VAKRANGEE Ltd. - Some Estimates & Calculations

In my previous article on VAKRANGEE Ltd., I had mentioned that I am estimating an Average Revenue per Month of about Rs.2,00,000/- from all the Next Gen VAKRANGEE Kendras, after a few months of operations. Some readers have raised questions/doubts about this figure. So let me present some explanations:

1) As per VAKRANGEE's March'18 result, the company generated a little over Rs.1600 crores in Revenues for the quarter from it's Kendra business. Assuming the company having all 45,000 Kendras active throughout that quarter, we can divide Rs.1600 crores by 45,000 to arrive at Average Quarterly Revenue generated by each Kendra, which comes to a figure close to Rs.3.60 lakhs. Dividing this number by 3, we get an Average Monthly Revenue per Kendra to be around Rs.1.20 lakhs. Obviously, not every Kendra will be generating this kind of Revenue. Some of the larger & older ones, could be generating in excess of Rs.2 lakhs or even Rs.3 lakhs per month. Whereas there could be many smaller ones, doing only Banking Correspondent business, generating less than Rs.50,000 per month. Since each Next Gen Kendra will be offering the entire bouquet of services, the Average Revenue per Month could easily cross the Rs.2 lakhs mark after a few months of operations. Obviously, the Average Revenue from an Urban Next Gen Kendra will be higher than that from a Rural one. VAKRANGEE shares nearly 75% of the Commissions/Fees earned from a Kendra with it's respective Franchisee, which is then accounted as a Cost by the company.

2) Consider Amazon booking business: Amazon offers VAKRANGEE a commission of between 2% to 8%, depending on the product category. Let's consider the Average commission to be 4%. Today one can buy almost everything via Amazon, right from a toothbrush upto an LED TV or from shoes to Caps. Many people, even from rural areas, have started buying stuff like Mobile phones, shoes, Laptops, clothes, even stuff like Mixer-Grinders or TVs or Coolers, etc. Online as it offers them a large variety of products to choose from. If each VAKRANGEE Kendra does an Average booking of goods worth just about Rs.50,000 per day on AMAZON, the Kendra generates a Commission of about Rs.2000 per day, translating into about Rs.50,000 per month, considering 25 working days in a month. Many of the Kendras, having larger population density around them, can do much higher amount of AMAZON business. Remember that most of the VAKRANGEE Kendras are located in areas where people do not have a proper Postal address. Hence it is convenient for both, the customer as well as AMAZON, to do business via a VAKRANGEE Kendra.

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3) Courier Booking/Delivery & Reverse Logistics for eCommerce Companies: Many of the VAKRANGEE Kendras, doing AMAZON business, were already handling Parcels. This provided VAKRANGEE the experience & opportunity to offer full fledged Courier Booking/Delivery services for many leading Courier Companies. How this works is: These Courier Companies will handover Parcels/Packages to VAKRANGEE's District Master Franchise, who in turn will be responsible to reach those goods to the respective local Franchises, depending on Pin Codes covered. With more & more people across the country making Online purchases, the demand for efficient Delivery mediums is on the rise. These eCommerce companies also need Reverse Logistics services to handle product-returns. VAKRANGEE intends to offer this service through it's network of Next Gen Kendras. Even if each VAKRANGEE Kendra handles on an average about 50 parcels per day, it can easily translate into Average Revenues of about Rs.25,000 per month from each Kendra. The demand could easily go higher in the coming months/years.

4) ATM Service: Most of the Next Gen VAKRANGEE Kendras are being setup in locations which have a large number of people from lower middle class residing nearby. Most Banks do not prefer to setup their ATMs in such locations. Standalone Bank ATMs have much higher operating costs as they need exclusive outlet with AC, Guard, Lights, Internet Connectivity, and also Cash replenishment tie-up with a service provider. All these things take the Fixed Costs of a Standalone Bank ATM to anywhere in the region of Rs.20,000 to 40,000, depending on the Rural or Urban location. Hence the break-even for Standalone Bank ATMs is around 50 transactions per day. In case of VAKRANGEE's ATM at it's Next Gen Kendras, most of the Operating Costs are saved as it doesn't need Exclusive outlet (for ATM) or a guard or separate AC/Lights. Even Cash replenishment is handled by the Kendra staff. Hence the ATM-specific Fixed Costs are very low and even those are borne by the Franchises. Every transaction at such White Label ATMs earns VAKRANGEE a fee of about Rs.25 or 30. Even if the Average number of ATM transactions per day is just 50 per ATM, it translates into about 1250 transactions in a month with 25 working days. Hence the ATM alone can earn in excess of Rs.30,000 in fees from the various Banks in a month on a conservative estimate.

