Tata Motors Ltd

NSE:TATAMOTORS

Q1-2026 Earnings Call

[Operator]

Good day, and welcome to Tata Motors Q1 FY '26 Earnings Call. Today, we have with us Mr. PB Balaji, Group CFO, Tata Motors; Mr. Girish Wagh, Executive Director, Tata Motors; Mr. Shailesh Chandra, MD, Tata Motors Passenger Vehicles Limited and Tata Passenger Electric Mobility Limited; Mr. GV Ramanan, CFO, Commercial Vehicles; Mr. Dhiman Gupta, CFO, Passenger Vehicles; Mr. Richard Molyneux, CFO, Jaguar Land Rover; and we also have our colleagues from investor relations team.

Today, we plan to walk you through the results presentation followed by a Q&A. [Operator Instructions] I now hand over to Mr. PB Balaji to take over. Over to you, sir.

[P. Balaji, executive]

Thank you. Good evening, everybody. So starting with the safe harbor statement, a slight shift here. So the sale of the Tata Motors Finance business, we have now removed the segment called vehicle financing from our business and included in corporate others. That's the only shift that is there. Some marginal shifts in the way of free cash flow is defined where you included mutual fund investment as well there. So that's the only shift there, nothing material there.

Next slide, please. Quarterly activity intensity continued. Domestically, we had the air-conditioned cabin being launched. And at the JLR side, we had the Range Rover/Range Rover Sport Black versions getting through.

On the EV side, and I'm sure Shailesh is going to talk about it, the introduction of the lifetime warranty on the high-voltage batteries has been a blockbuster that helped out very well in the sales. He will talk about that.

And JLR rating has been upgraded to Ba1 investment grade by Moody's.

Next slide. A few updates on the corporate actions. Part of the press is the demerger. We have the NCLT final hearing today and it has been concluded, and the judgment is reserved and that should help us complete this, this quarter. And the effective date for the demerger will be 1st October, on plan.

Then, of course, last week, we talked about the Evoque acquisition at length. So I don't intend to go through it. It is there just to ensure that the details are well covered. It's the same slide you would have seen last time.

Next slide, please. There's been a, Richard is going to talk about it, a very intense quarter from the point of view of a number of moving parts that we have to deal with in the financial side. The revenues were down 9.1% at INR 3 lakh crores -- sorry, the wholesales were down 9.1% at 300,000 units. Revenues were down 2.5% at 104,000 units.

Profit before tax and exceptional items came in at INR 5,600 crores. A key point here, if you look at the net profit line, where there's a substantial profit from discontinued operations last year of almost INR 4,900 crores, that is basically the Tata Motors Finance business when it was sold to Tata Capital. It is a discontinued business that had to be marked to market, and that's what you see as a gain as a profit from discontinued operations, not the underlying basis. So this is before exceptional items is what you see as the number shift here.

EBITDA at 9.2% was down 40 bps, and we're going to talk about that both on the PV side and the JLR side.

EBIT at 370 -- went down by 370 bps.

And free cash flow, nothing to worry there. It's a seasonal number that we are playing with. On top of it, of course, tariffs did impact.

Next slide, please. Where did the growth declines come from? A lot of it coming out of volume and mix, offset by translation, fundamentally pound sterling to the rupee.

And profitability-wise, JLR declined, which Richard is going to talk about, coming from the tariff hit as well as some one-offs that we had.

CV continued its performance of improving profits despite revenue decline. So now we're running at almost 12%-plus EBITDA and that is what you see there.

Net debt, domestic motors, INR 3,600 crores minus INR 5,200 crores, still at net cash. JLR is seasonal in terms of its net debt going up because of the first quarter. And the reassuring point is the net auto finance, which has sharply declined is also giving boost to the net profit line.

Next slide, please. Let me hand it over to Richard to take you through grossing quarter. Richard, over to you.

[Richard Molyneux, executive]

Grossing is one word for it. So it's been a quarter that we've made a lot of progress both in terms of evolving our brand, but also working with [indiscernible] and his team in the U.K. company to strike up a more favorable trade deal with the U.S. than virtually every other country.

However, it would be wrong to say Q1 was full of only good news. The external environment presented us with multiple challenges of scale, speed and sometimes an unpredictability that can't immediately just be absorbed, which have impacted our Q1 results.

So these results are on this chart. Wholesales, as previously announced, were 87,000, generating a revenue of GBP 6.6 billion. It's worth noting that revenue per car was a record for us. It equaled our record of GBP 76,000 per car despite the weakness of the dollar in this quarter. So this is driven by our brand strength and the fact that more than 77% of our sales in the quarter are Range Rover, Range Rover Sport and Defender. So we achieved joint record revenue per car.

EBT was GBP 351 million, driven by an EBIT of 4%. These, along with the negative free cash flow, were all impacted by U.S. tariffs, which we have accounted for the full 27.5% for the full quarter. Also, dollar weakness and industry dynamics in China had an effect, and I'll explain more on future charts.

The next chart, please. As per usual, I'm not going to go through this chart in detail. All the points are covered in the presentation, but they're summarized here for your reference.

Next. After a really strong Q4, volumes of 87,000 in Q1 were in line with our internal plans as we wound down Jaguar models and temporarily paused shipments to the U.S. following the tariff introductions. Demand for Range Rover and Range Rover Sport remained strong, but Evoque was down 1/3 year-over-year as we upgraded systems in our Halewood plant and focus on higher-margin vehicles. This is what's caused the fall in overall Range Rover numbers below last year's numbers.

Defender remained really strong with wholesales up 15% year-over-year and retail also grew.

Discovery was down as Disco Sport was also paused for the Halewood systems upgrade. And Jag volumes are now almost exclusively for [ F-type ].

So regionally, the U.K. is impacted year-over-year by lower Jaguar volumes, but also by the fact that FY '25 Q1, the number on the far left was an exceptional year. FY '26 Q1 is actually higher than both FY '24 Q1 and FY '23 Q1. So the fact that we had a really super strong Q1 last year shouldn't take away from the fact that our U.K. business does remain very strong.

North America obviously had some disruption, and Q1 also saw an offset from the very strong wholesale push that we did before the tariff increase.

Europe is Jag impacted largely, but had a solid quarter.

And on the right-hand side, for the first time, we're actually going to split out MENA and overseas to give both these core markets appropriate focus. Both regions were up year-over-year.

And finally, China. An incredibly difficult market continues even before changes in the luxury tax rules that came in, in July. But we performed well on wholesale. The retail including the locally produced cars fell. Do remember these locally produced units towards the end of their life as our plant in Changshu moves to produce new Freelander product next year.

Next chart. So this is the key chart in explaining our Q1 performance, walking from a PBT in Q1 last year of GBP 693 million to GBP 351 million we've just reported. Volume was adverse 10,000 units quarter-over-quarter, but partly offset by the mix improvement in the Range Rover and Defender [indiscernible].

