The long term borrowings include external commercial borrowings during the year of US$ 500 million (2,544.13 crores) at floating rates. The borrowings on account of foreign currency convertible notes increased by 367.51 crores mainly due to exchange fluctuation. The net repayment of fixed deposits from public and shareholders (unsecured) was 1,231.09 crores. The short term borrowing by way of commercial paper was 131.27 crores as at March 31, 2012 as compared to 1,519.82 crores as at March 31, 2011. Current maturities of Long term borrowings as at March 31, 2012 include 2,406.74 crores as at March 31, 2012 on account of Convertible Alternative Reference Securities (CARS), which will be due for redemption on July 11, 2012.

Trade payables were 8,744.83 crores as at March 31, 2012 as compared to 8,817.27 crores as at March 31, 2011. These include acceptances which have been lowered from 4,864.73 crores as at March 31, 2011 to 3,808.24 crores by reducing the tenure with a view to lower discounting cost, by substituting own funds.

Provisions (current and non-current) as at March 2012 and 2011, were 3,600.82 crores and 3,267.11 crores, respectively, representing an increase of 333.71 crores. The provisions are mainly towards warranty, employee retirement benefits, premium payable of redemption of debentures/FCCNs, delinquency and proposed dividends.

Fixed Assets: The tangible assets (net of depreciation and including capital work in progress) increased from 12,631.82 crores as at March 31, 2011 to 13,656.77 crores as at March 31, 2012. The increase is mainly attributable to expansion and new facility at Dharwad and plant and equipment across all locations.

The intangible assets (net of amortisation) increased from 2,505.11 crores as at March 31, 2011 to 3,273.05 crores as at March 31, 2012. The increase pertains to new product development for products/variants introduced in the year, mainly World truck, Manza and Indica Vista (LHD), Aria, Safari Storme and LCV for future. The intangible assets under development were 2,126.37 crores as at March 31, 2012 and 2,079.17 crores as at March 31, 2011. These relate to new products planned in the future.

Investments (Current + Non current) decreased to 20,493.55 crores as at March 31, 2012 as compared to 22,624.21 crores as at March 31, 2011. The reduction was due to part redemption of 6.25% Cumulative Redeemable Preference Shares of US$ 100 each at par of TML Holdings Pte Ltd, Singapore, of 4,146.98 crores. This was partly offset by increase in investments (net) in subsidiaries and associates by 1,853.82 crores.

Inventories stood at 4,588.23 crores as compared to 3,891.39 crores as at March 31, 2011. The increase mainly relates to finished goods inventory by 707.80 crores, which was planned in view of expected growth of volume.

Trade Receivables (net of allowance for doubtful debts) were 2,708.32 crores as at March 31, 2012, as compared to 2,602.88 crores as at March 31, 2011. The allowances for doubtful debts were 181.23 crores as at March 31, 2012 against 135.66 crores as at March 31, 2011. Trade receivables increased mainly due to volumes and also relate to delays in payment by the government-owned transport companies.

Cash and bank balances were 1,840.96 crores, as at March 31, 2012 compared to 2,428.92 crores as at March 31, 2011. The deposits as at March 31, 2011, included unutilized proceeds of 505.00 crores out of Qualified Institutional Placement issue.

1. The net cash from operations was 3,653.59 crores as compared to 1,505.56 crores in the previous year. The cash generated from operations before working capital changes was 4,304.49 crores as compared to 4,656.71 crores in the previous year. There was net outflow of 314.42 duirng the year towards working capital mainly attributable to increase in inventory on account to volumes.

2. The net cash inflow from investing activity was 144.72 crores as compared to net cash outflow of 2,521.88 crores for the previous year. There was redemption of preference shares by TML Holdings Singapore, resulting in cash inflow of 4,146.98 crores.

3. The net change in financing activity was outflow of 4,235.59 crores against inflow of 1,648.42 crores for last year. The Company had raised equity through raising of equity through QIP last year 3,249.80 crores. Further there has been an outflow of dividends and interest of 2,944.63 crores (last year 2,197.14 crores). There has been a net decrease on account of borrowings of 1,290.98 crores as compared to inflow of 592.17 crores in last year.

Opportunities and Risks

Opportunities

Infrastructure Growth: The Government of India has been focusing on improving road infrastructure through two main umbrella programs – National Highway Development Project (NHDP) and Pradhan Mantri Gram Sadak Yojna (PMGSY). While National Highways Authority of India (NHAI) has till date awarded 65% of the projects by road length (the plan is to upgrade, widen and strengthen 55,000 km of road network), 35% still remains to be awarded. Of the awarded projects, 36% of the work has been completed and work on the remaining 29% is underway. The Government has planned in budget for FY 2012-13, to award a further 8,800 km of projects, higher than originally planned. Under the PMGSY, the Government aims to develop 368,368 km of rural roads. Of this, till date about 73% of network has been completed (including upgradation). This improved connectivity presents a significant opportunity for the Company with its wide product range in commercial, utility and passenger vehicles. The emphasis on road development has seen an increase in demand for construction equipment, including tippers. Also, there is positive effect in terms of demand for both Cargo and Passenger Small Commercial Vehicles from newly connected rural areas. Further progress in road development work including sanction of new projects will help to sustain growth in the Commercial Vehicle industry.

