Annual Report - Tata Motors -2008-2009

TATA MOTORS LIMITED

ANNUAL REPORT 2008-2009

DIRECTOR'S REPORT

TO
THE MEMBERS OF
TATA MOTORS LIMITED

The Directors present their Sixty-Fourth Annual Report and the Audited
Statement of Accounts for the year ended March 31, 2009.

1. FINANCIAL RESULTS:

Financial Year
(Rs. in Crores)

2008-09 2007-08

(i) Gross Revenue 28599.27 33093.93

(ii) Net Revenue (excluding excise duty) 25660.79 28739.41

(iii) Total Expenditure 23908.35 25807.82

(iv) Operating Profit 1752.44 2931.59

(v) Other Income 925.97 483.18

(vi) Profit before Interest, Depreciation,
Exceptional items & Tax 2678.41 3414.77

(vii) Interest and Discounting Charges:

(a) Gross Interest and Discounting Charges 1073.10 541.56

(b) Adjustment/Transfer to Capital Account (399.42) (259.19)

(c) Net Interest and Discounting Charges 673.68 282.37

(viii) Product Development Expenses 51.17 64.35

(ix) Depreciation 874.54 652.31

(x) Exceptional item - Notional Exchange
(loss)/gain (net) on Revaluation of
Foreign Currency Borrowings, Deposits and
Loan Given (65.26) 160.73

(xi) Profit Before Tax 1013.76 2576.47

(xii) Tax Expenses 12.50 547.55

(xiii) Profit After Tax 1001.26 2028.92

(xiv) Balance Brought Forward from
Previous Year 1383.07 1013.83

(xv) Credit taken for Dividend
Distribution Tax for previous year 15.29 -

(xvi) Amount Available for
Appropriations 2399.62 3042.75

APPROPRIATIONS:

(a) Debenture Redemption Reserve 267.80 -

(b) General Reserve 100.13 1000.00

(c) Dividend (including tax) 345.70 659.68

(d) Balance carried to Balance Sheet 1685.99 1383.07

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2. DIVIDEND:

Considering the Company's financial performance, the Directors have
recommended a reduced dividend of Rs.6/- per share on the increased capital
of 44,98,32,659 Ordinary Shares of Rs.10/- each (previous year - Rs.15/-
per share) and Rs.6.50 per share on 6,41,75,655 'A' Ordinary Shares of
Rs.10/- each (previous year - NIL per share) fully paid-up for the
Financial Year 2008-09.

3. OPERATING RESULTS AND PROFITS:

2008-09 was a difficult year faced by the automotive sector globally. The
spread of the economic downturn of the Western world significantly affected
business environment in India as well. The Company faced significant
pressure in its domestic and overseas markets. Despite the challenges, the
Company successfully completed the acquisition of Jaguar and Land Rover and
launched the Tata Nano, overcoming serious impediments of a last minute
plant dislocation amidst much political turmoil.

In view of the fall in demand in the domestic and international markets,
the Company's turnover for the year declined by 13.6% to Rs. 28,599 crores.
The Company however continues to be the largest automobile Company in India
in revenue. Lower volumes and high input prices for major part of the year
caused EBITDA margin to fall to 6.8% in FY 09 compared with 10.2% in the
last Fiscal. Currency volatility and high interest cost resulted in a PBT
of Rs. 1014 crores, a decline of 60.7% over the last Fiscal. The Profit
After Tax was Rs. 1,001 crores, a decline of 50.7% over the last year.
Performance of the Company in both the Commercial and the Passenger
Vehicles segments is discussed in detail in the Management Discussion and
Analysis which forms a part of this Annual Report. A snapshot is given
below.

4. COMMERCIAL VEHICLES:

The Company reported sales of 291,993 commercial vehicles in the domestic
and international markets, a decline of 17.2% over the last fiscal.
Domestic sales declined by 15.2% to 265,373 vehicles, while exports
declined by 33.2% to 26,620 vehicles as a result of the recessionary trends
in most markets. Despite the tough operating environment, the Company was
able to consolidate its position as a market leader in the domestic market
and improve its market share from 62.2% to 63.8% during the year. The
Company gained considerable market share in both the M&HCV as well as LCV
segments in the domestic market. While LCV volumes grew by 3.0% during the
year, driven primarily by the new products launched in the last year, M&HCV
volumes declined by 31.4%, due to the impact of slowdown in industrial
activity.

The Company launched 28 new commercial vehicles during the year. New
products offer better features and fuel efficiency, thereby lowering the
total cost of ownership for the users. The contribution of new products to
total sales volumes has been increasing steadily. Among the new products
launched in 2008-09, were LPT 3118 - a truck with lift axle, CNG variants
of the Ace, Magic and Xenon, new range of LCV buses manufactured by Tata
Marcopolo Motors and the ICV 909 bus.

The Company also completed the execution of its first order of 650 low
floor buses to Delhi Transport Corporation (DTC). It has also bagged a
second order of 1625 similar buses from DTC to be executed in financial
year 2009-10, the total order value of which is over Rs.2200 crores.

Ace and Magic volumes continue to increase and their contribution to the
total sales volumes is increasing. These products are also relatively less
affected by the overall economic downturn.

The Company has also unveiled the World Truck range of its next generation
heavy trucks in May 2009. The sales are expected to start in the first half
of the current financial year. The Company expects to launch application
specific variants at appropriate times.

5. PASSENGER VEHICLES:

The Company achieved a sales volume of 214,428 vehicles (including Fiat
cars) in the domestic and overseas markets. Sales in the domestic market
were 207,512 vehicles, a decline of 4.8% over the previous year. However,
the Company continued to be amongst the top three players in the Indian
passenger vehicle market with a market share of 13.1% (only Tata cars).

The Company paved the way to strengthen its presence in the domestic
passenger vehicles market with a series of launches during the year. It
launched the second generation Indica Vista and the Fiat 500 as a CBU
import as well as the Xenon XT, a lifestyle pick-up. The Company also made
an entry into the upper mid-size segment through the distribution of the
Fiat Linea in the last quarter of the year followed by the Fiat Grande
Punto in June 2010. The Indica Vista received the Jury Award at the
Business Standard Motoring Car of the Year Awards and the Best Value for
Money Car at the UTVi Autocar Awards. In March 2009, the Company launched
the Tata Nano, in the domestic market. The launch generated tremendous
excitement in the media and the automobile industry worldwide with over
2.03 lacs fully paid bookings being received in a 17 day period. The
Company was also awarded the Wall Street Journal Technology Innovation
Award for the Tata Nano, in the transportation sector.

The continued success of the Compact Sedan Indigo CS helped the Company
achieve a 56.6% growth in volumes in the entry mid- size segment. With the
addition of Sumo Grande in utility vehicles in the year, the Company
crossed sales of four lacs units of the Sumo range since its launch. The
Company showcased its future product offerings at the Geneva Motor Show
2009. The Tata Nano Europa which would be launched in the European markets,
received a lot of media attention, so did the Tata Indica Vista EV- a plug-
in electric Indica Vista with a 215 km range between charges, which would
be launched in select European countries in the current year. The Company
also presented the Pr1ma concept, a premium sedan based on the New Indigo
platform.

The Company entered the certified pre-owned car business under the brand
name Tata Motors Assured. It would offer reliable and high quality
certified pre-owned Tata cars with service and warranty support. This
initiative should support the growth of new car sales over a period of time
for the Company and also help protect the residual value of its cars.

The Company and its vehicle brands continue to be recognized among the
'Most Trusted Brands' in the industry. The Company continued to improve its
quality and customer satisfaction ratings of its first generation vehicles
and expects even more significant improvements with the next generation
cars. The Company's passenger vehicle exports at 6,916 vehicles declined by
53.3% over the previous year mainly due to the economic meltdown in most
international markets.

6. JAGUAR LAND ROVER:

On June 2, 2008, the Company completed the acquisition of Jaguar Land Rover
from Ford Motor Company of U.S. (Ford) for a net consideration of US$ 2.3
billion (on a cash free, debt free basis) in an all cash transaction out of
the purchase consideration. Ford also contributed about US$ 600 million to
the Jaguar Land Rover pension plans. Jaguar and Land Rover are global
premium automotive businesses encompassing engineering, design, manufacture
and marketing of Jaguar luxury performance cars and Land Rover premium all-
terrain vehicles.

The purchase consideration included the ownership by Jaguar and Land Rover
of necessary Intellectual Property Rights, 3 major manufacturing
facilities, 2 advanced design and engineering centres in U.K., a worldwide
network of 20 national sales companies and a minimum assured capital
allowance of approximately US$ 1.1 billion for future tax set-offs.

Jaguar Land Rover also tied up with Ford for supply of engines, stampings
and other components on a long term basis for its business as also for
transition support in areas of auto financing, IT, accounting and access to
Ford's test facilities. The Jaguar Land Rover acquisition was routed
through the Company's 100% subsidiary, Jaguar Land Rover Limited, U.K.,
which had availed a short term bridge loan facility of US$ 3 billion from a
syndication of banks and guaranteed by the Company. The Company prepaid
part of the said facility out of proceeds of a Rights Issue and certain
divestments and the balance outstanding as on March 31, 2009 was US$ 2.02
billion. For repayment of the said amount, the Company in May 2009 raised
resources through further divestments and issued Secured Non-Convertible
Credit Enhanced Rupee Debentures in four tranches, having tenors upto 7
years, aggregating Rs.4,200 crores on a private placement basis. The
balance facility of US$ 1 billion was rolled over and guaranteed by the
Company, by extending the final maturity upto December 2010.