You can see the incremental duty cost in the quarter of GBP 254 million on a P&L basis equivalent to nearly 4% EBIT. And just to state again, we are assuming in these actuals that the 27.5% duty on all cars out of the U.K. and Europe was enforced for the entire quarter.

We did have a partial offset to the tariff cost when the Congress in the U.S. reset federal CAFE penalties to 0, allowing us to release our balance sheet reserves. But the net hit from U.S. developments was a major headwind we faced. We do welcome the deals done by the U.K. and EU governments, which will reduce the scale of tariff pain going forward, but they do not remove it.

In terms of net pricing, sales allowances is trending up a little, but still remains low by industry standards at 4.1% on a retail incurred basis.

Our contribution costs continued to progress well with reductions in material costs, but we have had to reserve the 2 significant historical warranty recalls, driving that P&L charge to 5.4% in the quarter.

The next column, D&A year-over-year remains favorable as we've stopped our production in [indiscernible] and [indiscernible]. And you can see the impact of dollar weakening in the penultimate column, the GBP 205 million hit partly offset by our hedging processes.

So a quarter significantly impacted by U.S. tariffs, the partly associated dollar weakening and historical warranty adjustments.

Next chart. Walking us then through the cash, this is the first quarter for a while that we have had cash profit after tax actually lower than investment. So I do note -- it's important to note here that excluding the incremental tariff payment, our cash profit would have been more than [ our investment ].

The big change in the quarter is working capital where we've returned to a more normal seasonality. If you remember, Q4 working capital was over GBP 1 billion favorable as in Q4 sold 110,000 units, but we only paid the component sets on about 99,000 or 96,000. In this quarter, it's the other way around. We sold 87,000 units, but paid the component sets on about 99,000. So payables fell, inventory rose. It's normal seasonality for us.

The bottom line is a GBP 758 million cash loss, of which circa GBP 200 million is from U.S. tariff cash hit. And again, just for explanation, in the U.S., you pay your tariffs in cash essentially 1 month after. So in the quarter, we had 2 big tariff payments in May and June.

Next chart. So investment. Investment levels remained consistent. Q1 was probably at the lower end of our recent range of GBP 850 million to GBP 1 billion per quarter with both engineering and capital spend lower than in Q1 last year. Capitalization ratio was just on 70%, and that is probably near the peak for us given our stage in the cycle plan.

Next page. Right, into the business update.

Next page. Look, it's really important in times of challenge that we put our energy into building our strengths rather than just focusing on mitigating problems. So we focused in the quarter on building our brands in this page with partnerships. You can see Range Rover in Wimbledon. You can see Defender the partner of the Oasis tour, I love that picture. You can see a glimpse into the evolving Discovery brand at the Goodwood event down in Goodwood. And Jaguar builds its presence in its major future markets. So we are focusing on our strength and growing those as well as trying to mitigate the weaknesses that we see.

Next chart. Some of those problems, and we've had a few of them. Standing aside U.K - specific issues such as higher employment taxes, the biggest is obviously tariffs. We welcomed the deals that have been done, and they will provide certainty for us to plan around. But they do take what was initially a 1,000% increase in the cost of our tariffs down. They take them down significantly, but the increase is still 300% of the cars from the U.K. and 500% for the cars from Europe whenever the 15% reduction actually takes effect. It has not done as of yet.

In terms of other geopolitics, we have good news, really good news of the U.K.-India free trade agreement, but also further bad news in that China have reduced their luxury tax threshold from RMB 1.3 million to RMB 900,000, capturing almost all of our Range Rover sales now with an additional 10% tax. And that's in a market where retailer finance is still very restricted.

Finally, BEV demand is certainly not following projections certainly outside of China. So we will rely on the flex nature of our [ analog ] architecture for longer.

A lot of issues, but we're absolutely not just passively sitting and watching them. We are impacting more than ever before with government, and we have already started executing a significant transformation program to get ourselves even better focused around 4 key missions.

Next chart. So these are the missions. You've seen them before, each with dedicated teams and Board lead. They're fully up and running and they're delivering results, impacting progressively through this year and next to bring GBP 1.4 billion of value, and that's excluding the tariff [ vision ]. So this will be about circa 5% EBIT to offset some of those risks that we mentioned earlier on.

Next page. So let's summarize. We're on track to deliver our guidance, 4% in what is historically our worst quarter and with tariff impacts reducing going forward means we are sticking with our 5% to 7% guidance for the year, and then we will build from there.

So with that, thank you for your attention. I'll hand back to Balaji.

[P. Balaji, executive]

Thanks, Richard. Let's now hand it over to Girish and Ramanan to take you through the CV business. Ramanan, over to you.

[GV Ramanan, executive]

Thank you, Balaji. Can we go to the next page, please. Our overall Vahan market share improved by 50 bps over last quarter, and it's at 36.1%. We saw market share gain by 40 bps both in medium goods and the passenger segment by maintaining a very resilient performance in heavy and light good vehicles despite a drop in the TIV in these segments. The recent launch of ACE Pro we are expecting to gradually increase our market presence in this segment.

Can we go to the next page? On the financials, it was, indeed, a tough quarter from a volume standpoint and that is reflected in the revenue being 470 bps lower on a Y-o-Y basis.

However, margins continued to be healthy. And both EBITDA and EBIT have grown on a Y-o-Y basis. This is majorly come from lower material costs and better realization. For the quarter, EBITDA was at around 12.2% and EBIT was at 9.7%. We continue to maintain a superior ROCE performance, which is at 39.6%. Overall, a good financial performance in the quarter.

Can we to the next page, please. This is the EBIT walk from Q1 '25 of last year to Q1 '26 where we see the absolute profitability increase by around approximately INR 122 crores, which is an improvement of 80 bps on a Y-o-Y despite a revenue drop of around 4.7% that we had shown you earlier. This is primarily coming from savings in variable costs and better realization and is further complemented by saving in fixed costs.

I would now request Girish to give you more business insights. Can you go to the next page, please?

[Girish Wagh, executive]

Thank you, Ramanan, and good evening, everyone. Let me start with the proprietary data that we started sharing. So this is based on the fleet age that we have in around 850,000 vehicles. So broadly you'll see in most of the segments, the utilization of the fleets remained healthy. But each one of the segments have also shown a dip in the recent month, and that is actually because of the early onset of monsoon. But otherwise, the level still remains at a good level.

The sentiment index has dropped in MCV, in tippers and this is also because of the early onset of monsoon. ILCV continues to do well. SCV and pickup is something which is coming down, and this is also because of a level of satisfaction with the current conditions and current rate being lower.

And the freight rate, and this is especially for heavy-duty long haul, continued to firm up. Transporter profitability are also in a good position.

Next. In Q1, the industry volumes almost remained flat with marginal growth of around 0.7%. But the total industry volumes in heavies and small commercial vehicles actually dropped. And there was a single-digit growth seen in ILMCV and buses and vans. In buses and vans, they actually continue to do well now. The whole of last year and first quarter of this year, I think they have done pretty well.

