79
Notice
Directors’ Report
(69-103)
Management Discussion & Analysis
Corporate Governance
Secretarial Audit Report
10.2% from 10.1% of net revenue. While a part of revenue
relates to volumes, the major increases were in IT costs,
warranty and engineering expenses at JLR, partly offset by
exchange gain on trading activities at JLR.
Amount capitalised represents
expenditure transferred to capital
and other accounts allocated out of employee cost and other
expenses, incurred in connection with product development
projects and other capital items. The expenditure transferred to
capital and other accounts has increased to
`
13,537.85 crores from
`
10,193.45 crores of FY 2012-13, mainly on account of various
product development projects undertaken by the Company and
JLR, for introduction of new products, development of engine and
products variants.
Other Income
was
`
828.59 crores from
`
815.59 crores in
FY 2012-13 and mainly includes interest income of
`
675.45 crores
(FY 2012-13
`
694.06 crores) and profit on sale of investment of
`
114.58 crores (FY 2012-13
`
80.09 crores). The increase is due to
profit on sale of mutual funds, mainly at TML.
Profit before Interest, Depreciation, Exceptional Items and Tax
has increased from
`
27,433.16crores in FY 2012-13 to
`
38,231.50
crores in FY 2013-14, and represented 16.4% of revenue.
Depreciation
and
Amortization
(including
product
development / engineering expenses written off):
During
FY 2013-14, expenditure increased to
`
13,643.37 crores from
`
9,622.87 crores in FY 2012-13. The increase in depreciation
of
`
1,496.84 crores is on account of plant and equipment and
tooling (mainly towards capacity and new products)
installed in
last year, the full effect of which is reflected in the current year.
The amortization expenses have gone up from
`
3,593.90 crores
in FY 2012-13 to
`
5,573.94 crores in FY 2013-14, attributable to
new product introduced during the last year. The expenditure on
product development / engineering cost written off has increased
by
`
543.62 crores. As explained above, there was an element of
increase representing translation impact.
Finance Cost
increased by 33.0% to
`
4,733.78 crores from
`
3,560.25
crores in FY 2012-13. The increase mainly represented borrowings
for the short term and long term needs of the Group. The increase
is partly attributable to prepayment of 2011 Senior notes by JLR.
Exceptional Items
(
`
in crores)
Exchange loss (net) including
on revaluation of foreign
currency borrowings, deposits
and loans
FY 2013-14
FY 2012-13 Change
707.72
515.09
192.63
Impairment of intangibles and
other costs
224.16
87.62
136.54
Employee separation cost
53.50
-
53.50
Total
985.38
602.71
382.67
i.
Foreign exchange loss (net) represents impact on account
of revaluation of foreign currency borrowings, deposits and
loans, and amortisation of loss / gain, on such foreign currency
monetary items which was deferred in previous years.
ii.
Impairment of intangibles and other costs are in respect
of subsidiary companies, triggered by continuous under
performance, mainly attributed by challenging market
conditions in which the subsidiaries operate.
iii.
Employee separation cost -To address the challenges, business
downturn, the Company had rolled out organization wide
cost optimization programme, which included employee
cost as an important pillar, Accordingly, based on requests
from employees for early retirement, the Company has given
early retirement with a lump sum amount of
`
53.50 crores to
various employees.
Consolidated Profit Before Tax (PBT)
increased to
`
18,868.97
crores in FY 2013-14, compared to
`
13,647.33 crores in FY 2012-
13, representing an increase of
`
5,221.64 crores. Due to severe
contraction in domestic volumes, TML’s contribution to PBT was
negative. JLR by virtue of its strong performance, contributed to
PBT. The increase also includes translation impact.
Tax Expense
represents a net charge of
`
4,764.79 crores in FY
2013-14, as compared to net charge of
`
3,776.66 crores in FY 2012-
13. The tax expense is not comparable with the profit before tax,
since it is consolidated on a line-by-line addition for each subsidiary
company and no tax effect is recorded in respect of consolidation
adjustments. Effective tax rate in FY 2013-14 is 25.3% as compared
to 27.7% in FY 2012-13.
