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Tata Motors Ltd.

BSE: 500570 Sector: Auto
NSE: TATAMOTORS ISIN Code: INE155A01022
BSE 00:00 | 24 Apr 2020 Tata Motors Ltd
NSE 05:30 | 01 Jan 1970 Tata Motors Ltd

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OPEN 75.30
PREVIOUS CLOSE 75.65
VOLUME 2248898
52-Week high 239.10
52-Week low 63.60
P/E
Mkt Cap.(Rs cr) 24,616
Buy Price 74.15
Buy Qty 970.00
Sell Price 74.15
Sell Qty 1885.00
OPEN 75.30
CLOSE 75.65
VOLUME 2248898
52-Week high 239.10
52-Week low 63.60
P/E
Mkt Cap.(Rs cr) 24,616
Buy Price 74.15
Buy Qty 970.00
Sell Price 74.15
Sell Qty 1885.00

Tata Motors Ltd. (TATAMOTORS) - Director Report


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Company director report

TO THE MEMBERS OF TATA MOTORS LIMITED

The Directors present their Seventy Fourth Annual Report along with theAudited Financial Statement of Accounts for the Financial Year 2018-19.

FINANCIAL RESULTS

(Rs in crores)

Standalone*

Consolidated

FY 2019 FY 2018 FY 2019 FY 2018
Revenue from operations 69202.76 58689.81 301938.40 292340.64
Total expenditure 63476.23 55824.11 272143.59 258536.37
Operating profit 5726.53 2865.70 29794.81 33804.27
Other Income 2554.66 2492.48 2965.31 3957.59
Profit before interest foreign exchange depreciation amortization exceptional item and tax 8281.19 5358.18 32760.12 37761.86
Finance cost 1793.57 1744.43 5758.60 4681.79
Profit before depreciation amortization exceptional item foreign exchange and tax 6487.62 3613.75 27001.52 33080.07
Depreciation amortization and product development/ engineering expenses 3670.40 3576.87 27815.20 25085.46
Foreign exchange (gain)/loss (net) 215.22 17.14 905.91 (1185.28)
Profit/(loss) before exceptional items and tax 2602.00 19.74 (1719.59) 9179.89
Exceptional Items - (gain) / loss (net) 203.07 966.66 29651.56 (1975.14)
Profit/(loss) before tax 2398.93 (946.92) (31371.15) 11155.03
Tax expenses (net) 378.33 87.93 (2437.45) 4341.93
Profit/(loss) after tax 2020.60 (1034.85) (28933.70) 6813.10
Share of profit of joint venture and associates (net) - - 209.50 2278.26
Profit/(loss) for the year 2020.60 (1034.85) (28724.20) 9091.36
Other comprehensive income/(loss) (23.43) 43.22 (5575.77) 29562.51
Total Other comprehensive income/(loss) for the year 1997.17 (991.63) (34299.97) 38653.87
Attributable to:
Shareholders of the Company - - (34401.73) 38524.52
Non-controlling interest - - 101.76 129.35

* These include the Company's proportionate share of income andexpenditure in its two joint operations namely Tata Cummins Pvt. Ltd. and Fiat IndiaAutomobiles Pvt. Ltd.

DIVIDEND

In view of inadequate profits for FY 2018-19 no dividend is permittedto be paid to the Members as per the provisions of the Companies Act 2013 ('the Act') andthe Rules framed thereunder.

TRANSFER TO RESERVES

The Board of Directors has decided to retain the entire amount ofprofits for FY 2018-19 in the Profit and Loss Account.

FINANCIAL PERFORMANCE AND STATE OF THE COMPANY'S AFFAIRS

Operating Results and Profits

The Indian economy in FY 2018-19 started with a healthy 8.2% growth inthe first quarter on the back of domestic resilience. Growth eased to 7.3% in thesubsequent quarter due to rising global volatility largely from financial volatilitynormalized monetary policy in advanced economies externalities from trade disputes andinvestment rerouting. Further the Indian rupee depreciated because of the crude priceshock and conditions exacerbated as recovery in some advanced economies caused fasterinvestment outflows.

Global growth is moderating as the recovery in trade and manufacturingactivity is losing its steam. Despite ongoing negotiations trade tensions among majoreconomies remain elevated. Growth in the United States has remained solid bolstered byfiscal stimulus. In contrast activity in the Euro Area has been somewhat weaker thanpreviously expected owing to slowing net exports. China registered growth of 6.5% in2018. A rebound in private fixed investment helped offset a decline in publicinfrastructure and other state spending. However industrial production and export growthhave decelerated reflecting easing global manufacturing activity. Japan's economy alsosaw annualized growth of 0.8% due to bad weather and natural disasters. The GDP rate ofRussia slowed down to 0.8% in 2018. At a growth rate of 1.2% South Africa's economicexpansion would still be above the 0.8% level at which the economy expanded in 2018. TheMiddle East economy growth looks uncertain with the cut in oil production in compliancewith OPEC+ deal and geopolitical risks will continue to cap the growth.

The Tata Motors Group registered a growth of 3.3% in income fromoperations to '301938 crores in FY 2018-19 as compared to '292341 crores in FY2017-18. This was due to better sales volume in the business in India and due to favorabletranslation impact from Great Britain Pound ('GB') to Indian Rupee (T) of '14517crores. Earnings before other income interest and tax were Rs 3774 crores in FY 2018-19compared to Rs 11788 crores in FY 2017-18. The decrease was primarily driven by theperformance of Jaguar Land Rover business including higher depreciation and amortizationand fixed marketing expenses / selling costs. The Company's net loss (attributable toshareholders of the Company) was Rs 28826 crores in FY 2018-19 as compared to a profit ofRs 8989 crores in FY 2017-18. In FY 2018-19 the Company has taken an impairment chargeof Rs 27838 crores for Jaguar Land Rover due to weak sales and profitability change inthe market conditions especially in China and technology disruptions.

Tata Motors Limited recorded revenue from operations (including jointoperations) of Rs 69203 crores in FY 2018-19 17.9% higher from Rs 58690 crores in FY2017-18. Growth in demand of Medium and Heavy Commercial Vehicle ('M&HCV') and LightCommercial Vehicle ('LCV') new product offerings in passenger cars and Utility Vehicles('UV') resulted in increase in EBITDA margins to 7.4% in FY 2018-19 as against 4.1% in FY2017-18. Profit Before and After Tax (including joint operations) for FY 2018-19 were atRs 2399 crores and Rs 2021 crores respectively as compared to Loss Before and After Tax(including joint operations) of Rs 947 crores and Rs 1035 crores respectively for FY2017-18.

Jaguar Land Rover ('JLR') (as per IFRS) recorded revenue of GB24.2billion in FY 2018-19 compared to GB25.8 billion in FY 2017-18 down by 6.2% broadly inline with the decline in wholesales (excluding CJLR) which were down 6.9% primarily as aresult of the challenging conditions in China.

Consolidated EBITDA for FY 2018-19 was GB2.0 billion lower comparedGB2.8 billion for FY 2017-18 as a result of the lower wholesales higher incentive andwarranty costs partially offset by Project Charge cost efficiencies and favourablerealised foreign exchange movements. The Loss Before Interest and Tax ('EBIT') wasGB(180) million in FY 2018-19 compared to EBIT of GB971 million in FY 2017-18 due tothe lower EBITDA higher depreciation and amortisation and lower profits from the Chinajoint venture.

The Loss Before Tax excluding exceptional items in FY 2018-19 wasGB(358) million compared to Profit Before Tax excluding exceptional items of GB1.1billion in FY 2017-18 primarily reflecting the lower EBIT higher interest costs andunfavourable revaluation of hedges and foreign currency debt in FY 2018-19 compared tofavourable revaluation in the prior year. Exceptional charges totalled 3.3 billion forFY 2018-19 including a 3.1 billion asset impairment in Q3 and a further 149 millionfor employee separation charges in Q4.

