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Tata Motors Ltd.

BSE: 500570 Sector: Auto
NSE: TATAMOTORS ISIN Code: INE155A01022
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OPEN 412.00
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VOLUME 368376
52-Week high 553.00
52-Week low 357.95
P/E
Mkt Cap.(Rs cr) 130,302
Buy Price 410.20
Buy Qty 352.00
Sell Price 0.00
Sell Qty 0.00
OPEN 412.00
CLOSE 411.05
VOLUME 368376
52-Week high 553.00
52-Week low 357.95
P/E
Mkt Cap.(Rs cr) 130,302
Buy Price 410.20
Buy Qty 352.00
Sell Price 0.00
Sell Qty 0.00

Tata Motors Ltd. (TATAMOTORS) - Director Report

Company director report

TO THE MEMBERS OF TATA MOTORS LIMITED

The Directors present their Seventy Second Annual Report along with the AuditedStatement of Accounts for Fiscal 2017.

Pursuant to the notification issued by the Ministry of Corporate Afiairs on February16 2015 and under the Companies (Indian Accounting Standards) Rules 2015 and otheraccounting principles generally accepted in India the Company has adopted IndianAccounting Standards on April 1 2016 with the transition date as April 1 2015. Fiscal2016 Financial Statements have been prepared in accordance with the recognised andmeasurement principles stated therein.

FINANCIAL PERFORMANCE SUMMARY

(Rs in crores)

Tata Motors Tata Motors Group
(Standalone)* (Consolidated)
Fiscal 2017 Fiscal 2016 Fiscal 2017 Fiscal 2016
FINANCIAL RESULTS
Income from operations 49100.41 47383.61 274492.12 277660.59
Total expenditure 47399.74 44018.78 237579.76 235884.31
Operating profit 1700.67 3364.83 36912.36 41776.28
Other Income 978.84 1402.31 754.54 885.35
Profit before interest depreciation amortization exceptional item and tax 2679.51 4767.14 37666.90 42661.63
Finance costs 1590.15 1592.00 4238.01 4889.08
Cash profit 1089.36 3175.14 33428.89 37772.55
Depreciation amortization and product development/ engineering expenses 3423.87 2747.49 21318.56 20179.55
Foreign exchange (gain)/loss (net) (252.45) 222.91 3910.10 1616.88
Profit/(loss) for the year before exceptional items and tax (2082.06) 204.74 8200.23 15976.12
Exceptional Items - loss (net) 338.71 271.84 (1114.56) 1850.35
Profit/(loss) before tax (2420.77) (67.10) 9314.79 14125.77
Tax expenses/(credit) (net) 59.22 (4.80) 3251.23 3025.05
Profit/(loss) after tax (2479.99) (62.30) 6063.56 11100.72
Share of profit of joint ventures and associates (net) - - 1493.00 577.47
Profit/(loss) for the year (2479.99) (62.30) 7556.56 11678.19
Other comprehensive income/(loss) 95.48 85.47 (27494.57) 3157.46
Total Other comprehensive income/(loss) for the year (2384.51) 23.17 (19938.01) 14835.65
Attributable to:
(a) Shareholders of the Company (20005.94) 14724.64
(b) Non-controlling interest 67.93 111.01

* These include the Company's proportionate share of income and expenditure in its twoJoint Operations namely Tata Cummins Pvt Ltd and Fiat India Automobiles Pvt Ltd.

DIVIDEND

Considering the continued weak operating environment in the standalone business and inview of the losses for the year no dividend is permitted to be paid to the Members forFiscal 2017 as per the Companies Act 2013 ("the Act") and the Rules framedthereunder.

TRANSFER TO RESERVES

In Fiscal 2016 an additional amount has been transferred from retained earnings toDebenture Redemption Reserve (DRR) on outstanding Non-Convertible Debentures (NCDs) andSenior Notes (including interest accrued where applicable) of Rs43.79 crores. Due tolosses in Fiscal 2017 resulting in debit balance in retained earnings no amount has beentransferred to DRR on the NCDs allotted in Fiscal 2017.

OPERATING RESULTS AND PROFITS

Fiscal 2017 has been marked by couple of ‘Black Swan' events (like Brexit -UKdecision to exit EU and Demonetization in India) having a large impact on the futurecourse of developments. This year was marked by the way for the long awaited andtransformational Goods and Service Tax (GST).

Growth of World GDP has been 3.1% in Fiscal 2016. A recovery in commodity prices hasprovided some relief to commodity exporters and helped in reducing the defiationarypressures. The Orgainisation of the Petroleum Exporting Countries (OPEC) ability toincrease price by cutting down production has been curtailed by rising Shale gas output inUS. Moreover structural problems such as low productivity growth and high-incomeinequality persisted and are likely to be continued. Activity rebounded strongly in theUnited States in second half of calendar 2016 compared to weaker first half. Howeveroutput remained below potential in a number of other advanced economies notable in theEuropean area. The picture of emerging market and developing economies remained much morediverse. The growth rate in China was a bit stronger than expected supported by continuedpolicy stimulus. Activity was weaker than expected in some Latin American countries suchas Brazil whereas activity in Russia was slightly better than expected in partrefiecting firmer oil prices.

India's economy has grown at a strong pace in recent years owing to the implementationof critical structural reforms and lower external vulnerabilities. It has grown by 7.1% inFiscal 2017 compared to 7.9% in Fiscal 2016 primarily because of the temporaryconsumption shock induced by cash shortages and payment disruptions from demonetisation.Private investment continues to remain weak due to over capacity. In order to propel theeconomy the government has been trying to give a thrust to the investment by allocating ahigher sum towards gross fixed capital formation.

The Tata Motors Group registered a de-growth of 1.1% in income from operationsto Rs274492 crores in Fiscal 2017 as compared to Rs277661 crores in Fiscal 2016 dueto negative translation impact from Great British Pound (GB) to Indian Rupee (Rs) ofRs27686 crores and de-growth in the M&HCV segment in India was ofiset by higherwholesale volumes in Jaguar and Land Rover and growth in Passenger Vehicle segment inIndia. The consolidated EBITDA margins for Fiscal 2017 stood at 13.4%. ConsequentlyProfit Before Tax (PBT ) and Profit After Tax (PAT) [post share of profit of jointventures and associates (net)] were Rs9315 crores and Rs7557 crores respectively.

Tata Motors Limited recorded income from operations (including joint operations) ofRs49100 crores 3.6% higher from Rs47384 crores in the previous year. Muted demand ofM&HCV and LCV due to weak replacement demand subdued freight demand from industrialsegment which took a further hit post demonetization and lower than expected pre-buyingahead of the implementation of BS-IV resulting in lower EBITDA margins of 3.5% in Fiscal2017 as against 7.1% in Fiscal 2016. Loss Before and After Tax (including jointoperations) for Fiscal 2017 were at Rs2421 crores and Rs2480 crores respectively ascompared to Loss Before and After Tax (including joint operations) of Rs67 crores and Rs62crores respectively in Fiscal 2016. The losses were primarily driven by less favourablemarket and model mix including higher marketing expenses depreciation and amortizationand other operating cost. Jaguar Land Rover (JLR) (as per IFRS) recordedrevenues of GB24.3 billion compared to GB22.3 billion in Fiscal 2016 driven by highersales volumes and weaker GB. Consolidated EBITDA for Fiscal 2017 at GB3.0 billion wasmarginally lower as compared to EBITDA of GB3.1 billion for Fiscal 2016 as the higherrevenue was more than ofiset by higher marketing manufacturing and other operatingexpenses. EBIT was GB1.5 billion in Fiscal 2017 lower than GB1.8 billion in Fiscal2016 due to higher depreciation and amortization which were partially ofiset by higherprofits from the Chinese joint venture. PBT in Fiscal 2017 was GB1.6 billion in-linewith the PBT of GB1.6 billion in Fiscal 2016 the lower EBIT and unfavourable foreignexchange revaluation was more than ofiset by a favourable revaluation of commodity hedgesand of GB151 million further recoveries relating too to Tianjin fire in this yearcompared to GB157 million net charge than in Fiscal 2016.