5) Banking Correspondent Point: This is still the primary business for VAKRANGEE Kendras and is also responsible for propelling huge growth in the number of VAKRANGEE Kendras across the country. Many of the Kendras still continue to operate only as BC Points. These BC Points are mainly located in areas where there are good number of migrant labourers. These labourers transfer cash to their family member's bank account at their native place, after every few days. Most Bank branches take little interest in serving such customers and push them towards a Banking Correspondent. The BC takes care of such transactions and charges a small fee of about 1% of the amount. VAKRANGEE is probably the largest Banking Correspondent license holder in the country. VAKRANGEE's Banking Correspondent in my town, started as a single-person, single-laptop, operation a few years ago. But today has 5 people working there and 3 laptops. Most of the times all the people there are completely busy. Even on a conservative estimate, if each Banking Correspondent/Kendra handles just about 50 transactions in a day with an average ticket size of Rs.5,000/-, the total amount transacted comes to Rs.1,50,000/-, translating into a fee of Rs.1,500/- per day per Kendra. Hence this business alone could take the Monthly Revenue to something like Rs.40,000/- per Kendra.

The Four services that I have discussed above, together have the potential to generate Monthly Revenues of Rs.1.50 lakhs or more per Next Gen Kendra. Apart from these services, there are other services like Rail/Bus ticket bookings, Life Insurance & General Insurance sales, including Motor Insurance, Mutual Fund Investments, Bill Payments & Recharges, etc. All these services together can easily take the Average Revenue per Next Gen VAKRANGEE Kendra per month to over Rs.2 lakhs, after the initial few months of operations.

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Some thoughts on VAKRANGEE Ltd.'s Potential

After an amazing run throughout 2017 & hitting a peak of over Rs.500 in January'18, VAKRANGEE Ltd.'s share price has experienced extremely stormy weather since then. Over the last 6 to 7 months, the company has been accused of several things, including misuse of funds to purchase large number of shares of PC Jeweler Ltd.; overstating or misguiding investors about the number of it's active franchises; resignation of auditor at an awkward time creating doubts about the authenticity of it's numbers; withdrawal of it's announcement of large Dividend/Buyback further creating doubts about availability of funds with the company; etc. All these developments, aided with lots of rumour-mongering, somehow makes one feel that the share price fall from a peak of over Rs.500 to a low of just over Rs.30 is an orchestrated fall.

I looked at VAKRANGEE Ltd's share price for the first time when it fell from Rs.500 to about 220 levels. After a quick check of the company's Quarterly Results & it's business model, I made my initial investment in VAKRANGEE Ltd around the Rs.200 to 225 zone. My initial views were: VAKRANGEE Ltd. offers several necessary services through it's over 40,000 Kendras to Semi-urban and Rural Citizens, mainly for people at the bottom of the pyramid. My Logic was simple that there is immense scope for growth of this kind of business as India has a huge population which can benefit from these kind of services. Unfortunately, my Views were mainly built on the Next Gen VAKRANGEE Kendra format, which the company had released only in February'2018 or so, a little before I had my first look at the company.

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It was only a little later that I realised that over 95% of VAKRANGEE Kendras are still from either of the Phase-1, 2 or 3 formats. While trying to better understand VAKRANGEE Kendra's business evolution, I now know that a substantial portion of the 45,000 Franchises that the company boasts of, are operating as just Banking Correspondent Points or BC Points (Phase-1 format). I am assuming the number to be a third of the total number, i.e. about 15,000 could be just BC Points. BC Points primarily offer a customer the facility for Cash Deposit or Withdrawal upto a certain limit like Rs.5,000 or so.

Another 15,000 centers could be of the Phase-2 format, where they are offering few additional services like Prepaid Recharges for Mobile & DTH connections or Electricity Bill Payments, etc. in addition to Banking Correspondent services. Most of these Phase-1 & 2 centers are of the non-exclusive type, i.e. they are only a part of some other business setup like a kirana store or some other consumer-facing business.

The Phase-3 format, which was probably introduced only about 15 to 18 months ago, is more of the exclusive store type. In addition to BC services & Recharge/Bill Payment services, these centers offered e-Governance services as well as e-Commerce services. Tie-up with Amazon is one of the biggest positives for centers as a person living in relatively remote areas can approach a nearest VAKRANGEE Kendra to book a product on Amazon and get it delivered at the Kendra itself for easy collection. This is positive for Amazon as well as VAKRANGEE as well as the Consumer from remote areas. Many of the Phase-3 format centers also offered ATM service.