We transitioned our entire portfolio of trucks to air-conditioned cabins. And as has been the tradition, I think we also complemented it with the launch of higher power-to-weight ratio variance, and therefore, delivering more value to the customer. So I think we have maintained this trend that whenever there is a regulatory transition, it comes with some price increase for the customer. So we always give some value improvement along with that.

The HCV volumes in Q1 declined primarily due to regional demand shifts. And let me give some flavor to this. So when I've seen the North volumes going down because there was an impact for a few weeks due to operations in [indiscernible].

What I've also seen the volumes in East are getting impacted to some extent due to the Bangladesh issue. And also, what has helped -- or rather has impacted is the early onset of monsoons, which I said earlier. The monsoon started early in June, and therefore, the tipper sale actually became almost flat in June.

The ILMCV segment continues to do well. It witnessed volume growth, mainly supporting fruits, vegetable, manufacturing in the segment. And within that, I think the MCV has been a standout performer during the first quarter.

SCV pickup volumes specifically for Tata Motors have now stabilized at lower levels, but we clearly see growth in the pipeline now with the launch of the ACE Pro, which has been accepted very well and the price points and alternate powertrains that we have launched it with.

Buses and vans, the volumes grew almost 12%. And the performance was also influenced by salient shifts in segment as also some of the tender-driven business, which actually was allocated in Q4 of the last year.

In electric mobility, we delivered 43 buses, that's it. Same quarter last year, we had delivered almost 750 buses, this quarter 43 buses. And with this, now we have delivered all our buses as a part of the CESL tender 1. There is a repeat order that we have received from BMTC, which we will satisfy subsequently.

Ace EV continues to be stable in volumes. I mean, we have now more than 8,700 vehicles. And more so, we launched ACE Pro EV at a very attractive price. It becomes the most affordable 4-wheel electric trucks and is actually offering better total cost of ownership than similar EVs and the EMIs are actually equal to electric 3-wheelers. We also, of course, pursued the PLI certification for ACE Pro EV.

As far as sustainability is concerned, which is the decarbonization, circularity, our performance remains on track.

Smart City, as I said, we have completed the deployment of buses at all the locations. And our fleet now has completed more than 400 million kilometers. And we continue to improve the uptime as well as outshedding. The performance, therefore, continues to be above the contractual terms despite extreme conditions, especially in Q1 in Delhi.

An interesting development is we emerged as L1 in a tender for a completely new technology of public transportation, which is being introduced in the country. So this is an 18-meter articulated bus, which can carry 135 passengers at a time. So something between the current electric bus and the metro. And it also comes with a flash charging technology, which enables almost 30% to 50% charging in a minute.

And this is a tender, which had come from Nagpur Municipal Corporation. It will also be kind of a technology pilot. But of course, this has already been deployed in around 10 cities in Europe and Australia globally. So this is a new technology, and we are quite excited with this technology. And there are a few more inquiries also from a few other states who just started coming with this.

Next. On the digital business, we continued to scale up all our businesses in terms of Fleet Edge, more than 825,000 active vehicles, 80% monthly active users and 59% weekly active users.

During the quarter 1, we also came up with a very attractive value proposition for the Fleet Edge subscription with which the subscription percentages have gone up by almost 50% to 60%. And this is just the first month. I think as we go ahead with more communication, I think we should be able to do even better.

Mileage Saarathi continues to do well, and we have around 6% improvement in fuel efficiency in real-life operating conditions.

On E-dukaan, our online spare parts sales, we have tied up with third-party logistics service providers to deliver parts at the doorstep. And we have 2 types of services: Standard; as well as Express. So there is a good traction that we see in the pilot cities. We now have more than 9,000 customers and 31,000 retailers onboarded onto the platform.

Fleet Verse wherein we are selling vehicles directly to the customer, more than 10,000-plus platform-assisted retails. So these many customers are directly coming to us on the platform.

And at an overall level, digitally generated leads led to almost 28% of the retail in Q1, which is growing quarter-on-quarter.

Next slide. Now going ahead, the focus areas, we believe that the Q2 TIV is likely to improve on a year-on-year basis essentially due to the lower base in Q2 of last year. So post the election, I think last year, Q2 was lower volume, and on that base, we expect a single-digit growth.

We also expect the normalization of monsoons. And in the fiscal season starting post 15th August, an also anticipated recovery in rural and infrastructure-led demand.

I think our focus areas, we will continue to drive the trucks market share while maintaining strong realization. And as we go ahead, we know there will be an improvement in geographical salience as well as recovering tippers, which will aid our shares further.

In MCV buses, I think we have been doing pretty well with the launch of new products and service offerings. And we have gained some share in the private segment for MCV buses, this is intercity segment. So we'll continue this gain and as also the ramp-up of volumes in vans.

ACE Pro, we started selling -- retailing from the last month and the production ramp-up has been started. And now I think we should be ramping up the retails of ACE Pro as we go ahead. We have received very encouraging response during the launches, which was done all across the country.

Finally, I think we would, of course, like to sustain the financial performance by consistently delivering double-digit EBITDA margins as well as the return on capital employed.

So that's about CV. Back to you Balaji.

[P. Balaji, executive]

Thanks, Girish and Ramanan. Let me pass the baton to Shailesh and Dhiman. Dhiman, would you want to start off?

[Dhiman Gupta, executive]

Thanks, Balaji. Fair to say it has been a challenging quarter for us on multiple fronts when we had a loss in volumes and consequential impact it had on profitability. Overall industry demand, as we saw, it was soft with the further stress in the INR 10 lakhs car segment, which you've been seeing for a while. Our market share was down 50 bps on account of adverse salient shift and some of the transition phases we saw in some of our models, Altroz, Harrier and Safari.

Portfolio emission continues to trend well below CAFE norms, so no concerns there. While the relative mix of CNG and EV was stable in the quarter, we are going to see a very sharp increase in EV mix to 17% next quarter.

Next slide, please. Our EV volumes had been range-bound at about 5,500 per month for almost 3 years. Consumer sentiments have been muted due to the overall global narrative we had on EVs. And the market expansion was coming in primarily from new competition launches in the last 6 months.

However, happy to observe that in the last 2 months, we've seen a buoyancy in consumer demand in this space, the green shoots of which are visible in our market share increasing to 40% in July. This still does not fully reflect the gains on Harrier.ev, which saw blockbuster opening, and we will be definitely end the quarter on a much higher note.

Next slide, please. Last 12 months with the moderation in demand that we saw the overall industry channel stock has continued to build accompanied by periods of very high discounting to aid in stock liquidation.

We have taken a conscious call to be more proactive in keeping our channel inventories in check. I'll park this point for a while as Shailesh is definitely going to pick up in greater detail in the subsequent slide. But the overall, we moderated our offtakes, which is reflected in the 10% volume and revenue decline. The loss in operating leverage and that the additional hit in commodity inflation that has been coming in April has meant that we are down on all profitability parameters.

