Hit by a spate of bad news, shares of Tata Motors fell 1.17 per cent while Tata Motors DVR hit a fresh 52-week low of ₹209.50 on the BSE on Thursday. Year-to-date, the shares of Tata Motors and Tata Motors’ DVR have fallen 20 per cent and 29 per cent respectively.
After the resignation of Timothy (Tim) Leverton, President and Chief Technical Officer, on September 4, there have been media reports that the majority of the workers at the company’s commercial vehicle unit at Jamshedpur staged a protest on September 6 over the non-payment of revised wages.
This, however, should not rattle investors of Tata Motors as the UK-based premium luxury cars brand Jaguar Land Rover contributes close to 79 per cent and 99 per cent of the company’s consolidated sales and net profit respectively.
But the news does hold significance as the company is a market leader in the commercial vehicles segment in India, and CVs account for the lion’s share of the standalone business. The revival in standalone operations has been seen as a positive trigger for the stock, which was weighed down in FY 2017 by a surge in net loss and market share loss.
The Jamshedpur facility is the oldest of the four facilities that manufacture commercial vehicles, and produces the flagship heavy duty truck Prima along with Ultra. It has an annual production capacity of around 1.5 lakh units. The news will act as a hangover in the medium term.
Tata Motors worked out a long-term wage settlement for permanent workers at the Jamshedpur plant last month wherein it introduced a performance-linked payment, accounting for 10 per cent of the total salary; it will be linked to productivity, quality and safety, according to media reports.
Tata Motors’ market share of medium and heavy duty commercial vehicles dropped to 49 per cent in FY17 from 51.9 per cent in FY16; and in the heavy-duty truck segment, its market share fell to 53 per cent in FY17 from 58 per cent in FY16. Overall, the company’s market share in CVs fell to 44.4 per cent in FY17 from 46.2 per cent in FY16.