Free cash flow was negative 1.3 billion for FY19 (including 1.4billion positive free cash flow in Q4) after lower investment of 3.8 billion and 403million of working capital inflows. As at 31 March 2019 JLR had 3.8 billion of cash anda 1.9 billion undrawn credit facility resulting in 5.7 billion of total liquidity.

TMF Holdings Limited ('TMFHL') the Company's captive financingsubsidiary reported consolidated revenues of Rs 3975 crores (FY 2017-18: Rs 2908crores) and Profit After Tax of Rs 164 crores in FY 2018-19 (FY 2017-18: Rs 76 crores).

Tata Daewoo Commercial Vehicle Company Limited South Korea ('TDCV')(as per Korean GAAP) registered revenues of KRW 651.36 billion a drop of 25.0% over FY2017-18. The Loss After Tax was KRW 28.02 billion as compared to Profit After Tax of KRW33.66 billion in FY 2017-18. Lower profitability was mainly due to lower sales and lowerabsorption of fixed costs partially offset by material cost reduction.

Vehicle Sales and Market Shares

The Tata Motors Group sales for the year stood at 1274072 vehiclesup by 4.3% as compared to FY 2017-18. Global sales of all Commercial Vehicles were527286 vehicles while sales of Passenger Vehicles were at 746786 vehicles.

Tata Motors

Tata Motors recorded sales of 679288 vehicles a growth of 16.2% overFY 2017-18 higher than the Indian Auto Industry grew by 5.9%. The Company's market shareincreased to 15.5% in FY 2018-19 from 14.1% in FY 2017-18. The Company's exports onstandalone basis were marginally higher by 1.4% to 53140 vehicles in FY 2018-19 ascompared to 52404 vehicles in FY 2017-18.

Commercial Vehicles ('CV')

The CV Industry started FY 2018-19 on a very strong note whichcontinued through first half before being impacted by the implementation of the increasedAxle load norm. This resultant drop in demand along with increase in parc capacity theliquidity crunch triggered by the NBFC crisis coupled with other factors dampened thedemand largely in second half. However overall FY 2018-19 was a year of robust growth forthe CV industry. Tata Motors CV Business sales in the domestic market for FY 201819witnessed a robust growth of 17.2% with 468788 units sold. The market share of TataMotors for FY 2018-19 was 45.1%. All the four segments showed strong growth with three outof four segments inching up their market share.

Some of the highlights for the year were:

• M&HCV volumes grew by 12.3% in FY 2018-19. Several newproducts and variants across the Prima and Signa platforms were launched. These includeLPT 1618 5L Turbotronn - the first 4 cylinder engine offering in M&HCV range SIGNA4923.T and 4823.T - India's first range of 16 wheeler trucks with 49T and 47.5T GVW theentire range of Increased Axle Load range of products from 18.5T to 55T GVW across truckstractors and new range of Tippers: - 1913.T and 1918.T 2818.T 3518.T 4223.T 4623.S5523.S 2823.TK/K 1918K 1923K. Tata Motors inched up its market share by 0.7% in thissegment with a growth for the first time after 10 years.

• ILCV volumes registered a strong growth of 23% in the FY2018-19. Tata Motors reinforced its position through the introduction of the Ultra 1518.TUltra 1412 Ultra T.7 with smaller cabin design suitable for intercity operations indomestic and international markets. In addition the launch of LPT407/27 FE LPT 1412SLPLPT 1212CRX LPT1512 CRX SFC 909 LPT 909/49 CNG and India's first 13.8T CNG vehicleLPT1412 CNG in the regular ICV range helped Tata Motors establish itself as No. 1 in ICVssub-segment. Tata Motors also launched specialized e-commerce containers range withadvanced features like surveillance cameras OTP based Lock Load sensors etc. in theyear. Tata Motors market share in the segment was up by 0.5% compared to FY 2017-18.

• SCV & Pickup Volumes grew by 23.9% in FY 2018-19. The launchof Tata Ace Gold with the legendary facia popular among the target customer group addedto the Company's strength in the Ace family. The market share was up by 0.7% compared toFY 2017-18.

• Volumes in the CV passenger segment grew by 3.5% in FY 2018-19.The introduction of 15 seater and 12 seater Winger helped to cater to the ever increasingtour and travel segment. The year also saw introduction of 1623 a 230 HP 12 meter bustypically used for intercity coaches. In addition EGR vehicles on the 1515 range and 1212a bus meant to cater to the higher seating capacity rugged application very prevalent inthe country today were launched. On the other end of the spectrum 407 on the smallerwheel base (2900 WB) was introduced as a perfect fit to intra-city congested roads forboth school and staff applications.

• Reiterating its commitment to greener fuel options the Companystarted delivery of electric buses to various State Transport Units.

• The Company significantly improved the ability to providecustomers with end-to-end support and comfort through enhancing value added services undera umbrella brand of "Sampoorna Seva". The key elements include 6 Year 6 lakh kmwarranty on the entire range of M&HCVs Tata Alert breakdown assistance serviceavailable across 3 million kilometers of Indian roads and Tata Delight Loyalty Program.

• Non-vehicle business revenue for CVBU from spares prolife andaggregates increased by 21.6% in FY 2018-19. Tata Motors Genuine Oil ('TMGO') launchedlast year reached 17000 KL of sale helping to bring down the Total Cost of Ownership forits customers.

Passenger Vehicles ('PV')

The domestic PV Industry grew by 2.8% during FY 2018-19 registering avolume of 3.35 million vehicles. Barring the first quarter industry de-grew consecutivelyfor three quarters. Overall the Industry performance was affected by delay inavailability of retail finance higher interest rate higher acquisition price because ofrequirement of buying three year insurance at the time of purchase negative sentiment inmarket and postponement of purchase decisions. As a result the retail sales was far belowexpectations. This led to higher stock at dealerships and dealers faced the challenge ofthe working capital rotation.

The festival seasons during the year did not give the expected impetus.The beginning of the festive season was washed out due to unprecedented floods in Kerala.During Navaratri and Diwali the market was expected to bounce back and infuse positiveenergy into the system. But just before this festive season the liquidity was severelyimpacted because of NBFC crisis. The festive season reported a 14% de-growth one of theworst festive sales performance in the recent past.

Whilst market situation remained challenging throughout the year TataMotors PV business outperformed the market. The Company registered a 13.9% overall growthin FY 2018-19 with a total volume of 210500 units. The market share for the year was6.3% an improvement of 60 basis points from FY 2017-18. The growth rate 13.9% for theCompany is ahead of the industry. This is the highest unit sales and market share over thelast 5 years.

Tiago registered a growth of 17% in its 3rd year of market presencewith 200000 + customers. Nexon was awarded with 5 star safety rating by GNCAP the onlycar in India with 5 star safety rating and established itself as the second most sellingSUV with annual sales of over 55000 units.

To counter the market slowdown the Company did four critical productinterventions within 51 days in festival season namely Tiago NRG Nexon KRAZ TigorRefresh and Tiago/Tigor JTP range of products. These interventions helped to attractadditional set of customers and continue the market buzz. On January 23 2019 the TataHarrier was launched and the initial response from customers is overwhelming.

Customer satisfaction remained as the centre of business. The Companyranked a clear 2nd in JD Power customer satisfaction survey. In FY 2017-18 the Companyshared the 2nd rank with Maruti Suzuki. Non-vehicular business revenue improved 15% overlast financial year. The Net Promoter Score of PV business significantly improved from anegative score of 13 in FY 2014-15 to a positive score of 18 in FY 2018-19 signifyingimprovement in brand perception. This helped the Company to gain pricing power acrossmodels and exercise pricing leadership.