In May 2016 JLR redeemed the remaining US$84 million (GB57 million equivalent) ofthe 8.125% US$ bond maturing in 2021 by exercising its call option the majority of whichwas successfully tendered and redeemed in March 2015. In January 2017 JLR issued a€650 million 7-year bond with a coupon of 2.20% and a GB300 million 4-year bondwith a coupon of 2.75%. In addition JLR successfully undertook a consent solicitation inMarch 2017 to align the terms of three of their older bonds to the terms of the Euro andGB bonds issued in January 2017.

Tata Motors Finance Limited (TMFL) (consolidated) (as per Indian GAAP) theCompany's captive financing subsidiary reported revenue of Rs2721 crores (Fiscal 2016Rs3229 crores) and reported a Loss After Tax Rs1182 crores in Fiscal 2017 as comparedto PAT Rs267 crores in Fiscal 2016.

Tata Daewoo Commercial Vehicle Company Limited South Korea (TDCV) (as per KoreanGAAP) registered revenues of KRW 1032 billion in Fiscal 2017 a growth of 17.3% overFiscal 2016 mainly due to increase in domestic sales. The PAT was KRW 50 billion comparedto KRW 46 billion in Fiscal 2016. Higher domestic volume better mix favourable exchangerealizations and material cost reduction helped in improving profits.

VEHICLE SALES AND MARKET SHARES

The Tata Motors Group sales for this year stood at 1157808 vehicles up by8.8% as compared to Fiscal 2016. Globally the Company sold 396097 Commercial Vehiclesand Passenger Vehicles were 761711.

TATA MOTORS

Tata Motors recorded sales of 545416 vehicles a growth of 6.5% over Fiscal 2016. InFiscal 2016 Industry in India grew by 8.3% resulting in the Company's market sharedecreasing to 12.8% in Fiscal 2017 in the Indian Automotive Industry from 13.1% in theFiscal 2016. The Company's exports on standalone basis grew by 10.6% to 64221vehicles in Fiscal 2017 as compared to 58058 vehicles in Fiscal 2016.

Commercial Vehicles

The domestic demand for Commercial Vehicles was volatile through the year as a resultof Government and Regulatory announcements - e.g. Goods and Service Tax (GST)demonetization emissions change from BS-III to BS-IV etc. Within the domestic market theCompany sold 324175 Commercial Vehicles a marginal fall of 0.8% from Fiscal 2016. Whilethe overall growth of Commercial Vehicles for the Company has been muted some specificsegments like M&HCV tipper (Construck) Buses and Pickup have seen strong growthduring Fiscal 2017.

Some of the highlights for the year were:

Unveiled its very first Brand Ambassador – Akshay Kumar in December 2016. He willbe the face of the entire CVBU range going forward. The Xenon Yodha Pickup was launched inJanuary 2017. A reliable new Pickup with high levels of performance and lower operatingcosts it has been very well received and is gaining acceptance from customers. Launched arange of state of the art buses running on alternate fuels including Electric Hybrid andLNG. An order for 25 hybrid buses to the Mumbai Metropolitan Region Development Authorityis in the process of being fulfilled. The Magic Mantra SCV Passenger Vehicle with superiorperformance was launched to augment the existing Magic and Iris models in the last mileconnectivity segment.

The Magna Bus Coach was introduced as the next-generation coach for inter-city peoplemovement. Feedback on the product has been encouraging. In the M&HCV segment severalnew products were launched – Ultra 1518 truck LPK 1615 tipper LPT 3718 Pusher LiftAxle rigid truck and a further extension of the SIGNA range of Tractors. Ofiered invarious configurations the SIGNA range of Commercial Vehicles is engineered and built toofier M&HCV buyers a newly designed cabin with proven Tata Motors aggregates for aworld-class trucking experience. Launched a refreshed version of the Tata Loyalty Programwith a unique cover of Rs10 lakhs accidental insurance for five years for the driver– a first of its kind in the industry plus a host of benefits to enable customers toaccumulate points for every spend along with many more attractive options for redeemingpoints accrued. This year the Company won four prestigious awards at the Apollo CVAwards: ? Tata Armoured Personnel Carrier - winners of the Special CV Applicationof the Year award.

- MCV tipper of the Year award was won by Tata Prima 2528.K - Tata DLTdouble-deck tractor (trailer) carrier won the CV application builder of the Year award -Tata Signa 4923.S tractor won the HCV tractor cargo carrier of the Year award.

- Dealership of the Year Award- Cargo Motors Pvt. Ltd.

Dipper Campaign-Use Dipper At Night – an innovative campaign to bring awarenessamongst the truck driver community for safe practices has been extremely well received andacknowledged through various awards such as the CANNES 2016 - 2 awards – a first forthe TATA Group SPIKES ASIA 2016 awards and the EFFIES 2016 award.

Organized the Prima Truck Racing Championship Season 4 which drew in over 30000spectators. The highlights this year were the inclusion of FIA's European Truck RacingChampionship (ETRC) drivers in addition to the current crop of racers from the BritishTruck Racing Association (BTRA) the first female truck driver and an expansion of theIndian Truck Driver Racing Training Program called the "T1 Racer Program". TheT1 Racer Program (TRP) is a program started in 2016 to identify regular Indian truckdrivers and train them to become racers. This is the second year of the program. This yearalso saw the unveiling of a 1000 bhp truck which will feature as the racing platform forfuture editions.

In order to promote various applications on the Company's products a series ofcampaigns have been organized across the country: - Har Business ka ACE- FullyBuilt expo- Pan India 34 expos covering 14437 customers conducted to showcase theversatility of the Tata SCV platform and leverage the many applications for use by thecustomers. It has been well received as customers look towards buying ready to usesolutions from the Company for enhancing their business.

---Construck Mahotsav - covered 13 important locations in East India withparticipation from more than 5500 customers. This exclusive event to showcased the entirerange of construction and mining vehicles to leverage the growing demand for suchvehicles.

- -Truck -World in 2016-17 - Organized Truck World Exhibition with a full rangeof over 35 difierent models displayed and visited by more than 13000 customers acrosssome of the key trucking centers in the country such as Chandigarh Hyderabad GunturKanpur and Delhi.

- -Tata -407- 30 Year Celebration - More than 35000 customers participated inthis campaign over two months. The iconic Tata 407 celebrated 30 years and it continues tobe the best selling product in the category of LCV trucks. Customers across the countrywere felicitated for their support in making this one of the most successful brands in theCommercial Vehicle Industry.

- -HAMARE BUS KI BAT HAI - This unique programme reached out to the supportstafi of school buses across India helping them improve their eficiency at work.

Since it's inception the programme has reached out to 2313 schools in 299cities/towns covering over 96586 school bus stafi.

Passenger Vehicles

The domestic Passenger Vehicle Industry grew by 9.6% during Fiscal 2017. Correction infuel prices and easing financing cost has resulted in lower operating cost which shouldfurther aid domestic growth in near to medium term. Industry sales crossed 3 millionmilestone for the first time during the year. The Company's Passenger Vehicles sales werehigher by 23.5% at 157020 vehicles registering a 5.2% market share. The Company sold137175 cars (higher by 28.4%) and 19845 utility vehicles and vans (lower by 2.2%). Inthe Utility Vehicle segment competitive activity intensified with multiple new launchesmainly in the soft-roader category. The Company has taken various initiatives to improveits performance such as product refreshes/launch programs operational eficiency dealerefiectiveness working capital management and restructuring customer facing functions.

Some of the highlights of this year's performance were: Product launches continuedduring the Fiscal.

Tiago was launched in April 2016 with latest technological advancements and designengineering.

Tata Hexa was launched in January 2017 with Automatic and Manual Gearbox new designlanguage and class leading features.

Tigor Compact Sedan was launched towards the end of March 2017.

The above new product launches were in-line with the Company's objective of taking thebrand to a higher level while making it relevant for the younger buyer. The Companycontinued to focus on building brand strengths refreshing products and enhancing salesand service experience. The Company expanded it's new look stylish tech savvy best inclass fiagship Passenger Vehicle showrooms for superior customer experience The Companyhas signed a contract for supply of 3192 units of the Tata Safari Storme 44 to theIndian Armed Forces under a new category of vehicles – GS800 (General Service 800).

