Tata Motors' PB Balaji On The PV Business

That's right. We have said that very clearly. That's a vision that we have put out there, because that's what gives you a credible play. A podium finish is important, otherwise there's no point playing in this. So we are clear that we will be there, we want to get there, and we are confident that with the green shoots coming up, with the kind of consumer response we are getting on our products, with the kind of consumers we are attracting, some very simple statistics: 85% of my products are bought by individuals. That is very important because we were selling a lot to fleets earlier. That has changed dramatically and that number will go down further in the coming year as well because a lot of auto companies are now tying up with the shared economy. As we move through to a shared economy and moving back to the individual, which is more about the customer segment here, I'm more excited about the way the brand is perceived. The brand has to come together; then we can figure out where to take the brand. I'm not for a minute saying that fleet brands are not appropriate, but my brand has to first stand for something. How people love my brand for what it is? It can't be a white card lined up in front of you. They have to first love the brand, and that's a starting point. Coming from an FMCG background, brand is everything. We start from there, and therefore I am so happy to see that the brand is starting to land, that the consumer is now buying it. Most of these are young consumers, which means new media, and most of us do not understand the psyche. They are very different, very individualistic, highly edgy, they have a point of view on everything, they are rebellious, which means they have a counterpoint on everything that you say. Having a majority of those kinds of consumers is very exciting, and that fits in squarely with my design philosophy, which is about making people turn around and look and say 'what was that? where did that come from?' That is the impact for designers at the core of how the brand is starting to grow. Then you come and say that you like it over here. Our JD Power customer service index, that's where we have a faltering big time. We are number two with the market leader, which is very reassuring, and we should take it forward even further. So I think all importantly, my contribution: margins are sequentially increasing as mix is improving. All this tells me that we have a healthy business, rather the outlines of a healthy business that we can build with this. Otherwise I would have had a very different take if none of these were happening. I've had a very different take. One thing you can tell us is that we have been very carefully assessing every part of the portfolio and deciding what to do and what not to do.

As far as any product, it has its lifecycle. We believe at this point in time Indigo and Indica, if you look at my growth of 34%, the volume delivered is after a 54,000 unit drop in cars, which means we are picking up volumes big time, and the other ones even overcompensate for those losses. That is just the nature of the lifecycle. I think we shouldn't read too much into it. It's just normal business as usual care decisions. As part of the Nano concern, in its current form it will not meet crash norms from 2019 onwards. So we need to rethink how we are going to approach that. A huge amount of thinking is happening in the organization, and once we are ready with the decision, we will tell you.

We didn't say the car didn't have a future. We can't afford what it requires to build the brand. That doesn't mean that we are not open to finding a partner through which we can actually explore this opportunity if it is available. I think you will find this being very clear about the bold move. That's how I'd love you to see it. It's not that we have been erratic about it. We have said winning sustainably is the brief for PV. If we cannot win sustainably, we shouldn't invest. What is the long-term play? Is this the total Capex available? What are the things that are going to make sense? RaceMo is not falling into that setup. Is it going to make money in the horizon we are looking for? Because I have to reach breakeven as a priority. RaceMo not fitting the bill at this point in time, so we said okay, park it. We have ring-fenced it and ensured that it is in a position to actually be monetized if need be. Park it there. Until you find somebody out there to talk, because we are not finding any commercial streams on RaceMo, accounting prudence has been exercised. But the technological capability exists. If we can juice it, we will be delighted. If not, one fine day we'll make money and figure out a way to use it.

I don't want to get into the specific numbers, but on a sustainable basis, a startup model won't require more than about 4,000 crores, and that would come purely from free cash. Absolutely coming purely for these six models. No, I'm saying that the business model itself proves what Capex is. Usually for the next two years, on a long-term basis, if you just keep the BS6 out of the equation, if you had to run a business like Tata Motors at its scale, its size will require about 4,000 crores of Capex every year. My operating cash flows need to be at least that to begin with, and then come all my own aspirations of taking debt down. So that's how I would want you to look at the financial model that we are mentally thinking about.

I think BS6 and the number of models don't make any difference to consumers. The industry talks about you being slow with new launches because we are all preparing for BS6, but there's no such thing. We need to be clever enough to ensure that we are mingling the two together. My idea is getting launched in 2019 with BS6 has filled up, and we are never stopping waiting for BS6. Because keep in mind, for a consumer, BS6 doesn't mean anything. It's just something changing on the chemical factory added to the end of the car, that's what he looks at. Therefore, he wants his breakfast, lunch, dinner full time. So we need to be prepared for that.