Tata Motors Limited
Q1 2016 Earnings Call Transcript

Published: 7 Aug 2015

[Operator:]

Ladies and gentlemen good day and welcome to Tata Motors Q1 FY '16 Earnings Conference Call hosted by Macquarie Capital Securities India Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Mishra from Macquarie Capital Securities. Over to you, sir.

[Amit Mishra:]

Hello, everyone. Thanks for joining the call. We have with us today our Group CFO of Tata Motors, Mr. C. Ramakrishnan; Mr. Vijay Somaiya, Head of Investor Relations and the IR team. Sir, I will hand over the call to you for presentation. Over to you.

[Chandrasekaran Ramakrishnan:]

Thank you, Amit. Good evening everybody. Apart from Vijay and his IR Team, we also have [Indiscernible] joining us here. My colleague CFO in JLR and [indiscernible] space here in have an auto show in Europe. To start the presentation, Tata will shortly announce the first quarter results. Tata Motors Group Consolidated revenue came in at 61,000 crores down from 64,600 crores in the first quarter of last year. EBITDA margin at the consolidated level came in 16.1 down from 18.2 in the same period last year and profit after-tax 2,769 crores down from 5,300 crores in the same period last year. You will see the individual elements of it. If you go to the -- if you come to the India business Tata Motors Limited India; first quarter the net revenue was up at 9,300 crores up from 7,700 crores in the same period last year. EBITDA margin was positive at 4.7% compared to a negative EBITDA of 2.8% in the same period last year and profit after-tax 258 crores down from 394 crores same period last year. Jaguar Land Rover and that these numbers are as per IFRS as JLR reports, net revenue is a little over £5 billion and down from £5.3 billion in the first quarter of last year. EBITDA margin came in at 16.4% down from near all-time high of 20.3% in the same quarter last year and profit after-tax £492 million down from £693 million. In Tata Motor India business we had a strong growth in medium and heavy commercial vehicles segment of our commercial vehicle business and the passenger vehicle business, however light commercial vehicles continue to remain weak. Business maybe medium and heavy commercial vehicle growth has mainly driven the India's performance. In Jaguar Land Rover, it is a solid quarter, EBITDA margin at 16.4% and EBITDA of £800 million plus, but lower than a very strong quarter which we witnessed about a year ago primarily driven by weaker China sales in this quarter. In Tata Motors India business the net debt to equity came in at 0.63

[Operator:]

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] Our first question is from the line of Binay Singh from Morgan Stanley. Please go ahead.

[Binay Singh:]

Hello, sir. Thanks for the opportunity my first question is with regard to I note five things, pressures then China, we've been hearing that a lot of dealers have been saying that JLR is giving a rebate in China, most of them are saying that the dealers rebates will actually be paid in Q2 for Q1, so in terms of your accounting, do you like all these rebates will they reflect in next quarter or are you already provisioning for them in this quarter numbers?

[Chandrasekaran Ramakrishnan:]

I don’t know I can comment about the accounting and provisioning for a particular market and delivery vehicle, but in general if you go back Binay, I've been saying that the segment of the industry across the globe including China has been replacing fairly very fast conditions in terms of variable market excesses in general for the last several quarters. And I think these expenses will go up, you see some of that happening now and that will be too for China as well as for other markets. Once we -- because of the variable marketing expenses normally if it is firmed up and committed it will be provided for and it's difficult to say how much of it is provided in this quarter and how much is in the next quarter etc. but I think we will see both of the variable and fixed marketing expenses since we will generally see a creep-up in China as well as elsewhere. Against this, I think this also we have discussed earlier. If you step back from '15-'16, I'll come to '15-'16 fiscal year a little later, if you step back away from quarter-to-quarter or a 90 day performance; we started on the transition and the transformation in JLR, we started on the new strategy and the growth strategy about three, four years ago. And since that time we have been successfully several new products focusing on product development and introduction of new models, new platforms, powertrains et cetera. In the process, I think we also rationalize the number of platforms and significantly enhance the model to platform ratio. We have progressed half way through the journey with more efforts on the back end of the business to follow with more model launches on our new platform that are much more modular in construction. So, I think the business overall is halfway through in term of becoming much more cost efficient in the back end of the business from design, manufacturing and separating point of view and some of it had to be reinvested in the market in terms of supporting the new models and launches and brand building as soon as variable marketing expenses. Where it will balance out, I think you will have to see as the time goes on. So I think there is a lot to come from the business side in terms of JLR but we will see more pressures on the variable marketing and fixed marketing expenses. I know that presently I answered your question in terms of accounting and provision for this quarter and next quarter. I think we will see a general pressure on the variable marketing and fixed marketing expenses in this year and maybe in the years to come.

