As filed with the Securities and Exchange Commission on July 31, 2018
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM20-F
☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Fiscalfiscal year ended March 31, 20182020
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Date of event requiring this shell company report
For the transition period from to
Commission file number:001-32294
TATA MOTORS LIMITED
(Exact name of Registrant as specified in its charter)
N/A
(Translation of Registrant’s name into English)
Republic of India | Bombay House 24, Homi Mody Street Mumbai 400 001, India | |
(Jurisdiction of incorporation or organization) | (Address of principal executive offices) |
H.K. Sethna
Tel.: +91 22 6665 7219
Facsimile: +91 22 6665 7790
Email:hks@tatamotors.com
Address:
Bombay House
24, Homi Mody Street
Mumbai 400 001, India
(Name, Telephone, Email and/or Facsimile number, Email and Address of company contact person)Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of Each Exchange On Which Registered | ||
Ordinary Shares, par value Rs.2 per share* | TTM | New York Stock Exchange |
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
‘A’ Ordinary Shares, par value Rs.2 per share
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report. — 2,887,348,694report: 3,088,973,894 Ordinary Shares and 508,502,371508,502,896 ‘A’ Ordinary Shares, including 437,024,750320,793,365 Ordinary Shares represented by 87,400,49864,158,673 American Depositary Shares or ADSs,(“ADSs”), outstanding as atof March 31, 2018.2020. Each ADS represents five (5) Ordinary Shares as atof March 31, 2018.2020.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☒ Yes ☐ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ☐ Yes ☒ No
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or an emerging growth company. See the definitionsdefinition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule12b-2 of the Exchange Act.
Large accelerated filer ☒ Acceleratedfiler ☐ Non-accelerated filer ☐ Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards1 provided pursuant to Section 13(a) of the Exchange Act. N/A☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing.
U.S. GAAP ☐ | International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ | Other ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). ☐ Yes ☒ No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐
* | Not for trading, but only in connection with listed American Depositary Shares, each representing five (5) Ordinary Shares. |
1 | The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
In this annual report on Form20-F:20-F, each of the following terms has the meaning ascribed to it below:
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• | “CNG” refers to |
• | “Commercial Vehicles” or “CVs” means vehicles in the commercial vehicle segment, including SCV & Pickups, MHCVs, ILCVs and CV Passenger Vehicles; |
• | “Company” refers to Tata Motors Limited; |
• | “Companies Act” refers to the Indian Companies Act, 2013, as amended from time to time, unless stated otherwise; |
• | “Crores” refers to ten million Rs; |
• | “CV Passenger Vehicles” means commercial Passenger Vehicles, which are |
• | “Earnings Before Other Income, Interest and Tax” means earnings before share of profit/(loss) of equity accounted investees (net), assets written off/loss on sale of assets and others (net), other income/(loss) (net), foreign exchange gains/(loss) (net), interest income, interest expense and income tax expense; |
• | “Euro”, “EUR” and “€” mean the currency issued by the European Central Bank; |
• | “Fiscal” means our fiscal year ending on March 31 of that year; |
• | “Free Cash Flow” is a non-IFRS measure that equals cash flow from operating activities, less payment for property, plants and equipment and intangible assets; |
• | “GBP” means the British pound, the lawful currency of the United Kingdom; |
• | “GVW” means gross vehicle weight; |
• | “IFRS” means the International Financial Reporting Standards and its interpretations as issued by the International Accounting Standards Board; |
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• | “Indian GAAP” means the accounting principles generally accepted in India; |
• | “Indian rupees” and “Rs.” mean the lawful currency of India; |
• | “JLR” means Jaguar Land Rover; |
• | “Korean won” means the lawful currency of South Korea; |
• | “Lakhs” refers to one hundred thousand Rs; |
• | “Liters” means the measurement equivalent to 61.02 cubic inches of volume, or approximately 1.057 U.S. quarts of liquid measure; |
• | “LPG” refers to liquified petroleum gas; |
• | “Metric tons” or “tons” is a measurement equal to 1,000 kilograms or approximately 2,200 pounds; |
• | “MHCVs” means medium and heavy Commercial Vehicles, which are vehicles that have a GVW of over 12 metric tons; |
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• | “Millimeters” or “mm” means the measurement equal to 1/1000 of a meter. A meter is equal to approximately 39.37 inches and a millimeter is equal to approximately 0.039 inch; |
• | “Passenger |
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Executive — length between 4,500 mm and 4,700 mm; |
• | Luxury — length above 5,000 mm; |
• | Mid-size — length between 4,250 mm and 4,500 mm; |
• | Micro — length up to 3,200 mm; |
• | Mini — length |
Premium — length |
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• | “Passenger Vehicles” means Passenger Cars or Utility Vehicles; |
• | “Ratio of Net Debt to Shareholders’ Equity” is measured as (total debt less cash and cash equivalent, mutual funds—current and money market funds) divided by equity (including non-controlling interest). |
• | “Revenue” means the total revenue net of excise duty unless stated otherwise; |
• | “RMB” and “Chinese Renminbi” mean the lawful currency of the People’s Republic of China; |
• | “Russian Ruble” means the lawful currency of Russia; |
• | “SCV” means small Commercial Vehicles; |
• | “SG$” means the Singapore dollar, the lawful currency of Singapore; |
• | “Shares” means the Ordinary Shares and the ‘A’ Ordinary Shares of Tata Motors Limited, unless stated otherwise; |
• | “Small Commercial Vehicles & Pickups” or |
• | “SUV” means sports utility vehicle; |
• | “TML” refers to Tata Motors Limited a parent company; |
• | “UK” and “United Kingdom” mean the United Kingdom of Great Britain and northern Ireland; and |
• | “Utility Vehicles” or “UVs” means vehicles that have a seating capacity of five to ten persons, including the driver, which includes |
In addition to the terms defined above:
• | References to “we”, “our”, “us” and “Tata Motors Group” are to Tata Motors Limited and its consolidated subsidiaries, except as the context otherwise requires; |
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For our Jaguar Land Rover business, references to premium cars and luxury performance |
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• | Unless otherwise stated, comparative and empirical Indian industry data in this annual report on Form20-F have been derived from published reports of the Society of Indian Automobile Manufacturers |
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Figures in tables may not add up to totals due to |
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• | All references to websites in this annual report on Form 20-F are intended to be inactive textual reference for information only and information contained in or accessible through any such website does not form a part of this annual report on Form 20-F. |
Cautionary Note Regarding Forward-looking Statements
This annual report on Form20-F contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended or the Securities Act,(the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended or the Exchange Act.(the “Exchange Act”). Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may”, “will”, “should”, “potential”, “intend”, “expect”, “seek”, “anticipate”, “estimate”, “believe”, “could”, “plan”, “project”, “predict”, “continue”, “future”, “forecast”, “target”, “guideline” or other similar words or expressions. Forward-looking statements are not guarantees of performance and are based on certain assumptions, discuss future expectations, describe plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information. Our ability to predict results or the actual effect of plans or strategies is inherently uncertain, particularly given the economic environment. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements and you should not unduly rely on these statements. These forward-looking statements involve risks, uncertainties and other factors that may cause our actual results in future periods to differ materially from those forward-looking statements.
Information regarding important factors that could cause actual results to differ materially from those in our forward-looking statements appear in a number of places in this annual report on Form20-F and the documents incorporated by reference into this annual report on Form20-F, and include, but are not limited to:
changes in general economic, business, political, social, fiscal or other conditions in India, the United States, the United Kingdom and the rest of Europe, North America, Russia, China or in any of the other countriesregions where we operate;
the magnitude and the length of economic disruption as a result of the worldwide COVID-19 pandemic;
implementation of our growth strategy and new projects, including mergers, acquisitions and divestments, planned by management;
the level of competition in the currency exchange rate against the functional currency of the respective consolidated entities;automotive industry;
movements in the prices of key inputs such as steel, aluminum, rubber and plastics;
development of new technologies affecting the automotive market;
accidents and natural disasters;
changes in our credit rating and the terms on which we finance our working capital and capital and product development expenditures and investment requirements;
fluctuations in the currency exchange rate against the functional currency of new projects, including mergers and acquisitions, planned by management;the respective consolidated entities;
the performance of our distribution channels and contractual arrangements with suppliers;
government policies including those specifically regarding the automotive industry, including industrial licensing, environmental regulations, safety regulations, import restrictions and duties, excise duties, sales taxes, value added taxes, product range restrictions, diesel and gasoline prices and road network enhancement projects;
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various litigation, government investigations and proceedings affecting us; and
All forward-looking statements included herein are based upon information available to us on the date hereof and we are under no duty to update any of the forward-looking statements after the date hereof to conform these statements to actual results.
Non-IFRS Measures
We use the followingnon-IFRS performance indicators to monitor financial performance:
Earnings before other income, interestBefore Other Income, Interest and taxTax
Earnings before other income, interestBefore Other Income, Interest and taxTax is Earningsearnings before share of profit/(loss) of equity accounted investees (net), assets written off/loss on sale of assets and others (net), other income/(loss) (net), foreign exchange gains/(loss) (net), interest income, interest expense (net) and income tax expense. It is monitored by management for the purposespurpose of performance of income earned by our operations. Earnings before other income, interestBefore Other Income, Interest and taxTax is presented because management believes this givesrepresents the earnings earned by the business of the Company. Reconciliation of our consolidated earnings before other income, interestEarnings Before Other Income, Interest and taxTax to our consolidated net income is provided in Item 5.A “—“Operating and Financial Review and Prospects—Operating Results —Overview”.Results—Overview.”
Free Cash Flow
Free cash flowCash Flow is measured as cash flow from operating activities, less payments for property, plantplants and equipment and intangible assets. It is monitored by management for the purposespurpose of quantifying ongoing needs for investments in plantplants and machinery, products and technologies. Free cash flowCash Flow is presented because management believes this provides investors with a relevant measure of cash available to address our debts, pay dividends and fund capital expenditures and other strategic initiatives. Reconciliation of our free cash flowFree Cash Flow to cash flow from operating activitesactivities is provided in Item 5.A “—“Operating and Financial Review and Prospects—Operating Results —Overview”.Results—Overview.”
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Ratio of Net Debt to Shareholders’ Equity
Ratio of net debtNet Debt to shareholders’ equityShareholders’ Equity is measured as (Total(total debt less cash and cash equivalent, mutual funds—current and mutualmoney market funds) divided by equity (including minoritynon-controlling interest). It is monitored by management because it helps assess our debt commitments. Ratio of net debtNet Debt to shareholders’ equityShareholders’ Equity is presented because management believes it is a relevant financial measure for investors to understand the leverage employed in our operations and of our ability to obtain financing. ReconciliationCalculation of our ratioRatio of net debtNet Debt to shareholders’ equityShareholders’ Equity is provided in Item 5.A “—Operating Results —Overview”.Exhibit 7.1 to this annual report on Form 20-F.
Thenon-IFRS measures used herein should not be considered in isolation and are not measures of our financial performance or liquidity under IFRS. They may not be indicative of our results of operations, and should not be construed as alternatives for any IFRS measures. Additionally, thenon-IFRS measures may not be comparable to other similarly titled measures used by other companies.
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Item 1. | Identity of Directors, Senior Management and Advisers |
A. Directors and Senior Management
Not applicable.
Not applicable.
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Item 2. | Offer Statistics and Expected Timetable |
Not applicable.
B. Method and Expected Timetable
Not applicable.
Item 3. | Key Information |
The following tables set forth selected financial data, including selected historical financial information as atof and for each of the Fiscal years ended March 31,2020, Fiscal 2019, Fiscal 2018, Fiscal 2017 2016, 2015 and 2014,Fiscal 2016, in accordance with International Financial Reporting Standards,IFRS, as issued by the International Accounting Standards Board, or IFRS.Board.
The selected IFRS consolidated financial data as atof March 31, 20182020 and 20172019 and for each of Fiscal 2018, 20172020, Fiscal 2019 and 2016Fiscal 2018 are derived from our audited IFRS consolidated financial statements included in this annual report on Form20-F. The selected IFRS consolidated financial data as atof March 31, 2016, 20152018, 2017 and 20142016 and for Fiscal 20152017 and 2014Fiscal 2016 are derived from our audited IFRS consolidated financial statements not included in this annual report on Form20-F.
You should read our selected financial data in conjunction with Item 5 “—Operating“Operating and Financial Review and Prospects.”
Selected Financial Data Prepared in Accordance with IFRS
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2015 | 2014 | 2020 | 2020 | 2019 | 2018 | 2017 | 2016 | |||||||||||||||||||||||||||||||||||||
(In US$ millions, except share and per share amounts) | (In US$ millions, except share and per share amounts) | |||||||||||||||||||||||||||||||||||||||||||||||
(in Rs. millions, except share and per share amounts) | (in Rs. millions, except share and per share amounts) | |||||||||||||||||||||||||||||||||||||||||||||||
Revenues | 43,834.4 | 2,856,910.8 | 2,632,176.8 | 2,682,793.8 | 2,626,297.8 | 2,325,150.8 | 33,782.1 | 2,556,123.4 | 2,959,666.9 | 2,856,910.8 | 2,632,176.8 | 2,682,793.8 | ||||||||||||||||||||||||||||||||||||
Finance revenues | 399.5 | 26,040.3 | 24,318.3 | 22,318.8 | 22,630.8 | 29,875.9 | 503.9 | 38,127.8 | 33,995.5 | 26,040.3 | 24,318.3 | 22,318.8 | ||||||||||||||||||||||||||||||||||||
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Total revenues | 44,233.9 | 2,882,951.1 | 2,656,495.1 | 2,705,112.6 | 2,648,928.6 | 2,355,026.7 | 34,286.0 | 2,594,251.2 | 2,993,662.4 | 2,882,951.1 | 2,656,495.1 | 2,705,112.6 | ||||||||||||||||||||||||||||||||||||
Change in inventories of finished goods andwork-in-progress | (314.0 | ) | (20,465.8 | ) | (73,751.2 | ) | (27,540.1 | ) | (29,610.9 | ) | (28,317.3 | ) | 294.9 | 22,311.9 | 20,532.8 | (20,465.8 | ) | (73,751.2 | ) | (27,540.1 | ) | |||||||||||||||||||||||||||
Purchase of products for sale | 2,440.2 | 159,039.9 | 139,245.3 | 128,494.6 | 130,803.8 | 109,691.6 | 1,616.1 | 122,283.5 | 132,588.3 | 159,039.9 | 139,245.3 | 128,494.6 | ||||||||||||||||||||||||||||||||||||
Raw materials, components and consumables | 26,360.2 | 1,718,028.0 | 1,593,803.1 | 1,536,255.1 | 1,515,835.7 | 1,366,066.9 | 20,167.4 | 1,525,964.3 | 1,809,875.4 | 1,718,028.0 | 1,593,803.1 | 1,536,255.1 | ||||||||||||||||||||||||||||||||||||
Employee cost | 4,643.2 | 302,624.8 | 283,588.0 | 288,117.4 | 250,401.2 | 213,903.0 | 4,075.5 | 308,372.8 | 346,261.1 | 302,624.8 | 283,588.0 | 288,117.4 | ||||||||||||||||||||||||||||||||||||
Defined benefit pension plan amendment | (553.7 | ) | (36,090.1 | ) | — | — | — | — | — | — | 1,479.3 | (36,090.1 | ) | — | — | |||||||||||||||||||||||||||||||||
Depreciation and amortization | 3,219.3 | 209,818.2 | 182,405.4 | 168,074.9 | 134,495.8 | 110,462.6 | 2,744.1 | 207,632.1 | 230,197.8 | 209,818.2 | 182,405.4 | 168,074.9 | ||||||||||||||||||||||||||||||||||||
Other expenses | 9,662.5 | 629,755.4 | 608,461.6 | 585,321.4 | 545,909.5 | 498,777.7 | 7,947.4 | 601,339.1 | 657,298.7 | 629,755.4 | 608,461.6 | 585,321.4 | ||||||||||||||||||||||||||||||||||||
Impairment losses in Jaguar Land Rover | — | — | 278,379.1 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Impairment losses in passenger vehicle business | 58.9 | 4,454.8 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Provision for Onerous Contracts | 102.7 | 7,770.0 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Impairment losses of assets in subsidiaries | 46.7 | 3,532.0 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Provision/(Reversal) for loss of inventory (net of insurance recoveries) | (1.7 | ) | (111.9 | ) | (13,301.0 | ) | 16,383.9 | — | — | — | — | — | (111.9 | ) | (13,301.0 | ) | 16,383.9 | |||||||||||||||||||||||||||||||
Expenditure capitalized | (2,852.0 | ) | (185,882.0 | ) | (168,768.8 | ) | (166,783.2 | ) | (153,217.5 | ) | (135,246.8 | ) | (2,313.3 | ) | (175,033.8 | ) | (196,595.6 | ) | (185,882.0 | ) | (168,768.8 | ) | (166,783.2 | ) | ||||||||||||||||||||||||
Assets written off/loss on sale of assets and others (net) | 447.2 | 29,148.6 | 11,418.6 | 9,477.4 | 3,512.2 | 294.1 | 41.4 | 3,131.9 | 13,186.7 | 29,148.6 | 11,418.6 | 9,477.4 | ||||||||||||||||||||||||||||||||||||
Other (income)/loss (net) | (734.5 | ) | (47,873.3 | ) | (39,590.1 | ) | (12,613.0 | ) | (15,020.6 | ) | (8,026.7 | ) | (211.6 | ) | (16,009.4 | ) | (35,438.7 | ) | (47,873.3 | ) | (39,590.1 | ) | (12,613.0 | ) | ||||||||||||||||||||||||
Foreign exchange (gain)/loss (net) | 42.3 | 2,758.8 | 13,284.8 | 20,588.0 | 20,371.3 | (8,332.8 | ) | 224.5 | 16,985.4 | 5,824.2 | 4,332.9 | 16,590.4 | 21,047.0 | |||||||||||||||||||||||||||||||||||
Interest income | (109.3 | ) | (7,122.4 | ) | (5,640.7 | ) | (7,186.6 | ) | (6,763.9 | ) | (6,656.7 | ) | (154.6 | ) | (11,696.9 | ) | (7,864.6 | ) | (7,122.4 | ) | (5,640.7 | ) | (7,186.6 | ) | ||||||||||||||||||||||||
Interest expense (net) | 711.4 | 46,365.0 | 42,365.7 | 47,912.6 | 52,231.6 | 53,094.7 | ||||||||||||||||||||||||||||||||||||||||||
Impairment in an equity accounted investee | — | — | — | — | — | 8,033.7 | ||||||||||||||||||||||||||||||||||||||||||
Interest expense | 958.9 | 72,553.1 | 57,586.0 | 46,791.3 | 42,365.7 | 47,912.6 | ||||||||||||||||||||||||||||||||||||||||||
Share of (profit)/loss of equity accounted investees (net) | (349.6 | ) | (22,782.6 | ) | (14,930.0 | ) | (5,774.7 | ) | 1,748.3 | 1,877.6 | 132.2 | 10,000.0 | (2,095 | ) | (22,782.6 | ) | (14,930.0 | ) | (5,774.7 | ) | ||||||||||||||||||||||||||||
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Net income before tax | 1,622.4 | 105,740.5 | 97,904.4 | 124,384.9 | 198,232.1 | 179,405.1 | ||||||||||||||||||||||||||||||||||||||||||
Income tax expense | (583.9 | ) | (38,058.5 | ) | (35,670.0 | ) | (27,512.7 | ) | (69,149.7 | ) | (48,226.5 | ) | ||||||||||||||||||||||||||||||||||||
Net income/(loss) before tax | (1,445.2 | ) | (109,339.6 | ) | (317,553.1 | ) | 103,740.1 | 94,598.8 | 123,925.9 | |||||||||||||||||||||||||||||||||||||||
Income tax (expense)/credit | (48.2 | ) | (3,644.5 | ) | 25,425.0 | (37,678.2 | ) | (35,035.6 | ) | (27,420.9 | ) | |||||||||||||||||||||||||||||||||||||
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Net income after tax | 1,038.5 | 67,682.0 | 62,234.4 | 96,872.2 | 129,082.4 | 131,178.6 | ||||||||||||||||||||||||||||||||||||||||||
Net income/(loss) after tax | (1,493.4 | ) | (112,984.1 | ) | (292,128.1 | ) | 66,061.9 | 59,563.2 | 96,505.0 | |||||||||||||||||||||||||||||||||||||||
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Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2015 | 2014 | 2020 | 2020 | 2019 | 2018 | 2017 | 2016 | |||||||||||||||||||||||||||||||||||||
(In US$ millions, except share and per share amounts) | (In US$ millions, except share and per share amounts) | |||||||||||||||||||||||||||||||||||||||||||||||
(in Rs. millions, except share and per share amounts) | (in Rs. millions, except share and per share amounts) | |||||||||||||||||||||||||||||||||||||||||||||||
Net income/(loss) attributable to equity holders | 1,022.8 | 66,660.8 | 61,210.5 | 95,883.4 | 128,291.2 | 130,717.1 | (1,506.0 | ) | (113,940.3 | ) | (293,142.7 | ) | 65,040.7 | 58,539.3 | 95,516.2 | |||||||||||||||||||||||||||||||||
Net income/(loss) attributable tonon-controlling interest | 15.7 | 1,021.2 | 1,023.9 | 988.8 | 791.2 | 461.5 | 12.6 | 956.2 | 1,014.6 | 1,021.2 | 1,023.9 | 988.8 | ||||||||||||||||||||||||||||||||||||
Dividends per share Ordinary Shares | US$ | — | Rs. — | Rs.0.2 | Rs. — | Rs. 2.0 | Rs. 2.0 | |||||||||||||||||||||||||||||||||||||||||
Dividends per share ‘A’ Ordinary Shares | US$ | — | Rs. — | Rs.0.3 | Rs. — | Rs. 2.1 | Rs. 2.1 | |||||||||||||||||||||||||||||||||||||||||
Weighted average Ordinary shares outstanding: | ||||||||||||||||||||||||||||||||||||||||||||||||
Dividends per share of Ordinary Shares | US$ | — | Rs. — | Rs. — | Rs. — | Rs.0.2 | Rs. — | |||||||||||||||||||||||||||||||||||||||||
Dividends per share of ‘A’ Ordinary Shares | US$ | — | Rs. — | Rs. — | Rs. — | Rs.0.3 | Rs. — | |||||||||||||||||||||||||||||||||||||||||
Weighted average of Ordinary Shares outstanding: | ||||||||||||||||||||||||||||||||||||||||||||||||
Basic | 2,887,348,357 | 2,887,218,310 | 2,873,188,838 | �� | 2,765,339,619 | 2,760,961,457 | 2,95,23,53,090 | 2,887,348,474 | 2,887,348,357 | 2,887,218,310 | 2,873,188,838 | |||||||||||||||||||||||||||||||||||||
Diluted | 2,887,842,826 | 2,887,818,076 | 2,873,809,883 | 2,765,824,089 | 2,761,450,718 | 2,95,23,53,090 | 2,887,348,474 | 2,887,842,826 | 2,887,818,076 | 2,873,809,883 | ||||||||||||||||||||||||||||||||||||||
Weighted average ‘A’ Ordinary shares outstanding: | ||||||||||||||||||||||||||||||||||||||||||||||||
Weighted average of ‘A’ Ordinary Shares outstanding: | ||||||||||||||||||||||||||||||||||||||||||||||||
Basic | 508,502,336 | 508,483,714 | 506,063,234 | 487,445,041 | 487,440,271 | 50,85,02,473 | 508,502,371 | 508,502,336 | 508,483,714 | 506,063,234 | ||||||||||||||||||||||||||||||||||||||
Diluted | 508,736,110 | 508,736,110 | 506,320,979 | 487,684,611 | 487,684,558 | 50,85,02,473 | 508,502,371 | 508,736,110 | 508,736,110 | 506,320,979 | ||||||||||||||||||||||||||||||||||||||
Earnings per share: | ||||||||||||||||||||||||||||||||||||||||||||||||
Earnings/(Loss) per share of Ordinary Shares: | ||||||||||||||||||||||||||||||||||||||||||||||||
Basic | US$ | 0.3 | Rs. 19.6 | Rs. 18.0 | Rs. 28.4 | Rs. 39.4 | Rs. 40.2 | US$ | (0.4 | ) | Rs. (32.9 | ) | Rs. (86.3 | ) | Rs. 19.1 | Rs. 17.2 | Rs. 28.3 | |||||||||||||||||||||||||||||||
Diluted | US$ | 0.3 | Rs. 19.6 | Rs. 18.0 | Rs. 28.4 | Rs. 39.4 | Rs. 40.2 | US$ | (0.4 | ) | Rs. (32.9 | ) | Rs. (86.3 | ) | Rs. 19.1 | Rs. 17.2 | Rs. 28.2 | |||||||||||||||||||||||||||||||
Earnings per share of ‘A’ Ordinary Shares: | ||||||||||||||||||||||||||||||||||||||||||||||||
Earnings/(Loss) per share of ‘A’ Ordinary Shares: | ||||||||||||||||||||||||||||||||||||||||||||||||
Basic | US$ | 0.3 | Rs. 19.7 | Rs. 18.1 | Rs. 28.5 | Rs. 39.5 | Rs. 40.3 | US$ | (0.4 | ) | Rs. (32.9 | ) | Rs. (86.3 | ) | Rs. 19.2 | Rs. 17.3 | Rs. 28.4 | |||||||||||||||||||||||||||||||
Diluted | US$ | 0.3 | Rs. 19.7 | Rs. 18.1 | Rs. 28.5 | Rs. 39.5 | Rs. 40.3 | US$ | (0.4 | ) | Rs. (32.9 | ) | Rs. (86.3 | ) | Rs. 19.2 | Rs. 17.3 | Rs. 28.3 |
As described in Note 2(n)2(y) of our consolidated financial statements included in this annual report on Form 20-F, during Fiscal 2020, we applied IFRS 16.
As described in Note 2(x) of our consolidated financial statements included in this annual report on Form 20-F, during Fiscal 2019, we applied IFRS 9 and IFRS 15.
As described in Note 2(o) of our audited IFRS consolidated financial statements included in this annual report on Form 20-F, during Fiscal 2018, we changed our presentation of assets written off/loss on sale of assets and others (net) in the consolidated income statement. The change in presentation has beenwas retrospectively applied to prior year comparatives. The change in the presentation does not affect Netnet income, Totaltotal comprehensive income and earningsearnings/(loss) per share in any of the periods presented.
As described in Note 2(u)2(x) of our audited IFRS consolidated financial statements included in this annual report on Form20-F, during Fiscal 2017, we changed our presentation of foreign exchange gain/(loss) in the consolidated income statement. The change in presentation has beenwas retrospectively applied to prior year comparatives. There has beenwas no impact on net income for the years ended March 31, 2016, 2015 and 2014.
In Fiscal 2016, we conducted a renounceable rights offer of 150,644,759 new Ordinary Shares, including Ordinary Shares represented by ADSs, and 26,530,290 new ‘A’ Ordinary Shares of Rs.2 each to qualifying shareholders recorded in the shareholders register at the close of business on April 8, 2015, at a subscription price of Rs.450 each for new Ordinary Shares and Rs.271 each for new ‘A’ Ordinary Shares, in the ratio of six rights to subscribe to Shares for every 109 Shares held. The rights offer was fully subscribed and the shareholders received the new shares on May 13, 2015. As described in Note 39 to our audited consolidated financial statements for Fiscal 2016, the earliest period presented in the consolidated financial statement for each of Fiscal 2015 and 2014, basic and diluted earnings per share have been retrospectively adjusted for the bonus element of the rights offer attributable to the difference between the exercise price of the rights and the prevailing market price of the Shares.2016.
As at March 31, | As of March 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2015 | 2014 | 2020 | 2020 | 2019 | 2018 | 2017 | 2016 | |||||||||||||||||||||||||||||||||||||
(in US$ millions, except number of shares) | (in US$ millions, except number of shares) | |||||||||||||||||||||||||||||||||||||||||||||||
(in Rs. millions, except number of shares) | (in Rs. millions, except number of shares) | |||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Data | ||||||||||||||||||||||||||||||||||||||||||||||||
Total Assets | 49,650.1 | 3,235,937.2 | 2,666,646.0 | 2,619,981.3 | 2,345,643.4 | 2,184,775.9 | ||||||||||||||||||||||||||||||||||||||||||
Balance sheet data | ||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | 41,509.3 | 3,140,802.1 | 2,987,119.9 | 3,235,510.9 | 2,666,646.0 | 2,619,981.3 | ||||||||||||||||||||||||||||||||||||||||||
Long term debt, net of current portion | 9,381.2 | 611,419.4 | 605,644.5 | 504,511.3 | 544,862.5 | 454,138.6 | 11,009.7 | 8,33,048.1 | 708,067.0 | 611,419.4 | 605,644.5 | 504,511.3 | ||||||||||||||||||||||||||||||||||||
Total shareholders’ equity | 14,023.2 | 913,947.3 | 538,842.2 | 768,036.7 | 539,351.8 | 631,696.3 | 7,903.7 | 598,034.7 | 558,067.4 | 913,521.0 | 538,842.2 | 768,036.7 | ||||||||||||||||||||||||||||||||||||
Number of Equity shares outstanding | ||||||||||||||||||||||||||||||||||||||||||||||||
Number of equity shares outstanding | ||||||||||||||||||||||||||||||||||||||||||||||||
-Ordinary Shares | 2,887,348,694 | 2,887,348,428 | 2,887,203,602 | 2,736,713,122 | 2,736,713,122 | 3,088,973,894 | 2,887,348,694 | 2,887,348,694 | 2,887,348,428 | 2,887,203,602 | ||||||||||||||||||||||||||||||||||||||
-‘A’ Ordinary Shares | 508,502,371 | 508,502,291 | 508,476,704 | 481,966,945 | 481,966,945 | 508,502,896 | 508,502,371 | 508,502,371 | 508,502,291 | 508,476,704 |
Exchange Rate Information
For convenience, some of the financial amounts presented in this annual report on Form20-F have been translated from Indian rupee amountsrupees into U.S. dollar amountsdollars at the rate of Rs.65.18 =Rs.75.6650 to US$1.00, based on the fixing rate in the city of Mumbai as published by the Foreign Exchange Dealers’ Association of India on March 31, 2018.
The following table sets forth information with respect to the exchange rate between the Indian rupee and the U.S. dollar (Rs. per U.S. dollar) as published by Bloomberg L.P. for Fiscal 2018, 2017, 2016, 2015 and 2014.
Year ended March 31, | Period End | Period Average | High | Low | ||||||||||||
2018 | 65.18 | 64.46 | 65.71 | 63.37 | ||||||||||||
2017 | 64.85 | 67.08 | 68.78 | 64.85 | ||||||||||||
2016 | 66.25 | 65.45 | 68.71 | 62.19 | ||||||||||||
2015 | 62.50 | 61.16 | 63.68 | 58.46 | ||||||||||||
2014 | 59.89 | 60.47 | 68.83 | 53.81 |
The following table sets forth information with respect to the exchange rate between the Indian rupee and the U.S. dollar (Rs. per U.S. dollar) for the previous six months as published by Bloomberg L.P.
Month | Period End | Period Average | High | Low | ||||||||||||
January 2018 | 63.59 | 63.65 | 64.04 | 63.37 | ||||||||||||
February 2018 | 65.18 | 64.45 | 65.17 | 63.91 | ||||||||||||
March 2018 | 65.18 | 65.04 | 65.21 | 64.84 | ||||||||||||
April 2018 | 64.25 | 64.50 | 65.02 | 64.11 | ||||||||||||
May 2018 | 67.40 | 65.38 | 68.42 | 63.37 | ||||||||||||
June 2018 | 68.47 | 67.79 | 68.79 | 66.92 |
As at July 2018 (through July 30, 2018), the value of the Indian rupee against the U.S. dollar was Rs 68.68 per US$1.00, as published by Bloomberg L.P.2020.
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
This section describes the risks that we currently believe may materially affect our business, financial condition and results of operations. The factors below should be considered in connection with any forward-looking statements in this annual report on Form20-F and the cautionary statements on page ii.iii. Although we will be makingmake reasonable efforts to mitigate or minimize these risks, one or more of a combination of these risks could materially and adversely impact our business, revenues, sales, net assets, financial condition, results of operations, liquidity, capital resources and prospects.
Risks Associated with Our Business and the Automotive Industry
We have been, and may in the future be, adversely affected by the COVID-19 pandemic, the duration and economic, governmental and social impact of which is difficult to predict, and which may significantly harm our business, prospects, financial condition and results of operations.
Since the end of 2019, a disease caused by a novel strain of coronavirus (“COVID-19”), has spread in China and throughout the world, and the World Health Organization declared the COVID-19 outbreak a pandemic in March 2020. No fully effective treatments or vaccines have been developed as of the date of this annual report, and such development of treatments or vaccines may take a significant amount of time. The COVID-19 pandemic and associated governmental responses have adversely affected workforces, consumer sentiment, economies and financial markets. Such adverse effects, along with decreased consumer spending, have led to a global economic downturn. Based on the latest assessment by the International Monetary Fund, India’s economy is forecast to contract by 4.5% and it is estimated that the global economy would contract by 4.9% in 2020 due to the COVID-19 pandemic.
The COVID-19 pandemic has spread across all key regions, including the United Kingdom, China, North America, India and continental Europe, from which we derive the substantial majority of our revenues. Governments imposed travel bans, quarantines, lockdowns, “stay-at-home” orders, and similar mandates on individuals to substantially restrict daily activities and on many businesses to curtail or cease normal operations. Such measures, though temporary in nature, may continue or be re-enacted depending on the development of the COVID-19 pandemic. These measures have severely impacted the economic activity across the globe, resulting in the major economies facing the risk of significant and unprecedented economic downturns and recession. Social distancing measures have been eased or are being eased, and economic activity is gradually resuming. However, there remains considerable uncertainty about the extent, speed and regional differences of any recovery including any longer term impacts on our business and the possibility of a second wave of the COVID-19 pandemic. There have been instances where local lockdowns have been re-imposed where infection rates have started to suddenly increase again. There is a risk that widespread strict social distancing measures may be reintroduced in the future until effective treatments or vaccines have been developed. The COVID-19 pandemic, as well as efforts to contain it, has caused significant economic and financial disruptions around the world, including disruption to manufacturing operations, logistics and global supply chains and financial markets. Based on our management analytical estimates, as a result of the COVID-19 pandemic, profit before tax (“PBT”) for Tata Motors Limited was impacted by approximately Rs.5,000 million and free cash flow was impacted by approximately Rs.20,000 million in Fiscal 2020. We are expected to continue to be impacted by the COVID-19 pandemic in Q1 of Fiscal 2021 with minimal revenues and cash outflows estimated at Rs.50,000 million. As part of our mitigating actions, we have implemented rigorous cost and capital expenditure control measures, including cash improvement programme of Rs.60,000 million (including a cost savings programme of Rs.15,000 million). Capital expenditure guidance for Tata Motors Limited has been reduced by 66% to Rs.15,000 million in Fiscal 2021. For JLR, based on our management analytical estimates, PBT was impacted by GBP 599 million and free cash flow by GBP 767 million in Fiscal 2020, owing to the COVID-19 pandemic. JLR’s focus has been on conserving cash and prioritising capital expenditure on key products. It is expected that JLR will continue to be impacted by COVID-19 pandemic in Q1 Fiscal 2021 hence cash outflows is estimated to be up to GBP 2 billion. Capital expenditure guidance for JLR in Fiscal 2021 is reduced by 40% to GBP 2.5 billion while cash and cost savings through Project Charge + have been targeted at GBP 1.5 billion for Fiscal 2021.
As a result of the COVID-19 pandemic, the Company and Jaguar Land Rover enacted temporary plant shutdowns and implemented work-from-home protocols for employees who were able to work remotely in various jurisdictions, including India and the United Kingdom, to ensure public safety and to comply with government guidelines in various geographies. These shutdowns caused and will continue to cause disruptions in our business and negative effects on our cash flows, primarily because our operations realize less revenue during shutdowns while continuing to incur costs. As of the date of this annual report, Tata Motors Limited and Jaguar Land Rover have resumed production at all of its plants except for the Jaguar plant at Castle Bromwich in the UK (scheduled to restart production in August 2020), each under defined health and safety protocols.
There is significant uncertainty surrounding the extent and duration of such business disruptions, as continued cross-border restrictions could adversely affect our supply chains in India and globally. Although we have restored operations at our production facilities, our manufacturing rates and timelines may nonetheless be affected by global economic markets, the decrease in consumer confidence or changing behaviors such as working from home arrangements, which could impact demand in the global transportation and automotive industries.
The economic slowdown attributable to the COVID-19 pandemic has led to a severe decrease in global vehicle sales in markets around the world and the extent of recovery is still uncertain. Moreover, as a result of the restrictions imposed by governments in affected countries and negative consumers’ reaction to the COVID-19 pandemic in general, showroom traffic at our dealers dropped significantly and many dealers temporarily ceased operations, thereby reducing dealers’ demands for our products. Recently, over 98% of Jaguar Land Rover retailer sites are open either fully or partially, while over 90% of Tata Motors retailer sites have reopened.
The COVID-19 pandemic and the resulting business disruptions in several jurisdictions where we operate have had a material adverse impact on our operations, liquidity, business, financial conditions and/or credit ratings (Please see Item 5.B “Operating and Financial Review and Prospects—Liquidity and Capital Resources—Principal Sources of Funding Liquidity” of this annual report on Form 20-F). Any future impact on our business may take some time to materialize and may not be fully reflected in the results for the first quarter of Fiscal 2021 and certain levels of disruption are expected for the remainder of Fiscal 2021. Even after the COVID-19 pandemic subsides, we may continue to experience an adverse impact to our business as a result of its global economic impact, including any recession that has occurred or may occur. Specifically, difficult macroeconomic conditions, such as decreases in per capita income and level of disposable income, increased and prolonged unemployment or a decline in consumer confidence as a result of the COVID-19 pandemic could have a continuing adverse effect on demand for our products, as well as limit or significantly reduce points of access to such products.
Further, government-sponsored liquidity or stimulus programs in response to the COVID-19 pandemic may not be available to our customers, suppliers, dealers, or us, and in the event that such programs are available, they may nevertheless be insufficient to address the impact of the COVID-19 pandemic. Supply and distribution chains may be disrupted by the bankruptcies of our suppliers or dealers or a permanent discontinuation of their operations. Consequently, the impact on our business, prospects, financial condition and results of operation cannot be fully determined at this time.
Furthermore, we have implemented enhanced health and safety measures in our operations, such as new screening protocols, in line with public health rules and guidelines and industry practices to combat the spread of the COVID-19 pandemic. We are exposed to the risk of an increase in the number of workplace and third-party claims arising from actual or alleged failures to implement such measures adequately, or at all. In addition to the increase in costs associated with the implementation of such measures, we are also faced with the potential increase in legal, advisory and other costs as a result of any COVID-19 pandemic related claims from workers or third party suppliers that may come into contact with our operations. All or any of these factors could have a material adverse effect on our business, prospects, financial condition and results of operation.
Deterioration in global economic conditions could have a material adverse impact on our sales and results of operations.
The Indianongoing COVID-19 pandemic has a significant impact on economic activity globally. There are potentially high risks of credit rating downgrades across different sectors and countries. All geographies we operate in may be severely impacted as a result of ongoing COVID-19 pandemic. There remains considerable uncertainty around the ongoing COVID-19 pandemic and its negative impact on the financial and commodity markets.
The automotive industry could be materially affected materially by the general economic conditions and developments in India and around the world.world and investors’ reaction to such conditions and developments. The automotive industry, in general, is cyclical, and economic slowdowns in the recent past have affected the manufacturing sector in India, including automotive and related industries. Deterioration of key economic metrics, such as the growth rate, interest rates and inflation, reduced availability of competitive financing rates for vehicles, at competitive rates, implementation of burdensome environmental and tax policies, work stoppages and increase in freight rates and fuel prices could materially and adversely affect our automotive sales and results of operations. Deterioration in key economic factors in countries where we have sales operations may result in a decrease in demand for our automobiles. A decrease in demand could, in turn, cause automobile prices and manufacturing capacity utilization rates to fall.
In addition, investors’ reactions to economic developments or a loss of investor confidence in the financial systems of other countries may cause volatility in Indian financial markets and, indirectly, in the Indian economy.
Any worldwide financial instability, including as a result of the ongoing COVID-19 pandemic and with respect to increased protectionist measures and withdrawal from trade pacts by countries in which we operate, could also have a negative impact on the Indian economy, including the movement of exchange rates and interest rates in India. In the event global economic recovery is slower than expected, or if there is any significant financial disruption, this could have a material adverse effect on our cost of funding, portfolio of financing loans, business, prospects, results of operations, financial condition and the trading price of ourthe Company’s Shares and ADSs.
In November 2018, the United States, Mexico and Canada signed the United States-Mexico-Canada Agreement (“USMCA”), which is intended to succeed the North American Free Trade Agreement. The USMCA was revised by the three countries in December 2019, and has been ratified by the legislature of each of three countries. Potential governmental actions related to tariffs or international trade agreements has the potential to adversely impact demand for our products, our costs, customers, suppliers and/or the North American economy or world economy or certain sectors thereof and, thus, our business.
Our Jaguar Land Rover business has significant operations in the United Kingdom, North America, continental Europe and China, as well as sales operations in markets across the globe. Conditions in automotive markets were generally moreremained challenging in Fiscal 2018 with industry volumes down2020 as a result of the COVID-19 pandemic significantly year-on-year inimpacting sales and operations, as well as the United Kingdom (11%) reflecting a sharp decline in diesel-based vehicle sales (26.2%), and down slightly in the US (1.1%), but up modestly in China 1.3% and in Europe 3.8%. Conditions remained challenging in emerging markets such as Brazil, Russia and South Africa. Jaguar Land Rover’s growth plans may not quite materialize as expected which could have a significant adverse impact on our financial performance.wider global economy. If automotive demand softens because of lower or negative economic growth in key markets or due to other factors, Jaguar Land Rover’s operationsbusiness, prospects, financial condition and financial conditionresults of operation could be materially and adversely affected as a result. In addition, the current U.S. presidential administration couldmay seek to introduce additional changes to laws and policies governing international trade and impose additional tariffs and duties on foreign vehicle imports, which could have a material adverse effect on Jaguar Land Rover’s sales in the United States.
Deterioration in key economic factors, such as those mentioned above, in countries where Jaguar Land Rover has sales operations may result in a decrease in demand for Jaguar Land Rover automobiles. A decrease in demand would, in turn, cause automobile prices and manufacturing capacity utilization rates to fall. Such circumstances have in the past materially affected, and could in the future, materially affect, our business, results of operations and financial condition.
The United Kingdom’s contemplated exit from the European Union may adversely impact our business, prospects, financial condition and results of operations and financial condition.operations.
In a non-binding referendum onBrexit and the United Kingdom’s membership in the European Union in June 2016, a majoritypotential impact of the electorate voted for the United Kingdom’s withdrawal from the European Union. Pursuant to its invocation of Article 50 of the Lisbon Treaty, the United Kingdom is currently negotiating its exit from the European Union. Substantial uncertainty remains regarding the outcome of the negotiations, the United Kingdom’s future relationship with the European Union, the economic and political future of the United Kingdom have created significant uncertainty regarding the legal structure applicable to companies doing business in the United Kingdom as well as the scope and duration of a transitionary period, if any, following the expiration of the Article 50 period in December 2020. This uncertainty, along with any real or perceived impact of Brexit, could have a material adverse effect on our business, results of operations and financial condition.
Depending on the outcome of the negotiations, the United Kingdom could lose its present rights or terms of access to the single European Union market and European Union customs area and to the global trade deals negotiated by the European Union on behalf of its members. New or modified trading arrangementsfuture relationship between the United Kingdom and other countries may have a material adverse effect on our business. A decline in trade could also affect the attractiveness of the United Kingdom as a global investment center and, as a result, could have a detrimental impact on the level of investment in United Kingdom companies,European Union, including our Jaguar Land Rover business. Customer behavior may change as a result of global economic uncertainty, which may cause Jaguar Land Rover’s customers to re-evaluate when and to what extent they are willing to spend on our products and services. The uncertainty concerning the terms of Brexit could also have a negative impact on the growth of the United Kingdom economy and cause greater volatility in the British pound against foreign currencies in which Jaguar Land Rover conducts business, particularly the U.S. dollar, the Euro and the Chinese yuan.
There also exists significant uncertainty with respect to the laws and regulations that will apply as the United Kingdom determines which European Union-derived laws to replace or replicate. On March 29, 2017, the United Kingdom formally notified the European Council of its intention to leave the European Union. After a number of iterations, the European Commission and the UK’s negotiators reached an agreement on the terms of the United Kingdom’s withdrawal from the European Union, and these terms have been approved by the UK and European parliaments. The United Kingdom formally withdrew from the European Union, in accordance with the terms provided by the withdrawal agreement, on January 31, 2020 after which it entered into the transition period specified in the withdrawal agreement, which is currently scheduled to end on December 31, 2020. During this period, it is expected that the majority of the existing European Union rules will continue to apply in the United Kingdom. The terms of Brexit are still uncertain, including United Kingdom’s access to the European Union single market permitting the exchange of goods and services between the United Kingdom and the European Union. The United Kingdom may not be able to reach an agreement on its future relationship with the European Union by the end of the transitional period, and it is uncertain whether an extension to the transitional period, as a result of the COVID-19 pandemic or otherwise, is possible.
The legal, political and economic uncertainty regarding the terms of the United Kingdom’s exit from the European Union may adversely affect our businesses, including Jaguar Land Rover. This uncertainty may adversely affectalso result in economic slowdown and/or a deteriorating business activity and economic conditionsenvironment in the United Kingdom and the Eurozone.in one or more European Union Member States. In particular, changes in taxes, tariffs and other fiscal policies could have a significant impact on Jaguar Land Rover business; 21.7%Rover; 21% of its retail sales volume in Fiscal 2018 were2020 was to customers based in the EuropeanEurope Union (excluding the United Kingdom) and a substantial portion of its suppliers are situated there. The extent of Brexit’s impact on our operations in the United Kingdom will depend significantly on the trade negotiations between United Kingdom and European Union and the length of the transition period. The economic outlook could be further adversely affected by the risk of a greater push for independence by Scotland or Northern Ireland or the risk that the Euroeuro as the single currency of the European Union could cease to exist. We may be subject to risks associated with related foreign exchange volatility and supply chains if access to the European Union market is restricted as a result of Brexit. Changes to the United Kingdom’sUK’s border and immigration policy could likewise occur as a result of Brexit, potentially affecting our business’s ability to recruit and retain employees from outside the United Kingdom. Any of the foregoing factors and other factors relating to Brexit that we cannot predict may have a material adverse effect on our business, prospects, financial condition and results of operation, including the risks of impairments.
Impairment of tangible and intangible assets may have a material adverse effect on our results of operations.
Designing, manufacturing and selling vehicles is capital intensive and requires substantial investments in tangible and intangible assets such as research and development, product design and engineering technology. We review the value of our tangible and intangible assets to assess on an annual basis or trigger events basis whether the carrying amount is less than the recoverable amount for the asset concerned based on underlying cash-generating units (“CGU”) (such as Commercial Vehicles, Passenger Vehicles, Jaguar Land Rover and Vehicle Financing), either based on value in use (“VIU”) or fair value. During Fiscal 2020, we recorded an impairment charge of Rs.4,455 million for our Passenger Vehicles business due to changes in market conditions. During Fiscal 2020, we also recorded impairment charge of Rs.2,975 million and Rs.557 million in our subsidiaries Tata Motors European Technical Centre Plc and Trilix S.r.l., respectively. We recorded a GBP3.1 billion (Rs.278,379 million) impairment charge during Fiscal 2019 due to adverse market conditions, particularly in China, rising interest rates and the failureto meet internal business plans for our Jaguar Land Rover business. We may have to bear further impairment losses in the future if the carrying amount of tangible and intangible assets exceeds the recoverable amount, which could have a material adverse effect on our business, prospects, financial condition and results of operation.
Disruptions to our supply chains and shortages of essential raw materials may adversely affect our production and results of operations.
We rely on third parties for sourcing raw materials, parts and components used in the manufacture of our products. At the local level, we rely on smaller enterprises where the risk of insolvency is greater. Furthermore, for some parts and components, we are dependent on a single source. Our ability to procure supplies in a cost-effective and timely manner or at all is subject to various factors, some of which are not within our control. Furthermore, there is a risk that manufacturing capacity does not meet the sales demand thereby compromising our business performance. Given the time frames and investments required for any adjustment to the supply chain, there is no near-term remedy for such a risk. While we manage our supply chain as part of our supplier management process, any significant problems or shortages of essential raw materials in the future could adversely affect our results of operations.
The ongoing COVID-19 pandemic may lead to significant disruptions in the supply chains in India and globally. There are risks that our suppliers may be adversely affected hence may not be able to fully resume normal operations and ramp up their production schedule to levels immediately prior to the COVID-19 pandemic. Our suppliers of critical components are located across the world and some of them have declared provisions related to force majeure under relevant contracts. Thus, we expect disruptions, at uncertain frequencies, in operations at our global and Indian tier 1, 2 and 3 suppliers leading to inconsistent supplies. Further, suppliers are saddled with huge work-in-progress and semi-finished inventories, which may reduce their working capital and their ability to supply materials in line with the customer expectations.
In response to the COVID-19 pandemic, various national, state, and local governments where we and our suppliers operate issued decrees prohibiting certain businesses from continuing to operate and certain workers from reporting to work. Those decrees have resulted in supply chain disruptions and higher absenteeism in our facilities or our suppliers’ factories. It remains unclear how long these decrees will remain in place, whether decrees will be re-imposed, what additional decrees may be instituted, and the impact they may have on our company and our suppliers.
For Tata Motors Limited, the COVID-19 pandemic initially impacted supplies from certain areas in China in February 2020. Subsequently, supplies from European vendors were affected. Eventually, the nationwide lockdown imposed on India in late March 2020 led to complete suspension of manufacturing activities across the country. While manufacturing activities have resumed gradually across India since late May 2020, there are uncertainties for some supplies due to impact on vendors of shortage of manpower, limited raw material supplies, restrictions on working hours, incidence of COVID-19 positive cases at the supplier’s end and restricted permission to operate as per local regulations. Jaguar Land Rover enacted temporary shutdowns at the China Joint Venture plant in January 2020 and elsewhere in March 2020 as a result of which its supply chain was inevitably disrupted. Jaguar Land Rover has restarted production at China Joint Venture since March 2020 and most of other plants since mid-May 2020. While JLR’s suppliers have reopened lately and there have been no significant supply disruptions, current economic environment has put pressure on the supply chain and as a result JLR may receive claims in relation to suppliers in distress, and other COVID-19 pandemic related disruption claims. We may be compelled to provide additional support for our suppliers as a result of the COVID-19 pandemic. We are working closely with our suppliers to monitor the risks by, inter alia, defining inventory maintenance norms, building safety stocks, exploring localization options and exploring alternative sources, among others.
Deterioration in automobile demand and lack of access to sufficient financial condition.arrangements for our supply chain could impair the timely availability of components to our business. In addition, if one or more of the other global automotive manufacturers were to become insolvent, this would have an adverse impact on the supply chains and may further adversely affect our results of operations. We are also exposed to supply chain risks relating to lithium ion cells, which are critical for our electric vehicle production. Any disruption in the supply of battery cells from such suppliers could disrupt production of our vehicles. The severity of this risk is likely to increase as we and other manufacturers expand the production of electric vehicles and the demand for such vehicles increases.
We have also entered into supply agreements with Ford and certain other third parties for critical components and we remain reliant upon Ford and Ford’s joint venture with the PSA Group (the “Ford-PSA Joint Venture”) for a portion of our engines. However, following the launch of the Engine Manufacturing Centre (“EMC”) in Wolverhampton, and the subsequent China Joint Venture, we now also manufacture our own “in-house” engines, as such supply agreements will terminate by December 2020. We may not be able to manufacture certain types of engines or find a suitable replacement supplier in a timely manner in the event of any disruption in the supply of engines, or parts of engines, and other hardware or services provided to us by Ford or the Ford-PSA Joint Venture and such disruption could have a material adverse impact on our business, prospects, financial condition and results of operation.
A change in requirements under long-term supply arrangements committing Jaguar Land Rover to purchase minimum or fixed quantities of certain parts, or to pay a minimum amount to the seller, could have a material adverse impact on our business, prospects, financial condition and results of operation. We have entered into a number of long-term supply contracts that require Jaguar Land Rover to purchase a fixed quantity of parts to be used in the production of Jaguar Land Rover vehicles (e.g., “take-or-pay” contracts). If the need for any of these parts were to lessen, including as a result of the COVID-19 pandemic or otherwise, Jaguar Land Rover could still be required to purchase a specified quantity of the part or pay a minimum amount to the seller pursuant to the take-or-pay contract, which could have a substantial adverse effect on our business, prospects, financial condition and results of operation.
Tata Motors Limited has also entered into agreements for the purchase of components from certain suppliers. If we have to procure lower quantities than committed hence our costs of procurement thereby increase, we may have to record provisions towards such contracts, thereby impacting our financial condition and results of operation. In Fiscal 2020, Tata Motors Limited recognized a provision of Rs. 7,770 million towards certain supplier contracts.
We are exposed to liquidity risks, including risks related to changes in our credit rating, which could adversely affect the value of our debt securities, finance costs and our ability to obtain future financing.
Our main sources of liquidity are cash generated from operations, existing notes, external debt in the form of factoring discount facilities and other revolving credit facilities. However, prevailing conditions in credit markets reflecting negative global economic conditions (resulting from result of higher oil prices, excessive public debt, the COVID-19 pandemic or for any other reasons) and lower consumer demand may adversely affect both consumer demand and the cost and availability of finance for our business and operations. See Item 5.B “Operating and Financial Review and Prospects—Liquidity and Capital Resources—Principal Sources of Funding Liquidity—Loan Covenants.”
We are also subject to various types of restrictions or impediments on the ability of our companies in certain countries to transfer cash across our companies through loans or dividends. These restrictions or impediments are caused by exchange controls, withholding taxes on dividends and distributions and other similar restrictions in the markets in which we operate. The transfer of cash is also subject to certain restrictions on cash pooling, intercompany loan arrangements or interim dividends in certain jurisdictions. We may face significant liquidity risks due to squeezed credit lines for non-banking financial companies (“NBFCs”) following the Infrastructure Leasing & Financial Services Limited crisis in 2018 and its impact on the Indian lending sector.
The COVID-19 pandemic may increase pressure on liquidity of the Company and its subsidiaries. (see “—We have been, and may in the future be, adversely affected by the COVID-19 pandemic, the duration and economic, governmental and social impact of which is difficult to predict, which may significantly harm our business, prospects, financial condition and results of operations.”)
Any credit ratings assigned to us or our debt securities may not reflect the potential impact of all risks related to structural, market, additional risk factors discussed and other factors that may affect the value of our debt securities. Credit rating agencies continually review the ratings they have assigned and their ratings may be subject to revision, suspension or withdrawal by the rating agency at any time. A downgrade in our credit rating may negatively affect our ability to obtain future financing to fund our operations and capital needs, which may affect our liquidity. It may also increase our financing costs by increasing the interest rates of our outstanding debt or the interest rates at which we are able to refinance existing debt or incur additional debt. A credit rating is not a recommendation to buy, sell or hold securities.
The ongoing COVID-19 pandemic and economic slowdown in certain geographic areas have led to Standard & Poor’s Rating Group (“S&P”) downgrading the credit ratings of Tata Motors Limited and its subsidiary Jaguar Land Rover from B+ to B in April 2020 and Moody’s Investors Service (“Moody’s”) downgrading the credit rating of Tata Motors Limited from BA3 to B1 and changing the outlook of Jaguar Land Rover from B1/ Under Review to B1/ Negative in June 2020. If disruption to the business as a result of the COVID-19 pandemic continues and increases further or the impact is worse than anticipated, the Company and its subsidiary may see further downgrades in credit ratings (see “—We have been, and may in the future be, adversely affected by the COVID-19 pandemic, the duration and economic, governmental and social impact of which is difficult to predict, which may significantly harm our business, prospects, financial condition and results of operations.”)
Intensifying competition could materially and adversely affect our sales,business, prospects, financial condition and results of operations.
The global automotive industry is highly competitive, and competition is likely to further intensify, in light of continuing globalization and consolidation.including from new industry entrants. Competition is especially likely to increase in the premium automotive categories as each market participant intensifies its efforts to retain its position in established markets while also expandingdeveloping a presence in emerging markets, such as China, India, Russia, Brazil and parts of Asia. Factors affecting competition include product quality and features, innovation and the development time for introduction of new products, cost control, pricing, reliability, safety, fuel economy, environmental impact and perception thereof, customer service and financing terms.other key markets. Some of our competitors based in the European Union may gain a competitive advantage that would enable them to benefit from their access to the European Union single market post-Brexit. There can beis no assurance that we will be able to compete successfully in the global automotive industry in the future.
We also face strong competition in the Indian market from domestic and foreign automobile manufacturers. Improving infrastructure and growth prospects in India, compared to those of other mature markets, have attracted a number of international companies to India, either through joint ventures with local partners or through independently owned operations in India. International competitors bring with them decades of international experience, global scale, advanced technology and significant financial resources. Consequently, domestic competition is likely to further intensify in the future. There can beis no assurance that we will be able to implement our future strategies in a way that will mitigate the effects of increased competition onin the Indian automotive industry.
Designing, manufacturing and selling vehicles is capital intensive and requires substantial investments in manufacturing, machinery, research and development, product design, engineering, technology and marketing in order to meet both consumer preferences and regulatory requirements. If our competitors consolidate or enter into other strategic agreements such as alliances,partnerships or joint ventures, they may be able to take better advantage of economies of scale. We believe thatSome of our competitors may behave formed such strategic alliances in recent years including the Renault–Nissan–Mitsubishi Alliance, which further included Mitsubishi as a partner in 2017, and the merger between Fiat Chrysler and Peugeot in accordance with the combination agreement entered into on December 18, 2019. If competitors are able to benefit from the cost savings offered by consolidation or alliances, whichstrategic partnerships, it could adversely affect our competitiveness with respect to those competitors. Competitors could use consolidation or alliances as a means of enhancing their competitiveness (including through the acquisition of technology), which could also materially adversely affect our business.competitiveness. Further, our growth strategy relies on the expansion of our operations in less mature markets abroad, where we may face significant competition and higher than expected costs to enter and establish ourselves.
The electric vehicle market may not evolve as anticipated.A significant reliance on key markets by both TML and Jaguar Land Rover increases the risk of a negative impact from reduced customer demand in those countries.
We intend to develop electricrely on certain key markets, including the United Kingdom, China, North America, India and continental Europe, from which we derive the substantial majority of our revenues. A decline in demand for our vehicles as more car manufacturers consider various opportunities to expand their electric vehicle product range and stringent emissions norms push OEMs increasinglyin these major markets may, in the directionfuture, significantly impair our business, financial position and results of adopting zerooperations. For example, the recent adverse public perception towards diesel powered vehicles, resulting from emissions technology. However,scandals and tax increases on diesel vehicles, has precipitated a sharp fall in diesel sales, primarily in the United Kingdom and Europe, and created uncertainty for customers that could further impact our sales of electricdiesel vehicles are hardin the future. The ongoing COVID-19 pandemic has had a significant impact across our key markets worldwide. Additionally, in China, the economy is experiencing a tempering of industry growth and increased pricing pressures due to predict asmacroeconomic volatility, regulatory and policy changes, softening consumer demand may fail to shiftand increasing competition. Softening of the Chinese economy would likely impact our growth opportunities in favor of electric vehicles and this market segment may remain small relative to the overallChina, an important market for yearsus. In addition, our strategy, which includes new product launches and expansion into growing markets, may not be sufficient to come. Consumers may remain reluctant to adopt electric vehicles due tomitigate a decrease in demand for our products in mature markets in the lack of fully developed charging infrastructure or long charging times. If the value proposition of electric vehicles fails to fully materialize, thisfuture, which could have a material adverse effect on our financial condition or results of operations.
If we are unable to effectively implement or manage our growth strategy, our operating results and financial condition could be materially and adversely affected.
As part of our growth strategy, we may open new manufacturing, research or engineering facilities, expand existing facilities, add additional product lines or expand our businesses into new geographical markets. There is a range of risks inherent in such a strategy that could adversely affect our ability to achieve these objectives, including, but not limited to, the following: the potential disruption of our business; the uncertainty that new product lines will generate anticipated sales; the uncertainty that we may not be able to meet or anticipate consumer demand; the uncertainty that a new business will achieve anticipated operating results; the diversion of resources and management’s time; our cost reduction efforts, which may not be successful; the difficulty of managing the operations of a larger company; and the difficulty of competing for growth opportunities with companies having greater financial resources than we have.
More specifically, our international businesses face a range of risks and challenges, including, but not limited to, the following: language barriers, cultural differences, difficulties in staffing and managing overseas operations, inherent difficulties and delays in contract enforcement and the collection of receivables under the legal systems of foreign countries, the risk ofnon-tariff barriers, regulatory and legal requirements affecting our ability to enter new markets through joint ventures with local entities, difficulties in obtaining regulatory approvals, environmental permits and other similar types of governmental consents, difficulties in negotiating effective contracts, obtaining the necessary facility sites or marketing outlets or securing essential local financing, liquidity, trade financing or cash management facilities, export and import restrictions, multiple tax regimes (including regulations relating to transfer pricing and withholding and other taxes on remittances and other payments from subsidiaries), foreign investment restrictions, foreign exchange controls and restrictions on repatriation of funds, other restrictions on foreign trade or investment sanctions, and the burdens of complying with a wide variety of foreign laws and regulations. Furthermore, as part of our global activities, as we may engage with third-party dealers and distributors, whom we do not control but who could nevertheless take actions that could have a materialsignificant adverse impact on our reputation and business; we cannot assure you that we will not be held responsible for any activities undertaken by such third parties. If we are unable to manage risks related to our expansion and growth in other parts of the world and therefore fail to establish a strong presence in those higher growth markets, our business, results of operations and financial condition could be adversely affected or our investments could be lost.
Furthermore, we are subject to risks associated with growing our business through mergers and acquisitions. We believe that our acquisitions provide us opportunities to grow significantly in the global automobile markets by offering premium brands and products. Our acquisitions have provided us with access to technology and additional capabilities while also offering potential synergies. However, the scale, scope and nature of the integration required in connection with our acquisitions present significant challenges, and we may be unable to integrate the relevant subsidiaries, divisions and facilities effectively within our expected schedule. An acquisition may not meet our expectations and the realization of the anticipated benefits may be blocked, delayed or reduced as a result of numerous factors, some of which are outside our control.
For example, we acquired the Jaguar Land Rover business from Ford in June 2008, and since then Jaguar Land Rover has become a significant part of our business, accounting for 76.8% of our total revenues in Fiscal 2018. As a result of the acquisition, we are responsible for, among other things, the obligations and liabilities associated with the legacy business of Jaguar Land Rover. There can be no assurances that any legacy issues at Jaguar Land Rover or any other acquisition we have undertaken in the past or will undertake in the future would not have a material adverse effect on our business, financial condition and results of operations, as well as our reputation and prospects.
We will continue to evaluate growth opportunities through suitable mergers and acquisitions in the future. Growth through mergers and acquisitions involves business risks, including unforeseen contingent risks or latent business liabilities that may only become apparent after the merger or acquisition is completed. The key success factors are seamless integration, effective management of the merged and/or acquired entity, retention of key personnel, cash flow generation from synergies in engineering and sourcing, joint sales and marketing efforts, and management of a larger business. If any of these factors fails to materialize or if we are unable to manage any of the associated risks successfully, our business, financial condition and results of operations could be materially and adversely affected.performance.
Our future success depends on our ability to satisfy changing customer demands by offering innovative products in a timely manner and maintaining such products’product competitiveness and quality.
Customer preferences, especially in many of the more mature markets, have trended towards smaller and more fuel-efficient and environmentally-friendly vehicles. ClimateNew technologies, climate change concerns, increases in fuel prices and certain government regulations (such as CO2 emissions limitshave resulted in changes in customer preferences and higher taxes on SUVs) and the promotion of new technologies encourageshave encouraged customers to look beyond standard purchasing factors (such as price, design, performance, brand image and features) to differentiation of the technology used. Customer preferences in the vehicle or the manufacturer or provider of this technology.certain more mature markets have trended towards smaller and more fuel-efficient and environmentally-friendly vehicles. Such consumer preferences could materially affect our ability to sell premium passenger carsPassenger Cars and large ormedium-sizedall-terrainmedium-sized all-terrain vehicles at current or targetedtarget volume levels, and could have a material adverse effect on our general business activity, net assets, financial position and results of operations.
In contrast to other mature markets, consumer preferences in the United States have shifted towards increased demand for pickup trucks and larger SUVs. A shift in consumer demand away from these vehicles within the United States towards compact and mid-size Passenger Cars, whether in response to higher fuel prices or other factors, could adversely affect our profitability. Conversely, if the trend in U.S. consumer preferences for SUVs holds, we could face increased competition from other carmakers as they adapt to the market shift and introduce their own SUV models, which could materially and adversely impact our business, financial position or results of operations. Our operations may be significantly impacted if we fail to develop, or experience delays in developing, fuel-efficient vehicles and certain technologies that reflect changing customer preferences and meet the specific requirements of government regulations. Our competitors may gain significant advantages if they are able to offer products satisfying customer needs or government regulations earlier than we are able to, which could adversely impact our business, prospects, financial condition and results of operation.
Further, there is no assurance that our new models will meet our sales expectations, in which case we may be unable to realize the intended economic benefits of our investments, which would materially affect our business, results of operations and financial condition. Delays or cost overruns in implementing new product launches, expansion plans or capacity enhancements could also materially and adversely impact our financial condition and results of operations.
As a result of the public discourse on climate change and volatile fuel prices, we face more stringent government regulations, including imposition of speed limits and higher taxes on sports utility vehicles or premium automobiles. We endeavor to take account of these factors, and we are focused on researching, developing and producing new drive technologies, such as hybrid engines and electric cars. We are also investing in development programs to reduce fuel consumption through the use of lightweight materials, reducing parasitic losses through the driveline and improving aerodynamics. Coupled with consumer preferences, a failure to achieve our planned objectives or delays in developing fuel efficient products could materially affect our ability to sell premium passenger cars and large ormedium-sizedall-terrain vehicles at current or targeted volumes and could have a material adverse effect on our general business activity, net assets, financial position and results of operations. In addition, deteriorationthere is a risk that our quality standards can be maintained only by incurring substantial costs for monitoring and quality assurance. A decrease in the quality of our vehicles (or public perception of such a decrease) could force us to incur substantial costs and damage our reputation. image and reputation as a premium automobile manufacturer and materially affect our business, prospects, financial condition and results of operation.
There is also a risk that the capital invested on researching and developing new technologies, including autonomous, connected and electrification technologies, or the capital invested in mobility solutions to overcome and address future travel and transport challenges, will, to a considerable extent, have been spent in vain, because the technologies developed or the products derived therefrom are unsuccessful in the market or exhibit failures that are impracticable or too costly to remedy or because competitors have developed better or joint ventures set up by competitors will develop better solutions and will be able to manufacture the resulting products more rapidly, in larger quantities, with a higher quality and/or at a lower cost.less expensive products. It is possible that we could then be compelled to make new investments in researching and developing other technologies to maintain our existing market share or to win back the market share lost to competitors. Finally, our manufacturing operations and sales may be subject to potential physical impacts of climate change, including changes in weather patterns and an increased potential for extreme weather events, which could affect the manufacture and distribution of our products and the cost and availability of raw materials and components.
Private and commercial users of transportation increasingly use modes of transportation other than the automobile. The reasons for this include the rising costs of automotive transport, increasing traffic density in major cities and environmental awareness. Furthermore, the increased use ofcar-sharing concepts and other innovative mobility initiatives facilitates access to other methods of transport, thereby reducing dependency on private automobiles. Furthermore,non-traditional market participants and/or unexpected disruptive innovations may eliminate dependency on the private automobile altogether. A shift in consumer preferences away from private automobiles would have a material adverse effect on our general business activity and on our sales, prospects, financial condition and results of operations.
To stimulate demand, competitors in the automotive industry have offered customers and dealers price reductions on vehicles and services, which has led to increased price pressures and sharpened competition within the industry. As a provider of numerous high-volume models, our profitability and cash flows are significantly affected by the risk of rising competitive price pressures. Special sales incentives and increased price pressures in the new car business also influence price levels in the used car market, with a negative effect on vehicle resale values. This could have a negative impact on the profitability of the used car business in our dealer organization.
There can be no assurance that our new models will meet our sales expectations, in which case we may be unable to realize the intended economic benefits of our investments, which would in turn materially affect our business, results of operations and financial condition. In addition, there is a risk that our quality standards can be maintained only by incurring substantial costs for monitoring and quality assurance. For our customers, one of the determining factors in purchasing our vehicles is the high quality of the products. A decrease in the quality of our vehicles (or if the public were to have the impression that such a decrease in quality had occurred) could damage our image and reputation as a premium automobile manufacturer and in turn materially affect our business, results of operations and financial condition.
In addition, product development cycles can be lengthy, and there is no assurance that new designs will lead to revenues from vehicle sales, or that we will be able to accurately forecast demand for our vehicles, potentially leading to inefficient use of our production capacity. Additionally, our high proportion of fixed costs, due to our significant investment in property, plantplants and equipment, further exacerbates the risks associated with incorrectly assessing demand for our vehicles.
Our production facilities are highly regulated and we may incur significant costs to comply with, or address liabilities under, environmental, health and safety laws and regulations applicable to them.
Our production facilities are subject to a wide range of increasingly strict environmental, health and safety requirements. These requirements address, among other things, air emissions, wastewater discharges, releases into the environment, human exposure to hazardous materials, the storage, treatment, transportation and disposal of wastes and hazardous materials, the investigation and clean-up of contamination, process safety and the maintenance of health and safety conditions in the workplace. Many of our operations require permits and controls to monitor or reduce pollution. We have incurred, and will continue to incur, substantial on-going capital and operating expenditures to ensure compliance with current and future environmental, health and safety laws and regulations or their more stringent enforcement. Violations of these laws and regulations could result in the imposition of significant fines and penalties, the suspension, revocation or non-renewal of our permits, production delays or limitations, imprisonment, or the closure of our plants. Other environmental, health and safety laws and regulations could impose restrictions or onerous conditions on the availability or the use of raw materials we need for our manufacturing process. Violations of these laws and regulations may occur, among other ways, from errors in monitoring emissions of hazardous or toxic substances from our vehicles or production sites into the environment, such as our use of incorrect methodologies or defective or inappropriate measuring equipment, errors in manually capturing results, or other mistaken or unauthorized acts of our employees, suppliers or agents.
Our manufacturing units must ensure compliance with various environmental statutes. Significant statutes for our business include the Water (Prevention and Control of Pollution) Act, 1974 and the Rules thereunder, the Air (Prevention and Control of Pollution) Act, 1981 and the Rules thereunder, the Environment Protection Act, 1986 and the Rules thereunder and the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016. The basic purpose of these statutes is to control, abate and prevent pollution. In order to achieve these objectives, pollution control boards (“PCBs”), which are vested with diverse powers to deal with water and air pollution and hazardous waste disposal, have been set up in each state. The PCBs are responsible for establishing standards for maintenance of clean air and water, directing the installation of pollution control devices in industries and undertaking inspection to ensure that units or plants are functioning in compliance with the standards prescribed. These authorities also have the power of search, seizure and investigation.
The Corporate Average Fuel Economy (“CAFÉ”) standards are applicable to M1 category vehicles from April 1, 2017. As a result, we are required to demonstrate CAFE compliance for our Passenger Vehicles, Commercial Vehicles and EV M1 models. TML has successfully complied with the Phase 1 CAFE requirements for Fiscal 2017 and Fiscal 2018. Through the use of the CAFE calculator, we regularly monitor production volumes and process to ensure that organizational level CAFE compliance (which will require us to produce enough fuel-efficient models to compensate for those models having higher CO2 emissions in g/km) is established at all times during the year. Any non-compliance could lead to penalties, product recalls and/or other punitive measures. To support our compliance obligations, our overall product portfolio needs to be enhanced with the incorporation of electric and hybrid vehicles as well as the inclusion of environmental-friendly technological features in existing and forthcoming models.
In 2016, the Ministry of Environment, Forests & Climate Change (“MoEFCC”) under the Government of India re-vamped several national level legislations governing waste management. Specifically the Plastic Waste Management Rules 2016, the Bio-Medical Waste (BMW) Management Rules 2016, e-waste Management Rules-2016, and the Construction and Demolition (C&D) Waste Management Rules 2016. All our plants have analyzed these new regulations for its applicability and aligned their compliance practices accordingly.
Our business and manufacturing processes result in the emission of greenhouse gases such as carbon dioxide. We expect legal requirements to reduce greenhouse gases to become increasingly more vulnerablestringent and costly to reduced demandaddress over time. For example, the European Union Emissions Trading Scheme (“EU ETS”), a European Union-wide system in which allowances to emit greenhouse gases are issued and traded, is now in Phase IV and currently applies to three manufacturing facilities in the United Kingdom, and is in the process of being applied for premium performance carsour Slovakia manufacturing facility. The free allocation of EUETS carbon allowances significantly reduces in Phase 4 of the scheme (from end of 2020) and, as a result, we will be required to purchase an increased number of allowances, potentially at substantial cost. This forecast is subject to further evaluation based on the final terms of the Brexit negotiations and their impact on the regulated carbon schemes. In any event, there will be a cost to purchase credits in Slovakia and that will be covered following EUETS permit application and issue.
In response to increased public interest, carbon legislation is rapidly evolving around the globe. The implementation requirements differ, with some countries such as the United Kingdom setting targets for “Net Zero Carbon” attainment by 2050. In other countries, timeframes and the degree of commitment varies.
We have a Climate Change Agreement (“CCA”) in the United Kingdom which covers our three vehicle manufacturing plants and one of our Special Operations facilities. This requires us to deliver a 15% reduction in energy use per vehicle by 2020 compared to the 2008 baseline.
The Carbon Reduction Commitment (“CRC”) energy efficiency scheme ceased in 2019. In response to the loss of revenue for Her Majesty’s Treasury from the cessation of the CRC, the amount of Climate Change Levy that we pay has increased in the United Kingdom. There has been the development of the Streamlined Energy and Carbon Reporting Scheme (“SECR”) which will replace reporting under CRC and is compulsory for UK entities for UK operations.
The Best Available Techniques Reference Document (“BREF”) for our paint shops has been under review and in 2019 changes have been proposed, including the lowering of permissible emissions to 30g/m2. Subject to the final terms of Brexit negotiations, it is possible that our paint shops will need to adhere to the revised BREF requirements within four years from its issue date and, in any event, our paint shop in Slovakia will need to meet this requirement.
Many of our sites have an extended history of industrial activity. We may be required to investigate and remediate contamination at those sites, as well as properties we formerly operated, regardless of whether we caused the contamination or the activity causing the contamination was legal at the time it occurred. For example, some of our buildings at our Solihull plant and other plants in the United Kingdom are undergoing an asbestos removal program in connection with all-terrainon-going vehiclesrefurbishment and rebuilding. In our overseas facilities prior to purchase, we undertook studies that informed us of the presence of contamination or otherwise in the ground prior to development. In Brazil, our manufacturing site is adjacent to a facility (the “Itatiaia West” site), where organic solvent contamination of the ground had previously occurred. We have purchased the Itatiaia West site and are currently progressing relevant permits for operation and developing plans for further remediation of the organic solvent contamination. The Itatiaia West site is listed on the Environmental Regulators site (Instituto Estadual do Ambiente) as contaminated. Some of these historical issues are being addressed in conjunction with our site development works whilst others are subject to ongoing treatment regimes.
In connection with contaminated properties, as well as our operations generally, we also could be subject to claims by government authorities, individuals and other third parties seeking damages for alleged personal injury or property damage or damage to natural resources resulting from hazardous substance contamination or exposure caused by our operations, facilities or products. The discovery of previously unknown contamination, or the imposition of new obligations to investigate or remediate contamination at our facilities, could result in substantial unanticipated costs. We could be required to establish or substantially increase financial reserves for such obligations or liabilities and, if we fail to accurately predict the amount or timing of such costs, the related adverse impact on our business, propsects, financial condition or results of operations could be material.
If we are unable to effectively implement or manage our growth strategy and strategy to deliver competitive business efficiency, our business, prospects, financial condition and results of operation could be materially and adversely affected.
As part of our growth strategy, we may open new manufacturing, research or engineering facilities, expand existing facilities, add additional product lines or expand our businesses into new geographical markets that feature higher growth potential than automobile manufacturersmany of the more mature automotive markets in developed countries. There is a range of risks inherent in such a strategy that could adversely affect our ability to achieve these objectives, including, but not limited to: the potential disruption of our business; the uncertainty that we may not be able to meet or anticipate consumer demand; the uncertainty that a new business will achieve anticipated operating results; the difficulty of managing the operations of a larger company; the difficulty of competing for growth opportunities with companies that have greater financial resources than we have; and other similar operational and business risks. More specifically, our international businesses face a range of risks and challenges, including, but not limited to: language barriers, cultural differences, inherent difficulties and delays in contract enforcement and the collection of receivables under the legal systems of foreign countries, the risk of non-tariff barriers, regulatory and legal requirements, environmental permits and other similar types of governmental consents, liquidity, trade financing or cash management facilities, export and import restrictions, multiple tax regimes, foreign investment restrictions, foreign exchange controls and restrictions on repatriation of funds, other restrictions on foreign trade or investment sanctions, the burden of complying with a more diversified product range.wide variety of foreign laws and regulations and other similar operational and business risks. If we are unable to manage risks related to our expansion and growth in new geographical markets and fail to establish a strong presence in high growth markets, our business, prospects, financial condition and results of operation could be adversely affected.
Delivering on our business and strategic objectives is key to sustaining profitable and cash accretive growth. Any uncertainties that materially compromise the achievement of our objectives could unfavorably impact our operational and financial performance. With the launch of Turnaround 2.0, Tata Motors Limited intends to drive its journey towards Competitive, Consistent and Cash-accretive growth, Jaguar Land Rover operateshas announced Project Charge + and Project Accelerate to conserve cash, reduce costs and increase operational efficiency. If we are unable to deliver these objectives, our business, prospects, financial condition and results of operation could be materially and adversely affected.
Deterioration in the premium performance carof any of our subsidiaries, joint ventures or affiliates could materially and adversely affect our results of operations.
We have made and may continue to make capital commitments to our subsidiaries, joint ventures and affiliates. If the business or operations of any of these subsidiaries, joint ventures and affiliates deteriorate, the value of our investments may decline substantially. We are also subject to risks associated with joint ventures and affiliates wherein we retain only partial or joint control.
In joint ventures, we are required to foster our relationships with our all-terrainco-owners as well as promote the overall success of the joint venture. If there is a significant change in these relationships (for example, if a co-owner changes or relationships deteriorate), our success in the joint venture may be materially adversely affected.
We entered into a joint venture with Chery Automobile Company Ltd. (“Chery”) in China to develop, manufacture and sell certain Jaguar Land Rover vehicles and at least one own-branded vehicle segments,in China (the “China Joint Venture”). Additionally, in March 2018, Jaguar Land Rover announced its strategic partnership with Waymo LLC (“Waymo”) to develop the world’s first premium self-driving electric vehicle. Joint ventures and strategic partnership projects, like our joint venture in China and partnership with Waymo, may be developed pursuant to agreements over which we only have partial or joint control. Investments in projects over which we have partial or joint control are very specific segmentssubject to the risk that the other shareholders of the premium passenger car market,joint venture, who may have different business or investment strategies than we do or with whom we may have a disagreement or dispute, may have the ability to block business, financial or management decisions, such as the decision to distribute dividends or appoint members of management, which may be crucial to the success of the project or our investment in the project, or otherwise implement initiatives that may be contrary to our interests. Moreover, our partners may be unable, or unwilling, to fulfill their obligations under the relevant joint venture agreements and it has a more limited range of models than some of its competitors. Accordingly, its performance is linked to market conditions and consumer demand in those market segments. Furthermore, someshareholder agreements or may experience financial or other premium performance vehicle manufacturers operatedifficulties that may adversely impact our investment in a relatively broader spectrum of market segments, which makes them comparatively less vulnerable to reduced demand for any specific segment. Any downturnparticular joint venture or reduction in the demand for premium passenger cars andall-terrain vehicles, or any reduced demand for Jaguar Land Rover’s most popular models in the geographic markets in which it operates could have a substantial adverse effect on its performance and earnings.strategic partnership projects.
We are subject to risks associated with product liability, warrantywarranties and recall.recalls.
We are subject to risks and costs associated with product liability, warranties and recalls in connection with performance, compliance or safety-relatedsafety related issues affecting our productsvehicles. From time to time, we may be subject to investigations by governmental authorities relating to safety and other compliance issues with our vehicles. For example, there are ongoing investigations with governmental agencies in United Kingdom relating to the quality of TDV6 diesel engines installed in some of our vehicles that are already in service, which may,have resulted in turn,repair actions being required. In particular, as our vehicles become more technologically advanced, we are subject to risks related to their software and operation, including our advanced driver assistance systems automation. We expend considerable resources in connection with product recalls and these resources typically include the cost of the part being replaced and the labor required to remove and replace the defective part. In addition, product recalls can cause our customersconsumers to question the safety or reliability of our vehicles, and thuswhich may harm our reputation. Any harm to our reputation may result in a materially adverse effect on our business, impacting our reputation, results from operations and financial condition. Such events could also require us to expend considerable resources to remediate, and we may also be subject to class actions or other large-scale product liability or other lawsuits in various jurisdictions where we conduct business. In May 2016, an industry-widesubstantial loss of customers. For example, regarding the Takata Corporation (“Takata”) passenger airbag safety recall was announced in May 2015 in the United States by the National Highway Traffic System Administration or NHTSA, in respect of airbags from Takata Corporation or Takata, a supplier of airbags. Certain front-passenger airbags supplied by Takata were installed in vehicles sold by Jaguar Land Rover. The Company considered(the “NHTSA”), we have commenced remediatory actions. Following the cost associated with the recall and recognized an additionalinitial provision of GBP67.4 million, for the estimated cost of repairs in our income statement for Fiscal 2016. We expect to utilize the provision held at the end of Fiscal 2020 with respect to the recall is GBP46.1 million and we intend to use it as the mandated repairs are made over the next one to four years astwo years. Scrutiny of the mandated repairing are fulfilled.automotive industry by national governments remains stringent in relation to potential safety defects or compliance transgressions.
Furthermore, we may also be subject to class actions or other large-scale lawsuits pertaining to product liability or other lawsuitsmatters in various jurisdictions in which we have a significant presence. The use of shared components in vehicle production increases this risk because individual components are deployed in a number of different models across our brands. Any costs incurred or lost sales caused by product liability, warranties and recalls could materially adversely affect our business and reputation.
Changes or uncertainty in respect of LIBOR and/or SONIA may affect some our financing arrangements.
Some of our financing arrangements are, or may in the future be, linked to LIBOR and/or SONIA (as defined below). LIBOR has been the subject of recent national, international and other regulatory guidance and proposals for reform, which may cause it to cease to exist entirely after 2021. On November 29, 2017, the Bank of England and the U.K. Financial Conduct Authority (the “FCA”) announced that the market working group on Sterling Risk-Free Rates would have an extended mandate to catalyze a broad transition from LIBOR to the Sterling Over Night Index Average rate (“SONIA”) across sterling bond, loan and derivatives markets so that SONIA is established as the primary sterling interest rate benchmark by the end of 2021. On April 23, 2018, the Bank of England took over administration of SONIA and issued a series of reforms as part of its implementation as a replacement to LIBOR. From April 2018, the Bank of England has been setting the interest rate benchmark using SONIA, meaning that banks are no longer compelled by the FCA to submit LIBOR rates beyond 2021. These reforms and other pressures may cause LIBOR to disappear entirely or perform differently than in the past (as a result of a change in methodology or otherwise) or may create disincentives for market participants to continue to administer or participate in LIBOR or may have other consequences which cannot be predicted.
Any of these reforms or pressures described above or any other changes to a relevant interest rate benchmark (including LIBOR or SONIA or any alternative or successor benchmark rate) could affect the level of the published rate, including to cause it to be higher, lower and/or more volatile than it would otherwise be. If LIBOR is discontinued, then the rate of interest applicable to our financing arrangements that are linked to LIBOR may be determined by applicable contractual fall-back provisions, although such provisions have not been tested and may not operate as intended. Additionally, SONIA and/or any other alternative or successor benchmark rates are, or will be for a period of time, largely untested, and the use of SONIA and/or such alternative or successor benchmark rates may have adverse consequences that impact our financing arrangements.
More generally, any of the above matters or any other significant change to the setting or existence of LIBOR (or any alternative or successor benchmark rates, including SONIA) could affect the amounts available to us to meet our obligations under our financing arrangements and/or could have a material adverse effect on the value or liquidity of, and the amounts payable under, our financing arrangements. Changes in the manner of administration of LIBOR (or any alternative or successor benchmark rates, including SONIA) could result in adjustment to the conditions applicable to some of our financing arrangements or other consequences as relevant to those financing arrangements. While we may seek to amend the agreements related to our financing arrangements linked to LIBOR (or any alternative or successor benchmark rates, including SONIA), we may not be able to amend such agreements before any of the risks disclosed hereby materialize or at all. No assurance can be provided that relevant changes will not be made to LIBOR or any other relevant benchmark rate and/or that such rates will continue to exist.
Potential changes to our business through acquisitions and divestments may have a material adverse effect on our future results and financial condition
We regularly examine a range of corporate opportunities, including acquisitions and divestments, with a view to determining whether those opportunities will enhance our strategic position and financial performance
We are subject to risks associated with mergers, acquisitions and divestments relating to our business. We believe that our acquisitions provide us opportunities to grow significantly in the global automobile markets including premium brands and products and provide us with access to technology, additional capabilities and potential synergies. However, the scale, scope and nature of the integration or separation required in connection with such transactions present significant challenges, and we may be unable to integrate or separate the relevant subsidiaries, divisions and facilities effectively within our expected schedule. A transaction may not meet our expectations and the realization of the anticipated benefits may be blocked, delayed or reduced as a result of numerous factors, some of which are outside our control.
Additionally, there are risks relating to the completion of any particular transaction occurring, including counterparty and settlement risk, or the non-satisfaction of any completion conditions (for example, relevant regulatory or third party approvals).We acquired the Jaguar Land Rover business from the Ford Motor Company (“Ford”) in June 2008, and since then Jaguar Land Rover has become a significant part of our business, accounting for 80% of our total revenues in Fiscal 2020. As a result of the acquisition, we are responsible for, among other things, the obligations and liabilities associated with the legacy business of Jaguar Land Rover. There can be no assurance that any legacy issues at Jaguar Land Rover or any other acquisition we have undertaken in the past or will undertake in the future will not have a material adverse effect on our business, financial condition and results of operations, as well as our reputation and prospects.
We will continue to evaluate opportunities through suitable mergers, acquisitions and divestments in the future. Such opportunities may involve risks, including unforeseen contingent risks or latent business liabilities that may only become apparent after the transaction is completed. Integration or separation of an acquired or divested business can be complex and costly, sometimes including combining or separating relevant accounting and data processing systems, and management controls, as well as managing relevant relationships with employees, customers, regulators, counterparties, suppliers and other business partners. Integration or separation efforts could create inconsistencies in standards, controls, procedures and policies, as well as diverting management attention and resources. Additionally, there can be no assurance that employees, customers, counterparties, suppliers and other business partners of newly acquired or retained businesses will remain post-acquisition or post-divestment, and the loss of employees, customers, counterparties, suppliers and other business partners may adversely affect our operations or results. If we are unable to manage any of the associated risks successfully, our business, prospects, financial condition and results of operations could be materially and adversely affected.
Our strategy to grow the business through capital investments may not be successful or as successful as we expect.
Our strategic priorities to grow our business include investing in new models and modular architectures and in autonomous, connected and electric technologies, as well as shared mobility services. Jaguar Land Rover’s annual total product and other investment spending was GBP3.3 billion in Fiscal 2020 and is expected to be around GBP2.5 billion in Fiscal 2021 as we are planning to launch the first products on the new modular longitudinal architecture platform. We aim to fund total product and other investment spending out of cash flows from operating activities supported by debt capital markets and bank funding as required. We now expect the protracted business disruption as a result of COVID-19 pandemic will have a significant impact on our business in Fiscal 2021 (see “—We have been, and may in the future be, adversely affected by the COVID-19 pandemic, the duration and economic, governmental and social impact of which is difficult to predict, and which may significantly harm our business, prospects, financial condition and results of operations.”). As the situation is still evolving, it is not possible to quantify this impact.
The targets described above represent our strategic objectives and do not constitute capital spending and earnings projections or forecasts. These targets are based on a range of expectations and assumptions regarding, among other things, our present and future business strategies, volume growth, cost efficiencies, capital spending program and the environment in which we operate, which may prove to be inaccurate. While we do not undertake to update our targets, we may change our targets from time to time. Actual results may differ materially from our targets. Accordingly, there can be no assurance that we will achieve any of our targets, whether in the short, medium or long term. The occurrence of one or more of the risks described in this “Risk Factors” section, many of which are beyond our control and could have an immediate impact on our earnings and/or the probability of which may be exacerbated in the medium to long term, could materially affect our ability to realize the targets described above. In particular, our capital spending target could be affected by investment needs arising from, among other factors, electrification, diesel uncertainty, emissions compliance, driver assistance, connectivity and mobility trends. Our ability to achieve our targets may be materially impaired by negative geopolitical and macro-economic factors, such as the exit of the United Kingdom from the European Union (see “—The United Kingdom’s exit from the European Union may adversely impact our business, prospects, financial condition and results of operations”), industry trends, including market and competitive forces (such as higher incentives), new or the expansion of existing regulatory constraints, reduced customer demand for our vehicles, significant increases in our cost base, unexpected delays or failure in implementing or realizing the benefits of our investments and the impact of our new capitalization policy, in addition to the other factors described in this “Risk Factors” section. Furthermore, we operate in a very competitive and rapidly changing environment. We may face new risks from time to time, and it is not possible for us to predict all such risks which may affect our ability to achieve the targets described above. Given these risks and uncertainties, we may not achieve our targets at all or within the timeframe described above.
The electric vehicle market may not evolve as anticipated.
Sales of electric vehicles are hard to predict because consumer demand may fail to shift in favor of electric vehicles, and this market segment may remain small relative to the overall market for years to come. Consumers may remain or become reluctant to adopt electric vehicles due to the lack of fully developed charging infrastructure, long charging times or increased costs of purchase and fueling. In March 2018, we announced our strategic long-term partnership with Waymo to design, engineer and produce Jaguar I-PACE vehicles to be used by Waymo in their autonomous vehicle mobility service. The self-driving technology developed by Waymo is currently being tested in San Francisco and California. In addition, from 2020, we will begin the manufacture of next-generation Electric Drive Units at our Engine Manufacturing Centre in Wolverhampton which will be used to power our future battery electric and plug-in hybrid vehicles. However, there can be no assurances that the partnership will be successful in achieving its commercial objective or that Waymo will purchase the number of vehicles contemplated by our partnership or that our next-generation Electric Drive Units will be successful. In June 2019, we announced a collaboration with BMW to develop next-generation Electric Drive Units to support the advancement of electrification technologies. As with our partnership with Waymo, there can be no assurances that the partnership will be successful in achieving its commercial objective. If the value proposition of electric vehicles fails to fully materialize, this could have a material adverse effect on our business, prospects, financial condition and results of operation.
We are exposed to a broad range of climate-related risks arising from both the physical and non-physical impacts of climate change and related risks, which may affect our results of new drive and other technologies being developedoperations and the resulting effects on the automobile market.markets in which we operate.
Over the past few years, the global market for automobiles, particularly in established markets, has been characterized by increasing demand for more environmentally-friendly vehicles and technologies. This is related, in particular, toIn light of the public debatediscourse on global warmingclimate change and climate protection. We endeavor to take accountvolatile fuel prices, we face more stringent government regulations, including the imposition of climate protectionspeed limits and the ever more-stringent laws and regulations that have been and are likely to be adopted. We are focusinghigher taxes on researching, developing and producing new drive technologies, such as hybrid engines and electric cars. Jaguar Land Rover is also investing in development programs to reduce fuel consumption through the use of lightweight materials, reducing parasitic losses through the driveline and improvements in aerodynamics. Recently, severalSUVs or premium automobiles. Several jurisdictions, such as Norway, Germany, the United Kingdom, France, the Netherlands, India and China, have announced thetheir intention to substantially reduce or eliminate the sale of conventionally fueled vehicles in their markets in the coming decades.
DieselThe emissions levels of diesel technologies have also become the focus of legislators in the United States and European Union as a result of emissions levels.Union. This has led various carmakers to announce programs to retrofit diesel vehicles with software that will allow them to reduce emissions which may require us to undertake increased R&Dresearch and development spending. There is a risk that these R&Dresearch and development activities, including retrofit software upgrades, will not achieve their planned objectives or that competitors or joint ventures set up by competitors will develop better solutions and will be able to manufacture the resulting products more rapidly, in larger quantities, with a higher quality and/or at a lower cost. This
Coupled with increased consumer preferences for more environmentally-friendly vehicles, failure to achieve our planned objectives or delays in developing fuel-efficient products could leadmaterially affect our ability to increased demand for the productssell premium Passenger Cars and large or medium-sized all-terrain vehicles at current or targeted volumes and could have a material adverse effect on our general business activity, net assets, financial position and results of such competitors and result in a loss of market share for usoperations. There is also a risk that the money invested in researchingour competitors or joint ventures set up by competitors will develop better solutions and developing new technologies, including autonomous, connected and electrification technologies, or money invested in mobility solutions to overcome and address future travel and transport challenges, will to a considerable extent, have been spent in vain, because the technologies developed or the products derived therefrom are unsuccessful in the market or because competitors have developed better or less expensive products. It is possible that we could then be compelled to make new investments in researching and developing other technologies to maintain its existing market share or to win back the market share lost to competitors.
In addition, climate change concerns and the promotion of new technologies encourages customers to look beyond standard factors (such as price, design, performance, brand image or comfort/features) to differentiation of the technology used in the vehicle or the manufacturer or provider of this technology. This could lead to shifts in demand and the value-added parameters in the automotive industry at the expense of our products.
Our competitors may be able to benefit frommanufacture the resulting products more rapidly, in larger quantities, with a higher quality and/or at a lower cost. Finally, our manufacturing operations and sales may be subject to potential physical impacts of climate change, including changes in weather patterns and an increased potential for extreme weather events, which could affect the manufacturing and distribution of our products, as well as the cost savings offeredand availability of raw materials and components. Private and commercial users of transportation increasingly use modes of transportation other than the automobile, especially in connection with increasing urbanization. In addition, the increased use of car sharing services (e.g., Zipcar and DriveNow) and other innovative mobility initiatives facilitate access to alternative modes of transport, thereby reducing dependency on private automobiles. Furthermore, non-traditional market participants and/or unexpected disruptive innovations may disrupt the established business model of the industry by industry consolidation or alliances.introducing new technologies, distribution models and methods of transportation. A shift in consumer preferences away from private automobiles would have a material adverse effect on our general business activity and on our business, prospects, financial condition and results of operations.
Underperformance of our distribution channels may adversely affect our sales and results of operations.
As partOur products are sold and serviced through a network of authorized dealers and service centers across India and through a network of distributors and local dealers in international markets. Any underperformance by or a deterioration in the financial condition of our growth strategy, it may open new manufacturing, researchdealers or engineering facilities, expand existing facilities, add additional product lines or expand our businesses into new geographical markets. There is a range of risks inherent in such a strategy thatdistributors could materially and adversely affect our sales and results of operations.
Our distribution channel partners have been adversely affected by the Company’s ability to achieve these objectives, including, but not limited to, the following: the potential disruptionCOVID-19 pandemic. Their profitability has declined as customers have been refraining from or delaying vehicle purchases in light of the our business; the uncertainty that new product lines will generate anticipated sales; the uncertainty that itpandemic. Further, during lockdown period, local dealers may be required to suspend businesses while they continue to incur operating and non-operating expenses such as salaries, rent and interest on unsold inventory. Even after such dealers resume operations, they may not be able to meet or anticipate consumer demand;compensate for the uncertainty that a new business will achieve anticipated operating results;expenses incurred during lockdown and recovery phases, thus their operations and sales may be further affected.
In Fiscal 2020, Indian automotive industry faced multiple challenges such as liquidity crunch after the diversiondebacle of resourcesInfrastructure Leasing & Financial Services Limited, decrease in rural sales due to weak monsoon, credit tightening by banks in the automotive sector and management’s time;transition from BSIV to BSVI. In light of these challenges, industry sales volumes has declined over the year, affecting the profitability of our cost reduction effortsdistribution channel partners, and the COVID-19 pandemic has further accentuated such challenges. Financial institutions have further tightened financing in the automotive industry. In the absence of availability of funding, dealers may not be successful;able to resume operations to full scale, leading to further loss of sales.
If dealers or importers encounter financial difficulties and our products and services cannot be sold or can be sold only in limited numbers, the difficultysales of managingsuch dealers and importers may be adversely affected. Additionally, if we cannot replace the operations of a larger company; andaffected dealers or importers with other franchises, the difficulty of competing for growth opportunities with companies having greater financial resources than we have.difficulties experienced by such dealers or importers could have an indirect effect on our vehicle deliveries.
Any disruptionConsequently, we could be compelled to provide additional support for dealers and importers and, under certain circumstances, may even take over their obligations to customers, which would adversely affect our financial position and results of operations in the supplyshort term.
Furthermore, as part of automobile componentsour global activities, we may engage with third-party dealers and distributors, whom we do not control, but who could nevertheless take actions that may have a material adverse impact on our results of operations.reputation and business. We cannot assure you that we will not be held liable for any activities undertaken by such third parties.
We are more vulnerable to reduced demand for premium performance cars and all-terrain vehicles than automobile manufacturers with a more diversified product range.
Adverse economic conditions, a decline in automobile demand and lack of access to sufficient financing arrangements, among others, could have a negative financial impact on our suppliers, thereby impairing timely availability of components to us or causing increase in the costs of components. In addition, if one or more of the other global automotive manufacturers were to become insolvent, this would have an adverse effect on our supply chains and may have a material adverse effect on our results of operations.
We have also entered into supply agreements with Ford and certain other third parties for critical components and remain reliant upon Ford and theFord-PSA joint venture for a portion of our engines. However, following the launch of the Engine Manufacturing Centre (EMC) in Wolverhampton, we now also manufacture our own‘‘in-house’’ engines. We may not be able to manufacture certain types of engines or find a suitable replacement supplier in a timely manner in the event of any disruption in the supply of engines, or parts of engines, and other hardware or services provided to us by Ford or theFord-PSA joint venture and such disruption could have a material adverse impact on our operations, business and/or financial condition.
A change in requirements under long-term supply arrangements committing Jaguar Land Rover operates in the premium performance car and all-terrain vehicle segments, which are very specific segments of the premium Passenger Car market, and it has a more limited range of models than some of its competitors. Accordingly, its financial performance is linked to purchase minimummarket conditions and consumer demand in those market segments. Some other premium performance vehicle manufacturers operate in a relatively broader spectrum of market segments, which makes them comparatively less vulnerable to reduced demand for any specific segment. Any downturn or fixed quantities of certain parts,reduction in the demand for premium Passenger Cars and all-terrain vehicles, or to pay a minimum amount to the seller, could have a material adverse impact on our financial condition or results of operations. We have entered into a number of long-term supply contracts that requireany reduced demand for Jaguar Land Rover to purchase a fixed quantity of parts to be usedRover’s most popular models in the production of Jaguar Land Rover vehicles (e.g.,‘‘take-or-pay’’ contracts). If the need for any of these parts were to lessen, Jaguar Land Rover could still be required to purchase a specified quantity of the part or pay a minimum amount to the seller pursuant to thetake-or-pay contract,geographic markets in which it operates could have a substantial adverse effect on our financial condition or results of operations.its performance and earnings.
Increases in input prices may have a material adverse effect on our results of operations.
In Fiscal 20182020 and 2017,Fiscal 2019, the consumption of raw materials, components aggregates and purchase of products for sale (including changes in inventory) constituted 64.4% and 62.5%65.6%, respectively, of our revenues. Prices of commodity items used in manufacturing automobiles, including steel, aluminum, copper, zinc, rubber, platinum, palladium and rhodium, have become increasingly volatile in recent years. Further, there is an increase in the use of precious metals (including rhodium and palladium) as raw materials in vehicles due to stringent emission policies across the world. The COVID-19 pandemic has a significant impact on the supply of precious metals as certain countries where such precious metals are mined are currently under lockdown. Furthermore, prices of commodity items such as steel, non-ferrous metals, precious metals, rubber and petroleum products may rise significantly. Further price movements depend on the evolving economic scenarios across the globe. Most of these inputs are priced in U.S. dollars on international markets. The COVID-19 pandemic has led to weakening of Indian rupees against the U.S. dollar, which can significantly increase our direct material cost. While we continue to pursue cost reduction initiatives, an increase in price of input materials could severely impact our profitability to the extent such increase cannot be absorbed by the market through price increases and/or could also have a negative impact on demand.
For example, BSVI vehicles are required to be registered post April 1, 2020 pursuant to recent laws in India will lead to an increase in price of input materials. In addition, an increased price and supply risk could arise from the need for rare and frequently sought-after raw materials for which demand is high, such as rare earth metals, which are predominantly found in China. Rare earth metal prices and supply remain uncertain. In the past, China has limited the exportbecause of rare earths from time to time. Due to intense price competition and our high level of fixed costs base, we may not be able to adequately address changes in commodity prices even if they are foreseeable. Increases in fuel costs also pose a significant challenge, especially
In addition, we are exposed to the risk of contraction in the commercialsupply, and premiuma corresponding increase in the price of, rare and frequently highly sought after raw materials, especially those used in vehicle categories where increased fuelelectronics such as rare earth metals, which are predominantly produced in China. Rare earth metal prices have an impact on demand.and supply remain uncertain. China has, in the past, limited the export of rare earths from time to time. If we are unable to find substitutes for supplies ofsuch 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 financial condition and results offrom operations could be materially and adversely affected. We are also exposed to supply chain risks relating tolithium-ion cells which are critical for our electric vehicle production. Any disruption in the supply of battery cells from such suppliers could disrupt production of our vehicles. The severity of this risk is likely to increase as we and other manufacturers increase electric vehicle production.
We manage these risks through the use of fixed supply contracts with tenor up to 12 months and the use of financial derivatives pursuant to a defined hedging policy. We enter into a variety of foreign currency, interest rates and commodity forward contracts and options to manage our exposure to fluctuations in foreign exchange rates, interest rates and commodity price risk.risks. These financial exposures are managed in accordance with our risk management policies and procedures. We use foreign currency forward and option contracts to hedge risks associated with foreign currency fluctuations relating to highly probable forecast transactions. We also enter into interest rate swaps and interest rate currency swap agreements, mainly to manage exposure on our fixed rate or variable rate debt. We further use interest rate derivatives or currency swaps to hedge exposure to exchange rate fluctuations on principal and interest payments for borrowings denominated in foreign currencies. Specific transactional risks include risks like liquidity and pricing risks, interest rate and exchange rate fluctuation risks, volatility risks, counterparty risks, settlement risks and gearing risks. However, the hedging transactions may not adequately protect us against these risks. In addition, if markets move adversely, we may incur financial losses on such hedging transactions, theand our business, prospects, financial condition and results of operationsoperation may be adversely impacted.
Any inability to implement our growth strategy by entering new markets may adversely affect our results of operations.
Our growth strategy relies on the expansion of our operations in emerging markets such as ASEAN, SAARC Latin American countries, north and west Africa as well as other parts of the world which feature higher growth potential than many of the more mature automotive markets in developed countries. The costs associated with entering and establishing ourselves in new markets, and expanding such operations may, however, be higher than expected, and we may face significant competition in those regions. In addition, our international business faces a range of risks and challenges, including language barriers, cultural differences, difficulties in staffing and managing overseas operations, inherent difficulties and delays in contract enforcement and the collection of receivables under the legal systems of foreign countries, the risk ofnon-tariff barriers, regulatory and legal requirements affecting our ability to enter new markets through joint ventures with local entities, difficulties in obtaining regulatory approvals, environmental permits and other similar types of governmental consents, difficulties in negotiating effective contracts, obtaining the necessary facility sites or marketing outlets or securing essential local financing, liquidity, trade financing or cash management facilities, export and import restrictions, multiple tax regimes (including regulations relating to transfer pricing and withholding and other taxes on remittances and other payments from subsidiaries), foreign investment restrictions (including restrictions on incentives offered by foreign governments for investment in their jurisdictions), foreign exchange controls and restrictions on repatriation of funds, other restrictions on foreign trade or investment sanctions, and the burdens of complying with a wide variety of foreign laws and regulations. If we are unable to manage risks related to our expansion and growth in other parts of the world and therefore fail to establish a strong presence in those higher growth markets, our business, results of operations and financial condition could be adversely affected or our investments could be lost.
A significant reliance on key markets by both TML and Jaguar Land Rover increases the risk of negative impact of reduced customer demand in those countries.
TML and Jaguar Land Rover rely on the United Kingdom, Chinese, North American, continental European, Indian and other overseas markets. Any decline in demand for our and Jaguar Land Rover’s vehicles in these major markets may in the future significantly impair our and Jaguar Land Rover’s business, financial position and results of operations. Further, decreased demand for our and Jaguar Land Rover’s products may not be sufficiently mitigated by new product launches and expansion into growing markets, which could have a significant adverse impact on our and Jaguar Land Rover’s financial performance.
We are exposed to liquidity risks.
Our main sources of liquidity are cash generated from operations, existing notes, external debt in the form of factoring discount facilities and other revolving credit facilities. However, adverse changes in the global economic and financial environment may result in lower consumer demand for vehicles, and prevailing conditions in credit markets may adversely affect both consumer demand and the cost and availability of finance for our business and operations. If the global economy goes back into recession and consumer demand for our vehicles drops, as a result of higher oil prices, excessive public debt or for any other reasons, and the supply of external financing becomes limited, we may again face significant liquidity risks. See Item 5. “Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Loan Covenants.”
We are also subject to various types of restrictions or impediments on the ability of our companies in certain countries to transfer cash across our companies through loans or interim dividends. These restrictions or impediments are caused by exchange controls, withholding taxes on dividends and distributions and other similar restrictions in the markets in which we operate. The cash in some of these jurisdictions is subject to certain restrictions on cash pooling, intercompany loan arrangements or interim dividends.
Changes in our credit rating could adversely affect the value of our debt securities, finance costs and our ability to obtain future financing
Any credit ratings assigned to us or our debt securities may not reflect the potential impact of all risks related to structure, market, additional risk factors discussed and other factors that may affect the value of our debt securities. A credit rating is not a recommendation to buy, sell or hold securities. Credit rating agencies continually review the ratings they have assigned and their ratings may be subject to revision, suspension or withdrawal by the rating agency at any time. A downgrade in our credit rating may negatively affect our ability to obtain future financing to fund our operations and capital needs, which may affect our liquidity. It may also increase our financing costs by increasing the interest rates of our outstanding debt or the interest rates at which we are able to refinance existing debt or incur additional debt.
Exchange rate and interest rate fluctuations could materially and adversely affect our financial condition and results of operations.
Our and Jaguar Land Rover’s operations are subject to risks arising from fluctuations in exchange rates with reference to countries in which we operate. We import capital equipment, raw materials and components from, manufacture vehicles in, and sell vehicles into, various countries, and therefore, our revenues and costs have significant exposure to the relative movements of the GBP, the U.S. dollar, the Euro, the Russian Ruble, the Chinese Renminbi, the Singapore dollar, the Japanese Yen,yen, the Australian dollar, the South African rand, the Thai baht, the Korean won and the Indian rupee. With respect to Jaguar Land Rover, the United Kingdom’s exit from the European UnionBrexit could also have a negative impact on the growth of the United Kingdom economy and cause greaterincrease volatility inof the GBP. This could directly impact our sales volumes and financial results, as we derive the majorityA significant proportion of our revenues from overseas markets and source significant levels of rawinput materials and components and capital equipment are sourced overseas, in particular from Europe, and therefore we have costs in, and significant exposure to the movement of, the Euro (specifically a strengthening of the Euro) and certain other currencies relative to the GBP (Jaguar Land Rover’s reporting currency), which may result in a decrease indecreased profits to the extentnon-GBP costs these are not fully mitigated bynon-GBP non GBP sales. The pound sterling appreciated significantlymajority of our product development and manufacturing operations, as well as our global headquarters, are based in the United Kingdom, but we also have national sales companies which operate in the major markets in which we sell vehicles. As a result, we have exposure to movements of the U.S. dollar, the Euro, Chinese Renminbi, the Russian Ruble and other currencies relative to the Indian rupeeGBP and U.S. dollar in Fiscal 2018. As published by Bloomberg L.P., theforeign exchange rate as at March 31, 2017 expressed in Indian rupees per GBP1.00, was Rs.80.92 compared to Rs.91.60 as at March 31, 2018volatility may affect our results of operations, profitability and Rs.90.03 as at June 30, 2018 and the rate expressed in US$ per GBP1.00, was US$1.25 as at March 31, 2017 compared to US$1.40 as at March 31, 2018 and US$1.32 as at June 30, 2018.financial position.
Moreover, we have outstanding foreign currency-denominated debt and are sensitive to fluctuations in foreign currency exchange rates. We have experienced and could in the future experience foreign exchange losses on obligations denominated in foreign currencies in respect of our borrowings and foreign currency assets and liabilities due to currency fluctuations.
We are exposed to changes in interest rates, as we have both interest-bearing assets (including cash balances) and interest-bearing liabilities, certain of which bear interest at variable rates (including the term loan facility, the UKEF & commercial loan facilities and the UK fleet financing facility), whereas the notes and existing notes bear interest at fixed rates. We are therefore exposed to changes in interest rates. Although we engage in managing our interest and foreign exchange exposure through use of financial hedging instruments, such as forward contracts, swap agreements and option contracts, higher interest rates and a weakening of the Indian rupee against major foreign currencies could significantly increase our cost of borrowing, which could have a material adverse effect on our financial condition, results of operations and liquidity. Please see note 35(d)39(d)(i) – (b) to our consolidated financial statements included elsewhere in this annual report on Form20-F for further detail on our exposure to fluctuations in interest rates.
Appropriate hedging lines for the type of risk exposures we are subject to may not be available at a reasonable cost, particularly during volatile rate movements, or at all. Moreover, there are risks associated with the use of such hedging instruments. While hedging instruments may mitigate our exposure to fluctuations in currency exchange rates to a certain extent, we potentially forego benefits that might result from market fluctuations in currency exposures. These hedging transactions can also result in substantial losses. Such losses could occur under various circumstances, including, without limitation, any circumstances in which a counterparty does not perform its obligations under the applicable hedging arrangement (despite having International Swapsinternational swaps and Derivatives Association (ISDA)derivatives association agreements in place with each of our hedging counterparties), there are currency fluctuations, the arrangement is imperfect or ineffective, or our internal hedging policies and procedures are not followed or do not work as planned. In addition, because our potential obligations under the financial hedging instruments are marked to market, we may experience quarterly and annual volatility in our operating results and cash flows attributable to our financial hedging activities.
A decline in retail customers’ purchasing power, or consumer confidence or in corporate customers’ financial condition and willingness to invest could materially and adversely affect our business.
Demand for vehicles for personal use generally depends on consumers’ net purchasing power, their confidence in future economic developments and changes in fashion and trends, while demand for vehicles for commercial use by corporate customers (including fleet customers) primarily depends on the customers’ financial condition, their willingness to invest (motivated by expected future business prospects) and available financing. A decrease in potential customers’ disposable income, or their financial flexibility, reductions in the availability of consumer financing and used car valuations or an increase in the cost of financing will generally have a negative impact on demand for our products. A weak macroeconomic environment, combined with restrictive lending and a low level of consumer sentiment generally, may reduce consumers’ net purchasing power and lead existing and potential customers to refrain from purchasing a new vehicle,vehicles, to defer a purchase further or to purchase a smaller model with less equipment at a lower price. A deteriorating macroeconomic environment may disproportionately reduce demand for luxury vehicles. It also leadscould lead to reluctance by corporate customers to invest in vehicles for commercial use and/or to lease vehicles, resulting in a postponement of fleet renewal contracts.
To stimulate demand, the automotive industry has offered customers and dealers price reductions on vehicles and services, which has led to increased price pressures and sharpened competition within the industry. AsWe are a provider of numerous high-volume models, so our profitability and cash flows are significantly affected by the risk of rising competitive and price pressures. In recent years, incentive spending in the automotive industry has been increasing to stimulate demand for vehicles, which has impacted us and has ultimately led to an increase in the cost of sales attributable to those incentives.
Special sales incentives and increased price pressures in the new car business also influence price levels in the used car market, with a negative effect on vehicle resale values. This may have a negative impact on the profitability of the used car business in our dealer organization.
We are subject to risks associated with the automobile financing business.may be adversely affected by labor unrest.
The saleAll of our commercialpermanent employees in India, other than officers and passenger vehicles is heavily dependent on funding availability formanagers, and most of our customers. Rising delinquenciespermanent employees in our automotive business in South Korea and early defaults have contributedthe United Kingdom, including certain officers and managers, are members of labor unions and are covered by our wage agreements, where applicable, with those labor unions.
In general, we consider our labor relations with all of our employees to a reduction in automobile financing, which, in turn, has had an adverse effect on funding availability for potential customers. This reduction in available financing may continuebe good. However, in the future we may be subject to labor unrest, which may delay or disrupt our operations in the affected regions, including impacting the acquisition of raw materials and haveparts, the manufacture, sales and distribution of products and the provision of services. If work stoppages or lock-outs at our facilities or at the facilities of our major vendors occur or continue for a material adverse effect onlong period of time, our business, prospects, financial condition and results of operations.operations may be materially and adversely affected. During Fiscal 2018, we faced two standalone incidents of labor unrest in India, one at our Jamshedpur plant and the other at our Sanand plant. Although these particular issues were amicably resolved, there is no assurance that additional labor issues could not occur, or that any future labor issues will be amicably resolved.
DefaultIn addition, we engage in bi-annual negotiations in relation to wage agreements, covering approximately 17,000 of our unionized employees, the most recent of which resulted in a one year wage agreement covering the period from November 2018 to October 2019 and we expect to negotiate a new labor agreement with the trade unions in 2020.There is a risk, however, that future negotiations could escalate into industrial action ranging from “work to rule” to a strike before a settlement is ultimately reached.
We are exposed to operational risks, including cybersecurity risks, in connection with our use of information technology.
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This includes, among other things, losses that are caused by a lack of controls within internal procedures, violation of internal policies by employees, disruption or malfunction of information technology (“IT”) systems, computer networks and telecommunications systems, mechanical or equipment failures, human error, natural disasters, security breaches or malicious acts by third parties (including, for example, hackers), whether affecting our customerssystems or affecting those of third party providers. We are generally exposed to risks in the field of information technology, since unauthorized access to or misuse of data processed on our IT systems, human errors associated therewith or technological failures of any kind could disrupt our operations, including the manufacturing, design and engineering processes. In particular, as vehicles become more technologically advanced and connected to the Internet, our vehicles may become more susceptible to unauthorized access to their systems. As a business with complex manufacturing, research, procurement, sales and marketing and financing operations, we are exposed to a variety of operational risks and, if the protection measures put in place prove insufficient, our results of operations and financial condition can be materially adversely affected. In addition, we would likely experience negative press and reputational impacts. Cybersecurity incidents could lead to loss of productivity, negative impact on our reputation, and, in extreme cases, financial loss due to business disruptions.
Our business and prospects could suffer if we lose one or more key personnel or if we are unable to attract and retain our employees.
Our business and future growth depend largely on the skills of our workforce, including executives and officers, and automotive designers and engineers. The loss of the services of one or more of our personnel could impair our ability to implement our business strategy. In view of intense competition, any inability to repay installments as duecontinue to attract, retain and motivate our workforce could materially and adversely affect our business, financial condition, results of operations and cash flows. In addition, any downgrade in our credit ratings may increase our borrowing costs and restrict our access to the debt markets. Over time, and particularly in the event of any credit rating downgrade, market volatility, market disruption, regulatory changes or otherwise, we may need to reduce the amount of financing receivables we originate, which could severely disrupt our ability to support the sale of our vehicles.
Jaguar Land Rover has consumer finance arrangements in place with Lloyds Black Horse in the United Kingdom, FCA Bank S.p.A. in European markets and Chase Auto Finance in North America and has similar arrangements with local providers in a number of other key markets. Any reduction in the supply of available consumer financing for the purchase of new vehicles or an increase in the cost thereof would make it more difficult for some of its customers to purchase its vehicles, which could put Jaguar Land Rover under commercial pressure to offer new (or expand existing) retail or dealer incentives to maintain demand for its vehicles, thereby materially and adversely affecting our sales and results of operations. For example, during the global financial crisis, several providers of customer finance reduced their supply of consumer financing for the purchase of new vehicles. Additionally, base interest rates in developed economies are at historic lows. An increase in interest rates due to tightening monetary policy or for any other reason would result in increased costs for consumers.
Furthermore, Jaguar Land Rover offers residual value guarantees on the purchase of certain leases in some markets. The value of these guarantees is dependent on used car valuations in those markets at the end of the lease, which is subject to change. Consequently, we may be adversely affected by movements in used car valuations in these markets.prospects.
Underperformance of our suppliers and distribution channels could have a material adverse effect on our sales and results of operations.
We rely on third parties for sourcing raw materials, parts and components used in the manufacture of our products. At the local level, we are exposed to reliance on smaller enterprises where the risk of insolvency is greater. Furthermore, for some parts and components, we are dependent on a single source. Our ability to procure supplies in a cost-effective and timely manner or at all is subject to various factors, some of which are not within our control. For instance, the outcome of the Brexit negotiations could lead to reduced access to the European Union single market and to the global trade deals negotiated by the European Union on behalf of its members, which could affect the imports of raw materials, parts and components and disrupt Jaguar Land Rover supplies. Furthermore, there is the risk that manufacturing capacity does not meet, or exceeds, sales demand thereby compromising business performance and without any near term remedy given the time frames and investments required for any change. While we manage our supply chain as part of our supplier management process, any significant problems with our supply chain or shortages of essential raw materials in the future could affect our results of operations in an adverse manner.
Our products are sold and serviced through a network of authorized dealers and service centers across India and through a network of distributors and local dealers in international markets. We monitor the performance of our dealers and distributors and provide them with support to enable them to perform to our expectations. There can be no assurance, however, that our expectations will be met. Any underperformance by or a deterioration in the financial condition of our dealers or distributors could materially and adversely affect our sales and results of operations.
If dealers or importers encounter financial difficulties and our products and services cannot be sold or can be sold only in limited numbers, this would have a direct effect on the sales of such dealers and importers. Additionally, if we cannot replace the affected dealers or importers with other franchises, the financial difficulties experienced by such dealers or importers could have an indirect effect on our vehicle deliveries.
Consequently, we could be compelled to provide additional support for dealers and importers and, under certain circumstances, may even take over their obligations to customers, which would adversely affect our financial position and results of operations in the short term.
Deterioration in the performance of any of our subsidiaries, joint ventures and affiliates could materially and adversely affect our results of operations.
We have made and may continue to make capital commitments to our subsidiaries, joint ventures and affiliates, and if the business or operations of any of these subsidiaries, joint ventures and affiliates deteriorates, the value of our investments may decline substantially. Operating a business as a joint venture often requires additional organizational formalities and a requirement of information sharing. We are also subject to risks associated with joint ventures and affiliates wherein we retain only partial or joint control. Our partners may be unable, or unwilling, to fulfill their obligations, or the strategies of our joint ventures or affiliates may not be implemented successfully, any of which may significantly reduce the value of our investments or relationship with theco-owner may be deteriorated, and, which could, in turn, have a material adverse effect on our reputation, business, financial position or results of operations.
We may be adversely impacted by political instability, wars, terrorism, multinational conflicts, countries resorting to protectionism, natural disasters, fuel shortages/shortages and prices, epidemics and labor strikes.
Our products are exported to a number of geographical markets, and we plan to further expand our international operations in the future. For example,Consequently, we have manufacturing facilitiesare subject to various risks associated with conducting our business both within and designoutside our domestic market and engineering centers in India, the United Kingdom, China, South Korea, Thailand, South Africa, Brazil and Indonesia. Consequently, our operations in markets abroad may be subject to political instability, wars, terrorism, civil disturbances, regional or multinational conflicts, natural disasters and extreme weather, fuel shortages, epidemics and pandemics (such as the ongoing COVID-19 pandemic) and labor strikes. Any disruption of the operations of our manufacturing, design, engineering, sales, corporate and other facilities could materially and adversely affect our business, prospects, financial condition and results of operations. In addition, conducting business internationally, especially in emerging markets, exposes us to additional risks, including adverse changes in economic and government policies, unpredictable shifts in regulation, inconsistent application of existing laws and regulations, unclear regulatory and taxation systems and divergent commercial and employment practices and procedures. If any of these events were to occur, there can be no assurance that we would be able to shift our manufacturing, design, engineering, sales, corporate and other operations to alternate sites in a timely manner, or at all. In addition, conducting business internationally, especially in emerging markets, exposes us to additional risks, including adverse changes in economic and government policies, unpredictable shifts in regulation, inconsistent application of existing laws, applicability of retrospective taxes, sanctions programs, unclear regulatory and taxation systems and divergent commercial and employment practices and procedures. Any deterioration in international relations, especially between India and its neighboring countries, may result in investor concern regarding regional stability. Any significant or prolonged disruption or delay in our operations related to these risks could materially and adversely affect our business, prospects, financial condition and results of operations. See – “We have been, and may in the future be, adversely affected by the COVID-19 pandemic, the duration and economic, governmental and social impact of which is difficult to predict, which may significantly harm our business, prospects, financial condition and results from operations”.
Terrorist attacks, civil disturbances, regional conflicts and other acts of violence, particularly in India, may disrupt or otherwise adversely affect the markets in which we operate, our business and our profitability. India has from time to time experienced social and civil unrest and hostilities and adverse social, economic or political events, including terrorist attacks and local civil disturbances, riots and armed conflict with neighboring countries. Events of this nature in the future could influence the Indian economy and could have a material adverse effect on our business, as well as the market for securities of Indian companies, including ourthe Company’s Shares and ADSs. Such incidents could also create a greater perception that investment in Indian companies involves a higher degree of risk and could have a material adverse effect on our business, prospects, results of operations and financial condition, and also the market price of ourthe Company’s Shares and ADSs.
We are vulnerable to supply chain disruptions resulting from natural disasters, orpandemics (such as the man-madeCOVID-19 pandemic) or accidents. For example, on August 12, 2015, there was an explosion in the city port of Tianjin, one of three major ports in China through which we import our vehicles. Approximately 5,800 of our vehicles were stored at various locations in Tianjin at the time of the explosion, and, as a result, we recognized an exceptional charge of GBP245 million in the three months ended September 30, 2015. Subsequently, GBP274 million of net insurance proceeds and other recoveries have been received till March 31, 2018, including GBP35 million related to other costs associated with Tianjin including lost and discounted vehicle revenue. A significant delay or sustained interruption in the supply of key inputs sourced from areas affected by disasters or accidents could materially and adversely affect our ability to maintain our current and expected levels of production, and therefore negatively affect our revenues and increase our operating expenses.
We are a global organization, and are therefore vulnerable to shifts in global trade and economic policies and outlook. Policies that result in countries withdrawing from trade pacts, increasing protectionism and undermining free trade could substantially affect our ability to operate as a global business. In particular, the current U.S. presidential administration could seek to introduce changes to laws and policies governing international trade and impose additional tariffs and duties on foreign vehicle imports, which could have a material adverse effect on our sales in the United States. Additionally, negative sentiments towards foreign companies among our overseas customers and employees could adversely affect our sales as well as our ability to hire and retain talented people. A negative shift in either policies or sentiment with respect to global trade and foreign businesses could have a material adverse effect on our business, prospects, results of operations and financial condition.
Our business is seasonal in nature and a substantial decrease in our sales during certain quarters could have a material adverse impact on our financial performance.
The sales volumes and prices for our vehicles are influenced by the cyclicality and seasonality of demand for these products. The automotive industry has been cyclical in the past, and we expect this cyclicality to continue.
In the Indian market, demand for our vehicles generally peaks between January and March, although there is a decrease in demand in February just before release of the Indian fiscal budget. Demand is usually lean from April to July and picks up again in the festival season from September onwards, with a decline in December due toyear-endas customers defer purchases to the new year.
Our Jaguar Land Rover business is impacted by thebi-annual biannual registration of vehicles in the United Kingdom where the vehicle registration number changes every March and September, which leads to an increase in sales during these months, and, in turn, has an impact onimpacts the resale value of vehicles. This leads to an increase in sales during the period when the aforementioned change occurs. Most other markets, such as the United States, are influenced by the introduction ofnew-model-year products, which typically occurs in the autumn of each year. Furthermore, in the United States, there is some seasonality in the purchasing pattern of vehicles in the northern states for Jaguar when there is a concentration of vehicle sales in the spring and summer months and for Land Rover, where the trend for purchasing 4x4 vehicles is concentrated in the autumn and winter months.Markets in China tend to experience higher demand for vehicles around the Lunar New Year holiday in either January or February, the Chinese National Day holiday and the Golden Week holiday in October. In addition, demand in Western European automotive markets tends to be softer during the summer and winter holidays. Jaguar Land Rover’s cash flows are impacted by the temporary shutdown of four of their manufacturing plants in the United Kingdom (including the Engine Manufacturing CentreEMC at Wolverhampton) during the summer and winter holidays. Sales inholidays, as well as shutdowns resulting from the automotive industry have been cyclical in the pastCOVID-19 pandemic and we expect this cyclicality to continue.Brexit.
Restrictive covenants in our financing agreements could limit our operations and financial flexibility and materially and adversely impact our financial condition, results of operations and prospects.
Some of our financing agreements and debt arrangements set limits on and/or require us to obtain lender consent before, among other things, pledging assets as security. In addition, certain financial covenants may limit our ability to borrow additional funds or to incur additional liens. In the past, we have been able to obtain required lender consent for such activities. However, there can be no assurance that we will be able to obtain such consents in the future. On June 30, 2020, we notified one of our Indian lenders in respect of our US$425 million loan facility that as at June 30, 2020, the Company failed to maintain one of the financial ratios under the terms of the loan facility. On July 30, 2020, the Company received confirmation from the lender that it has approved an increase in such threshold and has given waiver of the Company’s failure to maintain the relevant financial ratio for Fiscal 2021. If our liquidity needs or growth plans require such consents and such consents are not obtained, we may be forced to forego or alter our plans, which could materially and adversely affect our business, prospects, financial condition and results of operations and financial condition.operation.
In the event we breach these covenants, the outstanding amounts due under such financing agreements could become due and payable immediately and/or result in increased costs. A default under one of these financing agreements may also result in cross-defaults under other financing agreements and result in the outstanding amounts under such other financing agreements becoming due and payable immediately. Defaults under one or more of our financing agreements could have a material adverse effect on our business, prospects, financial condition and results of operations.operation.
Future pension obligations may prove more costly than currently anticipated and the market value of assets in our pension plans could decline.
We provide post-retirement and pension benefits to our employees, including defined benefit plans. Our pension liabilities are generally funded. However, lower returns on pension fund assets, changes in market conditions, interest rates or inflation rates, and adverse changes in other critical actuarial assumptions, may impact our pension liabilities or assets and consequently increase funding requirements. Further, any changes in government regulations, may adversely impact the pension benefits payable to the employees, which could materially decrease our net income and cash flows.
Jaguar Land Rover provides post-retirement and pension benefits to its employees, some of which are defined benefit plans. As part of Jaguar Land Rover’s strategic business review process, Jaguar Land Rover closed its defined benefit pension plans to new joiners as of April 19, 2010. All new Jaguar Land Rover employees from April 19, 2010 join a new defined contribution pension plan. Under the arrangements with the trustees of the defined benefit pension schemes, an actuarial valuation of the assets and liabilities of the schemes is undertaken every three years in order to determine cash funding rates. As a result of the April 2018 valuation process, a funding deficit of GBP 554 million was disclosed and we agreed to a schedule of contributions with the trustee which, together with the expected investment performance of the assets of the schemes, is expected to eliminate the deficit by 2028. Cash contributions towards the deficit will be GBP 60 million each year until Fiscal 2024 followed by GBP 25 million each year until the fiscal year ending March 31, 2028. The revised schedule of contributions also reflects the reduced ongoing cost of benefit accrual of approximately 22% for Fiscal 2020 and approximately 21% for Fiscal 2021 and ongoing benefits from changes implemented on April 5, 2017 (compared to a previous rate of 31%). As of March 31, 2020, Jaguar Land Rover’s UK defined benefit pension improved to a surplus of GBP 380 million, as compared to a deficit of GBP 667 million as of March 31, 2019. This improvement was primarily due to an increase in the discount rate used to value the liabilities, as well as asset increases due to interest rate hedges and contributions paid.
We may be materially and adversely affected by the divulgence of confidential information.
Although we have implemented policies and procedures to protect confidential information, such as key contractual provisions, future projects, financial information and customer records, such information may be divulged as a result of internal leaks, hacking, other threats from cyberspace or other factors. If confidential information is divulged, we could be subject to claims by affected parties, regulatory penalties, negative publicity and loss of proprietary information, all of which could have an adverse and material impact on our reputation, business, financial condition, results of operations and cash flows.
Our business could be negatively affected by the actions of activist shareholders.
Certain shareholders of the Company may from time to time advance shareholder proposals or otherwise attempt to effect changes at the Company, influence elections of the directors of the Company (“Directors”) or acquire control over our business. Our success largely depends on the ability of our current management team to operate and manage effectively. Campaigns by shareholders to effect changes at publicly listed companies are sometimes led by investors seeking to increase short-term shareholder value by advocating corporate actions such as financial restructuring, increased borrowing, special dividends, stock repurchases or even sales of assets or the entire company, or by voting against proposals put forward by the board of directors of the Company (the “Board”) and our management. If faced with actions by activist shareholders, we may not be able to respond effectively to such actions, which could be disruptive to our business.
We rely on licensing arrangements with Tata Sons Private Limited to use the “Tata” brand. Any improper use of the associated trademarks by our licensor or any other third parties could materially and adversely affect our business, financial condition and results of operations.
Our rights to our trade names and trademarks are a crucial factor in marketing our products. Establishment of the “Tata”“TATA” word mark and logo mark in and outside India is material to our operations. We have licensed the use of the “Tata”“TATA” brand from our Promoter, Tata Sons Private Limited or (“Tata Sons.Sons”). If Tata Sons, or any of its subsidiaries or affiliated entities, or any third party uses the trade name “Tata”“TATA” in ways that adversely affect such trade name or trademark, our reputation could suffer damage, which, in turn, could have a material adverse effect on our business, prospects, financial condition and results of operations.
We are subject to risks associated with the automobile financing business.
The sale of our Commercial Vehicles and Passenger Vehicles is heavily dependent on funding availability for our customers. Rising delinquencies and early defaults have contributed to a reduction in automobile financing, which, in turn, has had an adverse effect on funding availability for potential customers. This reduction in available financing may continue in the future and have a material adverse effect on our business, prospects, financial condition and results of operations.
Default by our customers or inability to repay installments as due could materially and adversely affect our business, prospects, financial condition, results of operations and cash flows. In addition, any downgrade in our credit ratings may increase our borrowing costs and restrict our access to the debt markets. Over time, and particularly in the event of any credit rating downgrade, market volatility, market disruption, regulatory changes or otherwise, we may need to reduce the amount of financing receivables we originate, which could severely disrupt our ability to support the sale of our vehicles.
The Reserve Bank of India (the “RBI”) has announced several measures to ease the financial system stress resulting from the COVID-19 pandemic, including a moratorium of three months for dues falling between March 1, 2020 to May 31, 2020 on loan repayments for specific borrower segments and an asset classification standstill benefit to overdue accounts where a moratorium has been granted. On May 23, 2020 the RBI permitted extension of the moratorium for further three months until August 31, 2020. Such regulatory measures are temporary in nature, and there is considerable uncertainty around the COVID-19 pandemic and further relief measures may be required. These moratorium policies would impact debt collections in the short run. Once relief measures are lifted, there is a possibility of increase in non-performing assets. While the TMF group has taken certain asset classification benefits and holds provisions as at March 31, 2020 against the potential impact of COVID-19 pandemic based on the information available, there is significant uncertainty around debt collections in the future, and we may further be required to provide for loan allowances which may impact our results of operation and profitability.
Jaguar Land Rover has consumer finance arrangements in place with Black Horse Limited (part of the Lloyds Banking Group) in the United Kingdom, FCA Bank S.p.A. (a joint venture between Fiat Auto and Crédit Agricole) in major European markets and Chase Auto Finance in the United States and have similar arrangements with local providers in a number of other key markets. Any reduction in the supply of available consumer financing for the purchase of new vehicles or an increase in the cost thereof would make it more difficult for some of its customers to purchase its vehicles, which could put Jaguar Land Rover under commercial pressure to offer new (or expand existing) retail or dealer incentives to maintain demand for its vehicles, thereby materially and adversely affecting our sales and results of operations. For example, during the global financial crisis, several providers of customer finance reduced their supply of consumer financing for the purchase of new vehicles. Additionally, base interest rates in developed economies are at historic lows. Base interest rates in developed economies, specifically the United States and the United Kingdom, are still relatively low, despite recent increases, due to, among other things, expansive government monetary policies. As interest rates rise generally, market rates for new vehicle financing are expected to rise as well, which may make our vehicles less affordable to retail consumers or steer consumers to less expensive vehicles that tend to be less profitable for us, adversely affecting our business, prospects, financial condition and results of operations. Additionally, if consumer interest rates increase substantially or if financial service providers tighten lending standards or restrict their lending to certain classes of credit, consumers may not desire to or be able to obtain financing to purchase or lease our vehicles. An increase in interest rates due to tightening monetary policy or for any other reason would result in increased costs for us to the extent we decided to absorb the impact of such increase and/or consumers. As a result, a substantial increase in consumer interest rates or tightening of lending standards could have a material adverse effect on the Group’s business, prospects, financial condition and results of operations.
Furthermore, Jaguar Land Rover offers residual value guarantees on the purchase of certain leases in some markets. The value of these guarantees is dependent on used car valuations in those markets at the end of the lease, which is subject to change. Consequently, we may be adversely affected by movements in used car valuations in these markets.
Inability to protect or preserve our intellectual property could materially and adversely affect our business, financial condition and results of operationsoperations..
We own or otherwise have rights in respect of a number of patents and trademarks relating to the products we manufacture.manufacture, which have been obtained over a period of years. In connection with the design and engineering of new vehicles and the enhancement of existing models, we seek to regularly develop new intellectual property.technical designs for use in our vehicles. We also use technical designs whichthat are the intellectual property of third parties with such third parties’ consent. These patents and trademarks have been of value in the growth of our business and may continue to be of value in the future. Although we do not regard any of our businesses as being dependent upon any single patent or related group of patents, an inability to protect this intellectual property generally, or the illegal breach of some or a large group of our intellectual property rights, wouldmay have a materially adverse effect on our operations, business and/or financial condition and results of operations.condition. We may also be affected by restrictions on the use of intellectual property rights held by third parties, and we may be held legally liable for the infringement of the intellectual property rights of others in our products. Moreover, intellectual property laws of some foreign countries may not protect our intellectual property rights to the same extent as U.S. or UK laws.
ImpairmentWe may incur significant costs to comply with, or face civil and criminal liability for infringements of, intangible assets may have a material adverse effect on our results of operations.the European General Data Protection Regulation.
Designing, manufacturingIn April 2016, the European Union enacted the General Data Protection Regulation (the “GDPR”). The GDPR is a uniform framework setting out the principles for legitimate data processing and selling vehicles is capitalcame into force on May 25, 2018. The new regime may impose a substantially higher compliance burden on us and limit our rights to process personal data, lead to cost intensive administration processes, oblige us to provide the personal data that we record to customers in a form that would require additional administrative processes or require substantial changes in our IT environment. Additionally, there are much greater sanctions in case of violations of the GDPR requirements compared to the previous regime. These sanctions depend on the nature of the infringed provision and requires substantial investments in intangible assets such as researchmay consist of civil liabilities and development, product designcriminal sanctions. Our failure to implement and engineering technology. We reviewcomply with the value ofGDPR could significantly affect our intangible assets to assess on an annual basis whether the carrying amount matches the recoverable amountreputation and relationships with our customers and suppliers, and civil and criminal liabilities for the asset concerned based on underlying cash-generating units. We may have to take an impairment loss as at a current balance sheet date or future balance sheet date, if the carrying amount exceeds the recoverable amount, whichinfringement of data protection rules could have a material adversesignificant negative effect on our financial condition and the results of operations.
We may be adversely affected by labor unrest.
All of our permanent employees in India, other than officers and managers, and most of our permanent employees in South Korea and the United Kingdom, including certain officers and managers, in relation to our automotive business, are members of labor unions and are covered by our wage agreements, where applicable, with those labor unions.
In general, we consider our labor relations with all of our employees to be good. However, in the future we may be subject to labor unrest, which may delay or disrupt our operations in the affected regions, including the acquisition of raw materials and parts, the manufacture, sales and distribution of products and the provision of services. If work stoppages or lock-outs at our facilities or at the facilities of our major vendors occur or continue for a long period of time, our business, financial condition and results of operations may be materially and adversely affected. During Fiscal 2018, we faced two standalone incidents of labor unrest in India, one at our Jamshedpur plant and the other at our Sanand plant. Although these particular issues were amicably resolved, there is no assurance that additional labor issues could not occur, or that any future labor issues will be amicably resolved.
Our business and prospects could suffer if we lose one or more key personnel or if we are unable to attract and retain our employees.
Our business and future growth depend largely on the skills of our workforce, including executives and officers, and automotive designers and engineers. The loss of the services of one or more of our personnel could impair our ability to implement our business strategy. In view of intense competition, any inability to continue to attract, retain and motivate our workforce could materially and adversely affect our business, financial condition, results of operations and prospects.
Future pension obligations may prove more costly than currently anticipated and the market value of assets in our pension plans could decline.
We provide post-retirement and pension benefits to our employees, including defined benefit plans. Our pension liabilities are generally funded. However, lower returns on pension fund assets, changes in market conditions, interest rates or inflation rates, and adverse changes in other critical actuarial assumptions, may impact our pension liabilities or assets and consequently increase funding requirements, which could materially decrease our net income and cash flows. Jaguar Land Rover provides post-retirement and pension benefits to its employees, some of which are defined benefit plans. As part of Jaguar Land Rover’s Strategic Business Review process, it closed the Jaguar Land Rover defined benefit pension plan to new joiners as at April 19, 2010. All new Jaguar Land Rover employees from April 19, 2010 join a new defined contribution pension plan. Under the arrangements with the trustees of the defined benefit pension schemes, an actuarial valuation of the assets and liabilities of the schemes is undertaken every three years. The most recent valuation, as at April 2015, indicated a shortfall in the assets of the schemes as at that date, versus the actuarially determined liabilities as at that date of £789 million (compared to £702 million as at April 2012). The 2018 valuation process is underway and will be completed during 2019. As at March 31, 2018, Jaguar Land Rover’s UK defined benefit pension accounted deficit had decreased to £438 million, as compared to £1,461 million as at March 31, 2017. This decrease was primarily due to Jaguar Land Rover approving and communicating, on April 3, 2017, its defined benefit schemes’ members that the defined benefit schemes’ rules were to be amended with effect from April 6, 2017 so that, among other changes, retirement benefits will be calculated on a career average basis rather than based upon a member’s final salary at retirement. As a result of the remeasurement of the schemes’ liabilities, a past service credit of £437 million has arisen and has been recognized in Fiscal 2018.
Lower return on pension fund assets, changes in market conditions, changes in interest rates, changes in inflation rates and adverse changes in other critical actuarial assumptions, may impact our pension liabilities or assets and consequently increase funding requirements, which will adversely affect our financial condition and results of operations.
We are exposed to operational risks, including cybersecurity risks, in connection with our use of information technology.
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This includes, among other things, losses that are caused by a lack of controls within internal procedures, violation of internal policies by employees, disruption or malfunction of IT systems, computer networks and telecommunications systems, mechanical or equipment failures, human error, natural disasters, security breaches or malicious acts by third parties (including, for example, hackers). We are generally exposed to risks in the field of information technology, since unauthorized access to or misuse of data processed on our IT systems, human errors associated therewith or technological failures of any kind could disrupt our operations, including the manufacturing, design and engineering processes. In particular, as vehicles become more technologically advanced and connected to the internet, our vehicles may become more susceptible to unauthorized access to their systems. Like any other business with complex manufacturing, research, procurement, sales and marketing and financing operations, we are exposed to a variety of operational risks and, if the protection measures put in place prove insufficient, our results of operations and financial condition can be materially adversely affected. In addition, we would likely experience negative press and reputational impacts.position.
Some of our vehicles will make use oflithium-ion battery cells, which have been observed in somenon-automotive applications to catch fire or vent smoke and flames, and such events have raised concerns, and future events may lead to additional concerns, about the safety of the batteries used in automotive applications.
The battery packs that we use, and will use, in our electric vehicles make use oflithium-ion cells. On rare occasions,lithium-ion cells can rapidly release the energy they contain by venting smoke and flames in a manner that can ignite nearby materials as well as otherlithium-ion cells.
While we have designed the battery pack to passively contain any single cell’s release of energy without spreading to neighboring cells, there can be no assurance that a field or testing failure of our vehicles will not occur, which could subject us to lawsuits, product recalls, or redesign efforts, and/or serious reputational harm, all of which would be time consuming and expensive. Negative public perceptions regarding the suitability oflithium-ion cells for automotive applications, or any future incident involvinglithium-ion cells such as a vehicle fire, even if such incident does not involve our vehicles, could seriously harm our business.
In June 2019, we announced that we plan to manufacture a range of new electrified vehicles at our manufacturing plant in Castle Bromwich, United Kingdom, and we expect to open a new battery assembly center in Hams Hall (North Warwickshire, United Kingdom) in 2020, with an installed capacity of 150,000 units. In addition, we store a significant number oflithium-ion lithium ion cells at various warehouses and at some of our manufacturing facilities. Any mishandling of or accidents involving battery cells may cause disruption to the operation of our facilities. While we have implemented safety procedures related to the handling of the cells, there can be no assurance that a safety issue or fire related to the cells would not disrupt our operations. Such damage or injury could lead to adverse publicity manufacturing issues and potentially a safety recall. Moreover, any failure of a competitor’s electric vehicle may cause indirect adverse publicity for us and our electric vehicle products. All of the above issuesproducts, which could harm our business, prospects, financial condition and operating results.
We may be materially and adversely affected by the divulgence of confidential information.
Although we have implemented policies and procedures to protect confidential information, such as key contractual provisions, future projects, financial information and customer records, such information may be divulged, including as a result of internal leaks, hacking, other threats from cyberspace or other factors. If this occurs, we could be subject to claims by affected parties, negative publicity and loss of proprietary information, all of which could have an adverse and material impact on our reputation, business, financial condition, results of operations and cash flows.
Any failures or weaknesses in our internal controls could materially and adversely affect our financial condition and results of operations.
As discussed in Item 15,15. “Controls and Procedures,” upon an evaluation of the effectiveness of the design and operation of our internal controls, we concluded that there was a material weakness such that our internal controls over financial reporting were not effective as atof March 31, 2018.2020. Although we have instituted remedial measures to address the material weakness identified and continually review and evaluate our internal control systems to allow management to report on the sufficiency of our internal controls, we cannot assure you that we will not discover additional weaknesses in our internal controls over financial reporting. Further, the Company’s management continually improves, simplifies and rationalizes the Company’s internal control framework where possible within the constraints of existing IT systems. However, any additional weaknesses or failure to adequately remediate the existing weakness could materially and adversely affect our financial condition or results of operations.operations and/or our ability to accurately report our financial condition and results of operations in a timely and reliable manner.
Our insurance coverage may not be adequate to protect us against all potential losses to which we may be subject, and thiswhich may have a material adverse effect on our business, financial condition and results of operations.
While we believe that the insurance coverage we maintain is reasonably adequate to cover all normal risks associated with the operation of our business, there can be no assurance that our insurance coverage will be sufficient, that any claim under our insurance policies will be honored fully or in a timely manner, or that our insurance premiums will not increase substantially.business. There can be no assurance that any claim under our insurance policies will be honored fully or timely, our insurance coverage will be sufficient in any respect or our insurance premiums will not change substantially. Accordingly, to the extent that we suffer loss or damage that is not covered by insurance or that exceeds our insurance coverage, or are required to pay higher insurance premiums, our business, prospects financial condition and results of operations could be materially and adversely affected.
Our business could be negatively affected by the actions of activist shareholders.
Certain of our shareholders may from time to time advance shareholder proposals or otherwise attempt to effect changes at the Company, influence elections of directors or acquire control over our business. Our success largely depends on the ability of our current management team to operate and manage effectively. Campaigns by shareholders to effect changes at publicly listed companies are sometimes led by investors seeking to increase short-term shareholder value by advocating corporate actions such as financial restructuring, increased borrowing, special dividends, stock repurchases or even sales of assets or the entire company, or by voting against proposals put forward by the board of directors and management of the company. If faced with actions by activist shareholders, we may not be able to respond effectively to such actions, which could be disruptive to our business.
Political and Regulatory Risks
India’s obligations under the World Trade Organization Agreement could materially affect our business.
India’s obligations under its World Trade Organization agreement could reduce the present level of tariffs on imports of components and vehicles. Reductions of import tariffs could result in increased competition, which in turn could materially and adversely affect our sales, business, prospects, financial condition and results of operations.
New or changing laws, regulations and government policies regarding increased fuel economy, reduced greenhouse gas and other emissions, vehicle safety and taxes, tariffs or fiscal policies may have a significant impact on our business.
As an automobile company, we are subject to extensive governmental regulations regarding vehicle emission levels, noise, safety and levels of pollutants generated by our production facilities. We expect the number and extent of legal and regulatory requirements and our related costs of compliance to continue to increase significantly in the future. In Europe and the United States, for example, governmental regulation is primarily driven by concerns about the environment (including greenhouse gas emissions), fuel economy, energy security and vehicle safety. In particular, the United States, Europe and China haveincreasingly stringent regulations relatingregulatory environment in our industry, particularly with respect to vehicle emission regulations, is leading to heightened regulatory scrutiny and more investigations into vehicle manufacturers, including randomized testing. We are subject to randomized testing and similar enquiries by regulatory authorities with a focus on emissions and environmental performance. In China, increasingly stringent tailpipe emissions and other regulations have been introduced by the Chinese government in the short-to-medium term future to reduce greenhouse gas emissions and noxious emissions. The tightening of vehicle emissions regulations will require significant costsimprove air quality standards. Requirements to optimize vehicles in line with these governmental actions could significantly affect our plans for compliance. While we are pursuing various technologies in order to meet the required standards in the various countries in which we sell our vehicles, these regulations are likely to become more stringent and the resulting higher compliance costs may be significant to our operationsglobal product development and may adversely impact our business, financial conditionresult in substantial costs, including significant fines and resultspenalties in cases of operations. Theynon-compliance. These requirements may also limitresult in limiting the typetypes and amounts of vehicles we sell and where we sell them, which couldmay affect our revenues.
Recently, several jurisdictions, such as Norway, Germany, the United Kingdom, France, the Netherlands and China have announced the intention to eliminate the sale of conventionally fueled vehicles in their markets in the coming decades. Diesel technologies have also become the focus of legislators in the United States and European Union as a result of emission levels. This has led to various carmakers to announce programs to retrofit diesel vehicles with software that will allow them to reduce emissions. To maintain our competitiveness and compliance with applicable laws and regulations, we may be required to undertake increased R&D spending as well as other capital expenses.
There is a risk that these R&D activities may not achieve their planned objectives or our competitors will develop better solutions and will be able to manufacture the resulting products more rapidly. This could result in loss of market share for us.
There is also a risk that investments in research and development of new technologies, including autonomous, connected and electrification technologies, and solutions to address future travel and transport challenges, may fail to generate sufficient returns because the technology developed or the product derived therefrom are unsuccessful in the marked and/or because our competitors have developed better and/or less expensive products.
Additionally, in order to comply with current and future safety and environmental norms, we may have to incur additional capital expenditureexpenditures and R&D expenditureresearch and development expenditures to (i) operateupgrade products and maintain our productionmanufacturing facilities, (ii) install new emissionsemission controls or reduction technologies (iii)and purchase or otherwise obtain allowances to emit greenhouse gases, (iv) administer and managewhich would have an impact on our greenhouse gas emissions program, and (v) invest in research and development to upgrade products and manufacturing facilities.cost of production. If we are unable to develop commercially viable technologies or otherwise unable to attain compliance within the time frames set by the new standards, we could face significant civil penalties or be forced to restrict product offerings significantly.drastically to remain in compliance. For example, in the United States, manufacturers are subject to substantial civil penalties if they fail to meet federal Corporate Average Fuel Economy, or CAFE standards. Please see Item 4.B “Information on the Company—Business Overview—Government Regulations — Governmental Regulations—Environmental, fiscal and other governmental regulations around the world—Greenhouse gas/CO2/fuel economy legislation” for additional detail on these standards. These penalties are calculated at US$5.50 for each tenth of a mile below the required fuel efficiencyfuel-efficiency level for each vehicle sold in a model year in the U.S. market. As with many European manufacturers, sinceSince 2010, Jaguar Land Rover has paid total penalties of US$46 million for its failure to meet CAFE standards. Jaguar Land RoverSince 2011, we have purchased approximately US$71 million in credits from third party original equipment manufacturers (“OEMs”) to offset our NHTSA, EPA and California Air Resources Board (“CARB”) penalties. Additionally, we expect to buy approximately US$12 million in credits in Fiscal 2020 from third party OEMs to offset our expected NHTSA and EPA penalties for model year 2019 vehicles. We could incur a substantial increase in these penalties, including as a result of announced increases in CAFE civil penalties to adjust for inflation. Moreover, environmental and safety standards may at times impose conflicting imperatives, which pose engineering challenges and would, among other things, increase our costs. While we are pursuing the development and implementation of various technologies in order to meet the required standards in the various countries in which we sell our vehicles, the costs for compliance with these required standards could be significant to our operations and may materially and adversely affect our business, prospects, financial condition and results of operations.
Moreover, safety and environmental standards may at times impose conflicting imperatives, which pose engineering challenges and would, among other things, increase our costs.
While we are pursuing the development and implementation of various technologies in order to meet the required standards in the various countries in which we sell our vehicles, the costs for compliance with these required standards could be significant to our operations and may materially and adversely affect our business, prospects, financial condition and results of operations. The Motor VehiclesVehicle (Amendment) Bill, 2017 was passed in the Lok SabhaAct 2019 has been published on April 10, 2017, and is currently being debated in the Rajya Sabha.August 9, 2019. This BillAct addresses vehicle recalls, road safety, traffic management and accident insurance, among other matters. In its current draft, the BillThe Act imposes civil and criminal liability on manufacturers selling vehicles in contravention of the standards specified in the Bill,Act, or required by the government to recall their vehicles. The BillAct also proposes the creation of the National Road Safety Board to provide advice to the central and state governments on all aspects of road safety and traffic management.
Commencing July 1, 2017, the Indian tax regime underwent a systemic change. The Government of India, in conjunction with the state governments, implemented a comprehensive national goods and services tax or GST,(“GST”) regime to subsume a large number of Centralcentral government and Statestate government taxes into one unified tax structure. It is a dual GST with Centralcentral government and Statestate government simultaneously levying it on the common base. The tax is called Central GST, (CGST), if levied by Centralthe central government; State/Union Territorystate union territory GST, (SGST/UTGST), in instances where the state or union territory levy the tax; and Integratedintegrated GST, (IGST), in instances where the GST is levied on the inter-state supply of goods and services. While both the central and state governments have publicly announced that all committed incentives will be protected following the implementation of the GST, given the limited availability of information or alignment of industrial policy of various Statestate government to cover GST or to protect the quantum of incentive available to industries inpre-GST regime, we are unable to provide any assurance as to this or any other aspect of the tax regime, or guarantee that the implementation of GST will not materially or adversely affect our business, orprospects, financial condition.condition and results of operation.
Imposition of any additional taxes and levies designed to limit the use of automobiles and changes in corporate and other taxation policies, as well as changes in export and other incentives given by various governments or import or tariff policies, could adversely affect the demand for our vehicles and our results of operations. For instance, the United Kingdom’s exit from the European Union would result in material changes to the UK’sUnited Kingdom’s tax, tariff and fiscal policies. In addition, the current U.S. presidential administration could seek to introducehas called for changes to laws and policies governing international trade to further restrict free trade, including imposing tariffs on certain goods imported into the United States. For example, the announcement of unilateral tariffs on imported products by the United States has triggered retaliatory actions from certain foreign governments and imposemay trigger retaliatory actions by other foreign governments, potentially resulting in a “trade war”. A “trade war” of this nature or other governmental action related to tariffs or international trade agreements, the impact of which cannot yet be fully assessed, could negatively affect the economics of the end-markets in which we operate (such as the United States and China), including regional or global demand for automobiles and automobile-components as well as our customers’ ability to purchase our cars.
Recently, the United Kingdom announced that, from April 2020, a 2% digital services tax could be imposed on the UK revenue of digital services businesses (such as social media networks, search engines and online marketplaces) that are considered to derive significant value from the participation of their UK users. As a response to this proposal, the United States Treasury indicated that such digital services tax could have a discriminatory effect on U.S. multinational digital companies and warned that the United States could take retaliatory actions, such as in the form of a tax on UK car exports to the United States, should the new digital services tax be imposed. In addition, in a report submitted to the President of the United States on February 17, 2019, the U.S. Department of Commerce recommended a potential 25% tariff on automobiles and auto-parts imported into the United States. Following the expiration of the subsequent 90-day decision period, the President of the United States announced that the imposition of such additional tariffs would be delayed by another six months. Considering the fact that the additional extension has expired without the U.S. government taking any decision regarding additional tariffs and dutieswithout a new extension to the decision period being announced, it remains uncertain whether the U.S. government will indeed impose a 25% tariff on foreign vehicle imports,automobiles and auto-parts in the future, but should such tariffs or similar trade barriers be imposed by the U.S. government, this would increase the cost of our vehicles in the United States (as we have no manufacturing operations in the United States), which couldis likely to have a material adverse effect on our sales in the United States.States and our results of operation. Moreover, any countermeasures to such additional tariffs by regional or global trading partners, including the European Union and China, could slow down global economic growth and decrease global demand for automobiles and automobile components. Additional developments may also occur that we cannot currently know about or anticipate, or that may be impossible to plan for or protect against. Furthermore, in recent years, Brazil has increased import duty on foreign vehicles, which has put pressure on sales margins in Brazil and has prompted us to enter into discussionsalong with the Brazilian government to exempt arelated exemptions provided certain number of imported vehicles from the increased tariff. Finally, the European Commission is currently investigating whether certain tax and other incentives granted by the government of Slovakia in connection with the construction of our Slovakian manufacturing facility complied with European Union rules on state aid. Such government actions may be unpredictable and beyond our control, and any adverse changes in government policy could have a material adverse effect on our business prospects, results of operations and financial condition.criteria are met.
Evaluating and estimating our provision and accruals for our taxes requires significant judgment. As we conduct our business, the final tax determination may be uncertain. We operate in multiple geographical markets and our operations in each market are susceptible to additional tax assessments and audits. Our collaborations with business partners are similarly susceptible to such tax assessments.
Authorities may engage in additional reviews, inquiries and audits that disrupt our operations or challenge our conclusions regarding tax matters. Any resulting tax assessment may be accompanied by a penalty or additional fee for failing to make the initial payment. Our tax rates may be affected by earnings estimation errors, losses in jurisdictions that do not grant a related tax benefit, changes in currency rates, acquisitions, investments, or changes in laws, regulations or practices. Additionally, government fiscal pressures may increase the likelihood of adverse or aggressive interpretations of tax laws or regulations or the imposition of arbitrary or onerous taxes, interest charges and penalties. Tax assessments may be leviedinitiated even where we consider our practices to be in compliance with tax laws and regulations. Should we challenge such taxes or believe them to be without merit, we may nonetheless be required to pay them. These amounts may be materially different from our expected tax assessments and could additionally result in expropriation of assets, attachment of additional securities, liens, imposition of royalties or new taxes and requirements for local ownership or beneficiation.
Regulations in the areas of investments, taxes and levies may also have an impact on Indian securities, including ourthe Company’s Shares and ADSs. For more information, see Item 4.B “—“Information on the Company—Business Overview—GovernmentGovernmental Regulations” of this annual report on Form20-F.
In 2014, the antitrust regulator in China, the Bureau of Price Supervision and Anti-Monopoly of the National Development and Reform Commission (the ‘‘NDRC’’), launched an investigation into the pricing practices of more than 1,000 Chinese and international companies in the automotive industry, including Jaguar Land Rover and many of our competitors. The NDRC has reportedly imposed fines on certain of our international competitors as a result of anti-competitive practices pertaining to vehicle and spare-part pricing. In response to this investigation, we established a process to review our pricing in China and announced reductions in the manufacturer’s suggested retail price for the5.0-liter V8 models, which include the Range Rover, Range Rover Sport andF-Type and the price of certain of our spare parts. Further imposition of price reductions and other actions taken in relation to our products may significantly reduce our revenues and profits generated by operations in China and have a material adverse effect on our financial condition and results of operations. As a result, our attempts to offset the potential decline in revenue and profits by increasing operational efficiencies and leveraging economies of scale (for example, through local production in China) may fail or not be as successful as expected. Furthermore, any regulatory action taken or penalties imposed by regulatory authorities may have significant adverse financial and reputational consequences on our business and have a material adverse effect on our results of operations and financial condition.
On March 29, 2017, the Supreme Court of India prohibited the sale and registration of Bharat Stage III vehicles from April 1, 2017. Bharat Stage emission standards are emission standards instituted by the Government of India to regulate the output of air pollutants from internal combustion engines and Spark-ignition engines equipment, including motor vehicles. These regulations are similar to European emission standards, and seeks to curb emission levels from motor vehicles. Bharat Stage III similar to European standards (Euro III) which was in place between 2000 and 2005 in most western nations. The Supreme Court’s judgment overturned a government regulation, and was unexpected. The Petroleum Ministry of India in consultation with Public Oil Marketing Companies brought forward the date of BharatStage-VIBSVI grade auto fuels in NCTNational Capital Territory of Delhi with effect from April 1, 2018 instead of April 1, 2020. The Governmentshortage of BSVI fuel across India has announced its intentionin the future could impact our business, prospects, results of operations and financial condition. We could be impacted by the change of emission standards in India from BSIV to leapfrog to BharatStage-VI fromBSVI, effective April 1, 2020. 2020, as BSIV vehicles will not be allowed to be registered after that date. The change in emission standards may also increase the cost of BSVI vehicles and impact our profitability.
Any future potential or real unexpected change in law could have could have a material adverse effect on our business prospects, results of operations and financial condition.
We may be affected by competition law in India and any adverse application or interpretation of the Competition Act could adversely affect our business.
The Indian Competition Act, 2002 (the Competition Act)“Competition Act”) oversees practices having an appreciable adverse effect on competition or AAEC,(“AAEC”) in a given relevant market in India. Under the Competition Act, any formal or informal arrangement, understanding or action in concert, which causes or is likely to cause an AAEC, is considered void and results in imposition of substantial penalties. Consequently, all agreements entered into by us could be within the purview of the Competition Act. Furthermore, any agreement among competitors which directly or indirectly involves determination of purchase or sale prices, limits or controls production, sharing the market by way of geographical area or number of subscribers in the relevant market or which directly or indirectly results inbid-rigging or collusive bidding is presumed to have an AAEC in the relevant market in India and is considered void. The Competition Act also prohibits abuse of a dominant position by any enterprise. We cannot predict with certainty the impact of the provisions of the Competition Act on our agreements at this stage.
On March 4, 2011, the Government of India issued and brought into force the combination regulation (merger control) provisions under the Competition Act with effect from June 1, 2011. These provisions require acquisitions of shares, voting rights, assets or control or mergers or amalgamations that cross the prescribed asset- and turnover-based thresholds to be mandatorily notified to andpre-approved by the Competition Commission of India or CCI.(the “CCI”). Additionally, on May 11, 2011, the CCI issued the Competition Commission of India (Procedure for Transaction of Business Relating to Combinations) Regulations, 2011 (as amended), which sets out the mechanism for the implementation of the merger control regime in India.
Furthermore, the CCI has extraterritorial powers and can investigate any agreements, abusive conduct or combination occurring outside India if such agreement, conduct or combination has an AAEC in India. The CCI has initiated an inquiry against us and other car manufacturers collectively referred to hereinafter as the OEMs, pursuant to an allegation that genuine spare parts of automobiles manufactured by the OEMs were not made freely available in the open market in India and, accordingly, anti-competitive practices were carried out by the OEMs.
If we are adversely affected, directly or indirectly, by the application or interpretation of any provision of the Competition Act, or any enforcement proceedings initiated by the CCI, or any adverse publicity that may be generated due to scrutiny or prosecution by the CCI or if any prohibition or substantial penalties are levied under the Competition Act, it could adversely affect our business, prospects, financial condition and results of operations.
Compliance with new or changing corporate governance and public disclosure requirements adds uncertainty to our compliance policies and increases our costs of compliance.
We are subject to a complex and continuously changing regime of laws, rules, regulations and standards relating to accounting, corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and U.S. Securities and Exchange Commission or SEC,(the “SEC”) regulations, Securities and Exchange Board of India or SEBI,(the “SEBI”) regulations, New York Stock Exchange or NYSE,(the “NYSE”) listing rules, and the Companies Act, as well as Indian stock market listing regulations. New or changed laws, rules, regulations and standards may lack specificity and are subject to varying interpretations. Under applicable Indian laws, for example, remuneration packages may, in certain circumstances, require shareholders’ approval. New guidance and revisions may be provided by regulatory and governing bodies, which could result in continuing uncertainty and higher costs of compliance. We are committed to maintaining high standards of corporate governance and public disclosure. However, our efforts to comply with evolving regulations have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management resources and time. In addition, there can be no guarantee that we will always succeed in complying with all applicable laws, regulations and standards.
The Companies Act has effected significant changes to the existing Indian company law framework, such as in the provisions related to the issue of capital, disclosures in offering documents, corporate governance, norms, accounting policies and audit matters, related party transactions, class action suits against companies by shareholders or depositors, prohibitions on loans to directors and insider trading, including restrictions on derivative transactions concerning a company’s securities by directors and key managerial personnel. The Companies Act may subject us to higher compliance requirements, increase our compliance costs and divert management’s attention. We are also required to spend, in each financial year, at least 2% of our average net profits during the three immediately preceding financial years, calculated for Tata Motors Limited on a standalone basis under Ind AS, toward corporate social responsibility activities. Furthermore, the Companies Act imposes greater monetary and other liability on usthe Company and our directorsits Directors for anynon-compliance. Due to limited relevant jurisprudence, in the event that our interpretation of the Companies Act differs from, or contradicts with, any judicial pronouncements or clarifications issued by the Government of India in the future, we may face regulatory actions or be required to undertake remedial steps. In addition, some of the provisions of the Companies Act overlap with other existing laws and regulations (such as corporate governance provisions and insider trading regulations issued by SEBI). SEBI promulgated the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 or the Listing Regulations,(the “Listing Regulations”) which are applicable to all Indian companies with listed securities or companies intending to list its securities on an Indian stock exchange, and the Listing Regulations became effective on December 1, 2015. Pursuant to the Listing Regulations, we arethe Company is required to establish and maintain a vigilance mechanism for directorsDirectors and employees to report their concerns about unethical behavior, actual or suspected fraud or violation of ourthe Company’s code of conduct (the “Tata Code of ConductConduct”) or ethics policy under our whistleblower policy (the “Whistleblower Policy”), to implement increased disclosure requirements for price sensitive information, to conduct elaborate directorsdetailed director familiarization programs and comprehensive disclosures thereof, in accordance with the Listing Regulations. WeThe Company may face difficulties in complying with any such overlapping requirements. Furthermore, wethe Company cannot currently determine the impact of certain provisions of the Companies Act and the revised SEBI corporate governance norms.standards. Any increase in ourthe Company’s compliance requirements or in ourthe Company’s compliance costs may have a material and adverse effect on ourthe Company’s business, prospects, financial condition and results of operations.
We are subject to risks associated with legal proceedings and governmental investigations, including potential adverse publicity as a result thereof.
We are and may be involved from time to time in civil, labor, administrative or tax proceedings arising in the ordinary course of business. It is not possible to predict the potential for, or the ultimate outcomes of, such proceedings, some of which may be unfavorable to us. In such cases, we may incur costs and any mitigating measures (including provisions taken on our balance sheet) adopted to protect against the impact of such costs may not be adequate or sufficient. In addition, adverse publicity surrounding legal proceedings, government investigations or allegations may also harm our reputation and brands.
In 2014, the antitrust regulator in China, the Bureau of Price Supervision and Anti-Monopoly of the National Development and Reform Commission (the “NDRC”), launched an investigation into the pricing practices of more than 1,000 Chinese and international companies in the automotive industry, including Jaguar Land Rover and many of our competitors. The NDRC has reportedly imposed fines on certain of our international competitors as a result of anti-competitive practices pertaining to vehicle and spare-part pricing. In response to this investigation, we established a process to review our pricing in China and announced reductions in the manufacturer’s suggested retail price for the 5.0-litre V8 models, which include the Range Rover, Range Rover Sport and F-TYPE and the price of certain of our spare parts. Imposition of price reductions and other actions taken in the future in relation to our products may significantly reduce our revenue and profits generated by operations in China and have a material adverse effect on our business, prospects, financial condition and results of operation. As a result, our attempts to offset the potential decline in revenue and profits by increasing operational efficiencies and leveraging economies of scale (for example, through local production in China) may fail or not be as successful as expected. Furthermore, any regulatory action taken or penalties imposed by regulatory authorities may have significant adverse financial and reputational consequences on our business and have a material adverse effect on our results of operations and financial condition.
In any of the geographical markets in which we operate, we could be subject to additional tax liabilities.
Evaluating and estimating our provision and accruals for our taxes requires significant judgement. As we conduct our business, the final tax determination may be uncertain. We operate in multiple geographical markets and our operations in each market are susceptible to additional tax assessments and audits. Our collaborations with business partners are similarly susceptible to such tax assessments. Authorities may engage in additional reviews, inquiries and audits that disrupt our operations or challenge our conclusions regarding tax matters. Any resulting tax assessment may be accompanied by a penalty (including revocation of a benefit or exemption from tax) or additional fee for failing to make the initial payment.