Next slide, please. ICE margins have been under stress for a period of time. While our cost reduction efforts are coming through well, it has not been enough to offset the steep loss of operating leverage, adverse model mix and the continued high industry discounting.

In this quarter, we had the additional impact of commodity inflation coming in primarily through steel, safeguard duty and FX risk. And a residual part of it will also come in Q2.

Our ICE margins will improve from here. However, they are likely to remain under pressure for some more time as we plan to exit the calendar year with a very low level of model year stock.

Redoubling our cost reduction efforts, improved model mix from launch of some curated variants of Harrier and Safari that Shailesh is going to talk about, and hopefully, some price increases in H2 with a strong festive period makes us confident of getting this back up by another 3%, 4% in the next few quarters.

The margin improvement story for EVs has been very encouraging. We have seen EV profitability improving on a year-on-year basis even without the PLI with significant cost reductions coming through. We were at EBITDA breakeven with PLI this quarter. And the improved mix coming in from Harrier.ev and the additional vehicles coming on to PLI platform will see continued uplift in margins from here.

Shailesh, over to you.

[Shailesh Chandra, executive]

Thank you, Dhiman. So let me start with industry highlights. The demand has been muted for the industry in quarter 1. We saw flat wholesales and quite a muted growth also in Vahan. April actually had seen a strong -- it was strong at the start, carrying the momentum for festivities like [ Holi Phagwah ] by the end of March 2025. However, in May and June, we saw a significant slowdown in demand.

We see the overall industry demand remained soft. And this has resulted in an environment of sustained high levels of discounting also to drive retails. And this is prevalent across the OEMs and segments.

Channel inventory for the industry had also grown by 5 to 7 days in quarter 1. And this is based on offtake in Vahan data that we track. And this was due to lower-than-expected retail in quarter 1 than what industry was expecting.

Volume stress is actually more pronounced in sub- INR 10 lakh segment with a declining -- decline in momentum over recent months. And this because this is because of a combination of reasons, growth in propensity for used car also, I would say, to some extent. On the contrast, INR 10-plus lakh segment, we have been seeing healthy demand driven by more resilient customer base, I would say.

In EV industry, we have seen growth in quarter 1 primarily due to impact of new launches, which has added incremental volumes in the industry. It has really been interesting to see strong demand for EVs in high-priced segments above INR 20 lakhs. And this really goes to show that if EV addresses all the concerns of the customers in terms of range, price parity, best capabilities, customers are willing to ship from ICE to EVs.

Talking about Tata Motors. Looking at the past 1.5 years, the overall demand environment for the industry has been volatile and tough. And therefore, in this environment to drive sustainable growth for the business, we felt it was critical to keep the channel health in focus, and therefore, we moderated our wholesale in quarter 1 to ensure controlled growth in our channel inventories, which is important to ensure healthy network.

We also saw the transition of some of our key models in the portfolio, which have a new product interventions, including Altroz [indiscernible] Harrier and Safari curated variants. We just launched that Adventure X. We call them Adventure X at a very attractive price point and it's very much feature-loaded. So much like any product transition that we see, it involved the ramp down of the volumes for a few months, trying to scale up post launch. And these launches at the end of quarter 1 and start of quarter 2 have also resulted in some impact in our volumes and profitability because of Harrier.

Our new launches, Tiago and Altroz, have seen very strong traction in the month. Despite of the broader trend in hatches showing a decline, double-digit decline in this segment, these 2 products have got very strong response. In June, we saw 22% year-on-year increase in bookings for both models combined and this is going to drive growth in this segment in the coming quarters.

And the launch of Harrier.ev has been widely successful with a strong launch marketing campaign to support awareness and consideration. And we're happy to see that we received 10,000 bookings by day 1, which has established a very strong pipeline for the product going forward.

And Harrier.ev volume impact is not present in quarter 1, as Ramanan mentioned. It will be visible from quarter 2.

We also saw traction for the rest of our portfolio in EVs, particularly towards the end of the quarter, especially for Nexon.ev. And we were really surprised that once we offered the lifetime warranty for both Nexon and core EV, there was a sharp increase in retail as well as bookings in July 2025.

Next slide, please. So in terms of key actions, as I mentioned earlier, that channel health is important to ensure long-term growth. It is the kind of operating environment today. And therefore, to ensure a healthier channel, we are maximizing retails. We have institutionalized a stock policy that will guide how we balance our wholesales for the year.

At the same time, to ensure that we are aligned to the prolonged demand volatility and to ensure dealer profitability, we have tweaked our S&OP process, which will enable greater alignment between our supplies and market demand. We will also maximize the upcoming festive period through strong marketing campaigns and leveraging the product intervention that I talked about.

Our new launches Harrier, Safari adventure X variants just launched few days back, curated variants at very competitive price points, this will help us drive volume growth and will help improve our model mix.

In EVs, as Dhiman also mentioned, we will leverage the growing demand of our portfolio along with the commencement of deliveries for Harrier.ev to drive volume growth. And further actions on products, strong marketing mainstreaming actions we continue to maintain our first mover advantage.

There are already green shoots that we see in terms of recovery in EVs in July 2025. Actually, in July, was our highest ever bookings of the existing portfolio. And our bookings, excluding Harrier.ev, grew by 25% over the levels that we were seeing in quarter 1. So it was a very sharp jump in July.

Next one, EV, particularly, we saw strong consumer interest, especially after the announcement of lifetime warranty. And our bookings went up in July by 55% over quarter 1 and Harrier.ev had a blockbuster launch, I talked about this. We achieved the highest ever retail also in July '25, which was 40% more than quarter 1 levels. And we are yet to see the full impact of Harrier.ev retails from August onwards.

And therefore, the Vahan market share for EV, which had gone down to 35% level bounced back to 40% in July. And we are pretty much on track to, as we have been mentioning, progressively move towards the 50-plus percent market share level in the coming quarters.

That's it from my side. Back to you, Balaji.

[P. Balaji, executive]

Thank you, Shailesh and Dhiman. Quick summary, I'll wrap this up fast. Despite a tough quarter in terms of numbers, growth-wise, I think cash profit after tax ahead of investment spend, so prudence continues. And the only swing that you see some working capital that is seasonal, that will reverse it itself.

Next slide, please. Investment spending is in line with plan, and don't expect to overshoot this. It's steady across years as well.

Next slide. So where is -- how do we see the future ahead? I think from a global demand perspective, I think it's fair to say after hearing Richard also, you would have got the same message saying that the global demand is likely to remain challenging in the short term. It's also a bit confusing. Therefore, that is the situation on the global demand.

Domestic demand underlying basis should start improving gradually as the spend continue, lower interest rates, exciting product launches and the festive season starting to kick in.

And therefore, our focus remains, focus on what we can control and execute our strategies flawlessly. These are the individual verticals and is there for you all to see, that's what Shailesh, Girish and Richard just talked about. So don't want to repeat that.

With that, let me then turn you over to questions. We have about 19 of them so far, and let's get started.

[P. Balaji, executive]

So good mix of questions coming from across the board. So let me try and start with the ones that -- just give me a minute, please.

