Management Discussion and Analysis
 
FINANCIAL PERFORMANCE ON A CONSOLIDATED BASIS

The financial information discussed in this section is derived from the Company's Audited Consolidated Financial Statements.

Tata Motors Group primarily operates in the automotive segment. The acquisition of JLR enabled the Company to enter the premium car market. The Company continues to focus on profitable growth opportunities in global automotive business, through new products and market expansion. The Company and JLR, 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 the 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. Automotive operations segment accounted for 98.81% and 98.83% of total revenues in FY 2012-13 and FY 2011-12, respectively. For FY 2012-13, revenue from automotive operations before inter-segment eliminations was Rs.187,648.85 crores compared to Rs.164,604.28 crores for FY 2011-12.

The automotive operations segment is further divided into Tata Motors and other brand vehicles (including spares and vehicle financing) and Jaguar Land Rover. (A reference may be made to review of performance of TML and Jaguar Land Rover business as discussed above). For FY 2012-13, Jaguar Land Rover contributed 72.9% (63.6% for FY 2011-12) of the total automotive revenue (before intra segment elimination) and the remaining 27.1% (36.4% for FY2011-12) was contributed by Tata and other brand vehicles. Revenue and segment results for automotive operations is given below :

   
  FY 2012-13 FY 2011-12
  (Rs. in crores)
Total Revenues    
Tata vehicles/spares and financing thereof 50,919.99 59,921.24
Jaguar and Land Rover 136,822.17 104,750.93
Intra-segment eliminations (93.31) (67.89)
Total 187,648.85 164,604.28
 
Segment results before other income, finance cost, tax and exceptional items
Tata vehicles/spares and financing thereof 1,736.89 4,152.00
Jaguar and Land Rover 14,975.61 12,359.45
Intra-segment eliminations
Total 16,712.50 16,511.45
   

The other operations business segment includes information technology, machine tools and factory automation solutions, and investment business. For FY 2012-13, revenue from other operations before inter-segment eliminations was Rs.2,265.92 crores compared to Rs.1,948.58 crores for FY 2011-12. Segment results before other income, finance cost, tax and exceptional items (before intersegment eliminations) was Rs.375.68 crores as compared to Rs.294.88 crores for FY 2011-12.

The revenue from operations net of excise duty on a consolidated basis, has grown by14.0% in FY 2012-13 to Rs.188,817.63 crores. The increase is mainly attributable to growth in automotive revenue mainly at Jaguar Land Rover business. The analysis of performance on consolidated basis is given below:-

   
  Percentage to Revenue from operations
  FY 2012-13 FY 2011-12
Revenue from operations net of excise duty 100 100
Expenditure:    
Cost of material consumed (including change in stock) 63.7 66.1
Employee Cost 8.8 7.4
Manufacturing and other expenses (net) 18.8 17.2
Amount Capitalised (5.4) (5.0)
Total Expenditure 85.9 85.7
Other Income 0.4 0.4
Profit before Exceptional Items, Depreciation, Interest and Tax 14.5 14.7
Depreciation and Amortisation (including product development/engineering expenses written off ) 5.1 4.2
Finance costs 1.9 1.8
Exceptional Item – Loss 0.3 0.5
Profit before Tax 7.2 8.2
   
 
Cost of materials consumed (including change in stock)
 
   
  FY 2012-13 FY 2011-12
  ( Rs. in crores)
Consumption of raw materials and components 111,600.44 100,797.44
Purchase of product for sale 11,752.07 11,205.86
Change in finished goods and Work-in-progress (3,031.43) (2,535.72)
Total 120,321.08 109,467.58
   

Cost of material consumed decreased from 66.9% to 64.7% of total revenue (excluding income from vehicle financing). At TML RM cost was 73.6% of net revenue as compared to 73.1%, representing a marginal increase of 50 basis points, mainly attributable to product mix (reduction in M&HCV sales). For JLR the RM cost was 62.8% of revenue (FY 2011-12 64.5%), representing a reduction of 169 basis points. The reduction is mainly attributable to product mix, cost reduction programmes and reduction in input price of major metals consumed. On a consolidated basis, JLR operations have significantly contributed to reduction in material cost in terms of % to revenue.