Our tax rates may be affected by earnings estimation errors, losses in jurisdictions that do not grant a related tax benefit, changes in currency rates, acquisitions, investments, or changes in laws, regulations, or practices. Additionally, government fiscal or political pressures may increase the likelihood of adverse or aggressive interpretations of tax laws or regulations or the imposition of arbitrary or onerous taxes, interest charges and penalties. Tax assessments may be levied even where we consider our practices to be in compliance with tax laws and regulations. Should we challenge such taxes or believe them to be without merit, we may nonetheless be required to pay them. These amounts may be materially different from our expected tax assessments and could additionally result in expropriation of assets, attachment of additional securities, liens, imposition of royalties or new taxes and requirements for local ownership or beneficiation.
We may have to comply with more stringent foreign investment regulations in India in the event of an increase in shareholding ofnon-residents or if we are considered as engaged in a sector in which foreign investment is restricted.
Indian companies, which are owned or controlled bynon-resident persons, are subject to investment restrictions specified in the Consolidated Foreign Direct Investment Policy (“Consolidated FDI (Foreign Direct Investment) Policy.Policy”). Under the Consolidated FDI Policy issued in 2017, an Indian company is considered to be “owned” bynon-resident persons if more than 50% of its equity interest is beneficially owned bynon-resident persons. Thenon-resident equity shareholding in our companythe Company may, in the near future, exceed 50%, thereby resulting in our companythe Company being considered as being “owned” bynon-resident entities under the Consolidated FDI Policy. In such an event, any investment by usthe Company in existing subsidiaries, associates or joint ventures and new subsidiaries, associates or joint ventures will be considered as indirect foreign investment and shall be subject to various requirements specified under the Consolidated FDI Policy, including sectoral limits, approval requirements and pricing guidelines, as may be applicable.
Furthermore, as part of our automotive business, we supply, and have in the past supplied, vehicles to Indian military and paramilitary forces and in the course of such activities have obtained an industrial license from the Department of Industrial Policy. The Consolidated FDI policy applies different foreign investment restrictions to companies based upon the sector in which they operate. While we believe we are an automobile company by virtue of the significance of our automobile operations, in the event that foreign investment regulations applicable to the defense sector (including under the Consolidated FDI Policy) are made applicable to us, we may face more stringent foreign investment restrictions and other compliance requirements compared to those applicable to us presently, which, in turn, could materially affect our business, prospects, financial condition and results of operations.
We require certain approvals or licenses in the ordinary course of business, and the failure to obtain or retain them in a timely manner, or at all, could materially and adversely affect our operations.
We require certain statutory and regulatory permits, licenses and approvals to carry out our business operations and applications for their renewal need to be made within certain time frames. For some of the approvals whichthat may have expired, we have either made, or are in the process of making, an application for obtaining the approval or its renewal. While we have applied for renewal for such approvals, registrations and permits, we cannot assure you that we will receive them in a timely manner, or at all. We can make no assurances that the approvals, licenses, registrations and permits issued to us would not be suspended or revoked in the event ofnon-compliance or allegednon-compliance with any terms or conditions thereof, or pursuant to any regulatory action. Furthermore, if we are unable to renew or obtain necessary permits, licenses and approvals on acceptable terms in a timely manner, or at all, our business, prospects, financial condition and results of operations could be materially and adversely affected.
Risks associatedAssociated with Investments in an Indian Company
Political changes in the Government of India could delay and/or affect the further liberalization of the Indian economy and materially and adversely affect economic conditions in India, generally, and our business, in particular.
Our business could be significantly influenced by economic policies adopted by the Government of India. Since 1991, successive governments have pursued policies of economic liberalization and financial sector reforms.
The Government of India has at various times announced its general intention to continue India’s current economic and financial liberalization and deregulation policies. However, protests against such policies, which have occurred in the past, could slow the pace of liberalization and deregulation. The rate of economic liberalization could change, and specific laws and policies affecting foreign investment, currency exchange rates and other matters affecting investment in India could change as well. While we expect any new government to continue the liberalization of India’s economic and financial sectors and deregulation policies, there can be no assurance that such policies will be continued.
The Government of India has traditionally exercised and continues to exercise influence over many aspects of the economy. Our business and the market price and liquidity of ourthe Company’s Shares and ADSs and Shares may be affected by interest rates, changes in policy, taxation, social and civil unrest and other political, economic or other developments in or affecting India.
A change in the Government of India’s economic liberalization and deregulation policies could disrupt business and economic conditions in India generally, and specifically our business and operations, as a substantial portion of our assets are located in India. This could have a material adverse effect on our business, prospects, financial condition and results of operations.operation.
Any downgrading of India’s debt rating by a domestic or international rating agency could negatively impact our business.
Any adverse revisions to India’s credit ratings for domestic and international debt by domestic or international rating agencies could adversely impact our ability to raise additional financing, as well as the interest rates and other commercial terms at which such additional financing is available. This could have a material adverse effect on our financial results, business prospects, ability to obtain financing for capital expenditures and the price of ourthe Company’s Shares and ADSs.
We may be materially and adversely affected by Reserve Bank of India policies and actions.
The Indian stock exchanges are vulnerable to fluctuations based on changes in monetary policy formulated by the Reserve Bank of India, or RBI. We can make no assurances about future market reactions to RBI announcements and their impact on the price of ourthe Company’s Shares and ADSs. Furthermore, our business could be significantly impacted were the RBI to make major alterations to monetary or fiscal policy. Certain changes, including the raising of interest rates, could negatively affect our sales and consequently our revenue,Revenue, any of which could have a material adverse effect on our business, prospects, financial condition and results of operations.operation. While the RBI has initiated several relief measures, such as providing moratorium on loans, relaxing provisioning norms towards certain loans and taking other measures to enhance liquidity for NBFCs, there is a considerable uncertainty evolving around COVID-19 pandemic and further relief measures and policy actions may be needed to assist economic recovery. The impact of COVID-19 pandemic on our business and financial performance remains highly uncertain and dependent on spread of COVID-19 pandemic and further steps taken by the Government of India and the RBI to mitigate the economic impact.
Rights of shareholders under Indian law may be more limited than under the laws of other jurisdictions.
Our ArticlesThe memorandum and articles of Associationassociation of the Company (the “Articles of Association”) and Indian law govern ourthe Company’s corporate affairs. Legal principles relating to these matters and the validity of corporate procedures, directors’ fiduciary duties and liabilities, and shareholders’ rights may differ from those that would apply to a company incorporated in another jurisdiction. Shareholders’ rights under Indian law may not be as extensive as shareholders’ rights under the laws of other countries or jurisdictions, including the United States. You may also have more difficulty in asserting your rights as a shareholder of our companythe Company than you would as a shareholder of a corporation organized in another jurisdiction.
The market value of your investment may fluctuate due to the volatility of the Indian securities market.
Stock exchanges in India, including BSE Limited or the BSE,(the “BSE”) have, in the past, experienced substantial fluctuations in the prices of their listed securities. Such fluctuations, if they continue or recur, could affect the market price and liquidity of the securities of Indian companies, including ourthe Company’s Shares and ADSs. These problems have included temporary exchange closures, broker defaults, settlement delays and strikes by brokers. Volatility in other stock exchanges, including, but not limited to, those in the United Kingdom and China, may affect the prices of securities in India, including ourthe Company’s Shares, which may in turn affect the price of ourthe Company’s ADSs. In addition, the governing bodies of the stock exchanges in India have from time to time imposed restrictions on trading in certain securities, limitations on price movements and margin requirements. Furthermore, from time to time, disputes have occurred between listed companies and stock exchanges and other regulatory bodies, which in some cases may have had a negative effect on market sentiment.
There may be a differing level of regulation and monitoring of the Indian securities markets and the activities of investors, brokers and other participants, than in the United States. SEBI received statutory powers in 1992 to assist it in carrying out its responsibility for improving disclosure and other regulatory standards for the Indian securities markets. Subsequently, SEBI has prescribed regulations and guidelines in relation to disclosure requirements, insider dealing and other matters relevant to the Indian securities market. There may, however, be less publicly available information about Indian companies than is regularly made available by public companies in the United States.
Investors may have difficulty enforcing judgments against us or our management.
We areThe Company is a public limited company incorporated in India. The majority of our directorsthe Company’s Directors and executive officers are residents of India and substantially all of the assets of those persons and a substantial portion of ourthe Company’s assets are located in India. As a result, it may not be possible for you to effect service of process within the United States upon those persons or us.the Company. In addition, you may be unable to enforce judgments obtained in courts of the United States against those persons outside the jurisdiction of their residence, including judgments predicated solely upon U.S. federal securities laws. Moreover, it is unlikely that a court in India would award damages on the same basis as a foreign court if an action were brought in India or that an Indian court would enforce foreign judgments if it viewed the amount of damages as excessive or inconsistent with public policy.
Section 44A of the Indian Code of Civil Procedure, 1908, as amended or the Civil Code,(the “Civil Code”) provides that where a foreign judgment has been rendered by a superior court (within the meaning of the section) in any country or territory outside of India which the Government of India has by notification declared to be a reciprocating territory, such foreign judgment may be enforced in India by proceedings in execution as if the judgment had been rendered by an appropriate court in India. However, the enforceability of such judgments is subject to the exceptions set forth in Section 13 of the Civil Code.
Section 44A of the Civil Code is applicable only to monetary decrees not being in the nature of amounts payable in respect of taxes or other charges of a similar nature or in respect of fines or other penalties and does not include arbitration awards.
If a judgment of a foreign court is not enforceable under Section 44A of the Civil Code as described above, it may be enforced in India only by a suit filed upon the judgment, subject to Section 13 of the Civil Code and not by proceedings in execution. Accordingly, as the United States has not been declared by the Government of India to be a reciprocating territory for the purposes of Section 44A, a judgment rendered by a court in the United States may not be enforced in India except by way of a suit filed upon the judgment.
The suit must be brought in India within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability in India. Generally, there are considerable delays in the resolution of suits by Indian courts.
A party seeking to enforce a foreign judgment in India is required to obtain prior approval from the RBI, under the Foreign Exchange Management Act, 1999 or FEMA(“FEMA”) to repatriate any amount recovered pursuant to such enforcement. Any judgment in a foreign currency would be converted into Indian rupees on the date of judgment and not on the date of payment.
Risks associatedAssociated with ourthe Company’s Shares and ADSs
Fluctuations in the exchange rate between the Indian rupee and the U.S. dollar may have a material adverse effect on the market value of ourthe Company’s ADSs and Shares, independent of our operating results.
The exchange rate between the Indian rupee and the U.S. dollar has changed materially in the last two decades and may materially fluctuate in the future. Fluctuations in the exchange rate between the Indian rupee and the U.S. dollar will affect, among others things, the U.S. dollar equivalents of the price of ourthe Company’s Shares in Indian rupees as quoted on stock exchanges in India and, as a result, may affect the market price of the ADSs. Such fluctuations will also affect the U.S. dollar equivalent of any cash dividends in Indian rupees received on the Shares represented by the ADSs and the U.S. dollar equivalent of the proceeds in Indian rupee of a sale of Shares in India.
Holders of ADSs have fewer rights than shareholders and must act through the depositarydepository to exercise those rights.
Although ADS holders have a right to receive any dividends declared in respect of the Shares underlying the ADSs, they cannot exercise voting or other direct rights as a shareholder with respect to the Shares underlying the ADSs. Citibank, N.A. as depositary, or the depositary,depository (the “depository”) is the registered shareholder of the deposited Shares underlying ourthe Company’s ADSs, and only the depositarydepository may exercise the rights of shareholders in connection with the deposited Shares. The depositarydepository will notify ADS holders of upcoming votes and arrange to deliver our voting materials to ADS holders only if requested by us.the Company. The depositarydepository will try, insofar as practicable, subject to Indian laws and the provisions of ourthe Articles of Association, to vote or have its agents vote the deposited securities as instructed by the ADS holders. If the depositarydepository receives voting instructions in time from an ADS holder which fails to specify the manner in which the depositarydepository is to vote the Shares underlying such ADS holder’s ADSs, such ADS holder will be deemed to have instructed the depositarydepository to vote in favor of the items set forth in such voting instructions. If the depositarydepository has not received timely instructions from an ADS holder, such ADS holder shall be deemed to have instructed the depositarydepository to give a discretionary proxy to a person designated by us, subject to the conditions set forth in the deposit agreement. If requested by us, the depositaryCompany, the depository is required to represent all Shares underlying ADSs, regardless of whether timely instructions have been received from such ADS holders, for the sole purpose of establishing a quorum at a meeting of shareholders.
In addition, in your capacity as an ADS holder, you will not be able to examine ourthe Company’s accounting books and records, or exercise appraisal rights. Registered holders of ourthe Company’s Shares withdrawn from the depositarydepository arrangements will be entitled to vote and exercise other direct shareholder rights in accordance with Indian law. However, a holder may not know about a meeting sufficiently in advance to withdraw the underlying Shares in time. Furthermore, an ADS holder may not receive voting materials, if we dothe Company does not instruct the depositarydepository to distribute such materials, or may not receive such voting materials in time to instruct the depositarydepository to vote.
ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when it deems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deems it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement (as defined below), or for any other reason.
For further details on the terms and conditions of ourthe Company’s ADSs and the rights and obligations of ourthe Company’s ADS holders, please see the amended and restated deposit agreement, dated as atof September 27, 2004 among us,the Company, Citibank, N.A., as depositary,depository, and all holders and beneficial owners of ADSs issued thereunder, as amended and supplemented by Amendment No. 1, dated as atof December 16, 2009, hereinafter referred to as the deposit“deposit agreement,” which is incorporated by reference into this annual report on Form20-F.
Moreover, pursuant to Indian regulations, we arethe Company is required to offer ourits shareholders preemptive rights to subscribe for a proportionate number of Shares to maintain their existing ownership percentages prior to the issue of new Shares. These rights may be waived by a resolution passed by at least 75% of ourthe shareholders of the Company present and voting at a general meeting. ADS holders may be unable to exercise preemptive rights for subscribing to these new Shares unless a registration statement under the Securities Act is effective or an exemption from the registration requirements is available to us. OurThe Company’s decision to file a registration statement would be based on the costs, timing, potential liabilities and the perceived benefits associated with any such registration statement and we dothe Company does not commit that weit would file such a registration statement. If any issue of securities is made to ourthe shareholders of the Company in the future, such securities may also be issued to the depositary,depository, which may sell such securities in the Indian securities market for the benefit of the holders of ADSs. There can be no assurance as to the value, if any, the depositarydepository would receive upon the sale of such rights or securities. To the extent that ADS holders are unable to exercise preemptive rights, their proportionate ownership interest in our company would be reduced.
The Government of India’s regulation of foreign ownership could materially reduce the price of the ADSs.
Foreign ownership of Indian securities is regulated and is partially restricted. In addition, there are restrictions on the deposit of Shares into ourthe Company’s ADS facilities. ADSs issued by companies in certain emerging markets, including India, may trade at a discount to the market price of the underlying Shares, in part because of the restrictions on foreign ownership of the underlying Shares and in part because ADSs are sometimes perceived to offer less liquidity than underlying Shares that can be traded freely in local markets by both local and international investors. See Item 10.D “—“Additional Information—Exchange Controls”.Controls.”
There are restrictions on daily movements in the price of the Shares, which may constrain a shareholder’s ability to sell, or the price at which a shareholder can sell, Shares at a particular point in time.
The Shares are subject to a daily circuit breaker imposed by stock exchanges in India on publicly listed companies, including us,that includes the Company, which does not allow transactions causing volatility in the price of the Shares above a certain threshold. This circuit breaker operates independently from the index-based market-wide circuit breakers generally imposed by SEBI on Indian stock exchanges. The percentage limit on ourthe Company’s circuit breaker is set by the stock exchanges in India based on the historical volatility in the price and trading volume of ourthe Company’s Shares. The stock exchanges in India are not required to inform usthe Company of the percentage limit of the circuit breaker from time to time, and may change it without ourthe Company’s knowledge. This circuit breaker effectively acts to limit the upward and downward movements in the price of ourthe Company’s Shares. As a result of this circuit breaker, wethe Company cannot make any assurance regarding the ability of ourthe shareholders of the Company to sell their Shares or the price at which such shareholders may be able to sell their Shares.
You may be subject to Indian taxes arising out of capital gains on the sale of the Shares. Capital gains arising from the sale of Shares are generally taxable in India.
With effect from April 1, 2018, any gain realized on the sale of the Shares will be subject to capital gains tax in India. See Item 10.E “Additional Information—Taxation—Taxation of Capital Gains and Losses—Indian Taxation—Capital Gains” of this annual report on Form20-F for further information on the application of capital gains tax in India to ourthe shareholders of the Company and ADS holders.holders of the Company.
Item 4. | Information on the Company |
A. History and Development of the Company
We wereThe Company was incorporated on September 1, 1945 as a public limited company under the Indian Companies Act VII of 1913 as Tata Locomotive and Engineering Company Limited, and weit received a certificate of commencement of business on November 20, 1945. OurThe Company’s name was changed to Tata Engineering and Locomotive Company Limited on September 24, 1960, and to Tata Motors Limited on July 29, 2003. Tata Motors Limited is incorporated and domiciled in India. We commenced operations as a steam locomotive manufacturer. Thismanufacturer, but this business was discontinued in 1971. Since 1954, we have been manufacturing automotive vehicles. The automotive vehicle business commenced with the manufacture of commercial vehiclesCommercial Vehicles under financial and technical collaboration withDaimler-Benz AG (now Daimler AG) of Germany. This agreement ended in 1969. We produced only commercial vehiclesCommercial Vehicles until 1991, whenthereafter we started producing passenger vehiclesPassenger Vehicles as well. Together with ourits consolidated subsidiaries, we formthe Company forms the Tata Motors Group.
In March 2004, we acquired Daewoo Commercial Vehicle Co. Ltd., (now known as Tata Daewoo Commercial Vehicle Co. Ltd. (“TDCV”)) at Gunsan in South Korea. TDCV is engaged in the business of manufacturing heavy vehicles such as cargo, trucks, dump trucks, tractor trailers and special purpose vehicle mixers.
In September 2004, wethe Company became the first company from India’s automotive sector to be listed on the New York Stock Exchange. OurNYSE. The Company’s ADSs are traded on the NYSE under the symbol “TTM”. OurThe Company’s Ordinary Shares and ‘A’ Ordinary Shares are traded on the BSE under the codes 500570 and 570001, respectively, and the National Stock Exchange of India Ltd., or NSE, (the “NSE”) under the symbols “TATAMOTORS” and “TATAMTRDVR”, respectively.
In June 2008, we acquired the Jaguar Land Rover business from Ford Motor Company.Ford. Jaguar Land Rover is a global automotive business, which designs, manufactures and sells Jaguar luxury sedans, sports cars and luxury performance SUVs and Land Rover premiumall-terrain vehicles, as well as related parts, accessories and merchandise. The Jaguar Land Rover business has internationally recognized brands, a product portfolio of award-winning luxury performance cars, luxury performance SUVs and premiumall-terrain vehicles, brand-specific global distribution networks and research and development capabilities. As a part of our acquisition of the Jaguar Land Rover business, we acquired three major manufacturing facilities located in Halewood, Solihull and Castle Bromwich and two advanced design and engineering facilities located at Whitley and Gaydon, all in the United Kingdom, together with national sales companies in several countries.
We are one of the leading global automobile manufacturers in the world, providing integrated and smart e-mobility solutions to customers in over 125 countries. With an employee base of over 75,000, our top-of-the-line manufacturing facilities are located across India, the United Kingdom, the United States, Italy and South Korea. We are the only OEM in India that offers an extensive range of mobility solutions for our automotives, covering cars, Utility Vehicles, trucks, and buses. We have a strong global network of 134 subsidiaries, associate companies and joint ventures, including the Jaguar Land Rover in the United Kingdom and the Tata Daewoo in South Korea. We offer a broad portfolio of automotive products, ranging fromsub-1 ton to 4955 ton GVW trucks (including pickup trucks) to small, medium, and large buses and coaches to passenger cars,Passenger Cars, premium luxury cars and SUVs.
We have a substantial presence in India and also have global operations in connection with production and sale of Jaguar and Land Rover brand passenger vehicles. We are the largest commercial vehicle manufacturer in terms of revenue in India and among the top six passenger vehicle manufacturers in terms of units sold in India during Fiscal 2017. We estimate that over 8.5 million vehicles produced by us are being operated in India as of the date of this annual report on Form20-F.
We operate six principal automotive manufacturing facilities in India: atIndia, including at: (i) Jamshedpur in the state of Jharkhand, at(ii) Pune in the state of Maharashtra, at(iii) Lucknow in the state of Uttar Pradesh, at(iv) Pantnagar in the state of Uttarakhand, (v) Sanand in the state of Gujarat and at(vi) Dharwad in the state of Karnataka. We also operate four principal automotive manufacturing facilities in the United Kingdom through our Jaguar Land Rover business: atbusiness, including at: (i) Solihull and Castle Bromwich in the West Midlands at(ii) Castle Bromwich also in the West Midlands, (iii) Halewood in Liverpool and an(iv) engine plant at Wolverhampton in the West Midlands. In Fiscal 2015, Jaguar Land Rover opened its inaugural overseas manufacturing facility in China, with its joint venture partner, Chery Automobile Company Ltd., or Chery, the China Joint Venture. In June 2016, Jaguar Land Rover opened a new manufacturing plant in Itatiaia, Brazil, with an annual production capacity of 24,000 units. Jaguar Land Rover now produces theI-PACE battery electric vehicle and the new JaguarE-PACE in Graz, Austria under its manufacturing partnership with Magna Steyr. Furthermore, Jaguar Land Rover’s new 150,000 units per annum manufacturing plant in Nitra, Slovakia opened in October 2018 and is scheduled to start production at the end of 2018 withcurrently producing the Land Rover Discovery. In Fiscal 2019 Jaguar Land Rover announced that next-generation Electric Drive Units (“EDU”), developed in collaboration with BMW, will be produced at the company’s EMC in Wolverhampton. At the same time Jaguar Land Rover announced that these EDUs will be powered by batteries assembled at a new Jaguar Land Rover Battery Assembly Centre located at Hams Hall, North Warwickshire.
We expanded our international operations through mergers and acquisitions, and in India we have made strategic alliances involvingnon-Indian companies in recent years, including, but not limited to, the following:
We have a joint venture agreement with FCA Italy Spa (earlier called(previously known as Fiat Group Automobiles S.p.A., Italy), which is part of the Fiat Chrysler Automobiles Group (FCA)(“FCA”). Together with the FCA, we operate a facility located at Ranjangaon in Maharashtra to manufacture passenger cars,Passenger Cars, engines and transmissions for the Indian and overseas markets. Established in April 2008, the plant currently manufactures the Fiat Linea, Fiat Punto, Tata Indica, Jeep, Nexon, Tata Bolt and Tata Zest vehicles, as well as components for such vehicles, such as engines and transmissions. During May 2012, both the joint-venture partners decided tore-align their Indian joint venture. Accordingly, in March 2013, we and Fiat Group signed a restructuring framework agreement or RFA.(the “RFA”). Under the RFA:
○ | The joint arrangement to manufacture and assemble Fiat-branded products, Tata products and any new products (including for third parties) in accordance with the terms and conditions settled in the RFA. The current third-party orders to continue in accordance with current terms. |
○ | The distribution company, owned by FCA, is responsible for distribution of the Fiat vehicles and parts from April 1, 2013. |
In October 2010, weTML acquired an 80% equity interest in Trilix Srl. (“Trilix”), or Trilix, a design and engineering company, in line with our objective to enhance our styling/styling and design capabilities to meet global standards. With effect from December 6, 2018, TML increased its equity interest in Trilix to 100%. Trilix offers design and engineering services in the automotive sector, including styling, architecture, packaging, surfacing, macro and micro-feasibility studies and detailed engineering development. Trilix continues to implement a strategic growth policy and in March 2013 moved to a new facility as part of its ongoing implementation of this growth policy.
Jaguar Land Rover opened a manufacturing plant for the China Joint Venture in Changshu, China in October 2014 and began manufacturing the Range Rover Evoque shortly thereafter. Manufacture of the Land Rover Discovery Sport commenced in the third quarter of Fiscal 2016 followed by the long wheel base Jaguar XFL in the first half of Fiscal 2017 whichthat went on sale in September 2016 and subsequently the long wheel base XEL whichthat went on sale in December 2017. Total phase one investment in the joint venture was approximately RMB 10.9RMB10.9 billion, which contributed toward the establishment of the manufacturing plant, research and development center and engine production facility. Jaguar Land Rover committed to invest RMB 3.5RMB3.5 billion of equity capital in the China Joint Venture, representing 50% of the share capital and voting rights of the joint venture company. Investment to support phase two, which will add additional manufacturing capacity, willmay be supported by further capital injections from Jaguar Land Rover and Chery. In July 2017, the China Joint Venture opened an engine manufacturing facility to produce the Jaguar Land Rover2.0-litre2.0-Liter petrol Ingenium engine for installation into vehicles produced locally at the joint venture plant in Changshu.
In July 2015, Jaguar Land Rover agreed to a manufacturing partnership with Magna Steyr, an operating unit of Magna International Inc, to build certain future Jaguar Land Rover models in Graz, Austria to support Jaguar Land Rover’s growth plans. We believe that Magna Steyr has extensive contract manufacturing expertise working with many other car manufacturers globally. In Fiscal 2018,The Jaguar Land Rover started manufacturing theI-PACE battery electric vehicle and the JaguarE-PACE.E-PACE are currently manufactured at the plant in Graz, Austria.
In December 2015, Jaguar Land Rover concluded an agreement with the Government of the Slovak Republic for the development of a new manufacturing plant in western Slovakia with the first cars expected to be produced in 2018. The new facility represents an investment of GBP1 billion and initial annual capacity of up to 150,000 units with potential further investment of GBP500 million to increaseunits. The plant opened in October 2018 and currently produces the capacity of the facility to 300,000 vehicles per annum.
As previously disclosed in our Fiscal 2017 annual report on Form20-F filed on July 28, 2017, in June 2017, we signed an agreement with Warburg Pincus to divest an approximately 30% stake in Tata Technologies Limited, or TTL, held by us along with our subsidiary Sheba Properties Limited, following which Warburg Pincus would have owned a 43% equity interest in TTL. However, due to delays in securing regulatory approvals required for the closing of the transaction as well as the inability of TTL to meet certain contractually-agreed to performance thresholds because of market challenges, the parties to the transaction have mutually decided not to proceed with the closing of the transaction. Tata Motors continues to explore strategic options to sell its stake in Tata Technologies and remains positive on the outlook of the business.Land Rover Discovery.
On March 30, 2017, TML’sthe Board approved a scheme of merger and arrangement between TML and TML Drivelines Limited or TMLDL,(“TMLDL”), a wholly-owned subsidiary of TML. The merger was completed on April 30, 2018. The merger had no impact on theour consolidated financial statements.
On May 23, 2018, the Board approved the sale of TML’s shareholding in its wholly-owned subsidiary, TAL Manufacturing Solutions Limited, to Tata Advanced Systems Ltd., a Tata group company. The divestment of TAL Manufacturing Solutions Limited was closed on March 29, 2019 and TML has received Rs.5,334 million, and has acquired the non-aerospace business of TAL Manufacturing Solutions Limited for Rs.1 million. The acquisition of non-aerospace business had no impact on our consolidated financial statements.
Brabo Robotics and Automation Limited (“BRAL”) was incorporated on July 17, 2019, as a-wholly owned subsidiary of Tata Motors Limited with an operating plan to take-over the robotics and factory automation (“RAB”) division of TML as a going concern. The RAB business of TAL Manufacturing Solutions Limited was transferred to TML with effect from April 30, 2019. Presently, BRAL is operational and engaged in RAB business and envisages to explore opportunities within the RAB avenue.
Please see Item 4.B “—“Information on the Company—Business Overview—Our Strategy—Capital and Product Development Expenditures” and Item 5.B “Operating and Financial Review and Prospect—Liquidity and Capital Resources—Capital Expenditures” of this annual report on Form20-F for details on our principal capital expenditures.
Through our other subsidiary and associate companies, we are engaged in providing engineering and automotive solutions, construction equipment manufacturing, automotive vehicle components manufacturing and supply chain activities, machine tools and factory automation solutions, high-precision tooling and plastic and electronic components for automotive and computer applications, and automotive retailing and service operations. TTLTata Technologies Limited (“TTL”) is engaged in providing specialized engineering and design services, product lifecycle management or PLM,(“PLM”) and product-centric IT services to leading global manufacturers. TTL’s customers are among the world’s premier automotive, aerospace, industrial heavy machinery and consumer durables manufacturers. As atof March 31, 2018, 72.29% of2020, we held 72.48% stake in TTL, was owned by us, and itTTL had 12twelve subsidiaries and one joint venture.
TML Distribution Company Limited or TDCL, our(“TDCL”), TML’s wholly-owned subsidiary, was incorporated on March 28, 2008. TDCL provides distribution and logistics support for distribution of our products throughout India. TDCL commenced its operations in Fiscal 2009.
OurTML’s subsidiary, Tata Motors Finance Limited or TMFL,(“TMFL”), was incorporated on June 1, 2006, with the objective of becoming a preferred financing provider for our dealers’ customers by capturing customer spending over the vehicle life-cycle relating to vehicles sold by us. In India, TMFL is registered with the RBI as a Systemically Importantsystemically important Non-Depositnon-deposit TakingNon-Banking Financial Company, ortaking NBFC and is classified as an Asset Finance Companyasset finance company under the RBI’s regulations on NBFCs. In Fiscal 2015, TMFL acquired 100% shareholding of Rajasthan Leasing Private Ltd,Ltd., which subsequently changed its name to Tata Motors Finance Solutions Private Ltd,Ltd., an NBFC registered with the RBI. On June 4, 2015, Tata Motors Finance Solutions Private LtdLtd. was converted into a public limited company, named Tata Motors Finance Solutions Limited or TMFSL.(“TMFSL”). TMFSL focuses on the used vehicle financing business. On March 31, 2016, TMFL acquired 100% shareholding in Sheba, Properties Ltd, or Sheba, a wholly-owned subsidiary of TML and an NBFC-registered entity with the Reserve Bank of India,RBI, as a part of restructuring and consolidation of financial services companies under TMFL. Pursuant to restructuring arrangements, TMFL transferred its New Vehicle Finance (NVF)new vehicle finance business to Sheba on January 31, 2017. During Fiscal 2018, TMFL changed its name to TMF Holding Ltd, or TMFHLHoldings Limited (“TMFHL”) and Sheba changed its name to Tata Motors FinanceTMFL. During Fiscal 2019, TMFHL had acquired 26% of the share capital of Loginomic Tech Solutions Pvt. Limited, or TMFL.a technology-based freight aggregator.
Our
TML’s wholly-owned subsidiary, Tata Motors Insurance Broking and Advisory Services Limited or TMIBASL,(“TMIBASL”) is a licensed Direct General Insurance Brokercomposite insurance broker with the Insurance Regulatory and Development Authority of India that operatesservices customers across the country with its expertise in the Indian marketinsurance brokerage and has plans to branch out globally to seek additional business opportunities.consultancy services. TMIBASL commenced business in Fiscal 2008 and providesend-to-end insurance solutions in direct insurance and reinsurance businesses. With the retail sector withfast-evolving global risk trends, TMIBASL focuses its expertise and efforts to effectively deliver a focus on the automobile sector. TMIBASL offerswide range of products and services to various OEMs in the passenger vehicle, commercial and construction equipment markets, including to us.for its clients.
In May 2018, TML’s boardthe Board approved the sale of TML’s defense business, as well as TML’s shareholding in its wholly-owned subsidiary, TAL Manufacturing Solutions Ltd, to Tata Advanced Systems Limited, a TATATata group company. With respect to the defense business, upon closing of the transaction, TML will receive an upfront consideration of Rs.1,000 million and a deferred consideration of 3% of the revenue generated from certain projects for up to 15 years, starting in Fiscal 2020, subject to a maximum deferred consideration of Rs.17,500 million. ForThe scheme of arrangement in respect of the above (“Scheme”) has been approved by the shareholders at the National Company Law Tribunal (“NCLT”) convened shareholders meeting held on July 30, 2019 and sanctioned by the Honorable NCLT, Mumbai bench and the Honorable NCLT Hyderabad bench vide its shareholding in TAL Manufacturing Solutions Ltd,orders dated December 12, 2019 and December 20, 2019 respectively. As per Clause 21 of the Scheme, the Scheme would be effective on receipt of necessary approvals from authorities, including the Ministry of Defense.
On July 31, 2020, pursuant to the provisions of sections 230 to 232 and other applicable provisions of Companies Act, 2013 and subject to the requisite regulatory approvals, the Board approved a scheme of arrangement between the Company and TML will receive Rs.6,250 million,Business Analytics Services Limited (“TMLBASL”) and willtheir respective shareholders, inter alia, for the transfer of the Company’s Passenger Vehicles business including electric vehicle business as a going concern, on a slump sale basis as defined under section 2(42C) of the Income-tax Act 1961, to TMLBASL. Pursuant to such scheme, the Board also acquireapproved thenon-aerospace business reduction of TAL Manufacturing Solutions Ltd for Rs.1 million.the Company’s share capital without extinguishing or reducing its liability on any of its Shares by writing down a portion of its securities premium account amounting to Rs11,173.59 crores, with a corresponding adjustment to the accumulated losses of the Company.Upon such scheme becoming effective, the name of the TMLBASL shall be changed to ‘Tata Motors Passenger Vehicles Limited’.
As atof March 31, 2018,2020, our operations included 98103 consolidated subsidiaries, 2 joint operations, 4 joint ventures and 3228 equity method affiliates, in respect of which we exercise significant influence. As atof March 31, 2018,2020, we had approximately 81,09078,906 permanent employees, including approximately 56,16851,104 permanent employees at our consolidated subsidiaries and joint operations.
Tata Incorporated serves as ourthe Company’s authorized United StatesU.S. representative. The address of Tata Incorporated is 101 Park Avenue, New York, NY 10178, the United States of America.
Our Registered OfficeThe Company’s registered office is located at Bombay House, 24, Homi Mody Street, Mumbai 400 001, India. OurThe Company’s telephone number is+91-22-6665-8282 and ourthe Company’s website address is www.tatamotors.com. OurThe Company’s website does not constitute a part of this annual report on Form20-F. The SEC maintains a web site www.sec.gov that contains reports, proxy statements and other information regarding registrants, including Tata Motors Limited, that file electronically with the SEC.
Over the last three years, from June 30, 2017 to June 30, 2020, the holdings of the Company’s largest shareholder, Tata Sons along with its subsidiaries, have increased from 28.66% to 36.29%. Please see Item 7.A “Major Shareholders and Related Party Transactions—Major Shareholders” for further details of recent changes in major shareholders’ shareholding in the Company.
We primarily operate in the automotive segment. Our automotive segment includes all activities relating to the development, design, manufacture, assembly and sale of vehicles, including financing thereof, as well as sale of related parts and accessories. The acquisition of the Jaguar Land Rover business has enabled us to enter the premium car market in developed markets, such as the United Kingdom, the United States, Europe and China, as well as several emerging markets, such as Russia, Brazil and South Africa, amongst others. Going forward, we expect to focus on profitable growth opportunities in our global automotive business, through new products and market expansion. Within our automotive operations, we continue to focus on integration and synergy through sharing of resources, platforms, facilities for product development and manufacturing, sourcing strategy and mutual sharing of best practices.
Our business segments are (i) automotive operations and (ii) all other operations. Our automotive operations include all activities relating to development, design, manufacture, assembly and sale of vehicles including financing thereof, as well as sale of related parts and accessories. We provide financing for vehicles sold by dealers in India. The vehicle financing is intended to encourage sales of vehicles by providing financing to the dealers’ customers and as such is an integral part of our automotive business. Our automotive operations segment is further divided into Tata and other brand vehicles (including financing thereof) and Jaguar Land Rover. Tata and other brand vehicles consist of vehicles manufactured under our Tata, Daewoo and Fiat brands, and exclude vehicles manufactured under Jaguar Land Rover brands.
A core initiative of the Companyours was the implementation of the Organization Effectiveness (OE) program, a strategic program designed to overhaul and transform the Company.
Tata Motors Group. Pursuant to the changes implemented as a result of the OE program, the CompanyTata Motors Group has drawn separate strategies for commercial vehicles, passenger vehiclesCommercial Vehicles, Passenger Vehicles and financing business from Fiscal 2019. Consequent to these changes, Commencing fiscalFiscal 2019, the reportable segments will beare as follows:
Automotive operations: Our automotive segment consists of the following four reportable sub-segments:
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○ | “Tata Passenger Vehicles”: Includes Passenger Vehicles and Utility Vehicles manufactured under the Tata |
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Tata Commercial vehicles will include Commercial vehicles manufactured under Tata
○ | “Vehicle Financing”: Includes financing of TML and Jaguar Land Rover new vehicles, pre-owned vehicles including other OEMs brands and corporate lending to our channel partners, |
Other operations: Other operations consist of IT services and Daewoo brands. Tata passenger vehicles will include passenger vehicles manufactured under Tatamachine tools and Fiat brands and excludes vehicles manufactured under Jaguar Land Rover brands. Tata Motors Finance will include financing of Tata and Jaguar Land Rover new vehicles, pre-owned vehicles including other OEMs brands and corporate lending to our channel partners.factory automation solutions.
We believe that this reorganization will improvestructure improves speed, agility and simplicity within our business units, and enable strong functional leadership, improved decision-making, quicker responses to changing market conditions and clear accountability.
We produce a wide range of automotive products, including:
Passenger Vehicles: Our range of Tata-branded passenger cars include the Nano (micro), the Indica, the Bolt,Passenger Cars includes the Tiago (compact) and the Altroz (premium) in the hatchback category, and the Indigo eCS, the Tigor and the ZestTigor EV (mid-sized) in the sedan category. We have expanded our passenger carPassenger Car range with several variants and fuel options designed to suit various customer preferences. . Our Jaguar Land Rover operations have an established presence in the premium passenger carPassenger Car market under the Jaguar brand name. There are sevensix car lines currently manufactured under the Jaguar brand name, including theF-TYPEtwo-seaterF-TYPE two-seater sports coupe and convertible, the XF sedan (including the long wheel base XFL at the China joint venture)Joint Venture), the XJ saloon, the XE sports saloon (including long wheel base XEL at the China joint venture)Joint Venture), the F-PACE Jaguar’s luxury performance SUV, theF-PACE,SUV), the JaguarE-PACE compact SUV (manufactured in Graz, Austria under its manufacturing partnership with Magna Steyr and also manufactured at the China Joint Venture plant), and the JaguarI-PACE an(an all-electric performance SUV and Jaguar’s first battery electric vehicle. The JaguarE-PACE will also be produced at the China Joint Venturevehicle manufactured in Graz, Austria under its manufacturing partnership with sales expected to begin later this year.Magna Steyr).
Utility Vehicles: We manufacture a range of Tata brand utility vehicles,Utility Vehicles, including the Hexa,Harrier, the Nexon, (compact SUV), the Sumo and the Safari (which are SUVs), the Tata Aria, a crossover, and the Venture, a multipurpose utility vehicle. We offer two variants of the Safari: the Dicor and the Storme. We also offer a variant of the Sumo, the Sumo Gold, which is an entry level UV.Nexon (EV). There are six car lines under the Land Rover brand, comprising the Range Rover, Range Rover Sport, Range Rover Evoque, the Land Rover Discovery, Land Rover Discovery Sport and the Range Rover Velar (which went on sale in July 2017).Velar.
SCVSCVs & Pickups: We manufacture a variety of small commercial vehiclesCommercial Vehicles (less than 3.5 ton), including pickup truckstrucks. This includes the Tata Ace, India’s first indigenously developed mini-truck, with a 0.70.75 ton payload with different fuel options;options (including the Super Ace,newly launched Petrol variant) and the Tata Intra, with a 1-ton payload; the Ace Zip, with a 0.6 ton payload;different payload options. In addition, we launched the XenonTata Yodha pickup truck.range with single cab and double cab variants and 4X2 and 4X4 options.
MediumMHCVs and Heavy Commercial Vehicles and Intermediate Light Commercial VehicleILCVs:: We manufacture a variety of mediumMHCVs and heavy commercial vehicles, and intermediate light commercial vehiclesILCVs, which include trucks, tractors, tippers, and multi-axle vehicles and pickups with GVWs (including payload) of between 3.5 tons and 4955 tons. We also provide fully-built solutions for special applications like garbage compactors, containers, tankers, reefers, and diesel bowser to customers and various government organizations including solutions related to national defense. In addition, through Tata Daewoo Commercial Vehicle Co. Ltd., or TDCV, we manufacture a wide array of trucks ranging from 215 horsepower to 560 horsepower, including dump trucks, tractor-trailers, mixers and cargo vehicles. Our signature product is the Prima and Prima LX range of trucks, which are sold in India and South Korea as well as exported to a number of countries in South Asia, the Middle East and Africa. The SIGNA range of new M&HCVMHCV trucks launched in 2016 has been extended to several additional tractor and tipper variants. The newest addition to this portfolio is the Ultra range panning from 5-ton Light Commercial Vehicles (“LCV”) to 30-ton tractors.
CV Passenger VehiclesVehicles:: We manufacture a variety of passenger carriers including buses. Our products include Magic and the Magic Iris,Express, including an electric variant both of which areand a passenger variantsvariant for commercial transportation developed on the Tata Ace platform; and the Winger. In addition, the Magic Express small passenger vehicle was launched in fiscal 2018. We also offer a range of buses, which includes the Semi Deluxe Starbus Ultra Contract Bus and the new Starbus Ultra. Our range of buses is intended for a variety of uses, including as intercity coaches (with both air-conditioned and non-air-conditioned luxury variants), as school transportation and as ambulances. We also offer a range of electric buses in different configurations for every application. Our range of diesel and CNG buses complies with the prevalent BSVI norms.
Our other operations business segment includes information technology, or IT, services and machine tools and factory automation solutions.
Our Strategy
We intend to further strengthen our position in the Indian automobile industry further by investing in new products that exceed customer expectations, improving customer experiences across all our touchpoints, making rigorous cost improvements across theour product range, and optimizing our manufacturing and distribution strategy. We have pursued a strategy of increasing our presence in the global automotive markets and enhancing our product range and capabilities through strategic acquisitions and alliances. Building on the success of our ‘Turnaround’ action plan, we have introduced the ‘Turnaround 2.0’. Turnaround 2.0 aims at ‘Winning Decisively’ in the CVCommercial Vehicle business, ‘Winning Sustainably’ in the PVPassenger Vehicle business and embedding ‘Turnaround‘Turnaround’ into our corporate culture. We aim to achieve consistent, competitive, cash accretive growth. OurIn January 2020, we launched a range of new BSVI Passenger Vehicles and Utility Vehicles. In addition to emission migration, our commercialized BSVI products are streamlined and developed with enhanced features, superior performance and value-added enhancers. Jaguar Land Rover aims to ‘Win Distinctively’ by leveraging its uniqueness. JLR is committed to achieving sustainable, profitable growth with positive cash flows in the medium to long term with the strong focus on cost reduction and affordability of capital investments.investments, supported by the Project Charge + and Project Accelerate. Our goal is to position ourselves as a major international automotive company, offering the widest range of products across product segments and applications. Our strategy to achieve these goals consists of the following elements:
Continued focus on new product development
To meet the fast evolving business needs and expectations of customers, each and every BSVI product has been conceptualized and developed to deliver on the key purchasing criteria of our customers, including best in class operating economics, comfort and convenience, and enhanced connectivity to assist our customers in better management of their fleet and transportation businesses utilizing our connected vehicle platform.
The adoption of BSVI norm by the Government of India has provided us with an opportunity to enhance the value and quality of our vehicles. Our BSVI range goes beyond mere regulatory compliance and delivers enhanced value proposition for customers, either by improving total cost of ownership (“TOC”) or increasing the revenue earning potential. We unveiled the entire range of BSVI trucks, buses and powertrains at Auto Expo 2020, ranging from Ace to 55 ton Prima in goods transportation, 15 seater winger to 55 (+D) Seater LNG bus in passenger mobility, and two next generation Turbotron engines.
In January 2020, we launched all-new BSVI range of products with Passenger Cars and Utility Vehicles. In addition to emission migration, our commercialized BSVI products are streamlined and developed with enhanced features, superior performance and value-added enhancers. Our recent product launches and anticipated product launches include the following::
Several new variants across the Prima and Signa ranges of medium and heavy trucks were launched during Fiscal 2018.2020. These includeincluded focused introduction of key products in Ultra 1918.T, Prima Lx 5530.S, C Series in 16T, 40T & 5L in 28T, 35T, Signa 2823.K, Signa 1923, Signa 4223.TK, Prima 2825.K. New trucks included Prima 4623 S, E-series 19T and 30T across tractors, Signa 2818, Signa 3521, 2521 5L, Forza C, 48T and 49T LDL across trucks and on Tippers – Prima Lx 2825 K HRT, Prima LX 3125, Signa 3518 TK and Signa 4225 TK. Application specific launches included Prima 4030.S for LPG Application, Signa 4018.S TFT, Signa 4923.S TFT on Tractor; LPT 2818 TFT, Signa 2818 Refueler, LPT 2818 60WB IOCL, Signa 3518 Tanker application across Trucks and LPK 1918 42WB South Market, LPK 2518 G950 Sainik Mining, Ultimax with Bell Crank suspension, Signa 3718, Signa 3718.TK, Prima 2530.K Scoop andDAC, Prima Lx 3125.K 23cm.2530.K 16 Box HD LB for Tippers. We also unveiled the M&HCV range of BSVI products at Auto Expo 2020.
In theour Ultra range of intermediate and light commercial vehicles,ILCVs, in April 2018,Fiscal 2020, we launched the Ultra 1518 truck and introduced theT.16 Sleeper, Ultra Narrow cabT.11, Ultra T.12, Ultra T.7 with smaller cabin design developedsuitable for intercity operations in domestic and international markets. A cleanmarket. While in the regular ILCV range SFC 407/33 RJ, LPT 407/34 EX PS HT, LPT 1512 CRX SLP, LPT 1412 CRX 13.8T, LPK 1212 HD FET, were launched. We also developed various applications as per the need of government and customers such as road sweeper, refuse compactors on CNG, varianthoper tipper, diesel bowser, CNG cascade carrier and cash van.
Intra V10 BSIV and V20 BSIV was also introducedlaunched in Q1 Fiscal 2020 in maxi truck segment with increased body load sizes, more powerful engine and larger cabins. These models, with payloads from 1 ton to 2 ton for one way distance up to 200 kilometers are well suited for transportation in semi-urban and city areas for individual owners and market loaders.
Extended range of Tigor EV was launched in October 2019.
Nexon, our subcompact SUV, was launched in September 2017. Nexon EV was launched in January 2020.
H5X and 45X, our two models, unveiled in February 2018, are based on the new Optimal Modular Efficient Global Advanced (“Omega”) architecture, which is derived from Land Rover’s D8 platform and Agile, Light, Flexible and Advanced (“ALFA”) platform.
Harrier, the first model from Omega architecture, was launched in January 2019. The new Harrier 2020 range was launched at the Auto Expo 2020.
Our collaboration with BMW to develop next generation electronic drive units to power the next generation of all-electric vehicles was announced in June 2019.
In July 2019, Jaguar Land Rover revealed plans to manufacture a range of new electrified vehicles at its Castle Bromwich manufacturing plant in the UK.
JLR will open a new battery assembly centre near Birmingham in the UK and will begin the manufacture of next-generation electric drive units at the EMC in Wolverhampton in the UK by the end of 2020.
Sales and production of the all-new Range Rover Evoque ramped up significantly during the year.Fiscal 2020.
The Ace familyrefreshed Land Rover Discovery Sport was launched in May 2019 and recently went on sale through our China Joint Venture in March 2020.
Production of small commercial vehicles was further strengthened witha 6 cylinder Ingenium 3.0-litre petrol engine started in 2020 at the launch of the XL series (Ace XL, Zip XL and Mega XL) July 2017, with increased load body sizes and reduced total cost of ownership.EMC in Wolverhampton, UK.
In September 2019, Jaguar Land Rover unveiled new facilities at its Gaydon site in Warwickshire, creating the passenger segment, the Magic Express small passenger vehicle was launched in June 2017.UK’s largest automotive creation and development center.
TML becameSoftware updates over the air included in all new models was announced in November 2019.
JLR’s first OEMbattery electric vehicle, the Jaguar I-PACE won the golden steering wheel award for best SUV in India to deploy Advanced Driver Assistance Systems (ADAS) systems in its Prima and Signa range in Fiscal 2018. This package includes Electronic Stability Control (ESC), Automatic Traction Control (ATC), Hill Start Aid (HSA), a Collision Mitigation System (CMS) and a Lane Departure Warning System (LDWS).November 2019.
Jaguar XE: The allLand Rover acquired Bowler Motors Limited, the all-terrain performance specialist, in December 2019.
Refreshed Jaguar F-TYPE was launched in December 2019.
Altroz, the first model from new Jaguar XE went onALFA architecture, was launched in January 2020.
Production of the all-new Land Rover Defender began in January 2020 at the manufacturing plant in Nitra, Slovakia, with first retail salesales in March 2020.
In February 2020 the United States in May 2016.National Automotive Innovation Centre at the University of Warwick was officially opened, one of Europe’s largest automotive R&D hubs.
Jaguar XFL: The allLand Rover unveiled its bold new long wheel base Jaguar XFL, specifically designedconcept vehicle, Project Vector, in February 2020 as part of the company’s Destination Zero journey, offering its vision of an autonomous, electric, connected future for the China market, is produced by or China joint venture and went on sale in September 2016.urban mobility.
JaguarF-PACE: The JaguarF-PACE luxury performance SUV went on sale in April 2016.
Range Rover Evoque Convertible: The new Range Rover Evoque convertible went on sale in June 2016.
Land Rover Discovery: The all new Land Rover Discovery went on sale in February 2017.
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The new Jaguar XF Sportbrake was revealed toPlug-in hybrid versions of the public on June 14 by Andy Murray ahead of Wimbledon 2017 for which Jaguar is the official car partner. The new Jaguar XF Sportbrake is due to go on sale during the summer of 2017
JaguarE-PACE: Jaguar’s new compact performance SUV went on sale in November 2017. The JaguarE-PACE will also be produced by our China joint venture with sales expected to begin later this year.
Jaguar XEL: The all new long wheel base Jaguar XEL, specifically designed for the China market is produced by our China joint venture and went on sale in December 2017.
The refreshed 18 model year Range Rover Evoque and Range Rover Sport (including plug in hybrid models) went on sale from November 2017.
JaguarI-PACE battery vehicle was revealed to the public in March 2018 and is expected to go on sale in autumn 2018.
Nexon: Our subcompact SUV was launched in September 2017.
H5X and 45X: Our two attractive models unveiled in February 2018 based on the new Omega and Alpha Architecture.
Production of Jaguar Land Rover’sin-house2.0-litre 4 cylinder Ingenium gasoline engine commenced at the China joint venture engine plant in the July 2017 for installation into the locally produced Jaguar XEL, Jaguar XFL, Land Rover Discovery Sport and the Range Rover Evoque models are also produced at the China joint venture.were recently launched in April 2020 supported by a new 1.5-litre 3-cylinder Ingenium petrol engine.
In our international markets we launched several key products in Fiscal 2018 such as the Prima in Philippines, Signa in Sri Lanka, Yodha in Nepal, Ultra Bus range in Tanzania, Ultra Truck range in South Africa, and unveiled the Ultra in Thailand and Indonesia. We also launched the complete CR range of intermediate and light commercial vehicles in Nepal.
Our research and development focuses on developing and acquiring the technology, core competencies and skill sets required for the timely delivery of our envisaged future product portfolio with industry-leading features across our range of commercial and passenger vehicles. For the passenger vehicle product range, our focus is on stunning design, driving pleasure and connected car technologies. For the commercial vehicle product range, our focus is on enhancing fuel-efficiency, minimizing the total cost of ownership and providing maximum overall value. We continue to endeavor to adopt technologies for our product range to meet the requirements of a globally competitive market. We have also undertaken programs for development of vehicles, which run on alternate fuels such as LPG, CNG,bio-diesel, electric-traction and hydrogen.
We have plans to expand the range of our product base further, supported by our strong brand recognition in India, our understanding of local consumer preferences,in-house engineering capabilities and extensive distribution network. WithFacing growing competition, changing technologies and evolving customer expectations, we understand the importance of bringing new platforms to address market gaps and further enhance our existing range of vehicles to ensure customer satisfaction. Our capital expenditures totalled Rs.415,103totaled Rs.302,945 million, Rs.311,627Rs.342,236 million and Rs.306,233Rs.415,103 million during Fiscal 2018, 20172020, Fiscal 2019 and 2016,Fiscal 2018, respectively, and we currently plan to invest approximately of Rs.461Rs.249 billion in Fiscal 20192021 in capacity, new products and technologies.
(1) | Pro-forma analytically derived unaudited estimate consisting of GBP 1.9 billion of investment savings (compared to original planning targets), GBP 0.6 billion improvement in inventory (since Q3 FY19) and GBP 1.0 billion cost efficiencies (primarily SG&A, employee and material costs and other) |
Jaguar Land Rover continues to invest in enhancing its technological strengths throughin-house research and development activities, including the development of its engineering and design centers which centralize Jaguar Land Rover’s capabilities in product design and engineering. In September 2019, Jaguar Land Rover unveiled new facilities at its Gaydon site in Warwickshire, which was the largest automotive creation and development center in the UK. Jaguar Land Rover also participates in advanced research consortia that bring together leading manufacturers, suppliers or academic specialists in the United Kingdom and are supported by funding from the UK Government’s Technology Strategy Board.
Leveraging our capabilities
We have manufacturing facilities across five locations in India, which deliver mobility solutions to four product lines with products ranging from 0.5 tons to 55 tons. These state-of-art facilities cater to not the only domestic and international market but also defense markets. To date, over a history of 65 years, we have manufactured more than 9.6 million Commercial Vehicles. In Fiscal 2020, we have delivered more than 0.5 million vehicles while driving our operating costs towards benchmark levels through various initiatives and levers. We also endeavor to make our operations sustainable in terms of safety and health, corporate responsibility, and environment with stringent targets in these areas enabled by various initiatives and guided by strong governance committees.
Our product portfolio of Tata-brand vehicles includes the Tiago, Altroz, Tigor, Tigor (EV), Nexon, Nexon (EV), Harrier, which enable us to compete in various Passenger Vehicle market categories. We also offer alternative fuel vehicles. We also intend to expand our sales reach and volumes in rural areas, where an increase in wealth has resulted in a declining difference between urban and rural automobile purchase volumes.
We believe that the foundation of our growth over the last five decades has been a deep understanding of economic conditions and customer needs, and the ability to translate this understanding into desirable products though research and development. In India, our Engineering Research Centre, or ERC,engineering research center (the “ERC”), established in 1966, has enabled us to successfully design, develop and produce our own range of vehicles. Jaguar Land Rover’s research and development operations are built aroundstate-of-the-art engineering facilities, extensive test tracks, testing centers, design hubs and a virtual innovation center. The Engineering Research Centre, or ERC in India and Jaguar Land Rover engineering and development operations in the United Kingdom have identified areas to leverage the facilities and resources to enhance the product development process and achieve economies of scale. Furthermore, we havethe Company has a wholly-owned subsidiary, Tata Motors European Technical Centre PLC or TMETC,(“TMETC”), in the United Kingdom, which is engaged in automobile research and engineering.
We believe that ourin-house research and development capabilities, including those of our subsidiaries Jaguar Land Rover, TDCV and Trilix in Italy, TMETC in the United Kingdom and our joint ventures with Marcopolo S.A. of Brazil in India, with Thonburi in Thailand and Tata Africa Holdings (SA) (Proprietary) Ltd. in South Africa, will enable us to expand our product range and extend our geographical reach. We continually strive to achieve synergy wherever possible with our subsidiaries and joint ventures.
We have continued modernizing our facilities to meet demand for our vehicles. Our Jamshedpur plant, which manufactures our entire range of M&HCVs,MHCVs, including the Prima, both for civilian and defense uses, was our first plant, set up in 1945 to manufacture steam locomotives. It led our entry into commercial vehiclesCommercial Vehicles in 1954. The Jamshedpur plant has been modernized over the years and in Fiscal 2015, we celebrated 60 years of truck manufacturing at our first manufacturing and engineering facility in Jamshedpur.
Our product portfolio of Tata-brand vehicles includes the Nano, Indica, Tiago, Indigo, Tigor, Sumo, Sumo Grande, Safari, Safari Storme, Hexa, Aria, Zest, Bolt and Venture, which enable us to compete in various passenger vehicle market categories. We also offer alternative fuel vehicles under the Nano and Indigo brands. We also intend to expand our sales reach and volumes in rural areas, where an increase in wealth has resulted in a declining difference between urban and rural automobile purchase volumes.
Jaguar Land Rover invests substantially in the development of new and refreshed products for new and existing segments by introducing new powertrains and technologies, including CO2 reduction and electrification that satisfy both customer preferences and regulatory requirements. Jaguar Land Rover also invests in expanding manufacturing capacity in the United Kingdom and internationally to meet customer demand. Jaguar Land Rover expects investment spending of over GBP4.5up around GBP 2.5 billion (approximately Rs.414 billion) in Fiscal 2019, reflecting its growth plans.2021. Around half of that investment is expected to be spent on R&Dresearch and development with the other half expected to be spent on tangible fixed assets such as facilities, tools and equipment as well as other investments.
In October 2014, Jaguar Land Rover opened its Engine Manufacturing CentreEMC at Wolverhampton, in the West Midlands. The plant currently manufactures Jaguar Land Rover’s ownin-house2.0-litrein-house 2.0-Liter diesel and gasoline engines which are now available across the majority of models.models as well as the new 6 cylinder 3.0-litre Ingenium gasoline engine. Jaguar Land Rover’sin-house engines have been engineered to ensure maximum manufacturing efficiency, flexibility to increase the number of engine variants and consistently high quality. In July 2017, the China joint ventureJoint Venture opened its engine manufacturing facility which produces Jaguar Land Rover ownin-house2.0-litrein-house 2.0-Liter petrol Ingenium engine for installation into vehicles produced locally at the joint venture plant in Changshu. In January 2019, Jaguar Land Rover announced that next-generation EDU, developed in collaboration with BMW, will be produced at the company’s EMC in Wolverhampton. At the same time Jaguar Land Rover announced that these EDUs will be powered by batteries assembled at a new Jaguar Land Rover Battery Assembly Centre located at Hams Hall, North Warwickshire
The JaguarE-PACE and the all-electricJaguarI-PACE battery electric vehicle are produced under the manufacturing partnership with Magna Steyr, in Graz, Austria. Jaguar Land Rover’s new manufacturing facility in Nitra, Slovakia, (Europe), with annual capacity of 150,000 units, opened in October 2018 and is scheduled to start production atcurrently producing the end of 2018 beginning with the new Land Rover Discovery.Discovery and production of the all-new Land Rover Defender started in January 2020. Subject to feasibility studies, Jaguar Land Rover has the option to invest a further GBP500 million to expand capacity to 300,000 units annually. In June 2016, Jaguar Land Rover opened its first wholly-owned international manufacturing plant in Brazil, which manufactures the Range Rover Evoque and Land Rover Discovery Sport for the local market.
Continuing focus on high quality and enhancing customer satisfaction
We place strong emphasis on customer comfort, and had launched Sampoorna Seva in 2018, which is a comprehensive package that addresses all after-sales needs of our customers. This has now been upgraded to Sampoorna Seva 2.0, leveraging our extensive network of more than three times our competitors. The key highlights include guaranteed turnaround time at all our workshops and unique breakdown assistance service “TATA Alert”, under which we promise to reach our customers in 2 hours anywhere across the country and put their vehicles on-road within 24 hours. Consistent delivery on these services have led to high level of customer satisfaction.
We recognize that Commercial Vehicle drivers, whom we call Saarthis, form the backbone of our industry and therefore we have launched three novel flagship programs to improve their quality of life. Tata Samarth program offers a comprehensive insurance package tailor made for the Saarthis and their families. Our Saarthi Aaram Kendras program aims to improve the ‘on-road quality of life of our Saarthi’s by providing access to basic necessities and our Desh ke Saarthi program offers a platform for commercial vehicle drivers to find jobs based on their skills and preferences. These programs have proven successful with the positive responses we received from our customers.
In 2019, we collaborated with a major automobile oil manufacturer, Indian Oil Corporation Limited, to launch Tata Motors Genuine Oil, a single brand of affordable lubricating oils that is suitable for use across our entire range of products. Tata Motors Genuine Oil is now widely available in different packaging sizes for the needs of small customers with single or fewer vehicles. For Commercial Vehicle customers, one of their key considerations when purchasing vehicles is the total cost of ownership. Hence Tata Motors Limited is committed to provide accessible products with good value, for instance we provide competitively priced Tata Genuine Parts and DuraFit parts which are widely available via off line and online channels. Fiscal 2020 saw significant jump in satisfaction scores of channel partners, retailers and mechanics on spare parts availability based on survey results of the Metric Global Spares Parts influencers engine mechanics satisfaction survey 2020 and Spares parts influencers non engine mechanics satisfaction survey 2020.
Our various efforts to improve customer satisfaction levels continued to be reflected in numerous recognitions we received. In a recent Net Promoter Score Brand Health Track survey conducted by Millward Brown Market Research Services India Pvt. Ltd., TML Commercial Vehicles scored at 65, an increase of 2 points from 63 in last survey which is an improvement of 8 points from 57 in Fiscal 2018. In addition, the Company stood first amongst the competition in both sales and service satisfaction scores in the Sales Satisfaction Study survey conducted by Nielsen (India) Private Limited in Fiscal 2020. Further, Tata Motors Commercial Vehicle Business Unit was awarded the Customer Obsession Award for two consecutive years by the Confederation of Indian Industry (“CII”), with a special award for “Digital journey”.
During Fiscal 2020, we won many prestigious awards at various commercial vehicle forums. Tata Motor’s Commercial Vehicle Business Unit (“CVBU”) was awarded in the Exemplary Category in Total Cost Management assessment by the CII. We won six awards at the Apollo CV Awards 2020 including the CV maker of the year award. Girish Wagh, President, CVBU received CV Man of the Year award at Apollo CV Awards 2020. We also received eight prestigious awards at ET Now CV awards.
One of our principal goals is to achieve international quality standards for our products and services. We have established a comprehensive purchasing and quality control system that is designed to consistently deliver quality products and superior service. We also have a program for assisting vendors from whom we purchase raw materials or components to maintain quality. Each vendor is reviewed on a quarterly basis on parameters of quality, cost and delivery, and preference is given to vendors with TS 16949 certification.
Through close coordination supported by our IT systems, we monitor quality performance in the field and implement corrections on an ongoing basis to improve the performance of our products, thereby improving customer satisfaction. We believe our extensive sales and service network has also enabled us to provide quality and timely customer service. We are encouraging focused initiatives at both sales and service touch points to enhance customer experience and strive to be the best in class, and we believe that the reach of our sales, service and maintenance network provides us with a significant advantage over our competitors. We ranked a clear second for the consecutive third year in the J.D. Power Asia Pacific 20172019 India Customer Service Index (CSI) Studycustomer service index study score.
In our passenger vehiclePassenger Vehicle segment, we launched our compact SUV Nexon in Fiscal 2018. The Nexon, Hexa and Racemo received a strong response and accolades with 2513 awards during the year.
| Media | Category | Product | |||
The | ||||||
Design of the year | Tata | |||||
Tata Harrier | ||||||
3. | Autocar Awards | Manufacturer of the Year | Tata | |||
Best Design | Tata Sierra Concept EV | |||||
5. | Motor Vikatan Awards | Best Design | Tata Harrier | |||
6. | Flywheel Auto Awards | Best Design | Tata Harrier | |||
7. | Quarter Mile Awards | Design of the year Premium SUV of the year | Tata Harrier | |||
8. | Car | |||||
Design of the year | Tata | |||||
Disruptive Design of the Year Most Awaited Car of the Year | Tata Harrier | |||||
10. | Motorbeam Awards | Car | Tata | |||
11. 12. 13. | MotorOctane Awards 2020 Jagran Hi Tech Awards 2019 Namaste Car Awards | Best Mid-level Premium Vehicle Best Update of the Year 2019 SUV of the year Car of the Year | Tata Harrier Tata Tiago Tata Harrier Tata Harrier |
The company also collaborated with a major automobile oil manufacturer, Indian Oil, to launch Tata Motors Genuine Oil (TMGO), a single brand of affordable lubricating oils that is guaranteed by Tata Motors for use across our product lines.
Various efforts to improve customer satisfaction levels have begun to bear fruit. In a recent Net Promoter Score (NPS) survey conducted by an independent agency, TML Commercial Vehicles received an industry leading score of +57, significantly ahead of the completion.
During Fiscal 2018, we won several awards at the Apollo CV Awards 2018 with the Magic Express winning the Small People Mover of the Year, Magna Bus winning the M&HCV People Mover of the Year, Signa 4923.S winning the HCV Tractor Cargo Carrier of the Year, and the Starbus Hybrid winning the Social Recognition award.
Additionally2020, the TML Commercial Vehicles Business UnitCVBU won numerous awards, for its various innovative media campaigns, which include:including:
ET NOW RETAILS AWARDS
No. | Award Category | Awarded Model/campaign | ||
1. | CV of the Year | Tata Intra | ||
2. | LCV Cargo Mover of the Year: | Tata Ultra T.7 | ||
3. | HCV Rigid Cargo of the Year | Tata Signa 4823 T | ||
4. | Small People Mover of the Year | Tata 407/29 - 20 Seater | ||
5. | ICV People Mover of the Year | Tata Ultra 9/9 Electric Bus | ||
6. | Promising Debut of the Year | Tata Prima Lx 5530.S | ||
7. | Social Media Campaign of the Year | Photo OK Please |
APOLLO CV AWARDS
No. | Award Category | Awarded Model/OEM | ||
1. | CV Maker of the Year | Tata Motors Limited | ||
2. | SCV of the Year | Tata Intra V10/V20 | ||
3. | LCV cargo carrier of the Year | Tata Ultra T.7 | ||
4. | HCV Rigid Cargo Carrier of the Year | Tata Signa 4823.T | ||
5. | ICV Tipper of the Year | Tata LPK 1212 HD FET |
Silver WARC Prize for Asian Strategy and award for the Best Channel Thinking : Use Dipper At Night Campaign – an innovative campaign to bring awareness amongst the truck driver community of safe practices
Effies –Bronze award for the Tata Yodha media campaign.
Jaguar and Land Rover has received over 200 awards from leading international motoring writers, magazines and opinion leaders during Fiscal 2018,2020, reflecting the strength of its modelline-up, design and engineering capabilities. A selection of recent awards is listed below.
Award | Model | Awarding Institution | Date | |||
Best SUV | Jaguar I-PACE | Golden Steering Wheel | November 2019 | |||
World Green Car | ||||||
Jaguar | World Car of the Year Awards | April | ||||
JaguarI-PACE | ||||||
JaguarI-PACE | ||||||
Environmental performance
Jaguar Land Rover’s strategy is to invest in products and technologies that are ahead of expected stricter environmental regulations and ensure that it benefits from a shift in consumer awareness of the environmental impact of their vehicles. Jaguar Land Rover’s environmental vehicle strategy focuses on developing new propulsion technology, overall vehicle weight reduction and reducing parasitic losses through the driveline. It has developedplug-in hybrid electric vehicle (“PHEV”) versions of the Range Rover and Range Rover Sport and PHEV variants of the Range Rover Evoque and Land Rover Discovery Sport, without compromising the vehicles’off-road capability or load space.
Jaguar Land Rover uses aluminum and other lightweight materials to reduce overall vehicle weight and improve fuel and CO2 efficiency. For example, the Jaguar XE is the only vehicle in its class to usethat uses an aluminum-intensivealuminium-intensive monocoque. Jaguar Land Rover planplans to continue to build on this expertise and extend the application of aluminum construction as they develop a range of new products. The aluminum body architecture introduced on the Jaguar XE is also used in the lightweight Jaguar XF, JaguarF-PACE and Range Rover Velar and the all new JaguarI-PACE electric vehicle.Velar. The Land Rover Discovery usesand the all-new Land Rover Defender use the same lightweight architecture as the Range Rover and Range Rover Sport. Jaguar Land Rover is developing a new modular longitudinal architecture for future models.
Jaguar Land Rover has also developed more efficient powertrains and other related technologies. This includesThese include smaller and more efficient2.0-litre2.0-Liter Ingenium diesel and gasoline engines (now available across the majority of our modelits models range), stop-start, mild andplug-in hybrids as well as a new 6 cylinder 3.0-litre ingenium gasoline engine, stop-start, PHEVs and battery electric propulsion technologies. Jaguar Land Rover’s smaller and more efficient family of Ingenium diesel and gasoline engines, as well as the lightweight Range Rover, and Range Rover Sport,Plug-in Hybrids Electric Vehicles—PHEV, powered by downsized Range Rover Evoque and more efficient engines andLand Rover Discovery Sport PHEVs, alternative powertrains such as the JaguarI-PACE Battery Electric Vehicle – BEV, have all contributedbattery electric vehicle and the further rollout of electrification across the model range are anticipated to the improvement of Jaguar Land Rover’s carbon footprint.
Jaguar Land Rover’s current productline-up is the most efficient it has ever been and thecontribute to improved environmental performance of its vehicles has been further improved through the launch of new models. The2.0-litre Ingenium diesel and gasoline engines, now used extensively in the productline-up, provide significant CO2 reductions as compared to the outgoing powertrains.our vehicles.
Jaguar Land Rover is also taking measures to reduce emissions, waste and the use of natural resources in all of its operations.
Mitigating cyclicality
The automobile industry is impacted by cyclicality. To mitigate the impact of cyclicality, we plan to continually strengthen our operations through gaining market share across different segments, and offering a wide range of products in diverse geographies. We also plan to continue to strengthen our business operations other than vehicle sales, such as financing of our vehicles, spare part sales, service and maintenance contracts, sales of aggregates fornon-vehicle businesses, reconditioning of aggregates and sale of castings, production aids and tooling/tooling and fixtures in order to reduce the impact of cyclicality of the automotive industry.
Expanding our international business
Our international expansion strategy involves entering into new markets where we have an opportunity to grow and introduce new products to existing markets in order to grow our presence in such markets. Our international business strategy has already resulted in the growth of our international operations in select markets and chosen segments over the last five years. Based on our internal assessments, in recent years, we have grown our market share across various African and Middle East markets such as Tanzania, Saudi Arabia,Kenya, Uganda and United Arab Emirates,Nigeria, in addition to maintainingstrengthening our dominant market position in the South Asian markets of Bangladesh, Nepal and Sri Lanka based on data compiled by our country managers. In keeping with our strategy to enter and grow in new regions, we have focused on business in the ASEAN countries, where in recent years we entered Indonesia, Malaysia, Vietnam and the Philippines. We entered Tunisia two years ago, and are already a major player in the pickup truck market.
countries. We have also expanded our international presence through acquisitions and joint ventures. Our acquisition of Jaguar Land Rover significantly expanded our presence in overseas markets. Through Jaguar Land Rover, we offer products in the premium performance car and premiumall-terrain vehicle categories with globally recognized brands, and we have diversified our business across markets and product categories as a result. We intend to build upon the internationally recognized brands of Jaguar Land Rover. The production of the Range Rover Evoque commenced at the China joint ventureJoint Venture in October 2014 and went on general retail sale in China in February 2015. Production of the Discovery Sport was also added as the second vehicle to be manufactured at the China joint ventureJoint Venture in Fiscal 2016, which went on general retail sale in November 2015. In September 2016, the long wheelbase Jaguar XFL went on sale followed by the long wheel base Jaguar XEL in December 2017. TheE-PACE also went on sale in November 2017 and will be produced atcommenced sales from the China joint venture with sales expected to begin laterJoint Venture in September 2018. The all new Land Rover Discovery went on sale in February 2017 and the new Range Rover Velar went on sale in July 2017 with the refreshed 18 model year Range Rover and Range Rover Sport (including plug in hybridPHEV models) going on sale from November 2017. The multi award winning JaguarI-PACE went on sale in June 2018 and the all new Evoque went on sale in February 2019. The new refreshed Jaguar XE was launched in March 2019 and the refreshed Land Rover intends to expand its global footprint by increasing marketingDiscovery Sport was revealed in May 2019 and its global dealer network as well as expanding its manufacturing basewas launched in China (through our China Joint Venture) in March 2020. The refreshed Jaguar F-TYPE was launched in December 2019 and the United Kingdom and internationally, includingproduction of the newall-new Land Rover Defender began in January 2020 at the manufacturing plant in Nitra, Slovakia, where productionwith first retail sales in March 2020. Plug-in hybrid versions of the Range Rover Evoque and the Land Rover Discovery is scheduled to commence later this year.
Our joint venture with the Thonburi Group, Tata Motors (Thailand) Limited, is also focusing on increasing its geographical reachSport, supported by introducing Thailand-manufactured pickup trucksa new 1.5-litre 3-cylinder Ingenium petrol engine, were recently launched in other Asian markets. Thailand-produced pickup trucks were introduced in Malaysia in the beginning of Fiscal 2015.April 2020.
During Fiscal 2008, we established a joint venture company to undertake manufacture and assembly operations in South Africa, which has been one of our largest export markets from India in terms of unit volume. The joint venture company, Tata Motors (SA) (Proprietary) Limited, commenced operations in July 2011. Currently, Tata Motors (SA) (Proprietary) Limited caters to the South African, Zambia and Mozambique markets and, in Fiscal 2018,2020, sold 815 chassis860 units.
Reducing operating costs
We believe that our scale of operations provides us with a significant advantage in reducing costs and we plan to continue to sustain and enhance this cost advantage.
Our ability to leverage our technological capabilities and our manufacturing facilities among our commercial vehicleCommercial Vehicles and passenger vehiclePassenger Vehicles businesses enables us to reduce cost. For example, the diesel engine used in our Indica was modified to engineer a new variant for use in the Ace platform, which helped to reduce the project cost. Similarly, platform sharing for the manufacture of pickup trucks and UVs enables us to reduce capital investment that would otherwise be required, while allowing us to improve the utilization levels at our manufacturing facilities. Where appropriate, we intend to apply our existinglow-cost engineering and sourcing capability to Jaguar Land Rover vehicles.
Passenger Vehicle business landscape is seeing rapid transformation in the form of tightening emission norms, push towards electrification, enhanced disruptions from autonomous and connected technologies and as the aspiration levels of the Indian consumer continue to rise, requiring stepped up investments in contemporary products in a competitive market. We are taking steps towards subsidiarization of the PV business to secure mutually beneficial strategic alliances that provide access to products, architectures, powertrains, new age technologies and capital and is likely to optimize the operating cost base further into Fiscal 2021.
We are working towards the consolidation of our future Passenger Vehicles on two architectures: the ALFA architecture and the Omega architecture. With all products coming out of these two platforms, we plan to utilize cost benefits coming out of common parts and economies of scale to continue our Passenger Vehicles turnaround. Similar efforts are being taken with our Commercial Vehicles as well.
Our vendor relationships also contribute to our cost reductions. For example, we believe that the vendor rationalization program that we are undertaking will provide economies of scale to our vendors, which would benefit our cost programs. We are also undertaking various internal and external benchmarking exercises that would enable us to improve the cost effectiveness of our components, systems andsub-systems.
We have intensified efforts to reviewAs part of our Project Charge and realign our cost structure through a number of measures such as reduction of manpower costs and rationalization of other fixed costs. OurProject Charge+ programmes Jaguar Land Rover business continuesachieved GBP3.5 billion of cost and cash efficiencies as at March 31, 2020, with a further GBP1.5 billion saving targeted in the 12 months until March 31, 2021. We anticipate to focus on cost management initiatives such as streamlining its purchasing processeshave total savings of GBP5 billion under the Charge and building on its strong relationships with suppliers while increasing employee deployment and flexibility across its sites. In addition, as explained above, our Jaguar Land Rover business continues to increase its use of its new modular aluminum architecture across vehicle platforms and also intends to develop its new modular longitudinal architecture in future models.Charge + programmes.
Enhancing capabilities through the adoption of superior processes
Tata Sons and the entities promoted by Tata Sons, including us, aim at improving quality of life through leadership in various sectors of national economic significance. In pursuit of this goal, Tata Sons and the Tata Sons-promoted entities have institutionalized an approach, called the Tata‘Tata Business Excellence Model,Model’, which has been formulated along the lines of the Malcolm Baldridge National Quality Award to enable us to improve performance and attain higher levels of efficiency in our businesses and in discharging our social responsibility. The model aims to nurture core values and concepts embodied in various focus areas such as leadership, strategic planning, customers, markets and human resources, and to translate them to operational performance. Our adoption and implementation of this model seeks to ensure that our business is conducted through superior processes.
We have deployed a balance score card system for measurement-based management and feedback. We have also deployed a new product introduction process for systematic product development and a PLM system for effective product data management across our organization. We have adopted various processes to enhance the skills and competencies of our employees. We have also enhanced our performance management system, with appropriate mechanisms to recognize talent and sustain our leadership base. We believe these will enhance our way of doing business, given the dynamic and demanding global business environment.
Expanding customer financing activities
WithVehicles sales embedded with financing a critical factor in vehicleexpedite purchases and in light of the rising consumer aspirations in India, we intend to expand our vehicle financing activities to enhance our sales. In addition to improving our competitiveness in customer attraction and retention, we believe that expanding the financing business may also contribute toward moderating the impact on our financial results from the cyclical nature of vehicle sales. As part of our efforts to achieve this objective, we have teamed up with various public sector, cooperative and Grameen bankswithin Tata Motors Group to introduce new financing schemes. TMFL has increased its reach by openingvarious consumer programs, which increases sales and improves consumer satisfaction. We are servicing consumers in more than 11,000 postal codes in the country through a numbernetwork of limited services275 physical branches in tier 2 and 3 towns. During Fiscal 2017, 49 spoke branches were introduced. These branches are attached to hub branches, which increase customer touchpoint and expedite loan processing times. This has reduced turnaround times and, we believe, improved customer satisfaction. In addition to TML dealer sales outlets and Direct Sales Agents, TMFL has 267 branches throughout India. TMFL’s channel finance initiative andfee-based insurance support business have also helped improve profitability.digital presence. To facilitate increased sales,sale and retention of clients, we arehave launched lifecycle products. Additionally, we also working on arranging financingtie-ups in our international markets.offer various customized funding solutions to dealers and vendors, thereby supporting the entire ecosystem.
Continuing to invest in technology and technical skills
We believe we are one of the most technologically advanced indigenous vehicle manufacturers in India. Over the years, we have enhanced our technological strengths through extensivein-house research and development activities. Further, our research and development facilities at our subsidiaries, such as TMETC, TDCV, TTL, and Trilix, together with the two advanced engineering and design centers of Jaguar Land Rover, have increased our capabilities in product design and engineering. In our Jaguar Land Rover business, we are committed to investments in new technologies to develop products that meet the challenges and opportunities of the premium market, including developing sustainable technologies, like electric propulsion, to improve fuel economy and reduce CO2 emissions and new modular longitudinal architecture. We consider technological leadership to be a significant factor in continued success, and therefore intend to continue to devote significant resources to upgrade our technological base.
Maintaining financial strength
Our cash flow from operating activities in Fiscal 20182020 and 2017Fiscal 2019 was Rs.238,574Rs.266,329 million and Rs. 303,107Rs.188,890 million, respectively. Our operating cash flows are primarily due to our Jaguar Land Rover business, implementation of cost reduction programs, and prudent working capital management at Tata Motors India.management. We have established processes for project evaluation and capital investment decisions with an objective to enhance our long-term profitability.
Leveraging brand equity
We introduced our Go to Market Excellence (“GTME”) initiative in Fiscal 2020 for our three product lines, MHCV, ILCV and buses with a varied approach suitable to the product segment and market. GTME is designed to improve lead generation, management and conversion through organized process and digital interventions. Our initiative integrates digital and human channels and capabilities to strengthen customer relationships continuously and meet the rising expectations of the industry. GTME started in Q2 of Fiscal 2019 in South India region for ILCV and MHCV where core sales and service processes were analyzed and re-designed to address the gaps with focus on setting up a scalable digitized process for market share and realization improvement. Presently GTME has been horizontally deployed across India to assist in shaping and digitizing our sales process.
In May 2019, the Company launched a market-leading vehicle Tata Intra in the new compact truck segment. Over 800 key customers, financiers and manufacturers witnessed the launch at Chennai which was covered widely in the national media. For our CV Passenger Vehicles, we displayed our promising range of buses including electric bus at Prawas 2019 and we showcased our ready-to-use fully-built vehicles in form of reefer range of trucks at the Cold Chain Industry Expo (Refcold 2019). Thousands of key stake holders from the industry and the ministry were present in both these events. The company launched the Saarthi Aaram Kendra on national highways to uplift the conditions of on-road commercial vehicle drivers by providing them driver rest area, canteens, doctor’s facility, vehicle service facility, driver training room amongst other things. This was done in association with Indian Oil Corporation Limited, the largest commercial oil company in the country.
Tata Motors Limited introduced its new range of BSVI vehicles at the Auto Expo 2020, a bi-annual auto show held in India which all leading Indian and international auto brands participate. Going beyond compliance, we have redesigned and re-engineered to bring in the new range of BSVI vehicles based on the strategy of product attribute leadership standing on four pillars - lower total cost of ownership, comfort, safety and connectivity. Built on the theme of Connected India, Tata Motors Limited was also awarded the best CV stall design at the Auto Expo 2020.
For pre-owned vehicles, Tata Motors Limited has a brand named TATA OK. Under this brand, we promote exchange of vehicles in the India market, for which customers can exchange a pre-owned vehicle and buy a new vehicle in similar segment. This helps us to retain our existing customers and also capture new customers.
We offer a variety of support products and services for our customers. In order to improve customer experience and business prospects of our BSVI vehicles, we have decided to upgrade ther connected vehicle solution on our existing connected vehicle platform. Our new connected vehicle solution aims to address the existing difficulties faced by customers in their trip management, fleet management and business management by improving efficiency and productivity through our cutting-edge automotive connectivity services. Our connected vehicle solution, which will be launched in phases, seeks to introduce new features, including connected diagnostics, maintenance module and ecosystem integration. Each of our BSVI MHCV vehicles will be assembled with a telematic control unit and equipped with the basic version of our connected vehicle solution.
Since 2019, Tata Motors Limited has increased emphasis on digitally-led work and campaigns as more and more semi-urban and rural customers adopt digital technology as a medium for their businesses. Our digital initiatives gained recognition in the industry, with more than 20 awards won in the last financial year.
We believe customers associate the Tata name with reliability, trust and ethical value, and that our brand name is gaining significant international recognition due to the international growth strategies of various Tata companies. The Tata brand is used and its benefits are leveraged by Tata companies to their mutual advantage. We recognize the need for enhancing our brand recognition in highly competitive markets in which we compete with internationally recognized brands. We, along with Tata Sons and other Tata companies, will continue to promote the Tata brand and leverage its use in India, as well as in various international markets where we plan to increase our presence. Supported by the Tata brand, we believe our product brands, such as the Indica, Indigo, Sumo, Safari, Aria, Venture, Nano,Tiago, Tigor, Tigor (EV), Altroz, Nexon, Nexon (EV), Harrier, Ace, Magic, and Prima, Daewoo, Jaguar, Range Rover and Land Rover are highly regarded, which we intend to continue to nurture and promote. At the same time, we will continue to build new brands, such as the newly launched SIGNA range of M&HCVs, and the Tiago, the Hexa and the Tigor to further enhance our brand equity.
In Fiscal 2017, we introduced a newsub-brand, TAMO, to leverage new business models and technologies. It is a fast-paced vertical working in an incubator environment for providing innovative mobility solutions. TAMO as a new, separated vertical will operate in the first step on a low volume, low investment model to provide fast tracked proofs of technologies and concepts. TAMO will act as an open platform to network with global startups and leading tech companies, to get access to trends, innovations and solutions, for the design of exciting future products and services. For the rapidly changing automotive environment, TAMO is expected to transform the experience of interfacing and interacting with customers and the wider community. TAMO provides a digitaleco-system, which will be leveraged by Tata Motors to support the mainstream business in the future.
Our commercial vehicle initiative, Project Neev, provides a growth program for rural India designed to promote self-employment. Local, unemployed rural youth have been enrolled and trained to work from home as promoters of our commercial vehicles. Project Neev is currently operational in 19 states in India and has engagements in 456 districts and 3,613sub-districts, which covers more than 470,500 villages. The rural penetration drive initiated through Project Neev has deployed an approximately 6,500 member dedicated team in towns and villages with populations of less than 50,000. Project Neev currently completed its sixth wave of expansion and reorganization called NEEV Overdrive, and we intend to expand its operations in all major states across India. This program has been appreciated and recognized in various forums.
In light of the positive response received by “Truck World: Advanced Trucking Expo”, which was launched in Fiscal 2015, we organized six Truck World Exhibitions with a full range of over 35 different models displayed. The events were also used to highlight new product launches. This has been backed up with 10,000+ market activations including 3100+ customer meets and 1600+ Fuel Trials.
For the intermediate and light truck range, we organized 53 ILCV Expos, showcasing the complete ILCV range from TML, across 17 states with a total of 18,500 customers attending.
Another initiative through our commercial vehicles business isTATA-OK.TATA-OK seeks to promote our commercial vehicles by capturing new customer segments (such as economical and used vehicle buyers), promoting the sale of new vehicles through the exchange of used commercial vehicles at our dealerships, increasing the resale value of its commercial vehicles products, and facilitating deeper customer engagement and thereby promoting brand loyalty.
We offer a variety of support products and services for our customers. Tata FleetMan, our telematics and fleet management service, is designed to enable the commercial sector to boost productivity and profitability. With the goal of bringing the most advanced technology in this area to our customers, we have entered into a partnership withUK-based Microlise Limited to introduce global standards of telematics and fleet management solutions into the Indian logistics and transport industry, to enhance Tata FleetMan’s telematics systems through upgrades of the underlying technology and to develop the next generation of fleet telematics solutions for the Indian transport industry. Original equipment fitment of Tata Fleetman commenced in Fiscal 2016, and as of Fiscal 2018, we have covered the entire M&HCV range.
In order to support our customers throughout the life of their vehicle, we have introduced a range of value added services under the brand “Sampoorna Seva”. The Tata Alert breakdown service promises to respond to the breakdown site within four hours of notification and to return the vehicle to the road within 48 hours, covering some 3 million km of Indian roads. Other key elements include a 6 year 6 lakh km warranty on the M&HCV range and the Tata Delight loyalty program. This was coupled with the introduction of new services, such as the Tataon-site service and parts support using container workshops. These workshops are anon-site service support system that deploy a containeron-site, which houses the repair equipment to carry out most routine maintenance activities for a fleet. In addition, we offeron-demand annual maintenance contracts or AMCs, which provides maintenance solutions to all customers for a wide range of vehicles, including large fleet owners.
As of Fiscal 2018, the “Humare Bus Ki Baat Hain” campaign which was started in 2013 to cultivate safe practices of school bus drivers, promote our brand and build connections with riders and other stakeholders, has reached more than 46,000 school staff in 1,500 schools across India.
TML participated in the SIAM Auto Expo 2018 in Greater Noida in India, where 15 vehicles and 1 new engine from the CV portfolio were showcased. Some of the key products displayed were:
Overview of Automotive Operations
We sold 961,463, 1,274,072 and 1,221,124 1,091,748 and 1,029,845 units worldwide in Fiscal 2018, 20172020, Fiscal 2019 and 2016,Fiscal 2018, respectively, consisting of 675,826485,511 units of Tata Commercial Vehicles and other brand vehiclesTata Passenger Vehicles and 545,298475,952 units (excluding wholesales from the China joint venture)Joint Venture) of Jaguar Land Rover vehicles in Fiscal 2018.2020. In terms of units sold, our largest market iswas India where we sold 616,801448,614 and 480,915693,756 units during Fiscal 20182020 and 2017Fiscal 2019, respectively (constituting 50.5%46.7% and 44.1%54.5% of total sales in Fiscal 20182020 and Fiscal 2017,2019, respectively), followed by China,North America, where we sold 150,116135,766 units and 125,207133,237 units in Fiscal 20182020 and 2017,Fiscal 2019, respectively (constituting 12.3%14.1% and 11.5%10.5% of total sales in Fiscal 20182020 and 2017,Fiscal 2019, respectively). A geographical breakdown of our revenue is set forth in Item 5.A “—Operating Results—Geographical breakdown”.
Our total sales worldwide (including international business sales, Jaguar Land Rover sales and excluding sales by our China Joint Venture) in Fiscal 2018, 20172020, Fiscal 2019 and 2016Fiscal 2018 are set forth in the table below:
Category | Year ended March 31 | |||||||||||||||||||||||
2018 | 2017 | 2016 | ||||||||||||||||||||||
Units | % | Units | % | Units | % | |||||||||||||||||||
Passenger cars | 319,492 | 26.2 | % | 310,171 | 28.4 | % | 212,152 | 20.6 | % | |||||||||||||||
Utility vehicles | 445,080 | 36.4 | % | 385,480 | 35.3 | % | 426,740 | 41.4 | % | |||||||||||||||
Commercial vehicles | 456,552 | 37.4 | % | 396,097 | 36 | % | 390,953 | 38 | % | |||||||||||||||
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Total | 1,221,124 | 100.0 | % | 1,091,748 | 100.0 | % | 1,029,845 | 100.0 | % | |||||||||||||||
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2020 | 2019 | 2018 | ||||||||||||||||||||||
Units | % | Units | % | Units | % | |||||||||||||||||||
Passenger Cars | 202,010 | 21.0 | % | 286,730 | 22.5 | % | 291,299 | 23.9 | % | |||||||||||||||
Utility Vehicles | 411,866 | 42.8 | % | 460,056 | 36.1 | % | 473,273 | 38.7 | % | |||||||||||||||
Commercial Vehicles | 347,587 | 36.2 | % | 527,286 | 41.4 | % | 456,552 | 37.4 | % | |||||||||||||||
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Total | 961,463 | 100.0 | % | 1,274,072 | 100.0 | % | 1,221,124 | 100.0 | % | |||||||||||||||
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Tata Commercial Vehicles and Tata Passenger Vehicles
India is the primary market for Tata and other brand vehicles (including vehicle financing). During Fiscal 2020, Indian automotive sector was impacted by subdued demand, weak consumer sentiment, economic slowdown, impact in credit flows due to spillovers from the NBFC crisis and transition to BSVI. Other geographic markets were also affected by various macro and industry headwinds.
The following table sets forth our total sales worldwide of Tata Commercial Vehicles and other brand vehicles:Tata Passenger Vehicles:
Category | Year ended March 31 | Year ended March 31 | ||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||||||||||||||||||||
Units | % | Units | % | Units | % | Units | % | Units | % | Units | % | |||||||||||||||||||||||||||||||||||||
Passenger cars & utility vehicles | 219,274 | 32.4 | % | 160,905 | 28.9 | % | 129,558 | 24.9 | % | |||||||||||||||||||||||||||||||||||||||
Commercial vehicles | 456,552 | 67.6 | % | 396,097 | 71 | % | 390,953 | 75 | % | |||||||||||||||||||||||||||||||||||||||
Tata Passenger Cars | 137,924 | 28.4 | % | 234,500 | 30.8 | % | 219,274 | 32.4 | % | |||||||||||||||||||||||||||||||||||||||
Tata Commercial Vehicles | 347,587 | 71.6 | % | 527,286 | 69.2 | % | 456,552 | 67.6 | % | |||||||||||||||||||||||||||||||||||||||
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Total | 675,826 | 100.0 | % | 557,002 | 100.0 | % | 520,511 | 100.0 | % | 485,511 | 100.0 | % | 761,786 | 100.0 | % | 675,826 | 100.0 | % | ||||||||||||||||||||||||||||||
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Our overall vehicle salesPlease see Item 5.A “Operating and Financial Review and Prospects—Operating Results—Geographical Breakdown” for Tata and other brand vehicles increaseda breakdown of the Company’s total revenue by 21.3% to 675,826 unitsgeographic market in Fiscal 2018 from 557,002 units in2020, Fiscal 2017. The revenue attributable to Tata2019 and other brand vehicles (before inter-segment elimination) increased by 25.4% to Rs.649,972 million in Fiscal 2018, compared to Rs.518,431 million in Fiscal 2017.2018.
According to data released by the Society of Indian Automobile Manufacturers (SIAM), in Fiscal 2018, the Indian automotive industry (PV & CV) recorded a 10.1% growth in domestic sales as compared to an 8.2% growth in Fiscal 2017. The passenger vehicle (PV) segment grew 7.3% in Fiscal 2018 (as compared to 9.2% in Fiscal 2017) due to continued consumption demand and strong rural growth. The commercial vehicle industry registered a 21.7% growth in Fiscal 2018 as compared to 4.2% growth in previous fiscal, as a result of the implementation of GST, restrictions on overloading and infrastructure growth supported by the Government of India, high investments ine-commerce segment driving the demand for last mile transportation requirements, growth in replacement demand and improved financing and recovery in rural demand.
We sold 675,826, 557,002 and 520,511 units of Tata and other brand vehicles in Fiscal 2018, 2017 and 2016, respectively. Of the 675,826485,511 units sold overall in Fiscal 2018, we2020, the Company sold 616,801448,614 units of Tata Commercial Vehicles and other brand vehiclesTata Passenger Vehicles in India while 59,025and 36,897 units were sold outside of India, compared to 480,915693,756 units and 76,08768,030 units respectively in Fiscal 2017. Our share of the Indian four-wheeler automotive vehicle market, which consists of automobile vehicles other thantwo- and three-wheeler categories, increased from 12.7% in Fiscal 2017 to 14.1% in Fiscal 2018. 2019.
We maintained our leadership position in the commercial vehicleCommercial Vehicle category in the industry,India, which was characterized by increased competition during the year. The passenger vehiclePassenger Vehicle market also continued to be subject to intense competition.
A principal reason for the increase in the volume of sales of Tata and other brand vehicles, mainly medium and heavy commercial vehicles, is the revival of the demand with the entry of new products and strong demand supported by economic growth
The following table sets forth our market share in various categories in the Indian market based on wholesale volumes:
Category | Year ended March 31 | |||||||||||
2018 | 2017 | 2016 | ||||||||||
Passenger cars | 6.2 | % | 6.5 | % | 5.3 | % | ||||||
Utility vehicles1 | 4.6 | % | 2.0 | % | 2.7 | % | ||||||
Intermediate and Light commercial vehicles2 | 44.9 | % | 42.4 | % | 46.4 | % | ||||||
Medium and heavy commercial vehicles | 54.3 | % | 55.1 | % | 58.5 | % | ||||||
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SCV & Pickups | 39.6 | % | 37.5 | % | 37.3 | % | ||||||
CV Passenger | 45.3 | % | 46.0 | % | 47.6 | % | ||||||
Total Four-Wheel Vehicles | 14.2 | % | 12.7 | % | 13.1 | % | ||||||
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Category | Year ended March 31 | |||||||||||
2020 | 2019 | 2018 | ||||||||||
Passenger Cars | 4.2 | % | 5.9 | % | 6.2 | % | ||||||
Utility Vehicles | 5.6 | % | 7.0 | % | 4.6 | % | ||||||
Medium and Heavy Commercial Vehicles | 57.4 | % | 55.0 | % | 54.3 | % | ||||||
Intermediate and Light Commercial Vehicles | 47.2 | % | 45.4 | % | 44.9 | % | ||||||
SCVs & Pickups | 37.9 | % | 40.1 | % | 39.6 | % | ||||||
CV Passenger Vehicles | 40.9 | % | 44.0 | % | 45.3 | % | ||||||
Total Four-Wheel Vehicles | 12.7 | % | 15.5 | % | 14.1 | % | ||||||
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Source: Society of Indian Automobile Manufacturers Report and our internal analysis.
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Passenger vehiclesVehicles in India
Industry-wide sales of passenger vehiclesPassenger Vehicles in India increaseddecreased by 7.3%17.3% in Fiscal 2018,2020, compared to a 9.6%2.8% growth in Fiscal 2017 utility vehicles2019, while Utility Vehicles sales also witnessed significant growthremained flat during Fiscal 2018 due to continued consumption demand2020 as a result of weak consumer sentiment, rising cost of vehicle ownership, liquidity stress and strong rural growth. Reflecting the growth in the Indian passenger vehicle sector, our passenger vehiclegeneral economy slowdown. Our Passenger Vehicle sales in India increaseddecreased by 39.2%37.4% to 218,097131,796 units in Fiscal 20182020 from 156,731210,500 units in Fiscal 2017,2019, due to new product offerings by us.macro headwinds impacting the industry and our focus on retail sales for seamless transition to BSVI. During Fiscal 2020, the Passenger Vehicle retail sales were 13% higher than Passenger Vehicle wholesales. For a smooth transition to BSVI, the Company focused on stock reduction through retail acceleration. We have achieved seamless transition to BSVI with our “New Forever” range.
Passenger Cars in India
We sold 138,08471,719 units in the passenger carPassenger Cars category (Tata Brand vehicles)(Tata-brand vehicles in India) in Fiscal 2018,2020, compared to 138,152131,035 units in Fiscal 2017.2019. In January 2020, we launched Altroz (a premium hatchback and the first model from ALFA platform) and we sold 8,412 units. Our market share for passenger carsPassenger Cars in India was lower at 6.2%4.2% in Fiscal 2018,2020, as compared to 6.5%5.9% in Fiscal 2017.2019.
Utility vehiclesVehicles in India
In the utility vehiclesUtility Vehicles category, we sold 49,08960,077 units in Fiscal 2018,2020, representing an increasea decrease of 168.5%24.4% from 18,57979,465 units in Fiscal 2017. During Fiscal 2018, we launched, Nexon, a compact SUV and sold 27,111 units.2019. Our market share improvedof Utility Vehicles in India decreased and currently stands at 4.6%5.6% in Fiscal 2018,2020, compared to 2.0%7.0% in Fiscal 2017, primarily due to the popularity of Nexon.
During Fiscal 2018 Fiat branded vehicles sold were 29,807 units.2019.
Commercial vehiclesVehicles in India
Industry sales of commercial vehicles increasedCommercial Vehicles decreased by 21.7%30.0% to 887,316726,762 units in Fiscal 20182020 from 729,3601,038,834 units in Fiscal 2017.2019. Industry sales in the M&HCVMHCVs segment has growndeclined the most, by 17.3%51.9% at 247,659132,272 units in Fiscal 2018,2020, as compared to 211,198274,750 in Fiscal 2017. The MHCV industry has shown signs of recovery since July 2017. The implementation of GST, restrictions on overloading and infrastructure growth supported by the Government has boosted the demand.2019. Industry sales of ILCV reported an increasea decrease of 27.9%29.0% to 103,13189,066 units in Fiscal 2018,2020, from 80,625125,471 units in Fiscal 2017.2019. Industry sales of SCV & Pickups reported an increase by 29.9%a decrease of 20.2% to 421,084411,352 units in Fiscal 2018,2020, from 324,090515,491 units in Fiscal 2017. The ILCV & SCV industry growth is mainly due to high investments ine-commerce segments which is driving demand for last mile transportation requirements, growth in replacement demand, improved financing and recovery in rural demand.2019. Industry sales of CV Passenger reported a marginal increasedecrease of 1.8%23.6% to 115,44294,072 units in Fiscal 2018,2020, from 113,447123,122 units in Fiscal 2017 due to muted demand from STUs.2019.
The sales of our commercial vehiclesCommercial Vehicles in India outperformedunderperformed the industry with a growthdecline rate of 23.3%33.4% to 399,821312,267 units in Fiscal 20182020 from 324,184468,788 units in Fiscal 2017.2019. Despite several challenges, through focused management efforts we achieved seamless transition into BSVI. As a result, our BSIV inventory in the ecosystem was near zero as at March 31, 2020.
M&HCVsMHCVs in India
Our sales in the MHCVMHCVs category increasedin India decreased by 15.5%49.7% to 134,45575,918 units in Fiscal 2018,2020, as compared to sales of 116,403151,004 units in Fiscal 2017.2019. The implementationdecline was witnessed on account of GST, restrictions on overloadinghigher capacity arising from axle load regulations, poor freight availability, falling freight rates, slowdown in the infrastructure developments, delayed payments to contractors, liquidity stress and infrastructure growth supported byoverall sharp decline in the Government of India boosted demand for M&HCVs.economy.
ILCVs in India
Our sales in the ILCVILCVs in India segment increaseddecreased by 35.6%26.2% to 46,34342,077 units in Fiscal 2018,2020, from 34,17557,015 units in Fiscal 2017.2019. The ILCV industry growth isin India declined mainly due to high investments ine-commerce segments which is driving demand for last mile transportation requirements, growth inlack of replacement demand, improved financingslowdown in economy, liquidity constraints and recoverydecline in rural demand.discretionary spending.
SCVSCVs & Pickups in India
Our sales in SCVSCVs & Pickups segment increasedin India decreased by 37.3%24.6% to 166,746155,790 units in Fiscal 20182020 from 121,411206,655 units in Fiscal 2017.The2019. The SCV growthsegment is mainlyheavily dependent on the ‘First Time User’ category of customers and thus has been impacted due to high investmentsthe liquidity crunch, higher interest rates and difficulty ine-commerce segments which is driving demand for last mile transportation requirements, growth in replacement demand, improved financing and recovery in rural demand. funding from the NBFCs.
CV Passenger CarsVehicles in India
IndustryOur sales ofin CV Passenger reported a marginal increase of 1.8%Vehicles segment in India decreased by 28.9% to 115,44238,482 units in Fiscal 2018,2020 from 113,44754,114 units in Fiscal 20172019, due to muted demand from State Transport Undertakings. Our CV passenger segment remained flat with a growth of 0.2% to 52,277 unitsoverall decline in Fiscal 2018 from 52,195 units in Fiscal 2017.industry volume.
Tata Commercial Vehicles and other brand vehicles—Tata Passenger Vehicles—Exports
International business has consistently expanded since its inception in 1961. We have a global presence in more than 46 countries, including all South Asian Association for Regional Cooperation countries,Southern Asia, South Africa, Africa, Middle East, Southeast Asia and Ukraine. We market a range of products including M&HCVMHCV trucks, LCV trucks, buses, pickups and small commercial vehicles.Commercial Vehicles.
Our overall sales in international markets decreased by 22.4%41.4% to 59,02531,144 units in Fiscal 2018 from 76,0872020 as compared to 53,140 units in Fiscal 2017. Our exports of vehicles manufactured in India decreased by 24.1% in Fiscal 2018 to 47,693 units from 62,830 units in Fiscal 2017. The reduction was on account of contraction in total industry volumes in few key markets. The increase of exports to Nepal provided an opportunity for us.2019. Our top five export destinations for vehicles manufactured in India, that is,were Bangladesh, Nepal, Sri Lanka, Nepal, South AfricaKuwait and Indonesia,Tanzania, which accounted for approximately 81% and 79%73% of the exports of commercial vehiclesCommercial Vehicles, while Nepal, Bangladesh, Tanzania, Bhutan and passenger vehicles, respectively.Sri Lanka were top 5 export destinations for Passenger Vehicles and accounted for 99% of exports of Passenger Vehicles. We intend to strengthen our position in the geographic areas we are currently operating in and explore possibilities of entering new markets with similar market characteristics to the Indian market. Commercial Vehicles exports were 29,664 units in Fiscal 2020, as compared to 51,119 units in Fiscal 2019. Global economic slowdown and liquidity crunch impacted the industry volumes across most of our major markets, for instance Southern Asia, Middle East and African markets witnessed a decline in volumes in Fiscal 2020 as compared to Fiscal 2019. Our market shares in almost all focus markets have either improved or sustained as compared to Fiscal 2019. We also corrected our distributor stocks which had built up due to the sudden drop in demand and completed many prestigious orders with major municipalities and government bodies across the globe. Passenger Vehicles exports were 1,480 units in Fiscal 2020, compared to 2,021 units in Fiscal 2019. 200 Units of Hexa were supplied to Bangladesh army.
TDCV, our subsidiary company engagedwhich engages in the design, development and manufacturing of M&HCVs,MHCVs, witnessed a decrease in the overall sales by 14.0%22.2% to 8.8705,190 units in Fiscal 20182020 from 10,3176,672 units in Fiscal 2017.2019. In its domestic market (South Korea), TDCV’s sales decreased by 22.0%18.1% from 8,7954,371 units in Fiscal 20172019 to 6,8593,581 units in Fiscal 2018,2020, primarily due to lower industry volumes, and aggressive discounting and marketing strategies of importers.importers and impact of the COVID-19 pandemic in the fourth quarter of Fiscal 2020. The combined market share was 20.5% in Fiscal 2020 as compared to 21.1% in Fiscal 2019. The export market scenario continued to remain challenging in Fiscal 2018 with2020 due to factors like local currency depreciation against the US Dollar,such as continuing statutory regulations to reduce imports, global economic downturn and the slowdown in Chinese economy impacting commodity exporting countries and increased dealer inventory. However, TDCV could increase itsCOVID-19 pandemic which has adversely impacted overall sales. The export sales to 2,011 units, 32.1% higher compared to 1,522showed reduction of 30.1% from 2,301 units in Fiscal 2017.2019 to 1,609 units in Fiscal 2020.
Tata Commercial Vehicles and other brand vehicles—Tata Passenger Vehicles—Sales and Distribution
Our sales and distribution network in India as at March 20182020 comprised approximately 4,931 contactover 5,528 touch points for sales and service for our passengerits Passenger Vehicles and commercial vehicle business. Our subsidiary TDCL acts as a dedicated distribution and logistics management company to support the sales and distribution operations of our vehicles in India. We believe this has improved the efficiency of our selling and distribution operations and processes.Commercial Vehicles businesses. We use a network of service centers on highways and a toll-free customer assistance center to provide24-houron-road24-hour sideroadside assistance, including replacement of parts, to vehicle owners.
TDCL provides distribution and logistics support for vehicles manufactured at our facilities and has set up stocking points at some of our plants and at different places throughout India. TDCL helps us improve planning, inventory management, transport management and timing of delivery. We have a customer relations management system, or CRM, at all of our dealerships and offices across the country, which supports users both at our company and among our distributors in India.India and abroad.
We market our commercialCommercial Vehicles and passenger vehiclesPassenger Vehicles in several countries in Africa, the Middle East, South East Asia, South Asia, Australia, Latin America, Australia, Russia and the Commonwealth of Independent States countries. We have a network of distributors in all such countries, where we export our vehicles. Such distributors have created a network of dealers and branch offices and facilities for sales and after-sales servicing of our products in their respective markets. We have also stationed overseas resident sales and service representatives in various countries to oversee our operations in the respective territories.
Tata Commercial Vehicles and other brand vehicles—Tata Passenger Vehicles—Competition
We face competition from various domestic and foreign automotive manufacturers in the Indian automotive market. Improving infrastructure and robust growth prospects compared to other mature markets have attracted a number of international companies to India who have either formed joint ventures with local partners or have established independently owned operations in India. Global competitors bring with them decades of international experience, global scale, advanced technology and significant financial resources, and as a result, competition is likely to further intensify in the future. We have designed our products to suit the requirements of the Indian market based on specific customer needs, such as safety, driving comfort, fuel efficiencyfuel-efficiency and durability. We believe that our vehicles are suited to the general conditions of Indian roads and the local climate. The vehicles have also been designed to comply with applicable environmental regulations currently in effect. We also offer a wide range of optional configurations to meet the specific needs of our customers. We intend to develop and are developing products to strengthen our product portfolio in order to meet the increasing customer expectation of owning world-class products.
Tata Commercial Vehicles and other brand vehicles—Tata Passenger Vehicles—Seasonality
Demand for our vehicles in the Indian market is subject to seasonal variations. Demand generally peaks between January and March, although there is a decrease in demand in February just before release of the Government of India’s fiscal budget. Demand is usually lean from April to July and picks up again in the festival season from September onwards, with a decline in December due to model year change.end.
Tata Commercial Vehicles and other brand vehicles—Tata Passenger Vehicles—Vehicle Financing
Through our wholly owned subsidiary TMFL,TMFHL and its step down subsidiaries Tata Motors Finance Ltd (“TMFL”) and Tata Motors Finance Solutions Ltd (“TMFSL”), collectively referred to as “TMF group” we provide financing services to purchasers of our vehicles through our independent dealers, who act as our agents for financing transactions, and through our branch network. The vehicle financing is intended to encourage sales of vehicles by providing financing to the dealers’ customers and as such is an integral part of the automotive business. TMFLTMF group disbursed Rs.154,060Rs.150,290 million and Rs.92,976Rs.219,930 million in vehicle financing in India during Fiscal 20182020 and 2017,Fiscal 2019, respectively. During Fiscal 20182020 and 2017,Fiscal 2019, approximately 25%30% and 22%26%, respectively, of our vehicle unit sales in India were financedmade by TMFL.the dealers through financing arrangements with Company’s captive financing subsidiary. As at March 31, 20182020 and 2017, total vehicle finance receivables outstanding amounted to Rs.238,990 million and Rs.175,633 million, respectively, and the2019, TMF group’s customer finance receivable portfolio comprised 488,456624,354 and 552,991577,399 contracts, respectively. Our gross finance receivables amounted to Rs.250,708 million and Rs.211,608 million as at March 31, 2018 and 2017, respectively. We followTMF group follows specified internal procedures, including quantitative guidelines, for selection of ourthe finance customers.customers and assists in managing default and repayment risk in the portfolio. We originate all of the contracts through our authorized dealers and direct marketing agents with whom we have agreements. All of our marketing, sales and collection activities are undertaken through dealers or by TMFL.TMF group.
We securitizeTMFL securitizes or sellsells our finance receivables on the basis of the evaluation of market conditions and funding requirements. The constitution of these pools is based on criteria that are decided by credit rating agencies and/or based on the advice that we receive regarding the marketability of a pool. We undertakeTMFL undertakes these securitizations of our receivables due from purchasers by means of private placement.
We actTMFL acts as the collection agentsagent on behalf of the investors, representatives, special purpose vehicles or banks, in whose favor the receivables have been assigned, for the purpose of collecting receivables from the purchasers on the terms and conditions contained in the applicable deeds of securitization, in respect of which pass-through certificates are issued to investors in case of special purpose vehicles, or SPVs. WeTMFL also securesecures the payments to be made by the purchasers of amounts constituting the receivables under the loan agreements to the extent specified by rating agencies by any one or all of the following methods:
• | furnishing collateral to the investors, in respect of the obligations of the purchasers and the undertakings to be provided by TMFL; |
• | furnishing, in favor of the investors, 15% of the future principal in the receivables as collateral, for securitizations done through Fiscal 2020, either by way of a fixed deposit or bank guarantee or subordinate tranche to secure the obligations of the purchasers and our obligations as the collection agent, based on the quality of receivables and rating assigned to the individual pool of receivables by the rating agency (ies); and |
• | by way of over-collateralization or by investing in subordinate pass-through certificates to secure the obligations of the purchasers. |
TMF Group also undertakes direct assignment where there is no support provided to the investors in respect of the obligations of the purchasers and the undertakings to be provided by us;
Fordirect assignments.For further details, see Note 35(b)39(b) to our consolidated financial statements included elsewhere in this annual report onForm 20-F.
Jaguar Land Rover
Total wholesales of Jaguar Land Rover vehicles (excluding Chery Jaguar Land Rover)the China Joint Venture) with a breakdown between Jaguar and Land Rover brand vehicles, in Fiscal 20182020 and 2017Fiscal 2019 are set forth in the table below:
Fiscal 2018 | Fiscal 2017 | Fiscal 2020 | Fiscal 2019 | |||||||||||||||||||||||||||||
Units | % | Units | % | Units | % | Units | % | |||||||||||||||||||||||||
Jaguar | 150,484 | 27.6 | % | 169,284 | 31.7 | % | 125,820 | 26.4 | % | 153,757 | 30.3 | % | ||||||||||||||||||||
Land Rover | 394,814 | 72.4 | % | 365,462 | 68.3 | % | 350,132 | 73.6 | % | 354,138 | 69.7 | % | ||||||||||||||||||||
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Total | 545,298 | 100.0 | % | 534,746 | 100.0 | % | 475,952 | 100.0 | % | 507,895 | 100.0 | % | ||||||||||||||||||||
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In Fiscal 2018,2020, Jaguar Land Rover wholesale volumes (excluding our China Joint Venture) were 545,298475,952 units up 2.0%down 6.3%, compared to Fiscal 20172019, and wholesale volumes of CheryChina Joint Venture were 49,450 units, reflecting a 13.9% decrease compared to the 57,428 units in Fiscal 2019. The decrease in wholesale volumes (excluding China Joint Venture) in Fiscal 2020 primarily reflects the decline in sales in the fourth quarter (a decrease of 20.3% as compared to Fiscal 2019) as a result of the COVID-19 pandemic. By region, Jaguar Land Rover (China joint venture)wholesale volumes (excluding our China Joint Venture) were 88,212 units, reflecting a 33.5% growth135,766 in North America (an increase of 1.9% as compared to 2017. This is mainly dueFiscal 2019), but decreased in other regions at 14.2%, 8.8%, 7.3% and 4.6%, respectively in other overseas markets, Europe, the UK and China. Wholesale volumes recovered well in the 9 months to introductionDecember 31, 2019 (an increase of 8.5% as compared to the long wheel base Jaguar XEL duringsame period in Fiscal 2018 as well as2019), before the COVID-19 pandemic impacted sales ramp upin the fourth quarter of Fiscal 2020. By model, the long wheel base Jaguar XFL atincrease of sales in our all-new Range Rover Evoque (an increase of 44.2% year-on-year), the China joint venture. Lowercommencement of sales of more established models partiallyour all-new Land Rover Defender and the award-winning Jaguar I-PACE (an increase of 2.0% year-on-year) were offset by the risedecline in sales driven byof other models, including the introduction of new models. Wholesale volumes were up in China (11.0%), in North America (3.4%) and other Overseas markets (13.0%), which includes Russia, Brazil and South Africa but down in the United Kingdom (1.1%) and in Europe (7.2%), reflecting continuing uncertainty over diesel.Land Rover Discovery Sport.
Jaguar wholesale volumes were 150,484125,820 units, in fiscal 2018, down 11.1%18.2% compared to Fiscal 2017, reflecting2019, with increased sales of the introduction of theE-PACEall-electric I-PACE (up 2.0% compared to Fiscal 2019), were offset by lower sales of the Jaguar XE, JaguarF-PACE, Jaguar XF.other models.
Land Rover wholesale volumes were 394,814350,132 units, in fiscal 2018, up 8.0%down slightly 1.1% compared to the prior year led by the introductionFiscal 2018, as significantly higher sales of the all-newRange Rover VelarEvoque (an increase of 44.2% as compared to Fiscal 2019) and the all new Discovery, partiallystart of sales of the all-new Land Rover Defender largely offset by lower sales of the Range Rover Evoque and Discovery Sport. Sales of Range Rover and Range Rover Sport were also lower year on year on account of the model year change over, including the launch of our first Plug in Hybrid models, during the third and fourth quarter.other models.
Jaguar Land Rover’s performancePerformance in key geographical marketsKey Geographical Markets on a retail basisRetail Basis
Retail volumes (including retail sales from the China Joint Venture) in Fiscal 2018 increased2020 declined by 1.7%12.1% to 614,309508,659 units from 604,009578,915 units in Fiscal 2017 led by2019 with over two-thirds of that volume decline occurring in the introduction offourth quarter as the Range Rover Velar, the all new Land Rover DiscoveryCOVID-19 pandemic impacted sales and the JaguarE-PACE as well as continued demand for the JaguarF-PACE and the long wheel base Jaguar XFL from our China joint venture. This increase was partially offset by lower salessupply of the Jaguar XE (long wheel base Jaguar XEL launched in December 2017 with sales still ramping up), Jaguar XJ, Discovery Sport and Range Rover Evoque. Retail sales of Range Rover and Range Rover Sport were also loweryear-on-year on account of the model year change over during the third and fourth quarter. vehicles across all regions.
United Kingdom
Industry vehicle sales fell 11.0%10.9% in Fiscal 20182020 in the United Kingdom as diesel vehicle sales declined 28.5% year-on-yeardue to a weaker automotive cycle,continued volatility in the run up to the general election in December 2019 and uncertainty related to Brexit and the continuing uncertainty around diesel (diesel sales are down 26.2% yearsubsequent transition period which is currently scheduled to end on year).December 31, 2020. Jaguar Land Rover retail volumes decreased by 12.8%9.6% to 108,759106,612 units in Fiscal 2018 from 124,7552020 compared to 117,915 units in Fiscal 2017, which was broadly2019. By brand, Jaguar retails were 32,533 vehicles in line with the declineFiscal 2020, down 15.5% compared to 38,515 vehicles in industry volumes. The introduction of RangeFiscal 2019, and Land Rover Velar and JaguarE-PACE as well as continuing demand for the JaguarF-PACEretails were 74,079 vehicles, down 6.7% compared to 79,400 vehicles in the United Kingdom were not enough to offset lower sales of more established models, including the model year changeover impacting sales of Range Rover and Range Rover Sport, and the lower demand for diesel powered vehicles.Fiscal 2019.
North America
Economic performance in North America was generally favorableweakened in Fiscal 20182020, with solid GDP growthinterest rate reductions and strong labor market conditions. Industrymonetary policy actions implemented to combat the economic impact of the COVID-19 pandemic, and industry vehicle sales in North America were down slightly (1.1%) in Fiscal 2018 whilst3.9% year-on-year. Jaguar Land Rover retail sales increased by 4.7% year-on-yearretails also decreased, down 7.5% year on year, to 129,319 units from 123,527129,346 units in Fiscal 2017. Jaguar retail sales were down 1.7% in North America as continued demand for the JaguarF-PACE and the introduction of the JaguarE-PACE were offset by lower sales of the Jaguar XE and other models. Land Rover retailed 88,4642020 compared to 139,778 units in Fiscal 2018, up 8.0%, from 81,949 units2019. By brand, Jaguar retails were 30,095 vehicles in Fiscal 2020, down 18.1% compared to 36,768 vehicles in Fiscal 2019, and Land Rover retails, were 99,251, down 3.6% compared to 103,010 last year led by the introduction of Range Rover Velar and the all new Discovery partially offset by lower sales of Range Rover Evoque, Discovery Sport and Range Rover Sport, primarily reflecting the model year changeover.year.
Europe
Economic performancegrowth in Europe improved duringwas low in Fiscal 20182020 due to the negative impacts of Brexit and rising protectionism with consistent GDP growth of around 2.5%.economic activity in the EU, including Germany and Italy. Further, uncertainty in diesel regulations, the reduction in subsidies for electric vehicles (notably in the Netherlands) have impacted our sales in Europe. Industry volumes in Europe were up 3.4%down 4.8% but Jaguar Land Rover retail sales in Europe weredeclined further, down 5.3%16.1% year on year to 133,592107,037 vehicles in Fiscal 20182020 from 141,043 last year, primarily driven by uncertainty over diesel. Jaguar volumes decreased by 10.1% to 36,248 units127,566 in Fiscal 20182019, By brand, Jaguar retails were 35,335 vehicles in Fiscal 2020, down 28.6% compared to 40,332 units49,474 vehicles in Fiscal 2017 as the introduction of the JaguarE-PACE was more than offset by lower sales of the Jaguar XE, Jaguar XF2019, and the JaguarF-PACE. Land Rover retails were 97,344 units71,702 in Fiscal 2018,2020, down 3.3%8.2% compared to the 100,711 units78,092 vehicles in Fiscal 2017 as the introduction of the Range Rover Velar and the all new Discovery solid sales were offset by lower sales of other models, including lower sales of Range Rover and Range Rover Sport which were impacted by the model year change over in the third and fourth quarter.2019.
China
Passenger car salesEconomic growth continued to slow in China increased by 1.3% induring Fiscal 2018 supported by GDP growth of around 6.8%, broadlyin-line2020 as weaker market conditions and trade tension with the government’s target.US continued. Further, the COVID-19 pandemic has resulted in nationwide shutdown in China for most of the fourth quarter. As a result industry vehicle sales declined by 16.6% year-on-year however Jaguar Land Rover retail volumes (including sales from the China Joint Venture) increaseddecreased by 19.9%less than the industry, down 8.9% (despite a strong recovery in the second and third quarter, with double digit year-on-year growth) to 150,11690,124 units in Fiscal 20182020 from 125,20798,922 units in Fiscal 2017.2019. By brand, Jaguar retail salesretails were 26,061 vehicles in Fiscal 2018 were 44,705 units, up 52.3%2020, down 20.5% compared to the 29,351 units32,797 vehicles in Fiscal 2017 primarily reflecting the introduction of the long wheel base Jaguar XFL from China joint venture2019, and continued demand for the JaguarF-PACE. Furthermore, sales of the long wheelbase Jaguar XEL from China joint venture started in December 2017 and are still ramping up. Land Rover retail salesretails were 105,411 units64,063 vehicles in Fiscal 2018, up 10.0%2020, down 3.1% compared to the 95,856 units sold66,125 vehicles in Fiscal 2017 led by the introduction of the Range Rover Velar and continued demand for the Discovery Sport and Range Rover Evoque from China joint venture. Retail sales of Discovery were somewhat loweryear-on-year due to the launch phasing of the all new Discovery in China during Fiscal 2018.2019.
Other Overseas markets
Conditions in other overseas markets remained challenging in Fiscal 2020 with bushfires in Australia, tensions and conflict in the Middle East, stagnant growth in Russia and the trade tensions between the US and China impacting sales in Asia (notably South Korea). Jaguar Land Rover’s retail volumes in the other overseas markets increaseddecreased by 3.4%20.3% to 92,523 units75,540 vehicles in Fiscal 20182020 compared to 89,47794,734 units in the prior year.Fiscal 2019. By brand, Jaguar retail volumesretails were 20,674 units,16,569 vehicles in Fiscal 2020, down 7.9%26.8% compared to the 22,455 units last year the introduction of the JaguarE-PACE22,644 vehicles in Fiscal 2019, and solid demand for the JaguarF-PACE was more than offset by lower sales of the Jaguar XE, Jaguar XF and the Jaguar XJ. Land Rover retail volumesretails were 71,849 units,58,971 vehicles in Fiscal 2020, down 7.2%18.2% compared to the 67,022 units72,090 vehicles in Fiscal 2017 led by the introduction of the Range Rover Velar and the all new Discovery, partially offset by lower sales of Range Rover and Range Rover Sport, which were impacted by the model year changeover in the third and fourth quarters.2019.
Jaguar Land Rover’s Sales &and Distribution
As at March 31, 2018,2020, Jaguar Land Rover distribute its vehicles in 120124 markets for Jaguar and 129128 markets for Land Rover globally. Sales locations for vehicles are operated as independent franchises. Jaguar Land Rover isare represented in its key markets through its National Sales Company’sCompanies (“NSC’s”NSC”) as well asthird-party third party importers. Jaguar and Land Rover hashave regional offices in certain select countries that manage customer relationships and vehicle supplies and provide marketing and sales support to their regional importer markets. The remaining importer markets are managed from the United Kingdom.
Jaguar Land Rover products are sold through a variety of sales channels: through its dealerships for retail sales; for sale to fleet customers, includingwhich include daily rental car companies;companies, commercial fleet customers;customers, leasing companies;companies and governments. Jaguar Land Rover doesdo not depend on a single customer or small group of customers to the extent that the loss of such a customer or group of customers would have a material adverse effect on its business.
As at March 31, 2018,2020, Jaguar Land Rover global sales and distribution network comprised 23 NSCs, 7977 importers, 2 export partners and 1,5712,874 franchise sales dealers, of which 1,2261,323 are joint Jaguar and Land Rover dealers.
Jaguar Land Rover — Competition
Jaguar Land Rover operates in a globally competitive environment and faces competition from established premium and other vehicle manufacturers who aspire to move into the premium performance car and premium SUV markets, some of which are much larger than they are. Jaguar vehicles compete primarily against other European brands such as Audi, Porsche, BMW and Mercedes Benz.Benz as well as Tesla. Land Rover and Range Rover vehicles compete largely against SUVs from companies such as Audi, BMW, Infiniti, Lexus, Mercedes Benz, Porsche, Volvo and Volkswagen.
Jaguar Land Rover — Seasonality
Jaguar Land Rover volumes are impacted by thebi-annual biannual change inage-related age related registration plates of vehicles in the United Kingdom, where newage-related age related plate registrations take effect in March and September. This has an impact on the resale value of the vehicles because sales are clustered around the time of the year when the vehicle registration number change occurs. Seasonality in most other markets is driven by the introduction of new model year vehicles and derivatives. Furthermore, Western European markets tend to be impacted by summer and winter holidays, and the Chinese market tends to be affected by the Lunar New Year holiday in either January or February, the PRC National Day holiday and the Golden Week holidaysholiday in October. The resulting sales profile influences operating results on aquarter-to-quarter quarter to quarter basis.
Other Operations
In addition to our automotive operations, we are also involved in other business activities, including information technologyIT services, machine tools and factory automation services. Net revenues,The Company’s revenue from other operations before inter-segment elimination, from these activities totaled Rs.31,335 million, Rs.31,154 million and Rs.29,116eliminations was Rs.30,376 million in Fiscal 2018, 2017 and 2016, respectively, representing nearly 1.1%,2020, a decrease of 14.0% from Rs.35,324 million in Fiscal 2019. Revenues from other operations represented 1.2% and 1.1% of our total revenues, before inter-segment eliminationeliminations, in the corresponding Fiscal periods.2020 and Fiscal 2019.
Information TechnologyIT Services
As atof March 31, 2018, we2020, TML owned a 72.29%72.48% equity interest in our subsidiary, TTL. TTL, founded in 1994 and a part of the Tata Motors Group, provides product development IT services solutions for PLM and Enterprise Resource Management, or ERM,enterprise risk management (“ERM”) to automotive, aerospace, industrial heavy machinery and consumer durables manufacturers and their suppliers. TTL’s services include product design, analysis and production engineering, knowledge-based engineering, PLM, ERM and CRM systems. TTL also distributes, implements and supports PLM products from leading solution providers in the world, such as Dassault Systems and Autodesk.
TTL is headquartered in India with regional headquarters in the United States, the United Kingdom and Singapore. In Fiscal 2014, TTL acquired Cambric Corporation, an engineering services organization, to achieve greater domain expertise and presence in the industrial equipment sector. In Fiscal 2018, TTL acquired Escenda Engineering AB, a Sweden based Design Companydesign company to strengthen its offering to existing clients and expand its footprint in Scandinavian countries. TTL has a combined global workforce of around 8,4888,623 professionals (including 1,041923 contractors) serving clients worldwide from facilities in the North America, Europe, and Asia Pacific regions. As atof March 31, 2018,2020, TTL hashad 12 subsidiary companies and one joint venture, as well as offshore development centers in India, Thailand and Romania.
The consolidated revenues of TTL decreased by 3.5%3.1% in Fiscal 20182020 to Rs.26,915Rs.28,521 million (including sales to Tata Motors Limited and its consolidated subsidiaries) from Rs.27,880Rs.29,422 million in Fiscal 2017,2019, primarily due to operationsoverall slowdown in the automotiveauto industry generally and aerospace markets.particularly in China. TTL recorded profit after tax of Rs.2,457Rs.2,516 million in Fiscal 2018,2020, reflecting a decreasean increase of 30.5%28.7% over Rs.3,534Rs.3,526 million in Fiscal 2017.2019.
Research and Development
Our research and development focuses on developing and acquiring the technology, core competencies and skill sets required for the timely delivery of our envisaged future product portfolio with industry-leading features across our range of Commercial Vehicles and Passenger Vehicles. For the Passenger Vehicles product range, our focus is on design, driving pleasure and connected car technologies. For the Commercial Vehicle product range, our focus is on enhancing fuel-efficiency, minimizing the TOC and providing maximum overall value. We continue to endeavor to adopt technologies for our product range to meet the requirements of a globally competitive market. We have also undertaken programs for development costs, charged to our income statement, in Fiscal 2018, 2017of vehicles, which run on alternative fuels such as LPG, CNG, bio-diesel, electric-traction and 2016 were Rs.35,319 million, Rs.34,136 million and Rs.34,688 million, respectively. hydrogen.
Our research and development activities focus oninvolve product development, environmental technologies and vehicle safety. In India, our Engineering Research Centre, orthe ERC, established in 1966, is one of the fewin-house automotive research and development centers in India recognized by the Government of India. The ERC is integratedheadquartered at Pune with all of the Tata Motors Global Automotive Product Designbranches at Jamshedpur and Development CentersLucknow in South Korea,India, Trilix in Italy and theTMETC in United Kingdom.
In Fiscal 2018, the focus was2020, we played a leading role in proactively driving electric mobility in India. To build a sustainable future for India, we have been working collaboratively on providing mobility solutions for intelligently-connected cities designed to offer convenience, safety, security,various electric and efficiency to its customers.hybrid vehicle solutions. As the only OEM with anend-to-end extensive product portfolio across its passengerPassenger Vehicles and commercial vehiclesCommercial Vehicles businesses, we intend to play a complimentarycomplementary role in the smart cities of the future. From public transport to personal cars, from last milelast-mile connectivity to BRTS,bus rapid transit systems, from emergency response vehicles to commercial utility vehicles,Utility Vehicles, from green and sustainable solutions to vehicles designed to amplify the thrill of the drive,driving experience, we strive to carry a product portfolio to connect the aspirations and needs of our customers. To build on an enabling ecosystem of sustainable technology, we have worked on zero emission electric variant of vehicles that have redefined the automotive landscape worldwide. We are also actively working on innovation by bringing ingenuity into the areas of vehicle engineering and development. We have developed a comprehensive approach to address the barriers and ‘Winning proactively in e-Mobility’. We have clearly prioritized our electric vehicles capabilities and today we are one of the frontrunners in this industry. We aim for our electric vehicle business to contribute 10-15% to our overall Passenger Vehicle business in the next 4-5 years.
Our focus on digitization, connectivity, automation and advanced regulations compliance is helping us deliver exciting innovations to our customers worldwide. On current product portfolio, we offer enhancements through an approach of modular architecture strategy, enhanced powertrain solution, light weighting and system efficiency improvement strategies. With a new vision set for the Company, by Fiscal 2024, we strive to become the most aspirational Indian auto brand, leading the industry by delivering superior financial returns, driving sustainable mobility solutions, exceeding customer expectations and creating highly engaged work force.
In addition, to this, the Company also runs several innovation projects in the domains of light weighting, xEVs and hybrids, guided diagnostics, telematics and, ADAS features. While all of our current products comply with existing BharatStage-IV emission norms, we are taking all necessary steps to ensure readiness for the upcoming BharatStage-VI regulations in India. For timely introduction of BharatStage-VI complaint products, the major focus is given on simulations,looking at product rationalization, product upgrade with enhanced features, accelerated testing and validation on HIL benches. . Productfor product competitiveness for TML engines/vehiclesour engines and vehicles. This is targeted through base powertrain enhancement, application specific technology for exhaust after-treatment, customer value propositions such asbest-in-class fuel efficiency,fuel-efficiency, superior performance, better total low cost of ownership, increased service interval,intervals, reduced downtime and turn-around time. Application specificEnhanced fuel-efficiency and thereby reduction in carbon footprint is promoted through various powertrain as well as vehicle level technology selectioninterventions.
Looking at short lead time for BSVI implementation, we continued our focus on timely development and duty cycle based performance optimizationensuring production readiness of BSVI products in the Indian market. It entailed migration of more than 20 engine platforms covering small commercial vehicles to heavy commercial vehicles, passenger cars, and utility vehicles covering gasoline, diesel and alternate fuel segments. A state-of-art advanced powertrain development center was commissioned in a record span of 15 months and the facility could be utilized for ongoing BSVI development. The compliance and sustenance of various legislations (including FE regulations in passenger vehicles, commercial vehicles and electric vehicles, BSIV new type approvals and noise levels) affecting existing products at BSIV level and with some limited launches in select segments continued as per business needs. BSVI in India is bringing the paradigm shift in emission control technology measures across vehicles segments in which Tata Motors Limited operates. Extensive class room and online trainings were developed and imparted across the value chain to ensure sufficient training is promoted for all employees. For our current product portfolio, the enhancements are key enablers to achieve these goals.offered through automated manual transmission, introduction of fuel efficient lube oil and higher drain intervals, improved filtration technology and connectivity solutions on platforms. The trend will continue as we implement value-added new launches and carry over products in BSVI regime as well. Enhanced fuel efficiency and thereby reduction in carbon footprint is planned to behas been achieved through various powertrain as well as vehicle level measures. Company foresees Bharat Stage VI regulation as an opportunity for productSimultaneous investments in production facilities upgrade, BSIV ramp down and BSVI ramp up strategy throughout supply chain was also effectively implemented. We have been at the forefront in the domain of electric vehicles (buses and cars) through feature enhancements within program timelines. Architecturallaunches demonstrated till date.
We monitor changes in powertrain, advanced cooling system with electro-viscous fan, enginede-speeding are also factoredregulatory and customer requirement scenarios. It responded to changes in regulations and market demands resulting from the development programCAFE standards for Passenger Cars (irrespective of fuel type including electric), increased axle load (assessment and recertification of all affected models and variants), and heavy duty fuel economy for 12 tons and above GVW diesel vehicles. We work to deliver superior fuel efficiency and high level of product durability toensure the customer. Company is ensuring emission roadworthiness of its entire vehicle portfolio by investing significantly in design &and development efforts, associated capital equipment and in infrastructure over Bharat Stage VIBSVI program duration.
In passenger vehicles the company’sbusiness, our continued efforts have translated into successful product launches and concept unveils. After launch of Tata Nexon, was critically acclaimedthe first engineered and won multiple awards, most notablymanufactured car in India car with 5-Star Global NCAP compliant for adult occupant protection and 3-Start for child occupant protection in Fiscal 2019, we marked our entry into the prestigious Autocar “Best Designpremium hatchback segment with the launch of Tata Altroz. Altroz is GNCAP 5 star rated car that enters the premium hatch category with BSVI ready powertrain. In addition, three fully refreshed BSVI ready cars - Tiago, Tigor, and Styling Award 2018”Nexon along with the all New Harrier 2020 were launched in Fiscal 2020. Tata Harrier offers class leading performance with a host of design, technology and “Best Valuefeature upgrade along with BSVI engine and automatic transmission.
In the electric vehicle portfolio, we added the Tata Nexon EV, an aspirational SUV for Money Carpersonal car buyers who are looking for a thrilling and connected drive experience with zero emissions. Tata Nexon is powered by the cutting-edge Ziptron technology, which offers performance with range of 312 km on a single charge as certified by ARAI. In addition it has fast charging capability, extended battery life and class leading safety features.
An updated version of the Year 2018”original segment defining SCV, the all New Tata Intra was launched with rugged and the NDTV Car & Bike “Subcompact SUVpowerful compact truck range built on our new ‘Premium Tough’ design philosophy. We are one of the Year 2018” and “Design of the Year 2018”. The Nexon offers cutting edge features such as an automated manual transmission (AMT), a freestanding infotainment display, keyless entry/ignition, intelligent start/stop systems, intelligent alternator controller’s application integrationleading commercial vehicle brands in upcoming premium hatch and a wearable key, a market first.South Africa. We also launched a special edition of the lifestyle SUV Hexa. To promote green and sustainable transport solutions, we launched Tiago EV & Tigor EV. In February 2018, we showcased two new innovative products—H5X conceptvariants, Ultra Plus 1418 and Ultra 814 AMT, enhancing the Ultra Platform range at Futuroad Expo, 2019 in Johannesburg, South Africa. The Ultra AMT 814 is a variant of the existing Ultra range of vehicles for 5 seater luxury SUV anddiscerning customers looking for ease of operations. The Ultra Plus 1418 is a completely new model complimenting the ‘45X concept’ for a premium hatchback.
In commercial vehicles, we launchedHCV range of Ultra offerings. We are one of the New Tata INTRA - the stylish, feature loaded, compact truck that is set tore-define the SCV segment. Demonstrating our capabilitiesleading bus manufacturers in providing smart and safeIndia. We showcased seven new public transportation wevehicles at Prawaas 2019. A biennial event, Prawaas 2019 displayed new technologies, innovations, products and services in the 12 meter Electric Bus with a Smart Bus Stop and passenger carriers - the Magic EV and the Iris EVtransportation domain in Navi Mumbai in July 2019. We displayed an extensive range of sustainable mobility solutions at the Auto Expo 2018.
The SIGNA 4323 – Highest tonnage rigid trucks with6-axle2020, connecting India’s aspirations. Going beyond BSVI by showcasing a completely new range of passenger, electric and30-ton payload, commercial vehicles this year. We unveiled the Prima 3718 with advanced rubber Suspension system‘HBX Show Car’, based on the ALFA Architecture and the ‘Sierra EV Concept’, Hexa Safari Edition, ‘Harrier 2020’, based on the OMEGA Architecture, Flagship SUV – the Gravitas. In Commercial Vehicles space, we unveiled the all-new Tata Winger and the Tata Prima 4930.S with latest, advanced safety and driving features.facelift 5530.S.
In addition toWith the dynamic showcasecustomer at center of products,all initiatives, our Passenger Vehicle Business Unit ranked 2nd in the company displayed its New Generation Diesel Turbotron Engines of 3L and 5L capacities for its commercial vehicle applications. Thesestate-of-the-art engines offerbest-in-class fuel economy, excellent performance (flat torque curve & highlow-end torque), lower TCO, better reliability and durability.J.D. Power 2019 India Customer Service Index (Mass Market) Study.
During Fiscal 2018,2020, we filed 5086 patent applications and 2589 design applications. In respect of applications filed in earlier years, 80179 patents werehave been granted and 2350 designs were registered. Both filing and grant details include nationalIndia and international jurisdictions.
We plan to continue our endeavorendeavors in the research and development space to develop vehicles with reduced cost, time to market and shorter product life cycles. One ofWe aim for the main future initiatives in this direction would be a platform approach of creating bills of material and bills of process that have a high degree of commonality to reduce complexity and enhance ability to the scale. Tata Motors aims for timely and successful conclusion of technology projects so as to begin their induction into mainstream products, which will lead to a promising future.
We haveContinuing the journey of excellence, we constantly adopted new technologies and practices in the digital product development domain to improve the product development process.efficiency. This has led to better front loading of product creation, validation and testing, which results in greater likelihood of timely delivery and ensuring that new products are properly developed from the beginning.with lower cost impacts due to design change. Niche integration tools, systems and processes continue to be enhanced in the areas of CAx, knowledge based engineering, or KBE, product lifecycle management, or PLMKnowledge Based Engineering (“KBE”), Product Lifecycle Management (“PLM”), and manufacturing planning management, or MPM,Manufacturing Planning Management (“MPM”), for more efficientend-to-end delivery of the product development process. To deliver projectsMore than 250 automation and KBE application tools were developed and deployed across ERC, which meets customer targethas resulted into 7% improvement in the Productivity for the designers. EGURU product mobility application deployed at dealership are getting upgraded with BSVI details, which is helping dealership to impart a virtual showroom experience and explain the product features to do the things rightcustomer.
Machine learning based algorithms and application are introduced into various domains such as design, service, quality and manufacturing. Trained AI models help in prediction of warranty defect code based on investigation report using natural language processing, prediction of on field engine failure on the first time, we are working on onebasis of test data from plant and service report.
Digital Manufacturing was used predominantly to validate the manufacturability of critical assembly operations in virtual environment for BSVI and new vehicle programs. Digitization of some of the critical project known as Requirementsbusiness processes related to purchase and budgeting was accomplished with its online workflow and approvals. Specialized application for body fastener (weld spot, sealant) design developed and deployed for quick authoring and adaptation of changes in body engineering.
Based on the guidelines set for the company, the IoT platform is now built and deployed. The first programs implementing the connected vehicle features are completely supported on the same. This will drive the enhancement to vehicle connectivity further and also help the company to leverage data to provide better products and services to its customers. Continuing the journey of dimensions Management Design Verificationthe company has progressed further to making it integral to the design and Validation (RMDV2). This project will bring system engineering approach towards our product development process which will bring all engineering design rulesembedded into the core PLM supported by library of use cases and standardsknowledge driven intervention to proactively address issues. Bots framework is further supplemented with the NLP based voice support and helping to drive the implementation further.
Model Based Systems Engineering approach is initiated for enhancing control on one platform to meet the design requirement. In terms of physical assets used for product validationproject delivery and testing, we havestate-of-the-art facilities, such as Crash Lab, which is a facility where crash tests are performed, engine development and testing facilities, prototype shop and noise, vibration and harshness refinement facilities. These facilities are used extensively to physically validate the new products in a robust manner before they enter the market.cost.
Jaguar Land Rover’s research and development operations are built aroundstate-of-the-art engineering facilities, test tracks, testing centers, design hubs and a virtual innovation center. Our ERC in India and Jaguar Land Rover’s engineering and development operations in the United Kingdom work to enhance the product development process and achieve economies of scale.
Jaguar Land Rover’s two primary design and development centers are equipped with computer-aided design and manufacturing and engineering tools configured to support an ambitiousa product development cycle plan. In recent years, Jaguar Land Rover has refreshed the entire Jaguar range under a unified concept and design language, and has continued to enhance the design of Land Rover’s range ofall-terrain vehicles. The majority of Jaguar Land Rover’s products are designed and engineered in the United Kingdom. Jaguar Land Rover currently offers hybrid technology on some of its models such as the Range Rover, and Range Rover Evoque and Land Rover Discovery Sport as well as their first battery electric vehicle, the JaguarI-PACE. In addition to the development of electric vehicles, Jaguar Land Rover has also developed more efficient powertrains, including smaller and more efficient2.0-litre2.0-Liter diesel and gasoline engines (now available across the majority of our model range), as well as the a 3.0-Liter 6 cylinder Ingenium petrol engine recently announced, to satisfy growing customer demand and to further improve the environmental performance of its vehicles. In June 2019, Jaguar Land Rover announced a collaboration with BMW to develop the next-generation Electric Drive Units to support the advancement of electrification technologies that will be installed in future Jaguar Land Rover vehicles and will be manufactured at the Engine Manufacturing Centre in the UK.
Intellectual Property
We create, own, and maintain a wide array of intellectual property assets throughout the world that are among our most valuable assets. Our intellectual property assets include patents, trademarks, copyrights, designs, trade secrets and other intellectual property rights. We proactively and aggressively seek to protect our intellectual property in India and other countries.
We own a number of patents in different fields of automobile technology and have applied for new patents which are pending for grant in India, as well as in other countries. We have also filed a number of patent applications outside India under the Patent Cooperation Treaty and Paris Convention Treaty, which we expect will be effective in other countries going forward. We also obtain new patents as part of our ongoing research and development activities.
We own registrations for a number of trademarks, domain names and have pending applications for registration of these in India, as well as in other countries. The registrations mainly include trademarks for our vehicle models and other promotional initiatives. We use the Tata brand, which has been licensed to us by Tata Sons. We believe that establishment of the Tata word mark and logo mark in India and around the world is material to our operations. As part of our acquisition of TDCV, we have rights to the perpetual and exclusive use of the Daewoo brand and trademarks in South Korea and overseas markets for the product range of TDCV.
As part of the acquisition of our Jaguar Land Rover business, ownership (orco-ownership, as applicable) of core intellectual property associated with Jaguar Land Rover was transferred to us; however, such intellectual property is still ultimately owned by Jaguar Land Rover entities. Additionally, perpetual royalty-free licenses to use other essential intellectual property from the third parties have been granted to us for use in Jaguar and Land Rover vehicles. Jaguar Land Rover owns registered designs to protect the design of its vehicles in several countries.
In varying degrees, all of our intellectual property is important to us. In particular, the Tata, Jaguar, Land Rover and Range Rover brands are integral to the conduct of our business, a loss of which could lead to dilution of our brand image and have a material adverse effect on our business.
Components and Raw Materials
The principal materials and components required by us for use in Tata Commercial Vehicles and other brand vehiclesTata Passenger Vehicles are steel sheets (forin-house stampings) and plates, iron and steel castings and forgings, items such as alloy wheels, tires, fuel injection systems, batteries, electrical wiring systems, electronic information systems and displays, interior systems such as seats, cockpits, doors, plastic finishers and plastic functional parts, glass and consumables, such as paints, oils, thinner, welding consumables, chemicals, adhesives and sealants, and fuels. We also require aggregates such as axles, engines, gear boxes and cams for our vehicles, which are manufacturedin-house or by our subsidiaries, affiliates, joint ventures or operations and strategic suppliers. We have long-term purchase agreements for certain critical components such as transmissions and engines. We have established contracts with certain commodity suppliers to cover our own as well as our suppliers’ requirements in order to moderate the effect of volatility in commodity prices. We have also undertaken special initiatives to reduce material consumption through value engineering and value analysis techniques.
Our sourcing department in India has two divisions, namely, purchasing and supplier quality (P&SQ), and supply chain management (SCM)(“SCM”). Purchasing oversees the commercial aspects of products sourcing. They also oversee the allocation of share of business. The supplier quality division is responsible for APQP and managing ongoing supplier relationships. SCM oversees the supply and delivery of parts from our suppliers. Our purchasing back office, known as GDC, supports the Purchasing division in managing all transactional work in SAP ERP system.
As part of our strategy to become a value for money vehicle manufacturer, we have undertaken various initiatives to reduce our fixed and variable costs. We started ane-sourcing initiative in India in 2002, pursuant to which we procure some supplies through reverse auctions. We also use external agencies as third-party logistic providers. This has resulted in space and cost savings. Our initiatives to leverage information technology in supply chain activities have resulted in improved efficiency through real time information exchange and processing with our suppliers. We continue to explore saving opportunities through our supplier base using various mechanisms such as our Value‘Value Addition and Value Engineering (VAVE)Engineering’ initiative and competitive sourcing.
We have an established supplier quality sixteen-step process in order to ensure quality of outsourced components. We formalized the component development process using Automotive Industry Action Group guidelines. We also have a program for assisting suppliers from whom we purchase raw materials or components to maintain quality. Preference is given to suppliers with TS 16949 certification. We also maintain a stringent quality assurance program that includes random testing of production samples, frequentre-calibration of production equipment and analysis of post-production vehicle performance, as well as an ongoing dialogue with supplier partners to eliminate production defects.
We are also exploring opportunities for increasing the global sourcing of parts and components from low cost countries, and have in place a supplier management program that includes supplier base upgradation, supplier quality improvement and supplier satisfaction surveys. We have begun to include our supply chain in our initiatives on social accountability and environment management activities, including supply chain carbon footprint measurement and knowledge sharing on various environmental aspects.
The principal materials and components required for use in Jaguar Land Rover vehicles are steel and aluminum, in sheet (forin-house stamping) or externally inpre-stamped form, aluminum castings and extrusions, iron/iron and steel castings and forgings and items such as alloy wheels, tires, fuel injection systems, batteries, electrical wiring systems, electronic information systems and displays, leather-trimmed interior components such as seats, cockpits and doors, plastic finishers and plastic functional parts, glass and consumables (paints, oils, thinner, welding consumables, chemicals, adhesives and sealants), rare earth minerals and fuels. Jaguar Land Rover also requires certain highly functional components, such as axles, engines and gear boxes for its vehicles, which are mainly manufactured by strategic suppliers. We have long-term purchase agreements for critical components, such as transmissions (ZF Friedrichshafen AG) and engines (Ford andFord-PSA) The components and raw materials in Jaguar Land Rover cars include steel, aluminum, copper, platinum, palladium and a number of other commodities. Jaguar Land Rover has established contracts with certain commodity suppliers (e.g., Novelis) to cover its own and its suppliers’ requirements to mitigate the effect of price volatility and supply disruption. Special initiatives are also undertaken to reduce material consumption through value engineering and value analysis techniques.
Jaguar Land Rover works closely with its suppliers to meet its requirements for parts and components. Jaguar Land Rover has established quality control programs to ensure that externally purchased raw materials and components are monitored and meet its quality standards. Jaguar Land Rover also outsources many of the manufacturing processes and activities to various suppliers. Where this is the case, Jaguar Land Rover provides training to outside suppliers. Jaguar Land Rover also continues to work with its suppliers to optimize procurement.
Jaguar Land Rover has launched Range Rover and Range Rover Sportplug-in hybrids and their first battery electric vehicle, the JaguarI-PACE. By 2020, an electric option will be available for all of their models. With the introduction of electric propulsion technology into Jaguar Land Rover vehicles, exposure to certain commodities (e.g. lithium, nickel and cobalt) may increase.
Although Jaguar Land Rover has commenced the production of its own“in-house” four cylinder diesel and gasoline engines as well as the 6 cylinder 3.0-litre Ingenium gasoline engine, it currently continues to source a significant proportionsome of its engines from Ford and the joint venture between Ford and PSAFord-PSA Joint Venture on anarm’s-length basis. Supply agreements have been entered into with Ford as further set out below:
• | Long-term agreements have been entered into with Ford for technology sharing and joint development, providing technical support across a range of technologies focused mainly around powertrain engineering such that we may continue to operate according to our existing business plan. This includes the EuCD platform, a shared platform consisting of shared technologies, common parts and systems and owned by Ford, which is shared among Land Rover, Ford and Volvo cars. |
• | Supply agreements, aligned to the business cycle plan and with different engines having different end-stop dates as of September 2020 to December 2020 at the latest, were entered into with Ford for (i) the long-term supply of engines developed by Ford, (ii) engines developed by us but manufactured by Ford and (iii) engines developed by the Ford-PSA Joint Venture. Purchases under these agreements are generally denominated in Euro and GBP. |
Suppliers
We have an extensive supply chain for procuring various components. We also outsource many manufacturing processes and activities to various suppliers. Where this is the case, we provide training to the external suppliers.
Our associate company, Tata AutoCompAuto Comp Systems Ltd., or TACO, manufactures automotive components and collaborates with international manufacturers by setting up joint ventures with them.
In 2016, we introduced Manufacturingmanufacturing site assessment (MSA)(“MSA”) for India suppliers, a comprehensive supplier assessment process. The framework is broadly based on lead measures and lag measures to assess the suppliers’ capability to service our requirements. To facilitate financial oversight, MSA also integrates financial risk assessment.
We have initiated a supplier optimization initiative for Indian domestic suppliers. This initiative will rationalize the current supply base enabling scale cost benefits, improved quality and balance in volume cyclicality. This also improves supplier relationships, giving TML better access to technologies and support in vehicle development for new programs.
We have entered into long-term agreements with Ford for technology sharing, joint development and for providing technical support across a range of technologies focused mainly around powertrain engineering such that we may continue to operate according to our existing business plan. This includes the EuCD platform, a shared platform consisting of shared technologies, common parts and systems and owned by Ford, which is shared among Land Rover, Ford and Volvo Cars.vehicles.
Supply agreements, havingend-stop dates to December 2020 at the latest, , were entered into with Ford Motor Company for (i) the long-term supply of engines developed by Ford, , (ii) engines developed by us but manufactured by Ford and (iii) engines developed by theFord-PSA joint venture.Joint Venture. Purchases under these agreements are generally denominated in euroEuro and pounds sterling.GBP.
Suppliers are appraised based on our long-term requirements through a number of platforms, such as Vendor Councilvendor council meetings, council regional chapter meetings, national vendor meets and location-specific vendor meets. We also take efforts to assess supplier financial risk.
Capital and Product Development Expenditures
Our capital expenditure totalled Rs.415,103 million, Rs.311,627expenditures totaled Rs.302,945 million and Rs.306,233Rs.342,236 million during Fiscal 2018, 2017,2020 and 2016,Fiscal 2019, respectively. Our capital expenditureexpenditures during the past three Fiscaltwo fiscal years related primarily to new product development and capacity expansion for new and existing products to meet market demand as well as investments toward improving quality, reliability and productivity that are each aimed at increasing operational efficiency.
We intend to continue to invest in our business units in general, and in research and product development in particular, over the next several years in order to improve our existing product range, develop new products and platforms and to build and expand our portfolio in the passenger vehiclePassenger Vehicle and commercial vehicleCommercial Vehicle categories. We believe this will strengthen our position in the Indian automotive market and help us to grow our market share internationally.
As part of this future growth strategy, we plan to make investments in product development, capital expenditureexpenditures in capacity enhancement, plant renewal and modernization and to pursue other growth opportunities. Our subsidiaries also have their individual growth plans and related capital expenditure plans. These expenditures are expected to be funded largely through cash generated from operations, existing investible surplus in the form of cash and cash equivalents, investment securities and other external financing sources.
Governmental Regulations
Governmental Regulations in India
Automotive Mission Plan, 2016-2026
The Automotive Mission Plan2016-26 or (“AMP 2026,2026”) is the collective vision of the Government of India and the Indian automotive industry, in which the goal is for the vehicles, auto components, and tractor industries to reach certain size benchmarks over the next ten years and also contribute to India’s development, global footprint, technological maturity, competitiveness, and institutional structure and capabilities. AMP 2026 also seeks to define the trajectory of specific regulations and policies that govern research, design, technology, testing, manufacturing, imports/exports, sales, use, repair, and scrapping of automotive vehicles, components and services.
The vision statement of AMP 2026—“Vision 3/12/65”—states: “By 2026, the Indian automotive industry will be among the top three of the world in engineering manufacture and export of vehicles and auto components, and will encompass safe, efficient and environment friendly conditions for affordable mobility of people and transportation of goods in India comparable with global standards, growing in value to over 12% of India’s GDP, and generating an additional 65 million jobs”.
AMP 2026 envisages that the Government of India and the Indian automotive industry will work together to strengthen India’s position in the global automotive industry. AMP 2026 is intended to help the Indian automotive industry focus on its strengths and improve its competitiveness in selectselected segments, achieve the annual production target of Rs.16,160,000Rs.1,616,000 crores to Rs.18,895,000Rs.1,889,500 crores in terms of its size, and establish its “Right to Win” on the global stage.
The Auto Policy, 2002
The Auto Policyauto policy was introduced by the Department of Heavy Industry, Ministry of Heavy Industries and Public Enterprises of the Government of India in March 2002, with the aims, among other things, of promoting a globally competitive automotive industry that would emerge as a global source for automotive components, establishing an international hub for manufacturing small, affordable passenger cars,Passenger Cars, ensuring a balanced transition to open trade at a minimal risk to the Indian economy and local industry, encouraging modernization of the industry and facilitating indigenous design, research and development, as well as developing domestic safety and environment standards on par with international standards.
Auto Fuel Vision &and Policy 2025
The Ministry of Petroleum and Natural Gas constitutedformed an expert committee under the Chairmanshipchairmanship of Shri Saumitra Chaudhuri, Member Planning Commission,a member planning commission, on December 19, 2012. Its objective was to recommend auto fuel quality applicable through model year 2025. The committee in its draft report has recommended Bharat Stage IV compliant fuel across the country by 2017 and Bharat Stage V compliant fuel with 10 ppm of sulfur to be made available from 2020 onward. The draft report proposes nationwide Bharat Stage V emission normsstandards for new four-wheelers from model year 2020 and for all four-wheelers from model year 2021. It also recommends Bharat Stage VIBSVI emissions normsstandards from model year 2024 onwards. In April 2014, the expert committee submitted its recommendations to the committee empowered by the Ministry of Petroleum and Natural Gas, which proposed the implementation of emission normsstandards one year earlier than the expert committee’s recommendations, which would result in the implementation of Bharat Stage V emission normsstandards starting in model year 2019 and Bharat Stage VIBSVI emissions normsstandards starting in model year 2023. However, in January 2016, the Government of India decided to implement the Bharat Stage VIBSVI emission normsstandards even earlier by skipping Bharat Stage V emission norms.standards. As such, the Bharat Stage VI normsBSVI standards will be made applicable from April 1, 2020 to all categories of vehicles across India. This two stage migration is going to be a huge challenge from developmental and capexcapital expenditure investment perspectives.
FAME II Scheme
The Government of India announced the Faster Adoption and Manufacturing of Hybrid & Electric Vehicles or FAME.in India Phase II (“FAME II”) scheme in March 2019. FAME II is proposed to be implemented over a period of three years from Fiscal 2020 to Fiscal 2022. This scheme, in furtherance of the National Mission on Electric Mobility 2020 (NEMMP)(“NEMMP”), is intended to supportplug-in vehicle, PHEV, or xEV, market development and its manufacturing network to achieve self-sustenance by focusing on fourand the scheme is proposed to be implemented through three areas: (1) technology development, (2)(i) demand creation, (3) pilot projects,incentives (ii) establishment of network of charging stations and (4) public charging infrastructure. FAME envisions collaboration between the government, industry(iii) administration of scheme including publicity, information, education and academia to develop and promote the xEV market in India.communication activities.
Central Motors Vehicles Rules, 1989
Chapter V of the Central Motor Vehicle Rules, 1989 or the CMV Rules,(the “CMV Rules”) sets forth provisions relating to construction, equipment and maintenance of motor vehicles, including specifications for dimensions, gears, indicators, reflectors, lights, horns, safety belts and others. The CMV Rules govern emission standards for vehicles operating on CNG, gasoline, liquefied petroleum gas and diesel.
On and from the date of commencement of the CMVCentral Motor Vehicle (Amendment) Rules, 1993, every manufacturer must submit the prototype of every vehicle to be manufactured by it for testing by the Vehicle Research and Development Establishment of the Ministry of Defense of the Government of India, the Automotive Research Association of India, Pune, the Central Machinery Testing and Training Institute, Budni (MP), the Indian Institute of Petroleum, Dehradun, the Central Institute of Road Transport, Pune, the International Center for Automotive Technology, Manesar or such other agencies as may be specified by the central government for granting a certificate by that agency as to the compliance of provisions of the Motor Vehicles Act, and the CMV Rules.
The CMV Rules also require the manufacturers to comply with notifications in the Official Gazette, issued by Government of India, to use such parts, components or assemblies in the manufacture of certain vehicles according to standards specified by either the Automotive Industry Standards Committee or the Bureau of Indian Standards.
Emission and Safety in India
The Government of India, starting in April 2017, mandated Bharat Stage IV norms,standards, which are equivalent to Euro IV norms,standards, for all vehicles across India. All categories of our vehicles currently manufactured arewere compliant with BharatStage-IV norms. Stage IV standards. BharatStage-VI norms Stage VI standards will be applicable across the country starting April 1, 2020. All categories of our vehicles currently manufactured are compliant with Bharat Stage VI standards.
The MinistrySupreme Court of Road Transport and Highways,India in its judgement, dated October 24, 2018, directed that no motor vehicle conforming to the emission standards of BSIV shall be sold or MoRTH, has also imposed restrictions onregistered in the registration of BharatStage-IV vehicles sold afterentire country with effect from April 1, 2020. Fully built BharatStage-IV vehicles manufactured before April 1, 2020 may not be registered after June 30, 2020Hence, our product plan, migration, manufacturing and BharatStage-IV vehicles sold in the form of drive-away chassis manufactured before April 1, 2020 may not be registered after September 30, 2020.product launches have been synchronized to fulfill these requirements.
CAFE normsstandards for M1 category vehicles
The Corporate Average Fuel Economy (CAFE) normsCAFE standards are applicable to M1 category vehicles from April 1, 2017. As a result, we are required to demonstrate CAFE compliance for our PVPassenger Vehicles, Commercial Vehicles and CVEV M1 models. TML has successfully complied with the Phase 1 CAFE requirements for Fiscal 2017 and Fiscal 2018. Through the use of the CAFE Calculator,calculator, we willregularly monitor production volumes and process to ensure that organizational level CAFE compliance (which will require us to produce enough fuel efficientfuel-efficient models to compensate for those models having higher CO2CO2 emissions in g/km) is established at all times during the year. Anynon-compliance could lead to penalties, product recalls and/or other punitive measures. To support our compliance obligations, our overall product portfolio needs to be enhanced with the incorporation of electric and hybrid vehicles as well as the inclusion of environmental-friendly technological features in existing and forthcoming models.
Light, Medium and Heavy Duty Fuel EfficiencyFuel-Efficiency Norms
The Ministry of Power issued the final notification for Heavy Duty Fuel EfficiencyFuel-Efficiency Norms for Diesel Vehicles of categories M3 and N3 with GVW of 12T &and above. Every vehicle of the specified categories must meet fuel efficiencyfuel-efficiency targets mentioned in notification based on constant speed fuel consumption tests conducted at 40 km/h and 60 km/h. Phase 1 will be implementedis applicable starting April 1, 2018 for vehicles complying withBS-IV BS4 emission normsstandards and Phase 2 will be implemented startingapplicable from April 1, 2021 for vehicles complying withBS-VI BSVI emission standards. However, in absence of notification from the Ministry of Road Transport and Highways (“MoRTH”), the norms have never been implemented. Therefore, in June 2019, Ministry of Power has decided to implement Phase 1 of Heavy Duty Fuel Efficiency Norms from April 1, 2020, however final notification from MoRTH is still awaited for implementation of such norms.
Fuel Efficiency Norms for Light and Medium Duty vehicles having gross vehicle weight ranging from 3.5T to 12T was notified by Ministry of Power in July 2019. The notification is applicable with effect from April 1, 2020, however final notification from MoRTH is still awaited for implementation of such norms.
Crash and other safety requirements for Motor Vehicles
India has a well-established regulatory framework administered by the Ministry of Road Transport and Highways.MoRTH. Recently, the Government of India has embarked on a wide ranging program to institute standardized safety features for a variety of motor vehicles. Crash safety requirements, such as full frontal, offset frontal and lateral impact,have been made mandatory for all new models starting October 1, 2017 and from October 1, 2019 for all existing models of vehicle categories as specified in the individual standards. A pedestrian compliance program will behas been instituted for all new models from October 1, 2018 and for all existing models from October 1, 2020. Passenger vehicles will requireVehicles (M1 Category) have been mandatorily equipped with additional safety features such as driver airbag, safety belt reminders for driver and co-driver, reverse parking alert system, speed alert system and manual override for central locking system and air bags from 1st July 1, 2019 onwards. Also the provisioning of child lock system has been prohibited in M1 transport category vehicles from July 1, 2019.
Anti-lock braking system (ABS) will be required(“ABS”) has been mandated for all M1 and M2 category passenger vehiclesPassenger Vehicles starting April 1, 2018 and April 1, 2019, for new models and existing models, respectively. The Government of India has also mandated advanced braking requirements for all motor vehicles which would become applicable progressively from 2021 onwards. The revised anti-lock braking requirements for M2, M3, N3 and N2 (for vehicles meant for the carriage of hazardous goods and LPG) will be applicable from April 1, 2021 for new models and April 1, 2022 for all models. The revised braking requirements for all category of vehicles will be applicable from April 1, 2021 for new models and April 1, 2022 for all models.
To facilitate informed consumer decision-making, the government is in the process of formulating the Bharat New Vehicle Safety Assessment Programme, (BNVSAP), a star-rating based system of safety assessment for passenger vehicles. Additionally, starting April 1,Passenger Vehicles.
Fitment of vehicle location tracking system and emergency buttons have been mandated for national permit vehicles from November 2, 2018 the government will requireand for all passenger public service vehicles from January 1, 2019.
Additionally, the MoRTH has also mandated the compliance with the Truck Body Code for all N2, N3 category vehicles in two phases (Phase I and Phase II) from October 1, 2018 and October 1, 2019, respectively. However drive away chassis without cabins built by OEMs are exempted till March 31, 2020. The MoRTH has also mandated compliance with advanced requirements for fully-built buses manufactured on and after April 1, 2019 supplied by OEM body builders. This calls for compliance to be outfitted with a vehicle location tracking devicerequirements such as acceleration, NVH limits, multiplexing for wiring harness and an emergency buttons.
TML is also subject to bus body code, ambulance codefitment of fire detection and motor caravan code regulations. We believesuppression systems. The reverse parking alert system for all of our buses and ambulances comply with current requirements.trucks including small Commercial Vehicles has been mandated from April 1, 2020. Many revised standards are now being mandated for various component and system level requirements such as fuel tanks, mirrors, light signaling devices, steering gears and effort, retro reflective devices, Safety Glazing in Fiscal 2019 and Fiscal 2020. Also, MoRTH has mandated the fitment of high security registration plates by the vehicle manufacturer and dealers on all motor vehicles manufactured on or after April 1, 2019.
TML is working toward meeting all applicable regulations which we believe are likely to come into effect in various markets in the near future. We believe our vehicles also comply with the various safety regulations in effect in the other international markets where we currently operate.
India is a signatory to the 1998 UNECE Agreement on Global Technical Regulations and has voted in favor of all eleven Global Technical Regulations.global technical regulations (“GTRs”). TML works closely with the Government of India to participate in WP 29 World Forum for Harmonization of Vehicle Regulations activities.
The Motor VehiclesVehicle (Amendment) Bill, 2017 was passed in the Lok SabhaAct 2019 has been published on April 10, 2017, and is currently being debated in the Rajya Sabha.August 9, 2019. This Billact addresses vehicle recalls, road safety, traffic management and accident insurance, among other matters. In its current draft, the BillThe act imposes civil and criminal liability on manufacturers selling vehicles in contravention of the standards specified in the Bill,act, or required by the government to recall their vehicles. The Billact also proposes the creation of the National Road Safety Board to provide advice to the central and state governments on all aspects of road safety and traffic management.
The Essential Commodities Act, 1955
The Essential Commodities Act, 1955, as amended by the Essential Commodities (Amendment and Validation) Act, 2009 or the Essential(the “Essential Commodities Act,Act”) authorizes the Government of India, if it finds it necessary or expedient to do so, to provide for regulating or prohibiting the production, supply, distribution, trade and commerce in the specified commodities under the Essential Commodities Act, in order to maintain or increase supplies of any essential commodity or to secure their equitable distribution and availability at fair prices, or to secure any essential commodity for the defense of India or the efficient conduct of military operations. The definition of “essential commodity” under the Essential Commodities Act includes “component parts and accessories of automobiles”.