The global meltdown and high fuel prices, especially after September 2008
with vehicle financing and demand drying up, impacted auto industry
worldwide, including Jaguar Land Rover. The volumes over the 10 months post
acquisition reduced by 32% as compared to the comparable period in the
previous year resulting in a Loss before tax of GB Pount 281 million. In
response Jaguar Land Rover has taken prompt action to reduce inventory,
improve working capital, reduce investments and payroll costs including
more than 2000 job losses. Transition initiatives are progressing as per
plan in areas of marketing, customer financing support, IT and related
infrastructure. The Jaguar brand strategy of offering 'Beautiful Fast Cars'
is being enhanced continuously through introduction of new products like XF
and the new XJ. Jaguar XF, which was launched in 2008, witnessed an
excellent response in the market during the year. Similarly the new XJ,
which will be launched in the next financial year, will help in further
enhancement of the brand as will Jaguar's achievement of number one
position in the JD Power vehicle dependability survey. The new models which
were launched during the year included Jaguar 10MY XFR, Jaguar 10MY XKR and
addition to Land Rover's range of finest all-terrain vehicles were,10MY
Range Rover, 10MY Range Rover Sports, Discovery4 and Freelander2-'Stop-
Start' besides other product upgrades.

Land Rover received a grant offer of Pount 27 million to build a new small
Range Rover at its Halewood plant. In June 2009, Jaguar Land Rover have
begun sales of its range of premium performance saloon cars and sports
utility vehicles in the Indian market from a state-of-the-art exclusive
showroom in Mumbai with the Company as its distributor. This flagship
facility will offer a range of Jaguar and Land Rover vehicles and aims to
establish a benchmark experience in luxury car sales in India.

The actuarial losses (net) of Rs.1457.21 crores of pension plans of Jaguar
Cars Ltd. and Land Rover, UK, have been accounted in 'Reserves and Surplus'
in accordance with IFRS principles and permitted by AS21 in the
consolidated financial statements. The actuarial losses significantly
represent short term valuation impact on the plan assets. This treatment is
consistent with the accounting principles followed by Jaguar Cars Ltd and
Land Rover, UK, under IFRS.

7. TATA MOTOR FINANCE - CUSTOMER FINANCING INITIATIVES:

Tata Motors Finance Limited and the Vehicle financing division of the
Company which operate under the brand name 'Tata Motorfinance (TMF)'
financed 1,53,007 new vehicles, a decline of 13.8% over 1,77,437 in the
previous year. TMF disbursed Rs.7,415 crores, a decline of 22.9% over
Rs.9,620 crores in the previous year. During the year, TMF extended support
to the Company's vehicle sale by financing 32.9% of the total domestic
sales, compared to 33.6% in the previous year. TMF is on course to become a
strong captive financing arm to support the vehicle sales business as well
as to de-risk the cyclical revenue stream of the vehicle business. The
extensive network of TMF will also complement the dealer network of
vehicles sales, thus widening the reach of the Company.

In the Commercial vehicle financing, TMF achieved a market share of 35.8%,
with total disbursements of Rs.5,200 crores (previous year Rs.6,300
crores), recording a decline of 17.4% and financed 94,882 units, a decline
of 11.9% over the previous year. In the passenger vehicle financing
segment, TMF achieved a market share of 29%, with total disbursements at
Rs. 1807 crores (previous year Rs.2,228 crores), recording a 18.9% decline
and financed 58,125 units, a decrease of 16.7% over the previous year.

8. HUMAN RESOURCES & INDUSTRIAL RELATIONS:

During the year the Company entered into a 3 year wage settlement with its
Union at Lucknow through amicable process of negotiations. The permanent
employee's strength of the Company as on March 31, 2009 was 23,638. The
Company's industrial relations were cordial at all plants. Recruitment
across all levels, extensive training and skill enhancement activities were
carried out at new locations in line with the Company's expansion and
growth plans. Due to the tough market conditions necessary steps to reduce
overall wage costs, including hiring freeze were taken in the second half
of the year.

Towards Organizational Health and Safety, the plants at Jamshedpur, Pune,
Uttarakhand and Lucknow were certified with OHSAS 18001 2007. The Company
observed block closures which were supported by its employees and unions at
Pune, Jamshedpur and Lucknow. The Communication on Progress 2007-08 was
submitted to the United Nations Global Compact. The report is based on the
ten principles of Global Compact in areas of Human Rights, Environment,
Labour and Anti-corruption. The Company's plants at Pune and Jamshedpur
were certified with SA-8000, a global social accountability standard for
working conditions, certifying labour practices in their facilities and
those of their suppliers and vendors.

9. FINANCE:

With significant pressure on liquidity mainly towards the second half of
the year, the Company's capital expenditure programme and the growing
business requirement, the overall borrowings of the Company stood at
Rs.13,165.56 crores at a Debt: Equity ratio of 1.08:1. Early correction
efforts undertaken by the Management helped to lower inventory levels
significantly. The Company has also taken and will continue to implement
suitable steps for raising long term resources to match the Company's fund
requirement with its loan maturity profile.

During the year, the Company repurchased and cancelled US$ 17 Million of 0%
CARS (Due 2012) and Yen 300 Million of 0% FCCN (Due 2011).Total profit on
this buyback is Rs. 50.74 crores. The Company's rating for foreign currency
borrowings was revised by Standard & Poor to B+ (Credit Watch with Negative
Implications) and by Moodys' to B3 (Negative Outlook). For borrowing in
local currency the rating was revised to A (Stable) by Crisil and to LA+ by
ICRA.

10. RIGHTS ISSUES:

In October 2008, the Company raised an aggregate of Rs.4139.33 crores
through a simultaneous but unlinked Rights Issue of Ordinary Shares and 'A'
Ordinary Shares of 64,276,164 Ordinary Shares of Rs.10 each at a premium of
Rs.330/- per share aggregating Rs.2185.39 crores in the ratio of one
Ordinary Share for every six Ordinary Shares; and 64,276,164 'A' Ordinary
Shares of Rs.10 each at a premium of Rs.295/- per 'A' Ordinary Share
aggregating Rs.1960.42 crores in the ratio of one 'A' Ordinary Share for
every six Ordinary Shares.

The Company was one of the first in India to issue differential voting
shares. The 'A' Ordinary Shareholders enjoy all rights and privileges that
are enjoyed by Ordinary Shareholders in law and under the Articles of

Association, except as to dividend and voting, viz. the right to receive
dividend for any financial year at five percentage points more than the
aggregate rate of dividend declared on Ordinary Shares for that financial
year and the right to vote any resolution on a poll or by postal ballot, by
one vote for every ten 'A' Ordinary Shares held.

The difficult market conditions at the time of issuance resulted in the
issue receiving a poor response. The Rights Issue was fully subscribed
after taking into consideration subscription by Promoters and Underwriters
to the extent of the undersubscribed portion. The Net Proceeds have been
utilized to prepay part of the Short Term Bridge Loan availed by it for the
acquisition of Jaguar and Land Rover from Ford Motor Company.

11. INFORMATION TECHNOLOGY INITIATIVES:

The Company continued to strengthen its IT capabilities in all areas of its
business, particularly in the design, manufacturing and customer interface
functions. The Company uses Digital Product Development, Digital
Manufacturing Solutions and better integration with vendors in order to
improve significantly its product development processes and capabilities.
During the year, the ERP system - SAP was also deployed on the NANO project
and the Company's subsidiary TML Distribution Company Limited. The NANO
website has been launched which facilitates online booking along with
exhibiting all other product details. Launch of a web based supplier portal
fulfills the business requirement of capturing potential supplier's
information, communication platform for suppliers and news about supply
chain.

The Company made significant developments in the Customer Relationship
Management and Dealer Management Systems area. The Company has instituted
an online Dealer Management System for the channel partners that has helped
the dealerships keep a step ahead of the increasing challenges of the
automotive industry. It is supplemented with a robust analytical tool to
help the dealerships and Tata Motors take decisions. The Company today has
multiple touch points for the customer, including portals and a call center
to voice their inquiries and concerns. The Company is leveraging its
connected dealer network for communication and training.

12. OTHER TECHNOLOGY INITIATIVES:

The Company has continued its endeavor to absorb the best of available
technologies for its product range to meet the requirements of globally
competitive markets. All of the Company's vehicles and engines are
compliant with the prevalent regulatory norms in India and in other
countries to which the vehicles are exported. The Company has also
undertaken programs for development of vehicles which would run on
alternate fuels like LPG, CNG, Bio-Diesel, Electric traction etc. The
Company, in its constant endeavor to upgrade and improve the product
development methods and processes and has acquired capabilities in the area
of digital product development such as Modeling of Airbag systems,
Introduction of new working methods (Concurrent Engineering with Digital
Mockup, Digital Manufacturing along with the NPI process) Knowledge Based
Engineering tools to capture and enhance knowledge and incorporate design
rules to improve productivity, quality and efficiency in design process.

During the year, the Company has filed 195 Patent applications, 29 Design
applications and 90 Copyright applications. 6 Patents were granted, 73
Designs and 3 copyrights were registered to the Company for applications
filed in earlier years.