Okay. First question coming from Raghu, Nuvama. Richard, it's coming your way. I think there are a lot of questions on tariffs. And the question is how have you accounted for it, number one.

Second, just in terms of is there any rollback possible to May 8? That's the second set of questions there.

And what if -- how do you plan to mitigate it in terms of pricing? And while you're on it, could you also give clarity on the emissions compliance provisions related to the U.S.? Can you therefore pick up the entire U.S. tariffs, emissions, accounting? How do you intend to mitigate it all in one shot?

[Richard Molyneux, executive]

Okay. Let me give it a go. Right. Tariffs in the U.S. So -- they have been -- 25% is the tariff that Trump announced in his Section 232 executive order became effective essentially the start of the quarter. That tariff is on top of the standard most favored nation tariff, which was 2.5%. So essentially, through the entirety of Q1, we have been booking the P&L at 27.5% tariffs from cars exported from the U.K. and cars exported from Europe.

There is absolutely a chance that we will get the tariff reduction to 10% in the U.K. backdated to the 8th of May. We are working with the relevant governments to make sure that, that happens as that is what was included in the original deal. However, it has not yet been enacted, and therefore, we haven't got sufficient certainty of that to book it in the accounts.

So these accounts in Q1 assumed 27.5% flat throughout the quarters in terms of P&L. I mentioned to you earlier on that in terms of cash payments, you pay the U.S. tariffs 1 month afterwards. So we have paid 2 months in the quarter of the much higher tariff level.

The third one, which we will have paid in July will come in cash in Q2. I saw another question around tariffs, which is when do you pay them? You pay them when the vehicle lands on U.S. soil. So it's not related to wholesale. It's not related to anything other than when the vehicle lands in the U.S.

So in terms of what we have done, we reacted as quickly as we could, as you know, in terms of stopping shipments and making sure that we had a very strong dealer stock going into the quarter. The first thing we did was reduce some of the sales allowances of the VME levels because that is a quicker thing to do for us than changing price.

We have subsequently changed prices a little bit on '25 model year Range Rover went up a couple of percent, and we have announced increases on [ '26 model year ]. So we are taking some price. We are taking some variable marketing reductions as well as a partial offset to the tariff cost.

In terms of emissions, so the so-called one big beautiful bill that was passed set federal CAFE levels, maximum point to zero. That was passed on the 4th of July. We used the fact that, that was substantially enacted in law at the time to release our balance sheet reserve for federal CAFE fines. That stood at circa GBP 120 million.

There were other changes in terms of tariffs globally, including the introduction -- sorry, not tariffs, in terms of emissions costs globally, including the introduction of some costs in Canada for model year '26, changes in the U.K., et cetera, et cetera. So the net effect for us that you'll see on the report of all of the emissions changes globally was GBP 76 million better on a year-over-year basis, but the absolute balance sheet change that we recorded in this period was GBP 120 million. Hope, I covered most of the questions.

[P. Balaji, executive]

Can you also cover the accounting piece, Richard?

[Richard Molyneux, executive]

Yes, sorry, the accounting piece. It's shown in cost of sales. So it's not shown as a revenue item. It's shown in cost of sales.

[P. Balaji, executive]

Yes. Thank you. Probably I'll come to you, Shailesh. I think a lot of things around launches, also about your EBITDA margin guidance from here on as well as EV production, rare earths, particularly here in India. And how do you see the discounts playing out from here?

[Shailesh Chandra, executive]

Sure. So as far as Sierra is concerned, it is very much on track. We had always mentioned that this is going to get launched in H2. Whether it will be quarter 3 or quarter 4, I think we'll let you know when we are pretty closer to the date of the launch, but it is on track.

As far as profitability is concerned, I think Dhiman has covered this in greater detail. We are very committed to bringing it back to the double-digit EBITDA level. The next 1 or 2 quarters will be challenged, but the operating leverage coming back, model mix improving from here on, the potential price increase that Dhiman mentioned in H2 of the year, I think all these are going to help us. And also, as you know, first quarter was also impacted because of IPL spends that is getting normalized marketing spends that we'd be doing.

So I think beyond that, I'll again ask Dhiman to later on talk about any additional things that we have missed, but we are very confident of coming back to these EBITDA levels in the next 2 to 3 quarters. Now the other question is EV production vis-a-vis rare earth challenge that we are seeing.

I think we are covered as far as the stock is concerned for the next 2 to 3 months. And we have created alternatives to deal with the situation. Of course, it means alternative sourcing from beyond China also, but also seeing wherever possible we can avoid rare earth, I think all these options are being looked into. So hopefully, we should not be affected because of the rare earth inventory issue that is going on.

The next question is how much is the increase in discounts on quarter-on-quarter basis? As I said that we have been very prudent in terms of not allowing stock to increase too much. While we had to do discount -- had to counter the competition discounts in certain segments, but this increase on a quarter-to-quarter basis would not have been more than 50 bps that kind of a number. Yes, that's it, I think.

[P. Balaji, executive]

Thanks, Shailesh. Girish, coming to you. In terms of utilization, the dichotomy in the data, I think in the level of utilization, what levels do new fleet additions come in? And the utilization in HCV cargo is like why is industry TIV still dropping and what's affecting the sentiment? If you could just cover that.

[Girish Wagh, executive]

Yes. So see, you will appreciate that this fleet utilization metric and data is something that we started generating for last few quarters. We don't have a correlation today to very specifically say that beyond a particular level of fleet utilization, it leads to new purchases. And in addition to that, I think this is also dependent on a few other factors like what are the projects undergoing in that particular state, how are the other end-use sectors of commercial vehicles are doing, et cetera.

So I think the only thing I would say is that the fleet utilization actually continues to be healthy and at a higher level as compared to the same period last year. I think you also have a question that despite the fleet utilization being good, why the volumes have gone down. So I would say that actually, this fleet utilization also was seen in good pipeline generation. But throughout first quarter, we saw that generally, there was a postponement in purchase decision-making by customers.

And then later on, of course, there was an early onset of monsoon, which therefore impacted the volumes, especially in the month of June. So despite being end of the quarter, the retail volumes were not so high, and we immediately align our offtake to the retails.

In addition to that, I would say that there are a few states where the payments in government projects have been delayed in -- at least towards the end of Q1, and that was also something which was impacting the retail volumes in Q1. Balaji? There was another question, Balaji from [ Balu ].

[P. Balaji, executive]

Yes. Related point was on delinquency. I think Kapil had asked it earlier. Related point, how do you see delinquencies in the CV segment and financing availability?

[Girish Wagh, executive]

Yes. So delinquencies, I think in buses and vans, there is no issue whatsoever. In ILMCVs and HCVs, they remain at a low level. I think in SCV pickup, the delinquencies amongst all the segments, they do remain high. But the good thing is that Tata Motors portfolio, as shown by the financials to us of small commercial vehicle and figures has actually improved on the early delinquencies, which is seen in the first 6 months.