Finally in January or February this year, VAKRANGEE introduced the Next Gen Kendra format, which is aimed at offering a modern and standardized look & feel of exclusive VAKRANGEE Kendras, offering the entire bouquet of services, including an ATM at every Next Gen Kendra. Since April'2018, VAKRANGEE has taken up the task of upgrading all it's existing Franchises to this Next Gen Format over the next 12 to 18 months. This is a mammoth transition for the company and actually deserves appreciation, but unfortunately the company's share price has been surrounded by so much negativity that all these developments have been ignored.

Out of the existing 45,000 franchises of VAKRANGEE, I am expecting only about 20,000 to 25,000 of them to readily Invest for Upgradation to the Next Gen Format. These will include all the Phase-3 franchises and some of the Phase-2 ones as well. The rest of them might prefer to continue operating with limited number of services. When the time comes, VAKRANGEE might decide to look for New Franchises in all such locations where the existing ones are Not willing to Upgrade to the Next Gen Format. VAKRANGEE continues to aim at having 75,000 Next Gen Kendras by the end of year 2020. This is a very Big aim and it will be a Big positive surprise if the company manages to achieve this figure even by the end of 2021.

Coming to some Financial numbers, VAKRANGEE reported a little over Rs.1600 crores in Revenues from it's Kendras business for the January to March'18 Quarter. The company books all the Commission earned for the various services offered through it's Kendras as it's Revenues and then shares between 60 to 75% of it with the Franchises, depending on the type of service & existing format. The Next Gen Upgradation work was yet to start during that Quarter. Assuming that the company had all 45,000 franchises active during that quarter (in Phase-1 or 2 or 3 formats), the Average Revenue earned comes to about Rs.1,20,000 per Kendra per month.

Normal Logic says that the Phase-3 Kendras will be earning much more than the Phase-1 or 2 Kendras, and those in Urban areas to be earning more than those in Rural areas. Let's assume that Phase-3 Kendras to be generating an Average Revenue of over Rs.1,50,000 per month. The Next Gen Kendras can certainly exceed this figure with better marketing support from the company as well as increased number of services with good commission structure, like Life Insurance, Health Insurance, Car & Bike Insurance, Mutual Funds, Rail ticket & Bus ticket bookings, Amazon & other e-Commerce booking, Courier/Parcel booking, etc. The ATM alone could generate over Rs.25,000 in Revenues per Kendra per month. I am expecting the Average Revenue per Next Gen Kendra to be crossing Rs.2,00,000 per month mark, after a few months of operations.

{Remember that VAKRANGEE will be using it's substantial Cash Balance for primarily 2 things: Capital Investment for purchase of thousands of ATMs (about Rs.2.5 lakhs for each machine x 20,000 = Rs.500 crores over the next 12 months alone); Large-scale Advertising/Marketing support across the country to let the public know of VAKRANGEE Kendra near them. Once the operations at the initial batch of about 5,000 Next Gen Kendras stabilise and they start generating decent Revenues, VAKRANGEE is expected to distribute a portion of it's Cash Balance with the shareholders in the form of a Dividend or a Buyback.}

Assuming that by June'19 VAKRANGEE manages to upgrade about 20,000 Kendras to the Next Gen Format, Revenues from these Next Gen Kendras alone could be in the vicinity of Rs.1200 crores per Quarter.Even if the old format Kendras, active then, contribute just about Rs.300 to 400 crores, the total Quarterly Revenues could be in the vicinity of Rs.1500 crores. By December'2020, even if the company manages to have about 40,000 to 45,000 Next Gen Kendras active, instead of the targeted 75,000 Kendras, still VAKRANGEE's Quarterly Revenues could be in the vicinity of Rs.3000 crores or higher. I think these are fairly conservative assumptions & estimates and VAKRANGEE can certainly achieve them, if not exceed them.

At the current price of about Rs.42 per share, VAKRANGEE is valued at just about Rs.4,500 crores. This is peanuts if we consider the company's past Operational & Financial track record and the Future potential. An Investor capable of ignoring all the Negative Air & Rumour mongering surrounding this company's stock, can consider this as an Opportunity to Invest for the Lifetime. In a year or two from now, the Dividends alone could offer good returns on the current price. One just needs to hold patience to ride through the current stormy weather & this period of transition, in order to see positive developments start reflecting in the company's Financial Performance from the next year onwards.