13. CONSOLIDATED FINANCIALS:

In accordance with the Statement of Accounting Standard on Consolidated
Financial Statements (AS 21) and the Accounting Standard on Accounting for
Investments in Associates (AS 23) and Accounting Standard on Accounting for
Joint Ventures (AS 27), issued by the Institute of Chartered Accountants of
India (ICAI), the subsidiary companies, associate companies and joint
venture have been considered in the Consolidated Financial Statements of
the Company. As may be seen from the consolidated statements, the
consolidated gross revenues was Rs. 74,151.21 crores. The consolidated
financial performance of the Company is not comparable to 2007-08 on
account of the acquisition of Jaguar and Land Rover business in June 2008.
In 2007-08, the consolidated gross revenue was Rs. 40,340.79 crores. The
consolidated revenues (net of excise) in 2008-09 amounted to Rs. 70,938.85
crores (2007-08: Rs. 35,660.07 crores). On a consolidated basis, the
Company reported a Loss after Tax, after adjustment for share of minority
interest and profit/(loss) in respect of associate companies in 2008-09 of
Rs. 2,505.25 crores; in 2007-08, the Company had reported a Profit after
Tax, after adjustment for share of minority interest and profit/(loss) in
respect of associate companies of Rs. 2,167.70 crores.

SUBSIDIARY AND ASSOCIATE COMPANIES:

a. Subsidiary Companies:

At the beginning of the year, the Company had 30 Subsidiary companies.
During the year the following changes have taken place:-

Subsidiary Companies formed/acquired:-

* Telco Construction Equipment Co. Ltd. (TELCON), the Company's subsidiary
on April 2, 2008, completed the acquisition of Serviplem, S. A., Zaragoza,
Spain (Serviplem) by acquiring 79% of its share capital. Serviplem is in
the business of manufacturing Concrete Transit Mixers, Dry Bulk Tanks and
Pumps with the brand name 'Baryval'. With about 60% market share in Spain,
Serviplem is ranked among the top six manufacturers in the world. Baryval
Assistencia Tecnica S.L. is a 60% subsidiary of Serviplem S.A. engaged in
the business of assembling transit mixers on trucks. Inner Mongolia North
Baryval Engineering Special Vehicle Corporation Ltd (NBSV), a 56%
subsidiary of Serviplem, has a manufacturing base in Baotou, China.

* On April 9, 2008, TELCON completed the acquisition of Comoplesa Lebrero,
S.A., Zaragoza, Spain (Lebrero) by acquiring 60% of its share capital.
Lebrero with whom TELCON was associated since 2002, as its technology
partners, is in the business of manufacturing Compactors and Tandem
Rollers. Eurl Lebrero France is a 100% subsidiary of Comoplesa Lebrero S.A(
Lebrero) and is functioning as a trading office of Compactors manufactured
by Lebrero.

* During the year, the Company acquired Jaguar Land Rover Limited (JLR). As
on March 31, 2009, JLR had 34 subsidiary companies.

* Tata Motors European Technical Centre Plc, the Company's wholly owned
subsidiary in the U.K. acquired a 71.69% shareholding in Miljobil Grenland,
A S, a Norwegian company specialising in the development and manufacture of
electric vehicles. Electric vehicles form a significant part of the ongoing
strategy for the company. Miljo Innovasjon A S a wholly owned subsidiary of
Miljobil Grenland, A S specializes in the development and manufacture of
lithium ion batteries. This investment was made in order to secure a route
to market for batteries for electric vehicles and enables the Company to
develop convenient and sustainable solutions for electric and hybrid
vehicles.

Subsidiary Companies merged:

* Tata Technologies iKS was merged with INCAT Systems INC.

Name changed:-

* Tata Motors Insurance Broking & Advisory Services Ltd from Tata Motors
Insurance Services Ltd.

* Tata Technologies (Thailand) Ltd. from INCAT (Thailand) Ltd.

* Tata Technologies Europe Ltd. from INCAT Ltd.

Consequently, the Company has 70 subsidiary companies as on March 31, 2009.

Other than the above there has been no material change in the nature of the
business of the subsidiary Companies. The main financial parameters of the
Subsidiary Companies for FY 2008-09 are provided under 'Subsidiary
Companies: Financial Highlights - 2008-09' on page nos. 50 & 51 of the
Annual Report.

As required under the Listing agreement with the Stock Exchanges, the
Company is mandatorily required to prepare the Consolidated Financial
Statements, according to the applicable Indian Accounting Standards and
reflects the financial position of all the subsidiary Companies of the
Company.

On an application made by the Company under Section 212(8) of the Companies
Act, 1956, the Central Government exempted the Company from attaching a
copy of the Balance Sheet and the Profit and Loss Account of the subsidiary
companies and other documents to be attached under Section 212(1) of the
Act to the Annual Report of the Company. Accordingly, the said documents
are not being attached with the Balance Sheet of the Company. A gist of the
financial performance of the subsidiary companies is contained in the
report. The Annual Accounts of the subsidiary companies are open for
inspection by any member/investor and the Company will make available these
documents/details upon request by any Investor of the Company or its
subsidiary companies who may be interested in obtaining the same. Further,
the annual accounts of the subsidiary companies will also be kept for
inspection by any investor at its Registered Office of the Company and at
the Head Offices of the subsidiary company concerned.

b. Associate Companies:

As on March 31, 2009, the Company had the following associate companies:

Tata Cummins Limited (TCL), in which the Company has a 50% shareholding,
with Cummins Engine Co. Inc., USA holding the balance. TCL is engaged in
the manufacture and sale of high horse power engines used in the Company's
range of M & HCVs.

Tata AutoComp Systems Limited (TACO) is a holding company for promoting
domestic and foreign Joint Ventures in auto components and systems and is
also engaged in engineering services, supply chain management and after
market operations for the auto industry. The Company's shareholding in TACO
is 26%.

Tata Precision Industries Pte. Ltd., Singapore, in which the Company has a
49.99% shareholding is engaged in the manufacture and sale of high
precision tooling and equipment for the computer and electronics industry.

Nita Co. Ltd., Bangladesh, in which the Company holds 40% equity, is
engaged in the assembly of TATA vehicles for the Bangladesh market.

Hispano Carrocera S.A. (HC), a well-known Spanish bus manufacturing
company, in which the Company had acquired a 21% stake in March 2005 was
another major step in the Company's plans for globalization. Hispano has
two manufacturing units, one in Spain which caters to the European market
and the other one in Casablanca through its subsidiary, Carrosseries
Hispano Maghreb, Morocco which caters to the Moroccan and other North
African markets. HC is present in both the 'city bus' and 'coach market'
segment in both the geographies.

Fiat India Automobiles Limited, a 50: 50 joint venture company between Tata
Motors Limited and Fiat Company located in Ranjangaon, Maharashtra is
engaged in the manufacture of Tata and Fiat branded products as well as
engines and transmissions for use by both the partners.

Automobile Corporation of Goa Ltd. (ACGL), a Company in which Tata Motors
Limited has a 42.37% shareholding, was incorporated in 1980, jointly with
EDC Limited (a Goa government enterprise). ACGL is a listed company engaged
in manufacturing sheet metal components, assemblies and bus coaches and is
the largest supplier of buses (mainly for exports) to the Company.

14. FIXED DEPOSITS:

In December 2008 the Company launched a public fixed deposit scheme to meet
a part of the funding requirements of the Company. The scheme has received
an overwhelming response and the management of the Company is thankful to
all the investors for participating in the scheme and the faith reposed in
the Company. The aggregate amount collected under fixed deposit scheme as
on March 31, 2009 was Rs.1,232.47 crores from 1,44,000 depositors. The
Company has no overdue deposits other than unclaimed deposits.

15. ENERGY, TECHNOLOGY & FOREIGN EXCHANGE:

Details of energy conservation and research and development activities
undertaken by the Company along with the information in accordance with the
provisions of Section 217(1)(e) of the Companies Act, 1956, read with the
Companies (Disclosure of Particulars in the Report of Board of Directors)
Rules, 1988, are given as an Annexure to the Directors' Report.

16. DIRECTORS:

Mr. V.R. Mehta, who had been on the Board of the Company since 1998 as an
Institutional Nominee of Unit Trust of India and was appointed in his
individual capacity in 2005, retired from the Board of Directors w.e.f.
January 30, 2009 upon completion of the age of 75 years, as per the 'Policy
for Retirement Age of Non-Executive Directors' adopted by the Company. Mr
Mehta was on the Board for more than 10 years and was the Chairman of the
Audit Committee and Member of the Remuneration Committee. Mr Mehta had by
his counsel and guidance significantly contributed to deliberation at the
Board and Committee meetings. The Directors place on record their
appreciation of the contributions made by Mr Mehta during his tenure as
Director of the Company.

M/s. S. Bhargava, N. Munjee and V.K. Jairath were appointed as Additional
Directors, with effect from July 25, 2008, July 25, 2008 and March 31, 2009
respectively, in accordance with Article 132 of the Articles of Association
of the Company and Section 260 of the Companies Act, 1956. M/s Bhargava,
Munjee and Jairath in their capacity as Additional Directors, will cease to
hold office at the forthcoming Annual General Meeting and are eligible for
appointment. Notices under Section 257 of the Act have been received from a
Member signifying his intention to propose their appointment as Directors.

Mr. Ravi Kant superannuated on June 1, 2009 as per the Company's Retirement
Policy and the terms of his appointment. Taking into consideration the
contribution made by Mr Kant during his tenure and the critical phase
through which the Company was passing, the Board decided to continue
availing the benefit of Mr Kant's counsel and have appointed him as the
Non-Executive Vice-Chairman on the Board of Directors of the Company with
effect from June 2, 2009. As an Additional Director, Mr Kant holds office
up to the date of the forthcoming Annual General Meeting of the Company and
is eligible for appointment. Notice under Section 257 of the Act has been
received from a Member signifying his intention to propose his appointment
as a Director.

Mr. P.M. Telang, Executive Director (Commercial Vehicles Business Unit) was
appointed as the Managing Director - India Operations with effect from June
2, 2009. An abstract and memorandum of interest Under Section 302 of the
Companies Act, 1956 has been sent to the members of the Company.

