Management Discussion and Analysis

EBITDA was GB£1,981 million (8.2% margin) in FY 2018-19, compared to the EBITDA of GB£2,794 million (10.8% margin) in FY 2017-18, primarily reflecting the lower wholesales, particularly in China, higher incentive and warranty costs, partially offset by Project Charge cost efficiencies and favourable realized foreign exchange movements.

The loss before interest tax and exceptional charges (EBIT) was negative GB£180 million (0.7% margin) in FY 2018-19, compared to the EBIT of GB£971 million (3.8% margin) in FY 2017-18 due to the lower EBITDA as well as an increase in depreciation and amortization and lower profits from the China joint venture.

The loss before tax (“PBT”) before exceptional item of GB£358 million in FY 2018-19 compared to profit of GB£1,074 million in FY 2017-18, as the lower EBIT, explained by higher interest costs and unfavourable revaluation of foreign currency debt and hedges in FY 2018-19 compared to favourable revaluation in the previous year. In Q3 of FY 2018-19, JLR concluded that the carrying value of assets should be written down, resulting in a GB£3,105 million pre-tax exceptional charge. In Q4 FY 2018-19, JLR implemented a redundancy programme to deliver ongoing cost savings and to capture the one-time separation costs an exceptional charge of GB£149 million was recognized. After these exceptional items the loss before tax was GB£3,629 million in FY 2018-19 compared to PBT of GB£1,512 million (including GB£437 million exceptional pension credit) in FY 2017-18.

The loss after tax was GB£3,321 million in FY 2018-19 compared to PAT of GB£1,114 million in FY 2017-18. The losses incurred in FY 2018-19 resulted in a GB£308 million tax credit compared to GB£398 million tax charge in FY 2017-18 (26.3% effective tax rate).

Net cash generated from operating activities was GB£2,253 million in FY 2018-19 compared to GB£2,958 million in FY 2017-18, primarily reflecting the loss in FY 2018-19, partially offset by GB£405 million of working capital inflows (GB£81 million working capital inflow in FY 2017-18), and GB£22 million of dividends received from the China joint venture compared to GB£206 million of dividends received in FY 2017-18. In addition GB£227 million was paid in tax in FY 2018-19 compared to GB£312 million in FY 2017-18.

After GB£3,389 million of investment spending (excluding GB£421 million of expensed Research and Development),GB£178 million of net interest (including the payment of lease obligations) expense and GB£47 million of other inflows and adjustments, free cash flow was negative GB£1,267 million. The net increases in debt of GB£613 million reflects the issuance of a EUR500 million bond in September 2018, the completion and draw down of the US$1 billion loan in October 2018, partially offset by the maturity of the US$700 million bond in December 2018 and a GB£54 million reduction in drawings under an uncommitted invoice discounting facility wound down ahead of its expiry in April and replaced with a newly established US$700 million committed invoice discounting facility. A dividend of GB£225 million was paid to Tata Motors in June 2018 and GB£3 million of other distributions were paid during the year. As a result Jaguar Land Rover had a total cash balance of GB£3,775 million (comprising GB£2,747 million of cash and cash equivalents and GB£1,028 million of financial deposits) as at March 31, 2019 compared to GB£4,657 million of total cash as at March 31, 2018 (comprising GB£2,626 million of cash and cash equivalents and GB£2,031 million of financial deposits). With total cash of GB£3,775 million and an undrawn revolving credit facility of GB£1,935 million (maturing in July 2022), total liquidity available to Jaguar Land Rover was GB£5,710 million as at March 31, 2019, compared to GB£6,592 million as at March 31, 2018.

FINANCIAL PERFORMANCE OF TMF HOLDINGS LTD AT CONSOLIDATED BASIS (AS PER IND AS)

Consolidated revenue for TMF Holdings during FY 2018-19 increased 36.7% to Rs. 3,974.57 crores, compared to Rs. 2,908.47 crores in FY 2017-18. The Profit before tax was Rs. 122.64 crores in FY 2018- 19 compared to Rs. 30.69 crores in FY 2017-18. The Profit after tax was Rs. 163.97 crores in FY 2018-19, as compared to Rs. 76.34 crores in previous year. The GNPA reduced by 139 bps to 2.57% (measured on 90 days basis). NNPA at 1.37%.

FINANCIAL PERFORMANCE OF TATA DAEWOO COMMERCIAL VEHICLES (AS PER KOREAN GAAP):

During FY 2018-19, TDCV, registered revenues of KRW 651.36 billion (Rs.4,090 crores), a drop of 25.0% over the previous year revenues of KRW 868.26 billion (Rs.5,035 crores), mainly due to lower domestic sales and market slowdown. The loss after tax was KRW 28.02 billion (Rs.179 crores) compared to profit after tax of KRW 33.66 billion (Rs.203 crores) of FY 2017-18. Lower absorption of fixed cost due to lower production and lower sales has resulted into lower profitability during the year as compared to previous year which was partially offset the impact of lower sales which was partially set off by material cost reduction

FINANCIAL PERFORMANCE OF TATA TECHNOLOGIES LTD

The consolidated revenue of TTL in FY 2018-19 increased by 9.3% to Rs.2,942.21 crores, compared to Rs.2,691.48 crores in FY 2017- 18. The profit before tax increased by 39.9% to Rs.470.94 crores in FY 2018-19, compared to Rs.336.53 crores in FY 2017-18. The profit after tax increased by 43.3% to Rs.352.60 crores in FY 2018- 19, as compared to Rs.245.81 crores in FY 2017-18. The Company witnessed increase in revenue due to favourable currency movement which helped in growth of revenue in UK & Europe and North America, the growth in APAC Revenue was primarily driven by strong revenue growth in India & China in key accounts and growth in educational product sales. There has been increase in purchase of traded products, employee costs and other expenses partially offset by outsourcing and consultancy charges, leading to an increase in profits.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an adequate system of internal controls in place. It has documented policies and procedures covering all financial and operating functions. These controls have been designed to provide a reasonable assurance with regard to maintaining of proper accounting controls for ensuring reliability of financial reporting, monitoring of operations, and protecting assets from unauthorized use or losses, compliances with regulations. The Company has continued its efforts to align all its processes and controls with global best practices.