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Tata Motors Group (NYSE:TTM)
Q4 2020 Earnings Call
Jun 15, 2020, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, good day and welcome to the Tata Motors' 4Q and FY 2020 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]

I'll now hand the conference over to Mr. Yogesh Aggarwal. Thank you, and over to you Mr. Aggarwal.

Yogesh Aggarwal -- Managing Director and Head of Research

Thank you, Samar. Good evening, everyone. On behalf of HSBC Securities, I welcome you all for the Tata Motors' quarterly results conference call. I'm very happy to introduce the Tata management team today. We have with us Mr. Guenter Butschek, MD and CEO; Professor Dr. Ralf Speth, CEO, JLR; Mr. P B Balaji, Group CFO; Mr. Adrian Mardell, CFO, JLR; Mr. Girish Wagh, CV Business Head; and Mr. Shailesh Chandra, PV and Electric Vehicles Business Head, along with members of the Investor Relations team. Thanks again to the management team for taking time out today. We will start the session with some comments from the management, followed by Q&A.

Over to you, Balaji.

P B Balaji -- Group Chief Financial Officer

Thanks, Yogesh. Firstly, once again, thanks all of you for taking the time to join the session. I hope all of you are safe and sound along with your family and loved ones. So without further ado, you already have the press release as well as a investor deck with you. So we will try and take out the specific slides that you'd want to emphasize, and thereafter leave it open for questions to the maximum extent possible.

Prakash, can you move to the next slide, the standard Safe Harbor statement? Nothing new here. Other than a call out that we have tried to calculate the impact of COVID-19 on our numbers, and those are analytical purposes using our best estimate. That is the only call out that I have additional to what we normally have.

Keep moving, Prakash. Key highlights of the year. It's been a action packed year from a product and product offensive, as well as technology offensive perspective. In India, I think the entire range got ready for BSVI and transitioned smoothly to BSVI; then of course, there was an exciting Tata Altroz launch that happened; Nexon EV was unveiled in December last year; and from a JLR perspective, the most exciting launch of the year in the -- form of a new Defender, as well as the Discovery Sport that got launched into China; and the PHEV versions of Evoque and Discovery Sport also came through; and we unveiled the Vector mobility concept earlier this year.

And -- apart from the product launches, which are quite intensive, going to the next slide, we also had a series of management actions that we have been taking. First was the whole Charge+ delivery. Moving Charge to Charge+ are now stepping up that number to now GBP5 billion is what we are now calling out, having delivered at GBP3.5 billion. And, of course, the collaboration with BMW, that we called out in our Investor Day, and the software-over-the-air was announced, along with the Defender launch, including the new infotainment module.

On the balance sheet side, we talked about the promoter equity support through a preferential allotment happened in this financial year. And of course, in March, we called out the subsidiarization of the PV business, which has been approved by the Board. And of course, from a -- this -- one of the smoothest transitions into BSVI with negligible inventory as we entered, despite forward coming in at the most inappropriate time for the transition, all these have been delivered.

In terms of financials, sorry -- go back a slide, please. We've already seen these numbers, let me just call out the key things that stand out. On a full-year basis, we were near EBIT breakeven, despite a 23% drop in volumes, and the revenue down almost 14%. And EBIT was at minus 0.2%, and the profit before tax and exceptional -- before exceptional items was INR7,700 crores. The exceptional item being the INR2,500 crores charge that we have taken for asset writedowns and other provisions in the PV business.

And the call out that we would love to make is, that despite all these challenges second half of the year was positive free cash flows. Even this quarter was a neutral free cash flow despite all the challenges that we see. So a combination of what started looking as a solid second quarter and third quarter performance coming in from JLR and continued issues in India due to a variety of factors did get offset quite significantly by COVID as the quarter ended. And of course, the big ones in India being the medium and heavy commercial vehicles decline and the stock correction that we did. It has not been a great year, despite promising two quarters that came through.

Next slide. You've seen it, combinations of the reason for what happened. The call out here is, I think from a volume and mix perspective, that's probably the entire story of why the declines happened. And contributions from JLR was about 4% down, the biggest contribution coming from Tata Motors Standalone dropping almost 8% in the total 13% decline that you saw. The retails, of course, being higher than wholesales in India by almost 65,000 units by the time the year-ended.

The next slide. The EBIT walk, you've already seen. The good news is, JLR. Despite all its challenges, increased its EBIT by about 50 bps, well, almost the entire fall can be explained by the drop in the TML stand-alone numbers for reasons we have talked about many times in the past.

Moving on to Slide 8, this is how the debt is actually laid out. We ended the quarter with a INR42,000 crores of net automotive debt, and then add on top of it a INR6,000 crores of lease payments, that is basically IFRS 16, a combination of those two becoming INR48,000 crores. But it was backed with strong liquidity both in JLR and in TML; JLR at GBP5.6 billion and Tata Motors stand-alone at INR6,700 crores, and these debt maturities are well spread out. So the liquidity remains strong and the debt maturities are well spread out is a key call out in this slide. And even as we end May and look into June, the liquidity position continues to remain adequate as we look into the business coming out of the lockdown.

So a few set of slides on the actions -- corporate actions that is out there. As far as JLR is concerned, the key call out I am making here is the Charge+ delivery is now being increased to GBP5 billion, an increase of GBP1.5 billion over what we delivered in FY -- in the 18 months to FY 2020. Capex is being rationalized quite substantially by up 40% to GBP2.5 billion in FY 2021, and FY 2022 plans are being recalibrated. I'll give you the context in the subsequent slide.

Similarly in India, the capex is being rationalized by a significant 66% to INR1,500 crores in FY 2021, and FY 2022 again being recalibrated. And India again is calling out a structural cash and cost out plan of INR6,000 crores of cash improvements that have been launched, including INR1,500 crores of cost saving is being called out. These are pretty sizable interventions to reduce the cash burn both in JLR and in India, given the fact that the demand situation has been -- is quite volatile and likely to be subdued for a while.

Moving to the actions that we're taking on the PV business, and just pulling out all the actions that are coming together to make PV win sustainably. First, of course, is a call out of reimagining PV in order to rejuvenate the front end sales and service. And I'm going to ask Sailesh to talk about it in his section. We also have a full -- the most refreshed range of cars that Tata Motors ever had, and therefore, this we will find drive salients and customer preference of this fully refreshed BSVI range.

We called out in March a separate legal entity in order we can make this business a long-term value creation entity, and this will drive transparent capital allocation and focus within the business. And we are now building an efficient cost base as well. If you'll recollect, we already worked significantly in improving the contribution margins of this business. We will step it up even further and reduce fixed costs further in this business to reduce breakeven. And along those line, we are taking an exceptional charge for rationalizing the asset base and other provisions of about INR2,500 crores in this business in India. And the aim of this business, we are now making it explicit, is to become cash positive by FY 2023 through all these steps that have been laid out in front of you.

On the corporate actions front, again, a series of call outs that we are making. Number 1 question that keeps coming again and again, the Tata Motors Group is the flagship of the Tata, and it enjoys full promoter support. And we are now calling significant intervention in terms of change of strategy to significantly deleverage this business, the entire Tata Motors Group. And starting point of it is all the cash intervention that we talked about, and JLR will -- also along with that would be JLR becoming sustainably cash positive from FY 2022 onwards, while becoming future-ready. These are big calls that have been taken to ensure that this business remains sustainably cash accretive in the long run. And would love to leave this with you in terms of how we are thinking about the business strategy going forward.

So let me now hand it over to Adrian, who can take you or walk you through the JLR number. Adrian, over to you.

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

Many thanks, Balaji. Good evening, everybody. Just call out a few of these. Of course, first year loss before exceptional items and tax was GBP393 million loss, slightly worse than FY 2019. Of course, quarter four was devastated by the impact of COVID-19. Quarter four loss was GBP494 million, and that was GBP63 million [Phonetic] less than the previous quarter four in FY 2019.

You all know that our Q2 and our Q3 results were much stronger than prior year, and I think that starts to indicate how much impact COVID actually had in the final quarter. We were headed for a pre-COIVD quarter four of just over 6% EBIT. On a full-year basis, Balaji has mentioned, the EBIT margin did improve actually versus prior year, 0.1% was a negative EBITDA or actually was a 0.5% improvement versus last year as well to 8.7%. We will talk Charge later, which is clearly the underpinning of a significant turnaround in Jaguar Land Rover over the last 18 months. Temporarily, of course, COVID has impacted that.

On volumes, retails were down 12%, achieved 508,700. Revenue was down 5% at just under GBP23 billion. Of course, we had a very, very weak Q4, just a 110,000 retails in Q4, down more than 45,000 units from last year. Quarter four, of course, is always our strongest quarter. Market dynamics with the U.K. were significantly impacted.

From a cash perspective, even after the impact of COVID, we were still cash positive in Q4, GBP225 million, full year negative GBP702 million. We don't like that, but it was GBP563 million better than the previous year even after COVID. Our cash breakeven has now fallen below GBP500,000 [Phonetic] wholesales. It was significantly higher than that before the Charge program actually began.

Next slide, if you would please. Okay, so this is the retail call out full-year 2020 by region. I think China is the one, of course, I'm going to land on. COVID did have a more significant impact in China in Q4 because we all know it started earlier in China from the Chinese New Year date. If you remember, we were trending more than 20% higher year-over-year in Q2 and Q3 in China. On a full-year basis that you see here, we were down 8.9%, which shows the extent of the fall-off in February and March. But that was better than industry, industry minus 16.6%.

Wholesales, which exclude CJLR, were 476,000 units, 6.3% down. And from a wholesale revenue and therefore, of course, cash generation perspective, quarter four was the second weakest quarter of the fiscal year after Q1. It's normally by far the strongest quarter because of those market dynamics, including of course, the biggest selling months in U.K. is in March. So a dramatic impact on volumes in quarter four.

Next page, if you would please. Okay, so this is retails by nameplate and full-year data as well, year-over-year by nameplate is shown. Besides, standout is the Evoque. Of course, the new Evoque, 25% up year-over-year even after COVID. I-PACE was also up year-over-year, almost 40%, so that stand out as well for us, although the Q4, as I mentioned retails were only 110,000 units. You can see the winners and losers on the right hand side of the page.