Environmental Regulations
Our manufacturing units must ensure compliance with various environmental statutes. Significant statutes for our business include the Water (Prevention and Control of Pollution) Act, 1974 and the rulesRules thereunder, the Air (Prevention and Control of Pollution) Act, 1981 and the rulesRules thereunder, the Environment Protection Act, 1986 and the rulesRules thereunder and the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016. The basic purpose of these statutes is to control, abate and prevent pollution. In order to achieve these objectives, Pollution Control Boards, or PCBs, which are vested with diverse powers to deal with water and air pollution and hazardous waste disposal, have been set up in each state. The PCBs are responsible for establishing standards for maintenanceenvironmental quality and regulating industries through the issue of clean air‘Consent to Establish’, ‘Consent to Operate’ and water, directing the installation of pollution control devices in industries‘Hazardous Waste Authorisation’ and undertaking inspection of industries to ensure that units or plants are functioning in compliance with the standards prescribed.prescribed therein. These authorities also have the power of search, seizure and investigation. All of our manufacturing plants are either in possession of current, valid consentsConsents to operateOperate and hazardous waste authorizationsHazardous Waste Authorizations or are in the process of renewing their consents to operate and hazardous waste authorizationsthe same from the respective PCBs of the states where they operate. InOther key regulations applicable to our Plants include the past year, the Ministry of Environment, Forests & Climate Change, Government of India hasre-vamped several National level legislations governing waste management. Specifically theBatteries (Management and Handling) Amendment Rules, 2010. The Plastic Waste Management Rules 2016, theBio-Medical Waste (BMW) Management Rules 2016,e-waste Management Rules-2016, and the Construction and Demolition (C&D) Waste Management Rules 2016. AllWe ensure that all prescribed standards are followed for control of pollution and management of waste and we have made significant investments toward pollution control and environmental protection at our plants have analyzed these new regulations for its applicability and aligned their compliance practices accordingly.
The Ministry of Environment and Forests under the Government of India receives proposals for expansion, modernization and establishment of projects and the impact of such projects on the environment are assessed by the Ministry, before it grants environmental clearances for the proposed projects under the Environmental Impact Assessment Notification, 2006 and its amendments (the “EIA”) govern the process of granting ‘Environmental Clearance’ to certain projects which are specified in the Schedule to the Rules. All of our manufacturing plants have obtained environmental clearances for specific projects in the past as and when mandated.
The Ministry of Environment, Forests and Climate Change (“MoEFCC”) has recently published a draft notification on March 23, 2020, titled The EIA Notification, 2020. We ensure that all prescribed norms are followed for management of wastehave submitted our comments and we have made significant investments toward pollution control and environmental protection at our manufacturing plants.
suggestions to MoEFCC on the Draft Notification. The Government of India intends to regulate end of life vehicles or ELVs,(“ELVs”), which would be applicable to passenger carsPassenger Cars and two wheelers. The Authorized Collectionauthorized collection and Dismantling Centers, or ACDCs,dismantling centers would be equipped to handle commercial vehiclesCommercial Vehicles as well. The purpose of the ELV policy is to remove vehicles that have gone beyond their useful life such that these vehicles are endangering the environment and posing safety hazards topublic safety.
The Central Pollution Control Board has formulated the public.draft guidelines for environmentally sound management of end-of-life vehicles for implementation on the principle of shared responsibility that mandates the specific roles for the stakeholders in the EV value chain which includes government authorities, manufacturers, recyclers, dealers, intermediaries, insurers and consumers.
MoRTH prepared a concept note titled the Voluntary Vehicle Fleet Modernization Programme, orV-VMP, which may be applicable for vehicles purchased on or before March 31, 2005. TheRecently MoRTH has sought comments fromalso issued the publicdraft guidelines for setting up, authorization and involved stakeholders. Various intensives, such asoperation of Authorized Vehicles Scrapping Facility in the country. These guidelines are notified for the safe and regulated disposal of above mentioned vehicles for protection of the environment and promotion of a reduction in excise duty by 50%legally compliant vehicle dismantling and a special discount from automobile manufacturers, are intended to be given to the customers as part of this policy. The State Run Transport Undertakings, or SRTU, buses would be given a 100% excise duty exemption based on this policy to promote public transport and also to reduce congestion on the roads.scrapping industry.
Regulation of Imports and Exports
Regulation of quantitative restrictions on imports into India were liberalized with effect from April 1, 2001, pursuant to India’s World Trade Organization obligations, and imports of capital goods and automotive components were placed under the open general license category.
Automobiles and automotive components may, generally, be imported into India without a license from the Government of India subject to their meeting Indian standards and regulations, as specified by designated testing agencies. As a general matter, cars, UVs and SUVs in completely built up or CBU,(“CBU”), condition may be imported at 60% basic customs duty. However, cars with cost, insurance and freight value of more than US$40,000 or with engine capacities greater than 3,000 cubic centimeters for dieselpetrol variants and 2,500 cubic centimeters for gasolinediesel variants or with both, may be imported at a 100% basic customs duty. Commercial vehiclesVehicles may be imported at a basic customs duty of 20%40% and components may be imported at a basic customs duty ranging from at 10%15% to 7.5%.
MoRTH issued the final notificationregarding the acceptance of international standards (such as the United Nation Economic Commission for Europe (the “ECE”) or Japan) for direct import of CKD units without any need of domestic type approval by amending provisions of CMV Rules 92 and 126. Under the modified rules, the compliance of such part, component or assembly shall be deemed to be established for the purpose of CMV Rules 124 and 126. Also vehicle manufacturer can import unused RHD CBUs or CKDs directly or through their authorized representative, up to 2500 units of M1 and up to 500 units of other categories of vehicles annually, compliant with the international standard (such as the ECE or Japan) without any need for domestic CMV Rules Type Approval for Sales and Registration.
The FDI Policy
Automatic approval for foreign equity investments up to 100% is allowed in the automobile manufacturing sector under the FDI Policy. See Item 10.D “—“Additional Information—Exchange Controls” for additional information relating to restrictions on foreign investment under Indian law.
Indian Taxes
See Item 10.E “—“Additional Information—Taxation” for additional information relating to our taxation.
Major Taxes applicableApplicable on goodsGoods up to June 30, 2017
Excise Duty
The Government of India imposes excise duty on cars and other motor vehicles and their chassis, for which rates vary from time to time and across vehicle categories reflecting the policies of the Government of India. The chart below sets forth a summary of excise duty rates as applicable as atof June 30, 2017.
Tax Rate | Excise Duty (per vehicle or chassis) | |||||||||||||||||||
Small cars1 | Cars other than small cars2 | Motor vehicles for more than 13 persons | Chassis fitted with engines for vehicles of more than 13 persons | Trucks | Chassis fitted with engines for trucks | Safari, SUVs and UVs | ||||||||||||||
June 30, 2017 | 12.5 | % | 24% or 27%1 | 12.5 | % | 14% | 12.5 | % | 13% | 27% or 30% |
1. | Small cars are cars with a length not exceeding 4,000 mm and an engine capacity not exceeding 1,500 cubic centimeters for cars with diesel engines, and not exceeding 1,200 cubic centimeters for cars with gasoline engines. The higher rate is applicable if the engine capacity exceeds 1,500 cubic centimeters. |
2. | Cars other than small cars are cars with a length exceeding 4,000 mm with an engine capacity exceeding 1,500 cubic centimeters for diesel engines and 1,200 cubic centimeters for gasoline engines. |
All vehicles and chassis are subject to the Automobile Cess,automobile cess, which is levied at 0.125%., on assessable value. Certain passenger vehiclesPassenger Vehicles are also subject to the National Calamity Contingent Duty, which is levied at 1% on assessable value. Infra CessInfrastructure cess is applicable on certain vehicles falling under heading 8703 at 1% of assessable value in case of small cars-Petrol/cars-petrol/LPG/CNG, at 2.5% in case of small cars-Dieselcars-diesel and at 4% in case of other motor vehicles.
Value Added Tax
The Value Added Tax, or VAT,value added tax (“VAT”) has been implemented throughout India. VAT enablesset-off on input tax credit of VAT paid on inputs by traders and manufacturers against the output VAT/CSTCentral Sales Tax (the “CST”) liability, thereby eliminating the cascading effect of taxation. Standard rate of VAT in general was prescribed as 5% and 12.5%, along with special brackets of 0%, 1%, 3%, 4%, 13.5%, 14% 14.5%, 15%, 20%, 22% and 23% have been announced for various categories of goods and commodities sold in/from the respective Statesstates and certain Statesstates have also introduced additional VAT of 1% to 3% on specified commodities, including automobiles.
In some of the states, a surcharge of 5% to 10% on VAT has been introduced on automobiles. Since its implementation, VAT has had a positive impact on our business. Prior to the implementation of VAT, a major portion of sales tax paid on purchases formed part of our total cost of materials. The implementation of VAT has resulted in savings on the sales tax component, as VAT paid on inputs may generally beset-off against tax paid on outputs.
In addition to VAT, a Central Sales Taxthe CST continues to exist, although it was proposed to be abolished in a phased manner. The Central Sales TaxCST rate was reduced to 2% in2008-09. 2008-2009. There was no change in Central Sales Taxthe CST rates after June 01,1, 2008 and the same rates continued as onof June 2017.
Economic Stimulus Package and Incentives
Following the passage of the Fiscal 2014 budget, in February 2014, the Government of India further amended the central value added tax, or Cenvat, rates. Till December 31, 2014, the Cenvat on small cars, trucks and buses was reduced to 8% and Cenvat on cars other than small cars was reduced to 20% or 24% from 24% or 27%, respectively. The Cenvat on UVs was reduced from 27% or 30% to 24%. The Cenvat for chassis, which was increased from 12% to 14% in the budget for the Fiscal 2013, was reduced to 9%.
The Government of India launched the NEMMPNational Electric Mobility Mission Plan to encourage reliable, affordable and efficient electric vehicles that meet consumer performance and price expectations. Through collaboration between the government and industry for promotion and development of indigenous manufacturing capabilities, required infrastructure, consumer awareness and technology, the NEMMP aims to help India to emerge as a leader in the electric vehicle market in the world by 2020 and to contribute towardtowards national fuel security.
Furthermore, the Ministry of Road Transport & HighwaysMoRTHs and the Bureau of Energy Efficiency in India finalized labeling regulations for the M1 category of vehicles, which includes passenger vehiclesPassenger Vehicles with nine seats or less.fewer.
The Government of India’s plan to encourage India’s transition to hybrid and electric mobility consists of the following initiatives:
Demand Side: Mandate use of electric vehicles in areas such as public transportation and government fleets in order to create initial demand for OEMs and provide incentives for the sales of electric vehicles to consumers.
Supply Side: Link incentives to localization of the production of key components of electric vehicle in a phased manner.
Research and Development: Fund research and development programs along with OEMs and component suppliers to develop optimal solutions for India at low cost.
Infrastructure Support: Develop pilot programs to support hybrid and/or electric vehicles and test their effectiveness and make modest investments to build public charging infrastructure to support electric vehicles, especially for buses.
Taxes Applicable from July 1, 2017
Goods and Services Tax
The introduction of Goods and Services Tax, orthe GST from July 1, 2017 was a very significant step in the field of indirect tax reforms in India. By subsuming a large number of Centralcentral and Statestate taxes into a single tax, the aim was to mitigate cascading or double taxation and pave the way for a common national market.
The salient features of GST are:
Applicable on “supply” of goods or services as against the earlier concept of tax on manufacture of goods or on sale of goods or on provision of services.
Based on the principle of destination based consumption taxation as against the present principle of origin-based taxation.
Dual GST with the center and the states simultaneously levying it on a common base.
Replaced the taxes earlier levied and collected by the center, namely: (a) central excise duty; (b) duties of excise (medicinal and toilet preparations); (c) additional duties of excise (goods of special importance); (d) additional duties of excise (textiles and textile products); (e) additional duties of customs (commonly known as CVD); (f) special additional duty of customs; (g) service tax; (h) cesses and surcharges insofar as they relate to supply of goods or services.
State taxes that were subsumed within the GST are (a) state VAT; (b) the CST; (c) purchase tax; (d) luxury tax; (e) entry tax (all forms); (f) entertainment tax (except those levied by the local bodies); (g) taxes on advertisements; (h) taxes on lotteries, betting and gambling; (i) state cesses and surcharges insofar as they relate to supply of goods or services.
The GST rates together with the GST Compensation Cesscompensation cess rates applicable to vehicles as onof March 31, 20182020 are listed below:
Commodity | GST Rate | GST Comp. Cess Rate | ||||||
Small Cars (Diesel) | 28 | % | 3 | % | ||||
Small Cars (Gasoline) | 28 | % | 1 | % | ||||
Motor Vehicles for transport of 10 to 13 persons incl. driver | 28 | % | 15 | % | ||||
Motor vehicles for more than 13 persons | 28 | % | — | |||||
Chassis fitted with engine for more than 13 persons | 28 | % | — | |||||
Chassis fitted with engine for trucks | 28 | % | — | |||||
Safari, SUVs and UVs | 28 | % | 22 | % | ||||
Car—Motor vehicle of engine capacity not exceeding 1500cc | 28 | % | 17 | % | ||||
Motor vehicle of engine capacity exceeding 1500 cc and other than SUV | 28 | % | 20 | % | ||||
Truck | 28 | % | — |
GST Comp. Cess Rate Small Cars (Diesel) Small Cars (Gasoline) Motor Vehicles for transport of 10 to 13 persons incl. driver Motor vehicles for transport of more than 13 persons Chassis fitted with engine for transport of more than 13 persons Chassis fitted with engine for trucks SUVs and UVs Car—Motor vehicle of engine capacity not exceeding 1500cc Motor vehicle of engine capacity exceeding 1500 cc and other than SUV Truck Electrically operated vehicles (any type)Commodity GST Rate 28 % 3 % 28 % 1 % 28 % 15 % 28 % — 28 % — 28 % — 28 % 22 % 28 % 17 % 28 % 20 % 28 % — 5 % —
Environmental, fiscal and other governmental regulations around the world
Our Jaguar Land Rover business has significant operations in the United Kingdom, North America, Europe, China and other markets whichthat have stringent and ever evolving regulations relating to vehicle emissions. Compliance with the proposed tightening of vehicle emissions regulations by the European Union may entail significant costs. Although Jaguar Land Rover is pursuing various technologies to meet the different environmental standards, the costs of compliance can be significant to its operations and may adversely and materially impact its business, financial condition and results of operations.
Article 50 was triggered on March 29, 2017 to start the process for the United Kingdom to leave the European Union. The general election on June 8, 2017, concluded in a hung parliament and resulted in the Conservatives forming a coalition government with the Democratic Unionist Party of Northern Ireland. The formation of a coalition government adds to the uncertainty emanating from the circumstances surrounding Brexit. This uncertainty has weighed on the economic performance of the United Kingdom with recent higher inflation leading to a rise of 0.25% in the base interest rate adding further pressure to economic growth. In addition, a rise in UK vehicle tax in April 2017 as well as a higher taxes levied on diesel vehicles have adversely impacted automotive industry sales.
Economic growth in the Eurozone is improving. The outcome of the French elections strengthened support for the European Union with elections in Germany expected to conclude in September.
The United States economy continues to grow, albeit at a slower rate. However, import tariffs have been imposed on steel and aluminum which could be applied to a wider set of imported goods, including automobiles, and could lead to further volatility going forward.
China’s economy continues to perform broadly in line with targets set by the government and is anticipated to continue doing so. However, market volatility is anticipated. The economic environment in emerging markets is likely to remain challenging in the short-term.
Greenhouse gas / CO2 / fuel economy legislation
Current legislation in Europe limits passenger carPassenger Car fleet average greenhouse gas emissions to 13095 grams of CO2 per kilometer for 100% ofall new cars from 2015.2020. Different targets apply to each manufacturer based on their respective fleets of vehicles and average weight. Jaguar Land Rover has receivedbeen granted a permitted derogation by the European Commission Secretariat General under Regulation (EC) No. 443/2009 Article 11(4) from the weight-basedweight based target requirement available to small volume and niche manufacturers. As a result, Jaguar Land Rover is permitted to reduce emissions by 25%45% from 2007 levels rather than meeting a specific CO2 emissions target.
Jaguar Land Rover had an overall 20152016-2019 target of an average of 178.0 grams of CO2 per kilometer for itsour full fleet of vehicles registered in the European Union. In 2018, under provisional EU that year, with Jaguar Land Rover and Tata Motors monitored as a single ‘‘pooled’’ entity for compliance with this target (for Jaguar Land Rover alone, this number is 179.8 g/km). In the European Environment Agency report “Monitoring of CO2 emission from passenger cars—Data 2016—Final data”data our fleet delivered 150155.1 grams of CO2 per kilometer, well below the mandated target.
TheIn 2019, the European Union has regulated target reductions for 95% of a manufacturer’s full fleet of new passenger cars registered in the European Union in 2020 to average 95 grams of CO2 per kilometer, rising to 100% in 2021. The new rule for 2020 contains an extension of the niche manufacturers’ derogation and permits us to reduce our emissions by 45% from 2007 levels, which enables Jaguar Land Roverus to have an overall target of 132 grams of CO2 per kilometer. WithThe 2018 EU CO2 legislation extended the rapid growthNiche Volume Derogation facility out to then end of Jaguar Land Rover sales, there is2028.
In 2019, the European Union has regulated target reductions for 95% of a risk that Jaguar Land Rover may exceedmanufacturer’s full fleet of new passenger cars registered in the300,000-unit European Union in 2020 to average 95 grams of CO2 per kilometer, rising to 100% in 2021. The new rule for 2020 contains an extension of the niche manufacturers’ derogation volume threshold before 2020. All cycle plans are now structuredand permits us to achievereduce our emissions by 45% from 2007 levels, which enables us to have an overall target of 132 grams of CO2 per kilometer. The 2018 EU CO2 legislation extended thenon-derogated CO2 target. Niche Volume Derogation facility out to then end of 2028.
In the United States, both CAFE standards and greenhouse gas emissionsemission standards are imposed on manufacturers of passenger cars and light trucks. NHTSA has set theThe federal CAFE standards for passenger cars and light trucks was set in 2011 by the NHTSA to meet an estimated combined average fuel economy level of 35.554.5 miles per US gallon for 20162025 model year vehicles.vehicles achieved by a 3.5% 5% year-on-year fuel consumption reduction from model year 2016. Meanwhile, the United States Environmental Protection Agency or EPA, and NHTSA issued a joint rule to reduce the(“EIA”) had set an average greenhouse gas emissions target from passenger cars, light trucks and medium-dutymedium duty passenger vehicles for model years2012-16 to 250 grams of CO2 per mile, approximately 6.63L/100km or 35.5 miles per US gallon if the requirements were met only through fuel economy standards. The United States federal government extended this program to cars and light trucks for model years 2017 through 2025, targeting an estimated combined average emissions level of 243 grams of CO2 per mile in 2017 andat 163 grams per mile in model year 2025 which is equivalent(equivalent to the CAFE 54.5 miles per US gallon if achieved exclusively through fuel economy standards. In addition, many other markets either have or will shortly define similarstandards).
However, in April 2018, the EPA announced that the model years 2022 through 2025 emission standards are not appropriate given challenges to technology and the strain on investors. The EPA stated that it planned to harmonize the greenhouse gas emission standards and the CAFE standards without explicitly stating what those changes would be. This harmonization of standards on a national scale could significantly rollback CAFE standards and climate change rules will be rolled back significantly. Any such roll back is highly likely to in turn become subject to challenge. In August 2018, a Notice of Proposed Rule Making (“NPRM”) was issued proposing flat lining of emissions targets for model years 2021-2026 at model year 2020 target levels as well as detailed changes to “flexibilities”. Automotive manufacturers had 60 days to respond to the NPRM in which the industry supported a half way compromise between the current standards including Brazil, Canada, China,and the European Free Trade Association, India, Japan, Mexico, Saudi Arabia, South KoreaNPRM proposal. Any potential benefit to us in rolling back CAFE standards may be counter balanced by the current U.S. presidential administration’s possible changes to laws and Switzerland.policies governing international trade and potential additional tariffs and duties on foreign vehicle imports.
Although the State of California ishas been empowered to implement more stringent greenhouse gas emissionsemission standards, it has, so far, elected to accept the existing U.S. federal standards for compliance with the state’s own requirements. The California Air Resources Board enacted regulations that deem manufacturers of vehicles for model years 2012 through 2016 that were in compliance with the EPA greenhouse gas emissions regulations to also be in compliance with California’s greenhouse gas emission regulations. In November 2012, the California Air Resources Board (“CARB”) accepted the federal standard for vehicles with model years2017-25 2017 to 2025 for compliance with the state’s own greenhouse gas emission regulations.regulations via the “deemed to comply” mechanism. Through the coordination of the National Program with the CARB’s standards, automakers can seek to build one single fleet of vehicles across the United States that satisfies all requirements, and consumers can continue to have a full range of vehicle choices that meet their needs.
However, in September 2019, the US federal government revoked California’s right to set its own standards that require stricter air pollution rules than the federal government requires. California immediately moved to challenge the revocation in court and is movinglooking to move forward with other stringent emission regulations for vehicles, including the Zero Emission Vehicle regulation, or ZEV,(“ZEV”), which requires manufacturers to increase their sales of zero emissions vehicles year on year,year-on-year, up to an industry average of 22% of vehicles sold in the state by 2025. The precise sales required in order to meet a manufacturer’s obligation in any given model year depend on the size of the manufacturer and the level of technology sold (for example, transitional zero emission technologies, such asplug-in hybrids, can account for at least a proportion of a manufacturer’s obligation, but these technologies earn compliance credits at a different rate from purezero-emissions zero emissions vehicles). Other compliance mechanisms are available under ZEV, such as banking and trading of credits generated through the sale of eligible vehicles. The final rule that emerges from the NPRM process and the outcome of the dispute between the State of California and the US federal government over California’s ability to adopt separate, stricter emission standards may affect our sales in the US although the ultimate impact cannot be determined at present.
Jaguar Land Rover isIn addition, many other markets have employed similar greenhouse gas emissions standards, including Brazil, Canada, China, India, Japan, Mexico, Saudi Arabia, South Korea, Switzerland and, recently, Taiwan, each with different target mechanisms, targets, timing, requirements, compliance penalties and regulatory flexibilities.
We are fully committed to meeting all of these standards. Technology deployment plans incorporated into cycle plans are directed at achieving these standards. These plans include the use of lightweight materials, including aluminum, which will contribute to overall lighter vehicles, thereby improving fuel efficiency, reducing parasitic losses through the driveline and improvements in aerodynamics. The plans also include the development and installation of smaller and more efficient engines in existing Jaguar Land Rover vehicles and other drivetrain efficiency improvements, including the use of eight-speed or nine-speed transmissions in some of Jaguar Land Rover’s vehicles. Jaguar Land Rover continues to introduce smaller vehicles such as the Jaguar XE, its most fuel-efficient Jaguar yet and to continue lightening new models as demonstrated with the aluminum construction of theall-new Discovery. The technology deployment plans also include the research, development and deployment of hybrid-electric vehicles. These technology deployment plans require significant investment. Local excise tax initiatives are a key consideration in ensuring Jaguar Land Roverour products meet customer needs for environmental footprint and cost of ownership concerns as well as continued access to major city centers (such as London and Paris’ Ultra Low Emission Zones and similar low emissions areas being contemplated in other major urban centers).
Non-greenhouse gas emissions legislationrequirements
The European Union has adopted Euro 6, the latest in a series of more stringent standards for emissions of other air pollutants from passenger and light commercial vehicles, such as nitrogen oxide,NOx, carbon monoxide, hydrocarbons and particulates. These standards have been tightened again by the Euro 6d Temp standard, which incorporates the introduction of Real Driving Emissions or RDE,(“RDE”) as a complement to laboratory testing to measure compliance. As a first step, manufacturers will beare required to reduce the discrepancy between laboratory compliance values and RDE procedure values to a conformity factor of a maximum of 2.1 (110%) for newall models byfrom September 2017 for passenger cars and byfrom September 2018 for new light commercial vehicles. Following that, manufacturers will be required to reduce this discrepancy to a conformity factor of a maximum of 1.5 (50%1.43 (43%) by January 2020 for new models of passenger cars and by January 2021 for new models of light commercial vehicles.
StartingIn 2017 and 2018, there was a move to the new Worldwide harmonized Light vehicles Test Procedure, or WLTP in Europe, with changes made in September 2018, to address global concerns on more customer-correlatedcustomer correlated fuel economy certified levels as well as air quality concerns. It is expected that other countriesOther markets will follow suit and introducelikely adopt similar requirements. All programsprogrammes are being fully engineered to enable the adoption of these new requirements. Jaguar Land Rover is also accelerating some of these initiatives to improve RDE ahead of the mandated timing.
In California, theLow-Emission Low Emission Vehicle 3 (“LEV3”) regulations recently adopted LEV3 regulations as well as theand ZEV regulations place ever-stricterstrict limits on emissions of particulates, nitrogen oxides,NOx, hydrocarbons, organics and greenhouse gases from passenger cars and light trucks. These regulations require ever-increasing levels of technology in engine control systems,on-board diagnostics and after treatment systems affecting the base costs of our powertrains. California’s LEV3 and ZEV regulations cover model years 2015 to 2025. Additional stringency of evaporative emissions also requires more-advanced materials and joints solutions to eliminate fuel evaporative losses, all for much longer warranty periods (up to 150,000 miles in the United States).
In addition, in April 2014, the Tier 3 Motor Vehicle Emission and Fuel Standards issued by the EPA were finalized. With Tier 3, the EPA hasin April 2014 established more stringent vehicle emissions standards broadly aligned to the CARBCalifornia’s LEV3 standards for 2017 to 2025 model year vehicles. The EPA made minor amendments to these Tier 3 standards in January 2015.
While Europe and the United States typically lead the implementation of these emissions programs,programmes, many other nations and states typically follow on with adoption of similar regulations two to four years thereafter. For example, China’s Stage IV targets a national average fuel consumption of 5.0L/100km by 2021.2021 and a Stage V national average fuel consumption of 4.0L/100km by 2025. In response to severe air quality issues in Beijing and other major Chinese cities, the Chinese government also intends towill adopt more stringent emissions standards beginning in 2019.known as China 6, which is broadly aligned to California LEV3 levels.
To comply with the current and future environmental norms, we may have to incur substantial capital expenditure and R&Dresearch and development expenditure to upgrade products and manufacturing facilities, which would have a material and adverse impact on our cost of production and results of operations.
Noise legislation
The European Commission adopted new rules, which apply to new homologations from July 2016, to reduce noise produced by cars, vans, buses, coaches and light and heavy trucks. Noise limit values would be lowered in two steps of each twoA-weighted decibels for vehicles other than trucks, and oneA-weighted decibel in the first step and two in the second step for trucks. Compliance would be achieved over aten-year period from the introduction of the first phase.
Vehicle safety legislation
Jaguar Land Rover’sOur products are certified in all markets in which they are sold and compliance is achieved through vehicle certification in respective countries. Many countries use, and in many instances adopted into their own regulatory frameworks, the regulations and technical requirements provided through the United Nations Economic Commission for Europe(UN-ECE)(“UN-ECE”) series of vehicle regulations.
Vehicles sold in Europe are subject to vehicle safety and environmental regulations established by both the European Union and by individual member states, if any. In 2009, the European Union enacted a new regulation to establish a simplified framework for vehicle safety, repealing more than 50 existing directives and replacing them with a single regulation aimed at incorporating relevant United Nations standards. Following the incorporation of the United Nations standards commenced in 2012, the European Commission requires new model cars to have electronic stability control systems and has introduced regulations relating tolow-rolling resistance tires, tiretyres, tyre pressure monitoring systems and requirements for heavy vehicles to have advanced emergency braking systems and lane departure warning systems. The new safety requirements came into force from November 2014 for all new vehicles sold in the EU market. The newlatest mandatory measures include safety belt reminders for more that the driver seat, electric car safety requirements, easier child seat anchorages, tiretyre pressure monitoring systems and gear shift indicators.
NHTSA issues federal motor vehicle safety standardsFederal Motor Vehicle Safety Standards covering a wide range of vehicle components and systems such as airbags,occupant protection, seatbelts, brakes, windshields, tires,tyres, steering columns, displays, lights, door locks, side impact protection and fuel systems. Jaguar Land Rover is required to test new vehicles and equipment and assure their compliance with these standards before selling themNHTSA has recently added, in the United States. It is also required to recall vehicles found to have defects that present an unreasonable risk to safety or which do not conformaddition to the requiredtechnical requirements United States Federal Motor Vehicle Safety Standards,Standard (“FMVSS”) requirements, voluntary agreements relating to autonomous emergency brake system installation and rear seat reminder systems.
Failure to repair them without chargemeet product regulated requirements in any jurisdiction will likely require some form of product recall to remedy the owner.compliance failure. The financial cost and impact on consumer confidence of such recalls can be significant depending on the nature of the deficiency, repair required and the number of vehicles affected. We have no investigations relating to alleged safety defectsThe different standards applicable across the territories or potential compliance issues pending before NHTSA.
These standards add tocountries increase the cost and complexity of designing and producing vehicles and equipment. In recent years,
Regulations continue to evolve, there are methods and processes in place to monitor regulatory developments and ensure these are captured, internally communicated and design and engineering completed which consider all regulated requirements.
On June 22, 2017, we filed a noncompliance report after determining that approximately 126,127 Jaguar vehicles do not fully comply with FMVSS No. 135, Light Vehicle Brake Systems, as the brake fluid warning statement label on the subject vehicles is not permanently affixed as required. Instead, we installed a label that fits over the neck of the brake fluid reservoir that can be removed when the brake fluid reservoir cap is removed. On July 20, 2017, we petitioned the NHTSA has mandated,for a decision that the subject noncompliance is inconsequential as it relates to motor vehicle safety for the following reasons, among other things:others:
a system for collecting information relating toThe installed label will not fall off or become displaced during normal vehicle performance and customer complaints, as well as data from foreign recalls to assist in the early identification of potential vehicle defects as required by the Transportation Recall Enhancement, Accountability, and Documentation (TREAD) Act; anduse or operation.
enhanced requirements for frontalThe installed label is only able to be removed when the brake fluid reservoir cap is displaced which, based on routine maintenance schedules, is once every 3 years in service.
We have not received any customer complaints on this issue.
There have been no accidents or injuries as a result of this issue.
Vehicle production has been corrected to fully conform, with a new filler cap.
In April 2019, NHTSA granted the above mentioned petition.
NHTSA continue to raise enquiries relating to reports of product safety matters. More recently, NHTSA has been actively reviewing post recall remedy issues through their recall query process. In June 2019, NHTSA requested information relating to reports of fuel leaks from the fuel tank outlet flange or dust cover. All NHTSA enquiries are published and side impact, including a lateral pole impact.
Furthermore, the Cameron Gulbransen Kids Transportation Safety Act of 2007, or the Kids and Cars Safety Act, requires NHTSA to enact regulations related to rearward visibility andbrake-to-shift interlock, and to consider regulating the automatic reversal functions on power windows. The costs to meet these proposed regulatory requirements may be significant.
As at July 27, 2018, Jaguar Land Rover has one issue under investigation by NHTSA. The investigation concerns a defective conditionare in the electronically-controlled door latch system while certain vehicles were in motion. The investigation is ongoing and Jaguar Land Rover is co-operating fully with NHTSA.public domain.
While vehicle safety regulations in Canada are similar to those in the United States, many other countries have requirements different from those in the United States.requirements. The differing requirements among various countries create complexity and increase costs such that the development and production of a common product that meets the country regulatory requirements of all countries is not possible. Global Technical Regulations, or GTRs,(“GTRs”), developed under the auspices of the United Nations, continue to have an increasing impact on automotive safety activities, as indicated by the European Union legislation. In 2008, GTRs on electronic stability control, head restraints and pedestrian protection were each adopted by the United Nations World Forum for the HarmonizationHarmonisation of Vehicle Regulations, and are now in different stages of national implementation. While global harmonization is fundamentally supported by the automobile industry in order to reduce complexity, national implementation may still introduce subtle differences into the system.
The effect of Brexit on vehicle certification and type approval in the United Kingdom and European Union is clear and implementation of the changes required to accommodate this have now been completed. The European Union has issued regulation to facilitate a transition from the current 28 member state system permitting transfer to one of the remaining member state approval authorities. The UK Government has introduced legislation allowing proof of compliance from the European Union to be accepted in the United Kingdom for a limited period of time whilst the United Kingdom implements its system of vehicle certification and type approval.
Insurance Coverage
The Indian insurance industry is predominantly state-owned and insurance tariffs are regulated by the Indian Insurance Regulatory and Development Authority. We have insurance coverage which we consider reasonably sufficient to cover all normal risks associated with our operations, including business interruptions, and which we believe are in accordance with industry standards in India. We have obtained coverage for product liability for some of our vehicle models in several countries to which we export vehicles. TDCV has insurance coverage as is required and applicable to cover all normal risks in accordance with industry standards in South Korea, including product liability. We have also taken insurance coverage on directors and officersofficer’s liability to minimize risks associated with international litigation for us and our subsidiaries.
In accordance with treasury policy, Jaguar Land Rover has maintained insurance coverage that is reasonably adequate to cover normal risks associated with the operation of its business, such as coverage for people, property and assets, including construction, general, auto and product liability. On August 12, 2015, a series of explosions caused widespread damage at the Port of Tianjin in China, one of three major locations in China through which Jaguar Land Rover imports its vehicles. At the time of the explosion, approximately 5,800 Jaguar Land Rover vehicles were stored at various locations in Tianjin. Many of these vehicles were destroyed or damaged in the explosion, and, as a result, Jaguar Land Rover recognized an exceptional charge of GBP245 million in the second quarter of Fiscal 2016. By the end of Fiscal 2017, GBP274 million had been recovered through the receipt of insurance proceeds and other recoveries. These included amounts received for insurance, tax recoveries, foreign exchange gains and the sales of vehicles that were at the port at the time of the explosion including GBP35 million related to other costs associated with Tianjin including lost and discounted vehicle revenue. There can be no assurance that any claim under our insurance policies will be honored fully or timely, our insurance coverage will be sufficient in any respect or our insurance premiums will not increase substantially. Accordingly, to the extent that we suffer loss or damage that is not covered by insurance or which exceeds our insurance coverage, or have to pay higher insurance premiums, our financial condition may be materially and adversely affected.
We are insured by insurers of recognized financial standing against such losses and risks and in such amounts as are prudent and customary in the business in which it is engaged. All such insurance is in full force and effect.
We are able to renew our existing insurance coverage, as and when such policies expire or to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business, as now conducted.
Export Promotion Capital Goods
Since Fiscal 1997, we have benefited from participation in the Export Promotion Capital Goods Scheme or the EPCG Scheme,(the “EPCG Scheme”), which permits us to import capital equipment under a special license at a substantially reduced customs duty. Our participation in this scheme is subject to us fulfilling an obligation to export goods manufactured or produced by the use of capital equipment imported under the EPCG Scheme to the value of a multiple of the cost plus insurance and freight value of these imports or customs duty saved over a period of 6 8 and 128 years from the date of obtaining the special license. We currently hold 4535 licenses (excluding redeemed licenses) which require us to export our products of a value of approximately Rs.33.68Rs.43.53 billion between the years 2016 to 2024,2026, and we carefully monitor our progress in meeting our incremental milestones. After fulfilling some of the export obligations as per provisions of Foreign Trade Policy,foreign trade policy, as atof March 31, 2018,2020, we have remaining obligations to export products worth approximately Rs.3.80Rs.24.09 billion by March 2024.2026. In the event that the export obligation under the EPCG Scheme is not fulfilled, we would have to pay the differential between the reduced and normal duty on the goods imported along with interest. In view of our past record of exceeding our export milestones, and our current plans with respect to our export markets, we do not currently foresee any impediments to meeting our export obligation in the required time frame.
Legal Proceedings
In the normal course of business, we face claims and assertions by various parties. We assess such claims and assertions and monitor the legal environment on an ongoing basis, with the assistance of external legal counsel where appropriate. We record a liability for anyall claims where a potential loss is probable and capable of being estimated andestimated. We disclose such matters in our financial statements if they are material. ForWe disclose potential losses whichthat are considered reasonably possible but notless than probable we provide disclosure in theour financial statements, butstatements. However, we do not record a liability in our financial statements unless the loss becomes probable. Should anyIf certain new developments arise, such as a change in law or rulingsa ruling against us, we may need to make provisions in our financial statements, which could adversely impact our reported financial condition and results of operations. Furthermore, if significant claims are determined against us andIf we are required to pay all or a portion of the disputed amounts,a significant claim, there could be a material adverse effect on our business and profitability. Certain claims that are above Rs.200 million in value are described in Note 3337 to our consolidated financial statements included in this annual report on Form20-F. Certain claims that are below Rs.200 million in value pertain to indirect taxes, labor and other civil cases. There are otherOther claims against us which pertain to motor accident claimsaccidents in India (involvinginvolving vehicles that were damaged in accidents while being transferred from our manufacturing plants to regional sales offices),offices, product liability claims and consumer complaints. Some of these casesother claims relate to the replacement of vehicles parts of vehicles and/or compensation for deficiencydeficiencies in services provided by us or our dealers.
We had initially set up our Nano projectCapital investments underway as of March 31, 2014, included the investment of Rs.3,098.8 million to build an automobile manufacturing facility at Singur in Singur, West Bengal under a lease agreement with the West Bengal Industrial Development Corporation, or WBIDC.for Nano project. In October 2008, we moved ourthe Nano project from Singur in West Bengal to Sanand in Gujarat. In JanuaryJune 2011, the newly elected Government of West Bengal (the “West Bengal Government”) enacted a law cancelingknown as the land lease agreement at Singur Land Rehabilitation & Development Act, 2011 and by virtue of the provisions of this Act the West Bengal Government took over possession of the land. We challenged the constitutional validity of the law.law’s constitutionality. In June 2012, the Calcutta High Court declared the law unconstitutional and restored our rights under the land lease agreement. The StateWest Bengal Government filed an appeal in the Supreme Court of India in August 2012.
The appeal is ongoing, and the timeline for its resolution is uncertain and the result is uncertain. In Fiscal 2015, our management made a provision for carrying the capital cost of buildings at Singur amounting to Rs.3,098.8 million, excluding other assets (such as electrical installations) and expenses written off or provided in earlier years, security expenses, lease rent and claim for interest on the whole amount (including Rs.3,098.8 million).
In August 2016, the Supreme Court of India ordereddeclared the Stateacquisition of the land for the project by the West Bengal Government illegal and directed that the land be returned to returnthe landowners. Because the Supreme Court of India held that the land acquisition was illegal, the West Bengal Government’s subsequent appeal regarding the Singur Act’s constitutionality before the Supreme Court of India was rendered moot and withdrawn. The Supreme Court of India’s decision also rendered the West Bengal Government’s lease of the land to TML unviable. However, the farmers from whom WBIDC acquiredlease agreement contained a clause stating that, if the land. Following this decision, we decidedacquisition was deemed illegal, the West Bengal Government would indemnify TML for the capital cost it had incurred on the site. The lease agreement also provided for arbitration as a mechanism to pursueresolve any dispute between TML and the indemnities provided by WBIDC as lessor. WBIDC did not respond positively,West Bengal Government. When TML raised its claim for compensation for indemnification for capital and other costs, the West Bengal Government declined to grant the same. TML sought arbitration pursuant to ourthe lease agreement we are currently taking stepsin order to commenceresolve the arbitration.dispute. After arbitration commenced, TML filed its claim for compensation before the arbitral tribunal comprising two retired judges from the Calcutta High Court and presided over by a retired judge from the Supreme Court of India. The arbitration proceedings before the arbitral tribunal have started in May 2019.
The Competition Commission of India, or CCI has initiated an inquiry against us and other car manufacturers (collectively, referred to hereinafter as the OEMs)“Indian OEMs”) pursuant to an allegationallegations that the Indian OEMs engaged in anticompetitive conduct by not making genuine spare parts of automobiles manufactured by the Indian OEMs were not made freely available in the open market in India and, accordingly, anti-competitive practices were carried out by the OEMs. The CCI through itsIndia. In an order dated August 25, 2014, the CCI held that the Indian OEMs had violated the provisions of SectionSections 3 and Section 4 of the Competition Act, 2002, and imposed a penalty of 2% of the average turnovertotal revenues for three years. Subsequently, we and other car manufacturersIndian OEM’s filed a writ petition before the Delhi High Court challenging the constitutional validityconstitutionality of SectionSections 22(3) and 27(b) of the Indian Competition Act, under which the order was passed and the penalty imposed. The matter is currently pending before
In April 2019, the Delhi High Court.
During Fiscal 2015, Jaguar Land Rover’s Brazilian subsidiary receivedCourt directed the petitioners to approach the National Company Law Appellate Tribunal (“NCLAT”) for further deliberation on the merits. TML has filed a demand for 167 million Brazilian Real in relationspecial leave petition before the Supreme Court of India challenging the Delhi High Court’s order, which was admitted by the Supreme Court of India. The Supreme Court of India has also continued the stay on recovery of the penalty imposed by the CCI. Further hearings on the matter are yet to additional indirect taxes (PIS and COFINS) claimed as being due on local vehicle and parts sales made in 2010. The court case was heard on July 27, 2017, and the subsidiary was successful.take place.
A SEBI Order, dated March 6, 2018, directed TML to conduct an internal inquiry within 3three months into the leakage of information relating to its financial results for the quarter ended December 2015 and to take appropriate actions against those responsible. TML hired Ernst & Young LLP to conduct an internal investigation. The report was submitted to SEBI on June 11, 2018. There has been no further communication from SEBI.
The Company, consequent to an order of the Supreme Court of India in the case of R.C Gupta and Ors. Vs Regional Provident Fund Commissioner, Employees Provident Fund Organization and Ors, evaluated the impact on its employee pension scheme and concluded that because the Court had stated that the decision was applicable to the facts of that case, it will not be applicable to TML due to factual differences as per the external legal opinion. Hence it is not probable that there will be an outflow of resources. The Company has also filed an intervention application with the Supreme Court of India on April 2019, which is pending before the Court. The Company has also filed application before the authorities for surrender of exemption in respect of its pension scheme.
C.C. Organizational Structure.
Tata Sons—Our Promoter and its Promoted Entities
Tata Sons holds equity interests in its promoted companies engaged in a wide range of businesses. The various companiesentities promoted by Tata Sons, including Tata Motors Limited, are based substantially in India and had combined consolidatedaggregate revenues in excess of approximately US$100 billion in Fiscal 2018.for the financial year ending March 2019. The businesses of entities promoted by Tata Sons can be categorized under seventen business sectors, namely, engineering, materials, energy, chemicals,verticals, information technology, steel, automotive, consumer products,and retail, infrastructure, financial services, tourism and communicationstravel, aerospace and information systems.defence, telecom and media and trading and investments.
Some of the entities promoted by Tata Sons have their origins in the trading business founded by the founder Mr. Jamsetji Nusserwanji Tata in 1868, which was developed and expanded in furtherance of his dreams by his two sons, Sir Dorabji Tata and Sir Ratan Tata, following their father’s death in 1904. The family’s interests subsequently vested largely in the Sir Ratan Tata Trust, the Sir Dorabji Tata Trust and other associate trusts, collectively called “the Tata Trusts”. The Tata Trusts have been established for philanthropic and charitable purposes and together own a significant percentage of the share capital of Tata Sons.
Over the years, the operations of the entities promoted by Tata Sons have expanded to encompass a number of major industrial and commercial enterprises, including Indian Hotels Company Limited (1902), Tata Steel Limited (1907), one of the top ten steel manufacturers in the world, Tata Power Company Limited (1910), Tata Chemicals Limited (1939), which is the world’s second largest manufacturer of soda ash, and Tata Motors Limited (1945). Other Tata entities include Voltas Limited (1954), and Tata Consumer Products Limited (formerly known as Tata Global Beverages Ltd,Ltd.) (1962), along with itsUK-based subsidiary Tetley.Tetley tea business.
Tata Consultancy Services Limited or TCS,(“TCS”), a subsidiary of Tata Sons which started its operations in the 1960s as a division of Tata Sons and later became a listed public company, is a leading software service provider in India and several countries abroad and the first Indian software firm to exceed sales ofbreach the US$4 billion.100 billion market capitalization mark. TCS has delivery centers around the globe including the United States, of America, the United Kingdom, Hungary, Brazil, Uruguay, and China, Europe, Asia Pacific, Latin America, as well as India.
Tata Sons promoted India’s first airline, Tata Airlines, which later changed its name to Air India (India’s national carrier), as well as India’s largest general insurance company, New India Assurance Company Limited, both of which were subsequently taken over by the government as part of the Government of India’s nationalization program. In 1999, entities promoted by Tata Sons also invested in several telephone and telecommunication ventures, including acquiring a significant portion of the Government of India’s equity stake in the then state owned Videsh Sanchar Nigam Limited, which was subsequently renamed Tata Communications Limited. Companies promoted by Tata Sons are building multinational businesses that aspire to achieve growth through excellence and innovation, while balancing the interests of shareholders, employees and society.
Some of the other companies promoted by Tata Sons includeinclude: Titan Company, established in 1984, which is manufacturingmanufactures India’s largest and best-known range of personal accessories, such as watches, jewellery,jewelry, sunglasses, and prescription eyewear, and excels in precision engineering,engineering; Tata Housing Development Company, established in 1984, a real estate developer in India,India; Tata AIA Life Insurance Company, established in 2001, which is a joint venture between Tata Sons and AIA Life Group LtdLtd., Tata AIG General Insurance Company, established in 2001, which providesnon-life insurance solutions to individuals, groups and corporate houses in India andIndia; Tata Capital, established in 2007, a systemically importantnon-deposit takingnon-banking financial NBFC and a core investment company or NBFC,registered with the RBI, that fulfilsservices the financial needs of retail and institutional customers in India,India; Tata Realty and Infrastructure Limited, established in 2007, which is an Infrastructure and Real Estate developer,developer; AirAsia (India) Limited, a joint venture established in 2013, which is a low cost airline,airline; Tata SIA Airlines Limited, a joint venture established in 2013 which is engaged in full service scheduled passenger airline services,services; Tata Advanced Systems Limited, established in 2006 and its subsidiaries which are,inter alia, engaged in activities including scientific, technical and research and development activities, manufacturing, testing and experimenting equipment, and components, etc., in the field of advanced defense technologies, security systems, aerospace &and aerostructures.
We have for many years been a licensed user of the “TATA” brand owned by Tata Sons, and thus have gained from the use of the “TATA” brand and its brand equity. Tata Sons instituted a corporate identity program in the year 1998 tore-position the brand to compete in a global environment. A substantial ongoing investment and recurring expenditure is undertaken by Tata Sons to develop and promote a strong, well-recognized and common brand, which is intended to represent for the consumer a high level of quality, service and reliability associated with products and services offered by the entities promoted by Tata Sons.
Companies which have subscribed to the Tata Brand Equity & Business Promotion Scheme pay an annual subscription fee to use the “TATA” business name and trademarks and participate in and gain from the promotion of the Tata brand equity as well as avail themselves of various services including legal, human resources, economics and statistics, corporate communications and public affairs services organized by Tata Sons. We believe that we benefit from the use of and association with the “TATA” brand identity and accordingly, Tata Motors Limited and certain of its subsidiaries have subscribed to the Tata Brand Equity & Business Promotion Agreement and pay an annual subscription fee to Tata Sons which is in the range of 0.15% to 0.25% of the annual net income (defined as net revenues exclusive of excise duties and other governmental taxes andnon-operating income), subject to a ceiling of 5% of annual profit before tax (defined as profit after interest and depreciation but before income tax), each calculated on a standalone basis for these entities. In some of the past years, Tata Sons has lowered the absolute amount of subscription fee in light of its outlay for activities related to brand promotion and protection in those years. InFor Fiscal 2014, Fiscal 2015, Fiscal 2017, Fiscal 2018 and 2018,Fiscal 2020, no amount was paid in view of losses of Tata Motors Limited calculated on a standalone basis. Pursuant to our licensing agreement with Tata Sons, we have also undertaken certain obligations for the promotion and protection of the Tata brand identity licensed to us under the agreement. The agreement can be terminated by written agreementcommunications between the parties or by Tata Sons upon our breach of the agreement and our failure to remedy such a breach, or by Tata Sons upon providing six months’ notice for reasons to be recorded in writing. The agreement can also be terminated by Tata Sons upon the occurrence of certain specified events, including liquidation of Tata Motors Limited.
The entities promoted by Tata Sons continue to follow the ideals, values and principles of ethics, integrity and fair business practices espoused by the founder Mr. Jamsetji Tata, and his successors. To further protect and enhance the Tata brand equity, these values and principles have been articulated in the Tata Code of Conduct, which has been adopted by the entities promoted by Tata Sons. The Tata Trusts have also made significant contributions towards national causes through promotion of public institutions in the field of science, such as the Indian Institute of Science and the Tata Institute of Fundamental Research and in the field of social services through the Tata Institute of Social Sciences, the Tata Memorial Hospital, National Centre for the Performing Arts in Mumbai and, more recently, the Tata Medical Center at Kolkata in India for cancer patients, set up by the Tata Trusts and supported by Tata Sons and its promoted companies. The Tata Trusts are among the largest charitable foundations in India.
Some of the entities promoted by Tata Sons hold shares in other companies promoted by Tata Sons. Similarly, some of ourthe Company’s directors may hold directorships on the boards of Tata Sons and/or other entities promoted by Tata Sons. However, there are no voting agreements, material supply or purchase agreements or any other relationships or agreements that have the effect of binding us with other entities promoted by Tata Sons at management, financial or operational levels. With the exception of Tata Steel, which under ourthe Articles of Association has the right to appoint one directorDirector on our board of directors,the Board, neither Tata Sons nor its subsidiaries have any special contractual or other power to appoint our directorsDirectors or management. They have only the voting power of their respective shareholdings in Tata Motors.Motors Limited. Except as set forth in the tables below under the heading “Subsidiaries and Affiliates” and except for approximately a 15.37% equity interest in Tata Services Ltd,Limited., a 17.29% equity interest in Tata International Limited and a 10.47% equity interest in Tata Industries Limited, our shareholdings in other entities promoted by Tata Sons are generally insignificant as a percentage of their respective outstanding shares or in terms of the amount of our investment or the market value of our shareholdings of those companies.
Subsidiaries and Affiliates
The subsidiaries, joint operation and equity method affiliates and joint ventures of Tata Motors Limited that together with Tata Motors Limited form the Tata Motors Group as atof March 31, 20182020 are set forth in the chart below:
(1) |
|
(2) |
|
(3) | These subsidiaries are based in many countries outside India. |
(4) | Holding Company of Jaguar Land Rover Automotive Plc, Tata Daewoo Commercial Vehicle Co. Limited, Tata Motors (Thailand) Limited, Tata Motors (SA) (Proprietary) Limited, PT Tata Motors Indonesia and TMNL Motor Services Nigeria Limited. |
(5) | TML Holdings Pte. Limited increased its shareholding in Tata Motors (Thailand) Limited from 95.87% to 97.17% with effect from June 6, 2019 |
(6) | Holding in its subsidiary, Tata Daewoo Commercial Vehicle Sales and Distribution Co. Ltd. is 100%. |
Holding 99.997% in PT Tata Motors |
Shareholding in Tata Technologies Limited increased from 72.28% to 72.48% post buyback of shares. The holdings in these 12 subsidiaries |
(9) |
|
(10) |
|
(11) | The holding in these 12 subsidiaries ranges between 19% to 26% and holdings in 6 joint ventures ranges between 6.63% to 13%. |
(12) | Holding in its subsidiary, Chery Jaguar Land Rover Auto Sales Company Limited, |
(13) | An affiliate of Tata Technologies Limited. The shareholding increased from 36.14% to 36.24% |
Out of the above, the following are ourthe Company’s three significant subsidiaries as defined under RegulationS-X:
Name | Country of Incorporation | Ownership Interest / Voting Power | ||||||
Jaguar Land Rover Automotive | United Kingdom | 100 | % | |||||
Jaguar Land Rover Limited | United Kingdom | 100 | % | |||||
Jaguar Land Rover Holdings Limited | United Kingdom | 100 | % |
With respect to certain subsidiaries and affiliates, where Tata Motors Limited has a joint venture partner, voting on certain items of business may be based on affirmative voting provisions and board of director’s participation clauses in the relevant joint venture agreement(s).
D.Property,D. Property, Plants and Equipment
Facilities
We operate six principal automotive manufacturing facilities in India. The first facility was established in 1945 at Jamshedpur in the state of Jharkhand in eastern India. We had commenced construction of the second facility in 1966 (with production commencing in 1976) at Pune, in the state of Maharashtra in western India, the third facility in 1985 (with production commencing in 1992) at Lucknow, in the state of Uttar Pradesh in northern India, the fourth at Pantnagar in the state of Uttarakhand, India, which commenced operations in Fiscal 2008, the fifth at Sanand in Gujarat in western India for manufacturing of the Nano, which commenced operations in June 2010, and the sixth plant for manufacturing Tata Marcopolo buses under our joint venture with Marcopolo and LCVs at Dharwad in Karnataka (which buses are also produced at Lucknow). The Jamshedpur, Pune, Sanand, Pantnagar and Lucknow manufacturing facilities have been accredited with an ISO/TS 16949:2000(E) certification.
The manufacturing facilities of TDCV are based in Gunsan, South Korea. TDCV has received the ISO/TSIATF 16949 certification, an internationalthe automotive quality systems specificationmanagement system, given by SGS UK Ltd., ana certification body accredited by the International Automotive Task Force, or IATF, accredited certification body.Force. It is the first South Korean automobile OEM to be awarded an ISO/TScommercial vehicle manufacturer that received the IATF 16949 certification.
Fiat India Automobiles Private Limited, our joint arrangement with the FCA, has its manufacturing facility located in Ranjangaon, Maharashtra. The plant is used for manufacturing Tata and Fiat branded cars and engines, and transmissions for use by both partners.
Tata Motors (Thailand) Limited is our joint venture with Thonburi Automotive Assembly Plant Co. Ltd, and has a manufacturing facility located in Samutprakarn province, Thailand. The facility is used for the manufacture and assembly of pickup trucks. Through our joint venture in Thailand, we offered refreshed versions of Tata brand pickup trucks in Fiscal 2016 and increased the joint venture’s product range by introducing Daewoo brand M&HCV trucks in Thailand.
Through Jaguar Land Rover, we currently operate four principal automotive manufacturing facilities in the United Kingdom at Solihull, Castle Bromwich, Halewood and the Engine Manufacturing CentreEMC at Wolverhampton, as well as two product development facilities in the United Kingdom at Gaydon and Whitley. Most of these facilities are owned as freehold estates or are held through long-term leaseholds, generally with nominal rents. In December 2015, Jaguar Land Rover announced an initial investment of GBP1 billion to build a manufacturing facility in Slovakia (owned as a freehold estate), with production scheduled to commencewhich opened in lateOctober 2018 withand currently produces the Land Rover Discovery.Discovery and the new Land Rover Defender. Jaguar Land Rover also owns a joint venture manufacturing plant under our China Joint Venture, in Changshu, near Shanghai, as part of a RMB 10.9an RMB10.9 billion investment that also includes a new research and development center, which opened in October 2014. A new engine plant producing Jaguar land Rover’s2.0-litre2.0-Liter Ingenium petrol engines opened in July 2017 for installation into vehicles manufactured by the China joint venture.Joint Venture. Jaguar Land Rover also opened a new manufacturing facility in Brazil in June 2016, which manufactures the Range Rover Evoque and Discovery Sport for the Brazilian market. Jaguar Land Rover now produces theI-PACE battery electric vehicle and the new JaguarE-PACE in Graz, Austria under its manufacturing partnership with Magna Steyr.
Tata Motors (SA) (Proprietary) Limited, our joint venture with Tata Africa Holdings (SA) (Proprietary) Ltd. for the manufacture and assembly operations of our LCVs and M&HCVsMHCVs in South Africa, owns and operates a manufacturing facility located in Rosslyn, South Africa.
Description of environmental issues that may affect our utilization of facilities
Tata Commercial Vehicles and other brand vehiclesTata Passenger Vehicles
As with other participants in the automobileAutomobile industry around the world, we areis exposed to regulatory risks related to climate change. The design and development of fuel-efficient vehicles and vehicles running on alternative renewable energy has become a priority as a resultbecause of fossil fuel scarcity, escalating fuel price, climate change concerns, and growing awareness about energy efficiency among customers.government regulations. New and advanced technologies encourage customers to look beyond standard purchasing factors and they may start looking for the product differentiation based on advanced technologies used in the vehicle.
We have adopted the Tata Group Climate Change Policy which addressesimplemented our sustainability and climate change policies that address key climate change issues related to products, processes and services. Weservices, and we are committed to reduction ofreduce the greenhouse gas emissions throughout the lifecycle of our productsproducts. Our approach towards climate change mitigation and developmentpursuing low carbon growth is three-fold – develop cleaner and more fuel-efficient vehicles, reduce environmental impacts of fuel efficientmanufacturing operations and build awareness among stakeholders. Our sustainability strategy is aligned with global and national policies of future mobility solutions. Accordingly, we are extensively working on low greenhouse gas emitting vehicles, as an integral part of ourcarbon product development across our Commercial Vehicle and manufacturing strategy.
The United Nations 21st Conference on Climate Change, Conference of the Parties was held in Paris from November 30, 2015 to December 11, 2015. The Paris Agreement, which was set out to improve upon and replace the Kyoto Protocol, went into effect on November 4, 2016. As India ratified the Paris global climate agreement, The Honorable Prime Minister Narendra Modi highlighted India’s commitment to reduce its emission intensity to 33% to 35% by 2030 compared to 2005 levels, through nationally determined contributions.
Considering the climate change risk, we are actively involved in partnerships with technology providers to embrace energy-efficientenergy efficient technologies not only for products but also for processes and are also participating actively in various national committees in India, which are working on formulating policies and regulations for improvement of the environment, including through reduction of greenhouse gases.
We are continually developing products to meet the current and future emission standards in India as a party to the United Nations Framework Convention on Climate Change, 1992 and its Kyoto Protocol, 1997, has been committed to addressing the global problem on the basis of the principle of “common but differentiated responsibilities and respective capabilities” of the member parties. At present, there are no legally binding targets for greenhouse gas reductions for India as it is a developing country. There are, however, opportunities for minimizing energy consumption through elimination of energy losses during manufacturing, thereby reducing manufacturing costs and increasing productivity.
The United Nations 21st Conference on Climate Change, Conference of the Parties, or COP 21, was held in Paris from November 30, 2015 to December 11, 2015. The Honorable Prime Minister Narendra Modi highlighted India’s commitment to reduce its emission intensity to 33% to 35% by 2030 compared to 2005 levels, through nationally determined development measures and priorities.
other countries. In order to manage regulatory and general risks of climate change, we are increasingly investing in the design and development of fuel efficient and alternative energy vehicles, in addition to implementing new advanced technologies. With the growing need for reducing on road emission for vehicles, innovative technologies are needed to increase efficiency ofsupport the changing scenario and achieving targets. In order to reduce carbon emissions from vehicles, our internal combustion engines.focus is on researching, developing and producing advanced technologies, such as hybrid engines, electric cars, fuel-cell vehicles. We have manufactured CNG andCNG-electric hybrid versionsdeveloped a range of buses, LCVs, and the Ace Xenon, as well as a liquefied petroleum gas version of the Indica passenger vehicle.
Moreover, we use refrigerantselectric vehicles, such as R134Athe Ultra 9m AC Electric bus, Tiago EV, Tigor EV, Nexon EV along with Altroz EV which we showcased at Geneva International Motor show in our products in order to minimize our contribution toward greenhouse gas emissions. We also ensure that no refrigerant is released to the atmosphere during any service, repair and maintenance of theair-conditioning systems of our vehicles by first recovering the refrigerant charge before the system is serviced and recharged. In addition, since 2009, we have voluntarily disclosed fuel-efficiency information for our passenger vehicles in India in accordance with a decision by SIAM.March 2019. We are also continuallysimultaneously putting efforts in the processour research and development of developing products to meet the currentvehicles, which are powered by alternative fuels like CNG, LPG, biodiesel and future emission norms in India and other countries. hydrogen.
For example, we offer products which meet the Bharat Stage III and Bharat Stage IV norms in India and Euro V norms in International markets.
In order to dealdealing with the challenges posed by climate change, we are striving harddetermined to reduce our carbon footprint and one of the interventions we have taken is to increase the proportion of renewable energy in our operations. We have made substantial investments in the area of wind and solar power to increase our renewable energy capacity. We have also signed power purchase agreements with renewable energy producers. Currently the share of renewable energy in our operations is 21% as against 17% during the last financial year. All our manufacturing facilities in India have robust Environmental Management System and are certified for ISO-14001,also all our manufacturing sites in India are ‘GreenCo’ certified. Besides efforts on switching to renewable energy we have taken several initiatives to reduce our energy intensity i.e specific energy required to produce vehicles. These initiatives have helped us in reducing our GHG emissions substantially. Besides energy & carbon, water and waste are also equally important for us. In an attempt to achieve zero waste to landfill/ incineration(ZWTL), we have rolled out an initiative called ‘Value from hazardous Waste’(VfHW) and thus not only reduced the generation of hazardous waste but also found out environment friendly application for the waste. Zero Liquid discharge(ZLD) is another initiative directed to reduce water consumptions. In most of our plant we recycle the treated effluent back in to the operations.
Pursuant to our commitment to climate change mitigation, we are a signatory to the RE100, a global collaborative initiative of influential businesses committed to usage of 100% renewable electricity. We have made substantial investments in the area of wind and solar power to increase our renewable energy capacity. We have signed power purchase agreements with renewable energy producers. In addition to renewable energy, we have taken several energy conservation initiatives, which helped us in reducing our greenhouse gas emissions. All our manufacturing facilities in India are certified for ISO-14001. Going beyond our manufacturing boundaries, we are implementing sustainable supply chain initiative in a phased manner since Fiscal 2017 for integrating sustainability in supply chain to minimize the environmental and social impacts of our supply chain. We have already covered 350+ suppliers under this initiative in last four years. We are also working on the downstream side of supply-chain with our dealerships and channel partners for improving the sustainability performance.
Jaguar Land Rover
Jaguar Land Rover’s production facilities are subject to a wide range of increasingly strict environmental, health and safety requirements. These requirements address, among other things, air emissions, wastewater discharges, accidental releases into the environment, human exposure to hazardous materials, the storage, treatment, transportation and disposal of wastes and hazardous materials, the investigation andclean-up of contamination, process safety and the maintenance of safehealth and safety conditions in the workplace. Many of Jaguar Land Rover’s operations require permits and controls to monitor or reduce pollution. Jaguar Land Rover hasWe have incurred, and will continue to incur, substantialon-going capital and operating expenditures to ensure compliance with current and future environmental, health and safety laws and regulations or their more stringent enforcement. Violations of these laws and regulations could result in the imposition of significant fines and penalties, the suspension, revocation ornon-renewal of ourJaguar Land Rover’s permits, production delays or limitations, imprisonmentsimprisonment, or the closure of Jaguar Land RoverRover’s plants. Other environmental, health and safety laws and regulations could impose restrictions or onerous conditions on the availability or the use of raw materials thatwe need for Jaguar Land Rover needs for itsRover’s manufacturing process. Violations of these laws and regulations may occur, among other ways, from errors in monitoring emissions of hazardous or toxic substances from Jaguar Land RoverRover’s vehicles or production sites into the environment, such as theirJaguar Land Rover’s use of incorrect methodologies or defective or inappropriate measuring equipment, errors in manually capturing results, or other mistaken or unauthorized acts of our employees, suppliers or agents.
Jaguar Land Rover’s business and manufacturing processes result in the emission of greenhouse gases such as CO2. Jaguar Land Rover expectsCarbon Dioxide. We expect the legal requirements to reduce greenhouse gassesgases to become increasingly more stringent and costly to address over time. For example, the EUEuropean Union Emissions Trading Scheme or EUETS, anEU-wide(“EU ETS”), a European Union-wide system in which allowances to emit greenhouse gases are issued and traded, is now in Phase 3 (2013 to 2020)IV and currently applies to Jaguar Land Rover’s fourthree manufacturing facilities. Jaguar Land Rover has managed its EUETSfacilities in the United Kingdom, and is in the process of being applied to our Slovakia manufacturing facility. The free allocation of EU ETS carbon allowances during previous phases of the EUETS scheme and uses remaining allowances from these earlier phases to meet its compliance requirements. The automotive sector was recognized as being at risk of “carbon leakage”significantly reduces in accordance with the EUETS rules. This means that Jaguar Land Rover will receive an increase in free allowances from 2015 and 2019. As a consequence of these actions, Jaguar Land Rover currently projects that it will reach the end of Phase 3 without the need to purchase EUETS carbon allowances. In Phase 4 of the scheme (2020 to 2027), free allowancesEU ETS (starting from the end of 2020) and, as a result, we will diminish to zero by 2027. Jaguar Land Rover therefore projects a needbe required to purchase EUETSan increased number of allowances, in Phase 4, potentially at a substantial cost. This forecast is subject to further evaluation circumstances surroundingbased on the final terms of the Brexit negotiations and itstheir potential impact on the regulated carbon schemes. In any event, there will be a cost to purchase increased credits in Slovakia and that will be assessed following EUETS permit application and issue.
Jaguar Land Rover hasIn response to increased public interest, carbon legislation is rapidly evolving around the globe. The implementation requirements differ, with some countries such as the United Kingdom setting targets for “Net Zero Carbon” attainment by 2050. In other countries, timeframes and the degree of commitment vary.
We have a Climate Change Agreement or CCA,(“CCA”) in the United Kingdom which covers itsJaguar Land Rover’s three vehicle manufacturing energy use at Castle Bromwich, Halewood, Solihullplants and most recently special operations at Oxford road.one of our Special Operations facilities. This requires Jaguar Land Roverus to deliver a 15% reduction in energy use per vehicle by 2020 compared to the 2008 baseline. Jaguar Land Rover’s projections show that it is on track to achieve this target and consequently will not need to purchase carbon allowances under this scheme.
Jaguar Land Rover are also registered as a participant in theThe Carbon Reduction Commitment Energy Efficiency Scheme, or(“CRC”) energy efficiency scheme ceased in 2019. In response to the loss of revenue for Her Majesty’s Treasury from the cessation of the CRC, Scheme, which regulates emissions from electricity and gas use primarily in itsnon-manufacturing activitiesthe amount of Climate Change Levy that we pay has increased in the United Kingdom. There has been the development of the Streamlined Energy and Carbon Reporting Scheme (“SECR”) which will replace reporting under CRC and is compulsory for UK entities for UK operations.
The Best Available Techniques Reference Document (“BREF”) for Jaguar Land Rover purchased carbon allowancesRover’s paint shops has been under this scheme forreview and in 2019 changes have been proposed, including the first time in 2015 forlowering of permissible emissions in Fiscal 2014.
Consultation on changesto 30g/m2. Subject to the energy taxation regime in the United Kingdomfinal terms of Brexit negotiations, it is possible that Jaguar Land Rover’s paint shops will see the removal of the CRC Scheme from 2019. Her Majesty’s Treasury has advised that any changesneed to adhere to the energy tax regime wouldrevised BREF requirements within four years from its issue date and, in any event, our paint shop in Slovakia will need to be cost neutral. Consequently, Jaguar Land Rover will see an increase in Climate Change Levy (CCL) paid on the energy we consume in lieu of the removal of CRC.meet this requirement.
Many of Jaguar Land Rover’s sites have an extended history of industrial activity. Jaguar Land RoverWe may be required to investigate and remediate contamination at those sites, as well as properties theywe formerly operated, regardless of whether theywe caused the contamination or the activity causing the contamination was legal at the time it occurred. For example, some of Jaguar Land Rover’sour buildings at theirour Solihull plant and other plants in the United Kingdom are undergoing an asbestos removal program in connection withon-going refurbishment and rebuilding. With respectPrior to purchase of overseas facilities for Jaguar Land Rover, we undertook studies that informed us of the presence of contamination or otherwise in the ground prior to development. In Brazil, Jaguar Land Rover’s manufacturing site is adjacent to a facility (the “Itatiaia West” site), where organic solvent contamination of the ground had previously occurred. We have purchased the Itatiaia West site and are currently progressing relevant permits for operation and developing plans for further remediation of the organic solvent contamination. The Itatiaia West site is listed on the Environmental Regulators site (Instituto Estadual do Ambiente) as contaminated. Some of these historical issues are being addressed in conjunction with Jaguar Land Rover’s site development works whilst others are subject to ongoing treatment regimes.
In connection with contaminated properties, as well as Jaguar Land Rover’s operations generally, Jaguar Land Roverwe also could also be subject to claims by government authorities, individuals and other third parties seeking damages for alleged personal injury or property damage or damage to natural resources resulting from hazardous substance contamination or exposure caused by Jaguar Land Rover’sour operations, facilities or products. The discovery of previously unknown contamination, or the imposition of new obligations to investigate or remediate contamination at Jaguar Land Rover’sour facilities, could result in substantial unanticipated costs. Jaguar Land RoverWe could be required to establish or substantially increase financial reserves for such obligations or liabilities. The above factors, coupled with an inabilityliabilities and, if we fail to accurately predict the amount or timing of such costs, could have a materialthe related adverse impact on Jaguar Land Rover’s business, financial condition and/or results of operations could be material.
In JLR’s overseas facilities prior to purchase JLR undertook studies that informed them of the presence of contamination or otherwise in the ground prior to development. In Slovakia some pesticide was found during one site investigation but when repeated was not located. In Brazil the manufacturing site is adjacent to a facility where organic solvent contamination of the ground occurred. The manufacturing site is largely unaffected but JLR have purchased the adjacent site and are currently progressing relevant permits for operation and developing plans for further remediation of the organic solvent contamination. The site known in JLR as Itatiaia West is listed on the Environmental Regulators site (INEA) as contaminated.
Production Capacity
The following table shows our production capacity as atof March 31, 20182020 and production levels by plant and product type in Fiscal 20182020 and 2017:Fiscal 2019:
As at March 31, 2018 | Year ended March 31, | |||||||||||
Production Capacity | 2018 | 2017 | ||||||||||
Production (Units) | ||||||||||||
Tata Motors Plants in India1 | ||||||||||||
Medium and heavy commercial vehicles, light commercial vehicles, utility vehicles and passenger cars | 1,622,920 | 601,695 | 529,927 | |||||||||
Jaguar Land Rover2, 5 | ||||||||||||
Utility vehicles, passenger cars | 841,000 | 618,000 | 620,287 | |||||||||
Other subsidiary companies’ plants (excluding Jaguar Land Rover)3 | ||||||||||||
Medium and heavy commercial vehicles, buses, bus bodies and pickup trucks | 52,000 | 21,036 | 21,858 | |||||||||
Joint operations4 (Passenger Vehicles) | 100,000 | 30,655 | 12,234 |
As of March 31, 2020 | Year ended March 31, | |||||||||||
Production Capacity | 2020 | 2019 | ||||||||||
Production (Units) | ||||||||||||
Tata Motors Limited Plants in India1 | ||||||||||||
Medium and Heavy Commercial Vehicles, Light Commercial Vehicles, Utility Vehicles and Passenger Cars | 1,454,900 | 424,453 | 677,095 | |||||||||
Jaguar Land Rover2, 5 | ||||||||||||
Utility Vehicles, Passenger Cars | 848,000 | 521,289 | 492,372 | |||||||||
Other subsidiary companies’ plants (excluding Jaguar Land Rover)3 | ||||||||||||
Medium and Heavy Commercial Vehicles, buses, bus bodies and pickup trucks | 21,200 | 5,662 | 7,657 | |||||||||
Joint operations4 (Passenger Vehicles) | 100,000 | 28,894 | 38,082 |
1. | This refers to estimated production capacity on a double-shift basis for all plants (except the Uttarakhand plant for which capacity is on a three-shift basis) for the manufacture of vehicles and replacement parts. |
2. | Production capacity is on a three-shift basis. Includes assembly plant in Brazil and vehicles manufactured under the manufacturing agreement with Magna Steyr in Graz, Austria. |
3. | The plants are located in South Korea, South Africa and Thailand. |
4. | Excludes production of |
5. | Includes capacity at |
Properties
We produce vehicles and related components and carry out other businesses through various manufacturing facilities. In addition to our manufacturing facilities, our properties include sales offices and other sales facilities in major cities, repair service facilities and research and development facilities.
The following table sets forth information, with respect to our principal facilities, a substantial portion of which are owned by us as atof March 31, 2018.2020. The remaining facilities are on leased premises.
Location | Facility or Subsidiary / Joint Operations Name | Principal Products or Functions | ||
India | ||||
In the State of Maharashtra | ||||
Pune (Pimpri, Chinchwad, Chikhali1, Maval) | Tata Motors Limited | Automotive vehicles, components, | ||
Pune (Hinjewadi)1 | Tata Technologies Ltd. | Software consultancy and services | ||
Mumbai, Pune | Tata Motors Limited/ | Automobile sales and service and vehicle financing | ||
Satara | Tata Cummins Pvt. Ltd. | Automotive engines | ||
Pune (Ranjangaon) | Fiat India Automobiles Pvt. Ltd. | Automotive vehicles and components |
Location | Facility or Subsidiary / Joint Operations Name | Principal Products or Functions | ||
In the State of Jharkhand | ||||
Jamshedpur | Tata Motors Limited | Automotive vehicles, components and research and development | ||
Jamshedpur | Tata Cummins Pvt. Ltd. | Automotive engines | ||
In the State of Uttar Pradesh | ||||
Lucknow1 | Tata Motors Limited | Automotive vehicles, parts and research and development | ||
Tata Marcopolo Motors Ltd. | Bus bodies | |||
In the State of Karnataka | ||||
Dharwad | Tata Motors Limited | Automotive vehicles, components, spare parts and warehousing | ||
Tata Marcopolo Motors Ltd. | Bus body manufacturing | |||
Bengaluru2 | Automobile sales and service | |||
In the State of Uttarakhand | ||||
Pantnagar1 | Tata Motors Limited | Automotive vehicles and components | ||
In the State of Gujarat | ||||
Sanand | Tata Motors Limited | Automotive vehicles and components | ||
Rest of India | ||||
Hyderabad | Automobile sales and service | |||
Automobile sales and service | ||||
Various other properties in India | Tata Motors Limited/Tata Motors Finance Ltd. | Vehicle financing business (office/ residential) | ||
Outside India | ||||
Singapore | Tata Technologies Pte Ltd. | Software consultancy and services | ||
Tata Daewoo Commercial Vehicles Co. | Automotive vehicles, components and research and development | |||
Thailand | Tata Motors (Thailand) Ltd. | Pick-up trucks | ||
Tata Technologies (Thailand) Ltd. | Software consultancy and services | |||
United Kingdom | Tata Motors European Technical Centre | Engineering consultancy and services | ||
United Kingdom | INCAT International PLC, Tata Technologies Europe | Software consultancy and services |
|
|
| ||
United Kingdom | ||||
Solihull | Jaguar Land Rover Limited | Automotive vehicles and components | ||
Castle Bromwich | Jaguar Land Rover Limited | Automotive vehicles and components | ||
Halewood | Jaguar Land Rover Limited | Automotive vehicles and components | ||
Gaydon | Jaguar Land Rover Limited | Research and product development | ||
Whitley | Jaguar Land Rover Limited | Headquarters and research and product development | ||
Wolverhampton | Jaguar Land Rover Limited | Engine manufacturing | ||
Spain | Tata Hispano Motors Carrocera S.A. | Bus body service | ||
Morocco | Tata Hispano Motors Carrocerries Maghreb SA | Bus body manufacturing and service | ||
South Africa | Tata Motors (SA) (Proprietary) Limited | Manufacture and assembly operations of vehicles | ||
Indonesia | PT Tata Motors Indonesia | Distribution of vehicles | ||
Austria | Jaguar Land Rover Limited | Automotive vehicles and components | ||
Brazil | Jaguar Land Rover Limited | Automotive vehicles and components | ||
Slovakia | Jaguar Land Rover Limited | Automotive vehicles and components | ||
Italy | Trilix Srl. | Automotive design and engineering | ||
Others (e.g. United States, United Kingdom, China, Europe, | Tata Technologies Ltd. | Software consultancy and services | ||
Jaguar Land Rover3 | National sales companies | |||
Regional sales offices |
Note: Excludes facilities held by our joint ventures, including the manufacturing plant held by Jaguar Land Rover Automotive Company Limited.
1. | Land at each of these locations is held under |
2. | Some of the facilities are held under |
3. | National sales companies are held by various subsidiaries of the Jaguar Land Rover group of |
Substantially all of our owned properties are subject to mortgages in favor of secured lenders and debenture trustees for the benefit of secured debenture holders.
A significant portion of our property, plantplants and equipment, except those in the United Kingdom, is pledged as collateral securing indebtedness incurred by us. We believe that there are no material environmental issues that may affect our utilization of these assets.
We have additional property interests in various locations around the world for limited manufacturing, sales offices, and dealer training and testing. The majority of these are housed within leased premises.
For further details regarding the current legal proceedings with respect to the leased land in West Bengal, please refer to Item 4.B “—“Information on the Company—Business Overview—Legal Proceedings” of this annual report on Form20-F.
We consider all of our principal manufacturing facilities and other significant properties to be in good condition and adequate to meet the needs of our operations.
Item 4A. | Unresolved Staff Comments |
None.
Item 5. | Operating and Financial Review and Prospects |
You should read the following discussion of our financial condition and results of operations together with our consolidated financial statements prepared in conformity with IFRS and information included in this annual report on Form20-F. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors including, but not limited to, those set forth in Item 3.D and elsewhere in this annual report on Form20-F.
A.OperatingA. Operating Results
All financial information discussed in this section is derived from our audited financial statements included in this annual report on Form20-F, which have been prepared in accordance with International Financial Reporting Standards as issued byIFRS.
We have adopted IFRS 16 with a modified retrospective approach. Accordingly, we have presented our prior comparative periods without applying the International Accounting Standards Board.principles of IFRS 16. Refer to Note 2(y) of our consolidated financial statements included in this annual report on Form 20-F.
The following discussion covers the fiscal years ended March 31, 2020 and 2019. For the discussion covering the fiscal year ended March 31, 2018, please refer to “Item 5.A.” of the Company’s annual report on Form 20-F for the fiscal year ended March 31, 2019 filed with the SEC on July 30, 2019.
Overview
In Fiscal 2018,2020, our total revenue, (net of excise duties), including finance revenues, increaseddecreased by 8.5%13.3% to Rs.2,882,951Rs.2,594,251 million from Rs.2,656,495Rs.2,993,662 million in Fiscal 2017.2019. Such decrease was mainly attributable to lower sales volumes from both Tata Motors Limited and Jaguar Land Rover and an unfavorable currency translation from GBP to Indian rupees. We recorded net income (excluding the share attributable tonon-controlling interests) of Rs.66,661loss was Rs.113,429 million in Fiscal 2018, representing an increase by 8.9% or Rs.5,4502020, as compared to a loss of Rs.293,143 million over net income in Fiscal 20172019. In Fiscal 2020 we have taken an impairment charge and provision for onerous contract of Rs.61,211 million.Rs.15,757 million for our Passenger Vehicle segment as against Rs.278,379 million in Fiscal 2019 for Jaguar Land Rover business. The loss in Fiscal 2020 was driven by the subdued performance of Tata Motors Limited along with Jaguar Land Rover, including higher variable marketing expenses and selling costs.
As discussed in our introductory remarks, we
We use earnings before other income, interestEarnings Before Other Income, Interest and taxTax to assess our operating performance; a reconciliation of our consolidated earnings before other income, interestEarnings Before Other Income, Interest and taxTax to our consolidated net income for the years ended March 31, 2018, 2017Fiscal 2020 and 2016Fiscal 2019 is set forth below.
For the year ended March 31, | For the year ended March 31, | |||||||||||||||||||
2018 | 2017 | 2016 | 2020 | 2019 | ||||||||||||||||
Rs. in million | Rs. in million | |||||||||||||||||||
Net Income | 67,682 | 62,234 | 96,872 | |||||||||||||||||
Net Income/(loss) | (112,984 | ) | (292,128 | ) | ||||||||||||||||
Add/(Less): | ||||||||||||||||||||
Share of (profit)/loss of equity accounted investees (net) | (22,783 | ) | (14,930 | ) | (5,775 | ) | 10,000 | (2,095 | ) | |||||||||||
Asset written off/loss on sale of assets and others (net) | 29,148 | 11,419 | 9,477 | 3,132 | 13,187 | |||||||||||||||
Other (income)/loss (net) | (47,873 | ) | (39,590 | ) | (12,613 | ) | (16,009 | ) | (35,439 | ) | ||||||||||
Foreign exchange (gain)/loss (net) | 2,759 | 13,285 | 20,588 | 16,985 | 5,824 | |||||||||||||||
Interest income | (7,122 | ) | (5,641 | ) | (7,187 | ) | (11,697 | ) | (7,865 | ) | ||||||||||
Interest expense (net) | 46,365 | 42,366 | 47,913 | |||||||||||||||||
Income tax expense | 38,059 | 35,670 | 27,513 | |||||||||||||||||
Earnings before other income, interest and tax | 106,235 | 104,813 | 176,789 | |||||||||||||||||
Interest expense | 72,553 | 57,586 | ||||||||||||||||||
Income tax expense/(credit) | 3,645 | (25,425 | ) | |||||||||||||||||
Earnings Before Other Income, Interest and Tax | (34,375 | ) | (286,355 | ) |
As also discussed in our introductory remarks, weWe use free cash flowFree Cash Flow to measure ongoing needs for investments in plantplants and machinery, products and technologies; a reconciliation of our free cash flowFree Cash Flow for the years ended March 31, 2018, 2017Fiscal 2020 and 2016Fiscal 2019 is set forth below.
Year ended March 31, | Year ended March 31, | |||||||||||||||||||
2018 | 2017 | 2016 | 2020 | 2019 | ||||||||||||||||
Rs. in million | Rs. in million | |||||||||||||||||||
Cash flow from operating activities | 238,574 | 303,107 | 374,713 | 266,329 | 188,908 | |||||||||||||||
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Payments for property, plant and equipment | (198,654 | ) | (162,799 | ) | (159,538 | ) | ||||||||||||||
Proceeds from sale of property, plant and equipment | 303 | 534 | 588 | |||||||||||||||||
Payments for property, plants and equipment | (143,192 | ) | (174,196 | ) | ||||||||||||||||
Proceeds from sale of property, plants and equipment | 1,715 | 672 | ||||||||||||||||||
Payment for intangible assets | (152,135 | ) | (143,799 | ) | (152,065 | ) | (153,829 | ) | (178,840 | ) | ||||||||||
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(350,486 | ) | (306,064 | ) | (311,015 | ) | (295,306 | ) | (352,364 | ) | |||||||||||
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Free cash flow | (111,912 | ) | (2,957 | ) | 63,698 | |||||||||||||||
Free Cash Flow | (28,977 | ) | (163,456 | ) | ||||||||||||||||
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As also discussed in our introductory remarks, weWe use ratioRatio of net debtNet Debt to shareholders’ equityShareholders’ Equity to measure our debt commitments; a reconciliation of our ratioRatio of net debtNet Debt to shareholders’ equityShareholders’ Equity as atof March 31, 20182020 and 20172019 are set forth in Exhibit 7.1 to this annual report on Form20-F.
Economy
INDIAIndia
According to the National Statistical Office, the Indian economy registered a slowdown in GDP during Fiscal 2020 and its GDP growth is estimated at 4.2% as compared to 6.1% in Fiscal 2019.
The year 2017 for India was marked by a numbersluggish growth is due to both endogenous and exogenous factors, the key indicator being lack of key structural initiativescredit growth and demand in market, leading to build strength across macro-economic parameters for sustainableslow growth in the future. final consumption expenditure, and decline in gross fixed capital formation and export earnings. Major global contributing factors are the Sino-American trade conflict, Brexit, geopolitical tensions and deceleration in developed economies. Another reason for this sluggish growth is the poor performance in the manufacturing and construction sectors. Based on data provided by the National Statistical Office, gross value added at basic prices for Fiscal 2020 from the manufacturing sector is estimated to grow by 0.3% as compared to growth of 8.6% from 2018 to 2019. Based on the latest assessment by the International Monetary Fund, India’s economy is forecast to contract by 4.5% in 2020 due to COVID-19 pandemic. Stringent measures to restrict the spread of the virus, which heavily curtail activities, will contribute to the contraction of Indian economic growth. Despite support from fiscal stimulus and continued monetary policy easing, spillovers from contracting global growth and balance sheet stress in the financial sector will also adversely impact economic activities.
To improve the economic situation, the Government of India took measures to revamp the financial sector by increasing credit outflows by the banks and NBFCs, reducing stress in real estate sector, liberalizing foreign direct investment norms, a significant cut in the corporate tax rate, easing tax rules for foreign portfolio investors and start ups and speeding up of resolution process under Insolvency and Bankruptcy Code, 2016.
The COVID-19 pandemic imposed fresh challenges to economy in the fourth quarter of Fiscal 2020. Steps taken to contain its spread such as the complete lockdown of the country brought economic activities to a standstill and impacted consumption and investment. The RBI has moved in a calibrated fashion to ensure conductive financial conditions and normalcy in the functioning of financial markets and institutions. The initial efforts to provide adequate system level liquidity are reflected in the sizable net absorptions under reverse repurchase operations. Several other measures are taken include relaxation of norms on cash reserve requirement, rate cuts, granting moratorium for loans, enhancing working capital financing to assist sectors and entities which are facing liquidity constraints. The government has come up with targeted measures to ease the economic pain in various sectors and announced overall economic package of Rs.20 lakh crores. In case of Micro, Small, and Medium Enterprises (“MSMEs”), government of India announced Rs.3 lakh crores collateral free loans with 12 months principal moratorium and 100% credit guarantee cover from government trust. In addition to this Rs.20,000 crores subordinate debt for stressed MSMEs was also announced.
The automobile industry was hit hard in Fiscal 2020 as sales fell across vehicle segments. According to data released by SIAM, in Fiscal 2020, the Indian automotive industry recorded a 20.3% decline in domestic sales as compared to a 5.9% growth in Fiscal 2019. The Passenger Vehicle segment declined 17.3% in Fiscal 2020, as compared to 2.8% growth in Fiscal 2019, due to weak consumer sentiment, rising cost of vehicle ownership, liquidity stress and general economic slowdown. The Commercial Vehicle industry in India registered a 30.0% decline in Fiscal 2020 as compared to 17.1% growth in Fiscal 2019, as a result of sharp slowdown in the economy, subdued demand, and higher capacity arising from the new axle load norms and the transition to BSVI.
The COVID-19 pandemic has cast a long shadow over a much-anticipated mild recovery in the automobile industry in Fiscal 2021 post BSVI migration. Consumers have been postponing their vehicle purchase decisions owing to uncertainty surrounding the COVID-19 pandemic. Passenger Vehicle segment demand is likely to be stagnant as this segment is significantly impacted by economic slowdown and decline in consumers’ purchasing power. With the shutdown of all non-essential services accompanied by liquidity and cash crunch, the demand for Commercial Vehicles is expected to be severely impacted in the first half of Fiscal 2021. A gradual improvement is expected thereafter as the GDP growth is anticipated to pick up on the back of rural recovery, normal monsoon, overall interventions from the Government of India and RBI and gradual easing of lockdowns.
World
Global growth decelerated markedly in Fiscal 2020 with continued weakness in global trade and investment. This weakness was widespread, affecting both advanced economies (particularly the European market) and emerging market and developing economies. Bilateral negotiations between the United States and China since October 2019 resulted in a phase one trade agreement. This comes after a prolonged period of rising trade disputes between the two countries, which has heightened policy uncertainty and weighed on sentiments involving international trade, consumer confidence, and investment. Financial market sentiment improved appreciably towards the end of 2019 along with the alleviation of trade tensions. Against this international context, global growth weakened to an estimated rate of 2.4% in 2019, being the lowest rate of expansion since the global financial crisis. Global trade growth, which is estimated to have slowed sharply from 4% in 2018 to 1.4% in 2019, is expected to be at the weakest pace since the global financial crisis.
During 2019, there has been a decline in the prices of most commodities mainly reflecting the deterioration in the growth outlook, especially that of emerging markets, which tend to have a larger income elasticity of demand for commodities. Prices for most base metals weakened in the second half of 2019, primarily due to weaker global growth and trade tensions. Agricultural prices declined in the second half of 2019 on improved weather conditions that ensured elevated stock levels for grains.
China growth has decelerated more than previously expected amid cooling domestic demand and heightened trade tensions. Trade policy uncertainty and higher tariffs on trade with the United States weighed on investor sentiment for most of 2019. Industrial production growth has reached multiyear lows, to an estimated rate of 6.1% in 2019. A permanent and lasting resolution of trade disputes with the United States that builds upon recent progress could bolster China’s growth prospects and reduce reliance on policy support.
China was further impacted by the COVID-19 pandemic at the end of Fiscal 2020. The impact of China’s slowdown was felt around the world. The COVID-19 pandemic has disrupted manufacturing supply chains and sharply curtailed energy and commodity demands. The market strain is being seen in ways that did not manifest during the global crisis of 2008. While countries and companies continue to understand the enormity of the scale of this pandemic, it is undeniable that the experience of this crisis may bring reflections to fundamental assumptions and priorities in the market and may present both a challenge and an opportunity. In China, output appears to be recovering from the large drop at the start of the year, although the strength of the expected rebound is uncertain.
The U.S. economy continued to grow moderately in 2019 and the labor market was strengthened further. GDP is reported to have increased at a moderate rate in the second half of 2019, although growth was slower than in the first half of the year suffered despiteand in 2018. Consumer spending rose at a moderate pace. Business fixed investment declined in the second half of 2019, United States reflecting a number of factors including trade policy uncertainty and weak global tailwinds. However,growth. Downside risks to the weakness seen at the beginning of 2017 seemsU.S. outlook seem to have bottomed outreceded in the latter part of the year, as the conflicts over trade policy diminished economic growth abroad showed signs of stabilizing, and financial conditions improved. After increasing solidly in 2017 and 2018, set in. Currently,manufacturing output dropped in 2019.
In United States, the economy seemsCOVID-19 pandemic and associated large-scale pandemic-control measures have massively disrupted economic activities. Compared to bethe global financial crisis, weekly unemployment claims have risen much faster, while industrial production and retail sales have fallen much more sharply. The Federal Reserve has cut rates to near-zero, and announced far-reaching measures to stabilize the financial system. The latter include unlimited purchases of U.S. government debt and mortgage-backed obligations, as well as large-scale purchases of corporate bonds and of securities issued by lower levels of government. The U.S. government has also provided fiscal support approaching US$3 trillion, including over US$1 trillion in loans to private sectors and to state and local governments. U.S. GDP is expected to contract by 6.1% in 2020, 790 basic points below previous forecasts, reflecting the severe consequences of the pandemic in the first half of the year, and an assumed gradual recovery in the second half. It is subsequently projected to rebound to 4% in 2021, as large-scale policy support gains traction, amid an assumed recovery in consumer and investor confidence.
Economic activities in Europe have deteriorated significantly due to the COVID-19 pandemic. Several economies were on the pathverge of recession in 2019, with particular weakness in the German industrial sector as it struggled with falling demand from Asia and disruptions to car production. In response, the European Central Bank has offered low-interest loans to banks, significantly boosted asset purchases, and allayed fears of member-country defaults by lifting distributional restrictions on its bond-buying program. Member states have rolled out significant fiscal support packages. Large member states are also advancing a major recovery with indicators of industrial production, stock market index, auto sales and exports having shown some uptick. It appears that India has also recovered fromplan for the effects of demonetization andEuropean Union, including grants for economies hardest hit by the introduction ofcrisis. Output in the GST.
As per advance estimates, India’s GDP increased 6.7%Euro area is expected to contract by 9.1% in Fiscal 20182020 as compared to an increaseprevious growth forecast of 7.1%1%, with all major member states experiencing recessions before a gradual recovery gets underway late in Fiscal 2017. India’sthe year. Growth is forecast to rebound to 4.5% in 2021, reflecting fading pandemic-related drag, and the eventual effects of accommodative fiscal and monetary policy.
United Kingdom GDP growth bottomed outslowed materially in the middle of 2017 after slowing for five consecutive quarters,2019 with GDP at 1.4% as weaker global growth and Brexit-related uncertainties weighed on spending. Weaker world growth has since improved significantly, with momentum carrying over into 2018been partly driven by trade protectionism and an associated rise in global uncertainty. These factors are likely to have weighed on the back ofbusiness investment, which had remained sluggish. The Brexit uncertainties that have been facing households, businesses and financial markets are likely to decline gradually, leading to a recoverypickup in investment. Although investment growth was still moderately lower in 2017 than in 2016, high-frequency indicators suggest that it accelerated into 2018. The temporary disruptions caused by the implementationhousehold and especially business spending. As a result of the GST dissipated by mid-2017,COVID-19 pandemic, the UK economy is likely to contract in 2020. The UK government has introduced a set of support measures, including 5% of GDP in discretionary spending to support business and manufacturing outputhouseholds, the Job Retention Scheme which provides companies with 80% of furloughed workers’ salaries, increase basic unemployment support, and industrial production have continuedprovide grants to firm since then.
Currently, India isself-employed people. Monetary policy has been eased, with Bank of England announcing rate cuts, increasing its bond purchasing program and extending the world’s seventh-largest economy, sitting between FranceWays and Italy. India has emerged asMeans facility. While the fastest growing major economy in the world as per the Central Statistics Organization and International Monetary Fund (IMF), and itgrowth is expected to be one of the top three economicrecover in the world over the next 10-15 years.
WORLD
2017 is the year which saw global economy accelerating although the United Kingdom economy is evidently slowing, while the US economy continues to grow at a modest pace. The Chinese economy continues to grow strong. However, the Eurozone2021 as confinement measures ease, uncertainty remains around future relationship with European Union and Japan show signs of acceleration, as do many of the major emerging economies such as Turkey and Russia. The US economy grew at 2.7% in Fiscal 2018, supported by broad-based strength in domestic demand.
During 2017, prices of base metal also strengthened, with strong growth in infrastructure sector in major countries around the globe. Crude prices remained range bound in most of 2017 although it started to give a signal of upward breakout towards fourth quarter of Fiscal 2018. Brent crude started a sharp rally in the middle of 2017 around $44/bbl and has rallied all the way to $79/bbl. The tensions in the Middle East and West Asia may add to the increase in oil prices.
The Eurozone grew at its fastest rate in a decade in 2017, reflecting strong consumption, investment, and exports. Amid continued monetary policy stimulus, growth is projected to be 2.1% in 2018, fueled by recovery confidence and monetary stimulus from the European Central Bank. The United Kingdom by contrast, has grown by 1.8% in 2017, down from 2016’s 1.9% rate and had the weakest expansion since 2012, mainly reflecting the impact of higher inflation in the wake of the 2016smooth Brexit vote and weaker investment due to uncertainty of future trade arrangements. The United Kingdom is expected to grow at 1.4% in 2018. The economies of Spain, Italy and France have shown better prospects. Germany accounted for 28% of the Euro area economy with a steady growth of 2% GDP.
China registered a growth of 6.9% in 2017 and remained stable this year. Activity continues to shift to consumption, while investment growth rates remain well below those in recent years. Industrial production has stabilized following significant cuts in overcapacity sectors. However, according to International Monetary Fund (IMF), China’s debt has ballooned to 234% of the total output. Supported by deepening macro-economic stability and gradual monetary loosening, Russia’s economy continued its recovery in 2017, mainly driven by non-tradable sectors. Growth momentum towards the end of 2017 slowed down but picked up in Fiscal 2018. Russia’s growth prospect remain modest.
Growth in Japan reached 1.7% in 2017, underpinned by supportive financial conditions and strong exports, but contracted at the beginning of this year. Nonetheless, unemployment is falling to levels not seen since the 1990s. South Africa experienced a GDP increase, mainly due to change in the political leadership.transition.
Automotive operations
Automotive operations is our most significant operating segment, accounting for 99.4%, 99.3% and 99.5% of our total revenues in each of Fiscal 2018, 2017,2020 and 2016, respectively.Fiscal 2019. In Fiscal 2018,2020, revenue from automotive operations before inter-segment eliminations was Rs.2,864,464Rs.2,576,583 million, as compared to Rs.2,639,061Rs.2,971,772 million in Fiscal 2017 and Rs.2,691,018 million in Fiscal 2016.2019.
Our automotive operations include:
All activities relating to the development, design, manufacture, assembly and sale of vehicles, as well as related spare parts and accessories;
Distribution and service of vehicles; and
Our automotive operations segment is further divided into four reporting segments: Tata and other brand vehicles (including financing thereof), andCommercial Vehicles, Tata Passenger Vehicles, Jaguar Land Rover. Rover and Vehicle Financing. The breakup of revenue for Fiscal 2020 and Fiscal 2019, and the percentage change from period to period (before intra-segment eliminations) is set forth in the table below.
Year ended March 31, | Change (%) | |||||||||||
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Rs. million | ||||||||||||
Tata Commercial Vehicles | 362,125 | 579,497 | (37.5 | ) | ||||||||
Tata Passenger Vehicles | 103,882 | 141,649 | (26.7 | ) | ||||||||
Jaguar Land Rover | 2,070,321 | 2,216,657 | (6.6 | ) | ||||||||
Vehicle Financing | 40,255 | 35,125 | (14.6 | ) |
In Fiscal 2018,2020, Jaguar Land Rover contributed 77.3%80.3% of our total automotive revenue compared to 80.4%74.6% in Fiscal 2017 and 81.8% in Fiscal 20162019 (before intra-segment elimination) and the remaining 22.7%, 18.1% was contributed by Tata Commercial Vehicles and other brand vehiclesTata Passenger Vehicles in Fiscal 20182020 compared to 19.6%24.3% in Fiscal 2017 and 18.2%2019, Whereas Vehicle financing contributed 1.6% in Fiscal 2016. Jaguar Land Rover revenue includes a translation loss from GBP2020 compared to Indian rupees.1.2% in Fiscal 2019. For further detail see Item 5.A “—Operating“Operating and Financial Review and Prospects —Operating Results—Fiscal 20182020 Compared to Fiscal 2017—2019—Revenue.”
Other Operationsoperations
Our other operations business segment mainly includes information technology services, machine tools and factory automation solutions. Our revenue from other operations before inter-segment eliminations was Rs.31,335Rs.30,376 million in Fiscal 2018, marginal increase2020, a decrease of 0.6%14.0% from Rs.31,154Rs.35,324 million in Fiscal 2017.2019. Revenues from other operations represented 1.1%, 1.2% and 1.1% of our total revenues, before inter-segment eliminations, in Fiscal 2018, 20172020 and 2016, respectively.Fiscal 2019. Earnings before other income, interestBefore Other Income, Interest and taxTax before inter-segment eliminations, (segment earnings), were Rs.3,046 million, Rs.3,798Rs.3,339 million and Rs.4,212Rs.4,104 million in Fiscal 2018, 20172020 and 2016,Fiscal 2019, respectively.
Geographical breakdownBreakdown
We have pursuedAs a strategyresult of increasing exports of Tata and other brand vehicles to new and existing markets. However,the COVID-19 pandemic, there is a significant reduction in revenue across most geographical markets in Fiscal 2018,2020. Such decline was lower in United States and China as compared to other economies. In Fiscal 2020, the percentages of revenue in China and United States have improved as compared to Fiscal 2019. China witnessed a double digit growth in volumes in second and third quarter of Fiscal 2020 and a decline on account of impact of COVID-19 in fourth quarter Fiscal 2020, thus resulting in marginal decline in revenues as compared to Fiscal 2019. Further, in Fiscal 2020, the revenue of our subsidiary in South Korea, TDCV, has been lowerdeclined due to lower industry volumes and aggressive discounting and marketing strategy from competitors in South Korea. Similarly for TTL, our specialized subsidiary engaged in engineering, design and information technology services, reported lower revenue and profits dueof importers. Due to adverse movement in exchange rates of major currencies as average rate of US$/INR declined by 3.9% in Fiscal 2018 compared to Fiscal 2017, while average rate of GBP/INR declined by 2.5% during the above period. TTL also suffered decline in revenue in Europe and North America mainly due to completion of vehicle programs with its key clients and delayed start of new programs due to client plan changes. The decline in Europe and North America were partially offset by growth in revenue in the Asia-Pacific region. Improved market sentiment in certain countries to which we export and the strong sales performance of Jaguar Land Rover has enabled us to increase our sales in these international markets in Fiscal 2018. However, due to unfavorable currency translation from GBP to INR and also growth indecreased revenue in India, on account of lower volumes as explained above, in Fiscal 2018,2020, the proportion of our net sales earned from geographic markets outside of India decreased to 79.9%increased from 77.3% in Fiscal 2018 from 84.1%2019 to 82.1% in Fiscal 2017.2020.
The following table sets forth our revenue from our key geographical markets:
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||||||||||||||||||||
Revenue | Rs. in million | Percentage | Rs. in million | Percentage | Rs. in million | Percentage | Rs. in million | Percentage | Rs. in million | Percentage | Rs. in million | Percentage | ||||||||||||||||||||||||||||||||||||
India | 578,403 | 20.1 | % | 422,499 | 15.9 | % | 411,399 | 15.2 | % | 465,564 | 17.9 | % | 678,148 | 22.7 | % | 578,403 | 20.1 | % | ||||||||||||||||||||||||||||||
China | 481,675 | 16.7 | % | 410,722 | 15.5 | % | 485,384 | 17.9 | % | 297,271 | 11.5 | % | 303,929 | 10.2 | % | 481,675 | 16.7 | % | ||||||||||||||||||||||||||||||
United Kingdom | 418,970 | 14.5 | % | 486,091 | 18.3 | % | 448,389 | 16.6 | % | 418,891 | 16.2 | % | 559,993 | 18.7 | % | 418,970 | 14.5 | % | ||||||||||||||||||||||||||||||
United States of America | 448,882 | 15.6 | % | 413,470 | 15.6 | % | 431,592 | 16.0 | % | 517,316 | 19.9 | % | 512,511 | 17.1 | % | 448,882 | 15.6 | % | ||||||||||||||||||||||||||||||
Rest of Europe | 470,288 | 16.3 | % | 469,927 | 17.7 | % | 415,022 | 15.3 | % | 431,138 | 16.6 | % | 452,088 | 15.1 | % | 470,288 | 16.3 | % | ||||||||||||||||||||||||||||||
Rest of the World | 484,733 | 16.8 | % | 453,786 | 17.0 | % | 513,327 | 19.0 | % | |||||||||||||||||||||||||||||||||||||||
Rest of the World * | 464,071 | 17.9 | % | 486,993 | 16.2 | % | 484,733 | 16.8 | % | |||||||||||||||||||||||||||||||||||||||
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Total | 2,882,951 | 100 | % | 2,656,495 | 100 | % | 2,705,113 | 100 | % | 2,594,251 | 100 | % | 2,993,662 | 100 | % | 2,882,951 | 100 | % | ||||||||||||||||||||||||||||||
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* | The “Rest of Europe” market is geographic Europe, excluding the United Kingdom and Russia. The “Rest of the World” market is any region not included above. |
Significant Factors Influencing Our Results of Operations
Our results of operations are dependent on a number of factors, which mainly include the following:
• | General economic conditions. We, similar to other participants in the automotive industry, are materially affected by general economic conditions. See Item 3.D |
• | Interest rates and availability of credit for vehicle purchases. Our volumes |
• | Goods and |
• | Our competitive position in the market. For a detailed discussion regarding our competitive position, see Item 4.B |
• | Cyclicality and seasonality. Our results of operations are also dependent on the cyclicality and seasonality in demand in the automotive market. For a detailed discussion on seasonal factors affecting our business, please see Item 4.B |
• | Environmental |
• | Pricing pressures: Similar to other major automotive companies, we face significant pricing pressures, as competitors offer customers and dealers price reductions in order to stimulate demand, which may in turn adversely affect our results of operations. See Item 3.D “Key Information—Risk Factors—Risks Associated with Our Business and the Automotive Industry.” |
• | Branding. The various product brands in our business, including Tata, Jaguar, Land Rover and Range Rover, are crucial in the marketing of our products. We believe our brands are associated with reliability, trust and ethical value. Our business, results of operations and reputation may be negatively affected by any usage of the brand by others that adversely affects or dilutes the brand. See Item 3.D “Key Information—Risk Factors—Risks Associated with Our Business and the Automotive Industry” and Item 4.B “Information on the Company—Business Overview—Intellectual Property.” |
• | New products. An important part of our growth strategy is the development of new and refreshed products and product lines, such as the all new Land Rover Defender, the refreshed Land Rover Discovery Sport and the refreshed Jaguar F-TYPE which were successfully launched in Fiscal 2020. Innovation and the development of new products and product lines require significant capital expenditures. There is also intense competition, as well as uncertainty with respect to changing consumer preferences, which may adversely affect our results of operations. See Item 3.D “Key Information—Risk Factors—Risks Associated with Our Business and the Automotive Industry” and Item 4.B “Information on the Company—Business Overview—Research and Development.” |
• | Foreign Currency Rates. Our operations and our financial position are quite sensitive to fluctuations in foreign currency exchange rates. Jaguar Land Rover earns significant revenue in the United States, Europe and China, and also sources a significant portion of its input |
• | Political and Regional Factors. As with the rest of the automotive industry, we are affected by political and regional factors. For a detailed discussion regarding these risks, please see Item 3.D “Key Information—Risk |
• | COVID-19 pandemic. The impact of the COVID-19 pandemic has created significant volatility in the global economy and |
Results of operations
We have adopted IFRS 16 with a modified retrospective approach in Fiscal 2020. Accordingly, we have presented our prior comparative period without applying the IFRS 16 principles. The following table sets forth selected items from our consolidated statements of income for the periods indicated and shows these items as a percentage of total revenues:revenue:
Percentage of Total Revenue | ||||||||||||||||||||
Year ended March 31, | Percentage Change | |||||||||||||||||||
2018 | 2017 | 2016 | 2017 to 2018 | 2016 to 2017 | ||||||||||||||||
Total revenues | 100 | % | 100 | % | 100 | % | 8.5 | % | -1.8 | % | ||||||||||
Raw materials, components and purchase of product for sale (including change in inventories of finished goods &work-in-progress) | 64.4 | 62.5 | 60.5 | 11.9 | % | 1.3 | ||||||||||||||
Employee cost | 10.5 | 10.7 | 10.7 | 6.7 | -1.6 | |||||||||||||||
Defined benefit pension plan amendment | -1.3 | — | — | 100.0 | — | |||||||||||||||
Other expenses | 21.8 | 22.9 | 21.6 | 3.4 | 4.0 | |||||||||||||||
Provision for loss of inventory (net of insurance recoveries) | — | * | -0.5 | 0.6 | 99.2 | -181.2 | ||||||||||||||
Depreciation and amortization | 7.3 | 6.9 | 6.2 | 15.0 | 8.5 | |||||||||||||||
Expenditure capitalized | -6.4 | -6.4 | -6.2 | 10.1 | 1.2 | |||||||||||||||
Assets written off/loss on sale of assets and others (net) | 1.0 | 0.4 | 0.4 | 155.3 | 20.5 | |||||||||||||||
Other (income)/ loss (net) | -1.6 | -1.5 | -0.5 | 20.9 | 213.9 | |||||||||||||||
Interest income | -0.2 | -0.2 | -0.3 | 26.3 | -21.5 | |||||||||||||||
Interest expense (net) | 1.6 | 1.6 | 1.8 | 9.4 | -11.6 | |||||||||||||||
Foreign exchange (gain) / loss (net) | 0.1 | 0.5 | 0.8 | -79.2 | -35.5 | |||||||||||||||
Share of (profit) / loss of equity accounted investees | -0.8 | -0.6 | -0.2 | 52.6 | 158.5 | |||||||||||||||
Net income before tax | 3.6 | 3.7 | 4.6 | 8.0 | -21.3 | |||||||||||||||
Income tax expense | -1.3 | -1.3 | -1.0 | 6.7 | 29.6 | |||||||||||||||
Net income | 2.3 | 2.4 | 3.6 | 8.7 | -35.8 | |||||||||||||||
Net income attributable to shareholders of Tata Motors Limited | 2.3 | 2.4 | 3.6 | 8.9 | -36.2 | |||||||||||||||
Net income attributable tonon-controlling interests | — | * | — | * | — | * | -0.3 | 3.5 |
Percentage of Total Revenue | ||||||||||||
Year ended March 31, | Percentage Change | |||||||||||
2020 | 2019 | 2019 to 2020 | ||||||||||
Total revenues | 100 | % | 100 | % | -13.3 | |||||||
Raw materials, components and purchase of product for sale (including change in inventories of finished goods & work-in-progress) | 64.4 | 65.6 | -14.9 | |||||||||
Employee cost | 11.9 | 11.6 | -10.9 | |||||||||
Defined benefit pension plan amendment cost/(credit) | — | — | * | -100.0 | ||||||||
Other expenses | 23.2 | 22.0 | -8.5 | |||||||||
Impairment losses in Jaguar Land Rover | — | 9.3 | -100.0 | |||||||||
Impairment losses in passenger vehicle business | 0.2 | — | 100.0 | |||||||||
Provision for Onerous Contracts | 0.3 | — | 100.0 | |||||||||
Impairment losses of assets in subsidiaries | 0.1 | — | 100.0 | |||||||||
Depreciation and amortization | 8.0 | 7.7 | -10.0 | |||||||||
Expenditure capitalized | -6.7 | -6.6 | -11.0 | |||||||||
Assets written off/loss on sale of assets and others (net) | 0.1 | 0.4 | -76.2 | |||||||||
Other (income)/loss (net) | -0.6 | -1.2 | -54.8 | |||||||||
Interest income | -0.5 | -0.3 | 48.7 | |||||||||
Interest expense | 2.8 | 1.9 | 25.8 | |||||||||
Foreign exchange (gain)/loss (net) | 0.7 | 0.2 | 191.6 | |||||||||
Share of (profit)/loss of equity accounted investees (net) | 0.4 | -0.1 | -577.3 | |||||||||
Net income/(loss) before tax | -4.3 | -10.5 | -65.7 | |||||||||
Income tax (expense)/credit | -0.1 | 0.8 | -114.3 | |||||||||
Net income/(loss) | -4.4 | -9.7 | -61.5 | |||||||||
Net income/(loss) attributable to shareholders of Tata Motors | -4.4 | -9.7 | -61.3 | |||||||||
Net income attributable to non-controlling interests | — | * | — | * | -5.8 |
* | Less than 0.1 |
The following table sets forth selected data regarding our automotive operations (Tata and other brand vehicles (including financing thereof)Commercial Vehicles, Tata Passenger Vehicles, Vehicle Financing and Jaguar Land Rover) for the periods indicated and the percentage change fromperiod-to-period period to period (before inter-segment eliminations):
Year ended March 31, | Percentage Change | |||||||||||||||||||
2018 | 2017 | 2016 | 2017 to 2018 | 2016 to 2017 | ||||||||||||||||
Total Revenues (Rs. million) | 2,864,464 | 2,639,061 | 2,691,018 | 8.5 | -1.9 | |||||||||||||||
Earnings before other income, interest and tax (Rs. million) | 104,645 | 102,958 | 173,315 | 1.6 | -40.6 | |||||||||||||||
Earnings before other income, interest and tax (% to total revenue) | 3.7 | % | 3.9 | % | 6.4 | % |
Year ended March 31, | Percentage Change | |||||||||||
2020 | 2019 | 2019 to 2020 | ||||||||||
Total Revenues (Rs. million) | 2,576,583 | 2,971,772 | (13.3 | ) | ||||||||
Earnings/(loss) Before Other Income, Interest and Tax (Rs. million) | (37,160 | ) | (289,256 | ) | (87.2 | ) | ||||||
Earnings Before Other Income, Interest and Tax (% to total revenue) | (1.4 | %) | (9.7 | %) |
The following table sets forth selected data from our automotive segment for the year ended March 31, 2020 (before inter and intra-segment eliminations):
Tata Commercial Vehicle | Tata Passenger Vehicle | Jaguar Land Rover | Vehicle Financing | |||||||||||||
Total Revenues (Rs. million) | 362,125 | 103,882 | 2,070,321 | 40,255 | ||||||||||||
Earnings/(loss) Before Other Income, Interest and Tax (Rs. million) | (7,643 | ) | (44,833 | ) | (6,657 | ) | 25,766 | |||||||||
Earnings Before Other Income, Interest and Tax (% to total revenue) | (2.1 | )% | (43.2 | )% | (0.3 | )% | 64.0 | % |
The following table sets forth selected data from our automotive segment for the year ended March 31, 2019 (before inter and intra-segment eliminations):
Tata Commercial Vehicle | Tata Passenger Vehicle | Jaguar Land Rover | Vehicle Financing | |||||||||||||
Total Revenues (Rs. million) | 579,497 | 141,649 | 2,216,657 | 35,125 | ||||||||||||
Earnings/(loss) Before Other Income, Interest and Tax (Rs. million) | 34,007 | (15,842 | ) | (323,813 | ) | 21,153 | ||||||||||
Earnings Before Other Income, Interest and Tax (% to total revenue) | 5.9 | % | (11.2 | )% | (14.6 | )% | 60.2 | % |
The following table sets forth selected data regarding our other operations for the periods indicated and the percentage change fromperiod-to-period period to period (before inter-segment eliminations):
Year ended March 31, | Percentage Change | |||||||||||||||||||
2018 | 2017 | 2016 | 2017 to 2018 | 2016 to 2017 | ||||||||||||||||
Total Revenues (Rs. million) | 31,335 | 31,154 | 29,116 | 0.6 | 7.0 | |||||||||||||||
Earnings before other income, interest and tax (Rs. million) | 3,046 | 3,798 | 4,212 | -19.8 | -9.8 | |||||||||||||||
Earnings before other income, interest and tax (% to total revenue) | 9.7 | % | 12.2 | % | 14.5 | % |
Year ended March 31, | Percentage Change | |||||||||||
2020 | 2019 | 2019 to 2020 | ||||||||||
Total Revenues (Rs. million) | 30,376 | 35,324 | (14.0 | ) | ||||||||
Earnings Before Other Income, Interest and Tax (Rs. million) | 3,339 | 4,104 | (18.6 | ) | ||||||||
Earnings Before Other Income, Interest and Tax (% to total revenue) | 11.0 | % | 11.6 | % |
Fiscal 20182020 Compared to Fiscal 20172019
Revenue
Our total consolidated revenue, (net of excise duty, where applicable), including finance revenue, increaseddecreased by 8.5%13.3% to Rs.2,882,951Rs.2,594,251 million in Fiscal 20182020 from Rs.2,656,495Rs.2,993,662 million in Fiscal 2017.2019.
Revenue from the sale of vehicles decreased to Rs.2,188,600 million in Fiscal 2020 as compared to Rs.2,576,721 million, a decrease of 15.1%. We sold 961,463 vehicles in Fiscal 2020, as compared to 1,274,072 vehicles in Fiscal 2019.
The revenue of our Tata brand vehicles increaseddecreased by 25.4%35.4% to Rs.649,972Rs.466,607 million in Fiscal 20182020 from Rs.518,431Rs.721,146 million in Fiscal 20172019 due to increaseddecreased volumes ofin all vehicle categories, i.e. M&HCVs, Passenger Cars, ILCVs, SCVs and UVs.categories. The revenue of our Jaguar Land Rover business increased by 4.4% to Rs.2,214,492from Tata Commercial Vehicles was Rs.362,125 million in Fiscal 2018 from Rs.2,120,6772020 as compared to Rs. 579,497 million in Fiscal 2017. The increase in revenue is Rs.93,815 million at our Jaguar Land Rover business, primarily due to increase in wholesale volumes driven by the success of new products launched in the year, including the Range Rover Velar, the JaguarE-PACE and the new Land Rover Discovery as well as continued demand for the JaguarF-PACE and the long wheel base Jaguar XFL in China, offset by lower sales of the XE, XJ,F-TYPE, Evoque and Discovery Sport. Sales of Range Rover and Range Rover Sport decreased due to the model year changeover ahead of the launch of the new refreshed models (includingplug-in hybrid variants) at the end of calendar year 2017. The increase was attributable to an increase in sales of Land Rover vehicles were to 394,814 units in Fiscal 2018 from 365,462 units in Fiscal 2017, an increase of 8.0%, offset by decrease in sales of Jaguar-brand vehicles from 169,284 units in Fiscal 2017 to 150,484 units in Fiscal 2018,2019, a decrease of 11.1% (volumes excluding Chery Jaguar Land Rover)37.5%. The revenue from Tata Passenger Vehicles was Rs.103,882 million in Fiscal 2020 as compared to Rs.141,649 million in Fiscal 2019, a decrease of 26.7%.
Our revenues from sales of vehicles and sparesspare parts manufactured in India increaseddecreased by 31.0%36.3% to Rs.575,484Rs.433,331 million in Fiscal 20182020 from Rs.439,134Rs.679,826 million in Fiscal 2017.2019. The increase was mainly attributable to revenues across all vehicle categories M&HCV, SCV’s and UV’s in India. The revenuesrevenue from passenger carsPassenger Cars in India increaseddecreased by 9.5%42.5% to Rs.49,995Rs.28,321 million in Fiscal 20182020 from Rs.45,674Rs.49,217 million in Fiscal 2017,2019, and revenue attributableUtility Vehicles decreased by 19.0% to utility vehicles, which increased by 170.8% to Rs.34,138Rs.41,682 million in Fiscal 20182020 from Rs.12,607Rs.51,434 million in Fiscal 2017. New product offerings in our passenger cars helped us increase our volumes and revenues in this category.2019. Further, revenues from M&HCVs increasedMHCVs decreased by 34%53.1% to Rs.269,723Rs.140,064 million in Fiscal 20182020 from Rs.201,212Rs.298,631 million. ILCVs increaseddecreased by 42%25.8% to Rs.47,346Rs.36,930 million in Fiscal 20182020 from Rs.33,413Rs.49,791 million in Fiscal 2017.2019. Revenues of SCVs and& Pickups in India increaseddecreased by 25%25.0% to Rs.46,856Rs.38,259 million in Fiscal 20182020 from Rs.37,348Rs.51,006 in Fiscal 20172019 and CV PassengersPassenger Vehicles revenue increaseddecreased by 22%2.5% to Rs.3,034Rs.39,363 million in Fiscal 20182020 from Rs.2,491Rs.40,378 million in Fiscal 2017.
Revenue from our vehicle financing operations increased by 7.1% to Rs.26,040 million in Fiscal 2018, as compared to Rs.24,318 million in Fiscal 2017.2019.
Revenue attributable to TDCV, our subsidiary company engaged in design, development and manufacturing of M&HCVs, decreased by 16.3%19.7% to Rs.48,370Rs.31,345 million in Fiscal 20182020 from Rs.57,774Rs.39,042 million in Fiscal 2017,2019, primarily due to lower industry volumes, aggressive discounting and marketing strategies of importers and impact of COVID-19 pandemic in South Korea. The market share of TDCV decreased to 26.5%March 2020 quarter and reduction in the export sales in Fiscal 20182020.
Revenue from our Vehicle Financing operations increased by 14.6% to Rs.40,255 million in Fiscal 2020, as compared to 29.6%Rs.35,125 million in Fiscal 2017. 2019. This is mainly due to increase in average loan book and upfront recognition of excess interest spread on the direct assignment transaction undertaken during Fiscal 2020.
The export market scenario continuesrevenue of our Jaguar Land Rover business decreased to remain challenging, impactedRs.2,070,321 million in Fiscal 2020 from Rs.2,216,657 million in Fiscal 2019. This was partially attributed to an unfavorable translation of Rs.40,239 million from GBP to Indian rupees in Fiscal 2020. Excluding currency translation, the revenue of Jaguar Land Rover decreased by various factors including, but not limited4.8%. There was a decrease of 6.3% in sales volume of Jaguar Land Rover vehicle as compared to local currency depreciation againstFiscal 2019. Out of which Jaguar brand vehicles sales were 125,820 units in Fiscal 2020 from 153,757 units in Fiscal 2019, a decrease of 18.2%, and Land Rover vehicles sales from 354,138 units in Fiscal 2019 to 350,132 units in Fiscal 2020, a decrease of 1.1% (volumes excluding the U.S. dollar, continuing statutory regulations to reduce imports, the slowdown in Chinese economy impacting commodity exporting countries and increased dealer inventory.China Joint Venture).
Revenue from other operations before(before inter-segment eliminations, remained flat at Rs.31,335eliminations) decreased by 14.0% to Rs.30,376 million in Fiscal 20182020 compared to Rs.31,154Rs.35,324 million in Fiscal 2017,2019, and represents 1.1% and 1.2% of our total revenues before(before inter-segment eliminations,eliminations) in Fiscal 20182020 and 2017, respectively.Fiscal 2019.
Cost and Expenses
Raw Materials, Components and Purchase of Products for Sale (including change in inventories of finished goods andwork-in-progress) (material costs)(“material costs”)
Material costs increaseddecreased by 11.9%14.9% to Rs.1,856,602Rs.1,670,560 million in Fiscal 20182020 from Rs.1,659,297Rs. 1,962,997 million in Fiscal 2017.2019 in line with reduction in revenue. Material costs include realized exchange gaingains of Rs.15,675Rs.3,408 million in Fiscal 20182020 as compared to Rs.7,553Rs. 13,518 million in Fiscal 2017.2019. As a percentage of revenue material costs are 64.4% in Fiscal 2020, as compared to 65.6% in Fiscal 2019.
Material costs for Tata Commercial Vehicles and Tata Passenger Vehicles decreased by 34.7% to Rs.343,221 million in Fiscal 2020 from Rs.525,322 million in Fiscal 2019, primarily due to a decrease in volumes. Further, material costs as a percentage of total revenue increased to 73.2% in Fiscal 2020, as compared to 72.8% in Fiscal 2019 primarily due to an unfavorable product mix leading to lower contribution margins.
For our India operations, material costs in the Passenger Vehicle segment decreased by 41.5% to Rs.24,707 million in Fiscal 2020, as compared to Rs.42,267 million in Fiscal 2019 for our Passenger Cars due to decreased Material costs for ILCVs decreased by 26.8% to Rs.27,022 million in Fiscal 2020, as compared to Rs.36,894 million in Fiscal 2019, and for MHCVs decreased by 49.4% to Rs.106,884 million in Fiscal 2020, as compared to Rs.211,028 million in Fiscal 2019. Material costs for SCVs & Pickups also decreased by 24.2% to Rs.29,458 million in Fiscal 2020, as compared to Rs.38,883 million in Fiscal 2019and CV Passenger Vehicles decreased marginally to Rs.32,218 million in Fiscal 2020, as compared to Rs.32,352 million in Fiscal 2019. The decrease was due to lower volumes in Fiscal 2020. Further, material costs as a percentage of revenue decreased to 68.1% in Fiscal 2020, as compared to 69.5% in Fiscal 2019.
Material costs decreased by 20.7% to Rs.21,445 million in Fiscal 2020, as compared to Rs.27,052 million in Fiscal 2019 for TDCV, primarily due to lower volumes, particularly in the domestic market. As a percentage of total revenue, material cost increased to 70.1% in Fiscal 2020, compared to 69.3% in Fiscal 2019, primarily due to mix of products.
At our Jaguar Land Rover operations, material costs in Fiscal 2018 increased2020 decreased by 7.1%7.6% to Rs.1,403,302Rs.1,323,643 million from Rs.1,309,697Rs.1,432,388 million in Fiscal 2017.2019. The increasedecrease was partially offset by favorable currency translation from GBP to INRIndian rupees of Rs.22,462Rs.23,859 million. Excluding currency translation, material costs attributable to our Jaguar Land Rover operations increaseddecreased by GBP 1,257GBP986 million (8.3%(6.3%) in Fiscal 20182020 mainly due to a 6% increase6.3% decrease in sales volume and mix of products. Material costs at our Jaguar Land Rover operations as a percentage of revenue increaseddecreased to 63%63.9% in Fiscal 20182020, from 61.3%64.7% in Fiscal 20172019 (in GBP terms), primarily driven by the increase in sales volumes and mix and a generally stronger Euro as compared to the pound sterling.
Material costs for Tata and other brand vehicles have also increased by 29.8% to Rs.448,506 million in Fiscal 2018 from Rs.345,437 million in Fiscal 2017, primarily due to increase in volumes. Further, material costs as a percentage of total revenue (excluding finance revenue) increased to 71.9% in Fiscal 2018, as compared to 69.8% in Fiscal 2017, primarily due to unfavorable product mix leading to lower contribution margin.
For our India operations, material costs in the passenger vehicle segment increased by 4.6% to Rs.44,266 million in Fiscal 2018, as compared to Rs.42,337 million in Fiscal 2017 for our passenger cars, and by 175.3% to Rs.29,639 million in Fiscal 2018, as compared to Rs.10,768 million in Fiscal 2017 for our utility vehicles, mainly due to increased unit sales. Material costs for ILCVs also increased by 45% to Rs.35,238 million in Fiscal 2018, as compared to Rs.24,305 million in Fiscal 2017, whereas material costs for M&HCVs increased by 37% to Rs.191,897 million in Fiscal 2018, as compared to Rs.139,582 million in Fiscal 2017. Material costs for SCVs & Pickups also increased by 43% to Rs.39,865 million in Fiscal 2018, as compared to Rs.27,904 million in Fiscal 2017, whereas material costs for CV Passengers increased by 20% to Rs.1,986 million in Fiscal 2018, as compared to Rs.1,655 million in Fiscal 2017.
Material costs decreased by 19.6% to Rs.31,118 million in Fiscal 2018, as compared to Rs.38,695 million in Fiscal 2017 for TDCV, primarily due to lower volumes particularly in the domestic market. As a percentage of total revenue, material cost decreased to 64.3% in Fiscal 2018, compared to 66.9% in Fiscal 2017, primarily due to mix of products.
Provision/(Reversal) for Loss of Inventory
On August 12, 2015, a series of explosions caused widespread damage at the Port of Tianjin in China, one of three major locations in China through which Jaguar Land Rover imports its vehicles. A provision of Rs.16,384 million (GBP157 million) (net of insurance recoveries) of Rs.5,342 million (GBP55 million)) has been recognized against the carrying value of inventory for the damage due to explosion at the port of Tianjin in China in Fiscal 2016. In Fiscal 2017, Rs.13,301 million (GBP151 million) relating to insurance recoveries, recovery of import duties and taxes and an updated assessment of the condition of the remaining vehicles led to a reversal of the initial provision recorded in Fiscal 2016. In Fiscal 2018, Rs.112 million (GBP 1 million) relating to insurance recoveries led to a further reversal of the initial provision recorded in Fiscal 2016..
Employee Costs
Our employee costs increaseddecreased by 6.7%10.9% in Fiscal 20182020 to Rs.302,625Rs.308,373 million from Rs.283,588Rs. 346,261 million in Fiscal 2017,2019, including the foreign currency translation impact from GBP to Indian rupees, discussed below.
Our permanent headcount increaseddecreased by 1.9%4.7% as atof March 31, 20182020 to 81,09078,906 employees from 79,55882,797 employees as atof March 31, 2017,2019, primarily due to new production facilities and research and development centers at Jaguar Land Rover. However, the average temporary headcount were flat at 38,017 employeesvoluntary early separations that commenced in fourth quarter of Fiscal 2018 from 38,692 employees in Fiscal 2017.
The employee cost2019 at Jaguar Land Rover and at Tata Daewoo in Fiscal 2020. The average temporary headcount has decreased to 19,169 employees in Fiscal 2020 from 31,647 employees in Fiscal 2019, mainly due to reduction of volumes.
The employee costs for Tata Commercial Vehicles and Tata Passenger Vehicles increasedby 7.2%1.5% to Rs.233,751Rs.59,430 million in Fiscal 20182020 from Rs.218,016Rs.58,529 million in Fiscal 2017. In GBP terms, employee costs at Jaguar Land Rover increased to GBP2,722 million in Fiscal 2018 from GBP2,490 million in Fiscal 2017, partially offset by favorable foreign currency translation from GBP to Indian rupees of Rs.4,675 million. The employee cost at Jaguar Land Rover as a percentage to revenue increased to 10.6% in Fiscal 2018 from 10.2% in Fiscal 2017, primarily reflecting increases in production capacity for new models and to support the development and launch of future products. Jaguar Land Rover increased its headcount by 7.3% in Fiscal 2018 to 43,224 employees from 40,265 employees in Fiscal 2017. To support new launches and product development projects. Jaguar Land Rover increased its average permanent headcount by 8.6% in Fiscal 2018 to 34,533 employees from 31,810 employees in Fiscal 2017 and the average temporary headcount were 7,254 employees in Fiscal 2018 as compared to 7,324 employees in Fiscal 2017. Total number of permanent employees as at March 31, 2018 was 36,300, as compared to 32,870 as at March 31, 2017 for Jaguar Land Rover.
The employee cost for Tata and other brand vehicles (including financing thereof) increased by 6.5% to Rs.54,665 million in Fiscal 2018 from Rs.51,310 million in Fiscal 2017.2019.
For our India operations, employee costs increased marginally by 5.3%0.6% to Rs.44,085Rs.48,105 million in Fiscal 20182020 from Rs.41,856Rs. 47,813 million in Fiscal 2017,2019, mainly due to regular annual increases in salary and wage agreements at our plants. The permanent headcount increaseddecreased by 13.0%6.3% as atof March 31, 20182020 to 41,29539,012 employees from 36,56041,655 employees as atof March 31, 2017. However, the2019. The average temporary headcount remained same at 30,464decreased by 41.8% to 15,674 employees in Fiscal 20182020 from 31,58626,913 employees in Fiscal 2017. In Fiscal 2018 and 2017, there was an expense of Rs.37 million and Rs.676 million, respectively, towards early-retirement given to various employees.2019.
At Tata Motors Limited, the parent company,TML, employee cost increased to Rs.37,499Rs.43,869 million in Fiscal 20182020 compared to Rs.36,261Rs.42,773 million in Fiscal 2017.2019. The employee cost as a percentage of revenue decreasedincreased to 6.5%10.1% in Fiscal 20182020 from 8.5%6.2% in Fiscal 2017.2019, mainly due to decreased revenues.
Employee costs at TDCV were increased by 6.7% to Rs.8,276Rs.9,318 million in Fiscal 2017 from Rs.7,7592020 as compared to Rs.8,273 million in Fiscal 2017,2019. The increase was mainly on account of voluntary redundancy program resulting in a charge of Rs.1,737 million in Fiscal 2020. This was partially offset by abolishment of certain overtime in Fiscal 2020.
The employee costs at Jaguar Land Rover decreasedby 14.6% to Rs.234,281 million in Fiscal 2020 from Rs.274,339 million in Fiscal 2019 primarily due to annual increments and headcount.leavers under the restructuring program that commenced in the fourth quarter of Fiscal 2019. In GBP terms, employee costs at Jaguar Land Rover decreased to GBP2,568 million in Fiscal 2020 from GBP2,820 million in Fiscal 2019. There were favorable foreign currency translation impacts from GBP to Indian rupees of Rs.4,371 million. Further, a charge of Rs.2,598 million for employee separation costs was taken in Fiscal 2020. The employee costs at Jaguar Land Rover as a percentage of revenue decreased to 11.2% in Fiscal 2020 from 11.7% in Fiscal 2019 in GBP terms. Jaguar Land Rover decreased its year-end headcount by 5.1% in Fiscal 2020 to 39,590 employees from 41,710 employees in Fiscal 2019. Jaguar Land Rover average permanent headcount decreased by 2.6% in Fiscal 2020 to 36,473 employees from 37,434 employees in Fiscal 2019. The average temporary headcount decreased to 3,117 employees in Fiscal 2020 from 4,276 employees in Fiscal 2019.
Defined benefit pension plan amendment
A credit of Rs.36,090 million (GBP437 million) duringIn Fiscal 2018 relates2019, the High Court in the United Kingdom ruled that pension schemes are required to equalize benefits for male and female members under the amendment ofguaranteed minimum pension that members earned between May 17, 1990 and April 5, 1997. Based on this ruling, we reassessed our obligations under the defined benefit scheme of Jaguar Land Rover. On April 3, 2017,existing Jaguar Land Rover approvedpension plans and communicated to its defined benefit scheme members that the defined benefit scheme rules were to be amended with effect from April 6, 2017 so that amongst other changes, retirement benefit will be calculated on a career average basis rather than based upon a member’s final salary at retirement.recorded an additional liability of Rs.1,479 million (GBP17 million).
Other Expenses
Other expenses increaseddecreased by 3.4%8.5% to Rs.629,755Rs.601,339 million in Fiscal 20182020 from Rs.608,462Rs.657,299 million in Fiscal 2017.2019. There was a favorable foreign currency translation of GBP to Indian rupees of Rs.7,801Rs.8,723 million pertaining to Jaguar Land Rover. As a percentage of total revenues, these expenses decreasedmarginally increased to 21.8%23.2% in Fiscal 20182020 from 22.9%22.0% in Fiscal 2017.2019. The major components of expenses are as follows:
Percentage of Total Revenue | Percentage of Total Revenue | |||||||||||||||||||||||||||||||||||||||
Year ended March 31, | Change | Year ended March 31, | Year ended March 31, | % Change | Year ended March 31, | |||||||||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||
(Rs. in millions) | (Rs. in millions) | |||||||||||||||||||||||||||||||||||||||
Freight and transportation expenses | 114,841 | 103,534 | 10.9 | % | 4.0 | % | 3.9 | % | 64,843 | 78,045 | (16.9 | ) | 2.5 | 2.6 | ||||||||||||||||||||||||||
Works operation and other expenses | 261,407 | 232,675 | 12.4 | 9.1 | 8.8 | 253,777 | 259,134 | (2.1 | ) | 9.8 | 8.7 | |||||||||||||||||||||||||||||
Publicity | 89,686 | 86,987 | 3.1 | 3.1 | 3.3 | 76,142 | 87,296 | (12.8 | ) | 2.9 | 2.9 | |||||||||||||||||||||||||||||
Allowance for trade and other receivables, and finance receivables | 401 | 7,360 | (94.6 | ) | 0.0 | 0.3 | 8,131 | 5,344 | 52.1 | 0.3 | 0.2 | |||||||||||||||||||||||||||||
Warranty and product liability expenses | 69,979 | 85,866 | (18.5 | ) | 2.4 | 3.2 | 109,012 | 118,921 | (8.3 | ) | 4.2 | 4.0 | ||||||||||||||||||||||||||||
Research and development expenses | 35,319 | 34,136 | 3.5 | % | 1.2 | % | 1.3 | % | 41,885 | 42,246 | (0.9 | ) | 1.6 | 1.4 | ||||||||||||||||||||||||||
Stores, spare parts and tools consumed | 15,007 | 24,442 | (38.6 | ) | 0.6 | 0.8 | ||||||||||||||||||||||||||||||||||
Processing charges | 10,701 | 16,344 | (34.5 | ) | 0.4 | 0.5 |
1. | Freight and transportation expenses |
2. | Our works operation and other expenses represented |
3. | Publicity expenses |
4. | The allowances for finance receivables |
5. | Warranty and product liability expenses represented |
6. | Research and product development costs represent research costs and costs pertaining to minor product enhancements, refreshes and upgrades to existing vehicle models. These represented |
7. | Store, spares parts and tools consumed represent 0.6% of our total revenue in Fiscal 2020 as compare to 0.8% in Fiscal 2019, in line with reduction in revenue. |
8. | Processing charges represent 0.4% of our total revenue in Fiscal 2020 as compare to 0.5% in Fiscal 2019, in line with reduction in revenue. |
Impairment losses in Jaguar Land Rover
In Fiscal 2019, we took an impairment charge of Rs.278,379 million. We assessed the recoverable amount of Jaguar Land Rover business, which represents a single CGU, as the higher of fair value less cost of disposal (“FVCLD”) and VIU of the relevant assets of the CGU, due to weaker sales and profitability, changes in market conditions, especially in China, and technological disruptions.
Impairment losses in passenger vehicle business
We assessed the recoverable value for the Passenger Vehicle segment of Tata Motors Limited which represent a separate CGU for the Company as at March 31, 2020, due to refresh of its strategy in response to change in market conditions on account of various factors (economic environment, demand forecasts etc.) including COVID 19 pandemic. The recoverable value of Rs.91,203 million was determined by Fair Value less Cost of Disposal (“FVLCD”), which was marginally higher than the VIU of the relevant assets of the CGU. The recoverable amount was lower than the carrying value of the CGU of Rs.95,655 million and this resulted in an impairment charge of Rs.4,455 million recognized for the year ended March 31, 2020.
Provision for Onerous Obligations
During the quarter and year ended March 31, 2020, a provision of Rs.7,770 million has been recognized for certain supplier contracts ranging from 5 to 10 years, which have become onerous, as the Company estimates that it will procure lower quantities than committed and the costs will exceed the future economic benefit.
Impairment losses of assets in subsidiaries
As a result of change in market conditions and demand forecast, we performed an impairment assessment for assets forming part of wholly owned subsidiaries Tata Motors European Technical Centre PLC and Trilix S.r.l. The recoverable amount of these assets were estimated to be lower than their carrying value and this resulted in an impairment charge of Rs.2,975 million and Rs.557 million in TMETC and Trilix, respectively during the year ended March 31, 2020.
Depreciation and Amortization
Our depreciation and amortization expenses decreased by 9.8% in Fiscal 2020, the breakdown of which is as follows:
Year ended March 31, | ||||||||
2020 | 2019 | |||||||
(Rs. in millions) | ||||||||
Depreciation | 104,594 | 120,828 | ||||||
Amortization | 91,873 | 109,370 | ||||||
Amortization of Leased Assets (RTU) | 11,165 | — | ||||||
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Total | 207,632 | 230,198 | ||||||
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The decrease in depreciation and amortization expenses is mainly due to impairment recognized in the third quarter of Fiscal 2019, along with favorable foreign currency translation from GBP to Indian rupees of Rs.3,346 million pertaining to Jaguar Land Rover. This is partially offset by new product launches, including Evoque, Defender and Discovery sport launched by Jaguar Land Rover and Altroz launched by Tata Motors Limited India operations. Amortization of right to use assets done during Fiscal 2020 on account of adoption of IFRS 16.
Expenditure capitalized
ThisExpenditure capitalized represents employee costs, stores and other manufacturing supplies and other workswork expenses incurred mainly toward product development projects. Considering the nature of our industry, we continually invest in the development of new products and invest to address safety, emission and other regulatory norms.standards. The expenditure capitalized increaseddecreased by 10.1%11.0% to Rs.185,882Rs.175,034 million in Fiscal 20182020 from Rs.168,769Rs.196,596 million in Fiscal 2017.2019. The increase is net ofdecrease was netted by an unfavorable foreign currency translation impact from GBP to Indian rupees of Rs.3,177Rs.2,786 million pertaining to Jaguar Land Rover. These reflect expenditures on new products and other major product development plans.
Depreciation and Amortization
Our depreciation and amortization expenses increased by 15.0% in Fiscal 2018, the breakdown of which is as follows:
Year ended March 31, | ||||||||
2018 | 2017 | |||||||
(Rs. in millions) | ||||||||
Depreciation | 107,621 | 94,557 | ||||||
Amortization | 102,197 | 87,848 | ||||||
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Total | 209,818 | 182,405 | ||||||
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The increase in depreciation and amortization expenses is after a favorable foreign currency translation from GBP to Indian rupees of Rs.3,704 million pertaining to Jaguar Land Rover. The increase in depreciation expenses, excluding translation impact was primarily attributable to equipment and tooling, related to new models (Discovery, Velar andE-PACE), technology and capacity. The amortization expenses for Fiscal 2018 mainly related to product development costs capitalized and new products introduced during this period, namely the Nexon, new Land Rover Discovery, Range Rover Velar and the JaguarE-PACE.
Assets written off/loss on sale of assets and others (net)
We recorded a loss on sale of assets and assets written off of Rs.29,148Rs.3,132 million in Fiscal 2018,2020, as compared to Rs.11,419Rs.13,187 million in Fiscal 2017. In Fiscal 2018 and 2017, product development in progress for certain projects were identified for write off. There have been disruptions in2019. Due to the auto industry such as electrification necessitating a reviewwind down of operations of our product development cost capitalization policy. We reviewed our tangible and intangiblesubsidiary at Tata Motors (Thailand) Ltd., assets to ensure “fit for future” and thusof Rs.529 million were written off certain product development programs in Fiscal 2018 of Rs.20,602 million.2019.
Other income (net)
There was a net gain of Rs.47,873Rs.16,009 million in Fiscal 2018,2020, as compared to Rs.39,590Rs.35,439 million in Fiscal 2017,2019, representing a decrease of Rs.9,447Rs.19,430 million.
The loss on change in the fair value of commodity derivatives was Rs.6,882 million in Fiscal 2020, as compared to gain of Rs. 848 million in Fiscal 2019, mainly at Jaguar Land Rover primarily due to the increase in commodity prices of major commodities, including aluminum, copper, platinum and palladium.
MTM loss on investments fair valued through profit or loss of Rs.3,891 million in Fiscal 2020 primarily driven by fair value reduction of Lyft investment at Jaguar Land Rover.
Miscellaneous income decreased by 11.7% to Rs.14,958 million in Fiscal 2020 from Rs.16,942 million in Fiscal 2019.
Incentives were Rs.9,739 million in Fiscal 2020 as compared to Rs.10,035 million in Fiscal 2019, mainly due to lower government grants.
During the year ended March 31, 2019, Tata Motors Limited sold investment in TAL Manufacturing Solutions Limited to Tata Advanced Systems Ltd and recorded profit of Rs.3,770 million.
Profit on sale of investments measured at fair value through profit or loss is Rs.1,873 million in Fiscal 2020. In Fiscal 2019, gain on sale of available-for-sale investments was Rs.1,286 million.
For further details see Note 3034 to our consolidated financial statements included elsewhere in this annual report onForm 20-F.
Interest income
Interest income increased to Rs.11,697 million in Fiscal 2020, compared to Rs.7,865 million in Fiscal 2019, stemming from an increased fixed deposit at both Tata Motors Limited and Jaguar Land Rover.
Interest expense (net)
Our interest expense (net of interest capitalized) increased by 9.4%26.0% to Rs.46,365Rs.72,553 million in Fiscal 20182020 from Rs.42,366Rs.57,586 million in Fiscal 2017.2019. As a percentage of total revenues, interest expense represented 1.6%2.8% and 1.9% in Fiscal 20182020 and 2017.Fiscal 2019, respectively. The interest expense (net) for Jaguar Land Rover was GBP80GBP210 million (Rs.6,572(Rs.18,984 million) in Fiscal 2018,2020, as compared to GBP68GBP111 million (Rs.6,011(Rs.10,107 million) in Fiscal 2017.2019. The increase in interest expense primarily reflects a full year of interest accrued on the GBP300 million 2.75% and EUR650 million 2.2% senior notes issued in January 2017 as well as interest accrued on the EUR500 million 4.5%5.875% senior notes and EUR500 million 6.875% senior notes issued in October 2017, partiallyNovember 2019, offset by higher capitalized interest capitalized. For Tata Commercial Vehicles and a favorable foreign currency translation of Rs.239 million from GBP to Indian rupees. For our operations of Tata and other brand vehicles (including financing thereof),Passenger Vehicles, interest expense increased by 9.5%12.6% to Rs.39,909Rs.53,787 million in Fiscal 20182020 from Rs.36,435Rs.47,757 million in Fiscal 2017,2019, mainly due to higher borrowings.borrowings, partially offset by lower interest rates. For the Vehicle Financing business, interest expense increased by 17.7% to Rs.30,793 million in Fiscal 2020 from Rs.26,157 million in Fiscal 2019, mainly due to higher borrowings due to increased business. See Item 5.B “—“Operating and Financial Review and Prospects—Liquidity and Capital Resources” of this annual report on Form20-F for additional details on our debt financing arrangements.
Foreign exchange (gain)/loss (net)
We had a net foreign exchange loss of Rs.2,759Rs.16,985 million in Fiscal 2018,2020, compared to Rs.13,285Rs.5,824 million in Fiscal 2017.2019.
Jaguar Land Rover recorded an exchange loss of Rs.12,118 million in Fiscal 2020, as compared to loss of Rs.5,385 million in Fiscal 2019. There was a net exchange loss on senior notes and other borrowings of GBP134 million in Fiscal 2020, as compared to a loss of GBP45 million in Fiscal 2019, mainly due to GBP weakening against U.S. dollars and Euro in Fiscal 2020. There was a gain of GBP20 million in Fiscal 2020, as compared to a loss of GBP66 million in Fiscal 2019, due to fluctuations in foreign currency exchange rates on derivatives contracts that are not hedge accounted and natural hedges of debt, mainly reflecting a stronger U.S. dollar and Euro. Furthermore, this also includes a loss on revaluation of other assets and liabilities of GBP23 million in Fiscal 2020, as compared to a gain of GBP16 million in Fiscal 2019.
For India operations, we incurred a net exchange loss of Rs.2,372 million in Fiscal 2020, as compared to loss of Rs.2,262 million in Fiscal 2019, mainly attributable to foreign currency denominated borrowings.
There was a net exchange loss on revaluation of foreign currency loans at our subsidiary TML Holdings Pte. Limited of Rs.2,531 million in Fiscal 2020 as compared to a gain of Rs.1,805 million in Fiscal 2019.
Income Taxes
Our income tax expense increased by 6.7% to Rs.38,059is Rs.3,645 million in Fiscal 20182020 from Rs.35,670tax credit of Rs.25,425 million in Fiscal 2017,2019, resulting in consolidated effective tax rates of 36.0%(3.3%) and 36.4%8.0%, for Fiscal 20182020 and 2017,Fiscal 2019, respectively.
Tax raterates applicable to individual entities have increased to 20%23.8% for fiscal 2018,Fiscal 2020, as compared to 14.6%17.2% in fiscal 2017.Fiscal 2019.
ReasonsThe reasons for significant differences in the Company’s recorded income tax expense of Rs.38,059Rs.3,645 million in Fiscal 2018,2020, as compared to Rs.35,670credit of Rs.25,425 million in Fiscal 2017,2019, are mainly the following:
During Fiscal 2020, Tata Motors Limited, on a standalone basis, did not recognize a deferred tax asset, amounting to Rs.25,817 million on losses, due to the uncertainty of future taxable profit as compared to Rs.1,883 million of minimum alternate tax credit during Fiscal 2019.
Furthermore, during Fiscal 2020, deferred tax assets totaling Rs.2,700 million as compared to Rs.2,856 million in Fiscal 2019, were not recognized in certain subsidiaries and joint operations due to uncertainty of realization. However, for certain of the subsidiaries and a joint operation, there was a utilization of unrecognized deferred tax assets of Rs.3,240 million in Fiscal 2020 as compare to Rs.7,016 million in Fiscal 2019.
Income tax credit on undistributed earnings of subsidiaries was Rs.856 million in Fiscal 2020, as compared to expense of Rs.1,278 million in Fiscal 2019, mainly due to losses during the year by the China Joint Venture and other subsidiaries.
The impact of change in the statutory tax rate is Rs.3,974 million in Fiscal 2020 includes a charge of Rs. 4,146 million (GBP 49.2 million) with respect to JLR UK for the impact of change in the UK statutory tax rate from 17% to 19% on deferred tax assets and liabilities as compared to Rs.4,540 million in Fiscal 2019.
Additional deduction for patent, research and product development cost of Rs.2,816 million in Fiscal 2020, as compared to Rs.1,891 million in Fiscal 2019, was mainly due to reduction in research and development claims at Tata Motors Limited on a standalone basis.
During Fiscal 2019, previously recognized deferred tax assets were written down on account of impairment of Jaguar Land Rover business of Rs.26,982 million.
For further details see Note 1720 to our consolidated financial statements included elsewhere in this annual report on Form20-F.
Share of profit of equity-accounted investees andnon-controlling interests in consolidated subsidiaries, net of tax
In Fiscal 2018,2020, our share of profit of equity-accounted investees reflected a gainloss of Rs.22,783Rs.10,000 million, as compared to Rs.14,930profit of Rs.2,095 million in Fiscal 2017.2019. Our share of profitloss (including other adjustments) in Chery Jaguar Land Rover Automotive Company Limitedthe China Joint Venture in Fiscal 20182020 was Rs.21,389Rs.10,160 million, as compared to Rs.13,544profit of Rs.1,009 million in Fiscal 2017.2019. The losses were mainly due to decrease in volumes and lower tax rebates.
The share ofnon-controlling interests in consolidated subsidiaries were flat at Rs.1,021decreased slightly to Rs.956 million in Fiscal 20182020 from Rs.1,024Rs.1,015 million in Fiscal 2017.2019.
Net income
Our consolidated net incomeloss in Fiscal 2018,2020, excluding shares ofnon-controlling interests, increased by 8.9% to Rs.66,661is Rs.113,940 million from Rs.61,211a loss of Rs.293,143 million in Fiscal 2017. Net income as a percentage of total revenues remained constant at 2.3% in Fiscal 2018 and 2017.2019. This increase was mainly the result of the following factors:
A loss of Rs.17,909 million in Fiscal 2017, primarily due to increased sales and cost reduction initiatives.
employee cost during Fiscal 2017 Compared to Fiscal 2016
Revenue
Our total consolidated revenue (net of excise duty, where applicable), including finance revenue, decreased by 1.8% to Rs.2,656,495 million in Fiscal 2017 from Rs.2,705,113 million in Fiscal 2016.
The revenue of our Tata brand vehicles increased by 5.7% to Rs.518,431 million in Fiscal 2017 from Rs.490,344 million in Fiscal 2016 due to increased volumes of Passenger Cars and LCV. However, the revenue of our Jaguar Land Rover business decreased by 3.6% to Rs.2,120,677 million in Fiscal 2017 from Rs.2,200,750 million in Fiscal 2016, reflecting a decrease foreign currency translation loss from GBP to Indian rupees of Rs.276,439 million. Excluding the impact of foreign currency translation, the increase in revenue is Rs.193,616 million at our Jaguar Land Rover business,2020 primarily due to volume increases driven by the success of new products we launched, such as theF-PACE and Discovery Sport, offset by the production constraints of the Defender and Discovery ahead of the start of sales of the all new Discoveryvoluntary early separations that commenced in the fourth quarter of Fiscal 2017, as well as strong growth2019 and lower depreciation and amortization expense during Fiscal 2020 mainly due to impairment recognized in China, the United Kingdom, North Americathird quarter of Fiscal 2019.
Earnings Before Other Income, Interest and European markets. The increase was attributableTax for Vehicle Financing amounted to an increase in sales of Jaguar-brand vehicles to 169,284 units in Fiscal 2017 from 102,106 units in Fiscal 2016, an increase of 65.8%, offset by decrease in sales of Land Rover from 407,228 units in Fiscal 2016 to 365,462 units in Fiscal 2017, a decrease of 10.3% (volumes excluding Chery Jaguar Land Rover). Furthermore, revenue includes realized losses on cash flow hedges of Rs.112,698Rs.25,766 million in Fiscal 20172020, as compared to a gain of Rs.7,691Rs.21,153 million in Fiscal 2016.
Our revenues from sales of vehicles and spares manufactured in India increased by 3.6% to Rs.439,134 million in Fiscal 2017 from Rs.423,698 million in Fiscal 2016. The increase was2019. This is mainly attributable to revenues from passenger cars in India, which increased by 37.5% to Rs.45,674 million in Fiscal 2017 from Rs.33,224 million in Fiscal 2016, and revenue attributable to utility vehicles, which increased by 21.2% to Rs.12,607 million in Fiscal 2017 from Rs.10,400 million in Fiscal 2016. New product offerings in our passenger cars helped us increase our volumes and revenues in this category. Further, revenues from ILCVs decreased by 3.7% to Rs.33,413 million in Fiscal 2017 from Rs.34,699 million in Fiscal 2016. The revenues from SCV & Pickups increased by 4.7% to Rs. 37,348 million in Fiscal 2017 from Rs. 35,676 million in Fiscal 2016. Revenues of M&HCVs in India decreased by 1.7% to Rs.201,212 million in Fiscal 2017 from Rs.204,604 in Fiscal 2016, primarily due to increased competition.
Revenue from our vehicle financing operations increased by 9% to Rs.24,318 million in Fiscal 2017, as compared to Rs.22,319 million in Fiscal 2016.
Revenue attributable to TDCV, our subsidiary company engaged in design, development and manufacturing of M&HCVs, increased by 21.0% to Rs.57,774 million in Fiscal 2017 from Rs.47,742 million in Fiscal 2016, primarily due to strong performance in its domestic Korean market. There was a strong demand from the construction sector and replacement demand including factors such as low interest rates and diesel prices. However, the exports markets were very challenging. Factors like persistentlylow-oil prices, local currency depreciation against the U.S. dollar, continuing statutory regulations to reduce imports, the slowdown in Chinese economy impacting commodity exporting countries, and increased dealer inventory adversely impacted TDCV’s exports in major markets, such as Algeria, Russia, Vietnam, South Africa and Gulf Cooperation Council, or GCC, countries.
Revenue from other operations, before inter-segment eliminations, increased by 7.0% to Rs.31,154 million in Fiscal 2017 from Rs.29,116 million in Fiscal 2016, and represents 1.2% and 1.1% of our total revenues, before inter-segment eliminations, in Fiscal 2017 and 2016, respectively.
Cost and Expenses
Raw Materials, Components and Purchase of Products for Sale (including change in inventories of finished goods andwork-in-progress) (material costs)
Material costs increased marginally by 1.3% to Rs.1,659,297 million in Fiscal 2017 from Rs.1,637,210 million in Fiscal 2016. Material costs include realized exchange gain of Rs.7,553 million in Fiscal 2017 as compared to a loss of Rs.25,571 million in Fiscal 2016.
At our Jaguar Land Rover operations, material costs in Fiscal 2017 marginally decreased by 0.7% to Rs.1,309,697 million from Rs.1,318,875 million in Fiscal 2016. The decrease was attributable to favorable currency translation from GBP to INR of Rs.171,240 million. Excluding currency translation, material costs attributable to our Jaguar Land Rover operations increased by GBP 1,666 million (12.4%) in Fiscal 2017 mainly due to a 5% increase in sales volume, an increase in duties of GBP 150 million, primarily due to an increase in sales to the US, and unfavorable foreign currency effects applicable for sourcing countries, notably the weakening of Sterling against the Euro. Material costs at our Jaguar Land Rover operations as a percentage of revenue increased to 61.3% in Fiscal 2017 from 60.9% in Fiscal 2016 (in GBP terms), primarily attributable to higher sales of our popularF-PACE and the new Discovery launched in Fiscal 2017.
Material costs for Tata and other brand vehicles have also increased by 10.3% to Rs.345,437 million in Fiscal 2017 from Rs.313,172 million in Fiscal 2016, primarily due to increase in volumes. Further, material costs as a percentageaverage loan book and upfront recognition of total revenue (excluding finance revenue) increased to 69.8% in Fiscal 2017, as compared to 66.9% in Fiscal 2016, primarily due to unfavorable product mix leading to lower contribution margin.
For our India operations, material costs inexcess interest spread on the passenger vehicle segment increased by 45.1% to Rs.42,337 million in Fiscal 2017, as compared to Rs.29,183 million in Fiscal 2016 for our passenger cars, and by 26.3% to Rs.10,768 million in Fiscal 2017, as compared to Rs.8,529 million in Fiscal 2016 for our utility vehicles, mainly due to increased unit sales. Material costs for ILCVs also increased 3.7% to Rs.24,305 million in Fiscal 2017, as compared to Rs.23,432 million in Fiscal 2016. For SCV & Pickups, the material costs increased by 14.4% to Rs. 27,904 million in Fiscal 2017 from Rs. 24,397 million in Fiscal 2016. Material costs for M&HCVs increased by 3.7% to Rs.139,528 million in Fiscal 2017, as compared to Rs.134,501 million in Fiscal 2016.
Material costs increased by 24.2% to Rs.38,695 million in Fiscal 2017, as compared to Rs.31,159 million in Fiscal 2016 for TDCV, primarily due to higher volumes particularly in the domestic market. The increase is also due to an unfavorable foreign currency translation from KRW to Indian rupees of Rs.1,076 million. As a percentage of total revenue, material cost increased to 66.9% in Fiscal 2017, compared to 65.3% in Fiscal 2016, primarily due to higher sale of mixer truck models (bearing lower margin) and aggressive pricing for export sales.
Provision/(Reversal) for Loss of Inventory
On August 12, 2015, a series of explosions caused widespread damage at the Port of Tianjin in China, one of three major locations in China through which Jaguar Land Rover imports its vehicles. A provision of Rs.16,384 million (GBP157 million) (net of insurance recoveries) of Rs.5,342 million (GBP55 million)) has been recognized against the carrying value of inventory for the damage due to explosion at the port of Tianjin in China in Fiscal 2016.
In Fiscal 2017, Rs.13,301 million (GBP151 million) relating to insurance recoveries, recovery of import duties and taxes and to an updated assessment of the condition of the remaining vehicles led to a reversal of the initial provision recorded in Fiscal 2016.
Employee Costs
Our employee costs decreased by 1.6% in Fiscal 2017 to Rs.283,588 million from Rs.288,117 million in Fiscal 2016, including the foreign currency translation impact from GBP to Indian rupees discussed below.
Our permanent headcount increased by 3.9% as at March 31, 2017 to 79,558 employees from 76,598 employees as at March 31, 2016, primarily due to new production facilities and research and development centers at Jaguar Land Rover. However, the average temporary headcount decreased by 3.2% to 38,692 employees in Fiscal 2017 from 40,205 employees in Fiscal 2016.
The employee cost at Jaguar Land Rover decreased by 4.7% to Rs.218,016 million in Fiscal 2017 from Rs.228,730 million in Fiscal 2016. This decrease includes a favorable foreign currency translation from GBP to Indian rupees of Rs.27,569 million. In GBP terms, employee costs at Jaguar Land Rover increased to GBP2,490 million in Fiscal 2017 from GBP2,321 million in Fiscal 2016. The employee cost at Jaguar Land Rover as a percentage to revenue decreased to 10.2% in Fiscal 2017 from 10.4% in Fiscal 2016. Due to consistent increases in volumes and to support new launches and product development projects, Jaguar Land Rover increased its average permanent headcount by 6.8% in Fiscal 2017 to 31,810 employees from 29,789 employees in Fiscal 2016 and the average temporary headcount increased by 1.5% in to 7,324 employees in Fiscal 2017 from 7,216 employees in Fiscal 2016. Total number of permanent employees as at March 31, 2017 was 32,870, as compared to 30,750 as at March 31, 2016 for Jaguar Land Rover.
The employee cost for Tata and other brand vehicles (including financing thereof) increased by 9.5% to Rs.51,310 million in Fiscal 2017 from Rs.46,836 million in Fiscal 2016.
For our India operations, employee costs increased by 13.6% to Rs.41,856 million in Fiscal 2017 from Rs.36,834 million in Fiscal 2016, mainly due to regular annual increases in salary and wage agreements at our Pune plant. The permanent headcount increased by 1.1% as at March 31, 2017 to 36,560 employees from 36,177 employees as at March 31, 2016. However, the average temporary headcount remained same at 31,586 employees in Fiscal 2017 from 31,625 employees in Fiscal 2016. In Fiscal 2017, there was an expense of Rs.676 million towards early-retirement given to various employees.
Employee costs at TDCV increased by 5.3% to Rs.7,759 million in Fiscal 2017 from Rs.7,370 million in Fiscal 2016, primarily due to annual increments and headcount by 4.0%.
In Fiscal 2016, we closed the manufacturing operations at Tata Hispano Motors Carrocerries Maghreb, or Hispano Maghreb, and paid Rs.223 million as employee separation costs.
Other Expenses
Other expenses increased by 4.0% to Rs.608,462 million in Fiscal 2017 from Rs.585,321 million in Fiscal 2016. There was a favorable foreign currency translation of GBP to Indian rupees of Rs.64,840 million pertaining to Jaguar Land Rover. As a percentage of total revenues, these expenses increased to 22.9% in Fiscal 2017 from 21.6% in Fiscal 2016. The major components of expenses are as follows:
Percentage of Total Revenue | ||||||||||||||||||||
Year ended March 31, | Change | Year ended March 31, | ||||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||
(Rs. in millions) | ||||||||||||||||||||
Freight and transportation expenses | 103,534 | 103,351 | 0.2 | % | 3.9 | % | 3.8 | % | ||||||||||||
Works operation and other expenses | 232,675 | 223,315 | 4.2 | 8.8 | 8.3 | |||||||||||||||
Publicity | 86,987 | 87,685 | -0.8 | 3.3 | 3.2 | |||||||||||||||
Allowance for trade and other receivables, and finance receivables | 7,360 | 15,319 | -52.0 | 0.3 | 0.6 | |||||||||||||||
Warranty and product liability expenses | 85,866 | 67,539 | 27.1 | 3.2 | 2.5 | |||||||||||||||
Research and development expenses | 34,136 | 34,688 | -1.6 | % | 1.3 | % | 1.3 | % |
Expenditure capitalized
This represents employee costs, stores and other manufacturing supplies and other works expenses incurred mainly toward product development projects. Considering the nature of our industry, we continually invest in the development of new products and invest to address safety, emission and other regulatory norms. The expenditure capitalized increased by 1.2% to Rs.168,769 million in Fiscal 2017 from Rs.166,783 million in Fiscal 2016. The increase is net of an unfavorable foreign currency translation impact from GBP to Indian rupees of Rs.20,219 million pertaining to Jaguar Land Rover. These reflect expenditures on new products and other major product development plans.
Depreciation and Amortization
Our depreciation and amortization expenses increased by 8.5% in Fiscal 2017, the breakdown of which is as follows:
Year ended March 31, | ||||||||
2017 | 2016 | |||||||
(Rs. in millions) | ||||||||
Depreciation | 94,557 | 79,643 | ||||||
Amortization | 87,848 | 88,432 | ||||||
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Total | 182,405 | 168,075 | ||||||
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The increase in depreciation and amortization expenses is after a favorable foreign currency translation from GBP to Indian rupees of Rs.18,432 million pertaining to Jaguar Land Rover. The increase in depreciation expenses, excluding translation impact was primarily due to full-year depreciation of the facility at Brazil and expenses attributable to plant and equipment and tooling, which are mainly toward capacity and new products. The amortization expenses for Fiscal 2017 mainly related to product development costs capitalized and new products introduced during this period, namely theF-PACE, the new Discovery, Tigor, Hexa and Yodha. Depreciation and amortization expenses represented 6.9% and 6.2% of total revenues in Fiscal 2017 and Fiscal 2016, respectively.
Assets written off/loss on sale of assets and others (net)
We recorded a loss on a sale of assets and assets written off of Rs.11,419 million in Fiscal 2017, as compared to Rs.9,477 million in Fiscal 2016. In Fiscal 2017 and 2016, product development in progress for certain projects were identified for write off.
Other income (net)
There was a net gain of Rs.39,590 million in Fiscal 2017, as compared to Rs.12,613 million in Fiscal 2016, representing an increase of Rs.25,036 million.
For further details see Note 30 to our consolidated financial statements included elsewhere in this annual report onForm 20-F.
Interest expense (net)
Our interest expense (net of interest capitalized) decreased by 11.6% to Rs.42,366 million in Fiscal 2017 from Rs.47,913 million in Fiscal 2016. As a percentage of total revenues, interest expense represented 1.6% in Fiscal 2017, compared to 1.8% in Fiscal 2016. The interest expense (net) for Jaguar Land Rover was GBP68 million (Rs.6,011 million) in Fiscal 2017, as compared to GBP90 million (Rs.8,797 million) in Fiscal 2016. The decrease in interest expense is primarily due to the prepayment of higher coupon senior notesdirect assignment transaction undertaken during Fiscal 2016 and2020.
Offset by a favorable foreign currency translation of Rs.663 million from GBP to Indian rupees. For our operations of Tata and other brand vehicles (including financing thereof), interest expense decreased by 7.2% to Rs.36,435 million in Fiscal 2017 from Rs.39,249 million in Fiscal 2016, mainly due to reduction in interest rates. See Item 5.B “—Liquidity and Capital Resources” of this annual report on Form20-F for additional details on our debt financing arrangements.
Foreign exchange (gain)/loss (net)
We had a net foreign exchange loss of Rs.13,285 million in Fiscal 2017, compared to Rs.20,588 million in Fiscal 2016. This was primarily attributable to our Jaguar Land Rover operations.
Income Taxes
Our income tax expense increased by 29.6% to Rs.35,670 million in Fiscal 2017 from Rs.27,513 million in Fiscal 2016, resulting in consolidated effective tax rates of 36.4% and 22.1%, for Fiscal 2017 and 2016, respectively.
Reasons for significant differences in the company’s recorded income tax expense of Rs.35,670 million in Fiscal 2017, as compared to Rs.27,513 million in Fiscal 2016, are mainly the following:
During Fiscal 2016, Tata Motors Limited, on a standalone basis received additional consideration of Rs.3,245 million, from TML Holdings Pte Ltd, a wholly owned subsidiary towards divestment of investments in Fiscal 2014 in a foreign subsidiary. Further, Tata Motors Limited, on a standalone basis divested investments in Sheba Properties Limited, wholly owned subsidiary, to Tata Motors Finance Ltd, a subsidiary, resulting in a profit of Rs.3,304 million. The resultant gain was subject to capital gains tax in India for Tata Motors Limited, on a standalone basis, resulting in utilization of business losses having a tax effect of Rs.550 million.
For further details see Note 17 to our consolidated financial statements included elsewhere in this annual report on Form20-F.
Share of profit of equity-accounted investees andnon-controlling interests in consolidated subsidiaries, net of tax
In Fiscal 2017, our share of profit of equity-accounted investees reflected a gain of Rs.14,930 million, as compared to Rs.5,775 million in Fiscal 2016.
The share ofnon-controlling interests in consolidated subsidiaries increased by 3.5% to Rs.1,024 million in Fiscal 2017 from Rs.989 million in Fiscal 2016.
Net income
Our consolidated net income in Fiscal 2017, excluding shares ofnon-controlling interests, decreased by 36.2% to Rs.61,211 million from Rs.95,883 million in Fiscal 2016. Net income as a percentage of total revenues also decreased from 3.6% in Fiscal 2016 to 2.3% in Fiscal 2017. This decrease was mainly the result of the following factors:
Losses before other income, interest and tax for Tata Passenger Vehicles amounted to Rs.44,833 million in Fiscal 2020, as compared to Rs.15,842 million in Fiscal 2019, due to decreased sales volume of M&HCVs, higher level of variable marketing spends, provision for inventory of Bharat Stage III vehiclesin cars and higher depreciation and amortization.Utility Vehicle segment.
Recent Accounting Pronouncements
Please refer to Note 2(w)2(y) and Note 2(z) to our consolidated financial statements included elsewhere in this annual report on Form20-F for adopted and yet to be adopted accounting pronouncements as atof March 31, 2018.2020.
Critical Accounting Policies
The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities as of the date of this annual report on Form20-F and the reported amounts of revenues and expenses for the years presented. The actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis and aton each balance sheet date. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods are affected.
In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are included in the following notes:
Impairment of Goodwill
Cash-generating unitsCGUs to which goodwill is allocated are tested for impairment annually aton each balance sheet date, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unitCGU is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to that unit and then to the other assets of the unitpro rata on the basis of carrying amount of each asset in the unit. Goodwill impairment loss recognized is not reversed in subsequent period. Please refer to Note 1415 to our consolidated financial statements included elsewhere in this annual report on Form20-F for assumptions used for goodwill impairment.