Exports

The Company exported 64221 vehicles (Fiscal 2016: 58058 vehicles) comprising 60184units of Commercial Vehicles and 4037units of Passenger Vehicles during Fiscal 2017.Export of Commercial Vehicles grew by 11.3% in Fiscal 2017 with 60184 unitsexported compared to 54052 in Fiscal 2016 crossing 60000 shipments for the first timeand the highest ever till date. The traditional markets of SAARC remained stronger thanlast year growing by 21.5% with Sri Lanka Bangladesh and Nepal contributing to thegrowth. However the mid-term duty change in Sri Lanka and the liquidity crisis in Nepalimpacted the growth momentum. The reconstruction and the easing up of pent up demand ledto record shipments to Nepal in Fiscal 2017. Low crude oil prices Middle Eastgeo-political situation currency devaluations and political strife cast a big shadow overthe Company's strong markets of Middle East and Africa this year with the exception ofthe newly opened market of Tunisia which grown more than 100%. The Company was able togrow market shares in the key markets of Nepal and Bangladesh. In Fiscal 2017 the Companysuccessfully bagged and executed several prestigious orders including 553 units Xenonpickups for PoS Malaysia; 537 units of buses to Ivory Coast as a part of their publictransportation system; 25 units of Prima in Oman to Al Tasneem; 25 units of ULTRA trucksin Bangladesh to Pran RFL; 32 units of ULTRA trucks in Malaysia to PoS and 39 units ofULTRA Buses in Nepal to Mahanagar Yatayat. Some of the key events in Fiscal 2017 were thelaunch of Tata ULTRA Trucks in Kenya and Tanzania; ULTRA Bus in Tanzania; Tata Prima inKingdom of Saudi Arabia and Bhutan. As a part of its strategy to expand its globalfootprint the Company also launched the Commercial Vehicle brand in Vietnam and Bolivia.In Fiscal 2017 the Company achieved a key milestone of 1000 Ultra retails in exportmarkets.

During the period Fiscal 2017 the Company exports of Passenger Vehicles stoodat 4037 units compared to 4006 units in the Fiscal 2016. Sales in Sri Lanka declinedconsiderably due to increase in import duties and tightening of retail financing. Howeverthis was compensated by the improved sales in Nepal and South Africa with a growth of 120%and 30% respectively.

In Nepal the launch of Tiago has helped the Company to improve its sales in the hatchsegment whereas increased sales of Zest helped to gain the leadership position in thecompact sedan segment. The Sumo continues to be the ‘Number One' selling brand in UVsin Nepal. In South Africa aggressive fieet sales push helped us to increase its salesover last year. In Bangladesh the Company has improved its sales on account of launch ofNano GenX and an institutional order for Sumo Ambulance.

Jaguar Land Rover

In Fiscal 2017 Jaguar Land Rover achieved record retail sales of 604009 units inFiscal 2017 a growth of 15.8% as compared to Fiscal 2016 primarily driven by theintroduction of the Jaguar F-PACE and continued strong demand for the Land Rover DiscoverySport. The retail sales were higher year-on-year in China by 32% North America by 24%the UK 16% and the Europe 13% in Fiscal 2017. However retail sales were down by 6% inother overseas markets which include Brazil Russia and South Africa. Some of the keyhighlights of Fiscal 2017: Retail sales of the new Jaguar F-PACE commenced in May 2016(Winner of World Car of the Year and World Car Design of the Year). The Jaguar XEcommenced sales in the US in May 2016.

The Range Rover Evoque convertible commenced sales in June 2016.

Production of the new long wheel base Jaguar XFL commenced at the Chinese joint ventureand went on sale locally in September 2016.

The all new Land Rover Discovery was unveiled in September 2016 with sales commencingin February 2017 .

The new Range Rover Velar was revealed to the public in March 2017 and is the 4th RangeRover model positioned between the Range Rover Evoque and the Range Rover Sport.

The Jaguar I-PACE concept JLR's first battery electric vehicle was unveiled inNovember 2016 with sales commencing in 2018. JLR opened it's first wholly ownedinternational manufacturing plant in Brazil in June 2016.

Production of JLR's in-house 4 cylinder Ingenium petrol engine commenced in September2016 at the Engine Manufacturing Centre in Wolverhampton in the UK and is now available inthe Jaguar XE XF F-PACE Land Rover Discovery Sport and Range Rover Evoque. The IngeniumPetrol Engine will also be available in the new Range Rover Velar from launch.

Construction of the manufacturing plant at Nitra in Slovakia began in September 2016and the all new Discovery would be the first vehicle to be produced at the new plant from2018. Jaguar XF won the Auto Express Golden Steering Wheel award for best saloon car of2016.

JLR launched it's InMotion Ventures business unit in April 2016 established to developinnovative solutions aimed at overcoming future travel and transport challenges.Investments to date include US$1 million into GoKid (a ride sharing service for schools)and SPLT (a ride sharing/car pooling platform for commuters).

Tata Daewoo Commercial Vehicle Company Limited

Tata Daewoo Commercial Vehicle Company Limited (TDCV) sold 10317 commercial vehicleshigher by 13.2% over Fiscal 2016 mainly due to increase in domestic sales. TDCV continuedthe strong performance in the domestic market in-spite of increased competition byselling 8795 commercial vehicles registering a growth of 25.0% compared to sales of7036 commercial vehicles in Fiscal 2016. The market share for both HCV and MCV Segmentsput together was 29.6% as compared to 31.0% in Fiscal 2016. The export market scenario wasvery challenging in Fiscal 2017. Factors like persistently low oil prices local currencydepreciation against the US dollar continuing statutory regulations to reduce importsthe slowdown in Chinese economy impacting commodity exporting countries and increaseddealer inventory adversely impacted TDCV's exports in major markets such as Gulf CorporationCouncil Russia Algeria Vietnam and South Africa. The export sales were 1522 commercialvehicles 26.8% lower compared to 2080 commercial vehicles in Fiscal 2016.

Tata Motors (Thailand) Limited

Tata Motors (Thailand) Limited (TMTL) sold 1332 units in Fiscal 2017 as compared to1312 units in Fiscal 2016. The Thai Automobile Industry has witnessed a fiat growth inFiscal 2017 after 3 straight years of decline. TMTL has taken the opportunity to refreshits products services and network as well as expand the range of ofierings to theThailand Customers. Fiscal 2017 saw the launch of Super Ace Mint in Q2 of Fiscal 2017 andUltra Trucks in later part of the year. Initial response for Ultra Truck was encouraging.During the year TMTL exported 317 vehicles to Malaysia against specific order from PoSMalaysia. TMTL is exploring similar opportunities in other parts of South East Asia andneighbouring continents.

Tata Motors (SA) (Pty) Limited

Tata Motors (SA) (Pty) Ltd (TMSA) sold 697 chassis in the South African market inFiscal 2017 compared to 765 chassis in Fiscal 2016 and exported 6 chassis to Mozambiqueduring Fiscal 2017. TMSA is in the process of introducing a new range of Ultra truck andfew more new models of Prima in South Africa and is exploring options to export vehiclesto other African countries.

Tata Motors Finance Limited

Tata Motors Finance Limited (TMFL) is the vehicle financing arm under the brand"Tata Motors Finance." TMFL's total disbursements (including refinance)increased by 3.5% at Rs9298 crores in Fiscal 2017 as compared to Rs8985 crores in Fiscal2016. TMFL financed a total 118883 vehicles refiecting an increase of 6.0% over 112114vehicles financed in Fiscal 2016. Disbursements for commercial vehicles decreased by 4.8%and were at Rs7127 crores (77898 units) as compared to Rs7485 crores (75970 units) ofFiscal 2016 mainly due to lower disbursements in the M&HV segment. Disbursements ofpassenger vehicles increased by 14.3% to Rs1542 crores (34126 units) from a level ofRs1350 crores (33185 units). Disbursements achieved under refinance (through TMFSL a100% Subsidiary of TMFL) were at Rs628 crores (6859 vehicles) as compared to Rs150 crores(2959 vehicles) during Fiscal 2016.