And next slide, if you would please. Here we go. Here is the profit bridge year-over-year before exceptional items. We've done this one. I'll remind you, last year we lost GBP358 million, 0.7% EBIT margin. Our actual loss for this year was GBP393 million before exceptionals, 0.1%. Well, I'll just call out a few things. We've talked them mostly. Previously China JV, we had a worst year, although we have stabilized the position actually in the JV. So you will see better results going forward [Technical Issues] in our JV business in China.

The most difficult assessment we had to do at the end of the year was on variable marketing. Of course, we did have too much dealer stock as we stopped retailing units toward the end of March. We ended up with more than 100,000 dealer inventory, which is about 25% higher at least than we'd wish to have. And our assessment has been around the incremental marketing support in this suppressed marketplace obviously to sell those cars into the market. That's significantly within that increase of net pricing you see there.

We also actually have an impact in our U.S. market on residual value. As you know, substantially all of our U.S. vehicles are sold on leases, which come back to us. And in April, particularly, the second hand residual value market was a very, very weak, low auction numbers as well. Although they may has picked up, and we believe the assessment we made at the end of March is still appropriate, but we did book another $78 million at the end of March for those reductions in marketing support.

Then the good stuff starts kicking in, some really good work in manufacturing, on material costs, all the structural cost improvements under the Charge program. We talked to them a lot before. I think we're really, really pleased as they continued, obviously, on a full year basis and through Q4, even though substantially that these costs wouldn't have been impacted by COVID of course.

Exchange out by perhaps to the right hand side of this page, what we've attempted to do here is call out specific things that we know were directly as a result of COVID about GBP599 million impact in the -- on the full-year basis. All happened over the last few weeks, and we'll just give a sense there where we are tracking just mid 2.4% EBIT, although there was a collapse in sterling as well over the last two weeks maybe, and we've ignored that from that impact assessment. We can talk more about that going forward if we wish to do so.

Next slide please. Cash, OK. So our cash full-year outflow was GBP702 million, that was GBP563 million better than FY 2019 and GBP225 positive in Q4 already mentioned. Estimated impact right at the end of March on cash was about GBP760 million. We effectively didn't pass 16,000 plus units due to the marketplace. We were tracking very, very strong in the first 10 weeks of the quarter in most of our markets. It was repeating the trend of earlier quarter two and quarter three. So the price side of this is very, very straightforward for us to do.

And the big news here is, before COVID, we think, we would have been cash positive for FY 2020. That's really important. That really shows the turnaround in the reassessment we've had in the business, which is why we can confidently say post-COVID, we will get back on track, and we will be cash positive in FY22 as Balaji has already said.

Next slide, if you would please. Okay, this is the investment. It's down significantly versus the previous year GBP516 million, just under GBP3.3 billion, and all areas have actually reduced over this period. As we've mentioned before, this hasn't been done by stopping significant programs. This has been done by diligence, efficiency, care over what you spend. There has also been some delays in the launches on Defender, but that car is ready to go once the dealers are ready to actually sell. So we are now in place. GBP516 million lower on investment versus the previous year.

That's the end of the financial update slides I believe. Just check next page if you'll please?

Okay, a quick look at other things happening to us. You know what, this has been an awful time for so many people. Jaguar Land Rover sadly have lost three of our employees to COVID. That's obviously the really awful side of this. The really good side of this is the response of people within this Company really has brought out the good side of people. You can see here, we turned our 3D printing to 14,000 visors a week for the frontline. We actually lent 362 cars to those services. Our employees went out to help and putting themselves at risk. The spirit of this place, the reason why I love this place has been shown over the last several months of this sad affair.So that's what we've actually been doing in times when we've not been able to get back to work.

Next slide, if you would please. Okay, so what have we done to respond to COVID. Well, our response was really, really quick. The Board of Management of Jaguar Land Rover met more than 46 times from the end of March through to the end of May. One-hour meetings, actions decision-based, closure of plants, very, very quickly because we knew that was happening and we knew we'd stop retailing cars to the marketplace, and therefore, we have to slow down production. Of course, health and safety of our employees have been paramount, and I will talk about the restart at the moment.

We had too much inventory at dealers because sales literally stopped. More than 40,000 retails didn't happen over the last few weeks of March. So managing down that inventory is really important. 89% of our retails are now fully or partly open, 58% of which are fully open. So thankfully, all of the retails across all of the regions are now opening up.

We instigated rigorous cost controls and spending freezes. We call them internally star chambers. We've run 155 star chambers cross-functional reviews of spend over the course of the period through to the end of May. Everything more than GBP25,000 was crossed reviewed with a full ICE check [Phonetic], and it had a dramatic impact on the cost on spending leaving the business, and I'll show you the impacts it's starting to have on cash over this horrible period.

Balaji has mentioned investment. We believe the investment target range for this year is around at GBP2.5 billion. We did put some investments on pause, and we'll be talking in Q2 at what point we will be releasing those. We will give you that information when we talk to you after the quarter one results. And we have actually given plants for close, of course. We have actually taken the benefit of the U.K. furlough scheme. At one point, more than 20,000 Jaguar Land Rover employees were on furlough at home, not actually working, even though a lot of those have now returned as we've started to rebuild cars.

Next slide, if you would please. Okay, so this is the stop under the restart policy on production. I won't go through them all. You can see them there. The only plant that hasn't yet started back is Castle Bromwich. Our inventory at Castle Bromwich was higher at the end of March, because that is a big selling season in the U.K., particularly for those products. And you will know, I think, that the UK and the European regions have opened up slower than China and North America, and therefore, the sales rate on those products has been lower. This is a demand led production recovery, and that plant will be closed until the point in time when that dealer inventories are reduced. On the right hand side, you see the statistics, 89% [Phonetic].

And next slide, if you would please. Okay, China, China, China. So you see here, I think, particularly on the left hand side what you could determine, a classic V-shape for China. The sales actually from the end of March recovered very, very quickly, and you can see there, we're now at the end of May, more than 4% higher than May 2019, which I'm not sure. Many people were predicting just a few short weeks ago. All of our showrooms are open, leads to strong closure rates are better, not many casual shoppers, most people coming into the dealership is seriously looking to buy vehicles. So we're very, very pleased of the return we've had in China. Of course, we can't predict what's going to happen going forward, but this is certainly two to three months after the Chinese market starts or open up. This is very encouraging position for us.

Next slide, please. I think this is the beautiful Defender coming up. No it isn't. Sorry. That must be afterwards. Recovery by region. This is also important. Okay, I've talked about China on the left hand side. North America is starting to show a version of a V as well. Our year-over-year in May for North America was 32% lower than last year. We were predicting a little bit worse than that. So obviously, we're looking at that data closely.

In June, you can see what I would say on UK, bearing in mind that March number fell away dramatically over the last 12 days. We pretty much stopped selling. That's really sales through to about the 19th of March. You can see all of the dealers were closed. Some of them started to open up in May time, and we're watching the data very carefully. In June, in the first 12 days, we're actually quite strong.

Europe, exactly the same story, but more dealers were open depending on market. And overseas, as well is generally following a pattern similar to Europe, although the volumes are a bit less. You can see the absolute numbers; 24,000 in May; June will be bigger. So we are steadily, cautiously, improving our demand levels.

Next page, if you would please. This is the one, beautiful Defender. Okay, not launched at the dealers, but you can see the start of sales. Data at the bottom there, U.K. and Europe have started. We already have more than 22,000 orders. We've actually put on pause the Defender 90, because we're making sure that the 110 actually gets an appropriate launch. 1.6 million configurations. We actually had complete configurations of this vehicle. It's certainly unprecedented in the history of Jaguar Land Rover. It just shows the amazing interest that we have actually have -- had. We will open up the Defender 90 at the show to world base later in quarter two, and we still believe this [Technical Issues] even though, of course, it has been interrupted, and we are really, really hopeful for what this great vehicle is going to do. It's just an amazing drive.

Next slide, please. Okay, Evoque and Discovery Sport, the data here clearly has been more impacted. Of course, it really depends on where these are sold. These are heavily sold in UK and Europe as you would know, and those are the regions most impacted by closures, and therefore, not surprisingly, this is a data that's most impacted negatively year-over-year. Not much else to say. We'll just have to watch carefully as we go through the balance of the year. I do expect June to be much better, as I mentioned. Both U.K. and in fact, Europe started strongly in the first two weeks of June. So we will have better results too year-over-year, but it will still be negative versus last year. The new PHEVs of course are in both of those vehicles from 2021 model year.

Next please. Charge, Charge, Charge; move to Charge+' really strong quarter. Again, it really wasn't influenced by COVID. This was all done by the time it started to impact. Investments were lower, working capital -- big working capital gain year-over-year. We did hit the GBP1 billion profit target, which I know a few of you were interested in as you thought we had a slow start in the first half of the year.

We did say, please watch, please wait, please be patient, and we've actually delivered the results. You had seen it in the bridge as well. The really positive thing is that results have come from across the total business, and as a result of which, Balaji mentioned, we are increasing the target to GBP5 billion. And I really feel good about that target. Actually, it wouldn't surprise me if going forward we would increase it again in the second half of the year, where of course, COVID, we need to watch carefully.

Next please. We saw earlier the GBP4 billion to GBP5 billion on Balaji's page [Phonetic], I don't need to say anymore. Next please. All right. I'll give you a bit of indication, because I know you are keen on what type of program is it. We are basically now thinking about, this is a 50-50 program. Investments will be low. We signaled that. Inventory, one of the things we will do here is, we will go again on the inventory. We will lean out our inventory, we will lean out the dealer inventory, we will bring it back down to a level even lower than the levels we had pre-COVID, and that's what we've got on the page here. In other savings, one one-off savings like the furloughs scheme from the UK Government will bring up our one-time non-recurring cash benefits mostly to GBP750 million we are saying here. We got plans for more than GBP750 million there.