Impairment
Property, plantplants and equipment and intangible assets
AtOn each balance sheet date, we assess whether there is any indication that any property, plantplants and equipment and intangible assets with finite lives may be impaired. If any such impairment exists, the recoverable amount of an asset is estimated to determine the extent of impairment, if any. Where it is not possible to estimate the recoverable amount of an individual asset, we estimate the recoverable amount of the cash-generating unitCGU to which the asset belongs.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually aton each balance sheet date, or earlier if there is an indication that the asset may be impaired.
RecoverableThe recoverable amount is the higher of fair value less costs to sell and value in use.VIU. In assessing value in use,VIU, the estimated future cash flows are discounted to their present value using apre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit)CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit)CGU) is reduced to its recoverable amount. AnIf this occurs, an impairment loss is recognized immediately in the income statement. Please refer to Note 17 and 18 to our consolidated financial statements included elsewhere in this annual report on Form 20-F for assumptions used for impairment for Jaguar Land Rover and Passenger Vehicle Business.
Finance receivables
We provide allowances for credit losses in finance receivables based on historical loss experience, current economic conditions and events, and the estimated collateral values for repossessed vehicles. This requires estimates, includingvehicles which includes significant assumptions related to the amountshistorical observation period, the correlation of forward looking macro-economic variables in the probability of default and timing of future cash flows expected to be received, which reflect changes in related observable data from period to period that may be susceptible to changes.estimated loss given default.
Capitalization of internally generated intangible assets
We undertake significant levels of research and development activityactivities, and for each vehicle program, periodic review is undertaken. We apply judgement in determining at what point in a vehicle programs lifecycle that recognition criteria under accounting standards is satisfied.
Product Warranty
Vehicle warranties are provided for a specified period of time. Our vehicle warranty obligations vary depending upon the type of the product, geographical location of its sale and other factors.
The estimated liability for vehicle warranties is recorded when the products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims and our estimates regarding possible future incidence based on actions on product failures.
Changes in warranty liability as a result of changes in estimated future warranty costs and any additional costs in excess of estimated costs can materially affect our net income. Determination of warranty liability is based on the estimated frequency and amount of future claims, which are inherently uncertain. Our policy is to continuouslyregularly monitor warranty liabilities to determine the adequacy of our estimate of such liabilities. Actual claims incurred in the future may differ from our original estimates, which may materially affect warranty expense.expenses.
Employee Benefits
Employee benefit costs and obligations are dependent on assumptions used in calculating such amounts. These assumptions include salary increase,increases, discount rates, health care cost trend rates, benefits earned, interest cost,costs, expected return on plan assets, mortality rates and other factors.
While we believe that the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect our employee benefit costs and obligations.
Recoverability/recognition of deferred tax assets
Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases, and unutilized business loss and depreciation carry-forwards and tax credits. Such deferred tax assets and liabilities are computed separately for each taxable entity and for each taxable jurisdiction. Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses, depreciation carry-forwards and unused tax credits could be utilized.
B.LiquidityB. Liquidity and Capital Resources
We finance our capital expenditures and research and development investments through cash generated from operations, cash and cash equivalents, and debt and equity funding. We also raise funds through the sale of investments, including divestments in stakes of subsidiaries on a selective basis.
The key element of the financing strategy is maintaining a strong financial position that allows us to fund our capital expenditures and research and development investments efficiently even if earnings are subject to short-term fluctuations. Our treasury policies for liquidity and capital resources are appropriate for the automotive operations and are set through business specific sensitive analysis and by benchmarking our competitors. These are reviewed periodically by our board of directors.the Board.
Our business segments are (i) automotive operations and (ii) all other operations. We provide financing for vehicles sold by dealers in India. Our automotive operations segment is further divided into Tata and other brand vehicles (including financing thereof) andCommercial Vehicles, Tata Passenger Vehicles, Jaguar Land Rover.Rover and Vehicle Financing. Furthermore, given the nature of our industry and competition, we are required to make significant investments in product development on an ongoing basis.
Principal Sources of Funding Liquidity
Our funding requirements are met through a mixture of equity, convertible ornon-convertible debt securities and other long-termlong- and short-term borrowings. We access funds from debt markets through commercial paper programs, convertible andnon-convertible debentures, and other debt instruments. We continuallyregularly monitor funding options available in the debt and equity capital markets with a view to maintainingmaintain financial flexibility.
See Note 3539 to our audited consolidated financial statements included elsewhere in this annual report on Form20-F for additional disclosures on financial instruments related to liquidity, foreign exchange and interest rate exposures and use of derivatives for risk management purposes.
The following table sets forth our short-termshort- and long-term debt position:
As at March 31, | As of March 31, | |||||||||||||||
2018 | 2017 | 2020 | 2019 | |||||||||||||
(Rs. in millions) | (Rs. in millions) | |||||||||||||||
Total short-term debt (excluding current portion of long-term debt) | 167,949 | 138,600 | ||||||||||||||
Total current portion of long-term debt | 109,339 | 40,927 | ||||||||||||||
Short-term debt (excluding current portion of long-term debt) | 163,625 | 201,503 | ||||||||||||||
Current portion of long-term debt | 191,324 | 150,341 | ||||||||||||||
Long-term debt net of current portion | 611,419 | 605,644 | 833,048 | 708,067 | ||||||||||||
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Total Debt | 888,707 | 785,171 | 1,187,997 | 1,059,911 | ||||||||||||
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During Fiscal 20182020 and 2017,Fiscal 2019, the effective weighted average interest rate on our long-term debt was 5.6%5.9% and 5.8%6.9% per annum, respectively. The following table sets forth a summary of long-term debt outstanding as atof March 31, 2018.2020.
Details of Long-term debt | Currency | Initial Principal amounts (millions) | Redeemable on | Interest Rate | Amount repaid during year ended March 31, 2018 (Rs. millions) | Outstanding (Rs. millions) | ||||||||||||||||||||||
31-Mar-18 | 31-Mar-17 | |||||||||||||||||||||||||||
Non-Convertible Debentures | INR | Various | 25,393 | 148,108 | 145,163 | |||||||||||||||||||||||
Collateralized debt obligations | INR | Various | 6,745 | 13,206 | 10,271 | |||||||||||||||||||||||
Buyers credit from bank | Various | Various | — | 15,000 | 15,191 | |||||||||||||||||||||||
Loan from banks / financial institutions | Various | Various | 72,784 | 137,182 | 127,410 | |||||||||||||||||||||||
Compulsory convertible Preference shares | INR | 8.780 | % | — | 8,840 | 4,340 | ||||||||||||||||||||||
Others | — | 2,120 | 1,918 | |||||||||||||||||||||||||
Senior Notes | ||||||||||||||||||||||||||||
Tata Motors Ltd | US$ | 250 | due 2024 | 5.750 | % | — | 16,194 | 16,088 | ||||||||||||||||||||
Jaguar Land Rover | US$ | 500 | due 2023 | 5.625 | % | — | 32,485 | 32,096 | ||||||||||||||||||||
Jaguar Land Rover | GBP | 400 | due 2023 | 3.875 | % | — | 36,665 | 32,108 | ||||||||||||||||||||
Jaguar Land Rover | GBP | 400 | due 2022 | 5.000 | % | — | 36,598 | 32,028 | ||||||||||||||||||||
Jaguar Land Rover | US$ | 500 | due 2027 | 4.500 | % | — | 31,569 | — | ||||||||||||||||||||
TML Holdings Pte Ltd | US$ | 300 | due 2021 | 5.750 | % | — | 19,488 | 19,250 | ||||||||||||||||||||
Tata Motors Ltd | US$ | 500 | due 2020 | 4.625 | % | — | 32,389 | 32,176 | ||||||||||||||||||||
Jaguar Land Rover | US$ | 500 | due 2020 | 3.500 | % | — | 32,714 | 32,299 | ||||||||||||||||||||
Jaguar Land Rover | US$ | 500 | due 2019 | 4.250 | % | — | 32,738 | 32,315 | ||||||||||||||||||||
Jaguar Land Rover | US$ | 700 | due 2018 | 4.125 | % | — | 45,845 | 45,185 | ||||||||||||||||||||
Jaguar Land Rover | GBP | 300 | due 2021 | 2.750 | % | — | 27,505 | 24,065 | ||||||||||||||||||||
Jaguar Land Rover | EUR | 650 | due 2024 | 2.200 | % | — | 52,112 | 44,669 | ||||||||||||||||||||
— | 396,302 | 342,278 | ||||||||||||||||||||||||||
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Total Long-term debt | 104,922 | 720,758 | 646,572 | |||||||||||||||||||||||||
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Details of Long-term debt Non-convertible debentures Collateralized debt obligations Buyers credit from bank Loan from banks / financial institutions Compulsory convertible Preference shares Others Senior Notes Tata Motors Limited Tata Motors Limited Jaguar Land Rover Jaguar Land Rover Jaguar Land Rover Jaguar Land Rover TML Holdings Pte. Limited Tata Motors Limited Jaguar Land Rover Jaguar Land Rover Jaguar Land Rover Jaguar Land Rover Jaguar Land Rover Jaguar Land Rover Jaguar Land Rover Total Long-term debt Currency Initial
Principal
amounts
(millions) Redeemable
on Interest
Rate Amount repaid
during year
ended
March 31, 2020
(Rs. millions) Outstanding
(Rs. millions) 31-Mar-20 31-Mar-19 Rs. Various 38,710 118,995 127,794 Rs. Various 25,930 42,299 30,473 Various Various 250 39,750 25,000 Various Various 37,097 368,260 279,380 Rs. 8.780 % 7,786 10,760 2,246 2,155 US$ 250 due 2024 5.750 % 18,609 17,187 US$ 250 due 2025 5.875 % 22,700 — US$ 500 due 2023 5.625 % 37,746 34,464 GBP 400 due 2023 3.875 % 37,258 36,006 GBP 400 due 2022 5.000 % 37,253 35,970 US$ 500 due 2027 4.500 % 42,346 34,586 US$ 300 due 2021 5.750 % 22,678 20,792 US$ 500 due 2020 4.625 % 19,864 18,049 US$ 500 due 2020 3.500 % 36,320 — 34,687 US$ 500 due 2019 4.250 % 35,740 — 34,713 EUR 500 due 2024 5.875 % 41,390 — GBP 300 due 2021 2.750 % 28,005 27,036 EUR 650 due 2024 2.200 % 53,984 50,367 EUR 500 due 2026 4.500 % 41,012 38,989 EUR 500 due 2026 6.875 % 42,191 — 174,047 1,024,372 858,408
The following table sets forth a summary of the maturity profile for our outstanding long—termlong-term debt obligations as atof March 31, 2018.2020.
Payments Due by Period1, 2 | Rs. in millions | |||
Within one year | ||||
After one year and up to two years | ||||
After two year and up to five years | ||||
After five year and up to ten years | ||||
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Total | ||||
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1. | Including |
2. | As of March 31, 2020, Jaguar Land |
The following table sets forth our total liquid assets, namely cash and cash equivalents, short—termshort-term deposits and investments in mutual funds:funds and money market funds (under other current investment):
As at March 31, | As of March 31, | |||||||||||||||
2018 | 2017 | 2020 | 2019 | |||||||||||||
(Rs. in millions) | (Rs. in millions) | |||||||||||||||
Total cash and cash equivalents | 147,168 | 139,868 | 184,678 | 215,598 | ||||||||||||
Total short-term deposits | 193,616 | 218,928 | 148,295 | 105,742 | ||||||||||||
Total mutual funds investments | 143,602 | 150,662 | ||||||||||||||
Total mutual fund and money market fund investments | 108,615 | 89,374 | ||||||||||||||
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Total liquid assets | 484,386 | 509,458 | 441,588 | 410,714 | ||||||||||||
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These resources enable us to address business needs in the event of changes in credit market conditions. Of the above liquid assets, Jaguar Land Rover holds Rs.429,726held Rs.342,730 million and Rs.444,018Rs.341,700 million as atof March 31, 20182020 and 2017,2019, respectively. Most of the Jaguar Land Rover’s liquid assets are maintained in GBP, U.S. dollars and Euro with smaller balances are maintained in US$, EUR and RMB and other currencies to meet operational requirements in those geographies.geographic regions.
We expect to invest over Rs.461 billionRs.249,000 million in property, plantplants and equipment and product development during Fiscal 2019.2021.
We will continue to invest in new products and technologies to meet consumer demand and regulatory requirements and in our manufacturing base in the United Kingdom and overseas. Jaguar Land Rover has invested around GBP1 billion in its manufacturing facility in Nitra, Slovakia with annual capacity of 150,000 units which opened in October 2018 and production scheduled to begin in 2018, starting withis currently producing the Land Rover Discovery.Discovery and the all-new Land Rover Defender (more recently from January 2020). Jaguar Land Rover has also invested around GBP1 billion in its engine manufacturing facility in Wolverhampton, which now produces 4 cylinder 2.0-litre Ingenium diesel and gasoline engines. The Jaguarengines as well as the new 6 cylinder I-PACE3.0-litre andE-PACE are now being produced under the contract manufacturing agreement with Magna Steyr in Graz, Austria. Furthermore the China joint venture opened its engine facility to produce2.0-litre petrol Ingenium engines in July 2017 for installation into locally manufactured Cherygasoline engine. In January 2019, Jaguar Land Rover vehiclesannounced that next-generation EDUs, will be produced at the company’s EMC in Wolverhampton and the long wheel basein June 2019 Jaguar XEL went on saleLand Rover announced that it will develop these next generation EDU’s in December 2017.collaboration with BMW. In January 2019, Jaguar Land Rover also announced that these EDUs will be powered by batteries assembled at a new Jaguar Land Rover Battery Assembly Centre located at Hams Hall, North Warwickshire. We expect that these investments, together with our other investments, will enable us to pursue further growth opportunities and address competitive positioning. We expect to meet most ofsatisfy our investments out of operating cash flows and cash liquidity available to us. In order to meet the balance of the requirements of our investments, we may be required to raise fundsus as well as additional funding through additional loans and by accessing the capital marketsother debt from time to time, as deemed necessary.
Tata Motors Limited at a consolidated level was free cash flowFree Cash Flow (which is anon-IFRS measure that equals cash flow from operating activities, less payment for property, plant and equipment and intangible assets) positivenegative of Rs.28,977 million in Fiscal 2018 of Rs.12,557 million, calculated on a standalone basis.2020. We expect that with the improvement in business performance in the future, the funding gap will be appropriately addressed.
The following table provides information for the credit ratingsrating of Tata Motors Limited for short-term borrowing and long-term borrowing from the following rating agencies as atof March 31, 2018:2020: Credit Analysis & Research Limited or CARE,(“CARE”), Information and Credit Rating Agency of India Ltd. (“ICRA”), or ICRA Limited, or ICRA, Credit Rating Information Services of India Ltd, or CRISIL Ltd, or CRISIL, Standard & Poor’s Ratings Group, orLtd. (“CRISIL”), S&P and Moody’s Investors Service, or Moody’s. A credit rating is not a recommendation to buy, sell or hold securities. A credit rating may be subject to withdrawal or revision at any time. Each rating should be evaluated separately of any other rating:
(as of March 31, 2020) | CARE | ICRA | CRISIL | S&P | Moody’s | |||||||||||||||
Long-term borrowings | ||||||||||||||||||||
Short-term borrowings | A1+ | A1+ | A1+ | — | — |
In April 2020, S&P revised its credit rating of Tata Motors Limited and in June 2020, Moody’s revised the credit rating of Tata Motors Limited. As at July 31, 2018,of the date of this annual report on Form 20-F, S&P’s credit rating of Tata Motors Limited stands at Ba2 byB and Moody’s and BB by S&P.credit rating of Tata Motors Limited stands at B1.
We believe that we have sufficient liquidity available to meet our planned capital requirements. However, our sources of funding could be materially and adversely affected by an economic slowdown, as was witnessed in Fiscal 2009, arising due to impact of the COVID-19 pandemic or other macroeconomic factors in India, the United Kingdom, the United States, Europe andor China, which are beyond our control. A decrease in the demand for our vehicles could affect our ability to obtain funds from external sources on acceptable terms or in a timely manner.
Our cash is located atin various subsidiaries. The cash in some of these jurisdictions, notably South Africa and Brazil, is subject to certain restrictions on cash pooling, intercompany loan arrangements or interim dividends. However, annual dividends are generally permitted, and we do not believe that these restrictions have, or are expected to have, any impact on our ability to meet our cash obligations.
Going concern assessment
The Company’s financial statements have been prepared on a going concern basis.
The Company recorded a net loss of Rs.112,984.1 million and Rs.292,128.1 million for the years ended March 31, 2020 and 2019, respectively, although it generated positive cash flows from operating activities of Rs.266,329.4 million and Rs.188,907.5 million during the same periods. The Company also had a net current liability position as of March 31, 2020 and 2019.
The Company has adopted going concern basis following a rigorous assessment of the financial position and forecasts of the Company for a period of at least eighteen months from the date of these financial statements.
The Company assessed its planned capital expenditures, debt repayments and refinancing as well as working capital requirements over this period, including the need for additional capital. In making this assessment, careful consideration has been given to the impact of COVID19 pandemic, in recognition of the impact it has had on the global economy and automotive industry. The impact has been significant, requiring temporary plant and retailer shutdowns, thereby impacting production and sales, and creating substantial uncertainty over the timeframe for economies and the automotive industry to recover. The Company has adopted various mitigating measures including rigorous cost and investment controls to conserve cash as much as possible considering these uncertainties.
As at March 31, 2020, the Company has sufficient liquidity, with cash and cash equivalents of Rs.184,678.0 million, short term deposits of Rs.148,294.8 million, current investments of Rs.108,615.3.million and undrawn credit facilities of Rs.218,366 million. In addition, during the year ended March 31, 2020, Tata Sons Private Limited subscribed to an aggregate of Rs.34,700.0 million warrants issued by the Company, of which Rs.8,675 million was received during the year. The balance amount of Rs.26,025.0 million, which will be due on exercise of options attached to warrants to subscribe for Ordinary Shares of the Company, will bring in further liquidity to the Company. Tata Sons Private Limited, as promoter of the Company, will provide financial support to help the Company meet its liquidity needs and covenants under the borrowing agreements with lenders until at least March 31, 2022.
Further, subsequent to the year end, the Company has raised additional long-term borrowings of Rs.40,000 million and a subsidiary in Singapore has refinanced a GBP 190 million (Rs. 17,631.7 million) loan with long term credit enhanced notes and a five year term loan. Jaguar Land Rover also increased an existing short-term working capital facility from GBP100 million (Rs.9,354 million) to GBP163 million (Rs.15,246 million) and a three year syndicated revolving loan facility for RMB 5 billion (Rs.52,379.4 million) in China. A wholly-owned Chinese subsidiary completed a GBP 170 million (Rs.15,901million) equivalent one-year loan with a Chinese bank. Such GBP 170 million (Rs.15,901 million) equivalent loan was then repaid in June and replaced with a new three-year GBP 567 million (Rs.53,034 million) equivalent facility with a syndicate of five Chinese banks. The GBP 567 million (Rs.53,034 million) equivalent syndicated loan is subject to an annual review customary in the Chinese banking market and a profitability and leverage covenant applicable only to JLR’s Chinese subsidiary, which are not expected to be breached in any of the scenarios tested. Both TML and JLR have a strong track record of raising funding in the bond and financing markets hence it is expected that TML and JLR will have opportunities to secure new funding in the future as evidenced by the completion of the GBP 567 million (Rs.53,034 million) Chinese syndicated loan in June 2020.
On June 30, 2020, the Company notified one of its Indian lenders on its US$425 million loan facility that as at June 30, 2020, the Company failed to maintain one of the financial ratios under the terms of the loan facility. On July 30, 2020, the Company received confirmation from the lender that it has approved an increase in such threshold and has given a waiver of the Company’s failure to maintain this ratio for Fiscal 2021. In the event the Company breaches any of the financial covenants in its financing agreements, the outstanding amounts due under such financing agreements could become due and payable immediately and/or result in increased costs. A default under one of these financing agreements may also result in cross-defaults under other financing agreements and result in the outstanding amounts under such other financing agreements becoming due and payable immediately. The Company will continue to monitor compliance with its financial covenants on all of its borrowings on an ongoing basis and has considered the risk of such defaults, including cross defaults, during the forecast period and expects to meet all of its financial covenants during the forecast period based on the financial support from Tata Sons.
The Company’s management expects that the Company will be able to secure additional funding facilities over the assessment period to increase available liquidity, considering the strong track record of raising funding in the bond and financing markets.
Considering the uncertainties in the economic outlook and recovery of the automotive sector, the Company’s management has developed cash flow and balance sheet forecasts. In evaluating the forecasts, the Company has taken into consideration both the sufficiency of liquidity to meet our financial obligations as they fall due as well as the potential impact on compliance with financial covenants during the forecast period. These forecasts indicate that the Company will have sufficient liquidity to operate and discharge its liabilities as they become due, taking into account (i) cash generated from operations, (ii) controllable mitigating actions pertaining to JLR such as deferral of non-essential capital and product development expenditure, further reductions of discretionary marketing spend and warranty goodwill payments, (iii) the funding facilities existing on the date of authorization of these financial statements and as at March 31, 2020, including the presently undrawn revolving credit facilities, (iv) the exercise of options by Tata Sons Private Limited and (v) the financial support from Tata Sons Private Limited to help the Company meet its liquidity needs and covenants under the borrowing agreements with lenders until at least March 31, 2022.
In developing these forecasts, the following key assumptions and scenarios were considered for the key components:
Key assumptions considered for Tata Motors Limited business
Expected future cash flows from operating activities and capital expenditure is based on the under mentioned key assumptions in the business projections:
Revenues based on latest total industry forecasts/estimates. Indian automobile industry volume forecast of about 2.78 million units and 3.18 million units for the financial years ending March 31, 2021 and 2022, representing decreases of about 21% and 9%, respectively, compared to year ended March 31, 2020 industry volumes of about 3.50 million units. A decrease in Tata Motors Limited volumes is less for the years ending March 31, 2021 and 2022, compared to the industry assumptions referenced.
Reduction in capital expenditure considering the macroeconomic environment by suspending certain programs. Estimated capital expenditure for the year ending March 31, 2021 is Rs.15,000 million for Tata Motors Limited.
Working capital cash inflows due to lower levels of inventory and trade receivables along with increase in acceptances with more suppliers or vendors opting for the same resulting in a net cash inflow of Rs.15,000 million in the year ending March 31, 2021 as compared to years ended March 31, 2020.
Key assumptions for Jaguar Land Rover business
In developing the forecasts, JLR estimated future cash flows from operating activities and capital expenditure is based on the under mentioned key assumptions in the business projections, including three scenarios: 1) base case, 2) severe and 3) extremely severe.
Scenario 1: Base Case
The base case scenario assumes:
A global industry volume forecast of about 71 million units for calendar year 2020 and 81 million units for 2021, representing decreases of about 21% and 10% respectively compared to 2019 industry volumes of about 90 million units based on a number of external industry volume forecasts. A decrease in JLR wholesale volumes is greater for Fiscal 2021 and less for Fiscal 2022 as compared to the industry assumptions referenced.
Investment, inventory and cost improvements are broadly consistent with the Project Charge target of GBP 1.5 billion (Rs.140,302 million) described above in Fiscal 2021. A target for Project Charge has not been set for Fiscal 2022 and so not all of the savings in Fiscal 2021 are assumed to continue at the same level in Fiscal 2022 for the purposes of this going concern analysis.
Scenario 2: Severe Scenario
The severe scenario assumes:
Industry volumes of about 55 million units for calendar year 2020 and about 65 million units for calendar year 2021, representing decreases of about 39% and 28% respectively compared to calendar year 2019. This represents a more L shaped recovery from the COVID-19 pandemic, based on selected external industry downside forecasts. The decline in JLR wholesale volumes for Fiscal 2021 and Fiscal 2022 is broadly similar to the assumed industry decline referenced.
Investment, inventory and cost improvements are broadly consistent with Project Charge targets indicated above but is expected to increase by about 15% in Fiscal 2021 and about 5% in Fiscal 2022 to partially mitigate the lower volumes in this scenario.
Scenario 3: Extremely Severe Scenario
An extremely severe scenario was assessed which is the same as Scenario 2 but with the following further sensitivities applied:
A further volume reduction of about 5% in Fiscal 2021 resulting in JLR wholesale volumes down about 35% in Fiscal 2021 and about 20% in Fiscal 2022, compared to Fiscal 2020.
Partial non-achievement of Project Charge+ targets with respect to inventory and cost savings including material costs, overheads and warranty.
Modest incremental supply chain cash impacts results from the COVID-19 pandemic.
A hard Brexit resulting in 10% tariffs on UK vehicle exports to EU countries and increased logistics and other associated costs from January 1, 2021 offset partially by the impact of a weaker pound expected in such a scenario.
A number of other smaller sensitivities.
In this scenario, JLR has identified a number of “tough choice” mitigating actions within their control that would be implemented to maintain sufficient liquidity in the business to remain a going concern. These actions include further significant reductions in investment spending, reductions in fixed marketing and other marketing related costs, and certain other discretionary costs.
Conclusion
Based on the evaluation described above, the Company’s management believes that the Company has sufficient funding available to it at the date of approval of these financial statements and that it will be able to continue as a ‘going concern’ in the foreseeable future and for a period of at least eighteen months from the date of these financial statements. Accordingly, the financial statements do not include any adjustments regarding the recoverability and classification of the carrying amount of assets and classification of liabilities that might result, should the Company be unable to continue as a going concern.
Long-term funding
In order to refinance our existing borrowings and for supportingsupport our long-term funding needs, we continued to raise funds during Fiscal 20172019 and 2018. We had inFiscal 2020. In the past, we issued convertible notes whichthat were convertible into equity or repayable on maturity. Details of major funding during Fiscal 20142016 through Fiscal 20182020 are provided below.
In May 2013, TML Holdings Pte Ltd., or TMLHS, issued SGD350 million, senior notes due 2018 at a coupon of 4.25% per annum. TMLHS refinanced these notes in Fiscal 2016 by obtaining a new syndicated loan of US$250 million maturing in March 2020.
During Fiscal 2014, TMLHS further raised US$600 million equivalent (US$460 million and SGD176.8 million) through a syndicated loan facility with US$300 million equivalent (US$250 million and SGD62.8 million) maturing in November 2017 and US$300 million equivalent (US$210 million and SGD114 million) in November 2019. This fund has been utilized for the general corporate purposes of Tata Motors Limited’s Indian operations. TMLHS repaid these loans in Fiscal 2016 by obtaining a new syndicated loan of US$600 million (with US$300 million maturing in October 2020 and US$300 million maturing in October 2022).
In December 2013 and January 2014, Jaguar Land Rover Automotive plc issued US$700 million senior notes due 2018 at a coupon of 4.125% per annum and GBP400 million senior notes due 2022 at a coupon of 5.000% per annum. The proceeds were used to refinance the GBP500 million senior notes due 2018 at a coupon of 8.125% per annum and US$410 million senior notes due 2018 at a coupon of 7.75% per annum, which were callable in May 2014 and subsequently redeemed them in full through a tender offer/deposit with the agent in March 2014.
During Fiscal 2014, we issued rated, listed, unsecured,non-convertible debentures, or NCDs, of Rs.11,000 million. The proceeds have been utilized for general corporate purposes.
In December 2011, Jaguar Land Rover entered in tointo a committed revolving credit facility forof GBP710 million for three and five years with a syndicate of banks. In July 2013, Jaguar Land Rover Automotive plc amended and restated the facility to GBP1,250 million at more favorable pricing and terms and conditions, which was subsequently upsized to GBP1,290 million. On July 29, 2015, Jaguar Land Rover refinanced the facility using a new facility agreement with a syndicate of 29 banks, increasing the size to GBP1.8 billion, all maturing in five years (2020), and subsequently upsized the facility to GBP1.87 billion in September 2015 by adding another bank under the accordion condition. Jaguar Land Rover is subject to certain customary financial and other covenants under this facility. This facility has been amended and extended in July 2017 to expire in July 2022 with GBP 1,935GBP1,935 million committed and fully undrawn as atof March 31, 2018.2020. Under the amended and extended facility, Jaguar Land Rover is no longer subject to financial covenants (interest(for example, the interest cover covenant is now removed), but othernon-financial covenants remain.
In Fiscal 2015, TMF Holdings Ltd. (TMFHL) and its subsidiary, TMFSL, issued NCDs and raised Rs.26,043 million. Furthermore, during Fiscal 2015, TMFL issued unsecured perpetual NCDs worth Rs.503 million toward tier 1 capital and unsecured long-term NCDs worth Rs.2,350 million as tier 2 capital to enhance its capital adequacy ratio based on the RBI guidelines.
In Fiscal 2015, Jaguar Land Rover Automotive plc issued (i) US$500 million senior notes due 2019 at a coupon of 4.250% per annum, (ii) US$500 million senior notes due 2020 at a coupon of 3.500% per annum and (iii) GBP400 million senior notes due 2023 at a coupon of 3.875% per annum. The proceeds were used for part prepayment of US$326 million senior notes due 2021 at a coupon of 8.125% per annum and GBP442 million senior notes due 2020 at a coupon of 8.250% per annum, and are being primarily used for general corporate purposes, including support for Jaguar Land Rover’s ongoing growth and capital spending requirements.
In Fiscal 2015, TML Holdings Pte. Ltd. issued US$300 million senior notes due 2021 at a coupon of 5.750% per annum for equity buyback.
In Fiscal 2015, we issued US$500 million senior unsecured notes due 2020 at a coupon of 4.625% per annum and US$250 million senior unsecured notes due 2024 at a coupon of 5.750% per annum. The proceeds have been used to refinance existing ECB of US$500 million and the balance of the proceeds is being used to incur new additional capital expenditure and other permitted purposes as per RBI ECB guidelines.
During Fiscal 2015, Tata Motors Limited issued rated, listed, unsecured NCDs of Rs.26,000 million. The proceeds have been utilized for general corporate purposes.
During Fiscal 2016, Tata Motors Limited allotted 150,490,480 Ordinary Shares (including 32,049,820 shares underlying ADRs) of Rs.2 each at a premium of Rs.448 per share, totaling Rs.67,721 million, and 26,509,759 ‘A’ Ordinary Shares of Rs.2 each at a premium of Rs.269 per share, totaling Rs.7,184 million, pursuant to the rights issue. 154,279 Ordinary Shares and 20,531 ‘A’ Ordinary Shares have been kept in abeyance. Out of the proceeds of the rights issue, Rs.5 billion havehas been used for funding expenditureexpenditures toward plantplants and machinery, Rs.15 billion towardhas been used for research and product development, Rs.40 billion towardhas been used for repayment in full or in part of certain long-termlong- and short-term borrowings, and Rs.14.011 billion towardhas been used for general corporate purposes.
During Fiscal 2016, TML Holdings Pte. Ltd., refinanced an existing unsecured multi-currency loan of US$600 million (US$250 million and SG$62.8 million maturing in November 2017, and US$210 million and SG$114 million maturing in November 2019) with a new unsecured loan of US$600 million (US$300 million maturing in October 2020, and US$300 million maturing in October 2022), and refinanced the existing SG$350 million 4.25% senior notes due in May 2018 with a new syndicated loan of US$250 million maturing in March 2020.
During Fiscal 2016, TMFHL issued 43,400,000 privately placed,privately-placed, cumulativenon-participating compulsory convertible preference shares of Rs.100, each convertible after seven years, which qualified as tier 1 capital.
In Fiscal 2016, Tata Motors Limited has exercised the call option and have subscribed entirely by April 2019. Further, TMFHL, and its subsidiary, TMFSL, issued NCDsnon-convertible debentures (“NCDs”) and raised Rs.22,140 million. Bank borrowings through secured and unsecured term loans continued to remain as the major source of funds for long-term borrowing, and during,borrowing. During Fiscal 2016, Rs.23,250 million was raised.
In January 2017, Jaguar Land Rover Automotive plcPlc issued (i) EUR 650EUR650 million senior notes due 2024 at a coupon interest of 2.200% per annum and (ii) GBP300 million senior notes due 2021 at a coupon interest of 2.750% per annum. The proceeds were for general corporate purposes, including support for Jaguar Land Rover’s ongoing growth and capital spending requirements. In March 2017, Jaguar Land Rover Automotive plcPlc completed consent transactions to align the terms of its (i) US$500 million 5.625% senior notes due 2023, (ii) US$700 million 4.125% senior notes due 2018 and (iii) GBP400 million 5.000% senior notes due 2022 to bonds it issued after January 31, 2014.
During Fiscal 2017, Tata Motors Limited issued rated, listed, unsecured NCDs of Rs.27,000 million. The proceeds have been utilizedused for general corporate purpose.purposes. Tata Motors Limited prepaid Rs.3000Rs.3,000 million of its unsecured 8.60% NCD due 2018 in February 2017.
In
During Fiscal 2017, TMFHL, and its subsidiaries, TMFL &and TMFSL, issued NCDs and raised Rs.3,161 million. Bank borrowings through secured and unsecured term loans continued to remain as the major source of funds for long-term borrowing, and during Fiscal 2017, Rs.2,625 million werewas raised. Overall during Fiscal 2017 for the TMFHLTMF group, the long-term debt (net) decreased by Rs.609 million.
During Fiscal 2018, Tata Motors Limited issued rated, listed, unsecured NCDs of Rs.15,000 million. The proceeds have been utilizedused for general corporate purpose.purposes.
In October 2017, Jaguar Land Rover Automotive plcPlc issued USD US$500 million senior notes due 2027 at a coupon interest of 4.500% per annum. The proceeds were for general corporate purposes, including support for Jaguar Land Rover’s ongoing growth and capital spending requirements.
During Fiscal 2018, TML Holdings Pte. Ltd.,Limited, a subsidiary of the Company, refinanced (i) an existing unsecured loan of USD600US$600 million (USD300(US$300 million maturing in October 2020 and USD300US$300 million maturing in October 2022) and (ii) a syndicated loan of USD250US$250 million maturing in March 2020 with a new unsecured loan of GBP640 million (GBP190 million maturing in July 2020, GBP225 million maturing in July 2022 and GBP225 million maturing in July 2023).
During Fiscal 2018, TMFHL and its subsidiaries issued NCDs and raised Rs.32,310 million. Bank borrowings through secured and unsecured term loans continued to remain the major source of funds for long-term borrowings, and during Fiscal 2018, Rs.23,300 million was raised. During Fiscal 2018, overall long-term debt (net) was increased by Rs.720 million.
During Fiscal 2019, Tata Motors Limited raised unsecured term loans amounting to Rs.15,000 million from banks for ongoing capital-spending requirements. Tata Motors Limited successfully completed a liability management exercise by the part-refinancing of US$500 million notes due for repayment on April 30, 2020. The Company raised ECB of US$237.468 million maturing in June 2025, which was used to repay the investors, who had surrendered their bonds through the tendering process.
In September 2018, Jaguar Land Rover Automotive Plc issued EUR500 million senior notes due 2026 at a coupon interest of 4.500% per annum. The proceeds were for general corporate purposes, including support for Jaguar Land Rover’s ongoing growth and capital spending requirements.
In October 2018, Jaguar Land Rover Automotive Plc signed a loan agreement with a syndicate of banks for US$1 billion and has drawn down the full amount. The loan has a final maturity on January 31, 2025, with 20% amortizing on October 31, 2022. The proceeds were for general corporate purposes, including support for Jaguar Land Rover’s ongoing growth and capital spending requirements.
In December 2018, the US$700 million senior notes with a coupon interest of 4.125% issued by Jaguar Land Rover Automotive Plc in December 2013 matured and were fully repaid
During Fiscal 2019, TMFHL and its subsidiaries, TMFL and TMFSL, raised Rs.20,660 million (face value) by issuing NCDs. Bank borrowings through secured term loans continued to be a major source of funds for long-term borrowing and raised Rs.63,060 million during Fiscal 2019.
During fiscal 2020, Tata Motors Limited allotted 201,623,407 Ordinary Shares at a price of Rs.150 per Ordinary Share aggregating to Rs.30,244 million and 231,333,871 Convertible Warrants (‘Warrants’), each carrying a right to subscribe to one Ordinary Share per Warrant, at a price of Rs.150 per Warrant (‘Warrant Price’), aggregating to Rs. 34,700 million on a preferential basis to Tata Sons Private Limited. An amount equivalent to 25% of the Warrant Price was paid at the time of subscription and allotment of each Warrant and the balance 75% of the Warrant Price shall be payable by the Warrant holder against each Warrant at the time of allotment of Ordinary Shares pursuant to exercise of the options attached to Warrant(s) to subscribe to Ordinary Share(s). The warrants can be exercised within 18 months from the date of allotment. The amount of Rs.38,919 million has been received and is being utilized for repayment of debt, meeting future funding requirements and other general corporate purposes of the Company and its subsidiaries, As at March 31, 2020, an amount of Rs. 27,619 million has been utilized.
During Fiscal 2020, the Tata Motors Limited raised unsecured term loans amounting to Rs.15,000 million from Banks for general corporate purpose and funding capital requirements. Tata Motors Limited raised unsecured, rated, listed NCD’s amounting to Rs.10,000 million for utilization towards capital expenditure including intangibles, refinancing of existing indebtedness and other general corporate purpose. In November 2019, Tata Motors Limited issued USD 300 million bonds due 2025 at coupon rate of 5.875% for funding capital requirements and other permitted use as per External Commercial Borrowings (“ECB”) guidelines.
In October 2019 Jaguar Land Rover Automotive plc completed and drew down in full a GBP625 million five-year amortizing loan facility backed by a GBP500 million guarantee from UK Export Finance (“UKEF”). In addition, the Company signed a new GBP100 million working capital facility for fleet buybacks in October 2019, fully drawn in November 2019.
In November 2019, Jaguar Land Rover Automotive Plc issued EUR€500 million senior notes due in 2024 at a coupon of 5.875% per annum and EUR300 million senior notes due in 2026 at a coupon of 6.875% per annum and an additional EUR200 million of senior notes in December 2019 due in 2026 also at a coupon of 6.875% per annum (the EUR300 million and EUR200 million senior notes due in 2026 are part of the same series of senior notes). The proceeds were for general corporate purposes, including support for Jaguar Land Rover’s ongoing growth and capital spending requirements.
In November 2019, the US$500 million senior notes with a coupon of 4.250% issued by Jaguar Land Rover Automotive Plc in November 2014 matured and were fully repaid.
In March 2020, the US$500 million senior notes with a coupon of 3.500% issued by Jaguar Land Rover Automotive Plc in March 2015 matured and were fully repaid. In addition, in March 2020 GBP52 million of the loan by a guarantee from the UKEF amortized and was repaid with GBP573 million of the loan outstanding at 31 March 2020.
During Fiscal 2020, TMFHL and its subsidiaries, raised Rs.22,700 million by issuing NCDs (including subordinated debt and perpetual NCDs). Total issuance through subordinated debt and hybrid perpetual NCDs was Rs.5,500 million. Bank borrowings including ECB’s continued to be a major source of funds for long-term borrowing and raised Rs.43,204 million during fiscal 2020.
Post March 31, 2020, Tata Motors Finance Group (“TMF Group”) raised Rs.16,250 million through secured, rated, listed NCD’s. Tata Motors Finance Group has also received sanction of Rs.9,000 million through secured term loan from banks for business purposes. TMF Group has also done direct assignment of 2,626 million as part of alternative source of raising funds and in line with the group strategy of Asset Lite model. TMF Group has been raising short term and long term funds on an continuous basis to ensure adequate liquidity, compliance with Asset Liability Management requirements and meeting funds requirements as per business plans.
Post March 31, 2020, Tata Motors Limited raised Rs.10,000 million through secured, rated, listed NCD’s. Tata Motors Limited also raised Rs.30,000 million through secured term loan for utilization towards capital expenditure including intangibles, refinancing of existing indebtedness and other general corporate purposes. Jaguar Land Rover (China) Investment Co. Ltd has signed a RMB 5 billion unsecured three year revolving loan facility with a syndicate of five Chinese banks. We plan to refinance and raise long-term funding through borrowings or equity issuances, on the basis of review of business plans, operating results and covenant requirements of our existing borrowings.
Short-term funding
We fund our short-term working capital requirements with cash generated from operations, overdraft facilities with banks, short- and medium-term borrowings from lending institutions, banks and commercial paper. The maturities of these short-short-term and medium-term borrowings and debentures are generally matched to particular cash flow requirements. We had borrowings of Rs.167,949Rs.163,625 million and Rs.138,599Rs.201,503 million as atof March 31, 20182020 and 2017,2019, respectively.
Our working capital limit for our India operations is Rs.140,000Rs.100,000 million. The working capital limits arelimit is secured by hypothecation of existing current assets of Tata Motors Limited, including stock of raw material, stock in process, semi-finished goods, stores and spares not relating to plantplants and machinery (consumable stores and spares), bills receivables and book debts, including vehicle financing receivables and all other moveable current assets, except cash and bank balances, loans and advances of Tata Motors Limited, both present and future. The working capital limit is renewed annually for Tata Motors Limited. Tata Motors Limited currently for Rs.500 croreshas Rs.15,000 million revolving credit facility which remained undrawn as atof March 31, 2018.2020.
As of March 31, 2020, Jaguar Land Rover Limited had sold receivables of GBP392 million equivalent under their US$700 million committed invoice discounting facility. Under the terms of this facility receivables are accounted as sold (through trade receivables in working capital) and therefore not accounted as debt under IFRS. GBP114 million was repaid against a previous working capital facility (accounted as debt that matured within Fiscal 2020). In November 2019 Jaguar Land Rover Limited drew down fully on a new GBP100 million secured working capital facility for fleet buybacks.
As at March 31, 2018,2020 the unutilized working capital limits for Tata Motors Limited were at Rs 48,038 million. The unutilized revolving credit facility amounted to Rs 15,000 million for Tata Motors Limited. For Jaguar Land Rover, had drawings of USD 209 million (GBP 149 million equivalent) under their USD 295 million uncommitted invoice discountingthe unutilized revolving credit facility and GBP 6 million of other outstanding discounted receivables as well as GBP 18.9 million of finance leases.was GBP1,935 million.
We had unused credit facilities of Rs.367,901 million and Rs.333,874 million as at March 31, 2018 and 2017, respectively.
Loan Covenants
Some of our financing agreements and debt arrangements set limits on and/or require prior lender consent for, among other things, undertaking new projects, issuing new securities, changes in management, mergers, sales of undertakings and investments in subsidiaries. In addition, certain negative covenants may limit our ability to borrow additional funds or to incur additional liens, and/or provide for increased costs in case of breach. Certain of our financing arrangements also include financial covenants to maintain certaindebt-to-equity ratios,debt-to-earnings ratios, liquidity ratios, capital expenditure ratios and debt coverage ratios.
We monitor compliance with our financial covenants on an ongoing basis. We also review our refinancing strategy and continue to plan for deployment of long termlong-term funds to address any potentialnon-compliance. On June 30, 2020, we notified the Indian lender on our US$425 million loan facility that as at June 30, 2020, the Company failed to maintain one of the financial ratio under the terms of the loan facility. On July 30, 2020, the Company received confirmation from the lender that it has approved an increase in such threshold and has given waiver of the Company’s failure to maintain this ratio for Fiscal 2021.
Certain debt issued by Jaguar Land Rover is subject to customary covenants and events of default, which include, among other things, minimum liquidity requirement in the case of the UKEF facility, restrictions or limitations on the amount of cash whichthat may be transferred outside of the Jaguar Land Rover group of companiesGroup in the form of dividends, loans or investments to TML and its subsidiaries. These are referred to as restricted payments“restricted payments” in the relevant Jaguar Land Rover financing documentation. In general, the amount of cash which may be transferred as restricted payments from the Jaguar Land Rover groupGroup to the Company and its subsidiaries is limited to 50% of its cumulative consolidated net income (as defined in the relevant financing documentation) from January 2011. As atof March 31, 2018,2020, the estimated amount that is available for dividend payments, other distributions and restricted payments was approximately GBP4,941GBP4,280 million.
As per S-X Regulations, a company must compute its proportionate share of restricted net assets basis consolidated financials. If the amount of such restriction is more than 25% of the company’s consolidated net assets, then condensed financial information of the parent company has to be presented. As of March 31, 2020, the restricted net assets is less than 25% of the consolidated net assets and hence the disclosure pertaining to parent only financials has not been given.
Cash Flow Data
The following table sets forth selected items from our consolidated statements of cash flows for the periods indicated.
Rs. in millions | Rs. in millions | |||||||||||||||||||
2018 | 2017 | 2016 | 2020 | 2019 | ||||||||||||||||
Net Cash provided by Operating Activities: | 238,574 | 303,107 | 374,713 | 266,329 | 188,908 | |||||||||||||||
Net income after tax | 67,682 | 62,234 | 96,872 | |||||||||||||||||
Net income/(loss) after tax | (112,984 | ) | (292,128 | ) | ||||||||||||||||
Adjustments to net income after tax | 259,421 | 226,002 | 284,906 | 346,037 | 570,966 | |||||||||||||||
Changes in operating assets and liabilities | 58,317 | 33,822 | 13,333 | 51,125 | (63,336 | ) | ||||||||||||||
Income tax paid | (30,212 | ) | (18,951 | ) | (20,398 | ) | (17,849 | ) | (26,594 | ) | ||||||||||
Net Cash used in Investing Activities | (262,016 | ) | (382,728 | ) | (370,501 | ) | (341,702 | ) | (197,111 | ) | ||||||||||
Purchase of property, plant and equipment and intangible assets (net) | (350,486 | ) | (306,064 | ) | (311,014 | ) | ||||||||||||||
Net investment, short term deposit, margin money and loans given | 63,591 | (89,243 | ) | (67,374 | ) | |||||||||||||||
Purchase of property, plants and equipment and intangible assets (net) | (295,306 | ) | (352,363 | ) | ||||||||||||||||
Net investment, short-term deposit, margin money and loans given | (63,877 | ) | 145,324 | |||||||||||||||||
Dividend and interest received | 24,879 | 12,579 | 7,887 | 17,481 | 9,928 | |||||||||||||||
Net Cash provided by / (used in) Financing Activities | 20,117 | 62,053 | (37,929 | ) | ||||||||||||||||
Equity issuance / Proceeds from issue of shares by a subsidiary tonon-controlling shareholders (net of issue expenses) | 0 | * | 52 | 74,334 | ||||||||||||||||
Net Cash provided by Financing Activities | 33,896 | 88,304 | ||||||||||||||||||
Proceeds from issue of shares and warrants (net of issue expenses) | 38,888 | — | ||||||||||||||||||
Dividends paid (including tonon-controlling shareholders of subsidiaries) | (560 | ) | (1,212 | ) | (1,059 | ) | (569 | ) | (947 | ) | ||||||||||
Interest paid | (54,107 | ) | (52,224 | ) | (56,068 | ) | (75,184 | ) | (68,404 | ) | ||||||||||
Short term (net) borrowings (net of debt issuance cost) | 29,604 | 24,853 | (18,780 | ) | ||||||||||||||||
Long term (net) borrowings (net of debt issuance cost) | 45,580 | 90,584 | (36,356 | ) | ||||||||||||||||
Distribution tonon-controlling interest | (400 | ) | — | — | ||||||||||||||||
Short-term (net) borrowings (net of debt issuance cost) | (37,276 | ) | 31,809 | |||||||||||||||||
Long-term (net) borrowings (net of debt issuance cost) | 108,037 | 125,846 | ||||||||||||||||||
Net change in cash and cash equivalents | (3,325 | ) | (17,567 | ) | (33,717 | ) | (41,477 | ) | 80,101 | |||||||||||
Cash and cash equivalents, end of the year | 147,168 | 139,868 | 171,536 | 184,678 | 215,598 |
Fiscal 20182020 compared to Fiscal 20172019
Cash and cash equivalents increaseddecreased by Rs.7,300Rs.30,920 million in Fiscal 20182020 to Rs.147,168Rs.184,678 million (mainly due tofrom Rs.215,598 million in Fiscal 2019, partially offset by an favorable currency translation of Rs.14,820Rs.3,674 million from GBP to Indian rupees) from Rs.139,868 million in Fiscal 2017.rupees. The decrease in cash and cash equivalents (excluding currency translation) resulted from the changes to our cash flows in Fiscal 20182020 when compared to Fiscal 20172019 as described below. Net cash provided by operating activities totaled Rs.238,574Rs.266,329 million in Fiscal 2018, a decrease2020, an increase of Rs.64,533Rs.77,421 million, as compared to Rs.303,107Rs. 188,908 million in Fiscal 2017.2019.
The net income after tax increased to Rs.67,682loss is Rs.112,984 million in Fiscal 2018 from Rs.62,2342020 as compared to a loss of Rs.292,128 million in Fiscal 2017.2019. Therefore, the net income after tax (after adjustments) increased to Rs.327,103 million in Fiscal 2018cash flows from Rs.288,236 million in Fiscal 2017.
However, theoperating activities before changes in operating assets and liabilities resulted in a net outflowincome of Rs.58,317Rs.233,053 million in Fiscal 2018, as compared to net inflow2020 from income of Rs.33,822Rs.278,838 million in Fiscal 2017.
For Tata and other brand vehicles (including financing thereof), there was a net outflow of cash on account of changes in operating assets and liabilities of Rs.62,475 million in Fiscal 2018, as compared to a net inflow of Rs.1,494 in Fiscal 2017. In Fiscal 2018, the net outflow in vehicle finance receivables was Rs.63,361 million as compared to Rs.17,916 million in Fiscal 2017. Excluding finance receivables, there was an inflow of Rs.886 million in Fiscal 2018, compared to Rs.19,410 million in Fiscal 2017, which was attributable to an increase in trade payables and acceptances by Rs.21,884 million, partly offset by increase in inventory by Rs.4,321 million.
For Jaguar Land Rover brand vehicles, there was a net out flow of cash on account of changes in operating assets and liabilities accounting to Rs.6,694 million in Fiscal 2018, as compared to an inflow of Rs.32,111 million in Fiscal 2017.
Income tax paid has increased to Rs.30,212 million in Fiscal 2018, as compared to Rs.18,951 million in Fiscal 2017, which was primarily attributable to tax payments by Jaguar Land Rover’s foreign subsidiaries in their respective tax jurisdictions.
Net cash used in investing activities totaled Rs.262,016 million in Fiscal 2018, as compared to Rs.382,728 million for Fiscal 2017, a decrease of Rs.120,712 million or 31.5%, mainly due to reduction in deposits with bank and financial institutions mainly at our Jaguar Land Rover. In Fiscal 2018, payments for capital expenditure at Jaguar Land Rover increased by 18.6% to Rs.317,634 million from Rs.267,821 million in Fiscal 2017. The capital expenditure were intended to support continued investment in new products at Jaguar Land Rover and manufacturing facilities in the United Kingdom, Austria and Slovakia Further, in Fiscal 2018, payments for capital expenditure at Tata and other brand vehicles (including financing thereof) were at Rs.38,091 million from Rs. 34,635 million in Fiscal 2017, mainly related to new products planned for future.
The following table sets forth a summary of our cash flow on property plant and equipment and intangible assets for the periods indicated.
For the year ended, | ||||||||
2018 | 2017 | |||||||
(Rs. in millions) | ||||||||
Tata and other brand vehicles | 38,091 | 34,635 | ||||||
Jaguar Land Rover | 317,634 | 267,821 |
Our net investment in short-term deposit margin moneys and loans resulted in an inflow of Rs.63,591 million in Fiscal 2018, as compared to an outflow of Rs.89,243 million in Fiscal 2017. The cash inflows in Fiscal 2018 mainly related to deposits and mutual fund realized by Jaguar Land Rover of Rs.52,812 million. In Fiscal 2017, the cash outflows mainly related to investment of surplus cash in bank deposits and mutual funds by Jaguar Land Rover of Rs.83,096 million and inflow in Tata and other brand vehicles (including financing thereof) of Rs.13,748 million.
Net cash inflow from financing activities totaled Rs.20,117 million in Fiscal 2018, as compared to Rs.62,053 million in Fiscal 2017, mainly due to an increase in long-term and short-term borrowings.
For Tata and other brand vehicles (including financing thereof), the short-term debt increased by Rs.32,254 million, whereas long-term debt (net) increased by Rs.10,679 million, due to additional borrowing. Specifically, there was an increase in debt (short-term and long-term) of Rs.54,351 million in Fiscal 2018 at TMFHL group, as compared to Rs.15,402 million in Fiscal 2017.
For Jaguar Land Rover, the short-term debt (net) decreased by Rs.306 million and long-term debt (net) increased by Rs.30,885 million in Fiscal 2018 due to issuance of senior notes.
Interest paid is Rs.54,107 million in Fiscal 2018, as compared to Rs.52,224 million in Fiscal 2017. For Jaguar Land Rover interest paid is Rs.13,638 million in Fiscal 2018, as compared to Rs.14,650 million in Fiscal 2017. For Tata and other brand vehicles, interest paid was Rs.42,525 million in Fiscal 2018, as compared to Rs.38,565 million in Fiscal 2017, due to an increase in borrowing in Fiscal 2018. Please see Item 5.B “—Liquidity and Capital Resources—Long-term funding” of this annual report on Form20-F for additional details on our prepayments of senior notes.
Fiscal 2017 compared to Fiscal 2016
Cash and cash equivalents decreased by Rs.31,668 million in Fiscal 2017 to Rs.139,868 million (by an unfavorable currency translation of Rs.20,281 million from GBP to Indian rupees) from Rs.171,536 million in Fiscal 2016. The decrease in cash and cash equivalents resulted from the changes to our cash flows in Fiscal 2017 when compared to Fiscal 2016 as described below.
Net cash provided by operating activities totaled Rs.303,107 million in Fiscal 2017, a decrease of Rs.71,606 million, as compared to Fiscal 2016. The net income after tax decreased to Rs.62,234 million in Fiscal 2017 from Rs.96,872 million in Fiscal 2016. Therefore, the net income after tax (after adjustments) decreased to Rs.288,236 million in Fiscal 2017 from Rs.381,778 million in Fiscal 2016.
2019. The changes in operating assets and liabilities resulted in a net inflow of Rs.33,822Rs.51,125 million in Fiscal 2017,2020, as compared to Rs.13,333outflow of Rs.63,336 million in Fiscal 2016. Primarily,2019.
In Fiscal 2020, the net inflow in vehicle finance receivables was Rs.20,208 million as a resultcompared outflow of Rs.97,257 million in Fiscal 2019. For Tata Commercial Vehicles and Tata Passenger Vehicles there was an inflow of Rs.643 million in Fiscal 2020 on account of changes in operating assets and liabilities, compared to an outflow of Rs.3,841 million in Fiscal 2019, which was mainly attributable to an increase in volumes in Fiscal 2017, atother non-current assets by Rs.4,847 million.
For Jaguar Land Rover inventories increased by Rs.62,855 million in Fiscal 2017, as compared to Rs.49,602 million in Fiscal 2016 and trade receivables by Rs.19,618 million, as compared to Rs.1,543 million in Fiscal 2016. After considering the increase in accounts payable and provisions, mainly driven by increase in volumes,brand vehicles, there was a net inflow of cash on account of changes in operating assets and liabilities of Rs.32,111accounting to Rs.30,444 million in Fiscal 2017,2020, as compared to Rs.42,315inflow of Rs. 31,146 million in Fiscal 2016, at Jaguar Land Rover.
For Tata and other brand vehicles (including financing thereof), there was a net inflow of cash on account of changes in operating assets and liabilities of Rs.1,494 million2019. This is mainly due to higher trade payables in Fiscal 2017,2020 as compared to an outflow of Rs.28,880 in Fiscal 2016. In Fiscal 2017, the net outflow in vehicle finance receivables was Rs.17,916 million as compared to Rs.13,955 million in Fiscal 2016. Excluding finance receivables, there was an inflow of Rs.19,410 million in Fiscal 2017, compared to an outflow of Rs.14,925 million in Fiscal 2016, which was attributable to an increase in trade payables and acceptances by Rs.29,374 million, partly offset by increase in inventory by Rs.3,374 million.2019.
Income tax paid has decreased to Rs.18,951Rs.17,849 million in Fiscal 2017 (lower profitability at Jaguar Land Rover),2020, as compared to Rs.20,398Rs.26,594 million in Fiscal 2016,2019, which was primarily attributable to tax payments by Jaguar Land Rover’s foreign subsidiaries in their respective tax jurisdictions.
Net cash used in investing activities totaled Rs.382,728Rs.341,702 million in Fiscal 2017,2020, as compared to Rs.370,501Rs.197,111 million for Fiscal 2016,2019, an increase of Rs.12,227Rs.144,591 million or 3.3%73.4%, mainly due to investmentan increase in property, plantdeposits with banks and equipment byfinancial institutions mainly at Jaguar Land Rover and product development projects both at our Jaguar Land Rover and India operations.Rover. In Fiscal 2017,2020, payments for capital expenditureexpenditures at Jaguar Land Rover decreased by 3.3% to Rs.267,821Rs.251,388 million from Rs.276,932Rs.293,642 million in Fiscal 2016.2019. The capital expenditureexpenditures were intended to support continued growthinvestment in sales volumesnew products at Jaguar Land Rover and manufacturing facilities in the United Kingdom, Austria and Brazil.Slovakia. Further, in Fiscal 2017,2020, payments for capital expenditureexpenditures at Tata Commercial Vehicles and other brand vehicles (including financing thereof) were at Rs.34,635Tata Passenger Vehicles decreased to Rs.43,319 million from Rs.33,682Rs.49,735 million in Fiscal 2016,2019, mainly relateddue to new products planned for future.the future, including BSVI.
The following table sets forth a summary of our cash flowoutflow on property, plantplants and equipment and intangible assets for the periods indicated.
For the year ended, | For the year ended, | |||||||||||||||
2017 | 2016 | 2020 | 2019 | |||||||||||||
(Rs. in millions) | (Rs. in millions) | |||||||||||||||
Tata and other brand vehicles | 34,635 | 33,682 | ||||||||||||||
Tata Commercial Vehicles and Tata Passenger Vehicles | 43,319 | 49,735 | ||||||||||||||
Jaguar Land Rover | 267,821 | 276,932 | 251,388 | 293,642 |
Our net investment in short-term deposit margin moneys and loans resulted in an outflow of Rs.89,243Rs.63,886 million in Fiscal 2017,2020, as compared inflows of Rs.145,324 million in Fiscal 2019. The cash outflows in Fiscal 2020 of Rs.49,919 million as compared to Rs.67,374inflow of Rs. 148,603 million in Fiscal 2016, which2019, mainly related to investment of surplus cash in bankhigher deposits and mutuallower money market funds realized by Jaguar Land Rover of Rs.83,096 million and Tata and other brand vehicles (including financing thereof) of Rs.7,864 million.Rover.
Net cash inflow from financing activities totaled Rs.62,053Rs.33,896 million in Fiscal 2017,2020, as compared to an outflow of Rs.37,929Rs.88,304 million in Fiscal 2016,2019, mainly due to decreaseda decrease in long-term and short-term borrowings.
For Tata Commercial Vehicles and other brand vehicles (including financing thereof),Tata Passenger Vehicles, the short-term debt increaseddecreased by Rs.20,586Rs.27,190 million, whereas long-term debt (net) decreasedincreased by Rs.53,761Rs.52,776 million, due to repayments. Specifically, thereadditional borrowings. There was an increase in debt (short-term and long-term) of Rs.15,402Rs.32,709 million in Fiscal 20172020 at TMFL,Vehicle Financing, as compared to Rs.9,169Rs.104,612 million in Fiscal 2016.2019.
For Jaguar Land Rover, the short-term debt (net) increaseddecreased by Rs.3,995Rs.10,275 million due to certain short term loans taken in some of the overseas subsidiary, and long-term debt (net) increased by Rs.145,914Rs.68,943 million in Fiscal 20172020, due to new issuance of senior notes.borrowings in Fiscal 2020.
Interest paid is Rs.52,224was Rs.75,184 million in Fiscal 2017,2020, as compared to Rs.56,068Rs.68,404 million in Fiscal 2016.2019. For Jaguar Land Rover, interest paid is Rs.14,650was Rs.18,633 million in Fiscal 2017,2020, as compared to Rs.11,420Rs.19,095 million in Fiscal 2016.2019. For Tata Commercial Vehicles and other brand vehicles,Tata Passenger Vehicles, interest paid was Rs.38,565Rs.25,680 million in Fiscal 2017,2020, as compared to Rs.44,538Rs 26,628 million in Fiscal 2016. Though there was2019, due to an increase in borrowing in Fiscal 2017,2020. For Vehicle Financing, interest paid was lower dueRs.30,852 million in Fiscal 2020 as compared to reductionRs.25,051 million in interest rates.Fiscal 2019. Please see Item 5.B “—“Operating and Financial Review and Prospects—Liquidity and Capital Resources—Principal Sources of Funding Liquidity—Long-term funding” of this annual report on Form20-F20-F. for additional details on our prepayments of senior notes.
Balance Sheet Data
Below is a discussion of major items and variations in our consolidated balance sheet as atof March 31, 20182020 and 2017,2019, included elsewhere in this annual report on Form20-F.
Our total assets were Rs.3,235,937Rs.3,140,802 million and Rs.2,666,646Rs. 2,987,120 million as atof March 31, 20182020 and 2017,2019, respectively. The increase by 21.4%5.1% in assets as atof March 31, 20182020 takes into account ana favorable foreign currency translation from GBP into Indian rupees as described below.
Our total current assets have increaseddecreased by Rs.199,312Rs.32,439 million to Rs.1,362,648Rs. 1,195,836 million or 2.6% as atof March 31, 2018 or 17.1%,2020, as compared to Rs.1,163,336Rs.1,228,275 million as atof March 31, 2017.2019.
Cash and cash equivalents increaseddecreased by 5.2%14.3% to Rs.147,168Rs.184,678 million as atof March 31, 2018,2020, compared to Rs.139,868Rs.215,598 million as atof March 31, 2017, which also includes2019, offset by a favorable foreign currency translation of Rs.14,820Rs.3,674 million from GBP to Indian rupees. We hold cash and cash equivalents principally in Indian rupees, GBP, Euro, U.S. dollars and Chinese Renminbi. Out of cash and cash equivalents as atof March 31, 2018,2020, Jaguar Land Rover holdsheld the GBP equivalent of Rs.114,691Rs.120,717 million, which consists of surplus cash deposits for future use. As atof March 31, 2018,2020, we had short-term deposits of Rs.193,616Rs.148,295 million, as compared to Rs.218,928Rs.105,742 million as atof March 31, 2017, a decrease2019, an increase of 11.6%40.2%, reflecting a decreasean increase in the value of deposits invested over a term of 90 daysthree months or longer at Jaguar Land Rover.
As atof March 31, 2018,2020, we had finance receivables, including thenon-current portion (net of allowances for credit losses), of Rs.238,990Rs.310,791 million, as compared to Rs.175,633Rs. 336,247 million as atof March 31, 2017, an increase2019, a decrease of 36.1%7.6%, primarily due to growthsale of loan portfolio by way of direct assignment amounting to Rs. 53,039 million where no support is provided to the investors in the commercial vehicles market in India, leading to higher disbursalform of vehicle financing, improved collection, which has contributed to the increase in net finance receivables.credit enhancement. Gross finance receivables were Rs.250,708Rs.317,304 million as atof March 31, 2018,2020, as compared to Rs.211,608Rs.344,577 million as atof March 31, 2017.2019. Vehicle financing is integral to our automotive operations in India. For further detail see Item 4.B “Information on the Company—Business Overview—OurOverview of Automobile Operations—Tata Commercial Vehicles and other brand vehicles (including financing thereof)—Tata Passenger Vehicles—Tata Commercial Vehicles and other brand vehicles—Tata Passenger Vehicles—Vehicle Financing”.Financing.”
Trade receivables (net of allowance for doubtful receivables) were Rs.198,933Rs.111,727 million as atof March 31, 2018,2020, representing an increasea decrease of 41.3%41.2% over March 31, 2017.2019. The increase isdecrease was partially due tooffset by a favorable foreign currency translation of Rs.16,780Rs.2,317 million from GBP to Indian rupees. Trade receivables for Tata Commercial Vehicles and other brand vehicles have increasedTata Passenger Vehicles decreased by 58.2%52.1% to Rs.54,928Rs.31,024 million as atof March 31, 20182020 from Rs.34,719Rs.64,737 million as atof March 31, 2017,2019, primarily representing dues from government owned transport companies and someon account of our dealers.lower sales volume due to the COVID-19 pandemic. The trade receivables of Jaguar Land Rover were Rs.143,740Rs.75,864 million as atof March 31, 2018,2020, as compared to Rs.100,062Rs.120,636 million as atof March 31, 2017.2019. The past dues for more than six months (gross) have increased from Rs.15,514Rs.15,161 million as atof March 31, 20172019 to Rs.16,968Rs.17,437 million or 9.4%15.0% as atof March 31, 2018 and these2020. These mainly represent dues from government-owned transport undertakings and passenger vehiclePassenger Vehicle dealers, for which we are pursuing recovery.
As atof March 31, 2018,2020, inventories were at Rs.424,296Rs.374,528 million, compared to Rs.352,954Rs.390,016 million as atof March 31, 2017, an increase2019, a decrease of 20.2%, primarily due to the increase in volumes and new model launches.4.0%. The increasedecrease in finished goods inventory was Rs.56,382Rs.18,823 million to Rs.338,690from Rs.315,072 million as atof March 31, 2018, as compared2019 to Rs.282,308Rs.296,249 million as atof March 31, 2017,2020, mainly due to increasea decrease in inventory volumes higher actual costs for all models due to the weakening of GBPat both Tata Motors Limited India operations and EUR exchange rates as well as other overheads.Jaguar Land Rover business. This increase is also due todecrease was partially offset by a favorable currency translation of Rs.41,438Rs.10,430 million from GBP to Indian rupees. In terms of number of days to sales, finished goods represented 4342 inventory days in sales in Fiscal 2018,2020, as compared to 39 inventory days in Fiscal 2017.2019.
Our investments (current andnon-current investments) have decreased to Rs.154,214Rs.118,896 million as atof March 31, 20182020 from Rs.157,280Rs.104,358 million as atof March 31, 2017,2019, representing a decreasean increase of 2.0%13.9%. Our investments mainly comprise mutual fund and money market funds investments of Rs.143,602Rs.108,615 million as atof March 31, 2018,2020, as compared to Rs.150,662Rs. 89,663 million as atof March 31, 2017.2019. Investments attributable to Jaguar Land Rover were Rs.130,227Rs.95,147 million as atof March 31, 2018,2020, as compared to Rs.120,073Rs.83,678 million as atof March 31, 2017,2019, an increase of 8.5%13.7%. Tata Motors Limited on standalone basis has investments in mutual funds of Rs.15,170Rs.8,853 million as atof March 31, 2018,2020, as compared to Rs.24,009Rs.11,013 million as atof March 31, 2017.2019.
Our other assets (current andnon-current) increased by 14.5%19.6% to Rs.101,053Rs.112,599 million as atof March 31, 20182020 from Rs.88,251Rs.94,151 million as atof March 31, 2017.2019. The increase is mainly attributable to GST, VAT, other taxes recoverable, statutory deposits and dues from Government of India which increasedpension assets has been recognized for the surplus on the UK defined benefit pension scheme at Jaguar Land Rover consequent to Rs.67,246 million as at March 31, 2018, as compared with Rs.60,302 million as at March 31, 2017.changes in actuarial assumptions causing the defined benefit schemes to move to a net asset position.
Our other financial assets (current andnon-current) have increased to Rs.109,036Rs.114,838 million as atof March 31, 20182020 from Rs.61,295Rs.82,137 million as atof March 31, 2017.2019. Derivative financial instruments have increased by 24.2% to Rs.53,230 million as at March 31, 2018 from Rs.42,855 million as at March 31, 2017, representing(representing options and other hedging arrangements, mainly related to the Jaguar Land Rover business) increased to Rs. 46,825 million as of March 31, 2020 from Rs.21,467 million as of March 31, 2019, predominantly due to an increase in the volume of U.S. dollar forward foreign exchange contracts coupled with the strengthening of the U.S. dollarGBP compared to GBPEuro and therefore decreasing the increasing fair value of these derivative contracts. AdvancesMargin money and other receivables recoverable in cash havecollateral with banks and deposit with financial institutions increased to Rs.34,938Rs.13,001 million as at March 31, 20182020 from Rs.7,159Rs.9,190 million as at March 31, 2017. Further, restricted bank deposits have increased to Rs.5,629 million as at March 31, 2018 from Rs.2,956 million as at March 31, 2017.2019.
Income tax assets (both current andnon-current) decreasedincreased by 7.3%7.2% to Rs.11,086Rs.12,963 million as atof March 31, 20182020 from Rs.11,955Rs.12,089 million as atof March 31, 2017.2019.
Property, plantplants and equipment (net of depreciation) increased by 30.6%7.0% from Rs.651,199Rs.762,303 million as atof March 31, 20172019 to Rs.850,444Rs.815,394 million as atof March 31, 2018.2020. The increase is partly due to a favorable foreign currency translation of Rs.61,812Rs.18,503 million from GBP to Indian rupees. After adjusting for the foreign currency translation impact, an increase of Rs.54,356Rs. 34,587 million is mainly represented additions toward new product launchesincludes gross addition of Rs.52,550 million for Discovery Sport tooling’s and facilities and Rs.21,000 million for tooling’s for Defender and addition in building of Rs.28,220 million at Jaguar Land Rover’s newRover. This is partially offset by depreciation charged during the year for property, plant and equipment and impairment charges taken in Passenger Vehicle business at Nitra, Slovakia.Tata Motors Limited. We have adopted IFRS 16 with modified retrospective approach, with effect from April 1, 2019. We have recognized Rs.55,836 million as right of use assets and lease liability of Rs.57,798 million as on the date of transition i.e. April 1, 2019.
Goodwill as atof March 31, 2018 decreased by 82.7% to Rs.1,1652020 was Rs.7,771 million, as compared to Rs.6,733Rs.7,479 million as atof March 31, 2017.2019. The decrease isincrease was attributable to goodwillfavorable translation impact pertaining to software consultancy and the services cash generating unit, pertaining to one of our subsidiary, Tata Technologies Ltd. classified as held for sale.Limited.
Intangible assets increased by 19.9%14.5% from Rs.571,514Rs.580,556 million as atof March 31, 20172019 to Rs.685,168Rs.664,545 million as atof March 31, 2018,2020. This increase is mainly due to gross addition made to the tune of Rs.140,887 million includes major one being Defender 110, which mainly include product development projects, brandsis partially offset by amortization for the year of Rs.91,873 million and other intangible assets.impairment charges taken in Passenger Vehicle business at Tata Motors Limited. This increase is also due to a favorable foreign currency translation of Rs.49,875Rs.19,213 million from GBP to Indian rupees. As at March 31, 2018,2020, there were product development projects in processprogress amounting to Rs.227,196 million.Rs.245,261 million as compared to Rs.219,714 million as at March 31, 2019.
Carrying value of investments in equity-accounted investees increaseddecreased by 16.9%17.2% to Rs.53,853Rs.44,189 million as at March 31, 2018,2020, from Rs.46,060Rs.53,349 million as atof March 31, 2017.2019. The increase isvalue of investments decreased mainly due to profits in our joint venture Chery Jaguar Automotive Company Limited inloss for the year Fiscal 2017 of Rs.21,389 million.2020 as compared to profit for Fiscal 2019 from the China Joint Venture.
A deferred tax liabilityasset (net) of Rs.5,030Rs.15,286 million was recorded in our income statement and a deferred tax liabilityliabilities of Rs.47,367Rs.16,681 million in other comprehensive income, which mainly includes Rs.5,942liability of Rs.13,833 million (including currency translation) toward post-retirement benefits and Rs.36,268Rs.3,185 million toward cash flow hedges in Fiscal 2018.2020. The net deferred tax liabilityasset of Rs.20,193Rs.35,160 million was recorded as atof March 31, 20182020 as compared to an asseta liability of Rs.32,415Rs.36,601 million as atof March 31, 2017.2019.
Accounts payable (including acceptances) were Rs.853,615Rs.733,385 million as atof March 31, 2018,2020, as compared to Rs.658,544Rs.791,453 million as atof March 31, 2017, an increase2019, a decrease of 29.6%7.3%, reflecting an increasea decrease in operations and an unfavorable foreign currency translation of Rs.81,513Rs.19,433 million from GBP to Indian rupees.
Other financial liabilities (current andnon-current) were Rs.147,006Rs.203,067 million as atof March 31, 2018,2020, as compared to Rs.296,866Rs.133,158 million as atof March 31, 2017, net2019 (net of an unfavorable currency translation impact of Rs.26,106 million,Rs.3,944 million), reflecting liabilities toward vehicles sold under repurchase arrangements, derivative instruments, deferred payment liabilities,and interest accrued but not due on loans and lease liabilities. Lease liabilities increased to Rs.59,771 million as of March 31, 2020 from Rs.1,734 million due to adoption of IFRS 16 as on April 1, 2019. Liability toward vehicles sold under repurchasing arrangements increased to Rs.44,236Rs.44,834 million as atof March 31, 20182020 from Rs.28,284Rs.42,437 million as atof March 31, 2017,2019, due to an increase in the repurchase business at Jaguar Land Rover. However, derivativeDerivative financial instruments have decreased by 66.1% to Rs.86,579 million as at March 31, 2018 from Rs.255,175 million as at March 31, 2017, representing(representing options and other hedging arrangements, mainly related to Jaguar Land Rover, predominantly dueRover) increased by 1.8% to a decrease in the volumeRs.75,365 million as of U.S. dollar forward foreign exchange contracts coupled with the depreciationMarch 31, 2020 from Rs.74,050 million as of GBP compared to the U.S. dollar therefore increasing the fair value of these derivative contracts.March 31, 2019.
Provisions (current andnon-current) increased by 27.6%13.7% to Rs.188,912Rs.250,659 million as atof March 31, 20182020 from Rs.148,108Rs.220,516 million as atof March 31, 2017.2019. Provisions for warranties increased by Rs.39,03810.3% or Rs.17,959 million mainly on accountto Rs.192,972 million as of volume growthMarch 31, 2020, as compared to Rs.175,013 million as of March 31, 2019 at Jaguar Land Rover business, mainly due to higher level of warranty campaign and Tata Motors Ltd, offset bygoodwill warranty provisions (such as campaigns in China) including an unfavorable foreign currency translation impact of Rs.17,189Rs.259 million from GBP to Indian rupees. Provisionsrupees Furthermore, provisions for product warrantyresidual risk for Jaguar Land Rover increased by 32.5% to Rs.159,337Rs.16,372 million as at March 31, 2018, as2020, compared to Rs.120,299Rs.3,627 million as at March 31, 2017. Furthermore, provisions2019 due to deterioration in economic indicators and customer behavior in a number of key markets (including the United States, Canada, and Germany) places downward pressure on used vehicle prices for product liability increased to Rs.13,199 million as at March 31, 2018, compared to Rs.12,655 million as at March 31, 2017.all OEMs.
Other liabilities (current andnon-current) decreased by 26.8%30.7% to Rs.156,200Rs.137,825 million as atof March 31, 2018,2020, as compared to Rs.213,383Rs.198,928 million as atof March 31, 2017.2019. Employee benefit obligations have decreased by 65.8%94.4% to Rs.41,008Rs.3,416 million as atof March 31, 2018,2020, as compared to Rs.119,840Rs.61,101 million as atof March 31, 2017,2019, mainly pertaining to the Jaguar Land Rover pension plan, consequent to changes in actuarial assumptions change in plan and higher payments in Fiscal 2018. However, therecausing the defined benefit schemes to move to a net asset position.
Our total debt was increase in the deferred revenue by 45.8% to Rs.64,366Rs.1,187,997 million as atof March 31, 2018 from Rs.44,1302020, as compared to Rs.1,059,911 million as atof March 31, 2017, mainly due to the introduction2019, an increase of new service plans at Jaguar Land Rover. Further there was12.1%, including an unfavorable currency translation of Rs.26,106 million from GBP to Indian rupees.
Our total debt was Rs.888,707 million as at March 31, 2018, as compared to Rs.785,171 million as at March 31, 2017, an increase of 13.2%, unfavorable currency translation of Rs.41,562Rs.16,489 million from GBP to Indian rupees. Short-term debt (including the current portion of long-term debt) increased by 54.5%0.9% to Rs.277,287Rs.354,949 million as atof March 31, 2018,2020, as compared to Rs.179,527Rs.351,844 million as atof March 31, 2017.2019. Long-term debt (excluding the current portion) increased by 1.0%17.7% to Rs.611,419Rs.833,048 million as atof March 31, 20182020 from Rs.605,645Rs.708,067 million as atof March 31, 2017.2019. Long-term debt (including the current portion) increased by 11.5%19.3% to Rs.720,758Rs.1,024,372 million as atof March 31, 20182020 as compared to Rs.646,572Rs.858,408 million as atof March 31, 2017.2019. Please see Item 5.B “—“Operating and Financial Review and Prospects—Liquidity and Capital Resources—Long termPrincipal Sources of Funding Liquidity—Long-term funding” for further details.
As noted above, we are exploring strategic options to sell our stake in Tata Technologies. Further, as noted above, in May 2018, TML’s board approved the sale of TML’s defense business as well as TML’s shareholding in its wholly-owned subsidiary, TAL Manufacturing Solutions Ltd, to Tata Advanced Systems Limited, a TATA group company. Accordingly, the assets pertaining to Tata Technologies, TAL Manufacturing Solutions Ltd and TML’s defense business have been classified as held for sale of Rs.25,852 million as at March 31, 2018. Liabilities directly associated with assets classified as held for sale are Rs.10,702 million as at March 31, 2018.
Total equity was Rs.913,947Rs.598,554 million as atof March 31, 20182020 and Rs.538,842Rs.558,067 million as atof March 31, 2017,2019, respectively.
Equity attributable to shareholders of Tata Motors LtdLimited increased from Rs.534,197Rs.552,739 million as atof March 31, 20172019 to Rs.908,590Rs.590,320 million as atof March 31, 2018.
2020, mainly due to reduction in losses and additional shares issued for Fiscal 2020. Our other components of equity reflected a gain of Rs.5,730Rs.6,357 million as atof March 31, 2018,2020, as compared to a loss of Rs.262,909Rs.33,368 million as atof March 31, 2017.2019. We have accounted for an actuarial gains/loss (net) gain of Rs.39,094Rs.74,328 million in respect of pension obligations as atof March 31, 2018.2020. In Fiscal 2018,2020, a gain of Rs.167,957Rs.19,586 million on cash flow hedges (net), is recorded in comprehensive income. There was also a gain in currency translation differences of Rs.100,322Rs.23,057 million.
The ratioRatio of net debtNet Debt to shareholders’ equityShareholders’ Equity (total debt less cash and cash equivalents, mutual funds—current and liquid marketable securitiesmoney market funds divided by total shareholders’ equity) under IFRS decreasedincreased from 0.91.4 as atof March 31, 20172019 to 0.71.5 as atof March 31, 2018.2020. Details of the calculation of this ratio are set forth in Exhibit 7.1 to this annual report on Form20-F.
The following table sets forth our contingent liabilities as atof the dates indicated.
As at March 31, | As of March 31, | |||||||||||||||
2018 | 2017 | 2020 | 2019 | |||||||||||||
(Rs. in millions) | (Rs. in millions) | |||||||||||||||
Income tax | 3,031 | 949 | 6,028 | 5,410 | ||||||||||||
Excise duties | 16,717 | 14,851 | 6,658 | 10,240 | ||||||||||||
Sales tax | 10,962 | 10,521 | 9,634 | 12,841 | ||||||||||||
Other taxes and claims1 | 3,670 | 3,000 | 7,256 | 4,516 | ||||||||||||
Other contingencies | — | 419 | ||||||||||||||
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|
| |||||||||||||
Total | 34,380 | 29,740 | 29,576 | 33,007 | ||||||||||||
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1. | Other taxes and claims include claims by other revenue authorities and distributors. See Item 4.B |
Rs.106,001Rs.125,033 million and Rs.202,511Rs.120,968 million in Fiscal 20182020 and 2017,Fiscal 2019, respectively, represent executory contracts on capital accounts otherwise provided for.
Under the joint venture agreement for ourthe China Joint Venture, we are committed to contribute RMB3.5 billioncontributing RMB5,000 million of capital toward our share in theof capital ofin the joint venture. As atof March 31, 2018,2020, we havehad an outstanding commitment of approximately RMB625 million.RMB1,525 million (Rs. 16,200 million).
On an ongoing basis, our legal department reviews pending cases, claims by third parties against us and other contingencies. For the purposes of financial reporting, we periodically classify these matters into gain contingencies and loss contingencies. Gain contingencies are not recognized until the contingency has been resolved and amounts are received or receivable. For loss contingencies that are considered probable, an estimated loss is recorded as an accrual in financial statements and, if the matter is material, the estimated loss is disclosed. We do not consider any of these matters to be individually sufficiently material to warrant disclosure in our financial statements. Loss contingencies that are considered possible are not provided for in our financial statements, but if we consider such contingencies to be material, individually or in the aggregate, they are disclosed in our financial statements. Most loss contingencies are classified as possible unless clearly frivolous, in which case they are classified as remote and are monitored by our legal department on an ongoing basis for possible deterioration. We do not disclose remote matters in our financial statements. See Note 3337 of our audited consolidated financial statements included elsewhere in this annual report onForm 20-F for additional information regarding our material claims and contingencies.
Capital ExpenditureExpenditures
Capital expenditureexpenditures totaled Rs.415,103Rs.302,945 million, Rs.311,627Rs.342,236 million and Rs.306,233Rs.415,103 million during Fiscal 2018, 20172020, Fiscal 2019 and 2016,Fiscal 2018, respectively. Our automotive operations accounted for a majority of thissuch capital expenditure.expenditures. We currently plan to invest over Rs.461Rs.249 billion in Fiscal 20192021 in new products and technologies. Please see Item 5.B “—“Operating and Financial Review and Prospects—Liquidity and Capital Resources” of this annual report on Form20-F for additional details.
Our capital expenditures in India during Fiscal 20182020 related mostly to (i) the introduction of new products, such as the Tata Ace XL range,Altroz, Nexon EV and Tata Harrier facelift version 2020, (ii) the development of planned future products and technologies, and (iii) quality and reliability improvements aimed at reducing operating cost reductions.costs.
Capital expenditureexpenditures for Jaguar Land Rover mainly included expenditureexpenditures for the global launches of the newall-new Land Rover Defender, the refreshed Land Rover Discovery Range Rover Velar,Sport, the refreshed JaguarE-PACE XE and the JaguarI-PACE, the U.S. launch of therefreshed Jaguar XE,F-TYPE, product development costs for various other future products investment to produce theE-PACE andI-PACE under the contract manufacturing arrangement with Magna Steyr, construction costs for the new manufacturing plant in Nitra, Slovakia and other investments manufacturing and technology, including the production of the new 6 cylinder Ingenium 3.0-litre gasoline engine and the development and manufacture of next generation EDU’s at the EMC in ourWolverhampton, UK facilities. as well as to support battery assembly at Jaguar Land Rover’s plant located at Hams Hall, in North Warwickshire, UK.
Jaguar Land Rover opened a manufacturing plant for the China Joint Venture in Changshu, China in October 2014 and began manufacturing the Range Rover Evoque there shortly thereafter. Manufacture of the Land Rover Discovery Sport commenced in the third quarter of Fiscal 2016, followed by the long wheel basewheel-base Jaguar XFL in the first half of Fiscal 2017, which went on sale in September 2016 and the long wheel basewheel-base Jaguar XEL which went on sale in December 2017.2017 and more recently the Jaguar E-PACE which went on sale from the China Joint Venture in September 2018. Jaguar Land Rover and Chery invested approximately RMB 10.9RMB10.9 billion in the first phase of the project, which was used to establish the manufacturing plant, a research and development center and an engine production facility. Jaguar Land Rover invested approximately RMB 3.5RMB3.5 billion of equity capital in the China Joint Venture, representing 50% of the share capital and voting rights of the joint venture company. Investment to support phase two, which will add additionalAdditional manufacturing capacity will be supported by further capital injections from Jaguar Land Rover and Chery.has since been added. In Fiscal 2018, there has been no further capital infusion.2020, a GBP67 million equivalent dividend was received from the China Joint Venture which was immediately re-invested into the China Joint Venture.
We continue to focus on development of new products for our various markets. Through Jaguar Land Rover, we continue to make investments in new technologies through its research and development activities to develop products that meet the requirements of the premium market, including developing sustainable technologies to improve fuel economy and reduce carbon dioxide emissions, includingsuch as the application ofplug-in hybrids, PHEVs, now available in the Range Rover and Range Rover Sport with PHEV’s versions of the Range Rover Evoque and Land Rover Discovery Sport recently launched, and battery electric technologies, as applied in Jaguar Land Rover’s first battery electric vehicle and the JaguarI-PACE. Please refer to Item 4.B “—Business Overview—Government Regulations” of this annual report on Form20-F for further details.
We intend to continue investing in our business units and research and development over the next several years, including capital expenditures for our ongoing projects, new projects, product development programs, mergers, acquisitions and strategic alliances in order to build and expand our presence in the passenger vehiclePassenger Vehicle and commercial vehicleCommercial Vehicle categories.
Please see Item 4.A “Information on the Company—History and Development of the Company” for more information on some of our recently launched and anticipated new products.
We engaged in additional financing activities during Fiscal 2014 and Fiscal 2015 as described above in the introduction to this Item 5.B. “—5.B “Operating and Financial Review and Prospects—Liquidity and Capital Resources”.Resources.”
C.ResearchC. Research and Development, Patents and Licenses etc.
Please see Item 4.B “—“Information on the Company—Business Overview” for the information required by this item.
D.Trend Information.D. Trend Information
Please see Item 5.A “—“Operating and Financial Review and Prospects—Operating Results” for the information required by this item.
E.E. Off-balance Sheet Arrangements
NoneNone.
F.TabularF. Tabular Disclosure of Contractual Obligations
The following table summarizes payments due under significant contractual commitments as atof March 31, 2018:2020:
Payment due by period | Payment due by period | |||||||||||||||||||||||||||||||||||||||
(Rs. in millions) | (Rs. in millions) | |||||||||||||||||||||||||||||||||||||||
Type | Total | Less than 1 year | 1 to 3 years | 3 to 5 years | More than 5 years | Total | Less than 1 year | 1 to 3 years | 3 to 5 years | More than 5 years | ||||||||||||||||||||||||||||||
Long-term debts1 | 720,758 | 143,508 | 316,861 | 231,761 | 160,292 | 1,024,372 | 240,735 | 435,067 | 326,846 | 205,702 | ||||||||||||||||||||||||||||||
Capital lease | 690 | 222 | 166 | 97 | 205 | |||||||||||||||||||||||||||||||||||
Operating lease | 53,679 | 8,808 | 13,526 | 8,002 | 23,343 | |||||||||||||||||||||||||||||||||||
Lease Liabilities1 | 59,771 | 13,127 | 19,414 | 14,264 | 49,121 | |||||||||||||||||||||||||||||||||||
Capital commitments | 106,001 | 105,333 | 458 | 43 | 167 | 128,947 | 128,426 | 506 | 15 | — | ||||||||||||||||||||||||||||||
Purchase commitments | 132,226 | 44,803 | 50,212 | 17,488 | 19,723 | 191,656 | 63,014 | 61,158 | 30,899 | 36,585 | ||||||||||||||||||||||||||||||
Other liabilities | 302,516 | 196,511 | 65,179 | 23,510 | 17,316 | 281,121 | 193,197 | 81,892 | 14,795 | 4,176 | ||||||||||||||||||||||||||||||
Provisions | 188,912 | 79,459 | 82,709 | 20,097 | 6,647 | 250,659 | 103,461 | 105,214 | 24,767 | 17,211 | ||||||||||||||||||||||||||||||
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Total | 1,504,782 | 578,644 | 529,111 | 300,998 | 227,693 | 1,936,525 | 741,960 | 703,251 | 411,586 | 312,795 | ||||||||||||||||||||||||||||||
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1. | Includes interest. |
See the section entitled “Cautionary Note on Forward-looking Statements” at the beginning of this annual report onForm 20-F.
Item 6. | Directors, Senior Management and Employees |
A.DirectorsA. Directors and Senior Management
Board of Directors
Under ourthe Articles of Association, wethe Company cannot have lessfewer than three or more than fifteen directors. At present, our boardDirectors. During Fiscal 2020, the Board comprised of directors comprises of nine directors. Our directorssix Directors. The Company’s Directors are not required to hold any of our Shares by way of qualification.
Under ourthe Articles of Association, the board of directors of Tata Steel, which owns, as of June 30, 2018, 0.0034%2020, 0.0032% of our Ordinary Shares and none of ourthe ‘A’ Ordinary Shares of the Company, has the right to nominate one directorDirector to our board of directors.the Board.
In addition, ourthe Articles of Association provide that (a) our debenture holders of the Company have the right to nominate one director, or the Debenture Director (the “Debenture Director”), if the trust deeds relating to outstanding debentures require the holders to nominate a directorDirector and (b) financial institutions in India have the right to nominate two directors, orDirectors (the “Financial Institutions Directors”) to the Financial Institutions Directors, to our board of directorsBoard pursuant to the terms of the relevant loan agreements. Currently, there isare no Debenture DirectorDirectors or Financial Institutions DirectorDirectors on our board of directorsthe Board and there are no relevant debentures or loan agreements outstanding that would empower financial institutions in India to nominate directorsDirectors to our board of directors.the Board.
As atof June 30, 2018, our directors2020, the Directors and senior management of the Company, in their sole and joint names, beneficially held an aggregate of 20,5002,20,000 Ordinary Shares (approximately 0.0007%0.007% of our issued share capital) and Nilno ‘A’ Ordinary Shares.Shares of the Company.
The following table provides information about our directors,the Directors, executive officers and Group Chief Financial Officer of the Company, as atof June 30, 2018:2020:
Name | Position | Date of birth/ business address1 | Year appointed as Director, Executive Officer or Chief Financial Officer | Expiration of term | Ordinary Shares beneficially owned as at June 30, 20182 | ‘A’ Ordinary Shares beneficially owned as at June 30, 2018 2 | ||||||||||||
Mr. N. Chandrasekaran 3 | Non-Executive Chairman | June 2, 1963 | 2017 | 2033 | — | — | ||||||||||||
Dr. R. A. Mashelkar4 | Independent Director | January 1, 1943 | 2007 | 2017 | — | — | ||||||||||||
Mr. Nasser Munjee | Independent Director | November 18, 1952 | 2008 | 2019 | — | — | ||||||||||||
Mr. V. K. Jairath | Independent Director | December 27, 1958 | 2009 | 2019 | — | — | ||||||||||||
Ms. Falguni Nayar | Independent Director | February 19, 1963 | 2013 | 2019 | — | — | ||||||||||||
Mr. O. P. Bhatt5 | Independent Director | March 7, 1951 | 2017 | 2022 | — | — | ||||||||||||
Mr. Subodh Bhargava 6 | Independent Director | March 30, 1942 | 2008 | 2017 | — | — | ||||||||||||
Ms. Hanne Sorensen7 | Independent Director | September 18, 1965 | 2018 | 2023 | — | — | ||||||||||||
Dr. Ralf Speth | Non-Executive Director | September 9, 1955 | 2010 | 2020 | — | — | ||||||||||||
Mr. Guenter Butschek8 | CEO & Managing Director | October 21, 1960 | 2016 | 2021 | — | — | ||||||||||||
Mr. C. Ramakrishnan9 | Group Chief Financial Officer | June 27, 1955 | 2007 | 2017 | 5,274 | 3,038 | ||||||||||||
Mr. P. B. Balaji10 | Group Chief Financial Officer | September 9, 1969 | 2017 | 2034 | 20,000 | — | ||||||||||||
Mr. Ravindra Pisharody 11 | Executive Director (Commercial Vehicles) | November 24, 1955 | 2012 | 2017 | — | — | ||||||||||||
Mr. S. B. Borwankar12 | Executive Director & Chief Operating Officer | July 15, 1952 | 2012 | 2019 | 500 | — |
Name | Position | Date of birth/ | Year appointed as Director, executive officer or Group Chief Financial Officer | Expiration of term | Ordinary Shares beneficially owned as of June 30, 2020 2 | ‘A’ Ordinary Shares beneficially owned as of June 30, 2020 2 | ||||||||||||||
Mr. N. Chandrasekaran | Non-Executive Chairman | June 2, 1963 | 2017 | 2033 | 2,00,000 | — | ||||||||||||||
Mr. O. P. Bhatt | Independent Director | March 7, 1951 | 2017 | 2022 | — | — | ||||||||||||||
Ms. Hanne Sorensen | Independent Director | September 18, 1965 | 2018 | 2023 | — | — | ||||||||||||||
Ms. Vedika | Independent Director | December 19, 1967 | 2019 | 2024 | — | — | ||||||||||||||
Sir. Ralf Speth3 | Non-Executive Director | September 9, 1955 | 2010 | 2020 | — | — | ||||||||||||||
Mr. Guenter Butschek | CEO and Managing Director | October 21, 1960 | 2016 | 2021 | — | — | ||||||||||||||
Mr. P. B. Balaji | Group Chief Financial Officer | September 9, 1969 | 2017 | 2029 | 20,000 | — |
1. | The business address of each of |
2. | Each of |
3. |
Subject to retirement by rotation and eligible forre-election by the members at the |
Biographies
Set forth below is a short biography of each of our directorsthe Company’s Directors and our Group Chief Financial Officer:
Mr. Natarajan Chandrasekaran (Chairman)
Mr. Natarajan Chandrasekaran is the Chairman of the Boardboard of Tata Sons Private Limited, the holding company and promoter of more than 100 Tata operating companies with aggregate annual revenues of more than US$100 billion, and a combined market capitalization exceeding US$120 billion at the start of 2017. He joined the board of Tata Sons in October 2016 and was appointed Chairman in January 2017.
Mr. Chandrasekaran’s appointment as Chairman of the Boardboard of Tata Sons is preceded by a30-year career at Tata Consultancy Services (TCS).TCS. He attended the Regional Engineering College, Trichy, Tamil Nadu, where he completed a Mastersmaster’s degree in Computer Applications before joining TCS in 1987. Under his leadership, TCS implemented a culture of customer focus and innovation, and consolidated its position as the largest private sector employer in India. TCS generated total revenues of US$16.5 billion in Fiscal 2016. It was ranked among the “Big 4” most valuable IT services brands worldwide and as one of the World’s Most Innovative Companies by Forbes, and recognized as a Global Top Employer by the Top Employers Institute across 24 countries.
Mr. Chandrasekaran was also appointed as a Directordirector on the Boardboard of India’s central bank, the Reserve Bank of India, in 2016.from 2016 till March, 3 2020. He also serves on the Boardboard of Directorsdirectors of Tata Steel Limited, TCS Foundation, the Indian Hotels Company Limited, the Tata Power Company Limited, Tata Global BeveragesConsumer Products Limited, , Jaguar Land Rover Automotive Plc, Tata Limited and TCS. He is also the Chairman of the Society and Board of Governor of the Indian Institute of Management—Lucknow, a Membermember on the Court of the Indian Institute of Science – Bangalore, International Advisory Council of the Bocconi University - Milan and on the International Advisory Board of the Singapore Economic Development Board.
Mr. Chandrasekaran’s business leadership has been recognized by several corporate and community organizations, and he has received numerous awards, including Business Leader of the Year at the ET Awards for Corporate Excellence 2016; CNBC TV 18 – ‘Indian��Indian Business Icon’ 2014;CNN-IBN Indian of the Year 2014 (business category); Best CEO‘Best CEO’ for 2013 and 2014 by Business Today; and Best CEO‘Best CEO’ 2010-15 Institutional Investor’s AnnualAll-Asia Executive Team rankings.
Mr. Chandrasekaran was appointed as aNon-Executive Board Chairman and Director of Tata Motors Limited with effect from January 17, 2017.
Dr. R. A. Mashelkar
Dr. Mashelkar is an eminent chemical engineering scientist, who retired from the post of Director General of the Council of Scientific and Industrial Research and is the President of the Indian National Science Academy, the National Innovation Foundation, the Institution of Chemical Engineers, United Kingdom and the Global Research Alliance. The President of India has honored Dr. Mashelkar with the Padma Shri (1991), the Padma Bhushan (2000) and the Padma Vibhushan (2014). Dr. Mashelkar holds a Ph.D. in Chemical Engineering from Bombay University.
Dr. Mashelkar is Chairman of the Board of Reliance GeneMedix Plc and holds directorships at Reliance Industries Limited, Thermax Ltd., Piramal Enterprises Limited, Invictus Oncology Pvt. Limited, Sakal Papers Pvt. Limited, International Longevity Centre India, Gharda Scientific Research Foundation, Gharda Medical and Advanced Technologies Foundation, Vyome Bioscience Pvt. Ltd. and Access Health International Inc.
Dr. Mashelkar was appointed as an Independent Director of Tata Motors Limited with effect from August 28, 2007 and retired with effect from December 31, 2017, upon attaining the age of 75 years in accordance with the Company’s Governance Guidelines on Board Effectiveness.
Mr. Nasser Munjee
Mr. Munjee served with HDFC Bank Limited for over 20 years in various positions, including as its Executive Director. He was the Managing Director of Infrastructure Development Finance Company Ltd. until March 2004. Presently, he is the Chairman of Development Credit Bank (since June 2005) and is also a member of the board of directors of various other companies, including ABB India Limited, Ambuja Cements Limited, Cummins India Limited, HDFC Limited, Jaguar Land Rover Automotive plc, Tata Chemicals Limited, Tata Chemicals North America Inc, Tata Chemicals Europe Holdings Pte. Ltd., TMFL, Aga Khan Foundation and Astarda Limited, as well as variousnon-profit organizations.
Mr. Munjee holds a bachelor’s degree and a master’s degree from the London School of Economics.
He was appointed as an independent director of Tata Motors Limited with effect from June 27, 2008.
Mr. V. K. Jairath
Mr. Jairath served as the Principal Secretary (Industries) of the State Government of Maharashtra and has over 25 years of experience in public administration, rural development, poverty alleviation, infrastructure, finance, industry, urban development, environmental management and a touch of the private sector occupying various important positions in the Government of India and the State Government of Maharashtra. Mr. Jairath holds directorships in Kirloskar Oil Engines Limited, Concorde Motors (India) Limited, TML Distribution Co. Limited, Wockhardt Limited, Kirloskar Industries Limited, the Bombay Dyeing & Manufacturing Co. Limited, Go Airlines (India) Limited and TMFSL.
Mr. Jairath holds a Bachelor of Arts Degree in Public Administration and Bachelor of Laws Degree, both from the Punjab University, a Masters in Economics from the University of Manchester and joined the Indian Administrative Service in 1982.
He was appointed as an independent director of Tata Motors Limited with effect from March 31, 2009.
Ms. Falguni Nayar
Ms. Nayar has spent over 19 years with Kotak Mahindra Bank, for the last six years as Managing Director and CEO of Kotak Investment Bank. She is the founder and CEO of Nykaa.com, an online shopping website for beauty and wellness products which also offers an online magazine, expert advice and virtual makeover tools. She is a member of the board of directors of several other Indian companies, including ACC Limited, Dabur India Limited, Kotak Securities Limited, Tata Technologies Limited, Endurance Technologies Limited and Aviva Life Insurance Company India Limited. She is also the promoter and director of Heritage View Developers Pvt. Limited, FSNE-Commerce Venture Pvt. Ltd., FSN Brands Marketing Pvt. Limited, NykaaE-Retail Pvt. Limited, Valleyview Probuild Pvt. Ltd., Sea View Probuild Pvt. Ltd., Sealink View Probuild Pvt. Ltd. and Golf Land Developers Pvt. Limited.
She was recognized as a “Top Business Woman” by Business Today in 2009 and 2011 and has received the FICCI Ladies Organization award for “Top Woman Achiever” in the field of banking in 2008. She holds a bachelor of commerce degree from Mumbai University and a PGDM from the Indian Institute of Management, Ahmedabad.
She was appointed as an independent director of Tata Motors Limited with effect from May 29, 2013.
Mr. Om Prakash Bhatt
Mr. Bhatt is a graduate in Science and a post graduate in English Literature (Gold Medalist). From July 1, 2006 to March 31, 2011, Mr. Bhatt was the Chairman, State Bank Group, which includes State Bank of India, India’s largest commercial bank; five associate banks in India; five overseas banks; SBI Life, the country’s largest private life insurer; SBI Capital Markets, India’s leading investment bank; SBI Fund Management; and other subsidiaries spanning diverse activities; from general insurance to custodial services. Under his leadership, SBI rose on the global list rankings of Fortune 500. He serves as a Non-Executive Chairman on the board of directors of Greenco Energy Holdings and as an Independent Directorindependent director on several Boardsboards including Standard Chartered Bank plc, Tata Consultancy Services Limited, Tata Steel Limited Greenco Energy Holdings and Hindustan Unilever Limited.
Mr. Bhatt has also served as Chairman of Indian Banks’ Association, the apex body of Indian banks. He was appointed as the government’s nominee on theIndia-USIndia-U.S. CEO Forum, Indo-French CEO Forum and Indo-Russia CEO Forum, forging links with a cross section of the world’s business leaders.
He was appointed as an independent directorIndependent Director of Tata Motors Limited with effect from May 9, 2017.
Ms. Hanne Sorensen
Ms. Hanne Birgitte Sorensen is a Danish national and holds an MSc in Economics and Management from the University of Aarhus. During the period1994-16, she was engaged in various roles within the A.P.Moller – Maersk A/S Group in Denmark, a conglomerate comprising of eight main companies, primarily specializing in the energy and transportation segment, inter-aliainter alia designated:
From2014-16 as the CEO of Damco, the Hague, Netherlands, a Supply Chain Management company specializing in retail, lifestyle, FMCG, technology and chemicals;
From2012-13 as the CEO of Maersk Tankers, Copenhagen, the world’s largest product tanker company; and
From2008-12 as the Senior VPVice President and Chief Commercial Officer of Maersk Line, Copenhagen, the world’s largest container shipping company.
Ms. Sorensen is presently on the Boardboard of Directorsdirectors and Committeescommittees thereof of Delhivery Private Limited, LafargeholcimLafargeHolcim Limited, Ferrovial S.A., Jaguar Land Rover Automotive Plc, Tata Consultancy Services Limited, Sulzer Limited, Jaguar Land Rover Holdings Limited and SulzerJaguar Land Rover Limited.
She was appointed as an Additional and Independent Director of Tata Motors Limited with effect from January 3, 2018.
Dr.Ms. Vedika Bhandarkar
Ms. Vedika Bhandarkar brings more than 25 years of experience, building teams and businesses with Indian and international financial institutions.
Since 2016, Ms. Bhandarkar has been engaged as a senior leader in India with Water.org a not-for-profit organization, overseeing the organization’s strategy, growth and water and sanitation program expansion in the country. She was Vice Chairman and Managing Director at Credit Suisse Securities (India) Private Limited from 2010 to 2015, and also a part of the 7 member Credit Suisse Asia Investment Banking Department Operating Committee and the Global IBD Management Committee. From 1998 to 2010, she served as the Managing Director and Head of Investment Banking at J.P. Morgan in India.
Ms. Bhandarkar began her career with ICICI Bank in 1989 where she worked at ISec, a joint venture between ICICI and J.P. Morgan. She is a board member of the Jai Vakeel Foundation, an institution focused on children and adults with intellectual disability. She also serves as a part time member of the Banks Board Bureau.
Ms. Bhandarkar holds an MBA from the Indian Institute of Management, Ahmedabad and B.Sc from the MS University. Ms. Bhandarkar is presently on the board of directors and committees thereof of Tata Sky Limited, Tata Investment Corporation Limited, TMF Holdings Limited, Tata Motors Finance Limited, Tata Motors Finance Solutions Limited, and Foundation of Accessible Aquanir and Sanitation.
She was appointed as an Independent Director of Tata Motors Limited with effect from June 26, 2019.
Sir Ralf Speth
Dr.Sir Speth was appointed to the post of Chief Executive Officer atCEO of Jaguar Land Rover Automotive plcPlc on February 18, 2010. He is a member of the board of directors of Jaguar Land Rover Automotive plc.Plc. Dr. Speth earned a degree in Engineering from Rosenheim University and holds a Doctorate in Mechanical Engineering and Business Administration from Warwick University. He has also been awarded a Fellowship of the Royal Academy of Engineering.
Having served BMW for 20 years, Dr. Speth joined Ford Motor Company’s Premier Automotive Group and served as Director of Production, Quality and Product Planning. He holds directorship in Tata Sons Private Limited, Jaguar Land Rover Limited, Jaguar Land Rover Holdings Limited, Jaguar Racing Limited, Spark44 (JV) Limited, ACEA, Bladon Jets, Confederation of British Industry, British American Business and the Society of Motor Manufacturers and Traders Limited and Jaguar Land Rover Ventures Limited.
He was appointed as anon-executiveNon-Executive andnon-independentNon-Independent directorDirector of Tata Motors Limited with effect from November 10, 2010. Sir Speth’s valuable contribution to the Company is greatly appreciated. It was announced on July 28, 2020 that, with effect from September 10, 2020, Mr. Thierry Bolloré will succeed Sir Speth as the CEO of Jaguar Land Rover Automotive Plc. Mr. Thierry Bolloré will be appointed as a Non-Executive Director of the Company.
Mr. Guenter Butschek
Mr. Butschek was appointed as our Chief Executive Officer &the Company’s CEO and Managing Director with effect from February 15, 2016. Prior to joining our company,the Company, Mr. Butschek served as Chief Operating Officer of the Airbus Group and was a member of the Group Executive Committee of the Airbus Group. Prior to Airbus, Mr. Butschek worked at Daimler AG, where he gained more than 25 years of experience in international automotive management and held positions in various departments, including production, industrialization and procurement. He has extensive global experience, in growing organizations and in developing new markets.
Mr. Butschek graduated from the University of Cooperative Education Stuttgart, Germany with a degree in business administration and economics. Mr. Butschek also serves on the Boardsboards of some of Tata Motors Limited’s subsidiaries and affiliates, namely, TMF Holdings Limited, Tata Technologies Limited, TDCV,Tata Daewoo Commercial Vehicles Limited, Tata Motors European Technical Centre Plc, Tata Hitachi Construction Machinery Company Private Limited and Tata Cummins Pvt. Limited.
Mr. Ravindra Pisharody
Mr. Pisharody has been the Executive Director (Commercial Vehicles) since June 21, 2012, having joined Tata Motors Limited as Vice President, Commercial Vehicles (Sales & Marketing), in 2007. He was also on the Board of several of Tata Motors Limited’s subsidiaries and affiliates. Before joining Tata Motors Limited, he worked for Castrol Ltd., a subsidiary of BP plc, and for Philips India, a subsidiary of Koninklijke Philips N.V., in various roles. Mr. Pisharody is an alumnus of the Indian Institute of Technology, Kharagpur and the Indian Institute of Management, Kolkata.
Mr. Pisharody, vide letter dated June 5, 2017, had tendered his resignation as Executive Director (Commercial Vehicles) of Tata Motors Limited, but continued to serve his term of office upto September 30, 2017 to ensure seamless transition in business operations.
Mr. Satish B. Borwankar
Mr. Borwankar started his career with Tata Motors Limited in 1974, as a Graduate Engineer Trainee and was appointed as an Executive Director (Quality) on June 21, 2012. He is currently the Executive Director and Chief Operating Officer with effect from June 5, 2017. He has been reappointed, subject to shareholders approval for a period from July 16, 2017 to July 15, 2019. He has worked in various executive positions for overseeing and implementing product development, manufacturing operations and quality control initiatives of the Commercial Vehicles Business Unit. He is also on the board of directors of certain of our subsidiaries, including Tata Cummins Private Limited, TML Drivelines Limited, TAL Manufacturing Solutions Limited, Tata Motors (Thailand) Limited and TDCV. He has played a significant role in establishing our greenfield projects. Mr. Borwankar is a mechanical engineer who studied at the Indian Institute of Technology, Kanpur.
Mr. Borwankar was designated as the Executive Director & Chief Operating Officer (COO) of Tata Motors Limited with effect from June 5, 2017. The board of directors has approved thisre-appointment for the period July 16, 2017 up to July 15, 2019, subject to shareholders’ approval.
Mr. P. B. Balaji (Group Chief Financial Officer)
Mr. Pathamadai Balachandran Balaji was appointed as our Group Chief Financial Officer with effect from November 14, 2017. As a result of this appointment, the chief financial officers of our subsidiaries report directly to Mr. Balaji. Prior to his appointment at Tata Motors Limited, Mr. Balaji was the Executive Director Finance & IT and CFO of Hindustan Unilever Limited (HUL)(“HUL”) and a Membermember of its Stakeholders’ Relationship, Corporate Social Responsibility and Risk Management Committees. Mr. Balaji joined HUL as a Management Trainee in May 1993 and has worked in number of roles in finance and supply chain over a period of 20 years.
Mr. Balaji was the Vice President, Finance for Unilever America, Supply Chain, based out of Switzerland, responsible for financial aspects of an 18 billionthat supply chain. Prior to that, he was the Group Chief Accountant of Unilever worldwide based atin London. Before moving to London, Mr. Balaji has served as the Vice President, Finance for the Home and Personal Care business in India and earlier as the Vice President, Treasury for the AAR region based out of Singapore.
Mr. Balaji is a Mechanical Engineer from IIT Chennai and has a PGDM from IIM Kolkata. Mr. Balaji was awarded the Best CFO in FMCG and Best CFO for “Creating Shared Value” by YES Bank – BW Business World as also All Asia 2017 award for Best CFO in Consumer by Institutional Investor. Mr. Balaji also serves on the Boardsboards of some of Tata Motors Limited’s subsidiaries, namely, Jaguar land Rover Automotive Plc, TMFL, TMFSL,Tata Motors Finance Limited, Tata Motors Finance Solutions Limited, TMF Holdings Limited and Tata Technologies Limited.
Mr. C. Ramakrishnan (Group Chief Financial Officer)
Mr. Ramakrishnan started his career with Tata Motors Limited in 1980. As Chief Financial Officer, he is responsible for our Finance, Accounts, Taxation, Business Planning, Investor Relations, Treasury, Customer Relationship Management & Data Management System and IT divisions.
Before becoming Chief Financial Officer of Tata Motors Limited, Mr. Ramakrishnan was with the Tata Group Chairman’s Office for seven years. Mr. Ramakrishnan was also on the Boards of Directors of several of Tata Motors Limited’s subsidiaries.
Mr. Ramakrishnan is a chartered accountant and a cost accountant. Mr. Ramakrishnan was appointed as Chief Financial Officer of Tata Motors Limited with effect from September 18, 2007. With effect from July 1, 2015, Mr. Ramakrishnan was appointed as Tata Motors’ Group Chief Financial Officer and continued as the Group Chief Financial Officer of Tata Motors Limited upto September 30, 2017.
There is no family relationship between any of our directors, including the CEO and Managing Director, the Executive Directors and the Group Chief Financial Officer. None of our directors or senior management are selected pursuant to any arrangement or understanding with any of our major shareholders, customers, suppliers or others.
The following table provides the annual compensation paid/accrued to our directors, Executive Officersthe Company’s Directors, executive officers and Group Chief Financial Officer in Fiscal 2018.2020. For full-time directors,Directors, the retirement benefits exclude the provision for encashable leave, and gratuity as a separate actuarial valuation is not available. We haveThe Company has not issued any stock options to our directors/employees.its Directors.
Name | Position | Remuneration1 (in Rs.) | ||||
Mr. | Non-Executive Chairman | |||||
| Independent Director | |||||
Mr. | Independent Director | |||||
| Independent Director | |||||
| ||||||
Mr. Om Prakash Bhatt6 | Independent Director | |||||
Ms. Hanne Sorensen711 | Independent Director | |||||
| Independent Director | 3,970,000 | ||||
Sir Ralf Speth | Non-Executive Director | |||||
Mr. Guenter Butschek | CEO | |||||
Mr. | ||||||
| ||||||
| ||||||
Mr. Satish Borwankar11 12 | Executive Director |
1. | Includes salary, allowance, taxable value of perquisites, commission and our contribution to provident fund and superannuation fund for the CEO and Managing Director, Executive Directors and the Group Chief Financial Officer, and sitting |
2. |
|
3. | The remuneration of Mr. Munjee comprises sitting fees of Rs.480,000 from the Company and includes remuneration of |
4. | The remuneration of Mr. Jairath comprises sitting fees of Rs.460,000 from the Company and includes directors’ fees of |
5. | The remuneration of Ms. Nayar |
6. |
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7. |
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8. |
|
9. | Sir Ralf Speth’s remuneration is paid by Jaguar Land Rover Automotive |
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11. |
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12. |
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13. |
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14. | Remuneration for the year ended March 31, 2020 includes Rs. 146.2 million of managerial remuneration, which is subject to |
15. | Mr Nasser Munjee, Mr Vinesh Kumar Jairath and Ms Falguni Nayar completed their tenure as Independent Directors of the Company on July 30, 2019. |
The CEO and Managing DirectorNon-Executive as well as full-time Directors of the executive directorsCompany are alsonot eligible to receive special retirement benefits atemployee stock options and have accordingly not participated in the discretion of our board of directors, which include a monthly pension,ex-gratia and medical benefits.
At the 71st Annual General Meetingemployee stock option scheme of the Company heldCompany.
Additional information required by this item is set forth in Item 6.E “Share ownership” of this annual report on August 9, 2016, our shareholders approved payment of the minimum remuneration to Mr. Pisharody, Mr. Borwankar and Mr. Butschek as per their agreements in view of inadequacy of profits for Fiscal 2016, 2017 and 2018.Form 20-F.
The Company has received approval from the Shareholders and the Central Government for appointment and payment of remuneration to Mr. Guenter Butschek, a foreign national, who is functioning in a professional capacity as its CEO and Managing Director for a period of 5 years from February 15, 2016, in accordance with Section 197 read together with Schedule V of the Act.
During the year under review, the Company did not have an Employee Stock Option Scheme for any of its employees or directors.
Our boardThe Board is comprised of directors’ size, comprises of nine directors,six Directors for Fiscal 2020, which is commensurate with the size of our companythe Company and consistent with the board size of other companies in the industry. Our board of directorsThe Board consists of executive, non-executiveExecutive, Non-Executive and independent directors.Independent Directors. Appointments of new directors are recommended by the Nomination and Remuneration Committee for consideration by the full boardBoard and the shareholders of directors and our shareholdersthe Company at each year’s annual general meeting.
The roles of the Chairman and Chief Executive Officer &CEO and Managing Director are distinct and separate with appropriate powers being delegated to the Managing Director to perform the day-to-day activities of managing our company.the Company. In the Tata Motors Group, we have 2two CEO’s, namely the CEO & MDand Managing Director of Tata Motors Limited, whose scope includes managing the Tata Motors Group, excludingbut not the Jaguar Land Rover (JLR) Group, and the CEO andof Jaguar Land Rover Automotive Plc, who is also a Non-Executive Director of JLR,the Company and whose scope covers managing JLR.Jaguar Land Rover. The respective Boardsboards of the Company and Jaguar Land Rover Automotive Plc have delegated the day-to-day running of the Groupgroup to the 2two CEO’s within certain limits, above which matters must be escalated to the Boardboard for determination.
Our board of directors,The Board, along with its committees, provides leadership and guidance to our management, in particular with respect to corporate governance, business strategies and growth plans, the identification of risks and their mitigation strategies, entry into new businesses, product launches, demand fulfillment and capital expenditure requirements, and the review of our plans and targets.
Our board of directorsThe Board has delegated powers to its committees through specific written and stated terms of reference and scope, and oversees the functioning operations of the committees through various circulars and minutes. The committees operate as empowered agents of the board of directorsBoard in accordance with their respective charters and/or terms of reference.
Board Effectiveness Evaluation
Pursuant to provisions of the Listing Regulations and the Companies Act, our board of directorsthe Board is required to carry out an annual evaluation of its own performance, and also the performance of its committees and individual directors.Directors, as well as an evaluation of the Independent Directors by the entire Board, in the absence of Independent Directors, of their performance and fulfillment of the independence criteria prescribed under the Act and the Listing Regulations. The performance of the board of directorsBoard and individual directorsDirectors is evaluated by our board of directorsthe Board and involves input from all the directors.Directors. The performance of the committees is evaluated by our board of directorsthe Board and involves input from committee members. In Fiscal 2018,2019, the Nomination and Remuneration Committee reviewed the performance of the individual directors.Directors. Also, a separate meeting of independent directorsIndependent Directors was held to review the performance ofnon-independentNon-Independent directors,Directors, the performance of our board of directorsthe Board as a whole and the performance of the chairperson of Tata Motors Limited; the independent directorsLimited. The Independent Directors took into account the views of the executive directorsExecutive Directors andnon-executiveNon-Executive directors.Directors. Subsequently, our board of directorsthe Board held a meeting to discuss the performance of our board of directors,the Board, its committees and the individual directors.Individual Directors as well as evaluate the performance and fulfillment of the independence criteria by the Independent Directors, as prescribed under the Act and the Listing Regulations.
The criteria for the performance evaluation of our board of directorsthe Board included factors such as our board of directors’Directors’ composition and structure and the effectiveness of our board of directors’the Board’s processes, information flow and functioning. The criteria for performance evaluation of the committees included factors such as the composition of the committees and the effectiveness of committee meetings. The criteria for performance evaluation of the individual directorsDirectors included factors such as the director’sDirector’s contribution to our board of directorsthe Board and committee meetings, including preparation on the issues to be discussed, meaningful and constructive contribution and input during meetings. In addition, the chairperson was evaluated on the key aspects of his role.
WeThe Company also conducted the familiarization programs for independent directors,Independent Directors in order to apprise the directorsDirectors about their roles, rights and responsibilities in ourthe Company, the nature of the industry in which we operate, ourit operates, the Company’s business model and related matters. The details of the program for familiarization of the independent directorsIndependent Directors are uploaded on the website of ourthe Company athttp://investors.tatamotors.com/pdf/familiarisation-programme-independentdirectors.pdf, which www.tatamotors.com. This website does not form part of this annual report on Form20-F20-F.
Our board of directorsThe Board also undertakes ourthe Company’s subsidiaries’ oversight functions through review of their performance against their set targets, advises them on growth plans and, where necessary, gives strategic guidelines. While all of ourthe Company’s subsidiaries have their respective boards of directors, and their management is responsible for their performance, our board of directorsthe Board oversees the performance of ourthe Company’s subsidiaries on a quarterly basis in order to exercise oversight over the performance and functioning of ourits subsidiaries. InAt a specific annual meeting of our Audit Committee,the Company’s audit committee (the “Audit Committee”), the chief executive officers and the chief financial officers of ourthe Company’s subsidiaries make presentations on significant issues in audit, internal control and risk management in ourthe Company’s subsidiaries. At least one independent directorIndependent Director of the Company is also a director on the Boardboard of Directorsdirectors of our unlisted material subsidiary.subsidiaries. The Audit Committee also reviews the financial statements, in particular,especially the investments made by the unlisted subsidiary companies.subsidiaries. The meeting minutes of the meetings of ourCompany’s subsidiaries are also placed before our board of directors andBoard, with attention is drawn to significant transactions and arrangements entered into by ourthe Company’s subsidiaries.
Please see Item 6.A “—“Directors, Senior Management and Employees—Directors and Senior Management” for details regarding the terms of office for our board of directors.the Board.
Committees
Audit Committee
The Audit Committee comprises four independent directors:three Independent Directors: Ms Vedika Bhandarkar (as Chairperson), Ms. Hanne Sorensen and Mr. Munjee (as Chairman), Mr. Jairath, Ms. Nayar and Mr O. P. Bhatt. Dr. Mashelkar a Member of the Committee retired in accordance with the Company’s Governance Guidelines on Board Effectiveness on December 31, 2017, upon attaining the age of 75 years. Mr Bhatt was appointed as a member of the Committee with effect from January 16, 2018. Ms Sorensen is a permanent invitee for all Audit Committee meetings with effect from January 16, 2018. The Audit Committee functions according to its Chartercharter that defines its composition, authority, responsibility and reporting functions in accordance with Section 177 of the Act, Regulation 18(3) read with Part C of Schedule II of the SEBI Listing Regulations and applicable U.S. regulations, and is reviewed from time to time. Provided below is the gist of the responsibilities of the Audit Committee. The full Chartercharter is available on ourthe Company’s website athttp://investors.tatamotors.com/pdf/audit_committee_charter.pdf which www.tatamotors.com. This website does not form part of this annual report on Form20-F. Provided below is a high level summary of the responsibilities of the Audit Committee:
Review with |
Board, focusing primarily on:
The financial reporting process and the |
Reports on the management’s discussion and |
Major accounting entries involving estimates based on an exercise of |
Compliance with accounting standards and |
Review of the |
Scrutiny of inter-corporate loans and |
Disclosures made under the CEO and |
Approval or any subsequent modification of transactions with related |
Review, alongside the management, our external auditors and internal auditors, identify weakness or deficiencies and recommend improvements to the management;
Recommend the appointment and/or removal of the statutory auditor, cost auditor, fix audit fees and approve non-audit or consulting services provided by the statutory auditors’ firms to Tata Motors Limited and its subsidiaries; evaluating auditors’ performance, qualifications, experience, independence and pending proceedings relating to professional misconduct, if any;
Review the adequacy of internal audit function, including the structure of the internal audit department, staffing and seniority of the chief internal auditor, coverage and frequency of internal audit, appointment, removal, performance and terms of remuneration of the chief internal auditor;
Discuss with the internal auditor and senior management, significant internal audit findings and follow-up thereon;
Review the findings of any internal investigation into matters involving suspected fraud or irregularity or a failure of internal control systems of a material nature and report the matter to the Board;
Discuss with the statutory auditor before the audit commences, the nature and scope of audit, as well as conduct post-audit discussions to ascertain any area of concern;
Review the functionality of the vigilance mechanism under the Whistleblower Policy;
Review the financial statements and investments made by subsidiary companies and subsidiary oversight relating to areas such as adequacy of the internal audit structure and function of the subsidiaries, their status of audit plan and its execution, key internal audit observations, risk management and the control environment;
Look into reasons for any substantial defaults in payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividend) and creditors, if any;
Review the effectiveness of the system for monitoring compliance with laws and regulations;
Approve the appointment of the Group Chief Financial Officer after assessing the qualification, experience and background of the candidate;
Approve and review policies in relation to the implementation of the Tata Code of Conduct to note the dealings by designated persons in securities of the Company and to provide directions on any penal action to be initiated, in case of any violation of the Tata Code of Conduct; and
Note and take on record the status reports, detailing the dealings by designated persons in securities of Tata Motors Limited, as submitted by our compliance officer on a quarterly basis and to provide directions on any penalties for any violations of the Insider Trading Code. Mr. P. B. Balaji, our Group Chief Financial Officer, is the compliance officer under the Insider Trading Code.
During the year, the Committeeinter alia reviewed key audit findings covering operational, financial and compliance areas. It also reviewed the internal control system in subsidiary companies. The Chairman of the Audit Committee briefsbriefed the Board on significant discussions at Audit Committee meetings. The Audit Committee has also adopted policies for the approval of services to be rendered by our independent statutory auditors, based on a procedure for ensuring such auditor’s independence and objectivity, as well as for the oversight of audit work for streamlining the audit process across our subsidiaries. The Chief Internal Auditorchief internal auditor reports to the Audit Committee to ensure independence of the internal audit processes.
The Audit Committee relies on the expertise and knowledge of the management, the internal auditors and the independent statutory auditor in carrying out its oversight responsibilities. It also uses external expertise, if required. The management is responsible for the preparation, presentation and integrity of our financial statements, including consolidated statements, accounting and financial reporting principles. The management is also responsible for internal control over financial reporting, and all procedures are designed to ensure compliance with accounting standards, applicable laws and regulations, as well as to objectively review and evaluate the adequacy, effectiveness and quality of our system of internal control.
Nomination and Remuneration Committee
The Nomination and Remuneration Committee comprisesis comprised of two independent directors—directors, Mr. O. P. Bhatt (Chairman) and Mr. Nasser MunjeeMs. Hanne Sorensen, and oneNon-Executive Director, Mr. N. Chandrasekaran. Dr. Mashelkar a Member of the Committee, consequent to his retirement as an Independent Director on December 31, 2017, also ceased to be the Chairman and Member of the Committee. Mr. Nasser Munjee and Mr. O. P. Bhatt were inducted as Members of the Committee with effect from March 29, 2017 and May 16, 2017, respectively. Mr. Bhatt was appointed as the Chairman of the Committee with effect from January 16, 2018.
The Nomination and Remuneration Committee functions according to its charter, which defines its objective, composition, meeting requirements, authority, power, responsibilities and reporting and evaluation functions in accordance with the Companies Act and Indian listing requirements. The following is a summary of the principal terms of reference of the Nomination and Remuneration Committee:
Make recommendations to the Board regarding the establishment and composition of the Board and its committees including the formulation of the criteria for determining qualifications, positive attributes and independence of a Director. The Nomination and Remuneration Committee periodically reviews the composition of the Board with the objective of achieving an optimum balance of size, skills, independence, knowledge, age, gender and experience;
Devise a policy on Board diversity;
Recommend to the Board the appointment or reappointment or removal of Directors, in accordance with the criteria laid down, including Independent Directors on the basis of reports on the performance evaluation of the Independent Directors;
Support the Board in matters related to setting up, reviewing and refreshing of committee composition;
Make recommendations to the Board on voting patterns for appointment and remuneration of Directors of the Company’s material subsidiaries; |
Provide guidelines for remuneration of directors of the Company’s material subsidiaries;
Recommend to the Board the appointment of Key Managerial Personnel (“KMP”) as defined under the Companies Act as the chief executive officer, chief financial officer and company secretary and senior management of Tata Motors Limited in accordance with the criteria laid down;
Consult the Audit Committee before recommending the appointment of the Group Chief Financial Officer;
Carry out an evaluation of every Director’s performance and supporting the Board and Independent Directors in evaluation of the performance of the Board, its committees and individual Directors. This shall include the formulation of criteria for evaluating Independent Directors and the Board;
Oversee the performance review process for KMP and the senior management of Tata Motors Limited, with a view that there is an appropriate cascading of Company’s goals and targets, and on an annual basis, review the performance of the Directors, KMP and senior management and recommend their remuneration;
Recommend the remuneration policy for Directors, KMP, the senior management of Tata Motors Limited and other employees. The Remuneration Policy is available on the Company’s website at www.tatamotors.com. The website does not form part of this annual report on Form 20-F;
On an annual basis, recommend to the Board the remuneration payable to the Directors, KMP and the senior management of Tata Motors Limited;
Review matters related to voluntary retirement and early separation schemes for Tata Motors Limited;
Oversee the familiarization program for Directors;
Oversee our human resources philosophy, human resources strategy and the efficacy of human resources practices, including those for leadership development, rewards and recognition, talent management and succession planning (specifically for the Board, KMP and executive team of Tata Motors Limited); and
Implement and administer any employee stock option scheme(s) approved by the Board, establish, amend or rescind any rules and regulations relating to the scheme(s), and make any other determinations that it deems necessary or desirable in connection with the scheme(s).
Stakeholders’ Relationship Committee
The Stakeholders’ Relationship Committee comprises of two independent directors,Independent Directors, Ms. NayarVedika Bhandarkar (Chairperson) and MsMs. Hanne Sorensen, as well as the Chief Executive Officer &CEO and Managing Director, Mr. Butschek. Mr Jairath stepped down as a MemberGuenter Butschek, and functions in accordance with Section 178 of the CommitteeAct and Regulation 20 read with effect from July 18, 2017. On January 16, 2018, the Board appointed Ms Nayar as the ChairpersonPart D of Schedule II of the Committee and Ms Sorensen as a Member of the Committee.Listing Regulations. The principal functions of the Stakeholders Relationship Committee are the following:
Approve issue of duplicate certificates for securities and transmission of securities;
Resolve grievances of security holders |
Executive Committee of the BoardCompany, including complaints related to transfer or transmission of Directorsshares, non-receipt of annual report, non-receipt of declared dividends, issue of new or ECOBduplicate certificates and general meetings;
The ECOB comprises
Review measures taken for effective exercise of onenon-executive director, one independent director and two full-time directors, namely, Mr. N. Chandrasekaran (Chairman), Mr. Munjee, Mr. Borwankar and Mr. Butschek. Mr. Pisharody ceased to be a Committee Member with effect from September 30, 2017. The Committee reviews and recommendsvoting rights by shareholders;
Review adherence to the service standards adopted by the Company in respect of various services being rendered by the registrar and transfer agent;
Review various measures and initiatives taken by the Company for reducing the quantum of unclaimed dividends and ensuring timely receipt of dividend warrants, annual reports, statutory notices by the shareholders of the Company;
Oversee statutory compliance relating to all securities including dividend payments and transfer of unclaimed amounts to the Company’s investor education and protection fund;
Review movements in shareholding and ownership structures of the Company;
Conduct a Shareholders’ satisfaction survey to ascertain the level of satisfaction amongst shareholders;
Suggest and drive implementation of various investor-friendly initiatives; and
Carry out any other function as is referred by the Board for due consideration, the revenue and capital expenditure budgets, long-term business strategies and plans, our organizational structure, raising finance, property-related issues, review and sale of investments and the allotment of securities within established limits. The Committee also discusses the matters pertainingfrom time to legal cases, acquisitions and divestment, new business forays and donations.time or enforced by any statutory notification, amendment or modification as may be applicable.
Safety, Health & Sustainability Committee
The Safety, Health & Sustainability or SHS Committee (the “SHS Committee”) comprises of one independent director and two whole-time directors, namely, Mr. Jairath (Chairman), Mr. Borwankar and Mr. Butschek. During the year, Dr Mashelkar ceased to be the Chairman and Member of the SHS Committee, consequent to his retirement as an Independent Director, on December 31, 2017. Mr Pisharody also ceased to be a Member of the Committee with effect from September 30, 2017, consequent to his resignation as ExecutiveMs. Hanne Sorensen (committee chairperson) and one full-time Director, (Commercial Vehicle) of the Company.Mr. Guenter Butschek. The SHS Committee’s objective is to review our safety, health and sustainability practices. The terms of reference of the SHS Committee include the following:
Take a holistic approach to safety, health and sustainability matters in decision making;
Provide direction to Tata Motors Group in carrying out its safety, health and sustainability function;
Frame broad guidelines and policies with regard to safety, health and sustainability;
Oversee the implementation of these guidelines and policies; and
Review our safety, health and sustainability policies, processes and systems periodically and recommend improvements from time to time.
Corporate Social Responsibility Committee
The Corporate Social Responsibility Committee or CSR Committee,(the “CSR Committee”) comprises of two independent directorsIndependent Directors and two whole-time directors,one full-time Directors, namely, Mr. O. P. Bhatt (Chairman)(committee chairperson), Ms. Nayar, Mr. BorwankarVedika Bhandarkar, and Mr. Guenter Butschek. Dr Mashelkar ceased to be the Chairman and Member of the Committee with effect from December 31, 2017 and Mr. Bhatt was appointed as the Chairman and Member of the Committee with effect from January 16, 2018. The terms of reference of the CSR Committee are to:
Formulate and recommend to the Board a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by us as specified in Schedule VII of the Companies Act;
Recommend the amount of expenditure to be incurred on the activities referred to in clause above; and
Monitor our Corporate Social Responsibility Policy from time to time.
The CSR Policypolicy is available on the Company’s website at http://investors.tatamotors.com/pdf/csrpolicy.pdfwww.tatamotors.com (which website does not form part of this annual report on Form20-F) as required under the provisions of Section 135 of the Act and Rule 9 of the Companies (Corporate Social Responsibility Policy) Rules, 2014.
Risk Management Committee
The Risk Management Committee, or RMC, constituted by our board of directorsthe Board pursuant to the provisions of Regulation 21 of the Indian Listing Regulations, comprises of one Independent Director, 2 whole-time directorsone full-time Director and the CFO,Group Chief Financial Officer, namely, MsMs. Hanne Sorensen (Chairperson)(committee chairperson), Mr. Borwankar, Mr.Guenter Butschek and Mr. P. B. Balaji. During the year, Dr Mashelkar ceased to be a Member of the RMC, consequent to his retirement as an Independent Director on December 31, 2017. Ms Sorensen was appointed as a Member of the RMC with effect from January 16, 2018. The Board on March 22, 2018 appointed Ms Sorensen as the Chairperson and inducted Mr. Borwankar, Mr. Butschek and Mr. Balaji, as Members of the RMC. On March 22, 2018 Mr. Munjee (erstwhile Chairman), Mr. Jairath and Ms. Nayar also ceased to be Members of the RMC. Pursuant to the Listing Regulations, we have a Risk Management Policy.risk management policy. The Risk Management Committee’s terms of reference are as follows:
Review the Company’s risk governance structure, risk assessment and risk management policies, practices and guidelines and procedures, including the risk management plan;
Review and approve the enterprise risk management framework;
Review the Company’s risk appetite and strategy relating to key risks, including product risk and reputational risk, cyber security risk, commodity risk, risks associated with the financial assets and liabilities such as interest risk, credit risk, liquidity exchange rate funding risk and market risk, as well as the guidelines, policies and processes for monitoring and mitigating such risks;
Oversee the Company’s process and policies for determining risk tolerance and review management’s measurement and comparison of overall risk tolerance to established levels;
Review and analyze risk exposure related to specific issues, concentrations and limit excesses and provide oversight of risk across the organization;
Review compliance with enterprise risk management policy, monitor breaches and trigger trips of risk tolerance limits and direct action;
Nurture a healthy and independent risk management function in the Company; and
Carry out any other function as is referred by the Board from time to time.
Executive Committee
The ExComExecutive Committee is comprised of various business functional heads, including Mr. Butschek, Mr. Borwankar, the President -PVBU,CEO and Managing Directors, the President—CVBU,Head of the Passenger Vehicle Business Unit (including Electric Vehicle Business), the Head of the Commercial Vehicles Business Unit, the Group Chief Financial Officer, the Chief Human Resource Officer, the Chief Technology Officer, the Chief Purchasing Officer, PresidentE-Mobility Business & Corporate Strategy and the Head of Corporate Communications. The Executive Committee provides oversight on the company strategy and key aspects of our business operations.
Apart from the committees described above, our board of directorsthe Board may also constitute committees of directorsDirectors with specific terms of reference as it may deem fit.
At Tata Motors Limited, we consider our human capital a critical factor to our success. Under the aegis of Tata Sons and the Tata Sons-promoted entities, the Company has drawn up a comprehensive human resource strategy, which addresses key aspects of human resource development, such as:
The codeTata Code of conductConduct and fair business practices;
A fair and objective performance management system linked to the performance of the businesses which identifies and differentiates employees by performance level;
Creation of a common pool of talented managers across Tata Sons and the Tata Sons promotedSons-promoted entities with a view to increasing their mobility through job rotation among the entities;
Evolution of performance based compensation packages to attract and retain talent within Tata Sons and the Tata Sons promotedSons-promoted entities; and
Development and delivery of comprehensive training programs to impact and improve industry- and/or function-specific skills as well as managerial competence.
In line with the human resource strategy, we havethe Company has implemented various initiatives in order to build better organizational capabilities that the we believe will enable usit to sustain competitiveness in the global marketplace. The Company’s focus is to attract talent, retain the better and advance the best. Some of the initiatives to meet this objective include:
Enhancing company’s image and desirability amongst the target engineering and management schools, to enable it to attract the best;
Fostering diverse workforce to leverage the multiplicity of skillsets in all its operations;
Developing skills of all Blue collaredblue-collar workforce to enable them to effectively meet the productivity and quality deliverables.deliverables; and
Training youth under Government of India’s National Employment Enhancement Mission in our skill development centers in all the plants. These trainees are given Automotive Skill Development Council certification, helping them get gainful employment in the industry. Engaging trainees benefit the company to meet the cyclicity of demand as well.
We employed approximately 81,09078,906 and 82,797 permanent employees as atof March 31, 2018, including as part of our Jaguar Land Rover business2020 and joint operations.2019, respectively. The average number of flexible (temporary, trainee and contractual) employees for Fiscal 20182020, was approximately 38,01619,169 (including joint operations). compared to 31,647 in Fiscal 2019.
The following table sets forth a breakdown of persons employed by our business segments and by geographic location as of the following dates.
Segment | As at March 31, | As of March 31, | ||||||||||||||||||||||
2018 | 2017 | 2016 | 2020 | 2019 | 2018 | |||||||||||||||||||
(No. of Employees) | (No. of Employees) | |||||||||||||||||||||||
Automotive | 72,683 | 71,428 | 68,089 | 70,766 | 73,394 | 72,151 | ||||||||||||||||||
Other | 8,407 | 8,130 | 8,509 | 8,140 | 9,403 | 8,939 | ||||||||||||||||||
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Total | 81,090 | 79,558 | 76,598 | 78,906 | 82,797 | 81,090 | ||||||||||||||||||
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As at March 31, | As of March 31, | |||||||||||||||||||||||
2018 | 2017 | 2016 | 2020 | 2019 | 2018 | |||||||||||||||||||
Location | (No. of Employees) | (No. of Employees) | ||||||||||||||||||||||
India | 41,295 | 42,991 | 42,238 | 39,012 | 41,655 | 41,295 | ||||||||||||||||||
Outside of India | 39,795 | 36,567 | 34,360 | 39,894 | 41,142 | 39,795 | ||||||||||||||||||
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Total | 81,090 | 79,558 | 76,598 | 78,906 | 82,797 | 81,090 | ||||||||||||||||||
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Training andTalent Development
We are committed to the development of our employees to strengthen their functional, managerial and leadership capabilities. We have a focused approach with the objective of addressing all capability gaps and preparing our employees to adopt to the fast changing external environment in order to meet ourthe company’s strategic objectives.
To achieve this, we have established theThe Tata Motors Academy, which addresses development needs of various segments of our workforce through a structured approach. The Tata Motors Academy focuses on three functional pillars – customer excellence, product leadership, and operational excellence – and one pillar on management education, all of which are aligned with the Company-level strategic objectives. The emphasis of functional academies is to strengthen knowledge, skills and expertise with an in depth approach, within respective function, and the emphasis of managementfunction. Management education isemphasizes on developing general management and leadership skills. Tata Motors Academy also provides executive education opportunities in the areas of B.Tech, M.Tech, Executive MBA.bachelor in technology, master in technology and executive master of business administration. Keeping up with the digital age, the academy has also embarked upon a decisive journey of digital learning for all its employees. These include online learning and virtual classrooms, which augment the offering of functional as well as management education pillars.
As an integral part of the Tata Motors Academy, the Company’s Learning Advisory Council which includes senior leaders from different parts of organization,(the “Learning Advisory Council”), aims to align its learning and development efforts, more closely with its business needs and priorities. TheLed by senior leaders across the organization, the Learning Advisory Council is responsible for providing guidance and strategic direction to the Academies to design, implement and review the learning agenda.
Our internal job posting portal, Career Xplore, was launched to provide employees growth opportunities across functions, locations and business units. Our Going Extra Miles initiative was launched so that employees can apply for deputation or stretch assignments. This supports employees to work on their individual development plans and widen their horizon of experience and exposure. annual organizational and talent review and succession planning exercise ensures healthy succession pipeline of critical roles
Skill Development
We continue our endeavor to deliver high quality products by enhancing our craftsmanship and improving manufacturing and assembly processes. We have been training our entire workforce in BSVI power transmission, assembly, testing and service areas as we roll out the entire range of BSVI products.
To meet technology disruptions and changing market dynamics, we have developed the “Future of Workplace” strategy, to build newer skills such as High Voltage (Electric Vehicles), Mechatronics (Industry 4.0), Auto Electronics, Vehicle Communication in our workforce. We are reskilling our permanent workforce into these newer technology areas , simultaneously ,we are working on creating “new age” workforce, young skilled , agile , digital inclined through our company’s flagship Full Time Apprenticeship program ( newer craftsman trades) and introduction of BVOC program.
We are now migrating from a trade-based training approach to a process-based training approach, which emphasizes team members’ knowledge as related to their actual work, in addition to the general trade-based skills, which are learneddeveloped at training institutes. These skills are very specific and not currently taught at the training institutes. Toto accomplish this, we are implementing a fundamental skills training initiative throughout organization. Its objective is to address key employee performance issues, such as inconsistent quality, poor craftsmanship, high frequencies of repair reworking and low productivity levels through training of front-line team members.
Jaguar Land Rover has always focused onone of the safety, security, wellbeinglargest apprenticeship programmes in the UK automotive sector with 1000 apprentices in development. Jaguar Land Rover invest in and support life-long learning and development of the people. We nurture and retain talentfor our employees, including our accredited apprenticeship programmes through the Jaguar Land Rover Academy, an environment offering accreditedAcademy. This includes JLR apprentice engineers completing almost 50,000 hours of learning, forthrough Technical Accreditation Scheme modules, developing their skills to help support the employees at every stagedelivery of their career. Actively shaping education and contributing to the skills development available to our communities is part of our long-term recruitment strategy. So too is continuing our successful apprentice and graduate program, working closely with academic partners such as the Warwick Manufacturing Group. We have been investing £100 million per year in theJaguar Land Rover’s ACES future. Jaguar Land Rover Academy for lifelong learningalso supports the Automotive Trailblazer Group and leads the creation and development of employees. Around a quarter of the employees are actively working towards a formal academic or professional qualification at all levels from apprenticeship to doctorate. Jaguar Land Rover alsoup-skilled 7,000 engineers with Master-level education since our Academy technical accreditation scheme began in 2010.
Closing the gender gapLevel 4 and a digital call for the worlds brightest and best6 automotive related Apprenticeship Standards.
Jaguar Land Rover has focused on attracting women into engineering and advanced manufacturing through programsprogrammes such as ourJLR’s Young Women in the Know initiative for female students aged 15 to 18. With fewer women than men in senior roles and a majority of men in production operations in factories, the gender gap can beis hard to close. Traditionally, a lower numbernumbers of women coming into the industry and flourishing within it has made this even harder. However, we areJaguar Land Rover is committed both to equality and encouraging a diverse workforce, and things are changing for the better. ThereThe proportion of managers who are female at Jaguar Land Rover has beenincreased to 19%, up from 17% in January 2017; the female proportion in our overall permanent workforce has increased by 34% during the same period. Jaguar Land Rover’s school education program increases engagement in STEM (science, technology, engineering and math) subjects as well as introducing successful female role models to girls as young as seven to increase their interest in engineering. Jaguar Land Rover’s Furthering Futures course is a 21% increaseweek-long career immersion program designed to encourage more young female STEM talent to consider engineering careers. Since the course was launched in 2012 Jaguar Land Rover have recruited 90 Furthering Futures participants into the Early Careers programmes. Since the 2018 report, the proportion of women in the company has increased from 12.0% in April 2018 to 12.7% in April 2019. In 2019 there has been a 0.8% decrease to our management grades since 2014. In 2017,gender pay gap and a 2.5% decrease to our gender bonus gap. At 4.1%, Jaguar Land Rover’s median gender pay gap is still significantly lower than the Office of National Statistics UK average of 17.3%. However, Jaguar Land Rover recruitedrecognizes they still have more women than men (55% female) onto their Advanced Apprentice Program. We have also developed new ways to seek out tomorrow’s innovators, partnering with virtual band Gorillazdo to findnarrow the next generation of software engineering brilliance, through code-breaking puzzles that test curiosity, persistence, lateral thinking and problem-solving. Those who have cracked them were interviewed by Jaguar Land Rover and the best were hired.gap further.
Union Wage Settlements
We have labor unions for operative grade employees at all its plantour plants across India, except Dharwad plant. The Company has generally enjoyed cordial relations with its employees at its factories and offices and have received union support in the implementation of reforms that impact safety, quality, cost erosion and productivity improvements across all locations.
Employee wages are paid in accordance with wage agreements that have varying terms (typically three to five years) at different locations. The expiration dates of the wage agreements with respect to various locations/locations and subsidiaries are as follows:
Location/subsidiaries | Wage Agreement valid until | |||
Pune Commercial | August 31, | |||
Pune Passenger | March 31, | |||
Jamshedpur | March 31, | |||
Mumbai | December 31, | |||
| March 31, 2020 | |||
Pantnagar | March 31, | |||
Sanand | September 30, 2020 | |||
Jaguar Land Rover | ||||
# - Under Negotiation |
The wage agreements at our Lucknow (Commercial Vehicle Business Unit) have expired and negotiations are underway for the new wage agreements. In the interim, the wages set forth in the previous wage agreements will continue until a new settlement is reached.
Our wage agreements link an employee’s compensation to certain performance criteria that are based on various factors such as quality, productivity, operating profit and an individual’s performance and attendance. As far as possible, we aim for cost neutral settlements, by achieving the critical performance parameters of the business with total employee involvement. We have generally received union support in implementation of reforms that impact quality, cost erosion and productivity improvements across all locations. In addition to this, this time we have signed settlement with variable pay as part of wage cost and staggered payment instead of one time pay to be bring more cost effectiveness on account of fixed pay.discipline.
Please see Item 4.B “Information on the Company—Business Overview—Legal Proceedings” for details related to the lawsuit filed by our union employees at TDCV related to wages.
Preferential Issue of Shares and Warrants to Tata Sons Private Limited
Pursuant to the approval of the Board of Directors dated October 25, 2019, Shareholders’ approval at the Extraordinary General Meeting convened on November 22, 2019 and the Allotment Committee authorized by the Board dated December 5, 2019, the Company has allotted 20,16,23,407 Ordinary Shares at a price of ₹150 per Ordinary Share and 23,13,33,871 Warrants, each carrying a right exercisable by the Warrant holder to subscribe to one Ordinary Share per Warrant, at a price (including the warrant subscription price and the warrant exercise price) of ₹150 per Warrant, to Tata Sons Private Limited (Company’s Promoter) on preferential basis.
Issue of shares which were earlier held in Abeyance
Pursuant to the approval of the duly constituted Board Approved Committee dated January 21, 2020, the Company has allotted 1,793 Ordinary shares and 525 ‘A’ Ordinary shares which were earlier held in abeyance.
Employee Stock Option Scheme
Pursuant to the resolution, dated May 23, 2018, passed by the Board and the special resolution passed by the Company’s shareholders at the annual general meeting on August 3, 2018, the Company approved the Tata Motors Limited Employees Stock Option Scheme 2018 (the “2018 Option Scheme”). The major objectives of the 2018 Option Scheme are to (i) ring fence key employees of the Company during the critical turn around phase and incentivize them to drive long term objectives of the Company, (ii) ensure employee pay-offs match the long gestation period of certain key initiatives, (iii) drive ownership behavior and collaboration among employees, and (iv) reward, retain and motivate eligible employees of for their performance and participation in the growth and profitability of the Company.
The 2018 Option Scheme is administered by the Nomination and Remuneration Committee under the powers delegated by the Board. The Nomination and Remuneration Committee is authorized to interpret the 2018 Option Scheme, to establish, amend and rescind any rules and regulations relating to the 2018 Option Scheme and to make any other determinations that it deems necessary for the administration and implementation of the 2018 Option Scheme. The Nomination and Remuneration Committee may correct any defect, omission or reconcile any inconsistencies in the 2018 Option Scheme in the manner and to the extent the Nomination and Remuneration Committee deems necessary or desirable and to resolve any difficulties in relation to the implementation of the 2018 Option Scheme and to take any action that the Board is entitled to take. Any decision of the Nomination and Remuneration Committee in the interpretation and administration of the 2018 Option Scheme, as described herein, shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned (including, but not limited to, any employee, grantee, participant, nominee and their beneficiaries and successors). The Nomination and Remuneration Committee shall not be liable for any action or determination made in good faith with respect to the 2018 Option Scheme or any option granted thereunder. The maximum number of options under the 2018 Option Scheme shall not exceed 13,800,000 that would entitle the grantees to acquire, in one or more tranches, not exceeding 13,800,000 equity shares and the number of options that may be granted to eligible employees under the 2018 Option Scheme in any one year should not exceed 335,000 options. The options granted under the 2018 Option Scheme would vest within a maximum period of five years from the date of grant of such options. In terms of the 2018 Option Scheme, the options shall vest in three equal tranches (i.e., June 30, 2021, June 30, 2022 and June 30, 2023). The Nomination and Remuneration Committee may extend the vesting date for the options to vest by a period not more than two months. The options shall vest with the employees subject to continuing employment with the Company or any other eligible Tata company and on the Company achieving certain performance metrics as contained in the 2018 Option Scheme. The exercise price and the number of options granted may be adjusted for any corporate action(s) announced by the Company prior to the exercise period pertaining to the relevant options, as may be decided by the Board or the Nomination and Remuneration Committee. Certain key information relating to the 2018 Option Scheme are set out below.
During Fiscal 2020 there has been no change in the Scheme. There were no Options granted or vested or any shares issued on vesting during the year.
During the year Fiscal 2020, total 589,530 options were expired or forfeited. As at March 31, 2020 an aggregate of 7,222,897 options were outstanding. The Scheme is in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.
Additional information required by this item is set forth in Item 6.A “—Directors,“Directors, Senior Management and Employees” of this annual report on Form20-F.
Item 7. | Major Shareholders and Related Party Transactions |
We areThe Company is a widely held, listed company with approximately 841,0531,533,381 shareholders of our Ordinary Shares and 167,023204,939 shareholders of our ‘A’ Ordinary Shares on record. To ourthe Company’s knowledge, as of June 30, 2018,2020, the following persons beneficially owned 1% or more of the 2,887,348,6943,088,973,894 Ordinary Shares and 508,502,371508,502,896 ‘A’ Ordinary Shares outstanding at that time:
Ordinary Shares
Name of Shareholder | Holding | Percentage | ||||||
Tata Sons Limited and Subsidiaries1 | 1,047,729,607 | 36.29 | ||||||
Citibank N.A.2 | 396,857,970 | 13.74 | ||||||
Reliance Capital Trustee Co. Ltd.—Reliance Top 200 Fund | 77,412,801 | 2.68 | ||||||
ICICI Prudential Balanced Advantage Fund | 34,056,551 | 1.18 | ||||||
SBI-ETF Sensex | 30,380,474 | 1.05 | ||||||
Government of Singapore | 59,659,854 | 2.07 | ||||||
Life Insurance Corporation of India | 149,295,627 | 5.17 | ||||||
ICICI Prudential Life Insurance Company Limited | 42,139,439 | 1.46 |
Name of Shareholder | Holding | Percentage | ||||||
Tata Sons Pvt. Limited | 1,220,779,930 | 39.52 | ||||||
Citibank, N.A.1 | 320,793,365 | 10.39 | ||||||
Life Insurance Corporation of India Limited | 147,200,039 | 4.77 | ||||||
Tata Industries Limited | 72,203,630 | 2.34 | ||||||
Reliance Capital Trustee Co Ltd-A/C Nippon India Large Cap Fund | 50,934,703 | 1.65 | ||||||
SBI Mutual Funds | 36,546,809 | 1.18 |
‘A’ Ordinary Shares32
Name of Shareholder | Holding | Percentage | ||||||
ICICI Prudential Balanced Advantage Fund | 51,866,662 | 10.20 | ||||||
Franklin India Smaller Companies Fund | 43,931,036 | 8.64 | ||||||
HDFC Trustee Co Ltd A/C HDFC Dual Advantage Fund | 24,246,279 | 4.77 | ||||||
UTI—Arbitrage Fund | 13,305,682 | 2.62 | ||||||
SBI— ETF Sensex | 10,211,737 | 2.01 | ||||||
Reliance Capital Trustee Co Ltd.A/C Reliance Arbitrage Fund | 5,544,043 | 1.09 | ||||||
Government of Singapore | 32,200,369 | 6.33 | ||||||
Franklin Templeton Investment Funds | 21,977,072 | 4.32 | ||||||
Amansa Holdings Private Limited | 14,303,747 | 2.81 | ||||||
Government Pension Fund Global | 13,746,021 | 2.70 | ||||||
HSBC Global Investment Funds—Indian Equity | 10,993,801 | 2.16 | ||||||
Monetary Authority of Singapore | 8,506,650 | 1.67 | ||||||
Eastspring Investments India Equity Open Limited | 8,153,160 | 1.60 | ||||||
Nordea Emerging Market Equities Fund | 8,064,089 | 1.59 | ||||||
Stichting Depositary Apg Emerging Markets Equity Pool | 7,213,074 | 1.42 | ||||||
Vanguard Total International Stock Index Fund | 5,429,772 | 1.07 | ||||||
Vanguard Emerging Markets Stock Index Fund, A Series of Vanguard International Equity Index Funds | 5,229,683 | 1.03 | ||||||
HDFC Standard Life Insurance Company Limited | 5,657,383 | 1.11 |
Name of Shareholder | Holding | Percentage | ||||||
ICICI Prudential Equity & Debt Fund | 61,050,411 | 12.01 | ||||||
Franklin India Focused Equity Fund | 53,317,890 | 10.49 | ||||||
Government of Singapore | 27,493,534 | 5.41 | ||||||
Tata Sons Private Limited | 26,722,401 | 5.26 | ||||||
Government Pension Fund Global | 24,850,532 | 4.89 | ||||||
HDFC Trustee Company Limited - Hdfc Tax Saverfund | 20,350,837 | 4.00 | ||||||
Postal Life Insurance Fund A/C Sbifmpl | 18,061,118 | 3.55 | ||||||
Morgan Stanley Asia (Singapore) Pte. | 13,004,900 | 2.56 | ||||||
UTI - Hybrid Equity Fund | 12,968,914 | 2.55 | ||||||
Franklin Templeton Investment Funds | 11,679,947 | 2.30 | ||||||
Monetary Authority of Singapore | 7,533,154 | 1.48 | ||||||
Rural Postal Life Insurance Fund A/C Sbifmpl | 6,909,783 | 1.36 | ||||||
Vanguard Total International Stock Index Fund | 6,100,461 | 1.20 | ||||||
SBI Long Term Equity Fund | 5,753,167 | 1.13 | ||||||
Eastspring Investments India Equity Open Limited | 5,719,441 | 1.12 | ||||||
Societe Generale | 5,161,441 | 1.02 | ||||||
Vanguard Emerging Markets Stock Index Fund, A Series Of Vanguard International Equity Index Funds | 5,071,396 | 1.00 |
1 |
Citibank, N.A., as |
The holders of ‘A’ Ordinary |
Over the last three years, from June 30, 20152017 to June 30, 2018,2020, the holdings of ourthe Company’s largest shareholder, Tata Sons along with its subsidiaries, have increased from 28.66%31.60% to 36.29%39.52%. The holdings of Tata Steel have decreased from 5.54%to 0.0035% as atof June 30, 2015 to 0.0035%as at June 30, 2018.2020. The shareholding of Life Insurance Corporation of India Ltd. has increaseddecreased from 4.15%5.18% to 5.17%4.77%. The shareholding of Citibank, N.A. as depositarydepository for ourthe Company’s ADSs and previously, our GDSs, has decreased from 21.40%17.18% to 13.74%10.39%.
According to our depositary,the depository, as atof June 30, 2018, we2020, the Company had 7371 registered holders of ourits ADSs with addresses in the United States, whose shareholding represented approximately 0.02%0.004% of ourthe Company’s outstanding Ordinary Shares as of that date, excluding any of ourthe Company’s ADSs held by Cede & Co. as a nominee for the Depository Trust Company. Because some of ourthe Company’s ADSs are held through brokers or other nominees, the number of record holders of ourthe Company’s ADSs with addresses in the United States may be fewer than the number of beneficial owners of ADSs in the United States. As of June 30, 2018,2020, there were 1151, 575 record holders of Ordinary Shares with addresses in the United States, representing 0.00748%0. 05999% of our outstanding Ordinary Shares as of that date, and there were 38166 record holders of ‘A’ Ordinary Shares with addresses in the United States, representing 0.01231%0. 04178% of ourthe Company’s outstanding ‘A’ Ordinary Shares as of that date.
The total permitted holding of Foreign Institutional Investors or FIIs,(“FIIs”) in the Ordinary Sharepaid-up capital has been increased to 35% by a resolution passed by ourthe shareholders of the Company on January 22, 2004 and to 75% of the ‘A’ Ordinary Sharepaid-up Capital approved by the Reserve Bank of IndiaRBI pursuant to their letter dated October 31, 2013. The FII holding as on June 30, 20182020 was approximately 18.86%15.62% in Ordinary Shares and 44.60%27.98% in ‘A’ Ordinary Shares. See Item 10.D “—“Additional Information—Exchange Controls” for further details.
Neither ourthe Company’s Ordinary Shares nor ‘A’ Ordinary Shares entitle the holder to any preferential voting rights.
Under the Takeover Regulations of India, in the event of any acquisition of shares or voting rights, which, taken together with shares or voting rights held by the acquirer and by persons acting in concert with such acquirer, aggregate to 5% or more of the shares or voting rights, or any acquisition or disposal of 2% or more shares or voting rights, or a change in the shareholding or voting rights (even if such change results in the shareholding falling below 5%) such person must file a report with us concerning the shareholding or the voting rights and the stock exchanges on which our Shares are traded. Please see Item 9.A “—9.C “The Offer and Listing Details—Markets”—Markets” for information with respect to these stock exchanges.
In addition, disclosures would be required under the Securities and Exchange Board of IndiaSEBI (Prohibition of Insider Trading) Regulations, 2015 or Insider Trading Regulations of India with respect to every promoter, employee or director, including their immediate relatives, who execute a trade or trades in excess of a monetary threshold of Rs.1 million in market value over a calendar quarter, within two trading days of reaching such threshold. Such a disclosure would be made to usthe Company and weit would in turn make a disclosure to the relevant stock exchanges. Furthermore, under ourthe Listing Regulations, governing Indian listed companies, we arethe Company is required to periodically disclose to such stock exchanges the name and percentage of shares held by persons or entities that hold more than 1% of ourits Shares. For the purposes of the above, Shares withdrawn from ourthe Company’s ADS facility will be included as part of a person’s shareholding.
To ourthe Company’s knowledge, we arethe Company is not, directly or indirectly, owned or controlled by any other corporation or by any government or by any other natural or legal persons severally or jointly. We areThe Company is not aware of any arrangements the operation of which may at a later time result in ourits change of control.
For details regarding voting rights, please refer to Item 10.B “—“Additional Information—Memorandum and Articles of Association—Voting Rights”.Rights.”
OurThe Company’s related parties principally consist of Tata Sons, subsidiaries and joint ventures of Tata Sons, ourthe Company’s joint ventures and ourthe Company’s associates and their subsidiaries. WeThe Company routinely enterenters into transactions with these related parties in the ordinary course of business. We enterThe Company enters into transactions for sale and purchase of products with ourits associates and joint ventures. The following table summarizes related party transactions and balances included in ourthe Company’s consolidated financial statements included elsewhere in this annual report on Form20-F for the year ended and as atof March 31, 2018:2020:
With associates and their subsidiaries | With joint Operations | With joint ventures | With Tata Sons and its subsidiaries and joint ventures | Notes | ||||||||||||||||
(Rs. in millions) | ||||||||||||||||||||
Purchase of products | 26,057 | 31,631 | 1,713 | (Note a | ) | |||||||||||||||
Sale of products | 2,016 | 5,455 | 60,082 | 7,091 | ||||||||||||||||
Services received | 89 | 1 | 5,501 | 17,353 | (Note b | ) | ||||||||||||||
Services rendered | 190 | 43 | 12,077 | 241 | ||||||||||||||||
Acceptances | — | — | — | 41,350 | (Note c | ) | ||||||||||||||
Purchase of property, plant and equipment | 624 | — | — | 2 | ||||||||||||||||
Purchase of investments | — | __ | 25 | (Note c | ) | |||||||||||||||
Interest income | 3 | — | 4 | (Note d | ) | |||||||||||||||
Interest expenses | 75 | 2 | — | 141 | ||||||||||||||||
Dividend income | 170 | 45 | 17,645 | 99 | ||||||||||||||||
Dividend paid | — | — | — | 225 | ||||||||||||||||
Amount receivable in respect of loans and interest thereon | — | — | — | 40 | (Note d | ) | ||||||||||||||
Amount payable in respect of loans and interest thereon | 560 | — | — | 48 | ||||||||||||||||
Loans taken | 4,890 | — | — | |||||||||||||||||
Loans repaid by us | 4,890 | — | — | — |
With associates and their subsidiaries | With joint Operations | With joint ventures | With Tata Sons and its subsidiaries and joint ventures | Notes | ||||||||||||||||
(Rs. in millions) | ||||||||||||||||||||
Purchase of products | 17,363 | 27,815 | 8 | 427 | (Note a | ) | ||||||||||||||
Sale of products | 1,871 | 6,810 | 19,519 | 8,476 | ||||||||||||||||
Services received | 229 | 8 | 42 | 15,602 | (Note b | ) | ||||||||||||||
Services rendered | 165 | 49 | 9,596 | 815 | ||||||||||||||||
Bills discounted | — | — | — | 31,485 | (Note c | ) | ||||||||||||||
Purchase of property, plants and equipment | 810 | — | — | 24 | ||||||||||||||||
Sale of property, plant and equipment | 22 | — | — | 953 | ||||||||||||||||
Interest (income)/expense, dividend (income)/paid.(net) | (136 | ) | 41 | (6,064 | ) | 294 | ||||||||||||||
Finance given (including loans and equity) | — | — | 6,182 | — | ||||||||||||||||
Finance given, taken back (including loans and equity) | — | — | — | 35 | ||||||||||||||||
Finance taken (including loans and equity) | 1,040 | — | — | 45,614 | (Note d | ) | ||||||||||||||
Finance taken, paid back (including loans and equity) | 810 | — | — | 8,583 | ||||||||||||||||
Assets Taken on Lease | — | 1,138 | — | — | (Note e | ) | ||||||||||||||
Repayment towards lease liability | — | 18 | — | — | ||||||||||||||||
Amount receivable in respect of loans and interest thereon | — | — | 251 | 42 | ||||||||||||||||
Amount payable in respect of loans and interest thereon | 460 | — | — | 19 | ||||||||||||||||
Amount payable in respect of Lease Liability | — | 1,120 | — | — | ||||||||||||||||
Trade and other receivables | 275 | — | 6,287 | 1,892 | ||||||||||||||||
Trade payables | 2,726 | 2,696 | 32 | 1,582 | ||||||||||||||||
Acceptances | — | — | — | 769 | ||||||||||||||||
Provision for amount receivables | — | — | 251 | — |
Notes:
The details of major items are as follows:
a. | During Fiscal |
b. | i) | The services received from Tata Sons include those for which brand subscription fees were paid pursuant to an agreement with them, under which Tata Motors Limited and certain of its subsidiaries have agreed to pay an annual subscription fee for participation and gain from promotion and protection of the Tata brand identity. Please see Exhibit 4.1 of this annual report on Form20-F for our Tata Brand Equity & Business Promotion Agreement. The annual subscription fee is equal to0.15%-0.25% of annual net income (defined as net revenues exclusive of excise duties and other governmental taxes andnon-operating income), subject to a ceiling of 5% of annual profit before tax, based on Tata Motors Limited’s standalone financial statements prepared in accordance with | ||
ii) | ||||
iii) |
c. | During Fiscal |
d. | During the year ended March 31, 2020, the Company has allotted 20,16,23,407 Ordinary Shares at a price of Rs.150 per Ordinary Share aggregating to Rs.30,243.5 million and 23,13,33,871 Convertible Warrants (‘Warrants’), each carrying a right to subscribe to one Ordinary Share per Warrant, at a price of Rs.150 per Warrant (‘Warrants Price’), aggregating to Rs.34,700.0 million on a preferential basis to Tata Sons Private Limited. An amount equivalent to 25% of the Warrant Price was paid at the time of subscription and allotment of each Warrant and the balance 75% of the Warrant Price shall be payable by the Warrant holder against each Warrant at the time of allotment of Ordinary Shares pursuant to exercise of the options attached to Warrant(s) to subscribe to Ordinary Share(s). The total amount received as of March 31, 2020 is Rs.38,918.5 million. |
e. | During Fiscal 2020, the Company has started procuring certain engines for its passenger vehicles from it joint operation Fiat India Automobiles Private Ltd. The Company has recognized a right of use (ROU) assets and lease liability of Rs.1,138 million payable in respect of such embedded lease within this arrangement. |
Please see Note 3841 to our consolidated financial statements included elsewhere in this annual report on Form20-F for further details on our related-party transactions.
C. Interests of Experts and Counsel
Not applicable.
Item 8. | Financial Information |
A. Consolidated Statements and Other Financial Information
Consolidated Financial Statements
The information required by this item is set forth beginning onpage F-1 of this annual report on Form20-F.
Legal or Arbitration Proceedings
The information on legal or arbitration proceedings required by this item is set forth in Item 4.B “—“Information on the Company—Business Overview—Legal Proceedings”.Proceedings.”
Dividend Policy
The Company may declare and pay a dividend out of profits for the year or previous financial year(s) as stated in the statutory financial statements of Tata Motors Limited, on a standalone basis, prepared in accordance with Indian GAAP/IndAS,Ind AS, after providing for depreciation in accordance with the provisions of Schedule II to the Companies Act. However, in the absence or inadequacy of said profits, it may declare dividend out of its free reserves, subject to certain conditions as prescribed under the Companies Act and the Companies (Declaration and Payment of Dividend) Rules, 2014. Based on the net income available for appropriation, dividends are recommended by our board of directorsthe Board for approval by the shareholders at our annual general meeting. Furthermore, our board of directorsthe Board may also pay an interim dividend at its discretion. The ‘A’ Ordinary Shareholders are entitled to receive a dividend for any financial year at five percentage points more than the aggregate rate of dividend declared on Ordinary Shares for that financial year.
The Company, in accordance with SEBI Notification dated July 8, 2016 read with Regulation 43A of the Listing Regulations, formulated a Dividenddividend distribution policy (the “Dividend Distribution Policy,Policy”), which was adopted by the board of directorsBoard at their meeting held on March 30, 2017. A copy of the Dividend Distribution Policy is available on our website athttp://www.tatamotors.com/investors/pdf/dividend-distribution-policy.pdf, which www.tatamotors.com (the website does not form part of this annual report on Form20-F. 20-F).
For Fiscal 2018,2020, after considering overall performance and results, and in accordance with the Companies (Declaration and Payment of Dividends) Rules, 2014 and our Dividend Distribution Policy, the Board of Directors has recommended that no dividend be paid to our shareholders.the shareholders of the Company. Since Fiscal 1956, we havethe Company has made dividend distributions in each Fiscalfiscal year except for Fiscal 2001, Fiscal 2002, Fiscal 2015, Fiscal 2017, Fiscal 2018, Fiscal 2019 and 2018.Fiscal 2020.
Other than as set forth in this annual report on Form20-F, no significant change has occurred with respect to us since the date of our audited consolidated IFRS financial statements included elsewhere in this annual report on Form20-F.
