Risks and Opportunities

The Company (including JLR) has initiated several programmes to optimise its operating efficiencies and implements its strategic roadmap.

These programmes may not deliver projected efficiencies and anticipated benefits may not accrue as expected.

The Company (including JLR) has launched certain initiatives to reduce product and business complexity and to benefit from economies of scale. Its robust project management processes ensure set targets are met.

JLR's expanding global presence increases its exposure to multiple geopolitical challenges which may impact its business.

India's automotive industry may be affected by the general economic conditions nationally and internationally.

JLR continues to expand its international footprint and maintains a balanced retail sales profile across key sales regions.

The Company (including JLR) continues to closely monitor global geopolitical and macroeconomic developments.

The Company (including JLR) is subject to a rapidly evolving regulatory landscape around environmental issues such as, CO₂ emissions and fuel economy. These developments impact all our products as well as the manufacturing facilities.

The Company has to migrate to BS VI in India from April 1, 2020. This entails challenges in the adaptation of technologies, innovations relating to manufacturing, testing and validation to the new standards.

JLR has invested substantially in the development of lightweight architecture, its in-house four-cylinder engines and electrification technologies, including mild and plug-in hybrid as well as battery electric vehicles.

The Company is making technological and other investments along with its partners such as Cummins to get itself ready with appropriate BS VI solutions across its products.

The global automotive industry (including India) is highly competitive and competition is likely to further intensify following the continuing globalisation and consolidation.

Brand positioning is becoming increasingly challenging as the dynamics of the automotive market (i.e. automated driving, electrification, digital connectivity) and the competitive pressures from existing automotive manufacturers and new disruptive entrants evolve.

Recent successful model launches at JLR has broadened its product range to existing and new customers in established and emerging segments.

The Company has also laid down a clear strategic roadmap for its future product and business strategy in India to mitigate the effect of increased competition.

Besides, the Company (including JLR) regularly monitors the perception of its brands to quickly identify and address emerging risks and opportunities.

The fast pace of technological development together with scarcity of specialist resources could result in a significant change in the automotive industry and increase the risk of delivering superior products demanded by current and future customers.

The Company (including JLR) continues to invest substantially in R&D and also continues its strategic focus on key technology areas including autonomy, connectivity and electrification to outsmart competition.

New and emerging technologies bring unprecedented threats to internet connected devices including vehicles and recent global hacking incidents impacting the geopolitical environment indicate an increase in the motivation to instigate cyber attacks.

The Company (including JLR) strives to implement consistent security policies and procedures as well as educating staff, vendors and suppliers to embed best practices by implementing internal tools to detect and mitigate the current and emerging cyber security threats. Intensifying Competition and Brand Positioning Technological Disruption Information and Cyber Security threats.

The Company's operations are subject to risks arising from fluctuations in exchange rates with reference to countries in which it operates. The Company imports capital equipment, raw materials and components from, manufacture vehicles in, and sell vehicles into, various countries, and therefore, its revenues and costs have significant exposure to the relative movements of currencies of those countries.

Also, the Company has an outstanding foreign currency denominated debt and is sensitive to fluctuations in foreign currency exchange rates.

Currency transaction risk is managed with financial derivatives in line with the hedging policy approved by the Company's and its respective subsidiaries' Board.

Also, JLR aims to align its sourcing base with its global sales profile and the revaluation of some of its US Dollar debt provides a natural offset to its US Dollar receivables.

Further, the Company hedges its foreign currency debt as per its hedging policy.

The Company (including JLR) is subjected to risks and costs associated with product liability, warranties and recalls in connection with performance, compliance or safety-related issues affecting the Company's products which may, in turn, cause the Company's customers to question the safety or reliability of its vehicles and thus result in a materially adverse effect on its business.

The Company (including JLR) regularly monitor the service data of its vehicles to proactively manage recalls and minimise warranty claims. Jaguar Land Rover also issues technical updates to its dealer network to manage identified faults and defects.

International expansion exposes the Company and its subsidiaries to increased diversity and complexity of legal and ther frameworks in a variety of jurisdictions. Therefore, the Company and its subsidiaries become subject to maintaining legal and ethical standards globally.

The Company's code of conduct sets out the behaviours that the Company expects of its staff, including conforming to the highest moral and ethical standards and complying with applicable laws, including anti-bribery, corruption and competition laws, sanctions and export controls.

The Company's and its subsidiaries' substantial R&D investment generates IP and the protection of this IP is necessary to prevent its unauthorised third-party use.

Conversely, the Company and its subsidiaries need to ensure that it does not infringe the IP of third parties.

TML and its subsidiaries have in-house specialists, who manage matters relating to IP and ensure that robust processes are followed by means of patents, registered designs, trademarks and copyrights.