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Notes Forming Part of Financial Statements

1. Background and operations of accounting policies and the reported amounts of
assets, liabilities and disclosures of contingent assets
Tata Motors Limited referred to as (“the Company” or “Tata and liabilities at the date of these financial statements
Motors”), designs, manufactures and sells a wide range of and the reported amounts of revenues and expenses for
automotive vehicles. The Company also manufactures engines the years presented. Actual results may differ from these
for industrial and marine applications. estimates.
The Company is a public limited Company incorporated and
Estimates and underlying assumptions are
domiciled in India and has its registered office at Mumbai,
reviewed at each balance sheet date. Revisions to
India. As at March 31, 2018, Tata Sons Limited, together with its
accounting estimates are recognised in the period
subsidiaries owns 36.46% of the Ordinary shares and 0.09%
in which the estimate is revised and future periods
of ‘A’ Ordinary shares of the Company, and has the ability to
affected.
significantly influence the Company’s operations.
In particular, information about significant areas of
These standalone financial statements were approved by the
estimation uncertainty and critical judgments in applying
Board of Directors and authorised for issue on May 23, 2018.
accounting policies that have the most significant effect
on the amounts recognised in the financial statements
2. Significant accounting policies
are included in the following notes:
a. Basis of preparation i) Note 3 and 5 - Property, plant and equipment and
Intangible assets - useful life and impairment
These financial statements have been prepared in
accordance with Ind AS as notified under the Companies ii) Note 29 - Recoverability/recognition of deferred tax
(Indian Accounting Standards) Rules, 2015 read with assets
Section 133 of the Companies Act, 2013 (the “Act”). The
financial statements have been prepared on historical iii) Note 27 and 28 - Provision for product warranty
cost basis except for certain financial instruments iv) Note 45 - Assets and obligations relating to
measured at fair value at the end of each reporting period employee benefits
as explained in the accounting policies below.
c. Revenue recognition
Joint operations Revenue is measured at fair value of consideration
Certain of the Company’s activities, are conducted through received or receivable.
joint operations, which are joint arrangements whereby Sale of products
the parties that have joint control of the arrangement
have rights to the assets, and obligations for the liabilities, The Company recognises revenues on the sale of
relating to the arrangement. As per Ind AS 111 - Joint products, net of discounts, sales incentives, customer
arrangements, in its separate financial statements, the bonuses and rebates granted, when products are
delivered to dealers or when delivered to a carrier for
Company being a joint operator has recognised its share
export sales, which is when title and risks and rewards of
of the assets, liabilities, income and expenses of these
ownership pass to the customer.
joint operations incurred jointly with the other partners,
along with its share of income from the sale of the Revenues are recognised when collectability of the
output and any assets, liabilities and expenses that it has resulting receivable is reasonably assured.
incurred in relation to the joint operation.
d. Government grants and incentives
Although not required by Ind AS’s, the Company has
Government grants are recognised when there is
provided in note 46 additional information of Tata Motors
reasonable assurance that the Company will comply with
Limited on a standalone basis excluding its interest in its
the relevant conditions and the grant will be received.
two Joint Operations viz. Tata Cummins Private Limited
These are recorded at fair value where applicable.
and Fiat India Automobiles Private Limited.
Government grants are recognised in the statement of
b. Use of estimates and judgments profit and loss, either on a systematic basis when the
Company recognises, as expenses, the related costs that
The preparation of financial statements in conformity
the grants are intended to compensate or, immediately if
with Ind AS requires management to make judgments,
the costs have already been incurred.
estimates and assumptions, that affect the application

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Notes Forming Part of Financial Statements
Government grants related to assets are shown as deferred Transactions in foreign currencies are recorded at the
revenue and amortised over the useful life of the asset. exchange rate prevailing on the date of transaction.
Government grants related to income are presented as an Foreign currency denominated monetary assets and
offset against the related expenditure, and government liabilities are re-measured into the functional currency at
grants that are awarded as incentives with no ongoing the exchange rate prevailing on the balance sheet date.
performance obligations to the Company are recognised
Exchange differences arising on settlement of
as income in the period in which the grant is received.
transactions and translation of monetary items are
recognised in the statement of Profit or Loss except to
e. Cost recognition
the extent, exchange differences which are regarded
Costs and expenses are recognised when incurred and as an adjustment to interest costs on foreign currency
are classified according to their nature. borrowings, are capitalised as part of borrowing costs.

Expenditure capitalised represents employee costs, h. Income taxes

stores and other manufacturing supplies, and other
expenses incurred for construction including product Income tax expense comprises current and deferred
development undertaken by the Company. taxes. Income tax expense is recognised in the statement
of Profit or Loss except when they relate to items that
are recognised outside profit or loss (whether in other
f. Provisions
comprehensive income or directly in equity), in which
A provision is recognised if, as a result of a past event, the case tax is also recognised outside profit or loss.
Company has a present legal or constructive obligation
Current income taxes are determined based on respective
that can be estimated reliably, and it is probable that an
taxable income of each taxable entity and tax rules
outflow of economic benefits will be required to settle
applicable for respective tax jurisdictions.
the obligation. Provisions are determined by discounting
the expected future cash flows at a pre-tax rate that Deferred tax assets and liabilities are recognised for
reflects current market assessments of the time value the future tax consequences of temporary differences
of money and the risks specific to the liability. between the carrying values of assets and liabilities
and their respective tax bases, and unutilised business
Product warranty expenses loss and depreciation carry-forwards and tax credits.
Such deferred tax assets and liabilities are computed
The estimated liability for product warranties are recorded
separately for each taxable entity. Deferred tax assets
when products are sold. These estimates are established
are recognised to the extent that it is probable that
using historical information on the nature, frequency
future taxable income will be available against which
and average cost of warranty claims and management
the deductible temporary differences, unused tax losses,
estimates regarding possible future incidences based
depreciation carry-forwards and unused tax credits could
on actions on product failures. The timing of outflows
be utilised.
will vary as and when warranty claim will arise, being
typically up to six years. Deferred tax assets and liabilities are measured based
on the tax rates that are expected to apply in the period
The Company also has back-to-back contractual when the asset is realised or the liability is settled, based
arrangement with its suppliers in the event that a vehicle on tax rates and tax laws that have been enacted or
fault is proven to be a supplier’s fault. Estimates are substantively enacted by the balance sheet date.
made of the expected reimbursement claim based upon
historical levels of recoveries from suppliers, adjusted for Current and deferred tax assets and liabilities are offset
inflation and applied to the population of vehicles under when there is a legally enforceable right to set off
warranty as on Balance Sheet date. current tax assets against current tax liabilities and when
they relate to income taxes levied by the same taxation
Supplier reimbursements are recognised as separate authority and the Company intends to settle its current
asset. tax assets and liabilities on a net basis.

g. Foreign currency i. Cash & cash equivalents

These financial statements are presented in Indian rupees, Cash and cash equivalents are short-term (three months
which is the functional currency of Tata Motors Limited. or less from the date of acquisition), highly liquid

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Notes Forming Part of Financial Statements

investments that are readily convertible into cash and prescribed in Schedule II of the Act. Estimated useful
which are subject to an insignificant risk of changes in lives of assets are as follows:
value.
Type of asset Estimated
j. Earnings per share useful life