Item 9. | The Offer and Listing |
In September 2004, the Company became the first company from India’s automotive sector to be listed on the NYSE. The detailsCompany’s ADSs are traded on our Sharethe NYSE under the symbol “TTM”. The Company’s Ordinary Shares and ADS price history‘A’ Ordinary Shares are includedtraded on BSE under the codes 500570 and 570001, respectively, and NSE under the symbols “TATAMOTORS” and “TATAMTRDVR”, respectively. In October 2014, the Company listed a dual tranche of senior unsecured notes and in Item 9.C “—Markets”.November 2019, the Company listed US $ 300 million - 5.875% senior notes due 2025 on the Singapore Exchange Securities Trading Limited (or SGX-ST) market, which is regulated by the Singapore Stock Exchange. The Company also has non-convertible debentures listed on NSE and BSE under the wholesale debt market segment.
Not applicable.
Ordinary SharesPlease refer to Item 9.A “The Offer and ADSs
National Stock Exchange of India Limited or NSE | BSE Limited or BSE | NYSE | ||||||||||||||||||||||||||||||||||
Closing Price per Ordinary Share | Closing Price per Ordinary Share | Closing Price per ADS | ||||||||||||||||||||||||||||||||||
Period High | Period Low | Period High | Period Low | Period High | Period Low | |||||||||||||||||||||||||||||||
(Rs. per Share) | Average Daily Trading Volume (in ‘000) | (Rs. per Share) | Average Daily Trading Volume (in ‘000) | (US$ per ADS) | Average Daily Trading Volume (in ‘000) | |||||||||||||||||||||||||||||||
Fiscal | ||||||||||||||||||||||||||||||||||||
2018 | 481.50 | 326.85 | 7,378.42 | 481.45 | 327.45 | 1121.62 | 37.31 | 24.90 | 1,304.20 | |||||||||||||||||||||||||||
2017 | 588.70 | 370.50 | 8,057.47 | 589.35 | 370.50 | 702.99 | 44.29 | 27.71 | 1,337.77 | |||||||||||||||||||||||||||
2016 | 568.15 | 276.35 | 8,498.88 | 567.55 | 275.65 | 983.24 | 46.35 | 20.56 | 1,859.87 | |||||||||||||||||||||||||||
2015 | 598.13 | 398.87 | 5,274.10 | 605.10 | 403.00 | 416.51 | 50.89 | 35.61 | 1,277.24 | |||||||||||||||||||||||||||
2014 | 416.95 | 255.20 | 7,227.83 | 417.05 | 255.30 | 820.41 | 35.41 | 22.25 | 495.69 | |||||||||||||||||||||||||||
Fiscal | ||||||||||||||||||||||||||||||||||||
2018 | ||||||||||||||||||||||||||||||||||||
1st Quarter | 481.50 | 419.60 | 6097.13 | 481.45 | 419.75 | 1907.79 | 37.31 | 32.73 | 1,222.14 | |||||||||||||||||||||||||||
2nd Quarter | 464.60 | 373.60 | 6845.45 | 464.60 | 373.35 | 1352.82 | 35.90 | 29.03 | 1,345.18 | |||||||||||||||||||||||||||
3rd Quarter | 462.90 | 397.05 | 8032.79 | 461.55 | 396.80 | 592.92 | 35.00 | 30.60 | 1,151.89 | |||||||||||||||||||||||||||
4th Quarter | 439.30 | 326.85 | 8,564.49 | 438.85 | 327.45 | 625.90 | 34.32 | 24.90 | 1,503.89 | |||||||||||||||||||||||||||
Fiscal | ||||||||||||||||||||||||||||||||||||
2017 | ||||||||||||||||||||||||||||||||||||
1st Quarter | 487.95 | 370.50 | 10,923.96 | 488.00 | 370.50 | 815.44 | 36.79 | 27.71 | 1,570.80 | |||||||||||||||||||||||||||
2nd Quarter | 588.70 | 455.15 | 7,304.68 | 589.35 | 455.25 | 870.63 | 44.29 | 33.97 | 1,311.71 | |||||||||||||||||||||||||||
3rd Quarter | 565.70 | 432.90 | 7,412.43 | 565.70 | 433.05 | 536.47 | 42.18 | 32.00 | 1,059.33 | |||||||||||||||||||||||||||
4th Quarter | 548.90 | 436.45 | 6,588.79 | 548.00 | 436.55 | 592.10 | 40.12 | 32.39 | 1,407.04 | |||||||||||||||||||||||||||
Month | ||||||||||||||||||||||||||||||||||||
March 2018 | 370.75 | 326.85 | 8,522.60 | 370.85 | 327.45 | 660.20 | 27.98 | 24.90 | 1,559.79 | |||||||||||||||||||||||||||
February 2018 | 395.80 | 358.50 | 9,553.12 | 396.05 | 358.55 | 685.55 | 30.87 | 27.70 | 1,391.89 | |||||||||||||||||||||||||||
January 2018 | 439.30 | 395.85 | 7,746.85 | 438.85 | 396.20 | 544.77 | 34.32 | 30.96 | 1,549.32 | |||||||||||||||||||||||||||
December 2017 | 431.85 | 397.05 | 6,757.68 | 431.20 | 396.80 | 616.94 | 33.07 | 30.60 | 851.44 | |||||||||||||||||||||||||||
November 2017 | 462.90 | 404.15 | 11,236.31 | 461.55 | 404.65 | 765.91 | 35.00 | 31.19 | 1,708.02 | |||||||||||||||||||||||||||
October 2017 | 437.05 | 415.50 | 5,784.02 | 436.55 | 415.25 | 378.61 | 33.33 | 31.72 | 894.18 |
Notes:
On July 30, 2018Listing—Offer and Listing Details” for information regarding all stock exchanges and other regulated markets on which the reported closing price of our Shares on the BSE and NSE was Rs. 267.30 per Share and Rs. 267.50 per Share, respectively. On July 30, 2018 the ADS closing price on the NYSE was US$19.39 per ADS.
‘A’ Ordinary Shares
NSE | BSE | |||||||||||||||||||||||
Closing Price per ‘A’ Ordinary Share | Closing Price per ‘A’ Ordinary Share | |||||||||||||||||||||||
Period High | Period Low | Period High | Period Low | |||||||||||||||||||||
(Rs. Per Share) | Avg. Daily Trading Volume (in ‘000) | (Rs. Per Share) | Avg. Daily Trading Volume (in ‘000) | |||||||||||||||||||||
Fiscal | ||||||||||||||||||||||||
2018 | 290.85 | 183.30 | 2,292.88 | 291.10 | 183.90 | 197.06 | ||||||||||||||||||
2017 | 373.50 | 259.90 | 2,123.26 | 373.35 | 260.10 | 228.43 | ||||||||||||||||||
2016 | 354.65 | 206.85 | 2,598.08 | 354.40 | 206.60 | 177.89 | ||||||||||||||||||
2015 | 383.98 | 209.06 | 2,570.50 | 388.25 | 211.20 | 179.78 | ||||||||||||||||||
2014 | 208.10 | 124.50 | 1,943.08 | 207.95 | 124.55 | 145.12 | ||||||||||||||||||
Fiscal | ||||||||||||||||||||||||
2018 | ||||||||||||||||||||||||
1st Quarter | 290.85 | 258.95 | 2,096.19 | 291.10 | 259.30 | 240.22 | ||||||||||||||||||
2nd Quarter | 276.50 | 210.15 | 2,374.57 | 275.80 | 209.55 | 152.60 | ||||||||||||||||||
3rd Quarter | 259.65 | 224.90 | 2,107.51 | 259.25 | 224.95 | 181.52 | ||||||||||||||||||
4th Quarter | 256.65 | 183.30 | 2,598.64 | 256.55 | 183.90 | 215.92 | ||||||||||||||||||
Fiscal | ||||||||||||||||||||||||
2017 | ||||||||||||||||||||||||
1st Quarter | 324.70 | 259.90 | 2,655.57 | 323.85 | 260.10 | 318.03 | ||||||||||||||||||
2nd Quarter | 373.75 | 290.95 | 1,883.75 | 373.35 | 291.25 | 263.74 | ||||||||||||||||||
3rd Quarter | 366.15 | 285.30 | 1,797.29 | 365.45 | 285.55 | 107.77 | ||||||||||||||||||
4th Quarter | 344.74 | 268.30 | 2,156.43 | 343.30 | 268.15 | 226.13 | ||||||||||||||||||
Month | ||||||||||||||||||||||||
March 2018 | 207.45 | 183.30 | 2,191.57 | 207.85 | 183.90 | 148.89 | ||||||||||||||||||
February 2018 | 222.05 | 201.95 | 2,710.36 | 221.80 | 202.45 | 291.92 | ||||||||||||||||||
January 2018 | 256.65 | 224.55 | 2,853.72 | 256.55 | 224.35 | 208.17 | ||||||||||||||||||
December 2017 | 244.10 | 224.90 | 1,794.80 | 244.80 | 224.95 | 134.07 | ||||||||||||||||||
November 2017 | 259.65 | 231.45 | 2,460.92 | 259.25 | 232.30 | 265.48 | ||||||||||||||||||
October 2017 | 246.10 | 230.35 | 2,031.45 | 245.95 | 230.55 | 136.62 |
Notes:
On July 30, 2018, the reported closing price of our ‘A’ Ordinary Shares on the BSE and NSE was Rs. 147.20 per Share and Rs. 146.80 per Share, respectively.securities are traded.
Not applicable.
Not applicable.
Not applicable.
Additional InformationItem 10. Item 10.
Not applicable.
Particulars | Authorized Capital | Issued Capital | Subscribed Capital | Paid Up Capital | ||||||||||||||
Common | Number of Equity shares | 5,000,000,000 | 3,598,202,563 | 3,597,476,790 | 3,597,476,790 | |||||||||||||
Nominal amount per Equity share | 2 | 2 | 2 | 2 | ||||||||||||||
Total amount of Equity shares | 10,000,000,000 | 7,196,405,126 | 7,194,953,580 | 7,194,953,580 | ||||||||||||||
Ordinary Shares | Number of Ordinary shares | 4,000,000,000 | 3,089,466,453 | 3,088,973,894 | 3,088,973,894 | |||||||||||||
Nominal amount per’ Ordinary shares | 2 | 2 | 2 | 2 | ||||||||||||||
Total amount of Ordinary shares | 8,000,000,000 | 6,178,932,906 | 6,177,947,788 | 6,177,947,788 | ||||||||||||||
‘A’ Ordinary Shares | Number of ‘A’ Ordinary shares | 1, 000,000,000 | 508,736,110 | 508,502,896 | 508,502,896 | |||||||||||||
Nominal amount per ‘A’ Ordinary shares | 2 | 2 | 2 | 2 | ||||||||||||||
Total amount of ‘A’ Ordinary shares | 2,000,000,000 | 1,017,472,220 | 1,017,005,792 | 1,017,005,792 | ||||||||||||||
Others | Number of preference shares | 300,000,000 | 0 | 0 | 0 | |||||||||||||
Nominal amount per preference share | 100 | 0 | 0 | 0 | ||||||||||||||
Total amount of preference shares | 30,000,000,000 | 0 | 0 | 0 | ||||||||||||||
Unclassified shares | 0 | 0 | 0 | 0 | ||||||||||||||
Total amount of unclassified shares | 0 | 0 | 0 | 0 | ||||||||||||||
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|
|
|
|
|
| |||||||||||
Total | 40,000,000,000 | 7,196,405,126 | 7,194,953,580 | 7,194,953,580 | ||||||||||||||
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B. Memorandum and Articles of Association
General
The Company is registered with the Registrar of Companies, Mumbai, under registration number 004520 and bearing Corporate Identify Number (CIN) L28920MH1945PLC004520. The following description of ourthe Company’s share capital is a summary of the material terms of our Memorandum andthe Articles of Association and Indian corporate law regarding ourthe Company’s Shares and the holders thereof. They may not contain all of the information that is important to you. To understand them fully, you should read our Memorandum of Association andthe Articles of Association, as amended, which are incorporated by reference into this annual report on Form20-F as Exhibit 1.2. The following description is qualified in its entirety by reference to our Memorandum andthe Articles of Association and applicable law.
Authorized and Issued Share Capital
OurThe authorized share capital of the Company is Rs.40 billion divided into:
4 billion Ordinary Shares of par value Rs.2 each, of which 2,887,843,0463,089,466,453 is issued, 2,887,348,6943,088,973,894 is subscribed and fully paid, 494,352492,559 are issued but held in abeyance and 570 are issued but partiallypaid-up as of the date of this annual report on Form20-F;
1 billion ‘A’ Ordinary Shares of par value Rs.2/- each, of which 508,736,110 isare issued, 508,502,371 is508,502,896 are subscribed and fully paid and 233,739233,214 are issued but held in abeyance as of the date of this annual report on Form20-F; and
300 million Convertible Cumulative Preference Sharesconvertible cumulative preference shares of par value Rs.100/- each; however, the Convertible Cumulative Preference Sharesconvertible cumulative preference shares have not been issued.
Pursuant to the resolution, dated May 23, 2018, passed by the Board and the special resolution passed by the Company’s shareholders at the annual general meeting held on August 3, 2018, the Company approved the 2018 Option Scheme. Based on the approval of the shareholders of the Company at such annual general meeting, an aggregate of 7,812,427 options were granted to eligible employees during Fiscal 2020 and Fiscal 2019 under the 2018 Option Scheme:
Number of options granted on September 6, 2018: 4,995,690
None
Number of our Shares are held by usoptions granted on March 28, 2019: 2,816,737
During the financial year 2019-20, there has been no change in the Scheme. There were no Options granted or vested or any shares issued on our behalf.vesting during the year. There were 589,530 options which got forfeited / lapsed during the year. The Scheme is in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.
Objects and Purposes
Our principal objects, as provided by clause 3 of our Memorandumthe Company’s memorandum of Association,association, include:
Manufacturing, marketing, import, export, hiring and letting on of commercial vehicles,Commercial Vehicles, automobile cars, two wheeler vehicles, heavy and construction equipment including components, accessories and spare parts in relation thereto;
To carry on the business as manufacturers and dealers of machinery articles and goods of all classes;
To carry on the business of manufacturing materials which may be usefully combined with ourthe Company’s manufacturing and engineering business; and
To carry on the business of financing andre-financing of all types of vehicles, construction equipment, capital equipment and services by way of credit, hire purchases, leases and loans.
Directors
Under ourthe Articles of Association, the number of our directorsDirectors of the Company may not be lessfewer than three or more than 15. Our board of directorsThe Board comprises ninesix members as of the date of this annual report on Form20-F. Appointments of new directorsDirectors and remuneration payable to them are made through a majority vote of the full board of directorsBoard and approved by a requisite majority of ourthe shareholders of the Company in attendance at each year’s annual general meeting, provided that a quorum is met.
Under the Companies Act, as well as ourthe Articles of Association, each of our directors,the Company’s Directors, who is in any way directly or indirectly concerned or interested in a contract or arrangement or proposed contract or arrangement entered into or to be entered into by or on our behalf of the Company is required to disclose the nature of his concern or interest at a meeting of the board of directorsBoard in which the contract or arrangement is discussed and shall not vote or participate at such meeting or the first meeting of the board of directorsBoard held after the directorDirector becomes concerned or interested.
Under the Companies Act and ourthe Articles of Association, we arethe Company is restricted from, directly or indirectly, advancing any loan, including any loan represented by a book debt, to any of our directorsits Directors or to any other person in whom the directorDirector is interested or give any guarantee or provide any security in connection with any loan taken by the directorDirector or such other person.
Under ourthe Articles of Association, a directorDirector is not required to hold any qualification shares. OurShares. The Articles of Association do not prescribe an age limit for the retirement of the directors.Directors. Under the governance guidelines adopted by our board of directors, executive directorsthe Board, Executive Directors retire at the age of 65, independent directorsIndependent Directors retire at the age of 75 and othernon-executive directors retire at the age of 70. Under the governance guidelines, the maximum tenure of an independent directorIndependent Director is five years or until retirement age, whichever is earlier, extendable for up to a total of two terms, based on, among other things, the merit and contribution of each director.earlier.
At the annual general meeting in each year,one-third of the directors,Directors, being those who have held their position the longest since their appointment, retire by rotation. Under the Companies Act, an independent director holds office for a term of up to five consecutive years on the board of a company and would not be liable to retire by rotation. An independent directorIndependent Director would be eligible to bere-appointed for an additional five-year term upon passing of a special resolution by our company.the Company. Re-appointment of an independent directorIndependent Director is effective upon fulfilling the conditions to appoint a directorDirector as described above. No independent directorIndependent Director may hold office for more than two consecutive terms of five years each. An independent directorIndependent Director may become eligible forre-appointment after the expiration of three years of ceasing to become an independent director,Independent Director, provided that he/she is not directly or indirectly associated with us during such three-year period.
In addition, under the Companies Act, every listed company in India is required to appoint at least one female director on the board of directors of a company. Further, under the provisions of the Listing Regulations, top 500 listed entities are required to appoint at least one independent woman director on the board of directors of a company. We areThe Company is in compliance with this requirement as of the date of this annual report on Form20-F.
Dividends
Under the Companies Act, no dividend can be declared or paid by a company for any fiscal year except out of the profits of the company for that fiscal year and/or any previous fiscal year(s) that remain undistributed. Furthermore, no company may declare a dividend unless carried over previous losses and depreciation not provided for in previous years are set off against profits of the company of the current year on a standalone basis. However, in the event of inadequacy or absence of profits during a fiscal year, the board of directorsBoard may declare a dividend not exceeding the average rate at which dividends were declared by it in the immediately preceding three years, calculated on a standalone basis. Dividends payable out of the undistributed, accumulated profits of a company from any prior fiscal year(s), and transferred by the company to its reserves, should not exceed 10% of thepaid-up capital and free reserves as stated in the latest audited financial statement, after setting off losses incurred in the fiscal year in which the dividend is declared, on a standalone basis. The balance of reserves after such withdrawal must not be below 15% of thepaid-up share capital as stated in the latest audited financial statements on a standalone basis.
Under the Companies Act, the Board of Directors of a company may declare interim dividend during any financial year or at any time during the period from closure of financial year till holding of the annual general meeting out of the surplus in the profit and loss account or out of profits of the financial year for which such interim dividend is sought to be declared or out of profits generated in the financial year till the quarter preceding the date of declaration of the interim dividend. Provided that in case the company has incurred loss during the current financial year up to the end of the quarter immediately preceding the date of declaration of interim dividend, such interim dividend shall not be declared at a rate higher than the average dividends declared by the company during the immediately preceding three financial years.
Under the Companies Act, unless the board of directors of a company recommends the payment of a dividend, the shareholders at a general meeting have no power to declare any dividend. Under ourthe Articles of Association, the shareholders at a general meeting may declare a lower, but not higher, dividend than that recommended by the board of directors.Board. Dividends are generally declared as a percentage of the par value. The board of directorsBoard may declare and pay interim dividends.
Under the Companies Act, dividends can be paid in cash only to shareholders listed on the register of shareholders on the date that is specified as the “record date” or “book closure date”. No shareholder is entitled to a dividend while any lien in respect of unpaid calls on any of such shareholder’s shares is outstanding.
The holders of ‘A’ Ordinary Shares are entitled to receive dividends for any fiscal year at a rate that is five percentage points more than the aggregate rate of dividends declared on Ordinary Shares for that fiscal year.
Under the Companies Act, as well as ourthe Articles of Association, if ourthe Company’s share capital is divided into different classes of shares, all or any of the rights or privileges attached to each class of shares may be varied, modified, abrogated or dealt with, with the consent in writing of the holders of not less than three-fourths of the issued shares of that class, or with the sanction of a special resolution passed at a separate meeting of the holders of the issued shares of that class. OurThe Articles of Association further provide that the rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly prohibited by the terms of the issue of the shares of that class, be deemed to be varied by the creation or issue of further shares rankingpari passu thereto.
The Companies Act allows a company to issue shares with differential rights as to dividends, voting or otherwise subject to the authority in its articles of association and other conditions prescribed under the applicable law. In this regard, the applicable laws in India provide that a company may issue shares with differential voting rights, if:
Such issuance is authorized by its shareholders through a postal ballot;
The company has distributable profits in terms of the Companies Act for a period of three financial years;
The company has not defaulted in filing financial statements and annual returns for the immediately preceding three years;
The articles of association of such company allow for the issuance of such shares with differential voting rights; and
Certain other conditions set forth in the Companies (Share Capital and Debentures) Rules, 2014 are fulfilled.
In accordance with ourthe Articles of Association, wethe Company may issue Ordinary Shares with differential rights as to voting and/or dividends up to an amount not exceeding 25% of ourits total issued Ordinary Share capital or such other limit as may be prescribed by applicable laws, rules or regulations. This is stricter than the requirement under the Companies Act and the Companies (Share Capital and Debentures) Rules, 2014, according to which no company may issue shares with differential rights exceeding 26% of its total post-issue paid up equity share capital including equity shares with differential rights issued at any point of time. An amendment to the Companies (Share Capital and Debenture) Rules, 2014 on June 18, 2014 clarified that the Companies Act, 1956 continues to govern equity shares with differential rights issued thereunder.
The Company, in accordance with SEBI Notification dated July 8, 2016, formulated a Dividend Distribution Policy, which was adopted by the board of directorsBoard at theirits meeting held on March 30, 2017. A copy of the Dividend Distribution Policy is available on our website athttp://www.tatamotors.com/investors/pdf/dividend-distribution-policy.pdf, which www.tatamotors.com (which website does not form part of this annual report on Form20-F.20-F).
Calls on Shares
Under the Companies Act, as well as ourthe Articles of Association, our board of directorsthe Board may from time to time make such calls as they think fit upon our members in respect of all moneys unpaid on the shares held by them respectively and each member is required to pay the amount of every call so made on them to our company.the Company. Under the Companies Act, a capital call on a particular class of shares shall be made on a uniform basis on all shares falling under such class.
General Meetings of Shareholders
Annual General Meetings
We areThe Company is required to hold an annual general meeting each year and not more than 15 months should elapse between each annual general meeting. The annual general meeting should be held within a period of six months from the date of closing of the fiscal year, unless extended by a period not exceeding three months by the Registrar of Companies at ourthe Company’s request for any special reason.
The Ministry of Corporate Affairs (“MCA”) through its circular dated May 5, 2020 (“AGM Circular”) introduced relaxations for holding an annual general meeting through video conferencing, during the calendar year 2020, subject to compliance with the (a) provisions associated with annual general meetings under the Companies Act, 2013 and the articles of association of the company through electronic mode; and (b) requirements prescribed under the AGM Circular.
Extraordinary General Meetings
Our board of directorsThe Board may convene an extraordinary general meeting of shareholders when necessary or at the request of a shareholder or shareholders holding in aggregate not less thanone-tenth of ourpaid-up share capital.
The MCA through its circular dated April 8, 2020 read with circular dated April 13, 2020, (collectively, “Circulars”) has permitted companies to hold extraordinary general meetings through video conferencing or other audio visual means, until September 30, 2020, to enable companies to take decisions on unavoidable matters, subject to compliance with certain conditions prescribed in the Circulars, in addition to any other requirements provided under the Companies Act, 2013, or the relevant rules. The Circulars provide that companies are requested to take all decisions of an urgent nature, requiring approval of members (other than items of ordinary business, or business where a person has a right to be heard) through postal ballot/e-voting, without holding a general meeting. However, where holding an extraordinary general meeting is unavoidable, the Circulars require extraordinary general meetings to be held through video conferencing, pursuant to key relaxations and compliances provided under the Circulars.
Notices
Written notices convening a meeting (including an annual general meeting or an extraordinary general meeting) setting forth the date, place and agenda of the meeting must be given to members at least 21 days prior to the date of the proposed meeting. A general meeting may be called after giving shorter notice if consent is received in writing or in electronic mode by not less than 95% of the shareholders entitled to vote at such meeting. We provideThe Company provides written notices of general meetings to all shareholders and, in addition, provideprovides public notice of general meetings of shareholders in a daily newspaper of general circulation in India as prescribed under the Companies Act.
Quorum
The quorum required for a general meeting of our companythe Company under the Companies Act is 5, 15 or 30 shareholders personally present, depending on whether the total number of shareholders on the date of the meeting is less than 1,000, is between 1,000 and 5,000, or exceeds 5,000, respectively.
Scope of General Meetings
Certain matters may not be transacted at a general meeting and instead must be authorized by a resolution passed by means of a postal ballot. These matters include, among others:
Alteration of the objects clause in a memorandum of association;
Alteration of articlesthe Articles of associationAssociation in order to constitute as a private company;
Change in place of registered office outside the local limits of any city, town or village;
Change in objects for which a company has raised money from public through a prospectus;
Issue of shares with differential rights as to voting, dividends or otherwise;
Variation in the rights attached to a class of shares or debentures or other securities;
Sale of the whole or substantially the whole of an undertaking of a company;
Buy-back of shares of a company; and
Granting loans or extending guarantees in excess of limits prescribed under the Companies Act and the rules issued thereunder.
A notice to all the shareholders shall be sent along with a draft resolution explaining the reasons for the action and requesting them to send their assent or dissent in writing on a postal ballot form or through an electronic voting facility within a prescribed number of days from the date of posting the notice. Such notice shall also be placed on the website of a company after such notice is sent to shareholders and shall remain on the website until the last date of receipt of the postal ballot from members.
Voting Rights
Methods of Voting
At a general meeting, unless a poll is demanded or voting is carried out electronically (including when mandated by Indian law), resolutions at a general meeting are decided by a show of hands, where each member present has one vote. Before or upon the declaration of the result of the voting on any resolution on a show of hands, a poll may be ordered to be taken by the chairman of the meeting or demanded by shareholder(s) holding at leastone-tenth of the voting rights in respect of the resolution or aggregatepaid-up capital of at least Rs.500,000. Upon a poll, each shareholder entitled to vote and present in person or by proxy shall have voting rights in the same proportion as the capitalpaid-up on each share held by such holder bears to our totalpaid-up capital.
Under the provisions of the Listing Regulations, listed companies in India are required to provide their shareholders with the facility to exercise their right to vote by electronic means either at a general meeting of the company or by means of a postal ballot in accordance with the prescribed procedure under the Companies Act. Furthermore, pursuant to the Companies Act, any company having not less than 1,000 shareholders shall provide its members with facilities to exercise their rights at general meetings by electronic means. Accordingly, we providethe Company provides such electronic voting facilities to all of ourits shareholders.
Where a resolution is put to vote on a poll, such voting entitlement (excluding fractions, if any), will be applicable to holders of ‘A’ Ordinary Shares. As per the terms of issue, holders of the outstanding ‘A’ Ordinary Shares shall be entitled to one vote for every ten ‘A’ Ordinary Shares held. Where a resolution is put to vote in the meeting and is to be decided on a show of hands, the holders of ‘A’ Ordinary Shares shall be entitled to the same number of votes as available to holders of Ordinary Shares.
Ordinary and Special Resolutions
Ordinary resolutions may be passed by simple majority of those shareholders present and voting at the meeting. Certain matters are required to be authorized by special resolutions, which require that the votes cast in favor of the resolution must be at least three times the votes cast against the resolution. OurThe Articles of Association do not permit cumulative voting for the election of our directors.Directors. Matters requiring action by special resolution include the following:
Alteration of the Memorandum of Association and Articles of Association;
Varying the terms of contract or objects in a prospectus;
Issuance of global depositarydepository receipts or sweat equity shares;
Variation of shareholders’ rights;
Reduction of share capital;
Buy-back of ourthe Company’s Shares;
Sale, lease or other disposal of the whole or substantially the whole of the undertaking of our company;
Investment in trust securities of the amount of compensation received by us as a result of any merger or amalgamation;
Borrowing money in excess of ourpaid-up share capital and free reserves;
Winding-up or schemes of amalgamation; and
Removal of statutory auditors.
Voting by Proxy
A person may act as proxy on behalf of members not exceeding 50 and holding in the aggregate not more than 10% of our total share capital carrying voting rights, provided that a member holding more than 10% of ourthe total share capital of the Company carrying voting rights may appoint a single person as a proxy and such person shall not act as a proxy for any other person or shareholder. A shareholder may exercise his or her voting rights by proxy to be given in the form prescribed under the Companies Act. The instrument appointing a proxy is required to be lodged with us at least 48 hours before the time of the meeting. A shareholder may, by a single power of attorney, grant a general power of representation regarding several general meetings of shareholders. Any of ourthe shareholders of the Company may appoint a proxy. A corporate shareholder is also entitled to nominate a representative to attend and vote on its behalf at general meetings. A proxy may not vote except on a poll and does not have a right to speak at meetings. An authorized representative shall be entitled to exercise the same rights and powers, including the right to vote by proxy and by postal ballot on behalf of a body corporate that it represents.
Convertible Securities/Securities and Warrants
WeThe Company may issue from time to time debentures that are partly or fully convertible into shares at the time of redemption, provided that such issuance is approved by a special resolution passed at a general meeting of our companythe Company as prescribed under the Companies Act.
Register of Shareholders and Record Dates
We areThe Company is obliged to maintain a register of shareholders at ourits registered office or at some other placean alternate venue in Mumbai. The register and index of ourthe Company’s beneficial owners, which are maintained by a depository under the Depositories Act, 1996, isare deemed to be the index of members and register of shareholders. We recognizeThe Company recognizes as shareholders only those persons who appear on our register of shareholders and weit cannot recognize any person holding any shareShare or part of it upon any trust, express, implied or constructive, except as permitted by law. In the case of sharesShares held in physical form, we registerthe Company registers transfers of sharesShares on the register of shareholders upon the lodgment of the share transfer form, which must be duly stamped and completed in all respects and accompanied by a share certificate, or ifcertificate. If there is no certificate, thea letter of allotment in respect of sharesShares transferred must be submitted together with the duly stamped and completed transfer forms. InWith respect of electronic transfers, the depository transfers sharesShares by entering the name of the purchaser in its books as the beneficial owner of the shares.Shares. In turn, we enterthe Company enters the name of the depository in ourits records as the registered owner of the shares.Shares. The beneficial owner is entitled to all the rights and benefits as well as the liabilities with respect to the sharesShares that are held by the depository. This activity is done by ourthe Company’s registrar and transfer agent.
For the purpose of determining the shareholders, the register may be closed for periods not exceeding 45 days each year and not exceeding 30 days at any one time, subject to prior notice of at least seven days or such lesser period as may be specified by SEBI for listed companies in India. In order to determine the shareholders entitled to dividends, wethe Company generally keepkeeps the register of shareholders closed for approximately 21 days each year. Under the Listing Regulations, o, wethe Company may, upon at least seven working days’ (excluding the date of intimation and the record date) advance notice to such stock exchanges, set a record date and/or close the register of shareholders in order to ascertain the identity of shareholders entitled to the dividend. The trading of sharesShares and the delivery of certificates in respect thereof may continue while the register of shareholders is closed.
Annual Report and Financial Results
Our IndASInd AS audited financial statements for the relevant fiscal year, the directors’ report and the auditors’ report which are collectively referred to hereafter as the Indian(collectively, “Indian Annual Report,Report”), must be prepared before the annual general meeting. The Indian Annual Report also includes other financial information, a corporate governance section, a management discussion and analysis report, and general shareholders’ information and is made available for inspection at our registered office during normal working hours for 21 days prior to our annual general meeting.
Under the Companies Act, we arethe Company is required to file an annual general meeting report with the Registrar of Companies within 30 days from the date of the annual general meeting. As required under the Listing Regulations, copies of the annual general meeting report are required to be simultaneously sent to all the stock exchanges on which our sharesthe Company’s Shares are listed. The annual general meeting report details shall include, among other things, the number of shareholders attending the meeting, the business that was transacted, the time and location of the meeting, a confirmation of quorum and a summary of the proceedings of the meeting. WeThe Company must also publish ourits financial results in at least one national English language daily newspaper in India, one newspaper published in the language of the region where ourits registered office is situated, as well as on ourits website.
We submitThe Company submits information, including ourthe Indian annual reportAnnual Report and half-yearly financial statements, in accordance with the requirements prescribed under the Listing Regulations.
Transfer of Shares
Shares held through depositories are transferred in book-entry form or in electronic form in accordance with SEBI regulations, which govern the functioning of the depositories and participants prescribeby prescribing record keeping requirements and safeguards to be followed in this system. Transfers of beneficial ownership of shares held through a depository are exempt from stamp duty. We haveThe Company has entered into an agreement for these depository services with National Securities Depository Limited and the Central Depository Services (India) Limited.
The SEBI requires that all investors hold ourthe Company’s Shares in book-entry form for trading and settlement purposes, except for transactions that are not made on a stock exchange and transactions that are not required to be reported to the stock exchange.
OurThe Company’s Shares are freely transferable, subject only to the provisions of the Companies Act under which, if a transfer of securities is in contravention of any of the provisions of the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act, 1992 or the Companies Act or any other law for the time being in force, the Company Law Board or CLB,(“CLB”) may, on an application made by the depository, company, depository participant, the holder of the securities or the SEBI, direct any company or a depository to set right the contravention and rectify its register or records concerned. The National Company Law Tribunal, or NCLT was constituted with effect from June 1, 2016. By virtue of Section 466(1) of Companies Act, 2013, the CLB stands dissolved, and accordingly all functions and powers of the CLB have been transferred to the NCLT. If a company without sufficient cause refuses to register a transfer of Sharesshares within one month from the date on which the instrument of transfer is delivered to the company, the transferee may appeal to the NCLT seeking to register the transfer of Shares.shares. The NCLT may, after hearing the parties, either dismiss the appeal, or by order, direct that the transfer or transmission shall be registered by the company and the company shall comply with such order within a period of ten days offrom the receipt of the order; or make direct rectification of the register and also direct the company to pay damages, if any, sustained by any party aggrieved.
Pursuant to the Listing Regulations, in the event we havethe Company has not effected thea transfer of Shares within 15 days or where we haveit has failed to communicate to the transferee any valid objection to the transfer within the stipulated time period of 15 days, we areit is required to compensate the aggrieved party for the opportunity loss caused during the period of the delay.
The Companies Act provides that the securities or other interest of any member of a public company (such as our company) shall be freely transferable. OurThe Articles of Association provide for restrictions on the transfer of shares,Shares, including granting power to the board of directorsBoard in certain circumstances to refuse to register or acknowledge transfer of sharesShares or other securities issued by us.the Company. However, under the Companies Act these transfer restrictions are not enforceable; however, transfer restrictions may be enforceable under contract law as between two or more parties to a contract or an arrangement.
Please see Item 7.A “Major Shareholders and Related Party Transactions—Major Shareholders” for a description of obligations under Indian law to disclose significant shareholdings to us.
Acquisition of Ourthe Company’s Own Shares
Under the Companies Act, companies may purchase their own shares or other specified securities out of their free reserves or their securities premium account or the proceeds of any shares or other specified securities (other than the kind of shares or other specified securities proposed to be bought back) subject to the following conditions:
Thebuy-back is authorized by the articles of |
A special resolution is passed at the general meeting authorizing thebuy-back; |
Thebuy-back is 25% or less of the aggregatepaid-up capital and free reserves, provided thatbuy-back of equity shares is limited to 25% of the total equity capital in that fiscal year; |
The ratio of the aggregate of secured and unsecured debts owed by the company afterbuy-back is not more than twice thepaid-up capital and its free reserves; |
All the shares or other specified securities forbuy-back are fullypaid-up; |
Thebuy-back of the shares or other specified securities listed on any recognized stock exchange is in accordance with the regulations made by SEBI in this regard; and |
Thebuy-back in respect of shares or other specified securities other than those specified in clause vi. above is in accordance with the Companies Act. The condition mentioned in clause ii. above would not be applicable if thebuy-back is for less than 10% of the totalpaid-up equity capital and free reserves of the company provided it has been authorized by the board of directors of |
A company is also prohibited from purchasing its own shares or specified securities through any subsidiary company or through any investment company, or if the company has defaulted on the repayment of deposit or interest, redemption of debentures or preference shares, payment of dividend to a shareholder, repayment of any term loan or interest payable thereon to any financial institution or bank, or in the event ofnon-compliance with other provisions of the Companies Act. However, if the default in relation to any such repayment has been remedied and a period of three years has lapsed after the default has been remedied,buy-back is not prohibited.
Rights of Holders of ‘A’ Ordinary Shares
Holders of ‘A’ Ordinary Shares are entitled to enjoy all rights and privileges that are enjoyed by holders of Ordinary Shares pursuant to applicable law and under ourthe Articles of Association, with certain differences with respect to dividend and voting entitlements as further summarized below. Holders of our ‘A’ Ordinary Shares have the following rights:
Right to receive dividends, if declared. ‘A’ Ordinary Shareholders are entitled to receive dividends for any fiscal year at a rate that is five percentage points higher than the aggregate rate of dividends declared on Ordinary Shares for that fiscal year;
Right to attend general meetings and class meetings of all Ordinary Shareholders (including a meeting called in relation to any scheme under Sections 391/394 of the Companies Act, 1956 or as amended) and exercise voting powers, unless prohibited by law;law, including:
○ | If any resolution at any such meeting is put to vote by a show of hands, each ‘A’ Ordinary Shareholder is entitled to one vote, which is the same number of votes as available to holders of Ordinary Shares; |
○ | If any resolution at any such meeting is put to vote on a poll, or if any resolution is put to vote by postal ballot, each ‘A’ Ordinary Shareholder is entitled to one vote for every ten ‘A’ Ordinary Shares held. Fractional voting rights of ‘A’ Ordinary Shareholders are disregarded. For example, if an ‘A’ Ordinary Shareholder holds 39 ‘A’ Ordinary Shares, such holder will be entitled to three votes. If an ‘A’ Ordinary Shareholder holds less than ten Ordinary Shares, such holder will not be entitled to vote on a poll. The class of Ordinary Shareholders includes Ordinary Shareholders and ‘A’ Ordinary Shareholders; |
○ | The right to vote may be exercised by the ‘A’ Ordinary Shareholders in person or by proxy; and |
○ | The right to receive offers for shares through a rights issue and be allotted bonus shares. Holders of ‘A’ Ordinary Shares are only entitled to further ‘A’ Ordinary Shares and such rights or bonus issue shall be made to holders of ‘A’ Ordinary Shares in amounts required to maintain the proportion of ‘A’ Ordinary Shares to Ordinary Shares prior to the issue; |
Where an offer is made to purchase the outstanding shares, voting rights, equity capital, share capital or voting capital of our company in accordance with SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulation, 2013, or the Takeover Code, and other applicable laws, holders of ‘A’ Ordinary Shares shall have the right to receive an offer to purchase ‘A’ Ordinary Shares in the same proportion as offered to the holders of Ordinary Shares;
○ | For example, where an offer is made under the Takeover Code to purchase 20% of the Company’s outstanding Shares or voting rights or equity capital or share capital or voting capital, such offer shall also include an offer for 20% of the outstanding Ordinary Shares and 20% of the outstanding ‘A’ Ordinary Shares; |
○ | Furthermore, the pricing guidelines as specified under the Takeover Code or any other applicable laws in respect of offer for Ordinary Shares shall apply to an offer for ‘A’ Ordinary Shares and the percentage premium offered for the ‘A’ Ordinary Shares to its floor price shall be equal to the percentage premium offered for the Ordinary Shares to its floor price. The floor price for the Ordinary Shares and the floor price for the ‘A’ Ordinary Shares shall be determined in accordance with the Takeover Code; |
○ | All consideration to be received by the holders of ‘A’ Ordinary Shares in accordance with any such offer shall be paid in the same form and at the same time as that to be received by holders of Ordinary Shares; and |
○ | For the purposes of the Takeover Code, the terms “shares”, “voting rights”, “equity capital”, “share capital” or “voting capital” means and includes Ordinary Shares and ‘A’ Ordinary Shares; |
Where the pricing guidelines as specified under the Takeover Code or any other applicable laws in respect of offer for Ordinary Shares shall apply to an offer for ‘A’ Ordinary Shares and the percentage premium offered for the ‘A’ Ordinary Shares to its floor price shall be equal to the percentage premium offered for the Ordinary Shares to its floor price. The floor price for the Ordinary Shares and the floor price for the ‘A’ Ordinary Shares shall be determined in accordance with the Takeover Code;
Where we makethe Company makes an offer to purchase ourits securities in accordance with the SEBI(Buy-Back)(Buy-Back ) of Securities Regulations, 1998 and other applicable laws, holders of ‘A’ Ordinary Shares shall have the right to receive an offer in the same proportion and on equitable pricing terms as offered to the holders of Ordinary Shares;
Right to receive surplus on liquidation as available to holders of Ordinary Shares and in accordance with the proportion of Ordinary Shares to ‘A’ Ordinary Shares;
Such other rights as may be available to an ordinary shareholder of a listed public company under the Companies Act and articlesthe Articles of association.Association.
The ‘A’ Ordinary Shares are not convertible into Ordinary Shares at any time. The ‘A’ Ordinary Shares will not at any time exceed 25% of our total issued share capital.
Liquidation Rights
Subject to ourthe Company’s statutory duties, the rights of creditors, workmen and of the holders of any other shares entitled by their terms of issue to preferential repayment over ourthe Company’s Shares, in the event of ourthe Company’s winding-up, the holders of ourthe Company’s Shares are entitled to be repaid the amounts of capitalpaid-up or credited aspaid-up on such shares, or in case of shortfall, proportionately. All surplus assets after payment of ourthe Company’s statutory duties, amounts due to workmen, the holders of any preference shares and other creditors belong to the holders of the equity shares in proportion to the amountpaid-up or credited aspaid-up on these shares respectively at the commencement of thewinding-up.
Except as given below, we arethe Company is not a party to any material contract other than contracts entered into in the ordinary course of business as of the date of this annual report on Form20-F:
The Tata Brand Equity and Business Promotion Agreement, dated December 18, 1998, incorporated by reference into this annual report on Form20-F as Exhibit 4.1. Tata Motors Limited and certain of ourits subsidiaries have agreed to pay an annual subscription fee to Tata Sons which is equal to0.15%-0.25% of annual net income (defined as net revenues exclusive of excise duties and other governmental taxes andnon-operating income), subject to a ceiling of 5% of annual profit before tax (defined as profit after interest and depreciation but before income tax) based on Tata Motors Limited’s standalone financial statements prepared in accordance with Indian GAAP for participation and gain from promotion and protection of the Tata brand identity. Pursuant to the agreement, we havethe Company has also undertaken certain obligations for the promotion and protection of the Tata brand licensed to us under the agreement.
The agreement dated January 26, 2010, entered into by Jaguar Land Rover with Dr.Sir. Ralf Speth in connection with his appointment as CEO and director.Director. The compensation drawn by him pursuant to this agreement is shown in Item 6.B “Directors, Senior Management and Employees—Compensation”.Compensation.”
The agreement dated March 30, 2016, entered into by Tata Motors Limited with Mr. Guenter Butschek in connection with his appointment as CEO and Managing Director. The compensation drawn by him pursuant to this agreement is shown in Item 6.B “Directors, Senior Management and Employees—Compensation”.Compensation.”
The agreement effective as of November 14, 2017, entered into by Tata Motors Limited with Mr. P. B. Balaji in connection with his appointment as the Group CFO.Chief Financial Officer. The compensation drawn by him pursuant to this agreement is shown in Item 6.B “Directors, Senior Management and Employees—Compensation”.Compensation.”
General
Prior to June 1, 2000, foreign investment in Indian securities, including the acquisition, sale and transfer of securities of Indian companies, was regulated by the Foreign Exchange Regulation Act, 1973 and the notifications issued by the RBI thereunder.
With effect from June 1, 2000, foreign investment in Indian securities is regulated by the Foreign Exchange Management Act 1999, as amended from time to time, or FEMA, and the rules, regulations and notifications made under FEMA. A person resident outside India can transfer any security of an Indian company or any other security to an Indian resident only under the terms and conditions specified in FEMA and the rules and regulations made thereunder or as permitted by the RBI.
The RBI issued the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations 2017, or the Foreign Exchange Regulations,(Non-debt Instruments) Rules, 2019 (the “FEMA Rules”) to regulate the issue of Indian securities, including ADSs, to persons resident outside India and the transfer of Indian securities by or to persons resident outside India. The Foreign Exchange RegulationsFEMA Rules provide that an Indian entity may issue securities to a person resident outside India or record in its books any transfer of security from or to such person only in the manner set forth in FEMA and the rules and regulations made thereunder or as permitted by the RBI.
Foreign Direct Investment
The Government of India, pursuant to its liberalization policy, introduced FEMA, which along with the rules, regulations and notifications issued thereunder, regulates all foreign direct investment intoin India. Foreign Direct Investment, or FDI,direct investment (“FDI”) means investment by way of subscription and/or purchase of securities of an Indian company by anon-resident investor. Regulatory approval is required for investment in some sectors, including housing, petroleum (other than refining), defense and strategic industries. Also, the following investments would require prior regulatory permission:
Foreign investments, including a transfer of shares, in excess of foreign investment limits;
Investments by an unincorporated entity;
Investment in industries for which industrial licensing is compulsory; and
All proposals relating to transfer of control and/or ownership pursuant to amalgamation, merger or acquisition of an Indian company currently owned or controlled by resident Indian citizens and Indian companies, which are owned or controlled by resident Indian citizens to anon-resident entity, the activities of which company are not under the “automatic” route under existing Indian foreign investment policy.
Subject to certain exceptions, FDI and investment bynon-resident Indians in Indian companies do not require the prior approval of the Government of India (acting through the concerned ministries or departments, in consultation with the DIPP, Ministry of Commerce and Industry) or the RBI. The Government of India has indicated that in all cases where FDI is allowed under the automatic route pursuant to the FDI policy, the RBI would continue to be the primary agency for the purposes of monitoring and regulating foreign investment. In cases where the approval of the Government of India is obtained, no approval of the RBI is required. In both cases, the prescribed applicable normsstandards with respect to determining the price at which the shares may be issued by the Indian company to thenon-resident investor would need to be complied with and a declaration in the prescribed form, detailing the foreign investment, must be filed with the RBI once the foreign investment is made in the Indian company. The foregoing description applies only to an issuance of shares by, and not to a transfer of shares of, Indian companies.
Pricing
Under the requirements of the Consolidated FDI Policy of 2017 or the FDI Policy,(the “FDI Policy”), which came into effect on August 28, 2017, the price of shares of a listed Indian company issued tonon-residents on an automatic basis cannot be less than the price worked out in accordance with the guidelines issued by the SEBI for the preferential allotment of shares where the shares of such company are listed.
Every Indian company issuing shares or convertible debentures in accordance with the Foreign Exchange Regulations is required to submit a report to the RBI within 30 days of receipt of the consideration.
The above description applies only to a primary issue of shares or convertible debentures by an Indian company.
Portfolio Investment by Foreign Portfolio Investors
The Securities and Exchange Board of IndiaSEBI (Foreign Portfolio Investors) Regulations, 2019 (the “2019 FPI Regulations”) have replaced the SEBI (Foreign Portfolio Investors) Regulations, 2014 or the(the “2014 FPI Regulations, have replaced the Securities and Exchange Board of India (Foreign Institutional Investors) RegulationsRegulations”) and the regime for investments by qualified institutional investors.
The FPI Regulations came into effect on June 1, 2014. UnderSeptember 23, 2019. Unlike the 2014 FPI Regulations, a Foreign Institutional Investor, or FII, who holds a valid certificateunder the 2019 FPI Regulations, there are only two categories of registration from SEBI shall beFPIs, i.e., Category I and Category II FPI. All existing Category I FPIs are deemed to be a registered Foreign Portfolio Investor, or FPI, until the expiry of the block of three years for which fees have been paidregistered as perCategory I FPIs under the FII2019 FPI Regulations. An FII shall not be eligibleAll existing Category III FPIs are deemed to investhave been registered as an FII after registeringCategory II FPIs under the 2019 FPI Regulations. All existing Category II FPIs are deemed to have been registered either as anCategory I FPI or Category II FPI under the 2019 FPI Regulations, depending on the eligibility criteria met by such FPIs under the 2019 FPI Regulations. There are no deemed re-categorization for existing Category III FPI registration to Category I FPI under the 2019 FPI Regulations.
FPIs who are registered with the SEBI are required to comply with the provisions of the 2019 FPI Regulations. A registeredAs per the FEMA Rules, the total holding of each FPI may buy, subject to(or an investor group) shall be below 10% of the ownership restrictions discussed below, and sell freely securities issued by any Indian company, realizetotal paid up equity capital gains on investments made through the initial amount invested in India, subscribe toa fully diluted basis or renounce rights offerings for shares, appoint a domestic custodian for custody of investments made and repatriate the capital, capital gains, dividends, income received by way of interest and any compensation received toward sale or renunciation of rights offerings of shares. An FPI may not hold moreless than 10% of the totalpaid up value of each series of debentures or preference shares or share warrants issued capital of aby an Indian company in its own name. Theand the total holding of all FPIs in a company is subject to a cap ofput together (i.e., aggregate limit) shall not exceed 24% of the totalpaid-uppaid up equity capital on a fully diluted basis or paid up value of aeach series of debentures or preference shares or share warrants. The FPIs investing in breach of the prescribed limit of 10% shall have the option of divesting their holdings within five trading days from the date of settlement of the trades causing the breach. In case the FPI chooses not to divest, then the entire investment in the company which canby such FPI and its investor group shall be considered as investment under FDI and the FPI and its investor group shall not make further portfolio investment in the company concerned. The aggregate investment limit of 24% mentioned above could also be increased to the relevant industry sector cap/sectoral cap or statutory ceiling, as applicable, by the Indian company concerned through a resolution by its board of directors followed by a special resolution to that effect by its shareholders.
With effect from April 1, 2020, the aggregate limit for investment by FPIs is the sectoral caps applicable to the particularIndian company as set out under the Foreign Direct Investment Regime,FDI route. Prior to March 31, 2020, companies were provided the option of setting a lower aggregate limit of 24% or 49% or 74% as deemed fit, instead of the sectoral caps, with the passingapproval of its board of directors and shareholders (through a special resolution by the shareholders ofresolution). If a company inhas decreased its aggregate limit to 24% or 49% or 74%, it may subsequently increase such aggregate limit to 49% or 74% or the sectoral cap or statutory ceiling, respectively as deemed fit, with the approval of its board of directors and shareholders (through a general meeting andspecial resolution). Once the aggregate limit has been increased to a higher threshold, the Indian company cannot reduce the same to a lower threshold.
Portfolio investment, up to aggregate foreign investment level of 49% or sectoral or statutory cap, whichever is lower, will not be subject to prior intimationeither governmental approval or compliance of sectoral conditions, as the case may be, if such investment does not result in transfer of ownership and control of the resident Indian company from resident Indian citizens or transfer of ownership or control to persons resident outside India and other investments by a person resident outside India shall be subject to the RBI. conditions of Government approval and compliance of sectoral conditions as laid down in the FEMA Rules.
Pursuant to resolutions of the board of directorsBoard and special resolutions passed by ourthe shareholders of the Company, the FII and FPI limits have been increased to 35% of thepaid-up capital of Ordinary Shares and 75% of thepaid-up capital of ‘A’ Ordinary Shares.
FPIs are permitted toThe FEMA Rules provide that an FPI may purchase shares and convertible debentures,equity instruments of a listed Indian company on a recognized stock exchange in India through public offer or private placement, subject to the individual and aggregate limits and the conditions specified.
Further, under the 2019 FPI Regulations, an FPI may sell securities so acquired (i) in an open offer in accordance with the Securities Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; or (ii) in an open offer in accordance with the Securities Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; or (iii) through buyback of securities by a listed Indian company either through:
Subject to compliance with all applicable Indian laws, rules, regulations, guidelines and approvals in terms of Regulation 21 of the SEBI FPI Regulations, an FPI may issue, subscribe to or otherwise deal in offshore derivative instruments (as defined under the 2019 FPI Regulations as any instrument, by whatever name called, which is issued overseas by an FPI against securities held by it that are listed or proposed to be issued is not less thanlisted on any recognized stock exchange in India, as its underlying) directly or indirectly, only in the price at which the sharesevent (i) such offshore derivative instruments are issued only to Indian residents, or
The FPI Regulations specify that the shares purchased by a single FPI or an investor group (which means the same set of ultimate beneficial person(s) investing through multiple entities) must be below 10% of the issued capital of a company. All existing investments by FIIs, qualified foreign investors, which are persons who have opened a dematerialized account with a qualified depository participantregistered as a qualified foreign investor andsub-accounts thereofCategory I FPI); (iii) such offshore derivative instruments are grandfathered, thus, if an FPI already holds 10% of the issued capital of a company, it is not required to divest its existing holdings to comply with the stipulation to hold “below 10%”.
Under the FPI Regulations, Offshore Derivative Instruments, or ODIs, may be issued to only those entities that are regulated by an appropriate foreign regulatory authority. Furthermore, such ODIs may only be issued after compliance with applicable know-your-client norms. However, entities that are themselves unregulated but managed‘know your client’ norms; and (iii) compliance with other conditions as may be prescribed by a regulated entity will be eligible counterparties for ODIs under the FPI Regulations if such entities (i) have previously entered into an ODI with an FII at any time prior to January 7, 2014, and (ii) are registered as clients of the FII. Hence, all outstanding ODI transactions and counterparties under the FII Regulations will be treated as permitted ODI transactions and counterparties under the FPI Regulations. SEBI issued a circular on November 24, 2014 aligning the applicable eligibility and investment norms between the FPI regime and subscription through the ODI regime. SEBI.
An FPI shall issue ODIsissuing offshore derivative instruments is also required to ensure that any transfer of offshore derivative instruments issued by or on its behalf, is carried out subject to, amongst others, the following conditions:
(a) such offshore derivative instruments are transferred only to those subscribers who: (i) meet the eligibility criteria that are applicable to an FPI under the FPI Regulations and (ii) do not have “opaque structures”, as defined under the FPI Regulations. The investment restrictions applicable to FPIs under the FPI Regulations apply to subscribers of ODIs as well. Existing ODI positions which are notpersons in accordance with the SEBI circular dated November 24, 2014 may continue until2019 FPI Regulations; and
(b) prior consent of the ODI contract expires.FPI is obtained for such transfer, except when the persons to whom the offshore derivative instruments are to be transferred to are pre – approved by the FPI.
Investors in ADSs do not need to seek the specific approval from the Government of India to purchase, hold or dispose of their ADSs. Notwithstanding the foregoing, if an FII,FPI, non-resident Indian or overseas corporate body were to withdraw its equity shares from an ADS program, its investment in the equity shares would be subject to the general restrictions on foreign ownership.
Registered FIIsFPIs are generally subject to tax under Section 115AD of the Income Tax Act of 1961.1961 (the “Income Tax Act”). See Item 10.E “Additional Information—Taxation—Taxation of Capital Gains and Losses—Indian Taxation”.Taxation.”
Portfolio Investment byNon-Resident Indians
A variety of methods for investing in shares of Indian companies are available tonon-resident Indians. These methods allownon-resident Indians to make portfolio investments in shares and other securities of Indian companies on a basis not generally available to other foreign investors. In addition to portfolio investments in Indian companies,non-resident Indians may also make foreign direct investments in Indian companies pursuant to the FDI. See “—Item 10.D “Additional Information—Exchange Control—Foreign Direct Investment”.Investment.”
Transfer of Shares and Convertible Debentures of an Indian Company by a Person Resident Outside India
The Government of India has granted general permission to persons residing outside India to transfer shares and convertible debentures held by them to an Indian resident, subject to compliance with certain terms and conditions and reporting requirements. A resident who wishes to purchase shares from anon-resident must, pursuant to the relevant notice requirements, file a declaration with an authorized dealer in the prescribed FormFC-TRS, together with the relevant documents and file an acknowledgment thereof with the Indian company to effect transfer of the shares to his name.
Moreover, the transfer of shares between an Indian resident and anon-resident (other than anon-resident Indian or NRI)(“NRI”)) does not require the prior approval of the Government of India or RBI, provided that (i) the activities of the investee company are under the automatic route pursuant to the FDI Policy, and the transfer is not subject to regulations under the Takeover Code, (ii) thenon-resident shareholding complies with sector limits under the FDI Policy and (iii) the pricing is in accordance with the guidelines prescribed by the SEBI and RBI.
Indirect Foreign Investment
The FDI Policy, among other things, prescribes the guidelines for (i) the calculation of total indirect foreign investment in Indian companies, (ii) transfer of ownership or control of Indian companies in sectors with caps from resident Indian citizens tonon-resident entities and (iii) guidelines on downstream investments by Indian companies. Pursuant to the Consolidated FDI Policy, for the purposes of computation of indirect foreign investment in an Indian company, foreign investments in its parent company, by FPI (holding as atof March 31 of the relevant year), NRIs, ADSs, global depositarydepository shares, foreign currency convertible bonds, FDI, convertible preference shares and convertible currency debentures are required to be taken together. The FDI Policy is reissued annually.
Issue of Securities Throughthrough the Depository Receipt Mechanism
Issue of securities through the depository receipt mechanism by Indian companies is governed by the Companies Act, 2013, the Companies (Issue of Global Depository Receipts) Rules, 2014 and the Depository Receipts Scheme, 2014 or the DR Scheme.(the “DR Scheme”).
The Government of India notifiedannounced the DR Scheme on October 21, 2014, which came into force on December 15, 2014. Consequently, the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 or the 1993 Scheme,(the “1993 Scheme”) has been repealed except to the extent relating to foreign currency convertible bonds. The RBI also issued a circular on January 22, 2015 highlighting the salient features of the DR Scheme.
Under the DR Scheme, an Indian company, listed or unlisted, private or public, is permitted to issue securities, including equity shares, through the depository receipt mechanism if such company has not been specifically prohibited from accessing capital markets or dealing in securities. However, the SEBI through its circular dated October 10, 2019 (“SEBI Circular”), has now restricted the scope of issuance of depository receipts (“DRs”) to companies incorporated in and listed on a recognized stock exchange in India. Permissible securities that may be issued by an Indian company throughas per the depository receipt mechanism are “securities” asSEBI Circular have been defined under the Securities Contracts (Regulation) Act, 1956,to mean equity shares and debt securities, which includes, among other things, shares, bonds, derivatives, units of mutual funds and similar instruments issued by private companies, provided that such securities are in dematerialized form.form and rank pari passu with the securities issued and listed on a recognized stock exchange.
The SEBI Circular has notified a detailed framework for issuance of DRs by a listed Indian company. The new framework which has come into force on October 10, 2019, sets out eligibility requirements as well as certain obligations to be complied with by issuers of DRs. Further, the Depository Receipts (Amendment) Scheme, 2019 (the “DR Circular”) has also been notified on October 7, 2019 which amends the definition of “permissible jurisdiction”, inter alia, to include the International Financial Services Centre in India. A “permissible jurisdiction” for the purpose of the SEBI Circular means jurisdictions as may be notified by the central government from time to time, pursuant to notification no. G.S.R. 669(E) dated September 18, 2019 in respect of sub-rule 1 of rule 9 of Prevention of Money-Laundering (Maintenance of Records) Rules, 2005. A list of “permissible jurisdictions” has been subsequently notified by the Central Government through a notification dated November 28, 2019. Accordingly, SEBI through its circular dated November 28, 2019 notified the list of ‘permissible jurisdictions’ pursuant to the SEBI Circular.
Previously, under the DR Scheme, Companies were only required to comply with eligibility requirements pertaining to prohibition from accessing capital markets or dealing in securities. However, the current framework prescribes certain additional requirements, including not being declared as a willful defaulter or a fugitive economic offender.
In addition to the requirements under the Companies Act, 2013 and the DR Scheme, the current framework under the DR Circular sets out certain additional requirements for issuance of DRs. A permissible holder, i.e. a holder of DRs, now excludes an Indian and a non-resident Indian, which is beyond the requirements of the DR Scheme.
An Indian company may issue securities to a foreign depository for the purpose of issuing depository receipts through any mode permissible for the issue of such securities to other investors. The foreign depository may issue depository receipts by way of a public offering or private placement or in any other manner prevalent in the permissible jurisdiction. A “permissible jurisdiction” is defined as a foreign jurisdiction which is a member of the Financial Action Task Force on Money Laundering and whose securities regulator is a member of the International Organization of Securities Commissions.
Under the DR Scheme, securities may be issued through the depository receipt mechanism up to such a limit that the aggregate underlying securities issued to foreign depositories for issuance of depository receipts along with securities already held by persons resident outside India does not exceed the applicable foreign investment limitslimit prescribed by regulations framed under the FEMA. The depository receiptsDRs and the underlying securities may be converted into each other subject to the applicable foreign investment limit. For our company,Company, there is no investment limit.
Under the 1993 Scheme, the pricing of deposit receipts for listed companies could not have been less than the average of the weekly high and low closing prices of the related shares quoted on the relevant stock exchange during the two weeks preceding the relevant date. However, the DR Scheme provides that underlying securities shall not be issued to a foreign depository for issuance of depository receiptsDRs at a price which is less than the price applicable to a corresponding mode of issuance to domestic investors.
A listed company issuing DRs is also now required to file with the Indian stock exchanges, any public disclosure made to the international stock exchange within 24 hours from the date of filing. The issuer would also be required to file the offer document for an initial issue of DRs with SEBI and the stock exchanges to seek their comments, if any.
A listed company issuing DRs is also required to ensure compliance with extant laws including compliance with the minimum public shareholding requirements and limits on foreign investment holding under the FEMA. As regards pricing, the current framework provides that the pricing of DR issuances would have to be undertaken at a minimum price equivalent to the price determined for corresponding mode of issue to domestic investors.
In terms of the DR Scheme, while the foreign depository is entitled to exercise of voting rights on the shares underlying the DRs could be dealt with contractually under the deposit agreement, if any, associated withsuch voting rights were not exercisable by the DR holders, the shares would not be counted towards minimum public shareholding requirements. Further, voting rights on the underlying securities whether pursuantshares are mandatorily required to voting instructions from the holder of depository receipts or otherwise. Furthermore, a holder of depository receipts issued against underlying equity shares shall have the same obligations as if it is the holder of the equity shares if it has the right to issue voting instructions.be exercised only by DR holders.
EACH INVESTOR OR PROSPECTIVE INVESTOR SHOULD CONSULT HIS, HER OR ITS OWN TAX ADVISORS WITH RESPECT TO INDIAN AND LOCAL TAX CONSEQUENCES OF ACQUIRING, OWNING OR DISPOSING OF EQUITY SHARES OR ADSs.
This section describes the material U.S. federal income tax consequences to “U.S. holders” (as defined below) and the Indian stamp duty and income and goods and service tax consequences to“non-residents” (as defined below) of owning Shares or ADSs. This discussion does not discuss all of the tax consequences that may be relevant to you in light of your individual circumstances, including foreign, state or local tax consequences, estate and gift tax consequences, and tax consequences arising under the Medicare contribution tax on net investment income or the alternative minimum tax. It applies to you only if you hold your Shares or ADSs as capital assets for tax purposes. This section does not apply to you if you are a member of a special class of holders subject to special rules, including:
A dealer in securities;
A trader in securities that elects to use amark-to-market method of accounting for securities holdings;
Atax-exempt organization;
A life insurance company;
A person that holds Shares or ADSs as part of a straddle or a hedging or conversion transaction;
A person that purchases or sells Shares or ADSs as part of a wash sale for tax purposes; or
A U.S. holder whose functional currency is not the U.S. dollar.
With regard to United StatesU.S. tax, the following discussion addresses only the material U.S. federal income tax consequences for persons that are “U.S. holders”. You are a U.S. holder if you are a beneficial owner of Shares or ADSs and you are, for U.S. federal income tax purposes:
An individual citizen or resident of the United States;
A corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state therein or the District of Columbia;
An estate whose income is subject to U.S. federal income tax regardless of its source; or
A trust if (i) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust, or (ii) it has a valid election in effect under applicable Treasury RegulationsDepartment regulations to be treated as a U.S. person.
With regard to Indian tax, the following discussion addresses only the tax consequences for persons that are“non-residents” of India, as defined in the Indian Income Tax Act, of 1961, as amended by the Finance Act, 2018, or the Income Tax Act,2020, and is based on the provisions of Section 115AC and other applicable provisions of the Income Tax Act and the Depository Receipts Scheme 2014 or the 2014DR Scheme, which has replaced the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 promulgated by the Government of India.
For purposesthe purpose of the Income Tax Act, anon-resident means a person who is not a “resident” of India. An individual is a resident of India during any fiscal year, if such person: (i) is in India in that year for 182 days or more or (ii) was in India for 365 days or more during the four preceding years and is in India for 60 days or more in that year. In order to avoid hardship to Indian citizens and persons of Indian origin who reside outside India (including for employment and business purpose), the above period of 60 days mentioned in (ii) above was relaxed to 182 days.
The Finance Act 2020, has reduced the said period of 182 days stated in the preceding paragraph to 120 days for Indian citizens and persons of Indian origin having total income greater than Rs. 15 lakhs (other than income from foreign sources). As a result, such individuals who come on a visit to India for 120 days or more but less than 182 days, would become a “Not Ordinarily Resident” under Indian law for such fiscal year (subject to satisfying other conditions mentioned in the second limb). This is applicable from Fiscal 2021.
The Finance Act 2020, with effect from April 1, 2020, has also provided that an Indian citizen would be deemed to be a resident in India (but “Not Ordinarily Resident” under Indian law) if such individual is not liable to tax in any other country or territory on account of residency or domicile (or any other similar nature) in that country, provided his total Income for the year, other than income from foreign sources, exceeds Rs.15 lakhs.
A firm or other association of persons is resident in India except where the control and the management of its affairs are situated wholly outside India. A company is said to be resident in India in any fiscal year if it is an Indian company or its “place of effective management”, in that year, is in India. “Place of effective management” means a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole are, in substance, made. The Residentialresidential test based on “place of effective management” is applicable from Fiscal 2017.
With regard to U.S. federal income tax, the following discussion is based upon the Internal Revenue Code of 1986, as amended, its legislative history, administrative pronouncements, judicial decisions and final, temporary and proposed Treasury Regulations,Department regulations, all as of the date hereof, changes to any of which may affect the tax consequences described herein, possibly with retroactive effect.effect, as well as on the Tax Convention between the United States of America and the Republic of India (the “Treaty”).
If an entity or arrangement that is classified as a partnership for U.S. federal income tax purposes holds Shares or ADSs, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership. If you hold Shares or ADSs as a partner in a partnership, you should consult your tax advisor with regard to the U.S. federal income tax treatment of an investment in ourthe Company’s Shares or ADSs.
This discussion addresses only U.S. federal income taxation and Indian stamp duty and income and goods and service taxation. In addition, this section is based in part upon the assumption that each obligation in the deposit agreement (as amended) and any related agreement will be performed in accordance with its terms.
This summary is not intended to constitute a complete analysis of the individual tax consequences tonon-resident holders for the acquisition, ownership and sale of ADSs and Shares.
Taxation of Dividends
In the descriptions below relating to Indian taxation, references to “you” are to a person resident outside India, subscribing to ADSs or Shares.
Indian Taxation
Dividends paidPrior to you will not be subject to Indian tax. However, we haveFinance Act, 2020, dividend income was exempt in your hands as the Company had to pay a “dividend distribution tax” under section115-O of theIncome-tax Act, currently at the effective rate of 20.555% (inclusive of applicable surcharge and cess) on the amount of dividend paid out. Further, in the case of a person (other than a domestic company and certain specified trust or institutions) who is a resident in India as per the Income Tax Act, income by way of dividends from domestic companies that exceed Rs.1,000,000 in the aggregate, shall be subject to income tax at 10% per annum, per Section 115BBDA of the Income Tax Act. ForHowever, pursuant to the Finance Act 2020, with effect from financial year beginning April 1, 2020, there has been a shift in the taxation of dividend income such that it will be now taxable in your hands as the provisions regarding dividend distribution tax under section 115-O of the aggregate amountIncome Tax Act stand deleted for dividend declared, distributed and/or paid by the Indian company after March 31, 20201.
Taxation in excessthe Hands of Rs.1,000,000 shall be subject toShareholder
Effective April 1, 2020, dividend on shares is taxable in the hands of the recipient under section 115A of the Income Tax Act at lower of the rate of 20% (plus applicable surcharge and cess) or as per the rates provided in the relevant double taxation avoidance agreement (“DTAA”) (read together with multilateral instruments (“MLI”) as applicable). Applicable effective tax rate for Fiscal 2021 on the dividend income under section 115A of the Income Tax Act, 1961 is tabulated below for certain category of recipients:
Category of shareholder | Dividend upto Rs.5 million | Dividend more than Rs.5 million but upto Rs.10 million | Dividend more than Rs.10 million but upto Rs.100 million | Dividend more than Rs. 100 million | ||||||||||||
Effective tax rate applicable to non resident individuals | 20.80 | % | 22.88 | % | 23.92 | % | 23.92 | % | ||||||||
Effective tax rate applicable to foreign companies | 20.80% | 21.22 | % | 21.84 | % |
Taxation in the Hands of ADS Holders
Dividend on ADS is taxable in the hands of the recipient under section 115AC of the Income Tax Act at lower of the rate of 10% (plus applicable surcharge and cess) or as per the rates provided in the relevant DTAA (read together with MLI, as applicable). Applicable effective tax without any deduction with respect to any expenditure or allowance or set offrate for Fiscal 2021 on the dividend income is tabulated below for certain category of loss.ADS holders:
If you are anon-resident of India, the distributions made to you of additional ADSs or Shares made with respect to ADSs or Shares should not be subject to Indian tax.
Category of ADS holder | Dividend upto Rs.5 million | Dividend more than Rs.5 million but upto Rs.10 million | Dividend more than Rs.10 million but upto Rs.100 million | Dividend more than Rs.100 million | ||||||||||||
Effective Tax rate applicable to non-resident individuals | 10.40 | % | 11.44 | % | 11.96 | % | 11.96 | % | ||||||||
Effective Tax rate applicable to foreign companies | 10.40% | 10.608 | % | 10.92 | % |
1 | The Finance Act, 2020 has deleted section 115BBDA of the Act which provided for tax at the rate of 10% on dividend income from domestic companies exceeding Rs. 1,000,000 in the hands of the shareholder being a person resident in India (other than a domestic company and certain specified trusts or institutions). |
U.S. Federal Income Taxation
The tax treatment of your Shares or ADSs will depend in part on whether or not the Company is classified as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes. Except as discussed below under Item 10.E “Additional Information—Taxation—Passive Foreign Investment Companies”, this discussion assumes that the Company is not classified as a PFIC for U.S. federal income tax purposes.
Under the U.S. federal income tax laws, and subject to the passive foreign investment company, or PFIC, rules described below, if you are a U.S. holder, the gross amount of any distribution we pay out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) with respect to Shares or ADSs, other than certain pro-rata distributions of the Company’s shares, will be treated as a dividend that is subject to U.S. federal income taxation. If you are anon-corporate U.S. holder, dividends that constitute qualified dividend income will be taxable to you at the preferential rates applicable to long-term capital gains provided that you hold the Shares or ADSs for more than 60 days during the121-day period beginning 60 days before theex-dividend date and meet other holding period requirements. Dividends we paythe Company pays with respect to ourthe Shares or ADSs generally will generally be qualified dividend income provided that, in the year that you receive the dividend, the Shares or ADSs are readily tradable on an established securities market in the United States or the Company is eligible for the benefits of the Treaty. The Company’s ADSs are listed on the NYSE, and the Company therefore expects that dividends paid on its ADSs will be qualified dividend income. The Company believes that it is currently eligible for the benefits of the Treaty and it therefore expects that dividends on the Company’s Shares will be qualified dividend income, but there can be no assurance that the Company will continue to be eligible for the benefits of the Treaty.
The dividend is taxable to you when you, in the case of Shares, or the depositary,depository, in the case of ADSs, receive the dividend, actually or constructively. The dividend will not be eligible for the dividends-received deduction generally allowed to United StatesU.S. corporations in respect of dividends received from other United StatesU.S. corporations. TheIn the case of a dividend payment on the Shares, the amount of the dividend distribution that you must include in your income as a U.S. holder will be the U.S. dollar value of the Indian rupee payments made, determined at the spot Indian rupee/U.S. dollar rate on the date the dividend distribution is includible in your income, regardless of whether the payment is in fact converted into U.S. dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date you include the dividend payment in your income to the date you convert the payment into U.S. dollars will be treated as ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income. The gain or loss generally will be income or loss from sources within the United States for foreign tax credit limitation purposes. Distributions in excess of current and accumulated earnings and profits, as determined for U.S. federal income tax purposes, will be treated as anon-taxable return of capital to the extent of your basis in the Shares or ADSs and thereafter as capital gain. However, we dothe Company does not expect to calculate earnings and profits in accordance with U.S. federal income tax principles. Accordingly, you should expect to generally treat distributions we makethe Company makes as dividends for U.S. federal income tax purposes.
Dividends that we paythe Company pays with respect to Shares and ADSs will generally be income from sources outside the United States and will, depending on your circumstances, be either “passive” or “general” income for purposes of computing the foreign tax credit limitation allowable to you. However, if (a) the Company is 50% or more owned, by vote or value, by U.S. persons and (b) at least 10% of the Company’s earnings and profits are attributable to sources within the United States, then for foreign tax credit purposes, a portion of the Company’s dividends would be treated as derived from sources within the United States. With respect to any dividend paid for any taxable year, U.S. source ratio of the Company’s dividends for foreign tax credit purposes would be equal to the portion of the Company’s earnings and profits from sources within the United States for such taxable year, divided by the total amount of the Company’s earnings and profits for such taxable year. You will not be entitled to claim a U.S. foreign tax credit for any Indian dividend distribution taxes paid by usthe Company on a distribution to you.
Taxation of Capital Gains and Losses
Indian Taxation
Capital Gains
If you are anon-resident of India, any gain realized by you on the sale of ADSs to anothernon-resident and any gain on conversion of ADS into shares, as per Section 47 of the Income Tax Act, will not be subject to Indian capital gains tax under Section 115AC and other applicable provisions of the Income Tax Act. Further conversion of ADS into Shares will not attract any tax in India.
Capital gains realized by you on the transfer of Shares (including Shares received in exchange of the ADSs), whether in India or outside India to anon-resident of India or Indian resident, will be liable for income tax under the provisions of the Income Tax Act.
Shares (including Shares issuable on the exchange of the ADSs) held by you for a period of more than 12 months will be treated as long-term capital assets and the capital gains arising on the sale thereof will be treated as long-term capital gains. If the Shares are held by you for a period of 12 months or less, such Shares will be treated as short-term capital assets and the capital gains arising on the sale thereof will be treated as short-term capital gains. Anon-resident holder’s holding period (for purposes of determining the applicable Indian capital gains tax rate) in respect of Shares received in an exchange or redemption for ADSs commences on the date on which the request for such redemption is made.
For the purpose of computing capital gains tax on the sale of the Shares received on conversion of ADS or sale of ADSs, the cost of acquisition of such Shares received in exchange for ADSs will be determined on the basis of the prevailing price of the Shares on the BSE or NSE, as applicable, as on the date on which the request for such redemptiontransfer is made, while the cost of acquisition of shares directly converted from the ADSs will be determined on the basis of the price prevailing on the BSE or NSE, as applicable, on the date of conversion into equity shares.made.
As per the Finance Act 2018, with effect from April 1, April 2018, gaingains realized by you exceeding Rs.1,00,000/- in a financial year on sale of listed Shares on BSE or NSE, held for more than 12 months, will now be subject to Indian capital gains tax in accordance with a newly inserted section 112A of the Income Tax Act. The transaction in Shares will be subject to securities transaction tax (“STT”), wherever applicable. The earlier exemption to such long term capital gains tax under section 10(38) of the Income Tax Act ishas been withdrawn with certain grandfathering provisions to safeguard the interest of existing investors. The grandfathering provisions as per the newly inserted Section 112A is furtherthat are discussed below for your reference. The Securities TransactionGrandfathering provisions were introduced in the Income Tax (‘STT’), continuesAct with a view to be levied at the timesafeguard interests of acquisition subject to exemption providedinvestors holding shares as per notification on June 5, 2017. The STT will be levied on and collected by the BSE or NSE, as applicable, on which shares are sold at the rate of 0.025% to 0.1% depending upon the nature of the transaction.
January 31, 2018. The Central Board of Direct Taxes, (CBDT) vide Notificationnotification, dated 04.02.2018April 2, 2018 issued FAQs clarifying that Costguidance providing illustrative scenarios for arriving at the cost of acquisition for Long-term Capital Asset transferred on or after April 1, 2018 shall be computed as under:
For instance, computation of LTCG on shares and computing the long-term capital gain. These scenarios (where shares are acquired on January 1, 2017 and sold on or after April 1, 2018, is illustrated below:2018) are given in the below table.
Sr. No. | Scenario | Actual Cost of Acquisition (AC) | Fair Market Value on January 1, 2018 (FMV) | Deemed Cost for computing LTCG (DC) | Sale Price on or after April 1, 2018 (SP) | LTCG/ (LTCL) | Scenario | Actual Cost of Acquisition (AC) | Fair Market Value on January 31, 2018 (FMV) | Deemed Cost for Computing LTCG (DC) | Sale Price on or After April 1, 2018 (SP) | LTCG/ (LTCL) | ||||||||||||||||||||||||||||||||
1 | AC<FMV<SP DC = FV | 100 | 200 | 200 | 250 | 50 | AC<FMV<SP DC = FV | 100 | 200 | 200 | 250 | 50 | ||||||||||||||||||||||||||||||||
2 | AC<FMV>SP DC = SP | 100 | 200 | | 200 (restricted to | | 150 | NIL | * | AC<FMV>SP DC = SP | 100 | 200 | | 200 (restricted to |
| 150 | NIL | * | ||||||||||||||||||||||||||
3 | AC>FMV<SP DC = AC | 100 | 50 | 100 | 150 | 50 | AC>FMV<SP DC = AC | 100 | 50 | 100 | 150 | 50 | ||||||||||||||||||||||||||||||||
4 | AC<FMV>SP DC = AC | 100 | 200 | 100 | ** | 50 | (50 | ) | AC<FMV>SP DC = AC | 100 | 200 | 100 | ** | 50 | (50 | ) |
* | As FMV is more than Sale Price, Deemed Cost is restricted to Sale Price resulting in LTCG as NIL. |
** | Though FMV > Actual Cost but since Sale Price < Actual |
In case of listed shares on recogniseda recognized stock exchange, FMV is the highest price as at January 1, 2018 and in case of unlisted shares the FMV is Net Asset Value as at March 31, 2018.
The said amendment is prospective in nature and thus, gains accrued on or before March 31, 2018 shall not be taxable.
Any gains realized by you on sale of listed Shares held for more than 12 months, whether STT is paid2 or not, will be subject to Indian capital gains tax at the rate of 10% plus applicable surcharge on income tax and education cess at the applicable rates.
Capital gains realized in respect of Shares held by you for 12 months or less (short-term capital gain) on which STT is paid, in the manner and rates set forth above, is subject to tax at the rate of 15% plus applicable surcharge on income tax and cess at the applicable rate. In the event that you do not pay STT, short-term capital gain will be subject to tax at variable rates with the maximum rate of 40% plus applicable rate of surcharge on income tax and cess at the applicable rate. The actual rate of tax on short-term capital gains depends on a number of factors, including your legal status and the type of income chargeable in India.
Tax on capitalCapital gains is generally subject to applicable withholding tax except where any treaty benefit may be deducted at source by the person paying for the shares in accordance with the relevant provisions of the Income Tax Act.available.
2 | As per section 112A, an exemption threshold of Rs. 100,000 is available in case applicable STT has been paid on transfer. |
Capital Losses
Section 115AC does not address capital losses arising on a transfer of Shares. In general terms, losses arising from a transfer of a capital asset in India may only be set off against capital gains and not against any other income. A short-term capital loss may be set off against a capital gain, whether short-term or long-term. However, long-term capital loss may only be set off against long-term capital gain and not against short-term capital gain. To the extent that the losses are not absorbed in the year of transfer, you may carry it forward for a period of eight assessment years immediately succeeding the assessment year for which the loss was first determined and may set off against the capital gains assessable for such subsequent assessment years. In order to set off capital losses in this manner, you would be required to file appropriate and timely Income tax returns in India. TheYou will now be allowed to off set any long-term capital loss arisingincurred on a sale of shares prior to 01.04.2018 in respect of which STT is paid may not be available forset-off against any capital gains. However, considering the fact that such long term capital gains will now be taxable as per newly inserted section 112A of the Act, you will be allowed toset-off such long term capital lossor after April 1, 2018 against any futurelong-term capital gains.
U.S. Federal Income Taxation
Generally, subject to the PFIC rules discussed below, if you are a U.S. holder and you sell or otherwise dispose of your Shares or ADSs, you will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference between the U.S. dollar value of the amount you realize and your tax basis, determined in U.S. dollars, in your Shares or ADSs. If you are anon-corporate U.S. holder, your capital gain is generally taxed at preferential rates where you have a holding period greater than one year in the applicable Shares or ADSs at the time of the sale or other disposition. If you are a U.S. holder, certain limitations exist on your ability to deduct capital losses for U.S. federal income tax purposes. Your gain or loss from the disposition or other sale of Shares or ADSs will generally be income or loss from sources within the United States for foreign tax credit limitation purposes.
As discussed under “Taxation of Capital Gains and Losses—Indian Taxation”, above, you may be subject to Indian tax upon a sale or other disposition of Shares or ADSs. The Indian capital gains tax described above should be treated as a creditable tax for U.S. federal income tax purposes. However, any capital gain that you recognize upon a sale of Shares or ADSs will generally be treated as U.S. source gain. Accordingly, you will not be able to claim a credit for the capital gains tax under the U.S. foreign tax credit limitation rules unless you recognize a sufficient amount of foreign source income in the appropriate U.S. foreign tax credit limitation basket in the taxable year in which you recognize the capital gain. In addition, the Securities Transaction Tax, levied and collected by BSE and NSE, as applicable depending on which shares are sold, may not be treated as a creditable tax for U.S. federal income tax purposes. You should consult your tax advisor regarding the application of the U.S. foreign tax credit rules to any Indian taxes that you are subject to in respect of a sale or disposition of the Shares or ADSs.
Passive Foreign Investment Companies
We believeThe Company believes that the Shares and ADSs should not currently be treated as stock of a PFIC for U.S. federal income tax purposes, butand the Company does not expect to become a PFIC in the foreseeable future. However, this conclusion is a factual determination that is made annually and thus may be subject to change. It is therefore possible that the Company could become a PFIC in a future taxable year. If wethe Company were to be treated as a PFIC, then gain realized on the sale or other disposition of your Shares or ADSs would in general not be treated as capital gain. Instead, if you are a U.S. holder that has not made amark-to-market election with respect to your ADSs or Shares, you would generally be treated as if you had realized such gain and certain “excess distributions” ratably over your holding period for the Shares or ADSs and would be taxed at the highest tax rate in effect for each such year to which the gain was allocated, together with an interest charged in respect of the tax attributable to each such year. With certain exceptions, your Shares or ADSs will be treated as stock in a PFIC if wethe Company were a PFIC at any time during your holding period in your Shares or ADSs. Dividends that you receive from usthe Company will not be eligible for the special tax rates applicable to qualified dividend income if we arethe Company is treated as a PFIC with respect to you either in the taxable year of the distribution or the preceding taxable year, but instead will be taxable at rates applicable to ordinary income.
Indian Tax Treaties
The provisions of the tax treaty entered into by India and the country of your residence will be applicable to the extent they are more beneficial to you. There is a Double Tax Avoidance Agreement between the United States and India. The Government of India has introduced a provision related to General Anti Avoidance Rules or GAAR,(“GAAR”), under which certain arrangements could be declared to be an impermissible avoidance arrangement. The consequences of such arrangements include denial of a tax benefit or benefit under tax treaty. As per the Income Tax Act, the GAAR provisions are applicable from the Government of India’s fiscal yearIndia as of Fiscal 2018. The Income Tax Rulesincome tax rules in this regard have been amended, and accordingly, investments made prior to April 1, 2017 are exempt from these GAAR provisions. Further, it has been clarified by amendment to the rules that GAAR provisions would apply to any arrangement (irrespective of the date on which such arrangement has been entered into) in respect of which tax benefit has been obtained on or after April 1, 2017. Also, the Government of India has introduced a provision by which you would not be entitled to claim any relief under the tax treaty unless a tax residency certificate is obtained by you from the government of the country of which you are resident. Furthermore, you shall be required to provide such other required information as has been publicly stated by the Government of India. Availability of any applicable tax treaty benefit would also be subjected to the amended provisions of the tax treaty read with the MLI.
Dividend income declared up to March 31, 2020 and distributed or paid thereafter will not be subject to tax in India in your hands. IfHowever, dividends declared and distributed or paid on or after April 1, 2020 shall be taxable in India in your hands subject to any relief provided in the tax treaty entered into by India and the country of which you are resident.
Further, if any Shares are held by you following withdrawal thereof from the depository under the deposit agreement, the provisions of a tax treaty, if any, entered into by India and the country of which you are resident will be applicable to determine the taxation of any capital gain arising from a transfer of such Shares.
Under the 1993 Scheme, during the period of fiduciary ownership of Shares in the hands of the depository, the provisions of the tax treaty entered into by India and the country of residence of the depository will be applicable to determine the taxation of any capital gains in respect of ADSs.
Indian Stamp Duty
Under Indian law, any transfer of ADSsADS will be exempt from liability to Indian stamp duty. Purchasers of Shares who seek to register such Shares on our share register are required to pay IndianWith effect from July 1, 2020, stamp duty at theshall be chargeable on transfer of shares in dematerialized form. The rate in such case shall be 0.015% of Rs.0.25 for every Rs.100 or part thereof of thetotal market value of such Shares. In order to register ashares in case transfer of Sharesis made on delivery basis and 0.003% in physical form with the company, itcase transfer is necessary to present a stamped deed of transfer. An acquisition of Shares in physical form from the depository in exchange for ADSs representing such Shares will not render an investor liable to Indian stamp duty but we will be required to pay stamp duty at the applicable ratemade on the share certificate. However, since our Shares are compulsorily deliverable in dematerialized form (except for trades of up to 500 Shares which may be delivered in physical form), no stamp duty is payable on the acquisition or transfer of Shares in dematerialized form.
Indian Goods and Services Tax
Brokerage or commission fees paid to stockbrokers in India in connection with the sale or purchase of Shares are now subject to an Indian Goods and Services tax of 18% effective July 1, 2017. A stockbroker is responsible for collecting such goods and services tax at such rate and for paying the same to the relevant authority.non-delivery basis.
F. Dividends and Paying Agents
Not applicable.
Not applicable.
You may review a copy of this annual report on Form20-F at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. You may call the SEC at1-800-732-0330 for additional information on how to obtain copies of all or any portion of the documents we file with or furnish to the SEC. The SEC also maintains a web sitewww.sec.gov that contains reports, proxy statements and other information regarding registrants, including Tata Motors Limited, that file electronically with the SEC. Please note that copies of the Company’s Form 20-F and Form SD filed with the SEC, are also available on our website at www.tatamotors.com (the website does not form part of this annual report on Form 20-F).
We are
The Company is subject to the information requirements of the Securities Exchange Act of 1934 and, in accordance therewith, are obligated to file annual reports onForm 20-F within the time specified by the SEC and furnish other reports and information onForm 6-K to the SEC. These reports and other information can be inspected at the public reference room at the SEC. You can also obtain copies of this material from the public reference room or by calling or writing the SEC upon payment of a prescribed fee. As a foreign private issuer, we arethe Company is exempt from the rules under the Securities Exchange Act of 1934 prescribing the furnishing and content of proxy statements to shareholders.
Not applicable.
Item 11. | Quantitative and Qualitative Disclosures about Market Risk |
Our exposure to financial risks derives primarily from changes in interest rates and foreign exchange rates. To mitigate these risks, we utilize derivative financial instruments, including interest rate option contracts and currency swap agreements, the application of which is primarily for hedging purposes and not for speculative purposes.
Commodity price risk
Commodity price risk is the possibility of impact from changes in the price of commodities, such asnon-ferrous metals (like aluminum), ferrous alloys (like steel) and others (like rubber, platinum and rhodium), which we use in production of automotive vehicles and their components.
See Note 3539 of our audited consolidated financial statements included elsewhere in this annual report on Form20-F for additional disclosures on market risk and financial instruments, including disclosure on the fair value of financial instruments.
Item 12. | Description of Securities Other than Equity Securities |
Not applicable.Tata Motors Limited issued E 28-A Series of 5,000 Rated, Listed, Unsecured, 9.27% (Tranche I) 9.31% (Tranche II) and 9.54% (Tranche III) Coupon, Redeemable, Non-Convertible Debentures of ₹2,000 million, ₹2,000 million and ₹1,000 million, issued and allotted by the Board approved Committee at their meeting held on November 14, 2019 and November 15, 2019 respectively on private placement basis.
Tata Motors Limited issued E 28-B Series of 5,000 Rated, Listed, Unsecured, Redeemable, Non-Convertible Debentures, 8.50% Coupon (Tranche I and Tranche II) of ₹2,500 million each, issued and allotted by the Board approved Committee at their meeting held on February 24, 2020 and February 26, 2020, respectively on private placement basis.
Not applicable.Pursuant to the approval of the Board of Directors dated October 25, 2019, Shareholders’ approval at the EGM convened on November 22, 2019 and the Allotment Committee authorised by the Board dated December 5, 2019, the Company has allotted 23,13,33,871 convertible warrants (‘Warrants’), each carrying a right exercisable by the Warrant holder to subscribe to one Ordinary Share per Warrant, at a price (including the warrant subscription price and the warrant exercise price) of ₹150 per Warrant, to Tata Sons Private Limited (Company’s Promoter) on preferential basis.
Not applicable.
Fees Payable by ADS Holders
Citibank, N.A., as depositarydepository under ourthe Company’s ADS program, collects fees for issuance and cancellation of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them on such fees as per the deposit agreement.
An ADS holder is required to pay the following service fees to the depositary:depository:
Service | Fees | |
Issuance of ADSs, delivery of deposited securities against surrender of ADSs, distribution of ADSs pursuant to stock dividends, free stock distributions or exercise of rights and distribution of securities other than ADSs or rights to purchase additional ADSs | Up to US$0.05 per ADS issued or surrendered or held, as applicable | |
Distribution of cash dividends or other cash distributions | Up to US$0.02 per ADS held | |
Up to US$0.02 per ADS held on the last business day of each calendar year |
An ADS holder or beneficial owner will also be responsible to pay certain fees and expenses incurred by the depositarydepository and certain taxes and governmental charges such as:
Taxes (including applicable interest and penalties) and other governmental charges;
Such registration fees as may from time to time be in effect for the registration of shares or other deposited securities on the share register and applicable to transfers of Ordinary Shares or other deposited securities to or from the name of the custodian, the depositarydepository or any nominees upon the making of deposits and withdrawals, respectively;
Such cable, telex and facsimile transmission and delivery expenses as are expressly provided in the deposit agreement;
The expenses and charges incurred by the depositarydepository in the conversion of foreign currency;
The fees and expenses incurred by the depositary,depository, the custodian or any nominee in connection with the servicing or delivery of deposited securities.
The fees and charges an ADS holder may be required to pay may vary over time and may be changed by us and by the depositary.depository. ADS holders will receive prior notice of increases in such fees and charges.
Fees and Other Payments Made by the DepositaryDepository to us
In Fiscal 2018, we have2020, the Company has received US$1,640,978.561,824,388.08 from the depositarydepository for standardout-of-pocket maintenance costs of ourits ADS program, including, but not limited to, continuing annual stock exchange listing fees, special investor promotion activities, issue-related expenses, cost for preparing and audit of IFRS accounts, legal and accounting fees associated with listing on the New York Stock Exchange,NYSE, miscellaneous expenses such as costs associated with votes by ADS holders and payments made to proxy firms.
Item 13. | Defaults, Dividend Arrearages and Delinquencies |
None.
Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds |
None.
Item 15. | Controls and Procedures |
Disclosure Controls and Procedures
We performed an evaluation of the effectiveness of the design and operation of disclosure controls and procedures as at March 31, 2018.2020. Based on this evaluation, our management concluded that our disclosure controls and procedures, as defined in Rules13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, were not effective as at March 31, 20182020 as a result of a material weakness in our internal control over financial reporting described below.
Management’s Annual Report on Internal Control Over Financial Reporting
Our managementManagement is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934.reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with IFRS. Our internal control over financial reporting includes policies and procedures that:
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS, and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and
Our managementprovide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
Management conducted an assessment of the effectiveness of our internal control over financial reporting based on the framework established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.Commission (“CSO”). Based on this assessment, management has concluded that a material weakness in its internal control over financial reporting existed as at March 31, 20182020 and hence, the internal control over financial reporting was not effective as at March 31, 2018.2020. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Details of the material weakness are set out below. Following
Our internal controls to prevent or detect material misstatement caused by inaccurate or incomplete information used in the identificationoperation of thesevarious process level and management review controls were not designed effectively as of March 31, 2020. Our internal controls at Tata Motors Limited were not designed to validate the accuracy of query parameters used to prepare information used in the operation of various process level and management review controls. Specifically, it did not require the preparer to retain and preserve screen shots of input parameters used to evidence that correct parameters were input in the system to generate the reports used in the above control activities. Management has determined that this deficiency constitutes a material weaknesses in internal control over financial reporting as of March 31, 2020, based on our evaluation under the criteria in Internal Control — Integrated Framework (May 2013) issued by the COSO. Accordingly, management undertook additional procedures which have confirmedconcludes that the entity did not maintain effective internal control over financial reporting as of March 31, 2020.
The material weakness did not result in any material error with respectmisstatements to either the interim or annual consolidated financial statements.
Attestation report of the registered public accounting firm
The attestation report of KPMG Assurance and Consulting Services LLP, an independent registered public accounting firm, on the effectiveness of our internal control over financial reporting as at March 31, 2020, is included in our consolidated financial statements, and, therefore, no adjustment tobeginning on page F-3 of this annual report on Form 20-F.
Changes in internal control over financial reporting
Except for the financial statement was required.
Privileged system access at third party logistics provider
We use a third party service provider to manage logistics and finance with respect to Land Rover aftermarket parts. This service provider operates its own Information Technology (IT) system, independent of Jaguar Land Rover’s IT systems and maintains the majority of financial transactions and records relating to aftermarket parts for Land Rover vehicles, which are then used for JLR’s financial statements. Two default system accounts on the provider’s IT system had privileged access rights, including the right to process transactions and make changes to data relied upon in preparation of JLR’s financial statements with respect to Land Rover aftermarket parts and were accessed during Fiscal 2018. Whilst no evidence exists to suggest these privileged accounts were used inappropriately, and they appear only to have been accessed by relevant IT personnel, we have been unable to obtain sufficient and appropriate evidence to confirm that access to these accounts was properly governed and restricted during Fiscal 2018. These accounts had access only to the provider’s IT system and not to JLRs IT systems. However, given the pervasive nature of the access provided to these privileged accounts including, for instance, the potential to make changes to system configuration within the provider’s IT system, it is not possible to rely on a number of reports generated by the provider’s IT system with respect to data used for JLR’s financial statement preparation. While the information given by the provider is subject to additional controls and review procedures operated by JLR, these procedures are largely dependent on the data coming from the provider’s IT system. In particular, such a risk has the potential to affect recognition and measurement of revenue and the valuation accuracy of inventoryremediation efforts described below in respect of Land Rover aftermarket parts.
Management perform procedures such as independent checksthe material weakness identified, there has not been any other change in our internal control over inventory, validation of cash allocation and settlement of sales transactionsfinancial reporting that occurred during the year. Dueperiod covered by this annual report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
The material weakness disclosed in our annual report on Form 20-F for Fiscal 2019 pertained to the insufficientdesign of controls over the preparation of the forecast financial information arising from the ineffective risk assessment activities. The material weakness was remediated in Fiscal 2020. The specific remediation actions taken by management included
Simplification of the business planning process and appropriate evidencedesign of the associated controls, which supported any need for ad-hoc impairment assessments during the year in addition to confirm the restricted access, Management performed additional proceduresexisting annual assessment;
Redesign of controls to ensure that there are no material misstatements inreflect improved risk assessment and further improvements to the financial statements as a resultmanagement review controls including consideration of this deficiency. These included a reviewaggregation levels, setting of physical security controlsmanagement expectations and the validationinvestigation and resolution of inventory valuation cost against JLR purchasing data. No material misstatementsoutliers in those areas where this is insufficient; and
Additional controls to validate any late changes to the forecast financial information once the primary controls have been identified in the financial statements as a result of this deficiency.operated.
We have also worked with the third party provider to undertake remedial measures to improve the evidence that supports the appropriate granting of the privileged access and reduce the risk of such an event occurring again. To supplement this, the third party provider has introduced a new daily automated detective control that would identify any instances where such privileged access is assigned. Checking of other, relevant third-party providers has noted no such issues.
Due to its inherent limitations, however, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
The attestation reportStatus of KPMG, an independent registered public accounting firm, onremediation actions plan to address material weakness
Management is currently working to establish a plan to remediate the effectivenessmaterial weakness which will include:
Making changes to reports, where input parameters to be displayed in the system generated report; and
Certain of our internalthe reports to be run automatically at the fixed interval with pre-determined input parameter and shared with the control over financial reporting as at March 31, 2018, is included in our consolidated financial statements, beginning on pageF-3 of this annual report on Form20-F.
Changes in Internal Control over Financial Reporting
Duringoperator. Any changes to the period covered by this annual report, except as discussed above, there were no changes in our internal control over financial reporting that have materially affected or are reasonably likelyinput parameter to materially affect our internal control over financial reporting.be done through change management process.
Item 16A. | Audit Committee Financial Expert |
Our board of directorsThe Board has determined that Mr. Nasser Munjee,Ms Vedika Bhandarkar, an independent directorIndependent Director and a memberChairman of our Audit Committee, is an “audit committee financial expert” as defined under the applicable rules of the SEC issued pursuant to Section 407 of the Sarbanes-Oxley Act of 2002. Mr. MunjeeMs Vedika Bhandarkar is independent under NYSE standards.
Item 16B. | Code of Ethics |
We haveThe Company has adopted the “TataTata Code of Conduct”, hereinafter referred as to the Code,Conduct, which is a written code of ethics applicable to all ourof its employees. The Tata Code of Conduct is available at all ourthe Company’s offices and on ourits website at:http://corp-content.tatamotors.com.s3-ap-southeast-1.amazonaws.com/wp-content/uploads/2015/10/tata-code-of-conduct.pdf, which www.tatamotors.com (the website does not form part of this annual report on Form20-F.20-F).
Our Company has zero tolerance for sexual harassment in the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment in the workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules thereunder. An internal complaints committee is in place for all workers and officers of the Company to redress complaints received regarding sexual harassment. All women associates (permanent, temporary, contractual and trainees) as well as any women visiting the Company’s office premises or women service providers are covered under sexual harassment policy. During Fiscal 2020, the Company had received 12 complaints on sexual harassments, 11 of which are closed as per process. The remaining one complaint was received during February 2020, and enquiry is in progress (the process was on hold during the COVID-19 pandemic lockdown). TML organized 39 sensitization workshops across locations, including a common training session for key ICC members.
In August 2004, ourthe Audit Committee adopted a Whistle Blower Policy, or the Whistleblower Policy, which provides a formal mechanism for all our directorsthe Company’s Directors and employees to approach ourthe Company’s management (or the Audit Committee in cases where the concern involves the senior management) and make protected disclosures to management about unethical behavior, actual or suspected fraud or violations of the Tata Code of Conduct or ourthe Company’s ethics policies. The Whistleblower Policy was updated on August 9, 2017, pursuant to the provisions of the Companies Act.Act and then again in Fiscal 2019 pursuant to the provisions of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015. The Whistleblower Policy is an extension of the Tata Code of Conduct, which requires every Director and employee to promptly report to managementthe Chief Ethics Counsellor or the Chairman of the Audit Committee any actual or possible violation of the Tata Code of Conduct or an event such directorDirector or employee becomes aware of that could affect ourthe Company’s business or reputation. The disclosures reported are addressed in the manner and within the time frames prescribed in the Whistleblower Policy. The Whistleblower Policy is available on ourthe Company’s website, athttp://investors.tatamotors.com/pdf/whistle-blower-policy.pdf, which www.tatamotors.com (the website does not form part of this annual report on Form20-F.20-F).
The information contained on our websites does not constitute a part of this annual report on Form20-F.
Item 16C. | Principal Accountant Fees and Services |
Our financial statements, prepared in accordance with IFRS, are audited by KPMG Assurance and Consulting Services LLP (“KPMG”), a firm registered with the Public Company Accounting Oversight Board in the United States.
KPMG has served as our independent public accountant for the year ended March 31, 2018, whereas Deloitte Haskins2020 and Sells LLP, or DHS has served as our independent public accountant for the year ended March 31, 2017,2019, for which audited financial statements appear in this annual report on Form20-F. The following table presents the aggregate fees for professional services and other services rendered by KPMG and DHS and the various member firms of KPMG and Deloitte to us, including some of our subsidiaries in Fiscal 20182020 and 2017.Fiscal 2019.
Year ended March 31, | ||||||||||||||
2018 | 2018 | 2017 | ||||||||||||
US$ in million | Rs. in million | |||||||||||||
Audit Fees | 8.8 | 576.4 | 592.8 | Audit and review of financial statements | ||||||||||
Tax Fees | 0.3 | 17.1 | 27.0 | Tax audit, certification of foreign remittances and tax advisory services | ||||||||||
All Other Fees | 0.7 | 47.7 | 40.7 | Other certifications and advisory services | ||||||||||
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Total | 9.8 | 641.1 | 660.5 | |||||||||||
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The above amount in Fiscal 2018, includes Rs.125.4 million paid to predecessor accountant, Deloitte Haskins and Sells LLP and its affiliates.
Year ended March 31, | ||||||||||||||
2020 | 2020 | 2019 | ||||||||||||
US$ in million | Rs. in million | |||||||||||||
Audit Fees | 9.2 | 695.4 | 677.8 | Audit and review of financial statements | ||||||||||
Tax Fees | 0.2 | 14.0 | 10.7 | Tax audit, certification of foreign remittances and tax advisory services | ||||||||||
All Other Fees | 0.7 | 56.7 | 15.8 | Other certifications and advisory services | ||||||||||
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Total | 10.1 | 766.1 | 704.3 | |||||||||||
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Audit Committeepre-approval for services rendered by independent accountants:
The Company has adopted a policy forpre-approval of services to be rendered by ourthe Company’s independent accountants for usit and ourits subsidiaries based on an elaborate procedure for ensuring auditor independence and objectivity.
At the beginning of each year, the Audit Committee approves the proposed services, including the nature, type and scope of services contemplated and/or the related fees to be rendered by these firms during the year.
In addition, Audit Committeepre-approval is also required for those engagements that may arise during the course of the year that are outside the scope of the initial services, and such fees arepre-approved by the Audit Committee.
The Company does not engage ourits independent accountants for ‘prohibited services’.
The Audit Committee recommends the appointment and compensation of independent accountants.
In case of urgent requirements, our Group Chief Financial Officer and the Chairman of our Audit Committee jointly approve any services that may be rendered by ourthe Company’s independent accountants or their member firms, and such services are subsequently ratified at the next Audit Committee meeting.
Thepre-approval is not required where the fees proposed to be paid for thenon-audit services do not exceed 5% of the total amount of fees paid by usthe Company to ourits independent accountants and their member firms during the Fiscalfiscal year, provided that such services were not recognized asnon-audit services at the time of the engagement of services. Such services are also promptly brought to the attention of the Audit Committee atand approved prior to the next meeting.completion of the audit by the Audit Committee or by one or more members of the Audit Committee who are members of the Board to whom authority to grant such approvals has been delegated by the Audit Committee. However, in Fiscal 20182020 and 2017, weFiscal 2019, the Company obtainedpre-approval for all services rendered by ourits independent accountant and fees from the Audit Committee.
Item 16D. | Exemptions from the Listing Standards for Audit Committees |
Not applicable.
Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers |
None.
Item 16F. | Change in Registrant’s Certifying Accountant |
Pursuant to Section 139(2) ofThere was no change in the Companies Act of India, 2013 (the “Companies Act”)Company’s certifying accountant in Fiscal 2020.
The Company appointed KPMG (Registered), as an Indian-listed company, TML is required to mandatorily replace its auditor onceIndian partnership firm, as the auditor has served in this capacity for a consecutive period of ten or more years. Further, each Indian company is required to complyTML and its subsidiaries for Exchange Act reporting purposes from Fiscal 2018. KPMG (Registered) converted into KPMG Assurance and Consulting Services LLP (a Limited Liability partnership firm) with this provision within three yearseffect from the date of commencement of the Companies Act. The requirement came into effect with respect to TML on April 1, 2017. July 23, 2020.
Deloitte Haskins & Sells LLP (“Deloitte”), the predecessor auditor of TML, has served as TML’s auditor for a period of 11 years. Consequently, in order to ensure compliance with applicable Indian regulations, the audit committee and board of directors of TML have changed the auditor of TML for the audit period commencing on April 1, 2017.
The audit committee and board of directors of TML, at meetings on April 18, 2017, and May 23, 2017, respectively, discussed and approved the appointment of B S R & Co. LLP (“BSR”) as the successor auditor for TML and its subsidiaries for the audit period commencing April 1, 2017. BSR is an Indian limited liability partnership, with access to KPMG International’s knowledge, databases and methodologies, and also qualifies for referral practice by other member firms. While BSR will audit financial statements of TML and its subsidiaries prepared in accordance with IndAS, KPMG (“KPMG”), an Indian partnership firm, will audit financial statements of TML and its subsidiaries prepared in accordance with IFRS, and is therefore the current auditor for TML and its subsidiaries for Exchange Act reporting purposes.
Deloitte served as the statutory auditor for the quarter ended June 30, 2017, for financial statements prepared in accordance with IndAS. In accordance with the Companies Act, Deloitte’s engagement period terminated at TML’s Annual General Meeting on August 22,purposes till Fiscal 2017. For purposes of Indian law, BSR’s engagement period commenced immediately upon the termination of Deloitte’s engagement. However, for purposes of applicable U.S. securities laws and regulations, Deloitte’s engagement ceased upon filing of the annual report on Form 20-F for Fiscal 2017 Annual Report on Form20-F with the SEC on July 28, 2017, and KPMG’s engagement period commenced as of April 1, 2017.
During the years ended March 31, 2017 and 2016, and through July 28, 2017, there were no disagreements with Deloitte on any matter of accounting principles or practices, financial statement disclosures, or auditing scope or procedure, which such disagreements, if not resolved to the satisfaction of Deloitte, would have caused Deloitte to make reference thereto in its reports on the financial statements of TML for such years.
For the two fiscal years ended March 31, 2017 and 2016, and through July 28, 2017, there were no “reportable events” as that term is described in paragraphs (A) through (D) of Item 16F(a)(1)(v) of Form20-F.
TML provided Deloitte with a copy of the disclosure it is making in the Fiscal 2017 Annual Report on Form20-F, and requested that Deloitte furnish TML with a letter addressed to the SEC, as contemplated under Item 16F(a)(3) of Form20-F, stating whether Deloitte agrees with the statements made by TML in this annual report on Form20-F, and if not, the respects in which Deloitte does not agree. A copy of Deloitte’s letter to the SEC dated July 28, 2017 is attached as Exhibit 15.2 to the Fiscal 2017 Annual Report on Form20-F filed with the SEC on July 28, 2017.
During the fiscal years ended March 31, 2017 and 2016, neither TML, nor anyone on its behalf, consulted KPMG regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered with respect to the financial statements of TML, and neither a written report was provided to TML or oral advice was provided that KPMG concluded was an important factor considered by TML in reaching a decision as to the accounting, auditing or financial reporting issue or (ii) any matter that was either the subject of a “disagreement,” as that term is defined in Item 16F(a)(1)(iv) of Form20-F and the related instructions to Item 16F of Form20-F, or a “reportable event,” as that term is described in Item 16F(a)(1)(v) of Form20-F.
Item 16G. | Corporate Governance |
As a foreign private issuer, as defined under Rule3b-4 of the Exchange Act, Tata Motors Limited is permitted under the NYSE listing standards to follow applicable Indian corporate governance practices with regard to various corporate governance matters. The following is a summary comparison of significant differences between our corporate governance practices and those required by the NYSE fornon-U.S. issuers.
We constantly striveThe Company strives to evolve and follow up on ourupdate its corporate governance guidelines and best practices. Our purpose has always beenpractices in the interest of transparency, long termlong-term shareholder value and respect for the minority shareholders. We discloseThe Company discloses timely and accurate information regarding ourits operations and performance.
This section on corporate governance as well as other relevant sections of this annual report on Form20-F provide further details pertaining to ourthe Company’s corporate governance mechanisms.
As on the date of this annual report on Form20-F, there have been no further clarifications sought by our Indian regulators.
Independent directorsDirectors
Our board of directorsThe Board has determined the independence of its directorsDirectors pursuant to applicable Indian listing requirements. As on June 30, 2018, five directors2020, three Directors of our board of directorsthe Board are independent directorsIndependent Directors pursuant to such requirements. Under such requirements, anon-executiveNon-Executive directorDirector is considered independent if he/she:
is, in the opinion of the Board, a person of integrity and possess relevant expertise and experience;
is or was not our promoter or a promoter of any of the Company’s holding, subsidiary or associate companies;
is not related to the Company’s promoters or Directors, or of any of the Company’s holding, subsidiary or associate companies;
does not have a pecuniary relationship, other than receiving remuneration as a Director or having transaction not exceeding ten per cent. of his total income with the Company or any of the Company’s holding, subsidiary or associate companies or their promoters or directors, during the two immediately preceding financial years or during the current financial year;
None of whose relatives:
(i) is holding any security of or interest in the Company, its holding, subsidiary or associate company during the two immediately preceding financial years or during the current financial year:
Provided that the relative may hold security or interest in the Company of face value not exceeding fifty lakh rupees or two per cent of the paid-up capital of the Company, its holding, subsidiary or associate company or such higher sum as may be prescribed;
(ii) is indebted to the Company, its holding, subsidiary or associate company or their promoters, or directors, in excess of such amount as may be prescribed during the two immediately preceding financial years or during the current financial year;
(iii) has given a guarantee or provided any security in connection with the indebtedness of any third person to the Company, its holding, subsidiary or associate company or their promoters, or directors of such holding company, for such amount as may be prescribed during the two immediately preceding financial years or during the current financial year; or
(iv) has any other pecuniary transaction or relationship with the company, or its subsidiary, or its holding or associate company amounting to two per cent. or more of its gross turnover or total income singly or in combination with the transactions referred to in sub-clause (i), (ii) or (iii);
neither themselves, nor whose relative(s):
holds or has held the position of a key managerial personnel or is or has been an employee of |
is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in which he/she is proposed to be appointed, |
a firm of auditors or company secretaries in practice or cost auditors of |
any legal or a consulting firm that has or had any transaction with |
holds together with his/her relatives two per cent or more of the total voting power of |
is a chief executive or director, by whatever name called, of anynon-profit |
is a material supplier, service provider or customer or a lessor or lessee of |
Possess requisite qualifications necessary to act as Director of the Company as specified in Rule 5 of the Companies (Appointment and Qualification of Directors) Rules, 2014.
Is not restrained from acting as a Director by virtue of any SEBI order or any such authority.
Is not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact his/her ability to discharge his/her duties with an objective independent judgment and without any external influence.
Non-management Directors’ Meetings
The NYSE listing standards require regularly scheduled executive sessions ofnon-management directors without management participation or regularly scheduled executive sessions consisting of only independent directors. Under applicable Indian legal requirements, one meeting on March 22, 2018 was required to be held during the year, displaying full attendance of only Independent Directors thereat, for the purpose of reviewing the performance ofNon-ExecutiveNon-IndependentNon-Executive Non-Independent Directors, including the Chairman of the Board and the performance of the Board and Board constituted Committees, as a whole..whole. Due to the COVID-19 pandemic and resulting lockdown in India, the meeting scheduled to be held on March 27, 2020 was cancelled and was held on June 6, 2020.
Please refer to Item 10.B “Additional Information—Memorandum and Articles of Association—Directors” for more information regarding our directors.the Company’s Directors.
Nomination and Remuneration Committee
The NYSE listing standards require a listed company to maintain a remuneration committee, composed entirely of independent directors. OurThe Company’s Nomination and Remuneration Committee comprises of two independent members and onenon-independentnon-executivenon-independent non-executive member, which is in compliance with the requirement regarding the number of independent members of the Nomination and Remuneration Committee under applicable Indian laws. We believeThe Company believes the constitution and main functions of our Nomination and Remuneration Committee generally comply with the spirit of the NYSE requirements fornon-U.S. issuers. Please seerefer to Item 6.C “Directors, Senior Management and Employees—Board Practices—Committees” for more information regarding our Nomination and Remuneration Committee.
Item 16H. | Mine Safety Disclosure |
Not applicable. |
Item 17. | Financial Statements |
We haveThe Company has responded to Item 18 in lieu of Item 17.
Item 18. | Financial Statements |
The information required by this item is set forth beginning onpage F-1 of this annual report on Form20-F.
Item 19. | Exhibits |
We haveThe Company has not included as exhibits certain instruments with respect to ourits long-term debt, the amount of debt authorized under each of which does not exceed 10% of ourits total assets, and we agreethe Company agrees to furnish a copy of any such instrument to the Securities Exchange CommissionSEC upon request.
1 | Incorporated by reference to |
2 | Incorporated by reference to |
3 | Incorporated by reference to |
4 | Incorporated by reference to |
5 | Incorporated by reference to |
6 | Incorporated by reference to |
7 | Incorporated by reference to the Company’s annual report on Form 20-F File No. 001-32294 filed on July 31, 2018. |
8 | Filed with this annual report on Form20-F. |
9 | Furnished herein. The information in this exhibit is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act, is deemed not filed for purposes of Section 18 of the Exchange Act, and otherwise is not subject to liability under such sections. |
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing onForm 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
July 31, 2018August 13, 2020
TATA MOTORS LIMITED | ||
By | /s/ Guenter Butschek | |
Name: | Guenter Butschek | |
Title: | CEO | |
By | /s/ | |
Name: | ||
Title: |
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page | ||||
Consolidated Financial Statements of Tata Motors Limited and subsidiaries : | ||||
Consolidated balance sheets as of March 31, | ||||
Consolidated income statements for the years ended March 31, | ||||
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
Tata Motors Limited
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheetsheets of Tata Motors Limited (Parent Company) and its subsidiaries (the “Company”)(collectively referred to as the Company) as of March 31, 2018,2020 and 2019, the related consolidated statements of income, statement, statement of comprehensive income, statement of cash flows, and statement of changes in equity for each of the yearyears in the three-year period ended March 31, 2018,2020, and the related notes and financial statement schedule 1 (collectively, the consolidated financial statements). In our opinion, the consolidated financial statementstatements present fairly, in all material respects, the financial position of the Company as of March 31, 2018,2020 and 2019, and the results of its operations and its cash flows for each of the yearyears in the three-year period ended March 31, 2018,2020, in conformity with the International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”)(IFRS).
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of March 31, 2018,2020, based on criteria established inInternal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated July, 31, 2018August 13, 2020 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.
Convenience Translation
The accompanying consolidated financial statements as of and for the year ended March 31, 2020 have been translated into United States dollars solely for the convenience of the reader. We have audited the translation and, in our opinion, the consolidated financial statements expressed in Indian rupees have been translated into dollars on the basis set forth in note 2(aa) of the notes to the consolidated financial statements.
Change in accounting principle
As discussed in Note 2(y(i)) to the consolidated financial statements, the Company has changed its method of accounting for leases as of April 1, 2019 due to the adoption of IFRS 16, Leases.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our auditaudits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditaudits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our auditaudits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our auditaudits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit providesaudits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
1) Going concern assessment
As discussed in Notes 2(e) and 2(f)(x) to the consolidated financial statements, the Company prepared its consolidated financial statements on a going concern basis. Management believes that the Company has sufficient funding available to it at the date of approval of these financial statements and that it will be able to continue as a going concern for a period of at least eighteen months from the date of these financial statements. In making this assessment, management has considered the impact of the COVID-19 pandemic, in recognition of the significant impact it has had on the Company, requiring temporary plant and retailer shutdowns. These actions impacted production and sales, and created substantial uncertainty over the timeframe for economies and the automotive industry to recover, as well as management’s mitigating measures including rigorous cost and investment reductions to conserve cash as much as possible considering these uncertainties. There was a failure to maintain a financial ratio on one of the Parent Company’s loans at June 30, 2020, which was subsequently waived by the lender for the period up to March 31, 2021. Certain financing agreements of the Parent Company contain cross default provisions, which can be triggered by any defaults on its financial covenants. Considering the uncertainties in the economic outlook and recovery of the automotive sector, management has developed cash flow and financial position forecasts to evaluate both the sufficiency of liquidity to meet obligations as they become due, as well as the potential impact on compliance with financial covenants during the forecast period. These forecasts take into account cash generated from operations, controllable mitigating actions pertaining to Jaguar Land Rover (the JLR Group) such as deferral of non-essential capital and product development expenditures, further reductions of discretionary marketing spend and warranty goodwill payments, and the funding facilities existing on the date of authorization of these consolidated financial statements, including the presently undrawn revolving credit facilities. Development of these forecasts required management to make subjective estimates and assumptions related to forecasts of cash flows from operating activities, cost improvements, capital expenditures, and working capital requirements. In addition, Tata Sons Private Limited, as promoter of the Company, has undertaken to provide additional financial support to help the Parent Company meet its liquidity needs and covenants under the borrowing agreements with lenders.
We identified the Company’s assessment of its ability to continue as a going concern and related disclosures as a critical audit matter. There was a high degree of subjectivity and significant judgment was involved in assessing the Company’s forecast of cash flows specifically the forecasted volume, controllable mitigating actions pertaining to the JLR Group as stated above, and monitoring of compliance with financial covenants due to the uncertainty in the forecasts resulting from the impact of COVID-19. Additionally, judgment was required to evaluate the need for a commitment of financial support by Tata Sons Private Limited.
The following are the primary procedures we performed to address this critical audit matter.
We evaluated the design and tested the operating effectiveness of certain internal controls relating to management’s going concern assessment in relation to forecast of cash flows specifically the forecasted volume, controllable mitigating actions pertaining to JLR Group as stated above, and the monitoring of compliance with financial covenants.
We evaluated the Company’s process for preparing the forecast of cash flows, specifically the forecasted volume, by testing the completeness and accuracy of the underlying data used by benchmarking it to externally derived industry data and evaluating the Company’s historical trends.
We evaluated the assumptions related to the controllability and timing of the controllable mitigating actions of the JLR Group, including the deferral of non-essential capital and product development expenditures and further reductions of discretionary marketing spend and warranty goodwill payments. We developed an understanding of the nature of spending on each item and then determined which actions are within the JLR Group’s control, both in terms of the amount of reduction and timing thereof, and assessing the feasibility to reduce such spending.
We independently assessed the sensitivity of reasonably possible changes to the key assumptions and judgments, such as forecasted volume, controllable mitigating actions, and considerations for the uncertainties due to COVID-19, used to determine management’s forecasts of cash flows and financial position.
We read the financial support letter provided by Tata Sons Private Limited, as promoter of the Company, to the Company to meet its liquidity needs and covenants under the borrowing agreements with lenders until at least March 31, 2022.
We evaluated management’s assessment of compliance with financial covenants for loan agreements of the Parent Company, including understanding and assessing the impact of default and cross default provisions of financial and other covenants included in the loan agreements by reading the loan agreements and discussing the provisions with management.
We assessed the adequacy of the disclosures related to the application of the going concern assumption.
2) Impairment of property, plant and equipment and intangible assets of the passenger vehicles cash generating unit
As discussed in Note 18(a) to the consolidated financial statements, the Company tests its passenger vehicle cash generating unit (CGU) for impairment at least annually and more frequently when there is an indication of impairment. An impairment loss is recognized if the recoverable amount is lower than the carrying value. The recoverable amount is determined based on the higher of value in use (VIU) and fair value less costs of disposal (FVLCD). As at March 31, 2020, the Company recognized an impairment loss of Rs 4,454.8 million for the passenger vehicle business unit CGU. After recognition of this impairment loss, the carrying value of net assets for this CGU was Rs 91,203.1 million as at March 31, 2020.
We identified the evaluation of the property, plant and equipment and intangible assets impairment analysis for the passenger vehicle CGU as a critical audit matter. This is due to the significant judgment required in evaluating the key assumptions used in calculating FVLCD, including forecasted sales volume and price for the year ending March 31, 2021, principles used in selection of comparable companies and time period of sales. The declining sales volumes on account of market condition and as a result of the COVID-19 pandemic has impacted the judgments and estimates used in calculating FVLCD.
The following are the primary procedures we performed to address this critical audit matter.
We evaluated the design and tested the operating effectiveness of certain internal controls over the key assumptions used in determining FVLCD, noted above.
We involved valuation professionals with specialized skills and knowledge who assisted in evaluating the principles used in selection of comparable companies and time period of sale.
We assessed the assumptions for forecasted sales volume and price for the year ending March 31, 2021 by:
1. | Comparing the volume and price assumptions to the Company’s historical trends in sales volumes and prices. |
2. | Comparing forecasted sales volumes for the year ending March 31, 2021 to externally derived data. |
We performed a sensitivity analysis over the enterprise value to sales multiple and forecasted sales volume of the year ending March 31, 2021 to assess the impact of changes in those assumptions on the valuation.
3) Impairment of property, plant and equipment and intangible assets of the Jaguar Land Rover CGU (JLR CGU)
As discussed in Note 17 to the consolidated financial statements, the Company tests its JLR CGU for impairment at least annually and more frequently when there is an indication of impairment. An impairment loss is recognized if the recoverable amount is lower than the carrying value. The recoverable amount is determined based on the higher of value in use (VIU) and fair value less costs to dispose (FVLCD). No impairment loss related to the JLR CGU was recognized for the year ended March 31, 2020. The carrying value of net assets for the JLR CGU was Rs 879,225.2 Million as at March 31, 2020.
We identified the evaluation of the property, plant and equipment and intangible assets impairment analysis of the JLR CGU as a critical audit matter. The estimated fair value of the JLR CGU approximated its carrying value, and due to economic impact of COVID-19 there was a higher risk that the property, plant and equipment and intangible assets may be impaired and, therefore, involved a high degree of challenging and subjective auditor judgment. There was significant auditor judgment required in evaluating the key assumptions used in calculating the VIU including estimates of forecast vehicles volumes, terminal value variable profit, terminal value SG&A expenses, the growth rate applied beyond approved forecast period, terminal value capital expenditure and discount rate. Assessing the reconciliation between the recoverable amount of the JLR CGU and the Company’s market capitalization attributable to JLR CGU also required significant auditor judgment.
The following are the primary procedures we performed to address this critical audit matter.
We evaluated the design and tested the operating effectiveness of certain internal controls over the key assumptions noted above, and the evaluation of market capitalization of the Company attributable to the JLR CGU.
We assessed the key assumptions used in calculating VIU including forecasted vehicle volumes, terminal value variable profit, terminal value SG&A expenses, growth rate applied beyond approved forecast period, and terminal value capital expenditure used in the VIU forecasts by:
1. | Comparing the assumptions to the Company’s historical trends in forecast vehicles volumes, terminal value variable profit, terminal value SG&A expenses, terminal value capital expenditure; |
2. | Comparing forecasted vehicles volumes to externally derived data; and |
3. | Validating the growth rate applied beyond approved forecast period by comparing to external benchmark data. |
We involved valuation professionals with specialized skills and knowledge who assisted in assessing the Company’s discount rate by comparing it to a discount rate range that was independently developed using publicly available market data for comparable entities.
We assessed the reconciliation between the estimated recoverable amount of the JLR Group CGU and the overall market capitalization of the Company.
4) Allowances for credit losses for finance receivables of the Company’s vehicle financing receivables
As discussed in Note 39 d(ii) to the consolidated financial statements, the Company’s allowances for credit losses for finance receivables (ACL) for vehicle financing receivables was Rs. 6,513.7 million. The ACL for vehicle financing receivables are determined using an expected credit loss model which is based upon statistical analysis that, among other factors, requires an assessment of significant increase in credit risk, which is primarily determined using the days past due status of vehicle financing receivables and also includes an analysis of historical delinquency experience for determining of probability of default (PD), actual loss experience for determining of loss given default (LGD) and impact of the current underlying economic conditions. Such methodology includes significant assumptions related to the historical observation period, the correlation of forward looking macro-economic variables in the PD, and estimated recoveries in the LGD.
We identified the assessment of the ACL for vehicle financing receivables as a critical audit matter because it involved significant measurement uncertainty, requiring complex and subjective auditor judgment, and specialized skills and knowledge. Specifically, complex and subjective auditor judgment was required to assess the loan staging criteria, both quantitative and qualitative, for the purpose of determining significant increase in credit risk and the methodology and significant assumptions used by the Company to estimate the PD, LGD and impact of the current underlying economic conditions.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the critical audit matter. This includes controls related to the assessment of the ACL, including controls over the:
development of the loan staging criteria used for determination of significant increase in credit risk; and
determination of the methodology and significant assumptions used by the Company to estimate the PD, LGD and the impact of the current underlying economic conditions.
We involved credit risk professionals with specialized skills and knowledge who assisted in:
evaluating the quantitative and qualitative considerations, including the impact of current economic conditions, used by the Company for the loan staging criteria used for determination of a significant increase in credit risk for compliance with IFRS 9 accounting principles and
assessing the methodology and significant assumptions used for estimation of PD, LGD and the impact of current economic conditions by performing both quantitative and qualitative evaluation of the conceptual soundness of the methodology used to estimate the ACL for compliance with IFRS 9 accounting principles and industry practice.
5) Product development cost capitalization
As discussed in Note 2(p) to the consolidated financial statements, product development costs are incurred by the Company for product development of new vehicle platforms, engines, transmissions and new products. The Company evaluates these costs to determine if they meet the criteria for capitalization as specified in IAS 38 “Intangible Assets” and when this capitalization should commence, and the Company capitalizes such costs when the product development will generate probable future economic benefits. The Company has capitalized Rs. 158,030.8 million of product development costs for the year ended March 31, 2020.
We have identified the evaluation of product development cost capitalization as a critical audit matter. This evaluation requires especially subjective auditor judgment due to the inherent uncertainty associated with the assessment of the probable future economic benefits associated with key assumptions such as forecasted sales volumes, margins and capital expenditures of the new product development. Further, the decline in sales volumes in the current year and the suspension of manufacturing activity due to mandatory lockdowns towards and after year end due to the COVID-19 pandemic has increased the degree of subjectivity associated with this evaluation.
The following are the primary procedures we performed to address this critical audit matter.
We evaluated the design and tested the operating effectiveness of certain internal controls over the product development cost capitalization process;
We evaluated the inputs used for forecasted sales volumes, margins and capital expenditure in the assessment of future economic benefit for selected projects by comparing the inputs used to source documents including externally derived data based on industry reports on various subsegments of vehicles;
We evaluated the Company’s ability to accurately forecast sales volumes, margins and capital expenditure by comparing the historical forecasts to the actual results for similar projects; and
We performed a sensitivity analysis of changes in the inputs considering the impact of historical forecasting accuracy on the Company’s assessment of whether future economic benefit is considered probable.
6) Valuation of defined benefit pension plan obligations at Jaguar Land Rover (JLR Group)
As discussed in Note 36 to the consolidated financial statements, JLR Group operate several defined benefit pension plans. JLR Group’s estimated pension defined benefit obligation amounted to Rs 728,421.5 million as of March 31, 2020. The plans provide for monthly pension after retirement as per salary drawn and service period as set out in rules of each plan and the pension benefit obligations are actuarially determined as per the projected unit credit method at the year end.
We identified the valuation of the pension defined benefit obligation at JLR Group as a critical audit matter. Small changes in the key assumptions and estimates, specifically, the discount rate, inflation rate and mortality /life expectancy, used to value the JLR Group’s pension obligation (before deducting scheme assets) would have a significant effect on the JLR Group’s pension defined benefit obligation.
The following are the primary procedures we performed to address this critical audit matter.
We evaluated the design and tested the operating effectiveness of certain internal controls over the selection of the above key assumptions used by its actuarial expert to value the pension defined benefit obligation and the selection and monitoring of its actuarial expert for competence and objectivity.
We involved actuarial professional with specialized skills and knowledge, who assisted in assessing the reasonableness of the discount rate, inflation rate and mortality/life expectancy, applied to the valuation of the pension obligation, by comparing to externally derived data.
/s/ KPMG Assurance and Consulting Services LLP
We have served as the Company’s auditor since 2018.
/s/ KPMG
Mumbai, India
July 31, 2018August 13, 2020
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
Tata Motors LimitedLimited:
Opinion on Internal Control Over Financial Reporting
We have audited Tata Motors Limited’s (Parent Company) and subsidiairies’subsidiaries’(the Company) internal control over financial reporting as of March 31, 2018,2020, based on criteria established inInternal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, because of the effect of the material weakness, described below, on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of March 31, 2018,2020, based on criteria established inInternal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheetsheets of the Company as of March 31, 2018,2020 and 2019, the related consolidated income statement, statementstatements, statements of comprehensive income, statementstatements of cash flows, and statementstatements of changes in equity for each of the yearyears in the three-year period ended March 31, 2018,2020, and the related notes and financial statement schedule 1 (collectively, the consolidated financial statements), and our report dated July 31, 2018August 13, 2020 expressed an unqualified opinion on those consolidated financial statements.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. A material weakness related to inappropriate system access restrictionsthe design of controls at a third party logistics providerthe Parent Company to validate the accuracy of query parameters used to prepare information used in the operation of various process level and management review controls has been identified and included in management’s assessment. The material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 20182020 consolidated financial statements, and this report does not affect our report on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Item 15 under Controls and Procedures of the accompanying Form 20F titled “Management’s Annual Report on Internal Control Over Financial Reporting”. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Disclaimer on Additional Information in Management’s Report
We do not express an opinion or any other form of assurance on management’s statements, included in the accompanying Item 15 titled “Management’s Annual Report on Internal Control Over Financial Reporting”“Status of remediation actions plan to address material weakness” referring to responsive or corrective actions taken after March 31, 2018,2020, relative to the aforementioned material weakness in internal control over financial reporting.
/s/ KPMG Assurance and Consulting Services LLP
Mumbai, India
July 31, 2018August 13, 2020
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
Tata Motors Limited
Mumbai, India
We have audited the accompanying consolidated balance sheet of Tata Motors Limited and its subsidiaries (the “Company” or “Tata Motors”) as of March 31, 2017 , and the related consolidated income statements, statements of comprehensive income, statements of cash flows, and statements of changes in equity for each of the two years in the period ended March 31, 2017. Our audit also included the financial statement schedule balance sheet as of March 31, 2017, and the related income statements, statements of comprehensive income and statements of cash flows, for each of the two years in the period ended March 31, 2017, included as Schedule 1 at Item 18. These
Consolidated Balance Sheets
As at March 31, | ||||||||||||||||
Notes | 2020 | 2020 | 2019 | |||||||||||||
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ASSETS: | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | 3 | US$ | 2,440.7 | Rs. | 184,678.0 | Rs. | 215,598.0 | |||||||||
Short-term deposits | 1,959.9 | 148,294.8 | 105,742.1 | |||||||||||||
Finance receivables | 4 | 1,882.7 | 142,452.9 | 115,515.2 | ||||||||||||
Trade receivables | 1,476.6 | 111,726.9 | 189,961.7 | |||||||||||||
Investments | 7 | 1,435.5 | 108,615.3 | 89,383.3 | ||||||||||||
Other financial assets | 8 | 786.5 | 59,514.2 | 49,970.7 | ||||||||||||
Inventories | 10 | 4,949.8 | 374,527.8 | 390,015.9 | ||||||||||||
Other current assets | 11 | 828.1 | 62,653.5 | 68,622.2 | ||||||||||||
Current income tax assets | 18.9 | 1,428.0 | 1,843.7 | |||||||||||||
Assets classified as held for sale | 43 | 25.7 | 1,944.3 | 1,622.4 | ||||||||||||
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Total current assets | 15,804.4 | 1,195,835.7 | 1,228,275.2 | |||||||||||||
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Non-current assets: | ||||||||||||||||
Finance receivables | 4 | 2,224.8 | 168,337.8 | 220,731.7 | ||||||||||||
Investments | 6 | 136.0 | 10,280.5 | 14,975.1 | ||||||||||||
Other financial assets | 9 | 731.1 | 55,323.5 | 32,166.0 | ||||||||||||
Property, plant and equipment | 13 | 10,776.4 | 815,393.5 | 762,303.3 | ||||||||||||
Right of use assets | 14 | 833.5 | 63,068.5 | — | ||||||||||||
Goodwill | 15 | 102.7 | 7,770.6 | 7,478.7 | ||||||||||||
Intangible assets | 16 | 8,782.7 | 664,544.5 | 580,555.9 | ||||||||||||
Investments in equity accounted investees | 19 | 584.0 | 44,188.9 | 53,348.8 | ||||||||||||
Non-current income tax assets | 152.4 | 11,534.9 | 10,245.6 | |||||||||||||
Deferred income taxes | 20 | 721.3 | 54,578.6 | 51,511.1 | ||||||||||||
Other non-current assets | 12 | 660.0 | 49,945.1 | 25,528.5 | ||||||||||||
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Total non-current assets | 25,704.9 | 1,944,966.4 | 1,758,844.7 | |||||||||||||
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Total assets | US$ | 41,509.3 | Rs. | 3,140,802.1 | Rs. | 2,987,119.9 | ||||||||||
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LIABILITIES AND EQUITY: | ||||||||||||||||
Liabilities: | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | 9,326.1 | 705,671.9 | 759,681.7 | |||||||||||||
Acceptances | 366.3 | 27,713.3 | 31,771.2 | |||||||||||||
Short-term borrowings and current portion of long-term debt | 21 | 4,691.1 | 354,949.0 | 351,843.7 | ||||||||||||
Other financial liabilities | 23 | 1,491.4 | 112,853.2 | 103,669.2 | ||||||||||||
Provisions | 25 | 1,365.0 | 103,291.8 | 101,967.5 | ||||||||||||
Other current liabilities | 26 | 1,090.5 | 82,503.5 | 88,640.9 | ||||||||||||
Current income tax liabilities | 137.7 | 10,415.8 | 10,176.4 | |||||||||||||
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Total current liabilities | 18,468.1 | 1,397,398.5 | 1,447,750.6 | |||||||||||||
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Non-current liabilities: | ||||||||||||||||
Long-term debt | 22 | 11,009.7 | 833,048.1 | 708,067.0 | ||||||||||||
Other financial liabilities | 24 | 1,192.2 | 90,214.2 | 29,488.8 | ||||||||||||
Deferred income taxes | 20 | 256.7 | 19,418.7 | 14,910.4 | ||||||||||||
Provisions | 25 | 1,947.7 | 147,366.8 | 118,548.5 | ||||||||||||
Other liabilities | 27 | 731.2 | 55,321.1 | 110,287.2 | ||||||||||||
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Total non-current liabilities | 15,137.5 | 1,145,368.9 | 981,301.9 | |||||||||||||
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Total liabilities | 33,605.6 | 2,542,767.4 | 2,429,052.5 | |||||||||||||
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Equity: | ||||||||||||||||
Ordinary shares | 28 | 81.7 | 6,178.4 | 5,775.2 | ||||||||||||
‘A’ Ordinary shares | 28 | 13.4 | 1,017.0 | 1,017.0 | ||||||||||||
Additional paid-in capital | 3,963.8 | 299,919.3 | 261,387.8 | |||||||||||||
Reserves | 3,652.3 | 276,352.5 | 317,926.7 | |||||||||||||
Other components of equity | 29 | 83.7 | 6,334.0 | (33,368.0 | ) | |||||||||||
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Equity attributable to shareholders of Tata Motors Limited | 7,794.9 | 589,801.2 | 552,738.7 | |||||||||||||
Non-controlling interests | 108.8 | 8,233.5 | �� | 5,328.7 | ||||||||||||
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Total equity | 7,903.7 | 598,034.7 | 558,067.4 | |||||||||||||
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Total liabilities and equity | US$ | 41,509.3 | Rs. | 3,140,802.1 | Rs. | 2,987,119.9 | ||||||||||
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See accompanying notes to consolidated financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Tata Motors Limited and its subsidiaries as of March 31, 2017 , and the results of their operations and their cash flows for each of the two years in the period ended March 31, 2017, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also, in our opinion, such financial statement schedule, when considered in relation
Consolidated Income Statements
Year ended March 31, | ||||||||||||||||||||
Notes | 2020 | 2020 | 2019 | 2018 | ||||||||||||||||
(In millions, except per share amounts) | ||||||||||||||||||||
Revenues | 31 | US$ | 33,782.1 | Rs. | 2,556,123.4 | Rs. | 2,959,666.9 | Rs. | 2,856,910.8 | |||||||||||
Finance revenues | 503.9 | 38,127.8 | 33,995.5 | 26,040.3 | ||||||||||||||||
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Total revenues | 34,286.0 | 2,594,251.2 | 2,993,662.4 | 2,882,951.1 | ||||||||||||||||
Change in inventories of finished goods and work-in-progress | 294.9 | 22,311.9 | 20,532.8 | (20,465.8 | ) | |||||||||||||||
Purchase of products for sale | 1,616.1 | 122,283.5 | 132,588.3 | 159,039.9 | ||||||||||||||||
Raw materials, components, and consumables | 20,167.4 | 1,525,964.3 | 1,809,875.4 | 1,718,028.0 | ||||||||||||||||
Employee cost | 32 | 4,075.5 | 308,372.8 | 346,261.1 | 302,624.8 | |||||||||||||||
Defined benefit pension plan amendment cost / (credit) | 36 | — | — | 1,479.3 | (36,090.1 | ) | ||||||||||||||
Depreciation and amortization | 2,744.1 | 207,632.1 | 230,197.8 | 209,818.2 | ||||||||||||||||
Other expenses | 33 | 7,947.4 | 601,339.1 | 657,298.7 | 629,755.4 | |||||||||||||||
Impairment losses in Jaguar Land Rover | 17 | — | — | 278,379.1 | — | |||||||||||||||
Impairment losses in passenger vehicle business | 18(a | ) | 58.9 | 4,454.8 | — | — | ||||||||||||||
Provision for onerous contracts | 18(b | ) | 102.7 | 7,770.0 | — | — | ||||||||||||||
Impairment losses of assets in subsidiaries | 18(c | ) | 46.7 | 3,532.0 | — | — | ||||||||||||||
Reversal for loss of inventory (net of insurance recoveries) | 10 | — | — | — | (111.9 | ) | ||||||||||||||
Expenditure capitalized | (2,313.3 | ) | (175,033.8 | ) | (196,595.6 | ) | (185,882.0 | ) | ||||||||||||
Assets written off / loss on sale of assets and others (net) | 44 | 41.4 | 3,131.9 | 13,186.7 | 29,148.6 | |||||||||||||||
Other (income)/loss (net) | 34 | (211.6 | ) | (16,009.4 | ) | (35,438.7 | ) | (47,873.3 | ) | |||||||||||
Foreign exchange loss (net) | 224.5 | 16,985.4 | 5,824.2 | 4,332.9 | ||||||||||||||||
Interest income | (154.6 | ) | (11,696.9 | ) | (7,864.6 | ) | (7,122.4 | ) | ||||||||||||
Interest expense | 35 | 958.9 | 72,553.1 | 57,586.0 | 46,791.3 | |||||||||||||||
Share of (profit)/loss of equity accounted investees (net) | 19 | 132.2 | 10,000.0 | (2,095.0 | ) | (22,782.6 | ) | |||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net income/(loss) before tax | (1,445.2 | ) | (109,339.6 | ) | (317,553.1 | ) | 103,740.1 | |||||||||||||
Income tax (expense)/credit | 20 | (48.2 | ) | (3,644.5 | ) | 25,425.0 | (37,678.2 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net income/(loss) | US$ | (1,493.4 | ) | Rs. | (112,984.1 | ) | Rs. | (292,128.1 | ) | Rs. | 66,061.9 | |||||||||
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|
|
|
|
|
|
| |||||||||||||
Attributable to: | ||||||||||||||||||||
Shareholders of Tata Motors Limited | (1,506.0 | ) | (113,940.3 | ) | (293,142.7 | ) | 65,040.7 | |||||||||||||
Non-controlling interests | 12.6 | 956.2 | 1,014.6 | 1,021.2 | ||||||||||||||||
Earnings/(loss) per share: | 42 | |||||||||||||||||||
Ordinary shares: | ||||||||||||||||||||
Basic | US$ | (0.4 | ) | Rs. | (32.9 | ) | Rs. | (86.3 | ) | Rs. | 19.1 | |||||||||
Diluted | US$ | (0.4 | ) | Rs. | (32.9 | ) | Rs. | (86.3 | ) | Rs. | 19.1 | |||||||||
‘A’ Ordinary shares: | ||||||||||||||||||||
Basic | US$ | (0.4 | ) | Rs. | (32.9 | ) | Rs. | (86.3 | ) | Rs. | 19.2 | |||||||||
Diluted | US$ | (0.4 | ) | Rs. | (32.9 | ) | Rs. | (86.3 | ) | Rs. | 19.2 |
See accompanying notes to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
/s/ Deloitte Haskins & Sells LLP
Tata Motors Limited and subsidiaries
Mumbai, IndiaConsolidated Statements of Comprehensive Income
July 28, 2017
Year ended March 31, | ||||||||||||||||
2020 | 2020 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Net income/(loss) | US$ | (1,493.4 | ) | Rs. | (112,984.1 | ) | Rs. | (292,128.1 | ) | Rs. | 66,061.9 | |||||
Other comprehensive income : | ||||||||||||||||
(i) Items that will not be reclassified subsequently to profit and loss : | ||||||||||||||||
Remeasurement gains and (losses) on defined benefit obligations (net) | 1,163.4 | 88,029.9 | (25,612.6 | ) | 46,751.0 | |||||||||||
Share of remeasurement gains and (losses) on defined benefit obligations (net) of equity accounted investees | 0.2 | 14.3 | 33.8 | (47.5 | ) | |||||||||||
Unrealized gains / (losses) on investments (net) | (17.6 | ) | (1,330.2 | ) | 355.4 | — | ||||||||||
Share of unrealized gains / (losses) on investments (net) of equity accounted investees | (0.5 | ) | (39.1 | ) | 77.7 | — | ||||||||||
Gains and (losses) in cash flow hedges of forecast inventory purchases | 89.3 | 6,753.2 | 18,134.5 | — | ||||||||||||
Income tax relating to items that will not be reclassified subsequently | (199.3 | ) | (15,081.0 | ) | 756.9 | (7,613.9 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
1,035.5 | 78,347.1 | (6,254.3 | ) | 39,089.6 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
(ii) Items that may be reclassified subsequently to profit and loss : | ||||||||||||||||
Currency translation | 292.7 | 22,145.9 | (20,413.2 | ) | 96,484.5 | |||||||||||
Gain/(loss) on cash flow hedges (net) | 222.3 | 16,823.9 | (28,142.8 | ) | 208,629.8 | |||||||||||
Available-for-sale investments | — | — | — | 399.6 | ||||||||||||
Gains and (losses) on finance receivables held at fair value | 18.0 | 1,362.4 | — | — | ||||||||||||
Share of other comprehensive income of equity accounted investees (net) | 13.6 | 1,026.1 | (586.1 | ) | 4,044.2 | |||||||||||
Income tax relating to items that may be reclassified subsequently | (41.5 | ) | (3,141.6 | ) | 5,319.9 | (39,450.0 | ) | |||||||||
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|
|
|
|
|
|
| |||||||||
505.1 | 38,216.7 | (43,822.2 | ) | 270,108.1 | ||||||||||||
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|
|
|
|
|
|
| |||||||||
Other comprehensive income/(loss) for the year, net of tax (i+ii) | 1,540.6 | 116,563.8 | (50,076.5 | ) | 309,197.7 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total comprehensive income/(loss) for the year | US$ | 47.2 | Rs. | 3,579.7 | Rs. | (342,204.6 | ) | Rs. | 375,259.6 | |||||||
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|
|
|
|
|
|
| |||||||||
Attributable to: | ||||||||||||||||
Shareholders of Tata Motors Limited | 32.9 | 2,498.7 | (343,213.4 | ) | 373,966.5 | |||||||||||
Non-controlling interests | 14.3 | 1,081.0 | 1,008.8 | 1,293.1 |
See accompanying notes to consolidated financial statements
Tata Motors Limited and subsidiaries
Consolidated Statements of Cash Flows
Year ended March 31, | ||||||||||||||||
2020 | 2020 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income/(loss) | US$ | (1,493.4 | ) | Rs. (112,984.1) | Rs. (292,128.1 | ) | Rs. | 66,061.9 | ||||||||
Adjustments for: | ||||||||||||||||
Depreciation and amortization expense | 2,744.1 | 207,632.1 | 230,197.8 | 209,818.2 | ||||||||||||
Inventory write-down | 42.4 | 3,208.1 | 6,086.3 | 6,074.2 | ||||||||||||
Allowances for finance receivables | 87.3 | 6,602.1 | 3,202.4 | 255.2 | ||||||||||||
Defined benefit pension plan amendment cost/(credit) | — | — | 1,479.3 | (36,090.1 | ) | |||||||||||
Provision for employee separation cost | 54.2 | 4,097.8 | 13,672.2 | — | ||||||||||||
Impairment losses in Jaguar Land Rover | — | — | 278,379.1 | — | ||||||||||||
Impairment losses of assets in subsidiaries | 46.7 | 3,532.0 | — | — | ||||||||||||
Impairment losses in passenger vehicle business | 58.9 | 4,454.8 | — | — | ||||||||||||
Provision for onerous contracts | 102.7 | 7,770.0 | — | — | ||||||||||||
Allowances for trade and other receivables | 20.2 | 1,528.5 | 2,141.9 | 145.7 | ||||||||||||
Share-based payments | 0.6 | 47.0 | 84.4 | — | ||||||||||||
Share of (profit)/loss of equity accounted investees (net) | 132.2 | 10,000.0 | (2,095.0 | ) | (22,782.6 | ) | ||||||||||
Loss on sale of assets/assets written off and others (net) | 41.4 | 3,131.9 | 13,186.7 | 23,825.5 | ||||||||||||
(Gain) on sale/loss on fair valuation of available-for-sale investments (net) | — | — | — | (1,561.7 | ) | |||||||||||
Marked-to-market (gain)/loss on investments measured at fair value through profit or loss | 51.4 | 3,890.5 | (2,385.4 | ) | — | |||||||||||
Profit on sale of investments (net) | (24.8 | ) | (1,873.4 | ) | (1,286.1 | ) | — | |||||||||
Profit on sale of investment in a subsidiary company | — | — | (3,769.8 | ) | — | |||||||||||
Loss on change in fair value of commodity derivatives | 96.3 | 7,287.6 | 3,120.0 | 170.9 | ||||||||||||
Fair value gain on disposal of joint venture | — | — | — | (190.6 | ) | |||||||||||
Provision for loan given to a joint venture | 3.3 | 251.2 | — | — | ||||||||||||
Foreign exchange loss (net) | 266.8 | 20,187.8 | 5,046.7 | 4,247.6 | ||||||||||||
Income tax expense/(credit) | 48.2 | 3,644.5 | (25,425.0 | ) | 37,678.2 | |||||||||||
Interest expense | 958.9 | 72,553.1 | 57,586.0 | 46,791.3 | ||||||||||||
Interest income | (154.6 | ) | (11,696.9 | ) | (7,864.6 | ) | (7,122.4 | ) | ||||||||
Dividend income and income on mutual funds | (2.8 | ) | (211.4 | ) | (172.8 | ) | (157.7 | ) | ||||||||
Gain on fair value of below market interest loans | — | — | (133.7 | ) | (60.2 | ) | ||||||||||
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|
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| |||||||||
Cash flows from operating activities before changes in following assets and liabilities | 3,080.0 | 233,053.2 | 278,922.3 | 327,103.4 | ||||||||||||
Trade receivables | 1,045.8 | 79,131.1 | 9,547.0 | (43,265.8 | ) | |||||||||||
Finance receivables | 267.1 | 20,207.7 | (100,637.9 | ) | (63,612.2 | ) | ||||||||||
Other financial assets | 8.5 | 645.3 | 2,301.3 | (33,730.5 | ) | |||||||||||
Other current assets | 83.9 | 6,351.7 | 6,905.2 | 1,820.0 | ||||||||||||
Inventories | 307.3 | 23,251.8 | 20,686.4 | (35,604.3 | ) | |||||||||||
Other non-current assets | (458.1 | ) | (34,660.6 | ) | (3,956.4 | ) | (307.6 | ) | ||||||||
Accounts payable | (1,014.9 | ) | (76,794.3 | ) | (26,895.1 | ) | 72,565.7 | |||||||||
Acceptances | (53.6 | ) | (4,053.8 | ) | (17,244.5 | ) | 631.0 | |||||||||
Other current liabilities | (133.9 | ) | (10,130.4 | ) | 19,807.0 | 5,631.7 | ||||||||||
Other financial liabilities | (60.3 | ) | (4,560.2 | ) | (300.1 | ) | 15,419.8 | |||||||||
Other non-current liabilities | (609.3 | ) | (46,100.4 | ) | 29,848.8 | (46,878.3 | ) | |||||||||
Provisions | 1,293.0 | 97,837.7 | (3,482.1 | ) | 69,012.9 | |||||||||||
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|
|
|
|
|
|
| |||||||||
Cash generated from operations | 3,755.5 | 284,178.8 | 215,501.8 | 268,785.8 | ||||||||||||
Income tax paid (net) | (235.9 | ) | (17,849.4 | ) | (26,594.3 | ) | (30,211.6 | ) | ||||||||
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|
|
|
|
|
| |||||||||
Net cash provided by operating activities | 3,519.6 | 266,329.4 | 188,907.5 | 238,574.2 | ||||||||||||
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|
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|
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| |||||||||
Cash flows from investing activities: | ||||||||||||||||
Deposits with banks/financial institutions | (5,301.6 | ) | (401,147.9 | ) | (240,663.9 | ) | (478,682.9 | ) | ||||||||
Realization of deposits with banks / financial institutions | 4,741.2 | 358,750.9 | 328,523.9 | 523,438.0 | ||||||||||||
(Purchase)/sale of mutual funds, money market funds and equity shares (net) | (177.0 | ) | (13,392.9 | ) | 56,390.2 | 23,610.9 | ||||||||||
Proceeds from sale of investment in a subsidiary company | — | — | 5,329.6 | — | ||||||||||||
Purchases of available-for-sale investments | — | — | — | (3,287.8 | ) | |||||||||||
Investments in others | (13.1 | ) | (994.1 | ) | (1,300.1 | ) | — | |||||||||
Proceeds from sale of available-for-sale investments | — | — | — | 194.3 | ||||||||||||
Proceeds from sale of investments in other companies | 2.8 | 214.5 | 51.8 | — | ||||||||||||
Excess of cash acquired on acquisition of subsidiary company | — | — | — | 144.5 |
Tata Motors Limited and subsidiaries
Consolidated Balance SheetsStatements of Cash Flows
As at March 31, | ||||||||||||||||
Notes | 2018 | 2018 | 2017 | |||||||||||||
(In millions) | ||||||||||||||||
ASSETS: | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | 3 | US$ | 2,258.0 | Rs. | 147,167.5 | Rs. | 139,867.6 | |||||||||
Short-term deposits | 2,970.7 | 193,615.7 | 218,927.6 | |||||||||||||
Finance receivables | 4 | 1,289.1 | 84,016.5 | 68,101.2 | ||||||||||||
Trade receivables | 3,052.3 | 198,933.0 | 140,755.5 | |||||||||||||
Investments | 6 | 2,249.9 | 146,637.5 | 150,411.5 | ||||||||||||
Other financial assets | 7 | 896.7 | 58,443.6 | 24,647.5 | ||||||||||||
Inventories | 9 | 6,510.1 | 424,296.2 | 352,953.8 | ||||||||||||
Other current assets | 10 | 1,175.7 | 76,625.5 | 65,439.9 | ||||||||||||
Current income tax assets | 32.0 | 2,087.4 | 2,231.8 | |||||||||||||
Investments in equity accounted investees (held for sale) | 16 | 76.3 | 4,973.5 | — | ||||||||||||
Assets classified as held for sale | 40 | 396.7 | 25,851.9 | — | ||||||||||||
|
|
|
|
|
| |||||||||||
Total current assets | 20,907.5 | 1,362,648.3 | 1,163,336.4 | |||||||||||||
|
|
|
|
|
| |||||||||||
Non-current assets: | ||||||||||||||||
Finance receivables | 4 | 2,377.8 | 154,973.2 | 107,531.3 | ||||||||||||
Investments | 6 | 116.3 | 7,576.5 | 6,868.2 | ||||||||||||
Other financial assets | 8 | 776.3 | 50,592.8 | 36,647.7 | ||||||||||||
Property, plant and equipment | 12 | 13,048.6 | 850,444.1 | 651,199.4 | ||||||||||||
Goodwill | 14 | 17.9 | 1,164.5 | 6,733.2 | ||||||||||||
Intangible assets | 15 | 10,512.7 | 685,167.9 | 571,513.8 | ||||||||||||
Investments in equity accounted investees | 16 | 750.0 | 48,878.9 | 46,060.1 | ||||||||||||
Non-current income tax assets | 138.1 | 8,999.0 | 9,723.1 | |||||||||||||
Deferred income taxes | 17 | 630.1 | 41,064.6 | 44,221.7 | ||||||||||||
Othernon-current assets | 11 | 374.8 | 24,427.4 | 22,811.1 | ||||||||||||
|
|
|
|
|
| |||||||||||
Totalnon-current assets | 28,742.6 | 1,873,288.9 | 1,503,309.6 | |||||||||||||
|
|
|
|
|
| |||||||||||
Total assets | US$ | 49,650.1 | Rs. | 3,235,937.2 | Rs. | 2,666,646.0 | ||||||||||
|
|
|
|
|
| |||||||||||
LIABILITIES AND EQUITY: | ||||||||||||||||
Liabilities: | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | 12,345.2 | 804,601.6 | 610,201.4 | |||||||||||||
Acceptances | 752.0 | 49,013.4 | 48,342.4 | |||||||||||||
Short-term borrowings and current portion of long-term debt | 18 | 4,254.5 | 277,287.4 | 179,526.7 | ||||||||||||
Other financial liabilities | 20 | 1,827.7 | 119,118.6 | 182,202.0 | ||||||||||||
Provisions | 22 | 1,218.5 | 79,418.5 | 58,082.7 | ||||||||||||
Other current liabilities | 23 | 1,105.5 | 72,050.7 | 60,605.2 | ||||||||||||
Current income tax liabilities | 239.2 | 15,590.7 | 13,925.8 | |||||||||||||
Liabilities directly associated with Assets classified as held for sale | 40 | 164.2 | 10,701.8 | — | ||||||||||||
|
|
|
|
|
| |||||||||||
Total current liabilities | 21,906.8 | 1,427,782.7 | 1,152,886.2 | |||||||||||||
|
|
|
|
|
| |||||||||||
Non-current liabilities: | ||||||||||||||||
Long-term debt | 19 | 9,381.2 | 611,419.4 | 605,644.5 | ||||||||||||
Other financial liabilities | 21 | 427.9 | 27,887.4 | 114,664.3 | ||||||||||||
Deferred income taxes | 17 | 939.9 | 61,257.8 | 11,806.4 | ||||||||||||
Provisions | 22 | 1,680.0 | 109,493.3 | 90,025.1 | ||||||||||||
Other liabilities | 24 | 1,291.1 | 84,149.3 | 152,777.3 | ||||||||||||
|
|
|
|
|
| |||||||||||
Totalnon-current liabilities | 13,720.1 | 894,207.2 | 974,917.6 | |||||||||||||
|
|
|
|
|
| |||||||||||
Total liabilities | 35,626.9 | 2,321,989.9 | 2,127,803.8 | |||||||||||||
|
|
|
|
|
| |||||||||||
Equity: | ||||||||||||||||
Ordinary shares | 25 | 88.6 | 5,775.2 | 5,775.2 | ||||||||||||
‘A’ Ordinary shares | 25 | 15.6 | 1,017.0 | 1,017.0 | ||||||||||||
Additionalpaid-in capital | 4,009.3 | 261,303.4 | 261,303.4 | |||||||||||||
Reserves* | 9,739.6 | 634,764.4 | 529,009.9 | |||||||||||||
Other components of equity | 26 | 87.9 | 5,729.8 | (262,908.5 | ) | |||||||||||
|
|
|
|
|
| |||||||||||
Equity attributable to shareholders of Tata Motors Limited | 13,941.0 | 908,589.8 | 534,197.0 | |||||||||||||
Non-controlling interests | 82.2 | 5,357.5 | 4,645.2 | |||||||||||||
|
|
|
|
|
| |||||||||||
Total equity | 14,023.2 | 913,947.3 | 538,842.2 | |||||||||||||
|
|
|
|
|
| |||||||||||
Total liabilities and equity | US$ | 49,650.1 | Rs. | 3,235,937.2 | Rs. | 2,666,646.0 | ||||||||||
|
|
|
|
|
|
Year ended March 31, | ||||||||||||||||
2020 | 2020 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Deposits of margin money and other restricted deposits | US$ | (206.4 | ) | Rs. | (15,618.6 | ) | Rs. | (7,647.1 | ) | Rs. | (3,917.6 | ) | ||||
Realization of margin money and other restricted deposits | 195.2 | 14,772.4 | 4,902.0 | 2,134.0 | ||||||||||||
(Increase)/decrease in short term inter-corporate deposits | (1.9 | ) | (144.4 | ) | (19.8 | ) | — | |||||||||
Loan given to joint venture | (0.2 | ) | (17.0 | ) | (37.5 | ) | — | |||||||||
Proceeds from loan/(given) to others | 0.5 | 34.2 | (34.2 | ) | — | |||||||||||
Investments in equity accounted investees | (80.1 | ) | (6,064.0 | ) | (93.1 | ) | (42.1 | ) | ||||||||
Dividends received from equity accounted investees | 82.3 | 6,224.4 | 2,149.8 | 17,816.4 | ||||||||||||
Interest received | 146.0 | 11,044.8 | 7,605.2 | 6,904.7 | ||||||||||||
Dividend received | 2.8 | 211.4 | 172.8 | 157.7 | ||||||||||||
Payments for property, plant and equipment | (1,892.4 | ) | (143,191.7 | ) | (174,195.5 | ) | (198,654.3 | ) | ||||||||
Proceeds from sale of property, plant and equipment | 22.7 | 1,714.8 | 672.3 | 303.0 | ||||||||||||
Payments for intangible assets | (2,033.0 | ) | (153,828.6 | ) | (178,839.7 | ) | (152,134.9 | ) | ||||||||
Payments for acquisitions, net of cash acquired | (3.6 | ) | (270.4 | ) | — | — | ||||||||||
Payments for purchase of minority stake in a subsidiary company | — | — | (77.6 | ) | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Net cash used in investing activities | (4,515.8 | ) | (341,702.2 | ) | (197,110.9 | ) | (262,016.1 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Cash flows from financing activities: | ||||||||||||||||
Proceeds from issue of shares and warrants (net of issue expenses) | 513.9 | 38,887.7 | — | — | * | |||||||||||
Dividends paid to non-controlling interests shareholders of subsidiaries (including dividend distribution tax) | (7.5 | ) | (568.5 | ) | (947.4 | ) | (959.6 | ) | ||||||||
Interest paid | (1,055.6 | ) | (79,876.5 | ) | (68,404.0 | ) | (54,106.4 | ) | ||||||||
Proceeds from issuance of short-term debt | 1,415.8 | 107,124.2 | 201,191.4 | 150,087.3 | ||||||||||||
Repayment of short-term debt | (1,698.7 | ) | (128,529.3 | ) | (218,521.3 | ) | (193,766.2 | ) | ||||||||
Net change in other short-term debt (with maturity up to three months) | (209.8 | ) | (15,871.2 | ) | 49,139.0 | 73,282.4 | ||||||||||
Proceeds from issuance of long-term debt | 3,843.0 | 290,777.7 | 261,013.1 | 152,108.8 | ||||||||||||
Repayments of long-term debt | (2,246.8 | ) | (170,005.2 | ) | (133,458.9 | ) | (105,872.5 | ) | ||||||||
Proceeds from Option settlement of long term borrowings | 25.2 | 1,909.0 | — | — | ||||||||||||
Repayment of lease liability | (115.8 | ) | (8,763.6 | ) | — | — | ||||||||||
Acquisition of minority | (2.9 | ) | (221.5 | ) | — | — | ||||||||||
Debt issuance cost | (12.8 | ) | (966.8 | ) | (1,708.2 | ) | (656.7 | ) | ||||||||
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Net cash provided by financing activities | 448.0 | 33,896.0 | 88,303.7 | 20,117.1 | ||||||||||||
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Net change in cash and cash equivalents | (548.2 | ) | (41,476.8 | ) | 80,100.3 | (3,324.8 | ) | |||||||||
Reversal of / (classified as) held for sale | — | — | 2,439.4 | (2,439.4 | ) | |||||||||||
Effect of foreign exchange on cash and cash equivalents | 139.5 | 10,556.8 | (14,109.2 | ) | 13,064.1 | |||||||||||
Cash and cash equivalents, beginning of the year | 2,849.4 | 215,598.0 | 147,167.5 | 139,867.6 | ||||||||||||
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Cash and cash equivalents, end of the year | US$ | 2,440.7 | Rs. | 184,678.0 | Rs. | 215,598.0 | Rs. | 147,167.5 | ||||||||
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Non-cash transactions: | ||||||||||||||||
Liability towards property, plant and equipment and intangible assets purchased on credit/deferred credit | US$ | 875.8 | Rs. | 66,267.8 | Rs. | 72,863.2 | Rs. | 83,465.4 | ||||||||
Increase/(decrease) in liabilities arising from financing activities on account of non-cash transactions: | ||||||||||||||||
Exchange differences | US$ | 613.5 | Rs. | 46,417.0 | Rs. | 11,201.5 | Rs. | 27,680.3 | ||||||||
Classified as held for sale | US$ | — | Rs. | — | Rs. | — | Rs. | (1,425.5 | ) | |||||||
Amortization of prepaid discounting charges | US$ | 14.3 | Rs. | 1,083.0 | Rs. | 1,581.9 | Rs. | 2,027.0 |
* less than Rs. 50,000
See accompanying notes to consolidated financial statements
Tata Motors Limited and subsidiaries
Consolidated statements of changes in equity
For the years ended March 31, 2020, March 31, 2019 and March 31, 2018
Other components of equity | Reserves* | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share capital | Additional paid-in capital | Share-based payments reserve | Currency translation reserve | Debt instruments through Other Comprehensive Income | Equity instruments through Other Comprehensive Income | Hedging reserve | Cost of Hedge reserve | Capital redemption reserve | Debenture redemption reserve | Reserve for research and human resource development | Special reserve | Earned surplus reserve | Retained earnings | Equity attributable to shareholders of Tata Motors Limited | Non- controlling interests | Total equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as at April 1, 2019 | Rs. 6,792.2 | Rs. | 261,303.4 | Rs. | 84.4 | Rs. | 28,388.6 | Rs. | — | 1,785.5 | Rs. | (60,668.2 | ) | Rs. | (2,873.9 | ) | Rs. | 22.8 | Rs. | 10,859.5 | Rs. | 1,993.9 | Rs. | 4,408.2 | Rs. | 451.8 | Rs. | 300,190.5 | Rs. | 552,738.7 | Rs. | 5,328.7 | Rs. | 558,067.4 | ||||||||||||||||||||||||||||||||||
Effect of transition to IFRS 16 | — | — | — | — | — | — | — | — | — | — | — | — | — | (1,961.4 | ) | (1,961.4 | ) | — | (1,961.4 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
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Balance as at April 1, 2019 after giving effect of transition to IFRS 16 | 6,792.2 | 261,303.4 | 84.4 | 28,388.6 | — | 1,785.5 | (60,668.2 | ) | (2,873.9 | ) | 22.8 | 10,859.5 | 1,993.9 | 4,408.2 | 451.8 | 298,229.1 | 550,777.3 | 5,328.7 | 556,106.0 | |||||||||||||||||||||||||||||||||||||||||||||||||
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Income for the period | — | — | — | — | — | — | — | — | — | — | — | — | — | (113,940.3 | ) | (113,940.3 | ) | 956.2 | (112,984.1 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income /(loss) for the period | — | — | — | 23,033.9 | 886.3 | (1,394.5 | ) | 22,214.0 | (2,628.2 | ) | — | — | — | — | — | 74,327.5 | 116,439.0 | 124.8 | 116,563.8 | |||||||||||||||||||||||||||||||||||||||||||||||||
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Total comprehensive income/(loss) for the period | — | — | — | 23,033.9 | 886.3 | (1,394.5 | ) | 22,214.0 | (2,628.2 | ) | — | — | — | — | — | (39,612.8 | ) | 2,498.7 | 1,081.0 | 3,579.7 | ||||||||||||||||||||||||||||||||||||||||||||||||
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Amounts recognized in inventory | — | — | — | — | — | — | (3,482.9 | ) | 1,073.4 | — | — | — | — | — | — | (2,409.5 | ) | — | (2,409.5 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Issue of shares persuant to preferential allotment (net of issue expenses of Rs. 30.8 million) | 403.2 | 29,809.5 | — | — | — | — | — | — | — | — | — | — | — | — | 30,212.7 | — | 30,212.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Issue of warrants | 8,675.0 | — | — | — | — | — | — | �� | — | — | — | — | — | 8,675.0 | — | 8,675.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Buyback of shares | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | (221.5 | ) | (221.5 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
Issue of perpetual instrument classified as equity by a subsidiary (refer note below) | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 2,500.0 | 2,500.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Dividend paid (including dividend tax) | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | (454.7 | ) | (454.7 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
Share based payments | — | — | 47.0 | — | — | — | — | — | — | — | — | — | — | — | 47.0 | — | 47.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Transfer (from)/to retained earnings | — | — | — | — | — | — | — | — | — | (471.0 | ) | — | 495.9 | (24.9 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Balance as at March 31, 2020 | Rs. | 7,195.4 | Rs. | 299,787.9 | Rs. | 131.4 | Rs. | 51,422.5 | Rs. | 886.3 | Rs. | 391.0 | Rs. | (41,937.1) | Rs. | (4,428.7) | Rs. | 22.8 | Rs. | 10,388.5 | Rs. | 1,993.9 | Rs. | 4,904.1 | Rs. | 451.8 | Rs. | 258,591.4 | Rs. | 589,801.2 | Rs. | 8,233.5 | Rs. | 598,034.7 | ||||||||||||||||||||||||||||||||||
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Rs. | 299,919.3 | Rs. | 6,334.0 | Rs. | 276,352.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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US$ | 95.1 | US$ | 3,962.1 | US$ | 1.7 | US$ | 679.5 | US$ | 11.7 | US$ | 5.2 | US$ | (554.2 | ) | US$ | (58.5 | ) | US$ | 0.3 | US$ | 137.3 | US$ | 26.4 | US$ | 64.8 | US$ | 6.0 | US$ | 3,417.5 | US$ | 7,794.9 | US$ | 108.8 | US$ | 7,903.7 | |||||||||||||||||||||||||||||||||
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US$ | 3,963.8 | US$ | 83.7 | US$ | 3,652.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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* |
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Note:
During the financial year ended March 31, 2020, Tata Motors Finance Limited, a subsidiary of the Company issued perpetual securities of Rs.2,500 million bearing a coupon interest rate of 11.50 % p.a, with a step up provision if the securities are not called after 10 years. The payment of any coupon may be cancelled or suspended at the discretion of the Board of Directors of Tata Motors Finance Limited. Accordingly, the Company has accounted these securities as equity instruments and any amount attributable to investors of these perpetual securities have been presented as non-controlling interest.