The other piece is the sustainable pieces, the flow-through pieces. We've got three very strong work streams now. We have been working at them for a few months; variable profit, net revenue improvements, of course, the marketplace has been significantly disturbed. So you will need to be patient with us on that one for maybe a quarter or so, but we've got clear plans.

Material costs, we've signaled the Ignite program at the end of January. Those plans are in place and we're now confident those reductions will start to come through once we bring out 2021 model year cars. And of course, a lot of this is change on vehicles, and we will come along a change points to vehicles, the next of which is 2021 model year. So as you will see that coming through as we go into the second half of this fiscal year. And finally, our overhead costs, our people reduction costs and selling and general admin costs will be significantly lower, and that will be really the story on that right-hand side of the first half of this year, where our Star Chamber processes have kicked in and have had a dramatic impact, much bigger than the impact you would have seen previously. That's the GBP5 billion. You can talk to us on October what the new number is. I am definitely confident that's going to grow.

Next page, please. Alright, funding. We've been able to get funding over this period of time as well. We did complete a deal with the syndicated banks in China last week. That's the full value of RMB5 billion over three years. We'll take Q&A on that. And we also completed early on in the process, in April, an extension for our fleet buyback in the U.K., and that was a worth of [Phonetic] GBP63 million as well. So through these difficult times, our net relationships and people who trust and believe in this Company are still prepared to put money forward. That's a greatest sign I can give you about how we are trusted by this external environment.

Next slide, please. Okay, looking ahead, quarter one will be significantly impacted by COVID. Of course, we've given you an indication of the cash positions, April and May GBP1.5 billion cash outflow. That is actual data. It overwhelmingly is driven by one-time working capital unwind. We're not building cars, we're paying our suppliers off, and therefore, working capital is unwinding on us. We think that's best part of GBP1.2 billion of that GBP1.5 billion, which tells you even when volumes are 50% of last year, the underlying cash loss over two months has only been GBP300 million that's a dramatic impact we're having on this place.

The outflow for FY 2021, quarter one is expected to be less than GBP2 billion. And with two weeks to go, we are definitely on track to be lower than the GBP2 billion outflow in Q1. So let me repeat, we have not drawn down our RCF facility. Alright. There is no need at this point in time for us to draw that facility down. Adequate liquidity is available with the new funds. Cash on hand, including the RCF is GBP4.5 billion plus.

Outlook -- full year performance outlook provided when we get better clarity going forward on what that demand is. It's a demand-led production and wholesale and revenue and cash generation. So it would be inappropriate for us to second-guess that with so much uncertainty still around pace of pick-up in the marketplace, people coming into the dealers. We would drive in free cash flows though from Q2 to Q4. That's the plan, and we expect to deliver on that plan.

I think that may be my last slide. Just check. Next one please. Yeah. Thank you.

P B Balaji -- Group Chief Financial Officer

Thanks, Adrian. Looking into the Tata Motors' domestic business and the challenges we faced, call out would be in terms of the growth decline of almost 37%, in which the M&HCV declined almost 50%. EBITDA, obviously getting impacted significantly because of this collapse in demand that we saw. And the system stock is now almost nil. So we don't have any dealer inventory in CV because the BSVI buildup was planned in the second half of the March, and we had the lock-down at that time. So looking forward to picking up that demand as and when it comes through, and PV also had an all-time low on BSVI inventory.

Overall, I think from a profitability perspective, the exceptionals I've already called out, and would also like to call out that, even though overall free cash flow was trending well in March before the lockdown impacted, second half of the year, we had a positive cash despite everything, the mayhem that you see in terms of numbers there.

And moving on to the next slide, where we -- actually I'd summarize our performance. Go back Prakash a minute. If I summarize the performance of Tata Motors, I think we are quite disappointed that despite the robust internal turnaround plans and actions that are delivered, we are unable to compensate for these shocks that are just coming one after the other, and look forward to watch interventions from our end to navigate this crisis.

Move forward. The profitability bridge, as you notice, almost it's entirely volume mix and pricing, as the BSIV to BSVI migration was happening. And the structural cost, we've managed to keep it flat, once you adjust for the depreciation and amortization the whole BSVI investments that you see. And we do expect this to start trending down as we start cutting out capex in the coming years. As far as, overall piece is concerned, the EBIT margin is more or less explained again by volume mix and net pricing, and the COVID impact for the quarter was almost about INR500 crores.

Move forward. On free cash flow side, the good part of the free cash flow is the way the receivables and inventory has come down. But of course, the sad part of it is, the whole operating cash flows not able to fund the investments that are out there and that's one more reason why the call out on the capital reduction, particularly in a scenario where demand is not likely to be strong, have been done. And the COVID impact for the quarter is almost INR2,000 crores because of call backs [Phonetic] in payables and acceptances, very similar to what Adrian called out as well.

Move forward. Investment spending, just go forward, the same numbers, you've already seen it rather than the call out that FY 2021 is restricted to INR1,500 crores, and it will be fundamentally on regulatory spends and products that have already reached advanced stages of lending, and everything else will be kept in abeyance till we are able to see demand coming through, and we are on our right to grow.

Move forward. Market shares has been a good story for us on the key categories of medium and heavy commercial vehicles and intermediate light commercial vehicles. These are quite high shares that are coming back after a long period of time. So quite happy with that. At the same time, disappointed with the small commercial vehicle and pickup segment, where this is a volume segment and therefore, this does talk from a salience of the total category. This does have significant salience, and therefore, that's the reason why the overall market share has been held.

Clearly, plans are afoot with -- Girish can talk about in terms of how to pick this up, but it is good to see M&HCV and ILCV picking up despite very, very clear focus that we are not -- we are not focused on wholesale. We want to do the retail focus, and that's helping deliver sustainably.

On the P&L of the CV business, move forward, Prakash. Overall, I think the EBITDA numbers just comfortably trends on double-digit has definitely been impacted by the collapse in the business on the M&HCV series side. And while we believe that while the inventory levels have all been well managed there, clearly the operating leverage hasn't kicked in at all. And that has really created the problem that you see here.

Move forward. On the passenger vehicle side, despite shutting down the retail sales system under Concorde, as well as the distribution arm, the wholesale market shares were held, and from a point of view of the during the course of the year, retail market shares were in line with last year of roughly about 6%. And this is something that has helped us in terms of keeping our dealers interested in this and ensuring that they do not get into trouble with BSVI. But this is not good enough and this is what Shailesh will talk about in his section.

Move forward. And the profitability is fundamentally coming out of drop in operating leverage as well as the inventory correction that we have done, all contributing to the drop in operating leverage. The good part is, contribution margins are steady, in line with the turnaround plans already implemented. We now need volumes to kick in for this business to start picking up, and that's the brief that Shailesh is working toward.

Move forward. And what is our response similar to what Adrian talked about in terms of the focus? From our side, the three clear imperatives in the India business; one, is to secure growth, secure cost and secure cash. On the secure growth side, I will leave it to Girish and Shailesh to talk about it briefly. On the cost side, we've clearly put out a plan to reduce INR1,500 crores of costs in the Tata Motors system, both variable and fixed. And on the cash side, one is about the capex and working capital reduction of almost INR4,500 crores and also secure a funding of INR4,000 crores, which we are in final stages of close out. That is the overall funding situation which I will talk about in a while.

Just move forward. Let me hand it over to Girish, who is on the line to talk about briefly the CV challenges that he is seeing in the market and how we plan to step up customer engagement. Girish?

Girish Wagh -- President, Commercial Vehicles Business Unit

Thanks, Balaji. I think before I get into customer engagement, just a point of information on the market share. So as Balaji mentioned, we grew the market share in both medium and heavies and intermediate and light commercial vehicles, and you will recollect that this growth has now happened for second year in succession. And especially, in medium and heavy commercial vehicles, we actually had grown the market share last in FY 2010. So FY 2011 to FY 2018, there was a downtrend, which was reversed last year, and this year, we continued to grow. So that's all -- I think the market share in this medium and heavies and Type-Cs [Phonetic] have grown for two years in succession.

Coming to this year, I think, as we entered into or we were exiting the last financial year, I think the COVID struck us, and the first thing which hit us was disruptions in the supply chain, especially where our material was coming from China and Europe, and then started the national lock down in the last week. So the first step that [Technical Issues] was to develop a business continuity plan for ourselves, and then we also deployed this business continuity plan to all our channel partners, both in domestic market as well as international market. So this business continuity plan essentially focused on a few themes, 10 things essentially. So on employee safety and social responsibility, cash conversion, cost reduction and then also as we start getting back into the restart phase, how do we look at demand generation and demand fulfillment. So this business continuity plan has been a very good mechanism for us to keep the Company on track, as well as the channel partners on track. And all of them have found it to be very useful.

Coming to the customer engagement, I think in this period, both the customers as well as our dealers have learned the digital way of increasing very well. And I can tell you that more than 1 million customers have been engaged during this period for two reasons, one is to explain to them the BSVI product range and also to start generating the pipeline. In addition to this, there has been a lot of engagement with the other stakeholders in the business, so be it financials, body builders and so on and so forth. So this has also helped us to finalize all the financing schemes, which are required for the BSVI vehicles. And in quite a few segments, we have been able to finalize the schemes in a manner that the equated monthly installment is equivalent to the BS4 EMI. So this gives a good lead for the customer.

This year we are also focusing on looking at the segments that are likely to grow or likely to show better growth as compared to the others. So we see a few segments, which are coming up. The first one you see is, for example, tipper in medium and heavy commercial vehicles, and this is comparative to the cargo range of vehicles. We also see good demand coming in for e-commerce for petroleum, oil and lubricant segment and also for segments like transportation of agricultural and daily produce. So we are focusing on this micro-segments and engaging with the customers to generate their demand, to generate pipeline.

We also started seeding the BSVI vehicles for the initial lot of identified customers, which is a good thing. So retail of BSVI has hopefully started. And we've also increased our focus on the non-vehicle business or more so after sales business. So here we see that more than 95% of our workshops across the country are open now. We also see that the job parts of the number of vehicles serviced in our workshops have approached very close to the per-COVID level, which means that the workshop revenue for the dealerships are coming close to the earlier period, as also the spare parts revenue for us. In addition to this, used vehicles business is likely to go up this year and that remains our focus area.