TMFL has increased its reach by opening limited services branches (called Spoke andCollections branches) exclusively in Tier 2 & 3 towns which has helped in reducingthe turn around time to improve customer satisfaction. TMFL had 261 branches at the end ofFiscal 2017. The book size of TMFL's corporate lending business which includes providingfinance to TML's Dealers and Vendors increased by 21.4% from Rs947 crores in Fiscal 2016to Rs1150 crores in Fiscal 2017. As a part of restructuring and consolidation offinancial services the Scheme of Arrangement between TMFL and Sheba Properties Limited(Sheba) wholly owned subsidiary of TMFL became efiective on May

9 2017. Based on the restructuring plan TMFL has transferred its New Vehicle Finance(NVF) business to Sheba on January 31 2017 (appointed date for transfer of assets of NVFBusiness).

MATERIAL CHANGES & COMMITMENT AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There are no material changes afiecting the financial position of the Companysubsequent to the close of the Fiscal 2017 till the date of this Report.

SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

There are no significant material orders passed by the Regulators or Courts orTribunal which would impact the going concern status of the Company and its futureoperation. However Members attention is drawn to the Statement on Contingent Liabilitiesand commitments in the Notes forming part of the Financial Statements.

RISK MANAGEMENT

The Risk Management Committee (RMC) comprising of four Independent Directors has beenentrusted with responsibility to assist the Board in (a) overseeing the Company's riskmanagement process and controls risk tolerance and capital liquidity and funding (b)setting strategic plans and objectives for risk management and review of risk assessmentof the Company (c) review the Company's risk appetite and strategy relating to key risksincluding credit risk liquidity and funding risk market risk product risk andreputational risk as well as the guidelines policies and processes for monitoring andmitigating such risks.

The Committee operates as per its Charter approved by the Board and within the broadguidelines laid down in it. The Company has a Risk Management Policy in accordance withthe provisions of the Act and SEBI (Listing Obligations and Disclosure Requirements)Regulation 2015 ("SEBI Listing Regulations"). It establishes various levels ofaccountability and overview within the Company while vesting identified managers withresponsibility for each significant risk. The Board takes responsibility for the overallprocess of risk management in the organisation. Through Enterprise Risk Managementprogramme business units and corporate functions address opportunities and the attendantrisks through an institutionalized approach aligned to the Company's objectives. This isfacilitated by internal audit. The business risk is managed through cross functionalinvolvement and communication across businesses. The results of the risk assessment arethoroughly discussed with the Senior Management before being presented to RMC.

INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENT

Details of internal financial control and its adequacy are included in the ManagementDiscussion and Analysis Report which forms part of this Report.

HUMAN RESOURCES

The Tata Motors Group employed 79558 permanent employees (Fiscal 2016: 76598employees) as of Fiscal 2017 and the Company employed 26035 permanent employees (Fiscal2016: 26569 employees) as of Fiscal 2017. The Tata Motors Group has generally enjoyedcordial relations with its employees and workers.

The Company has labour unions for operative / worker grade employees at all the plantsacross India except the Dharwad Plant. The labour union at Sanand Plant has recently beenregistered and the first settlement is yet to be done. The Company has generally enjoyedcordial relations with its employees and unions at its factories and ofices and hasreceived union support in the Company's implementation of reforms that impact safetyquality cost erosion and productivity improvements across all locations. Employee wagesare being paid in accordance with wage agreements that have varying terms (typically threeto four years) at difierent locations. With an objective of improving OrganizationalEfiectiveness the Company decided to undertake a structure change exercise with keyguiding principles of Empowerment to the Business Units with clear accountability forbusiness results strong functional leadership and oversight for an efiectivemaker-checker concept improved and speedier decision making agility and quickresponsiveness to market and strong cross functional alignment to drive quick issueresolution. A new product line organization has been created with complete Profit &Loss responsibility. Organisational restructuring has delayered the organization to 5managerial levels below ExCom. This has made the organization lean and agile. The Companyhas also rationalized span of control of key roles providing scope for career developmentand have significantly increased customer facing roles in both the BUs to enhance customercentricity in the organization. Transactional roles have been identified across functionsfor transition to shared services and therefore focus on core activities. Volumetricstudy has been performed to identify optimum manpower at each level bringing theorganizational spread closer to global standards. This combined with the Job Evaluationexercise and Management Audit helped in establishing clear job descriptions for each roleand identifying the right talent for the roles.

The Executive Committee conducted a thorough assessment of potential candidates for thetop 2/3 levels in the organisation. The assessment results were used for placement of thecandidates which was followed up with ‘on boarding' workshops and AstronautTrainings to prepare the management teams for the new responsibilities. In order to createa mind-set free of job titles and hierarchy the concept of designations has beenabolished and individuals will carry the title of their functional role. After marketbenchmarking revised Compensation & Policies have been rolled-out. The new terms andconditions of employment has been shared with the employees through individual letters byrespective managers.

For a smooth transition a transition team has been developed to lead the changemanagement process supported by continuous communications from the leadership team.

Prevention Of Sexual Harassment

The Company has zero tolerance for sexual harassment at workplace and has adopted aPolicy on prevention prohibition and redressal of sexual harassment at workplace in linewith the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules thereunder for prevention and redressalof complaints of sexual harassment at workplace. The Company is committed to providingequal opportunities without regard to their race caste sex religion colournationality disability etc. All women associates (permanent temporary contractual andtrainees) as well as any women visiting the Company's ofice premises or women serviceproviders are covered under this Policy. All employees are treated with dignity with aview to maintain a work environment free of sexual harassment whether physical verbal orpsychological.

During the Fiscal 2017 the Company had received four complaints on sexual harassmentswhich have been substantiated and appropriate actions were taken. The Company organized137 workshops and awareness program against sexual harassment. There were no complaintspending for more than 90 days during the year.

Similar initiatives on Prevention of Sexual Harassment are in place across the TataMotors Group of companies.

Safety & Health – Performance & Initiatives

The Company is committed to provide a safe and healthy working environment for itsemployees and associates to ensure a high degree of safety norms. The Company continouslystrives to perform beyond compliance whilst positively infiuencing its value chain membersto improve their safety standards. There is an increased focus on areas like training andawareness safety observations audits etc. to drive a positive safety culture.

The Company's India operation whilst achieved improved performance with TotalRecordable Case Frequency Rate (TRCFR) being 1.84 against the target of 1.96 for theFiscal 2017 the overall Safety Performance improved but recorded four fatalities duringthe year of which three were road related.

Manufacturing Plants across the country are certified to ISO 14001 - EnvironmentManagement Systems and OHSAS 18001 – Occupational Health & Safety ManagementSystem along-with Warehouses Safety Infrastructure upgraded and certification of OHSAS18001 for a warehouse was also accomplished during Fiscal 2017. All the Company'sManufacturing Plants across India are certified to ISO 50001 - Energy Management Systemtoo. The Company has undertaken several initiatives for resource conservation such asre-cycling of treated efiuents back to process energy material recovery andco-processing from hazardous wastes through cradle to grave waste management principlesand rainwater harvesting. Manufacturing plants also generate in-house renewable power andsource ofi-site green power where available. Except Sanand all the Company's sites arecertified for GreenCo. The Company places equal emphasis on safety processes behavioralsafety and strive to create a positive safety culture towards achieving the ultimate goalof ‘zero injury'. Safety is a primary focus area in daily management and safetyparameters are part of the scorecard for Senior Leaders. In same lieu ‘SAFE20 -20 minutes for Safety' the company's initiative on engagement in Safety. Sessions onRoad Safety were conducted at 9 ofices across India engaging tunes of 1000+ employeesalong with mentoring of Flexi Work Force under MY BUDDY" " program byPermanent Blue Collar Work force / Group leaders.

In line with Safety and Health Policy to enhance safety standards of its businesspartners Company engaged its upstream and downstream supply chain in the safety journey.The objective of such engagement is to raise the safety standards at Suppliers and Dealerworkshops. In addition to existing 16 safety standards new standards / guidelines likeCell Phone Policy CCTV Policy Lone Working Standard Industrial Hygiene StandardEngineering Standards Vehicle Usage & Replacement Guidelines were developed androlled out to raise the level of safety.

