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CORPORATE OVERVIEW (1-31)
STATUTORY REPORTS
FINANCIALS (123-204)
compliance costs may significantly impact the future results
of operations. In particular, the US and Europe have stringent
regulations relating to vehicular emissions. The proposed
tightening of vehicle emissions regulations by the European
Union will require significant costs for compliance. While the
Company is pursuing various technologies in order to meet
the required standards in the various countries in which the
Company sell our vehicles, the costs for compliance with these
required standards can be significant to the operations and
may adversely impact the results of operations.
To comply with current and future environmental norms, the
Company may have to incur additional capital expenditure
and R&D expenditure to upgrade products and manufacturing
facilities, which would have an impact on the Company’s cost
of production and the results of operations andmay be difficult
to pass through to its customers. If the Company is unable to
develop commercially viable technologies within the time
frames set by the new standards, the Company could face
significant civil penalties or be forced to restrict product
offerings drastically to remain in compliance. Moreover,
meeting government mandated safety standards is difficult
and costly because crash worthiness standards tend to conflict
with the need to reduce vehicle weight in order to meet
emissions and fuel economy standards.
The Company’s product development plan is structured to
allow it to develop vehicles which comply with current and
expected future environmental regulations particularly in the
United States covered by the CAFE and in other countries
such as China.
Intensifying Competition:
The global automotive industry is
highly competitive and competition is likely to further intensify
in view of the continuing globalization and consolidation in
the worldwide automotive industry. 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 developing a
presence in emerging markets, such as China. The factors
affecting competition include product quality and features,
innovation and product development time, ability to control
costs, pricing, reliability, safety, fuel economy, customer service
and financing terms.
The Company also faces strong competition in the Indian
market from domestic as wel l as foreign automobi le
manufacturers. Improving infrastructure and robust growth
prospects compared to other mature markets, are attracting 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.
Exchange and interest rate fluctuations:
The Company’s
operations are subject to risk arising from fluctuations in
exchange rates with reference to countries in which it operates.
These risks primarily stem from the relative movements of the
GBP, the US dollar, the Euro, the Chinese Yuan, the Russian
Ruble and the Indian Rupee.
In India, the Company imports capital equipment, raw
materials and components from, and also sells its vehicles in
various countries. These transactions are denominated primarily
in US dollars and Euros. Moreover, the Company has outstanding
foreign currency denominated debt and is sensitive to
fluctuations in foreign currency exchange rates. During the
year, the depreciation of the Indian Rupee against the US
dol lar adversely impacted the borrowing cost and
consequently, the results of operations. The Company has
experienced and expects to continue to experience foreign
exchange losses and gains on obligations denominated in
foreign currencies in respect of its borrowings and foreign
currency assets and liabilities due to currency fluctuations.
Jaguar Land Rover operations have significant exposure
FINANCIAL HIGHLIGHTS (32-45)