvestment rate because they actually lost money but reinvested money anyway.

Yeah, yeah, and I, I mean, I, I, I just feel that it's a matter of time.

Uh, and I think, uh, the biggest players, uh, in this, uh, market, and to give you example from the passenger vehicle space, uh, Tata Motors and Mahindra & Mahindra, both these Indian brands grew from two and a half lakh to half a million units in no time, and we saw how the ecosystem was stretched.

Yeah.

Uh, and I feel, according to me, as Ather scales up from here, the biggest challenge is gonna be how is it going to manage the scale?