Coming to the cost reduction and cash conservation, so Balaji has already spoken about it. So in cost reduction, we have actually repurposed our teams, mostly the engineering and operations team, to look at cost reduction. And this cost reduction program is even beyond what we've been doing over the last few years. So this is focusing on direct material cost, as well as all the variable and fixed conversion costs, and as well as other fixed costs. So significant targets have been taken across all the cost heads, and we have good plans for almost the entire amount that we've targeted. And for rest of the plan also we have good visibility to these areas, as the teams work toward idea generation.

In terms of production, I think we are working with strong guidelines for inventories, as well as receivables, and also the capex has been reduced by a great extent as compared to the previous two years. So in previous two years, we have done bulk of our investments in the BSVI transition as also improving the product propositions. And now, this year, as well as next year, we are going to focus on some of the remaining BSVI products, the Phase II ones, which we had intentionally decided for Phase II, as also preparing for the next set of regulations. So that's where we are focusing and have been able to cut down the capex, very, very well.

In terms of demand fulfillment, as you know, we have five plants in commercial vehicles. All the plants have started -- have become operational now. From 18th of May, we started the first plant and 28th May, it was the last plant which started. And all the plants are functional now. We have around 30% of the manpower, which is coming to the plants to start the production. So transition to the BSVI has happened now, and we have started producing the BSVI vehicles. As a part of this, we are also tracking the suppliers' ramp up. So we were tracking almost 1,000 supplier sites within the country to ensure a smooth ramp up. And I'm very happy to tell you that more than 95% of all these vendor sites have started working, which are required -- which actually supply the material to us. And as a part of that, we are in a good stage now for ramping up our BSVI production.

We are maintaining the social distancing measures within the plants. And the MHA guidelines have been converted into very clear standard operating procedures. So more than 100 standard operating procedures have been put in place, be it for our plants or channel partners, and there is also a strong audit mechanism to ensure that all these procedures are adhered to. During this entire period, we also looked at our social responsibility and support to the community, especially to the driver community. So we have ensured that the insurance policy that we were giving to our drivers, the medical insurance policy, also covers COVID testing and treatment now.

Within our plant, we have continued to support all the temporary workforce, as well as the local communities around the plant. And through our channel partners, a lot of support has been provided to drivers all across the country. Especially, when the lockdown started, the lot of vehicles, which were stranded, the drivers were stranded, and our channel partners have provided a lot of support to them during this entire period. So these are the actions, which are in place in the buckets for demand generation. So we did start off the pipeline generation as the country comes out of lock down. Demand fulfillment, I think we are ramping up our production for BSVI, and we will be in a position to supply the pipeline that we generate.

And finally, I think, a very strong focus on cost reduction and cash conservation actions also continue to ensure that we are absolutely on track.

Balaji, back to you.

P B Balaji -- Group Chief Financial Officer

Yeah. Thanks, Girish. Can we quickly move to the PV slides, and I'll hand it to Shailesh on his plan. Shailesh?

Shailesh Chandra -- President, Passenger Vehicles Business Unit

Yeah. Thank you, Balaji. So as far as PV business is concerned, as mentioned by Balaji, now we have a very strong product portfolio in place, which provides higher addressable market on the back of a completely new refreshed range. And this provides us an opportunity to reimagine the PV business and secure its future growth. So the approach would be to deliver on some key milestones in a very time bound manner and through very strong rigorous execution. And as you can see these milestones are driving higher sales to achieve higher -- double-digit market share on the back of these strong products.

We would be focusing on strengthening the operating cash flow and [Indecipherable] through corrections in the variable -- structural corrections in the variable cost and fixed cost. And of course then expand and strengthen the product portfolio through the internal accruals and potential partnership going ahead. So in order to support these milestones and drive systematic actions, we are going to focus on six key areas to reimagine the business and prepare it to be relevant and fiercely competitive in future. So the first one is reimagining sales. And we will focus here in driving change and mindset toward retail, and we would direct the policies and work practices that drive this behavior, and also bring forth cohesive working between the Tata Motors sales team and the dealers, which would ensure better client engagement as well as a very strong focus on the customer experience.

The second one, which is reimagining the PV dealer process and resources. In this initiative, we are going to focus on driving twin objective of growth and network profitability by really defining the dealer systems and the HR practices to ensure that we don't compromise on the sales attractiveness.

The third one is around reimagining the product delivery. And as I mentioned, we now have a very comprehensive and refreshed product portfolio in place. Now, the focus of this initiative will be to ensure that an agile system and a team is in place that keeps the portfolio relevant, basically through timely and speedy interventions so that we keep the market excitement on as far as our portfolio is concerned.

The next one is reimagining the PV digital transformation. As you know, digital is going to be the key source of differentiation and a key interface in the new evolving customer journey. And we see that COVID has just accelerated the shift toward greater mix of the customers to get an end-to-end immersive experience on digital platform, and therefore, digital transformation initiative is focused on delivering enhanced user experience, customer connect and reach.

Now, the fifth one, which is reimagining PV after sales. Sure it is of great importance, I think, for the business. And we have the aspiration to be seen as a leader in after sales experience. We have covered some distance in this regard by being ranked Number 2 in CSI for the last three years, but I think we definitely need to bring greater transformation to achieve our aspiration. And this specific initiatives going to focus on the same.

Last, but not the least, reimagining PV brand and marketing. Over the last few years the new products that we have launched and the strategy of focusing on the the NEW FOREVER has actually helped us in establishing stronger connect with the personal segment customers and also the younger customers. And it gets reflected in the fact that our NPS score has been increasing for a period of time and today it stands at around 25, and therefore, we need to continue working on enhancing our brand imagery to build very strong perception of the PV business in the market, which is very essential to drive the future growth.

Apart from this, pretty much similar to what Girish mentioned about cost reduction initiative, there is a very steep reduction, which we have planned for both bringing structural improvements in variable costs as well as fixed costs. And the focus here is to take it to the next level of what we have been doing for the last two to three years, and we would take it to the next level by implementing new cost reduction levers, making the decision-making faster. And also, we have significant increased in the last two months also the intensity of ideation workshops. So we are pretty confident that the stretched targets that we have taken as far as variable cost and fixed cost reductions is concerned gets delivered.

So this is in summary what we are planning to do as far as reimagining the PV business is concerned. Back to you, Balaji.

P B Balaji -- Group Chief Financial Officer

Thanks, Shailesh. Let me now cut -- move forward, Prakash. This we already covered, so let's move forward. Just getting into the funding slide. At this point in time, we have -- we are in final stages of securing a INR4,000 crores of term funding; INR1,000 crore already done, another INR3,000 crore will be done in the week itself. And we will continue to evaluate other options at an appropriate time, and we believe, therefore, we are well placed from a funding perspective.

Move forward. Tata Motors Finance take a minute on that. It's a business that's now actually for implementing the strategy that we had called out assiduously. And it's going asset light. It's looking at its ROE improvement plan. And has -- even though the disbursements have slowed down, thanks to the market situation, continues to hold a steady market share of about 27-odd percent. And its asset-light strategy meant that it has securitized or assigned more than INR9,000 crores of assets that we have sold down our assets. And the overall GNPA, we'd would want to track it both on and off book so that the quality of the assets that we are managing is there. So that's about 5.1%. And most importantly, the cost to income ratio, which was about 67% last year is now down to 51%, and it will go down further in the coming year as well.

Sufficiently liquid, and we are not seeing any challenges with respect to it getting its money that is needed. And this business has now delivered a PBT of INR149 crores compared to INR123 crores last year, an improvement despite the challenges that the NBFC market and the industry actually faced.

Move forward. So last, but not the least, looking at slide with you, calling out two things. One is, at this point in time, we will suspend the outlook till we get clarity on the demand. With the minimum revenues and -- both in JLR and here, we do expect Q1 to be significantly impacted, but we do expect to see a sustained improvement in cash flows from Q2 onwards as things pick up, and both in TML and in JLR.

And therefore, the plan on -- with a very clear call out on deleveraging, which I called out earlier and the focus on JLR getting cash positive next year and TML from cash positive from this year itself, we believe that we are on the right track, but obviously the COVID crisis means that the level of challenge that all of us are dealing with has gone up multi-fold, so that means we need to respond also with the same level of intensity and we believe with the intervention that we have planned on cash, on cost, on Charge, on capex and explicit call out on deleveraging, we believe we are moving in the right direction. And as and when we have further actions in this direction, we will share with you. But the theme of deleveraging is something that I would want to leave you with as a takeoff.

With this, let me now hand you over to questions. Yogesh, over to you.

Yogesh Aggarwal -- Managing Director and Head of Research

Thank you, Balaji. Operator, can we take questions now?

Questions and Answers:

Operator

Yeah. Sure. Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Pramod Amthe from CGS-CIMB. Please go ahead.

Pramod Amthe -- CGS-CIMB -- Analyst

Yeah. Hi. This is Pramod here. Two questions. One with regard to the stimulus packages launched with -- in the global [Technical Issues], how do you view them as they are more inclined to [Technical Issues] and how you feel JLR is positioned to benefit from the same?

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

Do you want to cover that one, Balaji?

P B Balaji -- Group Chief Financial Officer

Hi, Adrian. Yeah, please go ahead.

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

So the first question -- wasn't the first question on PV?

Ralf Speth -- Chief Executive Officer at Jaguar Land Rover

It's very difficult to understand the questions here. So we have problems to understand it.

Pramod Amthe -- CGS-CIMB -- Analyst

Okay. If I can repeat. Basically, considering that there are stimulus packages being announced globally for revising the car demand, what's your view on the same and how JLR is positioned to benefit from the same?

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

JLR stimulus package for what, excuse me?

Ralf Speth -- Chief Executive Officer at Jaguar Land Rover

The government?

Pramod Amthe -- CGS-CIMB -- Analyst

For car demand revival in Europe and other countries.

