Vehicle sales data should be based on registration and not on those bought by dealers, the country’s fourth largest carmaker Tata Motors has maintained despite concerns by proxy advisory firms that this could possibly lead to insider trading.
The Mumbai-based manufacturer of cars, trucks and buses has declined to share vehicle sales information for every month unlike many of its peers who do so on the very first day of every month. While April was a washout month with zero sales Tata Motors did not share sales data for May.
Speaking to Moneycontrol, P B Balaji, CFO - Tata Motors, said there was no possibility of insider trading.
He said: “Nobody can predict the revenue of this company basis the monthly sales because there is JLR (Jaguar Land Rover) in it too. The entire OEM, dealer and vendor ecosystems is super stressed out in terms of inventory levels, availability of cash, liquidity cycle and the likes. So we would not like to add to it using a metric which only pumps inventory into the system. ”
Tata Motors is not the first and only automotive company to have declined sharing of this data. Mercedes-Benz, BMW, Audi, Volvo and Jaguar Land Rover also do not share sales data. However since none of these companies are listed on the Indian stock exchanges there is no impact.
But, since Tata Motors is a listed entity, the information of vehicle sales will not be known to the company’s investors as well as analysts tracking the company. It will however be available only to the company’s employees. This anomaly has raised concerns over possibilities of insider trading.
Amit Tandon, the founder and managing director of Institutional Investors Advisory Services (IiAS), said, “If the management team has access to numbers then there is no reason why these cannot be shared with the investors.”
IiAS is an advisory firm providing independent opinions, research and data on corporate governance issues as well as voting recommendations on shareholder resolutions.
“We are working closely with SIAM to ensure that the VAHAN portal which gets registration data be widely used and widely reported and if that data is available on a monthly basis we will be the first ones to do it. The issue is not about transparency, the issue is about using the right metric to drive the right behavior," added Balaji.
Tata Motors used to share wholesale volumes (sales to dealers) while simultaneously pushing the industry for reporting retail sales (dealer to customer). This is because manufacturers have been repeatedly accused by their dealers of dumping stocks on them for shoring up the market shares which is calculated on wholesales.
“In the absence of registration data we have explicitly called out that our focus is retail. While we have encouraged others to report likewise (but) nobody seems to have done it. From our perspective it is important to ensure that the dealer viability is absolutely top-notch. To do so the wholesale market share does not aid any purpose whatsoever. Reporting wholesales results in erroneous behavior within the system and the right measure to look at is retail sales,” Balaji added.
While Tata Motors does not want to share wholesale data as frequently as before to avoid putting more pressure on its dealer partners market watchers say that it’s the wholesales that are a representative of the turnover and not retails.
“The better way to get the market to refocus on what they believe is the appropriate number is to declare both sets of numbers simultaneously. The market can then recalibrate itself. It also needs to be asked that when Tata Motors books a sale in their P&L account is it when the car is sold or registered? Shorn of everything else the market should be most focused on ‘when do you book a sale,” added Tandon.