[P. Balaji, executive]

Thank you, Girish. Shailesh, coming to you. This is on CAFE III. Jinesh Gandhi from Oaklane. Considering CAFE III guidelines are yet to be finalized, do you expect pushback of time lines? And what do you expect growth for PV in FY '26? And any material pickup in demand you expect in second half based on lower tax and interest rates?

[Shailesh Chandra, executive]

As far as CAFE III guidelines are concerned, we are in touch with the Ministry of -- mainly the Bureau of Energy Efficiency, and we are having this discussion with Ministry of Power also. But we don't see any change in the time lines. The discussions are more around the extent of stringency that is being asked for.

So I don't see any pushback as far as time lines are concerned. The second question is more in terms of expectation of domestic PV industry growth. See, our first 4 months has been absolutely 0% growth. In fact, last 2 months has been negative by 3%. And we have maintained that for the full year, we are going to see about, again, less than 5% growth, and that's what I would like to maintain for the industry.

And in the second half, there has to be actually material pickup in demand. Otherwise, we will not be in even around 4%, 5% of growth. So I believe because of all the actions that you have also mentioned in your question, lower tax, interest rates, the repo rate has been reduced and now it is reaching to the retail level also.

And also, we believe that rural demand is going to be strong post monsoon. So all -- [ there shouldn't ] a strong festive period because we are seeing the demand pattern pretty much mimicking what we had seen in the last financial year and last financial year had a very strong festive as well as December sales. So we believe that the trend would continue. So we're quite hopeful of this. And then the last question is on share of retails from digitally generated leads. I think this would be about 10% to 15%.

[P. Balaji, executive]

Thank you. Richard, coming to you, in terms of demand conditions in U.S., U.K. and China, would you expect -- how do you see the Q2 retail, wholesale trends? I would probably add to it also with your comments on inventory as well.

[Richard Molyneux, executive]

On demand, the uncertainty, I think, that's been so pervasive over the last few months, it has definitely impacted demand for big ticket luxury purchases across the board. So many of our clients are small business owners, many facing the same tariff challenges that we are.

Now that we've got some certainty going forward, I think we would expect this to slowly recover, but demand has been weaker than we would like since our year-end. In terms of regional splits, if anything, the U.S. is remaining still relatively solid. China, definitely since the introduction of the China luxury tax has continued to slow. The U.K. is reasonably stable.

And Europe, I think, is the market where that small business owner uncertainty has probably had the most effect. So I'd say certainly muted in the first quarter, driven by the uncertainty of the macro environment that we all face. But as that starts to stabilize through the back end of the year, we would expect that to recover slightly. And sorry, Balaji.

[P. Balaji, executive]

Apologies, finish, please.

[Richard Molyneux, executive]

I was going to talk in terms of inventory. So our retailer inventory levels are at probably the top end of our range at the moment. So we would not expect wholesales and retails to significantly diverge from here, and we'll manage them together with our retailer body. We still have a strong order bank, and we are expecting the -- as I said, we are expecting demand to slowly recover as certainty -- well, lack of uncertainty takes hold.

[P. Balaji, executive]

Yes. Could you just also -- since you're commenting on other markets, just talk Middle East as well. It's not been asked, but it's just a logical next question coming up.

[Richard Molyneux, executive]

Yes. Middle East is a really strong market for us. This quarter was a little bit affected by the fact that I think as a result of the conflict over in that zone, a fair few of them left the region on their summer journeys earlier than usual. But particularly for Range Rover and Defender, it remains an absolutely core market for us.

And that is why we both externally in our reporting, but also internally, we have now separated out MENA from the other overseas market so that we can give it the attention it needs. So it is definitely ripe for some further growth for Range Rover and Defender and ultimately, Jaguar as well.

[P. Balaji, executive]

Thanks, Richard. Girish, coming to you. In terms of CV full year outlook, we heard from Shailesh, how do you see CV full year outlook?

[Girish Wagh, executive]

So I think we still maintain that for the entire year [Technical Difficulty], and within that, I think HCV should do similar around 3% to 5% kind of a growth. ILMCV a bit lower. SCV pickup probably will remain flat. The volume should pick up from the festive season.

In terms of buses and van, while the projection is flat, but I think Q1 has done well. But Q1 and Q4 are generally good for buses and vans. I think it is very important to see how Q2 and Q3 pan out and also what kind of tenders come from the government, both ICE and electric. Based on that, we can say whether the volumes will remain flat or there will be a good growth even in buses. So that's where we see the full year, Balaji.

[P. Balaji, executive]

Maybe this is more Ramanan on your side. On the margin performance, can you let us know why have gross margins improved quarter-on-quarter? This is from Kapil, in light of higher steel prices and AC cabin impact, are these sustainable? And how much of PLI was coming on to it? And probably business PLI, probably Dhiman, I'll come to you in terms of PLI for PV for this year as well.

[GV Ramanan, executive]

Thanks, Balaji. So I think the reason for the Q-on-Q margin has been largely impacted by a combination of a couple of things. One, I think better realization and then the revenue salience in international market and the downstream business has been higher than the earlier quarter. So that's kind of helped us from a margin perspective.

On the question on sustainability, I think Girish just touch upon the focus area. That's a clear focus area for us to sustain robust financial performance. So we kind of look forward to it. There was a question on PLI. So I think the Q1 accrual of PLI was around INR 25 crores. And as Girish rightly said, we expect the volumes to be increasing in the bus. So as the year goes by, we see this amount going up for us.

[P. Balaji, executive]

Dhiman, can you just cover off PLI for PV as well?

[Dhiman Gupta, executive]

Yes. So I think, Balaji, we had given a guidance that our PLI run rate will be about INR 110 crores, INR 120 crores a quarter. We are on track. The PLI this quarter was about INR 115 crores. What is important to note is that you have a base year effect of FY '21, which kicks in, in Q1. The INR 20 crores gets deducted from the gross. And then there is a discounting impact because this cash is going to come next year.

So our P&L approval was about INR 87 crores. But for the full year, this only takes into account the PLI we are accruing on, unchanged PLI book. We have next one coming in at Harrier.ev. So for the full year, we are on track to get about INR 700 crores PLI accrual for the full year.

[P. Balaji, executive]

Thank you. Richard, coming back to you, time lines on deliveries of RR Electric and Jaguar Electric and as well as implication on China demand. You covered it a little bit. Maybe there's more questions coming out when this got bumped up, implication on China demand post the luxury tax?

[Richard Molyneux, executive]

Okay. So let me -- let's talk about BEV timing first. I think that was the first point. We're still lucky in that our main vehicle architecture, the one that sits under Range Rover and Range Rover Sport is fully ICE BEV flexible. The vehicles go down the same trim and final line, they go down virtually the same body shop line. So we are really flexible. We can launch when we are ready and when our customers are ready.

We expect it to be on sale next year, and our rollout of the other BEVs will go from there. For Jag, the on-sale date is going to vary a little bit by market. But I think what's really important, especially where demand is that in both cases, we are not going to compromise on the quality of the vehicles or their capability.