The Company continued Campaign ‘i-drive safe' – an initiative onbuilding a safe driving culture amongst its employee and associates and have trained themin defensive driving. In excess of 19103 employees and associates till date have beentrained under this campaign initiated few years ago. ‘My Road My Discipline' aRoad Safety Week campaign during January 11 to 17 included Road Safety Celebrationsconducted in all location including all plants ofices dealerships warehouses vendorsand social awareness messages were aired on FM on road safety in Indian 8 cities.

‘senSHEtize'- A Company's initiative on Women's Safety Awareness: 950 womenemployees were trained with focus on Women's Safety and Self-defense in 14 session acrossofices & plants.

Jagruti – Safety Awareness Building Campaign for Workshop Managers is ayear-long campaign focused on building awareness on safety and understanding of theCompany's expectations on Dealers Workshop Safety. This programme is in collaboration withthe Company Castrol and training partner ICECD. Jagruti Safety Awareness campaign wasinitiated done for channel partners-PV & CV dealers covering around 1800 workshoppan-India.

In health area the Company under the ‘Health Plus because you matter!'initiative engaged employees on various subject of health. Health & well-being ofaging workforce remains a prime concern. Various health programs across all locations withemphasis on contract employees- eye checkup of drivers stress management mailers etc.have been conducted under this initiative. For Food Safety Pune Plant was accredited withHACCPCertification

(ISO 22001) and rest of the plants shall be implementing in a phased manner.

In accordance with the Company's stand on protecting the planet the Company took anumber of initiatives to reduce its Green House Gases footprint by 3% over Fiscal 2016.Similarly in the Company's quest to go on renewable energy the Company used 75 millionunits of renewable electricity in its operations which is close to 17% of itsrequirement. On the Company's journey to ZWTL (Zero Waste To Landfill) it reducedhazardous waste to landfill / incineration by approx. 30% over Fiscal 2016.

On Sustainability supply chain sustainability was one of the major initiativesundertaken. 50 suppliers have been trained and assessed to sustainability expectations.Handholding of those suppliers is being done to improve the sustainability performance.

Circular economy natural capital evaluation of key dependencies design forenvironment biodiversity assessment life cycle assessment of products climateadaptation study were some of the other initiatives the Company has taken in sustainingits business and planet.

JLR the Company's subsidiary continues to drive health and safety through DestinationZero – A Journey to Zero Harm. The Company's commitment is refiected in the JLRcommitment ‘Blueprint for Lasting Success' with the key statement being"Our most valuable asset is our people nothing is more important than their safetyand well-being. Our co-workers and families rely on this commitment. There can be nocompromise". Activities to deploy this ambition promote awareness with each one ofat JLR encouraged to understand and take responsibility for its own and fellowcolleague's safety and well-being. Various Zero Harm programs publications and eventshave contributed to improved performance in Fiscal 2017 and additionally each functionalarea has built their own plan of activities to lead improved safety and well-being withintheir own area of responsibility. Lost Time Case performance has continued an improvingtrend with an overall business improvement of around 6% Y-O-Y against a backdrop ofcontinued growth and increased volumes and headcount. A notable improvement was seen inmanufacturing locations with over 20% improvement against last Fiscal performance. Many ofthe sites celebrated zero lost time accidents. The business has gone through OHSAS 18001 -recertification in Fiscal 2017 with all the UK locations accredited to this standardthrough a series of external assessments. Further locations have now been added to theassessment portfolio. The business has also maintained the internal safety assessmentprocess SHARP (Safety and Health Assessment Review Process) within its manufacturinglocations and has now extended a version into non-manufacturing locations. JLR alsocontinues to mature its approach to well-being activities with a number of targeted eventsover the past year and specific well-being focus and topics planned for the coming year. TMSAsustained good performance in areas of Safety and Health during Fiscal 2017. In June2016 TMSA successfully cleared audit inspection for Occupational Hygiene against therequirements of the OHSAS. TDCV Korea achieved an improvement in Safety Index to0.91 from 1.33 in Fiscal 2017. TMTL Thailand continued leadership commitment andengagement with focus in areas safety communication risk assessment improvingcapabilities of employees for emergency situations.

BUSINESS RESPONSIBILITY REPORT

Pursuant to Regulation 34(2)(f) of the SEBI Listing Regulations the BusinessResponsibility Report (BRR) initiatives taken from an environmental social and governanceperspective in the prescribed format is available as a separate section of the AnnualReport and also hosted on the Company's website www.tatamotors.com.

FINANCE

During the year the free cash fiows for Tata Motors Group were Rs (268) crores postspend on capex design and development of Rs30467crores. Tata Motors Group's borrowing asat March 31 2017 stood at Rs78604 crores (as at March 31 2016: Rs69360 crores). Cashand bank balances and investments in mutual funds stood at Rs51119 crores (as at March31 2016: Rs49693 crores). The consolidated net automotive debt to equity ratio stood at0.15 as at March 31 2017 as compared to (0.01) as at March 31 2016.

The cash fiows from operations were positive Rs1381 crores for standalone operations(including joint operations) of the Company. Spend on capex design and development wasRs3427 (net). The borrowings of the Company (including joint operations) as at March 312017 stood at Rs19574 crores (as at March 31 2016: Rs16473 crores). Cash and bankbalances including mutual funds stood at Rs 2687 crores (as at March 31 2016: Rs2534crores).

The Company in February 2017 prepaid Rs300 crores of its Unsecured 8.60% NCD due in2018. During the year the Company raised Rs2700 crores of funds through Unsecured NCDs.At JLR post spend on capex design and development of GB3065 million (Rs26869crores) the free cash fiows were GB295 million Rs ( 2586 crores) for Fiscal 2017. Theborrowings of JLR as at March 31 2017 stood at GB3581 million (Rs28977 crores)[previous year: GB2500 million (Rs23863 crores)]. Cash and financial deposits stood atGB5487 million (Rs44400 crores) [previous year: GB4651 million Rs ( 44395crores)]. Additionally JLR has undrawn committed long term bank lines of GB1870million (JLR data as per IFRS).

During the Fiscal JLR issued a €650 million bond maturing in 2024 paying anannual coupon of 2.200%. Subsequently JLR issued a GB300 million bond maturing in 2021paying an annual coupon of 2.750%.

During the Fiscal TMFL has neither raised any borrowings by way of unsecuredsubordinated perpetual non-convertible debentures towards Tier 1 and Tier 2 Capital nor byway of an issue of unsecured subordinated non-convertible debentures towards Tier 2Capital. Tata Motors Group has undertaken and will continue to implement suitable stepsfor raising long term resources to match fund requirements and to optimise its loanmaturity profile.

During the year the Company's rating for foreign currency borrowings was upgraded to"Ba1"/Stable by Moody's and to "BB+"/ Stable by Standard & Poor's.For borrowings in the local currency the ratings was retained by CRISIL at "AA"with a change in outlook to Positive and by ICRA at "AA" with a change inoutlook to Positive. The Non-Convertible Debentures and Long Term Bank facilities i.e.(Buyers Credit) rating by CARE was retained at "AA+". During the year JLR'srating was upgraded by Moody's at "Ba1"/Positive and was upgraded by Standard& Poor's at "BB+". For TMFL CRISIL has maintained its rating on long-termdebt instruments and bank facilities to CRISIL "AA/A1+"/with a change in outlookto Positive for long term. ICRA has also maintained its rating at "AA/A1+" witha change in outlook to Positive for long term. CARE has given rating of "AA+" onlong-term debt instruments with a Stable outlook.

FIXED DEPOSITS

The Company has not accepted any public deposits during Fiscal 2017. There were no overdues on account of principal or interest on public deposits other than the unclaimeddeposits as at the end of Fiscal 2017.

EXTRACT OF ANNUAL RETURN

As provided under Section 92(3) of the Act the details forming part of the extract ofthe Annual Return in Form MGT 9 is annexed as

Annexure - 1.

INFORMATION TECHNOLOGY AND DIGITAL PRODUCT DEVELOPMENT INITIATIVES

Information Technology Initiatives

The Company has been a pioneer in adopting Information Technologies to enable businessprocesses and deploying eficient & secure information technology. The Company has beenworking towards implementing the components of its IT roadmap to create a digital readyorganization. The Company leverages its strong partnerships with product and servicescompanies to harness the potential of Information Technology towards competitiveadvantage. The major highlights from IT at the Company are: Major technology upgradesundertaken in the ERP CRM analytics systems to make the systems current and leverage newversions' mobile friendly capabilities.