[Binay Singh:]

And sir, [indiscernible] something linked to it, the other expenses have been pretty flat quarter-to-quarter. So is that also because you are investing into a new engine facility by the topline contribution of those things, it will be limited for now, is that also getting reflected for now.

[Chandrasekaran Ramakrishnan:]

That’s right. You touched up on one other factor also for the quarter, apart from JV production ramp up and the new model ramp up excellence we also have a completely all new engine facility coming into the production and supplying -- beginning to supply which is also not running up to full capacity or it's also in the ramp up stage. Yes. All this will have a reflection in '15, '16 which you and I have discussed before.

[Binay Singh:]

So this Indian facility as of now you are only supplying for the XE?

[Chandrasekaran Ramakrishnan:]

XE only, yes.

[Abhijit Gajendragadkar:]

It will be supplied for the Discovery Sport.

[Chandrasekaran Ramakrishnan:]

It will be supplying for Discovery Sport, but right now for the XE and also for the Evoque.

[Binay Singh:]

Eventually for the Evoque.

[Chandrasekaran Ramakrishnan:]

Eventually for the Evoque. But right now it is only on the XE.

[Binay Singh:]

Right. And just lastly what is the JV loss for the quarter?

[Abhijit Gajendragadkar:]

That’s our share consolidated.

[Chandrasekaran Ramakrishnan:]

Its 50-50 JV, in the consolidated result, the share of the JV loss is about £6 million.

[Operator:]

Our next question from the line of Yogesh Aggarwal from HSBC. Please go ahead.

[Yogesh Aggarwal:]

Hi. Just going back to the previous question, so you mentioned marketing cost may go up over the next few quarters. So from a year-on-year perspective the fixed cost both staff and other expenses are up like 900 basis points despite a pound depreciation which would have held your gross margin, so if I look at gross margins today they are nearly all time high, so going forward as volumes pick up from XE and other models, do you believe operating leverage will help margins from here going forward?

[Chandrasekaran Ramakrishnan:]

Let me [indiscernible] about operating leverage, yes there is a huge volume growth potential across various products. Just to pick up the example that you talked about, XE for example, it's a segment that we have not been present before; without the XE the global Jaguar brand volumes have been in the range of 60,000 to 70,000 vehicles annually. The XE segment which is Mercedes C class or [indiscernible] series, is roughly about a 1.5 million plus market in the world. Even if you take 3%, or 4% or 5% market share across, we're talking about 5% to be another 75,000 potential volumes. In a way we are seeing Jaguar brand volume can double from where it is today. We will add one more variant of the XE to come later on, we are talking about further growth of the Jaguar brand at launch. Yes, there will be -- and similarly in the Range Rover and Range Rover Discovery and other segments, yes, there is a huge operating leverage. But remember at the same time for achieving this additional growth in volumes we’re also investing in manufacturing capacities, if you take more juice out of an existing plant and grow from 50% to capacity utilization to 80% and 90% capacity utilization there will be one type of operating leverage, if JLR capacity is nearly fully utilized and they are ultimately stepping up capacity profiting leverage impact to slightly lower, because we are also creating new preservatives. At the same time, I think the business efficiencies will also come in to the models itself in the component cost, greater share of components across a product line up, common features, common identity and carryover parts between one model to the other. Yes, overall I think the business will function much more efficiently from a cost point of view and practically if you add another dimension to it which we have seen in the last year plus and maybe into the next near future at least, commodity and component prices have been relatively benign. So I think we do see a lot more efficiencies in JLR business on the manufacturing, design and supply side, and from a strategic point of view.