Basic earnings per share has been computed by dividing

• Buildings, Roads, Bridge and culverts 4 to 60 years

net income by the weighted average number of shares • Plant, machinery and equipment 8 to 20 years
outstanding during the year. Partly paid up shares are • Computers and other IT assets 4 to 6 years
included as fully paid equivalents according to the • Vehicles 4 to 10 years
fraction paid up. Diluted earnings per share has been
• Furniture, fixtures and office 5 to 15 years
computed using the weighted average number of shares
appliances
and dilutive potential shares, except where the result
would be anti-dilutive. The useful lives are reviewed at least at each year end.
Changes in expected useful lives are treated as change in
k. Inventories accounting estimates.
Inventories are valued at the lower of cost and net Assets held under finance leases are depreciated over
realisable value. Cost of raw materials, components and their expected useful lives on the same basis as owned
consumables are ascertained on a moving weighted assets or, where shorter, the term of the relevant lease.
average basis. Cost, including fixed and variable Depreciation is not recorded on capital work-in-progress
production overheads, are allocated to work-in-progress until construction and installation are complete and the
and finished goods determined on a full absorption cost asset is ready for its intended use.
basis. Net realisable value is the estimated selling price
in the ordinary course of business less estimated cost of m. Other intangible assets
completion and selling expenses.
Intangible assets purchased are measured at cost less
accumulated amortisation and accumulated impairment,
l. Property, plant and equipment if any.
Property, plant and equipment are stated at cost of Amortisation is provided on a straight-line basis over
acquisition or construction less accumulated depreciation estimated useful lives of the intangible assets as per
less accumulated impairment, if any. details below:
Freehold land is measured at cost and is not depreciated.
Type of asset Estimated
Cost includes purchase price, taxes and duties, labour
amortisation
cost and direct overheads for self-constructed assets
period
and other direct costs incurred up to the date the asset is
ready for its intended use. • Technological know-how 8 to 10 years
• Software 4 years
Interest cost incurred for constructed assets is
capitalised up to the date the asset is ready for its The amortisation period for intangible assets with finite
intended use, based on borrowings incurred specifically useful lives are reviewed at least at each year-end.
for financing the asset or the weighted average rate of Changes in expected useful lives are treated as changes
all other borrowings, if no specific borrowings have been in accounting estimates.
incurred for the asset.
Internally generated intangible assets
Depreciation is provided on the Straight Line Method
(SLM) over the estimated useful lives of the assets Research costs are charged to the statement of Profit or
considering the nature, estimated usage, operating Loss in the year in which they are incurred.
conditions, past history of replacement, anticipated
technological changes, manufacturers warranties Product development costs incurred on new vehicle
and maintenance support. Taking into account these platform, engines, transmission and new products
factors, the Company has decided to retain the useful are recognised as intangible assets, when feasibility
life hitherto adopted for various categories of property, has been established, the Company has committed
plant and equipments, which are different from those technical, financial and other resources to complete the
development and it is probable that asset will generate

73rd Annual Report 2017-18 199

Notes Forming Part of Financial Statements
future economic benefits. with the accounting policy applicable to that asset.
Minimum lease payments made under finance leases
The costs capitalised include the cost of materials, direct are apportioned between the finance expense and
labour and directly attributable overhead expenditure the reduction of the outstanding liability. The finance
incurred up to the date the asset is available for use. expense is allocated to each period during the lease
term so as to produce a constant periodic rate of
Interest cost incurred is capitalised up to the date
interest on the remaining balance of the liability.
the asset is ready for its intended use, based on
borrowings incurred specifically for financing the Assets taken on operating lease
asset or the weighted average rate of all other
borrowings if no specific borrowings have been Leases other than finance leases are operating leases, and
incurred for the asset. the leased assets are not recognised on the Company’s
balance sheet. Payments made under operating leases
Product development costs are amortised over a period of are recognised in the statement of Profit or Loss on a
120 months for New Generation vehicles and powertrains straight-line basis over the term of the lease.
on the basis of higher of the volumes between planned
Assets given on finance lease
and actuals and on a straight line method over a period
of 36 months for Vehicle Variants, Derivatives and other All assets given on finance lease are shown as receivables
Regulatory Projects. at an amount equal to net investment in the lease. Initial
direct costs in respect of lease are expensed in the period
Capitalised development expenditure is measured at in which such costs are incurred. Income from lease
cost less accumulated amortisation and accumulated assets is accounted by applying the interest rate implicit
impairment, if any. in the lease to the net investment.

n. Goodwill p. Impairment
Cash generating units to which goodwill is allocated are At each balance sheet date, the Company assesses
tested for impairment annually at each balance sheet whether there is any indication that any property, plant
date, or more frequently when there is an indication that and equipment and intangible assets with finite lives may
the unit may be impaired. If the recoverable amount of the be impaired. If any such impairment exists the recoverable
cash generating unit is less than the carrying amount of amount of an asset is estimated to determine the extent of
the unit, the impairment loss is allocated first to reduce impairment, if any. Where it is not possible to estimate the
the carrying amount of any goodwill allocated to that recoverable amount of an individual asset, the Company
unit and then to the other assets of the unit pro rata on estimates the recoverable amount of the cash-generating
the basis of carrying amount of each asset in the unit. unit to which the asset belongs.
Goodwill impairment loss recognised is not reversed in Intangible assets not yet available for use, are tested
subsequent period. for impairment annually at each balance sheet date,
or earlier, if there is an indication that the asset may be
o. Leases impaired.
Recoverable amount is the higher of fair value less
At the inception of a lease, the lease arrangement is costs to sell and value in use. In assessing value in use,
classified as either a finance lease or an operating lease, the estimated future cash flows are discounted to their
based on the substance of the lease arrangement. present value using a pre-tax discount rate that reflects
current market assessments of the time value of money
Assets taken on finance lease and the risks specific to the asset for which the estimates
of future cash flows have not been adjusted.
A finance lease is recognised as an asset and a liability
at the commencement of the lease, at the lower of If the recoverable amount of an asset (or cash-
the fair value of the asset and the present value of generating unit) is estimated to be less than its
the minimum lease payments. Initial direct costs, if carrying amount, the carrying amount of the asset
any, are also capitalised and, subsequent to initial (or cash-generating unit) is reduced to its recoverable
recognition, the asset is accounted for in accordance amount. An impairment loss is recognised immediately
in the statement of Profit or Loss.

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Notes Forming Part of Financial Statements

q. Employee benefits incurred and has no further obligation beyond this
contribution.
i) Gratuity
Tata Motors Limited and its Joint operations have iii) Bhavishya Kalyan Yojana (BKY)
an obligation towards gratuity, a defined benefit Bhavishya Kalyan Yojana is an unfunded defined
retirement plan covering eligible employees. The benefit plan for employees of Tata Motors Limited.
plan provides for a lump-sum payment to vested The benefits of the plan include pension in
employees at retirement, death while in employment certain cases, payable up to the date of normal
or on termination of employment of an amount superannuation had the employee been in service,
equivalent to 15 to 30 days salary payable for each to an eligible employee at the time of death or
completed year of service. Vesting occurs upon permanent disablement, while in service, either as a
completion of five years of service. Tata Motors result of an injury or as certified by the appropriate
Limited make annual contributions to gratuity funds authority. The monthly payment to dependents of
established as trusts. Tata Motors Limited account the deceased/disabled employee under the plan
for the liability for gratuity benefits payable in the equals 50% of the salary drawn at the time of death
future based on an actuarial valuation. or accident or a specified amount, whichever is
greater. Tata Motors Limited account for the liability
ii) Superannuation for BKY benefits payable in the future based on an
actuarial valuation.
Tata Motors Limited have two superannuation plans,
a defined benefit plan and a defined contribution
iv) Provident fund and family pension
plan. An eligible employee on April 1, 1996 could
elect to be a member of either plan. In accordance with Indian law, eligible employees
of Tata Motors Limited and its Joint operations
Employees who are members of the defined
are entitled to receive benefits in respect of
benefit superannuation plan are entitled to benefits
provident fund, a defined contribution plan, in
depending on the years of service and salary drawn.
which both employees and the Company make
The monthly pension benefits after retirement range
monthly contributions at a specified percentage of
from 0.75% to 2% of the annual basic salary for each
the covered employees’ salary (currently 12% of
year of service. Tata Motors Limited account for
employees’ salary). The contributions, as specified
superannuation benefits payable in future under the
under the law, are made to the provident fund and
plan based on an actuarial valuation.
pension fund set up as an irrevocable trust by Tata
With effect from April 1, 2003, this plan was amended Motors Limited for its employees. The interest rate
and benefits earned by covered employees have payable to the members of the trust shall not be
been protected as at March 31, 2003. Employees lower than the statutory rate of interest declared
covered by this plan are prospectively entitled to by the Central Government under the Employees
benefits computed on a basis that ensures that the Provident Funds and Miscellaneous Provisions Act,
annual cost of providing the pension benefits would 1952 and shortfall, if any, shall be made good by the
not exceed 15% of salary. Company. The liability in respect of the shortfall of
interest earnings of the Fund is determined on the
During the year ended March 31, 2015, the employees basis of an actuarial valuation. The liability toward
covered by this plan were given a one-time option to interest is a defined benefit. There is no shortfall as at
exit from the plan prospectively. Furthermore, the March 31, 2018.
employees who opted for exit were given one- time
option to withdraw accumulated balances from the v) Post-retirement medicare scheme
superannuation plan.
Under this unfunded scheme, employees of Tata
The Company maintains a separate irrevocable trust Motors Limited receive medical benefits subject to
for employees covered and entitled to benefits. certain limits on amounts of benefits, periods after
The Company contributes up to 15% or ` 1,50,000 retirement and types of benefits, depending on
whichever is lower of the eligible employee’s their grade and location at the time of retirement.
salary to the trust every year. The Company Employees separated from the Company as part of
recognises such contribution as an expense when an Early Separation Scheme, on medical grounds