It's really important for us that these BEVs are, in fact, true Range Rivers, true Defenders, true Jaguars. They will be brilliant exemplars of their brand, and that's why we are confident that we can make them successful, not just in the Western markets, but also in China.

In terms of demand in China at the moment, it's still -- I mean the change in luxury tax was -- we had about 48 hours notice like the rest of the industry. And it came in mid sort of late July, I think, so only 2, maybe 3 weeks ago. So a little bit early to see what's happened.

What we have done for the moment for the interim is we have hold our retailers who we know are not in the best financial shape generally. That's not something specific to JLR, that's industry-wide. We have told our retailers that for the short term, we will take the cost of that luxury tax. The network -- the retailer network over there is fragile enough without having to take that. So in the short term, before we come up with a medium-term plan, but in the short term, we will take the cost of that. It is an extra 10% on the list price of the vehicle.

[P. Balaji, executive]

Thank you, Richard. Maybe we'll skip to another topic in terms of -- this is from Chandramouli, Goldman Sachs. Let me try and skip to EV, and I'll come back to JLR in a minute. There appears to be a year-on-year drop in EBITDA margin for electric cars. Could you elaborate the rationale? At the same time, given the low volume growth, will the discounting be high throughout FY '26?

[Shailesh Chandra, executive]

So year-on-year EBITDA margin for electric cars, this is not -- it's not the right question because -- so I'm going to cover the PV one, which is 1% to 2% PV volume growth. So see, we have been seeing that there are prior segments, there are specific models where we are seeing a significantly high level of discounts. Main pressure is in the less than INR 10 lakh segment is where I said, where the demand is under stress. It has seen a nearly 15% decline as compared to last year.

So this segment is under stress, and we'll continue to see discounting. We have also now started seeing kind of a flattish trend in SUVs and that is also something which we need to watch out for how the discounting environment would be. I think where the trend will remain strong, we have seen in the first quarter, CNG continuing to do well with 20% growth.

And this year, we also see that EVs are going to see about 70%, 75% growth. And the next question is around when do we expect the demand environment internally? Internally, I don't know. We already talked about how we are going to -- how -- with the new model launches, our growth is going to be better. Hopefully, from now on, [ industry retails ] and hatches, as I said that while the industry is declining by 14%, we are seeing growth here. There are new launches, Harrier Petrol, Harrier Safari Petrol is going to come. Harrier.ev is doing well. Then we have Sierra, which is going to come. So I think we have a lot of launches in the coming quarters. So I think it should significantly improve from here on.

[P. Balaji, executive]

Thanks, Shailesh. Richard, coming to you a different one on the tariff. This is more about the quota. 100,000 units per annum imports into the U.S. from the U.K. that can be done at 10% duty. Would that cover all of our imports into the U.S. coming from U.K.? And also the -- how do we intend to manage it? What are the kind of price increase mix benefit that we are planning to do to manage this?

[Richard Molyneux, executive]

So it's 100,000 units, as you say, at 10%. We think that, that will be enough to cover the volume that we would do within the U.S. For this year, the deal effective the 8th of May, if you do a pro rata from the 8th of May to the end of the year, the quota is 65,200 vehicles. We think, again, that will be sufficient. In terms of the mechanism for the purposes of this year, it's going to be on a first come, first served basis. For next year, we're working with the U.K. and U.S. teams to make sure there are some rules and structure that brought in almost certainly will do nobody any good.

So for this year, we think we're okay. For next year, we'll be working with the governments to try and come up with something which is a little bit more organized than the previous one.

[P. Balaji, executive]

Thank you. Shailesh, coming to you in terms of a couple -- what do you think worked well for Harrier.ev?

[Shailesh Chandra, executive]

Yes. So see, when you compare with any high SUV segment cars, irrespective of whether it is an EV or ICE, this is a car which is significantly superior in terms of not only performance, but all the kind of new tech features, which has gone inside this car. Whether you talk about the whole Dolby experience or the kind of screens that has been given 540-degree view or, for example, the APA, which is auto parking, [indiscernible] mode and all, this is something which people did not imagine in this kind of a car.

And on top of that, this is the first theme, which is an all-wheel drive. And people saw its capability that elephant trunk climb people were just amazed and surprised with the capability that an EV can really deliver. So those were the primary reason, and that's the reason why this is being completely compared, not only compared with ICE, but it is being seen significantly superior, 50% more in terms of torque, what you get in this segment.

So that has been really taken well. And from an EV perspective, when I see from that lens, the barriers, which used to be around range. This delivers a 500-kilometer range real range, which breaks the barrier around range, which used to be a concern, range anxiety we used to call. Then all of this comes at no incremental price. This is a price value, rather, if not slightly better than ICE.

So I think it has just ticked all the boxes what people could imagine or it has more than ticked the boxes that people expect in this kind of a category of car, and this has become a highly desirable vehicle in the segment.

[P. Balaji, executive]

Thanks, Shailesh. Girish, coming to you. This is from Jinesh, Oaklane. Can you talk about the upcoming CESL tender for 10,900 e-buses? Do they address your 2 concerns? And do we intend to participate again?

[Girish Wagh, executive]

Right. So yes, I think we have been engaging with the government for almost last 3 years. And therefore, over the last 3 years, we have not participated in the tender. We had 2 specific requests. One is a payment security mechanism. And herein, we worked with CESL and some of the other government agencies and a payment security mechanism based on the one used for Solar Energy Corporation has been worked out. And it is there currently in the tender document.

So this, to a large extent, meets our requirement on payment security mechanism. Our second requirement was about having an asset-light model. While this has not been addressed fully and exactly the way we want, but even this to a good extent, addresses what we were expecting. But herein, I think this will now call for a formation of a consortium with an operator who can run the buses and a financier who can bring in capital.

And therefore, I think we will now be working with financiers well as operators whom we can bring together, form a consortium. And our Smart City subsidiary then will be part of that particular consortium. And OEM Tata Motors will sell buses to this consortium. So that's something that we will work out.

Meanwhile, I think there is a good understanding that we now have on the profitability for operating the buses. I think we have been able to develop or build this model over the last 3 years with good experience. And therefore, we know what are the value-creating ports, et cetera, which is what we will participate in the upcoming tender. Balaji, he has another question on Ace Pro...

[P. Balaji, executive]

Yes, ACE Pro and ACE Pro EV, what are the feedback on ACE and ACE Pro EV? And how do you think it is likely to ramp up your volumes?

[Girish Wagh, executive]

Yes. So I must say that ACE Pro EV and also ACE Pro Bi-fuel, Petrol, all 3, the feedback has been very good. I think the value proposition has been appreciated very well, especially the price at which it has been launched and the capability and features that have been given. We also had a very unique launch wherein we did launches in 10 cities across the country.

It was a 2-day affair, wherein not just the media, but we also got in the influencers, key customers, financiers, all of them there and all of them were also made to drive the vehicle. So we have a very extensive feedback from these drive sessions. Generally, the participants have appreciated the pickup, the comfort, suspension, power.