See accompanying notes to consolidated financial statements
Tata Motors Limited and subsidiaries
Consolidated Income Statementsstatements of changes in equity
For the years ended March 31, 2020, March 31, 2019 and March 31, 2018
Year ended March 31, | ||||||||||||||||||||
Notes | 2018 | 2018 | 2017 | 2016 | ||||||||||||||||
(In millions, except per share amounts) | ||||||||||||||||||||
Revenues | US$ | 43,834.4 | Rs. | 2,856,910.8 | Rs. | 2,632,176.8 | Rs. | 2,682,793.8 | ||||||||||||
Finance revenues | 399.5 | 26,040.3 | 24,318.3 | 22,318.8 | ||||||||||||||||
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Total revenues | 44,233.9 | 2,882,951.1 | 2,656,495.1 | 2,705,112.6 | ||||||||||||||||
Change in inventories of finished goods andwork-in-progress | (314.0 | ) | (20,465.8 | ) | (73,751.2 | ) | (27,540.1 | ) | ||||||||||||
Purchase of products for sale | 2,440.2 | 159,039.9 | 139,245.3 | 128,494.6 | ||||||||||||||||
Raw materials, components, and consumables | 26,360.2 | 1,718,028.0 | 1,593,803.1 | 1,536,255.1 | ||||||||||||||||
Employee cost | 28 | 4,643.2 | 302,624.8 | 283,588.0 | 288,117.4 | |||||||||||||||
Defined benefit pension plan amendment | 32 | (553.7 | ) | (36,090.1 | ) | — | — | |||||||||||||
Depreciation and amortization | 3,219.3 | 209,818.2 | 182,405.4 | 168,074.9 | ||||||||||||||||
Other expenses | 29 | 9,662.5 | 629,755.4 | 608,461.6 | 585,321.4 | |||||||||||||||
Provision/(Reversal) for loss of inventory (net of insurance recoveries) | 9 | (1.7 | ) | (111.9 | ) | (13,301.0 | ) | 16,383.9 | ||||||||||||
Expenditure capitalized | (2,852.0 | ) | (185,882.0 | ) | (168,768.8 | ) | (166,783.2 | ) | ||||||||||||
Assets written off/loss on sale of assets and others (net) | 15 | (4) | 447.2 | 29,148.6 | 11,418.6 | 9,477.4 | ||||||||||||||
Other (income)/loss (net) | 30 | (734.5 | ) | (47,873.3 | ) | (39,590.1 | ) | (12,613.0 | ) | |||||||||||
Foreign exchange (gain)/loss (net) | 42.3 | 2,758.8 | 13,284.8 | 20,588.0 | ||||||||||||||||
Interest income | (109.3 | ) | (7,122.4 | ) | (5,640.7 | ) | (7,186.6 | ) | ||||||||||||
Interest expense (net) | 31 | 711.4 | 46,365.0 | 42,365.7 | 47,912.6 | |||||||||||||||
Share of (profit)/loss of equity accounted investees (net) | 16 | (349.6 | ) | (22,782.6 | ) | (14,930.0 | ) | (5,774.7 | ) | |||||||||||
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Net income before tax | 1,622.4 | 105,740.5 | 97,904.4 | 124,384.9 | ||||||||||||||||
Income tax expense | 17 | (583.9 | ) | (38,058.5 | ) | (35,670.0 | ) | (27,512.7 | ) | |||||||||||
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Net income | US$ | 1,038.5 | Rs. | 67,682.0 | Rs. | 62,234.4 | Rs. | 96,872.2 | ||||||||||||
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Attributable to: | ||||||||||||||||||||
Shareholders of Tata Motors Limited | 1,022.8 | 66,660.8 | 61,210.5 | 95,883.4 | ||||||||||||||||
Non-controlling interests | 15.7 | 1,021.2 | 1,023.9 | 988.8 | ||||||||||||||||
Earnings per share: | 39 | |||||||||||||||||||
Ordinary shares: | ||||||||||||||||||||
Basic | US$ | 0.3 | Rs. | 19.6 | Rs. | 18.0 | Rs. | 28.4 | ||||||||||||
Diluted | US$ | 0.3 | Rs. | 19.6 | Rs. | 18.0 | Rs. | 28.4 | ||||||||||||
‘A’ Ordinary shares: | ||||||||||||||||||||
Basic | US$ | 0.3 | Rs. | 19.7 | Rs. | 18.1 | Rs. | 28.5 | ||||||||||||
Diluted | US$ | 0.3 | Rs. | 19.7 | Rs. | 18.1 | Rs. | 28.5 |
Other components of equity | Reserves* | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share capital | Additional paid- in capital | Share-based payments reserve | Currency translation reserve | Available- for-sale investments | Equity instruments through Other Comprehensive Income | Hedging reserve | Cost of Hedge reserve | Capital redemption reserve | Debenture redemption reserve | Reserve for research and human resource development | Special reserve | Earned surplus reserve | Retained earnings | Equity attributable to shareholders of Tata Motors Limited | Non- controlling interests | Total equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as at April 1, 2018 | Rs. | 6,792.2 | Rs. | 261,303.4 | Rs. | — | Rs. | 49,388.8 | Rs. | 1,422.1 | Rs. | (39,224.0 | ) | Rs. | (4,473.1 | ) | Rs. | 22.8 | Rs. | 10,859.5 | Rs. | 1,993.9 | Rs. | 3,794.2 | Rs. | 435.9 | Rs. | 615,847.8 | Rs. | 908,163.5 | Rs. | 5,357.5 | Rs. | 913,521.0 | ||||||||||||||||||||||||||||||||||
Effect of transition to IFRS 9 | (1,422.1 | ) | 1,392.8 | (2,819.8 | ) | 204.8 | (148.5 | ) | (2,792.8 | ) | — | (2,792.8 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effect of transition to IFRS 15 | (418.0 | ) | (418.0 | ) | — | (418.0 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Balance as at April 1, 2018 after giving effect of transition to IFRS 9 and IFRS 15 | 6,792.2 | 261,303.4 | — | 49,388.8 | — | 1,392.8 | (42,043.8 | ) | (4,268.3 | ) | 22.8 | 10,859.5 | 1,993.9 | 3,794.2 | 435.9 | 615,281.3 | 904,952.7 | 5,348.2 | 910,310.2 | |||||||||||||||||||||||||||||||||||||||||||||||||
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Income/(loss) for the year | (293,142.7 | ) | (293,142.7 | ) | 1,014.6 | (292,128.1 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income /(loss) for the year | — | — | — | (21,000.2 | ) | — | 442.0 | (8,127.3 | ) | (5.1 | ) | (21,380.1 | ) | (50,070.7 | ) | (5.8 | ) | (50,076.5 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
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Total comprehensive income/(loss) for the year | — | — | — | (21,000.2 | ) | — | 442.0 | (8,127.3 | ) | (5.1 | ) | — | — | — | — | — | (314,522.8 | ) | (343,213.4 | ) | 1,008.8 | (342,204.6 | ) | |||||||||||||||||||||||||||||||||||||||||||||
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Amounts recognized in inventory | — | — | — | — | (10,497.1 | ) | 1,399.5 | — | — | — | — | — | — | (9,097.6 | ) | — | (9,097.6 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Non-controlling interest on Acquisitions during the period | — | — | — | — | — | — | — | — | — | — | — | — | 12.6 | 12.6 | (90.2 | ) | (77.6 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Realized gain on investments held at fair value through Other comprehensive income | — | — | — | — | (49.3 | ) | — | — | — | — | — | — | — | 49.3 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Dividend paid (including dividend tax) | — | — | — | — | — | — | — | — | — | — | — | — | — | (947.4 | ) | (947.4 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Share based payments | — | 84.4 | — | — | — | — | — | — | — | — | — | — | 84.4 | — | 84.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfer (from)/to retained earnings | — | — | — | — | — | — | — | — | — | — | 614.0 | 15.9 | (629.9 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
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Balance as at March 31, 2019 | Rs. | 6,792.2 | Rs. | 261,303.4 | 84.4 | Rs. | 28,388.6 | Rs. | — | Rs. | 1,785.5 | Rs. | (60,668.2 | ) | Rs. | (2,873.9 | ) | Rs. | 22.8 | Rs. | 10,859.5 | Rs. | 1,993.9 | Rs. | 4,408.2 | Rs. | 451.8 | Rs. | 300,190.5 | Rs. | 552,738.7 | Rs. | 5,328.7 | Rs. | 558,067.4 | |||||||||||||||||||||||||||||||||
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Rs. | 261,387.8 | Rs. | (33,368.0 | ) | Rs. | 317,926.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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* | Refer to note 29 |
See accompanying notes to consolidated financial statements
Tata Motors Limited and subsidiaries
Consolidated Statements of Comprehensive Income
Year ended March 31, | ||||||||||||||||
2018 | 2018 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Net income | US$ | 1,038.5 | Rs. | 67,682.0 | Rs. | 62,234.4 | Rs. | 96,872.2 | ||||||||
Other comprehensive income : | ||||||||||||||||
(i) Items that will not be reclassified subsequently to profit and loss : | ||||||||||||||||
Remeasurement gains and (losses) on defined benefit obligations (net) | 717.3 | 46,751.0 | (78,045.0 | ) | 49,062.3 | |||||||||||
Share of remeasurement gains and (losses) on defined benefit obligations (net) of equity accounted investees | (0.7 | ) | (47.5 | ) | (40.0 | ) | (8.7 | ) | ||||||||
Income tax relating to items that will not be reclassified subsequently | (116.8 | ) | (7,613.9 | ) | 12,407.4 | (11,402.1 | ) | |||||||||
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599.8 | 39,089.6 | (65,677.6 | ) | 37,651.5 | ||||||||||||
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(ii) Items that may be reclassified subsequently to profit and loss : | ||||||||||||||||
Currency translation differences | 1,480.4 | 96,484.5 | (94,148.0 | ) | 16,856.7 | |||||||||||
Gain/(loss) on cash flow hedges (net) | 3,176.9 | 207,055.7 | (157,447.3 | ) | 5,370.3 | |||||||||||
Available-for-sale investments | 6.1 | 399.6 | 752.6 | 4.7 | ||||||||||||
Share of other comprehensive income of equity accounted investees | 62.1 | 4,044.2 | (3,047.0 | ) | 291.1 | |||||||||||
Income tax relating to items that may be reclassified subsequently | (599.5 | ) | (39,069.7 | ) | 29,298.9 | (1,637.1 | ) | |||||||||
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4,126.0 | 268,914.3 | (224,590.8 | ) | 20,885.7 | ||||||||||||
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Other comprehensive income/(loss) for the year, net of tax (i+ii) | 4,725.8 | 308,003.9 | (290,268.4 | ) | 58,537.2 | |||||||||||
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Total comprehensive income/(loss) for the year | US$ | 5,764.3 | Rs. | 375,685.9 | Rs. | (228,034.0 | ) | Rs. | 155,409.4 | |||||||
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Attributable to: | ||||||||||||||||
Shareholders of Tata Motors Limited | 5,744.5 | 374,392.8 | (228,715.6 | ) | 154,323.2 | |||||||||||
Non-controlling interests | 19.8 | 1,293.1 | 681.6 | 1,086.2 |
See accompanying notes to consolidated financial statements
Tata Motors Limited and subsidiaries
Consolidated Statements of Cash Flows
Year ended March 31, | ||||||||||||||||
2018 | 2018 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income | US$ | 1,038.5 | Rs. 67,682.0 | Rs. 62,234.4 | Rs. 96,872.2 | |||||||||||
Adjustments for: | ||||||||||||||||
Depreciation and amortization expense | 3,219.3 | 209,818.2 | 182,405.4 | 168,074.9 | ||||||||||||
Inventory write-down/(reversals) | 93.2 | 6,074.2 | (4,579.1 | ) | 25,012.2 | |||||||||||
Allowances for finance receivables | 3.9 | 255.2 | 5,653.5 | 8,600.3 | ||||||||||||
Defined benefit pension plan ammendment | (553.7 | ) | (36,090.1 | ) | — | — | ||||||||||
Allowances for trade and other receivables | 2.2 | 145.7 | 1,706.0 | 6,719.1 | ||||||||||||
Impairment of Goodwill | — | — | 142.5 | — | ||||||||||||
Share of (profit)/loss of equity accounted investees (net) | (349.6 | ) | (22,782.6 | ) | (14,930.0 | ) | (5,774.7 | ) | ||||||||
Loss on sale of assets/assets written off and others (net) | 365.6 | 23,825.5 | 11,418.6 | 9,477.4 | ||||||||||||
(Gain) on sale/loss on fair valuation of available-for-sale investments (net) | (24.0 | ) | (1,561.7 | ) | (1,826.0 | ) | (1,813.9 | ) | ||||||||
(Gain)/Loss on change in fair value of commodity derivatives | 2.6 | 170.9 | (12,973.4 | ) | 5,818.7 | |||||||||||
Fair value gain on disposal of joint venture | (2.9 | ) | (190.6 | ) | — | — | ||||||||||
Foreign exchange (gain)/loss (net) | 41.0 | 2,673.5 | (12,840.5 | ) | 1,507.9 | |||||||||||
Income tax expense | 583.9 | 38,058.5 | 35,670.0 | 27,512.7 | ||||||||||||
Interest expense | 711.4 | 46,365.0 | 42,365.7 | 47,912.6 | ||||||||||||
Interest income | (109.3 | ) | (7,122.4 | ) | (5,640.7 | ) | (7,186.6 | ) | ||||||||
Dividend income and income on mutual funds | (2.4 | ) | (157.7 | ) | (105.1 | ) | (422.7 | ) | ||||||||
Gain on fair value of below market interest loans | (0.9 | ) | (60.2 | ) | (465.2 | ) | (508.1 | ) | ||||||||
Non-cash dividend income on mutual funds | — | — | — | (24.0 | ) | |||||||||||
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Cash flows from operating activities before changes in following assets and liabilities | 5,018.8 | 327,103.4 | 288,236.1 | 381,778.0 | ||||||||||||
Trade receivables | (663.8 | ) | (43,265.8 | ) | (23,677.8 | ) | (7,945.6 | ) | ||||||||
Finance receivables | (976.0 | ) | (63,612.2 | ) | (17,916.3 | ) | (13,954.5 | ) | ||||||||
Other financial assets | (517.5 | ) | (33,730.5 | ) | (1,193.2 | ) | (4,066.1 | ) | ||||||||
Other current assets | 27.9 | 1,820.0 | (7,700.4 | ) | 1,373.3 | |||||||||||
Inventories | (546.3 | ) | (35,604.3 | ) | (66,309.4 | ) | (57,341.5 | ) | ||||||||
Other non-current assets | (4.7 | ) | (307.6 | ) | (4,292.0 | ) | (1,100.4 | ) | ||||||||
Accounts payable | 1,113.4 | 72,565.7 | 84,935.1 | 40,776.5 | ||||||||||||
Acceptances | 9.7 | 631.0 | 8,527.3 | (974.3 | ) | |||||||||||
Other current liabilities | 86.4 | 5,631.7 | 7,854.0 | 8,359.4 | ||||||||||||
Other financial liabilities | 236.6 | 15,419.8 | 7,651.3 | 7,292.2 | ||||||||||||
Other non-current liabilities | (719.3 | ) | (46,878.3 | ) | 16,348.7 | 27,586.4 | ||||||||||
Provisions | 1,058.8 | 69,012.9 | 29,594.9 | 13,327.4 | ||||||||||||
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Cash generated from operations | 4,124.0 | 268,785.8 | 322,058.3 | 395,110.8 | ||||||||||||
Income tax paid (net) | (463.5 | ) | (30,211.6 | ) | (18,951.0 | ) | (20,397.8 | ) | ||||||||
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Net cash provided by operating activities | 3,660.5 | 238,574.2 | 303,107.3 | 374,713.0 | ||||||||||||
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Cash flows from investing activities: | ||||||||||||||||
Deposits with banks/financial institutions | (7,344.6 | ) | (478,682.9 | ) | (447,429.4 | ) | (434,418.0 | ) | ||||||||
Realization of deposits with banks / financial institutions | 8,031.3 | 523,438.0 | 334,465.5 | 414,663.0 | ||||||||||||
(Purchase)/sale of available-for-sale investments (net) | 362.3 | 23,610.9 | 19,143.8 | (47,147.3 | ) | |||||||||||
Purchases of available-for-sale investments/other investments | (50.4 | ) | (3,287.8 | ) | (63.6 | ) | (128.7 | ) | ||||||||
Proceeds from sale of available-for-sale investments/other investments | 3.0 | 194.3 | 506.1 | 892.1 | ||||||||||||
Excess of cash acquired on acquisition of subsidiary company | 2.2 | 144.5 | — | — |
Tata Motors Limited and subsidiaries
Consolidated Statements of Cash Flows
Year ended March 31, | ||||||||||||||||
2018 | 2018 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Deposits of margin money and other restricted deposits | US$ | (60.1 | ) | Rs.(3,917.6) | Rs.(4,192.5) | Rs.(57,287.5 | ) | |||||||||
Realization of margin money and other restricted deposits | 32.7 | 2,134.0 | 7,862.2 | 55,327.0 | ||||||||||||
(Increase)/decrease in short term inter-corporate deposits | — | — | 300.0 | 650.0 | ||||||||||||
Loan to others | — | — | (97.8 | ) | (7.5 | ) | ||||||||||
Repayment of loan by others | — | — | 7.5 | 83.3 | ||||||||||||
Repayments of loan by joint operation | — | — | 1,325.0 | — | ||||||||||||
Investments in equity accounted investees | (0.6 | ) | (42.1 | ) | (1,069.5 | ) | — | |||||||||
Dividends received from equity accounted investees | 273.4 | 17,816.4 | 6,091.9 | 154.2 | ||||||||||||
Interest received | 105.9 | 6,904.7 | 6,381.8 | 7,309.6 | ||||||||||||
Dividend received | 2.4 | 157.7 | 105.1 | 422.7 | ||||||||||||
Payments for property, plant and equipment | (3,048.0 | ) | (198,654.3 | ) | (162,798.7 | ) | (159,537.9 | ) | ||||||||
Proceeds from sale of property, plant and equipment | 4.6 | 303.0 | 533.9 | 588.4 | ||||||||||||
Payments for intangible assets | (2,334.3 | ) | (152,134.9 | ) | (143,798.9 | ) | (152,064.7 | ) | ||||||||
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Net cash used in investing activities | (4,020.2 | ) | (262,016.1 | ) | (382,727.6 | ) | (370,501.3 | ) | ||||||||
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Cash flows from financing activities: | ||||||||||||||||
Proceeds from issuance of shares | — | — | * | 45.5 | 74,904.8 | |||||||||||
Proceeds from issuance of shares to non-controlling interests shareholders | — | — | 6.2 | 1.9 | ||||||||||||
Shares issuance costs | — | — | — | (572.6 | ) | |||||||||||
Dividends paid (including dividend distribution tax) | — | — | (730.0 | ) | — | |||||||||||
Dividends paid to non-controlling interests shareholders of subsidiaries (including dividend distribution tax) | (8.6 | ) | (559.7 | ) | (482.2 | ) | (1,058.6 | ) | ||||||||
Interest paid | (830.2 | ) | (54,106.4 | ) | (52,223.8 | ) | (56,068.2 | ) | ||||||||
Proceeds from issuance of short-term debt | 2,302.8 | 150,087.3 | 150,052.6 | 84,602.0 | ||||||||||||
Repayment of short-term debt | (2,973.0 | ) | (193,766.2 | ) | (117,537.1 | ) | (90,004.4 | ) | ||||||||
Net change in other short-term debt (with maturity up to three months) | 1,124.4 | 73,282.4 | (7,662.5 | ) | (13,377.4 | ) | ||||||||||
Proceeds from issuance of long-term debt | 2,333.9 | 152,108.8 | 183,845.2 | 110,587.0 | ||||||||||||
Repayments of long-term debt | (1,624.4 | ) | (105,872.5 | ) | (92,121.3 | ) | (145,854.8 | ) | ||||||||
Debt issuance cost | (10.1 | ) | (656.7 | ) | (1,139.6 | ) | (1,088.4 | ) | ||||||||
Distribution to non-controlling interests | (6.1 | ) | (399.9 | ) | — | — | ||||||||||
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Net cash provided by/(used in) financing activities | 308.7 | 20,117.1 | 62,053.0 | (37,928.7 | ) | |||||||||||
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Net change in cash and cash equivalents | (51.0 | ) | (3,324.8 | ) | (17,567.3 | ) | (33,717.0 | ) | ||||||||
Classified as held for sale | (37.4 | ) | (2,439.4 | ) | — | — | ||||||||||
Effect of foreign exchange on cash and cash equivalents | 200.4 | 13,064.1 | (14,101.2 | ) | 7,822.2 | |||||||||||
Cash and cash equivalents, beginning of the year | 2,146.0 | 139,867.6 | 171,536.1 | 197,430.9 | ||||||||||||
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Cash and cash equivalents, end of the year | US$ | 2,258.0 | Rs.147,167.5 | Rs.139,867.6 | Rs.171,536.1 | |||||||||||
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Non-cash transactions: | ||||||||||||||||
Liability towards property, plant and equipment and intangible assets purchased on credit/deferred credit | US$ | 1,280.6 | Rs.83,465.4 | Rs.33,463.5 | Rs.37,960.4 | |||||||||||
Increase/(decrease) in liabilities arising from financing activities on account of non-cash transactions: | ||||||||||||||||
Exchange differences | US$ | 424.7 | Rs.27,680.3 | |||||||||||||
Classified as held for sale | US$ | (21.9 | ) | Rs.(1,425.5 | ) | |||||||||||
Amortisation of prepaid discounting charges | US$ | 31.1 | Rs.2,027.0 |
Other components of equity | Reserves* | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share capital | Additional paid-in capital | Currency translation reserve | Available- for-sale investments | Hedging reserve | Cost of Hedge reserve | Capital redemption reserve | Debenture redemption reserve | Reserve for research and human resource development | Special reserve | Earned surplus reserve | Retained earnings | Equity attributable to shareholders of Tata Motors Limited | Non- controlling interests | Total equity | ||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as at April 1, 2017 | Rs. | 6,792.2 | Rs. | 261,303.4 | Rs. | (50,933.2 | ) | Rs. | 1,062.8 | Rs. | (206,143.3 | ) | (6,704.6 | ) | Rs. | 22.8 | Rs. | 10,859.5 | Rs. | 1,644.3 | Rs. | 2,924.5 | Rs. | 317.1 | Rs. | 513,051.5 | Rs. | 534,197.0 | Rs. | 4,645.2 | Rs. | 538,842.2 | ||||||||||||||||||||||||||||
Income for the year | 65,040.7 | 65,040.7 | 1,021.2 | 66,061.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income /(loss) for the year | 100,322.0 | 359.3 | 166,919.3 | 2,231.5 | 39,093.7 | 308,925.8 | 271.9 | 309,197.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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Total comprehensive income/(loss) for the year | — | — | 100,322.0 | 359.3 | 166,919.3 | 2,231.5 | — | — | — | — | — | 104,134.4 | 373,966.5 | 1,293.1 | 375,259.6 | |||||||||||||||||||||||||||||||||||||||||||||
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Amounts recognized in inventory | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issue of shares held in abeyance | 0.0 | ** | — | — | — | — | — | — | — | — | — | — | 0.0 | ** | 0.0 | ** | ||||||||||||||||||||||||||||||||||||||||||||
Non-controlling interest on Acquisitions during the year | — | 986.2 | 986.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distribution to non-controlling interest | — | (399.9 | ) | (399.9 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes to non-controlling interest | — | (607.4 | ) | (607.4 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividend paid (including dividend tax) | — | (559.7 | ) | (559.7 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfer (from)/to retained earnings | 349.6 | 869.7 | 118.8 | (1,338.1 | ) | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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Balance as at March 31, 2018 | Rs. | 6,792.2 | Rs. | 261,303.4 | Rs. | 49,388.8 | Rs. | 1,422.1 | Rs. | (39,224.0 | ) | Rs. | (4,473.1 | ) | Rs. | 22.8 | Rs. | 10,859.5 | Rs. | 1,993.9 | Rs. | 3,794.2 | Rs. | 435.9 | Rs. | 615,847.8 | Rs. | 908,163.5 | Rs. | 5,357.5 | Rs. | 913,521.0 | ||||||||||||||||||||||||||||
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Rs. | 7,113.8 | Rs. | 632,954.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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* |
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** | Less than Rs. 50,000 |
See accompanying notes to consolidated financial statements
Tata Motors Limited and subsidiaries
Consolidated statements of changes in equity
For each of the years ended March 31, 2018, 2017 and 2016
Other components of equity | Reserves* | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share capital | Additional paid-in capital | Currency translation reserve | Available- for-sale investments | Hedging reserve | Capital redemption reserve | Debenture redemption reserve | Reserve for research and human resource development | Special reserve | Earned surplus reserve | Retained earnings | Equity attributable to shareholders of Tata Motors Limited | Non-controlling interests | Total equity | |||||||||||||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as at April 1, 2017 | Rs. | 6,792.2 | Rs. | 261,303.4 | Rs. | (50,933.2 | ) | Rs. | 1,062.8 | Rs. | (213,038.1 | ) | Rs. | 22.8 | Rs. | 10,859.5 | Rs. | 1,644.3 | Rs. | 2,924.5 | Rs. | 317.1 | Rs. | 513,241.7 | Rs. | 534,197.0 | Rs. | 4,645.2 | Rs. | 538,842.2 | ||||||||||||||||||||||||||
Income for the year | 66,660.8 | 66,660.8 | 1,021.2 | 67,682.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income /(loss) for the year | 100,322.0 | 359.3 | 167,957.0 | 39,093.7 | 307,732.0 | 271.9 | 308,003.9 | |||||||||||||||||||||||||||||||||||||||||||||||||
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Total comprehensive income/(loss) for the year | — | — | 100,322.0 | 359.3 | 167,957.0 | — | — | — | — | — | 105,754.5 | 374,392.8 | 1,293.1 | 375,685.9 | ||||||||||||||||||||||||||||||||||||||||||
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Issue of shares held in abeyance | 0.0 | ** | — | — | — | — | — | — | — | — | — | — | 0.0 | ** | — | 0.0 | ** | |||||||||||||||||||||||||||||||||||||||
Non-controlling interest on Acquisitions during the year | — | 986.2 | 986.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Distribution tonon-controlling interest | (399.9 | ) | (399.9 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes tonon-controlling interest | (607.4 | ) | (607.4 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividend paid (including dividend tax) | — | (559.7 | ) | (559.7 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Transfer (from)/to retained earnings | 349.6 | 869.7 | 118.8 | (1,338.1 | ) | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
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Balance as at March 31, 2018 | Rs. | 6,792.2 | Rs. | 261,303.4 | Rs. | 49,388.8 | Rs. | 1,422.1 | Rs. | (45,081.1 | ) | Rs. | 22.8 | Rs. | 10,859.5 | Rs. | 1,993.9 | Rs. | 3,794.2 | Rs. | 435.9 | Rs. | 617,658.1 | Rs. | 908,589.8 | Rs. | 5,357.5 | Rs. | 913,947.3 | |||||||||||||||||||||||||||
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Rs. | 5,729.8 | Rs. | 634,764.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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US$ | 104.2 | US$ | 4,009.3 | US$ | 757.8 | US$ | 21.8 | US$ | (691.7 | ) | US$ | 0.3 | US$ | 166.6 | US$ | 30.6 | US$ | 58.5 | US$ | 6.7 | US$ | 9,476.9 | US$ | 13,941.0 | US$ | 82.2 | US$ | 14,023.2 | ||||||||||||||||||||||||||||
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US$ | 87.9 | US$ | 9,739.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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See accompanying notes to consolidated financial statements
Balance as at April 1, 2016 Income for the year Other comprehensive income /(loss) for the year Total comprehensive income for the year Issue of shares held in abeyance Shares issued tonon-controlling interests Dividend paid (including dividend tax) Transfer to debenture redemption reserve Transfer to earned surplus reserve Balance as at March 31, 2017 Other components of equity Reserves* Share
capital Additional
paid-in
capital Currency
translation
reserve Available-
for-sale
investments Hedging
reserve Capital
redemption
reserve Debenture
redemption
reserve Reserve
for
research
and
human
resource
development Special
reserve Earned
surplus
reserve Retained
earnings Equity
attributable
to
shareholders
of Tata
Motors
Limited Non-controlling
interests Total equity (In millions) Rs. 6,791.8 Rs. 261,258.3 Rs. 45,936.6 Rs. 274.6 Rs. (84,860.0 ) Rs. 22.8 Rs. 10,421.6 Rs. 1,644.3 Rs. 2,924.5 Rs. 235.3 Rs. 518,947.3 Rs. 763,597.1 Rs. 4,439.6 Rs. 768,036.7 61,210.5 61,210.5 1,023.9 62,234.4 (96,869.8 ) 788.2 (128,178.1 ) (65,666.4 ) (289,926.1 ) (342.3 ) (290,268.4 ) — — (96,869.8 ) 788.2 (128,178.1 ) — — — — — (4,455.9 ) (228,715.6 ) 681.6 (228,034.0 ) 0.4 45.1 45.5 45.5 — 6.2 6.2 (730.0 ) (730.0 ) (482.2 ) (1,212.2 ) 437.9 (437.9 ) — — 81.8 (81.8 ) — — Rs. 6,792.2 Rs. 261,303.4 Rs. (50,933.2 ) Rs. 1,062.8 Rs. (213,038.1 ) Rs. 22.8 Rs. 10,859.5 Rs. 1,644.3 Rs. 2,924.5 Rs. 317.1 Rs. 513,241.7 Rs. 534,197.0 Rs. 4,645.2 Rs. 538,842.2 Rs. (262,908.5 ) Rs. 529,009.9
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See accompanying notes to consolidated financial statements
Balance as at April 1, 2015 Income for the year Other comprehensive income /(loss) for the year Total comprehensive income for the year Issue of shares pursuant to Rights (net of issue expenses of Rs. 572.6 million) Shares issued tonon-controlling interests Dividend paid (including dividend tax) Transfer to earned surplus reserve Transfer to special reserve Balance as at March 31, 2016 Other components of equity Reserves* Share
capital Additional
paid-in
capital Currency
translation
reserve Available-
for-sale
investments Hedging
reserve Capital
redemption
reserve Debenture
redemption
reserve Reserve
for
research
and
human
resource
development Special
reserve Earned
surplus
reserve Retained
earnings Equity
attributable
to
shareholders
of Tata
Motors
Limited Non-controlling
interests Total
equity (In millions) Rs. 6,437.8 Rs. 187,280.1 Rs. 28,887.9 Rs. 280.6 Rs. (88,603.2 ) Rs. 22.8 Rs. 10,421.6 Rs. 1,644.3 Rs. 2,695.8 Rs. 140.0 Rs. 385,734.0 Rs. 534,941.7 Rs. 4,410.1 Rs. 539,351.8 95,883.4 95,883.4 988.8 96,872.2 17,048.7 (6.0 ) 3,743.2 37,653.9 58,439.8 97.4 58,537.2 — — 17,048.7 (6.0 ) 3,743.2 — — — — — 133,537.3 154,323.2 1,086.2 155,409.4 354.0 73,978.2 74,332.2 74,332.2 — 1.9 1.9 — (1,058.6 ) (1,058.6 ) 95.3 (95.3 ) — — 228.7 (228.7 ) — — Rs. 6,791.8 Rs. 261,258.3 Rs. 45,936.6 Rs. 274.6 Rs. (84,860.0 ) Rs. 22.8 Rs. 10,421.6 Rs. 1,644.3 Rs. 2,924.5 Rs. 235.3 Rs. 518,947.3 Rs. 763,597.1 Rs. 4,439.6 Rs. 768,036.7 Rs. (38,648.8 ) Rs. 534,195.8
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See accompanying notes to consolidated financial statements
Tata Motors Limited and subsidiaries
Notes to Consolidated Financial Statements
1. | Background and operations |
Tata Motors Limited and its subsidiaries and joint operations, (collectively referred to as “the Company” or “Tata Motors”), designs, manufactures and sells a wide range of automotive vehicles. The Company provides financing for the vehicles sold by dealers of the Company in certain markets. The Company also manufactures engines for industrial and marine applications, aggregates such as axles and transmissions for commercial vehicles and factory automation equipment, and provides information technology services.
Tata Motors Limited (“Parent Company”) is a public limited company incorporated and domiciled in India and has its registered office at Mumbai, Maharashtra, India.
The Company’s subsidiaries include the Jaguar Land Rover business (referred to as JLR or Jaguar Land Rover).
As on March 31, 2018,2020, Tata Sons Private Limited (or Tata Sons), together with its subsidiaries, owns 36.46%42.32% of the Ordinary shares and 0.09%5.35% of ‘A’ Ordinary shares of Tata Motors Limited, and has the ability to significantly influence the Company’s operations (refer note 2528 for voting rights relating to Ordinary shares and ‘A’ Ordinary shares).
The consolidated financial statements were approved by the Board of Directors and authorized for issue on July 31, 2018.August 13, 2020.
2. | Significant accounting policies |
a. | Statement of compliance |
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (referred to as “IFRS”) as issued by the International Accounting Standards Board (referred to as “IASB”).
b. | Basis of preparation |
The consolidated financial statements have been prepared on historical cost basis except for certain financial instruments measured at fair value at the end of each reporting period as explained in the accounting policies below.
c. | Basis of consolidation |
Subsidiaries
The consolidated financial statements include Tata Motors Limited and its subsidiaries. Subsidiaries are entities controlled by the Company. Control exists when the Company (a) has power over the investee, (b) it is exposed, or has rights, to variable returns from its involvement with the investee and (c) has the ability to affect those returns through its power over the investee. The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements listed above. In assessing control, potential voting rights that currently are exercisable are taken into account. The results of subsidiaries acquired or disposed of during the year are included in the consolidated financial statements from the effective date of acquisition and up to the effective date of disposal, as appropriate.
Inter-company transactions and balances including unrealized profits are eliminated in full on consolidation.
Non-controlling interests in the net assets (excluding goodwill) of consolidated subsidiaries are identified separately from the Company’s equity. The interest ofnon-controlling shareholders may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets. The choice of measurement basis is made on anacquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus thenon-controlling interests’ share of subsequent changes in equity. Total comprehensive income is attributed tonon-controlling interests even if it results in thenon-controlling interest having a deficit balance.
Changes in the Company’s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Company’s interests and thenon-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which thenon-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the Company.
When the Company loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and anynon-controlling interests. Amounts previously recognized in other comprehensive income in relation to the subsidiary are accounted for (i.e., reclassified to profit or loss) in the same manner as would be required if the relevant assets or liabilities were disposed off. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39
(i) | the aggregate of the fair value of consideration received and the fair value of any retained interest and |
(ii) | the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. Amounts previously recognized in other comprehensive income in relation to the subsidiary are accounted for (i.e., reclassified to profit or loss) in the same manner as would be required if the relevant assets or liabilities were disposed off. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9 Financial Instruments: Recognition and Measurementor, when applicable, the cost on initial recognition of an investment in an associate or jointly controlled entity. |
Interests in joint arrangements
A joint arrangement is an arrangement of which two or more parties have joint control. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
Joint operations
Certain of the Company’s activities, are conducted through joint operations, which are joint arrangements whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. The Company recognizes, in the consolidated financial statements, its share of the assets, liabilities, income and expenses of these joint operations incurred jointly with the other partners, along with its share of income from the sale of the output and any assets, liabilities and expenses that it has incurred in relation to the joint operation.
Joint ventures
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. The results, assets and liabilities of a joint venture are incorporated in these financial statements using the equity method of accounting as described below.
Associates
Associates are those entities in which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not control or joint control of those policies. Significant influence is presumed to exist when the Company holds between 20 and 50 percent of the voting power of another entity.
The results, assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting as described below.
Equity method of accounting (equity accounted investees)
An interest in an associate or joint venture is accounted for using the equity method from the date in which the investee becomes an associate or a joint venture and are recognized initially at cost. The Company’s investment includes goodwill identified on acquisition, net of any accumulated impairment losses. The consolidated financial statements include the Company’s share of profits or losses and equity movements of equity accounted investees, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When the Company’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long-term investments in the nature of net investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Company has an obligation or has made payments on behalf of the investee.
When the Company transacts with an associate or joint venture of the Company, unrealized profits and losses are eliminated to the extent of the Company’s interest in its associate or joint venture.
d. | Business combinations |
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. Acquisition related costs are recognized in profit or loss as incurred. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition are recognized at their fair value at the acquisition date, except certain assets and liabilities required to be measured as per the applicable standard.
Purchase consideration in excess of the Company’s interest in the acquiree’s net fair value of identifiable assets, liabilities and contingent liabilities is recognized as goodwill. Excess of the Company’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the purchase consideration is recognized, after reassessment of fair value of net assets acquired, in the income statement.
e. | Going concern assessment |
The Company’s financial statements have been prepared on a going concern basis.
The Company recorded a net loss of Rs.112,984.1 million and Rs.292,128.1 million for the years ended March 31, 2020 and 2019, respectively, although it generated positive cash flows from operating activities of Rs.266,329.4 million and Rs.188,907.5 million during the same periods. The Company also had a net current liability position as of March 31, 2020 and 2019.
The Company has adopted going concern basis following a rigorous assessment of the financial position and forecasts of the Company for a period of at least eighteen months from the date of these financial statements.
The Company assessed its planned capital expenditures, debt repayments and refinancing as well as working capital requirements over this period, including the need for additional capital. In making this assessment, careful consideration has been given to the impact of COVID19 pandemic, in recognition of the impact it has had on the global economy and automotive industry. The impact, has been significant, requiring temporary plant and retailer shutdowns, thereby impacting production and sales, and creating substantial uncertainty over the timeframe for economies and the automotive industry to recover. This has also been accompanied by mitigating measures including rigorous cost and investment controls to conserve cash as much as possible considering these uncertainties.
As at March 31, 2020, the Company has sufficient liquidity, with cash and cash equivalents of Rs.184,678.0 million, short term deposits of Rs.148,294.8 million, current investments of Rs.108,615.3.million and undrawn credit facilities of Rs.218,366 million. In addition, during the year ended March 31, 2020, Tata Sons Private Limited, subscribed to warrants issued by the Company aggregating Rs.34,700.0 million, of which Rs.8,675 million was received during the year. The balance amount of Rs.26,025.0 million, which will be due on exercise of options attached to warrants to subscribe to Ordinary shares of the Company, will bring in further liquidity to the Company. Tata Sons Private Limited, as promoter of the Company, will provide financial support to help the Company meet its liquidity needs and covenants under the borrowing agreements with lenders until at least March 31, 2022.
Further, subsequent to the year end, the Company has raised additional long-term borrowings of Rs.40,000 million and a subsidiary in Singapore has refinanced a GBP 190 million (Rs. 17,631.7 million) loan with long term credit enhanced notes and a five year term loan. Jaguar Land Rover also increased an existing short-term working capital facility from GBP100 million (Rs.9,354 million) to GBP163 million (Rs.15,246 million) and a three year syndicated revolving loan facility for RMB 5 billion (Rs.52,379.4 million) in China. A wholly-owned Chinese subsidiary completed a GBP 170 million (Rs.15,901million) equivalent 1-year loan with a Chinese bank. The GBP 170 million (Rs.15,901 million) equivalent loan was then repaid in June and replaced with a new 3-year GBP 567 million (Rs.53,034 million) equivalent facility with a syndicate of 5 Chinese banks. The GBP 567 million (Rs.53,034 million) equivalent syndicated loan is subject to an annual review customary in the Chinese banking market and a profitability and leverage covenant applicable only to JLR’s Chinese subsidiary, which are not expected to be breached in any of the scenarios tested. Both TML and JLR have a strong track record of raising funding in the bond and bank markets and continues to expect it will have opportunities to issue new funding in the future as evidenced by the completion of the Chinese GBP 567 million (Rs.53,034 million) syndicated loan in June 2020.
On June 30, 2020, the Company notified one of its Indian lenders on its US$425 million loan facility that as at June 30, 2020, the Company failed to maintain one of the financial ratios under the terms of the loan facility. On July 30, 2020, the Company received confirmation from the lender that it has approved an increase in such threshold and has given a waiver of the Company’s failure to maintain this ratio for Fiscal 2021. In the event the Company breaches any of the financial covenants in its financing agreement, the outstanding amounts due under such financing agreements could become due and payable immediately and/or result in increased costs. A default under one of these financing agreements may also result in cross-defaults under other financing agreements and result in the outstanding amounts under such other financing agreements becoming due and payable immediately. The Company continues to monitor compliance with its financial covenants on all its borrowings on an ongoing basis and has considered the risk of such defaults, including cross defaults, during the forecast period and expects to meet all its financial covenants during the forecast period based on the financial support from Tata Sons.
In practice, management also expect that the Company will be able to raise additional funding facilities over the assessment period to increase available liquidity, considering the strong track record of raising funding in the bond and bank markets.
Considering the uncertainties in the economic outlook and recovery of the automotive sector, management has developed cash flow and balance sheet forecasts. In evaluating the forecasts, the Company has taken into consideration both the sufficiency of liquidity to meet obligations as they fall due as well as potential impact on compliance with financial covenants during the forecast period. These forecasts indicate that the Company will have sufficient liquidity to operate and discharge its liabilities as they become due, taking into account only cash generated from operations, controllable mitigating actions pertaining to JLR such as deferral of non-essential capital and product development expenditure, further reductions of discretionary marketing spend and warranty goodwill payments and the funding facilities existing on the date of authorization of these financial statements and as at March 31, 2020, including the presently undrawn revolving credit facilities, the exercise of options by Tata Sons Private Limited and the financial support from Tata Sons Private Limited to help the Company meet its liquidity needs and covenants under the borrowing agreements with lenders until at least March 31, 2022.
Based on the evaluation described above, management believes that the Company has sufficient funding available to it at the date of approval of these financial statements and that it will be able to continue as a ‘going concern’ in the foreseeable future and for a period of at least eighteen months from the date of these financial statements. Accordingly, the financial statements do not include any adjustments regarding the recoverability and classification of the carrying amount of assets and classification of liabilities that might result, should the Company be unable to continue as a going concern.
f. | Use of estimates and judgments |
The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities at the date of these financial statements and the reported amounts of revenues and expenses for the years presented. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed at each balance sheet date. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods affected.
In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are included in the following notes:
i) | Note 13, 16 and 17 – Property, plant and equipment and intangible assets – useful lives and impairment, capitalization of product development costs |
ii) | Note 15 – Impairment of goodwill |
iii) | Note 17 – Impairment of indefinite life intangible assets |
iv) | Note 20 – Recoverability/recognition of deferred tax assets |
v) | Note 25 – Provision for product warranty |
vi) | Note 36 – Measurement of assets and obligations |
vii) |
The COVID-19 pandemic has been rapidly spreading throughout the world, including India and other countries where the Group has its operations. Governments around the world have been taking significant measures to curb the spread of the virus including imposing mandatory lockdowns and restrictions in activities. Consequently, many of the Group’s manufacturing plants and offices had to be closed down for a considerable period of time, including after the year end. As a result of the lockdown, the likely revenue from the quarter ended March 31, 2020 has been impacted. Continued lockdowns are likely to impact the Group operationally including on supply chain matters. The Company is monitoring the situation closely taking into account directives from the Governments. Further, the Reserve Bank of India (RBI) has announced moratorium on loan repayments for specific borrower segments which impacts Group’s vehicle financing business in India. Management believes that it has taken into account all the possible impacts of known events arising from COVID-19 pandemic and the resultant lockdowns in the preparation of the financial statements including but not limited to its assessment of Group’s liquidity and going concern, recoverable values of its property, plant and equipment, intangible assets, intangible assets under development, allowance for losses for finance receivables and the net realisable values of other assets. However, given the effect of these lockdowns on the overall economic activity globally and in particular the countries where the Group operates and in particular on the global automotive industry, the impact assessment of COVID-19 on the abovementioned financial statement captions is subject to significant estimation uncertainties given its nature and duration and, accordingly, the actual impacts in future may be different from those estimated as at the date of approval of these financial statements. The Company will continue to monitor any material changes to future economic conditions and consequential impact on its financial results.
The Company generates revenue principally from – a) Sale of products – (i) commercial and passenger vehicles and vehicle parts and (ii) Sales of other products – certain software products and other automotive products The Company recognizes revenues on the sale of products, net of discounts, sales incentives, customer bonuses and rebates granted, when products are delivered to dealers or when delivered to a carrier for export sales, which is when control including risks and rewards and title of ownership pass to the customer. Sale of products is presented net of excise duty where applicable and other indirect taxes. The consideration received in respect of transport arrangements for delivering of vehicles to the customers are recognized net of their costs within revenues in the income statement. Revenues are recognized when collectability of the resulting receivable is reasonably assured. b) Sale of services – maintenance service and extended warranties for commercial and passenger vehicles, software support services and insurance broking services. Income from sale of maintenance services and extended warranties, including software services are recognized as income over the relevant period of service or extended warranty. When the Company sells products that are bundled with maintenance service or extended period of warranty, such services are treated as a separate performance obligation only if the service or warranty is optional to the customer or includes an additional service component. In such cases, the transaction price allocated towards such maintenance service or extended period of warranty is recognized as a contract liability until the service obligation has been met. The Company operates certain customer loyalty programs under which customer is entitled to reward points on the spend towards Company’s products. The reward points earned by customers can be redeemed to claim discounts on future purchase of certain products or services. Transaction price allocated towards reward points granted to customers is recognized as a deferred income liability and transferred to income when customers redeem their reward points. For certain sale of services wherein performance obligation is satisfied over a period of time, any amount received in advance is recorded as contract liability and recognized as revenue when service is rendered to customers. Any amount of income accrued but not billed to customers in respect of such contracts is recorded as a contract asset. Such contract assets are transferred to trade receivables on actual billing to customers. Refund liabilities comprise of obligation to customers to pay for discounts and sales incentives. Proceeds from sale of vehicles for which the Company or any of its subsidiaries have repurchase obligation in future is recorded as a liabilities – (i) Proceeds received in excess of agreed buy back price is recognized as Deferred income liability and (ii) the agreed buy back price is recognized as a liability towards vehicles sold under repurchase arrangements. Deferred income liability is recognized on a straight line basis over the term of the agreement. c) Financing revenues – Interest income from financing transactions and income from leasing of vehicles to customers. Finance and service charges are accrued on the unpaid principal balance of finance receivables using the effective interest method. For periods prior to April 1, 2018, the Company’s policy for revenue recognition was in accordance with IAS 18 Revenue as follows: Revenue is measured at fair value of consideration received or receivable. i) Sale of products The Company recognizes revenues on the sale of products, net of discounts, sales incentives, customer bonuses and rebates granted, when products are delivered to dealers or when delivered to a carrier for export sales, which is when title and risks and rewards of ownership pass to the customer. Sale of products includes export and other recurring and non-recurring incentives from governments (referred to as “incentives”). Sale of products is presented net of excise duty where applicable and other indirect taxes. Revenues are recognized when collectability of the resulting receivable is reasonably assured. For sale with repurchase agreements, revenue is measured as the difference between initial sale price and agreed repurchase price. Such revenue is recognized on a straight line basis over the terms of the agreement. If the sale of products includes a determinable amount for subsequent services (multiple component contracts) the related revenues are deferred and recognized as income over the relevant service period. Amounts are normally recognized as income by reference to the pattern of related expenditure. Incentives are recognized when there is reasonable assurance that the Company will comply with the conditions and the incentive will be received. Incentives are recorded at fair value where applicable. Revenues include incentives of Rs. 8,929.6 million for the year ended March 31, 2018. During the year ended March 31, 2018 Rs.4,746.4 million (included above), were received by a foreign subsidiary as an indirect tax incentive that requires the subsidiary to meet certain criteria relating to vehicle efficiency and investment in engineering and research and development. The indirect tax incentive received is reduced from indirect tax, which in turn is netted off against Revenue. The incentive is provided as a partial off set to the higher sales tax payable following implementation of new legislation. ii) Finance revenues Finance and service charges are accrued on the unpaid principal balance of finance receivables using the effective interest method. |
h. | Government grants and incentives Other income includes export and other recurring and non-recurring incentives from Government (referred as “incentives”). Government grants are recognized when there is reasonable assurance that the Company will comply with the relevant conditions and the grant will be received. These are recognized in the consolidated statement of profit and loss, either on a systematic basis when the Company recognizes, as expenses, the related costs that the grants are intended to compensate or, immediately if the costs have already been incurred. Government grants related to assets are netted off from the carrying value of related assets. Government grants related to income are presented as an offset against the related expenditure, and government grants that are awarded as incentives with no ongoing performance obligations to the Company are recognized as income in the period in which the grant is received.
Costs and expenses are recognized when incurred and are classified according to their nature. Expenditure capitalized represents employee costs, stores and other manufacturing supplies, and other expenses incurred for construction including product development undertaken by the Company.
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. i) Product warranty expenses The estimated liability for product warranties is recorded when products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future incidences based on actions on product failures. The timing of outflows will vary as and when warranty claim will arise, being typically up to six years. The Company also has back-to-back contractual arrangement with its suppliers in the event that a vehicle fault is proven to be a supplier’s fault. Estimates are made of the expected reimbursement claim based upon historical levels of recoveries from supplier, adjusted for inflation and applied to the population of vehicles under warranty as on balance sheet date. Estimated supplier reimbursements are recognized as separate asset. ii) Provision for onerous obligations A provision for onerous contracts is recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable costs of meeting its obligations under the contract. It is recognized when the Company has entered into a binding legal agreement for the purchase of components from suppliers that exceeds the benefits from the expected future use of the components and the Company sells the finished goods using the components at a loss. iii) Residual risk In certain markets, the Company is responsible for the residual risk arising on vehicles sold by dealers under leasing arrangements. The provision is based on the latest available market expectations of future residual value trends. The timing of the outflows will be at the end of the lease arrangements – being typically up to three years. iv) Legal and product liability Legal and product liability provision is recorded in respect of compliance with regulations and known litigations which impact the Company. The product liability claim primarily relates to motor accident claims, consumer complaints, dealer/supplier terminations, personal injury claims and compliance with regulations. v) Environmental liability Environmental liability relates to various environmental remediation cost such as asbestos removal and land clean up. The timing of when these costs will be incurred is not known with certainty.
These consolidated financial statements are presented in Indian rupees, which is the functional currency of Tata Motors Limited. Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Foreign currency denominated monetary assets and liabilities are re-measured into the functional currency at the exchange rate prevailing on the balance sheet date. Exchange differences are recognized in the income statement except to the extent of exchange differences, which are regarded as an adjustment to interest costs on foreign currency borrowings, are capitalized as part of borrowing costs. For the purpose of consolidation, the assets and liabilities of the Company’s foreign operations are translated to Indian rupees at the exchange rate prevailing on the balance sheet date, and the income and expenses at the average rate of exchange for the respective months. Exchange differences arising are recognized as currency translation reserve under equity. Exchange differences arising from the translation of foreign operations previously recognized in currency translation reserve in equity are not reclassified from equity to the income statement until the disposal of such operation.
Income tax expense comprises current and deferred taxes. Income tax expense is recognized in the income statement except when they relate to items that are recognized outside profit or loss (whether in other comprehensive income or directly in equity), in which case tax is also recognized outside profit or loss, or where they arise from the initial accounting for business combination. In the case of a business combination the tax effect is included in accounting for the business combination. Current income taxes are determined based on respective taxable income of each taxable entity and tax rules applicable for respective tax jurisdictions. Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases, and unutilized business loss and depreciation carry-forwards and tax credits. Such deferred tax assets and liabilities are computed separately for each taxable entity and for each taxable jurisdiction. Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses, depreciation carry-forwards and unused tax credits could be utilized. Deferred tax assets and liabilities are measured based on the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Current and Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
Basic earnings per share has been computed by dividing net income by the weighted average number of shares outstanding during the year. Partly paid up shares are included as fully paid equivalents according to the fraction paid up. Diluted earnings per share has been computed using the weighted average number of shares and dilutive potential shares, except where the result would be anti-dilutive.
Inventories (other than those recognized consequent to the sale of vehicles subject to repurchase arrangements) are valued at the lower of cost and net realizable value. Cost of raw materials, components and consumables are ascertained on a first in first out basis. Cost, including fixed and variable production overheads, are allocated to work-in-progress and finished goods determined on a full absorption cost basis. Net realizable value is the estimated selling price in the ordinary course of business less estimated cost of completion and selling expenses. Inventories include vehicles sold subject to repurchase arrangements. These vehicles are carried at cost to the Company and are amortized in changes in inventories of finished goods to their residual values (i.e., estimated second hand sale value) over the term of the arrangement.
Property, plant and equipment
Property, plant and equipment are stated at cost of acquisition or construction less accumulated depreciation less accumulated impairment, if any. Freehold land is measured at cost and is not depreciated. Heritage assets, comprising antique vehicles purchased by the Company, are not depreciated as they are considered to have a residual value in excess of cost. Residual values are re-assessed on an annual basis. Cost includes purchase price, taxes and duties, labor cost and direct overheads for self-constructed assets and other direct costs incurred up to the date the asset is ready for its intended use. Interest cost incurred for constructed assets is capitalized up to the date the asset is ready for its intended use, based on borrowings incurred specifically for financing the asset or the weighted average rate of all other borrowings, if no specific borrowings have been incurred for the asset. Depreciation is provided on a straight-line basis over estimated useful lives of the assets. Estimated useful lives of the assets are as follows:
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease. The depreciation period is reviewed at least at each year–end. Changes in expected useful lives are treated as changes in accounting estimates. Depreciation is not recorded on capital work-in-progress until construction and installation are complete and the asset is ready for its intended use. Capital-work-in-progress includes capital advances.
Intangible assets purchased, including those acquired in business combinations, are measured at cost or fair value as of the date of acquisition where applicable less accumulated amortization and accumulated impairment, if any. Intangible assets with indefinite lives are reviewed annually to determine whether indefinite-life assessment continues to be supportable. If not, the change in the useful-life assessment from indefinite to finite is made on a prospective basis. Amortization is provided on a straight-line basis over estimated useful lives of the intangible assets as per details below
The amortization period for intangible assets with finite useful lives is reviewed at least at each year-end. Changes in expected useful lives are treated as changes in accounting estimates. Capital work-in-progress includes capital advances. Internally generated intangible asset Research costs are charged to the income statement in the year in which they are incurred. Product development costs incurred on new vehicle platform, engines, transmission and new products are recognized as intangible assets, when feasibility has been established, the Company has committed technical, financial and other resources to complete the development and it is probable that asset will generate probable future economic benefits. The probable future economic benefits is assessed using key assumptions such as forecasted sales volumes, margins and capital expenditures. The costs capitalized include the cost of materials, direct labor and directly attributable overhead expenditure incurred up to the date the asset is available for use. Interest cost incurred is capitalized up to the date the asset is ready for its intended use, based on borrowings incurred specifically for financing the asset or the weighted average rate of all other borrowings if no specific borrowings have been incurred for the asset. Product development cost is amortized over a period of 24 months to 120 months. Capitalized development expenditure is measured at cost less accumulated amortization and accumulated impairment, if any.
The Company determines that a contract is or contains a lease, if the contract conveys right to control the use of an identified asset for a period of time in exchange for a consideration. At the inception of a contract which is or contains a lease, the Company recognises lease liability at the present value of the future lease payments for non-cancellable period of a lease which is not short term in nature except for lease of low value items. The future lease payments for such non-cancellable period is discounted using the Company’s incremental borrowing rate. Lease payments include fixed payments, i.e. amounts expected to be payable by the Company under residual value guarantee, the exercise price of a purchase option if the Company is reasonably certain to exercise that option and payment of penalties for terminating the lease if the lease term considered reflects that the Company shall exercise termination option. The Company also recognises a right of use asset which comprises of amount of initial measurement of the lease liability, any initial direct cost incurred by the Company and estimated dilapidation costs. Right of use assets is amortised over the period of lease or useful life of underlying assets. For periods prior to April 1, 2019, the Company’s policy for leases was in accordance with IAS 17 Leases as follows: At the inception of a lease, the lease arrangement is classified as either a finance lease or an operating lease, based on the substance of the lease arrangement. Assets taken on finance lease A finance lease is recognized as an asset and a liability at the commencement of the lease, at the lower of the fair value of the asset and the present value of the minimum lease payments. Initial direct costs, if any, are also capitalized and, subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Assets taken on operating lease Leases other than finance leases are operating leases which are not recognized on the Company’s balance sheet. Payments made under operating leases are recognized in the income statement on a straight-line basis over the term of the lease.
Cash generating units to which goodwill is allocated are tested for impairment annually at each balance sheet date, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to that unit and then to the other assets of the unit pro rata on the basis of carrying amount of each asset in the unit. Goodwill impairment loss recognized is not reversed in subsequent period.
At each balance sheet date, the Company assesses whether there is any indication that any property, plant and equipment and intangible assets with finite lives may be impaired. If any such impairment exists the recoverable amount of an asset is estimated to determine the extent of impairment, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Intangible assets with indefinite useful lives and intangible assets not yet available for use, are tested for impairment annually at each balance sheet date, or earlier, if there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in the income statement.
The Jaguar Land Rover subsidiaries operate several defined benefit pension plans, which are contracted out of the second state pension scheme until April 5, 2016. The assets of the plan are held in separate trustee administered funds. The plans provide for monthly pension after retirement as per salary drawn and service period as set out in rules of each fund. Contributions to the plans by the subsidiary group take into consideration the results of actuarial valuations. The plans with a surplus position at the year-end have been limited to the maximum economic benefit available from unconditional rights to refund from the scheme or reduction in future contributions. Where the subsidiary group is considered to have a contractual obligation to fund the pension plan above the accounting value of the liabilities, an onerous obligation is recognized. A separate defined contribution plan is available to employees of Jaguar Land Rover. Costs in respect of this plan are charged to the income statement as incurred.
Tata Motors Limited and its subsidiaries and joint operations in India have an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump-sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. Tata Motors Limited and such subsidiaries make annual contributions to gratuity funds established as trusts or insurance companies. Tata Motors Limited and its subsidiaries and joint operations in India account for the liability for gratuity benefits payable in the future based on an actuarial valuation.
Tata Motors Limited and some of its subsidiaries in India have two superannuation plans, a defined benefit plan and a defined contribution plan. An eligible employee on April 1, 1996 could elect to be a member of either plan. Employees who are members of the defined benefit superannuation plan are entitled to benefits depending on the years of service and salary drawn. The monthly pension benefits after retirement range from 0.75% to 2% of the annual basic salary for each year of service. Tata Motors Limited and such subsidiaries account for superannuation benefits payable in future under the plan based on an actuarial valuation. With effect from April 1, 2003, this plan was amended and benefits earned by covered employees have been protected as at March 31, 2003. Employees covered by this plan are prospectively entitled to benefits computed on a basis that ensures that the annual cost of providing the pension benefits would not exceed 15% of salary. During the year ended March 31, 2015, the employees covered by this plan were given a one-time option to exit from the plan prospectively. Furthermore, the employees who opted for exit were given one- time option to withdraw accumulated balances from the superannuation plan. Separate irrevocable trusts are maintained for employees covered and entitled to benefits. Tata Motors Limited and its subsidiaries contribute up to 15% or Rs.150,000, whichever is lower, of the eligible employees’ salary to the trust every year. Such contributions are recognized as an expense when incurred. Tata Motors Limited and such subsidiaries have no further obligation beyond this contribution.
Bhavishya Kalyan Yojana is an unfunded defined benefit plan for employees of Tata Motors Limited and some of its subsidiaries. The benefits of the plan include pension in certain cases, payable up to the date of normal superannuation had the employee been in service, to an eligible employee at the time of death or permanent disablement, while in service, either as a result of an injury or as certified by the appropriate authority. The monthly payment to dependents of the deceased/disabled employee under the plan equals 50% of the salary drawn at the time of death or accident or a specified amount, whichever is greater. Tata Motors Limited and these subsidiaries account for the liability for BKY benefits payable in the future based on an actuarial valuation.
In accordance with Indian law, eligible employees of Tata Motors Limited and some of its subsidiaries and joint operations are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees’ salary (currently 12% of employees’ salary). The contributions, as specified under the law, are made to the provident fund and pension fund set up as an irrevocable trust by Tata Motors Limited and its subsidiaries or to respective Regional Provident Fund Commissioner and the Central Provident Fund under the State Pension scheme. The interest rate payable to the members of the trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company. The embedded interest rate guarantee is considered to be defined benefit. Given the investment pattern prescribed by the authorities, most investments of provident fund has historically been in debt securities, thereby giving secure returns. However, during the year ended March 31, 2020, due to a ratings downgrade and potential bond default of some of the companies, the total liability of principal and interest guarantee has been actuarially valued as a defined benefit.
Tata Daewoo Commercial Vehicle Company Limited, or TDCV, a subsidiary company incorporated in Korea; has an obligation towards severance indemnity, a defined benefit retirement plan, covering eligible employees. The plan provides for a lump sum payment to all employees with more than one year of employment equivalent to 30 days’ salary payable for each completed year of service.
Under this unfunded scheme, employees of Tata Motors Limited and some of its subsidiaries receive medical benefits subject to certain limits on amounts of benefits, periods after retirement and types of benefits, depending on their grade and location at the time of retirement. Employees separated from the Company as part of an Early Separation Scheme, on medical grounds or due to permanent disablement are also covered under the scheme. Tata Motors Limited and such subsidiaries account for the liability for post-retirement medical scheme based on an actuarial valuation.
Tata Motors Limited and some of its subsidiaries and joint operations provide for the encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits, for future encashment. The liability is provided based on the number of days of unutilized leave at each balance sheet date on the basis of an actuarial valuation.
Remeasurement comprising actuarial gains and losses, the effect of the asset ceiling and the return on assets (excluding interest) relating to retirement benefit plans, are recognized directly in other comprehensive income in the period in which they arise. Remeasurement recorded in other comprehensive income is not reclassified to income statement. Actuarial gains and losses relating to long-term employee benefits are recognized in the income statement in the period in which they arise.
The measurement date of retirement plans is March 31. xi) The Present value of the defined benefit liability and the related current service cost and past service cost are measured using Projected Unit Credit Method.
Any dividend declared or paid by Tata Motors Limited for any financial year is based on the profits available for distribution as reported in the unconsolidated statutory financial statements of Tata Motors Limited (Standalone) prepared in accordance with Generally Accepted Accounting Principles in India. Indian law permits the declaration and payment of dividend out of profits for the year or previous financial year(s) as stated in the statutory financial statements of Tata Motors Limited (Standalone) prepared in accordance with Generally Accepted Accounting Principles in India after providing for depreciation in accordance with the provisions of Schedule II to the Companies Act. However, in the absence or inadequacy of the said profits, it may declare dividend out of free reserves, subject to certain conditions as prescribed under the Companies (Declaration and payment of Dividend) Rules, 2014. Accordingly, in certain years the net income reported in these financial statements may not be fully distributable. The amount available for distribution is Rs. Nil as at March 31, 2020.
The Company primarily operates in the automotive segment. The automotive segment comprises of four reportable segments i.e. Tata Commercial Vehicles, Tata Passenger Vehicles, Jaguar Land Rover and Vehicle Financing. Other operating segments do not meet the quantitative thresholds for disclosure and have been aggregated.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets other than equity instruments are classified into categories: financial assets at fair value through profit or loss and at amortized cost. Financial assets that are equity instruments are classified as fair value through profit or loss or fair value through other comprehensive income. Financial liabilities are classified into financial liabilities at fair value through profit or loss and other financial liabilities which are carried at amortized cost. Financial instruments are recognized on the balance sheet when the Company becomes a party to the contractual provisions of the instrument. Initially, a financial instrument is recognized at its fair value. Transaction costs directly attributable to the acquisition or issue of financial instruments are recognized in determining the carrying amount, if it is not classified as at fair value through profit or loss. Subsequently, financial instruments are measured according to the category in which they are classified. Financial assets at amortized cost: Financial assets having contractual terms that give rise on specified dates, to cash flows that are solely payments of principal and interest on the principal outstanding and that are held within a business model whose objective is to hold such assets in order to collect such contractual cash flows, are classified in this category. Subsequently, these are measured at amortized cost using the effective interest method less any impairment losses. Financial assets at fair value through other comprehensive income: These include financial assets that are equity instruments and are designated as such upon initial recognition irrevocably. Subsequently, these are measured at fair value and changes therein are recognized directly in other comprehensive income, net of applicable income taxes. When the equity investment is derecognized, the cumulative gain or loss in equity is transferred to retained earnings. Dividends from these equity investments are recognized in the statement of Profit or Loss when the right to receive payment has been established. Financial assets at fair value through profit and loss: Financial assets are measured at fair value through profit or loss unless it is measured at amortized cost or at fair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition are recognized in profit or loss. These also include certain equity instruments that are designated as such upon initial recognition irrevocably. Derivatives which are not designated as hedging instruments are recognized at fair value through profit or loss. Equity instruments: An equity instrument is any contract that evidence residual interests in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. Financial liabilities at fair value through profit or loss: Derivatives which are not designated as hedging instruments are recognized at fair value through profit or loss. Financial guarantee contracts: These are initially measured at their fair values and, are subsequently measured at the higher of the amount of loss allowance determined or the amount initially recognized less, the cumulative amount of income recognized. Other financial liabilities: These are measured at amortized cost using the effective interest method.
The fair value of a financial instrument on initial recognition is normally the transaction price (fair value of the consideration given or received). Subsequent to initial recognition, the Company determines the fair value of financial instruments that are quoted in active markets using the quoted bid prices (financial assets held) or quoted ask prices (financial liabilities held) and using valuation techniques for other instruments. Valuation techniques include discounted cash flow method and other valuation methods.
The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expires or it transfers the financial asset and substantially all the risk and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of the ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for the amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received. Financial liabilities are derecognized when these are extinguished, that is when the obligation is discharged, cancelled or has expired.
The Company recognizes a loss allowance for expected credit losses on a financial asset that is at amortized cost. Loss allowance in respect of financial assets is measured at an amount equal to life time expected credit losses and is calculated as the difference between their carrying amount and the present value of the expected future cash flows discounted at the original effective interest rate. Loss allowance in respect of finance receivables is measured at an amount equal to twelve month expected losses if credit risk on such assets has not increased significantly since initial recognition. An allowance equal to lifetime expected losses is provided if credit risk has increased significantly from date of initial recognition. Credit risk is determined to have increased significantly when a finance receivable becomes thirty days past due. Such impairment loss is recognized in the statement of profit and loss. If the amount of impairment loss decreases in a subsequent period, and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed. The reversal is recognized in the income statement.
The Company uses foreign currency forward and option contracts to hedge its risks associated with foreign currency fluctuations relating to highly probable forecast transactions and future payments in foreign currency for certain outstanding liabilities denominated in foreign currencies. The Company designates these forward and option contracts in a cash flow hedging relationship by applying hedge accounting principles. These forward and option contracts are stated at fair value at each reporting date. Changes in the fair value of these forward and option contracts that are designated and effective as hedges of future cash flows are recognized in other comprehensive income (net of tax) and the ineffective portion, if any is recognized in the consolidated income statement. Amounts accumulated in equity are reclassified to the consolidated income statements in the periods in which the forecasted transaction occurs. Forward element and time value of forwards and options are not considered as part of the hedge. These are treated as cost of hedge and the changes in fair value attributable to time value is recognized in the other comprehensive income along with the changes in fair value determined to be effective portion of the hedge. For hedges of forecast transactions, time value of options and forward element on forward contracts are considered as cost of transaction related hedge and accordingly any changes in their fair value is recognized in other comprehensive income and subsequently reclassified to consolidated income statement when the forecast transaction affects the consolidated income statement or recognized in the carrying value of asset when the forecasted transaction is for purchase of an asset. Effective portion of fair value changes in forward contracts and options designated as hedges against foreign currency fluctuations arising on certain liabilities denominated in foreign currency are recognized in other comprehensive income and reclassified to consolidated income statement when the underlying liabilities affect the consolidated income statement. The time value of options and forward element of forward contracts designated as hedges of underlying foreign currency liabilities are considered as cost of time period related hedged item and accordingly amortized and recognized in the consolidated income statement over the tenure of the contract. The Company also uses interest rate swaps to hedge its variability in cash flows from interest payments arising from floating rate liabilities i.e when interests are paid according to benchmark market interest rates. Effective portion of fair value changes on such interest rate swaps are recognized in other comprehensive income and accumulated in hedge reserve and reclassified to consolidated income statement when the hedged risk affects the consolidated income statement. Any ineffective portion of the fair value changes of hedging instruments are recognized in the consolidated income statement. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. For forecast transactions, any cumulative gain or loss on the hedging instrument recognized in equity is retained there until the forecast transaction occurs. If the forecast transaction is no longer expected to occur, the net cumulative gain or loss recognized in equity is immediately transferred to the consolidated income statement for the year.
Cash and cash equivalents are short-term (three months or less from the date of acquisition), highly liquid investments that are readily convertible into cash and which are subject to an insignificant risk of changes in value.
(i) IFRS 16 – Leases (refer note 14 Right-of-use of assets) The Company adopted IFRS 16 with effect from April1, 2019. In accordance with IFRS 16, at the inception of a contract, the Company assessed whether the contract is or contains a lease. The Company used following practical expedients on date of initial application of IFRS 16.
The Company has recognized Rs. 55,836 million as right to use assets and lease liability of Rs. 57,798 million as on the date of transition i.e. April 1, 2019. Further, an amount of Rs. 10,360 million has been reclassified from non- current /current assets to right of use assets for prepaid operating lease rentals. Lease payments of short term leases and leases of low value items are recognized as expense equally over the period of lease. Any lease for which non-cancellable period is less than 12 months is classified as short term lease. Any lease for an asset whose initial value is less than Rs. 0.3 million is classified as a low value item. (ii) IFRIC 23 – Uncertainty over Income Tax Treatments In June 2017, IASB issued IFRIC 23 which sets out how to determine the accounting tax position when there is uncertainty over income tax treatments. The Interpretation requires an entity to: determine whether uncertain tax positions are assessed separately or as a group; and assess whether it is probable that a tax authority will accept an uncertain tax treatment used, or proposed to be used, by an entity in its income tax filings: If yes, the entity should determine its accounting tax position consistently with the tax treatment used or planned to be used in its income tax filings. If no, the entity should reflect the effect of uncertainty in determining its accounting tax position The Company has applied this with effect from April 1, 2019. There is no significant impact in the Company Financial Statements on adoption.
New Accounting pronouncements affecting amounts reported and /or disclosures in the financial statements. The Company has not applied the following new and revised IFRSs that have been issued but are not yet effective.
Amendments to IFRS 10 | Sale or Contribution of Assets between an Investor and its Associate or Joint | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
IFRS 17 | Insurance Contracts.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Classification of Liabilities as Current or Non-Current.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amendments to IAS 1 and IAS 8 | Disclosure Initiative- Definition of Material.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amendments to IFRS | Definition of Business.2 |
1. | The IASB has postponed indefinitely the |
2. | Effective for annual periods beginning on or |
3. | Effective for annual periods beginning on or after January 1, 2023 |
4. | Effective for annual periods beginning on or after January 1, 2023 |
Amendments to IFRS 10 – Consolidated Financial Statements and IAS 28 – Investments in Associates and Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
In September 2014, IASB issued an amendment to IFRS 10 and IAS 28 to clarify the treatment of the sale or contribution of assets from an investor to its associate or joint venture, as follows:
Requires full recognition in the investor’s financial statements of gains and losses arising on the sale or contribution of assets that constitute a business (as defined in IFRS 3 Business Combinations).
Requires full recognition in the investor’s financial statements of gains and losses arising on the sale or contribution of assets that constitute a business (as defined in IFRS 3 Business Combinations)
Requires the partial recognition of gains and losses where the assets do not constitute a business, i.e., a gain or loss is recognized only to the extent of the unrelated investors’ interests in that associate or joint venture.
These requirements apply regardless of the legal form of the transaction, for example, whether the sale or contribution of assets occurs by an investor transferring shares in a subsidiary that holds the assets (resulting in loss of control of the subsidiary), or by the direct sale of the assets themselves.
The IASB has postponed indefinitely the effective date, with early adoption permitted.
Amendments to IFRS 2 – Share-based Payments
In June 2016, the IASB issued amendments to IFRS 2 – Share-based Payments that clarify how to account certain share-based payment transactions. The amendments for:
Accounting requirements with respect to the effects of vesting andnon-vesting conditions on the measurement of cash-settled share-based payments;
Accounting requirements with respect to share-based payment transactions with a net settlement feature for withholding tax obligations; and
Modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled. The amendments are effective from January 1, 2018, with early adoption permitted.
The Company has assessed and concluded there is no impact arising from adoption of these amendments.
IFRIC 22 – Foreign Currency Transaction and Advance Consideration
In December 2016, the IASB issued IFRIC 22 which clarified accounting requirements with respect to exchange rate to be used for reporting foreign currency transactions when payment is made or received in advance. This is effective for annual periods beginning on or after January 1, 2018. The Company has assessed and concluded that there is no impact arising from adoption of these amendments.
Amendments to IAS 40 – Investment Property
The amendments concern the application of paragraph 57 of IAS 40 Investment Property, which provides guidance on transfers to, or from, investment properties. This is effective for annual periods beginning on or after January 1, 2018. The Company has assessed and concluded that there is no impact arising from adoption of these amendments.
IFRS 17 Insurance Contracts
In May 2017, IASB issued IFRS 17 which establishes the principles for recognition, measurement, presentation and disclosure of insurance contracts and supersedes IFRS 4 Insurance Contracts. The standard outlines a General Model, which is modified for insurance contracts with direct participation features, described as Variable Fee Approach. The General Model is simplified if certain criteria are met by measuring the liability for remaining coverages using the Premium Allocation Approach. The General Model will use current assumptions to estimate the amounts, timings and uncertainty of future cash flows and it will explicitly measure the cost of that uncertainty; ituncertainty. It takes into account market interest rates and impact of policyholders’ options and guarantee. The standard is effective for annual periods beginning on or after January 1, 20212023 with early application permitted; itpermitted. It is applied retrospectively unless impracticable, in which case the modified retrospective approach or the fair value approach is applied. The Company is currently assessing thehas assessed that there will be no impact upon adoption of IFRS 17.
IFRIC 23 Uncertainty over Income Tax TreatmentsAmendments to IAS 1 – Classification of Liabilities as Current or Non-Current
In June 2017, IASBJanuary 2020, the International Accounting Standards Board (Board) issued IFRIC 23Classification of Liabilities as Current or Non-current, as an amendment to IAS 1 Presentation of Financial Statements.
The amendments clarify that conditions that exist at the end of the reporting period are those which sets out how to determine the accounting tax position when there is uncertainty over income tax treatments. The Interpretation requires an entity to:
determine whether uncertain tax positions are assessed separatelya right to defer settlement of a liability exists regardless of management intentions or as a group;expectations to exercise that right.
The standard is effective for annual periods beginning on or after January 1, 2023 with early application permitted. The Company is assessing probable impact in its financial statements on adoption of these amendments.
Amendments to IAS 1 and
assess whetherThis project was part of the Board’s plan to promote better communication in financial reporting.
As per the amendment, information is considered material if omitting, misstating or obscuring them could reasonably be expected to influence the decisions that the primary users of general purpose financial statements make on the basis of those financial statements.
The revised definition also narrows the definition of those who may be affected, by clarifying the term ‘primary users of financial statements’ which includes ‘existing and potential investors, lenders and other creditors’ who rely on general purpose financial statements for much of the financial information they need.
The amendment also describes the concept of obscuring information by explaining that the information is obscured if it is probablecommunicated in a way that would have an effect similar to that of an omission or misstatement.
Material information may also be obscured if they are scattered throughout the financial statements, or disclosed using a tax authority will accept an uncertain tax treatment used,language that is vague or proposed to be used, by an entity in its income tax filings: If yes,unclear or dissimilar items, transactions or other events are inappropriately aggregated, or disaggregated and further stating that the entity should determine its accounting tax position consistently withunderstandability of the tax treatment used or planned to be used in its income tax filings. If no, the entity should reflect the effectfinancial statements is reduced if material information is hidden because of uncertainty in determining its accounting tax position.immaterial information.
The companystandard is currentlyeffective for annual periods beginning on or after January 1, 2020 with early application permitted. The Company has concluded that there will be no significant impact on the presentation and disclosures of its financial statements upon adoption of this amendment.
Amendments to IFRS 3 – Definition of Business
In October 2018 the International Accounting Standards Board issued Definition of a Business (Amendments to IFRS 3). The amendments clarify the definition of a business for the purpose of assessing whether purchase of any asset or combination of assets would result in acquisition of business as per IFRS 3. The revised standard permits a simplified assessment of whether an acquired set of activities and assets is a group of assets rather than a business.
The amendments have clarified that acquired set of activities and assets must have substantive processes that can significantly contribute to the creation of outputs in order to meet the definition of business. Further, the amendment has also introduced concentration test which allows entities to assess value of assets acquired, if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, in which case the acquisition shall be considered as purchase of assets and not business acquisition.
The standard is effective for annual periods beginning on or after January 1, 2020 with early application permitted. The Company has assessed and concluded that there will not be any impact on adoption of IFRIC 23.this amendment.
Convenience translation |
The consolidated financial statements have been presented in Indian rupees (“Rs.”), Tata Motors Limited’s functional currency. For the convenience of the reader, the financial statements as at and for the year ended March 31, 2018,2020, have been translated into U.S. dollars at US$1.00 = Rs. 65.175Rs.75.6650 based on fixing rate in the City of Mumbai on March 31, 2018,2020, for cable transfers in Indian rupees as published by the Foreign Exchange Dealers’ Association of India (FEDAI).
Such translation should not be construed as representation that the rupee amounts have been or could be converted into U.S. dollars at that or any other rate, or at all.
3. | Cash and cash equivalents |
Cash and cash equivalents consist of the following:
As at March 31, | As at March 31, | |||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Cash balances | US$ | 4.8 | Rs. | 314.2 | Rs. | 326.2 | US$ | 0.9 | Rs. | 69.6 | Rs. | 292.1 | ||||||||||||
Balances with banks (including deposits with original maturity of up to three months) | 2,253.2 | 146,853.3 | 139,541.4 | 2,439.8 | 184,608.4 | 215,305.9 | ||||||||||||||||||
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|
| |||||||||||||||||||
Total | US$ | 2,258.0 | Rs. | 147,167.5 | Rs. | 139,867.6 | US$ | 2,440.7 | Rs. | 184,678.0 | Rs. | 215,598.0 | ||||||||||||
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|
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|
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4. | Finance receivables |
Finance receivables consist of vehicle loans, the details of which are as follows:
As at March 31, | As at March 31, | |||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Finance receivables | US$ | 3,846.7 | Rs. | 250,707.6 | Rs. | 211,607.6 | US$ | 4,193.6 | Rs. | 317,304.4 | Rs. | 344,577.4 | ||||||||||||
Less: allowance for credit losses | 179.8 | 11,717.9 | 35,975.1 | 86.1 | 6,513.7 | 8,330.5 | ||||||||||||||||||
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|
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| |||||||||||||||||||
Total | US$ | 3,666.9 | Rs. | 238,989.7 | Rs. | 175,632.5 | US$ | 4,107.5 | Rs. | 310,790.7 | Rs. | 336,246.9 | ||||||||||||
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| |||||||||||||||||||
Current portion | 1,289.1 | 84,016.5 | 68,101.2 | 1,882.7 | 142,452.9 | 115,515.2 | ||||||||||||||||||
Non-current portion | 2,377.8 | 154,973.2 | 107,531.3 | 2,224.8 | 168,337.8 | 220,731.7 | ||||||||||||||||||
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| |||||||||||||||||||
Total | US$ | 3,666.9 | Rs. | 238,989.7 | Rs. | 175,632.5 | US$ | 4,107.5 | Rs. | 310,790.7 | Rs. | 336,246.9 | ||||||||||||
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|
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|
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Changes in the allowance for credit losses in finance receivables are as follows:
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Balance at the beginning | US$ | 552.0 | Rs.35,975.1 | Rs.44,131.9 | Rs.46,554.3 | US$ | 110.1 | Rs. | 8,330.5 | Rs. | 11,717.9 | Rs. | 35,975.1 | |||||||||||||||||||
Effect of IFRS 9 transition | — | — | 177.8 | — | ||||||||||||||||||||||||||||
Allowances made during the year | 3.9 | 255.2 | 5,653.5 | 8,600.3 | 87.3 | 6,602.1 | 3,202.4 | 255.2 | ||||||||||||||||||||||||
Written off | (376.1 | ) | (24,512.4 | ) | (13,810.3 | ) | (11,022.7 | ) | (111.3 | ) | (8,418.9 | ) | (6,767.6 | ) | (24,512.4 | ) | ||||||||||||||||
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| |||||||||||||||||||||||||
Balance at the end | US$ | 179.8 | Rs.11,717.9 | Rs.35,975.1 | Rs.44,131.9 | US$ | 86.1 | Rs. | 6,513.7 | Rs. | 8,330.5 | Rs. | 11,717.9 | |||||||||||||||||||
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5. | Allowance for trade and other receivables |
Change in the allowances for trade and other receivables are as follows:
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Balance at the beginning | US$ | 232.8 | Rs.15,170.3 | Rs.14,460.4 | Rs. 8,727.8 | US$ | 168.1 | Rs. | 12,720.9 | Rs. | 14,776.2 | Rs. | 15,170.3 | |||||||||||||||||||
Allowances made during the year | 2.2 | 145.7 | 1,706.0 | 6,719.1 | 20.2 | 1,528.5 | 2,141.9 | 145.7 | ||||||||||||||||||||||||
Written off | (7.0 | ) | (454.9 | ) | (1,340.3 | ) | (889.3 | ) | (9.8 | ) | (741.9 | ) | (3,974.4 | ) | (454.9 | ) | ||||||||||||||||
Foreign exchange translation differences | 0.7 | 45.6 | 344.2 | (97.2 | ) | |||||||||||||||||||||||||||
Assets classified as held for sale | (2.0 | ) | (130.5 | ) | — | — | ||||||||||||||||||||||||||
Currency translation | 1.3 | 99.3 | (353.3 | ) | 45.6 | |||||||||||||||||||||||||||
Reversal of/(classified as) held for sale | — | — | 130.5 | (130.5 | ) | |||||||||||||||||||||||||||
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Balance at the end | US$ | 226.7 | Rs.14,776.2 | Rs.15,170.3 | Rs.14,460.4 | US$ | 179.8 | Rs. | 13,606.8 | Rs. | 12,720.9 | Rs. | 14,776.2 | |||||||||||||||||||
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6. | Other Investments - non-current |
As at March 31, | ||||||||||||
2020 | 2020 | 2019 | ||||||||||
(In millions) | ||||||||||||
(a) Investments - measured at fair value through other comprehensive income | ||||||||||||
Equity shares (quoted) | US$ | 21.0 | Rs. | 1,586.8 | Rs. | 3,033.9 | ||||||
Equity shares (unquoted) | 59.5 | 4,505.1 | 4,379.0 | |||||||||
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| |||||||
Total | US$ | 80.5 | Rs. | 6,091.9 | Rs. | 7,412.9 | ||||||
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| |||||||
(b) Investments - measured at fair value through profit or loss | ||||||||||||
Equity shares (quoted) | US$ | 20.9 | Rs. | 1,577.9 | Rs. | 4,231.4 | ||||||
Mutual funds | — | — | 288.4 | |||||||||
Non-cumulative redeemable preference shares | 0.1 | 4.0 | 54.0 | |||||||||
Cumulative redeemable preference shares | 0.2 | 15.0 | 25.0 | |||||||||
Equity shares (unquoted) | 21.2 | 1,603.9 | 1,242.8 | |||||||||
Convertible debentures | 11.6 | 877.1 | 1,490.8 | |||||||||
Others | 1.5 | 110.7 | 191.0 | |||||||||
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|
| |||||||
Total | US$ | 55.5 | Rs. | 4,188.6 | Rs. | 7,523.4 | ||||||
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| |||||||
(c) Investments - measured at amortized cost | ||||||||||||
Non-convertible debentures | US$ | — | Rs. | — | Rs. | 38.8 | ||||||
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| |||||||
Total | US$ | — | Rs. | — | Rs. | 38.8 | ||||||
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| |||||||
Total (a+b+c) | US$ | 136.0 | Rs. | 10,280.5 | Rs. | 14,975.1 | ||||||
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|
|
|
Other Investments - current |
Investments consist of the following:
As at March 31, | ||||||||||||
2018 | 2018 | 2017 | ||||||||||
(In millions) | ||||||||||||
Available-for-sale, at fair value | US$ | 2,255.6 | Rs.147,007.0 | Rs.153,265.3 | ||||||||
Unquoted equity investments, at cost* | 31.3 | 2,036.9 | 3,823.1 | |||||||||
Unquoted equity investments, at fair value** | 62.5 | 4,076.1 | — | |||||||||
Loans and receivables | 16.8 | 1,094.0 | 191.3 | |||||||||
|
|
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|
|
| |||||||
Total | US$ | 2,366.2 | Rs.154,214.0 | Rs.157,279.7 | ||||||||
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|
|
|
|
Available-for-sale, financial assets (investments) are as follows:
As at March 31, | ||||||||||||
2018 | 2018 | 2017 | ||||||||||
(In millions) | ||||||||||||
Quoted equity shares | US$ | 52.1 | Rs. 3,404.8 | Rs. 2,602.9 | ||||||||
Mutual funds | 2,203.5 | 143,602.2 | 150,662.4 | |||||||||
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| |||||||
Total available for sale securities | US$ | 2,255.6 | Rs.147,007.0 | Rs.153,265.3 | ||||||||
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|
|
The current andnon-current classifications of investments are as follows:
As at March 31, | ||||||||||||
2018 | 2018 | 2017 | ||||||||||
(In millions) | ||||||||||||
Current investments | US$ | 2,249.9 | Rs.146,637.5 | Rs.150,411.5 | ||||||||
Non-current investments | 116.3 | 7,576.5 | 6,868.2 | |||||||||
|
|
|
|
|
| |||||||
Total | US$ | 2,366.2 | Rs.154,214.0 | Rs.157,279.7 | ||||||||
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|
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|
|
As at March 31, | ||||||||||||
2020 | 2020 | 2019 | ||||||||||
(In millions) | ||||||||||||
(a) Investments - measured at fair value through other comprehensive income | ||||||||||||
Equity Shares (quoted) | US$ | — | Rs. | — | Rs. | 9.2 | ||||||
|
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|
|
|
| |||||||
Total | US$ | — | Rs. | — | Rs. | 9.2 | ||||||
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| |||||||
(b) Investments - measured at fair value through profit and loss | ||||||||||||
Mutual funds | US$ | 199.2 | Rs. | 15,069.3 | Rs. | 11,919.0 | ||||||
|
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|
|
|
| |||||||
Total | US$ | 199.2 | Rs. | 15,069.3 | Rs. | 11,919.0 | ||||||
|
|
|
|
|
| |||||||
(c) Investments - measured at amortized cost Unquoted: | ||||||||||||
Mutual funds | US$ | 1,236.3 | Rs. | 93,546.0 | Rs. | 77,455.1 | ||||||
|
|
|
|
|
| |||||||
Total | US$ | 1,236.3 | Rs. | 93,546.0 | Rs. | 77,455.1 | ||||||
|
|
|
|
|
| |||||||
Total (a+b+c) | US$ | 1,435.5 | Rs. | 108,615.3 | Rs. | 89,383.3 | ||||||
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|
|
|
|
|
Other financial assets - current |
Other financial assets - current consist of the following:
As at March 31, | As at March 31, | |||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Derivative financial instruments | US$ | 379.9 | Rs. | 24,761.3 | Rs. | 15,101.8 | US$ | 316.0 | Rs. | 23,913.0 | Rs. | 12,355.4 | ||||||||||||
Advances and other receivables recoverable in cash (including supplier recoveries) | 371.4 | 24,209.2 | 7,159.0 | |||||||||||||||||||||
Loans to channel partners | 19.7 | 1,487.6 | 885.2 | |||||||||||||||||||||
Advances and other receivables recoverable in cash | 333.2 | 25,214.3 | 26,543.0 | |||||||||||||||||||||
Inter corporate deposits | — | 3.2 | 3.1 | 0.6 | 46.9 | 23.1 | ||||||||||||||||||
Margin money with banks | 6.4 | 417.1 | — | — | — | 1,495.8 | ||||||||||||||||||
Government grant receivables | 63.1 | 4,114.0 | — | 56.8 | 4,296.9 | 5,003.1 | ||||||||||||||||||
Restricted bank deposits | 75.9 | 4,938.8 | 2,383.6 | 56.8 | 4,297.0 | 3,652.3 | ||||||||||||||||||
Others | 3.4 | 258.5 | 12.8 | |||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Total | US$ | 896.7 | Rs. | 58,443.6 | Rs. | 24,647.5 | US$ | 786.5 | Rs. | 59,514.2 | Rs. | 49,970.7 | ||||||||||||
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|
|
|
|
|
Margin money with banks is restricted cash deposits and consists of collateral provided for transfer of finance receivables.
Restricted bank deposits include Rs. 3,030.82,996.9 million and Rs. 1,861.42,509.3 million as at March 31, 20182020 and 2017,2019, respectively, held as security in relation to interest and repayment of borrowings. Out of these deposits, Rs. 850.91,015.1 million and Rs. 1,186.4942.7 million as at March 31, 20182020 and 2017,2019, respectively, are pledged till the maturity of the respective borrowings.
Other financial assets - |
Other financial assets -non-current consist of the following:
As at March 31, | As at March 31, | |||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Derivative financial instruments | US$ | 302.8 | Rs. | 22,911.6 | Rs. | 9,111.4 | ||||||||||||||||||
Loans to channel partners | 73.7 | 5,574.2 | 1,804.9 | |||||||||||||||||||||
Advance and other receivables recoverable in cash | 128.8 | 9,747.0 | 9,682.3 | |||||||||||||||||||||
Margin money with banks | US$ | 16.1 | Rs. | 1,048.0 | Rs. | 745.6 | 103.9 | 7,865.1 | 3,290.7 | |||||||||||||||
Government grants receivables | 76.4 | 5,781.9 | 5,080.8 | |||||||||||||||||||||
Loans to employees | 3.8 | 286.7 | 262.9 | |||||||||||||||||||||
Restricted deposits | 10.6 | 690.6 | 571.9 | 11.1 | 839.5 | 751.1 | ||||||||||||||||||
Loans to employees | 4.3 | 280.6 | 277.3 | |||||||||||||||||||||
Derivative financial instruments | 436.8 | 28,469.0 | 27,753.4 | |||||||||||||||||||||
Advance and other receivables recoverable in cash (including supplier recoveries) | 164.6 | 10,728.4 | — | |||||||||||||||||||||
Loans to joint arrangements | — | — | 37.5 | |||||||||||||||||||||
Others | 143.9 | 9,376.2 | 7,299.5 | 30.6 | 2,317.5 | 2,144.4 | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Total | US$ | 776.3 | Rs. | 50,592.8 | Rs. | 36,647.7 | US$ | 731.1 | Rs. | 55,323.5 | Rs. | 32,166.0 | ||||||||||||
|
|
|
|
|
|
Margin money with banks is restricted cash deposits and consists of collateral provided for transfer of finance receivables.
Restricted deposits as at March 31, 20182020 and 20172019, include Rs. 507.6561.2 million and Rs. 323.7452.6 million, respectively held as a financial deposit in relation to ongoing legal cases.
Inventories |
Inventories consist of the following:
As at March 31, | As at March 31, | |||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Raw materials, components and consumables | US$ | 693.1 | Rs. | 45,175.0 | Rs. | 34,220.0 | US$ | 433.1 | Rs. | 32,776.1 | Rs. | 36,026.0 | ||||||||||||
Work-in-progress | 620.4 | 40,431.7 | 36,425.6 | 601.4 | 45,502.9 | 38,917.6 | ||||||||||||||||||
Finished goods | 5,196.6 | 338,689.5 | 282,308.2 | 3,915.3 | 296,248.8 | 315,072.3 | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Total | US$ | 6,510.1 | Rs. | 424,296.2 | Rs. | 352,953.8 | US$ | 4,949.8 | Rs. | 374,527.8 | Rs. | 390,015.9 | ||||||||||||
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|
|
|
Inventories of finished goods include Rs.40,236.1Rs. 43,587.1 million and Rs. 26,379.443,807.1 million as at March 31, 20182020 and 2017,2019, respectively relating to vehicles sold subject to repurchase arrangements.
Cost of inventories (including cost of purchased products) recognized as expense during the years ended March 31, 2018, 20172020, 2019 and 20162018, amounted to Rs. 2,172,364.11,966,210.7 million, Rs. 1,975,324.22,283,424.2 million and Rs. 1,938,179.82,172,364.1 million, respectively.
During the years ended March 31, 2018, 20172020, 2019 and 2016,2018, the Company recorded inventory write-down expenses of Rs. 6,074.23,208.1 million, Rs. 3,725.16,086.3 million and Rs. 3,285.96,074.2 million, (excluding provision for loss of inventory at port of Tianjin in China mentioned below), respectively.
A provision of Rs. 16,383.9 million (GBP 157 million)(net of insurance recoveries of Rs. 5,342.4 million (GBP 55 million)) has been recognized against the carrying value of inventory during the year ended March 31, 2016, for the damage due to explosion at the port of Tianjin in China in August 2015. During the year ended March 31, 2018 and 2017, Rs. 111.9 million (GBP 1.4 million) and Rs. 13,301.0 million (GBP 151 million), respectively relating to insurance recoveries, recovery of import duties and taxes and an updated assessment of the condition of the remaining vehicles led to a reversal of the initial provision recorded.
Other current assets |
Other current assets consist of the following:
As at March 31, | As at March 31, | |||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Advances to suppliers and contractors | US$ | 55.9 | Rs. 3,640.2 | Rs. 4,029.4 | US$ | 66.9 | Rs. | 5,059.7 | Rs. | 4,340.7 | ||||||||||||||
Taxes recoverable, statutory deposits and dues from government | 870.7 | 56,749.8 | 49,049.8 | 558.9 | 42,291.5 | 50,719.5 | ||||||||||||||||||
Prepaid expenses | 221.0 | 14,403.5 | 11,063.0 | 161.0 | 12,180.7 | 12,106.8 | ||||||||||||||||||
Others | 28.1 | 1,832.0 | 1,297.7 | 41.3 | 3,121.6 | 1,455.2 | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Total | US$ | 1,175.7 | Rs. 76,625.5 | Rs. 65,439.9 | US$ | 828.1 | Rs. | 62,653.5 | Rs. | 68,622.2 | ||||||||||||||
|
|
|
|
|
|
Othernon-current assets |
Othernon-current assets consist of the following:
As at March 31, | As at March 31, | |||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Taxes recoverable, statutory deposits and dues from government | US$ | 161.0 | Rs. 10,496.3 | Rs. 11,252.6 | US$ | 94.3 | Rs. | 7,137.1 | Rs. | 10,819.0 | ||||||||||||||
Prepaid rentals on operating leases | 58.6 | 3,817.2 | 3,261.0 | — | — | * | 3,625.7 | |||||||||||||||||
Prepaid expenses | 124.1 | 8,086.3 | 6,312.4 | 11.2 | 848.6 | 7,684.2 | ||||||||||||||||||
Employee benefits | 505.0 | 38,210.8 | 46.2 | |||||||||||||||||||||
Others | 31.1 | 2,027.6 | 1,985.1 | 49.5 | 3,748.6 | 3,353.4 | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Total | US$ | 374.8 | Rs. 24,427.4 | Rs. 22,811.1 | US$ | 660.0 | Rs. | 49,945.1 | Rs. | 25,528.5 | ||||||||||||||
|
|
|
|
|
|
Others include Rs.15.7 million and Rs. 103.6 million towards pension assets as at March 31, 2018 and 2017, respectively.
* | Refer Note 14 |
Property, plant and equipment |
Property, plant and equipment consists of the following:
Land and buildings | Plant and equipment | Vehicles | Computers | Furniture and fixtures | Heritage Assets | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Cost as at April 1, 2017 | Rs. | 146,419.0 | Rs. | 791,127.5 | Rs. | 2,989.0 | Rs. | 19,466.4 | Rs. | 12,223.1 | Rs. | 4,233.6 | Rs. | 976,458.6 | ||||||||||||||
Additions | 34,576.8 | 156,105.9 | 1,340.2 | 2,708.2 | 1,464.3 | — | 196,195.4 | |||||||||||||||||||||
Asset acquired in business combination | 21.6 | 2.2 | — | 131.2 | 427.3 | — | 582.3 | |||||||||||||||||||||
Assets classified as held for sale | (1,273.1 | ) | (3,675.3 | ) | (38.8 | ) | (1,606.9 | ) | (407.3 | ) | — | (7,001.4 | ) | |||||||||||||||
Write down of assets | — | (5,368.2 | ) | — | — | — | (1,100.6 | ) | (6,468.8 | ) | ||||||||||||||||||
Currency translation differences | 16,380.8 | 83,892.9 | 114.6 | 1,436.4 | 1,218.2 | 500.0 | 103,542.9 | |||||||||||||||||||||
Disposal | (93.7 | ) | (29,661.3 | ) | (563.5 | ) | (834.4 | ) | (631.8 | ) | (86.1 | ) | (31,870.8 | ) | ||||||||||||||
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| |||||||||||||||
Cost as at March 31, 2018 | 196,031.4 | 992,423.7 | 3,841.5 | 21,300.9 | 14,293.8 | 3,546.9 | 1,231,438.2 | |||||||||||||||||||||
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| |||||||||||||||
Accumulated Depreciation as at April 1, 2017 | (24,775.8 | ) | (388,261.8 | ) | (1,832.6 | ) | (11,673.6 | ) | (6,016.6 | ) | — | (432,560.4 | ) | |||||||||||||||
Depreciation for the year | (6,560.6 | ) | (97,363.3 | ) | (483.8) | (1,869.4) | (1,343.8) | — | (107,620.9 | ) | ||||||||||||||||||
Assets classified as held for sale | 340.5 | 1,160.3 | 25.8 | 955.6 | 133.6 | — | 2,615.8 | |||||||||||||||||||||
Write down of assets | — | 3,890.8 | — | — | — | — | 3,890.8 | |||||||||||||||||||||
Currency translation differences | (2,181.0 | ) | (37,328.0) | (62.1) | (519.1) | (543.4) | — | (40,633.6 | ) | |||||||||||||||||||
Disposal | 27.8 | 27,556.0 | 493.5 | 774.3 | 570.9 | — | 29,422.5 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Accumulated Depreciation as at March 31, 2018 | (33,149.1 | ) | (490,346.0 | ) | (1,859.2 | ) | (12,332.2 | ) | (7,199.3 | ) | — | (544,885.8 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Net carrying amount as at March 31, 2018 | Rs. | 162,882.3 | Rs. | 502,077.7 | Rs. | 1,982.3 | Rs. | 8,968.7 | Rs. | 7,094.5 | Rs. | 3,546.9 | Rs. | 686,552.4 | ||||||||||||||
Capitalwork-in-progress | 163,891.7 | |||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Total | Rs. | 850,444.1 | ||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
US$ | 13,048.6 | |||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Cost as at April 1, 2016 | Rs. | 151,738.8 | Rs. | 790,647.8 | Rs. | 2,790.4 | Rs. | 18,131.6 | Rs. | 12,396.4 | Rs. | 4,977.8 | Rs. | 980,682.8 | ||||||||||||||
Additions | 11,796.2 | 94,006.5 | 529.3 | 3,182.6 | 1,433.5 | 14.8 | 110,962.9 | |||||||||||||||||||||
Write down of assets | — | — | — | — | — | — | — | |||||||||||||||||||||
Currency translation differences | (16,112.7 | ) | (88,612.9 | ) | (115.4 | ) | (1,375.9 | ) | (1,312.1 | ) | (759.0 | ) | (108,288.0 | ) | ||||||||||||||
Disposal | (1,003.3 | ) | (4,913.9 | ) | (215.3 | ) | (471.9 | ) | (294.7 | ) | — | (6,899.1 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Cost as at March 31, 2017 | 146,419.0 | 791,127.5 | 2,989.0 | 19,466.4 | 12,223.1 | 4,233.6 | 976,458.6 | |||||||||||||||||||||
Accumulated Depreciation as at April 1, 2016 | (21,900.4 | ) | (341,171.9 | ) | (1,580.7 | ) | (10,648.8 | ) | (5,438.5 | ) | — | (380,740.3 | ) | |||||||||||||||
Depreciation for the year | (5,229.4 | ) | (85,693.0) | (471.2) | (1,816.7) | (1,346.6) | — | (94,556.9 | ) | |||||||||||||||||||
Write down of assets | — | (1,020.4) | — | — | — | — | (1,020.4 | ) | ||||||||||||||||||||
Currency translation differences | 1,841.6 | 35,933.7 | 47.9 | 411.1 | 507.2 | — | 38,741.5 | |||||||||||||||||||||
Disposal | 512.4 | 3,689.8 | 171.4 | 380.8 | 261.3 | — | 5,015.7 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Accumulated Depreciation as at March 31, 2017 | (24,775.8 | ) | (388,261.8 | ) | (1,832.6 | ) | (11,673.6 | ) | (6,016.6 | ) | — | (432,560.4 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Net carrying amount as at March 31, 2017 | Rs. | 121,643.2 | Rs. | 402,865.7 | Rs. | 1,156.4 | Rs. | 7,792.8 | Rs. | 6,206.5 | Rs. | 4,233.6 | Rs. | 543,898.2 | ||||||||||||||
Capitalwork-in-progress | 107,301.2 | |||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Total | Rs. | 651,199.4 | ||||||||||||||||||||||||||
|
|
Notes:
Land and buildings | Plant and equipment | Vehicles | Computers | Furniture and fixtures | Heritage Assets | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Cost as at April 1, 2019 | Rs. | 259,382.6 | Rs. | 1,083,365.4 | Rs. | 4,498.6 | Rs. | 25,220.4 | Rs. | 16,255.1 | Rs. | 3,727.8 | Rs. | 1,392,449.9 | ||||||||||||||
Transition Adjustment for IFRS 16 | (1,733.9 | ) | (1,923.4 | ) | — | (1,861.5 | ) | (43.1 | ) | — | (5,561.9 | ) | ||||||||||||||||
Additions | 27,534.1 | 108,941.6 | 2,105.5 | 3,442.2 | 1,332.7 | — | 143356.1 | |||||||||||||||||||||
Additions through acquisitions | 53.0 | 11.6 | 0.3 | — | 6.0 | — | 70.9 | |||||||||||||||||||||
Currency translation | 9,995.8 | 31,673.1 | 58.6 | 653.1 | 486.9 | 121.2 | 42,988.7 | |||||||||||||||||||||
Disposal | (197.9 | ) | (6,730.6 | ) | (516.9 | ) | (294.8 | ) | (466.5 | ) | (86.7 | ) | (8,293.4 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Cost as at March 31, 2020 | 295,033.7 | 1,215,337.7 | 6,146.1 | 27,159.4 | 17,571.1 | 3,762.3 | 1,565,010.3 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Accumulated Depreciation as at April 1, 2019 | (41,870.0 | ) | (646,968.3 | ) | (2,224.7 | ) | (15,850.3 | ) | (9,612.7 | ) | (1,616.9 | ) | (718,142.9 | ) | ||||||||||||||
Transition Adjustment for IFRS 16 | 420.8 | 1,444.3 | — | 1,805.7 | 23.7 | — | 3,694.5 | |||||||||||||||||||||
Depreciation for the year | (11,152.5 | ) | (89,308.5 | ) | (933.9 | ) | (2,001.9 | ) | (1,197.1 | ) | — | (104,593.9 | ) | |||||||||||||||
Currency translation | (1,820.9 | ) | (18,630.4 | ) | (31.3 | ) | (319.6 | ) | (266.0 | ) | (54.0 | ) | (21,122.2 | ) | ||||||||||||||
Writeoff/impairment of assets | (191.4 | ) | (4,368.1 | ) | (7.4 | ) | (99.7 | ) | (125.5 | ) | — | (4,792.1 | ) | |||||||||||||||
Disposal | 129.5 | 5,137.6 | 479.2 | 294.8 | 251.9 | — | 6,293.0 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Accumulated Depreciation as at March 31, 2020 | (54,484.5 | ) | (752,693.4 | ) | (2,718.1 | ) | (16,171.0 | ) | (10,925.7 | ) | (1,670.9 | ) | (838,663.6 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Net carrying amount as at March 31, 2020 | Rs. | 240,549.2 | Rs. | 462,644.3 | Rs. | 3,428.0 | Rs. | 10,988.4 | Rs. | 6,645.4 | Rs. | 2,091.4 | Rs. | 726,346.7 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Capital work-in-progress | 89,046.8 | |||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Total | Rs. | 815,393.5 | ||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
US$ | 10,776.4 | |||||||||||||||||||||||||||
|
|
|
As at March 31, | ||||||||||||
2018 | 2018 | 2017 | ||||||||||
(In millions) | ||||||||||||
Buildings | US$ | 5.8 | Rs. | 378.5 | Rs. | 1,139.7 | ||||||
Plant and equipment | 10.6 | 693.2 | 559.2 | |||||||||
Computers | 1.9 | 121.0 | 155.2 | |||||||||
|
|
|
|
|
| |||||||
Total | US$ | 18.3 | Rs. | 1,192.7 | Rs. | 1,854.1 | ||||||
|
|
|
|
|
|
|
|
Land and buildings | Plant and equipment | Vehicles | Computers | Furniture and fixtures | Heritage Assets | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Cost as at April 1, 2018 | Rs. | 196,031.4 | Rs. | 992,423.7 | Rs. | 3,841.5 | Rs. | 21,300.9 | Rs. | 14,293.8 | Rs. | 3,546.9 | Rs. | 1,231,438.2 | ||||||||||||||
Additions | 68,356.7 | 162,366.3 | 1,095.1 | 5,374.5 | 2,255.1 | 243.8 | 239,691.5 | |||||||||||||||||||||
Currency translation | (5,218.1 | ) | (16,339.3 | ) | (6.4 | ) | (299.4 | ) | (199.0 | ) | (49.2 | ) | (22,111.4 | ) | ||||||||||||||
Reversal of assets classified as held for sale | 638.9 | 461.8 | 38.8 | 1,568.2 | 368.9 | — | 3,076.6 | |||||||||||||||||||||
Disposal | (426.3 | ) | (55,547.1 | ) | (470.4 | ) | (2,723.8 | ) | (463.7 | ) | (13.7 | ) | (59,645.0 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Cost as at March 31, 2019 | 259,382.6 | 1,083,365.4 | 4,498.6 | 25,220.4 | 16,255.1 | 3,727.8 | 1,392,449.9 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Accumulated Depreciation as at April 1, 2018 | (33,149.1 | ) | (490,346.0 | ) | (1,859.2 | ) | (12,332.2 | ) | (7,199.3 | ) | — | (544,885.8 | ) | |||||||||||||||
Depreciation for the year | (9,199.8 | ) | (107,143.4 | ) | (675.9 | ) | (2,544.8 | ) | (1,263.6 | ) | — | (120,827.5 | ) | |||||||||||||||
Reversal of assets classified as held for sale | (260.4 | ) | (137.3 | ) | (21.8 | ) | (1,015.0 | ) | (167.0 | ) | — | (1,601.5 | ) | |||||||||||||||
Currency translation | 488.1 | 4,451.2 | (0.1 | ) | 67.9 | 70.1 | — | 5,077.2 | ||||||||||||||||||||
Writeoff/impairment of assets | — | (105,718.0 | ) | (60.5 | ) | (2,348.2 | ) | (1,443.4 | ) | (1,616.9 | ) | (111,187.0 | ) | |||||||||||||||
Disposal | 251.2 | 51,925.2 | 392.8 | 2,322.0 | 390.5 | — | 55,281.7 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Accumulated Depreciation as at March 31, 2019 | (41,870.0 | ) | (646,968.3 | ) | (2,224.7 | ) | (15,850.3 | ) | (9,612.7 | ) | (1,616.9 | ) | (718,142.9 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Net carrying amount as at March 31, 2019 | Rs. | 217,512.6 | Rs. | 436,397.1 | Rs. | 2,273.9 | Rs. | 9,370.1 | Rs. | 6,642.4 | Rs. | 2,110.9 | Rs. | 674,307.0 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Capital work-in-progress | 87,996.3 | |||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Total | Rs. | 762,303.3 | ||||||||||||||||||||||||||
|
|
|
On transition to IFRS 16, the group recognized right of use assets for leases of any assets, other than low value items or whichever are short term in nature. Lease liabilities were recognized for such right of use assets equal to the amount of discounted value of all future lease payments from the date of transition, except for certain leases for which right of use assets and lease liabilities were measured at the inception date of lease and carrying amount equivalent to depreciated value of right of use assets and amortised cost of the liability as of the date of transition were recorded.
The reconciliation of the group’s commitments towards all its future minimum rental payments under non cancellable operating leases as at March 31, 2019 and lease liability recognized as per IFRS 16 as at April 1, 2019 is as follows:
(In millions) | ||||||||
Future minimum lease payments under non-cancellable operating leases as at March 31, 2019 | US$ | 822.4 | Rs. | 62,223.7 | ||||
Operating leases with renewal and termination options, others, etc. recorded on transition | 432.3 | 32,712.0 | ||||||
Extension and termination options in lease contract considered in lease liability recognized under IFRS 16 | 8.6 | 648.4 | ||||||
Operating lease commitements for which no lease liabilities have been recorded on transition | (57.8 | ) | (4,375.9 | ) | ||||
|
|
|
| |||||
Gross lease liabilities for former operating leases as at April 1, 2019 | 1,205.5 | 91,208.2 | ||||||
Discounting impact | (452.6 | ) | (34,247.6 | ) | ||||
|
|
|
| |||||
Lease liabilities for former operating leases as at April 1, 2019 | 752.9 | 56,960.6 | ||||||
Present value of finance lease liabilities as at March 31, 2019 | 11.1 | 837.0 | ||||||
|
|
|
| |||||
Total lease liabilities as at April 1, 2019 | US$ | 764.0 | Rs. | 57,797.6 | ||||
|
|
|
|
When measuring lease liability, the Group discounted lease payments using its incremental borrowing rate as at April 1, 2019. The weighted-average rate applied is 7.92%.
The following amounts are included in the Consolidated Balance Sheet as at March 31, 2020:
(In millions) | ||||||||
Current lease liabilities | US$ | 107.6 | Rs. | 8,141.8 | ||||
Non-current lease liabilities | 682.3 | 51,629.4 | ||||||
|
|
|
| |||||
Total lease liabilities | US$ | 789.9 | Rs. | 59,771.2 | ||||
|
|
|
|
The following amounts are recognized in the consolidated income statement for the year ended March 31, 2020:
(In millions) | ||||||||
Interest expense on lease liabilities | US$ | 62.0 | Rs. | 4,692.5 | ||||
Variable lease payment not included in the measurement of lease liabilities | 0.4 | 29.8 | ||||||
Income from sub-leasing of right-of-use assets | — | — | ||||||
Expenses related to short-term leases | 20.5 | 1,553.4 | ||||||
Expenses related to low-value assets, excluding short-term leases of low-value assets | 9.2 | 695.6 | ||||||
Gains or losses arising from sale-and-leaseback transactions | US$ | — | Rs. | — |
Right of use assets consist of the following: | (In millions) | |||||||||||||||||||||||||||||||
Land | Buildings | Plant, machinery and equipments | Furniture, Fixtures and Office Appliances | Vehicles | Computers & other IT assets | Other Assets | Total | |||||||||||||||||||||||||
Cost as at April 1, 2019 | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Effect of transition on adoption of IFRS 16 | Rs. | 2,673.9 | Rs. | 52,049.9 | Rs. | 7,867.0 | Rs. | 43.3 | Rs. | 178.6 | Rs. | 3,033.3 | Rs. | 349.8 | Rs. | 66,195.8 | ||||||||||||||||
Additions | — | 7,578.2 | 3,684.1 | 1,199.2 | 823.0 | 281.1 | — | 13,565.6 | ||||||||||||||||||||||||
Disposals/adjustments | — | (1,443.0 | ) | — | — | (14.1 | ) | — | — | (1,457.1 | ) | |||||||||||||||||||||
Currency translation differences | 57.5 | 1,846.7 | 226.0 | 87.6 | 36.0 | 47.0 | 11.7 | 2,312.5 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Cost as at March 31, 2020 | 2,731.4 | 60,031.8 | 11,777.1 | 1,330.1 | 1,023.5 | 3,361.4 | 361.5 | 80,616.8 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Accumulated amortization as at April 1, 2019 | ||||||||||||||||||||||||||||||||
Effect of transition on adoption of IFRS 16 | (1.5 | ) | (396.5 | ) | (1,427.0 | ) | (23.7 | ) | — | (1,805.7 | ) | — | (3,654.4 | ) | ||||||||||||||||||
Amortization for the period | (339.0 | ) | (7,101.9 | ) | (2,444.5 | ) | (109.9 | ) | (336.1 | ) | (745.1 | ) | (88.3 | ) | (11,164.8 | ) | ||||||||||||||||
Impairment of Asset | — | (2,539.8 | ) | (114.8 | ) | — | — | (0.3 | ) | — | (2,654.9 | ) | ||||||||||||||||||||
Disposal/adjustments | — | 299.6 | — | — | 8.6 | — | — | 308.2 | ||||||||||||||||||||||||
Currency translation differences | (13.3 | ) | (222.5 | ) | (95.1 | ) | (6.2 | ) | (13.4 | ) | (28.3 | ) | (3.6 | ) | (382.4 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Accumulated amortization as at March 31, 2020 | (353.8 | ) | (9,961.1 | ) | (4,081.4 | ) | (139.8 | ) | (340.9 | ) | (2,579.4 | ) | (91.9 | ) | (17,548.3 | ) | ||||||||||||||||
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net carrying amount as at March 31, 2020 | Rs. | 2,377.6 | Rs. | 50,070.7 | Rs. | 7,695.7 | Rs. | 1,190.3 | Rs. | 682.6 | Rs. | 782.0 | Rs. | 269.6 | Rs. | 63,068.5 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
US$ | 833.5 | |||||||||||||||||||||||||||||||
|
|
The Company has committed towards leases of Plant & Machinery which has not yet commenced for Rs. 1,710 million as on March 31, 2020.
Note:
The Company has adopted IFRS 16 with modified retrospective approach, with effect from April 1, 2019. Accordingly, the comparative periods have not been restated. The cumulative effect of initial application of the standard of Rs. 1,961.4 million has been recognized as an adjustment to the opening balance of retained earnings as at April 1, 2019. The Company has recognized Rs. 55,836.2 million as Right of use assets and lease liability of Rs. 57,797.6 million as on the date of transition i.e. April 1, 2019. Further, an amount of Rs. 10,359.7 million has been reclassified from non-current/current assets to Right of use assets for prepaid operating lease rentals. In the statement of profit and loss account for the year ended March 31, 2020 the nature of expenses in respect of operating leases has changed from lease rent in previous period to depreciation for the right of use asset and finance cost for interest accrued on lease liability. In respect of leases that were classified as finance lease, applying IAS 17, an amount of Rs. 4,154.3 million has been reclassified from property, plant and equipment to Right of use assets. There is no material impact on profit/(loss) after tax and earnings per share for the year ended March 31, 2020, on adoption of IFRS 16.
Leases as a lessee under IAS 17
The Company has taken land, buildings, plant and equipment, computers and furniture and fixtures under operating and finance leases. The following is the summary of future minimum lease rental payments undernon-cancellable operating leases and finance leases entered into by the Company:
As at March 31, | ||||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||||
Operating | Finance | Operating | Finance | |||||||||||||||||||||
Minimum Lease Payments | Minimum Lease Payments | Present value of minimum lease payments | Minimum Lease Payments | Minimum Lease Payments | Present value of minimum lease payments | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Not later than one year | Rs. | 8,808.0 | Rs. | 253.9 | Rs. | 222.3 | Rs. | 6,597.7 | Rs. | 258.2 | Rs. | 221.3 | ||||||||||||
Later than one year but not later than five years | 21,527.8 | 282.5 | 221.9 | 17,871.4 | 417.1 | 338.1 | ||||||||||||||||||
Later than five years | 23,342.9 | 380.6 | 245.6 | 14,645.5 | 372.2 | 202.0 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total minimum lease commitments | Rs. | 53,678.7 | Rs. | 917.0 | Rs. | 689.8 | Rs. | 39,114.6 | Rs. | 1,047.5 | Rs. | 761.4 | ||||||||||||
US$ | 823.6 | US$ | 14.1 | US$ | 10.6 | |||||||||||||||||||
Less: future finance charges | Rs. | (227.2 | ) | Rs. | (286.1 | ) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Present value of minimum lease payments | Rs. | 689.8 | Rs. | 761.4 | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Included in the financial statements as: | ||||||||||||||||||||||||
Other financial liabilities — current (refer note 20) | Rs. | 222.3 | Rs. | 221.3 | ||||||||||||||||||||
Other financial liabilities —non-current (refer note 21) | 467.5 | 540.1 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Rs. | 689.8 | Rs. | 761.4 | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
US$ | 10.6 | |||||||||||||||||||||||
|
|
Total operating lease rent expenses were Rs. 10,223.9 million, Rs. 8,224.8 million and Rs. 7,740.3 million for the years ended March 31, 2018, 2017 and 2016, respectively.
As at March 31, 2019 | ||||||||||||
Operating | Finance | |||||||||||
Minimum Lease Payments | Minimum Lease Payments | Present value of minimum lease payments | ||||||||||
Not later than one year | Rs. | 10,994.1 | Rs. | 330.0 | Rs. | 295.9 | ||||||
Later than one year but not later than five years | 26,261.2 | 970.9 | 791.2 | |||||||||
Later than five years | 24,968.3 | 2,492.5 | 647.6 | |||||||||
|
|
|
|
|
| |||||||
Total minimum lease commitments | Rs. | 62,223.6 | Rs. | 3,793.4 | Rs. | 1,734.7 | ||||||
Less: future finance charges | (2,058.7 | ) | ||||||||||
|
| |||||||||||
Present value of minimumlease payments | 1,734.7 | |||||||||||
|
| |||||||||||
Included in the financial statements as: | ||||||||||||
Other financial liabilities - current (refer note 23) | Rs. | 173.0 | ||||||||||
Other financial liabilities - non-current (refer note 24) | 1,561.7 | |||||||||||
|
| |||||||||||
Rs. | 1,734.7 | |||||||||||
|
|
Goodwill |
As at March 31, | ||||||||||||
2018 | 2018 | 2017 | ||||||||||
(In millions) | ||||||||||||
Balance at the beginning | US$ | 103.3 | Rs. | 6,733.2 | Rs. | 7,598.0 | ||||||
Classified as held for sale | US$ | (85.6 | ) | Rs. | (5,579.1 | ) | Rs. | — | ||||
Impairment | — | — | (142.5 | ) | ||||||||
Currency translation differences | 0.2 | 10.4 | (722.3 | ) | ||||||||
|
|
|
|
|
| |||||||
Balance at the end | US$ | 17.9 | Rs. | 1,164.5 | Rs. | 6,733.2 | ||||||
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|
As at March 31, | ||||||||||||
2020 | 2020 | 2019 | ||||||||||
(In millions) | ||||||||||||
Balance at the beginning | US$ | 98.8 | Rs. | 7,478.7 | Rs. | 1,164.5 | ||||||
Impairment (refer note 18 (c)) | (1.1 | ) | (83.1 | ) | (81.1 | ) | ||||||
Reversal of held for sale | — | — | 6,399.2 | |||||||||
Currency translation | 5.0 | 375.0 | (3.9 | ) | ||||||||
|
|
|
|
|
| |||||||
Balance at the end | US$ | 102.7 | Rs. | 7,770.6 | Rs. | 7,478.7 | ||||||
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|
As at March 31, 2018,2020, goodwill of Rs. 1,164.5990.9 million and Rs. 6,779.7 million relates to the “passenger vehicles – automotive and related activity segment (Tata and other brand vehicles including financing thereof) .vehicles)” and “others” segment, respectively. As at March 31, 2017,2019, goodwill of Rs. 1,154.11,079.5 million and Rs. 5,579.16,399.2 million relates to the “passenger vehicles – automotive and related activity segment (Tata and other brand vehicles including financing thereof)vehicles)” and “others” segment, respectively.
As at March 31, 2018,2020, goodwill of Rs. 990.96,779.7 million has been allocated to a joint operation.software consultancy and service cash generating unit. The recoverable amount of the cash generating unit has been determined based on value in use. Value in use has been determined based on future cash flows, after considering current economic conditions and trends, estimated future operating results, growth rates and anticipated future economic conditions.
As at March 31, 2018,2020, the estimated cash flows for a period of 5 years were developed using internal forecasts, and apre-tax discount rate of 12.4%13.30%. The cash flows beyond 5 years have been extrapolated assuming 2% terminal growth rates. The management believes that any reasonably possible change in the key assumptions would not cause the carrying amount to exceed the recoverable amount of the cash generating unit.
Intangible assets |
Intangible assets consist of the following:
Software | Patents and technological know how | Customer related | Intellectual property rights and other intangibles | Product development | Indefinite life trademarks and brands | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Cost as at April 1, 2017 | Rs. | 52,128.4 | Rs. | 13,136.9 | Rs. | 5,166.0 | Rs. | 1,950.0 | Rs. | 468,329.6 | Rs. | 50,035.0 | Rs. | 590,745.9 | ||||||||||||||
Additions | 8,472.0 | 427.5 | 223.1 | 615.3 | 155,417.4 | — | 165,115.3 | |||||||||||||||||||||
Asset acquired in Business Combination | 126.2 | — | — | 335.9 | — | — | 462.1 | |||||||||||||||||||||
Assets classified as held for sale | (2,488.3 | ) | (16.8 | ) | (486.9 | ) | — | — | — | (2,992.0 | ) | |||||||||||||||||
Currency translation differences | 6,943.2 | 1,673.6 | 710.5 | 367.1 | 69,602.0 | 7,028.1 | 86,324.5 | |||||||||||||||||||||
Fully amortized not in use | (2,166.2 | ) | — | — | — | (11,928.4 | ) | — | (14,094.6 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Cost as at March 31, 2018 | 63,015.3 | 15,221.2 | 5,612.7 | 3,268.3 | 681,420.6 | 57,063.1 | 825,601.2 | |||||||||||||||||||||
Accumulated amortization at April 1, 2017 | (22,148.2 | ) | (10,960.5 | ) | (2,254.4 | ) | (396.2 | ) | (207,832.3 | ) | — | (243,591.6 | ) | |||||||||||||||
Amortization for the year | (9,972.6 | ) | (1,350.7 | ) | (260.9 | ) | (536.7 | ) | (90,076.4 | ) | — | (102,197.3 | ) | |||||||||||||||
Assets Held for Sale | 1,700.5 | 6.4 | 109.6 | — | — | — | 1,816.5 | |||||||||||||||||||||
Write down of assets | (1,127.1 | ) | — | — | — | — | — | (1,127.1 | ) | |||||||||||||||||||
Currency translation differences | (2,970.2 | ) | (1,651.6 | ) | (325.5 | ) | 50.6 | (31,727.3 | ) | — | (36,624.0 | ) | ||||||||||||||||
Fully amortized not in use | 2,166.2 | — | — | — | 11,928.4 | — | 14,094.6 | |||||||||||||||||||||
Accumulated amortization at March 31, 2018 | (32,351.4 | ) | (13,956.4 | ) | (2,731.2 | ) | (882.3 | ) | (317,707.6 | ) | — | (367,628.9 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Net carrying amount as at March 31, 2018 | Rs. | 30,663.9 | Rs. | 1,264.8 | Rs. | 2,881.5 | Rs. | 2,386.0 | Rs. | 363,713.0 | Rs. | 57,063.1 | Rs. | 457,972.3 | ||||||||||||||
Capitalwork-in-progress | 227,195.6 | |||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Total | Rs. | 685,167.9 | ||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
US$ | 10,512.7 | |||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Cost as at April 1, 2016 | Rs. | 59,652.4 | Rs. | 15,255.7 | Rs. | 6,050.0 | Rs. | 820.8 | Rs. | 499,825.3 | Rs. | 59,021.8 | Rs. | 640,626.0 | ||||||||||||||
Additions | 7,991.3 | 17.9 | — | 1,294.3 | 75,330.0 | — | 84,633.5 | |||||||||||||||||||||
Currency translation differences | (8,214.7 | ) | (2,136.7 | ) | (884.0 | ) | (165.1 | ) | (70,353.9 | ) | (8,986.8 | ) | (90,741.2 | ) | ||||||||||||||
Fully amortized not in use | (7,300.6 | ) | — | — | — | (36,471.8 | ) | — | (43,772.4 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Cost as at March 31, 2017 | 52,128.4 | 13,136.9 | 5,166.0 | 1,950.0 | 468,329.6 | 50,035.0 | 590,745.9 | |||||||||||||||||||||
Accumulated amortization at April 1, 2016 | (24,918.1 | ) | (11,499.5 | ) | (2,282.7 | ) | (397.1 | ) | (193,706.3 | ) | — | (232,803.7 | ) | |||||||||||||||
Amortization for the year | (7,597.3 | ) | (1,316.7 | ) | (289.7 | ) | (10.6 | ) | (78,634.2 | ) | — | (87,848.5 | ) | |||||||||||||||
Write down of assets | — | — | — | — | (310.4 | ) | — | (310.4 | ) | |||||||||||||||||||
Currency translation differences | 3,066.6 | 1,855.7 | 318.0 | 11.5 | 28,346.8 | — | 33,598.6 | |||||||||||||||||||||
Fully amortized not in use | 7,300.6 | — | — | — | 36,471.8 | 43,772.4 | ||||||||||||||||||||||
Accumulated amortization at March 31, 2017 | (22,148.2 | ) | (10,960.5 | ) | (2,254.4 | ) | (396.2 | ) | (207,832.3 | ) | — | (243,591.6 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Net carrying amount as at March 31, 2017 | Rs. | 29,980.2 | Rs. | 2,176.4 | Rs. | 2,911.6 | Rs. | 1,553.8 | Rs. | 260,497.3 | Rs. | 50,035.0 | Rs. | 347,154.3 | ||||||||||||||
Capitalwork-in-progress | 224,359.5 | |||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Total | Rs. | 571,513.8 | ||||||||||||||||||||||||||
|
|
Software | Patents and technological know how | Customer related | Intellectual property rights and other intangibles | Product development | Indefinite life trademarks and brands | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Cost as at April 1, 2019 | Rs. | 67,681.8 | Rs. | 14,595.0 | Rs. | 5,980.0 | Rs. | 3,546.9 | Rs. | 697,541.0 | Rs. | 55,966.1 | Rs. | 845,310.8 | ||||||||||||||
Additions | 11,791.7 | 1,208.1 | 2.2 | 127,782.2 | — | 140,784.2 | ||||||||||||||||||||||
Additions through acquisitions | — | — | — | 103.2 | — | — | 103.2 | |||||||||||||||||||||
Currency translation | 2,653.9 | 445.7 | 181.0 | 1,926.6 | 23,127.6 | — | 28,334.8 | |||||||||||||||||||||
Fully amortized not in use | (404.6 | ) | — | — | — | (41,597.6 | ) | — | (42,002.2 | ) | ||||||||||||||||||
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| |||||||||||||||
Cost as at March 31, 2020 | 81,722.8 | 16,248.8 | 6,161.0 | 5,578.9 | 806,853.2 | 55,966.1 | 972,530.8 | |||||||||||||||||||||
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| |||||||||||||||
Accumulated amortization at April 1, 2019 | (46,300.8 | ) | (13,972.1 | ) | (3,699.7 | ) | (1,765.1 | ) | (405,420.9 | ) | (13,309.9 | )�� | (484,468.5 | ) | ||||||||||||||
Amortization for the year | (9,075.8 | ) | (399.3 | ) | (228.9 | ) | (253.6 | ) | (81,915.8 | ) | — | (91,873.4 | ) | |||||||||||||||
Write down/impairment of assets | (4.5 | ) | — | — | — | (1,702.0 | ) | — | (1,706.5 | ) | ||||||||||||||||||
Currency translation | (1,726.2 | ) | (444.5 | ) | (125.5 | ) | (469.9 | ) | (14,435.2 | ) | — | (17,201.3 | ) | |||||||||||||||
Fully amortized not in use | 404.6 | — | — | — | 41,597.4 | — | 42,002.0 | |||||||||||||||||||||
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| |||||||||||||||
Accumulated amortization at March 31, 2020 | (56,702.7 | ) | (14,815.9 | ) | (4,054.1 | ) | (2,488.6 | ) | (461,876.5 | ) | (13,309.9 | ) | (553,247.7 | ) | ||||||||||||||
|
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| |||||||||||||||
Net carrying amount as at March 31, 2020 | Rs. | 25,020.1 | Rs. | 1,432.9 | Rs. | 2,106.9 | Rs. | 3,090.3 | Rs. | 344,976.7 | Rs. | 42,656.2 | Rs. | 419,283.1 | ||||||||||||||
|
|
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| |||||||||||||||
Capital work-in-progress | 245,261.4 | |||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Total | Rs. | 664,544.5 | ||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
US$ | 8,782.7 | |||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Cost as at April 1, 2018 | Rs. | 63,015.3 | Rs. | 15,221.2 | Rs. | 5,612.7 | Rs. | 3,268.3 | Rs. | 681,420.6 | Rs. | 57,063.1 | Rs. | 825,601.2 | ||||||||||||||
Additions | 8,446.9 | 21.8 | — | 445.9 | 114,174.4 | — | 123,089.0 | |||||||||||||||||||||
Reversal of assets classified as held for sale | 2,488.3 | 17.5 | 486.9 | — | — | — | 2,992.7 | |||||||||||||||||||||
Currency translation | (1,923.6 | ) | (283.5 | ) | (119.6 | ) | (84.5 | ) | (12,321.8 | ) | (1,097.0 | ) | (15,830.0 | ) | ||||||||||||||
Fully amortized not in use | (4,345.1 | ) | (382.0 | ) | — | (82.8 | ) | (85,732.2 | ) | — | (90,542.1 | ) | ||||||||||||||||
|
|
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| |||||||||||||||
Cost as at March 31, 2019 | 67,681.8 | 14,595.0 | 5,980.0 | 3,546.9 | 697,541.0 | 55,966.1 | 845,310.8 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Accumulated amortization at April 1, 2018 | (32,351.4 | ) | (13,956.4 | ) | (2,731.2 | ) | (882.3 | ) | (317,707.6 | ) | — | (367,628.9 | ) | |||||||||||||||
Amortization for the year | (10,434.8 | ) | (768.3 | ) | (293.5 | ) | (395.7 | ) | (97,478.0 | ) | — | (109,370.3 | ) | |||||||||||||||
Reversal of assets classified as held for sale | (1,706.3 | ) | (4.8 | ) | (110.0 | ) | — | — | — | (1,821.1 | ) | |||||||||||||||||
Write down/impairment of assets | (6,694.0 | ) | — | (617.3 | ) | (474.0 | ) | (80,928.6 | ) | (13,168.8 | ) | (101,882.7 | ) | |||||||||||||||
Currency translation | 540.6 | 375.4 | 52.3 | (95.9 | ) | 4,961.1 | (141.1 | ) | 5,692.4 | |||||||||||||||||||
Fully amortized not in use | 4,345.1 | 382.0 | — | 82.8 | 85,732.2 | — | 90,542.1 | |||||||||||||||||||||
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|
|
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|
|
|
|
|
|
| |||||||||||||||
Accumulated amortization at March 31, 2019 | (46,300.8 | ) | (13,972.1 | ) | (3,699.7 | ) | (1,765.1 | ) | (405,420.9 | ) | (13,309.9 | ) | (484,468.5 | ) | ||||||||||||||
|
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|
|
|
|
|
|
|
|
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|
| |||||||||||||||
Net carrying amount as at March 31, 2019 | Rs. | 21,381.0 | Rs. | 622.9 | Rs. | 2,280.3 | Rs. | 1,781.8 | Rs. | 292,120.1 | Rs. | 42,656.2 | Rs. | 360,842.3 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Capital work-in-progress | 219,713.6 | |||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Total | Rs. | 580,555.9 | ||||||||||||||||||||||||||
|
|
1. | The useful life of trademarks and brands in respect of the acquired Jaguar Land Rover businesses have been determined to be indefinite as the Company expects to generate future economic benefits indefinitely from these assets. |
These indefinite life intangible assets have been allocated to the Jaguar Land Rover businesses. The recoverable amount of the cash generating unit has been determined based on value in use. Value in use has been determined based on future cash flows after considering current economic conditions and trends, estimated future operating results, growth rates and anticipated future economic conditions.
The estimated cash flows for a period of five years were developed using internal forecasts, and has been discounted using a pre-tax discount rate of 8.7%. The cash flows beyond five years have been extrapolated assuming 2.0% growth rate. The management believes that any reasonably possible change in the key assumptions would not cause the carrying amount to exceed the recoverable amount of the cash generating unit.
2. | During the year ended March 31, 2014, legislation was enacted that allows United Kingdom (UK) companies to elect for the Research and Development Expenditure Credit (RDEC) on qualifying expenditures incurred since April 1, 2013, instead of the existing super-deduction rules. As a result of this election by the Company’s subsidiary in the UK, Rs. |
16(b). | Intangible assets under development |
Year ended March 31, | ||||||||||||
2020 | 2019 | |||||||||||
Cost as at April 1, | US$ | 2,903.8 | Rs. | 219,713.6 | Rs. | 227,195.6 | ||||||
Additions | 2,088.6 | 158,030.8 | 173,698.8 | |||||||||
Transferred to other intangible assets | (1,842.6 | ) | (139,417.4 | ) | (122,621.4 | ) | ||||||
Reversal of assets classified as held for Sale | — | — | 125.4 | |||||||||
Provision for impairment/write off | (10.1 | ) | (767.1 | ) | (53,864.8 | ) | ||||||
Currency translation | 101.8 | 7,701.5 | (4,820.0 | ) | ||||||||
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|
|
|
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| |||||||
Balance at the end | US$ | 3,241.5 | Rs. | 245,261.4 | Rs. | 219,713.6 | ||||||
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|
Tata Motors Limited and subsidiaries
Notes to Consolidated Financial Statements
|
The Company is of the view that the operations of its subsidiary Jaguar Land Rover (JLR) represent a single cash-generating unit (‘CGU’).
In response to the annual requirement of IAS 36, and also the economic impact of COVID-19 and market capitalization of Tata Motors, management performed an impairment assessment as at March 31, 2020.
For the current year assessment, the recoverable value was determined using the value in use (“VIU”) approach outlined in IAS 36. No impairment was identified as the CGU recoverable amount exceeded its carrying amount by Rs. 35,543.1 million (GBP 380 million). The impairment loss recorded in the previous year was not reversed because it was considered that there was no significant change in the headroom associated with the CGU.
The Company has considered it appropriate to undertake the impairment assessment with reference to the latest business plan that was in effect as at the reporting date. The business plan includes a five-year cash flow forecast and contains growth rates that are primarily a function of the JLR’s Cycle Plan assumptions, historic performance and management’s expectation of future market developments through to 2024/25. In forecasting the future cash flows management have given due consideration to the risks that have arisen due to the current economic uncertainty and those arising due to the economic impact of COVID-19.
The Company has assessed the impact of COVID-19 and adjusted the cash flow forecast to reflect the latest Cycle Plan changes, including investment spend and new vehicle volume forecast. Additionally, the Company has assessed the potential impacts of changes, if any, of a severe downside on volume in the short term impacted by COVID-19 pandemic. The potential impact of reasonably possible outcomes of volume scenarios has been included in the VIU calculations through an adjustment in the discount rate.
The key assumptions used to determine the CGU VIU were as follows:
Growth rate applied beyond approved forecast period - calculated based on the weighted average long term GDP forecasts based on JLRs geographical sales footprint.
Discount rate - the discount rate is calculated with reference to a weighted average cost of capital (WACC) calculated by reference to an industry peer group. Inputs include risk-free rate, equity risk premium and risk adjustments based on company-specific risk factors including risks associated with uncertainty in relation to the short-term impact of COVID-19, Brexit and possible US tariffs.
Forecast vehicles volumes - the 5-year volumes have been validated against industry standard external data for market segment and geography and adjusted to reflect historical experience and latest Cycle Plan assumptions;
Terminal value variable profit - the 5-year variable profit forecasts are comprised of revenue, variable marketing, warranty costs, material costs and other variable costs. These values have been validated against historical performance rather than internal targets and adjusted for execution risk by further constraining cash flow estimates. The business has a range of vehicles and models at different stages in their product lifecycle. This variability drives different contribution levels for each product throughout the assessment period. When considering the cash flows to model into perpetuity, it is therefore necessary to derive a steady-state variable profit value based on the 5-year volume set and associated implied variable profit levels;
Terminal value SG&A expenses - SG&A expenses comprise a combination of fixed and variable costs and are subject to ambitious current business plans. For the 5-year cash flow forecasts the ambition has been constrained by adjusting cashflows to reflect historical levels i.e. not including all of management’s planned actions for continued cost control. The terminal value assumption is held at similar levels to the 5-year forecast period;
Terminal value capital expenditure - the 5-year cash flows timing and amount are prepared based on the latest Cycle Plan. The terminal value has been derived based the company’s best estimate of a maintenance levels of capital expenditure which has been derived from depreciation and amortization expectations and longer-term trends which are included in the VIU calculation. Expenditure on new models is excluded as “expansionary capital” unless expenditure is committed and substantively incurred as at the reporting date.
Sensitivity to Key Assumptions
The key assumptions that impact the value in use are considered to be those that (i) involve a significant amount of judgement and estimation and (ii) drive significant changes to the recoverable amount when flexed under reasonably possible outcomes.
As noted above, with a small level of headroom the VIU is sensitive to many reasonably possible changes, however, as a significant portion of the recoverable amount lies in the VIU terminal value, management have focussed disclosures on reasonably possible changes that impact the terminal value.
Given the inherent uncertainty about how risk may arise, and the interaction of volumes and cost management, management consider a net impact on terminal period cash flows to be the best means of indicating the sensitivity of the model to such changes in the terminal period.
The value of key assumptions used to calculate the recoverable amount are as follows:
As at March 31, | ||||||||
2020 | 2019 | |||||||
Growth rate applied beyond approved forecast period | 1.9 | % | 1.9 | % | ||||
Pre-tax discount rate | 12.5 | % | 11.8 | % | ||||
Terminal value variable profit (%GVR) | 19.7 | % | 22.6 | % | ||||
Terminal value capital expenditures (%GVR) | 9.1 | % | 11.0 | % |
The table below shows the amount by which the value assigned to the key assumptions must change for the recoverable amount of the CGU to be equal to its carrying amount:
As at March 31* | % Change | Revised Assumption | ||||||
Growth rate applied beyond approved forecast period | -17.8 | % | 1.6 | % | ||||
Pre-tax discount rate | 2.8 | % | 12.9 | % | ||||
Terminal value variable profit (%GVR) | -0.9 | % | 19.5 | % | ||||
Terminal value capital expenditures (%GVR) | 1.9 | % | 9.3 | % |
For the year ended March 31, 2019, the recoverable amount of the CGU was equal to its carrying amount, therefore the above disclosure is not applicable. |
In the impairment assessment performed by the company as at March 31, 2019, the recoverable value was determined based on value in use (“VIU”), which was marginally higher than the fair value less cost of disposal (“FVLCD”) of the relevant assets of the CGU. The recoverable amount was lower than the carrying value of the CGU, and this resulted in an exceptional impairment charge of Rs. 278,379.1 million (GBP 3,105 million) being recognized for the year ended March 31, 2019.
The impairment loss of Rs. 278,379.1 million (GBP 3,105 million) has been allocated initially against goodwill of Rs. 81.1 million (GBP 1 million) and the relevant assets, and thereafter the residual amount has been allocated on a pro-rated basis. This has resulted in Rs. 125,130.9 million ((GBP 1,396 million) allocated against tangible assets and Rs. 153,167.1 million (GBP 1,709 million) allocated against intangible assets.
18. | Impairment losses and other provisions |
(a) | Impairment losses in passenger vehicle segment |
The Company assessed the recoverable value for the Passenger Vehicle segment of Tata Motors Limited which represent a separate cash-generating unit (CGU) for the Company as at March 31, 2020, due to refresh of its strategy in response to change in market conditions on account of various factors (economic environment, demand forecasts etc.) including COVID 19 pandemic. The recoverable value of Rs. 91,203.1 million was determined by Fair Value less Cost of Disposal (‘FVLCD’), which was marginally higher than the Value in Use (‘VIU’) of the relevant assets of the CGU. The recoverable amount was lower than the carrying value of the CGU of Rs. 95,654.8 million and this resulted in an impairment charge of Rs. 4,454.8 million recognized for the year ended March 31, 2020.
CGU’s FVLCD has been valued using Comparable Company Market Multiple method (CCM). The average of enterprise value to sales multiples of Comparable Companies was applied to actual sales of the CGU for years ended March 31 2019, March 31 2020 and forecasted sales for the year ended March 31, 2021 has been considered as the FVCLD as per CCM.
Tata Motors Limited and subsidiaries
Notes to Consolidated Financial Statements
The approach and key (unobservable (level 3)) assumptions used to determine the CGU’s FVLCD were as follows:
As at March 31, | ||||
2020 | ||||
Enterprise value to Sales multiple | 0.75 |
The impairment loss of Rs. 4,454.8 million has been allocated to the carrying value of non-current assets on a pro-rated basis as follows:
As at March 31, 2020 | ||||
(in millions) | ||||
Property, plant and equipment (refer note 13) | 2,215.0 | |||
Right of use assets (refer note 14) | 144.3 | |||
Other intangible assets (refer note 16(a)) | 2,095.5 | |||
Total | 4,454.8 | |||
Sensitivity to key assumptions
The decrease in Enterprise Value (EV) to sales multiple by 10% would, in isolation, lead to an increase to the aggregate impairment loss by Rs. 9,120 million as at March 31, 2020 (although it should be noted that these sensitivities do not take account of potential mitigating actions).
(b) | Other provisions |
During the year ended March 31, 2020, a provision has been recognized for certain supplier contracts ranging from 5 to 10 years, which have become onerous, as the Company estimates that it will procure lower quantities than committed and the costs will exceed the future economic benefit.
(c) | Impairment losses of assets in subsidiaries |
(i) | The Company |
The Company has impaired the entire carrying value of following non current assets in the books of TMETC:
As at March 31, 2020 | ||||
(in millions) | ||||
Property, plant and equipment (refer note 13) | 497.4 | |||
Right of use assets (refer note 14) | 2,473.8 | |||
Other intangible assets (refer note 16(a)) | 3.7 | |||
Total | 2,974.9 | |||
(ii) | The Company also assessed the recoverable value for goodwill , tax and certain other assets belonging to its subsidiary Trilix S.r.l as a result of current market conditions and reduced demand forecasts resulting in a possibility of non recovery of these assets according to Management’s estimates. The Company recognized an impairment charge of Rs. 557.1 million for the year ended March 31, |
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Investments in equity accounted investees: |
(a) | Associates: |
The Company has no material associates as at March 31, 2018.2020. The aggregate summarized financial information in respect of the Company’s immaterial associates that are accounted for using the equity method is set forth below.
As at March 31, | ||||||||||||
2018 | 2018 | 2017 | ||||||||||
(In millions) | ||||||||||||
Carrying amount of the Company’s interest in associates | US$ | 143.2 | Rs. | 9,333.4 | Rs. | 8,726.3 |
As at March 31, | ||||||||||||
2020 | 2020 | 2019 | ||||||||||
(In millions) | ||||||||||||
Carrying amount of the Company’s interest in associates | US$ | 136.9 | Rs. | 10,362.3 | Rs. | 10,393.4 |
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Company’s share of profit/(loss) in associates* | US$ | 18.2 | Rs. | 1,183.0 | Rs. | 1,109.3 | Rs. | (214.0 | ) | |||||||||||||||||||||||
Company’s share of profit/(loss) in associates * | US$ | 2.2 | Rs. | 163.2 | Rs. | 1,110.6 | Rs. | 1,183.0 | ||||||||||||||||||||||||
Company’s share of other comprehensive income in associates | (0.3 | ) | (19.0 | ) | (155.1 | ) | (84.5 | ) | (0.4 | ) | (33.7 | ) | 83.2 | (19.0 | ) | |||||||||||||||||
Company’s share of total comprehensive income in associates | US$ | 17.9 | Rs. | 1,164.0 | Rs. | 954.2 | Rs. | (298.5 | ) | US$ | 1.7 | Rs. | 129.5 | Rs. | 1,193.8 | Rs. | 1,164.0 |
(i) | Fair value of investment in an equity accounted associate for which published price quotation is available, which is a level 1 input, was Rs. |
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(b) | Joint ventures: |
(i) | Details of the Company’s material joint venture as at March 31, |
Principal activity | Principal place of the business | % holding as at March 31, | ||||||||||||||||||||||||||
Name of joint venture | 2018 | 2017 | Principal activity | Principal place of the business | % holding as at March 31, | |||||||||||||||||||||||
Name of joint venture | 2020 | 2019 | ||||||||||||||||||||||||||
Manufacture and assembly of vehicles | China | 50 | % | 50 | % | Manufacture and assembly of vehicles | China | 50 | % | 50 | % |
Chery is a limited liability company,Company, whose legal form confers separation between the parties to the joint arrangement. There is no contractual arrangement or any other facts and circumstances that indicate that the parties to the joint venture have rights to the assets and obligations for the liabilities of the joint arrangement. Accordingly, Chery is classified as a joint venture. The summarized financial information in respect of Chery that is accounted for using the equity method is set forth below.
As at March 31, | As at March 31, | |||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Current assets | US$ | 1,263.0 | Rs. | 82,317.9 | Rs. | 76,082.8 | US$ | 741.0 | Rs. | 56,066.3 | Rs. | 67,701.9 | ||||||||||||
Non-current assets | 1,874.7 | 122,184.9 | 88,525.6 | 1,941.0 | 146,863.8 | 130,244.7 | ||||||||||||||||||
Current liabilities | (1,523.6 | ) | (99,298.3 | ) | (75,650.7 | ) | (1,667.4 | ) | (126,162.0 | ) | (99,923.6 | ) | ||||||||||||
Non-current liabilities | (217.6 | ) | (14,184.1 | ) | (14,249.7 | ) | (101.8 | ) | (7,703.7 | ) | (11,042.4 | ) | ||||||||||||
The above amounts of assets and liabilities include the following: | ||||||||||||||||||||||||
Cash and cash equivalents | 620.9 | 40,466.8 | 50,258.5 | 344.0 | 26,028.3 | 28,601.3 | ||||||||||||||||||
Current financial liabilities (excluding trade and other payables and provisions) | (59.6 | ) | (3,885.2 | ) | (17.0 | ) | (722.1 | ) | (54,635.8 | ) | (25,161.9 | ) | ||||||||||||
Non-current financial liabilities (excluding trade and other payables and provisions) | (214.8 | ) | (13,999.6 | ) | (14,168.8 | ) | (101.8 | ) | (7,703.7 | ) | (11,042.3 | ) | ||||||||||||
Share of net assets of material joint venture | 698.3 | 45,510.2 | 37,354.0 | 456.4 | 34,532.2 | 43,490.3 | ||||||||||||||||||
Other consolidation adjustments | (15.6 | ) | (1,016.2 | ) | (667.9 | ) | (9.3 | ) | (705.9 | ) | (534.9 | ) | ||||||||||||
Carrying amount of the Company’s interest in joint venture | US$ | 682.7 | Rs. | 44,494.0 | Rs. | 36,686.1 | US$ | 447.1 | Rs. | 33,826.3 | Rs. | 42,955.4 |
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Revenue | US$ | 3,649.8 | Rs. | 237,876.1 | Rs. | 189,601.3 | Rs. | 109,048.6 | US$ | 1,534.3 | Rs. | 116,090.2 | Rs. | 155,715.0 | Rs. | 237,876.1 | ||||||||||||||||
Net income/(loss) | 665.6 | 43,381.3 | 27,320.6 | 11,866.4 | (265.0 | ) | (20,054.0 | ) | 1,119.5 | 43,381.3 | ||||||||||||||||||||||
Other comprehensive income | — | — | — | — | ||||||||||||||||||||||||||||
Total comprehensive income for the year | 665.6 | 43,381.3 | 27,320.6 | 11,866.4 | (265.0 | ) | (20,054.0 | ) | 1,119.5 | 43,381.3 | ||||||||||||||||||||||
The above net income includes the following: | ||||||||||||||||||||||||||||||||
Depreciation and amortization | 183.3 | 11,947.8 | 9,201.1 | 5,720.1 | 238.5 | 18,047.3 | 18,857.6 | 11,947.8 | ||||||||||||||||||||||||
Interest income | (35.3 | ) | (2,298.7 | ) | (993.2 | ) | (789.0 | ) | (16.2 | ) | (1,223.7 | ) | (1,092.0 | ) | (2,298.7 | ) | ||||||||||||||||
Interest expense (net) | 9.3 | 609.0 | 706.6 | 986.2 | 29.4 | 2,223.4 | 1,266.3 | 609.0 | ||||||||||||||||||||||||
Income tax expense/(credit) | 178.5 | 11,630.5 | 9,014.4 | 4,339.4 | ||||||||||||||||||||||||||||
Income tax credit/(expenses) | US$ | 66.8 | Rs. | 5,053.6 | Rs. | (578.1 | ) | Rs. | (11,630.5 | ) |
Reconciliation of above summarized financial information to the carrying amount of the interest in the joint venture recognized in the consolidated financial statements:
As at March 31, | As at March 31, | |||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Net assets of the joint venture | US$ | 1,396.6 | Rs. | 91,020.4 | Rs. | 74,708.0 | US$ | 912.8 | Rs. | 69,064.4 | Rs. | 86,980.6 | ||||||||||||
Proportion of the Company’s interest in joint venture | 698.3 | 45,510.2 | 37,354.0 | 456.4 | 34,532.2 | 43,490.3 | ||||||||||||||||||
Other consolidation adjustments | (15.6 | ) | (1,016.2 | ) | (667.9 | ) | (9.3 | ) | (705.9 | ) | (534.9 | ) | ||||||||||||
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Carrying amount of the Company’s interest in joint venture | US$ | 682.7 | Rs. | 44,494.0 | Rs. | 36,686.1 | US$ | 447.1 | Rs. | 33,826.3 | Rs. | 42,955.4 | ||||||||||||
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During the year ended March 31, 2018,2020, a dividend of Rs. 17,644.96,063.9 million was received by a subsidiary in UK from Chery Jaguar Land Rover Automotive Co. Ltd. (2017:(2019: Rs. 5,928.81,990.3 million, 2016:2018: Rs. 17,644.9 million) and an amount of Rs. 6,063.9 million (2019: Nil, 2018: Nil) was invested by UK subsidiary in Chery Jaguar Land Rover Automotive Co. Ltd.
(ii) | The aggregate summarized financial information in respect of the Company’s immaterial joint ventures that are accounted for using the equity method is set forth below. |
As at March 31, | ||||||||||||
2018 | 2018 | 2017 | ||||||||||
(In millions) | ||||||||||||
Carrying amount of the Company’s interest in joint ventures | US$ | 0.4 | Rs. | 25.0 | Rs. | 647.7 |
During the year ended March 31, 2018, the Company acquired a further 10,000 ‘B’ shares in Spark 44 (JV) Ltd (Spark 44), increasing its share of the voting rights of Spark 44 from 50% to 50.5%. In addition, Spark 44’s Articles of Association together with the Shareholder Agreement were amended to give Jaguar Land Rover Limited control of Spark 44 as the majority shareholder.
Prior to this, Jaguar Land Rover Limited had joint control over Spark44 (JV) Limited and equity accounted for Spark44 (JV) Limited as a Joint Venture. Following the additional share purchase and change to Articles of Association and Shareholder Agreement Spark44 (JV) Limited has been consolidated as a subsidiary from August 31, 2017.
As at March 31, | ||||||||||||
2020 | 2020 | 2019 | ||||||||||
(In millions) | ||||||||||||
Carrying amount of the Company’s interest in joint ventures | US$ | — | Rs. | — | Rs. | — |
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Company’s share of profit/(loss) in immaterial joint ventures* | US$ | 2.5 | Rs. | 162.5 | Rs. | 276.5 | Rs. | 207.4 | US$ | — | Rs. | — | Rs. | (25.0 | ) | Rs. | 162.5 | |||||||||||||||
Company’s share of other comprehensive income in immaterial joint ventures | — | — | (130.3 | ) | — | — | — | — | — | |||||||||||||||||||||||
Company’s share of total comprehensive income in immaterial joint ventures | US$ | 2.5 | Rs. | 162.5 | Rs. | 146.2 | Rs. | 207.4 | US$ | — | Rs. | — | Rs. | (25.0 | ) | Rs. | 162.5 |
(c) | Summary of carrying amount of the Company’s interest in equity accounted investees: |
As at March 31, | ||||||||||||
2018 | 2018 | 2017 | ||||||||||
(In millions) | ||||||||||||
Carrying amount in immaterial associates | US$ | 143.2 | Rs. 9,333.4 | Rs. 8,726.3 | ||||||||
Carrying amount in material joint venture | 682.7 | 44,494.0 | 36,686.1 | |||||||||
Carrying amount in immaterial joint ventures | 0.4 | 25.0 | 647.7 | |||||||||
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Total | US$ | 826.3 | Rs. 53,852.4 | Rs. 46,060.1 | ||||||||
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Current (held for sale)# | US$ | 76.3 | Rs. 4,973.5 | Rs. — | ||||||||
Non current | 750.0 | 48,878.9 | 46,060.1 | |||||||||
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Total | US$ | 826.3 | Rs. 53,852.4 | Rs. 46,060.1 | ||||||||
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As at March 31, | ||||||||||||
2020 | 2020 | 2019 | ||||||||||
(In millions) | ||||||||||||
Carrying amount in immaterial associates | US$ | 137.0 | Rs. | 10,362.6 | Rs. | 10,393.4 | ||||||
Carrying amount in material joint venture | 447.1 | 33,826.3 | 42,955.4 | |||||||||
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Total | US$ | 584.1 | Rs. | 44,188.9 | Rs. | 53,348.8 | ||||||
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(d) | Summary of Company’s share of profit/(loss) in equity accounted investees: |
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Share of profit/(loss) in immaterial associates | US$ | 18.2 | Rs. | 1,183.0 | Rs. | 1,109.3 | Rs. | (214.0 | ) | US$ | 2.2 | Rs. | 163.2 | Rs. | 1,110.6 | Rs. | 1,183.0 | |||||||||||||||
Share of profit/(loss) in material joint venture | 332.8 | 21,690.7 | 13,660.3 | 5,933.2 | (132.6 | ) | (10,027.0 | ) | 559.8 | 21,690.7 | ||||||||||||||||||||||
Share of profit/(loss) on other adjustments in material joint venture | (3.9 | ) | (253.6 | ) | (116.1 | ) | (151.9 | ) | (1.8 | ) | (136.2 | ) | 449.6 | (253.6 | ) | |||||||||||||||||
Share of profit/(loss) in immaterial joint ventures | 2.5 | 162.5 | 276.5 | 207.4 | — | — | (25.0 | ) | 162.5 | |||||||||||||||||||||||
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US$ | 349.6 | Rs. | 22,782.6 | Rs. | 14,930.0 | Rs. | 5,774.7 | US$ | (132.2 | ) | Rs. | (10,000.0 | ) | Rs. | 2,095.0 | Rs. | 22,782.6 | |||||||||||||||
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(e) | Summary of Company’s share of other comprehensive income in equity accounted investees: |
Year ended March 31, | ||||||||||||||||
2018 | 2018 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Share of other comprehensive income in immaterial associates | US$ | (1.7 | ) | Rs. | (113.8 | ) | Rs. | (40.0 | ) | Rs. | (84.5 | ) | ||||
Currency translation differences-immaterial associates | 1.5 | 94.8 | (115.1 | ) | — | |||||||||||
Currency translation differences-material joint venture | 61.6 | 4,015.7 | (2,801.6 | ) | 358.5 | |||||||||||
Currency translation differences-immaterial joint ventures | — | — | (130.3 | ) | 8.4 | |||||||||||
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US$ | 61.4 | Rs. | 3,996.7 | Rs. | (3,087.0 | ) | Rs. | 282.4 | ||||||||
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Year ended March 31, | ||||||||||||||||
2020 | 2020 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Share of other comprehensive income in immaterial associates | US$ | (0.3 | ) | Rs. | (24.8 | ) | Rs. | 111.5 | Rs. | (113.8 | ) | |||||
Currency translation - immaterial associates | (0.1 | ) | (8.9 | ) | (28.3 | ) | 94.8 | |||||||||
Currency translation - material joint venture | 13.7 | 1,035.0 | (557.8 | ) | 4,015.7 | |||||||||||
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US$ | 13.3 | Rs. | 1,001.3 | Rs. | (474.6 | ) | Rs. | 3,996.7 | ||||||||
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* | Company’s share of profit/(loss) of the equity accounted investees has been determined after giving effect for the subsequent |
Income taxes |
The domestic and foreign components of net income before income tax:
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Net income before income taxes | ||||||||||||||||||||||||||||||||
Net income/(loss) before income taxes | ||||||||||||||||||||||||||||||||
India | US$ | (136.1) | Rs. | (8,867.9) | Rs. | (46,507.6) | Rs. | (19,696.5) | US$ | (756.4 | ) | Rs. | (57,230.3 | ) | Rs. | 27,429.8 | Rs. | (8,867.9 | ) | |||||||||||||
Other than India | 1,758.5 | 114,608.4 | 144,412.0 | 144,081.4 | (688.8 | ) | (52,109.3 | ) | (344,982.9 | ) | 112,608.0 | |||||||||||||||||||||
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Total | US$ | 1,622.4 | Rs. | 105,740.5 | Rs. | 97,904.4 | Rs. | 124,384.9 | US$ | (1,445.2 | ) | Rs. | (109,339.6 | ) | Rs. | (317,553.1 | ) | Rs. | 103,740.1 | |||||||||||||
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The domestic and foreign components of income tax expense:
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Current taxes | ||||||||||||||||||||||||||||||||
India | US$ | 37.1 | Rs. | 2,420.0 | Rs. | 1,842.8 | Rs. | 762.3 | US$ | 25.1 | Rs. | 1,900.7 | 5,034.3 | Rs. | 2,420.0 | |||||||||||||||||
Other than India | 469.6 | 30,608.5 | 29,531.1 | 17,608.2 | 225.1 | 17,029.9 | 17,217.9 | 30,608.5 | ||||||||||||||||||||||||
Deferred taxes | ||||||||||||||||||||||||||||||||
India | 7.6 | 494.6 | 3,111.6 | 1,862.7 | (18.0 | ) | (1,363.0 | ) | (3,241.9 | ) | 494.6 | |||||||||||||||||||||
Other than India | 69.6 | 4,535.4 | 1,184.5 | 7,279.5 | (184.0 | ) | (13,923.1 | ) | (44,435.3 | ) | 4,155.1 | |||||||||||||||||||||
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Total income tax expense | US$ | 583.9 | Rs. | 38,058.5 | Rs. | 35,670.0 | Rs. | 27,512.7 | ||||||||||||||||||||||||
Total income tax expense/(credit) | US$ | 48.2 | Rs. | 3,644.5 | Rs. | (25,425.0 | ) | Rs. | 37,678.2 | |||||||||||||||||||||||
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The reconciliation of estimated income tax to income tax expenseexpense/(credit) reported in the income statement is as follows:
Year ended March 31, | ||||||||||||||||
2018 | 2018 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Income before income taxes | US$ | 1,622.4 | Rs. | 105,740.5 | Rs. | 97,904.4 | Rs. | 124,384.9 | ||||||||
Income tax expense at tax rates applicable to individual entities | 324.2 | 21,127.0 | 14,260.2 | 23,634.1 | ||||||||||||
Additional deduction for patent, research and product development cost | (62.9 | ) | (4,099.8 | ) | (7,455.8 | ) | (14,494.0 | ) | ||||||||
Items (net) not deductible for tax | ||||||||||||||||
- foreign currency (gain)/loss relating to loans and deposits (net) | 20.5 | 1,336.2 | (739.8 | ) | 1,140.6 | |||||||||||
- interest, loss on conversion option and other expenses relating to borrowings for investment | 5.2 | 337.8 | 531.0 | 1,203.7 | ||||||||||||
- Dividend from subsidiaries, joint operations, equity accounted investees andavailable-for-sale investments | (0.8 | ) | (50.1 | ) | 27.1 | 1,345.3 | ||||||||||
Undistributed earnings of subsidiaries, joint operations and equity accounted investees | 140.7 | 9,170.1 | 4,134.3 | 5,402.2 | ||||||||||||
Deferred tax assets not recognized because realization is not probable | 151.9 | 9,902.3 | 29,372.1 | 13,288.8 | ||||||||||||
Utilization/credit of unrecognized tax losses, unabsorbed depreciation and other tax benefits | (55.0 | ) | (3,583.3 | ) | (2,950.5 | ) | (843.2 | ) | ||||||||
Profit on sale of business by a subsidiary to another subsidiary | — | — | 4,078.9 | — | ||||||||||||
Profit on sale of investments to wholly owned subsidiaries | — | — | — | 550.3 | ||||||||||||
Tax on share of (profit)/loss of equity accounted investees (net) | (70.6 | ) | (4,601.4 | ) | (3,146.7 | ) | (1,137.6 | ) | ||||||||
Impact of change in statutory tax rates | 82.7 | 5,392.6 | (5,684.6 | ) | (5,930.6 | ) | ||||||||||
Others | 48.0 | 3,127.1 | 3,243.8 | 3,353.1 | ||||||||||||
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Income tax expense reported | US$ | 583.9 | Rs. | 38,058.5 | Rs. | 35,670.0 | Rs. | 27,512.7 | ||||||||
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Year ended March 31, | ||||||||||||||||
2020 | 2020 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Income/(loss) before income taxes | US$ | (1,445.2 | ) | Rs. | (109,339.6 | ) | Rs. | (317,553.1 | ) | Rs. | 103,740.1 | |||||
Income tax expense at tax rates applicable to individual entities | (344.1 | ) | (26,033.5 | ) | (54,712.2 | ) | 20,746.7 | |||||||||
Additional deduction for patent, research and product development cost | (37.2 | ) | (2,816.2 | ) | (1,891.2 | ) | (4,099.8 | ) | ||||||||
Items (net) not deductible for tax /not liable to tax : | ||||||||||||||||
- foreign currency (gain)/loss relating to loans and deposits (net) (net), foreign currency (gain)/loss arising on account of Integral foreign operations. | 6.3 | 474.5 | (82.8 | ) | 1,336.2 | |||||||||||
- interest and other expenses relating to borrowings for investment | 7.4 | 558.0 | 621.6 | 337.8 | ||||||||||||
- Dividend from investments (other than subsidiaries, joint operations, equity accounted investees) | (0.9 | ) | (69.2 | ) | (15.5 | ) | (50.1 | ) | ||||||||
Undistributed earnings of subsidiaries, joint operations and equity accounted investees | (11.3 | ) | (855.6 | ) | 1,277.8 | 9,170.1 | ||||||||||
Deferred tax assets not recognized because realization is not probable | 376.9 | 28,517.0 | 4,738.7 | 9,902.3 | ||||||||||||
Utilization/credit of unrecognized tax losses, unabsorbed depreciation and other tax benefits | (42.8 | ) | (3,240.2 | ) | (7,016.4 | ) | (3,583.3 | ) | ||||||||
Previously recognized deferred tax assets written down on account of impairment of Jaguar Land Rover business | — | — | 26,981.5 | — | ||||||||||||
Previously recognized deferred tax assets written down | 6.5 | 492.7 | — | — | ||||||||||||
Profit on sale of investments in subsidiaries and Others | — | — | (932.0 | ) | — | |||||||||||
Tax on share of (profit)/loss of equity accounted investees (net) | 25.3 | 1,913.5 | (532.7 | ) | (4,601.4 | ) | ||||||||||
Impact of change in statutory tax rates (refer note below) | 52.5 | 3,973.5 | 4,540.4 | 5,392.6 | ||||||||||||
Others | 9.6 | 730.0 | 1,597.8 | 3,127.1 | ||||||||||||
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Income tax expense/(credit) reported | US$ | 48.2 | Rs. | 3,644.5 | Rs. | (25,425.0 | ) | Rs. | 37,678.2 | |||||||
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The UK Finance Act 2016 was enacted during the year ended March 31, 2017, which included provisions for a reduction in the UK Corporation tax rate to 17% with effect from April 1, 2020. Accordingly, UK deferred tax has been provided at rates applicable when the temporary difference is expected to reverse.Note:
Included within ‘Impact of change in statutory tax rates’ is a charge of Rs. 4,648.4 million for the impact of the change in the US federal rates from 35% to 21% on deferred tax assets for the year ended March 31, 2018.
