Tata Motors has flagged challenges on the supply chain front, saying that the recent lockdowns in China have led to an adverse impact as its suppliers are unable to deliver products and that it could be forced to stop production in some or all of its plants if it is unable to ensure the supply of critical parts from the country.

The homegrown auto major made these observations while elaborating on the risk factors in a filing with the US Securities and Exchange Commission.

In his letter to shareholders, N. Chandrasekaran, chairman of Tata Motors, said that the global shortage of semiconductors had a disproportionately adverse impact on Jaguar Land Rover’s production and sales during 2021-22 compared with its competitors.

“Even though we took various steps to address the issue, the situation continues to remain challenging,’’ he said.

“Chip shortages may impact us more than our competitors as they may have a greater level of buying power with suppliers or have a different range of features on their vehicles that are dependent on semiconductors,” the company said.

“We are also witnessing a temporary decrease in demand. These lockdowns in China have also led to some dealerships there to temporarily close, which may have an adverse impact upon our sales outlook in fiscal 2023,” it added.

as well as impact our ability to divert the supplies on lower end models, in which our competitors exclusively

operate or for which our competitors are able to better manage supplies’’, it added.

Tata Motors further said in the report that the recent lockdowns in parts of China as the Government pursues a strategy of containing the spread of COVID-19 are adversely impacting its supply chains and that its suppliers are unable to produce or deliver products.

According to the company, if it is unable to ensure a supply of critical parts from China for production, ``we may be forced to stop production in some or all of our plants, which will have a significantly negative impact on our cash flow in the future.

Tata Motors further said, "While we expect semiconductor supply to continue to gradually improve throughout fiscal 2023, there is no assurance that this will be the case and while the supply of semiconductors remains constrained, we may be more susceptible to supply-driven shocks in the future".

It added that the supply chain disruptions, if not managed, could have an adverse effect on production volume, revenue and profitability, customer satisfaction and reputation.

"As the transition to electrified vehicles continues the skills, processes and technologies required to ensure continuity of supply will change, so securing these supply chains is business critical. Raw materials comprise almost 65 per cent of our total costs. If we are unable to find substitutes for such raw materials or pass price increases on to customers by raising prices, or to safeguard the supply of scarce raw materials, our vehicle production, business and results from operations could be materially affected’’, it said in the risk factors.