And I think many of them have felt that it actually offers a very good option for intra-city last mile transportation. In terms of capacity and ramp-up, we don't see any issue. And we are going to, in fact, start ramping up from this month itself, not just EV, but even the Bi-fuel and Petrol version. Balaji, I'll just also answer Jinesh has asked one question about prebuy due to AC norms introduction.

So Jinesh, I would like to tell you that, frankly, we are not seeing any prebuy. There has been no prebuy whatsoever in HCVs and ILMCVs due to the AC norms, which in my view, is a good thing. I mean, it shows the maturity in the market. And in terms of your question about how the market will pan out over the next 9 months, since the Q1 has been more or less flat, the 3% to 5% growth that I have spoken about should now happen over the next 9 months. Balaji, back to you.

[P. Balaji, executive]

Thank you, Girish. Richard, coming to you, maybe to wrap the whole tariff impact up, a question from Kapil. Now that the tariffs are clear, both in EU and in U.K., what is the -- how much will the impact be? How much will it reduce from the current quarter in terms of bps? What's -- how are you assuming this?

[Richard Molyneux, executive]

Okay. On the assumption that the 15% reduction for Europe does become effective on or around the 1st of August. Remember that is the one uncertainty still in the market. We think this year, when you take it in the whole for a full FY '26 year, you're probably talking somewhere between GBP 500 million and GBP 600 million effect of tariffs for the year, net of the offsetting measures that we put in.

On a, let's say, more perpetual basis on a 10% and 15% basis, it's probably more around the GBP 300 million to GBP 400 million range. However, I will caveat that by saying, look, a lot of it will depend on how the market reacts in terms of demand and in terms of pricing. So those would be sort of type of estimates that I would...

[P. Balaji, executive]

Just staying with you there. Despite the -- you had good U.S. retail trends on a year-on-year basis even in July. Is it because dealers are selling pre-tariff inventory or customers expecting full pass-through on tariffs happening in the coming months? What's the read there?

[Richard Molyneux, executive]

I think there probably is a little bit of an expectation by customers that prices are more likely to be rising than falling, so getting in there now. Also typically around this time of year in the U.S., there's the move from '25 model year to '26 model year cars. So retailers will be trying to get rid of that. They will try to be selling their '25 model year cars before '26 lands on their shelf. So there's a little bit of seasonality that normally happens in a couple of months before you change your model year in the U.S.

[P. Balaji, executive]

Yes. Shailesh, coming to you. In terms of Nexon EV powertrain for the higher voltage, are we looking to shift supplier base to India? And when do you expect it to be 100% local sourced?

[Shailesh Chandra, executive]

See, we are -- as far as battery pack is concerned and the e-drive is concerned, it is completely localized. So it has already been made in India.

[P. Balaji, executive]

Okay. Richard, a comment on ForEx, if we did not pick up. This is basically with the USD appreciation, I suspect you're referring to pound appreciation here. How much of the impact dollar weakness is already in the P&L and assuming that due to hedging bulk of the impact is yet to come?

[Richard Molyneux, executive]

So yes, sure, we have a reasonably good hedge portfolio. Actually, the thing that we're most exposed to is the dollar-euro cross because we're long dollar, short euro. So the move of that over the last months or so during the quarter. I know it's currently at 116. I think it was probably at 104, 105 at the start of the year. That's the one that hurts us more. And we're keeping a close eye on that across to make sure it does not get any worse for us.

[P. Balaji, executive]

Okay. I think Vinay's questions, most of it we have covered already. We have covered accounting. We have covered PLI, JLR, VME. I think we've covered everything there. So let me see if there's any other questions that we have not covered.

It's an interesting question from Kapil, Shailesh. Girish coming to you. In terms of consumer sentiment, how exactly we measure it because one would expect that with the good monsoon, the sentiment should have picked up, but that's not playing out as one would expect. What's -- what are we missing?

[Girish Wagh, executive]

Yes. So as I've been saying, I think the sentiment is actually a combination of 2 factors, which is satisfaction with the current status. And how do they look into the near future, say, next 3, 6 months. And I think what we have seen across the segments apart from maybe ICV, I think the satisfaction with the current status is something, which has dropped from Q4 to Q1.

But the good thing is that the expectations from the future still remains optimistic. So I think that's how I would break down the sentiment survey again in almost all the segments. And I think to a large part, I would say it is also expected in the sense, I think the early onset of monsoons have in a manner of speaking, also given us the Q2 sentiment scores into Q1. I think that's a timing change which has happened this year.

[P. Balaji, executive]

Okay. This is Richard coming your way on financing. One is the cash flow recovery in the rest of the year, what would be the key drivers for it? Any year-end inventory upswing expected because of managing the quotas and any refinancing plans that you have in place? We haven't talked about the UKEF financing. Maybe you could cover that as well as part of that.

[Richard Molyneux, executive]

Yes. Why don't I do that first? So we signed a few days ago a GBP 1 billion UKEF backed loan facility in the U.K. to boost our liquidity. And that is not yet drawn, but it's going to be available very shortly. Our next maturity is a $700 million bond that is due in October.

So we boosted our short-term liquidity. The question -- the first question, cash flow recovery. So obviously, we paid a couple of hundred million pounds in tariffs in Q1, and that will be significantly smaller in future quarters. We will have working capital come back in our favor.

Again, remember, out of our GBP 758 million hit in the quarter in terms of operating cash, GBP 616 million of working capital and the vast majority of that is [indiscernible]. Also normally for us, we would have higher wholesale volume in the second half of the year than the first half of the year. So there's a few things that I would play on in that. The question around are we planning on adjusting delivery timings for first -- remember, the first quota is the 65,000 units that is applicable up until 31st of December this year.

At the moment, we're not anticipating that the U.K. industry will breach that. So we're not changing our plans. As of next year, the way the quota works is it's actually a quarterly quota of 25,000 units. Any part of the first quarter that isn't used gets added to the third quarter's number. Any part of the second quarter that isn't get used gets added to the fourth quarter.

So there is some flexibility during the year, and we'll manage that as we get through 2026. My intent, as I mentioned before, and our intent as a company is to work with the U.K. and U.S. governments to have something that is absolutely not free by the time we start next year's 100,000 unit catch through.

[P. Balaji, executive]

Great. Thanks. I think with this, we have come to the last of the questions. Once again, thanks all of you for your probing questions. Just to summarize, a very challenging quarter on multiple fronts, particularly on the JLR side.

But I think we are coming out of -- as we get -- finish this quarter and come out of this Q2 and then subsequently into the second half, lots of things that are underway in terms of interventions, be it in JLR, CV or in EV, which will help us sequentially start improving from here on. And one does expect to have a pretty strong second half as these things come into place.

So thank you once again, and I'm more than happy for clarifying any further questions that you may have. Do feel free to reach out to the Investor Relations team. Thank you. Speak to you soon.