73rd Annual Report 2017-18 201

Notes Forming Part of Financial Statements
or due to permanent disablement are also covered dividend out of free reserve subject to certain conditions.
under the scheme. Tata Motors Limited account for Accordingly, in certain years the net income reported in
the liability for post-retirement medical scheme the financial statements may not be fully distributable.
based on an actuarial valuation. The amount available for distribution is ` Nil as at March
31, 2018 (` Nil as at March 31, 2017).
vi)
Compensated absences
The Company provides for the encashment of s. Segments
leave or leave with pay subject to certain rules. The The Company is engaged mainly in the business of
employees are entitled to accumulate leave subject automobile products consisting of all types of commercial
to certain limits, for future encashment. The liability and passenger vehicles. These in the context of Ind AS
is provided based on the number of days of unutilised 108 - operating segments reporting are considered to
leave at each balance sheet date on the basis of an constitute one reportable segment.
independent actuarial valuation.
t. Investments in subsidiaries, Joint Ventures and
vii) Remeasurement gains and losses Associates
Remeasurement comprising actuarial gains and
Investments in subsidiaries, Joint Ventures and
losses, the effect of the asset ceiling and the
Associates are measured at cost as per Ind AS 27 –
return on assets (excluding interest) relating to
Separate Financial Statements.
retirement benefit plans, are recognised directly
in other comprehensive income in the period in
u. Financial instruments
which they arise. Remeasurement recorded in
other comprehensive income is not reclassified to i) Classification, initial recognition and measurement
statement of Profit or Loss.
A financial instrument is any contract that gives rise to
Actuarial gains and losses relating to long-term a financial asset of one entity and a financial liability
employee benefits are recognised in the statement or equity instrument of another entity. Financial
of Profit or Loss in the period in which they arise. assets other than equity instruments are classified
into categories: financial assets at fair value through
viii)
Measurement date profit or loss and at amortised cost. Financial assets
that are equity instruments are classified as fair
The measurement date of retirement plans is value through profit or loss or fair value through
March 31. other comprehensive income. Financial liabilities are
classified into financial liabilities at fair value through
ix) The present value of the defined benefit liability and
profit or loss and other financial liabilities.
the related current service cost and past service
cost are measured using projected unit credit Financial instruments are recognised on the balance
method. sheet when the Company becomes a party to the
contractual provisions of the instrument.
r. Dividends Initially, a financial instrument is recognised at its
fair value. Transaction costs directly attributable to
Any dividend declared by Tata Motors Limited for
the acquisition or issue of financial instruments are
any financial year is based on the profits available for
distribution as reported in the standalone statutory recognised in determining the carrying amount, if it
financial statements of Tata Motors Limited (without is not classified as at fair value through profit or loss.
joint operations) prepared in accordance with Generally Subsequently, financial instruments are measured
Accepted Accounting Principles in India, or Ind AS. according to the category in which they are classified.
Indian law mandates that dividend be declared out of
Financial assets at amortised cost: Financial assets
distributable profits, after setting off un-provided losses
having contractual terms that give rise on specified
and depreciation of previous years. In case of inadequacy
dates to cash flows that are solely payments of
or absence of profits in a particular year, a Company
principal and interest on the principal outstanding
may pay dividend out of accumulated profits of previous
and that are held within a business model whose
years transferred to retained earnings, however in the
objective is to hold such assets in order to collect
absence of accumulated profits, Company may declare
such contractual cash flows are classified in this

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Notes Forming Part of Financial Statements

category. Subsequently, these are measured at ii) Determination of fair value:
amortised cost using the effective interest method
less any impairment losses. The fair value of a financial instrument on initial
recognition is normally the transaction price (fair
Equity investments at fair value through other value of the consideration given or received).
comprehensive income: These include financial
Subsequent to initial recognition, the Company
assets that are equity instruments and are designated
determines the fair value of financial instruments
as such upon initial recognition irrevocably.
that are quoted in active markets using the quoted
Subsequently, these are measured at fair value and
changes therein are recognised directly in other bid prices (financial assets held) or quoted ask
comprehensive income, net of applicable income prices (financial liabilities held) and using valuation
taxes. techniques for other instruments. Valuation
techniques include discounted cash flow method
Dividends from these equity investments are
recognised in the statement of Profit or Loss when and other valuation models.
the right to receive payment has been established.
iii) Derecognition of financial assets and financial
When the equity investment is derecognised, the liabilities:
cumulative gain or loss in equity is transferred to
retained earnings. The Company derecognises a financial asset only
Financial assets at fair value through profit and loss: when the contractual rights to the cash flows
Financial assets are measured at fair value through from the asset expires or it transfers the financial
profit or loss unless it is measured at amortised cost asset and substantially all the risks and rewards
or at fair value through other comprehensive income of ownership of the asset to another entity. If the
on initial recognition. The transaction costs directly Company neither transfers nor retains substantially
attributable to the acquisition of financial assets all the risks and rewards of ownership and continues
and liabilities at fair value through profit or loss are to control the transferred asset, the Company
immediately recognised in profit and loss. recognises its retained interest in the asset and an
Equity instruments: An equity instrument is any associated liability for amounts it may have to pay.
contract that evidences residual interests in the If the Company retains substantially all the risks and
assets of the Company after deducting all of its rewards of ownership of a transferred financial asset,
liabilities. Equity instruments issued by the Company the Company continues to recognise the financial
are recorded at the proceeds received, net of direct
asset and also recognises a collateralised borrowing
issue costs.
for the proceeds received.
Financial liabilities at fair value through profit or
loss: Derivatives, including embedded derivatives Financial liabilities are decrecognised when these
separated from the host contract, unless they are extinguished, that is when the obligation is
are designated as hedging instruments, for which discharged, cancelled or has expired.
hedge accounting is applied, are classified into this
category. These are measured at fair value with iv) Impairment of financial assets:
changes in fair value recognised in the statement of
Profit or Loss. The Company recognises a loss allowance for
expected credit losses on a financial asset that is
Financial guarantee contracts: These are initially
at amortised cost. Loss allowance in respect of
measured at their fair values and, are subsequently
measured at the higher of the amount of loss financial assets is measured at an amount equal to
allowance determined or the amount initially life time expected credit losses and is calculated
recognised less, the cumulative amount of income as the difference between their carrying amount
recognised. and the present value of the expected future
cash flows discounted at the original effective
Other financial liabilities: These are measured
interest rate.
at amortised cost using the effective interest
method.
73rd Annual Report 2017-18 203
Notes Forming Part of Financial Statements
v. Hedge accounting comprehensively (for example, service revenue and
The Company uses foreign currency forward contracts contract modifications) and improve guidance for
to hedge its risks associated with foreign currency multiple-element arrangements. Ind AS 115 is effective
fluctuations relating to highly probable forecast from April 1, 2018.
transactions. The Company designates these forward
The Company will be adopting Ind AS 115 with a modified
contracts in a cash flow hedging relationship by applying
retrospective approach. The cumulative effect of initially
the hedge accounting principles.
applying this Standard will be recorded as an adjustment
These forward contracts are stated at fair value at each to the opening balance of retained earnings. The figures
reporting date. Changes in the fair value of these forward for the comparative periods will not be restated. The
contracts that are designated and effective as hedges of Company has assessed that the profit impact of Ind AS 115
future cash flows are recognised in other comprehensive adoption will not be significant to the financial statements.
income and the ineffective portion is recognised Certain payouts made to dealers such as infrastructure
immediately in the statement of Profit or Loss. Amounts support are to be treated as variable components of
accumulated in equity are reclassified to the statement consideration and will therefore in accordance with Ind
of Profit or Loss in the periods in which the forecasted AS 115, be recognised as revenue deductions in future.
transactions occur. These costs are presently reported as other expenses.
Forward premium in forward contract are not considered These change in presentation in the income statement
part of the hedge. These are treated as cost of hedge and will result in decrease in both revenues and expenses.
the changes in fair value attributable to forward premium Incentives received as Government Grants will be shown
is recognised in the other comprehensive income along as other income which is currently presented under other
with the changes in fair value determined to be effective operating revenues.
portion of the hedge.
The introduction of the Standard will give rise to new
Hedge accounting is discontinued when the hedging financial statement categories in the statement of financial
instrument expires or is sold, terminated, or exercised, position, being “contract assets” and “contract liabilities.”
or no longer qualifies for hedge accounting. For forecast These items can arise through advance payment received
transactions, any cumulative gain or loss on the hedging from customers or advance delivery of goods and services
instrument recognised in equity is retained there until the in excess of or ahead of billing at the contract level. In
forecast transaction occurs. addition, disclosure requirements are extended.