1 | For the year ended March 31, 2020, “Impact of change in statutory tax rates” includes a charge of Rs. 4,145.8 million (GBP 49.2 million) with respect to JLR UK for the impact of change in the UK statutory tax rate from 17% to 19% on deferred tax assets and liabilities. |
The UK Finance Act 2016 was enacted during the year ended March 31, 2017, which included provisions for a reduction in the UK corporation tax rate to 17% with effect from April 1, 2020. Subsequently a change to the main UK corporation tax rate, announced in the Budget on March 11, 2020, was substantively enacted as at March 31, 2020. The rate applicable from April 1, 2020 now remains at 19%, rather than the previously enacted reduction to 17%. |
Accordingly, JLR UK deferred tax has been provided at a rate of 19% on assets (2019: 17.6%) and 19% on liabilities (2019: 17.4%), recognising the applicable tax rate at the point when the timing difference is expected to reverse. |
2 | Tata Motors Limited (TML) has decided not to opt for the New Tax Regime inserted as per section 115BAA of the Income-tax Act, 1961 and enacted by the Taxation Laws (Amendment) Ordinance, 2019 (“the Ordinance”) which is applicable from Financial Year beginning April 1, 2019. TML has accordingly applied the existing tax rates in the financial statements for FY 2019-20. |
Significant components of deferred tax assets and liabilities for the year ended March 31, 20182020 are as follows:
Opening balance | Recognized in profit or loss | Recognized in /reclassified from other comprehensive income | Classified as held for sale | Closing balance | Opening balance | Adjustment on initial application of IFRS 16 | Adjusted Opening Balance | Recognized in profit or loss | Recognized in/ reclassified from other comprehensive income | MAT Credit Utilized | Closing balance | |||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||
Deferred tax assets: | ||||||||||||||||||||||||||||||||||||||||||||||||
Unabsorbed depreciation | Rs. | 19,921.0 | Rs. | 2,150.3 | Rs. | 15.8 | Rs. | (132.1 | ) | Rs. | 21,955.0 | Rs. | 21,942.5 | Rs. | — | Rs. | 21,942.5 | Rs. | (76.6) | Rs. | 1.6 | Rs. | — | Rs. | 21,867.5 | |||||||||||||||||||||||
Business loss carry forwards | 27,509.3 | 11,944.0 | 3,284.1 | — | 42,737.4 | 22,842.1 | — | 22,842.1 | 7,779.8 | 304.8 | — | 30,926.7 | ||||||||||||||||||||||||||||||||||||
Expenses deductible in future years: | ||||||||||||||||||||||||||||||||||||||||||||||||
- provisions, allowances for doubtful receivables and others | 26,824.2 | 2,191.5 | 1,233.1 | (34.9 | ) | 30,213.9 | 34,172.9 | — | 34,172.9 | 8,912.1 | 1,128.1 | — | 44,213.1 | |||||||||||||||||||||||||||||||||||
Compensated absences and retirement benefits | 21,729.6 | (7,224.7 | ) | (5,941.6 | ) | (137.0 | ) | 8,426.3 | 12,462.9 | — | 12,462.9 | (2,807.1 | ) | (13,833.1 | ) | — | (4,177.3 | ) | ||||||||||||||||||||||||||||||
Minimum alternate tax carry-forward | 749.2 | (329.5 | ) | — | (37.8 | ) | 381.9 | 1,066.2 | — | 1,066.2 | (356.9 | ) | — | (37.8 | ) | 671.5 | ||||||||||||||||||||||||||||||||
Property, plant and equipment | 1,119.0 | (308.3 | ) | 115.8 | — | 926.5 | 49,293.6 | 292.3 | 49,585.9 | 8,131.4 | 1,700.2 | — | 59,417.5 | |||||||||||||||||||||||||||||||||||
Derivative financial instruments | 44,289.4 | (465.4 | ) | (36,267.6 | ) | (3.9 | ) | 7,552.5 | 12,253.1 | — | 12,253.1 | (1,311.7 | ) | (3,184.8 | ) | — | 7,756.6 | |||||||||||||||||||||||||||||||
Unrealized profit on inventory | 15,696.4 | (3,038.2 | ) | 2,421.0 | — | 15,079.2 | 11,418.7 | — | 11,418.7 | 498.6 | 249.9 | — | 12,167.2 | |||||||||||||||||||||||||||||||||||
Others | 7,985.3 | 2,346.5 | 689.5 | (93.4 | ) | 10,927.9 | 12,588.7 | — | 12,588.7 | 2,349.7 | 398.7 | — | 15,337.1 | |||||||||||||||||||||||||||||||||||
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Total deferred tax assets | Rs. | 165,823.4 | Rs. | 7,266.2 | Rs. | (34,449.9 | ) | Rs. | (439.1 | ) | Rs. | 138,200.6 | Rs. | 178,040.7 | Rs. | 292.3 | Rs. | 178,333.0 | Rs. | 23,119.3 | Rs. | (13,234.6 | ) | Rs. | (37.8 | ) | Rs. | 188,179.9 | ||||||||||||||||||||
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Deferred tax liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||
Property, plant and equipment | 14,335.3 | 2,221.9 | 453.5 | (158.7 | ) | 16,852.0 | 15,717.8 | — | 15,717.8 | (2,740.9 | ) | (9.7 | ) | — | 12,967.2 | |||||||||||||||||||||||||||||||||
Intangible assets | 104,848.9 | 5,305.1 | 11,657.1 | 27.4 | 121,838.5 | 107,509.5 | — | 107,509.5 | 11,557.4 | 2,868.9 | — | 121,935.8 | ||||||||||||||||||||||||||||||||||||
Undistributed earnings in subsidiaries, joint operations and equity accounted investees | 13,376.3 | 5,081.6 | * | 939.3 | — | 19,397.2 | 16,892.2 | — | 16,892.2 | (1,317.6 | )* | 307.1 | — | 15,881.7 | ||||||||||||||||||||||||||||||||||
Fair valuation of retained interest in a subsidiary subsequent to disposal of controlling equity interest | 169.5 | — | — | — | 169.5 | 169.5 | — | 169.5 | — | — | — | 169.5 | ||||||||||||||||||||||||||||||||||||
Derivative financial instruments | 231.2 | (231.2 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Others | 446.9 | (81.2 | ) | (132.9 | ) | (96.2 | ) | 136.6 | 1,151.0 | — | 1,151.0 | 334.3 | 580.5 | — | 2,065.8 | |||||||||||||||||||||||||||||||||
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Total deferred tax liabilities | Rs. | 133,408.1 | Rs. | 12,296.2 | Rs. | 12,917.0 | Rs. | (227.5 | ) | Rs. | 158,393.8 | Rs. | 141,440.0 | Rs. | — | Rs. | 141,440.0 | Rs. | 7,833.2 | Rs. | 3,746.8 | Rs. | — | Rs. | 153,020.0 | |||||||||||||||||||||||
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Net assets/(liabilities) | Rs. | 32,415.3 | Rs. | (5,030.0 | ) | Rs. | (47,366.9 | ) | Rs. | (211.6 | ) | Rs. | (20,193.2 | ) | Rs. | 36,600.7 | Rs. | 292.3 | Rs. | 36,893.0 | Rs. | 15,286.1 | Rs. | (16,981.4 | ) | Rs. | (37.8) | Rs. | 35,159.9 | |||||||||||||||||||
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US$ | 497.4 | US$ | (77.2 | ) | US$ | (726.9 | ) | US$ | (3.1 | ) | US$ | (309.8 | ) | US$ | 483.7 | US$ | 3.9 | US$ | 487.6 | US$ | 202.0 | US$ | (224.4 | ) | US$ | (0.5) | US$ | 464.7 | ||||||||||||||||||||
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Deferred tax assets | US$ | 630.1 | Rs. | 41,064.6 | Rs. | 54,578.6 | ||||||||||||||||||||||||||||||||||||||||||
Deferred tax liabilities | US$ | (939.9 | ) | Rs. | (61,257.8 | ) | Rs. | (19,418.7 | ) | |||||||||||||||||||||||||||||||||||||||
Deferred tax assets | US$ | 721.3 | ||||||||||||||||||||||||||||||||||||||||||||||
Deferred tax liabilities | US$ | (256.7 | ) |
* | Net |
As at March 31, 2018,2020, unrecognized deferred tax assets amount to Rs. 39,382.168,539.9 million and Rs. 69,114.182,660.7 million, which can be carried forward indefinitely and up to a specified period, respectively. These relate primarily to business and capital losses and other deductible temporary differences. The deferred tax asset has not been recognized on the basis that its recovery is not considered probable in the foreseeable future.
Unrecognized deferred tax assets expire unutilized based on the year of origination as follows:
March 31, | In millions | In millions | ||||||||||||||
2019 | Rs. | 297.2 | US$ | 4.6 | ||||||||||||
2020 | 543.5 | 8.3 | ||||||||||||||
2021 | 6,297.0 | 96.6 | US$ | 73.9 | Rs. | 5,589.8 | ||||||||||
2022 | 4,348.8 | 66.7 | 106.7 | 8,070.3 | ||||||||||||
2023 | 12,171.7 | 187.7 | 116.2 | 8,791.7 | ||||||||||||
2024 | 94.6 | 7,157.2 | ||||||||||||||
2025 | 298.7 | 22,603.3 | ||||||||||||||
Thereafter | Rs. | 45,455.9 | US$ | 697.4 | US$ | 402.4 | Rs. | 30,448.4 |
The Company has not recognized deferred tax liability on undistributed profits of certain subsidiaries amounting to Rs. 745,891.7Rs.476,295.6 million and Rs. 409,655.3Rs.445,510.6 million as at March 31, 20182020 and 2017,2019, respectively,because it is able to control the timing of the reversal of temporary differences associated with such undistributed profits and it is probable that such differences will not reverse in the foreseeable future.
Significant components of deferred tax assets and liabilities for the year ended March 31, 20172019 are as follows:
Opening balance | Recognized in profit or loss | Recognized in /reclassified from other comprehensive income | Closing balance | Opening balance | Adjustment on initial application of IFRS 15 | Adjusted Opening Balance | Recognized in profit or loss | Recognized in/reclassified from other comprehensive income | MAT Credit Utilized | Reversal of items classified as held for Sale in earlier year | Divestment of a subsidiary company | Closing balance | ||||||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred tax assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Unabsorbed depreciation | Rs. | 19,432.6 | Rs. | 489.0 | Rs. | (0.6 | ) | Rs. | 19,921.0 | Rs. | 21,955.1 | Rs. | — | Rs. | 21,955.1 | Rs. | (161.2 | ) | Rs. | (0.1 | ) | Rs. | — | Rs. | 24.3 | Rs. | 124.4 | Rs. | 21,942.5 | |||||||||||||||||||||||
Business loss carry forwards | 34,321.9 | (4,177.0 | ) | (2,635.6 | ) | 27,509.3 | 42,737.4 | 84.5 | 42,821.9 | (19,255.9 | ) | (723.9 | ) | — | 22,842.1 | |||||||||||||||||||||||||||||||||||||
Expenses deductible in future years: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
- provisions, allowances for doubtful receivables and others | 33,149.5 | (5,127.0 | ) | (1,198.3 | ) | 26,824.2 | 30,213.9 | — | 30,213.9 | 3,911.1 | 2.2 | — | 21.2 | 24.5 | 34,172.9 | |||||||||||||||||||||||||||||||||||||
Compensated absences and retirement benefits | 11,859.0 | (6.2 | ) | 9,876.8 | 21,729.6 | 8,426.3 | — | 8,426.3 | 32.7 | 3,858.5 | — | 132.4 | 13.0 | 12,462.9 | ||||||||||||||||||||||||||||||||||||||
Minimum alternate tax carry-forward | 582.6 | 166.6 | — | 749.2 | 381.9 | — | 381.9 | 817.8 | (15.8 | )�� | 37.8 | (155.5 | ) | 1,066.2 | ||||||||||||||||||||||||||||||||||||||
Property, plant and equipment | 2,109.3 | (738.1 | ) | (252.2 | ) | 1,119.0 | 926.5 | — | 926.5 | 48,258.9 | 108.2 | — | — | — | 49,293.6 | |||||||||||||||||||||||||||||||||||||
Derivative financial instruments | 22,966.4 | (1,917.7 | ) | 23,240.7 | 44,289.4 | 7,552.4 | — | 7,552.4 | 1,022.1 | 3,674.7 | — | 3.9 | — | 12,253.1 | ||||||||||||||||||||||||||||||||||||||
Unrealized profit on inventory | 12,233.4 | 5,519.4 | (2,056.4 | ) | 15,696.4 | 15,079.2 | — | 15,079.2 | (3,811.5 | ) | 151.0 | — | — | — | 11,418.7 | |||||||||||||||||||||||||||||||||||||
Others | 5,745.0 | 3,044.4 | (804.1 | ) | 7,985.3 | 10,927.9 | — | 10,927.9 | 1,687.1 | (49.7 | ) | — | 15.2 | 8.2 | 12,588.7 | |||||||||||||||||||||||||||||||||||||
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Total deferred tax assets | Rs. | 142,399.7 | Rs. | (2,746.6 | ) | Rs. | 26,170.3 | Rs. | 165,823.4 | Rs. | 138,200.6 | Rs. | 84.5 | Rs. | 138,285.1 | Rs. | 32,501.1 | Rs. | 7,020.9 | Rs. | (15.8 | ) | Rs. | 234.8 | Rs. | 14.6 | Rs. | 178,040.7 | ||||||||||||||||||||||||
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Deferred tax liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, plant and equipment | 16,117.2 | (1,787.8 | ) | 5.9 | 14,335.3 | 16,852.0 | — | 16,852.0 | (1,142.6 | ) | (119.7 | ) | — | 56.0 | 72.1 | 15,717.8 | ||||||||||||||||||||||||||||||||||||
Intangible assets | 115,877.7 | 2,879.2 | (13,908.0 | ) | 104,848.9 | 121,838.5 | — | 121,838.5 | (12,420.5 | ) | (1,881.1 | ) | — | (27.4 | ) | — | 107,509.5 | |||||||||||||||||||||||||||||||||||
Undistributed earnings of subsidiaries joint operations and equity accounted investees | 13,436.3 | 480.7 | * | (540.7 | ) | 13,376.3 | ||||||||||||||||||||||||||||||||||||||||||||||
Undistributed earnings in subsidiaries, joint operations and equity accounted investees | 19,397.2 | — | 19,397.2 | (2,330.4 | )* | (174.6 | ) | — | — | — | 16,892.2 | |||||||||||||||||||||||||||||||||||||||||
Fair valuation of retained interest in a subsidiary subsequent to disposal of controlling equity interest | 169.5 | — | — | 169.5 | 169.5 | — | 169.5 | — | — | — | — | — | 169.5 | |||||||||||||||||||||||||||||||||||||||
Derivative financial instruments | 40.4 | 200.2 | (9.4 | ) | 231.2 | |||||||||||||||||||||||||||||||||||||||||||||||
Others | 624.1 | (222.8 | ) | 45.6 | 446.9 | 136.6 | — | 136.6 | 717.4 | 176.1 | — | 120.9 | 1,151.0 | |||||||||||||||||||||||||||||||||||||||
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Total deferred tax liabilities | Rs. | 146,265.2 | Rs. | 1,549.5 | Rs. | (14,406.6 | ) | Rs. | 133,408.1 | Rs. | 158,393.8 | Rs. | — | Rs. | 158,393.8 | Rs. | (15,176.1 | ) | Rs. | (1,999.3 | ) | Rs. | — | Rs. | 149.5 | Rs. | 72.1 | Rs. | 141,440.0 | |||||||||||||||||||||||
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Net assets/(liabilities) | Rs. | (3,865.5 | ) | Rs. | (4,296.1 | ) | Rs. | 40,576.9 | Rs. | 32,415.3 | Rs. | (20,193.2 | ) | Rs. | 84.5 | Rs. | (20,108.7 | ) | Rs. | 47,677.2 | Rs. | 9,020.2 | Rs. | (15.8 | ) | Rs. | 85.3 | Rs. | (57.5 | ) | Rs. | 36,600.7 | ||||||||||||||||||||
Deferred tax assets | Rs. | 44,221.7 | Rs. | 51,511.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
Deferred tax liabilities | Rs. | (11,806.4 | ) | Rs. | (14,910.4 | ) |
* | Net |
Significant components of deferred tax assets and liabilities for the year ended March 31, 20162018 are as follows:
Opening balance | Recognized in profit or loss | Recognized in/reclassified from other comprehensive income | Closing balance | Opening balance | Recognized in profit or loss | Recognized in/reclassified from other comprehensive income | Classified as held for sale | Closing balance | ||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||
Deferred tax assets: | ||||||||||||||||||||||||||||||||||||
Unabsorbed depreciation | Rs. | 15,844.4 | Rs. | 3,588.2 | Rs. | — | Rs. | 19,432.6 | Rs. | 19,921.0 | Rs. | 2,150.3 | Rs. | 15.8 | Rs. | (132.1 | ) | Rs. | 21,955.1 | |||||||||||||||||
Business loss carry forwards | 38,184.0 | (4,717.0 | ) | 854.9 | 34,321.9 | 27,509.3 | 11,944.0 | 3,284.1 | — | 42,737.4 | ||||||||||||||||||||||||||
Expenses deductible in future years: | ||||||||||||||||||||||||||||||||||||
- provisions, allowances for doubtful receivables and others | 34,102.7 | (1,660.3 | ) | 707.1 | 33,149.5 | 26,824.2 | 2,191.5 | 1,233.1 | (34.9 | ) | 30,213.9 | |||||||||||||||||||||||||
Compensated absences and retirement benefits | 18,693.1 | 3,795.6 | (10,629.7 | ) | 11,859.0 | 21,729.6 | (7,224.7 | ) | (5,941.6 | ) | (137.0 | ) | 8,426.3 | |||||||||||||||||||||||
Minimum alternate tax carry-forward | 898.7 | (316.1 | ) | — | 582.6 | 749.2 | (329.5 | ) | — | (37.8 | ) | 381.9 | ||||||||||||||||||||||||
Property, plant and equipment | 861.8 | 1,276.4 | (28.9 | ) | 2,109.3 | 1,119.0 | (308.3 | ) | 115.8 | — | 926.5 | |||||||||||||||||||||||||
Derivative financial instruments | 24,151.0 | (437.6 | ) | (747.0 | ) | 22,966.4 | 44,289.4 | (465.4 | ) | (36,267.6 | ) | (3.9 | ) | 7,552.4 | ||||||||||||||||||||||
Unrealized profit on inventory | 13,565.7 | (1,745.9 | ) | 413.6 | 12,233.4 | 15,696.4 | (3,038.2 | ) | 2,421.0 | — | 15,079.2 | |||||||||||||||||||||||||
Others | 4,162.1 | 1,384.4 | 198.5 | 5,745.0 | 7,985.3 | 2,346.5 | 689.5 | (93.4 | ) | 10,927.9 | ||||||||||||||||||||||||||
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Total deferred tax assets | Rs. | 150,463.5 | Rs. | 1,167.7 | Rs. | (9,231.5 | ) | Rs. | 142,399.7 | Rs. | 165,823.4 | Rs. | 7,266.2 | Rs. | (34,449.9 | ) | Rs. | (439.1 | ) | Rs. | 138,200.6 | |||||||||||||||
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Deferred tax liabilities: | ||||||||||||||||||||||||||||||||||||
Property, plant and equipment | 15,819.9 | 293.2 | 4.1 | 16,117.2 | 14,335.3 | 2,221.9 | 453.5 | (158.7 | ) | 16,852.0 | ||||||||||||||||||||||||||
Intangible assets | 102,641.2 | 11,071.7 | 2,164.8 | 115,877.7 | 104,848.9 | 5,305.1 | 11,657.1 | 27.4 | 121,838.5 | |||||||||||||||||||||||||||
Undistributed earnings in subsidiaries, joint operations and equity accounted investees | 14,265.4 | (1,122.2 | )* | 293.1 | 13,436.3 | |||||||||||||||||||||||||||||||
Undistributed earnings of subsidiaries joint operations and equity accounted investees | 13,376.3 | 5,081.6 | * | 939.3 | — | 19,397.2 | ||||||||||||||||||||||||||||||
Fair valuation of retained interest in a subsidiary subsequent to disposal of controlling equity interest | 169.5 | — | — | 169.5 | 169.5 | — | — | — | 169.5 | |||||||||||||||||||||||||||
Derivative financial instruments | 17.5 | (2.7 | ) | 25.6 | 40.4 | 231.2 | (611.5 | ) | 380.3 | — | — | |||||||||||||||||||||||||
Others | 538.0 | 69.9 | 16.2 | 624.1 | 446.9 | (81.2 | ) | (132.9 | ) | (96.2 | ) | 136.6 | ||||||||||||||||||||||||
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Total deferred tax liabilities | Rs. | 133,451.5 | Rs. | 10,309.9 | Rs. | 2,503.8 | Rs. | 146,265.2 | Rs. | 133,408.1 | Rs. | 11,915.9 | Rs. | 13,297.3 | Rs. | (227.5 | ) | Rs. | 158,393.8 | |||||||||||||||||
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Net assets/(liabilities) | Rs. | 17,012.0 | Rs. | (9,142.2 | ) | Rs. | (11,735.3 | ) | Rs. | (3,865.5 | ) | Rs. | 32,415.3 | Rs. | (4,649.7 | ) | Rs. | (47,747.2 | ) | Rs. | (211.6 | ) | Rs. | (20,193.2 | ) | |||||||||||
Deferred tax assets | Rs. | 39,575.9 | Rs. | 41,064.6 | ||||||||||||||||||||||||||||||||
Deferred tax liabilities | Rs. | (43,441.4 | ) | Rs. | (61,257.8 | ) |
* | Net |
Short-term borrowings and current portion of long-term debt |
Short-term borrowings and current portion of long-term debt consist of the following:
As at March 31, | ||||||||||||
2018 | 2018 | 2017 | ||||||||||
(In millions) | ||||||||||||
Commercial paper | US$ | 1,623.6 | Rs. | 105,815.5 | Rs. | 81,796.7 | ||||||
Loans from banks/financial institutions | 940.1 | 61,273.0 | 56,242.7 | |||||||||
Inter-corporate deposits | 13.2 | 860.0 | 560.0 | |||||||||
Current portion of long-term debt (refer note 19) | 1,677.6 | 109,338.9 | 40,927.3 | |||||||||
|
|
|
|
|
| |||||||
Total | US$ | 4,254.5 | Rs. | 277,287.4 | Rs. | 179,526.7 | ||||||
|
|
|
|
|
|
For details of carrying amount of assets pledged as security for secured borrowings refer note 36.
As at March 31, | ||||||||||||
2020 | 2020 | 2019 | ||||||||||
(In millions) | ||||||||||||
Commercial paper | US$ | 901.2 | Rs. | 68,189.2 | Rs. | 109,525.6 | ||||||
Loans from banks/financial institutions | 1,255.2 | 94,975.6 | 91,247.0 | |||||||||
Inter-corporate deposits | 6.1 | 460.0 | 730.0 | |||||||||
Current portion of long-term debt (refer note 22) | 2,528.6 | 191,324.2 | 150,341.1 | |||||||||
|
|
|
|
|
| |||||||
Total | US$ | 4,691.1 | Rs. | 354,949.0 | Rs. | 351,843.7 | ||||||
|
|
|
|
|
|
Long-term debt |
Long-term debt consists of the following:
As at March 31, | As at March 31, | |||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Non-convertible debentures | US$ | 2,272.5 | Rs. | 148,107.9 | Rs. | 145,163.4 | US$ | 1,572.7 | Rs. | 118,995.1 | Rs. | 127,793.8 | ||||||||||||
Collateralized debt obligations | 202.6 | 13,205.8 | 10,271.2 | 559.0 | 42,299.4 | 30,473.3 | ||||||||||||||||||
Buyers credit from banks at floating interest rate | 230.1 | 15,000.0 | 15,190.7 | 525.3 | 39,750.0 | 25,000.0 | ||||||||||||||||||
Loan from banks/financial institutions | 2,104.8 | 137,181.5 | 127,410.4 | 4,867.0 | 368,259.9 | 279,380.1 | ||||||||||||||||||
Senior notes | 6,080.6 | 396,301.9 | 342,278.1 | 5,881.7 | 445,036.1 | 382,845.6 | ||||||||||||||||||
Others | 168.2 | 10,961.2 | 6,258.0 | 132.6 | 10,031.8 | 12,915.3 | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Total | 11,058.8 | 720,758.3 | 646,571.8 | 13,538.3 | 1,024,372.3 | 858,408.1 | ||||||||||||||||||
Less: current portion (refer note 18) | 1,677.6 | 109,338.9 | 40,927.3 | |||||||||||||||||||||
Less: current portion (refer note 21) | 2,528.6 | 191,324.2 | 150,341.1 | |||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Long-term debt | US$ | 9,381.2 | Rs. | 611,419.4 | Rs. | 605,644.5 | US$ | 11,009.7 | Rs. | 833,048.1 | Rs. | 708,067.0 | ||||||||||||
|
|
|
|
|
|
Inventory, trade receivables, finance receivables, other financial assets, property, plant and equipment with a carrying amount of Rs. 321,300.7 million and Rs. 308,850.5 million are pledged as collateral/security against the borrowing as at March 31, 2020 and 2019, respectively.
Collateralized debt obligations
These represent amount received against finance receivables securitized/assigned, which do not qualify for derecognition.
Non-convertible debentures
The interest rate onnon-convertible debentures range from 7.28% to 11.50% and maturity ranging from April 20182020 to September 2024. During Fiscal 2018, the Company has exercised call option to redeem in full, at the end of 8th year from the date of allotment i.e. on April 30, 2018 non-convertible debentures amounting to Rs. 5,000 million.March 2029.
Buyers credit
The buyers line of credit from banks is repayable within four years from drawdown dates.
Loan from banks / financial institutions
Certain of the Company’s loans set limits on and/or require prior lender consent for, among other things, undertaking new projects, issuing new securities, changes in management, mergers, sales of undertakings and investment in subsidiaries. In addition, certain negative covenants may limit Company’s ability to borrow additional funds or to incur additional liens, and/or provide for increased costs in case of breach. Certain of the financing arrangements also include financial covenants to maintain certaindebt-to-equity ratios,debt-to-earnings ratios, liquidity ratios, capital expenditure ratios and debt coverage ratios.
Long-termLong term loans from banks/banks / financial institutions maturity is ranging from April 2018September 2020 to July 2023.June 2026. Interest rate is based on marginal cost of funds lending rate (MCLR) of respective banks for loans amounting to Rs. 71,769.9164,743.80 million. Interest rate is based on LIBOR for loans amounting to Rs. 65,411.6241,994.70 million.
Commercial Paper
Commercial paper are unsecured short term papers, issued at discount bearing no coupon interest. The yield on commercial paper issued by the Company ranges from 6.08%5.7% to 8.15%7.54%.
Senior notes (Euro MTF listed debt)
The senior notes of Jaguar Land Rover Automotive Plc (JLR) are listed on the Euro MTF market, which is a listed market regulated by the Luxembourg Stock Exchange.
Details of the tranches of the senior notes outstanding at March 31, 20182020 are as follows:
Issued on | Currency | Initial Principal amounts (in millions) | Outstanding Principal amounts (in millions) | Outstanding (In millions) | Interest rate | Redeemable on | Currency | Initial Principal amounts (in millions) | Outstanding Principal amounts (in millions) | Outstanding (In millions) As at March 31, | Interest rate | Redeemable on | ||||||||||||||||||||||||||||||||||||||||||||
As at March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issued on | Currency | Initial Principal amounts (in millions) | Outstanding Principal amounts (in millions) | 2020 | 2019 | Interest rate | Redeemable on | |||||||||||||||||||||||||||||||||||||||||||||||||
USD | 500 | 500 | Rs. | 32,485.2 | Rs. | 32,096.3 | 5.625 | % | February 2023 | Rs. | 37,745.8 | Rs. | 34,464.0 | |||||||||||||||||||||||||||||||||||||||||||
February 2015 | GBP | 400 | 400 | 36,664.8 | 32,108.4 | 3.875 | % | March 2023 | GBP | 400 | 400 | 37,258.2 | 36,005.8 | 3.875 | % | March 2023 | ||||||||||||||||||||||||||||||||||||||||
January 2014 | GBP | 400 | 400 | 36,598.4 | 32,027.6 | 5.000 | % | February 2022 | GBP | 400 | 400 | 37,253.1 | 35,969.8 | 5.000 | % | February 2022 | ||||||||||||||||||||||||||||||||||||||||
March 2015 | USD | 500 | 500 | 32,713.6 | 32,298.6 | 3.500 | % | March 2020 | USD | 500 | 500 | — | 34,686.5 | 3.500 | % | March 2020 | ||||||||||||||||||||||||||||||||||||||||
December 2013 | USD | 700 | 700 | 45,844.7 | 45,185.2 | 4.125 | % | December 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||
October 2014 | USD | 500 | 500 | 32,738.4 | 32,314.8 | 4.250 | % | November 2019 | USD | 500 | 500 | — | 34,713.0 | 4.250 | % | November 2019 | ||||||||||||||||||||||||||||||||||||||||
January 2017 | GBP | 300 | 300 | 27,504.6 | 24,065.2 | 2.750 | % | January 2021 | GBP | 300 | 300 | 28,004.9 | 27,036.8 | 2.750 | % | January 2021 | ||||||||||||||||||||||||||||||||||||||||
January 2017 | EUR | 650 | 650 | 52,112.4 | 44,668.8 | 2.200 | % | January 2024 | EUR | 650 | 650 | 53,984.3 | 50,367.0 | 2.200 | % | January 2024 | ||||||||||||||||||||||||||||||||||||||||
October 2017 | USD | 500 | 500 | 31,569.2 | — | 4.500 | % | March 2027 | USD | 500 | 500 | 42,346.9 | 34,585.5 | 4.500 | % | March 2027 | ||||||||||||||||||||||||||||||||||||||||
October 2018 | EUR | 500 | 500 | 41,012.1 | 38,989.5 | 4.500 | % | January 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||
November 2019 | EUR | 500 | 500 | 41,390.4 | — | 5.875 | % | November 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||
November 2019 | EUR | 500 | 500 | 42,191.4 | — | 6.875 | % | November 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | Rs. | 328,231.3 | Rs. | 274,764.9 | Rs. | 361,187.1 | Rs. | 326,817.9 | ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
These senior notes are subject to customary covenants and events of defult, which include, among other things, restrictions or limitations on the amount of cash which can be transferred outside the Jaguar Land Rover group of companies in the form of dividends, loans or investments.investments
Senior notes(SGX-ST listed debt)
The senior notes of Tata Motors Limited and TML Holdings Pte Ltd are listed on theSGX-ST market, which is a listed market regulated by the Singapore Stock Exchange.
Details of the tranches of the senior notes outstanding at March 31, 20182020 are as follows:
Issued on | Currency | Initial Principal amounts (in millions) | Outstanding Principal amounts (in millions) | Outstanding (In millions) | Interest rate | Redeemable on | Currency | Initial Principal amounts (in millions) | Outstanding Principal amounts (in millions) | Outstanding (In millions) | Interest rate | Redeemable on | ||||||||||||||||||||||||||||||||||||||||
As at March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Issued on | Currency | Initial Principal amounts (in millions) | Outstanding Principal amounts (in millions) | As at March 31, | Interest rate | Redeemable on | ||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||
USD | 250 | 250 | Rs. | 16,194.3 | Rs. | 16,087.8 | 5.750 | % | October 2024 | Rs. | 18,763.6 | Rs. | 17,187.3 | |||||||||||||||||||||||||||||||||||||||
May 2014 | USD | 300 | 300 | 19,487.7 | 19,249.8 | 5.750 | % | May 2021 | USD | 300 | 300 | 22,678.2 | 20,791.6 | 5.750 | % | May 2021 | ||||||||||||||||||||||||||||||||||||
October 2014* | USD | 500 | 500 | 32,388.6 | 32,175.6 | 4.625 | % | April 2020 | ||||||||||||||||||||||||||||||||||||||||||||
October 2014 | USD | 500 | 262.532 | 19,862.8 | 18,048.8 | 4.625 | % | April 2020 | ||||||||||||||||||||||||||||||||||||||||||||
November 2019 | USD | 300 | 300 | 22,544.4 | — | 5.875 | % | May 2025 | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
Total | Rs. | 68,070.6 | Rs. | 67,513.2 | Rs. | 83,849.0 | Rs. | 56,027.7 | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
For details of carrying amount of assets pledged as security for secured borrowings refer note 36
Other financial liabilities – current |
Other current financial liabilities consist of the following:
As at March 31, | As at March 31, | |||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Liability towards vehicles sold under repurchase arrangements | US$ | 678.7 | Rs. | 44,235.8 | Rs. | 28,283.8 | US$ | 592.5 | Rs. | 44,833.8 | Rs. | 42,436.5 | ||||||||||||
Interest accrued but not due | 168.1 | 10,957.2 | 9,432.4 | 169.9 | 12,855.3 | 10,595.8 | ||||||||||||||||||
Lease liabilities | 3.4 | 222.3 | 221.3 | |||||||||||||||||||||
Lease liabilities (refer note 14) | 107.6 | 8,141.8 | 173.0 | |||||||||||||||||||||
Derivative financial instruments | 952.5 | 62,076.6 | 142,579.5 | 565.7 | 42,805.9 | 47,425.3 | ||||||||||||||||||
Deferred payment liability | — | — | 700.8 | |||||||||||||||||||||
Unclaimed matured fixed deposits | 1.7 | 107.7 | 126.2 | 0.1 | 6.0 | 73.4 | ||||||||||||||||||
Others | 23.3 | 1,519.0 | 858.0 | 55.6 | 4,210.4 | 2,965.2 | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Total | US$ | 1,827.7 | Rs. | 119,118.6 | Rs. | 182,202.0 | US$ | 1,491.4 | Rs. | 112,853.2 | Rs. | 103,669.2 | ||||||||||||
|
|
|
|
|
|
Other financial liabilities –non-current |
Other financial liabilitiesnon-current consist of the following:
As at March 31, | As at March 31, | |||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Lease liabilities | US$ | 7.2 | Rs. | 467.5 | Rs. | 540.1 | ||||||||||||||||||
Lease liabilities (refer note 14) | US$ | 682.3 | Rs. | 51,629.4 | Rs. | 1,561.7 | ||||||||||||||||||
Derivative financial instruments | 375.9 | 24,502.0 | 112,595.7 | 430.3 | 32,558.8 | 26,624.4 | ||||||||||||||||||
Liability towards employee separation scheme | 13.1 | 852.2 | 723.6 | 10.0 | 758.3 | 791.0 | ||||||||||||||||||
Retention money, security deposits and others | 31.7 | 2,065.7 | 804.9 | 69.6 | 5,267.7 | 511.7 | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Total | US$ | 427.9 | Rs. | 27,887.4 | Rs. | 114,664.3 | US$ | 1,192.2 | Rs. | 90,214.2 | Rs. | 29,488.8 | ||||||||||||
|
|
|
|
|
|
Provisions |
Provisions consist of the following:
As at March 31, | As at March 31, | |||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Current | ||||||||||||||||||||||||
Product warranty | US$ | 994.5 | Rs. | 64,815.0 | Rs. | 46,706.4 | US$ | 1,045.4 | Rs. | 79,097.8 | Rs. | 74,042.5 | ||||||||||||
Legal and product liability | 168.8 | 10,999.2 | 8,809.6 | 153.7 | 11,630.7 | 13,951.2 | ||||||||||||||||||
Provision for residual risk | 9.5 | 622.0 | 548.0 | 75.6 | 5,723.6 | 851.2 | ||||||||||||||||||
Provision for environmental liability | 15.0 | 978.8 | 965.8 | 6.0 | 451.6 | 1,254.7 | ||||||||||||||||||
Provision for onerous contract | 47.9 | 3,622.5 | — | |||||||||||||||||||||
Employee related and other provisions | 30.7 | 2,003.5 | 1,052.9 | * | 36.4 | 2,765.6 | 11,867.9 | * | ||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Total-Current | US$ | 1,218.5 | Rs. | 79,418.5 | Rs. | 58,082.7 | US$ | 1,365.0 | Rs. | 103,291.8 | Rs. | 101,967.5 | ||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Non-current | ||||||||||||||||||||||||
Employee benefits obligations | US$ | 113.2 | Rs. | 7,380.0 | Rs. | 7,329.7 | ||||||||||||||||||
Product warranty | 1,450.3 | 94,521.6 | 73,592.6 | US$ | 1,505.0 | Rs. | 113,874.1 | Rs. | 100,970.1 | |||||||||||||||
Legal and product liability | 33.7 | 2,199.5 | 3,845.2 | 67.0 | 5,065.9 | 3,913.1 | ||||||||||||||||||
Provision for residual risk | 39.1 | 2,547.6 | 2,190.7 | 140.7 | 10,648.3 | 2,776.2 | ||||||||||||||||||
Provision for environmental liability | 23.0 | 1,500.5 | 1,780.0 | 21.2 | 1,606.6 | 1,381.2 | ||||||||||||||||||
Provision for onerous contract | 54.8 | 4,147.5 | — | |||||||||||||||||||||
Employee benefits obligations | 148.9 | 11,266.1 | 8,263.5 | |||||||||||||||||||||
Other provisions | 20.7 | 1,344.1 | 1,286.9 | 10.1 | 758.3 | 1,244.4 | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Total-Non-current | US$ | 1,680.0 | Rs. | 109,493.3 | Rs. | 90,025.1 | US$ | 1,947.7 | Rs. | 147,366.8 | Rs. | 118,548.5 | ||||||||||||
|
|
|
|
|
| |||||||||||||||||||
* Includes provision towards employee claims in foreign subsidiaries. |
* Includes provision towards employee claims in foreign subsidiaries. |
|
* Includes provision towards employee claims in foreign subsidiaries. |
|
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||
2018 | 2018 | 2018 | 2018 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||||||||||||
Product Warranty | Legal and product Liability | Product Warranty | Legal and product Liability | |||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Balance at the beginning | US$ | 1,845.8 | Rs. | 120,299.0 | US$ | 194.2 | Rs. | 12,654.8 | US$ | 2,313.0 | Rs. | 175,012.6 | US$ | 236.1 | Rs. | 17,864.3 | ||||||||||||||||
Provision made during the year | 1,309.4 | 85,338.8 | 32.1 | 2,091.3 | 1,420.8 | 107,508.0 | * | 41.4 | 3,130.0 | |||||||||||||||||||||||
Provision used during the year | (1,011.2 | ) | (65,905.9 | ) | (48.6 | ) | (3,161.3 | ) | (1,294.7 | ) | (97,962.0 | ) | (64.9 | ) | (4,912.0 | ) | ||||||||||||||||
Impact of discounting | 23.3 | 1,521.3 | — | — | 34.8 | 2,633.0 | — | — | ||||||||||||||||||||||||
Impact of foreign exchange translation | 278.2 | 18,130.3 | 24.8 | 1,613.9 | ||||||||||||||||||||||||||||
Liability for assets classified as held for sale | (0.7 | ) | (46.9 | ) | — | — | ||||||||||||||||||||||||||
Currency translation | 76.5 | 5,780.3 | 8.1 | 614.3 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Balance at the end | US$ | 2,444.8 | Rs. | 159,336.6 | * | US$ | 202.5 | Rs. | 13,198.7 | US$ | 2,550.4 | Rs. | 192,971.9 | US$ | 220.7 | Rs. | 16,696.6 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Current | US$ | 994.5 | Rs. | 64,815.0 | US$ | 168.8 | Rs. | 10,999.2 | US$ | 1,045.4 | Rs. | 79,097.8 | US$ | 153.7 | Rs. | 11,630.7 | ||||||||||||||||
Non-current | US$ | 1,450.3 | Rs. | 94,521.6 | US$ | 33.7 | Rs. | 2,199.5 | US$ | 1,505.0 | Rs. | 113,874.1 | US$ | 67.0 | Rs. | 5,065.9 | ||||||||||||||||
* Provision includes estimated recovery from suppliers Rs. 17,451.2 million. |
| |||||||||||||||||||||||||||||||
Year ended March 31, | ||||||||||||||||||||||||||||||||
2018 | 2018 | 2018 | 2018 | |||||||||||||||||||||||||||||
Provision for residual risk | Provision for environmental liability | |||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Balance at the beginning | US$ | 42.0 | Rs. | 2,738.7 | US$ | 42.1 | Rs. | 2,745.8 | ||||||||||||||||||||||||
Provision made during the year | 6.8 | 441.0 | (2.3 | ) | (147.9 | ) | ||||||||||||||||||||||||||
Provision used during the year | (3.2 | ) | (211.1 | ) | (7.0 | ) | (456.4 | ) | ||||||||||||||||||||||||
Impact of foreign exchange translation | 3.0 | 201.0 | 5.2 | 337.8 | ||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Balance at the end | US$ | 48.6 | Rs. | 3,169.6 | US$ | 38.0 | Rs. | 2,479.3 | ||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Current | US$ | 9.5 | Rs. | 622.0 | US$ | 15.0 | Rs. | 978.8 | ||||||||||||||||||||||||
Non-current | US$ | 39.1 | Rs. | 2,547.6 | US$ | 23.0 | Rs. | 1,500.5 | ||||||||||||||||||||||||
* Provision includes estimated recovery from suppliers Rs. (656.0) million. |
* Provision includes estimated recovery from suppliers Rs. (656.0) million. |
|
Year ended March 31, | ||||||||||||||||||||||||
2020 | 2020 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||||||
Onerous Contract | Provision for residual risk | Provision for environmental liability | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Balance at the beginning | US$ | — | Rs. | — | US$ | 47.9 | Rs. | 3,627.4 | US$ | 34.8 | Rs. | 2,635.9 | ||||||||||||
Provision made during the year | 102.7 | 7,770.0 | 165.9 | 12,555.9 | 7.2 | 543.0 | ||||||||||||||||||
Provision used during the year | — | — | (10.4 | ) | (786.5 | ) | (15.6 | ) | (1,184.0 | ) | ||||||||||||||
Currency translation | — | — | 12.9 | 975.1 | 0.8 | 63.3 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Balance at the end | US$ | 102.7 | Rs. | 7,770.0 | US$ | 216.3 | Rs. | 16,371.9 | US$ | 27.2 | Rs. | 2,058.2 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Current | US$ | 47.9 | Rs. | 3,622.5 | US$ | 75.6 | Rs. | 5,723.6 | US$ | 6.0 | Rs. | 451.6 | ||||||||||||
Non-current | US$ | 54.8 | Rs. | 4,147.5 | US$ | 140.7 | Rs. | 10,648.3 | US$ | 21.2 | Rs. | 1,606.6 |
Other current liabilities |
Other current liabilities consist of the following:
As at March 31, | As at March 31, | |||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Advances received from customers | US$ | 219.6 | Rs. | 14,312.5 | Rs. | 17,111.5 | ||||||||||||||||||
Contract liabilities (refer note 27 below) | US$ | 562.6 | Rs. | 42,566.3 | Rs. | 45,773.8 | ||||||||||||||||||
Statutory dues | 487.4 | 31,768.6 | 26,589.3 | 483.1 | 36,550.2 | 39,139.0 | ||||||||||||||||||
Deferred revenue | 356.8 | 23,249.9 | 14,173.3 | |||||||||||||||||||||
Others | 41.7 | 2,719.7 | 2,731.1 | 44.8 | 3,387.0 | 3,728.1 | ||||||||||||||||||
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Total | US$ | 1,105.5 | Rs. | 72,050.7 | Rs. | 60,605.2 | US$ | 1,090.5 | Rs. | 82,503.5 | Rs. | 88,640.9 | ||||||||||||
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Statutory dues include goods and service tax, sales tax, excise duty and other taxes payable. |
|
Statutory dues include goods and service tax, sales tax, excise duty and other taxes payable.
Other liabilities -non-current |
Other liabilitiesnon-current consist of the following:
As at March 31, | As at March 31, | |||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Employee benefit obligations | US$ | 629.2 | Rs. | 41,007.6 | Rs. | 119,840.3 | US$ | 45.2 | Rs. | 3,416.4 | Rs. | 61,101.2 | ||||||||||||
Deferred revenue | 630.8 | 41,116.2 | 29,956.2 | |||||||||||||||||||||
Contract liabilities (refer note below) | 662.9 | 50,157.7 | 46,730.9 | |||||||||||||||||||||
Others | 31.1 | 2,025.5 | 2,980.8 | 23.1 | 1,747.0 | 2,455.1 | ||||||||||||||||||
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Total | US$ | 1,291.1 | Rs. | 84,149.3 | Rs. | 152,777.3 | US$ | 731.2 | Rs. | 55,321.1 | Rs. | 110,287.2 | ||||||||||||
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Note:
(a) | Statement showing movement of contract liabilities is as follows: |
Year ended March 31, 2019 | ||||||||||||
2020 | 2020 | 2019 | ||||||||||
(In millions) | ||||||||||||
Opening contract liabilities | US$ | 1,222.6 | Rs. | 92,504.7 | Rs. | 78,678.9 | ||||||
Transition impact of IFRS 15 | — | — | 2,766.9 | |||||||||
Amount recognized in revenue during the year | (590.3 | ) | (44,667.2 | ) | (35,783.9 | ) | ||||||
Amount received in advance during the year | 562.4 | 42,551.5 | 49,580.5 | |||||||||
Amount refunded to customers during the year | (3.7 | ) | (281.5 | ) | (2,175.5 | ) | ||||||
Reversal of liabilities directly associated with assets held-for-sale | — | — | 717.7 | |||||||||
Currency translation | 34.5 | 2,616.5 | (1,279.9 | ) | ||||||||
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Balance at the end | US$ | 1,225.5 | Rs. | 92,724.0 | Rs. | 92,504.7 | ||||||
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Performance obligations in respect of amount received for future maintenance service and extended warranty will be fulfilled over a period of 6 years from year ending March 31, 2020 till March 31, 2026.
(b) | Contract liabilities comprise of the following: |
As at March 31, | ||||||||||||
2020 | 2020 | 2019 | ||||||||||
(In millions) | ||||||||||||
Advances received from customers - current | US$ | 148.8 | Rs. | 11,253.8 | Rs. | 17,396.1 | ||||||
Deferred revenue - current | 413.8 | 31,312.7 | 28,377.7 | |||||||||
Deferred revenue - Non-current | 662.9 | 50,157.5 | 46,730.9 | |||||||||
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Total contract liabilities | US$ | 1,225.5 | Rs. | 92,724.0 | Rs. | 92,504.7 | ||||||
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Equity |
Ordinary shares and ‘A’ Ordinary shares
The movement of number of shares and share capital is as follows:
Year ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2017 | 2016 | Year ended March 31, | Year ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ordinary shares | ‘A’ Ordinary shares | Ordinary shares | ‘A’ Ordinary shares | Ordinary shares | ‘A’ Ordinary shares | 2020 | 2019 | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
No. of shares | (In millions) | No. of shares | (In millions) | No. of shares | (In millions) | No. of shares | (In millions) | No. of shares | (In millions) | No. of shares | (In millions) | Ordinary shares | ‘A’ Ordinary shares | Ordinary shares | ‘A’ Ordinary shares | Ordinary shares | ‘A’ Ordinary shares | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
No. of shares | (In millions) | No. of shares | (In millions) | No. of shares | (In millions) | No. of shares | (In millions) | No. of shares | (In millions) | No. of shares | (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares at the beginning | 2,887,348,428 | Rs. | 5,775.2 | 508,502,291 | Rs. | 1,017.0 | 2,887,203,602 | Rs. | 5,774.8 | 508,476,704 | Rs. | 1,017.0 | 2,736,713,122 | Rs. | 5,473.8 | 481,966,945 | Rs. | 964.0 | 2,887,348,694 | Rs. | 5,775.2 | 508,502,371 | Rs. | 1,017.0 | 2,887,348,694 | Rs. | 5,775.2 | 508,502,371 | Rs. | 1,017.0 | 2,887,348,428 | Rs. | 5,775.2 | 508,502,291 | Rs. | 1,017.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued pursuant to Rights issue | — | — | — | — | — | — | — | — | 150,490,480 | 301.0 | 26,509,759 | 53.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued # | 266 | 0.00 | * | 80 | 0.00 | * | 144,826 | 0.4 | 25,587 | 0.0 | * | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued | — | — | — | — | — | — | — | — | 266 | 0.0 | * | 80 | 0.0 | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued under Preferential allotment (refer note below) | 201,623,407 | 403.2 | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allotment of shares held in abeyance | 1,793 | 0.00 | * | 525 | 0.00 | * | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Shares at the end | 2,887,348,694 | Rs. | 5,775.2 | 508,502,371 | Rs. | 1,017.0 | 2,887,348,428 | Rs. | 5,775.2 | 508,502,291 | Rs. | 1,017.0 | 2,887,203,602 | Rs. | 5,774.8 | 508,476,704 | Rs. | 1,017.0 | 3,088,973,894 | Rs. | 6,178.4 | 508,502,896 | Rs. | 1,017.0 | 2,887,348,694 | Rs. | 5,775.2 | 508,502,371 | Rs. | 1,017.0 | 2,887,348,694 | Rs. | 5,775.2 | 508,502,371 | Rs. | 1,017.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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US$ | 88.6 | US$ | 15.6 | US$ | 81.7 | US$ | 13.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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# | Out of shares held in |
* | Amounts less than |
Note:
During the year ended March 31, 2020, the Company has allotted 20,16,23,407 Ordinary Shares at a price of Rs.150 per Ordinary Share aggregating to Rs.30,243.5 million and 23,13,33,871 Convertible Warrants (‘Warrants’), each carrying a right to subscribe to one Ordinary Share per Warrant, at a price of Rs.150 per Warrant (‘Warrants Price’), aggregating to Rs.34,700.0 million on a preferential basis to Tata Sons Private Limited. An amount equivalent to 25% of the Warrant Price was paid at the time of subscription and allotment of each Warrant and the balance 75% of the Warrant Price shall be payable by the Warrant holder against each Warrant at the time of allotment of Ordinary Shares pursuant to exercise of the options attached to Warrant(s) to subscribe to Ordinary Share(s). The total amount received as of March 31, 2020 is Rs.38,918.5 million.
Authorized share capital
Authorized share capital includes 4,000,000,000 Ordinary shares of Rs. 2 each as at March 31, 2020 (4,000,000,000 Ordinary shares and 3,500,000,000 Ordinary shares of Rs. 2 each as at March 31, 2018 (3,500,000,000 Ordinary shares of Rs. 2 each as at March 31, 20172019 and 2016 ),2018), 1,000,000,000 ‘A’ Ordinary shares of Rs. 2 each as at March 31, 20182020 (1,000,000,000 ‘A’ Ordinary shares of Rs. 2 each as at March 31, 20172019 and 2016)2018) and 300,000,000 convertible cumulative preference shares of Rs. 100 each as at March 31, 20182020 (300,000,000 convertible cumulative preference shares of Rs. 100 each as at March 31, 20172019 and 2016)2018).
Subsequent to March 31, 2018, the Company completed the merger of TML Drivelines Ltd, a wholly owned subsidiary and accordingly the authorized share capital increased to 4,000,000,000 Ordinary shares of Rs. 2 each. There is no change for ‘A’ Ordinary shares.
Issued and subscribed share capital
Share issued includes partly paid up shares of 570 Ordinary shares of Rs. 2 each as at March 31, 2020, 2019 and 2018, and 2017 and 68,750 Ordinary shares as at March 31, 2016.respectively.
Ordinary shares and ‘A’ Ordinary shares:
The Company has two classes of shares – the Ordinary shares and the ‘A’ Ordinary shares both of Rs.2 each (together referred to as shares). In respect of every Ordinary share (whether fully or partly paid), voting rights shall be in the same proportion as the capital paid up on such Ordinary share bears to the total paid up Ordinary share capital of the Company. In case of every ‘A’ Ordinary share, if any resolution is put to vote on a poll or by postal ballot at any general meeting of shareholders, the holder shall be entitled to one vote for every ten ‘A’ Ordinary shares held as per the terms of its issue and if a resolution is put to vote on a show of hands, the holders of ‘A’ Ordinary shares shall be entitled to the same number of votes as available to holders of Ordinary shares.
Under the provisions of the revised Indian Listing Agreement with domestic Indian Stock Exchanges, every listed company is required to provide its shareholders with the facility to exercise their right to vote, by electronic means, either at a general meeting of the Company or by means of a postal ballot.
The dividend proposed by Tata Motors Limited’s Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. Further, the Board of Directors may also announce an interim dividend which would need to be confirmed by the shareholders at the forthcoming Annual General Meeting. The holders of ‘A’ Ordinary shares shall be entitled to receive dividend for each financial year at five percentage point more than the aggregate rate of dividend declared on Ordinary shares for that financial year.
In the event of liquidation, the shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholdings.
Other components of equity |
(a) | The movement of Currency translation reserve is as follows: |
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Balance at the beginning | US$ | (781.5 | ) | Rs. | (50,933.2 | ) | Rs. | 45,936.6 | Rs. | 28,887.9 | US$ | 375.2 | Rs. | 28,388.6 | Rs. | 49,388.8 | Rs. | (50,933.2 | ) | |||||||||||||
Exchange differences arising on translating the net assets of foreign operations (net) | 1,476.2 | 96,211.5 | (93,822.8 | ) | 16,758.7 | 290.7 | 22,007.8 | (20,414.1 | ) | 96,211.5 | ||||||||||||||||||||||
Net change in translation reserve – equity accounted investees (net) | 63.1 | 4,110.5 | (3,047.0 | ) | 290.0 | 13.6 | 1,026.1 | (586.1 | ) | 4,110.5 | ||||||||||||||||||||||
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Balance at the end | US$ | 757.8 | Rs. | 49,388.8 | Rs. | (50,933.2 | ) | Rs. | 45,936.6 | US$ | 679.5 | Rs. | 51,422.5 | Rs. | 28,388.6 | Rs. | 49,388.8 | |||||||||||||||
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(b) | The movement of gain/(loss) on Equity instruments held as fair value through other comprehensive income (FVTOCI) is as follows: |
Year ended March 31, | ||||||||||||||||
2020 | 2020 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Balance at the beginning | US$ | 23.6 | Rs. | 1,785.5 | Rs. | — | Rs. | — | ||||||||
Effect of transition to IFRS 9 | — | — | 1,392.8 | |||||||||||||
Other comprehensive income for the year | (18.1 | ) | (1,369.3 | ) | 438.1 | — | ||||||||||
Income tax relating to gain/(loss) recognized on equity investments, where applicable | (0.3 | ) | (25.2 | ) | 3.9 | — | ||||||||||
Profit on sale of equity investments reclassified to retained earnings | — | — | (49.3 | ) | — | |||||||||||
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US$ | 5.2 | Rs. | 391.0 | Rs. | 1,785.5 | Rs. | — | |||||||||
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(c) | The movement ofAvailable-for-sale investments reserve is as follows: |
Year ended March 31, | ||||||||||||||||
2018 | 2018 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Balance at the beginning | US$ | 16.3 | Rs.1,062.8 | Rs.274.6 | Rs.280.6 | |||||||||||
Gain/(loss) arising on revaluation ofavailable-for-sale investments (net) | 8.6 | 565.8 | 905.6 | 23.9 | ||||||||||||
Income tax relating to gain/loss arising on revaluation ofavailable-for-sale investments (net), where applicable | (0.2 | ) | (16.2 | ) | (16.0 | ) | (16.6 | ) | ||||||||
Cumulative (gain)/loss reclassified to profit or loss onavailable-for-sale investments (net) | (2.6 | ) | (169.2 | ) | (143.9 | ) | (22.0 | ) | ||||||||
Income tax relating to cumulative gain/loss reclassified to profit or loss onavailable-for-sale investments (net), where applicable | 0.7 | 45.2 | 42.5 | 7.6 | ||||||||||||
Net change in share ofavailable-for-sale investments reserves – equity accounted investees (net) | (1.0 | ) | (66.3 | ) | — | 1.1 | ||||||||||
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Balance at the end | US$ | 21.8 | Rs.1,422.1 | Rs.1,062.8 | Rs.274.6 | |||||||||||
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Year ended March 31, | ||||||||
2019 | 2018 | |||||||
(In millions) | ||||||||
Balance at the beginning | Rs.1,422.1 | Rs.1,062.8 | ||||||
Effect of transition to IFRS 9 | (1,422.1 | ) | ||||||
Gain/(loss) arising on revaluation of available-for-sale investments (net) | — | 565.8 | ||||||
Income tax relating to gain/loss arising on revaluation of available-for-sale investments (net), where applicable | — | (16.2 | ) | |||||
Cumulative (gain)/loss reclassified to profit or loss on available-for-sale investments (net) | — | (169.2 | ) | |||||
Income tax relating to cumulative gain/loss reclassified to profit or loss on available-for-sale investments (net), where applicable | — | 45.2 | ||||||
Net change in share of available-for-sale investments reserves – equity accounted investees (net) | — | (66.3 | ) | |||||
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Balance at the end | Rs. | — | Rs. | 1,422.1 | ||||
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The movement of Hedging reserve is as follows: |
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Balance at the beginning | US$ | (3,268.7 | ) | Rs. | (213,038.1 | ) | Rs. | (84,860.0 | ) | Rs. | (88,603.2 | ) | US$ | (801.8 | ) | Rs. | (60,668.2 | ) | Rs. | (39,224.0 | ) | Rs. | (206,143.3 | ) | ||||||||
Effect of transition to IFRS 9 | — | — | (2,819.8 | ) | — | |||||||||||||||||||||||||||
Gain/(loss) recognized on cash flow hedges | 1,603.6 | 104,519.0 | (266,264.8 | ) | (12,677.6 | ) | (305.7 | ) | (23,130.0 | ) | (89,824.6 | ) | 104,219.6 | |||||||||||||||||||
Income tax relating to gain/loss recognized on cash flow hedges | (301.0 | ) | (19,616.7 | ) | 50,952.5 | 1,982.5 | 56.9 | 4,305.8 | 16,974.8 | (19,598.8 | ) | |||||||||||||||||||||
(Gain)/loss reclassified to profit or loss | 1,573.3 | 102,536.7 | 108,817.5 | 18,047.9 | 662.2 | 50,102.9 | 79,903.6 | 101,603.1 | ||||||||||||||||||||||||
Income tax relating to gain/loss reclassified to profit or loss | (298.9 | ) | (19,482.0 | ) | (21,683.3 | ) | (3,609.6 | ) | (119.8 | ) | (9,064.7 | ) | (15,181.1 | ) | (19,304.6 | ) | ||||||||||||||||
Amount reclassed from Hedge reserve to Inventory on maturity of inventory hedges | (56.8 | ) | (4,299.9 | ) | (12,959.4 | ) | — | |||||||||||||||||||||||||
Income tax on amount reclassed from Hedge reserve to Inventory on maturity of inventory hedges | 10.8 | 817.0 | 2,462.3 | — | ||||||||||||||||||||||||||||
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Balance at the end | US$ | (691.7 | ) | Rs. | (45,081.1 | ) | Rs. | (213,038.1 | ) | Rs. | (84,860.0 | ) | US$ | (554.2 | ) | Rs. | (41,937.1 | ) | Rs. | (60,668.2 | ) | Rs. | (39,224.0 | ) | ||||||||
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Of the above balance related to: | ||||||||||||||||||||||||||||||||
Continued hedges | (509.0 | ) | (38,520.7 | ) | (56,981.5 | ) | (36,363.2 | ) | ||||||||||||||||||||||||
Discontinued hedges | (45.2 | ) | (3,416.4 | ) | (3,686.7 | ) | (2,860.8 | ) |
(e) | The movement of Cost of Hedging reserve is as follows: |
Year ended March 31, | ||||||||||||||||
2020 | 2020 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Balance at the beginning | US$ | (38.0 | ) | Rs. | (2,873.9 | ) | Rs. | (4,473.1 | ) | Rs. | (6,704.6 | ) | ||||
Effect of transition to IFRS 9 | — | — | 204.8 | — | ||||||||||||
Gain/(loss) recognized on cash flow hedges | (32.3 | ) | (2,453.4 | ) | (746.6 | ) | 1,873.5 | |||||||||
Income tax relating to gain/loss recognized on cash flow hedges | 7.9 | 600.6 | 207.5 | (398.2 | ) | |||||||||||
(Gain)/loss reclassified to profit or loss | (12.5 | ) | (942.4 | ) | 659.3 | 933.6 | ||||||||||
Income tax relating to gain/loss reclassified to profit or loss | 2.2 | 167.0 | (125.3 | ) | (177.4 | ) | ||||||||||
Amounts removed from hedge reserve and recognized in inventory | 17.5 | 1,324.9 | 1,727.8 | — | ||||||||||||
Income tax related to amounts removed from hedge reserve and recognized in inventory | (3.3 | ) | (251.5 | ) | (328.3 | ) | — | |||||||||
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Balance at the end | US$ | (58.5 | ) | Rs. | (4,428.7 | ) | Rs. | (2,873.9 | ) | Rs. | (4,473.1 | ) | ||||
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Of the above balance related to | ||||||||||||||||
Continued hedges | (57.3 | ) | (4,338.6 | ) | (2,873.9 | ) | (4,196.2 | ) | ||||||||
Discontinued hedges | (1.2 | ) | (90.1 | ) | — | (276.9 | ) |
The movement of gain/(loss) on debt instruments held as fair value through other comprehensive income (FVTOCI) is as follows: |
Year ended March 31, | ||||||||||||||||
2020 | 2020 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Balance at the beginning | US$ | — | Rs. | — | Rs. | — | Rs. | — | ||||||||
Other comprehensive income for the year | 18.0 | 1,362.4 | — | — | ||||||||||||
Income tax relating to gain/(loss) recognized on equity investments, where applicable | (6.3 | ) | (476.1 | ) | — | — | ||||||||||
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Balance at the end | US$ | 11.7 | Rs. | 886.3 | Rs. | — | Rs. | — | ||||||||
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(g) | Summary of Other components of equity: |
As at March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Currency translation reserve | US$ | 757.8 | Rs. | 49,388.8 | Rs. | (50,933.2 | ) | Rs. | 45,936.6 | US$ | 679.5 | Rs. | 51,422.5 | Rs. | 28,388.6 | Rs. | 49,388.8 | |||||||||||||||
Available-for-sale investments reserve | 21.8 | 1,422.1 | 1,062.8 | 274.6 | — | — | — | 1,422.1 | ||||||||||||||||||||||||
Investments reserve | 5.2 | 391.0 | 1,785.5 | — | ||||||||||||||||||||||||||||
Hedging reserve | (691.7 | ) | (45,081.1 | ) | (213,038.1 | ) | (84,860.0 | ) | (554.2 | ) | (41,937.1 | ) | (60,668.2 | ) | (39,224.0 | ) | ||||||||||||||||
Cost of hedge reserve | (58.5 | ) | (4,428.7 | ) | (2,873.9 | ) | (4,473.1 | ) | ||||||||||||||||||||||||
Debt reserve | 11.7 | 886.3 | — | — | ||||||||||||||||||||||||||||
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Total | US$ | 87.9 | Rs. | 5,729.8 | Rs. | (262,908.5 | ) | Rs. | (38,648.8 | ) | US$ | 83.7 | Rs. | 6,334.0 | Rs. | (33,368.0 | ) | Rs. | 7,113.8 | |||||||||||||
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Notes to reserves and dividends |
Additional paid-in capital
The amount received in excess of face value of the equity shares is recognisedrecognized in additional paid-in capital.
Retained earnings
Retained earnings are the profits that the Company has earned till date.
Capital redemption reserve
The Companies Act requires that where a company purchases its own shares out of free reserves or securities premium account, a sum equal to the nominal value of the shares so purchased shall be transferred to a capital redemption reserve account and details of such transfer shall be disclosed in the balance sheet. The capital redemption reserve account may be applied by the company, in paying up unissued shares of the company to be issued to shareholders of the company as fully paid bonus shares. Tata Motors Limited established this reserve pursuant to the redemption of preference shares issued in earlier years.
Debenture redemption reserve
The Companies Act requires that where a company issues debentures, it shall create a debenture redemption reserve out of profits of the companyCompany available for payment of dividend. The companyCompany is required to maintain a Debenture Redemption Reserve of 25% of the value of debentures issued, either by a public issue or on a private placement basis. The amounts credited to the debenture redemption reserve may not be utilized by the companyCompany except to redeem debentures. No DRR is required for debenture issued after August 16, 2019
Reserve for research and human resource development
In terms of Article 9 of the Act on Special Taxation Restriction in Korea, Tata Daewoo Commercial Vehicle Company Limited (TDCV, a subsidiary of Tata Motors Limited) is entitled for deferment of tax in respect of expenditures incurred on product development cost subject to fulfillment of certain conditions, by way of deduction from the taxable income, provided that TDCV appropriates an equivalent amount from “Retained Earnings” to “Reserve for Research and Human Resource Development”.
The deferment is for a period of three years and from the fourth year onwardsone-third of the reserve is offered to tax and an equal amount is then transferred from the reserve to “Retained earnings available for appropriation”.
Special reserve
The special reserve represents the reserve created by two subsidiaries of Tata Motors Limited pursuant to the Reserve Bank of India Act, 1934 (the “RBI Act”) and related regulations applicable to those companies. Under the RBI Act, anon-banking finance company is required to transfer an amount not less than 20% of its net profit to a reserve fund before declaring any dividend. Appropriation from this reserve fund is permitted only for the purposes specified by the RBI.
Earned surplus reserve
Under the Korean commercial code, TDCV is required to appropriate at least 10% of cash dividend declared each year to a legal reserve until such reserves equal to 50% of capital stock. This reserve may not be utilized for cash dividends, but may only be used to offset against future deficits, if any, or may be transferred to capital stock.
Hedge reserveReserve
Effective portion of fair value gain/(loss) on all financial insturments designated in cash flow hedge relationship are accumulated in hedge reserve.
Cost of hedge reserve
Fair value gain/(loss) attributable to cost of hedge on all financial instruments designated in cash flow hedge relationship are accumulated in cost of hedge reserve.
Dividends
The final dividend is recommended by the Board of Directors and is recorded in the books of account upon its approval by the shareholders. For the yearyears ended March 31, 20182020, 2019 and 2017,2018, considering the accumulated losses in the Tata Motors Limited (standalone,standalone financial statements, no dividend iswas permitted to be paid to the members, as per the Companies Act, 2013 and the rules framed thereunder. For
Share-based payments reserve
Share-based payments reserve represents amount of fair value, as on the year ended March 31, 2016, dividend per sharedate of Rs. 0.2grant, of unvested options and vested options not exercised till date, that have been recognized as expense in the income statement till date.
Reserve for Ordinary Shares (faceequity investments through other comprehensive income
Fair value gain / (loss) arising on equity investments that are designated as held at fair value through other comprehensive income is included here.
31. | Revenue |
Revenue consists of Rs. 2 each) and Rs. 0.3 for ‘A’ Ordinary Shares (face value of Rs. 2 each) was declared which was paid in year ended March 31, 2017.the following:
Year ended March 31, | ||||||||||||
2020 | 2020 | 2019 | ||||||||||
(In millions) | ||||||||||||
Sale of products | ||||||||||||
- Sale of vehicles | US$ | 28,924.8 | Rs. | 2,188,600.4 | Rs. | 2,576,720.5 | ||||||
- Sale of spare parts | 3,185.0 | 240,994.7 | 240,405.0 | |||||||||
- Sale of miscellaneous products | 1,225.0 | 92,686.9 | 114,449.7 | |||||||||
Sale of Services | 447.3 | 33,841.4 | 28,091.7 | |||||||||
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Total | US$ | 33,782.1 | Rs. | 2,556,123.4 | Rs. | 2,959,666.9 | ||||||
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Employee cost |
Employee cost consists of the following:
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Salaries, wages and welfare expenses | US$ | 4,149.5 | Rs. | 270,441.8 | Rs. | 255,325.7 | Rs. | 253,989.3 | US$ | 3,716.0 | Rs. | 281,172.4 | Rs. | 317,406.0 | Rs. | 270,441.8 | ||||||||||||||||
Contribution to provident fund and other funds | 493.7 | 32,183.0 | 28,262.3 | 34,128.1 | 359.5 | 27,200.4 | 28,855.1 | 32,183.0 | ||||||||||||||||||||||||
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Total | US$ | 4,643.2 | Rs. | 302,624.8 | Rs. | 283,588.0 | Rs. | 288,117.4 | US$ | 4,075.5 | Rs. | 308,372.8 | Rs. | 346,261.1 | Rs. | 302,624.8 | ||||||||||||||||
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Share based payments
Long Term Incentive Plan
A subsidiary of the Company operates a Long Term Incentive Plan (LTIP) arrangement for certain employees. The scheme provides a cash payment to the employee based on a specific number of phantom shares at grant and the share price of Tata Motors Limited at the vesting date. The cash payment is dependent on the performance of the underlying shares of Tata Motors Limited over the 3 year vesting period and continued employment at the end of the vesting period. The fair value of the awards is calculated using a Black-Scholes model at the grant date. The fair value is updated at each reporting date as the awards are accounted for as cash-settled plan. The inputs into the model are based on the Tata Motors Limited historic data, the risk-free rate and the weighted average fair value of shares, in the scheme at the reporting date. During the year ended March 31, 2016, the subsidiary company issued its final LTIP based on the share price of Tata Motors Limited.
The amount recognized in relation to the LTIP was Rs.Nil , Rs. 85.5 million, Rs. 701.391.8 million and Rs. 295.985.5 million for the years ended March 31, 2018, 20172020, 2019 and 2016,2018, respectively. The Company considers these amounts as not materialinsignificant and accordingly has not provided further disclosures as required by IFRS 2 “Share-based Payment”.
DuringEmployee Stock Options
The Company has alloted stock options to certain employees during the year ended March 31, 2017,2019, under Tata Motors Limited Employee Stock Options Scheme 2018 approved by the subsidiaryNomination and Remuneration Committee (NRC).
As per the scheme, the number of shares that will vest is conditional upon certain performance measures determined by NRC. The performance is measured over vesting period of the options granted which ranges from 3 to 5 years. The performance measures under this scheme include growth in sales, earnings and free cash flow. The options granted under this scheme are exercisable by employees till one year from date of its vesting.
The Company has launched a new long-term employment benefit scheme which provides a cash paymentgranted 7,812,427 number of options during the year ended March 31, 2019 at an exercise price of ₹ 345 /-. Option granted will vest equally each year starting from 3 years to certain employees based5 years from date of grant. Number of shares that will vest range from 0.5 to 1.5 per option granted depending on subsidiary’s performance against long-term business metrics. This new LTIP scheme has been accountedmeasures.
Year ended March 31, 2020 | Year ended March 31, 2019 | |||||||
Options outstanding at the beginning of the year | 7,812,427 | — | ||||||
Granted during the year | — | 7,812,427 | ||||||
Forfeited/Expired during the year | (589,530 | ) | — | |||||
Exercised during the year | — | — | ||||||
Outstanding at the end of the year | 7,222,897 | 7,812,427 | ||||||
Maximum/Minimum number of shares to be issued for outstanding options (conditional on performance measures) | 10,834,346/3,611,449 | 11,718,641/3,906,214 |
The Company recognized an amount of Rs. 47.0 million and Rs. 84.4 million in employee cost for in accordance with IAS 19 “Employee benefits”.Employee Stock Options for the years ended March 31, 2020 and March 31, 2019, respectively.
The following assumptions were used for calculation of fair value of options granted during the year ended March 31, 2019.
Estimate | ||||
Assumption factor | Year ended March 31, 2019 | |||
Risk free rate | 7%-8% | |||
Expected life of option | 4-6 years | |||
Expected volatility | 33%-37% |
Other expenses |
Other expenses consist of the following:
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Stores, spare parts and tools consumed | US$ | 339.2 | Rs. | 22,105.6 | Rs. | 24,191.1 | Rs. | 20,961.9 | US$ | 198.3 | Rs. | 15,007.1 | Rs. | 24,441.5 | Rs. | 22,105.6 | ||||||||||||||||
Freight and transportation expenses | 1,762.0 | 114,840.9 | 103,534.4 | 103,350.9 | 857.0 | 64,843.0 | 78,044.7 | 114,840.9 | ||||||||||||||||||||||||
Research and product development cost | 541.9 | 35,318.7 | 34,135.7 | 34,687.7 | 553.6 | 41,884.9 | 42,245.7 | 35,318.7 | ||||||||||||||||||||||||
Warranty and product liability expenses | 1,073.7 | 69,978.9 | 85,866.4 | 67,539.3 | 1,440.7 | 109,012.1 | 118,921.4 | 69,978.9 | ||||||||||||||||||||||||
Allowance for trade and other receivables, and finance receivables | 6.1 | 400.9 | 7,359.5 | 15,319.4 | 107.5 | 8,130.6 | 5,344.3 | 400.9 | ||||||||||||||||||||||||
Works operation and other expenses | 4,010.8 | 261,407.3 | 232,674.8 | 223,315.3 | 3,353.9 | 253,776.6 | 259,133.9 | 261,407.3 | ||||||||||||||||||||||||
Repairs to building and plant and machinery | 95.0 | 6,189.7 | 6,273.2 | 6,175.7 | 77.4 | 5,853.8 | 6,115.7 | 6,189.7 | ||||||||||||||||||||||||
Processing charges | 205.5 | 13,390.8 | 11,720.3 | 11,106.8 | 141.4 | 10,700.5 | 16,343.6 | 13,390.8 | ||||||||||||||||||||||||
Power and fuel | 200.7 | 13,080.8 | 11,598.2 | 11,436.3 | 167.2 | 12,649.5 | 15,859.3 | 13,080.8 | ||||||||||||||||||||||||
Insurance | 51.5 | 3,355.9 | 4,121.2 | 3,743.5 | 44.1 | 3,338.6 | 3,552.3 | 3,355.9 | ||||||||||||||||||||||||
Publicity | 1,376.1 | 89,685.9 | 86,986.8 | 87,684.6 | 1,006.3 | 76,142.4 | 87,296.3 | 89,685.9 | ||||||||||||||||||||||||
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Total | US$ | 9,662.5 | Rs.629,755.4 | Rs. | 608,461.6 | Rs. | 585,321.4 | US$ | 7,947.4 | Rs. | 601,339.1 | Rs. | 657,298.7 | Rs. | 629,755.4 | |||||||||||||||||
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Other income/(loss) (net) |
Other income/(loss) (net) consist of the following:
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Miscellaneous income | US$ | 675.2 | | Rs. | 44,007.6 | Rs. | 28,475.0 | Rs. | 21,907.7 | US$ | 197.7 | Rs. | 14,958.0 | Rs. | 16,941.8 | Rs. | 32,508.0 | |||||||||||||||
Incentives | 128.7 | 9,738.9 | 10,035.3 | 11,499.6 | ||||||||||||||||||||||||||||
Gain / (Loss) on change in fair value of commodity derivatives | 32.9 | 2,146.3 | 9,184.0 | (11,555.3 | ) | (91.0 | ) | (6,881.8 | ) | 847.5 | 2,146.3 | |||||||||||||||||||||
Dividend income and income on mutual funds | 2.4 | 157.7 | 105.1 | 446.7 | 2.8 | 211.4 | 172.8 | 157.7 | ||||||||||||||||||||||||
Gain/(loss) on sale, change in fair value ofavailable-for-sale investments (net) | 24.0 | 1,561.7 | 1,826.0 | 1,813.9 | — | — | — | 1,561.7 | ||||||||||||||||||||||||
Profit on sale of investments measured at FVTPL | 24.8 | 1,873.4 | 1,286.1 | — | ||||||||||||||||||||||||||||
Profit on sale of investment in a subsidiary company (note below) | — | — | 3,769.8 | — | ||||||||||||||||||||||||||||
MTM on investments measured at FVTPL | (51.4 | ) | (3,890.5 | ) | 2,385.4 | — | ||||||||||||||||||||||||||
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Total | US$ | 734.5 | Rs. | 47,873.3 | Rs. | 39,590.1 | Rs. | 12,613.0 | US$ | 211.6 | Rs. | 16,009.4 | Rs. | 35,438.7 | Rs. | 47,873.3 | ||||||||||||||||
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Note:
During the year ended March 31, 2019, the Company has sold investment in TAL Manufacturing Solutions Limited to Tata Advanced Systems Ltd.
Interest expense |
Interest expense (net) consists of the following:
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Gross interest expense | US$ | 910.0 | Rs. | 59,308.2 | Rs. | 55,306.7 | Rs. | 60,167.8 | US$ | 1,148.5 | Rs. | 86,899.6 | Rs. | 72,714.5 | Rs. | 59,734.5 | ||||||||||||||||
Less: Interest capitalized * | (198.6 | ) | (12,943.2 | ) | (12,941.0 | ) | (12,255.2 | ) | (189.6 | ) | (14,346.5 | ) | (15,128.5 | ) | (12,943.2 | ) | ||||||||||||||||
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Total | US$ | 711.4 | Rs. | 46,365.0 | Rs. | 42,365.7 | Rs. | 47,912.6 | US$ | 958.9 | Rs. | 72,553.1 | Rs. | 57,586.0 | Rs. | 46,791.3 | ||||||||||||||||
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* | Represents borrowing costs capitalized during the year on qualifying assets (property plant and equipment and product development). |
The weighted average rate for capitalization of interest relating to general borrowings was approximately 4.3 %, 4.4%5.5%, 5.4% and 6.3%4.3% for the years ended March 31, 2018, 20172020, 2019 and 2016,2018, respectively.
Employee benefits |
Defined Benefit Plan
Pension and post retirement medical plans
The following table sets out the funded and unfunded status and the amounts recognized in the financial statements for the pension and the post retirement medical plans in respect of Tata Motors, its Indian subsidiaries and joint operations:
For the year ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
As at March 31, | Pension benefits | Post retirement medical benefits | ||||||||||||||||||||||||||||||||||||||||||||||
Pension benefits | Post retirement medical benefits | 2020 | 2020 | 2019 | 2020 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2018 | 2018 | 2017 | (In millions) | ||||||||||||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||||||
Change in defined benefit obligations : | ||||||||||||||||||||||||||||||||||||||||||||||||
Defined benefit obligation, beginning of the year | US$ | 150.5 | Rs. | 9,807.6 | Rs. | 9,238.6 | US$ | 28.2 | Rs. | 1,838.6 | Rs. | 1,600.5 | US$ | 154.4 | Rs. | 11,682.6 | Rs. | 10,247.9 | US$ | 20.2 | Rs. | 1,534.0 | Rs. | 1,540.5 | ||||||||||||||||||||||||
Current service cost | 11.1 | 722.5 | 657.1 | 1.6 | 102.0 | 81.9 | 10.9 | 827.7 | 746.3 | 1.1 | 81.7 | 80.4 | ||||||||||||||||||||||||||||||||||||
Interest cost | 10.5 | 687.6 | 695.1 | 2.0 | 130.6 | 123.3 | 11.4 | 859.5 | 757.0 | 1.5 | 113.0 | 115.1 | ||||||||||||||||||||||||||||||||||||
Remeasurements (gains) / losses | ||||||||||||||||||||||||||||||||||||||||||||||||
Actuarial (gains) / losses arising from changes in demographic assumptions | (2.5 | ) | (160.3 | ) | (9.6 | ) | (1.7 | ) | (114.0 | ) | 21.7 | 0.5 | 35.5 | (11.9 | ) | (0.1 | ) | (6.7 | ) | — | ||||||||||||||||||||||||||||
Actuarial (gains) / losses arising from changes in financial assumptions | 3.5 | 228.8 | 160.1 | (0.4 | ) | (27.0 | ) | 218.2 | 4.9 | 371.2 | 141.9 | 1.3 | 99.1 | 81.1 | ||||||||||||||||||||||||||||||||||
Actuarial (gains) / losses arising from changes in experience adjustments | 1.6 | 105.0 | (65.0 | ) | (4.4 | ) | (289.6 | ) | (104.6 | ) | 3.3 | 246.6 | 592.7 | (0.7 | ) | (54.2 | ) | (150.3 | ) | |||||||||||||||||||||||||||||
Benefits paid from plan assets | (17.9 | ) | (1,168.5 | ) | (778.9 | ) | — | — | — | (11.0 | ) | (830.3 | ) | (713.1 | ) | — | — | — | ||||||||||||||||||||||||||||||
Benefits paid directly by employer | (0.9 | ) | (59.8 | ) | (89.8 | ) | (1.5 | ) | (100.1 | ) | (102.4 | ) | (0.8 | ) | (58.9 | ) | (58.2 | ) | (1.0 | ) | (77.1 | ) | (94.2 | ) | ||||||||||||||||||||||||
Past service cost—Plan amendments | 1.3 | 85.0 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Past service cost plan amendment | (0.7 | ) | (51.7 | ) | 3.9 | — | — | (19.9 | ) | |||||||||||||||||||||||||||||||||||||||
Curtailment | — | 0.3 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Acquisition/(Divestment) | — | 2.1 | (23.9 | ) | — | — | (18.7 | ) | ||||||||||||||||||||||||||||||||||||||||
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Defined benefit obligation, end of the year | US$ | 157.2 | Rs. | 10,247.9 | Rs. | 9,807.6 | US$ | 23.8 | Rs. | 1,540.5 | Rs. | 1,838.6 | US$ | 172.9 | Rs. | 13,084.6 | Rs. | 11,682.6 | US$ | 22.3 | Rs. | 1,689.8 | Rs. | 1,534.0 | ||||||||||||||||||||||||
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Change in plan assets: | ||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of plan assets, beginning of the year | US$ | 129.2 | Rs. | 8,417.8 | Rs. | 7,996.9 | US$ | — | Rs. | — | Rs. | — | US$ | 135.6 | Rs. | 10,250.4 | Rs. | 9,060.4 | US$ | — | Rs. | — | Rs. | — | ||||||||||||||||||||||||
Interest income | 9.7 | 633.3 | 600.5 | — | — | — | 10.6 | 804.5 | 716.0 | — | — | — | ||||||||||||||||||||||||||||||||||||
Remeasurements gains / (losses) | ||||||||||||||||||||||||||||||||||||||||||||||||
Return on plan assets, (excluding amount included in net Interest cost) | (0.4 | ) | (26.9 | ) | 264.1 | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Return on plan assets, (excluding amount included in net Interest Cost) | (2.4 | ) | (180.4 | ) | 27.0 | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Employer’s contributions | 18.5 | 1,204.7 | 335.2 | — | — | — | 16.4 | 1,238.0 | 1,172.6 | — | — | — | ||||||||||||||||||||||||||||||||||||
Benefits paid | (17.9 | ) | (1,168.5 | ) | (778.9 | ) | — | — | — | (11.0 | ) | (830.3 | ) | (713.1 | ) | — | — | — | ||||||||||||||||||||||||||||||
Acquisition/(Divestment) | — | — | (12.5 | ) | ||||||||||||||||||||||||||||||||||||||||||||
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Fair value of plan assets, end of the year | US$ | 139.1 | Rs. | 9,060.4 | Rs. | 8,417.8 | US$ | — | Rs. | — | Rs. | — | US$ | 149.2 | Rs. | 11,282.2 | Rs. | 10,250.4 | US$ | — | Rs. | — | Rs. | — | ||||||||||||||||||||||||
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As at March 31, | As at March 31, | |||||||||||||||||||||||||||||||||||||||||||||||
Pension benefits | Post retirement medical benefits | Pension benefits | Post retirement medical benefits | |||||||||||||||||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2018 | 2018 | 2017 | 2020 | 2020 | 2019 | 2020 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||
Amount recognized in the balance sheet consists of: | ||||||||||||||||||||||||||||||||||||||||||||||||
Present value of defined benefit obligation | US$ | 157.2 | Rs. | 10,247.9 | Rs. | 9,807.6 | US$ | 23.8 | Rs. | 1,540.5 | Rs. | 1,838.6 | US$ | 172.9 | Rs. | 13,084.6 | Rs. | 11,682.6 | US$ | 22.3 | Rs. | 1,689.8 | Rs. | 1,534.0 | ||||||||||||||||||||||||
Fair value of plan assets | 139.1 | 9,060.4 | 8,417.8 | — | — | — | 149.1 | 11,282.2 | 10,250.4 | — | — | — | ||||||||||||||||||||||||||||||||||||
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Net liability | US$ | (18.1 | ) | Rs. | (1,187.5 | ) | Rs. | (1,389.8 | ) | US$ | (23.8 | ) | Rs. | (1,540.5 | ) | Rs. | (1,838.6 | ) | US$ | (23.8 | ) | Rs. | (1,802.4 | ) | Rs. | (1,432.2 | ) | US$ | (22.3 | ) | Rs. | (1,689.8 | ) | Rs. | (1,534.0 | ) | ||||||||||||
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Amounts in the balance sheet: | ||||||||||||||||||||||||||||||||||||||||||||||||
Non–current assets | US$ | 0.2 | Rs. | 15.7 | 65.5 | US$ | — | Rs. | — | Rs. | — | US$ | 0.3 | Rs. | 21.1 | Rs. | 16.4 | US$ | — | Rs. | — | Rs. | — | |||||||||||||||||||||||||
Non–current liabilities | (16.3 | ) | (1,069.8 | ) | (1,455.3 | ) | (22.0 | ) | (1,420.1 | ) | (1,838.6 | ) | (24.1 | ) | (1,823.5 | ) | (1,448.6 | ) | (22.3 | ) | (1,689.8 | ) | (1,534.0 | ) | ||||||||||||||||||||||||
Liabilities for assets classified as held for sale | (2.0 | ) | (133.4 | ) | — | (1.8 | ) | (120.4 | ) | |||||||||||||||||||||||||||||||||||||||
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Net liability | US$ | (18.1 | ) | Rs. | (1,187.5 | ) | Rs. | (1,389.8 | ) | US$ | (23.8 | ) | Rs. | (1,540.5 | ) | Rs. | (1,838.6 | ) | US$ | (23.8 | ) | Rs. | (1,802.4 | ) | Rs. | (1,432.2 | ) | US$ | (22.3 | ) | Rs. | (1,689.8 | ) | Rs. | (1,534.0 | ) | ||||||||||||
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Total amount recognized in other comprehensive income consists of:
As at March 31, | ||||||||||||||||||||||||||||||||
Pension benefits | Post retirement medical benefits | |||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2018 | 2018 | 2017 | 2016 | |||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Remeasurements (gains) /losses | US$ | 36.4 | Rs. | 2,372.5 | Rs. | 2,172.1 | Rs. | 2,350.7 | US$ | (0.8) | Rs. | (51.7 | ) | Rs. | 378.9 | Rs. | 243.6 | |||||||||||||||
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US$ | 36.4 | Rs. | 2,372.5 | Rs. | 2,172.1 | Rs. | 2,350.7 | US$ | (0.8) | Rs. | (51.7 | ) | Rs. | 378.9 | Rs. | 243.6 | ||||||||||||||||
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As at March 31, | ||||||||||||||||||||||||||||||||
Pension benefits | Post retirement medical benefits | |||||||||||||||||||||||||||||||
2020 | 2020 | 2019 | 2018 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Remeasurements (gains) / losses | US$ | 51.6 | Rs. | 3,901.9 | Rs. | 3,068.2 | Rs. | 2,372.5 | US$ | (1.1 | ) | Rs. | (82.7 | ) | Rs. | (120.9 | ) | Rs. | (51.7 | ) | ||||||||||||
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US$ | 51.6 | Rs. | 3,901.9 | Rs. | 3,068.2 | Rs. | 2,372.5 | US$ | (1.1 | ) | Rs. | (82.7 | ) | Rs. | (120.9 | ) | Rs. | (51.7 | ) | |||||||||||||
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Information for funded plans with a defined benefit obligation in excess of plan assets:
As at March 31, | As at March 31, | |||||||||||||||||||||||
Pension benefits | Pension benefits | |||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Defined benefit obligation | US$ | 21.6 | Rs. | 1,410.8 | Rs. | 7,953.7 | US$ | 150.9 | Rs. | 11,419.8 | Rs. | 9,837.0 | ||||||||||||
Fair value of plan assets | US$ | 19.4 | Rs. | 1,262.9 | Rs. | 7,575.5 | US$ | 144.3 | Rs. | 10,916.0 | Rs. | 9,612.3 |
Information for funded plans with a defined benefit obligation less than plan assets:
As at March 31, | As at March 31, | |||||||||||||||||||||||
Pension benefits | Pension benefits | |||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Defined benefit obligation | US$ | 119.4 | Rs. | 7,781.8 | Rs. | 776.9 | US$ | 4.6 | Rs. | 345.1 | Rs. | 621.7 | ||||||||||||
Fair value of plan assets | US$ | 119.7 | Rs. | 7,797.5 | Rs. | 842.3 | US$ | 4.8 | Rs. | 366.1 | Rs. | 638.1 |
Information for unfunded plans:
As at March 31, | ||||||||||||||||||||||||
Pension benefits | Post retirement medical benefits | |||||||||||||||||||||||
2018 | 2018 | 2017 | 2018 | 2018 | 2017 | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Defined benefit obligation | US$ | 16.2 | Rs. | 1,055.3 | Rs. | 1,077.0 | US$ | 23.8 | Rs. | 1,540.5 | Rs. | 1,838.6 |
As at March 31, | ||||||||||||||||||||||||
Pension benefits | Post retirement medical benefits | |||||||||||||||||||||||
2020 | 2020 | 2019 | 2020 | 2020 | 2019 | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Defined benefit obligation | US$ | 17.4 | Rs. | 1,319.7 | Rs. | 1,223.9 | US$ | 22.3 | Rs. | 1,689.8 | Rs. | 1,534.0 |
Net pension and post retirement medical cost consist of the following components:
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension benefits | Post retirement medical benefits | Pension benefits | Post retirement medical benefits | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Service cost | US$ | 11.1 | Rs. | 722.5 | Rs. | 657.1 | Rs. | 642.6 | US$ | 1.6 | Rs. | 102.0 | Rs. | 81.9 | Rs. | 76.8 | US$ | 10.9 | Rs. | 827.7 | Rs. | 746.3 | Rs. | 722.5 | US$ | 1.1 | 81.7 | Rs. | 80.4 | Rs. | 102.0 | |||||||||||||||||||||||||||||||||
Past Service cost—Plan amendment | 1.3 | 85.0 | — | — | — | — | — | — | (0.7 | ) | (51.7 | ) | 3.9 | 85.0 | — | — | (19.9 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||
Net interest cost / (income) | 0.8 | 54.3 | 94.6 | 68.6 | 2.0 | 130.6 | 123.3 | 121.8 | 0.7 | 55.0 | 41.0 | 54.3 | 1.5 | 113.0 | 115.1 | 130.6 | ||||||||||||||||||||||||||||||||||||||||||||||||
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Net periodic cost | US$ | 13.2 | Rs. | 861.8 | Rs. | 751.7 | Rs. | 711.2 | US$ | 3.6 | Rs. | 232.6 | Rs. | 205.2 | Rs. | 198.6 | US$ | 10.9 | Rs. | 831.0 | Rs. | 791.2 | Rs. | 861.8 | US$ | 2.6 | Rs. | 194.7 | Rs. | 175.6 | Rs. | 232.6 | ||||||||||||||||||||||||||||||||
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Other changes in plan assets and benefit obligation recognized in other comprehensive income.
Year ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended March 31, | Pension benefits | Post retirement medical benefits | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension benefits | Post retirement medical benefits | 2020 | 2020 | 2019 | 2018 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2018 | 2018 | 2017 | 2016 | (In millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Remeasurements (gains) / losses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Return on plan assets, (excluding amount included in net Interest expense) | US$ | 0.4 | Rs. | 26.9 | Rs. | (264.1 | ) | Rs. | (203.4 | ) | US$ | — | Rs. | — | Rs. | — | Rs. | — | US$ | 2.4 | Rs. | 180.4 | Rs. | (27.0 | ) | Rs. | 26.9 | US$ | — | Rs. | — | Rs. | — | Rs. | — | |||||||||||||||||||||||||||||
Actuarial (gains) / losses arising from changes in demographic assumptions | (2.5 | ) | (160.3 | ) | (9.6 | ) | 14.6 | (1.7 | ) | (114.0 | ) | 21.7 | — | 0.5 | 35.5 | (11.9 | ) | (160.3 | ) | (0.1 | ) | (6.7 | ) | — | (114.0 | ) | ||||||||||||||||||||||||||||||||||||||
Actuarial (gains) / losses arising from changes in financial assumptions | 3.5 | 228.8 | 160.1 | 38.7 | (0.4 | ) | (27.0 | ) | 218.2 | 78.4 | 4.9 | 371.2 | 141.9 | 228.8 | 1.3 | 99.1 | 81.1 | (27.0 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Actuarial (gains) / losses arising from changes in experience adjustments on plan liabilities | 1.6 | 105.0 | (65.0 | ) | 61.7 | (4.4 | ) | (289.6 | ) | (104.6 | ) | (165.3 | ) | 3.3 | 246.6 | 592.7 | 105.0 | (0.7 | ) | (54.2 | ) | (150.3 | ) | (289.6 | ) | |||||||||||||||||||||||||||||||||||||||
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Total recognized in other comprehensive income | US$ | 3.0 | Rs. | 200.4 | Rs. | (178.6 | ) | Rs. | (88.4 | ) | US$ | (6.5 | ) | Rs. | (430.6 | ) | Rs. | 135.3 | Rs. | (86.9 | ) | US$ | 11.1 | Rs. | 833.7 | Rs. | 695.7 | Rs. | 200.4 | US$ | 0.5 | Rs. | 38.2 | Rs. | (69.2 | ) | Rs. | (430.6 | ) | |||||||||||||||||||||||||
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Total recognized in income statement and statement of other comprehensive income | US$ | 16.2 | Rs. | 1,062.2 | Rs. | 573.1 | Rs. | 622.8 | US$ | (2.9 | ) | Rs. | (198.0 | ) | Rs. | 340.5 | Rs. | 111.7 | US$ | 22.0 | Rs. | 1,664.7 | Rs. | 1,486.9 | Rs. | 1,062.2 | US$ | 3.1 | Rs. | 232.9 | Rs. | 106.4 | Rs. | (198.0 | ) | |||||||||||||||||||||||||||||
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The assumptions used in accounting for the pension and post retirement medical plans are set out below:
As at March 31, | As at March 31, | |||||||||||||||||||||||||||||
Pension benefits | Post retirement medical benefits | Pension benefits | Post retirement medical benefits | |||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2018 | 2017 | 2016 | 2020 | 2019 | 2018 | 2020 | 2019 | 2018 | |||||||||||||||||||
Discount rate | 7.50% - 8.00% | 6.75% - 7.50% | 6.75% - 8.00% | 8.00% | 7.30% | 8.00% | 6.10% -6.90% | 6.75% - 7.70% | 7.50% - 8.00% | 6.90 | % | 7.60 | % | 8.00 | % | |||||||||||||||
Rate of increase in compensation level of covered employees | 5.00% - 12.00% | 4.00% - 11.00% | 5.00% - 12.00% | NA | NA | NA | 5.00% - 10.00% | 5.75% - 12.00% | 5.00% - 12.00% | NA | NA | NA | ||||||||||||||||||
Increase in health care cost | NA | NA | NA | 6.00% | 6.00% | 6.00% | NA | NA | NA | 6.00 | % | 6.00 | % | 6.00 | % |
Plan Assets
The fair value of Company’s pension plan asset as of March 31, 20182020 and 20172019 by category are as follows:
Pension benefits | Pension benefits | |||||||||||||||
As at March 31 | Plan assets as of March 31 | |||||||||||||||
2018 | 2017 | 2020 | 2019 | |||||||||||||
Asset category: | ||||||||||||||||
Cash and cash equivalents | 6.0 | % | 1.0 | % | 5.8 | % | 6.5 | % | ||||||||
Debt instruments (quoted) | 68.4 | % | 72.0 | % | 67.3 | % | 66.9 | % | ||||||||
Debt instruments (unquoted) | 0.3 | % | 5.0 | % | 0.7 | % | 0.9 | % | ||||||||
Equity instruments (quoted) | 1.7 | % | 1.0 | % | 2.6 | % | 2.6 | % | ||||||||
Deposits with Insurance companies | 23.6 | % | 21.0 | % | 23.6 | % | 23.1 | % | ||||||||
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100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||
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The Company’s policy is driven by considerations of maximizing returns while ensuring credit quality of the debt instruments. The asset allocation for plan assets is determined based on investment criteria prescribed under the Indian Income Tax Act, 1961, and is also subject to other exposure limitations. The Company evaluates the risks, transaction costs and liquidity for potential investments. To measure plan asset performance, the Company compares actual returns for each asset category with published bench marks.
The weighted average duration of the defined benefit obligation as at March 31, 20182020 is 14.5113.97 years (2017(2019 : 16.0614.41 years)
The Company expects to contribute Rs.856.3Rs. 1,027.8 million to the funded pension plans in Fiscal 2019.2021.
The table below outlines the effect on the service cost, the interest cost and the defined benefit obligation in the event of a decrease/increase of 1% in the assumed rate of discount rate, salary escalation and health care cost:
Assumption | Change in assumption | Impact on defined benefit | Impact on service cost and | |||
Discount rate | Increase by 1% | Decrease by Rs.1,185.2 million | Decrease by Rs.232.6 million | |||
Decrease by 1% |
Increase by |
Increase by | ||||
Salary escalation rate | Increase by 1%
| Increase by | Increase by | |||
Decrease by | Decrease by Rs.956.7 million | Decrease by Rs.206.3 million | ||||
Health care cost | Increase by 1%
| Increase by | Increase by | |||
Decrease by | Decrease by Rs.152.6 million | Decrease by Rs.40.3 million |
Provident Fund
The following tables set out the funded status of the defined benefit provident fund plan of Tata Motors limited and the amounts recognized in the Company’s financial statements as at March 31, 2020.
(In millions) | ||||||||
Year ended March 31, | ||||||||
Change in benefit obligations : | 2020 | 2020 | ||||||
Defined benefit obligations at the beginning | US$ | 488.2 | Rs. | 36,939.2 | ||||
Service cost | 17.7 | 1,339.9 | ||||||
Employee contribution | 40.6 | 3,073.4 | ||||||
Acquisitions (credit) / cost | (18.5 | ) | (1,403.0 | ) | ||||
Interest expense | 41.3 | 3,125.4 | ||||||
Actuarial (gains) / losses arising from changes in experience adjustments on plan liabilities | 0.6 | 45.7 | ||||||
Benefits paid | (31.1 | ) | (2,356.8 | ) | ||||
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| |||||
Defined benefit obligation, end of the year | US$ | 538.8 | Rs. | 40,763.8 | ||||
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Year ended March 31, | ||||||||
Change in plan assets: | 2020 | 2020 | ||||||
Fair value of plan assets at the beginning | US$ | 489.8 | Rs. | 37,062.8 | ||||
Acquisition Adjustment | (18.5 | ) | (1,403.0 | ) | ||||
Interest income | 42.1 | 3,187.5 | ||||||
Return on plan assets excluding amounts included in interest income | (4.0 | ) | (302.3 | ) | ||||
Contributions (employer and employee) | 58.1 | 4,396.8 | ||||||
Benefits paid | (31.1 | ) | (2,356.8 | ) | ||||
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| |||||
Fair value of plan assets, end of the year | US$ | 536.4 | Rs. | 40,585.0 | ||||
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| |||||
(In millions) | ||||||||
Amount recognized in the balance sheet consists of | As at March 31, 2020 | |||||||
Fair value of plan assets | US$ | 536.4 | Rs. | 40,585.0 | ||||
Present value of defined benefit obligation | 538.8 | 40,763.8 | ||||||
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| |||||
(2.4 | ) | (178.8 | ) | |||||
Effect of asset ceiling | (0.4 | ) | (29.9 | ) | ||||
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| |||||
Net liability | US$ | (2.8 | ) | Rs. | (208.7 | ) | ||
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Total amount recognized in other comprehensive income consists of: | As at March 31, 2020 | |||||||
Remeasurements (gains) / losses | US$ | 2.4 | Rs. | 180.3 | ||||
Net periodic cost for Provident Fund consists of the following components: | For the year ended March 31, 2020 | |||||||
Service cost | US$ | 17.7 | 1,339.9 | |||||
Net interest cost / (income) | (0.8 | ) | (62.2 | ) | ||||
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Net periodic cost | US$ | 16.9 | Rs. | 1,277.7 | ||||
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| |||||
Other changes in plan assets and benefit obligation recognized in other comprehensive income. | As at March 31, 2020 | |||||||
Remeasurements | ||||||||
Return on plan assets, (excluding amount included in net Interest expense) | US$ | 4.0 | Rs. | 302.3 | ||||
Actuarial (gains) / losses arising from changes in experience adjustments on plan liabilities | 0.6 | 45.7 | ||||||
Adjustments for limits on net asset | (2.2 | ) | (167.7 | ) | ||||
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| |||||
Total recognized in other comprehensive income | 2.4 | 180.3 | ||||||
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| |||||
Total recognized in statement of profit and loss and other comprehensive income | US$ | 19.3 | Rs. | 1,458.0 | ||||
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| |||||
The assumptions used in determining the present value obligation of the Provident Fund is set out below: |
| |||||||
Particulars | As at March 31, 2020 | |||||||
Discount rate | 6.90 | % | ||||||
Expected rate of return on plan assets | 8.20% to 8.60 | % | ||||||
Remaining term to maturity of portfolio (years) | 26.91 | |||||||
The breakup of the plan assets into various categories as at March 31, 2020 is as follows: |
| |||||||
Particulars | As at March 31, 2020 | |||||||
Central and State government bonds | 44.2 | % | ||||||
Public sector undertakings and Private sector bonds | 34.1 | % | ||||||
Others | 21.7 | % | ||||||
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100.0 | % | |||||||
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The asset allocation for plan assets is determined based on investment criteria prescribed under the relevant regulations.
The sensitivity analysis is based on a change in expected rate of return on plan assets compared to the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952, while keeping all other assumptions constant. As at March 31, 2020, the defined benefit obligation would be affected by approximately Rs. 1,686.7 million on account of a 0.50% decrease and Rs. 38.7 million on account of a 0.50% increase in the expected rate of return on plan assets.
Severance indemnity plan
Severance indemnity is a funded plan of Tata Daewoo Commercial Vehicles Limited (TDCV), a subsidiary of Tata Motors Limited.
The following table sets out, the amounts recognized in the financial statements for the severance indemnity plan.
As at March 31, | ||||||||||||||
2018 | 2018 | 2017 | ||||||||||||
(In millions) | ||||||||||||||
Change in defined benefit obligation: | ||||||||||||||
Defined benefit obligation, beginning of the year | US$ | 53.4 | Rs. | 3,482.6 | Rs. | 3,339.2 | ||||||||
Service cost | 6.9 | 452.6 | 486.2 | |||||||||||
Interest cost | 1.2 | 79.0 | 63.4 | |||||||||||
Remeasurements (gains) / losses | ||||||||||||||
Actuarial (gains) / losses arising from changes in financial assumptions | — | (1.4 | ) | (156.5 | ) | |||||||||
Actuarial (gains) / losses arising from changes in experience adjustments on plan liabilities | 2.3 | 147.0 | (195.3 | ) | ||||||||||
Benefits paid from plan assets | (1.1 | ) | (70.8 | ) | (42.6 | ) | ||||||||
Benefits paid directly by employer | (0.5 | ) | (34.9 | ) | (13.5 | ) | ||||||||
Foreign currency translation | 3.1 | 202.2 | 1.7 | |||||||||||
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Defined benefit obligation, end of the year | US$ | 65.3 | Rs. | 4,256.3 | Rs. | 3,482.6 | ||||||||
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| |||||||||
Change in plan assets: | ||||||||||||||
Fair value of plan assets, beginning of the year | US$ | 49.8 | 3,245.3 | 2,617.6 | ||||||||||
Interest income | 1.3 | 81.5 | 55.8 | |||||||||||
Remeasurements gain / (loss) | ||||||||||||||
Return on plan assets, (excluding amount included in net Interest expense) | (0.8 | ) | (51.3 | ) | (25.4 | ) | ||||||||
Employer’s contributions | 10.1 | 656.4 | 642.2 | |||||||||||
Benefits paid | (1.1 | ) | (70.8 | ) | (42.6 | ) | ||||||||
Foreign currency translation | 3.0 | 192.5 | (2.3 | ) | ||||||||||
|
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| |||||||||
Fair value of plan assets, end of the year | US$ | 62.3 | Rs. | 4,053.6 | Rs. | 3,245.3 | ||||||||
|
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|
| |||||||||
As at March 31, | ||||||||||||||
2018 | 2018 | 2017 | ||||||||||||
(In millions) | ||||||||||||||
Amount recognized in the balance sheet consist of: | ||||||||||||||
Present value of defined benefit obligation | US$ | 65.3 | Rs. | 4,256.3 | Rs. | 3,482.6 | ||||||||
Fair value of plan assets | 62.3 | 4,053.6 | 3,245.3 | |||||||||||
|
|
|
|
|
| |||||||||
Net liability | US$ | (3.0 | ) | Rs. | (202.7 | ) | Rs. | (237.3) | ||||||
|
|
|
|
|
| |||||||||
Amounts in the balance sheet: | ||||||||||||||
Non- current liabilities | US$ | (3.0) | Rs. | (202.7) | Rs. | (237.3) |
Total amount recognized in other comprehensive income for severance indemnity consists of:
For the year ended March 31, | ||||||||||||
2020 | 2020 | 2019 | ||||||||||
(In millions) | ||||||||||||
Change in defined benefit obligation: | ||||||||||||
Defined benefit obligation, beginning of the year | US$ | 55.8 | Rs. | 4,223.3 | Rs. | 4,256.3 | ||||||
Service cost | 7.0 | 527.2 | 525.2 | |||||||||
Interest cost | 0.9 | 68.1 | 111.3 | |||||||||
Remeasurements (gains) / losses – | ||||||||||||
Actuarial (gains) / losses arising from changes in financial assumptions | 1.6 | 123.8 | 368.3 | |||||||||
Actuarial (gains) / losses arising from changes in experience adjustments on plan liabilities | (7.9 | ) | (598.7 | ) | (213.4 | ) | ||||||
Benefits paid from plan assets | (17.6 | ) | (1,329.2 | ) | (738.9 | ) | ||||||
Benefits paid directly by employer | (2.3 | ) | (174.3 | ) | (89.5 | ) | ||||||
Foreign currency translation | 0.1 | 7.3 | 4.0 | |||||||||
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|
|
|
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| |||||||
Defined benefit obligation, end of the year | US$ | 37.6 | Rs. | 2,847.5 | Rs. | 4,223.3 | ||||||
|
|
|
|
|
| |||||||
Change in plan assets: | ||||||||||||
Fair value of plan assets, beginning of the year | US$ | 47.6 | 3,600.7 | 4,053.6 | ||||||||
Interest income | 0.8 | 57.6 | 109.7 | |||||||||
Remeasurements gain / (loss) | ||||||||||||
Return on plan assets, (excluding amount included in net Interest expense) | (0.2 | ) | (15.2 | ) | (59.9 | ) | ||||||
Employer’s contributions | — | — | 219.7 | |||||||||
Benefits paid | (17.6 | ) | (1,329.2 | ) | (738.9 | ) | ||||||
Foreign currency translation | — | 3.4 | 16.5 | |||||||||
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|
| |||||||
Fair value of plan assets, end of the year | US$ | 30.6 | Rs. | 2,317.3 | Rs. | 3,600.7 | ||||||
|
|
|
|
|
| |||||||
As at March 31, | ||||||||||||
2020 | 2020 | 2019 | ||||||||||
(In millions) | ||||||||||||
Amount recognized in the balance sheet consist of: | ||||||||||||
Present value of defined benefit obligation | US$ | 37.6 | Rs. | 2,847.5 | Rs. | 4,223.3 | ||||||
Fair value of plan assets | 30.6 | 2,317.3 | 3,600.7 | |||||||||
|
|
|
|
|
| |||||||
Net liability | US$ | (7.0 | ) | Rs. | (530.2 | ) | Rs. | (622.6 | ) | |||
|
|
|
|
|
| |||||||
Amounts in the balance sheet: | ||||||||||||
Non- current liabilities | US$ | (7.0 | ) | Rs. | (530.2 | ) | Rs. | (622.6 | ) |
As at March 31, | ||||||||||||||||
2018 | 2018 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Remeasurements (gains) / losses | US$ | (9.4 | ) | Rs. | (611.1 | ) | Rs. | (808.0 | ) | Rs. | (481.6 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
US$ | (9.4 | ) | Rs. | (611.1 | ) | Rs. | (808.0 | ) | Rs. | (481.6 | ) | |||||
|
|
|
|
|
|
|
|
As at March 31, | ||||||||||||||||
2020 | 2020 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Remeasurements (gains) / losses | US$ | (11.3 | ) | Rs. | (856.0 | ) | Rs. | (396.3 | ) | Rs. | (611.1 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
US$ | (11.3 | ) | Rs. | (856.0 | ) | Rs. | (396.3 | ) | Rs. | (611.1 | ) | |||||
|
|
|
|
|
|
|
|
Net severance indemnity cost consist of the following components:
Year ended March 31, |
| Year ended March 31, |
| |||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Service cost | US$ | 6.9 | Rs. | 452.6 | Rs. | 486.2 | Rs. | 555.3 | US$ | 7.0 | Rs. | 527.2 | Rs. | 525.2 | Rs. | 452.6 | ||||||||||||||||
Net interest cost | (0.1 | ) | (2.5 | ) | 7.6 | 23.7 | 0.1 | 10.5 | 1.6 | (2.5 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Net periodic pension cost | US$ | 6.8 | Rs. | 450.1 | Rs. | 493.8 | Rs. | 579.0 | US$ | 7.1 | Rs. | 537.7 | Rs. | 526.8 | Rs. | 450.1 | ||||||||||||||||
|
|
|
|
|
|
|
|
Other changes in plan assets and benefit obligation recognized in other comprehensive income for severance indemnity plan:
Year ended March 31, | As at March 31, | |||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Remeasurements (gains) / losses | ||||||||||||||||||||||||||||||||
Return on plan assets, (excluding amount included in net Interest expense) | US$ | 0.8 | Rs. | 51.3 | Rs. | 25.4 | Rs. | 19.3 | US$ | 0.2 | 15.2 | Rs. | 59.9 | Rs. | 51.3 | |||||||||||||||||
Actuarial (gains) / losses arising from changes in financial assumptions | — | (1.4 | ) | (156.5 | ) | (653.2 | ) | 1.6 | 123.8 | 368.3 | (1.4 | ) | ||||||||||||||||||||
Actuarial (gains) / losses arising from changes in experience adjustments on plan liabilities | 2.3 | 147.0 | (195.3 | ) | (40.9 | ) | (7.9 | ) | (598.7 | ) | (213.4 | ) | 147.0 | |||||||||||||||||||
Actuarial (gains) / losses arising from changes in demographic assumptions | — | — | — | 33.1 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Total recognized in other comprehensive income | US$ | 3.1 | Rs. | 196.9 | Rs. | (326.4 | ) | Rs. | (641.7 | ) | US$ | (6.1 | ) | Rs. | (459.7 | ) | Rs. | 214.8 | Rs. | 196.9 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Total recognized in income statement and statement of other comprehensive income | US$ | 9.9 | Rs. | 647.0 | Rs. | 167.4 | Rs. | (62.7 | ) | |||||||||||||||||||||||
Total recognized in income statement and other comprehensive income | US$ | 1.0 | Rs. | 78.0 | Rs. | 741.6 | Rs. | 647.0 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
The assumptions used in accounting for the Severance indemnity plan is set out below:
As at March 31, | As at March 31, | |||||||||||||||||||||||
2018 | 2017 | 2016 | 2020 | 2019 | 2018 | |||||||||||||||||||
Discount rate | 2.8 | % | 2.3 | % | 1.9 | % | 1.6 | % | 2.0 | % | 2.8 | % | ||||||||||||
Rate of increase in compensation level of covered employees | 3.5 | % | 3.0 | % | 3.0 | % | 3.5 | % | 3.5 | % | 3.5 | % |
The table below outlines the effect on the service cost, the interest cost and the defined benefit obligation in the event of a decrease/increase of 1% in the assumed rate of discount rate, salary escalation rate:
Assumption | Change in assumption | Impact on defined benefit obligation | Impact on service cost and interest cost | |||||
Discount rate |
| Increase by 1% | Decrease by Rs. 303.6 million | Decrease by Rs. 104.3 million | ||||
Decrease by 1% | Increase by Rs. | Increase by Rs. 144.4 million | ||||||
Salary escalation rate | Increase by 1% | Increase by Rs. 345.2 million | Increase by Rs. 139.0 million | |||||
Decrease by 1% | Decrease by Rs.
| |||||||
|
Decrease by Rs. |
|
Severance indemnity plans asset allocation by category is as follows:
As at March 31, | ||||
2018 | 2017 | |||
Deposit with banks | 100% | 100% |
As at March 31, | ||||||||
2020 | 2019 | |||||||
Deposit with banks | 100 | % | 100 | % |
The weighted average duration of the defined benefit obligation as at March 31, 20182020 is 10.711.05 years (2017(2019 : 10.911.0 years)
The Company expects to contribute Rs.237.9Rs. 121.4 million to the funded severance indemnity plans in Fiscal 2019.2021.
Jaguar Land Rover Pension plan
Jaguar Land Rover Ltd UK, have pension arrangements providing for qualifying employees with defined benefits related to pay and service as set out in the rules of each fund.
The UK defined benefit schemes are administered by a separate fund that is legally separated from the Company. The trustees of the pension schemesscheme, are required by law to act in the interest of the fund, and of all relevant stakeholders in the scheme, and are responsible for the investment policy with regard to the assets of the schemes and all other governance matters. The board of trustees must be composed of representatives of the Company and plan participants in accordance with the plan’s regulations.
Through its defined benefit pension plans, the Company is exposed to a number of risks, the most significant of which are detailed below :below:
Asset volatility
The plan liabilities are calculated using a discount rate set with references to corporate bond yields; if plan assets under perform compared to the corporate bonds discount rate, this will create or increase a deficit. The defined benefit plans hold a significant proportion of equity type assets, which are expected to outperform corporate bonds in the long-term while providing volatility and risk in the short-term.
As the plans mature, the Company intends to reduce the level of investment risk by investing more in assets that better match the liabilities.
However, the Company believes that due to the long-term nature of the plan liabilities and the strength of the supporting group, a level of continuing equity type investments is an appropriate element of the Company’s long term strategy to manage the plans efficiently.
Changes in bond yields
A decrease in corporate bond yields will increase plan liabilities, although this is expected to be partially offset by an increase in the value of the plans’ bond holdings and interest rate hedging instruments.
Inflation risk
Some of the Company’s pension obligations are linked to inflation, and higher inflation will lead to higher liabilities (although, in most cases, caps on the level of inflationary increases are in place to protect the plan against extremehigh inflation). The plans hold a significant proportion of assets in index linked gilts, together with other inflation hedging instruments and also assets which are more looselyclosely correlated with inflation. However an increase in inflation will also increase the deficit to some degree.
Life expectancy
The majority of the plan’s obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plan’s liabilities. This is particularly significant in the UK defined benefit plans, where inflationary increases result in higher sensitivity to changes in life expectancy.
The following table sets out the disclosure pertaining to employee benefits of Jaguar Land Rover Limited
As at March 31, | As at March 31, | |||||||||||||||||||||||
Pension benefits | Pension benefits | |||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Change in defined benefit obligation: | ||||||||||||||||||||||||
Defined benefit obligation, beginning of the year | US$ | 12,376.6 | Rs. | 806,676.9 | Rs. | 731,790.6 | US$ | 10,343.8 | Rs. | 782,664.9 | Rs. | 767,800.4 | ||||||||||||
Service cost | 284.8 | 18,561.3 | 17,357.3 | 158.3 | 11,980.0 | 14,490.5 | ||||||||||||||||||
Interest cost | 315.8 | 20,584.3 | 24,107.4 | 242.2 | 18,327.9 | 19,814.7 | ||||||||||||||||||
Remeasurements (gains) / losses | ||||||||||||||||||||||||
Actuarial (gains) / losses arising from changes in demographic assumptions | (276.0 | ) | (17,990.4 | ) | (6,662.4 | ) | 7.9 | 594.9 | (4,533.1 | ) | ||||||||||||||
Actuarial (gains) / losses arising from changes in financial assumptions | (463.0 | ) | (30,177.8 | ) | 204,693.3 | (626.3 | ) | (47,390.2 | ) | 49,653.7 | ||||||||||||||
Actuarial (gains) / losses arising from changes in experience adjustments on plan liabilities | (130.2 | ) | (8,487.5 | ) | (18,672.2 | ) | (166.0 | ) | (12,563.2 | ) | 3,276.9 | |||||||||||||
Past service cost | (553.7 | ) | (36,090.1 | ) | — | |||||||||||||||||||
Plan settlement | (27.7 | ) | (1,807.6 | ) | — | |||||||||||||||||||
Past service cost/(credit) | 5.2 | 396.6 | 3,799.0 | |||||||||||||||||||||
Benefits paid | (1,295.6 | ) | (84,441.3 | ) | (19,724.2 | ) | (648.8 | ) | (49,089.1 | ) | (56,573.7 | ) | ||||||||||||
Member contributions | 5.0 | 324.8 | 175.3 | 1.8 | 133.4 | 135.8 | ||||||||||||||||||
Foreign currency translation | 1,544.2 | 100,647.8 | (126,388.2 | ) | 308.8 | 23,366.3 | (15,199.3 | ) | ||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Defined benefit obligation, end of the year | US$ | 11,780.2 | Rs. | 767,800.4 | Rs. | 806,676.9 | US$ | 9,626.9 | Rs. | 728,421.5 | Rs. | 782,664.9 | ||||||||||||
|
|
| ||||||||||||||||||||||
|
|
| ||||||||||||||||||||||
Change in plan assets: | ||||||||||||||||||||||||
Fair value of plan assets, beginning of the year | US$ | 10,562.8 | Rs. | 688,454.9 | Rs. | 678,033.0 | US$ | 9,547.4 | Rs. | 722,401.0 | Rs. | 727,378.9 | ||||||||||||
Interest Income | 286.3 | 18,661.3 | 22,617.1 | 226.5 | 17,139.1 | 19,040.2 | ||||||||||||||||||
Remeasurements gains / (losses) | ||||||||||||||||||||||||
Return on plan assets, (excluding amount included in net Interest expense) | (153.0 | ) | (9,974.6 | ) | 100,724.9 | 386.8 | 29,266.9 | 23,626.2 | ||||||||||||||||
Employer’s contributions | 376.7 | 24,554.2 | 19,899.5 | 274.8 | 20,792.9 | 24,078.1 | ||||||||||||||||||
Members contributions | 5.0 | 324.8 | 175.3 | 1.8 | 133.4 | 135.8 | ||||||||||||||||||
Plan settlement | (26.8 | ) | (1,749.5 | ) | — | |||||||||||||||||||
Benefits paid | (1,295.6 | ) | (84,441.3 | ) | (19,724.2 | ) | (648.8 | ) | (49,089.1 | ) | (56,573.7 | ) | ||||||||||||
Expenses paid | (11.9 | ) | (777.7 | ) | (789.0 | ) | (18.7 | ) | (1,416.8 | ) | (1,186.5 | ) | ||||||||||||
Foreign currency translation | 1,416.5 | 92,326.8 | (112,481.7 | ) | 328.0 | 24,816.8 | (14,098.0 | ) | ||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Fair value of plan assets, end of the year | US$ | 11,160.0 | Rs. | 727,378.9 | Rs. | 688,454.9 | US$ | 10,097.8 | Rs. | 764,044.2 | Rs. | 722,401.0 | ||||||||||||
|
|
|
|
|
| |||||||||||||||||||
As at March 31, | ||||||||||||||||||||||||
Pension benefits | ||||||||||||||||||||||||
2018 | 2018 | 2017 | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Amount recognized in the balance sheet consist of: | ||||||||||||||||||||||||
Present value of defined benefit obligation | US$ | 11,780.2 | Rs. | 767,800.4 | Rs. | 806,676.9 | ||||||||||||||||||
Fair value of plan assets | 11,160.0 | 727,378.9 | 688,454.9 | |||||||||||||||||||||
|
|
| ||||||||||||||||||||||
Net liability | US$ | (620.2 | ) | Rs. | (40,421.5 | ) | Rs. | (118,222.0 | ) | |||||||||||||||
|
|
| ||||||||||||||||||||||
Amount recognized in the balance sheet consist of: | ||||||||||||||||||||||||
Non- current assets | US$ | — | Rs. | — | Rs. | 38.1 | ||||||||||||||||||
Non -current liabilities | (620.2 | ) | (40,421.5 | ) | (118,260.1 | ) | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Net liability | US$ | (620.2 | ) | Rs. | (40,421.5 | ) | Rs. | (118,222.0 | ) | |||||||||||||||
|
|
|
The actual return on the schemes’ assets for the year ended March 31, 2020 was Rs. 46,416.8 million (2019: Rs. 42,670.4 million)
As at March 31, | ||||||||||||
Pension benefits | ||||||||||||
2020 | 2020 | 2019 | ||||||||||
(In millions) | ||||||||||||
Amount recognized in the balance sheet consist of: | ||||||||||||
Present value of defined benefit obligation | US$ | 9,626.9 | Rs. | 728,421.5 | Rs. | 782,664.9 | ||||||
Fair value of plan Assets | 10,097.8 | 764,044.2 | 722,401.0 | |||||||||
|
|
|
|
|
| |||||||
Net (liability)/Assets | US$ | 470.9 | Rs. | 35,622.7 | Rs. | (60,263.9 | ) | |||||
|
|
|
|
|
| |||||||
Amount recognized in the balance sheet consist of: | ||||||||||||
Non-current assets | US$ | 505.0 | Rs. | 38,201.4 | Rs. | — | ||||||
Non-current liabilities | (34.1 | ) | (2,578.7 | ) | (60,263.9 | ) | ||||||
|
|
|
|
|
| |||||||
Net (liability)/Assets | US$ | 470.9 | Rs. | 35,622.7 | Rs. | (60,263.9 | ) | |||||
|
|
|
|
|
|
Total amount recognized in other comprehensive income consist of:consists of :
As at March 31, | As at March 31, | |||||||||||||||||||||||||||||||
Pension benefits | Pension benefits | |||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Remeasurements (gains) / losses | US$ | 1,967.1 | Rs. | 128,212.1 | Rs. | 174,893.2 | Rs. | 96,259.4 | US$ | 850.6 | Rs. | 64,358.0 | Rs. | 152,983.4 | Rs. | 128,212.1 | ||||||||||||||||
Restriction of Pension asset (as per IFRIC 14) | (213.7 | ) | (13,928.1 | ) | (13,928.1 | ) | (13,928.1 | ) | (184.1 | ) | (13,928.1 | ) | (13,928.1 | ) | (13,928.1 | ) | ||||||||||||||||
Onerous obligation, excluding amounts included in interest expenses | (132.7 | ) | (8,650.4 | ) | (8,650.4 | ) | (8,475.1 | ) | (114.3 | ) | (8,650.4 | ) | (8,650.4 | ) | (8,650.4 | ) | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
US$ | 1,620.7 | Rs. | 105,633.6 | Rs. | 152,314.7 | Rs. | 73,856.2 | US$ | 552.2 | Rs. | 41,779.5 | Rs. | 130,404.9 | Rs. | 105,633.6 | |||||||||||||||||
|
|
|
|
|
|
|
|
Net pension and post retirement cost consist of the following components:
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||
Pension benefits | Pension benefits | |||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Current service cost | US$ | 284.8 | Rs. | 18,561.3 | Rs. | 17,357.3 | Rs. | 22,125.8 | US$ | 158.4 | Rs. | 11,980.0 | Rs. | 14,490.5 | Rs. | 18,561.3 | ||||||||||||||||
Past service cost | (553.7 | ) | (36,090.1 | ) | — | 13.8 | ||||||||||||||||||||||||||
Past service cost/(credit) | 5.2 | 396.6 | 3,799.0 | (36,090.1 | ) | |||||||||||||||||||||||||||
Administrative expenses | 11.9 | 777.7 | 789.0 | 824.5 | 18.7 | 1,416.8 | 1,186.5 | 777.7 | ||||||||||||||||||||||||
Interest cost on Onerous obligations | — | — | — | 1.0 | ||||||||||||||||||||||||||||
Plan settlement | (0.9 | ) | (58.1 | ) | — | — | — | — | — | (58.1 | ) | |||||||||||||||||||||
Net interest cost / (income) | 29.5 | 1,923.0 | 1,490.3 | 2,899.5 | ||||||||||||||||||||||||||||
Net interest cost / (income) (including onerous obligations) | 15.7 | 1,188.8 | 774.5 | 1,923.0 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Net periodic pension cost | US$ | (228.4 | ) | Rs. | (14,886.2 | ) | Rs. | 19,636.6 | Rs. | 25,864.6 | US$ | 198.0 | Rs. | 14,982.2 | Rs. | 20,250.5 | Rs. | (14,886.2 | ) | |||||||||||||
|
|
|
|
|
|
|
|
Amount recognized in other comprehensive income
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||
Pension benefits | Pension benefits | |||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Remeasurements (gains) / losses | ||||||||||||||||||||||||||||||||
Actuarial (gains) / losses arising from changes in demographic assumptions | US$ | (276.0) | Rs. | (17,990.4) | Rs. | (6,662.4) | Rs. | (3,560.2) | US$ | 7.9 | Rs. | 594.9 | Rs. | (4,533.1 | ) | Rs. | (17,990.4 | ) | ||||||||||||||
Actuarial (gains) / losses arising from changes in financial assumptions | (463.0 | ) | (30,177.8 | ) | 204,693.3 | (56,145.3 | ) | (626.3 | ) | (47,390.2 | ) | 49,653.7 | (30,177.8 | ) | ||||||||||||||||||
Actuarial (gains) / losses arising from changes in experience adjustments on plan liabilities | (130.2 | ) | (8,487.5 | ) | (18,672.2 | ) | 6,252.6 | (166.0 | ) | (12,563.2 | ) | 3,276.9 | (8,487.5 | ) | ||||||||||||||||||
Return on plan assets, (excluding amount included in net Interest expense) | 153.0 | 9,974.6 | (100,724.9 | ) | 5,079.0 | (386.8 | ) | (29,266.9 | ) | (23,626.2 | ) | 9,974.6 | ||||||||||||||||||||
Change in onerous obligation, excluding amounts included in interest expenses | — | — | (175.3 | ) | 98.6 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Total recognized in other comprehensive income | US$ | (716.2 | ) | Rs. | (46,681.1 | ) | Rs. | 78,458.5 | Rs. | (48,275.3 | ) | US$ | (1,171.2 | ) | Rs. | (88,625.4 | ) | Rs. | 24,771.3 | Rs. | (46,681.1 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Total recognized in income statement and statement of other comprehensive income | US$ | (944.6 | ) | Rs. | (61,567.3 | ) | Rs. | 98,095.1 | Rs. | (22,410.7 | ) | |||||||||||||||||||||
Total recognized in income statement and other comprehensive income | US$ | (973.2 | ) | Rs. | (73,643.2 | ) | Rs. | 45,021.8 | Rs. | (61,567.3 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
The assumptions used in accounting for the pension plans are set out below:
As at March 31, | ||||||||||||
Pension benefits | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Discount rate | 2.70 | % | 2.60 | % | 3.60 | % | ||||||
Expected rate of increase in compensation level of covered employees | 2.30 | % | 3.70 | % | 3.50 | % | ||||||
Inflation increase | 3.10 | % | 3.20 | % | 3.00 | % | ||||||
The assumed life expectations on retirement at age 65 are (years) | ||||||||||||
Retiring today : | ||||||||||||
Males | 21.3 | 21.5 | 21.5 | |||||||||
Females | 23.4 | 24.5 | 24.4 | |||||||||
Retiring in 20 years : | ||||||||||||
Males | 22.5 | 23.3 | 23.2 | |||||||||
Females | 25.1 | 26.3 | 26.2 |
As at March 31, | ||||||||||||
Pension benefits | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Discount rate | 2.4 | % | 2.4 | % | 2.7 | % | ||||||
Expected rate of increase in benefit revaluation of covered employees | 2.0 | % | 2.4 | % | 2.3 | % | ||||||
RPI Inflation rate | 2.6 | % | 3.2 | % | 3.1 | % |
Whilst salary inflation is no longer used in the calculation of the Projected Benefit Obligation or Service Cost our assumption for this, on average over the medium term, has reduced from CPI +0.5% to CPI as at March 31, 2020.
The assumed life expectations on retirement at age 65 are (years)
Retiring today : | ||||||||||||
Males | 21.0 | 21.0 | 21.3 | |||||||||
Females | 23.2 | 23.2 | 23.4 | |||||||||
Retiring in 20 years : | ||||||||||||
Males | 22.5 | 22.4 | 22.5 | |||||||||
Females | 25.2 | 25.1 | 25.1 |
For the valuation as at March 31, 2018,2020, the mortality assumptions used are the SAPS based table, in particular S2PxA tables and the Light tableTable for members of the Jaguar Executive Pension Plan.
For the Jaguar Pension Plan, scaling factorsfactor of 113%111% to 119%117% have been used for male members and scaling factorsfactor of 102%101% to 114%112% have been used for female members.
For the Land Rover Pension Scheme, scaling factor of 107% to 111% have been used for male members and scaling factor of 101% to 109% have been used for female members.
For the Jaguar Executive Pension Plan, an average scaling factor of 94% has been used for male members and an average scaling factor of 84% has been used for female members.
For the valuation as at March 31, 2019, the mortality assumptions used are the SAPS table, in particular S2PxA tables and the Light Table for members of the Jaguar Executive Pension Plan. For the Jaguar Pension Plan, scaling factor of 112% to 118% have been used for male members and scaling factor of 101% to 112% have been used for female members. For the Land Rover Pension Scheme, scaling factorsfactor of 108%107% to 113%112% have been used for male members and scaling factorsfactor of 102%101% to 111%109% have been used for female members. For the Jaguar Executive Pension Plan, an average scaling factor of 95%94% has been used for male members and an average scaling factor of 85%84% has been used for female members.
For the valuation at March 31, 2017 and 2016, the mortality assumptions used are the SAPS base table, in particular S2NxA tables and the Light table for members of the Jaguar Executive Pension Plan. A scaling factor of 120% for males and 110% for females has been used for the Jaguar Pension Plan, 115% for males and 105% for females for the Land Rover Pension Scheme and 95% for males and 85% for females for Jaguar Executive Pension Plan.
There2020 year end calculations there is an allowance for future improvements in line with the CMI (2017)(2019) projections and an allowance for long-term improvements of 1.25% per annum (2017, 2016:and Sk=7.5, (2019: CMI (2014)(2018) projections with 1.25% per annum improvements and Sk=7.5, 2018: CMI (2017) projections with 1.25% per annum improvements).
A past service cost of Rs. 396.6 million has been recognized in the year ended 31 March 2020. This reflects benefit improvements for certain members as part of the Group restructuring programme.
A past service cost of Rs. 3,799.0 million was recognized in the year ended March 31, 2019. This reflects benefit improvements for certain members as part of the Group restructuring programme and a past service cost following a High Court ruling in October 2018. As a result of the ruling, pension schemes are required to equalise male and female members’ benefits for the inequalities within guaranteed minimum pension (‘GMP’) earned between May 17, 1990 and April 5, 1997. The Group historically made no assumptions for the equalisation of GMP and therefore considered the change to be a plan amendment.
A past service credit of Rs. 36,090.1 million was recognized in the year ended March 31, 2018 after the Group approved and communicated to its defined benefit schemes’ members that the defined benefit schemes’ rules were to be amended with effect from April 6, 2017. As a result, among other changes, future retirement benefits would be calculated each year and revalued until retirement in line with a prescribed rate rather than based upon a member’s final salary at retirement.
Pension plans asset allocation by category is as follows:
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2018 | 2017 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||||||
Quoted * | Unquoted | Total | Quoted * | Unquoted | Total | Quoted * | Unquoted | Total | Quoted * | Unquoted | Total | |||||||||||||||||||||||||||||||||||||
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Information Technology | 12,181.6 | — | 12,181.6 | 11,490.4 | — | 11,490.4 | 11,598.3 | — | 11,598.3 | 7,166.5 | — | 7,166.5 | ||||||||||||||||||||||||||||||||||||
Energy | 5,167.9 | — | 5,167.9 | 4,936.0 | — | 4,936.0 | 935.3 | — | 935.3 | 3,047.5 | — | 3,047.5 | ||||||||||||||||||||||||||||||||||||
Manufacturing | 8,859.3 | — | 8,859.3 | 8,415.5 | — | 8,415.5 | 6,547.4 | — | 6,547.4 | 5,223.0 | — | 5,223.0 | ||||||||||||||||||||||||||||||||||||
Financials | 13,935.0 | — | 13,935.0 | 13,270.6 | — | 13,270.6 | 4,209.1 | — | 4,209.1 | 8,224.1 | — | 8,224.1 | ||||||||||||||||||||||||||||||||||||
Others | 38,482.7 | — | 38,482.7 | 36,494.3 | — | 36,494.3 | 23,408.3 | — | 23,408.3 | 22,724.1 | — | 22,724.1 | ||||||||||||||||||||||||||||||||||||
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78,626.5 | — | 78,626.5 | 74,606.8 | — | 74,606.8 | 46,698.4 | — | 46,698.4 | 46,385.2 | — | 46,385.2 | |||||||||||||||||||||||||||||||||||||
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Debt Instruments | ||||||||||||||||||||||||||||||||||||||||||||||||
Government | 351,696.7 | — | 351,696.7 | 237,091.3 | — | 237,091.3 | 181,831.3 | — | 181,831.3 | 227,093.5 | — | 227,093.5 | ||||||||||||||||||||||||||||||||||||
Corporate Bonds (Investment Grade) | 1,845.7 | 169,434.6 | 171,280.3 | 1,618.4 | 167,582.3 | 169,200.7 | 116,450.6 | 32,550.0 | 149,000.6 | 13,519.8 | 153,280.4 | 166,800.2 | ||||||||||||||||||||||||||||||||||||
Corporate Bonds (Non Investment Grade) | — | 53,894.2 | 53,894.2 | 9,953.0 | 33,500.3 | 43,453.3 | — | 70,151.0 | 70,151.0 | — | 55,472.6 | 55,472.6 | ||||||||||||||||||||||||||||||||||||
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353,542.4 | 223,328.8 | 576,871.2 | 248,662.7 | 201,082.6 | 449,745.3 |
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| 298,281.9 | 102,701.0 | 400,982.9 | 240,613.3 | 208,753.0 | 449,366.3 | |||||||||||||||||||||||||||||||||||||
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UK | — | 15,227.0 | 15,227.0 | — | 15,374.5 | 15,374.5 | — | 25,534.9 | 25,534.9 | — | 22,112.6 | 22,112.6 | ||||||||||||||||||||||||||||||||||||
Other | — | 14,765.5 | 14,765.5 | — | 12,623.3 | 12,623.3 | — | 22,354.8 | 22,354.8 | — | 20,763.6 | 20,763.6 | ||||||||||||||||||||||||||||||||||||
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— | 29,992.5 | 29,992.5 | — | 27,997.8 | 27,997.8 | — | 47,889.7 | 47,889.7 | — | 42,876.2 | 42,876.2 | |||||||||||||||||||||||||||||||||||||
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Cash and Cash equivalents | 20,109.4 | — | 20,109.4 | 7,525.4 | — | 7,525.4 | 63,445.3 | — | 63,445.3 | 19,047.9 | — | 19,047.9 | ||||||||||||||||||||||||||||||||||||
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Hedge Funds | — | 32,853.3 | 32,853.3 | — | 32,610.2 | 32,610.2 | — | 44,428.9 | 44,428.9 | — | 28,032.9 | 28,032.9 | ||||||||||||||||||||||||||||||||||||
Private Markets | 184.6 | 23,255.7 | 23,440.3 | — | 14,079.9 | 14,079.9 | — | 52,566.4 | 52,566.4 | 381.7 | 30,392.9 | 30,774.6 | ||||||||||||||||||||||||||||||||||||
Alternatives | 43,373.8 | 19,748.9 | 63,122.7 | 26,460.4 | 30,668.1 | 57,128.5 | — | 55,559.6 | 55,559.6 | 1,394.7 | 73,373.0 | 74,767.7 | ||||||||||||||||||||||||||||||||||||
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43,558.4 | 75,857.9 | 119,416.3 | 26,460.4 | 77,358.2 | 103,818.6 | — | 152,554.9 | 152,554.9 | 1,776.4 | 131,798.8 | 133,575.2 | |||||||||||||||||||||||||||||||||||||
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Foreign exchange contracts | — | 92.3 | 92.3 | — | 1,375.6 | 1,375.6 | — | (3,367.2 | ) | (3,367.2 | ) | — | 1,478.2 | 1,478.2 | ||||||||||||||||||||||||||||||||||
Interest Rate and inflation | — | 21,041.0 | 21,041.0 | — | 91,599.8 | 91,599.8 | — | 50,976.4 | 50,976.4 | — | 29,672.0 | 29,672.0 | ||||||||||||||||||||||||||||||||||||
Equity protection derivatives | — | 4,863.8 | 4,863.8 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
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— | 21,133.3 | 21,133.3 | — | 92,975.4 | 92,975.4 | |||||||||||||||||||||||||||||||||||||||||||
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Collateralized debt obligations | — | (118,770.3 | ) | (118,770.3 | ) | — | (68,214.4 | ) | (68,214.4 | ) | ||||||||||||||||||||||||||||||||||||||
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— | (118,770.3 | ) | (118,770.3 | ) | — | (68,214.4 | ) | (68,214.4 | ) |
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Total | 495,836.7 | 231,542.2 | 727,378.9 | 357,255.3 | 331,199.6 | 688,454.9 | 408,425.6 | 355,618.6 | 764,044.2 | 307,822.8 | 414,578.2 | 722,401.0 | ||||||||||||||||||||||||||||||||||||
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* | determined on the basis of quoted prices for identical assets or liabilities in active markets. |
As at March 31, 2020, the schemes held Gilt Repos. The splitnet value of Level 1 assetsthese transactions is 71% (2017: 52%), Level 2 assets 20% (2017: 41%) and Level 3 assets 9% (2017: 7%). Private market holdings are classified as Level 3 instruments. Includedincluded in the value of government bonds in the table ablove. The value of the funding obligation for Government securities, Interest Rate and Inflation derivatives arethe Repo transactions as noted above.is Rs. 246,837.8 million at March 31, 2020 (2019: Rs. 142,920.9 million, 2018: Rs. 120,379 million).
The sensitivity analysis below is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognisedrecognized within the consolidated balance sheet.
Assumption | Change in assumption | Impact on defined benefit obligation | Impact on service cost and interest cost | |||||||
Discount rate | Increase / decrease by 0.25% | | Decrease/increase by Rs. | | Decrease/increase by | |||||
Inflation rate | Increase / decrease by 0.25% | | Increase/decrease by Rs. | | Increase/decrease by Rs. | |||||
Mortality rate | Increase / decrease by 1 year | | Increase/decrease by Rs. | | Increase/decrease by Rs. |
Due to the economic effects of actions taken in response to the COVID-19 disease there is a higher degree of uncertainty in the valuations placed on some of the “unquoted” assets including property assets. In some cases the additional uncertainty will be small, however some managers have reported material uncertainty in their valuations. The directors consider these valuations to be the best estimate of the valuation of these investments, but there is a higher degree of uncertainty compared to previous years.
Private Equity holdings have been measured using the most recent valuations, adjusted for cash and currency movements between the last valuation date and March 31, 2020. The latest valuations for these assets precede the negative impact of the COVID-19 pandemic on financial markets. Given the movements in listed equity markets, the valuation of Private Equity holdings may vary significantly. The value of the Private Equity holdings in the JLR UK Plans included above is Rs. 31,988.8 million as at March 31, 2020.
Jaguar Land Rover contributes towards the UK defined benefit schemes. Following theThe April 5, 20152018 valuations were completed in December 2018. As a result of these valuations it is intended to eliminate the pension scheme funding deficits over the 10 years following the valuation date. As atto March 31, March 2018, there2028. There is currently no additional liability; however, followingliability over the changes to the definedProjected benefit schemes’ rules in April 2017, an additional obligation may arise in the future.obligation. The current agreed contribution rate for defined benefit accrual is 31%21% of pensionable salaries in the UK. UK reflecting the 2017 benefit structure.
Deficit contribution levels remaincontributions are paid in line with the schedule of contributions at a rate of Rs. 5,612.1 million per year until March 31, 2024 followed by Rs. 2,338.4 million per year until March 31, 2028, although as part of JLR’s response to the COVID-19 disease JLR has agreed following the 2015 statutory valuation. Both the ongoingto defer all of its contributions, payable for April, May and deficit contribution rates these are expected to reduce following the completionJune 2020, until FY22. This agreement is reflected in an updated Schedule of the 2018 statutory valuation during 2019.Contributions dated April 29, 2020.
The average duration of the benefit obligation at March 31, 20182020 is 20.119 years (2017: 21.6(2019: 19 years).
On April 3, 2017, Jaguar Land Rover Automotive Plc approved and communicated to its Defined Benefit schemes’ members that the defined benefit schemes’ rules were to be amended with effect from April 6, 2017 so that, amongst other changes, retirement benefits will be calculated on a career average basis rather than based upon a member’s final salary at retirement. These changes were effective from April 6, 2017 and as a result of there-measurement of the scheme’s liabilities, a past service credit of Rs. 36,090.1 million has recognised in year ended March 31, 2018.
Excluding this past service credit but allowing for With the new benefit structure effective April 6, 2017, the expected net periodic pension cost for Fiscal 2019the year ended March 31, 2020 is Rs. 21,203.9Rs.13,094.8 million. The Company expects to pay Rs.23,717.1Rs. 14,965.5 million to its defined benefit schemes in Fiscalthe year ended March 31, 2020.
During the year ended March 31, 2019, the High Court in United Kingdom ruled that pension schemes are required to equalize male and female members benefit for the inequalities within guaranteed minimum pension (GMP) earned between May 17, 1990 and April 5, 1997. Based on this, the Company reassessed its obligations under its existing Jaguar Land Rover pension plans and recorded an additional liability of an amount of GBP 16.5 million (Rs. 1,479.3 million) as past service costs for the year ended March 31, 2019.
Defined contribution plan
The Company’s contribution to defined contribution plans aggregated Rs. 8,995.910,305.5 million, Rs.7,549.5Rs. 11,862.1 million and Rs.6,768.5Rs.8,995.9 million for the years ended March 31, 2018, 20172020, 2019 and 2016,2018, respectively.
Commitments and contingencies |
In the ordinary course of business, the Company faces claims and assertions by various parties. The Company assesses such claims and assertions and monitors the legal environment on an ongoing basis, with the assistance of external legal counsel, wherever necessary. The Company records a liability for any claims where a potential loss is probable and capable of being estimated and discloses such matters in its financial statements, if material. For potential losses that are considered possible, but not probable, the Company provides disclosure in the financial statements but does not record a liability in its accounts unless the loss becomes probable.
The following is a description of claims and assertions where a potential loss is possible, but not probable. The Company believes that none of the contingencies described below would have a material adverse effect on the Company’s financial condition, results of operations or cash flows.
Litigation
The Company is involved in legal proceedings, both as plaintiff and as defendant. There are claims which the Company does not believe to be of material nature, other than those described below.
Income Tax
The Company has ongoingon going disputes with income tax authorities relating to tax treatment of certain items. These mainly include disallowed expenses, the tax treatment of certain expenses claimed by the Company as deductions and the computation of, or eligibility of, the Company’s use of certain tax incentives or allowances.
Most of these disputes and/or disallowances, being repetitive in nature, have been raised by the income tax authorities consistently in most of the years.
The Company has a right of appeal to the Commissioner of Income Tax (Appeals), or CIT (A), the Dispute Resolution Panel, or DRP, and to the Income Tax Appellate Tribunal, or ITAT, against adverse decisions by the assessing officer, DRP or CIT (A), as applicable. The income tax authorities have similar rights of appeal to the ITAT against adverse decisions by the CIT (A) or DRP. The Company has a further right of appeal to the Bombay High Court or the Hon’ble Supreme Court of India against adverse decisions by the appellate authorities for matters involving substantial question of law. The income tax authorities have similar rights of appeal.
As at March 31, 2018,2020, there are matters and/or disputes pending in appeal amounting to Rs.3,031Rs. 14,633 million, which includes Rs. 22966 million in respect of equity accounted investees (Rs.949(Rs. 5,410 million, which includes Rs.22Rs. 772 million in respect of equity accounted investees as at March 31, 2017)2019).
Customs, Excise Duty and Service Tax
As at March 31, 2018,2020, there are pending litigations for various matters relating to customs, excise duty and service taxestax involving demands, including interest and penalties, of Rs. 16,7176,653 million, which includes Rs. 5011 million in respect of equity accounted investees (Rs.14,851(Rs. 10,240 million, which includes Rs.60Rs. 61 million in respect of equity accounted investees as at March 31, 2017)2019). These demands challenged the basis of valuation of the Company’s products and denied the Company’s claims of Central Value Added Tax, or CENVAT credit on inputs. The details of the demands for more than Rs.200Rs. 200 million are as follows:
The Excise Authorities have raised a demand for Rs. 907 million as at March 31, 2018 (Rs. 907 million as at March 31, 2017), on account of alleged undervaluation ofex-factory discounts given by Company on passenger vehicles through invoices. The matter is being contested by the Company before the Bombay High Court.
As at March 31, 2018,2020, the Excise Authorities have raised a demand and penalty of Rs. 2,3992,683 million, (Rs. 2,399(Rs.2,432 million as at March 31, 2017)2019), due to the classification of certain chassis (as dumpersgoods transport vehicles instead of goods transport vehicles)dumpers) which were sent to automotive body builders by the Company, which the Excise Authorities claim requires the payment of the National Calamity Contingent Duty or NCCD.(NCCD). The Company has obtained a technical expert certificate on the classification. The appeal is pending before the Custom Excise & Service Tax Appellate Tribunal.
The Excise Authorities had denied the Company’s claim of a CENVAT credit of Rs. 360 million (Rs. 250 million as at March 31, 2017) claimed by the Company from Fiscal 1992 to Fiscal 2013, on technical grounds. The matter is being contested by the Company before the appellate authorities.
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As at March 31, 2018, the Excise Authorities had levied penalties and interest amounting to Rs. 6,799 million (Rs. 6,799 million as at March 31, 2017) with respect to CENVAT credit claimed by the Company from March 2010 to November 2012, on inputs, stating that vehicles manufactured at Uttarakhand plant are “Exempted Products” and the Company may not claim a CENVAT credit on these vehicles. The Company has challenged this demand as NCCD and the automobile cess is assessed on those vehicles, which are “duties of excise”. Therefore, the Company asserts that these vehicles are not “Exempted Products”. The matter is being contested by the Company before the appellate authorities.
As at March 31, 2018, the Excise Authorities have raised a demand amounting to Rs. 295 million (Rs. 295 million as at March 31, 2017) onpre-delivery inspection charges and free after-sales service charges incurred by dealers on Company’s products on the alleged grounds that thepre-delivery inspection charges and free after-sales services are provided by the dealer on behalf of the Company and should be included in excisable value of the vehicle. The case is pending before Tribunal.
As at March 31, 2018, the Service Tax Authorities has raised Service Tax demand of Rs. 549 million, (Rs. Nil as at March 31, 2017) wherein department alleged that the fee charged for securitization contract by one of our subsidiary, TMFL are not adequate. The matter is being contested by TMFL before the appellate authorities.
As at March 31, 2018,2020, the Exicse Authorities have confirmed demand & penalty totalling to Rs.Rs 909 million (Rs. Nil(Rs.909 million as at March 31, 2017)2019) towards vehicles allegedly sold below cost of production with an intention to penetrate the market. The matter is being contested by the Company before the appellate authorities.Customs, Excise and Service Tax Appellate Tribunal.
The Excise Authorities had denied the Company’s claim of a CENVAT credit of Rs. 534 million as at March 31, 2020 (Rs. 875 million as at March 31, 2019) on various inputs services such as Authorized Service Station Services, Erection, Commissioning & Installation Services, Common Services etc. claimed by the Company from financial year 2006 to 2017. The matters are being contested by the Company before the Appellate Authorities.
As at March 31, 2018,2020, the ExicseExcise Authorities have filed Appeal before appellate authority againstconfirmed the Order of adjudicating authority allowing Cenvat credit of service tax ofdemand and penalty totalling to Rs. 362501 million (Rs. 362912 million as at March 31, 2017)2019) alleging undervaluation of products sold by the Company. The matter is being contested by the Company before Appellate Authorities.
As at March 31, 2020, demand and penalty totalling to Rs.235 million (Rs. 235 million as at March 31, 2019) has been confirmed for alleged non-payment of service tax on services such as Event Management Services (Reverse Charge Mechanism), Authorized Service Station Services, Heat Treatment Services etc. The matter is being contested by the Company before Appellate Authorities.
The Excise Authorities are of the view that the Company had wrongly availed CENVAT credit amounting to Rs. 290 million as at March 31, 2020 (Rs. 290 million as at March 31, 2019) on consulting engineers services.various input services in relation to setting up of the factory in Singur. The Department was of the contention that since no manufacturing activity had taken place in Singur, the credit cannot be availed. The matter is contested in appeal.
Sales Tax / VAT
The total sales tax demands (including interest and penalty), that are being contested by the Company amount to Rs. 10,962Rs.9,621 million, which includes Rs. 109Rs.98 million in respect of equity accounted investees as at March 31, 2018 (Rs.10,5212020 (Rs.12,841 million, which includes Rs.115Rs.125 million in respect of equity accounted investees, as at March 31, 2017)2019). The details of the demands for more than Rs.200 million are as follows:
The Sales Tax Authorities have raised demand of Rs. 2,694 million(Rs. 1,995Rs.2,078 million (Rs.2,618 million as at March 31, 2017)2019) towards rejection of certain statutory forms for concessional lower/nil tax rate (Form F and Form C) on technical grounds and few other issues such as late submission, single form issued against different monthsmonths’ / quartersquarters’ dispatches / sales, etc. and denial of exemption from tax in absence of proof of export for certain year. The Company has contended that the benefit cannot be denied on technicalities, which are being complied with. The matter is pending at various levels.
The Sales Tax authorities have denied input tax credit and levied interest and penalty thereon due to varied reasons aggregating to Rs. 4,360Rs.2,218 million as at March 31, 2018 (Rs. 3,0742020 (Rs.4,652 million as at March 31, 2017)2019). The reasons for disallowing credit was mainly due to Taxes not paid by Vendors, incorrect method of calculation of set off as per the department, alleging suppression of sales as per the department etc. The matter is contested in appeal.
As at March 31, 2018,2020, Sales Tax demand aggregating Rs. 958Rs.253 million (Rs.467 million as at March 31, 2019) has been raised by Sales Tax Authorities for non submission of Maharashtra Trial Balance. This is relating to VAT assessment for the Financial year 2010-2013. The matter is contested in appeal.
The Sales Tax Authorities have raised demand for EntryCheck post /Entry Tax liability at various states amouting to Rs. 239 million.Rs.658 million (Rs.840 million as at March 31, 2019). The Company is contesting this issue.
The Sales Tax Authorities have raised demand of Rs. 1,488 million (Rs. Nil as at March 31, 2019) towards full CST liability on Chassis exported after enroute body building and interest thereon considering as CST sale. The Company has contended that the Company’s manufacturing plant dispatching chassis for enroot body building to bodybuilders as bill to the Company and ship to bodybuilders is constituted as export sale after Chassis export. The matter is contested in appeal.
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Other Taxes and Dues
Other amounts for which the Company may contingently be liable aggregate to Rs. 3,670Rs.6,375 million, which includes Rs. 18Rs.71 million in respect of equity accounted investees as at March 31, 2018 (Rs.3,0002020 (Rs.4,516 million, which includes Rs.18Rs.168 million in respect of equity accounted investees, as at March 31, 2017)2019). Following are the cases involving more thanwhere amount involved exceeds Rs.200 million:
The municipal authorities in certain states levy octroi duty (a local indirect tax) on goods brought inside the municipal limits at rates based on the classification of goods. Demands aggregating Rs.617 million as at March 31, 20182020 (Rs.617 million as at March 31, 2017)2019) had been raised demanding higher octroi duties on account of classification disputes relating to components purchased for the manufacture of vehicles and retrospective increase in octroi rates relating to past periods. The dispute relating to classification is presently pending before the Bombay High Court and the other dispute is pending before the Hon’ble Supreme Court.Court of India.
As at March 31, 2018,2020, property tax amounting to Rs. 568Rs.1,102 million (Rs.537(Rs.644 million as at March 31, 2017)2019) has been demanded by the local municipal authorities in respect of vacant land of the Company in the plants inat Pimpri (including residential land), Chinchwad and Chikhali. The Company hashad filed Special Leave Petition (SLP) before the Hon’ble Supreme Court of India against an unfavorable decision of the Bombay High Court. The Hon’ble Supreme Court hasof India had disposed of the SLP and remanded the matter back to the local municipal corporation for fresh adjudication. After fresh hearing, the municipal authority again passed the same order as it had passed earlier, which the Company has challenged before the Civil Court. The Civil Court has passed an injunction order restraining the municipal authority from taking any action of recovery.
As at March 31, 2018,2020, Sales tax / VAT amounting to Rs. 305Rs.344 million (Rs. 300(Rs.341 million as at March 31, 2017)2019) has been demanded onby local authorities onfrom dealers in respect of spare parts used for carrying out warranty repairs. The dispute is pending before the Hon’ble Supreme Court of India.
As at March 31, 2020, possession tax amounting to Rs.222 million (Rs.369 million as at March 31, 2019) have been demanded in respect of motor vehicles in the possession of the manufacturer and the authorization of trade certificate granted under the Central Motor Vehicle Rules, 1989. The matter is being contested before the Jharkhand High Court at Ranchi.
Other claims
There are other claims against the Company, the majority of which pertain to government body investigations with regards to regulatory compliances, motor accident claims, product liability claims and consumer complaints. Some of the cases also relate to the replacement of parts of vehicles and/or the compensation for deficiencies in the services by the Company or its dealers.
‘The Hon’ble Supreme Court of India (“SC”) by their order dated February 28, 2019, set out the principles based on which allowances paid to the employees should be identified for inclusion in basic wages for the purposes of computation of Provident Fund contribution. There are interpretative challenges and considerable uncertainty, including estimating the amount retrospectively. Pending the directions from the EPFO, the impact for past periods, if any, is not ascertainable reliably and consequently no financial effect has been provided for in the financial statements. The Company has complied with this on a prospective basis, from the date of the SC order.
The Company has, consequent to an Order of the Hon’ble Supreme Court of India in the case of R.C Gupta and Ors. Vs Regional Provident Fund Commissioner, Employees Provident Fund Organization and Ors, evaluated the impact on its employee pension scheme and concluded that this is not applicable to the Company based on external legal opinion and hence it is not probable that there there will be an outflow of resources.
Commitments
The Company has entered into various contracts with vendors and contractors for the acquisition of plant and machinery, equipment and various civil contracts of a capital nature amounting to Rs. 100,187Rs.134,953 million which includes Rs. 127 million in respect of equity accounted investees as at March 31, 2018 (Rs.196,1092020 (Rs.115,292 million which includes Rs.14,038 million in respect of equity accounted investees, as at March 31, 2017)2019), which are yet to be executed.
The Company has entered into various contracts with vendors and contractors for the acquisition of intangible assets of a capital nature amounting to Rs.5,814Rs.2,030 million as at March 31, 2018, (Rs.6,4022020, (Rs.5,676 million as at March 31, 2017)2019), which are yet to be executed.
Under the joint venture agreement with Chery Jaguar Land Rover Automotive Co. Limited, the Company is committed to contribute Rs. 36,221has an outstanding commitment of Rs.16,298 million as at March 31, 2018 (Rs.32,9562020 (Rs.6,440 million as at March 31, 2017)2019) towards its share in the capital of the joint venture of which Rs. 29,753 million (Rs.27,071 million as at March 31, 2017) has been contributed as at March 31, 2018. As at March 31, 2018, the Company has an outstanding commitment of Rs. 6,468 million (Rs.5,885 million as at March 31, 2017).
Capital Management |
The Company’s capital management is intended to create value for shareholders by facilitating the meeting of long-term and short-term goals of the Company.
The Company determines the amount of capital required on the basis of annual operating plans and long-term product and other strategic investment plans. The funding requirements are met through equity, convertible andnon-convertible debt securities, senior notes and other long-term/short-term borrowings. The Company’s policy is aimed at combination of short-term and long-term borrowings.
The Company monitors the capital structure on the basis of total debt to equity ratio and maturity profile of the overall debt portfolio of the Company.
Total debt includes all long and short-term debts as disclosed in notes 1821 and 1922 to the consolidated financial statements. Equity comprises all components excluding (profit)/loss on cash flow hedges and foreign currency translation reserve.
The following table summarizes the capital of the Company:
As at March 31, | As at March 31, | |||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Equity* | US$ | 13,954.1 | Rs. | 909,441.8 | Rs. | 802,888.7 | US$ | 7,832.2 | Rs. | 592,626.1 | Rs. | 593,022.3 | ||||||||||||
Short-term borrowings and current portion of long-term debt | 4,254.5 | 277,287.4 | 179,526.7 | 4,691.1 | 354,949.0 | 351,843.7 | ||||||||||||||||||
Long-term debt | 9,381.2 | 611,419.4 | 605,644.5 | 11,009.7 | 833,048.1 | 708,067.0 | ||||||||||||||||||
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Total debt | 13,635.7 | 888,706.8 | 785,171.2 | 15,700.8 | 1,187,997.1 | 1,059,910.7 | ||||||||||||||||||
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Total capital (Debt + Equity) | US$ | 27,589.8 | Rs. | 1,798,148.6 | Rs. | 1,588,059.9 | US$ | 23,533.0 | Rs. | 1,780,623.2 | Rs. | 1,652,933.0 | ||||||||||||
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* | Details of |
As at March 31, | As at March 31, | |||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Total equity as reported in balance sheet | US$ | 14,023.2 | Rs. | 913,947.3 | Rs. | 538,842.2 | US$ | 7,903.7 | Rs. | 598,034.7 | Rs. | 558,067.4 | ||||||||||||
Currency translation reserve attributable to | ||||||||||||||||||||||||
- Shareholders of Tata Motors Limited | (757.8 | ) | (49,388.8 | ) | 50,933.2 | (679.5 | ) | (51,422.5 | ) | (28,388.6 | ) | |||||||||||||
-Non-controlling interests | (3.0 | ) | (197.8 | ) | 75.2 | (4.7 | ) | (351.9 | ) | (198.6 | ) | |||||||||||||
Hedging reserve | 691.7 | 45,081.1 | 213,038.1 | 554.2 | 41,937.1 | 60,668.2 | ||||||||||||||||||
Cost of hedge reserve | 58.5 | 4,428.7 | 2,873.9 | |||||||||||||||||||||
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Equity as reported above | US$ | 13,954.1 | Rs. | 909,441.8 | Rs. | 802,888.7 | US$ | 7,832.2 | Rs. | 592,626.1 | Rs. | 593,022.3 | ||||||||||||
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Disclosures on financial instruments |
This section gives an overview of the significance of financial instruments for the Company and provides additional information on balance sheet items that contain financial instruments.
The details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognized, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2 to the consolidated financial statements.
(a) | Financial assets and liabilities |
The following table presents the carrying amounts and fair value of each category of financial assets and liabilities as at March 31, 2018.2020.
Financial assets | Cash, and loans and receivables | Available- for-sale financial assets | Derivatives other than in hedging relationship | Derivatives in hedging relationship | Total carrying value | Total fair value | Total carrying value | Total fair value | Cash and other financial assets at amortized cost | Financial assets as fair value | Derivatives other than in hedging relationship | Derivatives in hedging relationship | Total carrying value | Total fair value | Total carrying value | Total fair value | ||||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | Rs. | 147,167.5 | Rs. | — | Rs. | — | Rs. | — | Rs. | 147,167.5 | Rs. | 147,167.5 | US$ | 2,258.0 | US$ | 2,258.0 | Rs. | 184,678.0 | Rs. | — | Rs. | — | Rs. | — | Rs. | 184,678.0 | Rs. | 184,678.0 | US$ | 2,440.7 | US$ | 2,440.7 | ||||||||||||||||||||||||||||||||
Short-term deposits | 193,615.7 | — | — | — | 193,615.7 | 193,615.7 | 2,970.7 | 2,970.7 | 148,294.8 | — | — | — | 148,294.8 | 148,294.8 | 1,959.9 | 1,959.9 | ||||||||||||||||||||||||||||||||||||||||||||||||
Finance receivables | 238,989.7 | — | — | — | 238,989.7 | 238,235.9 | 3,666.9 | 3,655.3 | 273,592.8 | 37,197.90 | — | — | 310,790.7 | 306,014.4 | 4,107.5 | 4,044.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
Trade receivables | 198,933.0 | — | — | — | 198,933.0 | 198,933.0 | 3,052.3 | 3,052.3 | 111,726.9 | — | — | — | 111,726.9 | 111,726.9 | 1,476.6 | 1,476.6 | ||||||||||||||||||||||||||||||||||||||||||||||||
Unquoted equity investments* | — | 2,036.9 | — | — | 2,036.9 | — | 31.3 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unquoted equity investments, at fair value | — | 4,076.1 | — | — | 4,076.1 | 4,076.1 | 62.5 | 62.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other investments | 1,094.0 | 147,007.0 | — | — | 148,101.0 | 148,101.0 | 2,272.4 | 2,272.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other investments – non-current | — | 10,280.50 | — | — | 10,280.5 | 10,280.5 | 135.9 | 135.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other investments – current | 93,546.0 | 15,069.30 | — | — | 108,615.3 | 108,615.3 | 1,435.5 | 1,435.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other financial assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- current | 33,682.3 | — | 13,931.8 | 10,829.5 | 58,443.6 | 58,443.6 | 896.7 | 896.7 | 35,601.2 | — | 15,667.6 | 8,245.4 | 59,514.2 | 59,514.2 | 786.5 | 786.5 | ||||||||||||||||||||||||||||||||||||||||||||||||
- non-current | 22,123.8 | — | 11,880.7 | 16,588.3 | 50,592.8 | 50,592.8 | 776.3 | 776.3 | 32,411.9 | — | 3,890.8 | 19,020.8 | 55,323.5 | 55,323.5 | 731.1 | 731.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
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Total | Rs. | 835,606.0 | Rs. | 153,120.0 | Rs. | 25,812.5 | Rs. | 27,417.8 | Rs. | 1,041,956.3 | Rs. | 1,039,165.6 | US$ | 15,987.1 | US$ | 15,944.2 | Rs. | 879,851.6 | Rs. | 62,547.70 | Rs. | 19,558.4 | Rs. | 27,266.2 | Rs. | 989,223.9 | Rs. | 984,447.6 | US$ | 13,073.7 | US$ | 13,010.5 | ||||||||||||||||||||||||||||||||
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Financial liabilities | Derivatives other than in hedging relationship | Derivatives in hedging relationship | Other financial liabilities | Total carrying value | Total fair value | Total carrying value | Total fair value | |||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Accounts payable | Rs. | — | Rs. | — | Rs. | 705,671.9 | Rs. | 705,671.9 | Rs. | 705,671.9 | US$ | 9,326.1 | US$ | 9,326.1 | ||||||||||||||
Acceptances | — | — | 27,713.3 | 27,713.3 | 27,713.3 | 366.3 | 366.3 | |||||||||||||||||||||
Short-term debt (excluding current portion of long-term debt) | — | — | 163,624.8 | 163,624.8 | 163,624.8 | 2,162.6 | 2,162.6 | |||||||||||||||||||||
Long-term debt (including current portion of long-term debt) (refer note below) | — | — | 1,024,372.3 | 1,024,372.3 | 929,535.9 | 13,538.2 | 12,284.9 | |||||||||||||||||||||
Other financial liabilities: | ||||||||||||||||||||||||||||
- current | 19,262.8 | 23,543.1 | 70,047.3 | 112,853.2 | 112,853.2 | 1,491.4 | 1,491.4 | |||||||||||||||||||||
- non-current | 5,879.6 | 26,679.2 | 57,655.4 | 90,214.2 | 92,321.6 | 1,192.2 | 1,220.1 | |||||||||||||||||||||
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Total | Rs. | 25,142.4 | Rs. | 50,222.3 | Rs. | 2,049,085.0 | Rs. | 2,124,449.7 | Rs. | 2,031,720.7 | US$ | 28,076.8 | US$ | 26,851.4 | ||||||||||||||
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Note:
Financial liabilities | Derivatives other than in hedging relationship | Derivatives in hedging relationship | Other financial liabilities | Total carrying value | Total fair value | Total carrying value | Total fair value | |||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Accounts payable | Rs. | — | Rs. | — | Rs. | 804,601.6 | Rs. | 804,601.6 | Rs. | 804,601.6 | US$ | 12,345.2 | US$ | 12,345.2 | ||||||||||||||
Acceptances | — | — | 49,013.4 | 49,013.4 | 49,013.4 | 752.0 | 752.0 | |||||||||||||||||||||
Short-term debt (excluding current portion of long-term debt) | — | — | 167,948.5 | 167,948.5 | 167,948.5 | 2,576.9 | 2,576.9 | |||||||||||||||||||||
Long-term debt (including current portion of long-term debt) (refer note below) | — | — | 720,758.3 | 720,758.3 | 727,920.3 | 11,058.8 | 11,168.8 | |||||||||||||||||||||
Other financial liabilities: | ||||||||||||||||||||||||||||
- current | 8,090.1 | 53,986.5 | 57,042.0 | 119,118.6 | 119,118.6 | 1,827.7 | 1,827.7 | |||||||||||||||||||||
-non-current | 1,395.1 | 23,106.9 | 3,385.4 | 27,887.4 | 27,887.4 | 427.9 | 427.9 | |||||||||||||||||||||
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Total | Rs. | 9,485.2 | Rs. | 77,093.4 | Rs. | 1,802,749.2 | Rs. | 1,889,327.8 | Rs. | 1,896,489.8 | US$ | 28,988.5 | US$ | 29,098.5 | ||||||||||||||
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Includes Rs.83,339.3 million designated as hedged item in fair value hedge relationship. This includes a loss of Rs.4,220.3 million on account of fair value changes attributable to the hedged interest rate risk.
The following table presents the carrying amounts and fair value of each category of financial assets and liabilities as at March 31, 2017.2019.