In accordance with the provisions of the Companies Act, 1956 and the
Articles of Association of the Company, M/s. N.N. Wadia and S.M. Palia are
liable to retire by rotation and are eligible for re-appointment.

Attention of the Members is invited to the relevant items in the Notice of
the Annual General Meeting and the Explanatory Statement thereto.

17. CORPORATE GOVERNANCE:

A separate section on Corporate Governance forming part of the Directors'
Report and the certificate from the Company's auditors confirming
compliance of Corporate Governance norms as stipulated in Clause 49 of the

Listing Agreement with the Indian Stock Exchanges is included in the Annual
Report.

18. PARTICULARS OF EMPLOYEES:

Information in accordance with sub-section (2A) of Section 217 of the
Companies Act, 1956, read with the Companies (Particulars of Employees)
Rules, 1975.

19. AUDIT:

M/s Deloitte Haskins & Sells (DHS), who are the Statutory Auditors of the
Company hold office until the conclusion of the ensuing Annual General
Meeting. It is proposed to re-appoint them to examine and audit the
accounts of the Company for the Financial Year 2009-10. DHS have, under
Section 224(1) of the Companies Act, 1956, furnished a certificate of their
eligibility for re-appointment.

Cost Audit:

As per the requirement of the Central Government and pursuant to Section
233B of the Companies Act, 1956, the Company carries out an audit of cost
accounts relating to motor vehicles every year. Subject to the approval of
the Central Government, the Company has appointed M/s Mani & Co. to audit
the cost accounts relating to motor vehicles for the Financial Year 2009-
10.

20. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors,
based on the representation received from the Operating Management, confirm
that:-

* in the preparation of the annual accounts, the applicable accounting
standards have been followed and that there are no material departures;

* they have, in the selection of the accounting policies, consulted the
Statutory Auditors and have applied them consistently and made judgments
and estimates that are reasonable and prudent so as to give a true and fair
view of the state of affairs of the Company at the end of the financial
year and of the profit of the Company for that period;

* they have taken proper and sufficient care, to the best of their
knowledge and ability, for the maintenance of adequate accounting records
in accordance with the provisions of the Companies Act, 1956, for
safeguarding the assets of the Company and for preventing and detecting
fraud and other irregularities;

* they have prepared the annual accounts on a going concern basis.

21. ACKNOWLEDGEMENTS:

The Directors wish to convey their appreciation to all of the Company's
employees for their enormous personal efforts as well as their collective
contribution to the Company's performance. The Directors would also like to
thank the employee unions, shareholders, fixed deposit holders, customers,
dealers, suppliers, bankers, government and all the other business
associates for the continuous support given by them to the Company and
their confidence in its management.

On behalf of the Board of Directors

RATAN N. TATA
Chairman
Place : Mumbai,
Date : June 26, 2009

ANNEXURE TO THE DIRECTORS' REPORT:

(Additional information given in terms of Notification 1029 of 31-12-1988
issued by the Department of Company Affairs):

A. Conservation of Energy:

The Company has always been conscious of the need for conservation of
energy and has been steadily making progress towards this end. Energy
conservation measures have been implemented at all the plants and offices
of the Company and special efforts are being put on undertaking specific
energy conservation projects like Installation of Variable Frequency
Drives, Energy Efficient Motors, Energy Efficient Blowers & Pumps, LED &
CFL lamps, Wind Ventilators, Compressor Cooling water system improvement,
Polycarbonate transparent sheets, downsizing of motors, commissioning of
Medium Frequency induction Furnace, Wind Solar Hybrid System, Solar water
Heating System, switching off of street lights and High Mast Lights in
select areas etc. These changes have resulted in cost savings for the
Company aggregating around Rs.18.74 crores. The Company's Jamshedpur plant
was awarded a Trophy and Certificate for outstanding performance by CII -
ER Energy Conservation (ENCON) Award 2008 contest. The Company's Pune plant
won the CII - national Award for 'Excellence in Energy Management - 2008'
and has been declared an Excellent Energy Efficient Unit. The Company's
endeavour for tapping wind energy has also made significant contributions.
Total energy produced by wind power for this year was 583.8 lakh units and
this resulted in savings in electricity charges of Rs.18.1 crores.

B. Technology Absorption:

The Company has continued its endeavor to absorb the best of technologies
for its product range to meet the requirements of a globally competitive
market. All of the Company's vehicles and engines are compliant with the
prevalent regulatory norms in India and also in the countries to which they
are exported. The Company has also undertaken programs for development of
vehicles which would run on alternate fuels like LPG, CNG, Bio-diesel,
Electric traction etc.

Major Technology absorption projects undertaken during the last year
include:

Technology For Technology Provider Status

Vehicle Electrical and INTEDIS, Germany Completed
Electronic Architecture
Development methodology

Vehicle Mechatronics IDIADA-NSI, Spain Completed
Reliability Validation
process.

Door system integration IDIADA-NSI, Spain In Progress
and development of master
body side Body and trim
design on mini truck LG-Vens, Korea In Progress

Styling Development of Trilix, Italy In Progress
exteriors and interiors
of new goods and people
carrier

Trim design and NESC, Korea In Progress
development of new LCV

In keeping with the requirement of technological upgradation of its engines
development facility, the Company has added facilities such as
220KWTransient Dynamometer with state-of-the-art CVS emission measurement
facility for particle number counting system, gravimetric particulate
measurement system, etc. The Company has also added to its facility a
variety of testing equipment such as high frequency testing machine for
Elastomers, Bi-Natural Head Acoustics measurement device, Surface
Microphones for wind noise measurement, Full vehicle environmental test
facility to simulate extreme climatic conditions for operation of vehicles
and rapid metal casting facility for non-ferrous prototype castings etc.
The Company has developed and is in the Implementation phase of the
following new technologies for Its passenger cars and commercial vehicles:
a) FATC system Econ mode for optimizing energy consumption on HVAC systems
b) In-vehicle navigation and infotainment system c) Rain light sensor for
automatic activation of windscreen wiper d) Rear air-conditioner blower
control system and e) Pantograph wiper system for Nano, etc. During the
year, the Company has filed 195 Patent applications, 29 design applications
and 90 copyright applications. 6 Patents, 73 design and 3 copyrights were
granted to the Company for applications filed earlier this year.

Technology For Imported From Year of Status
Import

Direct injection AVL GMBH Austria & 2004-05 Implemented
common rail E IV Delphi Diesel systems
engines for passenger France
vehicles

Design and Development Institute of 2004-05 Implemented
of passenger vehicles development in
Automotive
engineering S.p.A
Italy

Safety and NVH MIRA Ltd UK 2004-05 Implemented
Integration in
passenger vehicles

Design and Development Ricardo UK Ltd. 2006-07
of New Generation
engine

Design and Development AVL List GMBH 2007-08 Under
of New Generation Austria Delphi Implementation
engine for ICV/MCV Diesel systems
France

Design and Development Torotrack (Holding) 2007-08
of Infinitely variable Ltd. UK
transmission

Design and Development Wagon SAS France 2007-08
of flush sliding window
plug in window

During the year the Company spent Rs.1,476.61 crores on Research and
Development activities including expenditure on capital assets purchased
for Research and Development which was 5.75% of the turnover.

C. Foreign Exchange Earning and Outgoing: Rs. in crores

Earning in Foreign Exchange 2436.57

Expenditure in foreign currency
(including dividend remittance) 2957.53

MANAGEMENT DISCUSSION AND ANALYSIS:

1. Business Overview:

The automobile sector in India was severly impacted by the disruption in
the Indian and global business environment. GDP growth slowed down
considerably from 9% in FY 07-08 to 6.7% in FY 08-09. While the slowdown in
the Indian economy was less compared to other world economies, it did have
a severe impact on most sectors. Both turnover and profitability of the
automotive sector came under tremendous pressure. Double digit inflation
and high material cost in the first half of the year leading to higher
vehicle prices, higher fuel prices, unavailability of finance, higher cost
of financing and uncertainty in the overall economic conditions impacted
demand to a great extent. The slowdown in the economy resulted in a drop in
industrial production, which reached new lows in the second half of the
year. All these factors eroded the bottomline of the companies in the
automotive sector.

Both the commercial and passenger domestic vehicles industry came under
tremendous pressure as a result of these market conditions. The commercial
vehicle industry which had already started showing signs of slowing down
last year, declined by 17.4% compared to the 7.6% growth in FY 07-08. The
passenger vehicle industry, which had showed a growth of 11.3% in the
previous fiscal went into negative zone with a decline of 0.5%. Supported
by stimulus measures undertaken by the government and the RBI, demand
showed some signs of revival towards the end of the year.

In such trying times, the Company's sales of 506,421 vehicles were 13.5%
lower than last year volumes. Even though domestic commercial vehicles
volumes declined by 15.2%, the Company consolidated its leadership position
in the domestic market by introducing new products to complement its
existing product portfolio. The passenger vehicles volumes declined by 4.8%
in the domestic market, primarily due to the phasing in of the new Indica
Vista in the second half of the year and sluggishness of the UV segment.
The Company's exports declined by 38.6% during the year, due to the
meltdown in major international markets and the consequent swings in
foreign exchange rates.

The industry performance in the domestic market during FY08-09 and the
Company's share is given below:-

Category Industry Sales (Nos.)

2008-09 2007-08 Growth

Commercial Vehicles * 415,652 503,218 -17.4%
Passenger Vehicles # 1,525,313 1,533,268 -0.5%
Total 1,940,965 2,036,486 -4.7%

Category Company Sales (Nos.)