Employee Cost was Rs.16,584.05 crores in FY 2012-13 as compared to Rs.12,298.45 crores in FY 2011-12; an increase of Rs.4,285.60 crores. Of the increase Rs.1,055.87 crores (approximately) relates to translation impact of JLR from UK Pounds to Indian Rupee. At JLR the increase in employee cost is attributable to increases in the permanent and contractual head count to support the volume increases/new launches and product development projects. At TML the employee cost increased to Rs.2,837.00 crores from Rs.2,691.45 crores in FY 2011-12, which mainly related to normal yearly revisions and wage settlements, at certain locations. Due to lower volumes at TML, salary cost as a % to revenue is higher at 6.3% as compared to 5.0% in FY 2011-12.

Manufacturing and Other Expenses include all works operation, indirect manufacturing expenses, freight cost, fixed marketing costs and other administrative costs. These expenses have increased to Rs.35,535.58 crores from Rs.28,453.97 crores in FY 2011-12. As explained above, each line item includes the element of translation impact of JLR (approximately Rs.2,363 crores).

The breakup is given below-

   
  FY 2012-13 FY 2011-12
  ( Rs. in crores)
Processing charges 1,450.56 1,539.14
Stores, spare parts and tools consumed 1,393.89 1,217.24
Freight, transportation, port charges, etc. 4,798.01 3,734.55
Repairs to buildings 120.25 101.51
Repairs to plant, machinery, etc. 195.10 175.42
Power and fuel 1,069.06 1,017.19
Rent 161.28 128.84
Rates and taxes 202.61 259.15
Insurance 225.30 227.18
Publicity 6,607.14 5,398.40
Works operation and other expenses 19,196.88 14,538.55
Excise Duty on change in Stock-in-trade 115.50 116.80
Manufacturing and Other Expenses 35,535.58 28,453.97
   

The increases are mainly driven by volumes, size of operations and also include inflation impact. These increased from 17.2% to 18.8% in the current year, in terms of % to revenue.

  1. Processing charges were mainly incurred by TML, where mainly due to volume contraction, the expenditure was lower.
  2. Freight, transportation, port charges etc. have increased, mainly at JLR, in view of increase in volumes in the overseas markets.
  3. The publicity expenses increase, mainly related to new product launches and ongoing product/brand campaigns.
  4. The works operation and other expenses have increased to 10.2% from 8.8% of net revenue. While a part of revenue relates to volumes, the major increases were in IT costs and exchange loss on trading activities at JLR.

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. The expenditure transferred to capital and other accounts has increased to Rs.10,191.97 crores from Rs.8,265.98 crores of FY 2011-12, mainly on account of various product development projects undertaken by the Company and JLR, for introduction of new products, development of engine and products variants.

Other Income increased to Rs.811.53 crores from Rs.661.77 crores in FY 2012-13 and mainly includes interest income of Rs.693.90 crores (FY 2011-12 Rs.487.64 crores). The increase is fully attributable to JLR, which relates to surplus cash invested on short-term basis.

Profit before Interest, Depreciation, Exceptional Items and Tax has increased from Rs.24,362.24 crores in FY 2011-12 to Rs.27,380.42 crores in FY 2012-13, and represented 14.5% of revenue.

Depreciation and Amortization (including product development/engineering expenses written off): During FY 2012-13, expenditure increased to Rs.9,590.89 crores from Rs.7,014.61 crores in FY 2011-12. The increase in depreciation of Rs.629.04 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 Rs.2,276.24 crores in FY 2012-13 to Rs.3,591.12 crores in FY 2011-12, attributable to new product introduced during the last year. The expenditure on product development/engineering cost written off has increased by Rs.632.36 crores. As explained above, there was an element of increase representing translation impact.