Enabling World Class Quality initiative of the Company through extending theimplementation of Manufacturing Execution System.

Completed multiple Proof of Concepts in the area of internet of things for smartmanufacturing. Digital initiatives like mobile backend and smart e-guru mobile app alongwith digital product demonstration capabilities for dealer's salesforce for efiective leadgeneration.

Focus on Supplier Relationship Transformation (SRT) through implementation of suppliersystems and inauguration of SRT training centre. Continued greater collaboration withsubsidiaries leveraging IT leadership in the Company. Strengthening information securitythrough multiple initiatives such as Network Access Control and preparation for ISO27000framework.

With the readiness of the Company's systems on the digital front it is entering anexciting phase of transformation using cutting edge technology to provide customer centricproducts and services.

Digital Product Development Systems Initiatives

The Company in its constant endeavor to improve processes in product design andmanufacturing planning domain has implemented various new processes and improved existingmanual process by converting them to digital. Direct business benefits in terms ofreduction in time efiort cost and improved control quality were achieved throughvarious initiatives some of which are listed below: 30 new knowledge based engineeringapplications designed and implemented across various product design and safety domains.They were integrated with various tools such as tyre life enhancement for heavy commercialvehicles exterior trims safety for passenger vehicles ensuring its validation in virtualenvironment thereby reducing the number of physical prototypes.

Specific Mobility Application developed to enable value based selling at CV dealershipsand were deployed at 10 locations across India.

Product Lifecycle Management (PLM) System Infrastructure was refreshed at Pantnagar andLucknow locations.

New innovative Visual Analytics and Reporting framework for applications was deployedfor PLM based data and 4 specific applications were implemented for product developmentteams. Augmentation of High Performance Computing (HPC) Infrastructure to execute anddeliver faster simulation results for product development (productivity improvement). Thisenabled more design optimization studies during concept and product development phase(capacity enhancement) thus reducing dependence on costly proto-parts & physicaltesting. 16 customized automation tools provided into CAE domain to increase CAE pre-postprocessing productivity for durability crash CFD and NVH functions.

In the digital manufacturing domain MOST (Maynard Operations Sequence Technique) wasimplemented on the shop fioor at various manufacturing locations.

Subsidiaries

Jaguar Land Rover:

JLR continue to develop the use of the latest Product Lifecycle Management (PLM)technologies to ensure JLR remains at the cutting edge of engineering and driveeficiencies into the process. The application of leading visualisation and systemsengineering technologies enable full engagement in the product creation process all withthe aim of producing cars and SUVs that the customers will love for life.

Tata Daewoo Commercial Vehicle:

TDCV continued the focus on quality and agility in its digital product creationprocesses. PLM software system was upgraded to a higher version giving enhanced features.The PLM processes were also improved considering various business requirements andscenarios.

Tata Technologies Limited (TTL):

TTL has invested in new technologies and practices both on software and hardware frontwith strong focus on its business goals and customer requirements. The digital tools andsystems continue to be enhanced and upgraded as per customer needs. It continued its newtechnology evaluation process to support the delivery teams with efiective and optimalhardware systems.

TTL invested to enhance the capacity of the High Performance Computing setup to addressgrowing needs of simulation by augmenting its processing power with latest hardware. Itextended the Virtual Desktop Infrastructure setup to support few delivery teams to providethem with scalable infrastructure that caters to their requirements on multiple operatingenvironments and also provide them with fiexible and controlled access to it fromanywhere. TTL leveraged the high performance and high availability computing forenterprise applications and has invested in latest technologies for data center upgrade.

Tata Motors European Technical Centre (TMETC):

TMETC continued the use of best in class hardware and softwaresystemstoenhancequalityandagilityinitsproductconceptualization design and virtualvalidation domain. Knowledge Based Engineering Applications were implemented in theengineering and design areas.

TECHNOLOGY AND ENVIRONMENT FRIENDLY INITIATIVES:

The Company is aiming towards meeting upcoming emission regulations by multifacetedapproach of adapting cleaner technologies for internal combustion engines and by workingon new technologies in the domains of xEVs Hybrids and Fuel Cell. The Company intends toreduce the emissions from vehicles through various powertrain as well as vehicle levelmeasures. Some of the key initiatives in this direction are mentioned below: Fueleficiency improvement in diesel SCVs by implementation of fuel control unit based FIEsystem on twin cylinder turbo diesel engine.

Better emission control for SCVs having two cylinder NA common rail BS-IV engine.

Multi operation mode (economy & normal torque mode) for better fuel economy &drive ability on commercial vehicles fueled with CNG. Fuel eficiency improvement in dieselpassenger car by engine downsizing (30% engine displacement reduction) friction reductionin piston ring pack and implementing multiple drive modes.

Various full electric vehicles ranging from SCV to 12m buses are being developed toaddress last mile transport and passenger commute in ecologically sensitive areas. Serieshybrid bus with New Gen 5L BS-IV diesel engine developed and serialized; the vehicle hassubstantially superior fuel economy over baseline diesel vehicle.

The fieet of Fuel Cell bus for demonstration is being built and two fuel cell busesare under testing.

CONSOLIDATED FINANCIAL STATEMENT

The Company announces its Consolidated Financial Statement on a quarterly basis. Asrequired under the SEBI Listing Regulations the Consolidated Financial Statement of theCompany and its subsidiaries prepared in accordance with Ind AS 110 issued by theInstitute of Chartered Accountants of India form part of the Annual Report and arerefiected in the Consolidated Financial Statement of the Company. Pursuant to Section129(3) of the Act a statement containing the salient features of the financial statementof the subsidiary companies is attached to the financial statement in Form AOC-1.The Company will make available the said financial statements and related detailedinformation of the subsidiary companies upon the request by any member of the Company orits subsidiary companies. These financial statement will also be kept open for inspectionby any member at the Registered Ofice of the Company and the subsidiary companies.Pursuant to the provisions of section 136 of the Act the financial statement of theCompany Consolidated Financial Statement along with relevant documents and separateaudited accounts in respect of subsidiaries are available on the website of the Company.

SUBSIDIARY JOINT VENTURES AND ASSOCIATE COMPANIES

The Company has 78 subsidiaries (14 direct and 64 indirect) as at March 31 2017 asdisclosed in the accounts. During the year the following changes have taken place insubsidiary companies:

Subsidiary companies formed/acquired:

Jaguar Land Rover Colombia S.A.S was incorporated with efiect from August 22 2016InMotion Ventures 1 Limited was incorporated with efiect from October 25 2016 InMotionVentures 2 Limited was incorporated with efiect from October 25 2016 InMotion Ventures 3Limited was incorporated with efiect from October 25 2016

Companies ceasing to be subsidiary companies / ceased operations:

JDHT Limited dissolved with efiect from December 27 2016 Silkplan Limited dissolvedwith efiect from January 17 2017 Tata Technologies (Canada) Inc. dissolved with efiectfrom December 13 2016

Name changes

Jaguar Land Rover Automotive Trading (Shanghai) Company Limited was renamed as JaguarLand Rover (China) Investment Co. Limited with efiect from November 1 2016 CambricManufacturing Technologies (Shanghai) Company Limited was renamed Tata ManufacturingTechnologies (Shanghai) Limited with efiect from February 22 2017

Re-structuring

The Scheme of Arrangement between Tata Motors Finance Limited and Sheba PropertiesLimited subsidiaries of the Company was approved by the Hon'ble National Company LawTribunal efiective from May 9 2017. Besides the above JLR continued to integrate /restructure legal entities for manufacturing and for exporting globally as combined brandlegal entities. Other than the above there has been no material change in the nature ofthe business of the subsidiary companies.

Associate Companies

As at March 31 2017 the Company has 8 associate companies and 7 joint ventures. Oneof these joint ventures has 14 wholly owned subsidiaries and details of the same aredisclosed in the accounts. The Company has adopted a Policy for determining MaterialSubsidiaries in line with Regulation 16 of the SEBI Listing Regulations. The Policy asapproved by the Board is uploaded on the Company's website (URL:www.tatamotors.com/investors/pdf/material.pdf ).