2008-09 2007-08 Growth

Commercial Vehicles * 265,373 312,935 -15.2%
Passenger Vehicles # 207,512 218,055 -4.8%
Total 472,885 530,990 -10.9%

Category Company Market Share (%)

2008-09 2007-08

Commercial Vehicles * 63.8 62.2
Passenger Vehicles # 13.6 14.2
Total 24.4 26.1

Source: Society of Indian Automobile Manufacturers report and Company
Analysis.

* including Magic and Winger sales # including Fiat branded cars.

The Company tried to mitigate the impact on margins by cost reduction
measures and tight control on working capital. The focus on new product
development remained and the Company introduced various new products in the
marketplace.

2. Industry Structure and Developments:

a. Commercial Vehicles:

The domestic commercial vehicle industry witnessed a decline of 17.4%
compared to the over 7.6% growth achieved in the last fiscal. Industry
volumes were impacted by the steep increase in consumer interest rates and
vehicle prices, unavailability of finance for majority of the segments and
a considerable decline in industrial activity compared to the last year.

The domestic industry performance during FY 2008-09 and the Company's share
is tabulated below:-

Domestic Industry Sales (Nos.)

Category 2008-09 2007-08 Growth

LCV* 232,090 229,425 1.2%
M&HCV 183,562 273,793 -33.0%
Total CV 415,652 503,218 -17.4%

Domestic Company Sales (Nos.)

Category 2008-09 2007-08 Growth

LCV* 151,676 147,316 3.0%
M&HCV 113,697 165,619 -31.4%
Total CV 265,373 312,935 -15.2%

Domestic Company Market Share (%)

Category 2008-09 2007-08

LCV* 65.4 64.4
M&HCV 61.9 60.4
Total CV 63.8 62.2

Source: Society of Indian Automobile Manufacturers report and Company
Analysis * including Magic & Winger sales

The Company's commercial vehicle sales in the domestic and international
markets, at 291,993 vehicles, were 17.2% lower than the previous year. The
Company reported domestic sales of 265,373 vehicles, which was a decline of
15.2% over the previous year. A strong product portfolio, coupled with the
support from the Company's financing arm Tata Motors Finance, helped the
Company in gaining considerable market share in the last year, in most
product segments. Exports came under tremendous pressure as a result of the
meltdown in most international markets, and declined by 33.2%. In the
domestic market, the M&HCV segment contracted drastically during the year,
and shrunk to almost two-thirds of its size last year. Despite the
adversities, the Company continued to strengthen its product portfolio in
this segment by introducing multi-axle and heavy duty trucks, tippers and
tip trailers to its existing offerings. The Company also strengthened its
M&HCV passenger range by launching its Super Milo range of buses with
superior operating economics, and the Hi Deck Coaches in association with
Hispano- our Spanish associate Company. The Company's market share in the M
& HCV category improved from 60.4% to 61.9%.

The LCV segment also faced pressure as a result of the slowdown and the
unavailability of finance for a large part of the year. However, the strong
performance of the products introduced by the Company in the previous
years- Ace, Magic and Winger, helped to register 2.7% growth in volumes, as
well as an increase in market share from 64.4% to 65.4% during the year.
The Company launched Winger Ambulance, and broke the long standing monopoly
of the incumbent in this segment.

During the year, the bus manufacturing facility of Tata Marcopolo Motors
Limited at Dharwad began commercial production. Going forward, this plant
will cater to India's growing need for world class fully built buses for
intra-city and inter-city transportation with comfort, quality and safety
of international standard. The manufacturing prowess of the joint venture
was proven in the execution of the 650 buses order it had received from DTC
in 2007. Based upon the performance of these vehicles, the Company received
another order of 1625 buses to be supplied to DTC in a phased manner over
the next financial year.

b. Passenger Vehicles:

The falling growth rate of the industry for the last two years slipped into
negative territory marginally this year. The tightening liquidity and the
drastic increase in interest rates, coupled with high fuel prices for a
major part of the year suppressed demand to a considerable extent. The
overall slowdown in the economy also accentuated the negative sentiments
with the consumers. Despite the new launches and heavy promotion spends by
players in the industry, the industry declined by 0.5% during the year.

The Industry performance and the Company's performance in the segments that
it operates in, is tabulated below:-

Domestic Industry Sales (Nos.)

Category 2008-09 2007-08 Growth

Small car (Mini + Compact) 936,500 929,650 0.7%
Midsize Car 245,015 223,034 9.9%
Utility Vehicle/SUV 223,238 238,705 -6.5%
Total Passenger Vehicles# 1,525,313 1,533,268 -0.5%

Domestic Company Sales (Nos.)*

Category 2008-09 2007-08 Growth

Small car (Mini + Compact) 115,160 138,916 -17.1%
Midsize Car 53,057 31,439 68.8%
Utility Vehicle/SUV 39,295 47,700 -17.6%
Total Passenger Vehicles# 207,512 218,055 -4.8%

Domestic Company Market Share (%)*

Category 2008-09 2007-08

Small car (Mini + Compact) 12.3 14.9
Midsize Car 21.7 14.1
Utility Vehicle/SUV 17.6 20.0
Total Passenger Vehicles# 13.6 14.2

Source: Society of Indian Automobile Manufacturers report and Company
Analysis # including all segments * including Fiat branded cars

In a challenging year for the industry, the Company recorded sales of
207,512 vehicles (including Fiat cars) in the domestic and overseas
markets. The Company continued to be amongst the top three players in the
Indian passenger vehicle market with a market share of 13.1% (only Tata
cars). The Company share has been rising since the launch of the Indica
Vista in August 2008, exiting in March 2009 with a market share of 14.5%.

The small car segment which contributes to over 60% of the market and has
been the major driver of growth in the Indian market in the recent past it
witnessed a marginal growth of 0.7% during the year despite new launches.
Volumes of Indica, at 111,254 declined by 18% due to the phasing out of the
old Indica in the first half and the introduction of the second generation
Indica Vista in the second half. Despite this, it remained amongst the top
3 selling cars in the country.

The Company launched a Limited Edition of the Indica Vista on December 30,
2008 in order to commemorate 10 years since the launch of the Indica,
during which close to 940,000 Indicas and a total of nearly 1.2 million
cars have been produced from the platform. Besides this, the Company
launched an LPG version of the Indica V2 Xeta. Indica's market share at
11.9% was augmented by Fiat Palio and Fiat 500's share of 0.4% in the
segment. Indica's share climbed up post the new Vista launch with a March
exit share of 13.9%. The Fiat 500 was launched in the market as a CBU and
has done well to shore up the brand image of Fiat prior to the launch of
its locally manufactured new products. The segment is set to see the
inclusion of 6 more models to its current strength of 19, most of them
towards the premium end.

The entry mid size segment witnessed new product launches and grew by 54.6%
during the year. The Indigo CS launched towards the end of last year,
received an encouraging response from the market and helped the Company
increase its volumes in the entry mid- size segment by 56.6%. The Company
increased its market share to 32.8% in the year.

The Company entered the upper mid size segment through the distribution of
the Fiat Linea in January 2009, being new product from its joint venture
with Fiat. The product received a good response from the market and became
the second highest seller in the segment in the three months of launch in
the fiscal. Between the Fiat 500, Palio and the Linea, the Company enabled
Fiat to acquire a position amongst the top ten car companies in the
country.

The Utility Vehicle market went through difficult times due to the hike in
fuel prices and the additional excise duty imposed by the Government on
vehicles with higher engine displacements, in the first half of the year.
Despite a number of new product launches, the segment declined by 6.5% this
year. The Company's sales declined by 17.6% and ended the year with a
market share of 17.6%, although it regained its No. 2 position in the
segment this year, compared to the previous year. The Company launched the
Xenon XT - a lifestyle pick up vehicle in its effort to develop a new
segment.

The much awaited 'Tata Nano' was launched in March 2009. There was an
overwhelming response with over 2.03 lakhs fully paid bookings received by
the company.

3. Financial Performance as a measure of Operational Performance:

In view of the slump in the domestic and international markets, the
Company's profit after tax decreased to Rs. 1,001.26 crores from Rs.
2,028.92 crores in the previous year, the margins were under pressure
mainly due to the rising input costs, lower volume growth and high interest
cost. The following table sets forth the breakup of the Company's expenses
as part of the net revenue.

Percentage of Turnover

2008-09 2007-08

Turnover net of excise duty 100 100

Expenditure:

Material (including change in stock and
processing charges) 75.5 73.3

Employee Cost 6.0 5.4

Manufacturing and other expenses (net) 11.6 11.1

Total Expenditure 93.1 89.8

Other Income 3.6 1.7

Profit before Exceptional Item,
Depreciation, Interest and Tax 10.5 11.9

Depreciation (including product
development expenditure) 3.6 2.5

Interest and Discounting Charges (Net) 2.6 1.0

Notional Exchange (Loss)/Gain (Net) on
revaluation of foreign currency borrowings,
deposits and loans given (0.3) 0.6

Profit before Tax 4.0 9.0

Turnover, net of excise duties reduced by 10.7% to Rs. 25,660.79 crores
from Rs. 28,739.41 crores in FY 2007-08. The total number of vehicles sold
during the year decreased by 13.5% to 506,421 units from 585,649 units in
FY 2007-08. The domestic volumes reduced by 10.9% to 472,885 units from
530,990 units in FY 2007-08, while export volumes reduced by 38.6% to
33,536 units in FY 2008-09 from 54,659 units in FY 2007-08.

