TO THE MEMBERS OF TATA MOTORS LIMITED
The Directors present their Sixty-Ninth Annual Report and the Audited Financial Statement for FY 2013-14. As required under the Ministry of Corporate Affairs' General Circular 08/2014 No. 1/19/2013-CL-V dated April 4, 2014, the Financial Statements and other reports required to be attached to the Annual Report for FY 2013-14 are governed by the relevant provisions, schedules, rules of the Companies Act, 1956.
FINANCIAL PERFORMANCE SUMMARY
DIVIDEND
Considering the Company's financial performance, the Directors have recommended a dividend of Rs.2/- per share (100%) on the capital of 2,736,713,122 Ordinary Shares of Rs. 2/- each and Rs.2.10 per share (105%) on 481,966,945 'A' Ordinary Shares of Rs.2/- each for FY 2013-14 (same as for FY 2012-13) and the same will be paid on or after August 1, 2014. The said dividend, if approved by the Members, would involve a cash outflow of Rs. 742 crores (previous year: Rs.728 crores) including dividend distribution tax, resulting in a payout of 222% (FY 2012-13: 241%) of the standalone profits for the year and 5% (previous year: 7%) of the consolidated profits of the Company.
OPERATING RESULTS AND PROFITS
The Global operating environment improved considerably in FY 2013-14, as economic activity strengthened and spending in most economies began to recover, however in a sporadic manner. Whilst the advanced economies, particularly the US and UK, led the rebound, as growth became broader and more entrenched, Europe saw the first tentative signs of recovery after a long and painful slowdown. India's economic growth rate in the current financial year remained weak at 4.7% (Previous Year: at 4.5%). The Industrial activity remained weak and the stagnation was broad based. Mining and manufacturing output remained negative and the economy witnessed decline in investment in new projects in line with slowdown in overall growth. FY 2013-14 was a challenging year for the Company as the Indian economy continued to be under severe stress.
The Tata Motors Group recorded a 22.2% growth in gross turnover from Rs.193,698 crores in the previous year to Rs.236,626 crores in FY 2013-14. This is the highest turnover recorded by the Group. The consolidated revenues (net of excise) for FY 2013-14 of Rs.232,834 crores grew by 23.3% over last year on the back of strong growth in volumes across products and markets at Jaguar Land Rover. The consolidated EBITDA margins for FY 2013-14 stood at 16.1%. Consequently, Profit Before Tax and Profit After Tax were Rs.18,869 crores and Rs.13,991 crores, respectively.
Tata Motors Limited recorded a gross turnover of Rs.37,758 crores, 23.4% lower from Rs.49,320 crores in the previous year. On top of a 16.7% decline in FY 2012-13, a decline of more than 40% over a 2 year period was witnessed. Sustained deceleration in the economic growth, high inflation, higher fuel prices, reduced availability of finance and elevated interest rate regime continued to impact demand for the Indian auto industry in general and commercial vehicle industry in particular. Additionally, the need to increase marketing expenses on account of severe competitive intensity and depressed market scenario impacted EBITDA margins from positive 4.8% in FY 2012-13 to negative 1.4% for FY 2013-14. The reduction of profits from operations was offset by dividend from subsidiary companies of Rs.1,574 crores (including dividend from JLR) as compared to Rs.1,584 crores for the previous year and profit of Rs.1,966 crores on divestment of investments in certain foreign subsidiaries to TML Holdings Pte Ltd, Singapore, a wholly owned subsidiary. Loss Before Tax and Profit After Tax for the FY 2013-14 were at Rs.1,026 crores and Rs.335 crores respectively, as compared to Profit Before Tax and Profit After Tax of Rs.175 crores and Rs.302 crores respectively in FY 2012-13.
With the expected positive momentum in the Indian economy, the Company is focused on growth and achieving profitability through a superior new product pipeline along with a renewed commitment to enhance quality and customer service and to reduce costs. The Horizonext strategy unveiled in the Delhi Auto Expo shed light on some of the new and exciting product initiatives like Zest, Bolt, improved Nano, Ultra trucks variants on Prima truck platform and a slew of other modified and refreshed products which will be introduced in the near future, boosting the Company's revenues. Investment in the right products and vehicle platforms are being made to ensure a competitive pipeline for the future. Together with forward looking product strategy, the Company is also focusing extensively on right sizing the business and operational improvements through various strategic projects for operational excellence and cost cutting initiatives.
Jaguar Land Rover recorded a turnover of GB£19,386 million, a growth of 22.8% from GB£15,784 million in the previous year. JLR had a successful year of continued growth in all markets with overall volumes up by 16%, reflecting continued product successes including the launch of the new Range Rover Sport and Jaguar F-TYPE and a full year of sales of the new Range Rover. More established models have also been performing well, in particular derivatives such as the XF Sportbrake and all-wheel drive and smaller engine options across the range. Consolidated EBITDA for FY 2013-14 was a record GB£3,393 million, an increase of 45.1% compared to FY 2012-13. The EBITDA improvement comprises increased sales volumes and revenues, as well as favourable product and market mix. Profit before tax (PBT) for FY 2013-14 was GB£2,501 million, an increase of GB£827 million (49%) compared to FY 2012-13. In FY 2013-14, JLR incurred one off costs for redemption of the higher coupon GB£500 million and US$410 million 2018 Notes (at 8.125% and 7.75% coupon respectively). The bond redemption was pre-financed by the successful issuances of US$700 million 4.125% 2018 Notes and GB£400 million 5% 2022 Notes, to reduce the Company's overall cost of debt in line with the improving credit. (Jaguar Land Rover's figures are as per IFRS)
Tata Motors Finance Limited, the Company's captive financing subsidiary, registered total revenues of Rs.3,026 crores higher by 7% of FY 2012-13 revenues and reported a Profit After Tax of Rs.101 crores in FY 2013-14 (FY 2012-13: Rs.309 crores). The results for the year were impacted due to tightness in the financial market, stress in the business environment and the consequent higher provision on account of Non-Performing Assets.
Tata Daewoo Commercial Vehicle Company Limited, South Korea registered revenues of KRW 884.1 billion (Rs.4,906 crores), a growth of 7.3% over the previous year. The positive impact of higher volume, various cost control initiatives and price increase in export market allowed company to achieve profit after tax of KRW 23.5 billion (Rs.130.4 crores) [FY 2012-13: loss of KRW 9.2 billion (Rs.45 crores)] (TDCV Figures are as per Korean GAAP).