[Yogesh Aggarwal:]

And sir, net net above the EBITDA what is the net benefit of currency in this quarter? And secondly, can you talk a little bit about the U.S. market particularly the Range Rover and Range Rover Sport, has there been any moderation in demand there in the waiting periods in U.S.?

[Chandrasekaran Ramakrishnan:]

Sorry what is the first question, can you repeat if you don’t mind?

[Yogesh Aggarwal:]

The net benefit of pound weakness in above the EBITDA.

[Abhijit Gajendragadkar:]

Yes, on the FX benefit in the EBITDA, so if you used to think about the operating exposure net of hedges. So operating exposure net of realized hedges was a little bit more than £50 million in the quarter in EBITDA. What I should say is that that’s the benefit compared to a year ago.

[Yogesh Aggarwal:]

And sequentially?

[Abhijit Gajendragadkar:]

Sequentially it's actually quite small, it's less the math sequentially.

[Yogesh Aggarwal:]

And on the U.S. market for Range Rovers?

[Abhijit Gajendragadkar:]

I guess actually, I don’t have the specific data on Range Rovers in the U.S. market, but in general we’ve been seeing good growth in the U.S. market with sales up about 13% and actually Vijay is just pointing out to me that in the presentation we actually say Range Rover is up 39.9%.

[Yogesh Aggarwal:]

I actually I know that, I was just wondering if sequentially the waiting periods are coming down and it's getting more normalized, the volumes in U.S.?

[Abhijit Gajendragadkar:]

In the U.S. honestly I haven’t heard anything about waiting times coming down in the U.S., but I am just telling you I haven’t heard anything like that. So I am probably telling you I don’t know with certainly, but I've certainly not heard anything about that.

[Operator:]

Our next is from the line of Ashish Nigam from Axis Capital. Participants are requested to restrict their questions to only two per participant so that the management could take questions from all participants.

[Ashish Nigam:]

This collapse in Evoque volumes in China, how much of that is due to demand weakness and how much is due to production issues at the JV?

[Abhijit Gajendragadkar:]

Well I don’t think anything -- none of that’s due to production issues. I think in general we think the quality of the Evoque’s being produced in the JV plant is every bit as good as what’s produced in the UK and I don’t think there have been any production issues at all. I think the issue has purely been ramp-up -- [indiscernible] imported Evoque and ramp-up of the new Evoque and I think it's important to note that as part of that the new integrated marketing and sales and service organization has been set up to support and coordinate sales for the JV and I think that organization has developed and grown if that's been an issue in the past but I think we've made some changes in the organization, added some new people that we think will address those issues.

[Ashish Nigam:]

Okay. So just on a related note, what were JV volumes during the quarter?

[Chandrasekaran Ramakrishnan:]

The wholesale numbers was 3,804 vehicles.

[Ashish Nigam:]

Okay. So because I mean you are selling on a steady state around give or take a few thousand but around 3,000 a month Evoques in China which collapse to this level every quarter so was that because of a pricing strategy going wrong or just the perception of made in China not being the same as made in U.K. in the eyes of the Chinese buyer could you just help us understand that?

[Abhijit Gajendragadkar:]

Yes. I think it will be wrong to say collapsed because I think you've migrated from an imported unit to a JV produced unit, but I guess what I would say is that in general the ramp ups been slower than we talked about and said there has been a new marketing and sales organization it is also the case that we have made a change in pricing to a wind what we think it needs to be in the market and that's been communicated at 5% to 6% so I think there is some things around the launch that didn’t happen as fast as we had planned but I think we've taken actions to try to address that and I think we need to give it some time to see how things progress after we've implemented those actions.