Tata Motors (India) Ltd.: Quarterly Sales Progress

In my earlier reports on Sales Updates of Tata Motors (India) business, I have been sharing the progress the company has been making on a Trailing-Twelve-Months basis. In this report I will be sharing the Segment-wise Quarterly Numbers of the company.

Here are the links to the earlier reports:
7th Dec'17: Tata Motors Ltd. - Gaining it's momentum back!!

6th Jan'18: Tata Motors Ltd. - December'17 Sales update.

6th Apr'18: Tata Motors (India) Sales Update: Post March'18

As we all know, the entire Automotive Industry in India suffered a setback around the end of March'17 when the SC declared that BS-III vehicles cannot be sold in the country from 1st April'2017. Not all vehicle manufacturers were ready with BS-IV compliant engines for their entire model range. The Commercial Vehicles division of Tata Motors was amongst the worst sufferers due to this event. The sales figures collapsed nearly 50% for Tata Motors CVs in April'17 and then started ramping up over the next few months. Still Tata Motors had reported a 33% drop in sales of M&HCVs during Q1-FY'18. The drop was less than 7% for LCVs, whereas the Cars & UVs segment had reported a modest growth of about 9% in Q1-FY'18.

Tata Motors had done a stellar recovery in sales from all three segments over the following 3 quarters of FY'18. With the company continuing to grow with good momentum during the initial months of FY'19, the Y-o-Y sales growth has been just spectacular. Have a look at the following table:

	Q1			Q2			Q3			Q4
	M&H CVs	LCVs	Cars & UVs	M&H CVs	LCVs	Cars & UVs	M&H CVs	LCVs	Cars & UVs	M&H CVs	LCVs	Cars & UVs
FY'2016-17	40788	50656	32285	39345	52835	42689	40995	50698	40964	54134	55578	41358
FY'2017-18	27149	47371	35171	44780	61469	47072	54980	68111	48417	63458	82121	58959
% Change Y-o-Y	-33.4	-6.5	8.9	13.8	16.3	10.3	34.1	34.3	18.2	17.2	47.8	42.6
FY'2018-19	53292	69923	53319
% Change Y-o-Y	96.3	47.6	51.6

In the M&HCVs segment, Tata Motors has posted a stupendous growth of 96% in Q1-FY'19 compared to Q1-FY'18. Part of this growth figure is due to the abnormally low figures of Q1 in last fiscal. But still the figures for Q1 of this fiscal are higher by about 30% when compared to Q1 of FY'17 too. Hence the sales of M&HCVs have been really good for Tata Motors, thanks to the new models launched by the company in the previous fiscal and the strong growth in Infrastructure sector of the country. Coming to LCVs, the segment recorded a growth of over 47%, selling almost 70,000 units during the quarter. This is inline with the strong sales recorded during the previous 3 quarters, with continued strong response to the new upgraded models launched by the company over the previous couple of quarters and strong growth in e-Commerce segment alongwith development of the hub-and-spoke model in various regions.

The Cars & UVs segment too has done extremely well, riding primarily on the success of the Tiago and the Nexon models, supported to some extent by the Tigor and the Hexa. Tata Motors has completely phased out the Nano, Indica & Indigo eCS models. Even the sales of Zest & Bolt are on the decline. The company is focusing on producing more of the new generation models and is now readying to upgrade it's Showrooms & Sales experience before the introduction of it's first model on the latest Modular platform. Just this week, Tata Motors has announced the name of the new SUV to be based on this new platform, which has been developed in association with Land Rover, as the Tata Harrier. During Q1-FY'19, Tata Motors reported a growth of over 51% in sales of Cars & UVs.

Over the next few quarters, I am expecting the growth rates for Tata Motors to taper down to around 20% levels as it will face high-base effect of strong numbers during Q2-Q4 of last fiscal. Even this growth will be considered to be healthy and will help the company improve it's profitability significantly during the current fiscal.

Tata Motors: Jaguar-Land Rover (JLR) progress for FY'2018

FY'2017 was a stupendous year for Jaguar-Land Rover (JLR), the luxury automobile brands owned by Tata Motors. JLR had managed to post strong double-digit growth in it's sales figures on the back of strong sales in US, China and other emerging markets, despite zero growth in it's primary markets of UK & Europe. It was always going to be a challenge to post healthy growth again in the following year, i.e. FY'2018. But the numbers posted by JLR are fairly encouraging. JLR witnessed over 9% decline in sales in UK & Europe during FY'2018, on the back of lower demand for Diesel vehicles and the UK-Brexit issue. The contribution of UK & Europe in JLR's total sales dropped from 44% in FY'17 to 39% in FY'18, thanks to decent growth posted in other geographies.