Finance Cost increased by 19.2% to Rs.3,553.34 crores from Rs.2,982.22 crores in FY 2011-12. The increase mainly represented borrowings for the short term and long term needs of the Group and in particular increased vehicle financing activity by TMFL.

In FY 2012-13, the Company issued rated, listed, unsecured non-convertible debentures of Rs.2,100 crores with maturities of 2-7 years to raise long term resources and optimize the loan maturity profile. JLR issued US$ 500 million Senior Notes due 2023 at a coupon of 5.625% per annum. The notes are callable at a premium for the present value of future interest rates, if called before a specified date and thereafter are callable at fixed premiums. Further, TMFL raised Rs.100 crores by issue of Subordinated Unsecured Nonconvertible Perpetual debentures towards Tier I Capital to meet its growth strategy and improve its capital adequacy ratio and Rs.90.40 crores by issue of Subordinated Unsecured, Non-convertible debentures towards Tier 2 Capital.

Exceptional Items
 
   
  FY 2012-13 FY 2011-12 Change
  (Rs. in crores)
Exchange loss (net) including on revaluation of foreign currency borrowings, deposits and loans 515.09 654.11 (139.02)
Impairment of intangibles and other costs 87.62 177.43 (89.81)
Total 602.71 831.54 (228.83)
   
  1. The exchange loss (net) relates foreign currency borrowings, deposits and loans and derivatives. Foreign exchange loss (net) represents impact on account of revaluation of foreign currency borrowings, deposits and loans, and amortisation of loss/gain, on such foreign currency monetary items which was deferred in last year.
  2. Impairment of intangibles and other costs are in respect of subsidiary companies, triggered by continuous under performance, mainly attributed by challenging market conditions in which the subsidiaries operate.

Consolidated Profit Before Tax (PBT) increased to Rs.13,633.48 crores in FY 2012-13, compared to Rs.13,533.87 crores in FY 2011-12, representing an increase of Rs.99.61 crores. Due to severe contraction in domestic volumes, TML's contribution to PBT was negative. JLR by virtue of its strong performance, contributed to PBT. Hence, despite increase in consolidated revenue, the PBT has marginally improved. The increase also includes translation impact.

Tax Expense represents a net charge of Rs.3,770.99 crores in FY 2012-13, as compared to net credit of Rs.40.04 crores in FY 2011-12. During FY 2011-12, JLR accounted for credit of GB£225 million (Rs.1,793.66 crores) in respect of carried forward past tax losses. 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 decreased to Rs.9,892.61 crores compared to Rs.13,516.50 crores in FY 2011-12, after considering the profit from associate companies and share of minority. The lower PAT as compared to last year is attributable to tax credit accounted in FY 2011-12, by JLR as explained above.

Consolidated Balance Sheet

Shareholders' fund was Rs.37,637.30 crores and Rs.32,698.50 crores as at March 31, 2013 and 2012, respectively.

Reserves increased from Rs.32,063.75 crores as at March 31, 2012 to Rs.36,999.23 crores as of March 31, 2013. The increase represents strong performance on a consolidated basis as explained above.

  • Balance in Profit & Loss Account and General Reserve has gone up by Rs.9,227.64 crores, representing results from operations for the year, net of distribution of dividend and transfer to other reserves.