Ralf Speth -- Chief Executive Officer at Jaguar Land Rover

The stimulus at the moment from the countries is quite different. In Europe, difficult to understand. In Norway, we are the very first one in introducing premium electric vehicles, and we have our I-PACE the award winning car. So in this kind of going green, we can maybe benefit. In addition, we have six PHEVs already in the marketplace. So we have a very, very young model line. So in that context, I guess it will help. And I see in the UK, still the discussion about the order of stimulus. So I cannot give you a clear picture about that.

Pramod Amthe -- CGS-CIMB -- Analyst

Sure. Second question is with regard to the PV business, what's the interest you are looking at or a timeline for bringing a partner into the PV business? And how should we look at those milestones? Thanks.

P B Balaji -- Group Chief Financial Officer

Yeah. Apologies. I didn't realize my phone had gone into mute after I finished. I couldn't respond earlier. So the partner, I think we are in conversations with various OEMs and multiple levels of interest is there in this, and at an appropriate time when we are planning the right partner we will definitely tell you. One of the reasons for the subsidiarization is also to enable us to get a right partner in the subsidiarized entity and is very much part of our plan to take PV sustainable over the long run.

Pramod Amthe -- CGS-CIMB -- Analyst

Thanks a lot.

Operator

Thank you. The next question is from the line of Pramod Kumar from Goldman Sachs. Please go ahead.

Pramod Kumar -- Goldman Sachs -- Analyst

Yeah. Thanks a lot for the opportunity and sorry for your loss at JLR to COVID. My first question pertains to the debt covenants, Balaji, as in are there -- is there any risk of any of the debt covenants across the Group company is getting breach given what's happening with the financial performance. And also, related to that is, basically, the existing financial support what you guys are getting from the UK government and how much does it impact your ability to really rightsize the UK operation given the substantial drop in volumes and substantial scale build up outside of UK. So, if you can address both of them, please. Thank you.

P B Balaji -- Group Chief Financial Officer

Yeah, I can confirm we don't have any financial covenants that are onerous or that get breached because of this. So, those are well under control. As far as UK government, those are -- the last one we had was a UK funding that happened and that is something that we were -- we took it in October last year, and those have been well received and as part of the funding plan for the year. For the new ones conversation has -- JLR has called out earlier as well, conversations continue on a variety of area. And as and when something fructifies, we will let you know. And I think from our plan, those are refinancing debt. They are not a fresh debt because the overall deleveraging plan is basically being called out to ensure that we take down the levels of debt to more sustainable levels and hence as and when something fructifies, we'll share with you.

Pramod Kumar -- Goldman Sachs -- Analyst

And any restrictions which come attached with these funding arrangement on your ability to rightsize or shutdown of the plants, anything like that?

P B Balaji -- Group Chief Financial Officer

The conversations happen on multiple forums on this and we have said, at this point in time, we will take the debt that we believe is comfortable for us in terms of adhering to the requirement our strategy as well. So, still I think these are still in discussion stages. If something fructifies, we will share with you.

Pramod Kumar -- Goldman Sachs -- Analyst

And second question is on the JLR negative working capital. This is one of the few stable companies which has got a negative working capital cycle. How sustainable it is given the headwinds for the dealer community is also facing and the shrinking volumes right and the increasing complexity of the business? So do you -- because that's a big source of capital for us in terms of cash flow generated -- cash flow generation, sorry. What is the level of confidence on this being the sustainable factors, even say two years to three years, five years out from the management level.

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

So let's be clear about why the negative working capital is actually happening. It's happening because we stopped building vehicles in the third week of March for seven weeks and therefore we stopped bringing parts into our factories and therefore we were paying suppliers for previous deliveries two months before which we actually are no longer building vehicles. It will reverse once our plants open as they have. It will reverse once we start bringing parts into our factories and it will reverse once demand -- it will fully reverse once demand lifts toward pre-COVID levels. So, it's purely as a result of settling supplier payments for the previous six weeks to eight weeks worth of production, and not actually building cars from the end of March through to the end of May. The restart process page we showed you, show that most of our plants began building. Again, we commenced in the 18th. Hello?

Pramod Kumar -- Goldman Sachs -- Analyst

Adrian, apologies. My question was on the sustainability of the negative working capital model where you get the money from dealers upfront and you pay your vendors with the delay. How sustainable is this practice of getting the money from the dealers upfront because most of your global peers don't run a negative working capital cycle wherein working capital is a source of cash flow? My question is pertaining to the sustainability of this in the longer term.

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

We work with funding partners within all of our regions. We've referenced North America where we work with Chase. That's a well-established model that we actually put in place just after we came out of Ford Motor Company 11 years ago in the great crisis. So, that is incredibly sustainable as a model and it will continue and the working capital negative will reverse once we start building cars.

Pramod Kumar -- Goldman Sachs -- Analyst

Fair enough. Thanks a lot. Yeah. Sorry, Balaji.

P B Balaji -- Group Chief Financial Officer

Sorry. I didn't have anything.

Ralf Speth -- Chief Executive Officer at Jaguar Land Rover

Thanks a lot to Goldman Sachs who increased forecast. So credit is really -- very interesting.

Pramod Kumar -- Goldman Sachs -- Analyst

Thanks a lot, and best of luck. Thank you.

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Chirag Shah from Edelweiss. Please go ahead.

Chirag Shah -- Edelweiss -- Analyst

Thanks for the opportunity. Balaji, my first question pertains to, only housekeeping one, on gross margins for -- we have seen across businesses in this quarter, gross margins deteriorated sequentially with YoY. So, any specific reasons for that? Is it more because of inventorization or there has been pressure on commodities or pricing pressure also?

P B Balaji -- Group Chief Financial Officer

Two -- three things that come to mind straight away. One of course is, if I take the India business, the mix has been completely out of whack given medium and heavy commercials going down. So, that has been a headwind against us. Then of course as VME both here and in JLR because of the BSVI migration, BSIV inventory being taken out discounts in the market because of a stricter market situation. And JLR of course, Adrian did talk about the residual value impact, becoming from, let's say like area like US. And third of course is, given the entire China situation that we had during the course of the year, your mix from a geography perspective also works against you as far as JLR is concerned and the combination of these mean that you do have a challenge on the contribution margin. And those are the things that we hope to reverse as we look ahead of it. Commodities per se, as we look into the future, no major inflation expected as for as purchased material. Yes, there will be here and then things there, particularly some of the more -- things like rhodium, platinum would be things there to watch out for. But barring that, no major commodity inflation coming up.

Chirag Shah -- Edelweiss -- Analyst

And the second question was on the comment made in JLR, breakeven level has been brought to around 500,000 units. How much more it can go up over next 12 months, the breakeven levels in JLR.

P B Balaji -- Group Chief Financial Officer

Adrian, would you want to pick that up?

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

Yeah, we're really struggling to hear the questions. I am sorry. The line clearly isn't very clear. So, could you repeat your question please.

P B Balaji -- Group Chief Financial Officer

Yeah, let me -- I think Chirag's line has got a problem. The question was, at 500,000 units cash breakevens have come down significantly to 500,000 units. How much further can it go down basis your experience was the question.

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

It's going to be -- it would be much lower in this fiscal year. So, at least the 10% lower than that this fiscal year, but my view is once we actually reappraise what COVID means, we'll be better placed to actually respond to that question, right. But it certainly can and will be lower in FY21 than the 500,000 units, significantly lower.

Chirag Shah -- Edelweiss -- Analyst

Thank you. Thank you very much.

Operator

Thank you. The next question is from the line of Sonal Gupta from UBS Securities.

Sonal Gupta -- UBS Securities -- Analyst

Yeah, hi, thanks for taking my question. Good evening, everyone. So one on JLR. Just wanted to understand, there seems to be a very sharp decline in average selling price per unit, in this quarter versus previous quarter. So, any exceptionals which are going in the revenue -- I mean in the VME, how big was the VME for this quarter?

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

Yeah. So, there's two pieces impacting that. There is -- obviously in Q4, COVID actually impacted China more than other areas and that's important to us. On a VME basis, we had two significant adjustments to make. One was a reappraisal on the marketing required to actually sell the 100,000 units that we actually had at the end of March. We booked about 2 percentage points increase in VME for that within the quarter and the rest was, I think, I referred to earlier about the incremental residual value risk we fed in which was $78 million, which is just about -- just over 1 percentage point. As a result of weakening of residuals and the option prices in April and May, although they did actually strengthen in May, we think that $78 million incremental provision is about right. That was the latest assessment we did toward the end of May. They are the two big pieces within the quarter that dramatically impacted the net revenue.

Sonal Gupta -- UBS Securities -- Analyst

Sure. Thanks. And Balaji, the other question I have is, I mean like, what is your thinking in terms of raising further equity for the company. I mean, like -- and what will drive that? So, just want to understand, I mean, like, how do you see the funding requirement from an equity perspective.

P B Balaji -- Group Chief Financial Officer

I think two comments here. One, if you look at the internal plans for the business, very clearly looking at significant cash generation both in JLR and in TML going forward. And I think the trigger for this -- and additionally, the call out on deleverage has also been done. So, I think the key trigger for this if you look at what is the level of our demand and how fast it is coming and basis that, we will need to decide how do we ensure that the business remains in sustainable levels of debt.

And at INR48,000 crores and also the fall out on the Q1 numbers, we believe definitely this debt is unsustainable and therefore the operational plans have been put in place. And then we believe that's good enough from a point of view of ensuring a level of cash generation that we can show the debt to start coming down and then we need to look at other options subsequently, but the entire focus is to get the operational performance up and not just look at it from an equity perspective alone. But the issue is not a debt equity issue per se. It's about sustainability of debt per se, and the interest cover that you need to operate with. And the demand shock is what we are watching, which we believe if that's going to get worse, then we'll need to think about it.

Sonal Gupta -- UBS Securities -- Analyst

Okay, sir. Great, thank you so much.

P B Balaji -- Group Chief Financial Officer

Thanks.