If the forecast transaction is no longer expected to occur, Further, Ind AS 115, allows for transitional arrangements
the net cumulative gain or loss recognised in equity is for modified and fulfilled contracts, and clarify the
immediately transferred to the statement of Profit or Loss identification of performance obligations, principal-agent
for the year. relationships, and licenses. The application of these
amendments is also not expected to have any major
w. Recent accounting pronouncements impact on the Company’s profitability, liquidity and capital
resources or financial position.
Ind AS 115 - Revenue from Contracts with Customers
The standard outlines a single comprehensive model Ind AS 21 - The Effect of Changes in Foreign Exchange
for entities to use in accounting for revenue arising Rates
from contracts with customers and supersedes most The amendment clarifies on the accounting of transaction
of the current revenue recognition guidance. The that include the receipt or payment of advance
core principle of the new standard is for companies consideration in a foreign currency. The appendix
to recognise revenue to depict the transfer of goods explains that the date of the transaction, for the purpose
or services to customers in amounts that reflect the of determining rate, is the date of initial recognition of
consideration (that is, payment) to which the company the non-monetary prepayment asset or deferred income
expects to be entitled to exchange for those goods or liability. If there are multiple payments or receipts in
services. The new standard also will result in enhanced advance, a date of transaction is established for each
disclosures about revenue, provide guidance for payment or receipt. The Company is evaluating the impact
transactions that were not previously addressed of this amendment on its financial statements.

204
 Notes Forming Part of Financial Statements
3. Property, plant and equipment
(` in crores)
Owned assets Given on lease Taken on lease
INTEGRATED REPORT  1-65

73rd Annual Report 2017-18

Land Buildings Plant, Furniture Vehicles Computers Plant, Buildings Buildings Plant, Computers Furniture Total
machinery and & other IT machinery machinery & other IT and
and fixtures assets and and assets fixtures
equipment equipment equipment
Cost as at April 1, 2017 4,574.93 3,384.43 24,767.37 243.74 186.75 639.65 38.68 4.05 31.28 36.43 178.88 4.31 34,090.50
Additions - 139.65 2,191.50 14.32 95.91 39.64 - - - 3.52 7.28 - 2,491.82
Assets classified as held for sale - - (2.30) - - - - - - - - - (2.30)
Assets written off - - (536.82) - - - - - - - - - (536.82)
Disposal - (0.56) (241.10) (12.14) (40.31) (18.60) (0.64) (0.03) - - - - (313.38)
Cost as at March 31, 2018 4,574.93 3,523.52 26,178.65 245.92 242.35 660.69 38.04 4.02 31.28 39.95 186.16 4.31 35,729.82
Accumulated depreciation as at April 1, 2017 - (996.55) (14,184.30) (136.41) (123.72) (526.26) (20.58) (0.68) (6.27) (34.60) (163.36) (0.65) (16,193.38)
Depreciation for the year - (107.66) (1,777.03) (13.43) (26.93) (34.64) (1.32) (0.07) (0.51) (0.79) (10.70) (0.86) (1,973.94)
Assets classified as held for sale - 1.14 - - - - - - - - - 1.14
Assets written off - - 389.09 - - - - - - - - - 389.09
Disposal - 0.25 180.01 6.76 34.87 17.62 0.28 - - - - - 239.79
STATUTORY REPORTS  66-184

Accumulated depreciation as at March 31,

2018 - (1,103.96) (15,391.09) (143.08) (115.78) (543.28) (21.62) (0.75) (6.78) (35.39) (174.06) (1.51) (17,537.30)
Net carrying amount as at March 31, 2018 4,574.93 2,419.56 10,787.56 102.84 126.57 117.41 16.42 3.27 24.50 4.56 12.10 2.80 18,192.52
Cost as at April 1, 2016 4,574.93 3,247.39 22,331.38 229.53 176.75 628.72 32.88 4.05 31.28 116.42 174.26 - 31,547.59
Effect of merger of TML Drivelines - 46.22 943.76 6.49 1.92 2.55 6.37 - - - - - 1,007.31
Cost as at April 1, 2016 4,574.93 3,293.61 23,275.14 236.02 178.67 631.27 39.25 4.05 31.28 116.42 174.26 - 32,554.90
Additions - 91.19 1,626.93 11.49 24.77 40.65 0.04 - - - 4.62 4.31 1,804.00
Disposal - (0.37) (134.70) (3.77) (16.69) (32.27) (0.61) - - (79.99) - - (268.40)
Cost as at March 31, 2017 4,574.93 3,384.43 24,767.37 243.74 186.75 639.65 38.68 4.05 31.28 36.43 178.88 4.31 34,090.50
Accumulated depreciation as at April 1, 2016 - (877.38) (12,072.58) (120.91) (111.96) (521.59) (17.50) (0.59) (5.76) (94.72) (151.35) - (13,974.34)
Effect of merger of TML Drivelines (11.99) (508.41) (4.40) (0.70) (1.88) (1.16) - - - - - (528.54)
Accumulated depreciation as at April 1, 2016 - (889.37) (12,580.99) (125.31) (112.66) (523.47) (18.66) (0.59) (5.76) (94.72) (151.35) - (14,502.88)
Depreciation for the year - (107.28) (1,724.37) (12.95) (24.84) (35.05) (2.15) (0.09) (0.51) (19.87) (12.01) (0.65) (1,939.77)
Disposal - 0.10 121.06 1.85 13.78 32.26 0.23 - - 79.99 - - 249.27
Accumulated depreciation as at March 31,
FINANCIAL STATEMENTS  185-353

2017 - (996.55) (14,184.30) (136.41) (123.72) (526.26) (20.58) (0.68) (6.27) (34.60) (163.36) (0.65) (16,193.38)
Net carrying amount as at March 31, 2017 4,574.93 2,387.88 10,583.07 107.33 63.03 113.39 18.10 3.37 25.01 1.83 15.52 3.66 17,897.12

Notes:
a) Building include ` 8,631.00 (as at March 31, 2017 ` 8,631.00) being value of investments in shares of Co-operative Housing Societies.
b) Land includes ` 525.80 crores for which transfer of title is pending.