These increase in reserves was offset by -

  • The pension reserve of JLR, which increased by Rs.2,354.13 crores (net), due to changes of actuarial assumptions (discount rate and inflations rate); and
  • An amount of Rs.1,416.90 crores (as at March 31, 2012 Rs.369.93 crores), being debit balance in hedging reserves account, representing marked to market impact on the derivative financial instruments.
Borrowings:
  As at March
31, 2013
As at March
31, 2012
  (Rs. in crores)
Long term borrowings 32,110.07 27,962.48
Short term borrowings 11,612.21 10,741.59
Current maturities of long term borrowings 9,869.10 8,444.89
Total 53,591.38 47,148.96
  1. Current maturities of Long term borrowings represents amount of loan repayable within one year.
  2. Long term borrowings including the current portion increased by Rs.5,571.80 crores to Rs.41,979.17 crores.
    • Jaguar Land Rover Automotive Plc has issued US$500 million (approximately Rs.2,691 crores), 5.625% Senior Notes due 2023 in FY 2012-13.
    • In FY 2012-13, the Company issued rated, listed, unsecured non-convertible debentures of Rs.2,100 crores with maturities of 2-7 years as a step to raise long term resources and optimize the loan maturity profile.
    • Vehicle Financing - TMFL has raised funds by issue of Secured Non-convertible debentures of Rs.2,696 crores.
  3. Increase in the short term borrowings were by way of commercial paper of Rs.2,755.30 crores as at March 31, 2013 as compared to Rs.1,252.95 crores as at March 31, 2012.

Other Long term liabilities were Rs.3,284.06 crores as at March 31, 2013, as compared to Rs.2,297.57 crores as at March 31, 2012. These included Rs.1,733.50 crores of derivative financial instruments, mainly JLR as at March 31, 2013 (Rs.271.31 crores as at March 31, 2012), reflecting increased notional liability consequent to valuation of derivative contracts.

Trade payables were Rs.44,780.15 crores as at March 31, 2013, as compared to Rs.36,686.32 crores as at March 31, 2012. The increase is attributable to increase in volumes, mainly at JLR.

Provisions (current and non-current) were towards warranty, employee benefit schemes, premium on redemption of FCCN and proposed dividend. Short term provisions are those which are expected to be settled during next financial year. The details are as follows:

   
  As at March
31, 2013
As at March
31, 2012
  ( Rs. in crores)
Long term provisions (Non-current) 8,319.15 6,232.39
Short term provisions (Current) 7,752.58 6,770.38
Total 16,071.73 13,002.77
   
  1. Provision for warranty and product liability increased by Rs.1,418.29 crores mainly on account of volumes at JLR.
  2. The provision for employee benefit schemes have mainly increased on account of change in actuarial factors at JLR (Rs.2,962.74 crores)
  3. The short term provision included Rs.855.73 crores as at March 31, 2012, towards premium on redemption of CARS, which has been fully paid/settled in FY 2012-13.
  4. The provision for dividend has gone down by Rs.732.30 crores, consequent to lower rate of proposed dividend.

Other current liabilities were Rs.22,140.96 crores as at March 31, 2013 as compared to Rs.19,069.78 crores as at March 31, 2012. These mainly included 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 was mainly due to increase in current maturities of long term debt (explained above), increase in liability for capital expenditure and derivative financial instruments.

Fixed Assets:
   
  As at March
31, 2013
As at March
31, 2012
Change
  ( Rs. in crores)
Tangible assets (including capital work-in-progress) 36,695.02 30,240.09 6,454.93
Intangible assets (including assets under development) 32,788.59 25,972.41 6,816.18
Total 69,483.61 56,212.50 13,271.11
   

The increase (net of depreciation) in the tangible assets mainly represented additions towards capacity/new product plans of the Company. The increase (net of amortization) in the intangible assets was Rs.6,816.16 crores, mainly attributable to new product developments projects at TML and JLR.

Investments (Current + Non-current) were Rs.9,057.72 crores as at March 31, 2013, as compared to Rs.8,917.71 crores as at March 31, 2012. The break-up is as follows:

   
  As at March
31, 2013
As at March
31, 2012
  ( Rs. in crores)
Mutual Funds 7,509.50 7,530.05
Investments in equity accounted investees (associate companies) 744.73 668.55
Quoted Equity shares 299.11 297.98
Unquoted Equity shares 383.03 354.42
Others 129.85 74.80
Provision for diminution in value of investments (net) (8.50) (8.09)
Total 9,057.72 8,917.71
   
Deferred tax assets/liability :
   
  As at March
31, 2013
As at March
31, 2012
  ( Rs. in crores)
Deferred tax assets 4,428.93 4,539.33
Deferred tax liability (2,019.49) (2,165.07)
   

Deferred tax assets, represents timing differences for which there will be future current tax benefits by way of unabsorbed tax losses and expenses allowable on payment basis in future years.