Operator

Thank you. The next question is from the line of Vinay Singh from Morgan Stanley. Please go ahead.

Vinay Singh -- Morgan Stanley -- Analyst

Hi, team. Thanks for the opportunity. The first question is on China. As the chart shows, we've started to see volume recovery. Could you comment a little bit about discounts in the market, how is the profitability of the China and how do you see the profitability of China JV going ahead? That's the first question.

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

Okay. Let me take that one before your next question. So, think about China as two pieces of our business. One is an import model where most of our larger SUV 5 units go. Actually, through this recovery period of April and May, transacting prices have increased and therefore market into the port has been a little lower. So, not only do we get a bounce back over year-over-year, we actually -- the price that the customer is paying in the market was slightly higher, 1% to 2% more than in pre-COVID periods.

From a JV model, we've done a lot of work as a team with the joint venture over the course of the end of 2019 calendar year. That was impacted by COVID. The plant actually was the first of our plants to close at the end of January, but we did actually introduce the Charge+ program to -- at the JV and it was sponsored by our partner Chery as well. So, we now believe we have actually reduced the breakeven point in China operations very, very close to the forecast volume for this year. So, you will see improvements and that's all areas. Just like the Charge+ program. So that's some manufacturing cost, that's some some structural costs, that's some marketing costs, that's some material costs and also net revenues. So, we're working hard to increase the net prices for all of our vehicles. I think I had mentioned before that four of the five nameplates have been refreshed over the previous 12 months. We took a lot of action to reduce the stocking levels and that's all starting to come together. So, I can confidently say on the track we're on, you will see year-over-year improvements from Q1 and going forward for our JV business.

Vinay Singh -- Morgan Stanley -- Analyst

Great, thanks for that response. The second question is that...

P B Balaji -- Group Chief Financial Officer

It really looks positive.

Vinay Singh -- Morgan Stanley -- Analyst

Yeah, no, that's encouraging. The second question is, when we look at the Charge+ plan for 2021, how dependent is it on underlying volume, especially the sustained improvement target that you had for GBP750 million or the other way around, what is your sort of underlying volume framework when you're setting out for this GBP1.5 billion of savings?

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

Yeah. Less based on volume than you might think, of course, elements for the Charge program, like our material cost would be. If we take a pound [Phonetic] out the car and produced 500,000 cars, it's more than we produce 450,000 cars. Right. So there is a direct link on our material cost element of the program, but I did mention I think earlier that, that particular element to the program will kick in, in the second half of this fiscal year, where we do expect volumes to be higher. The other elements, warranty cost is a big piece of it, much less volume-dependent, actually, more about where we sell which cars and the energy we're now getting in speed of effects which is dramatically improved over the course of the last 12 months as well as the early signals that we're starting to see on '20 model year vehicles. They are definitely tracking better than the last three model years, particularly '18 and '19, which is the really great news here for us.

Rules of the Road do not allow us to start to show that until the vehicles become maturer, but at the end of quarter one and certainly quarter two, if we continue on this track, we will see improvements on warranty cost performance. Parts and accessories will be partly actually be impacted by volumes. Of course, as you would expect, there is a link to volume there as well. Other elements like overheads, if anything, we have been more aggressive through the star chamber. So, those structural costs will likely be lower in the first half of the year than they would otherwise have been as we've constrained the organization in partial hibernation what we just haven't been building. So,it's a mixed bag, but the pieces that flow strongly will be the material cost piece, the parts and accessories, the warranty and the elements of that structural cost piece. So, the program is really well balanced actually, and I think you'll be quite impressed as we go forward in the quarters.

Vinay Singh -- Morgan Stanley -- Analyst

Yeah, great, thanks. We'll look forward to that. Thanks.

Operator

Thank you. The next question is from the line of Atul Singh [Phonetic] from Nomura Securities. Please go ahead.

Kapil Singh -- Nomura Securities -- Analyst

Yeah, hi, sir. This is Kapil. Thanks for the opportunity. Balaji, I wanted to know what is the sustainable level of capex that we should think about both the India and JLR business and how much is the R&D and maintenance split for both?

P B Balaji -- Group Chief Financial Officer

Yeah, I'll let Adrian talk about the business -- on the JLR business. As far as India is concerned, I think, the starting point of it is about what is the level of demand that is out there and what's the level of affordability that you can have. And obviously, we want to ensure that the products are out there, but all these also require a demand on that side. So at this point in time, it's the recalibration of the capex of INR1,500 crores, all of it capex. And this will have -- bulk of the focus will be on regulatory compliance and the new products that we intend to launch. Not much as far as on the ground and factory investments are concerned. Yes, they will be to the extent of tooling or jigs and fixtures and robots that you put in place, that's about it, but bulk of it will be related to regulatory and products. As far as sustainability of it is that, it totally depends on what sort of affordability that you have and then a plan to deleverage we will obviously look at all options including partnerships to ensure that we are managing this in the right way. Yeah, Adrian, on the JLR side, would you want to pick it up?

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

Yeah, thank you. Well, we've given you the guidance on the GBP2.5 billion for this year. Just so you're clear on that, we do have some of our programs on pause. Obviously, the ability to actually work all the programs, the way we're attempting to work is more difficult. So you should see, and you will expect to see actually half one investment being lower proportionally than the second half of the year. We do expect to lift those pauses as we go through the course of Q2 into Q3, which is the GBP2.5 billion. I mean the afford -- and by the way, within that, just to repeat, there was no significant change or cancellation of any of our programs. Clearly, affordability and speed -- speed of development will be judged going forward. We will build our liquidity. That's most important. We are determined to be free cash flow positive, right. Within there, there is a level of affordable investment and we will moderate for time without actually missing a drumbeat on the product. So we've given previously guidance of up to 4%. It will be lower than that. We'll come back later in the year once we figured out speed of liquidity build and affordability and what that means for those programs on pause.

P B Balaji -- Group Chief Financial Officer

And then, Kapil, just to add to it, there was a precious reason why we are giving ourselves degrees of freedom with the interventions on cost and cash both here and in JLR because it's not sustainable, you just -- you can't cut your way to prosperity, you will need to grow your way to prosperity and the cuts are more disciplined to ensure that we choose the right vehicles to invest in. So, this is not the norm. This is more a way to ensure we survive the prices and then once we tighten the belts, get our processes right, nothing stops us from getting back on track again. But we need to [Indecipherable] reality.

Kapil Singh -- Nomura Securities -- Analyst

Yeah, fully appreciate that. Second on Defender, we have 22,000 bookings. Are these retail bookings deposits and could you give some color what kind of demand you're seeing there, I mean, monthly bookings or something?

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

So these are dealer orders. Half of which -- half of which have already been pre-sold to customers. We've seen a quite a positive as we often do in early parts of the program. Mix of those vehicles is proportionate across all of the regions. There is no one region any stronger than the others necessarily. So, we've got a good balance of those sales, a good mix of the sales across all regions. We got more than three months forward cover. And bear in mind, we haven't had one dealer launch yet. So, we've really sold this off our virtual events. We'll adjust the 120 and we've actually contained all orders on the 90. So it's a really, really very strong start. Clearly we're in an unusual environment and an unpredictable environment and again I know I could stay in this, but we'll be much stronger placed in three months to be able to give you some direction you may be looking for from what we can expect from this product, but very excited over the first few months.

Kapil Singh -- Nomura Securities -- Analyst

Great. Look forward to that. Thank you so much.

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

Thank you.

Ralf Speth -- Chief Executive Officer at Jaguar Land Rover

You should drive one. It's fantastic.

Operator

Thank you. The next question is from the line of Gaurav Khandelwal from Mirae Asset. Please go ahead.

Gaurav Khandelwal -- Mirae Asset -- Analyst

Hi, team. Thank you for the opportunity. My first question is, I wanted to understand how well is the pension accounting JLR funded? And while you are there, with the decline in interest rate, is there a risk that you would have to invest one time in the pension account?

Bennett Birgbauer -- Treasurer, Jaguar Land Rover

Do you want me to take that question?

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

I'd love you Ben to take that question. Thank you.

Bennett Birgbauer -- Treasurer, Jaguar Land Rover

Okay. So, because of the way rates moved at the end of March with many of the distortions in the market, we actually ended the year with a pension surplus of over GBP400 million. So I would say that was in part a result of unusual rates particularly wide credit spreads at the time. And so, as credit spreads have normalized, I would expect that we see the pension [Technical Issues] at this point in time.

Gaurav Khandelwal -- Mirae Asset -- Analyst

Thanks. Good to hear that. And Balaji, any indication what kind of a funding you would need to invest in Tata Motors Finance?

P B Balaji -- Group Chief Financial Officer

None for the year. You will notice that we have gone in for an asset-light strategy and we are selling that down and the debt equity ratio measures all trending well and therefore no plans to invest at this point in time. And they will be self sufficient in their funding requirements by sourcing and selling down assets. We will go asset-light there. We are already at about INR32,000 crores and we will bring it all the way down to INR23,000 crores.

Gaurav Khandelwal -- Mirae Asset -- Analyst

But then -- Balaji, with last question from my side on the domestic business, if I just draw horizontal comparison on a quarter-on-quarter, employee costs and other expenditures, I think most of -- both these expenditure have been very sticky in the stand-alone business from the last eight quarters, particularly the employee cost. And now your volumes, because of exceptional reasons, have been down at almost around 40, 50%, but what gives you confident that you will be able to cut down your costs going forward when in the last two years these costs have actually not reduced there, but only increased on absolute basis?

P B Balaji -- Group Chief Financial Officer

Okay. We shouldn't forget there is a business that was growing at about almost 40%, U turn and then drops to 37%, there is a lead time to actually to navigate that kind of a fall that is there. And if you look at percentage turnover, three years in a row that employee costs, the percentage turnover was actually trending well down and our entire focus in Tata Motors, if you recollect I stated multiple times, while fixed costs have been tightly managed, our intention was to go look at the variable cost and get it right. And now with the collapse in volumes of this magnitude, I know by coming through this, the current cost road plan will have all aspects of course looking at it, including fixed costs and therefore those plans will be put in place to ensure that we remain -- we reduce our breakeven in a collapsed volume scenario. It's a question of focus that we are working on and at that point in time with the growth in volumes, we had one kind of an objective and now with FY '20 turning the way it did, you'll obviously have to correct for it going forward. And that's part of the plan for the year.

