(Abridged) Annual Report Annual nd 72 2016-17 72nd Annual Report 2016–17 (Abridged) Printed by www.spentamultimedia.com by Printed www.tatamotors.com Bombay House, 24 Homi Mody Street, Mumbai 400 001 24 Homi Mody Street, House, Bombay WHAT’S INSIDE CORPORATE OVERVIEW STATUTORY REPORTS FINANCIAL STATEMENTS 1 Board of Directors and 11 Notice F-1 Abridged Auditors’ Report Corporate Information 27 Board’s Report F-2 Auditors’ Report on Standalone 2 Chairman’s Message 64 Management Discussion Financial Statements 4 Managing Director’s Message and Analysis F-8 Abridged Standalone 6 Jaguar Land Rover (JLR) 116 Corporate Governance Report Financial Statements CEO’s Message 137 Business Responsibility Report F-23 Auditors’ Report on Consolidated 8 Financial Statistics Financial Statements F-28 Consolidated Financial Statements F-110 Subsidiary Companies Financial Highlights 2016-17 Attendance Slip Proxy Form Updation of Shareholders Information Map Tata Motors’ Business Green Initiatives Annual General Meeting Tata Motors have progressed in key areas As a responsible citizen, your Company Date : Tuesday, August 22, 2017 of engineering, manufacturing, world- strongly urges you to support the Green Time : 3.00 p.m. class sales and service support, for an Initiative by registering your email Venue : Birla Matushri Sabhagar, 19, overall superior customer experience. address with Company’s Registrars and Sir Vithaldas Thackersey Marg, Transfer Agents/Depositories to receive Mumbai 400 020 JLR’s Business communication, including the Annual The strengths of JLR include iconic Report, from the Company in electronic globally positioned brands, a strong mode. As an austerity measure and in product portfolio of award winning furtherance of the Green Initiative, the luxury and high performance cars Company has sent an Abridged Report and premium all-terrain vehicles, a to the Members for FY2016-17. The global distribution network, strong full copy of the Annual Report can be product development and engineering viewed under the ‘Investor’ section on the capabilities and a strong Company’s website-www.tatamotors.com management team. and would be provided to the Members on request. BOARD OF DIRECTORS & CORPORATE INFORMATION CHAIRMAN EMERITUS ExCom BANKERS Mr Ratan N Tata Mr Guenter Butschek Allahabad Bank CEO and Managing Director Andhra Bank BOARD OF DIRECTORS Mr Satish Borwankar Mr N Chandrasekaran Bank of America Executive Director and Non Executive Director and Chairman Bank of Baroda Chief Operating Officer Dr R A Mashelkar Bank of India Mr C Ramakrishnan Non Executive, Independent Director Group Chief Financial Officer Bank of Maharashtra Mr N Munjee Mr Girish Wagh Central Bank of India Non Executive, Independent Director Head- Commercial Vehicles Business Unit Citibank NA Mr V K Jairath Mr Mayank Pareek Corporation Bank Non Executive, Independent Director Head- Passenger Vehicles Business Unit Deutsche Bank Ms Falguni Nayar Dr Timothy Leverton Non Executive, Independent Director Federal Bank Chief Technology Officer HDFC Bank Mr O P Bhatt Mr Gajendra Chandel Non Executive, Independent Director Hongkong and Shanghai Chief Human Resource Officer Banking Corporation Dr Ralf Speth Mr Shailesh Chandra Non Executive Director ICICI Bank Head- Corporate Strategy & IDBI Bank Mr Guenter Butschek Business Transformation CEO and Managing Director Indian Bank Mr Thomas Flack Mr Satish Borwankar Chief Purchasing Officer Kotak Mahindra Bank Executive Director and Karur Vysya Bank Chief Operating Officer COMPANY SECRETARY Punjab National Bank Mr H K Sethna Mr Ravindra Pisharody Standard Chartered Bank Executive Director (Commercial Vehicles) AUDITORS State Bank of India Deloitte Haskins & Sells LLP REGISTERED OFFICE Union Bank of India (Registration No. 117366W/W-100018) Bombay House, United Bank of India 24, Homi Mody Street, SHARE REGISTRARS Mumbai 400 001 TSR Darashaw Limited WORKS Tel: +91-22- 66658282 6-10, Haji Moosa Patrawala Industrial Jamshedpur Fax: +91-22- 66657799 Estate 20, Dr E Moses Road, Email: [email protected] Pune Mahalaxmi, Mumbai 400 011 Website: www.tatamotors.com Lucknow Tel: +91-22-66568484 Fax: +91-22-66568494 Pantnagar CORPORATE IDENTITY NUMBER Email: [email protected] Sanand L28920MH1945PLC004520 Website: www.tsrdarashaw.com Dharwad 1 ABRIDGED ANNUAL REPORT 2016-17 Corporate Overview Statutory Reports Financial Statements CHAIRMAN’S MESSAGE Dear Shareholders, It is my honour and privilege to interact with you as the Chairman of the Board at Tata Motors and its British subsidiary Jaguar Land Rover. The automotive industry is going through multiple changes from different dimensions – changing regulatory and environmental standards as well as technological disruptions and the industry is also witnessing increased competition. From your company’s point of view JLR has posted an excellent performance but the performance of the domestic segment has been a major concern. The commercial vehicle segment has witnessed a continued decline in market share and the passenger car performance has been muted. Our consolidated net revenues declined by 1.2% to ₹269,850 crore for the 12 months to March 31st, 2017 and our consolidated profit before tax for the year fell sharply to ₹9,315 crore, compared with ₹14,126 crore in the prior year. Our standalone net revenues increased by 3.7% to ₹44,777 crore for the 12 months to March 31st, 2017 and our standalone loss before tax for the year fell to ₹2,421 crore, compared with ₹67 crore in the prior year. Business turnaround is the need of the hour and management is working with renewed focus and energy to improve our market share, reduce our cost base, streamline the supply chain and ensure launch of products on time to delight our customers.” 