Rural market penetration: In India, growth in FY 2012-13 is expected to come from reach and penetration in tier 2 and tier 3 markets. With growing connectivity and increased rural affluence, the demand for automobiles in rural areas has increased significantly. For FY 2012-13 as well, with indications of a normal monsoon and a robust growth in agriculture, the demand from the rural segment is likely to sustain. With a product range catering to even the buyer of smallest commercial vehicle or a fun-to-drive yet affordable passenger car offering, the Company is ideally placed to ride this growth story. Along with the product range, the Company is working on increasing reach and penetration of the sales and service network to be able to serve this market better. During FY 2011-12, the Company increased sales touch points by 35% and service touch points by 26%. With aggressive plans to further increase penetration this year, the Company has potential opportunity to leverage its wide product range and large distribution network, to accelerate growth.

Non-cyclical business growth: In order to insulate against the cyclicality of the automobile industry, specifically in the M&HCV segment, the Company has focused on lines of business and customer solutions which are inherently less cyclic in nature. For example, the sale of spares and the aggregate business, branded TATA GENUINE PARTS which has grown by 21% CAGR in the last five years and is poised to grow further in FY 2012-13. In order to maintain the growth, the Company has increased distribution reach by 50% over last year. The Company has a loyalty program for key brand decision makers like the mechanics and the retailers. A total of 26,000 mechanics and 19,000 retailers across India participate in these programs. These efforts also help us to serve our customers and know their needs and requirements on an ongoing basis. We have also established Rapid Customer Care centers all over India to deliver aggregates to customer anywhere in 24 hours. We are also focusing on other business avenues like Refurbishing, AMC, Reconditioning, etc. The focus of the Company is to reduce Total Cost of Ownership for the customers, enhancing their satisfaction with our products and services.

The Company is also focusing on the Defence business. With the Government of India opening up different segments of the Defence sector to private players, the Company is targeting moving from pure logistics solutions player to tactical and combat solutions; thus garnering a greater share of this market. On the back of aggressive plans by the Government in FY 2012-13, the Company is aiming to achieve both its revenue growth and profitability from this segment.

Exports from India: India has emerged as a major hub for global manufacturing with its advantage of lower input costs, availability of local supplier base and qualified and experienced resource base. As an established domestic manufacturer, the Company is ideally placed to leverage the above factors and pursue lucrative international markets, through the export of fully built vehicles export or CKD units. The Company also has the advantage of a strong in-house design and development team which is capable of developing solutions for different regulatory and emission norms as per market specifications in minimal time. Currently, the Company is present in Africa and ASEAN markets through its manufacturing facilities in some of the countries. The Company is also actively considering expanding its global manufacturing footprint in key international markets to take advantage of import duty differentials and local sourcing benefits.

Grow the business through new products and market expansion: Jaguar Land Rover offers products in the premium performance car and all-terrain vehicle segments, and it intends to grow the business by diversifying the product range within these segments, for example by offering different Powertrain combinations. The new Range Rover Evoque has helped expansion into a market segment that is attracted by a smaller, lighter and more "urban" off-road vehicle than the market segment in which the company's Range Rover models traditionally compete, while the new 2.2-litre diesel XF caters for a much wider group of potential customers, particularly company car drivers. As a producer of distinctive, premium products, the Company believes that it is well positioned to increase revenues in emerging affluent countries with growing sales potential.

Transform the business structure to deliver sustainable returns: The Company plans to strengthen operations by gaining a significant presence across a select range of products and a wide diversity of geographic markets. One key component of this strategy, which continues to deliver positive results, is the Company's focus on improving the mix of products and the mix of markets. The Company also plans to continue to strengthen business operations in addition to vehicle sales, such as spare part sales, service and maintenance contracts.

Investment in product development and technology: One of the Company's principal goals is to enhance its status as a leading manufacturer of automotive vehicles by investment in products, R&D, quality improvement and quality control. The Company's strategy is to maintain and improve its competitive position by developing technologically advanced vehicles. Over the years, the Company has enhanced its technological strengths through extensive in-house R&D activities.

The Company considers technological leadership to be a significant factor in its continued success, and therefore continues to devote significant resources to upgrading its technological capabilities. In line with this objective, the company is involved in a number of advanced research consortia that bring together leading manufacturers, suppliers and specialists.

Products and environmental performance: The Company's strategy is to invest in products and technologies that position its products ahead of expected stricter environmental regulations and ensure that it benefits from a shift in consumer awareness of the environmental impact of the vehicles they drive. The Company is committed to continued investment in new technologies, including developing sustainable technologies to improve fuel economy and reduce CO₂ emissions. The Company is the largest investor in automotive R&D in United Kingdom. The Company's environmental vehicle strategy focuses on new propulsion technology, weight reduction and reducing parasitic losses through the driveline. Projects like REEVolution, REHEV and Range-e are some examples of the Company's research into the electrification of premium sedan and all-terrain vehicles.

China and other developing markets: The Chinese economy is forecast to grow at above 8% over the next few years. Whilst light vehicles sales are expected to grow at around 10% p.a. in China, the global light vehicle sales are expected to grow at 4.2% p.a., with South America, China and South Asia expected to out-perform the average. With an established network of dealers in place in these markets and an updated product range, Jaguar and Land Rovers brands are well placed to benefit from this growth. The Joint Venture in China with Chery Automotive, currently pending approval by Chinese authorities, will give Jaguar Land Rover an additional scope to improve our position in that market.

Engine plant: Jaguar Land Rover is developing a new engine plant, alongside new, more fuel efficient engines. This will enable Jaguar Land Rover to improve their offering in terms of more efficient product and give us better control over engine supply to markets.