Gaurav Khandelwal -- Mirae Asset -- Analyst

Thank you. Thanks a lot.

P B Balaji -- Group Chief Financial Officer

Yeah, thanks.

Operator

Thank you. Next question is from Sahil Kedia from Bank of America. Please go ahead.

Sahil Kedia -- Bank of America -- Analyst

Yeah, hi, sir. I have a question for Balaji. Balaji, what happens to your hedging strategy in the forex side at JLR considering that there has been such a sharp decline in volumes, how are you thinking about that because some of the hedges would be taken before. So first, if you can kind of give us your thoughts on that?

P B Balaji -- Group Chief Financial Officer

Yeah. I'm sure Ben is itching to go on this particular point, but let me just state the context and then hand it over to Ben as well. Hedging and underlying go together and as the volumes start coming off, we consistently keep reviewing our hedge position and we do dial down, dial up depending on the ranges that we operate under. So, this is a dynamic process and it is very similar to ordering inventory, we order hedges on that respect and that's why we put it out and take it out depending on what is the external demand out there. So therefore, we do not expect any dramatic noise on the hedges, because of this once you take underlying plus hedges together, which is what we have been consistently reporting. Let me hand it over to Ben in case he would love to give more color to it than what I've given.

Bennett Birgbauer -- Treasurer, Jaguar Land Rover

Yeah, the only thing I'd also mention is that, we have been more -- just because of all the uncertainty in the world, we have been more -- with Brexit and otherwise, we have been more conservative about our hedging level. So, we went into this with lower hedged levels than perhaps we would have in the past to start with. It is the case that we've been dynamically monitoring. The reduction in volumes and we've been proactive and essentially are closing out hedges as soon as we see any risk of over hedging involved and that hasn't involved any significant release of P&L as a result of those closeouts just because of where the de-designated hedges have been relative to the hedging rates they were for [Indecipherable].

Sahil Kedia -- Bank of America -- Analyst

Thank you. I have one more question. Did you guys have taken the advantage of the furlough from the UK government. Can you tell us what is the amount or what is the likely amount that you could have done and what is the benefit that you got, if you could just help us quantify that?

Bennett Birgbauer -- Treasurer, Jaguar Land Rover

So we expect over the quarter one period, the monthly amount to be close to GBP50 million, 20,000 people were furloughed at maximum. That is now reducing in June, of course. Now we have 13,000 people. If you use the GBP2,500 a person, you broadly get to the monthly amount.

Sahil Kedia -- Bank of America -- Analyst

All right, thank you so much.

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

Thank you.

P B Balaji -- Group Chief Financial Officer

Before we go onto the next question, it's 8 o'clock now here and we had the call so that we are ending at this time, but given there is a fair number of questions in queue and maybe the presentation overrun a bit, happy to extend it by, say, 15 minutes, if it works for all of you and else happy to take it down here depending on how each of your individual diaries are. So, we're happy to say here in case of further questions are coming up, for the next 15 minutes.

Operator

Sure. Thank you very much. We take the next question from the line of Rakesh Jhunjhunwala from Rare Enterprises. Please go ahead.

Rakesh Jhunjhunwala -- Rare Enterprises -- Analyst

Yes, Sir. Good evening, sir. I applaud your great fight back. My question is, one of the electric cars, since your electric car I-PACE has got such a good response, what is the capacity we have to manufacture? How can it be scaled up?

P B Balaji -- Group Chief Financial Officer

Shailesh, can you pick this question up?

Shailesh Chandra -- President-E-Mobility Business & Corporate Strategy

[Speech Overlap] Balaji, this was regarding I-PACE. [Speech Overlap] regarding I-PACE?

Rakesh Jhunjhunwala -- Rare Enterprises -- Analyst

Regarding Jaguar's electric cars.

P B Balaji -- Group Chief Financial Officer

Oh, Jaguar I-PACE?

Rakesh Jhunjhunwala -- Rare Enterprises -- Analyst

Yeah.

P B Balaji -- Group Chief Financial Officer

Adrian, this is about Jaguar I-PACE capacities and ability to scale up further.

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

Yeah. Well, it's more about battery supply actually I think for us. So, you see the volumes there within our FY '20, 16,000 units. I think we referenced on several occasions, the demand ebbs and flows with different incentives from governments. Ralf mentioned that earlier. We have capacity to scale that number up based off the battery supply contracts we have, 30%, 40% relatively easily. So, we don't see any upside misses or upside losses as a result of potentially scaling up as those government incentives shift going forward.

Rakesh Jhunjhunwala -- Rare Enterprises -- Analyst

And is there gross contribution in this product as much as the other product?

P B Balaji -- Group Chief Financial Officer

I think the question was, is the gross contribution of this product as much as other products?

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

Well, the propulsion system, as you know, I think is more expensive than the other products where it holds -- where the market price holds up, you don't oversupply, it can be certainly yes. We're learning what those supplies are and they're changing very quickly on us because changes to government incentives. But as a base contribution, we actually make a considerable margin on [Speech Overlap]. And don't forget, of course, it's also there as a strategy, as a part of our CO2 compliance. Obviously, that full BEV units are the most compliant units and it's a part of our overall portfolio which enables other sales and other nameplates as well. So there's two reasons. Obviously, the vehicle itself and the value we make on the vehicle, but also it aids our compliance strategy, which is so important to us.

Rakesh Jhunjhunwala -- Rare Enterprises -- Analyst

How good is the demand? Hello? Adrian, how good is the demand?

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

How good is the demand?

Rakesh Jhunjhunwala -- Rare Enterprises -- Analyst

Yeah.

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

I think I've answered that. I think there's some upside capacity we could build should the demand be there and the demand ebbs and flows really quite quickly depending on government's approach toward the full BEV units.

P B Balaji -- Group Chief Financial Officer

Just to...

Rakesh Jhunjhunwala -- Rare Enterprises -- Analyst

Another question I had is -- repeat, please. Hello?

P B Balaji -- Group Chief Financial Officer

Just to add -- just from numbers perspective, if we look at, like, the current year, the I-PACE sold about 52,000 [Phonetic] units and it is one of the growth drivers in terms of over 1,500 [Phonetic] units more than what it sold last year in these challenging times. So, we believe there is opportunity here and now with all the PHEVs and other electric options coming through in the cars, we believe this is something that's going to reduce the risk profile of the sales in JLR across markets, across the board.

Rakesh Jhunjhunwala -- Rare Enterprises -- Analyst

No, no. I am talking from the point of view of price/earning ratio, but look at the way Tesla is valued, as you are selling electric cars, why should you also not be valued there? Another question I had is, can you give us the quantum on hedges that you have? To what percentage of -- or what is your hedges because the pound [Indecipherable] very sharply against the dollar. So the question is that, what are you are hedging your dollar revenue and what are your open hedge. What is your hedges amount?

P B Balaji -- Group Chief Financial Officer

Ben, would you want to pick this up, in terms of your dollar revenues and the hedges that you have and your hedging rate, all of which is there in the update that you give.

Bennett Birgbauer -- Treasurer, Jaguar Land Rover

I'm sorry. I apologize, Balaji, I couldn't quite understand the question. What's the question?

P B Balaji -- Group Chief Financial Officer

Yeah. The question is, what is the dollar volumes that we have, what are the dollar hedges and absolute that we maintain, and typical hedge ratios we operate under.

Rakesh Jhunjhunwala -- Rare Enterprises -- Analyst

No, no. No, I'd like to correct it. We maintain accounts in pounds. So therefore we are hedging the pound against all currency. Our revenue is finally recognized in pounds.

P B Balaji -- Group Chief Financial Officer

That's correct, Sir.

Rakesh Jhunjhunwala -- Rare Enterprises -- Analyst

Okay. So what is the quantum of hedge that we have, both on the supply side and on the sales side?

P B Balaji -- Group Chief Financial Officer

Correct. So, Ben, the question is what is the revenue hedges we put in...

Rakesh Jhunjhunwala -- Rare Enterprises -- Analyst

And at what rate it has been hedged.

P B Balaji -- Group Chief Financial Officer

Correct. What are the revenue hedges and the rates at which we do it and what are the pound rates and -- sorry, the supply rates and the hedges with a particular in euro and what is the rates we have done it.

Bennett Birgbauer -- Treasurer, Jaguar Land Rover

Balaji, that's a little bit too specific a question. I've actually got -- I need to pull up the notional principle of the hedges and come back. I don't know if we could go to another question for that information up and then we'll respond?

P B Balaji -- Group Chief Financial Officer

Yeah, can we just take this question in two minutes, Sir, as he pulls the data?

Rakesh Jhunjhunwala -- Rare Enterprises -- Analyst

And I must congratulate you all for your response. I mean it's very good and [Indecipherable] I think things will improve dramatically.

P B Balaji -- Group Chief Financial Officer

Thank you, sir. We'll will come back to your point on this one once Ben pulls up. Just tap me once you're ready, yeah? In the meanwhile, we go to the next question.

Operator

Sure.

Rakesh Jhunjhunwala -- Rare Enterprises -- Analyst

Please.

P B Balaji -- Group Chief Financial Officer

Thank you.

Operator

The next question is from Amyn Pirani from CLSA.

Amyn Pirani -- CLSA -- Analyst

Yes, hi. Thanks for the opportunity. My question was on the fact that you have cut your capex significantly, especially in India and you have taken writedowns also with respect to the Passenger Vehicle business. So, what are the trade-offs which have been done in terms of future launches because part of the strategy for Passenger Vehicle business turnaround was new launches and improving gross margins. So, how does that work going forward?

P B Balaji -- Group Chief Financial Officer

Okay. Maybe, Shailesh, you would want to pick this up as to how you're prioritizing your portfolio?