Exports

The Company exported 53140 vehicles (FY 2017-18: 52404 vehicles).

Export of CV marginally increased by 2% in FY 2018-19 with 51119 unitscompared to 50106 units in FY 2017-18. New regulations and political uncertainty in SriLanka and slump in Middle East impacted industry volumes in these markets. However ourmarket share in both these markets improved for commercial vehicles. Market share in mostof the focused markets either improved or have been strong and the Company successfullybagged several prestigious orders.

Export of PV stood at 2021 units compared to 2298 units in FY2017-18. Two large markets remain non-operational - Sri Lanka due to high import dutiestight retail financing and South Africa due to the closure of the distribution channel.Launch of new models in Nepal and Bangladesh helped the Company to achieve rank No. 4 andNo. 3 in the respective markets.

JLR

Retail sales were 578915 vehicles in FY 2018-19 down 5.8% year onyear primarily reflecting weaker market conditions in China which was partially offset bystrong growth in the UK and North America.

The introduction of new and refreshed models led by the Jaguar E-PACEaward winning I-PACE Range Rover Velar and the refreshed Range Rover and Range RoverSport were offset by lower sales of more established models mainly in China and therun-out of the first generation Range Rover Evoque in the third quarter with sales of thenew Evoque beginning to ramp up through the fourth quarter. By region sales were upstrongly in the UK by 8.4% and in North America by 8.1% and retails were also higher inOverseas markets by 2.4%. Retails sales in Europe declined 4.5% year on year on account ofcontinuing diesel uncertainty Brexit and the change to more stringent World HarmonisedLight Vehicle Testing Procedure ('WLTP') emissions testing regime. Retail sales in China(including sales from the joint venture) were down 34.1% year on year due to tradetensions with the US slowing economic growth and uncertainty driven by import dutychanges effective from July 2018 inventory reduction and corrective actions in China.

The total wholesale volumes (excluding sales from the China JointVenture) at 507895 units were down 6.9% as compared to the 545298 units in FY 2017-18generally reflecting the trends seen in the retail sales above.

Some of the key highlights of FY 2018-19 were:

• JLR's first battery electric vehicle the Jaguar I-PACE went onsale in June 2018 (2019 World Car of the Year 2019 World Car Design of the Year 2019World Green Car 2019 European Car of the Year).

• E-Pace launched and on sale from the China joint venture inSeptember 2018.

• All new Range Rover Evoque with hybrid options went on sale inQ4.

• Refreshed Jaguar XE launched in Q4 with exterior updates andsignificantly improved infotainment.

• Announced the reveal of the All New Land Rover Defender forlater in 2019.

• Project Charge announced to deliver 2.5 billion of cost cashand profit improvements by the end of FY 2020; and Project Accelerate announced to supportlong term sustainable profitable growth.

• Manufacturing plant in the city of Nitra in Slovakia commencedproduction of the Land Rover Discovery in October 2018.

• Land Rover celebrated it's 70 year anniversary.

• JLR completed it's first self-driving journey as part ofautonomous driving trials with the UK Autodrive project in Q2.

• Announced 6 cylinder Ingenium 3.0 litre petrol engine to bemanufactured at the Engine Manufacturing Centre in Wolverhampton UK to be introduced inRange Rover Sport.

• Announced the production of next-generation Electric Drive Units('EDU') at the Engine Manufacturing Centre in Wolverhampton later this year.

• Announced that the batteries to power the EDU's will beassembled at a new Battery Assembly Centre located at North Warwickshire in the UK.

TDCV

During FY 2018-19 sold 6672 commercial vehicles lower by 24.8% overFY 2017-18 mainly due to decrease in sales in domestic sales. TDCV sold 4371 commercialvehicles in the domestic market lower by 36.3% as compared to sales in FY 2017-18primarily due to lower industry volumes and aggressive discounting and marketingstrategies primarily driven by the imported brands. The market share for both HCV and MCVsegments put together was 21.1% as compared to 26.5% in FY 2017-18. However TDCV couldincrease its export sales to 2301 commercial vehicles 14.4% higher compared to 2011commercial vehicles in FY 2017-18.

TMFHL

It is the vehicle financing arm under the brand "TMF HoldingsLimited". TMFHL's disbursements (including refinance) increased by 42.8% at Rs 21993crores in FY 2018-19 as compared to Rs 15406 crores in FY 2017-18. New Vehicledisbursements are done through its subsidiary Tata Motors Finance Ltd ('TMFL'). TMFLfinanced 216015 vehicles reflecting an increase of 23.3% over 175128 vehicles financedin FY 2017-18. Disbursements for CV increased by 39.6% and were at Rs 15978 crores(142187 units) as compared to Rs 11448 crores (115689 units) in FY 2017-18 mainly dueto gain in market share (28.3% in FY 2018-19 vs. 26.1% in FY 2017-18). Disbursements of PVincreased by 28.5% to Rs 3013 crores (46500 units) from a level of Rs 2345 crores(42619 units). Used Vehicle disbursements done through Tata Motors Finance SolutionsLimited ('TMFSL') a 100% Subsidiary of TMFHL were at Rs 3002 crores (27328 vehicles) ascompared to Rs 1614 crores (16820 vehicles) during FY 2017-18.

Tata Motors (Thailand) Limited ('TMTL')

TMTL wholesales in FY 2018-19 was 633 units as compared to 682 units inFY 2017-18. The Thai Commercial Automobile Industry has witnessed a growth of 22% in FY2018-19 compared to 14% growth in the year before however as part of ongoing review TMTLhave undertaken a reassessment of its business model in Thailand to ensure it issustainable over the long term. As a part of the restructuring the Company has ceased thecurrent manufacturing operations in the financial year and are in the process of scalingdown the operations including reduction of manpower. The Company shall address theThailand market with a revamped product portfolio suitable to local market needsdelivered through a CBU distribution model. TMTL bagged a prestigious order from RoyalThai Army to supply 614 units of the 1.25 ton Tata Truck.

FINANCE

During the year the free cash flows for Tata Motors Group werenegative Rs 16346 crores (FY 2017-18: negative Rs 11191 crores) post spend on capexdesign and development of Rs 35236 crores. Tata Motors Group's borrowing as at March 312019 stood at Rs 106175 crores (as at March 31 2018: Rs 88951 crores). Cash and bankbalances and investments in mutual funds stood at Rs 42086 crores (as at March 31 2018:Rs 48974 crores). The consolidated net automotive debt to equity ratio stood at 0.47 asat March 31 2019 as compared to 0.15 as at March 31 2018.

Free cash flows were Rs 1539 crores (FY 2017-18: Rs 1339 crores)standalone basis with joint operations of the Company. Spend on capex design anddevelopment were Rs 4753 crores (net). The borrowings of the Company as on March 31 2019stood at Rs 18640 crores (as at March 31 2018: Rs 18464 crores). Cash and bank balancesincluding mutual funds stood at Rs 2981 crores (as at March 31 2018: Rs 2312 crores).Additionally the Company has undrawn committed lines of Rs 1500 crores.

During FY 2018-19 the Company raised unsecured term loans amounting toRs 1500 crores from Banks for general corporate purpose.

The Company successfully completed liability management exercise bypart refinancing of US$ 500 million notes due for repayment on April 30 2020. The Companyraised ECB of US$ 237.468 million maturing in June 2025 which was used to repay the bondsthrough the tendering process.