[Chandrasekaran Ramakrishnan:]

Actually its Ramakrishnan here, unlike you I would not rush to start calling it collapsed etc. and I don’t think you should [indiscernible] the Evoque potential and performance in the market based on this quarter performance, I think that being a competition to [indiscernible] one or the other and Russia conclusion and start calling terms say collapsed etc. I think would be somewhat premature. The arch 15 it's a new model going there completely new facility in a different country, this is the first manufacturing operation for Jaguar Land Rover outside of the U.K. and in the partner and in a different market like China. I think we have been talking about this challenge in ramping up our production there, it's not easy to start scaling our production in all new facility all of a sudden. Yes it can be faster and it gathers momentum month after month, and it will gather -- the first few thousands will be slower and the next we'll start joining up faster as everything settles down [indiscernible]. When this is happening, at the same in the same quarter we have seen as anticipated headwinds in China, particularly in this segment. And we also had to realign and combine the sales and operating function within ourselves and the JV is integrated sales and marketing. If you triangulate these three factors, I don't think you can [indiscernible] one or the other reasons, but I think over time it will play out well. The model itself is still a welcome model and it will be elsewhere in the world in China, it continues to have strong attraction in the consumer's mind. So I think we need to give it time for it to correct itself.

[Ashish Nigam:]

Okay. Just on a related note, it's also here --

[Chandrasekaran Ramakrishnan:]

Sorry to have come back again, if I heard you, I definitely wouldn’t multiply three into four and say this is the annual one.

[Ashish Nigam:]

No, no off course not, the annual is doing that but there is also --

[Chandrasekaran Ramakrishnan:]

Collapse out of [Indiscernible]

[Ashish Nigam:]

Fair enough sir fair enough, no it's, because it's also you say that the Evoque demand in China has been impacted by the sherry badge on the JV produced Evoque, so could you set the record straight has that been the case, and if so how do you plan to rectify that.

[Abhijit Gajendragadkar:]

I think the answer is we don't think that's been the issue, is the simple answer. The issue we think has been the other things that we've talked and we've taken actions to address and I think we need to give those, give it time for those actions to take hold. Actually financials as we don’t think that's been the issue is the simple to the issue we think is been the other things that we've talked about and we've taken actions to address and I think we need to give those give a time to those actions to take hold.

[Ashish Nigam:]

Okay. So you are certain that this price action which you all took around a month back is what was required and from here on you will expect volumes to ramp up without any other action on pricing at least going ahead.

[Abhijit Gajendragadkar:]

Well. I think you are trying to spoke words in my mount, but I think in general, I think we are confident that we've taken the appropriate actions in terms of the price adjustment or realignment that we talked about in terms of fine tuning some of the aspects of the new marketing and sales organization and adding some new people into that organization and I think that we believe we've addressed the problems.

[Ashish Nigam:]

Okay. That was very helpful. Thank you. Just one last question if I may, your R&D expense as a percent of sales has been in the 17% or 19% vicinity, so how do you see this percent trending going into new launches and is this why you expect a decline in margins going ahead?

[Chandrasekaran Ramakrishnan:]

No. I think the overall product development and CapEx point if you see the total CapEx we are in that range, 15% to 17% and we expect over a period of time three to five years to normalize which is more typical of our segment in which we operate, more like somewhere between 10% to 12% range. This definitely not going to happen any time too soon, but over a period time, I would give it about three, four years' time. It will normalize towards more like 10% to 12%. I wasn’t sure I understood your question.

[Ashish Nigam:]

No, no. I'm sorry I'm not talking about the CapEx as a percent of sales, I'm talking about the R&D that is expensed in the P&L which is around 17% or so, this quarter at least? Let me rephrase that --

[Chandrasekaran Ramakrishnan:]

That would have a direct impact on the margin.