Shailesh Chandra -- President-E-Mobility Business & Corporate Strategy

Yes, I will take it up, Balaji. So, thanks for the question. I think there is going to be no compromise as far as some of the future launches are concerned. And that is pretty much on track and the significant release of capex has come from the work which we have completed as far as the regulatory work was concerned. As you would have seen that at the start of the year, not only did we launch a new product like Altroz, but also took this transition from BSIV to BSVI to completely refresh and do model cycle enhancements -- mid-cycle enhancements also with the significant changes in the product styling etc. So, a lot of investment has been made already and that allows us that we are able to bring down the capex for the time being. And there are new products which are also in the pipeline. This is something which we are continuing to invest on and therefore there is going to be more significant compromise as far as our future our product line is concerned.

Of course, as we improve our profitability, our cash generation from the business that allows us to more -- more strengthen and grow our portfolio has been better. That is something which is a decision, which we had -- we will take as we also come out of this very uncertain environment. And then, we would also have to invest into the next step of regulatory changes which are going to come emanating from CAFE as well as BSVI Phase 2 and Audi [Phonetic]. So, I think we should be pretty much on track if everything goes as per the plan. So, not major compromises is what we have made.

P B Balaji -- Group Chief Financial Officer

And then just to amplify that point further, I think, this is not the way it will happen forever. We need to be clear that at some point, I mean, you need to get back into product creation mode and we don't want to leave gaps in the portfolio because of that, but it is just cognizance of the collapse in demand for us to sometimes take this bitter pill of saying that let's just pause it a bit and get back to normalcy before we start again. We can't just keep burning cash.

Amyn Pirani -- CLSA -- Analyst

Okay. Okay. That's helpful. Thanks for the opportunity.

Operator

Thank you.

Bennett Birgbauer -- Treasurer, Jaguar Land Rover

Hey, Balaji, we can go back to that question, if you want.

P B Balaji -- Group Chief Financial Officer

Sure. Go for it, Ben. Mr. Jhunjhunwala, if you are there. Ben, go for it, yeah.

Bennett Birgbauer -- Treasurer, Jaguar Land Rover

Yeah, so. Okay, so, the outstanding value of our hedge book in terms of notional principal and recognize that we are hedging out as far as four years or five years on some currencies is about GBP3 billion on renminbi, about GBP8 billion on dollar and then on euro around GBP6 billion equivalent and then smaller amounts on some other currencies. So, that's the amount of hedging. In general we're hedging between 55% -- 60% and 75% one year out and then descending in 20% drops from thereon beyond that. So for example, we would be at 55% to 40% two years out. So that's the policy that we operate.

Rakesh Jhunjhunwala -- Rare Enterprises -- Analyst

So, what is the rate at which you're hedged?

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

Hi, one second. So as an example, in this year, the hedge rate on the dollar portfolio is in the mid-1.30s descending to the low-1.30s after this year. The hedge rate on the euros is around 1.13% to 1.14% in FY 2021, and a little bit lower than that in the years further out as an example.

Analyst

And the renminbi -- and the Chinese currency?

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

The average -- on the renminbi, the average hedging rate is in the low-9s [Phonetic] in FY21 and FY22. But I guess I'd just point out that the renminbi, because the hedging market doesn't go out as far we only hedge out two years on the renminbi.

Analyst

Okay, sir. Thank you.

P B Balaji -- Group Chief Financial Officer

Thank you, sir. I think we have time for maybe one last question before we wind down.

Operator

Sure. We take the last question from the line of Sri Ranjan [Phonetic] from Antique Broking. Please go ahead.

Sri Ranjan -- Antique Broking -- Analyst

Yeah. Thanks for taking my question. My question is for Girish. You have been gaining market share in last two years too, I mean as you have said you said roughly 57% in M&HCV, even ILCV. So what's the aspiration there? I mean, how do you look at it? Say, we were at some point of time at round 60%, 65%. So that is our aspiration. And the second part is on the BSVI products. And how do you [Technical Issues] the products? Probably, you know even the competitor product etc. So how do you see, I mean adding [Indecipherable] jacking up the market share again?

Girish Wagh -- President, Commercial Vehicles Business Unit

Right. So I think on the first question regarding market share. Yes, I think we would like to continue with this trend, but it's very important to note that we have to take a balance between market share as well as the realizations. I think in the previous year, the realizations have taken a hit because of the inventory which was filed up when the market collapsed suddenly. So this year we have a target to get both market share as well as realizations up. So that is the response to the first question.

On the second question, I think we have done pretty well in terms of our BSVI range. So right almost three years back when we conceptualized this products we were clear that we are not going to use this milestone as for just regulatory compliance, but actually deliver more value to the customer. And that kind of planning and conceptualization happened across the entire range. So we see almost entire range we have better total cost of operation being delivered to the customer. In addition to that we've also come out with a lot of value enhancers across the products, which is something that the customers were looking forward to. And we've also improved our performance across most important attributes that the customer value during the purchase decision making.

So if you look at it, I think, therefore, we have a very good product range. We also selected the technology most aptly depending upon the segment and the usage. So we have, for example, in medium and heavy commercial vehicles, two engines from Cummins and one of them, of course, is the largest selling engine in the commercial vehicles globally. We have also used the technology expertise in after equipment both for their engines as well as some of our engines. So I think, both from technology point view [Technical Issues] value proposition point of you, we are very well placed in the commercial vehicles and accessing the entire range. And with this mean, we will evaluate this, dial-up our communication to ensure that we gain market share across the segment.

Sri Ranjan -- Antique Broking -- Analyst

Yeah. And just lastly, I mean, on the small commercial vehicle side. So how do you see the future because, I mean, there are couple of three-wheeler players who are also thinking that some of the products will not be available for small commercial vehicles, and market will probably shrink. So we will be actually getting -- three-wheeler will be gaining at expense of four-wheeler small commercial vehicles. So what's your thought on that?

And one last -- and one more question to the passenger vehicle side. So have the products are ready and then most of the products we have filled the white spaces broadly, but in terms of features and all, I mean like, we have seen in case Harrier, we have launched many new features after the year or so. So how do we see -- I mean, so can we think of they're launching all the barriers, all the features at the same time so that we don't lose out in terms of the customers, which has happened particularly in Harrier?

Girish Wagh -- President, Commercial Vehicles Business Unit

Right. So let me take the first one. As far as small commercial vehicles are concerned, this segment will also de-grow during this year as it did last year. But the rate at which the de-grows is always less than that of medium and heavies and intermediate and light commercial vehicles. And that's the kind of trend we are seeing this year also. So the demand generation that I spoke about, I think the pipeline is healthier on small commercial vehicle as compared to the larger vehicles. That is Number 1.

Number 2, I think, three wheelers hitting into small commercial results, the actual trend that we see is exactly opposite, and I'm talking about goods carrier segment. So over the past few years, actually customers have been moving up the ladder and moving more toward four wheeler like in Ace, because that gives them better total costs of operating as well as better earnings during the month. And I strongly believe that especially BSVI with the kind of range that we have, even if Ace, the starting from gasoline, which almost retains the BSIV pricing point, the CNG version as well as the diesel version, we have a very strong lineup. And in fact, we are actually priced to take away market from [Technical Issues].

Shailesh Chandra -- President, Passenger Vehicles Business Unit

Yeah, sure. So I think it's a pertinent question as far as Harrier is concerned, but almost qualify that our attempt has always been to do a proper featuring study of what are the features which are going to be relevant three, four years from now whenever we will develop a product and try our best to ensure that those are incorporated in the product definition itself. We also -- especially, when you talk about Harrier it is basically the option of automatic that we could not deliver coinciding with the manual transmission, and therefore, this has to go on and delayed.

But henceforth that I said that as a process, we will -- definitely our attention always been to ensure that we are bringing a comprehensive set of options as well as all the features which are relevant in that particular segment. And if you recall in the slide which I presented, also talked about the topic of a strong focus in product delivery and this system is exactly going to focus on the same aspect. That -- even if there are certain features and options which are left out, we are able to speedly bring it to the market, but henceforth the attempt would also be that our featuring study is robust, and we are able to coincide all the options and features altogether in one launch that we do at any point of time during the year. So that would be the attempt.

A pertinent point I would say, can't deny, but in Harrier we have missed that opportunity, but this would be our effort and endeavor going forward.

Sri Ranjan -- Antique Broking -- Analyst

And lastly on the...

P B Balaji -- Group Chief Financial Officer

[Speech Overlap] My suggestion just take it offline if need be. I think we are running behind here. We had run into another call as well. And therefore request if this can be taken offline. Do come again, Prakash, will be happy to answer it.

So thanks, everybody. Thanks all of you for staying on for another 20 minutes. I appreciate that and look forward to stay speaking to you soon. Stay safe and catch you soon. Take care. Bye-bye. Thanks all of you.

Operator

[Operator Closing Remarks]

Duration: 110 minutes

Call participants:

Yogesh Aggarwal -- Managing Director and Head of Research

P B Balaji -- Group Chief Financial Officer

Adrian Mardell -- Chief Financial Officer, Jaguar Land Rover

Girish Wagh -- President, Commercial Vehicles Business Unit

Shailesh Chandra -- President, Passenger Vehicles Business Unit

Ralf Speth -- Chief Executive Officer at Jaguar Land Rover

Bennett Birgbauer -- Treasurer, Jaguar Land Rover

Shailesh Chandra -- President-E-Mobility Business & Corporate Strategy

Pramod Amthe -- CGS-CIMB -- Analyst

Pramod Kumar -- Goldman Sachs -- Analyst

Chirag Shah -- Edelweiss -- Analyst

Sonal Gupta -- UBS Securities -- Analyst

Vinay Singh -- Morgan Stanley -- Analyst

Kapil Singh -- Nomura Securities -- Analyst

Gaurav Khandelwal -- Mirae Asset -- Analyst

Sahil Kedia -- Bank of America -- Analyst

Rakesh Jhunjhunwala -- Rare Enterprises -- Analyst

Amyn Pirani -- CLSA -- Analyst

Analyst

Sri Ranjan -- Antique Broking -- Analyst

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