JLR reported nearly 20% growth in China during FY'2018 and this region has now become the largest market for the company with nearly 25% contribution to overall sales. US is now the 3rd largest market for JLR contributing about 21% to overall sales, on the back of 5% growth during FY'2018. The recently announced Jaguar I-Pace Luxury Electric Vehicle is expected to garner strong numbers from the US region. It's sales are expected to begin before the end of the current quarter. JLR posted a 3% growth in sales across other Emerging markets and it now contributes just over 15% to the company's global sales.

JLR's Trailing-Twelve-Months Sales performance

Overall for the year JLR managed to post 5.4% growth in it's Wholesales during FY'18 to cross the 633,000 units mark, compared to little over 600,000 units done in FY'17. Between the two luxury brands, Jaguar reported 1.4% decline in sales, whereas Land Rover managed to post 8.4% growth in sales. Hopefully Jaguar's decline will get reversed with the launch of the I-Pace model across different geographies. This particular model has got good reviews from various Auto experts and has also got an order for 20,000 units from Google's Autonomous Car division, Waymo, which is expected to be executed over a 2 years period. (Click here for full report).

JLR has also announced that they will be launching Electric versions of all their popular models over the next 2-3 years. Going by the reviews received by their first Electric model, it could mean exciting times ahead for JLR. The only pain point for JLR will be it's home markets of UK & Europe. Hopefully the sales decline in these markets will slow down soon and we could see reversal into positive growth during the second half of current fiscal.

For a few years till FY'2017, JLR was the main growth engine for Tata Motors, while it's India business was struggling to grow or even hold on to volumes & market shares. During FY'2018, the roles have got more balanced. JLR's growth has slowed down to mid-single digit, while Tata Motors' India business has posted strong double-digit growth in volumes, across segments. Between FY'17 and FY'18, JLR's numbers grew from 600,000 units to 633,000 units, whereas Tata Motors India business volumes jumped from 542,000 units to 639,000 units. The latter has posted a growth of almost 18% compared to just over 5% growth posted by the former. Going by the momentum generated over the last few months, Tata Motors' India business is expected to grow at 10% to 15% again in FY'2019. What this means is that, even if JLR continues to post about 5% growth in sales for FY'2019, the overall growth for Tata Motors topline will be decent, whereas the bottomline should fare better thanks to better economies of scale.

Tata Motors (India) Sales Update: Post March'18

Back in December'17, I had reported about Tata Motors gaining it's Momentum back, based on the Sales numbers till November'17. That was just the beginning of the company's Sales recovery & strengthening of market share across segments. The last 5 months have been nothing short of stellar for the company. No doubt that the entire Industry is growing at a healthy pace, but Tata Motors is growing faster than competition in most segments, which is helping it gain back the market share it had lost in the previous couple of years.

March'18 has proved to be the best month for Tata Motors in terms of Sales, both in Passenger Vehicles as well as Commercial Vehicles, in a long long time. Tata Motors (India) Wholesales stood at 69,440 units in the Domestic market, a 35% Y-o-Y growth, and 6713 units for Export, a growth of 15% Y-o-Y. For the month of March'18, the M&HCV segment reported a growth of 20%, the LCV segment posted 48% growth, the UV segment grew 223% and only the Car segment posted a de-growth of 5%. The M&HCV number of 24,321 units and the LCV segment's number of 31,296, are probably the highest the company has ever recorded in it's long history. The Tata Nexon & Tata Hexa powered the company's UV numbers to 7,908 units, again a highest ever figure. It's only the Car segment numbers for Tata Motors, which have seen better days when the Indica & Indigo CS models were in their prime.

Tata Motors (India) ended the year FY'18 with M&HCV numbers of 190,367 units, a growth of almost 9%. Remember that this growth has been achieved despite a terrible Q1 for the company, when the SC ruling disallowed sales of BS-III vehicles across India from April'17. Tata Motors had reported 33% drop in M&HCV sales during that Quarter. This was followed by a small jerk due to GST implementation in July'17. Tata Motors' LCV sales have certainly done much better than expected. The FY'18 number has climbed to 259,072 units, a growth of over 23% Y-o-Y. This growth is mainly because of the success of new products launched about 6 months ago. Before that the company was losing market share to aggressive competition from M&M, Ashok Leyland and others. With the success of the new products in both M&HCV and LCV segments, Tata Motors has not just arrested the fall in market share, it is also clawing back some share gradually.

