Management Discussion and Analysis

Amount capitalized 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 decreased by 9.2% to Rs.855.08 crores in Fiscal 2018 from Rs.941.60 crores in Fiscal 2017, mainly due to various product development projects undertaken by the Company for the introduction of new products and the development of engine and products variants.

Other Income increased by 58.8% to Rs.1,557.60 crores in Fiscal 2018 from Rs.981.06 crores in Fiscal 2017. This includes interest income of Rs.397.71 crores in Fiscal 2018, compared to Rs.187.90 crores in Fiscal 2017. Dividend income increased to Rs.1,054.69 crores in Fiscal 2018 from Rs.672.65 crores in Fiscal 2017, whereas profit on sale of investment decreased marginally to Rs.103.17 crores in Fiscal 2018, compared to Rs.116.76 crores in Fiscal 2017, primarily profit on sale of mutual funds.

Profit before exceptional items, depreciation and amortization, interest, foreign exchange (gain)/loss and tax is Rs.5,358.18 crores in Fiscal 2018, representing 9.0% of revenue, compared to Rs.2,793.27 crores in Fiscal 2017.

Depreciation and amortization: During Fiscal 2018, expenditures increased by 2.1% to Rs.3,101.89 crores from Rs.3,037.12 crores in Fiscal 2017. The depreciation has increased by 1.8% to Rs.1,973.94 crores as compared to Rs.1,939.77 in Fiscal 2017 is due to new product launches. The amortization expenses have increased by 2.8% to Rs.1,127.95 crores in Fiscal 2018 from Rs.1,097.35 crores in Fiscal 2017, and are attributable to new products introduced during the year.

Expenditure on product development / engineering expenses written off increased by 4.5% to Rs.474.98 crores in Fiscal 2018 from Rs.454.48 crores in Fiscal 2017.

Finance Cost has increased by 11.2% to Rs.1,744.43 crores in Fiscal 2018 from Rs.1,569.01 crores in Fiscal 2017. The increase is attributable to higher interest rates and borrowings.

Foreign exchange loss of Rs.17.14 crores in Fiscal 2018 as compared to gain of Rs.252.78 crores in Fiscal 2017. The loss was due to depreciation on INR as compared to USD.

Exceptional items

  1. Employee separation cost: The Company has given early retirement to various employees resulting in an expense both in Fiscal 2018 and 2017.
  2. In order to make the Company fit for future certain product development programs were reviewed and accordingly an impairment charge of Rs.962.98 crores were taken during Fiscal 2018.
  3. Rs.147.93 crores for Fiscal 2017, relates to provision for inventory of BS III vehicles as at March 31, 2017.
  4. Loss before tax was Rs.946.92 crores in Fiscal 2018, compared to Rs.2,353.27 crores in Fiscal 2017. Though the Company performed well in terms of sales and revenue and reducing the costs, the losses were due to certain one-time charges to make the Company “fit for future”.

    Tax Expense represents a net charge of Rs.87.93 crores in Fiscal 2018, as compared to Rs.76.33 crores in Fiscal 2017.

    Loss after tax was Rs.1,034.85 crores in Fiscal 2018 as compared to Rs.2,429.60 crores in Fiscal 2017.