Financial assets | Cash, and loans and receivables | Available- for-sale financial assets | Derivatives other than in hedging relationship | Derivatives in hedging relationship | Total carrying value | Total fair value | Cash and other financial assets at amortized cost | Financial assets as fair value | Derivatives other than in hedging relationship | Derivatives in hedging relationship | Total carrying value | Total fair value | ||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | Rs. | 139,867.6 | Rs. | — | Rs. | — | Rs. | — | Rs. | 139,867.6 | Rs. | 139,867.6 | Rs. | 215,598.0 | Rs. | — | Rs. | — | Rs. | — | Rs. | 215,598.0 | Rs. | 215,598.0 | ||||||||||||||||||||||||
Short-term deposits | 218,927.6 | — | — | — | 218,927.6 | 218,927.6 | 105,742.1 | — | — | — | 105,742.1 | 105,742.1 | ||||||||||||||||||||||||||||||||||||
Finance receivables | 175,632.5 | — | — | — | 175,632.5 | 175,290.4 | 336,246.9 | — | — | — | 336,246.9 | 334,290.5 | ||||||||||||||||||||||||||||||||||||
Trade receivables | 140,755.5 | — | — | — | 140,755.5 | 140,755.5 | 189,961.7 | — | — | — | 189,961.7 | 189,961.7 | ||||||||||||||||||||||||||||||||||||
Unquoted equity investments* | — | 3,823.1 | — | — | 3,823.1 | — | ||||||||||||||||||||||||||||||||||||||||||
Other investments | 191.3 | 153,265.3 | — | — | 153,456.6 | 153,456.6 | ||||||||||||||||||||||||||||||||||||||||||
Other investments – non-current | 38.8 | 14,936.3 | — | — | 14,975.1 | 14,975.1 | ||||||||||||||||||||||||||||||||||||||||||
Other investments – current | 77,455.1 | 11,928.2 | — | — | 89,383.3 | 89,383.3 | ||||||||||||||||||||||||||||||||||||||||||
Other financial assets: | ||||||||||||||||||||||||||||||||||||||||||||||||
- current | 9,545.7 | — | 4,272.3 | 10,829.5 | 24,647.5 | 24,647.5 | 37,615.3 | — | 2,840.2 | 9,515.2 | 49,970.7 | 49,970.7 | ||||||||||||||||||||||||||||||||||||
-non-current | 8,894.3 | — | 11,165.1 | 16,588.3 | 36,647.7 | 36,647.7 | 23,054.6 | — | 5,219.4 | 3,892.0 | 32,166.0 | 32,166.0 | ||||||||||||||||||||||||||||||||||||
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Total | Rs. | 693,814.5 | Rs. | 157,088.4 | Rs. | 15,437.4 | Rs. | 27,417.8 | Rs. | 893,758.1 | Rs. | 889,592.9 | Rs. | 985,712.5 | Rs. | 26,864.5 | Rs. | 8,059.6 | Rs. | 13,407.2 | Rs. | 1,034,043.8 | Rs. | 1,032,087.4 | ||||||||||||||||||||||||
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Financial liabilities | Derivatives other than in hedging relationship | Derivatives in hedging relationship | Other financial liabilities | Total carrying value | Total fair value | |||||||||||||||
(In millions) | ||||||||||||||||||||
Accounts payable | Rs. | — | Rs. | — | Rs. | 759,681.7 | Rs. | 759,681.7 | Rs. | 759,681.7 | ||||||||||
Acceptances | — | — | 31,771.2 | 31,771.2 | 31,771.2 | |||||||||||||||
Short-term debt (excluding current portion of long-term debt) | — | — | 201,502.6 | 201,502.6 | 201,502.6 | |||||||||||||||
Long-term debt (including current portion of long-term debt) (refer note below) | — | — | 858,408.1 | 858,408.1 | 827,757.5 | |||||||||||||||
Other financial liabilities: | ||||||||||||||||||||
- current | 8,853.9 | 38,571.4 | 56,243.9 | 103,669.2 | 103,669.2 | |||||||||||||||
- non-current | 1,959.0 | 24,665.4 | 2,864.4 | 29,488.8 | 29,488.8 | |||||||||||||||
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Total | Rs. | 10,812.9 | Rs. | 63,236.8 | Rs. | 1,910,471.9 | Rs. | 1,984,521.6 | Rs. | 1,953,871.0 | ||||||||||
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Financial liabilities | Derivatives other than in hedging relationship | Derivatives in hedging relationship | Other financial liabilities | Total carrying value | Total fair value | |||||||||||||||
(In millions) | ||||||||||||||||||||
Accounts payable | Rs. — | Rs. — | Rs. 610,201.4 | Rs. 610,201.4 | Rs. 610,201.4 | |||||||||||||||
Acceptances | — | — | 48,342.4 | 48,342.4 | 48,342.4 | |||||||||||||||
Short-term debt (excluding current portion of long-term debt) | — | — | 138,599.4 | 138,599.4 | 138,599.4 | |||||||||||||||
Long-term debt (including current portion of long-term debt)* | — | — | 646,571.8 | 646,571.8 | 662,442.1 | |||||||||||||||
Other financial liabilities: | ||||||||||||||||||||
- current | 19,826.1 | 122,753.4 | 39,622.5 | 182,202.0 | 182,202.0 | |||||||||||||||
-non-current | 1,009.1 | 111,586.6 | 2,068.6 | 114,664.3 | 114,664.3 | |||||||||||||||
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Total | Rs. 20,835.2 | Rs. 234,340.0 | Rs. 1,485,406.1 | Rs. 1,740,581.3 | Rs. 1,756,451.6 | |||||||||||||||
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Includes USD denominated bonds designated as cash flow hedges against forecasted USD revenue amounting to |
2 | Includes Rs.34,585.5 million designated as hedged item in fair value hedge relationship. This includes a loss of Rs.445.6 million on account of fair value changes attributable to the hedged interest rate risk. |
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Level 1 to Level 3, as described below.
Quoted prices in an active market (Level 1): This level of hierarchy includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. This category consists quoted equity shares, quoted corporate debt instruments and mutual fund investments.
Valuation techniques with observable inputs (Level 2): This level of hierarchy includes financial assets and liabilities, measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices). This level of hierarchy includes Company’sover-the-counter (OTC) derivative contracts. Fair values of forward derivatives and commodity swap contracts are estimated by discounting expected future contractual cash flows using prevailing market interest rate curves. Option contracts are fair valued using standard options pricing methodology, based on prevailing market interest rates and volatilities.volatality.
Valuation techniques with significant unobservable inputs (Level 3): This level of hierarchy includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor based on available market data. The main items in this category are unquotedavailable-for-sale financial assets, measured at fair value.
As at March 31, 2018 | As at March 31, 2020 | |||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Financial assets measured at fair value | ||||||||||||||||||||||||||||||||
Available-for-sale financial assets | Rs. | 147,007.0 | Rs. | — | Rs. | — | Rs. | 147,007.0 | ||||||||||||||||||||||||
Unquoted equity investments | — | — | 4,076.1 | 4,076.1 | ||||||||||||||||||||||||||||
Investments | Rs. | 18,234.0 | Rs. | — | Rs. | 7,115.8 | Rs. | 25,349.8 | ||||||||||||||||||||||||
Derivative assets | — | 53,230.3 | — | 53,230.3 | — | 46,824.6 | — | 46,824.6 | ||||||||||||||||||||||||
Finance receivables | — | 37,197.9 | 37,197.9 | |||||||||||||||||||||||||||||
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Total | Rs. | 147,007.0 | Rs. | 53,230.3 | Rs. | 4,076.1 | Rs. | 204,313.4 | Rs. | 18,234.0 | Rs. | 46,824.6 | Rs. | 44,313.7 | Rs. | 109,372.3 | ||||||||||||||||
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|
| |||||||||||||||||||||||||
US$ | 2,255.6 | US$ | 816.7 | US$ | 62.5 | US$ | 3,134.8 | US$ | 241.0 | US$ | 618.9 | US$ | 585.7 | US$ | 1,445.6 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Financial liabilities measured at fair value | ||||||||||||||||||||||||||||||||
Derivative liabilities | Rs. | — | Rs. | 86,578.6 | Rs. | — | Rs. | 86,578.6 | Rs. | — | Rs. | 75,364.7 | Rs. | — | Rs. | 75,364.7 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Total | Rs. | — | Rs. | 86,578.6 | Rs. | — | Rs. | 86,578.6 | Rs. | — | Rs. | 75,364.7 | Rs. | — | Rs. | 75,364.7 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
US$ | — | US$ | 1,328.4 | US$ | — | US$ | 1,328.4 | US$ | — | US$ | 995.9 | US$ | — | US$ | 995.9 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
As at March 31, 2017 | ||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Financial assets measured at fair value | ||||||||||||||||||||||||||||||||
Available-for-sale financial assets | Rs. | 153,265.3 | Rs. | — | Rs. | — | Rs. | 153,265.3 | ||||||||||||||||||||||||
Derivative assets | — | 42,855.2 | — | 42,855.2 | ||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Total | Rs. | 153,265.3 | Rs. | 42,855.2 | Rs. | — | Rs. | 196,120.5 | ||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Financial liabilities measured at fair value | ||||||||||||||||||||||||||||||||
Derivative liabilities | Rs. | — | Rs. | 255,175.2 | Rs. | — | Rs. | 255,175.2 | ||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Total | Rs. | — | Rs. | 255,175.2 | Rs. | — | Rs. | 255,175.2 | ||||||||||||||||||||||||
|
|
|
|
Reconciliation of financial assets measured at fair value using significant unobservable inputs (Level 3) | As at March 31, 2020 | |||
Balance at the beginning | 7,382.6 | |||
Originated or purchased during the period | 39,470.3 | |||
Interest accrued on FVOCI Loans | 272.9 | |||
Proceeds during the period | (2,831.0 | ) | ||
Loan loss provision recognized | (168.9 | ) | ||
Fair value changes recognized through OCI | 1,333.2 | |||
Fair value changes recognized through P& L | (1,215.9 | ) | ||
Foreign exchange translation difference | 70.5 | |||
Balance at the end | 44,313.7 | |||
Note:
The Company has recognized mark to market gain / (loss) of Rs. 41.5 million in the income statement and Rs. 669.4 million in the statement of other comprehensive income for the year ended March 31, 2019.
As at March 31, 2019 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(In millions) | ||||||||||||||||
Financial assets measured at fair value | ||||||||||||||||
Investments | Rs. | 19,481.9 | Rs. | — | Rs. | 7,382.6 | Rs. | 26,864.5 | ||||||||
Derivative assets | — | 21,466.8 | — | 21,466.8 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | Rs. | 19,481.9 | Rs. | 21,466.8 | Rs. | 7,382.6 | Rs. | 48,331.3 | ||||||||
|
|
|
|
|
|
|
| |||||||||
US$ | 281.7 | US$ | 310.5 | US$ | 106.8 | US$ | 698.9 | |||||||||
|
|
|
|
|
|
|
| |||||||||
Financial liabilities measured at fair value | ||||||||||||||||
Derivative liabilities | Rs. | — | Rs. | 74,049.7 | Rs. | — | Rs. | 74,049.7 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | Rs. | — | Rs. | 74,049.7 | Rs. | — | Rs. | 74,049.7 | ||||||||
|
|
|
|
|
|
|
| |||||||||
US$ | — | US$ | 1,070.7 | US$ | — | US$ | 1,070.7 | |||||||||
|
|
|
|
|
|
|
|
There have been no transfers between level 1 and level 2 for the yearsyear ended March 31, 20182020 and 2017.2019.
The following table provides an analysis of fair value of financial instruments that are not measured at fair value on recurring basis, grouped into Level 1 to Level 3 categories:
As at March 31, 2018 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(In millions) | ||||||||||||||||
Financial assets not measured at fair value | ||||||||||||||||
Finance receivables | — | — | 238,235.9 | 238,235.9 | ||||||||||||
Other investments | — | 1,094.0 | — | 1,094.0 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | Rs. | — | Rs. | 1,094.0 | Rs. | 238,235.9 | Rs. | 239,329.9 | ||||||||
|
|
|
|
|
|
|
| |||||||||
US$ | — | US$ | 16.8 | US$ | 3,655.3 | US$ | 3,672.2 | |||||||||
|
|
|
|
|
|
|
| |||||||||
Financial liabilities not measured at fair value | ||||||||||||||||
Short-term debt (excluding current portion of long-term debt) | — | 167,948.5 | — | 167,948.5 | ||||||||||||
Long-term debt (including current portion of long-term debt) | 399,497.0 | 328,423.3 | — | 727,920.3 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | Rs. | 399,497.0 | Rs. | 496,371.8 | Rs. | — | Rs. | 895,868.8 | ||||||||
|
|
|
|
|
|
|
| |||||||||
US$ | 6,129.6 | US$ | 7,616.1 | US$ | — | US$ | 13,745.7 | |||||||||
|
|
|
|
|
|
|
| |||||||||
As at March 31, 2017 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(In millions) | ||||||||||||||||
Financial assets not measured at fair value | ||||||||||||||||
Finance receivables | — | — | 175,290.4 | 175,290.4 | ||||||||||||
Other investments | — | 191.3 | — | 191.3 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | Rs. | — | Rs. | 191.3 | Rs. | 175,290.4 | Rs. | 175,481.7 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Financial liabilities not measured at fair value | ||||||||||||||||
Short-term debt (excluding current portion of long-term debt) | — | 138,599.4 | — | 138,599.4 | ||||||||||||
Long-term debt (including current portion of long-term debt) | 353,235.2 | 309,206.9 | — | 662,442.1 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | Rs. | 353,235.2 | Rs. | 447,806.3 | Rs. | — | Rs. | 801,041.5 | ||||||||
|
|
|
|
|
|
|
|
Notes
As at March 31, 2020 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(In millions) | ||||||||||||||||
Financial assets not measured at fair value | ||||||||||||||||
Finance receivables | — | — | 268,816.5 | 268,816.5 | ||||||||||||
Other investments | 93,546.0 | — | — | 93,546.0 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | Rs. | 93,546.0 | Rs. | — | Rs. | 268,816.5 | Rs. | 362,362.5 | ||||||||
|
|
|
|
|
|
|
| |||||||||
US$ | 1,236.3 | US$ | — | US$ | 3,552.7 | US$ | 4,789.0 | |||||||||
|
|
|
|
|
|
|
| |||||||||
Financial liabilities not measured at fair value | ||||||||||||||||
Short-term debt (excluding current portion of long-term debt) | — | 163,624.8 | — | 163,624.8 | ||||||||||||
Long-term debt (including current portion of long-term debt) | 347,156.9 | 582,379.0 | — | 929,535.9 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | Rs. | 347,156.9 | Rs. | 746,003.8 | Rs. | — | Rs. | 1,093,160.7 | ||||||||
|
|
|
|
|
|
|
| |||||||||
US$ | 4,588.1 | US$ | 9,859.4 | US$ | — | US$ | 14,447.5 | |||||||||
|
|
|
|
|
|
|
| |||||||||
As at March 31, 2019 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(In millions) | ||||||||||||||||
Financial assets not measured at fair value | ||||||||||||||||
Finance receivables | — | — | 334,290.5 | 334,290.5 | ||||||||||||
Other investments | 77,455.1 | — | 38.8 | 77,493.9 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | Rs. | 77,455.1 | Rs. | — | Rs. | 334,329.3 | Rs. | 411,784.4 | ||||||||
|
|
|
|
|
|
|
| |||||||||
US$ | 1,120.0 | US$ | — | US$ | 4,834.5 | US$ | 5,954.5 | |||||||||
|
|
|
|
|
|
|
| |||||||||
Financial liabilities not measured at fair value | ||||||||||||||||
Short-term debt (excluding current portion of long-term debt) | — | 201,502.6 | — | 201,502.6 | ||||||||||||
Long-term debt (including current portion of long-term debt) | 352,851.5 | 474,906.0 | — | 827,757.5 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | Rs. | 352,851.5 | Rs. | 676,408.6 | Rs. | — | Rs. | 1,029,260.1 | ||||||||
|
|
|
|
|
|
|
| |||||||||
US$ | 5,102.3 | US$ | 9,781.2 | US$ | — | US$ | 14,883.5 | |||||||||
|
|
|
|
|
|
|
|
The short-term financial assets and liabilities are stated at amortized cost which is approximately equal to their fair value.
Derivatives are fair valued using market observable rates and published prices together with forecast cash flow information where applicable.
The fair value of finance receivables has been estimated by discounting expected cash flows using rates at which loans of similar credit quality and maturity would be made and internal assumptions such as expected credit losses and estimated collateral value for repossessed vehicles as at March 31, 20182020 and 2017. As2019. Since unobservable inputs are applied, finance receivables are classified in Level 3.
Available-for-sale securitiesEquity are carried at their fair values, which are generally based on market price quotations. The fair value in respect of the unquoted equity investments cannot be reliably measured.
The fair value of borrowings which have a quoted market price in an active market is based on its market price and for other borrowings the fair value is estimated by discounting expected future cash flows, using a discount rate equivalent to the risk-free rate of return, adjusted for the credit spread considered by the lenders for instruments of the similar maturity.
Costs of certain unquoted equity instruments has been considered as an appropriate estimate of fair value because of a wide range of possible fair value measurements and cost represents the best estimate of fair value within that range. These investments in equity instruments are not held for trading. Instead, they are held for medium or long-term strategic purpose. Upon the application of IFRS 9, the Company has chosen to designate these investments in equity instruments as at FVTOCI as the management believe that this provides a more meaningful presentation for medium or long-term strategic investments, than reflecting changes in fair value immediately in profit or loss.
Management uses its best judgment in estimating the fair value of its financial instruments. However, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented above are not necessarily indicative of all the amounts that the Company could have realized or paid in sale transactions as of respective dates. As such, the fair value of the financial instruments subsequent to the respective reporting dates may be different from the amounts reported at each year end.
Offsetting
Certain financial assets and financial liabilities are subject to offsetting where there is currently a legally enforceable right to set off recognized amounts and the Company intends to either settle on a net basis, or to realize the asset and settle the liability, simultaneously.
Certain derivative financial assets and financial liabilities are subject to master netting arrangements, whereby in the case of insolvency, derivative financial assets and financial liabilities will be settled on a net basis.
The following table discloses the amounts that have been offset, in arriving at the balance sheet presentation and the amounts that are available for offset only under certain conditions as at March 31, 2018:2020:
Gross amount recognized | Gross amount recognized as set off in the balance sheet | Net amount presented in the balance sheet | Amounts subject to an enforceable master netting arrangement | Net amount after offsetting | Gross amount recognized | Gross amount recognized as set off in the balance sheet | Net amount presented in the balance sheet | Amounts subject to an enforceable master netting arrangement | Net amount after offsetting | |||||||||||||||||||||||||||||||||||||||
Financial assets | Financial instruments | Cash collateral | Financial instruments | Cash collateral | ||||||||||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||
Derivative financial instruments | Rs. | 53,230.3 | Rs. | — | Rs. | 53,230.3 | Rs. | (49,058.2 | ) | Rs. | — | Rs. | 4,172.1 | Rs. | 46,824.6 | Rs. | — | Rs. | 46,824.6 | Rs. | (36,314.6 | ) | Rs. | — | Rs. | 10,510.0 | ||||||||||||||||||||||
Trade receivables | 199,905.7 | (972.7 | ) | 198,933.0 | — | — | 198,933.0 | 113,051.3 | (1,324.4 | ) | 111,726.9 | — | — | 111,726.9 | ||||||||||||||||||||||||||||||||||
Cash and cash equivalents | 163,843.3 | (16,675.8 | ) | 147,167.5 | — | — | 147,167.5 | 251,125.0 | (66,447.0 | ) | 184,678.0 | — | — | 184,678.0 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||
Total | Rs. | 416,979.3 | Rs. | (17,648.5 | ) | Rs. | 399,330.8 | Rs. | (49,058.2 | ) | Rs. | — | Rs. | 350,272.6 | Rs. | 411,000.9 | Rs. | (67,771.4 | ) | Rs. | 343,229.5 | Rs. | (36,314.6 | ) | Rs. | — | Rs. | 306,914.9 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||
US$ | 6,397.9 | US$ | (270.8 | ) | US$ | 6,127.2 | US$ | (752.7 | ) | US$ | — | US$ | 5,374.5 | US$ | 5,431.9 | US$ | (895.7 | ) | US$ | 4,536.2 | US$ | (479.9 | ) | US$ | — | US$ | 4,056.3 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||
Financial liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||
Derivative financial instruments | Rs. | 86,578.6 | Rs. | — | Rs. | 86,578.6 | Rs. | (49,058.2 | ) | Rs. | — | Rs. | 37,520.4 | Rs. | 75,364.7 | Rs. | — | Rs. | 75,364.7 | Rs. | (36,314.6 | ) | Rs. | — | Rs. | 39,050.1 | ||||||||||||||||||||||
Accounts payable | 805,574.3 | (972.7 | ) | 804,601.6 | — | — | 804,601.6 | 706,996.3 | (1,324.4 | ) | 705,671.9 | — | — | 705,671.9 | ||||||||||||||||||||||||||||||||||
Loans from banks/financial institutions (short-term) | 77,948.8 | (16,675.8 | ) | 61,273.0 | — | — | 61,273.0 | 161,422.6 | (66,447.0 | ) | 94,975.6 | — | — | 94,975.6 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||
Total | Rs. | 970,101.7 | Rs. | (17,648.5 | ) | Rs. | 952,453.2 | Rs. | (49,058.2 | ) | Rs. | — | Rs. | 903,395.0 | Rs. | 943,783.6 | Rs. | (67,771.4 | ) | Rs. | 876,012.2 | Rs. | (36,314.6 | ) | Rs. | — | Rs. | 839,697.6 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||
US$ | 14,884.7 | US$ | (270.8 | ) | US$ | 14,613.9 | US$ | (752.7 | ) | US$ | — | US$ | 13,861.2 | US$ | 12,473.2 | US$ | (895.7 | ) | US$ | 11,577.5 | US$ | (479.9 | ) | US$ | — | US$ | 11,097.6 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The following table discloses the amounts that have been offset in arriving at the balance sheet presentation and the amounts that are available for offset only under certain conditions as at March 31, 2017:2019:
Gross amount recognized | Gross amount recognized as set off in the balance sheet | Net amount presented in the balance sheet | Amounts subject to an enforceable master netting arrangement | Net amount after offsetting | Gross amount recognized | Gross amount recognized as set off in the balance sheet | Net amount presented in the balance sheet | Amounts subject to an enforceable master netting arrangement | Net amount after offsetting | |||||||||||||||||||||||||||||||||||||||
Financial assets | Financial instruments | Cash collateral | Financial instruments | Cash collateral | ||||||||||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||
Derivative financial instruments | Rs. | 42,855.2 | Rs. | — | Rs. | 42,855.2 | Rs. | (34,021.3 | ) | Rs. | — | Rs. | 8,833.9 | Rs. | 21,466.8 | Rs. | — | Rs. | 21,466.8 | Rs. | (17,173.7 | ) | Rs. | — | Rs. | 4,293.1 | ||||||||||||||||||||||
Trade receivables | 141,032.6 | (277.1 | ) | 140,755.5 | — | — | 140,755.5 | 191,052.4 | (1,090.7 | ) | 189,961.7 | — | — | 189,961.7 | ||||||||||||||||||||||||||||||||||
Cash and cash equivalents | 142,376.1 | (2,508.5 | ) | 139,867.6 | — | — | 139,867.6 | 254,334.7 | (38,736.7 | ) | 215,598.0 | — | — | 215,598.0 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||
Total | Rs. | 326,263.9 | Rs. | (2,785.6 | ) | Rs. | 323,478.3 | Rs. | (34,021.3 | ) | Rs. | — | Rs. | 289,457.0 | Rs. | 466,853.9 | Rs. | (39,827.4 | ) | Rs. | 427,026.5 | Rs. | (17,173.7 | ) | Rs. | — | Rs. | 409,852.8 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||
US$ | 6,750.9 | US$ | (575.9 | ) | US$ | 6,175.0 | US$ | (248.3 | ) | US$ | — | US$ | 5,926.7 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||
Financial liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||
Derivative financial instruments | Rs. | 255,175.2 | Rs. | — | Rs. | 255,175.2 | Rs. | (34,021.3 | ) | Rs. | — | Rs. | 221,153.9 | Rs. | 74,049.7 | Rs. | — | Rs. | 74,049.7 | Rs. | (17,173.7 | ) | Rs. | — | Rs. | 56,876.0 | ||||||||||||||||||||||
Accounts payable | 610,478.5 | (277.1 | ) | 610,201.4 | — | — | 610,201.4 | 760,772.4 | (1,090.7 | ) | 759,681.7 | — | — | 759,681.7 | ||||||||||||||||||||||||||||||||||
Loans from banks/financial institutions (short-term) | 58,751.2 | (2,508.5 | ) | 56,242.7 | — | — | 56,242.7 | 129,983.7 | (38,736.7 | ) | 91,247.0 | — | — | 91,247.0 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||
Total | Rs. | 924,404.9 | Rs. | (2,785.6 | ) | Rs. | 921,619.3 | Rs. | (34,021.3 | ) | Rs. | — | Rs. | 887,598.0 | Rs. | 964,805.8 | Rs. | (39,827.4 | ) | Rs. | 924,978.4 | Rs. | (17,173.7 | ) | Rs. | — | Rs. | 907,804.7 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||
US$ | 13,951.5 | US$ | (575.9 | ) | US$ | 13,375.4 | US$ | (248.3 | ) | US$ | — | US$ | 13,127.1 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
(b) | Transfer of financial assets |
The Company transfers finance receivables in securitization transactions and direct assignments. In such transactions the Company surrenders control over the receivables, though it continues to act as an agent for the collection of receivables. In most of these transactions, the Company also provides credit enhancements to the transferee.
Because of the existence of credit enhancements in such transactions, the Company continues to have the obligation to pay to the transferee, limited to the extent of credit enhancement, even if it does not collect the equivalent amounts from the original asset and continues to retain substantially all risks and rewards associated with the receivables, and hence, such transfer or assignment does not meet the derecognition criteria resulting into the transfer not being recorded as sale. Consequently, the proceeds received from the transfer are recorded as collateralized debt obligation.
Further the Company transfers certain trade receivables under the debt factoring arrangements. These do not qualify for derecognition, due to the recourse arrangement in place. Consequently the proceeds received from transfer are recorded as loans from banks / financial institutions and classified under short-term borrowings.
The carrying amount of trade receivables and finance receivables along with the associated liabilities is as follows:
As at March 31, | As at March 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||||
Nature of Asset | Carrying amount of asset sold | Carrying amount of associated liabilities | Carrying amount of asset sold | Carrying amount of associated liabilities | Carrying amount of asset sold | Carrying amount of associated liabilities | Carrying amount of asset sold | Carrying amount of associated liabilities | Carrying amount of asset sold | Carrying amount of associated liabilities | Carrying amount of asset sold | Carrying amount of associated liabilities | ||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||
Trade receivables | US$ | 231.3 | US$ | 231.3 | Rs. | 15,074.4 | Rs. | 15,074.4 | Rs. | 14,948.7 | Rs. | 14,948.7 | US$ | — |
| US$ | — |
| Rs. | — |
| Rs. | — |
| Rs. | 10,314.6 |
| Rs. | 10,314.6 |
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Finance receivables | US$ | 200.5 | US$ | 202.6 | Rs. | 13,069.1 | * | Rs. | 13,205.8 | Rs. | 10,043.8 | * | Rs. | 10,271.2 | US$ | 562.7 |
| US$ | 559.0 |
| Rs. | 42,573.7 | * | Rs. | 42,299.4 |
| Rs. | 30,338.3 | * | Rs. | 30,473.3 |
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* | Net of provision of Rs. |
(c) | Cash flow hedges |
As at March 31, 2018, the CompanyThe Group has a number of cash flow hedgingfinancial instruments in a hedging relationship. The Company and its subsidiariesGroup uses both foreign currency forward and option contracts, cross currency interest rate swaps and other currency options to hedge changes in future cash flows as a result of foreign currency and interest rate risk arrising from sales and purchases and repayment of borrowings.foreign currency bonds. The Company and its subsidiaries haveGroup has also designated some of its U.SU.S. dollar denominated bonds as hedging instruments in a cash flow hedging instrumentsrelationship to hedge the changes in future cash flows as a result of foreign currency risk arisingarrising from future anticipated sales. Cash flow hedges are expected to be recognized in profit or loss during the years ending March 31, 2019 to 2023.
The Company and its subsidiariesGroup also has a number of foreign currency derivative contracts,options and other currency options, which are entered into as an economic hedge of the financial risks of the Company. These contracts do not meet the hedge accounting criteria of IAS 39,IFRS 9, hence the change in fair value isof these derivatives are recognized immediately in the income statement.
Options are designated on spot discounted basis. The time value of options are identified as cost of hedge. Changes in the time value of options are recognized in cost of hedge reserve. Changes in the spot intrinsic value of options is recognized in hedge reserve. Changes in fair value arising from own and counterparty credit risk in options and forward exchange contracts are considered ineffective in the hedge relationship and thus the change in timefair value is recognisedof forward exchange contracts attributable to changes in credit spread are recognized in the income statement,statement. Cross currency basis spread was historically included in the hedging relationship. Cross currency basis spread arising from forward exchange contarcts is identified as it arises.cost of hedge and accordignly changes in fair value attributable to this is recognized in cost of hedge reserve.
Changes in fair value of foreign currency derivative contracts and foreign currency bonds, to the extent determined to be an effective hedge, is recognized in other comprehensive income and the ineffective portion of the fair value change is recognized in the income statement.
The following table summarizes the gain (loss) from cash flow hedgesfair value gain/losses recorded in hedge reserve and cost of hedge reserve is recognized in other comprehensivethe income statement when the forecasted transactions occur. The accumulated gain/losses in hedge reserve and cost of hedge reserve are expected to be recognized in the income statement.statement during the years ending March 31, 2020 to 2024.
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Fair value gain/(loss) of foreign currency derivative contracts recognized in Hedging reserve | US$ | 1,418.3 | Rs. 92,442.8 | (253,124.1 | ) | (12,677.6 | ) | US$ | (317.1 | ) | Rs. | (23,993.3 | ) | Rs. | (80,992.4 | ) | Rs. | 94,016.9 | ||||||||||||||
Fair value gain/(loss) of foreign currency bonds recognized in Hedging reserve | US$ | 190.8 | Rs. 12,435.2 | (13,140.7 | ) | — | (8.2 | ) | (618.3 | ) | (9,429.1 | ) | 12,435.2 | |||||||||||||||||||
Fair value gain/(loss) of cross currency interest rate swaps entered for cash flow hedges of repayment of foreign currency denominated borrowings recognized in Hedging reserve | US$ | (5.5 | ) | Rs. (359.0) | — | — | (10.8 | ) | (818.9 | ) | 446.0 | (359.0 | ) | |||||||||||||||||||
Fair value gain/(loss) of interest rate swaps entered for cash flow hedges of payment of interest on borrowings that are benchmarked to libor | (2.0 | ) | (152.9 | ) | (595.7 | ) | — | |||||||||||||||||||||||||
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Gain/(loss) recognized in Hedging reserve | 1,603.6 | 104,519.0 | (266,264.8 | ) | (12,677.6 | ) | ||||||||||||||||||||||||||
Gain/(loss) recognized in equity | US$ | (338.1 | ) | Rs. | (25,583.4 | ) | Rs. | (90,571.2 | ) | Rs. | 106,093.1 | |||||||||||||||||||||
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Gain/(loss) reclassified from Hedging reserve and recognized in ‘Revenue’ in the income statament on occurance of forecast sales | US$ | (1,822.3 | ) | Rs. (118,767.0) | (112,697.8 | ) | 7,690.6 | |||||||||||||||||||||||||
Gain/(loss) reclassified from Hedging reserve and recognized in ‘Revenue’ in the income statement on occurance of forecast sales | US$ | (667.6 | ) | Rs. | (50,511.8 | ) | Rs. | (79,529.5 | ) | Rs. | (118,767.0 | ) | ||||||||||||||||||||
Gain/(loss) reclassified out of Hedging reserve and recorded in ‘Raw materials, components and consumables’ in the income statement when forecast purchases affect income statement | US$ | 240.5 | Rs. 15,674.8 | 7,553.4 | (25,570.8 | ) | — | — | — | 15,674.8 | ||||||||||||||||||||||
Gain/(loss) reclassified from Hedging reserve and recognized in ‘Foreign exchange (gain)/loss (net)’ in the income statement on account of forecast transactions no longer expected to occur | US$ | 8.5 | Rs. 555.5 | (3,673.1 | ) | (167.7 | ) | 2.0 | 147.8 | (1,033.4 | ) | 555.5 | ||||||||||||||||||||
Gain/(loss) reclassified from Hedging reserve and recognized in ‘Foreign exchange (gain)/loss (net)’ in the income statement for repayment of foreign currency denominated borrowings recognized in hedging reserve | 15.9 | 1,203.5 | — | — | ||||||||||||||||||||||||||||
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Gain/(loss) reclassified from Hedging reserve to the income statement | (1,573.3 | ) | (102,536.7 | ) | (108,817.5 | ) | (18,047.9 | ) | ||||||||||||||||||||||||
Gain/(loss) reclassified from equity to the income statement | US$ | (649.7 | ) | Rs. | (49,160.5 | ) | Rs. | (80,562.9 | ) | Rs. | (102,536.7 | ) | ||||||||||||||||||||
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(d) | Financial risk management |
In the course of its business, the Company is exposed primarily to fluctuations in foreign currency exchange rates, interest rates, equity prices, liquidity and credit risk, which may adversely impact the fair value of its financial instruments.
The Company has a risk management policy which not only covers the foreign exchange risks but also other risks associated with the financial assets and liabilities such as interest rate risks and credit risks. The risk management policy is approved by the board of directors. The risk management framework aims to:
Create a stable business planning environment by reducing the impact of currency and interest rate fluctuations on the Company’s business plan.
Achieve greater predictability to earnings by determining the financial value of the expected earnings in advance.
(i) | Market risk |
Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity price fluctuations, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy.
(i)–(a) Foreign currency exchange rate risk:
The fluctuation in foreign currency exchange rates may have potential impact on the income statement and equity, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the respective consolidated entities.
Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in U.S. dollar, GBP, Chinese renminbi, Japanese yen, Singapore dollar and Euro, against the respective functional currencies of Tata Motors Limited and its subsidiaries.
The Company, as per its risk management policy, uses foreign exchange and other derivative instruments primarily to hedge foreign exchange and interest rate exposure. Furthermore, any movement in the functional currencies of the various operations of the Company against major foreign currencies may impact the Company’s revenues from its international operations. Any weakening of the functional currency may impact the Company’s cost of imports and cost of borrowings and consequently may increase the cost of financing the Company’s capital expenditures.
The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks. It hedges a part of these risks by using derivative financial instruments in accordance with its risk management policies.
The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate exposure of a currency and a simultaneous parallel foreign exchange rates shift in the foreign exchange rates of each currency by 10%.
The following analysis is based on the gross exposure as of the relevant balance sheet dates, which could affect the income statement. There is no exposure to the income statement on account of translation of financial statements of consolidated foreign entities. Furthermore, the exposure as indicated below is mitigated by some of the derivative contracts entered into by the Company as disclosed at clause (iv) below.
The following table sets forth information relating to foreign currency exposure (other than risk arising from derivatives disclosed at clause (iv) below) as at March 31, 2018:2020:
U.S. dollar | Euro | Chinese Renminbi | GBP | Canadian dollar | Others* | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Financial assets | Rs. | 185,949.4 | Rs. | 114,145.3 | Rs. | 45,268.6 | Rs. | 13,133.8 | Rs. | 15,354.1 | Rs. | 24,122.7 | 397,973.9 | |||||||||||||||
Financial liabilities | Rs. | 400,452.8 | Rs. | 409,942.4 | Rs. | 49,092.8 | Rs. | 62,634.1 | Rs. | 7,581.2 | Rs. | 30,946.8 | 960,650.1 |
* | Others mainly include currencies such as the Russian rouble, Singapore dollars, Swiss franc, Australian dollars, South African rand, Thai baht, Japanese Yen and Korean won. |
The table below outlines the effect change in foreign currencies exposure for the year ended March 31, 2020:
Change in assumption | for financial assets | Impact on Company’s net income before tax for financial liabilities | comprehensive income for financial liabilities | |||||||||||||||||||||||||
| Rs. (39,797.4) million | Decrease by Rs. (96,065.0) million | Decrease by Rs. (7,562.8) million | |||||||||||||||||||||||||
| Rs. 39,797.4 million | Increase by Rs. 96,065.0 million | Increase by Rs. 7,562.8 million |
The following table set forth information relating to foreign currency exposure (other than risk arising from derivatives disclosed at clause (iv) below) as at March 31, 2019:
U.S. dollar | Euro | Chinese Renminbi | GBP | Japanese Yen | Others* | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Financial assets | Rs. | 227,659.7 | Rs. | 125,940.9 | Rs. | 19,853.1 | Rs. | 16,006.7 | Rs. | 3,398.6 | Rs. | 27,184.6 | 420,043.6 | |||||||||||||||
Financial liabilities | Rs. | 390,892.0 | Rs. | 322,260.4 | Rs. | 38,501.1 | Rs. | 59,269.8 | Rs. | 4,405.9 | Rs. | 28,285.3 | 843,614.5 |
* | Others mainly include currencies such as the Russian rouble, Singapore dollars, Swiss franc, Australian dollars, South African rand, Singapore dollars, Thai baht and Korean won. |
10% appreciation/depreciation ofThe table below outlines the respectiveeffect change in foreign currencies with respect to functional currency of the Company would result in decrease/increase in the Company’s net income before tax by approximately Rs. 37,497.7 million and Rs. 72,790.6 million for financial assets and financial liabilities respectivelyexposure for the year ended March 31, 2018 and decrease/increase in the Company’s other comprehensive income by approximately Rs. 11,166.4 million in respect of financial liabilities designated in cash flow hedges for the year ended March 31, 2018.2019:
Change in assumption | Impact on Company’s net income before tax for financial assets | Impact on Company’s net income before tax for financial liabilities | Impact on Company’s other comprehensive income for financial liabilities | |||
Appreciation in foreign currencies by 10% | Decrease by Rs. (42,004.4) million | Decrease by Rs. (77,446.6) million | Decrease by Rs. (6,914.9) million | |||
Depreciation in foreign currencies by 10% | Increase by Rs. 42,004.4 million | Increase by Rs. 77,446.6 million | Increase by Rs. 6,914.9 million |
The following table set forth information relating to foreign currency exposure (other than risk arising from derivatives disclosed at clause (iv) below) as at March 31, 2017:2018:
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10% appreciation/depreciation of the respective foreign currencies with respect to functional currency of the Company would result in decrease/increase in the Company’s net income before tax by approximately Rs. 28,922.4 million and Rs. 58,201.0 million for financial assets and financial liabilities respectively, for the year ended March 31, 2017 and decrease/increase in the Company’s other comprehensive income before tax by approximately Rs. 7,525.4 million in respect of financial liabilities designated in cash flow hedges for the year ended March 31, 2017.
The following table set forth information relating to foreign currency exposure (other than risk arising from derivatives disclosed at clause (iv) below) as at March 31, 2016:
U.S. dollar | Euro | Chinese Renminbi | Japanese Yen | Others* | Total | U.S. dollar | Euro | Chinese Renminbi | GBP | Japanese Yen | Others* | Total | ||||||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Financial assets | Rs. | 73,411.8 | Rs. | 66,207.6 | Rs.63,929.2 | Rs.2,577.6 | Rs.41,348.7 | Rs.247,474.9 | Rs. | 135,310.7 | Rs. | 128,171.7 | Rs. | 49,977.2 | Rs. | 15,115.0 | Rs. | 4,750.2 | Rs. | 41,652.4 | 374,977.2 | |||||||||||||||||||||||||||||||
Financial liabilities | Rs. | 367,796.8 | Rs. | 165,362.8 | Rs.54,509.4 | Rs.6,163.9 | Rs.27,896.5 | Rs.621,729.4 | Rs. | 369,091.0 | Rs. | 311,926.9 | Rs. | 53,989.1 | Rs. | 63,716.6 | Rs. | 5,456.5 | Rs. | 35,389.5 | 839,569.6 |
* | Others mainly include currencies such as the Russian rouble, Swiss franc, Australian dollars, South African rand, Singapore Dollars, Thai baht and Korean won. |
10% appreciation/depreciation of
The table below outlines the respectiveeffect change in foreign currencies with respect to functional currency of the Company would result in decrease/increase in the Company’s net income before tax by approximately Rs. 24,747.5 million and Rs. 62,172.9 million for financial assets and financial liabilities respectivelyexposure for the year ended March 31, 2016.2018:
Change in assumption | Impact on Company’s net income before tax for financial assets | Impact on Company’s net income before tax for financial liabilities | Impact on Company’s other comprehensive income for financial liabilities | |||
Appreciation in foreign currencies by 10% | Decrease by Rs. (37,497.7) million | Decrease by Rs. (72,790.6) million | Decrease by Rs. (11,166.4) million | |||
Depreciation in foreign currencies by 10% | Increase by Rs. 37,497.7 million | Increase by Rs. 72,790.6 million | Increase by Rs. 11,166.4 million |
(Note: The impact is indicated on the income/loss before tax basis).
(i) – (b) Interest rate risk
Interest rate risk is measured by using the cash flow sensitivity for changes in variable interest rates. Any movement in the reference rates could have an impact on the Company’s cash flows as well as costs.
The Company is subject to variable interest rates on some of its interest bearing liabilities. The Company’s interest rate exposure is mainly related to debt obligations. The Company also uses a mix of interest rate sensitive financial instruments to manage the liquidity and fund requirements for its day to day operations like short termnon-convertible bonds and short term loans.
In its financing business, the Company enters into transactions with customers which primarily result in receivables at fixed rates. In order to manage this risk, the Company has a policy to match funding in terms of maturities and interest rates and also for certain part of the portfolio, the Company does not match funding with maturities, in order to take advantage of market opportunities.
The Company also enters into arrangements of securitization of receivables in order to reduce the impact of interest rate movements. Further, the Company also enters in to interest rate swap contracts with banks to manage its interest rate risk.
As at March 31, 2018, 20172020, 2019 and 2016,2018, financial liability of Rs. 210,182.8450,211.5 million, Rs. 189,283.6302,786.3 million and Rs. 221,171.2210,182.8 million, respectively, was subject to variable interest rates. Increase/decrease of 100 basis points in interest rates at the balance sheet date would result in an impact (decrease/increase in case of net income) of Rs. 2,101.84,502.1 million, Rs. 1,892.83,027.9 million and Rs. 2,211.72,101.8 million on income for the yearyears ended March 31, 2018, 20172020, 2019 and 2016,2018, respectively.
The model assumes that interest rate changes are instantaneous parallel shifts in the yield curve. Although some assets and liabilities may have similar maturities or periods tore-pricing, these may not react correspondingly to changes in market interest rates. Also, the interest rates on some types of assets and liabilities may fluctuate with changes in market interest rates, while interest rates on other types of assets may change with a lag.
The risk estimates provided assume a parallel shift of 100 basis points interest rate across all yield curves. This calculation also assumes that the change occurs at the balance sheet date and has been calculated based on risk exposures outstanding as at that date. The period end balances are not necessarily representative of the average debt outstanding during the period.
This analysis assumes that all other variables, in particular foreign currency rates, remain constant.
(Note: The impact is indicated on the income/loss before tax basis).
The Company uses cross currency interest rate swaps to hedge some of its exposure to interest rate arising from variable rate foreign currency denominated debt.
The Company uses cross currency interest rate swaps to hedge some of its exposure to interest rate arising from variable rate foreign currency denominated debt. The Company and its subsidiaries also uses cross currency interest rate swaps to convert some of its foreign currency denominated fixed rate debt to floating rate debt.
(i) – (c) Equity Price risk
Equity Price Risk is related to the change in market reference price of the investments in equity securities.
The fair value of some of the Company’s investments inavailable-for-sale equity securities exposes the Company to equity price risks. In general, these securities are not held for trading purposes. These investments are subject to changes in the market price of securities. The fair value of quoted equity securities measured at FVOCI/available-for-sale equity securities as at March 31, 2018, 20172020, 2019 and 2016,2018, was Rs. 3,404.81,586.8 million, Rs. 2,602.93,043.1 million and Rs. 2,105.03,404.8 million, respectively. A 10% change in equity prices of quoted equity securities measured at FVOCI / available-for-sale securities held as at March 31, 2017, 20162020, 2019 and 2015,2018, would result in an impact of Rs. 340.5158.7 million, Rs. 260.3304.3 million and Rs. 210.5340.5 million on equity, respectively.
The Company has investments in unquoted equity shares of Rs. 2,036.9 million as at March 31, 2018, Rs. 3,823.1 million as at March 31, 2017 and Rs.3,900.0 million as at March 31, 2016, the fair value of which cannot be reliablysome of the Company’s investments in quoted equity securities measured .at FVTPL as of March 31, 2020 and 2019, was Rs. 1,577.8 million and Rs. 4,231.4 , respectively. A 10% change in prices of these securities measured at FVTPL held as of March 31, 2020 and 2019, would result in an impact of Rs. 157.8 million and Rs. 423.1 on income statement, respectively.
(Note: The impact is indicated on equity before consequential tax impact, if any).
(ii) Credit risk
Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses both the direct risk of default and the risk of deterioration of creditworthiness as well as concentration risks.
Financial instruments that are subject to concentrations of credit risk, principally consist of investments classified as loans and receivables,available-for-salein debt instruments, trade receivables, finance receivables, loans and advances and derivative financial instruments. None of the financial instruments of the Company result in material concentrations of credit risks.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was Rs. 1,035,065.2983,045.4 million as at March 31, 20182020 and Rs. 887,129.21,028,129.9 million as at March 31, 2017,2019, being the total of the carrying amount of balances with banks, short term deposits with banks, trade receivables, finance receivables, margin money and other financial assets excluding equity investments.
Financial assets that are neither past due nor impaired
None of the Company’s cash equivalents, including time deposits with banks, are past due or impaired. Regarding trade receivables and other receivables, and other loans or receivables that are neither impaired nor past due, there were no indications as at March 31, 2018,2020, that defaults in payment obligations will occur.
Credit quality of financial assets and impairment loss
The ageing of trade receivables and finance receivables as of balance sheet date is given below. The age analysis have been considered from the due date.
As at March 31, | As at March 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2018 | 2018 | 2018 | 2018 | 2018 | 2017 | 2017 | 2017 | 2020 | 2020 | 2020 | 2020 | 2020 | 2020 | 2019 | 2019 | 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trade receivables | Gross | Allowance | Net | Gross | Allowance | Net | Gross | Allowance | Net | Gross | Allowance | Net | Gross | Allowance | Net | Gross | Allowance | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Period (in months) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Not due | US$ | 2,447.6 | US$ | (3.3 | ) | US$ | 2,444.3 | Rs.159,519.0 | Rs.(215.7 | ) | Rs.159,303.3 | Rs.119,438.7 | Rs.(909.9 | ) | Rs.118,528.8 | US$ | 1,083.6 | US$ | (4.4 | ) | US$ | 1,079.2 | Rs. | 81,991.8 | Rs. | (330.3 | ) | Rs. | 81,661.5 | Rs. | 150,898.8 | Rs. | (324.1 | ) | Rs. | 150,574.7 | ||||||||||||||||||||||||||||||||||||
Overdue up to 3 months | 503.6 | (5.7 | ) | 497.9 | 32,819.4 | (371.5 | ) | 32,447.9 | 17,718.2 | (319.8 | ) | 17,398.4 | 261.7 | (2.2 | ) | 259.5 | 19,802.0 | (163.8 | ) | 19,638.2 | 31,086.5 | (131.0 | ) | 30,955.5 | ||||||||||||||||||||||||||||||||||||||||||||||||
Overdue3-6 months | 34.4 | (5.4 | ) | 29.0 | 2,243.6 | (354.8 | ) | 1,888.8 | 1,859.3 | (254.9 | ) | 1,604.4 | 48.1 | (4.9 | ) | 43.2 | 3,635.8 | (372.1 | ) | 3,263.7 | 2,516.9 | (183.7 | ) | 2,333.2 | ||||||||||||||||||||||||||||||||||||||||||||||||
Overdue more than 6 months | 260.2 | (179.1 | ) | 81.1 | * | 16,967.8 | (11,674.8 | ) | 5,293.0 | * | 15,513.7 | (12,289.8 | ) | 3,223.9 | * | 230.5 | (135.8 | ) | 94.7 | 17,437.3 | (10,273.8 | ) | 7,163.5 | * | 15,160.5 | (9,062.2 | ) | 6,098.3 | ||||||||||||||||||||||||||||||||||||||||||||
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Total | US$ | 3,245.8 | US$ | (193.5 | ) | US$ | 3,052.3 | Rs.211,549.8 | Rs. (12,616.8 | ) | Rs.198,933.0 | Rs.154,529.9 | Rs. (13,774.4 | ) | Rs.140,755.5 | US$ | 1,623.9 | US$ | (147.3 | ) | US$ | 1,476.6 | Rs. | 122,866.9 | Rs. | (11,140.0 | ) | Rs. | 111,726.9 | Rs. | 199,662.7 | Rs. | (9,701.0 | ) | Rs. | 189,961.7 | ||||||||||||||||||||||||||||||||||||
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* | Trade receivables overdue more than six months include Rs. |
The Company makes allowances for losses on its portfolio of finance receivable on the basis of expected future collection from receivables. The future collection are estimated on the basis of past collection trend which are adjustedstatistical analysis that, among other factors, require assessment of significant increase in credit risk and analysis of historical delinquency for changes in current circumstances as well as expected changes in collection on accountdetermining of future with respect to certain macro economic factorprobability of default (PD), credit loss experience for determining of loss given default (LGD) and impact of macro-economic factors like GDP growth, fuel price and inflation.
As at March 31, | As at March 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2018 | 2018 | 2018 | 2018 | 2018 | 2017 | 2017 | 2017 | 2020 | 2020 | 2020 | 2020 | 2020 | 2020 | 2019 | 2019 | 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finance receivables # | Gross | Allowance | Net | Gross | Allowance | Net | Gross | Allowance | Net | Gross | Allowance | Net | Gross | Allowance | Net | Gross | Allowance | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Period (in months) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Not due* | US$ | 3,669.3 | US$ | (114.2 | ) | US$ | 3,555.1 | Rs.239,142.5 | Rs. (7,443.7) | Rs.231,698.8 | Rs.180,047.7 | Rs. (14,036.4) | Rs.166,011.3 | US$ | 4,024.2 | US$ | (69.9 | ) | US$ | 3,954.3 | Rs. | 304,484.6 | Rs. | (5,290.4) | Rs. | 299,194.2 | Rs. | 336,349.5 | Rs. | (6,082.0) | Rs. | 330,267.5 | ||||||||||||||||||||||||||||||||||||||||
Overdue up to 3 months | 69.4 | (2.4 | ) | 67.0 | 4,526.3 | (154.5 | ) | 4,371.8 | 7,029.2 | (407.5 | ) | 6,621.7 | 95.7 | (4.2 | ) | 91.5 | 7,243.0 | (314.3 | ) | 6,928.7 | 4,294.7 | (194.4 | ) | 4,100.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
Overdue more than 3 months | 108.0 | (63.2 | ) | 44.8 | 7,038.8 | (4,119.7 | ) | 2,919.1 | 24,530.7 | (21,531.2 | ) | 2,999.5 | 73.7 | (12.0 | ) | 61.7 | 5,576.8 | (909.0 | ) | 4,667.8 | 3,933.2 | (2,054.1 | ) | 1,879.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
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Total | US$ | 3,846.7 | US$ | (179.8 | ) | US$ | 3,666.9 | Rs.250,707.6 | Rs. (11,717.9) | Rs.238,989.7 | Rs.211,607.6 | Rs. (35,975.1) | Rs.175,632.5 | US$ | 4,193.6 | US$ | (86.1 | ) | US$ | 4,107.5 | Rs. | 317,304.4 | Rs. | (6,513.7) | Rs. | 310,790.7 | Rs. | 344,577.4 | Rs. | (8,330.5) | Rs. | 336,246.9 | ||||||||||||||||||||||||||||||||||||||||
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* | Allowance in the “Not due” category includes allowance against installments pertaining to impaired finance receivables which have not yet fallen due. |
# | Finance receivables originated in India. |
(iii) | Liquidity risk |
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements.
The Company has obtained fund andnon-fund based working capital lines from various banks. Furthermore, the Company has access to funds from debt markets through commercial paper programs,non-convertible debentures, senior notes and other debt instruments. The Company invests its surplus funds in bank fixed deposit and liquid and liquid plus schemes of mutual funds, which carry no/low mark to market risks. The Company has also invested 15% of thenon-convertible debentures (issued by the Company) falling due for repayment in the next 12 months in bank deposits, to meet the regulatory norms of liquidity requirements.
The Company also constantly monitors funding options available in the debt and capital markets with a view to maintaining financial flexibility.
The table below provides details regarding the contractual maturities of financial liabilities, including estimated interest payments as at March 31, 2018:2020:
Carrying amount | Due in 1st Year | Due in 2nd Year | Due in 3rd to 5thYear | Due after 5th Year | Total contractual cash flows | Carrying amount | Due in 1st Year | Due in 2nd Year | Due in 3rd to 5th Year | Due after 5th Year | Total contractual cash flows | |||||||||||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts payable and acceptances | Rs. | 853,615.0 | Rs. | 853,615.0 | Rs. | — | Rs. | — | Rs. | — | Rs. | 853,615.0 | US$ | 13,097.3 | Rs. | 733,385.2 | Rs. | 733,385.2 | Rs. | — | Rs. | — | Rs. | — | Rs. | 733,385.2 | US$ | 9,692.5 | ||||||||||||||||||||||||||||
Borrowings and interest thereon | 899,664.0 | 311,803.8 | 149,973.7 | 398,648.1 | 160,292.0 | 1,020,717.6 | 15,661.2 | 1,200,852.4 | 406,533.1 | 214,289.0 | 547,623.3 | 205,702.1 | 1,374,147.5 | 18,160.9 | ||||||||||||||||||||||||||||||||||||||||||
Lease liabilities | 59,771.2 | 13,126.7 | 10,626.1 | 23,052.1 | 49,120.7 | 95,925.6 | 1,267.8 | |||||||||||||||||||||||||||||||||||||||||||||||||
Other financial liabilities | 49,470.2 | 46,273.1 | 1,717.9 | 1,176.9 | 1,069.2 | 50,237.1 | 770.8 | 55,076.2 | 49,050.2 | 2,023.3 | 4,069.5 | 625.2 | 55,768.2 | 737.0 | ||||||||||||||||||||||||||||||||||||||||||
Derivative liabilities | 86,578.6 | 62,076.6 | 29,688.0 | 12,188.2 | 1,207.6 | 105,160.4 | 1,613.5 | 75,364.7 | 46,351.5 | 25,461.1 | 13,616.1 | 2,193.8 | 87,622.5 | 1,158.0 | ||||||||||||||||||||||||||||||||||||||||||
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Total | Rs. | 1,889,327.8 | Rs. | 1,273,768.5 | Rs. | 181,379.6 | Rs. | 412,013.2 | Rs. | 162,568.8 | Rs. | 2,029,730.1 | US$ | 31,142.8 | Rs. | 2,124,449.7 | Rs. | 1,248,446.7 | Rs. | 252,399.5 | Rs. | 588,361.0 | Rs. | 257,641.8 | Rs. | 2,346,849.0 | US$ | 31,016.2 | ||||||||||||||||||||||||||||
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Contractual maturities of borrowings includes cash flows relating to collateralized debt obligations. This represents the amount received against the transfer of finance receivables in securitization transactions and/or direct assignments, which do not qualify for derecognition. The liability of the Company in such cases is limited to the extent of credit enhancements provided. The contractual maturities of such collateralized debt obligations are as follows:
Carrying amount | Due in 1st Year | Due in 2nd Year | Due in 3rd to 5th Year | Total contractual cash flows | ||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Collateralized debt obligations | Rs. | 13,205.8 | Rs. | 7,280.9 | Rs. | 5,924.9 | Rs. | — | Rs. | 13,205.8 | US$ | 202.6 |
Collateralized debt obligations Carrying
amount Due in 1st
Year Due in 2nd
Year Due in 3rd
to 5th Year Total
contractual
cash flows (In millions) Rs. 42,299.4 Rs. 24,451.3 Rs. 14,942.0 Rs. 7,179.5 Rs. 46,572.8 US$ 615.5
The table below provides details regarding the contractual maturities of financial liabilities, including estimated interest payments as at March 31, 2017:2019:
Carrying amount | Due in 1st Year | Due in 2nd Year | Due in 3rd to 5th Year | Due after 5th Year | Total contractual cash flows | Carrying amount | Due in 1st Year | Due in 2nd Year | Due in 3rd to 5th Year | Due after 5th Year | Total contractual cash flows | |||||||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Financial liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts payable and acceptances | Rs. | 658,543.8 | Rs. | 658,543.8 | Rs. | — | Rs. | — | Rs. | — | Rs. | 658,543.8 | Rs. | 791,452.9 | Rs. | 791,452.9 | Rs. | — | Rs. | — | Rs. | — | Rs. | 791,452.9 | US$ | 11,444.6 | ||||||||||||||||||||||||||
Borrowings and interest thereon | 794,603.6 | 217,085.8 | 130,287.8 | 395,994.5 | 193,108.9 | 936,477.0 | 1,070,506.5 | 398,168.8 | 184,162.3 | 438,942.3 | 195,065.9 | 1,216,339.3 | 17,588.6 | |||||||||||||||||||||||||||||||||||||||
Other financial liabilities | 32,258.7 | 30,190.1 | 577.1 | 843.5 | 1,161.3 | 32,772.0 | 48,512.5 | 45,648.1 | 1,068.5 | 1,887.4 | 3,563.2 | 52,167.2 | 754.4 | |||||||||||||||||||||||||||||||||||||||
Derivative liabilities | 255,175.2 | 157,918.7 | 104,708.5 | 60,528.2 | 11.6 | 323,167.0 | 74,049.7 | 47,425.3 | 28,341.0 | 13,643.1 | 3,001.4 | 92,410.8 | 1,336.3 | |||||||||||||||||||||||||||||||||||||||
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Total | Rs. | 1,740,581.3 | Rs. | 1,063,738.4 | Rs. | 235,573.4 | Rs. | 457,366.2 | Rs. | 194,281.8 | Rs. | 1,950,959.8 | Rs. | 1,984,521.6 | Rs. | 1,282,695.1 | Rs. | 213,571.8 | Rs. | 454,472.8 | Rs. | 201,630.5 | Rs. | 2,152,370.2 | US$ | 31,123.9 | ||||||||||||||||||||||||||
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Contractual maturities of borrowings includes cash flows relating to collateralized debt obligations. This represents the amount received against the transfer of finance receivables in securitization transactions and/or direct assignments, which do not qualify for derecognition. The liability of the Company in such cases is limited to the extent of credit enhancements provided. The contractual maturities of such collateralized debt obligations are as follows:
Carrying amount | Due in 1st Year | Due in 2nd Year | Due in 3rd to 5thYear | Total contractual cash flows | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Collateralized debt obligations | Rs. | 10,271.2 | Rs. | 6,296.7 | Rs. | 3,671.0 | Rs.1,108.2 | Rs. | 11,075.9 |
Carrying amount | Due in 1st Year | Due in 2nd Year | Due in 3rd to 5th Year | Total contractual cash flows | ||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Collateralized debt obligations | Rs. | 30,473.3 | Rs. | 14,824.2 | Rs. | 10,134.0 | Rs. | 5,515.1 | Rs. | 30,473.3 | US$ | 440.7 |
(iv) | Derivative financial instruments and risk management |
The Company has entered into variety of foreign currency, interest rates and commodity forward contracts and options to manage its exposure to fluctuations in foreign exchange rates, interest rates and commodity price risk. These financial exposures are managed in accordance with the Company’s risk management policies and procedures.
The Company also enters into interest rate swaps and interest rate currency swap agreements, mainly to manage exposure on its fixed rate or variable rate debt. The Company uses interest rate derivatives or currency swaps to hedge exposure to exchange rate fluctuations on principal and interest payments for borrowings denominated in foreign currencies.
Specific transactional risks include risks like liquidity and pricing risks, interest rate and exchange rate fluctuation risks, volatility risks, counterparty risks, settlement risks and gearing risks.
Fair value of derivative financial instruments are determined using valuation techniques based on information derived from observable market data.
The fair value of derivative financial instruments is as follows:
As at March 31, | As at March 31, | |||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Foreign currency forward exchange contracts and options | US$ | (569.1 | ) | Rs. | (37,089.3 | ) | Rs. | (216,852.0 | ) | US$ | (325.6 | ) | Rs. | (24,631.9 | ) | Rs. | (52,426.5 | ) | ||||||
Commodity Derivatives | — | (2.4 | ) | 3,856.6 | (84.5 | ) | (6,394.7 | ) | 1,019.5 | |||||||||||||||
Others including interest rate and currency swaps | 57.4 | 3,743.4 | 675.4 | 32.9 | 2,486.5 | (1,175.9 | ) | |||||||||||||||||
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Total | US$ | (511.7 | ) | Rs. | (33,348.3 | ) | Rs. | (212,320.0 | ) | US$ | (377.2 | ) | Rs. | (28,540.1 | ) | Rs. | (52,582.9 | ) | ||||||
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The gain/loss onin foreign currency derivatives which are not hedge accounted, recognized in ‘Foreign“Foreign exchange (gain)/loss (net)’ loss(net) in the income statement was Rs.2,187.9Rs. 5,995.3 million (gain) (loss), Rs.5,044.8Rs. 2,883.7 million (gain) and Rs.1,198.9Rs. 2,187.9 million (gain) for the years ended March 31, 2020, 2019 and 2018 2017 and 2016,, respectively.
The gain/loss(loss) on commodity derivative contracts, recognized in the income statement was Rs. 2,146.36,881.8 million (gain)(loss) , Rs. 9,184.0847.4 million (gain) and Rs. 11,555.32,146.3 million (loss)(gain) for the years ended March 31, 2018, 20172020, 2019 and 2016,2018, respectively.
As at March 31, | As at March 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||
10% depreciation of foreign currency: | ||||||||||||||||||||||||||||||||||||||||||||||||
Gain/(loss) in hedging reserve | US$ | 695.5 | Rs. | 45,329.0 | Rs. | 130,197.9 | Rs. | 161,493.3 | US$ | 719.8 | Rs. | 54,467.4 | Rs. | 2,136.0 | Rs. | 71,814.7 | ||||||||||||||||||||||||||||||||
Gain/(loss) in statement of Profit and loss | US$ | 32.7 | Rs. | 2,134.2 | Rs. | (9,157.6 | ) | Rs. | 9,028.8 | US$ | (116.9 | ) | Rs. | (8,848.9 | ) | Rs. | 925.0 | Rs. | (7,371.1 | ) | ||||||||||||||||||||||||||||
10% Appreciation of foreign currency: | ||||||||||||||||||||||||||||||||||||||||||||||||
Gain/(loss) in hedging reserve | US$ | (818.6 | ) | Rs. | (53,353.8 | ) | Rs. | (136,266.8 | ) | Rs. | (174,283.9 | ) | US$ | (712.8 | ) | Rs. | (53,930.9 | ) | Rs. | (2,335.1 | ) | Rs. | (83,992.3 | ) | ||||||||||||||||||||||||
Gain/(loss) in statement of Profit and loss | US$ | (20.7 | ) | Rs. | (1,346.5 | ) | Rs. | 14,314.8 | Rs. | 2,453.8 | US$ | 140.8 | Rs. | 10,651.7 | Rs. | 6.7 | Rs. | 10,373.6 |
In respect of the Company’s commodity derivative contracts, a 10% depreciation/appreciation of all commodity prices underlying such contracts, would have resulted in an approximate gain/(loss) of (Rs. 4,583.2 million)/Rs. 4,583.2 million, (Rs. 4,797.9 million)/Rs. 4,797.9 million and (Rs. 4,614.2 million)/Rs. 4,614.2 million, (Rs. 4,612.4 million)/Rs. 4,612.4 million and (Rs. 4,963.5 million)/Rs. 4,963.5 million in the income statement for the years ended March 31, 2018, 20172020, 2019 and 2016,2018, respectively.
Exposure to gain/loss on derivative instruments offset to some extent the exposure to foreign currency risk, interest rate risk as disclosed above.
(Note: The impact is indicated on the income/loss before tax basis).
Disclosure on Financials instruments designated as hedging instrument in cashflow hedge
The details of cash flow hedges entered by the Company to hedge interest rate risk arising on floating rate borrowings and by one of the Company’s subsidiaries to hedge the currency fluctuation of its functional currency (GBP) against foreign currencies to hedge future cash flows arising from revenue and cost of materials is as follows:
Outstanding contracts
Average strike rate | Nominal amounts | Carrying value | ||||||||||||||||||||||||||||||
(in GBP) | (in millions) | (in millions) | ||||||||||||||||||||||||||||||
as at March 31, | as at March 31, | as at March 31, | ||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2020 | 2019 | 2020 | 2020 | 2019 | |||||||||||||||||||||||||
Foreign currency forwards | ||||||||||||||||||||||||||||||||
Cash flow hedges - USD | ||||||||||||||||||||||||||||||||
Sell - USD/ Buy - GBP | ||||||||||||||||||||||||||||||||
<1 year | 0.7229 | 0.6756 | US$ | 2,388.6 | Rs.165,182.1 | Rs.143,368.6 | US$ | (212.3 | ) | Rs. | (14,684.9 | ) | Rs. | (16,706.3 | ) | |||||||||||||||||
Between 1-5 years | 0.7649 | 0.6989 | 6,895.2 | 476,839.4 | 181,924.8 | (257.0 | ) | (17,771.6 | ) | (10,318.2 | ) | |||||||||||||||||||||
Cash flow hedges - Chinese Yuan | ||||||||||||||||||||||||||||||||
Sell - Chinese Yuan /Buy - GBP | ||||||||||||||||||||||||||||||||
<1 year | 0.1086 | 0.1054 | 2,165.4 | 149,748.9 | 192,968.4 | (79.8 | ) | (5,518.54 | ) | (13,848.0 | ) | |||||||||||||||||||||
Between 1-5 years | 0.1096 | 0.1075 | 1,608.2 | 111,212.6 | 117,573.1 | (27.1 | ) | (1,870.7 | ) | (3,892.0 | ) | |||||||||||||||||||||
Cash flow hedges -Euro | ||||||||||||||||||||||||||||||||
Buy - Euro / Sell - GBP | ||||||||||||||||||||||||||||||||
<1 year | 0.9109 | 0.8823 | 3,563.9 | 246,463.7 | 326,652.4 | 1.4 | 93.5 | 1,267.1 | ||||||||||||||||||||||||
Between 1-5 years | 0.9101 | 0.9192 | 4,577.0 | 316,521.1 | 364,757.3 | (23.0 | ) | (1,590.1 | ) | (6,607.3 | ) | |||||||||||||||||||||
Cash flow hedges - Other | ||||||||||||||||||||||||||||||||
<1 year | 0.0000 | 0.0000 | 1,224.0 | 84,648.8 | 162,918.9 | 69.3 | 4,793.2 | 181.0 | ||||||||||||||||||||||||
Between 1-5 years | 0.0000 | 0.0000 | 1,674.4 | 115,795.8 | 79,830.3 | 52.7 | 3,647.8 | 995.6 | ||||||||||||||||||||||||
Cash flow hedges of foreign exchange risk on recognized debt | ||||||||||||||||||||||||||||||||
Cross currency interest rate swaps | ||||||||||||||||||||||||||||||||
Buy - USD / Sell - GBP | ||||||||||||||||||||||||||||||||
>5 years | 0.7592 | 0.7592 | 513.5 | 35,507.8 | 34,359.8 | 76.6 | 5,295.3 | 1,004.7 | ||||||||||||||||||||||||
Buy- Euro / Sell - GBP | ||||||||||||||||||||||||||||||||
>5 years | 0.8912 | 0.8912 | 602.7 | 41,680.4 | 40,332.8 | 4.2 | 290.8 | (1,330.5 | ) | |||||||||||||||||||||||
Buy - USD / Sell- INR | ||||||||||||||||||||||||||||||||
>5 years | 83.5200 | — | 649.0 | 44,882.9 | — | 94.7 | 6,549.9 | — | ||||||||||||||||||||||||
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Total foreign currency derivative instruments | US$ | 25,861.9 | Rs. | 1,788,483.5 | Rs. | 1,644,686.4 | US$ | (300.3 | ) | Rs. | (20,765.3 | ) | Rs. | (49,253.9 | ) | |||||||||||||||||
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< 1 year | — | 0.736 | US$ | — | Rs. | — | Rs. | 556,467.1 | US$ | — | Rs. | — | Rs. | (69,148.8 | ) | |||||||||||||||||
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Total debt instruments denominated in foreign currency | US$ | — | Rs. | — | Rs. | 556,467.1 | US$ | — | Rs. | — | Rs. | (69,148.8 | ) | |||||||||||||||||||
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Cash flow hedges of interest rate risk arising on floating rate borrowings
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Average strike rate | Nominal amounts | Carrying value | ||||||||||||||||||||||||||
| (USD in million) | (in millions) | ||||||||||||||||||||||||||
as at March 31 | as at March 31 | as at March 31 | ||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2020 | 2019 | ||||||||||||||||||||||
Interest rate swaps linked to LIBOR | ||||||||||||||||||||||||||||
>5 years | 2.86 | % | 2.86 | % | 237.5 | 237.5 | US$ | (31.7 | ) | Rs. | (2,190.8 | ) | Rs. | (575.7 | ) | |||||||||||||
Total derivatives designated in hedge relationship | US$ | (332.0 | ) | Rs. | (22,956.1 | ) | Rs. | (49,829.6 | ) | |||||||||||||||||||
Total debt instruments designated in hedge relationship | US$ | Rs. | — | Rs. | (69,148.8 | ) |
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Inventory, trade receivables, finance receivables, other financial assets, property, plant and equipment with a carrying amount of Rs. 181,969.1 million and Rs. 171,051.8 million are pledged as collateral/security against the borrowings as at March 31, 2018 and 2017, respectively.
Fair value of collaterals over which the Company has taken possession and held as at March 31, 2018 and 2017, amounted to Rs. 606.2 million and Rs. 2,007.3 million, respectively. The collateral represents vehicles financed by the Company and the Company normally undertakes disposal of these vehicles through an auction process.
Segment reporting |
The Company primarily operates in the Automotiveautomotive segment. The Automotiveautomotive segment includes all activities relating to development, design, manufacture, assembly and sale of vehicles including financing thereof, as well as sale of related parts and accessories. The Company provides financing for vehicles sold by dealers in India. The vehicle financing is intended to drive sale of vehicles by providing financing to the dealers’ customers and as such is an integral part of automotive business. The financing activity is assessed as an integral part of the overall automotive business. The operating results of the financing activity does not include all of the interest orfor Vehicle Financing has been adjusted only for finance cost of funds employed for the purposesborrowings sourced by this segment.
a) Automotive: The Automotive segment consists of financing, and therefore the operating results of this activity is not used to make decisions about resources to be allocated or to assess performance.
The Company’s products mainly includefour reportable sub-segments: Tata and other brand vehicles andCommercial Vehicles, Tata Passenger Vehicles, Jaguar and Land Rover vehicles.and Vehicle Financing.
As at March 31, 2018, the automotive segment is bifurcated into the following two reportable segments:
Tata and other brand vehicles, including financing thereof and Jaguar Land Rover.
The Company’s other segment comprises primarily activities relating to information technology orb) Others: Others consist of IT services and machine tools and factory automation solutions.solutions
TheThis segment information presented is in accordance withprovided to and reviewed by the accounting policies adopted for preparing the consolidated financial statements of the Company. Segment revenues, expenses and results include inter-segment transfers. Such transfers are undertaken either at competitive market prices charged to unaffiliated customers for similar goods or at contracted rates. These transfers are eliminated on consolidation.Company’s Chief Operating Decision Maker (CODM).
Revenues: External revenue Inter-segment/intra-segment revenue Total revenues Earnings before other income, interest and tax(a) Share of profit/(loss) of equity accounted investees (net) Reconciliation to net income: Assets written off/loss on sale of assets and others (net) (29,148.6 ) Other income/(loss) (net) Foreign exchange gain/(loss) (net) Interest income Interest expense (net) Income tax expense Net Income Depreciation and amortization Capital expenditure Segment assets Assets classified as held for sale Investment in equity accounted investees Reconciliation to total assets: Investments Current andnon-current income tax assets Deferred income taxes Other unallocated financial assets1 Total assets Segment liabilities Liabilities classified as held for sale Reconciliation to total liabilities: Borrowings Current income tax liabilities Deferred income taxes Other unallocated financial liabilities2 Total liabilities Revenues: External revenue Inter-segment/intra-segment revenue Total revenues Earnings before other income, interest and tax(a) Finance costs pertaining to borrowings sourced by vehicle financing segment Segment results Share of profit/(loss) of equity accounted investees (net) Reconciliation to net income/(loss): Assets written off/loss on sale of assets and others (net) Other income/(loss) (net) Foreign exchange gain/(loss) (net) Interest income Interest expense (net) (excluding pertaining to borrowings sourced by vehicle financing segment) Income tax expense Net Income/(loss) Depreciation and amortization Capital expenditure For the year ended/as at March 31, 2018 Automotive and related activity Tata and other
brand vehicles
including
financing thereof * Jaguar
Land Rover Intra-segment
eliminations Total Others Inter-segment
eliminations Total (In millions) Rs. 649,894.1 Rs. 2,214,492.3 Rs. — Rs. 2,864,386.4 Rs. 18,564.7 Rs. — Rs. 2,882,951.1 US$ 44,233.9 77.9 — — 77.9 12,770.0 (12,847.9 ) — — Rs. 649,972.0 Rs. 2,214,492.3 Rs. — Rs. 2,864,464.3 Rs. 31,334.7 Rs. (12,847.9 ) Rs. 2,882,951.1 US$ 44,233.9 19,692.8 84,952.3 — 104,645.1 3,045.8 (1,456.3 ) 106,234.6 1,629.9 301.8 21,389.2 — 21,691.0 1,091.6 — 22,782.6 349.6 (447.2 ) 47,873.3 734.5 (2,758.8 ) (42.3 ) 7,122.4 109.3 (46,365.0 ) (711.4 ) (38,058.5 ) (583.9 ) Rs. 67,682.0 US$ 1,038.5 Rs. 31,426.2 Rs. 177,830.8 Rs. — Rs. 209,257.0 Rs. 561.2 Rs. — Rs. 209,818.2 US$ 3,219.3 34,030.9 380,417.9 — 414,448.8 841.6 (187.8 ) 415,102.6 6,369.0 Rs. 683,474.6 Rs. 1,968,420.4 Rs. (6.0 ) Rs. 2,651,889.0 Rs. 3,303.8 Rs. (12,031.4 ) Rs. 2,643,161.4 US$ 40,554.8 2,233.3 — — 2,233.3 27,569.1 (3,950.5 ) 25,851.9 396.7 3,071.7 45,023.9 — 48,095.6 5,758.8 — 53,854.4 826.3 154,214.0 2,366.2 11,086.4 170.1 41,064.6 630.1 306,706.5 4,705.9 Rs. 3,235,937.2 US$ 49,650.1 Rs. 201,185.8 Rs. 1,048,546.1 Rs. (7.1 ) Rs. 1,249,724.8 Rs. 840.2 Rs. (3,152.2 ) Rs. 1,247,412.8 US$ 19,139.4 — — — — 10,701.8 — 10,701.8 164.2 888,706.8 13,635.7 15,590.7 239.2 61,257.8 939.9 98,320.0 1,508.5 Rs. 2,321,989.9 US$ 35,626.9 For the year ended March 31, 2020 Automotive and related activity Tata and other brand vehicles * Vehicle
Financing Jaguar
Land
Rover Intra-segment
eliminations Total Others Inter-segment
eliminations Total Commercial
Vehicles Passenger
Vehicles Unallocable Total (In millions) Rs. 362,125.1 Rs. 103,881.5 Rs. — Rs. 466,006.6 Rs. 40,255.1 Rs. 2,070,320.9 Rs. — Rs. 2,576,582.6 Rs. 17,668.6 Rs. — Rs. 2,594,251.2 US$ 34,286.0 Rs. — Rs. — Rs. — Rs. — Rs. — Rs. — Rs. — Rs. — Rs. 12,707.3 Rs. (12,707.3 ) Rs. — US$ — Rs. 362,125.1 Rs. 103,881.5 Rs. — Rs. 466,006.6 Rs. 40,255.1 Rs. 2,070,320.9 Rs. — Rs. 2,576,582.6 Rs. 30,375.9 Rs. (12,707.3 ) Rs. 2,594,251.2 US$ 34,286.0 Rs. (7,642.8 ) Rs. (44,833.1 ) Rs. (3,794.0 ) (56,269.9 ) 25,766.4 (6,656.6 ) — (37,160.1 ) 3,338.9 (554.3 ) (34,375.5 ) (454.3 ) (30,793.1 ) (30,793.1 ) (30,793.1 ) (407.0 ) (7,642.8 ) (44,833.1 ) (3,794.0 ) (56,269.9 ) (5,026.7 ) (6,656.6 ) — (67,953.2 ) 3,338.9 (554.3 ) (65,168.6 ) (861.3 ) — — 337.0 337.0 — (10,337.0 ) — (10,000.0 ) — (10,000.0 ) (132.2 ) (3,131.9 ) (41.4 ) 16,009.4 211.6 (16,985.4 ) (224.5 ) 11,696.9 154.6 (41,760.0 ) (552.0 ) (3,644.5 ) (48.2 ) Rs. (112,984.1 ) US$ (1,493.4 ) Rs. 15,971.5 Rs. 16,728.1 Rs. 1,630.5 Rs. 34,330.1 Rs. 509.5 Rs. 172,447.3 Rs. — Rs. 207,286.9 Rs. 1,039.7 Rs. (694.5 ) Rs. 207,632.1 US$ 2,744.1 Rs. 23,283.3 Rs. 21,259.4 Rs. 4,263.9 Rs. 48,806.6 Rs. 1,095.7 Rs. 253,770.8 Rs. — Rs. 303,673.1 Rs. (728.3 ) Rs. — Rs. 302,944.8 US$ 4,003.8
Segment assets Assets classified as held for sale Investment in equity accounted investees Reconciliation to total assets: Investments Current and non-current income tax assets Deferred income taxes Other unallocated financial assets1 Total assets Segment liabilities Reconciliation to total liabilities: Borrowings Current income tax liabilities Deferred income taxes Other unallocated financial liabilities2 Total liabilities For the year ended March 31, 2020 Automotive and related activity Tata and other brand vehicles * Vehicle
Financing Jaguar Land
Rover Intra-
segment
eliminations Total Others Inter-
segment
eliminations Total Commercial
Vehicles Passenger
Vehicles Unallocable Total (In millions) Rs. 228,208.5 Rs. 152,956.5 Rs. 34,693.7 Rs. 415,858.7 Rs. 335,876.4 Rs. 1,834,868.3 Rs. — Rs. 2,586,603.4 Rs. 24,402.1 Rs. (13,946.9 ) Rs. 2,597,058.6 US$ 34,323.1 1,944.3 1,944.3 — — 1,944.3 — — 1,944.3 25.7 — — 4,689.6 4,689.6 33,843.6 — 38,533.2 5,655.7 44,188.9 584.0 118,895.8 1,571.3 12,962.9 171.3 54,578.6 721.3 311,173.0 4,112.6 Rs. 3,140,802.1 US$ 41,509.3 Rs. 129,613.0 Rs. 49,540.6 Rs. 14,568.4 Rs. 193,722.0 Rs. 5,284.9 Rs. 1,033,284.4 Rs. — Rs. 1,232,291.3 Rs. 7,879.3 Rs. (3,309.8 ) Rs. 1,236,860.8 US$ 16,346.5 1,187,997.1 15,700.8 10,415.8 137.7 19,418.7 256.7 88,075.0 1,163.9 Rs. 2,542,767.4 US$ 33,605.6
* | Tata and other brand vehicles include Tata Daewoo and Fiat brand vehicles. |
1. | Includes interest-bearing deposits and accrued interest income. |
2. | Includes interest accrued and other interest bearing liabilities. |
a. | Earnings before other income, interest and tax is Earnings before share of profit/(loss) of equity accounted investees (net), assets written off/loss on sale of assets and others (net), other income/(loss) (net) (excluding government incentives), foreign exchange gains/(loss) (net), interest income, interest expense (net) and income tax expense. |
Revenues: External revenue Inter-segment/intra-segment revenue Total revenues Earnings before other income, interest and tax(a) Finance costs pertaining to borrowings sourced by vehicle financing segment Segment results Share of profit/(loss) of equity accounted investees (net) Reconciliation to net income/(loss): Assets written off/loss on sale of assets and others (net) Other income/(loss) (net) Foreign exchange gain/(loss) (net) Interest income Interest expense (net) (excluding pertaining to borrowings sourced by vehicle financing segment) Income tax (expense)/credit Net Income/(loss) Depreciation and amortization Capital expenditure Segment assets Assets classified as held for sale Investment in equity accounted investees Reconciliation to total assets: Investments Current and non-current income tax assets Deferred income taxes Other unallocated financial assets1 Total assets Segment liabilities For the year ended March 31, 2019 Automotive and related activity Tata and other brand vehicles * Commercial
Vehicles Passenger
Vehicles Unallocable** Total Vehicle
Financing Jaguar
Land
Rover Intra-segment
eliminations Total Others Inter-segment
eliminations Total (In millions) Rs. 579,496.9 Rs. 141,622.2 Rs. — Rs. 721,119.1 Rs. 33,995.5 Rs. 2,216,656.9 Rs. — Rs. 2,971,771.5 Rs. 21,890.9 Rs. — Rs. 2,993,662.4 Rs. — Rs. 26.8 Rs. — Rs. 26.8 Rs. 1,129.5 Rs. — Rs. (1,156.3 ) Rs. — Rs. 13,432.8 Rs. (13,432.8 ) Rs. — Rs. 579,496.9 Rs. 141,649.0 Rs. — Rs. 721,145.9 Rs. 35,125.0 Rs. 2,216,656.9 Rs. (1,156.3 ) Rs. 2,971,771.5 Rs. 35,323.7 Rs. (13,432.8 ) Rs. 2,993,662.4 Rs. 34,007.1 Rs. (15,842.3 ) Rs. (4,761.8 ) 13,403.0 21,153.3 (323,812.6 ) — (289,256.3 ) 4,103.6 (1,201.8 ) (286,354.5 ) (26,156.5 ) (26,156.5 ) (26,156.5 ) 34,007.1 (15,842.3 ) (4,761.8 ) 13,403.0 (5,003.2 ) (323,812.6 ) — (315,412.8 ) 4,103.6 (1,201.8 ) (312,511.0 ) — — 416.7 416.7 (7.2 ) 753.7 — 1,163.2 931.8 — 2,095.0 �� — (13,186.7 ) 35,438.7 (5,824.2 ) 7,864.6 (31,429.5 ) 25,425.0 Rs. (292,128.1 ) Rs. 16,164.1 13,626.0 1,524.3 31,314.4 186.5 Rs. 197,437.4 Rs. — Rs. 228,938.3 Rs. 1,617.1 Rs. (357.6 ) Rs. 230,197.8 Rs. 20,100.8 29,331.7 763.5 50,196.0 719.6 Rs. 290,656.3 — 341,571.9 664.5 342,236.4 Rs. 237,225.5 Rs. 176,558.2 Rs. 15,037.0 Rs. 428,820.7 Rs. 382,615.8 Rs. 1,670,913.0 Rs. — Rs. 2,482,349.5 Rs. 20,037.4 Rs. (12,252.5 ) Rs. 2,490,134.4 1,622.4 — — 1,622.4 — — 1,622.4 — — 1,622.4 — — 4,225.5 4,225.5 26.6 43,181.7 — 47,433.8 5,915.0 — 53,348.8 — 104,358.4 12,089.3 51,511.1 274,055.5 Rs. 2,987,119.9 Rs. 157,447.7 Rs. 36,347.5 Rs. 17,521.3 Rs. 211,316.5 Rs. 7,114.3 Rs. 1,039,660.5 Rs. (3,376.5 ) Rs. 1,254,714.8 Rs. 5,290.7 Rs. (2,520.6 ) Rs. 1,257,484.9
For the year ended March 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||
Automotive and related activity | ||||||||||||||||||||||||||||||||||||||||||||
Tata and other brand vehicles * | ||||||||||||||||||||||||||||||||||||||||||||
Commercial Vehicles | Passenger Vehicles | Unallocable** | Total | Vehicle Financing | Jaguar Land Rover | Intra-segment eliminations | Total | Others | Inter-segment eliminations | Total | ||||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||
Reconciliation to total liabilities: | ||||||||||||||||||||||||||||||||||||||||||||
Borrowings | 1,059,910.7 | |||||||||||||||||||||||||||||||||||||||||||
Current income tax liabilities | 10,176.4 | |||||||||||||||||||||||||||||||||||||||||||
Deferred income taxes | 14,910.4 | |||||||||||||||||||||||||||||||||||||||||||
Other unallocated financial liabilities2 | 86,570.1 | |||||||||||||||||||||||||||||||||||||||||||
Total liabilities | Rs. | 2,429,052.5 | ||||||||||||||||||||||||||||||||||||||||||
* | Tata and other brand vehicles include Tata Daewoo and Fiat brand vehicles. |
** | Corporate expenses for Tata Motors Limited not identifiable to reportable segments kept as unallocable. |
1. | Includes interest-bearing loans and deposits and accrued interest income. |
2. | Includes interest accrued and other interest bearing liabilities. |
Earnings before other income, interest and tax is Earnings before share of profit/(loss) of equity accounted investees (net), assets written off/loss on sale of assets and others (net), other income/(loss) (net), foreign exchange gains/(loss) (net), interest income, interest expense (net) and income tax expense. |
For the year ended/as at March 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the year ended/as at March 31, 2017 | Automotive and related activity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Automotive and related activity | Tata and other brand vehicles* | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tata and other brand vehicles including financing thereof * | Jaguar Land Rover | Intra-segment eliminations | Total | Others | Inter-segment eliminations | Total | Commercial Vehicles | Passenger Vehicles | Unallocable** | Total | Vehicle Financing | Jaguar Land Rover | Intra- segment eliminations | Total | Others | Inter-segment eliminations | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
External revenue | Rs. | 518,398.3 | Rs. | 2,120,676.6 | Rs. | — | Rs. | 2,639,074.9 | Rs. | 17,420.2 | Rs. | — | Rs. | 2,656,495.1 | Rs.494,917.2 | Rs. | 128,840.3 | Rs. | 96.3 | Rs. | 623,853.8 | Rs. | 26,040.3 | Rs. | 2,214,492.3 | Rs. | — | Rs. | 2,864,386.4 | Rs. | 18,564.7 | Rs. | — | Rs. | 2,882,951.1 | |||||||||||||||||||||||||||||||||||||
Inter-segment/intra-segment revenue | 33.1 | — | (46.7 | ) | (13.6 | ) | 13,734.0 | (13,720.4 | ) | — | — | 77.9 | — | 77.9 | 111.9 | — | (111.9 | ) | 77.9 | 12,770.0 | (12,847.9 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
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Total revenues | Rs. | 518,431.4 | Rs. | 2,120,676.6 | Rs. | (46.7 | ) | Rs. | 2,639,061.3 | Rs. | 31,154.2 | Rs. | (13,720.4 | ) | Rs. | 2,656,495.1 | Rs. | 494,917.2 | Rs. | 128,918.2 | Rs. | 96.3 | Rs. | 623,931.7 | Rs. | 26,152.2 | Rs. | 2,214,492.3 | Rs. | (111.9 | ) | Rs. | 2,864,464.3 | Rs. | 31,334.7 | Rs. | (12,847.9 | ) | Rs. | 2,882,951.1 | ||||||||||||||||||||||||||||||||
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Earnings before other income, interest and tax(a) | (17,909.0 | ) | 120,866.8 | ** | — | 102,957.8 | 3,797.7 | (1,942.8 | ) | 104,812.7 | 36,694.4 | (29,998.8 | ) | (4,082.1 | ) | 2,613.5 | 17,079.3 | 84,952.3 | — | 104,645.1 | 3,045.8 | (1,456.3 | ) | 106,234.6 | ||||||||||||||||||||||||||||||||||||||||||||||||
Finance costs pertaining to borrowings sourced by vehicle financing segment | (19,053.0 | ) | (19,053.0 | ) | (19,053.0 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment results | 36,694.4 | (29,998.8 | ) | (4,082.1 | ) | 2,613.5 | (1,973.7 | ) | 84,952.3 | — | 85,592.1 | 3,045.8 | (1,456.3 | ) | 87,181.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share of profit/(loss) of equity accounted investees | 252.1 | 13,843.7 | — | 14,095.8 | 834.2 | — | 14,930.0 | — | — | 301.8 | 301.8 | — | 21,389.2 | — | 21,691.0 | 1,091.6 | — | 22,782.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation to net income: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets written off/loss on sale of assets and others (net) | (11,418.6 | ) | (29,148.6 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other income/(loss) (net) | 39,590.1 | 47,873.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign exchange gain/(loss) (net) | (13,284.8 | ) | (4,332.9 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest income | 5,640.7 | 7,122.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense (net) | (42,365.7 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense (net) (excluding pertaining to borrowings sourced by vehicle financing segment) | (27,738.3 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax expense | (35,670.0 | ) | (37,678.2 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Net Income | Rs. | 62,234.4 | Rs. | 66,061.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Depreciation and amortization | Rs. | 36,676.3 | Rs. | 144,472.0 | Rs. | — | Rs. | 181,148.3 | Rs. | 1,257.1 | Rs. | — | Rs. | 182,405.4 | Rs. | 15,417.3 | Rs. | 14,368.1 | Rs. | 1,457.4 | Rs. | 31,242.8 | Rs. | 183.4 | Rs. | 177,830.8 | Rs. | — | Rs. | 209,257.0 | Rs. | 561.2 | Rs. | — | Rs. | 209,818.2 | ||||||||||||||||||||||||||||||||||||
Capital expenditure | 40,056.9 | 269,658.7 | — | 309,715.6 | 3,652.3 | (1,740.6 | ) | 311,627.3 | Rs. | 13,554.5 | Rs. | 19,145.1 | Rs. | 859.8 | Rs. | 33,559.4 | Rs. | 471.5 | Rs. | 380,417.9 | Rs. | — | Rs. | 414,448.8 | Rs. | 841.6 | Rs. | (187.8 | ) | Rs. | 415,102.6 | |||||||||||||||||||||||||||||||||||||||||
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Segment assets | Rs. | 598,266.7 | Rs. | 1,526,362.8 | Rs. | — | Rs. | 2,124,629.5 | Rs. | 22,051.3 | Rs. | (10,237.2 | ) | Rs. | 2,136,443.6 | Rs. | 206,937.3 | Rs. | 136,472.5 | Rs. | 63,355.4 | Rs. | 406,765.2 | Rs. | 276,709.4 | Rs. | 1,967,993.9 | Rs. | (6.0 | ) | Rs. | 2,651,462.5 | Rs. | 3,303.8 | Rs. | (12,031.4 | ) | Rs. | 2,642,734.9 | |||||||||||||||||||||||||||||||||
Assets classified as held for sale | 2,233.3 | — | — | 2,233.3 | — | — | 2,233.3 | 27,569.1 | (3,950.5 | ) | 25,851.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in equity accounted investees | 3,773.1 | 38,357.2 | — | 42,130.3 | 3,929.8 | — | 46,060.1 | — | — | 3,855.0 | 3,855.0 | — | 45,023.9 | — | 48,878.9 | — | — | 48,878.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in equity accounted investees (held for sale) | — | — | — | — | — | — | — | — | 4,973.5 | — | 4,973.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation to total assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | 157,279.7 | 154,214.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current andnon-current income tax assets | 11,954.9 | 11,086.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred income taxes | 44,221.7 | 41,064.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other unallocated financial assets1 | 270,686.0 | 306,706.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Total assets | Rs. | 2,666,646.0 | Rs. | 3,235,510.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment liabilities | Rs. | 173,195.2 | Rs. | 872,507.1 | Rs. | — | Rs. | 1,045,702.3 | Rs. | 7,477.5 | Rs. | (2,504.4 | ) | Rs. | 1,050,675.4 | Rs. | 135,371.8 | Rs. | 31,371.7 | Rs. | 27,198.3 | Rs. | 193,941.8 | Rs. | 7,244.0 | Rs. | 1,048,546.1 | Rs. | (7.1 | ) | Rs. | 1,249,724.8 | Rs. | 840.2 | Rs. | (3,152.2 | ) | Rs. | 1,247,412.8 | |||||||||||||||||||||||||||||||||
Reconciliation to total liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings | 785,171.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current income tax liabilities | 13,925.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred income taxes | 11,806.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other unallocated financial liabilities2 | 266,225.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Total liabilities | Rs. | 2,127,803.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Liabilities classified as held for sale | — | — | — | — | 10,701.8 | — | 10,701.8 |
For the year ended/as at March 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||
Automotive and related activity | ||||||||||||||||||||||||||||||||||||||||||||
Tata and other brand vehicles* | ||||||||||||||||||||||||||||||||||||||||||||
Commercial Vehicles | Passenger Vehicles | Unallocable** | Total | Vehicle Financing | Jaguar Land Rover | Intra- segment eliminations | Total | Others | Inter-segment eliminations | Total | ||||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||
Reconciliation to total liabilities: | ||||||||||||||||||||||||||||||||||||||||||||
Borrowings | 888,706.8 | |||||||||||||||||||||||||||||||||||||||||||
Current income tax liabilities | 15,590.7 | |||||||||||||||||||||||||||||||||||||||||||
Deferred income taxes | 61,257.8 | |||||||||||||||||||||||||||||||||||||||||||
Other unallocated financial liabilities2 | 98,320.0 | |||||||||||||||||||||||||||||||||||||||||||
Total liabilities | Rs. | 2,321,989.9 | ||||||||||||||||||||||||||||||||||||||||||
* | Tata and other brand vehicles include Tata Daewoo and Fiat brand vehicles. |
** |
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Tata Motors Limited not identifiable to reportable segments kept as unallocable. 1. | Includes interest-bearing loans and deposits and accrued interest income. |
2. | Includes interest accrued and other interest bearing liabilities. |
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Revenues: External revenue # Inter-segment/intra-segment revenue Total revenues Earnings before other income, interest and tax #(a) Share of profit/(loss) of equity accounted investees (net) Reconciliation to net income: Assets written off/loss on sale of assets and others (net) Other income /(loss) (net) Foreign exchange gain/(loss) (net) # Interest income Interest expense (net) Income tax expense Net Income Depreciation and amortization Capital expenditure For the year ended March 31, 2016 Automotive and related activity Tata and other
brand vehicles
including
financing thereof * Jaguar
Land Rover Intra-segment
eliminations Total Others Inter-segment
eliminations Total (In millions) Rs. 490,273.9 Rs. 2,200,750.0 Rs. — Rs. 2,691,023.9 Rs. 14,088.7 Rs. — Rs. 2,705,112.6 69.8 — (75.7 ) (5.9 ) 15,027.0 (15,021.1 ) — Rs. 490,343.7 Rs. 2,200,750.0 Rs. (75.7 ) Rs. 2,691,018.0 Rs. 29,115.7 Rs. (15,021.1 ) Rs. 2,705,112.6 9,432.5 163,882.6 ** — 173,315.1 4,212.2 (738.7 ) 176,788.6 206.7 5,987.1 — 6,193.8 (419.1 ) — 5,774.7 (9,477.4 ) 12,613.0 (20,588.0 ) 7,186.6 (47,912.6 ) (27,512.7 ) Rs. 96,872.2 Rs. 27,796.5 Rs. 139,597.6 Rs. — Rs. 167,394.1 Rs. 680.8 Rs. — Rs. 168,074.9 39,064.7 266,777.2 — 305,841.9 1,243.1 (851.8 ) 306,233.2
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Earnings before other income, interest and tax is Earnings before share of profit/(loss) of equity accounted investees (net), assets written off/loss on sale of assets and others (net), other income/(loss) (net), foreign exchange gains/(loss) (net), interest income, interest expense (net) and income tax expense. |
Entity-wide disclosures
Information concerning principal geographic areas is as follows:
Net sales to external customers by geographic area by location of customers:
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016* | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
India | US$ | 8,874.5 | Rs. | 578,403.3 | Rs. | 422,499.1 | Rs. | 411,399.2 | US$ | 6,153.0 | Rs. | 465,564.5 | Rs. | 678,148.1 | Rs. | 578,403.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
United States of America | 6,887.3 | 448,881.5 | 413,469.9 | 431,592.2 | 6,836.9 | 517,316.1 | 512,511.1 | 448,881.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
United Kingdom | 6,428.4 | 418,970.3 | 486,091.5 | 448,389.3 | 5,536.1 | 418,890.7 | 559,993.0 | 418,970.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rest of Europe | 7,215.8 | 470,288.0 | 469,926.9 | 415,022.1 | 5,698.0 | 431,138.1 | 452,087.8 | 470,288.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
China | 7,390.5 | 481,675.0 | 410,721.9 | 485,384.3 | 3,928.8 | 297,271.0 | 303,929.1 | 481,675.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rest of the World | 7,437.4 | 484,733.0 | 453,785.8 | 513,325.5 | 6,133.2 | 464,070.8 | 486,993.3 | 484,733.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Total revenues | US$ | 44,233.9 | Rs. | 2,882,951.1 | Rs. | 2,656,495.1 | Rs. | 2,705,112.6 | US$ | 34,286.0 | Rs. | 2,594,251.2 | Rs. | 2,993,662.4 | Rs. | 2,882,951.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
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Non-current assets (Property, plant and equipment, Intangible assets, Right of use assets, othernon-current assets and Goodwill) by geographic area:
As at March 31, | As at March 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2020 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||
India | US$ | 3,446.4 | Rs. | 224,623.2 | Rs. | 239,755.9 | US$ | 3,496.1 | Rs. | 264,529.2 | Rs. | 248,726.3 | ||||||||||||||||||||||||||||||||||||
United States of America | 45.9 | 2,990.0 | 2,518.4 | 107.6 | 8,138.9 | 2,919.9 | ||||||||||||||||||||||||||||||||||||||||||
United Kingdom | 18,594.9 | 1,211,921.5 | 947,375.3 | 14,796.2 | 1,119,559.0 | 981,062.7 | ||||||||||||||||||||||||||||||||||||||||||
Rest of Europe | 1,111.2 | 72,420.6 | 12,089.9 | 1,434.6 | 108,549.8 | 94,708.0 | ||||||||||||||||||||||||||||||||||||||||||
China | 25.5 | 1,661.1 | 910.4 | 209.4 | 15,842.6 | 1,409.2 | ||||||||||||||||||||||||||||||||||||||||||
Rest of the World | 413.9 | 26,977.3 | 30,057.5 | 451.4 | 34,157.6 | 25,137.5 | ||||||||||||||||||||||||||||||||||||||||||
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Total | US$ | 23,637.8 | Rs. | 1,540,593.7 | Rs. | 1,232,707.4 | US$ | 20,495.3 | Rs. | 1,550,777.1 | Rs. | 1,353,963.6 | ||||||||||||||||||||||||||||||||||||
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Information about product revenues:
Year ended March 31, | ||||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016* | |||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Tata and Fiat vehicles | US$ | 8,829.8 | Rs. | 575,483.5 | Rs. | 436,306.2 | Rs. | 420,212.8 | ||||||||||||||||||||||||
Tata Daewoo commercial vehicles | 742.2 | 48,370.3 | 57,773.8 | 47,742.3 | ||||||||||||||||||||||||||||
Finance revenues | 399.5 | 26,040.3 | 24,318.3 | 22,318.8 | ||||||||||||||||||||||||||||
Jaguar Land Rover vehicles | 33,977.6 | 2,214,492.3 | 2,120,676.6 | 2,200,750.0 | ||||||||||||||||||||||||||||
Others | 284.8 | 18,564.7 | 17,420.2 | 14,088.7 | ||||||||||||||||||||||||||||
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Total revenues | US$ | 44,233.9 | Rs. | 2,882,951.1 | Rs. | 2,656,495.1 | Rs. | 2,705,112.6 | ||||||||||||||||||||||||
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2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Tata and Fiat vehicles | US$ | 5,761.0 | Rs. | 435,908.8 | Rs. | 682,076.2 | Rs. | 575,483.5 | ||||||||||||||||||||||||
Tata Daewoo commercial vehicles | 403.0 | 30,492.4 | 39,042.9 | 48,370.3 | ||||||||||||||||||||||||||||
Jaguar Land Rover vehicles | 27,361.7 | 2,070,320.9 | 2,216,656.9 | 2,214,492.3 | ||||||||||||||||||||||||||||
Others | 256.4 | 19,401.3 | 21,890.9 | 18,564.7 | ||||||||||||||||||||||||||||
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Sub-total | 33,782.1 | 2,556,123.4 | 2,959,666.9 | 2,856,910.8 | ||||||||||||||||||||||||||||
Finance revenues | 503.9 | 38,127.8 | 33,995.5 | 26,040.3 | ||||||||||||||||||||||||||||
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Total revenues | US$ | 34,286.0 | Rs. | 2,594,251.2 | Rs. | 2,993,662.4 | Rs. | 2,882,951.1 | ||||||||||||||||||||||||
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Related-party transactions |
The Company’s related parties principally consist of Tata Sons Private Limited, subsidiaries and joint ventures of Tata Sons Private Limited, the Company’s associates and their subsidiaries, joint operations and joint ventures of the Company. The Company routinely enters into transactions with these related parties in the ordinary course of business. The Company enters into transactions for sale and purchase of products and services with its associates, joint operations and joint ventures. Transactions and balances with its own subsidiaries are eliminated on consolidation.
The following table summarizes related-party transactions and balances included in the consolidated financial statements for the year ended/as at March 31, 2018:2020:
Associates and its subsidiaries | Joint ventures | Joint operations | Tata Sons Ltd, its subsidiaries and joint ventures | Total | Total | |||||||||||||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||||||
Purchase of products | Rs. | 26,057.0 | Rs. | — | Rs. | 31,631.0 | Rs. | 1,713.0 | Rs. | 59,401.0 | US$ | 911.4 | ||||||||||||||||||||||||||||||||||||
Sale of products | 2,016.0 | 60,082.1 | 5,454.9 | 7,091.0 | 74,644.0 | 1,145.3 | ||||||||||||||||||||||||||||||||||||||||||
Services received | 89.0 | 5,500.9 | 1.6 | 17,353.0 | 22,944.5 | 352.0 | ||||||||||||||||||||||||||||||||||||||||||
Services rendered | 190.0 | 12,077.2 | 43.4 | 241.0 | 12,551.6 | 192.6 | ||||||||||||||||||||||||||||||||||||||||||
Acceptances | — | — | — | 41,350.3 | 41,350.3 | 634.5 | ||||||||||||||||||||||||||||||||||||||||||
Purchase of property, plant and equipment | 624.0 | — | — | 2.0 | 626.0 | 9.6 | ||||||||||||||||||||||||||||||||||||||||||
Purchase of investments | — | 25.0 | — | — | 25.0 | 0.4 | ||||||||||||||||||||||||||||||||||||||||||
Interest (income)/expense, dividend (income)/paid, (net) | (95.0 | ) | (17,644.9 | ) | (46.0 | ) | 263.0 | (17,522.9 | ) | (268.9 | ) | |||||||||||||||||||||||||||||||||||||
Loans taken | 4,890.0 | — | — | — | 4,890.0 | 75.0 | ||||||||||||||||||||||||||||||||||||||||||
Loans repaid by us | 4,890.0 | — | — | — | 4,890.0 | 75.0 | ||||||||||||||||||||||||||||||||||||||||||
Amounts receivable in respect of loans and interest thereon | — | — | — | 40.0 | 40.0 | 0.6 | ||||||||||||||||||||||||||||||||||||||||||
Amounts payable in respect of loans and interest thereon | 560.0 | — | — | 48.0 | 608.0 | 9.3 | ||||||||||||||||||||||||||||||||||||||||||
Trade and other receivables | 633.0 | 10,371.4 | (0.7 | ) | 1,511.0 | 12,514.7 | 192.0 | |||||||||||||||||||||||||||||||||||||||||
Accounts payable | 1,496.0 | 2.5 | 1,848.8 | 3,357.0 | 6,704.3 | 102.9 | ||||||||||||||||||||||||||||||||||||||||||
Acceptances | — | — | — | 2,201.6 | 2,201.6 | 33.8 | ||||||||||||||||||||||||||||||||||||||||||
Deposit given as security | — | — | — | 30.0 | 30.0 | 0.5 |
Note: With the introduction of GST from July 1, 2017, the related party transactions reported do not include indirect tax component. The previous period figures to that extent are not comparable.
Associates and its subsidiaries | Joint ventures | Joint operations | Tata Sons Pvt Ltd, its subsidiaries and joint ventures | Total | Total | |||||||||||||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||||||
Purchase of products | Rs. | 17,362.6 | Rs. | 7.9 | Rs. | 27,814.7 | Rs. | 426.7 | Rs. | 45,611.9 | US$ | 602.8 | ||||||||||||||||||||||||||||||||||||
Sale of products | 1,870.7 | 19,519.2 | 6,810.3 | 8,475.5 | 36,675.7 | 484.7 | ||||||||||||||||||||||||||||||||||||||||||
Services received | 228.9 | 41.6 | 8.0 | 15,601.5 | 15,880.0 | 209.9 | ||||||||||||||||||||||||||||||||||||||||||
Services rendered | 165.4 | 9,595.8 | 49.3 | 814.6 | 10,625.1 | 140.4 | ||||||||||||||||||||||||||||||||||||||||||
Acceptances | — | — | — | 31,485.2 | 31,485.2 | 416.1 | ||||||||||||||||||||||||||||||||||||||||||
Purchase of property, plant and equipment | 810.0 | — | — | 23.7 | 833.7 | 11.0 | ||||||||||||||||||||||||||||||||||||||||||
Sale of property, plant and equipment | 21.8 | — | — | 953.0 | 974.8 | 12.9 | ||||||||||||||||||||||||||||||||||||||||||
Interest (income)/expense, dividend (income)/paid, (net) | (135.8 | ) | (6,064.3 | ) | 40.9 | 293.8 | (5,865.4 | ) | (77.5 | ) | ||||||||||||||||||||||||||||||||||||||
Finance given (including loans and equity) | — | 6,181.7 | — | — | 6,181.7 | 81.7 | ||||||||||||||||||||||||||||||||||||||||||
Finance given, taken back (including loans and equity) | — | — | — | 35.0 | 35.0 | 0.5 | ||||||||||||||||||||||||||||||||||||||||||
Finance taken (including loans and equity) | 1,040.0 | — | — | 45,613.6 | 46,653.6 | 616.6 | ||||||||||||||||||||||||||||||||||||||||||
Finance taken, paid back (including loans and equity) | 810.0 | — | — | 8,583.4 | 9,393.4 | 124.1 | ||||||||||||||||||||||||||||||||||||||||||
Assets Taken on Lease | — | — | 1,138.3 | — | 1,138.3 | 15.0 | ||||||||||||||||||||||||||||||||||||||||||
Repayment towards lease liability | — | — | 18.3 | — | 18.3 | 0.2 | ||||||||||||||||||||||||||||||||||||||||||
Amounts receivable in respect of loans and interest thereon | — | 251.3 | — | 41.8 | 293.1 | 3.9 | ||||||||||||||||||||||||||||||||||||||||||
Amounts payable in respect of loans and interest thereon | 460.0 | — | — | 19.3 | 479.3 | 6.3 | ||||||||||||||||||||||||||||||||||||||||||
Amount payable in respect of Lease Liability | — | — | 1,120.0 | — | 1,120.0 | 14.8 | ||||||||||||||||||||||||||||||||||||||||||
Trade and other receivables | 274.5 | 6,286.6 | — | 1,892.3 | 8,453.4 | 111.7 | ||||||||||||||||||||||||||||||||||||||||||
Accounts payable | 2,726.1 | 31.9 | 2,695.9 | 1,581.7 | 7,035.6 | 93.0 | ||||||||||||||||||||||||||||||||||||||||||
Acceptances | — | — | — | 769.0 | 769.0 | 10.2 | ||||||||||||||||||||||||||||||||||||||||||
Provision for amount receivables | — | 251.2 | — | — | 251.2 | 3.3 |
The following table summarizes related-party transactions and balances included in the consolidated financial statements for the year ended/as at March 31, 2017:2019:
Associates and its subsidiaries | Joint ventures | Joint operations | Tata Sons Ltd, its subsidiaries and joint ventures | Total | Associates and its subsidiaries | Joint ventures | Joint operations | Tata Sons Pvt Ltd, its subsidiaries and joint ventures | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase of products | Rs. | 20,585.2 | Rs. | 213.0 | Rs. | 22,757.5 | Rs. | 668.4 | Rs. | 44,224.1 | Rs. | 23,691.0 | Rs. | 24.6 | Rs. | 39,407.7 | Rs. | 2,028.0 | Rs. | 65,151.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sale of products | 2,504.9 | 49,835.3 | 3,237.2 | 4,615.0 | 60,192.4 | 3,284.0 | 29,465.5 | 8,253.2 | 8,281.0 | 49,283.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Services received | 109.8 | 10,885.7 | 0.7 | 19,701.5 | 30,697.7 | 462.0 | 11.3 | — | 18,668.0 | 19,141.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Services rendered | 166.4 | 7,718.8 | 161.2 | 1,301.3 | 9,347.7 | 217.0 | 7,653.2 | 60.4 | 1,163.0 | 9,093.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acceptances | — | — | — | 32,027.7 | 32,027.7 | — | — | — | 54,937.8 | 54,937.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase of property, plant and equipment | 137.9 | — | — | 1.1 | 139.0 | 135.0 | — | — | 8.0 | 143.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase of investments | 72.0 | — | — | — | 72.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sale of investments | — | — | — | 5,333.5 | 5,333.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest (income)/expense, dividend (income)/paid, (net) | (111.0 | ) | (5,943.6 | ) | (121.2 | ) | 642.6 | (5,533.2 | ) | (124.0 | ) | (1,991.3 | ) | (262.2 | ) | 231.0 | (2,146.5 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans given | — | 57.5 | — | — | 57.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans taken | 1,770.0 | — | — | — | 1,770.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans repaid by us | 2,100.0 | — | — | — | 2,100.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amounts receivable in respect of loans and interest thereon | — | — | — | 93.3 | 93.3 | — | 37.5 | — | 38.0 | 75.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amounts payable in respect of loans and interest thereon | 560.0 | — | — | 1,055.5 | 1,615.5 | 230.0 | — | — | 36.0 | 266.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trade and other receivables | 495.2 | 5,658.6 | — | 1,600.1 | 7,753.9 | 556.0 | 1,321.5 | — | 1,988.0 | 3,865.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts payable | 397.6 | 226.3 | 1,239.6 | 4,711.1 | 6,574.6 | 3,043.0 | 25.9 | 2,461.2 | 3,729.0 | 9,259.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Optionally Convertible Preference shares in to equity shares | 1,600.0 | — | — | — | 1,600.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans given | — | — | — | 303.0 | 303.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans given, repaid | — | — | 1,325.0 | 603.0 | 1,928.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans taken | 3,290.0 | — | — | 5,896.3 | 9,186.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans repaid by us | 3,000.0 | — | — | 6,269.5 | 9,269.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposit given as security | — | — | — | 30.0 | 30.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acceptances | — | — | — | 691.3 | 691.3 |
The following table summarizes related-party transactions and balances included in the consolidated financial statements for the year ended/as at March 31, 2016:2018:
Associates and its subsidiaries | Joint ventures | Joint operations | Tata Sons Ltd, its subsidiaries and joint ventures | Total | Associates and its subsidiaries | Joint ventures | Joint operations | Tata Sons Pvt Ltd, its subsidiaries and joint ventures | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase of products | Rs. | 17,687.4 | Rs. | — | Rs. | 27,814.5 | Rs. | 674.0 | Rs. | 46,175.9 | Rs. | 26,057.0 | Rs. | — | Rs. | 31,631.0 | Rs. | 1,713.0 | Rs. | 59,401.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sale of products | 2,123.8 | 31,051.5 | 5,971.2 | 7,566.8 | 46,713.3 | 2,016.0 | 60,082.1 | 5,454.9 | 7,091.0 | 74,644.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Services received | 96.4 | 8,427.0 | 1.2 | 18,503.6 | 27,028.2 | 89.0 | 5,500.9 | 1.6 | 17,353.0 | 22,944.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Services rendered | 218.5 | 6,263.5 | 79.7 | 1,123.1 | 7,684.8 | 190.0 | 12,077.2 | 43.4 | 241.0 | 12,551.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acceptances | — | — | — | 29,018.0 | 29,018.0 | — | — | — | 41,350.3 | 41,350.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sale of Investments | — | — | — | 71.5 | 71.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase of property, plant and equipment | 114.5 | — | — | 9.2 | 123.7 | 624.0 | — | — | 2.0 | 626.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase of investments | — | 25.0 | — | — | 25.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest (income)/expense, dividend (income)/paid, (net) | (119.8 | ) | — | (143.3 | ) | 376.3 | 113.2 | (95.0 | ) | (17,644.9 | ) | (46.0 | ) | 263.0 | (17,522.9 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans taken | 4,890.0 | — | — | — | 4,890.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans repaid by us | 4,890.0 | — | — | — | 4,890.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amounts receivable in respect of loans and interest thereon | 1,600.0 | — | 1,917.8 | 353.4 | 3,871.2 | — | — | — | 40.0 | 40.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amounts payable in respect of loans and interest thereon | 270.0 | — | — | 1,061.7 | 1,331.7 | 560.0 | — | — | 48.0 | 608.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trade and other receivables | 222.7 | 6,737.1 | — | 4,545.2 | 11,505.0 | 633.0 | 10,371.4 | 0.7 | 1,511.0 | 12,516.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts payable | 585.1 | 148.1 | 1,680.4 | 1,626.0 | 4,039.6 | 1,496.0 | 2.5 | 1,848.8 | 3,357.0 | 6,704.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans given | — | — | — | 300.0 | 300.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans given, repaid | — | — | — | 950.0 | 950.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans taken | 1,860.0 | — | — | 4,693.2 | 6,553.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans repaid by us | 1,590.0 | — | — | 4,488.1 | 6,078.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from issue of shares | — | — | — | 19,667.6 | 19,667.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits receivable | — | — | — | 30.0 | 30.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acceptances | — | — | — | 2,201.6 | 2,201.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposit given as security | — | — | — | 30.0 | 30.0 |
Compensation of key management personnel:
Year ended March 31, | Year ended March 31, | |||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Short-term benefits | US$ | 12.3 | Rs. | 798.4 | Rs. | 693.1 | Rs. | 557.8 | US$ | 8.6 | Rs. | 650.7 | Rs. | 633.9 | Rs. | 798.4 | ||||||||||||||||
Post-employment benefits* | 0.3 | 17.6 | 184.7 | 112.0 | 1.0 | 75.6 | 54.6 | 17.6 | ||||||||||||||||||||||||
Share based payment | 0.1 | 6.2 | 4.4 | — |
The compensation of CEO and Managing Director is Rs. 192.8 million and Rs. 263.2 million for the years ended March 31, 2020 and 2019, respectively. Remuneration for the year ended March 31, 2020 Includes Rs. 146.2 million (Rs. Nil for the year 2018-2019) of managerial remuneration which is subject to the approval of the shareholders.
The compensation of CEO at Jaguar Land Rover is Rs. 401.0 million and Rs. 318.2 million for the years ended March 31, 2020 and 2019, respectively.
* | Excludes provision for encashable leave and gratuity for certain key management personnel as a separate actuarial valuation is not available. |
Other transactions with key management personnel:
Year ended March 31, | ||||||||||||||||
2018 | 2018 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Issue of shares pursuant to rights issue | US$ | — | Rs. — | Rs. — | Rs. 0.8 | |||||||||||
Sale of products | — | 8.1 | 11.0 | |||||||||||||
Dividend paid | — | — | — | ** | — |
|
Refer note 3236 for information on transactions with post-employment benefit plans.
Earnings per share (“EPS”) |
Net income attributable to shareholders of Tata Motors Limited (In millions) | Weighted average shares (Nos.) | Earnings per share | ||||||||||||||
For the year ended March 31, 2018: | ||||||||||||||||
Ordinary Shares | ||||||||||||||||
Basic net earnings per share | Rs. | 56,635.6 | 2,887,348,357 | Rs. | 19.6 | |||||||||||
US$ | 869.0 | US$ | 0.3 | |||||||||||||
Effect of shares kept in abeyance | Rs. | (2.4 | ) | 494,469 | Rs. | (4.9 | ) | |||||||||
US$ | — | US$ | (0.1) | |||||||||||||
Diluted earnings per share | Rs. | 56,633.2 | 2,887,842,826 | Rs. | 19.6 | |||||||||||
US$ | 868.9 | US$ | 0.3 | |||||||||||||
‘A’ Ordinary Shares | ||||||||||||||||
Basic net earnings per share | Rs. | 10,025.2 | 508,502,336 | Rs. | 19.7 | |||||||||||
US$ | 153.8 | US$ | 0.3 | |||||||||||||
Effect of shares kept in abeyance | Rs. | 2.4 | 233,774 | Rs. | 10.8 | |||||||||||
US$ | — | US$ | 0.2 | |||||||||||||
Diluted earnings per share | Rs. | 10,027.6 | 508,736,110 | Rs. | 19.7 | |||||||||||
US$ | 153.9 | US$ | 0.3 | |||||||||||||
For the year ended March 31, 2017: | ||||||||||||||||
Ordinary Shares | ||||||||||||||||
Basic net earnings per share | Rs. | 52,001.4 | 2,887,218,310 | Rs. | 18.0 | |||||||||||
Effect of shares kept in abeyance | Rs. | (2.3 | ) | 599,766 | Rs. | (3.8 | ) | |||||||||
Diluted earnings per share | Rs. | 51,999.1 | 2,887,818,076 | Rs. | 18.0 | |||||||||||
‘A’ Ordinary Shares | ||||||||||||||||
Basic net earnings per share | Rs. | 9,209.1 | 508,483,714 | Rs. | 18.1 | |||||||||||
Effect of shares kept in abeyance | Rs. | 2.3 | 252,396 | Rs. | 9.1 | |||||||||||
Diluted earnings per share | Rs. | 9,211.4 | 508,736,110 | Rs. | 18.1 | |||||||||||
For the year ended March 31, 2016: | ||||||||||||||||
Ordinary Shares | ||||||||||||||||
Basic net earnings per share | Rs. | 81,481.3 | 2,873,188,838 | Rs. | 28.4 | |||||||||||
Effect of shares kept in abeyance | Rs. | (3.6 | ) | 621,045 | Rs. | (5.8 | ) | |||||||||
Diluted earnings per share | Rs. | 81,477.7 | 2,873,809,883 | Rs. | 28.4 | |||||||||||
‘A’ Ordinary Shares | ||||||||||||||||
Basic net earnings per share | Rs. | 14,402.1 | 506,063,234 | Rs. | 28.5 | |||||||||||
Effect of shares kept in abeyance | Rs. | 3.6 | 257,745 | Rs. | 14.0 | |||||||||||
Diluted earnings per share | Rs. | 14,405.7 | 506,320,979 | Rs. | 28.5 |
Net income attributable to shareholders of Tata Motors Limited (In millions) | Weighted average shares (Nos.) | Earnings per share | ||||||||||||||||||
For the year ended March 31, 2020: | ||||||||||||||||||||
Ordinary Shares | ||||||||||||||||||||
Basic net earnings/(loss) per share | Rs. | (97,199.1 | ) | 2,952,353,090 | Rs. | (32.9 | ) | |||||||||||||
US$ | (1,284.7 | ) | US$ | (0.4 | ) | |||||||||||||||
Effect of shares kept in abeyance | Rs. | # | # | Rs. | # | |||||||||||||||
US$ | # | US$ | # | |||||||||||||||||
Diluted earnings/(loss) per share | Rs. | (97,199.1 | ) | 2,952,353,090 | Rs. | (32.9 | ) | |||||||||||||
US$ | (1,284.7 | ) | US$ | (0.4 | ) | |||||||||||||||
‘A’ Ordinary Shares | ||||||||||||||||||||
Basic net earnings/(loss) per share | Rs. | (16,741.2 | ) | 508,502,473 | Rs. | (32.9 | ) | |||||||||||||
US$ | (221.3 | ) | US$ | (0.4 | ) | |||||||||||||||
Effect of shares kept in abeyance | Rs. | # | # | Rs. | # | |||||||||||||||
US$ | # | US$ | # | |||||||||||||||||
Diluted earnings/(loss) per share | Rs. | (16,741.2 | ) | 508,502,473 | Rs. | (32.9 | ) | |||||||||||||
US$ | (221.3 | ) | US$ | (0.4 | ) | |||||||||||||||
For the year ended March 31, 2019: | ||||||||||||||||||||
Ordinary Shares | ||||||||||||||||||||
Basic net earnings/(loss) per share | Rs. | (249,246.9 | ) | 2,887,348,474 | Rs. | (86.3 | ) | |||||||||||||
Effect of shares kept in abeyance | Rs. | # | # | Rs. | # | |||||||||||||||
Diluted earnings/(loss) per share | Rs. | (249,246.9 | ) | 2,887,348,474 | Rs. | (86.3 | ) | |||||||||||||
‘A’ Ordinary Shares | ||||||||||||||||||||
Basic net earnings/(loss) per share | Rs. | (43,895.8 | ) | 508,502,371 | Rs. | (86.3 | ) | |||||||||||||
Effect of shares kept in abeyance | Rs. | # | # | Rs. | # | |||||||||||||||
Diluted earnings/(loss) per share | Rs. | (43,895.8 | ) | 508,502,371 | Rs. | (86.3 | ) | |||||||||||||
For the year ended March 31, 2018: | ||||||||||||||||||||
Ordinary Shares | ||||||||||||||||||||
Basic net earnings/(loss) per share | Rs. | 55,258.1 | 2,887,348,357 | Rs. | 19.1 | |||||||||||||||
Effect of shares kept in abeyance | Rs. | (2.4 | ) | 494,469 | Rs. | (4.9 | ) | |||||||||||||
Diluted earnings/(loss) per share | Rs. | 55,255.7 | 2,887,842,826 | Rs. | 19.1 | |||||||||||||||
‘A’ Ordinary Shares | ||||||||||||||||||||
Basic net earnings/(loss) per share | Rs. | 9,782.6 | 508,502,336 | Rs. | 19.2 | |||||||||||||||
Effect of shares kept in abeyance | Rs. | 2.4 | 233,774 | Rs. | 10.3 | |||||||||||||||
Diluted earnings/(loss) per share | Rs. | 9,785.0 | 508,736,110 | Rs. | 19.2 |
‘A’ Ordinary shareholders are entitled to receive dividend at 5 percentage points more than the aggregate rate of dividend determined by the Company on Ordinary shares for the financial year.
# | Since there is a loss for the years ended March 31, 2020 and 2019 potential equity shares are not considered as dilutive and hence Diluted EPS is same as Basic EPS. |
43. |
|
DetailsAs at March 31, 2020, certain assets of the Company related to defence business are classified as “Held for Sale” as they meet the criteria laid out under IFRS.
The below table outlines various assets and liabilities classifed as held for sale as atsale.
As at March 31, | ||||||||||||
2020 | 2020 | 2019 | ||||||||||
(In millions) | ||||||||||||
Property, plant and equipment | US$ | 0.7 | Rs. 45.0 | Rs. 11.4 | ||||||||
Intangible assets | 29.1 | 1,899.3 | 1,611.0 | |||||||||
|
|
|
|
|
| |||||||
Total assets | US$ | 29.8 | Rs.1,944.3 | Rs.1,622.4 | ||||||||
|
|
|
|
|
|
44. | Assets written off / loss on sale of assets and others (net) |
The Company has written off certain property, plant and equipment and intangible assets amounting to Rs.1,999.3 million, Rs. 6,784.5 million and Rs. 27,312.2 million for the years ended March 31, 2020, 2019 and 2018 are as follows.and recorded a loss/(profit) on sale of assets of Rs. 1,132.6 million, Rs.6,402.2 million and Rs. 1,836.4 million for the years ended March 31, 2020, 2019 and 2018.
As at March 31, | ||||||||
2018 | 2018 | |||||||
(In millions) | ||||||||
ASSETS: | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | US$ | 37.4 | Rs.2,439.4 | |||||
Short-term deposits | 3.1 | 201.2 | ||||||
Trade receivables | 80.5 | 5,245.8 | ||||||
Other financial assets | 4.9 | 319.0 | ||||||
Inventories | 14.7 | 958.0 | ||||||
Other current assets | 9.0 | 584.7 | ||||||
Current income tax assets | 11.1 | 726.4 | ||||||
|
|
|
| |||||
Total current assets | 160.7 | 10,474.5 | ||||||
|
|
|
| |||||
Non-current assets: | ||||||||
Investments | 4.9 | 317.9 | ||||||
Other financial assets | 8.4 | 546.9 | ||||||
Property, plant and equipment | 69.7 | 4,545.3 | ||||||
Goodwill | 85.6 | 5,579.1 | ||||||
Intangible assets | 47.2 | 3,076.1 | ||||||
Non-current income tax assets | 4.9 | 318.4 | ||||||
Deferred income taxes | 3.2 | 211.6 | ||||||
Othernon-current assets | 12.1 | 782.1 | ||||||
|
|
|
| |||||
Totalnon-current assets | 236.0 | 15,377.4 | ||||||
|
|
|
| |||||
Total assets | US$ | 396.7 | Rs.25,851.9 | |||||
|
|
|
| |||||
LIABILITIES | ||||||||
Current liabilities: | ||||||||
Accounts payable | 60.2 | 3,926.4 | ||||||
Short-term borrowings and current portion of long-term debt | 14.4 | 939.0 | ||||||
Other financial liabilities | 1.0 | 67.0 | ||||||
Provisions | 1.8 | 117.1 | ||||||
Other current liabilities | 28.3 | 1,844.1 | ||||||
Current income tax liabilities | 11.0 | 714.3 | ||||||
|
|
|
| |||||
Total current liabilities | 116.7 | 7,607.9 | ||||||
|
|
|
| |||||
Non-current liabilities: | ||||||||
Long-term debt | 7.5 | 486.5 | ||||||
Other financial liabilities | 0.2 | 13.4 | ||||||
Provisions | 4.6 | 297.0 | ||||||
Other liabilities | 35.2 | 2,297.0 | ||||||
|
|
|
| |||||
Totalnon-current liabilities | 47.5 | 3,093.9 | ||||||
|
|
|
| |||||
Total liabilities | US$ | 164.2 | Rs.10,701.8 | |||||
|
|
|
|
45. | Tata Motors Limited (“Parent Company”) – condensed financial information as to financial position, cash flows and results of operations has not been provided, as per the requirements of Rule 12-04 (a) of Regulation S-X, because restricted net assets of the consolidated subsidiaries does not exceed 25% of the consolidated net assets as at March 31, 2020. As at March 31, 2020 and 2019, Rs. 115,515.2 million and Rs. 127,705.6 million, respectively, of restricted assets were not available for distribution. |
46. | Subsequent event |
a) Performance of the Company during the quarter ended June 30, 2020
The performance in the quarter ended June 30, 2020, has been significantly weaker in both JLR and TML with the full impact of lockdowns being reflected in the results. The Company’s global wholesales in this quarter, including Jaguar Land Rover, were at 91,594 nos., lower by 64%, as compared to the quarter ended June 30, 2019. Of this, global wholesales of all commercial vehicles (including Tata Daewoo range) during this quarter were at 11,598 nos., lower by 89%, over the same quarter of the previous year. Further, the global wholesales of all passenger vehicles in this quarter were at 79,996 nos., lower by 49% as compared to same quarter of the previous year. Accordingly, revenue and profitability for the quarter ended June 30, 2020 has been impacted showing a downward trend as below.
For the quarter ended June 30, | ||||||||||||||||
2020 | 2020 | 2019 | Change % | |||||||||||||
(In millions) | ||||||||||||||||
Revenue* | US$ | 4,226.9 | Rs.319,830.6 | Rs.614,669.9 | -48 | % | ||||||||||
Profit/(loss) before tax* | (817.3 | ) | (61,837.3 | ) | (32,381.8 | ) | 91 | % | ||||||||
Profit/(loss) after tax* | US$ | (1,116.0 | ) | Rs.(84,439.8 | ) | Rs.(36,796.6 | ) | 129 | % |
* as per Form 6-K filed for the quarter ended June 30, 2020
The Company has also resumed operations in all its plants across the world. Recently, over 98% of Jaguar Land Rover retailer sites are open either fully or partially, while over 90% of Tata Motors retailer sites have reopened.
b) Fund raising and liquidity updates –
i) | In May 2020, Tata Motors Ltd has issued Rs. 10,000 million, 8.80% Secured rated listed redeemable non-convertible debentures due 2023. |
ii) | In June 2020, Jaguar Land Rover signed and drawn a three year syndicated revolving loan facility for RMB 5 billion (Rs.52,379.4 million) in China. |
iii) | In June 2020, Tata Motors Ltd has taken a secured term loan of Rs. 30,000 million from a financial institution at an interest rate of 8.5% per annum with maturity ranging from June 2022 to June 2026. |
iv) | In July, 2020, TML Holdings Pte Ltd has refinanced the GBP 190 million (Rs.17,631.7 million) loan with credit enhanced notes due 2023 and loan with tenor of 5 years from Bank of Baroda and State Bank of India, respectively. |
47. | We had the following subsidiaries as at March 31, |
Sr. No. | Name of the Subsidiary Company | Country of incorporation | % of Equity Shareholding | Name of the Subsidiary Company | Country of incorporation | % of Equity Shareholding | ||||||||||
(A) DIRECT SUBSIDIARIES | ||||||||||||||||
1 | Concorde Motors (India) Limited | India | 100.00 | TML Business Services Limited [formerly known as Concorde Motors (India) Limited] | India | 100.00 | ||||||||||
2 | TAL Manufacturing Solutions Limited | India | 100.00 | Tata Motors European Technical Centre PLC | UK | 100.00 | ||||||||||
3 | Tata Motors European Technical Centre PLC | UK | 100.00 | Tata Motors Insurance Broking and Advisory Services Limited | India | 100.00 | ||||||||||
4 | Tata Motors Insurance Broking and Advisory Services Limited | India | 100.00 | TMF Holdings Limited | India | 100.00 | ||||||||||
5 | TMF Holdings Limited (formerly known as Tata Motors Finance Limited) | India | 100.00 | TML Holdings Pte. Limited | Singapore | 100.00 | ||||||||||
6 | TML Holdings Pte. Limited | UK | 100.00 | TML Distribution Company Limited | India | 100.00 | ||||||||||
7 | TML Distribution Company Limited | India | 100.00 | Tata Hispano Motors Carrocera S.A. | Spain | 100.00 | ||||||||||
8 | Tata Hispano Motors Carrocera S.A. | Spain | 100.00 | Tata Hispano Motors Carrocerries Maghreb SA | Morocco | 100.00 | ||||||||||
9 | Tata Hispano Motors Carrocerries Maghreb SA | Morocco | 100.00 | Trilix S.r.l. | Italy | 100.00 | ||||||||||
10 | TML Drivelines Limited | India | 100.00 | Tata Precision Industries Pte. Limited | Singapore | 78.39 | ||||||||||
11 | Trilix S.r.l. | Italy | 80.00 | Tata Technologies Limited | India | 72.48 | ||||||||||
12 | Tata Precision Industries Pte. Limited | Singapore | 78.39 | Tata Marcopolo Motors Limited | India | 51.00 | ||||||||||
13 | Tata Technologies Limited | India | 72.39 | Brabo Robotics and Automation Limited (Incorporated w.e.f July 17, 2019) | India | 100.00 | ||||||||||
14 | Tata Marcopolo Motors Limited | India | 51.00 | |||||||||||||
(B) INDIRECT SUBSIDIARIES | (B) INDIRECT SUBSIDIARIES | |||||||||||||||
(i) Subsidiaries of TML Holdings Pte. Ltd. | (i) Subsidiaries of TML Holdings Pte. Ltd. | |||||||||||||||
14 | Tata Daewoo Commercial Vehicle Company Limited | South Korea | 100.00 | |||||||||||||
15 | Tata Daewoo Commercial Vehicle Company Limited | South Korea | 100.00 | Tata Daewoo Commercial Vehicle Sales and Distribution Company Limited | South Korea | 100.00 | ||||||||||
16 | Tata Daewoo Commercial Vehicle Sales and Distribution Company Limited | South Korea | 100.00 | Tata Motors (Thailand) Limited | Thailand | 97.17 | ||||||||||
17 | Tata Motors (Thailand) Limited | Thailand | 95.49 | Tata Motors (SA) (Proprietary) Limited | South Africa | 60.00 | ||||||||||
18 | Tata Motors (SA) (Proprietary) Limited | South Africa | 60.00 | PT Tata Motors Indonesia | Indonesia | 100.00 | ||||||||||
19 | PT Tata Motors Indonesia | Indonesia | 100.00 | PT Tata Motors Distribusi Indonesia | Indonesia | 100.00 | ||||||||||
20 | PT Tata Motors Distribusi Indonesia | Indonesia | 100.00 | TMNL Motor Services Nigeria Limited | Nigeria | 100.00 | ||||||||||
21 | TMNL Motor Services Nigeria Limited | Nigeria | 100.00 | Jaguar Land Rover Automotive Plc | UK | 100.00 | ||||||||||
(ii) Subsidiaries of Jaguar Land Rover Automotive Plc | ||||||||||||||||
22 | Jaguar Land Rover Automotive Plc | UK | 100.00 | Jaguar Land Rover Holdings Limited | UK | 100.00 | ||||||||||
(ii) Subsidiaries of Jaguar Land Rover Automotive Plc | (iii) Subsidiaries of Jaguar Land Rover Holdings Limited | |||||||||||||||
23 | Jaguar Land Rover Holdings Limited | UK | 100.00 | Jaguar Land Rover Limited | UK | 100.00 | ||||||||||
(iii) Subsidiaries of Jaguar Land Rover Holdings Limited | ||||||||||||||||
24 | Jaguar Land Rover Limited | UK | 100.00 | Jaguar Land Rover Austria GmbH | Austria | 100.00 | ||||||||||
25 | Jaguar Land Rover Austria GmbH | Austria | 100.00 | Jaguar Land Rover Japan Limited | Japan | 100.00 | ||||||||||
26 | Jaguar Land Rover Japan Limited | Japan | 100.00 | JLR Nominee Company Limited | UK | 100.00 | ||||||||||
27 | JLR Nominee Company Limited | UK | 100.00 | Jaguar Land Rover Deutschland GmbH | Germany | 100.00 | ||||||||||
28 | Jaguar Land Rover Deutschland GmbH | Germany | 100.00 | Jaguar Land Rover Classic Deutschland GmbH | Germany | 100.00 | ||||||||||
29 | Jaguar Land Rover North America LLC | USA | 100.00 | Jaguar Land Rover North America LLC | USA | 100.00 | ||||||||||
30 | Jaguar Land Rover Nederland BV | Netherlands | 100.00 | Jaguar Land Rover Nederland BV | Netherlands | 100.00 | ||||||||||
31 | Jaguar Land Rover Portugal - Veículos e Peças, Lda. | Portugal | 100.00 | Jaguar Land Rover Portugal - Veículos e Peças, Lda. | Portugal | 100.00 | ||||||||||
32 | Jaguar Land Rover Australia Pty Limited | Australia | 100.00 | Jaguar Land Rover Australia Pty Limited | Australia | 100.00 | ||||||||||
33 | Jaguar Land Rover Italia Spa | Italy | 100.00 | Jaguar Land Rover Italia Spa | Italy | 100.00 | ||||||||||
34 | Jaguar Land Rover Korea Company Limited | South Korea | 100.00 | Jaguar Land Rover Korea Company Limited | South Korea | 100.00 | ||||||||||
35 | Jaguar Land Rover (China) Investment Co. Limited | China | 100.00 | Jaguar Land Rover (China) Investment Co. Limited | China | 100.00 |
Sr. No. | Name of the Subsidiary Company | Country of incorporation | % of Equity Shareholding | Name of the Subsidiary Company | Country of incorporation | % of Equity Shareholding | ||||||||||
36 | Jaguar Land Rover Canada ULC | Canada | 100.00 | Jaguar Land Rover Canada ULC | Canada | 100.00 | ||||||||||
37 | Jaguar Land Rover France, SAS | France | 100.00 | Jaguar Land Rover France, SAS | France | 100.00 | ||||||||||
38 | Jaguar Land Rover (South Africa) (Pty) Limited | South Africa | 100.00 | Jaguar Land Rover (South Africa) (Pty) Limited | South Africa | 100.00 | ||||||||||
39 | Jaguar e Land Rover Brasil Indústria e Comércio de Veículos LTDA | Brazil | 100.00 | Jaguar e Land Rover Brasil Indústria e Comércio de Veículos LTDA | Brazil | 100.00 | ||||||||||
40 | Limited Liability Company “Jaguar Land Rover” (Russia) | Russia | 100.00 | Limited Liability Company “Jaguar Land Rover” (Russia) | Russia | 100.00 | ||||||||||
41 | Jaguar Land Rover (South Africa) Holdings Limited | South Africa | 100.00 | Jaguar Land Rover (South Africa) Holdings Limited | South Africa | 100.00 | ||||||||||
42 | Jaguar Land Rover India Limited | India | 100.00 | Jaguar Land Rover India Limited | India | 100.00 | ||||||||||
43 | Jaguar Land Rover Espana SL | Spain | 100.00 | Jaguar Land Rover Espana SL | Spain | 100.00 | ||||||||||
44 | Jaguar Land Rover Belux NV | Belgium | 100.00 | Jaguar Land Rover Belux NV | Belgium | 100.00 | ||||||||||
45 | Jaguar Cars South Africa (Pty) Limited | South Africa | 100.00 | Jaguar Cars South Africa (Pty) Limited | South Africa | 100.00 | ||||||||||
46 | The Jaguar Collection Limited | UK | 100.00 | Jaguar Cars Limited | UK | 100.00 | ||||||||||
47 | Jaguar Cars Limited | UK | 100.00 | Land Rover Exports Limited | UK | 100.00 | ||||||||||
48 | Land Rover Exports Limited | UK | 100.00 | Land Rover Ireland Limited | Ireland | 100.00 | ||||||||||
49 | Land Rover Ireland Limited | Ireland | 100.00 | The Daimler Motor Company Limited | UK | 100.00 | ||||||||||
50 | The Daimler Motor Company Limited | UK | 100.00 | Daimler Transport Vehicles Limited | UK | 100.00 | ||||||||||
51 | Daimler Transport Vehicles Limited | UK | 100.00 | S.S. Cars Limited | UK | 100.00 | ||||||||||
52 | S.S. Cars Limited | UK | 100.00 | The Lanchester Motor Company Limited | UK | 100.00 | ||||||||||
53 | The Lanchester Motor Company Limited | UK | 100.00 | Shanghai Jaguar Land Rover Automotive Services Company Limited | China | 100.00 | ||||||||||
54 | Shanghai Jaguar Land Rover Automotive Services Company Limited | China | 100.00 | Jaguar Land Rover Pension Trustees Limited | UK | 100.00 | ||||||||||
55 | Jaguar Land Rover Pension Trustees Limited | UK | 100.00 | Jaguar Land Rover Slovakia s.r.o | Slovakia | 100.00 | ||||||||||
56 | Jaguar Land Rover Slovakia s.r.o | Slovakia | 100.00 | Jaguar Land Rover Singapore Pte. Ltd. | Singapore | 100.00 | ||||||||||
57 | Jaguar Land Rover Singapore Pte. Ltd. | Singapore | 100.00 | Jaguar Racing Limited | UK | 100.00 | ||||||||||
58 | Jaguar Racing Limited | UK | 100.00 | InMotion Ventures Limited | UK | 100.00 | ||||||||||
59 | InMotion Ventures Limited | UK | 100.00 | Lenny Insurance Limited (Formerly known as InMotion Ventures 1 Limited) | UK | 100.00 | ||||||||||
60 | InMotion Ventures 1 Limited | UK | 100.00 | InMotion Ventures 2 Limited | UK | 100.00 | ||||||||||
61 | InMotion Ventures 2 Limited | UK | 100.00 | InMotion Ventures 3 Limited | UK | 100.00 | ||||||||||
62 | InMotion Ventures 3 Limited | UK | 100.00 | InMotion Ventures 4 Limited | UK | 100.00 | ||||||||||
63 | Jaguar Land Rover Colombia S.A.S | Columbia | 100.00 | Jaguar Land Rover Colombia S.A.S | Columbia | 100.00 | ||||||||||
64 | Jaguar Land Rover Ireland (Services) Limited | Ireland | 100.00 | Jaguar Land Rover Ireland (Services) Limited | Ireland | 100.00 | ||||||||||
65 | Jaguar Land Rover Taiwan Company Limited | Taiwan | 100.00 | Jaguar Land Rover Taiwan Company Limited | Taiwan | 100.00 | ||||||||||
66 | Jaguar Land Rover Servicios México, S.A. de C.V. | Mexico | 100.00 | Jaguar Land Rover Servicios México, S.A. de C.V. | Mexico | 100.00 | ||||||||||
67 | Jaguar Land Rover México, S.A.P.I. de C.V. | Mexico | 100.00 | Jaguar Land Rover México, S.A.P.I. de C.V. | Mexico | 100.00 | ||||||||||
68 | Spark44 (JV) Limited | UK | 50.50 | Jaguar Land Rover Hungary KFT | Hungary | 100.00 | ||||||||||
(iv) Subsidiaries of Spark44 (JV) Limited | ||||||||||||||||
69 | Spark44 Pty. Ltd. | Australia | 50.50 | Jaguar Land Rover Classic USA LLC | USA | 100.00 | ||||||||||
70 | Spark44 GmbH | Germany | 50.50 | Jaguar Land Rover Ventures Limited (Incorporated w.e.f. May 16, 2019) | UK | 100.00 | ||||||||||
71 | Spark44 LLC | USA | 50.50 | Bowler Motors Limited (formerly known as Jaguar Land Rover Auto Ventures Limited) | UK | 100.00 | ||||||||||
72 | Spark44 Shanghai Limited | China | 50.50 | Jaguar Land Rover (Ningbo) Trading Co. Limited (Incorporated w.e.f. November 4, 2019) | China | 100.00 | ||||||||||
73 | Spark44 DMCC | UAE | 50.50 | Spark44 (JV) Limited | UK | 50.50 | ||||||||||
(iv) Subsidiaries of Spark44 (JV) Limited | ||||||||||||||||
74 | Spark44 Demand Creation Partners Pvt. Limited | India | 50.50 | Spark44 Pty. Ltd. | Australia | 50.50 | ||||||||||
75 | Spark44 Limited | UK | 50.50 | Spark44 GmbH | Germany | 50.50 | ||||||||||
76 | Spark44 Singapore Pte. Ltd. | Singapore | 50.50 | Spark44 LLC | USA | 50.50 | ||||||||||
77 | Spark44 Communications SL | Spain | 50.50 | Spark44 Shanghai Limited | China | 50.50 | ||||||||||
78 | Spark44 DMCC | UAE | 50.50 | |||||||||||||
79 | Spark44 Demand Creation Partners Pvt. Limited | India | 50.50 | |||||||||||||
80 | Spark44 Limited | UK | 50.50 | |||||||||||||
81 | Spark44 Singapore Pte. Ltd. | Singapore | 50.50 | |||||||||||||
82 | Spark44 Communications SL | Spain | 50.50 |
Sr. No. Name of the Subsidiary Company 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 Country of
incorporation % of Equity
Shareholding Spark44 S.r.l. Italy 50.50 Spark44 Seoul Limited Korea 50.50 Spark44 Japan K.K. Japan 50.50 Spark44 Canada Inc Canada 50.50 Spark44 Pty. Limited South Africa 50.50 (v) Subsidiaries of Tata Technologies Limited Tata Technologies Pte Limited Singapore 72.29 Tata Technologies (Thailand) Limited Thailand 72.29 Tata Manufacturing Technologies (Shanghai) Limited China 72.29 INCAT International Plc. UK 72.29 INCAT GmbH Germany 72.29 Tata Technologies Europe Limited UK 72.29 Escenda Engineering AB Sweden 72.29 Tata Technologies Inc. USA 72.35 Tata Technologies de Mexico, S.A. de C.V. Mexico 72.35 Cambric GmbH Germany 72.35 Cambric Limited USA 72.32 Tata Technologies SRL Romania Romania 72.32 (vi) Subsidiaries of TMF Holdings Ltd. Tata Motors Finance Solutions Limited India 100.00 Tata Motors Finance Limited (formerly known as Sheba Properties Limited) India 100.00
On July 31, 2018, the company has decided to cease the current manufacturing operations of Tata Motors Thailand Ltd. The Company will address the Thailand market with a revamped product portfolio, suitable to local market needs, delivered through a CBU distribution model. The relevant restructuring costs will be accounted in Q2 of Fiscal 2019.
Condensed Financial Information of Tata Motors Limited
(“Parent Company”)
on a standalone basis
|
As at March 31, | ||||||||||||
2018 | 2018 | 2017 | ||||||||||
(In millions) | ||||||||||||
ASSETS: | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | US$ | 83.9 | Rs.5,465.3 | Rs.1,883.9 | ||||||||
Short-term deposits | — | 0.7 | 110.7 | |||||||||
Finance receivables | 2.4 | 157.9 | 161.9 | |||||||||
Trade receivables | 534.1 | 34,811.4 | 21,280.0 | |||||||||
Investments | 380.3 | 24,789.3 | 24,009.2 | |||||||||
Other financial assets | 163.0 | 10,624.7 | 4,025.3 | |||||||||
Inventories | 863.0 | 56,246.4 | 55,044.2 | |||||||||
Other current assets | 216.8 | 14,130.6 | 18,075.9 | |||||||||
Assets classified as held for sale | 34.3 | 2,233.3 | — | |||||||||
Investments in equity accounted investees (held for sale) | 3.7 | 238.5 | — | |||||||||
Current income tax assets | 11.3 | 737.0 | 1,293.1 | |||||||||
|
|
|
|
|
| |||||||
Total current assets | 2,292.8 | 149,435.1 | 125,884.2 | |||||||||
|
|
|
|
|
| |||||||
Non-current assets: | ||||||||||||
Investments | 47.6 | 3,101.5 | 5,283.1 | |||||||||
Other financial assets | 143.6 | 9,362.0 | 5,859.3 | |||||||||
Property, plant and equipment | 2,217.2 | 144,507.4 | 150,045.3 | |||||||||
Goodwill | 15.2 | 990.9 | 990.9 | |||||||||
Intangible assets | 1,094.4 | 71,324.7 | 81,397.4 | |||||||||
Investments in subsidiaries, joint ventures and equity accounted investees | 2,214.2 | 144,307.3 | 148,101.4 | |||||||||
Non-current income tax assets | 100.5 | 6,548.9 | 7,245.8 | |||||||||
Other non-current assets | 192.5 | 12,544.8 | 12,947.8 | |||||||||
|
|
|
|
|
| |||||||
Total non-current assets | 6,025.2 | 392,687.5 | 411,871.0 | |||||||||
|
|
|
|
|
| |||||||
Total assets | US$ | 8,318.0 | Rs.542,122.6 | Rs.537,755.2 | ||||||||
|
|
|
|
|
| |||||||
LIABILITIES AND EQUITY: | ||||||||||||
Liabilities: | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable | 1,481.8 | 96,579.3 | 73,229.8 | |||||||||
Acceptances | 738.7 | 48,145.8 | 43,792.9 | |||||||||
Short-term borrowings and current portion of long-term debt | 882.0 | 57,486.5 | 58,795.3 | |||||||||
Other financial liabilities | 241.1 | 15,712.3 | 16,533.6 | |||||||||
Provisions | 130.4 | 8,501.8 | 4,679.8 | |||||||||
Other current liabilities | 283.1 | 18,453.7 | 17,753.2 | |||||||||
Current income tax liabilities | 3.3 | 217.7 | 806.4 | |||||||||
|
|
|
|
|
| |||||||
Total current liabilities | 3,760.4 | 245,097.1 | 215,591.0 | |||||||||
|
|
|
|
|
| |||||||
Non-current liabilities: | ||||||||||||
Long-term debt | 2,017.0 | 131,458.6 | 136,766.5 | |||||||||
Other financial liabilities | 33.1 | 2,158.8 | 7,103.6 | |||||||||
Deferred income taxes | 23.7 | 1,546.1 | 971.9 | |||||||||
Provisions | 148.5 | 9,678.2 | 8,507.1 | |||||||||
Other liabilities | 23.6 | 1,537.7 | 1,805.3 | |||||||||
|
|
|
|
|
| |||||||
Total non-current liabilities | 2,245.9 | 146,379.4 | 155,154.4 | |||||||||
|
|
|
|
|
| |||||||
Total liabilities | 6,006.3 | 391,476.5 | 370,745.4 | |||||||||
|
|
|
|
|
| |||||||
Equity: | ||||||||||||
Ordinary shares | 88.6 | 5,775.1 | 5,775.1 | |||||||||
‘A’ Ordinary shares | 15.6 | 1,017.1 | 1,017.1 | |||||||||
Additional paid-in capital | 4,043.7 | 263,549.0 | 263,549.0 | |||||||||
Reserves | (1,854.8 | ) | (120,909.9 | ) | (104,245.7 | ) | ||||||
Other components of equity | 18.6 | 1,214.8 | 914.3 | |||||||||
|
|
|
|
|
| |||||||
Equity attributable to shareholders of Tata Motors Limited | 2,311.7 | 150,646.1 | 167,009.8 | |||||||||
Non-controlling interests | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Total equity | 2,311.7 | 150,646.1 | 167,009.8 | |||||||||
|
|
|
|
|
| |||||||
Total liabilities and equity | US$ | 8,318.0 | Rs.542,122.6 | Rs.537,755.2 | ||||||||
|
|
|
|
|
|
Year ended March 31, | ||||||||||||||||
2018 | 2018 | 2017 | 2016 | |||||||||||||
(In millions, except per share amounts) | ||||||||||||||||
Revenues | US$ | 8,855.2 | Rs. | 577,137.6 | Rs. | 426,155.0 | Rs. | 428,526.9 | ||||||||
Finance revenues | 0.2 | 11.2 | 19.4 | 28.0 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total revenues | 8,855.4 | 577,148.8 | 426,174.4 | 428,554.9 | ||||||||||||
Change in inventories of finished goods andwork-in-progress | 128.0 | 8,343.3 | (2,533.0 | ) | 135.3 | |||||||||||
Purchase of products for sale | 730.7 | 47,624.1 | 39,459.7 | 41,019.7 | ||||||||||||
Raw materials, components, and consumables | 5,689.1 | 370,789.8 | 277,313.2 | 249,998.9 | ||||||||||||
Employee cost | 575.4 | 37,499.1 | 36,261.4 | 31,883.3 | ||||||||||||
Depreciation and amortization | 450.3 | 29,351.4 | 34,798.3 | 25,804.5 | ||||||||||||
Other expenses | 1,444.5 | 94,144.6 | 99,055.2 | 89,732.9 | ||||||||||||
Expenditure capitalized | (130.9 | ) | (8,533.1 | ) | (9,414.8 | ) | (10,344.0 | ) | ||||||||
Assets written off/loss on sale of assets and others (net) | 300.7 | 19,601.2 | 9,749.0 | 5,523.1 | ||||||||||||
Other (income)/loss (net) | (309.1 | ) | (20,148.8 | ) | (13,269.6 | ) | (22,654.0 | ) | ||||||||
Foreign exchange (gain)/loss (net) | 2.2 | 143.9 | (2,698.5 | ) | 2,635.9 | |||||||||||
Interest income | (60.2 | ) | (3,926.0 | ) | (1,846.5 | ) | (2,637.8 | ) | ||||||||
Interest expense (net) | 270.8 | 17,650.5 | 15,901.5 | 14,955.5 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income before tax | (236.1 | ) | (15,391.2 | ) | (56,601.5 | ) | 2,501.6 | |||||||||
Income tax expense | (21.2 | ) | (1,382.5 | ) | (1,674.5 | ) | 198.8 | |||||||||
|
|
|
|
|
|
|
| |||||||||
Net income | US$ | (257.3 | ) | Rs. | (16,773.7 | ) | Rs. | (58,276.0 | ) | Rs. | 2,700.4 | |||||
|
|
|
|
|
|
|
| |||||||||
Statement of Comprehensive Income |
Year ended March 31, | ||||||||||||||||
2018 | 2018 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Net income | US$ | (257.3 | ) | Rs.(16,773.7) | Rs. (58,276.0) | Rs. 2,700.4 | ||||||||||
Other comprehensive income : | ||||||||||||||||
(i) Items that will not be reclassified subsequently to profit and loss : | ||||||||||||||||
Remeasurement gains and (losses) on defined benefit obligations (net) | 1.6 | 105.0 | 101.8 | 207.7 | ||||||||||||
Income tax relating to items that will not be reclassified subsequently | (0.6 | ) | (35.9 | ) | (37.9 | ) | (57.3 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
1.0 | 69.1 | 63.9 | 150.4 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
(ii) Items that may be reclassified subsequently to profit and loss : | ||||||||||||||||
Gain/(loss) on cash flow hedges (net) | (3.4 | ) | (220.2 | ) | 59.2 | (139.7 | ) | |||||||||
Available-for-sale investments | 6.9 | 451.5 | 654.1 | 101.6 | ||||||||||||
Income tax relating to items that will be reclassified | 1.1 | 69.2 | (20.5 | ) | 46.8 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
4.6 | 300.5 | 692.8 | 8.7 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Other comprehensive income/(loss) for the year, net of tax (i+ii) | 5.6 | 369.6 | 756.7 | 159.1 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total comprehensive income for the year | US$ | (251.7) | Rs. (16,404.1) | Rs. (57,519.3) | Rs. 2,859.5 | |||||||||||
|
|
|
|
|
|
|
|
|
Year ended March 31, | ||||||||||||||||
2018 | 2018 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income | US$ | (257.4 | ) | Rs. (16,773.7) | Rs. (58,276.0) | Rs. 2,700.4 | ||||||||||
Adjustments for: | ||||||||||||||||
Depreciation and amortization expense | 450.3 | 29,351.4 | 34,798.3 | 25,804.5 | ||||||||||||
Inventory write-down | 24.9 | 1,623.3 | 1,802.7 | 1,363.3 | ||||||||||||
Allowances for trade and other receivables | (16.8 | ) | (1,091.9 | ) | 1,705.1 | 1,958.2 | ||||||||||
Loss on sale of assets/assets written off and others (net) | 253.5 | 16,521.5 | 9,748.8 | 5,523.1 | ||||||||||||
(Gain) on sale/loss on fair valuation ofavailable-for-sale investments (net) | (15.5 | ) | (1,011.2 | ) | (1,261.0 | ) | (8,042.2 | ) | ||||||||
Gain on fair value of below market interest loans | (0.9 | ) | (60.2 | ) | (465.2 | ) | (505.0 | ) | ||||||||
Foreign exchange (gain)/loss (net) | 7.2 | 467.8 | (2,291.1 | ) | 1,758.2 | |||||||||||
Income tax expense | 21.2 | 1,382.5 | 1,674.5 | (198.8 | ) | |||||||||||
Interest expense | 270.8 | 17,650.5 | 15,901.5 | 14,955.5 | ||||||||||||
Interest income | (60.2 | ) | (3,926.0 | ) | (1,846.5 | ) | (2,637.8 | ) | ||||||||
Dividend income and income on mutual funds | (161.8 | ) | (10,546.9 | ) | (6,765.0 | ) | (10,617.1 | ) | ||||||||
Provision for impairment of investment in a subsidiary | — �� | — | 1,231.7 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Cash flows from operating activities before changes in following assets and liabilities | 515.3 | 33,587.1 | (4,042.2 | ) | 32,062.3 | |||||||||||
Trade receivables | (187.0 | ) | (12,187.7 | ) | (2,023.6 | ) | (7,040.5 | ) | ||||||||
Finance receivables | — | 0.4 | (27.7 | ) | 205.7 | |||||||||||
Other financial assets | (171.9 | ) | (11,202.3 | ) | (800.7 | ) | (174.3 | ) | ||||||||
Other current assets | 59.6 | 3,883.0 | (2,521.2 | ) | (2,019.7 | ) | ||||||||||
Inventories | (43.0 | ) | (2,803.7 | ) | (5,714.3 | ) | (2,288.3 | ) | ||||||||
Othernon-current assets | 6.6 | 430.0 | 119.7 | 1,149.8 | ||||||||||||
Accounts payable | 422.0 | 27,495.7 | 18,628.5 | 3,578.8 | ||||||||||||
Acceptances | 66.8 | 4,352.9 | 4,920.1 | (632.5 | ) | |||||||||||
Other current liabilities | (9.7 | ) | (632.3 | ) | 1,651.3 | 3,720.2 | ||||||||||
Other financial liabilities | (122.6 | ) | (7,992.3 | ) | 4,106.4 | (3,287.8 | ) | |||||||||
Othernon-current liabilities | (13.0 | ) | (849.0 | ) | (324.8 | ) | 817.4 | |||||||||
Provisions | 82.4 | 5,370.3 | 780.7 | 1,173.5 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Cash generated from operations | 605.5 | 39,452.1 | 14,752.2 | 27,264.6 | ||||||||||||
Income tax paid (net) | (1.9 | ) | (126.0 | ) | (937.5 | ) | (235.0 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net cash provided by operating activities | 603.6 | 39,326.1 | 13,814.7 | 27,029.6 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Cash flows from investing activities: | ||||||||||||||||
Investments in Mutual Fund (purchased)/sold (net) | 151.3 | 9,861.1 | (5,374.0 | ) | (16,690.2 | ) | ||||||||||
Investments in subsidiary companies | (46.0 | ) | (3,000.0 | ) | (1,390.8 | ) | (599.8 | ) | ||||||||
Investments in joint ventures | (0.4 | ) | (25.0 | ) | — | — | ||||||||||
Purchase ofavailable-for-sale investments | (6.4 | ) | (416.3 | ) | — | — | ||||||||||
Advance towards investments in subsidiary | — | — | — | (731.1 | ) | |||||||||||
Loans to subsidiaries and equity accounted investees | — | — | (0.7 | ) | (779.7 | ) | ||||||||||
Loans to others | — | — | — | (7.5 | ) | |||||||||||
Proceeds from sale of investments in subsidiary companies | — | — | — | 7,469.0 | ||||||||||||
Proceeds from sale of investments in other companies | — | — | — | 850.5 | ||||||||||||
Repayment of loans by joint operation | — | — | 1,325.0 | — | ||||||||||||
Repayment of loans by others | — | — | 7.5 | — |
Year ended March 31, | ||||||||||||||||
2018 | 2018 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Deposits with banks/financial institutions | US$ | (92.4 | ) | Rs.(6,025.4) | Rs.— | Rs.(21,955.0) | ||||||||||
Realization of deposits with banks/financial institutions | 83.7 | 5,453.3 | 1,140.0 | 21,255.6 | ||||||||||||
Deposit of margin money and other restricted deposits | (25.5 | ) | (1,661.3) | (1,147.1) | (55,112.9 | ) | ||||||||||
Realization of margin money and other restricted deposits | 11.1 | 723.8 | 2,650.0 | 53,537.4 | ||||||||||||
(Increase)/decrease in short term inter-corporate deposits | 9.2 | 600.0 | 200.0 | (350.0 | ) | |||||||||||
Interest received | 60.4 | 3,934.5 | 2,561.1 | 2,539.0 | ||||||||||||
Dividend received | 161.8 | 10,546.9 | 6,765.0 | 10,424.6 | ||||||||||||
Payments for property, plant and equipment | (193.6 | ) | (12,608.7) | (18,728.3) | (16,876.3 | ) | ||||||||||
Proceeds from sale of property, plant and equipment | 4.3 | 278.4 | 154.1 | 344.2 | ||||||||||||
Payments for intangible assets | (221.6 | ) | (14,438.8) | (15,541.6) | (15,960.0 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net cash used in investing activities | (104.1 | ) | (6,777.5) | (27,379.8) | (32,642.2 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Cash flows from financing activities: | ||||||||||||||||
Proceeds from issuance of shares | — | 0.0* | 45.5 | 74,332.2 | ||||||||||||
Dividends paid (including dividend distribution tax) | (0.4 | ) | (27.5) | (730.0) | — | |||||||||||
Interest paid | (325.1 | ) | (21,188.7) | (19,575.9) | (20,859.1 | ) | ||||||||||
Proceeds from issuance of short-term debt | 559.2 | 36,447.0 | 66,166.7 | 31,182.5 | ||||||||||||
Repayment of short-term debt | (1,046.9 | ) | (68,232.8) | (32,984.4) | (49,569.1 | ) | ||||||||||
Net change in other short-term debt (with maturity up to three months) | 210.0 | 13,689.4 | (16,472.8) | (26,376.2 | ) | |||||||||||
Proceeds from issuance of long-term debt | 248.8 | 16,218.0 | 40,705.2 | 4,684.5 | ||||||||||||
Repayments of long-term debt | (90.1 | ) | (5,871.0) | (25,962.2) | (14,183.5 | ) | ||||||||||
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Net cash provided by/(used in) financing activities | (444.5 | ) | (28,965.6) | 11,192.1 | (788.7 | ) | ||||||||||
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Net change in cash and cash equivalents | 55.0 | 3,583.0 | (2,373.0) | (6,401.3 | ) | |||||||||||
Effect of foreign exchange on cash and cash equivalents | — | (1.6) | (13.8) | 7.3 | ||||||||||||
Cash and cash equivalents, beginning of the year | 28.9 | 1,883.9 | 4,270.7 | 10,664.7 | ||||||||||||
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Cash and cash equivalents, end of the year | US$ | 83.9 | Rs. 5,465.3 | Rs.1,883.9 | Rs.4,270.7 | |||||||||||
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Non-cash transactions: | ||||||||||||||||
Liability towards property, plant and equipment and intangible assets purchased on credit/deferred credit | US$ | 39.6 | Rs.2,580.4 | Rs.3,278.2 | Rs.4,151.5 | |||||||||||
Increase / (decrease) in liabilities arising from financing activities on account ofnon-cash transactions : |
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Exchange differences | US$ | 3.9 | Rs.256.6 | |||||||||||||
Amortisation / EIR adjustments of prepaid borrowings | US$ | 2.1 | Rs.137.3 |
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The Parent Company’s long-term debt consists of the following:
As at March 31, | ||||||||||||
2018 | 2018 | 2017 | ||||||||||
(In millions) | ||||||||||||
Non-convertible debentures | US$ | 1,242.4 | Rs.80,972.3 | Rs.70,485.7 | ||||||||
Buyers credit from banks at floating interest rate | 230.2 | 15,000.0 | 15,190.7 | |||||||||
Senior notes | 745.4 | 48,583.0 | 48,263.4 | |||||||||
Loan from banks/financial institution | 114.8 | 7,478.7 | 6,565.1 | |||||||||
Others | 22.2 | 1,447.3 | 1,301.7 | |||||||||
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Total | 2,355.0 | 153,481.3 | 141,806.6 | |||||||||
Less: current portion | 338.0 | 22,022.7 | 5,040.1 | |||||||||
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Long-term debt | US$ | 2,017.0 | Rs.131,458.6 | Rs.136,766.5 | ||||||||
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The table below provides details regarding the contractual maturities of long-term debt (including interest payment):
As at March 31, | ||||||||||||
2018 | 2018 | 2017 | ||||||||||
(In millions) | ||||||||||||
Due in 1st Year | US$ | 499.2 | Rs.32,535.8 | Rs.15,416.0 | ||||||||
Due in 2nd Year | 306.2 | 19,959.8 | 26,534.1 | |||||||||
Due in 3rd to 5th Year | 1,632.4 | 106,388.7 | 101,586.7 | |||||||||
Due after 5th Year | 547.9 | 35,709.4 | 50,037.0 | |||||||||
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Total | US$ | 2,985.7 | Rs.194,593.7 | Rs.193,573.8 | ||||||||
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Notes to schedule 1
Schedule 1 has been provided pursuant to the requirements of Rule12-04 (a) of RegulationS-X, which requires condensed financial information as to financial position, cash flows and results of operations of the Parent Company as of the same dates and for the same periods for which audited consolidated financial statements have been presented because restricted net assets of the consolidated subsidiaries exceed 25% of the consolidated net assets as at March 31, 2018.
As at March 31, 2018 and 2017, Rs. 429,855.1 million and Rs.407,920.8 million, respectively, of restricted net assets were not available for distribution.
Basis of preparation
The Condensed financial information of Tata Motors Ltd (Parent Company), has been prepared in accordance with International Financial Reporting Standards (Referred to as “IFRS”) as issued by International Accounting Standards Board (referred as “IASB”). The Company has used the same accounting policies as set out in the consolidated financial statements except that the parent company’s investments in subsidiaries, joint ventures and equity method investees were recorded at cost less any impairment.
Certain of the company’s activities, are conducted through joint operations, which are joint arrangements whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. As per IFRS-11 Joint arrangements, in its separate financial statements, the Company being joint operator has recognized its share of assets, liabilities, income and expenses of the joint operations incurred jointly with the other partners.
During the years ended March 31, 2018, 2017 and 2016, cash dividends amounting to Rs. 9,992.5 million, Rs.6,733.3 million and Rs.10,208.7 million were paid to the Parent Company by its subsidiaries and equity accounted investees, respectively.
Effective April 30, 2018, the Company completed the merger of TML Drivelines Ltd, which is a wholly owned subsidiary of the Company, pursuant to a scheme of arrangement of merger, which will be accounted as a common control transaction in Fiscal 2019.
Sr. No. | Name of the Subsidiary Company | Country of incorporation | % of Equity Shareholding | |||||
83 | Spark44 S.r.l. | Italy | 50.50 | |||||
84 | Spark44 Seoul Limited | Korea | 50.50 | |||||
85 | Spark44 Japan K.K. | Japan | 50.50 | |||||
86 | Spark44 Canada Inc | Canada | 50.50 | |||||
87 | Spark44 Pty. Limited | South Africa | 50.50 | |||||
88 | Spark44 Colombia S.A.S. | Columbia | 50.50 | |||||
89 | Spark44 Taiwan Limited | Taiwan | 50.50 | |||||
(v) Subsidiaries of Tata Technologies Limited | ||||||||
90 | Tata Technologies Pte Limited | Singapore | 72.48 | |||||
91 | Tata Technologies (Thailand) Limited | Thailand | 72.48 | |||||
92 | Tata Manufacturing Technologies (Shanghai) Limited | China | 72.48 | |||||
93 | INCAT International Plc. | UK | 72.48 | |||||
94 | INCAT GmbH | Germany | 72.48 | |||||
95 | Tata Technologies Europe Limited | UK | 72.48 | |||||
96 | Escenda Engineering AB | Sweden | 72.48 | |||||
97 | Tata Technologies Inc. | USA | 72.48 | |||||
98 | Tata Technologies de Mexico, S.A. de C.V. | Mexico | 72.48 | |||||
99 | Cambric GmbH | Germany | 72.48 | |||||
100 | Cambric Limited | USA | 72.48 | |||||
101 | Tata Technologies SRL Romania | Romania | 72.48 | |||||
(vi) Subsidiaries of TMF Holdings Ltd. | ||||||||
102 | Tata Motors Finance Solutions Limited | India | 100.00 | |||||
103 | Tata Motors Finance Limited | India | 100.00 |
F-98F-121