Deposits: The Company has not accepted any public deposits during FY2018-19. There were no over dues on account of principal or interest on public depositsother than the unclaimed deposits as at the end of FY 2018-19 which is Rs 7.30 crores(Previous year Rs 10.80 crores).

At JLR post spend on capital expenditure design and development ofGB3373 million ('30325 crores) [FY 2017-18: GB4186 million ('35776 crores)] thefree cash flows were negative GB1267 million ('9962 crores) for FY 2018-19. Theborrowings of JLR as on March 31 2019 stood at GB4511 million ('40829 crores) [as atMarch 31 2018: GB3731 million ('34238 crores)]. Cash and financial deposits stood atGB3775 million ('34168 crores) [as at March 31 2018: GB4657 million ('42977crores)]. Additionally JLR has undrawn committed long term bank lines of GB1935million (JLR data as per IFRS).

During FY 2018-19 JLR issued €500 million senior notes due in2026 at a coupon of 4.50% per annum. JLR also raised US$ 1000 million through syndicatedloan. The proceeds were for general corporate purposes including support for JLR'songoing growth and capital spending requirements.

At TMFHL and its subsidiaries the borrowings as on March 31 2019stood at Rs 37814 crores (as at March 31 2018: Rs 27470 crores). Cash and bank balancesand investments in mutual funds stood at Rs 2119 crores (as at March 31 2018: Rs 1206crores). TMFHL and its subsidiaries raised Rs 2066 crores by issuing NCDs. Bankborrowings through secured term loans continued to be a major source of funds forlong-term borrowing and raised Rs 6306 crores during FY 2018-19. TMFL has also donesecuritization of Rs 3862 crores in FY 2018-19.

Tata Motors Group has undertaken and will continue to implementsuitable steps for raising long term resources to match fund requirements and to optimiseits loan maturity profile.

Credit Rating : During FY 2018-19 the Company's rating for foreigncurrency borrowings was downgraded to "Ba2" / Negative by Moody's and to"B+" / Watch Negative by Standard & Poor's. For borrowings in the localcurrency Non-Convertible debentures and long term bank facilities i.e. (Buyers Credit andRevolving Credit Facility) the ratings were downgraded by CARE to "AA" / Stableand the ratings were retained with a change in outlook by CRISIL at "AA / Negativeand by ICRA at "AA / Negative". During the year JLR's rating was downgraded byMoody's at "Ba3" / Negative and by Standard & Poor's at "B+" /Watch Negative on account of weak performance and challenging external environment at JLR.

During FY 2018-19 for TMFHL and its subsidiaries CRISIL and ICRA hasmaintained its rating and changed its outlook on longterm debt instruments and long termbank facilities to "AA / Negative". Further CARE has changed the ratings on longterm debt and long term bank facilities to CARE AA / Stable.

Material Changes and Commitment Affecting the Financial Position

There are no material changes affecting the financial position of theCompany subsequent to the close of the FY 2018-19 till the date of this report.

CONSOLIDATED FINANCIAL STATEMENT

The consolidated financial statement of the Company and itssubsidiaries for FY 2018-19 are prepared in compliance with the applicable provisions ofthe Act and as stipulated under Regulation 33 of the SEBI Listing Regulations as well asin accordance with the Indian Accounting Standards notified under the Companies (IndianAccounting Standards) Rules 2015. The audited consolidated financial statement(condensed) together with the Auditor's Report thereon form part of this Annual Report.Pursuant to Section 129(3) of the Act a statement containing the salient features of theFinancial Statement of the subsidiary companies is attached to the Financial Statement inForm AOC-1. Pursuant to the provisions of Section 136 of the Act the Company will makeavailable the said financial statement of the subsidiary companies upon a request by anymember of the Company or its subsidiary companies. These financial statements of theCompany and the subsidiary companies will also be kept open for inspection by any memberat the Registered Office of the Company and would be available on the Company's websiteURL: https://www.tatamotors.com/ investors/annual-reports/.

SUBSIDIARY JOINT ARRANGEMENTS AND ASSOCIATE COMPANIES

The Company has 99 subsidiaries (12 direct and 87 indirect) 10associate companies 3 joint ventures and 2 joint operations as at March 31 2019 asdisclosed in the accounts.

During FY 2018-19 the following changes have taken place in subsidiary/ associates / joint venture companies:

Name of the companies which have become subsidiaries associates orjoint ventures during the year:

Subsidiaries

• Spark44 Taiwan Limited (Taiwan) was incorporated with effectfrom May 7 2018.

• Spark44 Colombia S.A.S. (Colombia) was incorporated with effectfrom May 10 2018.

• Jaguar Land Rover Classic USA LLC was incorporated with effectfrom June 1 2018 (dormant).

• Jaguar Land Rover Hungary KFT was incorporated with effect fromJuly 30 2018.

• Jaguar Land Rover Classic Deutschland GmbH was incorporated witheffect from August 10 2018.

• InMotion Ventures 4 Limited was incorporated with effect fromJanuary 4 2019.

Associates

• Tata Toyo Radiator Limited was converted from a joint venture tosubsidiary company with effect from July 1 2018.

• Loginomic Tech Solutions Private Limited ('TruckEasy') stakeacquired with effect from July 10 2018.

• Automotive Skill Training Pvt. Ltd. converted into PrivateLimited Company from Section 25 Company with effect from December 10 2018 (formerlyAutomotive Skills Training Foundation)

• TitanX Engine Cooling Poland incorporated with effect fromApril 25 2018.

Name of the companies which have ceased to be subsidiaries associatesor joint ventures during the year:

Subsidiaries

• TML Drivelines Limited merged with the Company with effect fromApril 30 2018 and consequently Authorised Share Capital of the Company increased from Rs3900 crores to Rs 4000 crores.

• The Jaguar Collection Limited (dormant) dissolved with effectfrom June 19 2018.

• Entire shareholding in TAL Manufacturing Solutions Limited('TAL') sold to Tata Advanced Systems Limited with effect from March 29 2019 afteracquisition of the non-aerospace business from TAL.

Associates

• Serviplem S.A.U. liquidated with effect from February 6 2019.Restructuring

• Shareholding in Tata Technologies Limited ('TTL') decreased from72.29% to 72.28% on account of further allotment of 6188 shares with effect from April20 2018.

• Shareholding in Tata Motors (Thailand) Limited increased from95.49% to 95.81% on account of further allotment of 2500000 shares to TML Holdings Pte.Ltd. with effect from April 2 2018 and from 95.81% to 95.87% on account of furtherallotment of 548000 shares to TML Holdings Pte. Ltd. with effect from November 22 2018.

• Shareholding in Trilix S.r.l. increased from 80% to 100% witheffect from December 6 2018.

Transfer of Defense Undertaking to Tata Advanced Systems Limited: TheCompany proposes to transfer the value added segment of Defence vehicles business andspecialized Defence projects (excluding FICV) ('Defense Undertaking') pursuant to a Schemeof Arrangement as a going concern on a slump sale basis to Tata Advanced Systems Limited('TASL') a wholly owned subsidiary of Tata Sons Private Limited at an enterprise valueof Rs 209.27 crores arrived at using the Net Asset Value Method. The total considerationreceivable from the said transfer has been negotiated for an upfront consideration of Rs100 crores (to be adjusted for design and development spent and changes in workingcapital) plus a future consideration of 3% of the revenue generated from identifiedSpecialized Defence Projects for upto 15 years from the financial year ended FY 2020subject to a maximum of Rs 1750 crores. Your Company has received No Objection from theStock Exchanges SEBI and the Competition Commission of India for the said transfer andrequisite approvals from the Company's shareholders National Company Law Tribunal('NCLT') the Ministry of Defence and other statutory authorities are under process.