[Ashish Nigam:]

No. Let me rephrase my question. How important is that R&D expense line item in your guidance for lower margin?

[Chandrasekaran Ramakrishnan:]

I don’t think it will be a material one because still the product development expenses which are mainly focused towards new products or new facilities have to be capitalized. It can change mainly from quarter-to-quarter depending on timing and the content of the expenditure incurred in the quarter, but however on the same time the overall R&D expenditures also contributing to near projects and attractive margins in terms of multiplicity of models across the platform. So I think that should be in overall terms it should be okay.

[Operator:]

Thank you. Our next question is from the line of Sonal Gupta from UBS. Please go ahead.

[Sonal Gupta:]

Hi. Thanks for taking my question, so just one on China, could you just talk about how is the performance [ex] the transition models. I mean how have you seen things for Range Rover, Range Rover Sport and Discovery in the first quarter in China and are you seeing some pricing pressure for these models as well?

[Abhijit Gajendragadkar:]

On Range Rover, Range Rover Sport and discovery so that would be in the larger SUV segment and I think sales for those have held up, we would recognize that that segment was maybe down about 4% in the quarter and that is about what sales in aggregate of those three models were so we think those have held up.

[Sonal Gupta:]

And just on internal transfer pricing for JV, I mean now that you are having this integrated sales and marketing organization, do you cross subsidized some of these JV model flag given the discount thing and it comes back to you as a lower transport pricing, I mean how does this work, does JV bear the full cost of it?

[Abhijit Gajendragadkar:]

Well the JV is the standalone company and so I think we do sell some things to the JV so of course there is some transfer pricing in there but in general, you know if for example there is -- for example on the adjustment to the price of the Evoque, there is no cross subsidy at that. That’s for the JV income statement.

[Sonal Gupta:]

And you’ve given us negative 6 million so that's all the cost that JV's borne including the pricing issues etc. the discounts that they're giving?

[Chandrasekaran Ramakrishnan:]

Well, I think our consolidation of 50% of the profits of the JV.

[Sonal Gupta:]

Right. And just on the domestic business, I mean you’ve talked about again 35 billion to 40 billion in terms of CapEx and product development. I mean, I know there has been some encouraging improvement in terms of margin but there is still very low and I mean if I look at the first quarter versus first quarter despite the rights issue that you've done of 75 billion rupees is absolutely your net debt has not gone down year-on-year. So there is a massive cash flow and which is happening in the domestic business, and you are not really cutting CapEx. So I just want to understand like what is the strategy?

[Chandrasekaran Ramakrishnan:]

I think that if you look from a rights issues perspective, rights issue we got the money in middle of May which is there so from that perspective what are seeing is the usage and the reduction impact for only one, one and a half months. So obviously the interest benefits that start flow through from Q2 which is there. Also bear in mind that there is a seasonality in working capital in India, typically Q1 is the highest working capital than it seizes of a bit in the rainy season and in the second half of the year you typically repay the working capital cycle. So you are looking at a point of time when because of the seasonality and only part of it of rights issue you're seeing that impact.

[Sonal Gupta:]

I am seeing net debt year-on-year, quad Q1 versus Q1 so unless you're saying that it's not really comparable your inventory days are actually similar, okay receivables day are probably slightly lower. So I am just saying that I mean in terms of strategy I mean while you're reiterating a commitment for 35 billion to 40 billion, I mean effectively it means that the domestic business at least for the, I mean even assuming some improvement in profitability is not the free cash flow breakeven also. So I am just trying to come from that angle as to what is really the plan, I mean when do you expect from your side the domestic business to really be free cash flow breakeven at least?