At the start of FY'18, Tata Motors took a conscious decision to stop pushing sales of it's older car models like the Indica, Indigo eCS and the Nano, and let them die. Together these models were generating nearly 5,000 units on a monthly basis. The chart alongside clearly shows that Tata Motors has managed to limit volume losses in the Car segment, due to the stoppage of the above models, to a very small percentage. The company managed to increase production of it's Tiago and Tigor models to around 10,000 to 11,000 units every month. But the bigger story for Tata Motors' Passenger Vehicles business is the super success of the Tata Nexon. This model is single-handedly brought a lot of excitement in the Tata Motors showrooms and also on the sales charts. The rising blue bars in the neighbouring chart is giving enough evidence of the same. The Cars + UVs business did volumes of about 1,57,300 units in FY'17. The same has now jumped to about 1,89,700 units in FY'18, a growth of about 20%. This growth has helped Tata Motors grab the No.4 position in the Indian passenger car business, jumping over Toyoto and Honda in the last 12 months. After taming the 2 Japanese giants, Tata Motors is now aiming for the No.3 spot, which is currently held by another Indian UV giant Mahindra & Mahindra. For doing so, Tata Motors might need more than just the numbers from the Nexon and the Tiago. Can Tata Motors launch another strong model in FY'19, to help it climb the ladder further? Let's wait & watch.

Tata Motors Ltd. - December'17 Sales update.

About a month ago, I wrote a report on Tata Motors Ltd., saying it's gaining it's momentum back. (Click here for that report). And the company has managed to post a stellar set of Despatch numbers for the last month of the 2017 calendar, which is normally a slow month for vehicle sales as buyers prefer to purchase a new-year model. Tata Motors despatched a total of 60,820 units during December'17, commercial vehicles & passenger vehicles combined, both Domestic & Exports put together. This is probably the first time the company has crossed the 60,000 units mark in the last few years!! The 12-months average number till November'17 was 47,135.

The star performing segments for Tata Motors are Commercial Vehicles (both M&HCV and LCV) and the Utility Vehicles segment, all recording numbers even higher than March'16 & March'17 numbers. The Cars segment was the only one showing the year-end fatigue, reporting a 16% de-growth Y-o-Y. But Tata Motors will be more than happy with the other 3 key segments firing on all cylinders. Another positive is that even the Export numbers have perked up after a long time. The 12-months average Export number for Tata Motors till November'17 was 4185 units per month. The company exported 6293 units during December'17, which is the highest number since October'16. A pickup is Export numbers, if sustained over the coming few months, will give even more support to the company turnaround efforts.

Coming to the Trailing-Twelve-Months Sales numbers for the different segments, please have a look at the following charts:

The 12-months M&HCV sales number is now just over 1,81,000 units, which is the highest level achieved during this year and is about 3.3% higher than the number at January'17. The 12-months LCV sales number of 2,32,529 is also the highest for the year and is about 9.3% higher than the number at January'17. A good momentum of sales from these segments reflects not just good times for the company's business turnover & profits, but also for the country's economy in general. The Q4 of any fiscal is generally the strongest for CV sales. Hence it will be important to see how the numbers progress for Tata Motors during the next 3 months, especially after a stellar last couple of months.

The sales of Tata Motors' passenger cars reported some de-growth during December'17. Hence we can see the 12-months number dip slightly M-o-M. But have a look at the strong jump in 12-months UV sales numbers, powered by strong demand for both Nexon & Hexa. The number, which is currently at 39,149, should cross the 60,000 mark over the next 4 to 5 months. Remember that the Average Selling Price for a UV is higher than that for a Car. Hence a small dip in Car numbers, coupled with strong growth in UV numbers, will result in stronger position for Tata Motors' Passenger Vehicles division. The combined 12-months volumes for Passenger Vehicles division in January'17 was just under 1,50,000 units. It has now risen to 1,72,000 units and should cross the 2,00,000 units mark in the next 6 to 8 months time. The passenger vehicles division of Tata Motors has been loss making for the company for the last few years, mainly due to dismal capacity utilisation. As the volumes increase, the capacity utilisation improves and will help the company achieve operating break-even soon.