205
Notes Forming Part of Financial Statements
4.
Leases
The Company has taken land, buildings, plant and equipment, computers and furniture and fixtures under operating and finance
leases. The following is the summary of future minimum lease rental payments under non-cancellable operating leases and finance
leases entered into by the Company:
(` in crores)
As at March 31, 2018 As at March 31, 2017
Operating Finance Operating Finance
Minimum Minimum Present value Minimum Minimum Present value
Lease Lease of minimum Lease Lease of minimum
Payments Payments lease Payments Payments lease
payments payments
Not later than one year 0.40 6.56 5.78 0.97 8.65 8.36
Later than one year but not later than
five years 1.62 9.61 8.62 1.62 9.97 9.44
Later than five years 29.50 1.70 1.43 29.90 - -
Total minimum lease commitments 31.52 17.87 15.83 32.49 18.62 17.80
Less: future finance charges (2.04) (0.82)
Present value of minimum lease
payments 15.83 17.80
Included in the financial statements as:
Other financial liabilities - current
(refer 26) 5.78 8.36
Other financial liabilities - non-current
(refer 25) 10.05 9.44
15.83 17.80
Total operating lease rent expenses were ` 77.45 crores and ` 28.79 crores for the years ended March 31, 2018 and 2017, respectively.

The Company has given plant and equipment under finance leses. The following is the summary of future minimum lease payments
receivables for assets given on finance leases by the Company:

As at March 31, 2018 As at March 31, 2017

Minimum Present value Minimum Present value
lease of minimum lease of minimum
payments lease payments lease
receivables payments receivables payments
receivables receivables
Not later than one year 33.95 12.04 - -
Later than one year but not later than five years 117.01 37.44 - -
Later than five years 78.74 80.00 - -
Total minimum lease payments receivables 229.70 129.48 - -
Less: unearned finance income (100.22) -
Present value of minimum lease payments receivables 129.48 -
Included in the financial statements as:
Other financial assets - current (refer 13) 12.04 -
Other financial assets - non-current (refer 12) 117.44 -
129.48 -

206
INTEGRATED REPORT  1-65 STATUTORY REPORTS  66-184 FINANCIAL STATEMENTS  185-353

Notes Forming Part of Financial Statements

5. (a) Other Intangible assets
(` in crores)
Technical know Computer Product Total
how Software development
Cost as at April 1, 2017 349.15 542.24 4,804.98 5,696.37
Additions 42.09 31.95 1,633.95 1,707.99
Fully amortised not in use - (1.27) - (1.27)
Assets classified as held for sale - - (66.29) (66.29)
Cost as at March 31, 2018 391.24 572.92 6,372.64 7,336.80
Accumulated amortisation as at April 1, 2017 (156.65) (492.10) (2,270.91) (2,919.66)
Amortisation for the year (39.12) (28.45) (1,060.38) (1,127.95)
Fully amortised not in use - 1.27 - 1.27
Assets classified as held for sale - - 21.68 21.68
Accumulated amortisation as at March 31, 2018 (195.77) (519.28) (3,309.61) (4,024.66)
Net carrying amount as at March 31, 2018 195.47 53.64 3,063.03 3,312.14
Cost as at April 1, 2016 348.91 513.06 6,796.77 7,658.74
Effect of merger of TML drivelines - 8.71 - 8.71
Cost as at April 1, 2016 348.91 521.77 6,796.77 7,667.45
Additions 0.24 20.47 445.97 466.68
Fully amortised not in use - - (2,437.76) (2,437.76)
Cost as at March 31, 2017 349.15 542.24 4,804.98 5,696.37
Accumulated amortisation as at April 1, 2016 (123.45) (459.13) (3,672.69) (4,255.27)
Effect of merger of TML drivelines - (4.96) - (4.96)
Accumulated amortisation as at April 1, 2016 (123.45) (464.09) (3,672.69) (4,260.23)
Amortisation for the year (33.20) (28.01) (1,035.98) (1,097.19)
Fully amortised not in use - - 2,437.76 2,437.76
Accumulated amortisation as at March 31, 2017 (156.65) (492.10) (2,270.91) (2,919.66)
Net carrying amount as at March 31, 2017 192.50 50.14 2,534.07 2,776.71

(b) Intangible assets under development

For the year ended March 31,
2018 2017
Balance at the beginning 5,368.38 4,133.93
Additions 1,634.69 1,813.10
Capitalised during the year (1,644.55) (447.91)
Assets classified as held for sale (177.56) -
Write off/provision for impairment (1,355.81) (130.74)
Balance at the end 3,825.15 5,368.38

73rd Annual Report 2017-18 207

Notes Forming Part of Financial Statements
6. Investments in subsidiaries, joint ventures and associates measured at cost - non-current
(` in crores)
Number Face value Description As at As at
per unit March 31, 2018 March 31, 2017
Equity shares
i) Subsidiaries
Unquoted
- - Tata Technologies Ltd [Note 7(1)] - 224.10
6,36,97,694 10 Concorde Motors (India) Ltd [Note 3] 109.63 109.63
- - TAL Manufacturing Solutions Ltd [Note 7(1)] - 200.00
- - Tata Motors Insurance Broking and Advisory Services Ltd [Note 71(1)
and Note 7(2)] - 19.31
5,39,98,427 (GBP) 1 Tata Motors European Technical Centre PLC, (UK) [Note 2] 474.90 474.90
7,900 - Tata Technologies Inc, (USA) 0.63 0.63
1,40,47,35,056 10 Tata Motors Finance Ltd [85,714,285 shares acquired during the year] 2,800.00 2,500.00
8,67,00,000 10 Tata Marcopolo Motors Ltd 86.70 86.70
22,50,00,000 10 TML Distribution Company Ltd 225.00 225.00
2,51,16,59,418 (GBP) 1 TML Holdings Pte Ltd, (Singapore) 10,158.52 10,158.52
1,34,523 (EUR) 31.28 Tata Hispano Motors Carrocera S.A., (Spain) 17.97 17.97
1,220 (IDR) 8,855 PT Tata Motors Indonesia 0.01 0.01
2,02,000 (MAD) 1,000 Tata Hispano Motors Carroceries Maghreb S.A., (Morocco) 49.59 49.59
1,83,59,203 (SGD) 1 Tata Precision Industries Pte. Ltd, (Singapore) 40.53 40.53
Trilix Srl., Turin (Italy) [Note 4] 11.94 11.94
1,00,000 (NGN) 1 TMNL Motor Services Nigeria Ltd -# -#
13,975.42 14,118.83
Less: Provision for impairment of long-term investments (214.28) 13,761.14 (214.28) 13,904.55
ii) Associates
Quoted
29,82,214 10 Automobile Corporation of Goa Ltd 108.22 108.22
Unquoted
16,000 (TK) 1,000 NITA Co. Ltd (Bangladesh) 1.27 1.27
5,23,33,170 10 Tata AutoComp Systems Ltd 77.47 77.47
- - Tata Hitachi Construction Machinery Company Private Ltd (Note 7(1)) - 186.96 238.50 425.46
iii) Joint Ventures (JV)
Unquoted
25,00,000 10 JT Special Vehicle (P) Ltd (24,95,000 shares acquired during the year) 2.50 2.50 0.01 0.01
TOTAL 13,950.60 14,330.02
# less than ` 50,000/-
Notes:
(1) Market Value of quoted investments. 332.65 189.16
(2) The Company had given a letter of comfort to ANZ Bank, London for GBP 2 million (` 18.46 crores as at March 31, 2018) against loan extended by the bank to Tata
Motors European Technical Centre PLC. UK (TMETC). Also the Company has given an undertaking to ANZ Bank, London to retain 51% ownership of TMETC at all
times during the tenor of the loan.
(3) The Company has given a letter of comfort to Tata Capital Financial Services Ltd amounting to ` 15.00 crores against credit facility extended to Concorde Motors
(India) Ltd (CMIL). The Company will not dilute its stake in CMIL below 100% during the tenor of the facility.
(4) Trilix Srl., Turin (Italy) is a limited liability Company.