CONSERVATION OF ENERGY TECHNOLOGY

ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section

134(3)(m) of the Act read along with Rule 8 of the Companies (Accounts) Rules 2014is annexed as Annexure - 2.

CORPORATE GOVERNANCE

At the Company we constantly strive to evolve and follow up on the Corporate Governanceguidelines and best practices. Our purpose has always been transparency long termshareholder value and respect to the minority shareholders. The Company discloses timelyand accurate information regarding its operations and performance. During the second halfof the year under review the Company witnessed leadership change at Tata Sons (ourpromoter). During this period there were allegations made regarding the ethics andgovernance of the Company. Clarifications were also sought by the Regulators with respectto certain business decisions and governance processes. The Company would like tocategorically deny the references and would like to impress upon you that it has robustsystems and processes in place to ensure compliance to all regulatory requirements. TheCompany's Board exercises its independence both in letter and in spirt. The Directors havealways acted in the best interest of the Company and will continue to do so.

The Board closely monitored the events during this period and allegations made. TheAudit Committee of the Board reviewed all the issues that were brought up includingcorrespondence between the Regulators and the Company on the issues raised in therepresentations made by Mr Cyrus P Mistry and Mr Nusli Wadia in terms of Section 169 ofthe Act and allegations made in this regard in the proceedings before the National CompanyLaw Tribunal initiated against our Promoter. The Company has filed responses to theRegulators denying all such allegations. In such responses the Company has reiteratedthat the Company is in compliance of the governance processes and requirements in all suchcases. The Committee reviewed the various compliances and disclosures and the rigourapplied when strategic decisions were taken and the detailed responses to the Regulatorsby the Company denying such allegations. After due deliberations with relevant oficialsand review of relevant documents and on the basis of a detailed review of these by areputed independent Legal Counsel the Committee expressed its confirmation of theresponses by the Company to the Regulators. It follows that the aforesaid allegationsagainst your Company and its governance were incorrect and such statements were madewithout exercising proper care.

A separate section on Corporate Governance and the certificate from the PracticingCompany Secretary confirming compliance of Corporate Governance norms as stipulated inRegulation 34 read along with Schedule V of the SEBI Listing Regulations givinginformation pertaining to the Board Committee of the Board and other details of relevanceforms part of this Report.

DIRECTORS

Appointment

The Company has on the recommendation of Nomination & Remuneration Committee (NRC)and in accordance with provisions of the Act and SEBI Listing Regulations appointed MrNatarajan Chandrasekaran (DIN: 00121863) as Additional Director and Chairman of the Boardwith efiect from January 17 2017 and Mr Om Prakash Bhatt (DIN: 00548091) was appointed asAdditional and Independent Director for a tenure of 5 years on May 9 2017 subject toapproval of Members at the forth coming Annual General Meeting (AGM) of the Company. Theyshall hold ofice as Additional Directors upto the date of the AGM and are eligible forappointment as Directors. As reported in the previous year Mr Guenter Butschek wasappointed as Chief Executive Oficer and Managing Director of the Company for a term of 5years w.e.f. February 15 2016. The Members have vide Special Resolution passed at the AGMheld on August 9 2016 approved of the said appointment and payment of minimumremuneration in case of inadequacy of profits or no profits in any financial year. Anapplication to the Central Government has been filed by the Company and the approval isawaited.

Re-appointment

In accordance with provisions of the Act and the Articles of Association of theCompany Dr Ralf Speth (DIN: 03318908) is liable to retire by rotation and is eligible forre-appointment. The disclosures required pursuant to Regulation 36 of SEBI ListingRegulations are given in the Notice of the AGM forming part of the Annual Report anddisclosure pursuant to Schedule V Part II proviso of Section II B(iv)IV of the Act andSchedule V of the SEBI Listing Regulations is disclosed in the Corporate GovernanceReport forming part of the Annual Report.

Attention of the Members is invited to the relevant item in the Notice of the AGM andthe Explanatory Statement thereto.

Cessation

Mr Cyrus P Mistry Non-Executive Director and Chairman (DIN: 00010178) (resigned withefiect from December 19 2016. Based on the requisition of Tata Sons Limited theshareholders at the Extraordinary General Meeting of the Company held on December 22 2016voted in favour of removal of Mr N N Wadia as an Independent Director (DIN: 00015731) MrWadia ceased to be a Director of the Company with efiect from December 22 2016. Mr SubodhBhargava Independent Director (DIN: 00035672) retired on March 29 2017 on attaining theage of 75 years in accordance with Governance Guidelines on Board Efiectiveness. TheBoard places on record their appreciation for the contribution of these Directors duringtheir tenure.

Independent Directors

All Independent Directors of the Company have given declarations under Section 149(7)of the Act that they meet the criteria of independence as laid down under Section 149(6)of the Act and Regulation 16 of the SEBI Listing Regulations.

KEY MANAGERIAL PERSONNEL

The Key Managerial Personnel (KMPs) of the Company during Fiscal 2017 are: Mr GuenterButschek Chief Executive Oficer and Managing Director Mr Ravindra Pisharody ExecutiveDirector (Commercial Vehicles) Mr Satish Borwankar Executive Director (Quality) Mr CRamakrishnan Group Chief Financial Oficer Mr Hoshang Sethna Company Secretary

During the year there was no change in the KMPs of the Company.

GOVERNANCE GUIDELINES

During the year under review the Company adhered to the Governance Guidelines on BoardEfiectiveness. The Governance Guidelines cover aspects related to composition and role ofthe Board Chairman and Directors Board diversity definition of independence Directorterm retirement age and Committees of the Board. It also covers aspects relating tonomination appointment induction and development of Directors Director remunerationSubsidiary oversight Code of Conduct Board Efiectiveness Review and Mandates of BoardCommittees.

Selection and procedure for nomination and appointment of Directors

The NRC is responsible for developing competency requirements for the Board based onthe industry and strategy of the Company. The Board composition analysis refiects in-depthunderstanding of the Company including its strategies environment operations financialcondition and compliance requirements.

The NRC conducts a gap analysis to refresh the Board on a periodic basis includingeach time a Director's appointment or re-appointment is required. The Committee is alsoresponsible for reviewing and vetting the CVs of potential candidates vis--vis therequired competencies undertake a reference and due diligence and meeting potentialcandidates prior to making recommendations of their nomination to the Board. At the timeof appointment specific requirements for the position including expert knowledgeexpected is communicated to the appointee.

Criteria for Determining Qualifications Positive Attributes and Independence of aDirector

The NRC has formulated the criteria for determining qualifications positive attributesand independence of directors in terms of provisions of Section 178 (3) of the Act andRegulation 19 read along with Schedule II of SEBI Listing Regulations which is annexed as

Annexure - 3.

REMUNERATION POLICY

The Company has in place a Remuneration Policy for the Directors Key ManagerialPersonnel and other employees pursuant to the provisions of the Act and Regulation 19 ofSEBI Listing Regulations the same is annexed as Annexure - 4.

BOARD EVALUATION

The annual evaluation process of the Board of Directors ("Board") Committeesand individual Directors was carried out in the manner prescribed in the provisions of theAct Guidance Note on Board Evaluation issued by Securities and Exchange Board of India onJanuary 5 2017 and as per the Corporate Governance requirements prescribed by SEBIListing Regulations. The performance of the Board Committees and individual Directors wasevaluated by the Board seeking inputs from all the Directors. The performance of theCommittees was evaluated by the Board seeking inputs from the Committee Members. The"NRC" reviewed the performance of the individual Directors a separate meetingof Independent Directors was also held to review the performance of Non-IndependentDirectors; performance of the Board as a whole and performance of the Chairperson of theCompany taking into account the views of Managing Director / Executive Directors andNon-Executive Directors. This was followed by a Board meeting that discussed theperformance of the Board its Committees and individual Directors.