The Company has adopted a Policy for determining Material Subsidiarieswhich has been amended during the year in line with Regulation 16 of the SEBI ListingRegulations. The Policy as approved by the Board is available on the Company's websiteURL: https://investors.tatamotors.com/pdf/material.pdf .

Other than the above there has been no material change in the natureof the business of the subsidiary companies.

RISK MANAGEMENT

The Board takes responsibility for the overall process of riskmanagement throughout the organization. Through an Enterprise Risk Management programmethe Company's business units and corporate functions address risks through aninstitutionalized approach aligned to the Company's objective. This is facilitated byinternal audit. The Business risk is managed through crossfunctional involvement andcommunication across businesses. The result of the risk assessment are presented to thesenior management. The Risk Management Committee reviews business risk areas covering thetop operational financial strategic and regulatory risks.

INTERNAL FINANCIAL CONTROL SYSTEMS AND ADEQUACY

The Board has adopted policies and procedures for governance of orderlyand efficient conduct of its business including adherence to the Company's policiessafeguarding its assets prevention and detection of frauds and errors accuracy andcompleteness of the accounting records and timely preparation of reliable financialdisclosures. The Company's internal control systems commensurate with the nature of itsbusiness the size and complexity of its operations.

The Company has an independent in-house Internal Audit ('IA')department that functionally reports to the Chairman of the Audit Committee therebymaintaining its objectivity. Remediation of deficiencies by the IA department has resultedin a robust framework for internal controls. These are detailed in the ManagementDiscussion and Analysis Report which forms part of this Report.

HUMAN RESOURCES

The Tata Motors Group employed 82797 permanent employees as of FY2018-19 (FY 2017-18: 81090 employees). The Company employed 27572 permanent employees asof FY 2018-19 (FY 2017-18: 24989 employees).

The Company has labour unions for operative / worker grade employees atall its plants across India except the Dharwad Plant. The Company has generally enjoyedcordial relations with its employees and unions at its factories and offices and havereceived unions' support in the Company's implementation of reforms that impact safetyquality cost and productivity improvements across all locations. Employee wages are beingpaid in accordance with wage agreements that have varying terms (typically three to fouryears) at different locations.

In line with the Company's philosophy of continuously harnessingemployee potential and developing them to become more capable professionals and futureleaders in FY 2018-19 we have partnered with Symbiosis International (Deemed University)and launched a 2 year Management Program ('EPGDBM') with curriculum around operationsfinance people management supply chain & marketing and 90 employees joined in the1st batch. To enable comprehensive development of white collar workforce the Company hascreated 4 Learning Academies - Commercial Excellence Management Development OperationsExcellence and Product Leadership. During FY 2018-19 8443 permanent white collaremployees were trained under these academies on various functional and managerial aspects.To develop its blue collar workforce the Company trained 11721 employees in technician'sskill development quality management and productivity improvement.

Inclusion and Diversity

The Company believes that with diversity and inclusion at workplace itcan leverage the multiplicity of skillsets in all its operations. The Company hasestablished policies and a supportive work environment especially for its women employeesand for employees from different backgrounds age-groups and ethnicities as well.

The Company also endorses the initiative from Tata Group - SecondCareer Initiative Program ('SCIP') to offer an opportunity to returning mothers who wouldlike to restart their professional careers. Rs GearUp' initiative for mid-level womenmanagers is designed to provide management development inputs focussed on leadershipskills to make them ready as future leaders. Company's Human Resource ('HR') policyframework including maternity leave policy sabbatical and half-day-half-pay policy andflexible timings helps employees to establish a work-life balance. The company employed3.5% permanent women employees as of FY 2018-19. (FY 2017-18: 3.3%).

Prevention of Sexual Harassment

The Company has zero tolerance for sexual harassment at workplace andhas adopted a Policy on Prevention Prohibition and Redressal of sexual harassment atworkplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules thereunder. InternalComplaints Committee ('ICC') is in place for all works and offices of the Company toredress complaints received regarding sexual harassment. All women associates (permanenttemporary contractual and trainees) as well as any women visiting the Company's officepremises or women service providers are covered under this Policy.

During FY 2018-19 the Company had received 11 complaints on sexualharassments 10 of which have been substantiated and appropriate actions taken. Theremaining 1 complaint was received during mid March and is being investigated. There wereno complaints pending for more than 90 days. The Company organized 103 workshops orawareness programs against sexual harassment.

Tata Motors Limited Employees Stock Option Scheme

In order to ring fence and incentivize key talent for driving longterm objectives of the Company and ensuring that employee payoffs match the tong gestationperiod of certain key initiatives whilst simultaneously fostering ownership behavior andcollaboration amongst employees the Tata Motors Limited Employees Stock Option Scheme2018 ('TML ESOP Scheme 2018' / 'the Scheme') was implemented during the year. Based on theapproval of the shareholders at the Annual General Meeting held on August 3 2018aggregate 7812427 number of Options were granted to the Eligible Employees during theyear under the Scheme.

During the financial year 2018-19 there has been no change in theScheme. There were no ESOP that vested or any shares issued on vesting during the year.The Scheme is in compliance with the Securities and Exchange Board of India (Share BasedEmployee Benefits) Regulations 2014. Appropriate disclosures prescribed under the saidRegulations with regard to the Scheme are available on the Company's website URL:https://www.tatamotors.com/ investors/ESOP/

PARTICULARS OF EMPLOYEES

Disclosure pertaining to remuneration and other details as requiredunder Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is annexed to the Report as Annexure -1.

Statement containing particulars of top 10 employees and the employeesdrawing remuneration in excess of limits prescribed under Section 197 (12) of the Act readwith Rule 5(2) and (3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is provided in the Annexure forming part of this report. In termsof proviso to Section 136(1) of the Act the Report and Accounts are being sent to theshareholders excluding the aforesaid Annexure. The said Statement is also open forinspection at the Registered Office of the Company. Any member interested in obtaining acopy of the same may write to the Company Secretary. None of the employees listed in thesaid Annexure are related to any Director of the Company.

BUSINESS RESPONSIBILITY REPORT

Pursuant to Regulation 34(2)(f) of the SEBI Listing Regulations theBusiness Responsibility Report (BRR) on initiatives taken from an environmental socialand governance perspective in the prescribed format is available as a separate section ofthe Annual Report and is also available on the Company's website URL: https://www.tatamotors.com/investors/business-responsibility-report/

SAFETY & HEALTH - PERFORMANCE & INITIATIVES

Tata Motors has been in a Safety Excellence journey since 7 years. Withvery high level engagement in Safety the Organization has taken huge strides to improveSafety Organization Structure and build strong safety systems with a vision of achieving'Zero Injury at Workplace'.

For FY 2018-19 Tata Motors including its subsidiaries achieved theSafety Performance Target with Total Recordable Case Frequency Rate ('TRCFR') being 0.80against the target of 1.01. For Indian Operations also Tata Motors Safety Performance waswell within targets with Total Recordable Case Frequency Rate ('TRCFR') being 0.60 againstthe target of 0.89. Unfortunately 3 fatalities were recorded - one each at a manufacturinglocation workshop ('DTC') and a road incident. Robust incident investigation has beencarried out for all 3 incidents and horizontal deployment of recommendations has beencompleted.

As a part of our robust governance mechanism the Company has dedicatedcommittees and various functional teams to ensure safety and implementation of our safetystandards. Safety Health and Sustainability ('SHS') committee of Board reviews theCompany's safety performance every quarter. Plant level sub-committees for safety areformed who functionally report to corporate level sub-committees. The reviews happen atmulti levels - factory level by Factory Implementation committee plant level Apexcommittee or sub-committee the SHS council and finally by the SHS committee. For nonplant and services areas focussed monthly reviews happen at regional offices and withCustomer Service teams. Similar mechanism is also in place at workshop warehouses andeven at office locations.