[Chandrasekaran Ramakrishnan:]

If you recollect the LCV segment which is the large segment in commercial vehicle that is still showing a negative growth of 19% for Q1 that’s a very large segment almost 65% of our commercial vehicle volumes come from the LCV that is under performing and as you would have heard it on the press conference, Mr. Pisharody did say that he expects the recovery in last quarter of this financial year, I think we need to wait for LCV recovery to happen, that’s one point which is there. Also as you are aware in the passenger car segment we had told you that a structural story. The capacity utilization there is still lower at around 30%, 35%. You need to take your volumes up 50% at least before you break even. So passenger car is a drag on the combined profitability at this point of time.

[Operator:]

Our next question is from the line of Rakesh Jhunjhunwala from Rare Enterprises. Please go ahead.

[Rakesh Jhunjhunwala:]

My question is, last persons question is very relevant that you have capacity in the car business, your cash flow [indiscernible], general market recovers, doesn’t recover nobody can really predict. Sir, this kind of heavy investment without [indiscernible] not have returns on investments we have made. As a financial analyst I've really questioned the return on investment.

[Chandrasekaran Ramakrishnan:]

Thanks Rakesh, I think it’s an important point, I think in terms of the industry that we are in passenger vehicle or commercial vehicle in the auto industry, we definitely need to make this level of investment for continuously introducing newer platforms, technologies, engines, new models, new obligations et cetera. There is no getting away from the fact.

[Rakesh Jhunjhunwala:]

But, sir the capacity is not utilized.

[Chandrasekaran Ramakrishnan:]

Rakesh can I finish? It does not mean the capital expenditure as you call it 3,500 crores or 4,000 crores range annually is going to create more and more capacity. So then sitting on 30%, 35% capacity utilization passenger vehicles and maybe 50% plus in commercial vehicles, I don’t think the management is imprudent to invest in more capacities, we are not investing in capacities. The investment is focused towards new products, new engines, new models, model we have refreshed it, new platforms. So it is going more directly to the product rather than [indiscernible] capacity being created. That’s number one. Number two, I think we’re also looking at a point of time when the overall market has shrunk considerably in the last three, four years. We are coming out of a cycle which has been a prolonged downturn which has been I will say unprecedented both in terms of its severity and also in terms of its length of time. I think we’re beginning to see coming out of it in steps, it has started happening in medium and heavy commercial vehicles, maybe give a couple of quarters, I think we’ll see it in small commercial vehicles. In the passenger vehicle business more than market I think we had number of things to correct internally ourselves; number one, in terms of newer products and the faster development introduction of newer and more exciting products. Number two, in terms of maintaining consistent performance and customer experience and product quality in the market, greater scales effective and the number of defections are also underway. And we need to gain back significant amount of market share that they have lost in the last few years. So I think if you look at the combination of those I think we need to ensure that we emerge from this downturn stronger than what we've had when we entered it. In our commercial vehicle range, we've completely revitalized our product range, launch the Prima and newer platform vehicles, highly versatile, highly modular in construction. The Prima platform itself can generate something like 80 to 100 different variants. The new light commercial platform is launched which is the Ultra, again an extremely versatile and modular platform; again, dozens and dozens of models and applications from a single platform. Tata Ace and its platform will see more and more variants and models coming in and different tonnages. So I think that business -- and each of these models we have ensured in terms of actions and improvements, in terms of telematic solutions it contains in terms of the interior comfort, cabins, in terms of fuel efficiency, power performance, engine output. In each of these factors, we have ensured from a benchmark point of view we rank amongst the top or the best in each of the segments we operate. Similarly in passenger vehicles we are seeing a migration in the business from older platforms to newer platforms. The new platform models will start coming from next year. In the meantime there is a catch up in terms of the older vehicles that we had, so we are seeing more and more refreshed products so to the older platforms, last year and in this year, and from next year onwards the new generation platform vehicles will start rolling. So when you look at the business and this type of situation with macro turnaround hopefully beginning to happen and the business strengthening in terms of continues investments in new models and product, I think the opportunities we see are quite exciting. We continue to maintain our dominant position in commercial product or market share and all that requires investments. I think we are very short sighted -- look at the current performance, therefore I will cut back on investment for the future.