Deferred tax liabilities represent timing differences where current benefit in tax will be off-set by debit in the Profit and Loss Statement.

Loans and Advances
   
  As at March
31, 2013
As at March
31, 2012
  ( Rs. in crores)
Long term loans and advances 15,465.46 13,657.95
Short term loans and advances 12,608.46 11,337.22
Total 28,073.92 24,995.17
   
Loans and advances include
  1. Credit entitlement of Minimum Alternate Tax (MAT) of Rs.1,513.34 crores as at March 31, 2013 (Rs.1,451.45 crores as at March 31, 2012), relating to Tata Motors. The credit/refund will be against tax paid at normal rate, within time limit as per the Income Tax Act.
  2. Receivables towards vehicle financing by Tata Motors Finance Ltd Rs.18,226.78 crores as at March 31, 2013, as compared to Rs.15,747.67 crores as at March 31, 2012; and
  3. VAT, other taxes recoverable, statutory deposits and dues of Rs.5,659.37 crores as at March 31, 2013, as compared to Rs.5,626.70 crores as at March 31, 2012.

Inventories as of March 31, 2013, stood at Rs.20,969.01 crores as compared to Rs.18,216.02 crores as at March 31, 2012. Inventory at TML was Rs.4,455.03 crores as compared to Rs.4,588.23 crores as at March 31, 2012. Inventory at JLR was Rs.14,726.76 crores as compared to Rs.12,174.64 crores as at March 31, 2012. The increase at JLR is consistent with the volume growth. In terms of number of days of sales, finished goods represented 29 inventory days in FY 2012-13; same as FY 2011-12.

Trade Receivables (net of allowance for doubtful debts) were Rs.10,942.66 crores as at March 31, 2013, representing an increase of Rs.2,705.82 crores, which was attributable to increase in sales, at JLR. Trade Receivables have decreased in TML by Rs.890.28 crores. The allowances for doubtful debts were Rs.321.68 crores as at March 31, 2013 against Rs.326.21 crores as at March 31, 2012.

Cash and bank balances were Rs.21,112.67 crores, as at March 31, 2013 compared to Rs.18,238.13 crores as at March 31, 2012. The Company holds cash and bank balances in Indian Rupees, GB£, and Chinese Renminbi etc. The cash balances include bank deposits maturing within one year of Rs.11,369.21 crores; compared to Rs.9,500.48 crores as at March 31, 2012. It included Rs.4,320 crores as at March 31, 2013 (Rs.3,697crores as at March 31, 2012) held by a subsidiary that operates in a country where exchange control restrictions potentially restrict the balances being available for general use by Tata Motors Limited and other subsidiaries.

Consolidated Cash Flow

The following table sets forth selected items from consolidated cash flow statement:

   
  FY 2012-13 FY 2011-12 Change
  (Rs. in crores)
Net Cash from Operating Activities 22,062.23 18,384.32 3,677.91
Profit for the year 9,892.61 13,516.50  
Adjustments for cash flow from operations 14,460.64 8,915.84  
Changes in working capital (67.95) (2,280.08)  
Direct taxes paid (2,223.07) (1,767.94)  
       
Net Cash used in Investing Activities (23,412.58) (20,542.85) (2,869.73)
Payment for fixed assets (Net) (18,720.34) (13,782.85)  
Net investments, short term deposit, margin money and loans given (5,498.44) (7,297.58)  
Dividend and interest received 806.20 537.58  
       
Net Cash from/(used in) Financing Activities (1,655.79) 6,567.18 (8,222.97)
Proceeds from issue of share to minority shareholders 0.56 138.54  
Dividend Paid (including paid to minority shareholders (1,508.73) (1,503.11)  
Interest paid (4,655.99) (3,373.69)  
Net Borrowings (net of issue expenses) 4,508.37 11,305.44  
       