Training and awareness across organisation continues to be consideredas a key element of Safety Strategy. Aspects such as Safety Management FundamentalsIncident Investigations Contractor Safety Management Actions Employees Can Take ('AECT')etc. are considered in training programmes for key leaders 500+ internal trainers newjoinees in induction progammes as also refreshers to existing employees.

The Company continued Campaign 'i-drive safe' - an initiative onbuilding a safe driving culture amongst its employee and associates and have trained themin Defensive Driving. Road Safety Month campaign was observed in February 2019 with thetheme 'Road Safety is Life Safety' which included Road Safety Celebrations conducted inall location including all Plants Offices Dealerships Warehouses and Vendors.

SUSTAINABILITY

The manufacturing plants across the Country are certified to ISO14001:2015 - Environment Management Systems and OHSAS 18001 - Occupational Health &Safety Management System. All 7 plants are certified for Food Safety Management System ISO22000:2005. The CV manufacturing plants of the Company across India are certified to ISO50001 - Energy Management System. Guided by its Environmental Policy Climate ChangePolicy and Environmental Procurement Policy the Company is focused on minimising theenvironmental impact of its products processes and services throughout the life-cycle.Manufacturing Plants track energy and environmental performance in a periodic andstructured manner at Head-Operations level. The Company actively benchmarks its energy andenvironmental performance between our own Plants as well as peers and adopts bestpractices across Plant locations for maximum impact. All the Company's sites have obtainedCII-GreenCo Rating and 2 Plants have achieved Platinum rating in FY 2018-19.

The Company continued to drive a number of initiatives to reduce itsenvironmental footprint in FY 2018-19. Our GreenHouse Gas (GHG) mitigation approachincludes driving Energy Conservation in manufacturing operations and generation /procurement of renewable energy. The Company consumed 94.2 million units of renewableelectricity in its operations (16.1 % of total power consumption) compared to 99.38million units in FY 201718 (20.76% of total power consumption). The proportion ofrenewable power in previous financial year was greater due to allocation of wind powerarrears. RE capacity was enhanced by 2MWp Roof-top Solar PV Project at Lucknow and PimpriPune Plants and 0.5MW at Chinchwad Pune in FY 2018-19 which will help offset GHGemissions in the FY 2019-20. Taking this further the Company has signed a Power PurchaseAgreement ('PPA') with Tata Power Renewable Energy Ltd. ('TPREL') for setting up anadditional 7 MWp capacity of roof and ground mounted solar photovoltaic ('PV')installations across Jamshedpur Pantnagar and Dharwad Plants.

The Company monitors water sourcing practices at its manufacturingPlants and continued to work on lowering water consumption through water conservation inoperations re-cycling treated effluent for re-use in process and harvesting rainwater. Atotal of 977656 m3 of water was conserved through these efforts in FY 2018-19 which is13.8% of total water consumption as compared to 17.3% in FY 2017-18.

Hazardous wastes are disposed in accordance with authorizations issuedby the Authorities in the States we operate. These include destruction of hazardous wasteat cost by landfilling and incineration at Approved Common Treatment Storage and DisposalFacilities; energy and material recovery from hazardous wastes through co-processing incement plants; and material conversion through approved re-cyclers for hazardous wastessuch as spent thinner paint sludge and sealant.

The Company commenced an initiative across Plants in FY 201819 called"Value from Hazardous Waste" aimed at diverting hazardous waste from landfill /incineration at approved sites and instead derive value from the same. This initiativeaims to ultimately achieve 'Zero Waste to Landfill' status from manufacturing operations.The quantum of hazardous waste diverted from landfill / incineration was higher by 15.5%over FY 2017-18. However due to higher waste generation on the back of higher volumeshazardous waste sent for disposal to Common Treatment Storage and Disposal Facilities alsoincreased by 41.2%.

The Company has also initiated actions to minimise the consumption offlexible plastic packaging in its operations. While plastic packaging used for dispatch ofauto parts between Plants and to Warehouses has been significantly reduced work isongoing on plastic packaging used by our Suppliers. This is being done by elimination ofplastic packaging where feasible and converting expendable (single-use) plastic packagingto returnable (multiple- use) packaging.

On Sustainability we continued implementation of sustainable supplychain initiatives during FY 2018-19. 115 suppliers have been trained and providedhandholding to improve sustainability performance and assessed towards sustainabilityexpectations.

Circular economy natural capital evaluation of key dependenciesdesign for environment biodiversity assessment life cycle assessment of productsclimate adaptation study were some of the other initiatives the Company has taken insustaining its business and planet.

JLR continues to drive health and safety through Destination Zero - AJourney to Zero Harm. The ambition is reflected in the JLR commitment with the keystatement being "Our most valuable asset is our people nothing is more importantthan their safety and wellbeing. Our co-workers and families rely on this commitment.There can be no compromise". The concept of Destination Zero Harm enables theconsistent message on safety to continue to be highly visible in the business.

The development of focused plans has ensured that each functional areaaligned at Board level has a specific 'Destination Zero' Harm Plan. These have assistedeach functional area to tailor their own plan of activities to lead improved safety andwellbeing within their own area of responsibility sponsored from the most senior levelfunctionally.

To support the wider ambition of zero harm as well as focusing onincidents JLR also continued to mature the approach to wellbeing activities with a focuson mental health and the continuation of programmes designed to support open discussionson matters of mental health as well as other support interventions to assist in improvedwellbeing both in mental and physical health.

Performance on Lost Time Injuries ('LTI') remained relatively stableespecially within manufacturing. Many locations within the sites celebrated sustained zerolost time injuries. The performance on safety was assisted in part through variousactivities taken during the year such as improving quality of safety behaviouralobservations introduction of revised internal audit programme called SHARP effectiveimplementation of existing safety management programs safety and wellbeing weeks robustsafety training leadership training and driving assessments etc.

The business has gone through OHSAS 18001 - surveillance visits in2018-19 within all the UK locations and maintained its accreditation to this standardthrough a series of external assessments. It has now started the cycle of assessments tomigrate to the new International Standard ISO 45001 with accreditation to ISO 45001expected at the end of the assessment period in 2019-20.

TDCV's Safety Index continued to improve from 1.24 to 0.52 in FY2018-19. TDCV has implemented reinforced High-risk Control Program [LockOut Energy Control('LOEC') Pedestrian and InPlant Vehicle ('PIV') and Confined Space entry] and operatedthe standing committee (PIV Committees and LOEC Committee) from 2018. In addition TDCVhas assigned emergency medical technicians ('EMTs') to designated places and conductedtraining sessions for all the employees to ensure a prompt response to any emergencysituations within the company.

CORPORATE SOCIAL RESPONSIBILITY

The brief outline of the Corporate Social Responsibility (CSR) Policyof the Company and the initiatives undertaken by the Company on CSR activities during theyear in the format prescribed in the Companies (CSR Policy) Rules 2014 are set out inAnnexure - 2 of this Report. The Policy is available on Company's website at URL: https://investors.tatamotors.com/pdf/csr-policy.pdf.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION & FOREIGN EXCHANGEEARNING AND OUTGO

The information on conservation of energy technology absorption andforeign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act readalong with Rule 8 of the Companies (Accounts) Rules 2014 is annexed herewith as Annexure- 3.

EXTRACT OF ANNUAL RETURN

Pursuant to Sections 92 & 134(3) of the Act and Rule 12 of theCompanies (Management and Administration) Rules 2014 the extract of Annual Return inForm MGT-9 is provided in Annexure -4 to this Report and is also available on theCompany's website URL: https://www.tatamotors.com/investors/annual-return/.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Re-appointment

In accordance with provisions of the Act and the Articles ofAssociation of the Company Mr N Chandrasekaran Non-Executive Chairman (DIN:00121863) isliable to retire by rotation and is eligible for re-appointment.