[Rakesh Jhunjhunwala:]

Other question I had is, that when do you expect to break in domestically on the PBT level, in the fourth quarter?

[Abhijit Gajendragadkar:]

[Audio gap] because then I'll be trying to predict date for you --

[Rakesh Jhunjhunwala:]

It's not a question of prediction, you normally predict the future relating to volume de-growth.

[Abhijit Gajendragadkar:]

I think a lot depends on how the macro performance happens. Today what we are seeing for example, even in the medium heavy commercial vehicles, we see growth more driven by fleet replacement demand rather than for our truck operators fleet capacity expansion. That deeper segment is yet to start growing, even in medium heavy commercial vehicles. I think in the macro level the number of problems I have to get on ground, even though there are lot of good intention and financials closure and things beginning to happen. I think we need to see a lot more action on the ground before medium and heavy commercial vehicles achieve a sustainable and real growth momentum in terms of fleet capacity expansion. That will settle down to the small commercial vehicles and last mile vehicle towards the end of the fiscal year. We are seeing a full turn around, I would think it's about a year away.

[Rakesh Jhunjhunwala:]

Another question sir, why this China-China, I mean China is 14% of your sales. You said China in your assessment, is China the beginning and end of your profitability? I mean today you are -- sir suppose China slows for a year, so what will you reason will bring out, transition of sales don’t grow there. Sir, don’t you think you have the capability to make up of their sales in the other regions, would be kind of products you are launching and the quality of those products.

[Abhijit Gajendragadkar:]

Rakesh, once again thank you for the question, I was hoping somebody would raise this. In this quarter we are seeing compared to quarter one year ago, China's share of our global volumes in Jaguar Land Rover come down from the 29% to 14%. The overall volumes has still been quite respectable and turnover wise it's almost on par. And EBITDA wise the margins have come down, but it's come down by about 2 to 3 percentage points, from 19 to 16. This is on the back of China volumes, share for JLR coming down from 29% to 14%. Yes we are seeing a double digit growth in other markets U.S., U.K., Europe and other markets, in some of the markets there has been 20%. Just to reinstate what I said earlier, for JLR, Europe saw a growth of about 28% year-on-year. U.K. saw a growth of 20.5% and U.S. about 12.7%-13%. That's the type of growth we see which is on the back of the U.S. products and the market pull for the JLR brand. Yes we do see volume growth opportunities everywhere including in China. It is the largest market in the world and it be a total volume that China is up [Technical Difficulty] the focus on premium segment in China, I think it continues to be an important market for us. Overall on the back of product line up, we feel good about the future despite this '14-'16 being a difficult year for JLR, on the operations point of view in terms of the ramp up and market change that is happening in a crowded way in one particular year. Longer term we continue to feel optimistic about growth, both top length and bottom length.

[Rakesh Jhunjhunwala:]

Sir, after the change how is July being [indiscernible].

[Chandrasekaran Ramakrishnan:]

I don’t have the July numbers.

[Rakesh Jhunjhunwala:]

[indiscernible]

[Chandrasekaran Ramakrishnan:]

Oh yes I do, but --

[Rakesh Jhunjhunwala:]

Because the figures [indiscernible] --

[Chandrasekaran Ramakrishnan:]

We will cover it next few days.

[Operator:]

Due to time constraints that was our last question. I now hand the floor back to management for closing comments.

[Chandrasekaran Ramakrishnan:]

Thanks everybody for joining. Sorry, I think the number of questions we could take was a little less because I think I have to expand little bit on the answers but some of the questions were quite interesting and I had to provide straightly, broader and longer time picture and not so much focus on the quarter and the number. But thank you very much as we all believe -- we can engage with you separately in one to one meetings to discuss more in detail. Thank you very much for joining.

[Operator:]

Thank you very much sir. On behalf of Macquarie Capital Securities that concludes this conference call. Thank you for joining us you may now disconnect your lines.