2 Chairman’s Message Managing Director’s Message JLR CEO’s Message Financial Statistics (2-3) I would like to thank our employees as well as our extended partners, including dealers, suppliers and other stakeholders for their hard work and commitment in this critical phase of Tata Motors.” Jaguar Land Rover represents world-class quality, reliability I am confident that the series of actions being taken by the and performance through its exceptional product range. The management team will succeed and show an improved company delivered a 9.2% increase in full year revenues to £24.3 performance in both the commercial vehicle and passenger billion in the last financial year, and reported pre-tax profits up vehicle segments in India and deliver better financial results. 3.4% at £1.6 billion. I would like to thank our employees as well as our extended In the domestic market, the market share in both the Commercial partners, including dealers, suppliers and other stakeholders Vehicles and Passenger Vehicles have declined significantly. The for their hard work and commitment in this critical phase of market share CV segment has fallen to 44.4% from a high of Tata Motors. 59.4% in FY 2011-12, while market share for PV declined to 5.2% from 13.1% in the same period. Overall, delays in new product Finally, I thank you for your continued trust, confidence launches as well as lack of adequate responsiveness to the and support. competitive environment and an unsustainable cost structure have contributed to this performance. Best Regards, N Chandrasekaran In the domestic business segment, business turnaround is the Mumbai, May 23, 2017 need of the hour and management is working with renewed focus and energy to improve our market share, reduce our cost base, streamline the supply chain and ensure launch of products on time to delight our customers. 3 ABRIDGED ANNUAL REPORT 2016-17 Corporate Overview Statutory Reports Financial Statements MANAGING DIRECTOR’S MESSAGE Dear Shareholders, When I joined almost a year and a half ago, there was an immediate need to launch a transformation journey, setting the long-term priorities for the organization, redefining the MVV (Mission, Values, and Vision), laying down the blueprint for CV & PV business strategy till 2020, and launching our strategic game plan with high impact projects for bottom-line/ top-line improvement - all leading to a robust business plan for the fiscal year ‘16-17. With this background, we set ourselves towards aspirational targets in terms of market share and financials. On June 20, ‘16, we kick-started our transformation journey to be “FUTUREADY”, to instill a sense of the ‘very purpose’ for the organization’s existence, which immediately caught up with the organization. The ImpACT (Improvement by Action) projects with full time senior leaders and dedicated teams having ownership at ExCom level helped us focus on four angles of attack – intense top-line focus, cost optimization, customer centricity and structural improvements in processes. These projects have started to payback and have created a great change of momentum in the entire organization. We have built a very strong savings potential with positive effects in FY17/18 and the years to come. On June 20, ‘16, we kick-started our transformation journey to be “FUTUREADY”, to instill a sense of the ‘very purpose’ for the organization’s existence, which immediately caught up with the organization.” 4 Chairman’s Message Managing Director’s Message JLR CEO’s Message Financial Statistics (4-5) I would like to take this opportunity to commit to a stretched plan in FY17/18, thereby compensating on our poor performance in FY16/17 with a promise of a better year.” One of the most important initiatives in FY16/17 was the to advance the launch time of some of our new products. In Organizational Effectiveness (OE) exercise, with the objective of full alignment with the board, we have finalized a business bringing the much needed empowerment and accountability turnaround plan through which we take upon ourselves to within the BU’s, strong functional oversight based on the key deliver a robust bottom-line improvement in FY17/18. principles of speed, simplicity and agility. Due to its magnitude and complexity, the transition of the new management structure In conclusion, I would say that we have immense opportunities, w.e.f.