Net Raw Material consumption inclusive of processing charges decreased by
8.0% to Rs.19,386.63 crores in FY 2008-09, from Rs.21,074.62 crores in FY
2007-08. Material Cost as a % of net turnover has increased to 75.5% from
73.3% for the last year. This was largely a result of increase in prices of
steel, aluminum, nickel, copper and natural rubber. However, the Company
managed to lower the impact through its on going cost reduction programme
with initiatives like global sourcing, vendor rationalization and value
engineering.

Employee Cost reduced increased marginally by 0.4% during the year to
Rs.1,551.39 crores from Rs.1,544.57 crores registered in the previous year
mainly inline with trends in industry and economy. The manpower increased
marginally to 23,638 from 23,230 with increases also in flexible manpower.

Manufacturing and Other Expenses reduced by 6.8% to Rs. 2,970.33 crores in
FY 2008-09 from Rs. 3,188.63 crores in FY 2007-08. These were 11.6% of net
turnover for the year as compared to 11.1% for the previous year, due to
higher sales and marketing expenses.

Profit before depreciation, exceptional item, interest and tax decreased by
21.6% to Rs. 2,678.41 crores from Rs.3,414.77 crores in FY 2007-08. The
margin decreased to 10.4% from 11.9% in FY 2007-08.

Depreciation (including product development expenditure) for 2008-09
increased by 29.2% to Rs. 925.71 crores from Rs. 716.66 crores in FY 2007-
08 on account of increase in fixed assets. It represents 3.6% of net
turnover as compared to 2.5% for FY 2007-08.

Net interest cost increased to Rs. 673.68 crores in FY 2008-09 from
Rs.282.37 crores in FY 2007-08. With the global crisis in the financial
markets the rates at which funds were available to the company had
drastically increased. The company required external funds to manage its
capital expenditure programme and also to manage working capital
requirements.

Profit Before Tax (PBT) of the Company reduced to Rs. 1,013.76 crores from
Rs. 2,576.47 crores in FY 2007-08.

Profit After Tax (PAT) decreased by 50.7% to Rs. 1,001.26 crores from
Rs.2,028.92 crores in FY 2007-08. This was mainly on account of decrease in
turnover, due to slump in domestic and international markets. Basic Earning
Per Share (EPS) decreased to Rs. 22.70 as compared to Rs. 52.64 last year
for Ordinary Shares. Basic EPS for A' Ordinary Shares is Rs. 23.20.

Balance Sheet size of the Company increased to Rs. 26,425.64 crores as at
March 2009 from Rs. 15,095.74 crores as at March 2009. This increase is
attributed to significant capital expenditure incurred by the Company on
new products and programmes and strategic investments. As on March 31,
2009, the Ordinary Share Capital of the Company stood at Rs. 449.83 crores
as compared to Rs. 385.50 crores as on March 31, 2008 and A' Ordinary
Share Capital of Rs. 64.18 crores, raised during the year by Rights Issue.

Gross debt (total of secured and unsecured loans) increased to Rs.13,165.56
crores as on March 31, 2009 as compared to Rs. 6,280.52 crores as on March
31, 2008 as a consequence of higher capital expenditure and strategic
investments.

Net debt (gross debt reduced by available cash and bank balances and in
mutual fund investments) stood at Rs. 12,486.66 crores as on March 31, 2009
as compared to Rs. 3,617.01 crores as on March 31, 2008.

Fixed Assets including Capital Work in Progress increased to Rs. 14,599.31
crores in FY 2008-09 from Rs.10,452.27 crores in FY 2007-08.

Investments increased to Rs. 12,968.13 crores in FY 2008-09 from
Rs.4,910.27 crores in FY 2007-08. During the year, the Company continued to
make additional long term and strategic investments. The Company invested a
total of Rs. 8,330 crores in equity and preference shares of TML Holding
(Pte) Ltd. Singapore which in turn acquired the business of Jaguar Land
Rover. The Company has also made further investments of Rs. 100 crores in
Tata Motors Finance Ltd., to further strengthen the vehicle financing
activity of the Company. An investment of Rs. 115 crores was made in TML
Distribution Company Ltd which would work towards further strengthening the
Distribution and Sales network of the Company. During the year an
additional investment of Rs.117.95 crores was made in Fiat India
Automobiles Ltd. The company also sold off its investments in Mutual Funds,
where surplus cash was parked last year, for meeting the requirements.

Net Current Assets decreased to Rs. (1,143.82) crores as at March 31, 2008
from Rs. (272.85) crores as at March 31, 2008. The Current assets, loans
and advances have decreased by Rs. 355.23 crores as compared as at March
31, 2008. The increase in Sundry debtors, due to higher year end sale The
Current liabilities and provisions have increased marginally by Rs. 202.41
crores. The cash generated from operations before working capital changes
and before considering the deployment in the vehicle financing business was
Rs. 1,556.70 crores as compared to Rs. 2,762.77 crores in the previous
year. After considering the impact of working capital changes and inflows
on account of securitisation of financing loan portfolio (net of
deployment), the net cash generated from operations was Rs. 1,295.02 crores
as compared to Rs. 6,179.47 crores in the previous year. The cash and bank
balances have reduced by Rs. 1,255.49 crores. As at March 31, 2008, the
Company had parked Rs. 1,122.40 crores for making investments in the year
2008-09.

4. Opportunities and Threats:

a. Opportunities:

Road development:

Continued improvement in road infrastructure in coming years is expected to
have a positive effect on automobile sales. The Golden Quadrilateral road
project was 98% complete as on March 31, 2009. The North South East West
(NSEW) road corridors are expected to be completed by December 2009. Rural
connectivity is expected to correspondingly improve which would expand
significantly the population/markets/supply sources participating in the
overall economic growth. Improvement in road infrastructure will facilitate
faster transportation of goods and passengers, and would in turn create
demand for safer, reliable and faster vehicles. The Company is poised to
benefit from the same, as it has a wide range of goods and passenger
transportation vehicles ranging from 0.75 Ton load carrier to large haulage
tractors (49T) for goods movement, buses and coaches for public
transportation and passenger cars and utility vehicles for personal
transportation.

Increase in income levels:

A growing middle income level population, rise in their average income
levels, moderation in income tax rates and the recently announced increase
in compensation for government employees, all augur well for the automotive
industry, both in terms of personal transportation requirements as well as
freight movement.

Growing consumer culture:

The demand for a better lifestyle has enhanced consumption levels and rapid
growth in several areas like retail chains, cellular phones and cable and
satellite television. The Company, with its wide portfolio is expected to
benefit from improvement in lifestyle and higher aspiration levels in
passenger cars and potential growth in freight movement. This growing
consumerism is expected to lead to an increase in car penetration from the
current levels of 8 per thousand towards the 500+ levels witnessed in the
developing countries.

Large two wheeler market:

India has a 65 million two wheeler population and an annual sale of over
7.4 million two wheelers. The Company believes that the gap between two
wheeler prices and the current entry level car prices offer a huge
opportunity for an affordable, safe and comfortable small car with
appealing design and features. It is hoped that the TATA Nano would address
this huge potential in demand.

International Business:

India continues to be a cost effective source for the automotive industry
globally, both for vehicles and components. India's manufacturing base will
benefit from these scale economies and technology/quality improvements. The
Company has opportunities to increase its exports significantly,
particularly with the new and contemporary product offerings in commercial
vehicles and passenger cars. The Company is also setting up/exploring
manufacturing footprint overseas that would combine these advantages with
local operations and sourcing in these markets.

b. Threats:

Credit unavailability:

Tightening of liquidity position and reduction in exposure to vehicle
financing by banks/NBFCs, would have an adverse impact on the automotive
industry. This was evident last year when the credit crunch was felt not
just by the consumers, but the companies as well. Though the captive
vehicle financing has been strengthened by the Company, it would be a
challenge for the Company to fully offset the decrease in credit
availability from outside sources.

Hardening of interest rates and other inflationary trends:

Hardening of consumer interest rates could have an adverse impact on the
automotive industry. Increase in inflation could also have a negative
impact on automobile sales in the domestic market.

Fuel prices:

Increase in fuel prices has an adverse impact on automobile demand as
consumers think of alternative solutions and postpone purchases, as was
seen last year when oil prices reached a peak of US$ 145 per barrel.

Input costs:

Prices of commodity items like steel, non-ferrous and precious metals and
rubber witnessed unprecedented increases in short period last year, which
could only be partially offset by the Company's cost reduction initiatives.
Whilst the Company continues to pursue cost reduction initiatives, increase
in price of input materials, could have a negative impact on the demand in
the domestic market and/or could severely impact the Company's
profitability to the extent that these cost escalations are not absorbed by
the market through price realization.

Government regulations:

Stringent emission norms and safety regulations could bring new
complexities and cost increases for automotive industry, impacting the
Company's business. WTO, Free Trade Agreements and other similar policies
could make the market more competitive for local manufacturers.

Global competition:

India continues to be an attractive destination for the global automotive
players. The global automotive manufacturers present in India, have been
expanding their product portfolio and enhancing their production
capacities. To counter the threat of growing global competition, the
Company has planned to bridge the quality gap between its products and
foreign offerings, while maintaining its low cost product development /
sourcing advantage.

Growing consumer awareness:

Growing awareness amongst consumers is driving up expectations from
automobile companies in terms of providing world class features and
technology for which adequate price realization is not always possible.

Growth in Mass Transit systems:

The domestic passenger vehicle demand could be impacted by the growth of
road and rail based mass transit systems. However, the Company would
benefit from the road based mass transit system due to its wide range of
commercial passenger carriers.