208
INTEGRATED REPORT  1-65 STATUTORY REPORTS  66-184 FINANCIAL STATEMENTS  185-353

Notes Forming Part of Financial Statements

7. Investments in subsidiaries and associate (held for sale) - carried at lower of cost or net-realisable
value - current

Number Face value Description As at As at

per unit March 31, 2018 March 31, 2017
Equity shares
Subsidiaries
Unquoted
3,03,00,600 10 Tata Technologies Ltd (refer note 1 below) 224.10 -
11,50,00,000 10 TAL Manufacturing Solutions Ltd (refer note 1 below) 200.00 -
50,00,000 10 Tata Motors Insurance Broking and Advisory Services Ltd
[refer note 1 & 2 below] (25,00,000 Bonus shares during the year) 19.31 -
Total 443.41 -
Associates
Unquoted
4,54,28,572 10 Tata Hitachi Construction Machinery Company Private Ltd
(refer note 1 below) 238.50 -
Total 681.91 -

Note:

(1) The investment in the Company’s subsidiaries Tata Technologies Ltd, TAL Manufacturing Solutions Ltd and Tata Motors Insurance Broking and Advisory
Services Ltd and associate Tata Hitachi Construction Machinery Company Private Ltd are classified as “Held for Sale” as they meet the criteria laid out under
Ind AS 105.
(2) The Company has given a letter of comfort to HDFC bank amounting to ` 1 crore against Working Capital Facility to Tata Motors Insurance Broking and
Advisory Services Ltd (TMIBASL). Also the Company has given an undertaking to HDFC bank that it will not dilute its stake below 51% in TMIBASL during the
tenor of the loan.

73rd Annual Report 2017-18 209

Notes Forming Part of Financial Statements
8. Investments-non-current
(` in crores)
Number Face value Description As at As at
per unit March 31, 2018 March 31, 2017
Investment in equity shares measured at fair
value through other comprehensive income
Quoted
- - Tata Steel Ltd [Note 9 (a)] - 213.96
- - Tata Chemicals Ltd [Note 9 (a)] - - 4.22 218.18
Unquoted
50,000 1,000 Tata International Ltd 28.85 28.85
1,383 1,000 Tata Services Ltd 0.14 0.14
350 900 The Associated Building Company Ltd 0.01 0.01
1,03,10,242 100 Tata Industries Ltd 183.19 183.19
33,600 100 Kulkarni Engineering Associates Ltd - -
12,375 1,000 Tata Sons Ltd 68.75 68.75
2,25,00,001 10 Haldia Petrochemicals Ltd 22.50 22.50
2,40,000 10 Oriental Floratech (India) Pvt. Ltd - -
43,26,651 15 Tata Capital Ltd 6.70 6.70
50,000 10 NICCO Jubilee Park Ltd 0.05 310.19 0.05 310.19
TOTAL 310.19 528.37
Note:
a) Investment in equity shares measured at fair value through other comprehensive income also include:
(Amount in `)
Number Face value Description As at As at
per unit March 31, 2018 March 31, 2017
- - Metal Scrap Trade Corporation Ltd - 25,000
50 5 Jamshedpur Co-operative Stores Ltd 250 250
16,56,517 (M$) 1 Tatab Industries Sdn. Bhd., (Malaysia) 1 1
4 25,000 ICICI Money Multiplier Bond 1 1
100 10 Optel Telecommunications 1,995 1,995
- - Punjab Chemicals - 1

b)
(` in crores)
As at As at
March 31, 2018 March 31, 2017
(1) Book Value of quoted investments - 218.18
(2) Book Value of unquoted investments 310.19 310.19
(3) Market Value of quoted investments - 218.18

210
INTEGRATED REPORT  1-65 STATUTORY REPORTS  66-184 FINANCIAL STATEMENTS  185-353

Notes Forming Part of Financial Statements

9. Investments-current
(` in crores)

Number Face value Description As at As at

per unit March 31, 2018 March 31, 2017

Investments in Mutual funds measured at

Fair value through profit and loss

Unquoted

Mutual funds 1,517.03 2,437.42

Investment in equity shares measured at fair

value through other comprehensive income

Quoted

51,41,696 10 Tata Steel Ltd (709,199 rights issue during

the year) (note (a) below) 293.62 -

3,54,599 10 Tata Steel Ltd (Partly Paid) (354,599 rights

issue during the year) (note (a) below) 5.46 -

70,249 10 Tata Chemicals Ltd (note (a) below) 4.76 303.84 - -

TOTAL 1,820.87 2,437.42

Note:
a) The Investment in Tata Steel Ltd and Tata Chemicals Ltd are classified as current investments.

b) Investment in equity shares measured at fair value through other comprehensive income also include:

(Amount in `)

Number Face value Description As at As at

per unit March 31, 2018 March 31, 2017

80,000 10 Metal Scrap Trade Corporation Ltd 25,000 -

200 10 Punjab Chemicals 1 -

c)

(` in crores)

As at As at
March 31, 2018 March 31, 2017

(1) Book Value of quoted investments 303.84 -

(2) Market Value of quoted investments 303.84 -

(3) Book Value of unquoted investments 1,517.03 2,437.42

73rd Annual Report 2017-18 211

Notes Forming Part of Financial Statements
10. Loans and advances- non current
(` in crores)
As at As at
March 31, 2018 March 31, 2017
Unsecured :
(a) Loans to employees 27.23 24.77
(b) Loan to subsidiaries
Considered good 12.04 12.04
Considered doubtful 585.75 585.75
597.79 597.79
Less : Allowances for doubtful loans (585.75) 12.04 (585.75) 12.04

( c) Dues from subsidiary companies, Considered doubtful

Tata Hispano Motors Carrocera S.A. 53.74 53.74
Less : Allowances for doubtful dues (53.74) - (53.74) -

(d) Deposits 58.37 68.57

(e) Others
Considered good 46.32 286.08
Considered doubtful 7.30 16.41
53.62 302.49
Less : Allowances for doubtful loans and advances (7.30) 46.32 (16.41) 286.08
Total 143.96 391.46

11. Loans and advances- current

As at As at
March 31, 2018 March 31, 2017
Secured :
Finance receivables 15.79 16.19
(net of provision of ` 7.22 crores and ` 6.86 crores as at March
31, 2018 and 2017, respectively)
Unsecured :
(a) Advances and other receivables 68.03 82.59
(net of provision of ` 123.15 crores and ` 87.04 crores as at
March 31, 2018 and 2017, respectively)
(b) Inter corporate deposits - Considered good - 60.00
( c) Dues from subsidiary companies (Note below) 17.23 22.79
(d) Loan to subsidiary company (Tata Motors European Technical
Centre Plc, UK) 39.22 34.39
TOTAL 140.27 215.96
Note:
As at As at
March 31, 2018 March 31, 2017
Dues from subsidiary companies:
(a) PT Tata Motors Indonesia 4.53 6.78
(b) Concorde Motors (India) Ltd 2.78 -
( c) Tata Motors Insurance Broking and Advisory Services Ltd 0.05 0.07
(d) Tata Motors (SA) (Proprietary) Ltd 0.80 5.17
(e) Tata Motors Nigeria Ltd 0.20 0.20
(f) PT Tata Motors Distribusi Indonesia 2.36 2.11
(g) Jaguar Land Rover Ltd - 1.21
(h) Tata Daewoo Commercial Vehicle Co. Ltd - 0.24
(i) Tata Motors (Thailand) Ltd 6.51 6.12
(j) Tata Motors European Technical Centre PLC - 0.02
(k) Tata Motors Finance Ltd - 0.01
(l) TML Holdings Pte Ltd - 0.86
17.23 22.79

212
INTEGRATED REPORT  1-65 STATUTORY REPORTS  66-184 FINANCIAL STATEMENTS  185-353

Notes Forming Part of Financial Statements

12. Other financial assets - non-current
(` in crores)
As at As at
March 31, 2018 March 31, 2017
(a) Derivative financial instruments 200.13 190.75
(b) Restricted deposits 3.98 3.94
( c) Finance lease receivable 117.44 -
(d) Government grants 467.14 -
(e) Others 4.71 1.63
Total 793.40 196.32

13. Other financial assets - current

As at As at
March 31, 2018 March 31, 2017
(a) Derivative financial instruments 42.21 100.35
(b) Interest accrued on loans and deposits 0.59 1.19
( c) Term / Fixed deposits other than banks - 40.00
(d) Finance lease receivable 12.04 -
(e) Interim dividend 42.37 -
(f) Government grants 411.40 -
(g) Others 137.70 -
Total 646.31 141.54