The disclosures required pursuant to Regulation 36 of the SEBI ListingRegulations and Clause 1.2.5 of the Secretarial Standard are given in the Notice of AGMforming part of the Annual Report.

Independent Directors

In terms of Section 149 of the Act and the SEBI Listing Regulations MrNasser Munjee Mr Vinesh Kumar Jairath Ms Falguni Nayar Mr Om Prakash Bhatt and Ms HanneSorensen are the Independent Directors of the Company as on date.

All Independent Directors of the Company have given declarations underSection 149(7) of the Act that they meet the criteria of independence as laid down underSection 149(6) of the Act and Regulation 16(1)(b) of the SEBI Listing Regulations. Interms of Regulations 25(8) of the Listing Regulations the Independent Directors haveconfirmed that they are not aware of any circumstance or situation which exists or may bereasonably anticipated that could impair or impact their ability to discharge theirduties with an objective independent judgement and without any external influence.

Mr Nasser Munjee Mr Vinesh Kumar Jairath and Ms Falguni Nayar wereappointed as Independent Directors at the 69th AGM of the Company held on July 31 2014for period of 5 years and are holding office till July 30 2019. The Board hereby placeson record its appreciation for their valuable contribution and guidance during theirtenure as Independent Director.

Key Managerial Personnel

In terms of Section 203 of the Act the Key Managerial Personnel (KMPs)of the Company during FY 2018-19 are:

• Mr Guenter Butschek Chief Executive Officer and ManagingDirector

• Mr Satish Borwankar Executive Director and Chief OperatingOfficer

• Mr Pathamadai Balachandran BaLaji Group Chief Financial Officer

• Mr Hoshang Sethna Company Secretary

The tenure of Mr Satish Borwankar Executive Director and ChiefOperating Officer of the Company ends on July 15 2019. Mr Borwankar started his careerwith the Company in 1974 as a Graduate Engineer Trainee and has served in variousoperating functions like manufacturing quality vendor development and strategicsourcing rising through the ranks to become its Executive Director and Chief OperatingOfficer. The Board of Directors hereby places on record its appreciation for theinvaluable contributions made by Mr Borwankar during his tenure.

CORPORATE GOVERNANCE

At the Company we ensure that we evolve and follow the corporategovernance guidelines and best practices sincerely to boost long-term shareholder valueand to respect minority rights. The Company considers it an inherent responsibility todisclose timely and accurate information regarding its operations and performance as wellas the leadership and governance of the Company.

A separate section on Corporate Governance and the certificate from thePracticing Company Secretary confirming compliance of Corporate Governance norms asstipulated in Regulation 34 read along with Schedule V of the SEBI Listing Regulationsgiving information pertaining to the Board and its Committees transfers to IEPF authorityetc. form part of this Report.

MEETINGS OF THE BOARD

During the year the Board of Directors met 7 times. For detailsplease refer to the Corporate Governance Report which forms part of this Annual Report.

COMMITTEES OF THE BOARD

The Committees of the Board focus on certain specific areas and makeinformed decisions in line with the delegated authority.

The following Committees constituted by the Board function according totheir respective roles and defined scope:

• Audit Committee

• Nomination and Remuneration Committee

• Corporate Social Responsibility Committee

• Stakeholders Relationship Committee

• Risk Management Committee

• Safety Health and Sustainability Committee

Details of composition terms of reference and number of meetings heldfor respective committees are given in the Corporate Governance Report which forms a partof this Report. Further during the year under review all recommendations made by theAudit Committee have been accepted by the Board.

BOARD EVALUATION

The annual evaluation process of the Board of Directors individualDirectors and Committees was conducted in accordance with the provision of the Act and theSEBI Listing Regulations.

The Board evaluated its performance after seeking inputs from all thedirectors on the basis of criteria such as the Board composition and structureeffectiveness of board processes information and functioning etc. The performance of theCommittees was evaluated by the Board after seeking inputs from the committee members onthe basis of criteria such as the composition of committees effectiveness of committeemeetings etc. The above criteria are as provided in the Guidance Note on Board Evaluationissued by the Securities and Exchange Board of India.

The Chairman of the Board had one-on-one meetings with the IndependentDirectors and the Chairman of NRC had one-on-one meetings with the Executive andNon-Executive Non-Independent Directors. These meetings were intended to obtainDirectors' inputs on effectiveness of the Board/Committee processes.

The Board and the NRC reviewed the performance of individual directorson the basis of criteria such as the contribution of the individual director to the boardand committee meetings like preparedness on the issues to be discussed meaningful andconstructive contribution and inputs in meetings etc.

In a separate meeting of independent directors performance ofNonIndependent Directors and the Board as a whole was evaluated. Additionally they alsoevaluated the Chairman of the Board taking into account the views of Executive andNon-Executive Directors in the aforesaid meeting. The above evaluations were thendiscussed in the Board meeting and performance evaluation of Independent Directors wasdone by the entire Board excluding the Independent Director being evaluated.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

All Board members of the Company are afforded every opportunity tofamiliarize themselves with the Company its management its operations and above all theIndustry perspective and issues. They are made to interact with senior managementpersonnel and proactively provided with relevant news views and updates on the Companyand sector. All the information/documents sought by them is/are also shared with them forenabling a good understanding of the Company its various operations and the industry ofwhich it is a part.

The details of the Familiarisation Programme for Independent Directorswith the Company in respect of their roles rights responsibilities in the Companynature of the industry in which Company operates business model of the Company andrelated matters are available on the Company's website URL: https://investors.tatamotors.com/pdf/familiarisation-programme- independent-directors.pdf.

POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION

The Company's policy on directors' appointment and remuneration andother matters provided in Section 178(3) of the Act (salient features) has been brieflydisclosed hereunder and in the Corporate Governance Report which is a part of thisReport.

Selection and procedure for nomination and appointment of Directors

The Nomination and Remuneration Committee ('NRC') is responsible fordeveloping competency requirements for the Board based on the industry and strategy of theCompany. The Board composition analysis reflects in-depth understanding of the Companyincluding its strategies environment operations financial condition and compliancerequirements.

The NRC conducts a gap analysis to refresh the Board on a periodicbasis including each time a Director's appointment or reappointment is required. The NRCreviews and vets the profiles of potential candidates vis-a-vis the required competenciesundertakes due diligence and meeting potential candidates prior to making recommendationsof their nomination to the Board.

Criteria for determining qualifications positive attributes andindependence of a Director

In terms of the provisions of Section 178(3) of the Act and Regulation19 of the SEBI Listing Regulations the NRC has formulated the criteria for determiningqualifications positive attributes and independence of Directors the key features ofwhich are as follows:

• Qualifications - The Board nomination process encouragesdiversity of thought experience knowledge age and gender. It also ensures that theBoard has an appropriate blend of functional and industry expertise.

• Positive Attributes - Apart from the duties of Directors asprescribed in the Act the Directors are expected to demonstrate high standards of ethicalbehavior communication skills and independent judgment. The Directors are also expectedto abide by the respective Code of Conduct as applicable to them.

• Independence - A Director will be considered independent if he /she meets the criteria laid down in Section 149(6) of the Act the Rules framed thereunderand Regulation 16(1)(b) of the SEBI Listing Regulations.

The Directors affirm that the remuneration paid to Directors KMPs andemployees is as per the Remuneration Policy of the Company.