The criteria for performance evaluation of the Board included aspects like Boardcomposition and structure; efiectiveness of Board processes information and functioningetc. The criteria for performance evaluation of Committees of the Board included aspectslike composition and structure of the Committees functioning of Committee meetingscontribution to decision of the Board etc. The criteria for performance evaluation of theindividual Directors included aspects on contribution to the Board and Committee meetingslike preparedness on the issues to be discussed meaningful and constructive contributionand inputs in meetings integrity etc. In addition the Chairman was also evaluated on thekey aspects of his role.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

ThedetailsoftheFamiliarisationProgrammeforIndependentDirectors with the Company inrespect of their roles rights responsibilities in the Company nature of the industry inwhich Company operates business model of the Company and related matters are put up onthe website of the Company at (URL:www.tatamotors.com/investors/pdf/familiarisation-programme-independent-directors.pdf).

VIGIL MECHANISM

The Company has adopted a Whistle Blower Policy establishing vigil mechanism toprovide a formal mechanism to the Directors and employees to report their concerns aboutunethical behaviour actual or suspected fraud or violation of the Company's Code ofConduct or ethics policy. The Policy provides for adequate safeguards againstvictimization of employees who avail of the mechanism and also provides for direct accessto the Chairman of the Audit Committee. It is afirmed that no personnel of the Company hasbeen denied access to the Audit Committee. The policy of vigil mechanism is available onthe Company's website at (URL: www.tatamotors.com/ investors/pdf/whistle-blower-policy.pdf).

PARTICULARS OF EMPLOYEES

Disclosure pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5 (1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed to the Report as Annexure - 5.

The statement containing particulars of top 10 employees and the employees drawingremuneration in excess of limits prescribed under Section 197 (12) of the Act read withRule 5 (2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is provided in a seperate Annexure forming part of the Report. In terms ofproviso to Section 136(1) of the Act the Report and Accounts are being sent to theshareholders excluding the aforesaid Annexure. The said statement is also open forinspection at the Registered Ofice of the Company. Any member interested in obtaining acopy of the same may write to the Company Secretary.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The brief outline of the Corporate Social Responsibility (CSR) Policy of the Companyand the initiatives undertaken by the Company on CSR activities during the year are setout in Annexure - 6 of this Report in the format prescribed in the Companies (CSRPolicy) Rules 2014. The Policy is available on Company's web-site at (URL:www.tatamotors. com/investors/pdf/csr-policy-23july14.pdf ).

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS BY THE COMPANY

The details of Loans Guarantees or Investments made during Fiscal 2017 are givenbelow:

Rs in crores

Companies Nature of Transaction Loans Investments
Tata Marcopolo Motors Limited Inter-corporate deposits 10.00 -
Tata Motors European Technical Centre Plc Investment in loans/ shares 34.39
Concorde Motors Compulsory -- $
India Limited Convertible Debentures with a call option to TML

Notes:

$ Concorde Motors has issued CCD of Rs78 crores to TMFL. The call option is availablewith the Company to acquire the CCDs from TMFL.

- During Fiscal 2017 the Company has given no Guarantee to any of its subsidiariesjoint ventures and associate companies

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All contracts/ arrangements/ transactions entered by the Company during the year withrelated parties were on an arms' length basis in the ordinary course of business and werein compliance with the applicable provisions of the Act and SEBI Listing Regulations. Theprior approval of the Audit Committee was sought for all related party transactions. TheCompany has adopted a Policy on Related Party Transactions which even provides for theparameters to grant Omnibus Approval(s) by the Audit Committee and is available on thewebsite at (URL:www.tatamotors.com/investors/pdf/rpt-policy.pdf ). A statement on relatedparty transactions specifying the details of the transactions pursuant to each omnibusapproval granted have been placed on a quarterly basis for review by the Audit Committee.During the Fiscal 2017 there have been no related party transactions of the Company withits Directors and Key Managerial Personnel or their relatives its holding subsidiary orassociate companies as prescribed under Section 188 of the Act and SEBI ListingRegulations. Also there are no material transactions with any related party that arerequired to be disclosed under Form AOC-2.

AUDIT

Statutory Audit

In the 69th Annual General Meeting held on July 31 2014 M/s. Deloitte Haskins &Sells LLP (DHS) Chartered Accountants (ICAI Firm

Registration No. 117366W/W-100018) was re-appointed as Statutory Auditors of theCompany for a tenure of 3 year subject to ratification of their appointment by Members atevery subsequent AGM. DHS tenure of 3 year as Statutory Auditors concludes at this ensuingAGM. The report of the Statutory Auditors is enclosed to this Report and contains noqualification reservation or adverse remark. The observations made in the Auditors'Report are self-explanatory and therefore do not call for any further comments.

The Board of Director of the Company has on the recommendation of the Audit Committeeand a per Section 139 of the Act it is proposed to appoint M/s B S R & Co. LLPChartered Accountants (B S R LLP) (ICAI Firm No. 101248W/W – 100022) for a tenure of5 year to hold ofice from the conclusion of the ensuing AGM till the conclusion of the78th AGM of the Company to be held in the year 2022 subject to ratification of theirappointment at every subsequent AGM at such remuneration as approved by the Members atthis AGM. Further B S R LLP have under Section 139(1) of the Act and the Rules framedthereunder furnished a certificate of their eligibility and consent for appointment. TheBoard commend to seek consent of its Members on appointment of BSR LLP as StatutoryAuditors for tenure of 5 year to examine and audit the accounts of the Company during thesaid period.

Cost Audit

As per Section 148 of the Act the Company is required to have the audit of its costrecords conducted by a Cost Accountant in Practice. The Board of Directors of the Companyhas on the recommendation of the Audit Committee approved the appointment of M/s Mani& Co. a firm of Cost Accountants in Practice (Registration No.000004) as the CostAuditors of the Company to conduct cost audits pertaining to relevant products prescribedunder the Companies (Cost Records and Audit) Rules 2014 for the year ending March 312018. The Board of Director on recommendation of the Audit Committee approved remunerationof Rs5 lakhs plus out of pocket expenses subject to ratification of their remuneration bythe Members at the forthcoming AGM. M/s Mani & Co. have under Section 139(1) of theAct and the Rules framed thereunder furnished a certificate of their eligibility andconsent for appointment.

M/s Mani & Co. have vast experience in the field of cost audit and have conductedthe audit of the cost records of the Company for the past several years under theprovisions of the erstwhile Companies Act 1956.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors onrecommendation of the Audit Committee appointed M/s Parikh & Associates a firm of

Company Secretaries in Practice to conduct the Secretarial Audit of the Company for theyear ended March 31 2017. The Report of the Secretarial Audit is annexed herewith as Annexure-7. The Board provides clarification on Auditor's observation(s) contained in theReport: a) the Company has provided adequate responses on queries / observations raised bythe Central Government and their approval is awaited. b) As at March 31 2017 NRC hadrecommended to the Board appointment of Mr Om Prakash Bhatt as Additional and IndependentDirector. The Board considered the recommendation of NRC and appointed Mr O P Bhatt asAdditional and Independent Director on May 9 2017.

DIRECTORS' RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutorycost external agencies and secretarial auditors including audit of internal financialcontrols over financial reporting by the statutory auditors and the reviews performed byManagement and the relevant Board Committees including the Audit Committee the Board isof the opinion that the Company's internal financial controls were adequate and efiectiveduring Fiscal 2017.

Accordingly pursuant to Section 134(5) of the Act the Board of Directors to the bestof their knowledge and ability confirm that: (a) in the preparation of the annualaccounts the applicable accounting standards have been followed and that there are nomaterial departures; (b) they have selected such accounting policies and have appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of afiairs of the Company at the end of thefinancial year and of the loss of the Company for that period; (c) they have taken properand suficient care for the maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting fraud and other irregularities; (d) they have prepared the annual accountson a going concern basis; (e) they have laid down internal financial controls to befollowed by the Company and such internal financial controls are adequate and wereoperating efiectively*; and

(f ) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and such systems are adequate and operating efiectively.

*please refer to the Section "Internal Control Systems and their Adequacy in theManagement Discussion and Analysis".

ACKNOWLEDGEMENT

The Directors wish to convey their appreciation to all of the Company's employees fortheir enormous personal efiorts as well as their collective contribution to the Company'sperformance. The Directors would also like to thank the employee unions shareholderscustomers dealers suppliers bankers Government and all the other business associatesfor the continuous support given by them to the Company and their confidence in itsmanagement.

On behalf of the Board of Directors
N CHANDRASEKARAN
Chairman
(DIN: 00121863)
Mumbai
May 23 2017