14. Other non-current assets

As at As at
March 31, 2018 March 31, 2017
(a) Capital advances 285.54 561.01
(b) Taxes recoverable, statutory deposits and dues from government 931.39 998.39
( c) Prepaid lease rental on operating lease 127.74 128.86
(d) Recoverable from Insurance companies 185.99 150.00
(e) Others 15.73 20.19
Total 1,546.39 1,858.45

15. Other current assets

As at As at
March 31, 2018 March 31, 2017
(a) Advance to suppliers and contractors 234.65 242.73
(b) Taxes recoverable, statutory deposits and dues from government 1,047.35 1,445.97
( c) Prepaid expenses 94.00 105.16
(d) Recoverable from Insurance companies 26.97 20.84
(e) Others 36.76 10.35
Total 1,439.73 1,825.05

73rd Annual Report 2017-18 213

Notes Forming Part of Financial Statements
16. Inventories
(` in crores)
As at As at
March 31, 2018 March 31, 2017
(a) Raw materials and components 2,216.20 1,510.40
(b) Work-in-progress 787.02 825.60
( c) Finished goods 2,014.37 2,817.80
(d) Stores and spare parts 201.69 195.57
(e) Consumable tools 43.31 38.39
(f) Goods-in-transit - Raw materials and components 407.54 165.25
Total 5,670.13 5,553.01
During the year ended March 31, 2018 and 2017, the Company recorded inventory write-down expenses of ` 162.87 crores and `
180.70 crores, respectively.
Cost of inventories (including cost of purchased products) recognised as expense during the year ended March 31, 2018 and 2017
amounted to ` 50,328.14 crores and ` 44,238.04 crores, respectively.

17. Trade receivables-unsecured

As at As at
March 31, 2018 March 31, 2017
Considered good 3,479.81 2,128.00
Considered doubtful 543.50 693.17
4,023.31 2,821.17
Less : Allowances for doubtful debts (543.50) (693.17)
Total 3,479.81 2,128.00

18. Allowance for trade receivables, loans and other receivables

For the For the
year ended year ended
March 31, 2018 March 31, 2017
Balance at the beginning 1,447.55 1,432.44
Allowances made/(reversed) during the year (109.19) 133.72
Written off (15.85) (118.61)
Balance at the end 1,322.51 1,447.55

19. Cash and cash equivalents

As at As at
March 31, 2018 March 31, 2017
(a) Cash on hand 0.14 0.38
(b) Cheques on hand 242.77 0.79
( c) Balances with banks (refer note below) 303.91 118.32
(d) Deposits with banks - 109.45
546.82 228.94
Note:
Includes remittances in transit 145.17 60.91

214
INTEGRATED REPORT  1-65 STATUTORY REPORTS  66-184 FINANCIAL STATEMENTS  185-353

Notes Forming Part of Financial Statements

20. Other bank balances
(` in crores)
As at As at
March 31, 2018 March 31, 2017
With upto 12 months maturity:
(a) Earmarked balances with banks (refer note below) 248.53 86.60
(b) Bank deposits 0.07 11.07
Total 248.60 97.67
Note:
Earmarked balances with banks as at March 31, 2018 of ` 163.50 crores (as at March 31, 2017 ` 67.50 crores) is held as security in
relation to repayment of borrowings.

21. Equity Share Capital

As at As at
March 31, 2018 March 31, 2017
(a) Authorised:
(i) 400,00,00,000 Ordinary shares of ` 2 each 800.00 700.00
(as at March 31, 2017: 350,00,00,000 Ordinary shares of ` 2 each)
(ii) 100,00,00,000 ‘A’ Ordinary shares of ` 2 each 200.00 200.00
(as at March 31, 2017: 100 ,00,00,000 ‘A’ Ordinary shares of ` 2 each)
(iii) 30,00,00,000 Convertible Cumulative Preference shares of ` 100 each 3,000.00 3,000.00
(as at March 31, 2017: 30,00,00,000 shares of ` 100 each)
Total 4,000.00 3,900.00
(b) Issued [Note (h)]:
(i) 288,78,43,046 Ordinary shares of ` 2 each 577.57 577.57
(as at March 31, 2017: 288,78,43,046 Ordinary shares of ` 2 each)
(ii) 50,87,36,110 ‘A’ Ordinary shares of ` 2 each 101.75 101.75
(as at March 31, 2017: 50,87,36,110 ‘A’ Ordinary shares of ` 2 each)
Total 679.32 679.32
( c) Subscribed and called up:
(i) 288,73,48,694 Ordinary shares of ` 2 each 577.47 577.47
(as at March 31, 2017: 288,73,48,428 Ordinary shares of ` 2 each)
(ii) 50,85,02,371 ‘A’ Ordinary shares of ` 2 each 101.70 101.70
(as at March 31, 2017: 50,85,02,291 ‘A’ Ordinary shares of ` 2 each)
679.17 679.17
(d) Calls unpaid - Ordinary shares
310 Ordinary shares of ` 2 each (` 1 outstanding on each) and 260 Ordinary shares of `
2 each (` 0.50 outstanding on each) (0.00) (0.00)
(as at March 31, 2017: 310 Ordinary shares of ` 2 each (` 1 outstanding on each) and 260
Ordinary shares of ` 2 each (` 0.50 outstanding on each)
(e) Paid-up (c+d): 679.17 679.17
(f) Forfeited - Ordinary shares 0.05 0.05
Total (e+f) 679.22 679.22

73rd Annual Report 2017-18 215

Notes Forming Part of Financial Statements
(g) The movement of number of shares and share capital
Year ended Year ended
March 31, 2018 March 31, 2017
(No. of shares) (` in (No. of shares) (` in crores)
crores)
(i) Ordinary shares
Balance as at April 1 288,73,48,428 577.47 288,72,03,602 577.44
Add: Allotment of shares held in abeyance 266 0.00 * 1,44,826 0.03
Balance as at March 31 288,73,48,694 577.47 288,73,48,428 577.47
(ii) ‘A’ Ordinary shares
Balance as at April 1 50,85,02,291 101.70 50,84,76,704 101.70
Add: Allotment of shares held in abeyance 80 0.00 * 25,587 0.00
Balance as at March 31 50,85,02,371 101.70 50,85,02,291 101.70

* less than ` 50,000/-

(h) The entitlements to 494,352 Ordinary shares of ` 2 each (as at March 31, 2017 : 494,618 Ordinary shares of ` 2 each) and
233,739 ‘A’ Ordinary shares of ` 2 each (as at March 31, 2017: 233,819 ‘A’ Ordinary shares of ` 2 each) are subject matter of
various suits filed in the courts / forums by third parties for which final order is awaited and hence kept in abeyance.

(i) Rights, preferences and restrictions attached to shares:

(i) Ordinary shares and ‘A’ Ordinary shares both of ` 2 each :
• The Company has two classes of shares – the Ordinary shares and the ‘A’ Ordinary shares both of ` 2 each (together
referred to as shares). In respect of every Ordinary share (whether fully or partly paid), voting rights shall be in the same
proportion as the capital paid up on such Ordinary share bears to the total paid up Ordinary share capital of the Company.
In case of every ‘A’ Ordinary share, if any resolution is put to vote on a poll or by postal ballot at any general meeting of
shareholders, the holder shall be entitled to one vote for every ten ‘A’ Ordinary shares held as per the terms of its issue and
if a resolution is put to vote on a show of hands, the holder of ‘A’ Ordinary shares shall be entitled to the same number of
votes as available to holders of Ordinary shares.
• The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual
General Meeting. Further, the Board of Directors may also declare an interim dividend. The holders of ‘A’ Ordinary shares
shall be entitled to receive dividend for each financial year at five percentage point more than the aggregate rate of dividend
declared on Ordinary shares for that financial year.
• In the event of liquidation, the shareholders are eligible to receive the remaining assets of the Company after distribution of
all preferential amounts, in proportion to their shareholdings.
(ii) American Depository Shares (ADSs) and Global Depository Shares (GDSs) :
• Each ADS and GDS underlying the ADR and GDR respectively represents five Ordinary shares of ` 2 each. A holder of ADS
and GDS is not entitled to attend or vote at shareholders meetings. An ADS holder is entitled to issue voting instructions
to the Depository with respect to the Ordinary shares represented by ADSs only in accordance with the provisions of the
Company’s ADSs deposit agreement and Indian Law. The depository for the ADSs and GDSs shall exercise voting rights in
respect of the deposited shares by issue of an appropriate proxy or power of attorney in terms of the respective deposit
agreements.
• Shares issued upon conversion of ADSs and GDSs will rank pari passu with the existing Ordinary shares of ` 2 each in all
respects including entitlement of the dividend declared.