Net (decrease)/increase in cash and cash equivalent (3,006.14) 4,408.67  
Effect of exchange fluctuation on cash flows 521.94 1,078.96  
Cash and cash equivalent, beginning of the year 14,833.02 9,345.41  
Cash and cash equivalent, end of the year 12,348.82 14,833.04  
   
Analysis:
  1. Cash generated from operations before working capital changes and change in finance receivable was Rs.24,353.25 crores as compared to Rs.22,432.34 crores in the previous year, representing an increase in cash generated through consolidated operations, consistent with the growth in revenue on a consolidated basis. After considering the impact of working capital changes and net movement of vehicle financing portfolio, the net cash generated from operations was Rs.24,285.30 crores as compared to Rs.20,152.26 crores in the previous year. The following factors contributed to net increase in working capital for the year:-
    • Increase in vehicle financing receivables by Rs.2,479.10 crores, consequent to increase in financing activity to support sales in India.
    • Increase in trade and other receivables amounting Rs.2,727.65 crores mainly due to increase in sales to importers at JLR.
    • Increase in inventories amounting to Rs.2,693.24 crores (mainly in finished goods) due to higher volumes/activity at JLR.
    • The above increases were offset by increase in trade and other payables by Rs.7,508.61 crores (due to revenue growth) and net increase in provisions of Rs.1,322.46 crores.
  2. The net cash outflow from investing activity increased during the current year to Rs.23,412.58 crores from Rs.20,542.85 crores for the last year.
    • Capital expenditure was at Rs.18,720.34 crores during the year as against Rs.13,782.85 crores for the last year, related mainly to capacity/expansion of facilities, quality and reliability projects and product development projects.
    • The change in net investments mainly represents deposits/ restricted deposits (net) Rs.6,135.57 crores against Rs.1,683.25 crores in the last year. Further, in FY 2011-12, the Company parked surplus cash in mutual funds net Rs.5,840.09 crores.
  3. The net change in financing activity was an outflow of Rs.1,655.79 crores against net inflow Rs.6,567.18 crores for last year.
    • During FY 2012-13, Rs.5,615.83 crores were raised from long term borrowings (net) as compared to Rs.14,365.91 crores. During FY 2011-12, JLR raised funds by issued of Senior Notes of GB£1,500 million (Rs.12,327.19 crores) (net), resulting in increase (net) in borrowings during FY 2011-12.
    • Net increase in short term borrowings of Rs.1,837.51 crores as compared to decrease of Rs.1,913.58 crores.

As of March 31, 2013, Tata Motors Group borrowings (including short term debt) were Rs.53,591.38 crores compared with Rs.47,148.96 crores as of March 31, 2012.

The Company believes that it has sufficient resources available to meet planned capital requirements. However, the sources of funding could be adversely affected by an economic slowdown as was witnessed in FY 2008-09 or other macroeconomic factors in India and abroad such as Europe and markets where the Company is present such as China. A decrease in the demand for the Company products and services could lead to an inability to obtain funds from external sources on acceptable terms or in a timely manner. In order to refinance the Company acquisition related borrowings and for supporting long term fund needs, the Company continued to raise funds in FY 2011-12 and FY 2012-13, through issue of various equity, equity linked and debt securities described below.

In May 2011, JLR issued GB£1,000 million equivalent Senior Notes (Notes). The Notes issued included GB£500 million Senior Notes due 2018 at a coupon of 8.125% per annum, US$ 410 million Senior Notes due 2018 at a coupon of 7.75% per annum and US$ 410 million Senior Notes due 2021 at a coupon of 8.125% per annum. The proceeds are/will be used to refinance existing debt and for general corporate purposes. The notes are callable at a premium for the present value of future interest rates, if called before a specified date for each series of notes and thereafter are callable at fixed premiums.