5. Risks and concerns:

Interest rates and credit availability: Consumer interest rates witnessed
an upward movement in the second half of FY 08-09. Tightening of the
liquidity position, non-availability of vehicle finance and firming up of
interest rates would affect vehicle demand, which could impact the
Company's revenues and profits.

Exchange rates:

The Company's exports constitute 9.1% of the turnover and imports
constitute 5.8% of material consumption. Further, the Company has large
foreign currency borrowings in the form of foreign currency convertible
securities. Movements in exchange rates and volatility in the foreign
exchange markets could significantly impact profits.

Freight Rates:

Moderation in industrial activity, slowdown in freight movement and
increase in fuel price would adversely impact vehicle operators' margins to
the extent not recovered through increase in freight rates. This would have
an adverse impact on commercial vehicle demand.

Railways:

The renewed focus of Railways on cement, steel and container movement and
planned nationwide rail freight corridor connecting major cities could
impact the demand of commercial vehicles for goods transportation. However,
it is expected that with the growth in road infrastructure and increase in
vehicle penetration and with product offerings suitable for different
applications, road transport would continue to have a dominant role and
offer flexible, speedy and point-to-point service.

Cyclicality:

The commercial vehicle industry due to its strong linkages with the economy
would be impacted by slowdown in economic growth. The Company has
strengthened its less cyclical businesses like passenger carriers, small
and light trucks and passenger cars as well as its spare parts and other
service offerings to counter moderation in demand. The increasing trend of
offering price discounts in the market could also affect the Company's
margins.

Competition and Regulation in Overseas markets:

In the overseas markets, many of which have stricter norms of vehicle
regulations related to emission, safety, noise, technology, etc., the
Company competes with international players which have global brand image,
larger financial capability and multiple product platforms. These factors
may impact the demand of the Company's products in overseas markets.

Manufacturing:

The Company manufactures its products at multiple locations and its
operations could be affected by disruption in its supply chain due to any
natural calamities and work stoppages at its suppliers' end due to load
shedding, labour problems, etc.

New Competition:

Intensity of competition has increased in almost all the segments of the
Indian automotive market due to entry of new players and expansion plans of
existing ones. The Company is aware of the increasing competition and is
taking measures to remain competitive in the market place.

New projects:

The Company is undertaking a variety of new projects ranging from the
launch of a small car to the development of a new truck model. These
projects are in various stages of execution. Though the Company employs
sophisticated techniques and processes to forecast the demand of new
products, yet the same is subject to margin of error. Timely introduction
of new products, their acceptability in the market place and managing
complexity of operations across various manufacturing locations would be
the key to sustain competitiveness.

6. Outlook:

FY 2008-09 was an extraordinary year for economies across the world. The
financial turmoil of the western world had far reaching implications on the
business environment. While the impact on developing economies like India
was less severe, the GDP growth slowed down to 6.7% compared with the 9%
growth achieved last year.

While the trend in the last quarter of the year indicates that things might
be improving, the situation would continue to remain tough for sometime.
Interest rates have relatively declined, liquidity has improved and
customer confidence seems to be slowly improving. This would positively
impact the market for passenger vehicles and the small commercial vehicles
to some extent. However, the market for heavy commercial vehicles is
expected to remain sluggish for sometime before the economy starts to show
revival.

In this scenario, the Company will continue to focus on introducing new
products in the market to target new customer segments. The Company will
further strengthen the in-house vehicle financing arm to make up for the
lack of finance from external sources. The Company has also planned various
cost reduction measures, which in addition to the softening of raw material
prices will help the Company in improving the competitiveness of the
products in the marketplace.

7. Internal Control Systems and their adequacy:

The Company has in place adequate system of internal control. It has
documented 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, monitoring of operations,
protecting assets from unauthorized use or losses, compliances with
regulations and for ensuring reliability of financial reporting. The
Company has continued its efforts to align all its processes and controls
with global best practices in these areas as well.

Some significant features of the internal control systems are:

* Corporate policies on accounting and major processes;

* Well-defined processes for formulating and reviewing annual and long term
business plans;

* Preparation and monitoring of annual budgets for all operating and
service functions;

* State-of-the-art ERP, Supplier Relations Management and Customer
Relations Management, connect its different locations, dealers and vendors
for efficient and seamless information exchange;

* An on-going program for reinforcement of the Tata Code of Conduct. The
Code covers integrity of financial reporting, ethical conduct, regulatory
compliance, conflict of interests review and reporting of concerns. All
employees of the Company are regularly exposed to communications under this
program;

* Bi-monthly meeting of the management committee at apex level to review
operations and plans in key business areas;

* A well established multidisciplinary Internal Audit team, which reviews
and reports to management and the Audit Committee about the compliance with
internal controls and the efficiency and effectiveness of operations and
the key process risks;

* Audit Committee of the Board of Directors, comprising independent
directors, which is functional since August 1988, regularly reviews the
audit plans, significant audit findings, adequacy of internal controls,
compliance with Accounting Standards as well as reasons for changes in
accounting policies and practices, if any;

* A comprehensive information security policy and continuous upgrades to IT
system;

* Documenting major business processes and testing thereof including
financial closing, computer controls and entity level controls as part of
compliance with Sarbanes-Oxley Act;

* Anti-fraud programme.

During the year, the Internal Audit department initiated a Quality
Assurance and Improvement Program (QAIP) with the objective of appraising
the efficiency and effectiveness of the Internal Audit activity and rating
the Internal Audit activity's compliance with its Audit Charter and the
Institute of Internal Auditors' (IIA) International Standards for the
professional practice of Internal Auditing. As part of this program, A team
of external assessors constituted by IIA, USA visited the company and
engaged with the Audit Committee, members of Senior Management and the
Internal Audit staff. IIA conferred upon the company the Top Rating namely
'Generally Conforms', which indicates that the Internal Audit activity's
relevant structure, policies, procedures and processes conform with the
majority of the elements of the standards and the code of ethics.

The Board takes responsibility for the total process of risk management in
the organisation. The Audit Committee reviews reports covering operational,
financial and other business risk areas. Through an Enterprise Risk
Management programme, each Business Unit addresses opportunities and the
attendant risks through an institutionalized approach that is aligned to
the Company's objectives. This is also facilitated by internal audit. The
business risks is managed through cross functional involvement and intense
communication across businesses. Results of the risk assessment and
residual risks are presented to the senior management.

8. Material Developments in Human Resources/Industrial Relations:

A cordial industrial relations environment prevailed at all the
manufacturing units of the Company during the year. The Company entered
into a three year wage settlement with its Union at Lucknow through
amicable process of negotiations. The permanent employee's strength of the
Company as on March 31, 2009 was 23638.

9. Overview of the Consolidated Performance and Financial Results of the
Company:

The following table sets forth selected consolidated financial information
for the Company, including as a percentage of turnover net of excise duty,
for the years ended March 31, 2009 and 2008. For information we have given
the results of Jaguar Land Rover for the period June 1, 2008 to March 31,
2009.

For the year ended March 31,

2009 2008
(Rs. in (Rs. in
crores) % crores) %

Turnover net of
excise duty 70,938.85 100.0 35,660.07 100.0

Material (incl.
change in stock &
processing charges) 48,556.55 68.4 24,846.37 69.7

Employee cost 7,297.42 10.3 2,745.16 7.7

Manufacturing and
other expenses (net) 12,887.48 18.2 3,818.42 10.7

Total Expenditure 68,741.45 96.9 31,409.95 88.1

Other income 798.96 1.1 267.48 0.8

Profit before
Depreciation,
Interest,
Amortisation,
Exceptional item
and Tax 2,996.36 4.2 4,517.60 12.7

Depreciation (incl.
product development
expenditure) 2,854.52 4.0 848.02 2.4

Amortisation of
miscellaneous
expenditure in
subsidiaries 0.9 *0.0 0.96 *0.0

Profit before
Interest, Exceptional
item and Tax 140.94 0.2 3,668.62 10.3

Interest and
Discounting charges
(net) 1,930.90 2.7 743.06 2.1

Notional Exchange
(gain)/loss (net) on
revaluation of
foreign currency
borrowings, deposits
and loans given 339.29 0.5 (160.73) (0.5)

Profit before Tax (2,129.25) (3.0) 3,086.29 8.7

* Denotes less than 0.05%

Comments on the performance of major subsidiaries:

The consolidated financial results for fiscal year 2008-09 include Jaguar
and Land Rover business (JLR) acquired in June 2008. The consolidated
operations were significantly driven by JLR. Following is the brief
overview of the performance of major subsidiaries.

Jaguar and Land Rover Business:

Jaguar and Land Rover Business, acquired on June 2, 2008 comprised three
major manufacturing facilities in U.K., two advanced design and engineering
facilities, National Sales Companies in several regions across the World
and significant Intellectual Property Rights. In fiscal 2009, the global
financial crisis impacted the whole of the automotive industry. The effect
on the premium market has been particularly evident with industry volumes
falling between 25% and 30%. Nearly all the key participants in the luxury
segment witnessed a fall in volumes mainly due to the general lack of
consumer credit.

As compared to corresponding period of the previous year, during the period
June '08 to March '09, JLR volumes witnessed a decline of 32%. While Land
Rover fell by 39%, decline in Jaguar volumes were contained at 4% mainly
supported by the success of the new XF launched in January 2008.

JLR retail sales in North America declined by 37% mainly due to higher fuel
prices which affected demand for both new and used vehicles with larger
capacity engines. The resultant sharp reduction in residual values, coupled
with the reduced availability of credit, made leasing deals both more
expensive and less readily available. Jaguar retail volumes for the period
June 2008 to March 2009 were 10.9% down compared to the same period in the
previous year. Relatively better performance compared to the relevant
segment trends was largely due to the positive market reaction to the new
Jaguar XF. Land Rover retail volumes for the period June 2008 to March 2009
were down by 45% compared to the same period in the previous year.