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Notes Forming Part of Financial Statements

(j) Number of shares held by each shareholder holding more than 5 percent of the issued share capital :

As at March 31, 2018 As at March 31, 2017

% of Issued No. of Shares % of Issued No. of Shares
Share Capital Share Capital
(i) Ordinary shares :
(a) Tata Sons Ltd 32.72% 96,13,81,852 28.71% 82,89,70,378
(b) Life Insurance Corporation of India 5.08% 14,92,95,627 5.18% 14,94,23,428
( c) Citibank N.A. as Depository # 43,70,24,750 # 53,04,96,280
(ii) ‘A’ Ordinary shares :
(a) HDFC Trustee Company Ltd-HDFC Equity Fund * 34,40,000 8.19% 4,16,71,282
(b) Franklin Templeton Mutual Fund * 1,42,99,041 5.96% 3,03,29,225
( c) ICICI Prudential Balanced Advantage Fund 9.44% 4,79,98,379 - -
(d) Franklin India Smaller Companies Fund 8.74% 4,44,31,036 - -
(e) HDFC Large Cap Fund 5.15% 2,62,02,083 - -
(f) Government Of Singapore 6.78% 3,44,87,840 * 2,16,02,490

# held by Citibank, N.A. as depository for American Depository Receipts (ADRs) and Global Depository Receipts (GDRs)
* Less than 5%

(k) Information regarding issue of shares in the last five years

(a) The Company has not issued any shares without payment being received in cash.
(b) The Company has not issued any bonus shares.
( c) The Company has not undertaken any buy-back of shares.

22. A) Other components of equity

(a) The movement of Equity instruments through Other Comprehensive Income is as follows:
(` in crores)
Year ended Year ended
March 31, 2018 March 31, 2017
Balance at the beginning (27.12) (100.96)
Other comprehensive income for the year 44.04 73.84
Balance at the end 16.92 (27.12)

(b) The movement of Hedging reserve is as follows:

Balance at the beginning 11.26 7.39
Gain/(loss) recognised on cash flow hedges (4.80) 17.22
Income tax relating to gain/loss recognised on cash flow hedges 1.66 (5.97)
(Gain)/loss reclassified to profit or loss (17.22) (11.30)
Income tax relating to gain/loss reclassified to profit or loss 5.96 3.92
Balance at the end (3.14) 11.26

73rd Annual Report 2017-18 217

Notes Forming Part of Financial Statements
(` in crores)
( c) The movement of Cost of Hedging reserve is as follows:
Year ended Year ended
March 31, 2018 March 31, 2017
Balance at the beginning 11.38 -
Gain/(loss) recognised on cash flow hedges 19.86 17.40
Income tax relating to gain/loss recognised on cash flow hedges (6.87) (6.02)
(Gain) / loss reclassified to profit or loss (17.40) -
Income Tax relating to (gain) / loss reclassified to profit or loss 6.02 -
Balance at the end 12.99 11.38
(d) Summary of Other components of equity:
Equity instruments through other comprehensive income 16.92 (27.12)
Hedging reserve (3.14) 11.26
Cost of hedging reserve 12.99 11.38
Total 26.77 (4.48)

(B) Notes to reserves

a) Capital redemption reserve

The Indian Companies Act, 2013 (the “Companies Act”) requires that where a company purchases its own shares out
of free reserves or securities premium account, a sum equal to the nominal value of the shares so purchased shall be
transferred to a capital redemption reserve account and details of such transfer shall be disclosed in the balance sheet.
The capital redemption reserve account may be applied by the company, in paying up unissued shares of the company
to be issued to shareholders of the company as fully paid bonus shares. Tata Motors Limited established this reserve
pursuant to the redemption of preference shares issued in earlier years.

b) Debenture redemption reserve

The Companies Act requires that where a company issues debentures, it shall create a debenture redemption reserve
out of profits of the company available for payment of dividend. The company is required to maintain a Debenture
Redemption Reserve of 25% of the value of debentures issued, either by a public issue or on a private placement
basis. The amounts credited to the debenture redemption reserve may not be utilised by the company except to
redeem debentures.

c) Securities premium
The amount received in excess of face value of the equity shares is recognised in Securities Premium Account.

d) Retained earnings
Retained earnings are the profits that the Company has earned till date.

e) Dividends
For the year ended March 31, 2018 and 2017, considering the losses in the Tata Motors Limited (Standalone), no dividend is
permitted to be paid to the Members, as per the Companies Act, 2013 and the Rules framed thereunder.

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Notes Forming Part of Financial Statements

23. Long-term borrowings
(` in crores)
As at As at
March 31, 2018 March 31, 2017
Secured:
(a) Privately placed Non-Convertible Debentures (refer note I (i) (a) and I (ii) (a)) 200.00 700.00
(b) Term loans:
(i) from banks (refer note I (i) ( c)) 635.45 621.57
(ii) others (refer note I (i) ( b)) 144.75 130.16
( c) Finance lease obligations 10.05 9.44
990.25 1,461.17
Unsecured:
(a) Privately placed Non-Convertible Debentures (refer note I (ii) (b)) 6,307.37 5,898.57
(b) Term loan from banks
Buyer’s line of credit (at floating interest rate) (refer note I (iv)) 1,000.00 1,500.00
( c) Senior notes (refer note I (iii)) 4,858.29 4,826.35
12,165.66 12,224.92
Total 13,155.91 13,686.09

24. Short-term borrowings

As at As at
March 31, 2018 March 31, 2017
Secured:
Loans from banks (refer note II) 1,454.11 1,662.95
1,454.11 1,662.95
Unsecured:
(a) Loans from banks 13.62 46.33
(b) Inter corporate deposits from subsidiaries and associates 203.75 177.00
( c) Commercial paper 1,428.39 3,272.24
1,645.76 3,495.57
Total 3,099.87 5,158.52

I. Information regarding long-term borrowings

(i) Nature of security (on loans including interest accrued thereon) :
(a) Rated, Listed, Secured, 9.95% Coupon, Non-Convertible Debentures amounting to ` 200 crores included within Long-
term borrowings in note 23 and 10.25% Coupon, Non-Convertible Debentures amounting to ` 500 crores included
within Current maturities of Long-term borrowings in note 26 are secured by a pari passu charge by way of an English
mortgage of the Company’s freehold land together with immovable properties, plant and machinery and other movable
assets (excluding stock and book debts) situated at Sanand in the State of Gujarat.
(b) The term loan of ` 584.82 crores (recorded in books at ` 133.39 crores) is due for repayment from the quarter ending
March 31, 2033 to quarter ending March 31, 2038, along with simple interest at the rate of 0.10% p.a. The loan is secured
by a second and subservient charge (creation of charge is under process) over Company’s freehold land together with
immovable properties, plant and machinery and other movable assets (excluding stock and book debts) situated at
Sanand plant in the State of Gujarat.
The term loan of ` 35.92 crores (recorded in books at ` 11.36 crores) is due for repayment from the quarter ending June
30, 2030 to March 31, 2033, along with a simple interest of 0.01% p.a. The loan is secured by bank guarantee for the due
performance of the conditions as per the terms of the agreement.
( c)
Term loan of ` 635.45 is taken by joint operation Fiat India Automobiles Private Ltd which is due for repayment from
December 2017 to May 2023. The loan is secured by first charge over fixed assets procured from its loan/jeep project.

73rd Annual Report 2017-18 219

Notes Forming Part of Financial Statements
ii) Schedule of repayment and redemption for Non-Convertible Debentures :
(` in crores)
Non-Convertible Debentures (NCDs) Redeemable on Principal
(a) