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Financial performance on a consolidated basis

Tata Motors Group primarily operates in the automotive segment. The acquisition of Jaguar Land Rover enabled the Company to enter the premium car market in developed markets such as the UK, USA and Europe and in growing markets like China and Russia. The Company continues to focus on profitable growth opportunities in global automotive business, through new products and market expansion. The Company will also continue to focus on integration, and synergy through sharing of resources, platforms, facilities for product development and manufacturing, sourcing strategy, mutual sharing of best practices.

The business segments are (i) automotive operations and (ii) all other operations. The automotive operations include all activities relating to development, design, manufacture, assembly and sale of vehicles including financing thereof, as well as sale of related parts and accessories. The Company provides financing for vehicles sold by dealers in India. The vehicle financing is intended to drive sale of vehicles by providing financing to the dealers customers and as such is an integral part of automotive business. The automotive operations segment is further divided into Tata Motors and other brand vehicles (including spares and financing thereof) and Jaguar Land Rover. The other operations business segment includes information technology, machine tools and factory automation solutions and investment business.

The Revenue from operations net of excise duty on a consolidated basis, has recorded a growth of 35.6% in FY 2011-12 to 1,65,654.49 crores. The increase is mainly attributable to growth in automotive revenue both at Tata Motors and Jaguar Land Rover businesses. Automotive operations segment accounted for 98.8% and 99.3% of total revenues in FY 2011-12 and FY 2010-11, respectively. For FY 2011-12, revenue from automotive operations before inter-segment eliminations was 1,64,604.28 crores compared to 1,21,238.27 crores for FY 2010-11. (A reference may be made to review of performance of Tata Motors and Jaguar Land Rover business discussed above). The analysis of performance on consolidated basis is given below:-

 
  Percentage of Turnover
    FY 2011-12   FY 2010-11
Revenue from Operations net of excise duty   100.0   100.0
Expenditure:        
- Cost of material consumed
  (including change in stock)
  66.1   64.7
- Employee Cost   7.4   7.6
- Manufacturing and other expenses   17.2   17.8
- Amount Capitalised   (5.0)   (4.7)
Total Expenditure   85.7   85.4
Other Income   0.4   0.3
Profit before Exceptional Item,
Depreciation and amortisation,
Interest and Tax
  14.7   14.9
Depreciation and Amortization (including product development /engineering expenses written off)   4.2   4.6
Finance costs   1.8   2.0
Exceptional item - loss / (gain)   0.5   (0.2)
Profit before Tax   8.2   8.5
Cost of material consumed (including change in stock)
 
( in crores)
    FY 2011-12   FY 2010-11
Consumption of raw materials and components   100,797.44   70,453.73
Purchase of product for sale   11,205.86   10,390.84
Change in finished goods and Work-in-progress   (2,535.72)   (1,836.19)
Total   1,09,467.58   79,008.38
 

Cost of material consumed increased from 64.7% to 66.1% of net revenue. The increase is mainly attributable to product mix, increase input cost and import duties that are not fully absorbed through pricing.

Employee Cost is 12,298.45 crores in FY 2011-12 as compared to 9,342.67 crores in FY 2010-11, an increase by 2,955.78 crores in absolute terms. As a percentage of net revenue it reduced from 7.6% to 7.4% in the current year. The increase mainly relates to normal yearly increments, performance based payments, impact of wage revisions and partly due to increased volumes. Jaguar Land Rover increased the permanent and agency head count to support the volume increases.

Manufacturing and Other Expenses include works operation, indirect manufacturing expenses, freight cost, fixed marketing costs and other administrative costs. These expenses have increased to 28,453.97 crores from 21,703.09 crores in FY 2010-11. The breakup is given below-

 
( in crores)
    FY 2011-12   FY 2010-11
Processing charges   1,539.14   1,172.48
Consumption of stores and spare parts   1,217.24   1,189.24
Freight, transportation, port charges, etc.   3,734.55   2,436.93
Repairs to buildings   101.51   69.85
Repairs to plant, machinery, etc.   175.42   228.45
Power and fuel   1,017.19   851.60
Rent   128.84   104.72
Rates and taxes   259.15   193.56
Insurance   227.18   161.71
Publicity   5,389.40   4,089.95
Works operation and other expenses   14,538.55   11,065.55
Excise Duty on change in Stock-in-trade   116.80   139.05
Manufacturing and Other Expenses   28,453.97   21,703.09
 

The increases are mainly driven by volumes, size of operations and also include inflation impact. In terms of net revenue, these decreased from 17.8% to 17.2% in the current year. The publicity expenses have increased mainly on account of new product introductions both at Tata Motors and Jaguar Land Rover. The works operation and other expenses during the current year have come down to 8.8% from 9.1% of net revenue. The group continues to contain costs at all levels.

Amount capitalised represents expenditure transferred to capital and other accounts allocated out of employee cost and other expenses incurred in connection with product development projects and other capital items. This increased to 8,265.98 crores from 5,741.25 crores of FY 2010-11, mainly on account of various product development projects undertaken by the Company and Jaguar Land Rover.

Other Income increased to 661.77 crores from 429.46 crores in FY 2010-11 and mainly includes interest income of 487.64 crores (FY 2010-11 339.85 crores). The increase is attributable to attributable to return on surplus cash invested by Jaguar Land Rover.

Profit before Exceptional Item, Depreciation and amortisation, Interest and Tax has increased from 18,244.49 crores in FY 2010-11 to 24,362.24 crores in FY 2011-12 and represents 14.7% of net revenue for the current as compared to 14.9% for last year.

Depreciation and Amortization (including product development / engineering expenses written off): During FY 2011-12, expenditure increased by 24.1% to 7,014.61 crores from 5,653.06 crores in FY 2010-11. The increase in depreciation of 177.34 crores is on account of plant and equipment (mainly towards capacity and new products) installed in last year, the full effect of which is reflected in the current year. The amortization expenses have gone up from 1,483.71 crores in FY 2010-11 to 2,276.24 crores in FY 2011-12, attributable to new products introduced during the last year. The expenditure on product development / engineering cost has increased by 391.68 crores.

Finance cost increased by 25.0% to 2,982.22 crores from 2,385.27 crores of FY 2010-11. During the year Jaguar Land Rover raised GB£ 1,500 million with coupon rate ranging from 7.75% to 8.25% for different maturities.The increase in finance cost relates to recognition of amortised debt issue cost expensed upon prepayment of high debt cost.

Exceptional Items ( in crores)
    FY 2011-12   FY 2010-11   Change
Exchange loss / (gain) (net) including on revaluation of foreign currency borrowings, deposits and loans   654.11   (231.01)   885.12
Goodwill Impairment and other costs   177.43   -   177.43
Total   831.54   (231.01)   1,062.55
 

Due to steep depreciation of rupee against all major currencies, the exchange loss (net of capitalization / deferment) including on revaluation of Foreign Currency Borrowings, Deposits and Loans of <img src="images/rupee.gif" width="10" height="10">654.11 crores was recorded as compared to gain of 231.01 crores in FY 2010-11 (mainly at Tata Motors), resulting in a swing of 885.12 crores. Goodwill Impairment and other costs are in respect of subsidiary companies, triggered by continuous underperformance, mainly attributed by challenging market conditions in which the subsidiaries operate.

Consolidated Profit Before Tax (PBT) increased to 13,533.87 crores in FY 2011-12 compared to 10,437.17 crores in FY 2010-11, representing an increase of 3,096.70 crores, mainly attributable to a remarkable improvement in the performance of the Jaguar Land Rover business.

Tax expense represents a net credit of 40.04 crores in FY 2011-12 compared to net charge of 1,216.38 crores in FY 2010-11. During the year, Jaguar Land Rover accounted for credit of GB£ 225 million (1,793.66 crores) in respect of carried forward past tax losses, in view of certainty of utilising these against future profits. The tax expense (without considering the tax credit for losses) was lower due to tax benefits of R & D expenses at Tata Motors, which are eligible for weighted deduction and tax treatment of exchange loss. The tax expense is not comparable with the profit before tax, since it is consolidated on a line-by-line addition for each subsidiary company and no tax effect is recorded in respect of consolidation adjustments.

Consolidated Profit After Tax increased to 13,516.50 crores compared to 9,273.62 crores in FY 2010-11, after considering the profit from associate companies and share of minority.

Consolidated Balance Sheet

The assets and liabilities increased on account of foreign currency translation impact mainly in respect of Jagaur Land Rover.

Shareholders' fund was 33,149.93 crores and 19,171.47 crores as at March 31, 2012 and 2011, respectively.

Reserves increased from 18,533.76 crores as at March 31, 2011 to 32,515.18 crores as of March 31, 2012, increase mainly due to strong performance on a consolidated basis as explained above. The other major changes were translation reserves credit of 2,363.59 crores and pension reserves debit of 128.12 crores (net).

Borrowings:
( in crores)
    As at March 31, 2012   As at March 31, 2011
Long term borrowings   27,962.48   17,256.00
Short term borrowings   10,741.59   13,106.15
Current maturities of long term borrowings   8,444.89   2,448.40
Total   47,148.96   32,804.02
 

Long term borrowings including the current portion increased by 16,702.97 crores to 36,407.37 crores. During the year, Jaguar Land Rover issued GB£ 1,500 million (12,327.19 crores) equivalent Senior Notes. The Company has taken ECB loan of US$ 500 million (2,544.13 crores) and Tata Motors Finance Ltd has issued zero coupon debentures of 826.00 crores maturing by FY 2015-16.

The increase in current maturities of Long term borrowings is attributable to Convertible Alternative Reference Securities (CARS), which will be due for redemption on July 11, 2012 and fixed deposits.

Fixed deposits from public and shareholders (unsecured) decreased by 1,231.09 crores, whereas term loan from banks increased by 4,750.43 crores. Certain loans from banks availed by some of the subsidiary companies carry covenants restricting repayment of intra group loans and payment of dividend.

Other Long term liabilities were 2,458.58 crores as at March 31, 2012 as compared to 2,292.72 crores as at March 31, 2011, and include 1,577.28 crores premium on redemption of non convertible debentures as at March 31, 2012.

Trade payables were 36,686.32 crores as at March 31, 2012, as compared to 27,903.06 crores as at March 31, 2011. The increase is attributable to volumes. Reduction in acceptances is due to decrease in tenure from 89 days to 34 days by using our own funds for supplier payments. This has enabled us to lower discounting cost.

Provisions (current and non-current) are towards warranty, employee benefit schemes, premium on redemption of FCCN and proposed dividend. The details are as follows:

( in crores)
    As at March 31, 2012   As at March 31, 2011
Long term provisions   6,071.38   4,825.64
Short term provisions   6,770.38   5,131.49
Total   12,841.76   9,957.13
 

The above includes, provision for warranty of 5,252.17 crores as at March 31, 2012, which increased by 1,125.98 crores mainly on account of volume growth. The provision for employee benefit schemes was 3,451.37 crores as at March 31, 2012, as compared to 2,773.27 crores as at March 31, 2011, the increase was on account of change in actuarial assumption factors.

Other current liabilities were 19,069.78 crores as at March 31, 2012 as compared to 8,984.92 crores as at March 31, 2011. These mainly include liability towards vehicles sold under repurchase arrangements, liability for capital expenditure, statutory dues, and current liability of long term debt and advance / progress payment from customers. The increase is mainly due to increase in current maturities of long term debt explained above.

 
Fixed Assets: ( in crores)
    As at March 31, 2012   As at March 31, 2011   Change
Tangible assets (including capital work-in-progress)   30,240.09   25,006.76   5,233.33
Intangible assets (including assets under development)   25,972.41   18,214.29   7,758.12
Total   56,212.50   43,221.05   12,991.45
 
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