The said policy is also available on the Company's website URL:https://investors.tatamotors.com/pdf/directors-appointment- remuneration.pdf

VIGIL MECHANISM

The Company believes in the conduct of the affairs of its constituentsin a fair and transparent manner by adopting the highest standards of professionalismhonesty integrity and ethical behaviour. In line with the Tata Code of Conduct ('TCOC')any actual or potential violation howsoever insignificant or perceived as such would bea matter of serious concern for the Company. The role of the employees in pointing outsuch violations of the TCOC cannot be undermined.

Pursuant to Section 177(9) of the Act and Regulation 4(2)(d) (iv) ofthe SEBI Listing Regulations a Whistleblower Policy and Vigil Mechanism was establishedfor directors employees and stakeholders to report to the management instances ofunethical behaviour actual or suspected fraud or violation of the Company's code ofconduct or ethics policy. The Vigil Mechanism provides a mechanism for employees of theCompany to approach the Chief Ethics Counsellor ('CEC')/Chairman of the Audit Committee ofthe Company for redressal. The Company has revised the Whistleblower Policy in accordancewith amendments made to SEBI (Prohibition of Insider Trading) Regulations 2015.

It is affirmed that no personnel of the Company has been denied accessto the Audit Committee. The policy of vigil mechanism is available on the Company'swebsite at URL: https://investors .tatamotors.com/Ddf/whistle-blower-Dolicy.Ddf.

AUDIT

Statutory Audit

M/s B S R & Co. LLP Chartered Accountants (ICAI Firm No.101248W/W-100022) the Statutory Auditors of the Company hold office until the conclusionof Seventy Seventh AGM to be held in the year 2022. Pursuant to Section 141 of the Actthe Auditors have represented that they are not disqualified and continue to be eligibleto act as the Auditor of the Company.

The Report of the Statutory Auditor forming part of the Annual Reportdoes not contain any qualification reservation adverse remark or disclaimer. Theobservations made in the Auditor's Report are self-explanatory and therefore do not callfor any further comments.

The Statutory Auditor of the Company has not reported any fraud asspecified under the second proviso to Section 143(12) of the Act.

Branch Audit

Members' approval is being sought vide item No. 5 of the Notice forauthorizing the Board of Directors to appoint Branch Auditors for the purpose of auditingthe accounts maintained at the Branch Offices of the Company abroad.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Act and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board of Directorappointed M/s Parikh & Associates a firm of Company Secretaries in Practice toconduct the Secretarial Audit of the Company for year ended March 31 2019. The Report ofthe Secretarial Audit is annexed herewith as Annexure - 5. The said Secretarial AuditReport does not contain any qualification reservations adverse remarks and disclaimer.

Cost Audit

As per Section 148 of the Act the Company is required to have theaudit of its cost records conducted by a Cost Accountant. The Board of Directors of theCompany has on the recommendation of the Audit Committee approved the appointment of M/sMani & Co. a firm of Cost Accountants in Practice (Registration No.000004) as theCost Auditors of the Company to conduct cost audits for relevant products prescribed underthe Companies (Cost Records and Audit) Rules 2014 for the year ending March 31 2020. TheBoard on recommendations of the Audit Committee have approved the remuneration payable tothe Cost Auditor subject to ratification of their remuneration by the Members at theforthcoming AGM.

M/s Mani & Co. have under Section 139(1) of the Act and the Rulesframed thereunder furnished a certificate of their eligibility and consent forappointment.

The cost accounts and records of the Company are duly prepared andmaintained as required under Section 148(1) of Act.

OTHER DISCLOSURES

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All contracts/ arrangements/ transactions entered by the Company duringthe FY 2018-19 with related parties were on an arm's length basis and in the ordinarycourse of business. There were no material related party transactions (RPTs) undertaken bythe Company during the year that require shareholders' approval under Regulation 23(4) ofthe SEBI Listing Regulations or Section 188 of the Act. The approval of the AuditCommittee was sought for all RPTs. All the transactions were in compliance with theapplicable provisions of the Act and SEBI Listing Regulations.

Given that the Company does not have any RPTs to report pursuant toSection 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules 2014in Form AOC-2 the same is not provided. The details of RPTs during FY 2018-19 includingtransaction with person or entity belonging to the promoter/ promoter group which hold(s)10% or more shareholding in the Company are provided in the accompanying financialstatements.

During the FY 2018-19 the Non-Executive Directors of the Company hadno pecuniary relationship or transactions with the Company other than sitting feescommission and reimbursement of expenses as applicable.

The Policy on Related Party Transactions was amended during the year inline with amendment to the Act and SEBI Listing Regulations. The Revised Policy isavailable on the Company's website URL: https://investors.tatamotors.com/pdf/rpt-policy.pdf

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

The details of Loans and Investments made during FY 2018-19 are givenbelow:

(Rs in crores)
Name of Companies Nature of Transactions Loans Investment
JT Special Vehicle Private Limited Loan 3.75 -
TAL Manufacturing Solutions Limited Acquisition of NonAerospace Business - 0.1
TMF Holdings Limited Call option exercised for Compulsorily convertible preference shares: Series A - 130
TMF Holdings Limited Equity Infusion - 600
Tata Precision Industries Singapore Loan 0.5 -
Trilix S.R.L Acquisition of remaining 20% stake - 7.97

During FY 2018-19 the Company has not given guarantee to any of itssubsidiaries joint ventures and associate companies.

SECRETARIAL STANDARDS

The Company has devised proper systems to ensure compliance with theprovisions of all applicable Secretarial Standards issued by the Institute of CompanySecretaries of India and that such systems are adequate and operating effectively.

DIVIDEND DISTRIBUTION POLICY

Pursuant to Regulation 43A of SEBI Listing Regulations the Board ofDirectors of the Company have formulated a Dividend Distribution Policy ('the policy').The Policy was amended by the Board to make it more dynamic yet simple.

The amended policy is annexed to this Report as Annexure - 6 and isalso available on the Company's website URL: https://investors .tatamotors.com/pdf/dividend-distribution-policy.pdf

SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS

There are no significant material orders passed by the Regulators orCourts or Tribunal which would impact the going concern status of the Company and itsfuture operation. However Members attention is drawn to the Statement on ContingentLiabilities and Commitments in the Notes forming part of the Financial Statement.

DIRECTORS' RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls and compliancesystems established and maintained by the Company work performed by the internalstatutory cost secretarial auditors and external agencies including audit of internalfinancial controls over financial reporting by the Statutory Auditors and the reviewsperformed by Management and the relevant Board Committees including the Audit Committeethe Board is of the opinion that the Company's internal financial controls were adequateand effective during FY 2018-19.

Accordingly pursuant to Section 134(5) of the Act the Board ofDirectors to the best of their knowledge and ability confirm that:

(a) in the preparation of the accounts for the financial year endedMarch 31 2019 the applicable accounting standards have been followed and that there areno material departures;

(b) we have selected such accounting policies and have applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period;

(c) proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

(d) the annual accounts have been prepared on a going concern basis;

(e) proper internal financial controls were laid down and that suchinternal financial controls are adequate and were operating effectively*; and

(f) proper systems were devised to ensure compliance with theprovisions of all applicable laws and such systems are adequate and operating effectively.

*ptease refer to the Section "internal Control Systems and theirAdequacy"in the Management Discussion and Analysis.

ACKNOWLEDGEMENTS

The Directors wish to convey their appreciation to all of the Company'semployees for their contribution towards the Company's performance. The Directors wouldalso like to thank the shareholders employee unions customers dealers suppliersbankers Governments and all other business associates for their continuous support to theCompany and their confidence in its management.

On behalf of the Board of Directors

N CHANDRASEKARAN
Chairman
(DIN: 00121863)
Mumbai May 20 2019


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