In September 2011, the Company raised Syndicated Foreign currency term loans of US$ 500 million in two tranches with tenors between four to seven years towards financing its general capital expenditure and investments in its overseas subsidiaries in accordance with guidelines on External Commercial Borrowings (ECB) issued by the Reserve Bank of India.

In March 2012, JLR issued GB£500 million Senior Notes due 2020, at a coupon of 8.25% per annum. The proceeds will be used for general corporate purposes. The notes are callable at a premium for the present value of future interest rates, if called before a specified date and thereafter are callable at fixed premiums.

During FY 2011-12, TMFL raised Rs.154.50 crores by an issue of unsecured, non-convertible, debentures towards Tier 2 Capital to meet its growth strategy and improve its capital adequacy ratio.

In FY 2012-13, the Company issued rated, listed, unsecured nonconvertible debentures of Rs.2,100 crores with maturities of 2-7 years as a step to raise long term resources and optimize the loan maturity profile.

In January 2013, JLR issued US$ 500 million Senior Notes due 2023, at a coupon of 5.625% per annum. The proceeds will be used for general corporate purposes, including, to support ongoing growth and capital spending plans. The notes are callable at a premium for the present value of future interest rates, if called before a specified date and thereafter are callable at fixed premiums.

During FY 2012-13, TMFL raised Rs.90.40 crores by issue of Subordinated Unsecured, Non-convertible debentures towards Tier 2 Capital and Rs.100 crores was raised by issue of Subordinated Unsecured Non-convertible Perpetual debentures towards Tier I Capital to meet its growth strategy and improve its capital adequacy ratio.

The Tata Motors Group fund its short-term working capital requirements with cash generated from operations, overdraft facilities with banks, short and medium term borrowings from lending institutions, banks and commercial paper. The maturities of these short and medium term borrowings and debentures are generally matched to particular cash flow requirements. During April 2012, Tata Motors received approvals from the Board to increase the working capital limits to Rs.14,000 crores from the existing Rs.12,000 crores from banks in India.

The working capital limits are secured by hypothecation of certain existing current assets of the Company. The working capital limits are renewed annually.

In December 2011, JLR established 3-5 year committed Revolving Credit Facility amounting to GB£710 million from a syndicate of 13 banks. During July and August 2012, JLR received approvals for additional GB£85 million limits taking the facility to GB£795 million as of March 31, 2013.

The Tata Motors Group cash and bank balances were Rs.21,112.67 crores as at March 31, 2013, as compared to Rs.18,238.13 crores as at March 31, 2012. These enable the Group to cater to business needs in the event of changes in market conditions.

Some of the Company's financing agreements and debt arrangements set limits on and/or require prior lender consents for, among other things, undertaking new projects, issuing new securities, changes in management, mergers, sale of undertakings and investment in subsidiaries. In addition, certain financial covenants may limit the Company's ability to borrow additional funds or to incur additional liens. Certain of the Company financing arrangements also include covenants to maintain certain debtto-equity ratios, debt-to-earnings ratios, liquidity ratios, capital expenditure ratios and debt coverage ratios.

In respect of one of the borrowings, aggregating Rs.4,200.00 crores (Rs.3,050.00 crores outstanding as at March 31, 2013), the Company has not met two of the covenants, due to extremely difficult market conditions affecting the performance and redemption of CARS of Rs.3,493.83 crores (including redemption premium) resulting in depletion of long term funds. This entails incremental effective cost of borrowing by100 basis points per annum, in respect of which the Company has sought waiver and is confident of obtaining the same.

The cash and liquidity is located at various locations in its subsidiaries along with balances in India. Jaguar Land Rover's subsidiary in China is subject to foreign exchange controls and thereby has some restrictions on transferring cash to other companies of the group outside of China.

There may also be legal or economic restrictions on the ability of subsidiaries to transfer funds to the Company in the form of cash dividends, loans, or advances, however such restrictions have not had and are not estimated to have significant impact on the ability of the Company to meet its cash obligations.

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