In the United Kingdom and Europe (excluding Russia) sales were also driven
by favourable market reaction to the new Jaguar XF. Jaguar retail volumes
for the period June 2008 to March 2009 were flat and up 3% respectively
versus the same period in previous year. Land Rover retail volumes for this
period were down by 43% and 45% respectively, compared to the same period
in the year 2007-08.

Retail volumes had been particularly strong in Russia and China, where
volumes grew by 41% and 40% for Jaguar and 10% and -2% for Land Rover.
However demand in recent months in Russia has been weakening and future
trading conditions appear to remain challenging. Whilst the downturn has
slowed Land Rover's expansion plans, Land Rover maintains its position as
the number one premium brand in Russia, outselling BMW and Mercedes Benz.
In February 2009, JLR signed a memorandum of understanding to supply one of
its Chinese importers with 13,000 vehicles over three years. This is a
significant order, particularly welcome at this challenging time. The order
is for both Jaguar and Land Rover vehicles. China was the company's fifth
largest market last year when it sold 2,000 Jaguars and almost 11,000 Land
Rovers there. In response to the magnitude of the adverse market conditions
and the resulting deterioration in the company's position, JLR implemented
decisive actions to realign production with the lower levels of demand.

In addition, JLR has implemented significant cost reduction initiatives
across the business. Fixed marketing and selling costs have been reduced in
line with sales volumes and head count reductions implemented across all
functions of more than 2000. Despite the economic climate JLR has
successfully launched product upgrades over the past ten months.

Jaguar continued the theme of beautiful fast cars' established by the XK.
In January 2009 Jaguar revealed the upgraded XF and XK models, featuring
powertrain changes giving significantly improved performance and fuel
economy, a wider range of models and external styling and interior trim
enhancements. The XFR has quickly established itself as the benchmark
luxury sports saloon, drawing global praise for its engineering and dynamic
qualities, performance and capabilities - underlined by winning a number of
comparison tests against significant opposition, particularly from BMW and
Mercedes. The new 3.0 liter Diesel has also been acclaimed and is already
regarded as the standard against which all other diesel-powered cars are
being measured.

In May 2009, the Freelander 2 TD4_e, Land Rover's most fuel efficient to
date featuring a new intelligent Stop/Start system, went on sale giving up
to a 20% improvement in fuel economy in real world test. In April 2009,
Land Rover revealed the upgraded Range Rover, Range Rover Sport and
Discovery 4 models which feature a range of powertrain changes together
with exterior and interior modification. The new models are intended to go
on sale in the second half of 2009. Land Rover is pushing into emerging
markets, remains true to its core values (it has only ever produced
authentic and tremendously capable 4x4 vehicles) and is working very hard
to improve quality, fuel economy and emissions.

Land Rover, in conjunction with Jaguar, announced a Pound 800 million (over
five years) programme specifically aimed at reducing carbon dioxide
emissions, which is supported by an industry leading carbon offset
programme balancing emissions from the manufacture of all Land Rover
vehicles as well as the first 45,000 miles of customer vehicle use in the
UK and other countries. Key was the introduction of an intelligent
stopstart system, which will be fitted as standard to all diesel manual
Freelander 2s and effects a 7% improvement in CO2 emissions.

In early 2009, Jaguar joined the programme with all manufacturing generated
emissions from Castle Bromwich and Halewood being offset. Jaguar customers
are also provided with a mechanism for them to offset their vehicle usage.

Transition from Ford - JLR is currently in the process of establishing
operations in markets where we have previously operated as part of Ford
legal entities. This transition is progressing to plan with fifteen markets
successfully being transitioned since acquisition. All markets except
Singapore have now transitioned. Major markets transitioned to date include
USA, Canada, South Africa, France, Brazil and China.

Ford Credit provided dealer / customer financing support for the first 12
months following acquisition. JLR has now transitioned to financing
arrangements with FGA Capital (JV between Fiat Auto and Credit Agricole) in
UK / Europe and Chase Auto Finance in the US and local providers in certain
other key markets.

In addition JLR continues to work with Ford to separate its IT
infrastructure and support systems.

Tata Daewoo Commercial Vehicles (TDCV):

During FY 2008-09, Korean commercial vehicle industry declined by 31.7%
compared to FY 2007-08;

* Higher base effect which was a result of pre-purchases by the customers
prior to switch over from Euro III to Euro IV, effective January 1, 2008.

* Lack of sufficient funds for vehicle financing and higher interest rates
in the second half of the year due to global financial crisis.

Total sales of TDCV in FY 2008-09 stood at 9,137 units a decline of 23.2%
compared to 11,899 units in the corresponding period last year. However,
higher exports at 4,280 units in FY 2008-09 compared to 3,312 units in FY
2007-08 last year helped TDCV to partially offset the decline of sales in
the domestic market. Market share of TDCV in MHCV segment stood at 27.1% in
FY 2008-09, compared with 33.5% in FY 2007-08. The loss of market share was
mainly on account of vendor constraints.

Telco Construction Equipment Co. Ltd. (TELCON):

During the year, the Construction Equipment sector witnessed sharp downturn
especially after Sep08 due to credit squeeze and tight money market
situation. The customers were unable to source finance at reasonable rates
and coupled with uncertainty in the economy, demand saw a steep decline.
However, the company was able to withstand the pressure due to its product
range and established spares and service network. The company was able to
improve its sales mix through large excavator segment catering to the
mining industry which was still showing positive growth. Thus the company
was able to restrict its topline decline to 20%. This also enabled the
company to maintain its market share of its excavators and backhoe loaders
segments while improving on the wheel loader segment. During the year, the
company manufactured its first Indigenous 'Tata-Hitachi ZAXIS 75' and
'Tata-Hitachi ZAXIS 370' Hydraulic Excavators and TM06 Transit Mixer (6
cu.m) (a technology from the Spanish acquisition). Key investments in its
Kharagpur project was sustained in spite of slow down and commercial
production is planned in October 2009.

Tata Motors Finance Ltd. (TMFL):

Tata Motors undertakes its Vehicle Financing business through TMFL, TML
(Vehicle Financing) and Tata Capital under the brand Tata Motor Finance
(TMF). In line with the volume performance of Tata Motors, the volumes
financed by TMF in FY 2008-09 also witnessed a decline. Consequently,
combined disbursals for FY 2008-09 were Rs. 7,415 crores a decline of
22.92% from Rs 9,620 crore in FY 2007-08. In passenger car financing, FY
2008-09 market share stood at 29.0%, while market share in CV segment stood
at 35.8%. The book size at the end of March'09 for TMFL stood at Rs. 54
billion. NIM of vehicle financing business was ~ 4.6%. Financial
performance of TMFL was impacted by higher provisions for NPAs, which
continue to be more conservative than as per the norms of Reserve Bank of
India.

Tata Technologies Ltd (TTL):

During FY 2008-09, TTL doubled its Profit after Tax with sustained focus
highmargin business and streamlining of cost base with:

* Growth in share of offshore business
* High utilization of manpower
* Tight cost management

During the year, TTL won a multi-year multi-million dollar contract to
provide Engineering Design, PLM and IT support services from a major Global
Auto OEM. TTL is a top-3 solutions and software provider of leading
Engineering and PLM products in all major economic geographies. It expanded
presence in aerospace design and aero structures market with the help of
strategic group alliances and enhanced capability and won several projects
in the PLM consulting arena.

Comments on Financial Performance on a Consolidated basis:

a) The sales net of excise duty on a consolidated basis excluding JLR
sales, have recorded a negative growth of 11% during the current year
mainly due to a significant downturn in the automotive volumes and general
economic slowdown. ( A reference may be made to review of TML performance
discussed and subsidiary performance discussed above).

b) Profit before Interest, Exceptional items and Tax has declined from
Rs.3668.62 crores in 2007-08 to Rs. 140.94 crores in 2008-09. The
significant negative variation is mainly attributable to the following
major factors.

i) JLR business recorded a loss mainly due to lower volumes, higher selling
expenses and fixed costs/employee cost/depreciation which lower volumes
could not fully absorb.

ii) TML and other subsidiaries recorded a negative growth in volumes which
coupled with higher input costs lowered the operating profits.

c) The PBT has decreased from Rs 3086.29 crores in 2007-08 to Loss before
tax of Rs 2129.25 crores in the current year. In addition to factors
mentioned in (b), contributing factors are:

i) Increase in financing cost due to acquisition debt, increased working
capital requirements and capex for capacity and new product plan.

ii) The notional foreign exchange valuation loss (net) on borrowing /
deposits / loans given of Rs.339.29 crores in 2008-09 as compared to net
gain of Rs. 160.73 crores in 2007-08.

d) The Consolidated Capital Employed of the Company as on March 31, 2009
was at Rs. 37,254.79 crores as compared to Rs. 19,647.12 crores as on March
31, 2008. The increase of Rs 17,607.67 crores was mainly due to inclusion
of Jaguar and Land Rover Group in financial statements.

CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis describing the
Company's objectives, projections, estimates, expectations may be 'forward-
looking statements' within the meaning of applicable securities laws and
regulations. Actual results could differ materially from those expressed or
implied. Important factors that could make a difference to the Company's
operations include, among others, economic conditions affecting demand
/supply and price conditions in the domestic and overseas markets in which
the Company operates, changes in the Government regulations, tax laws and
other statutes and incidental factors.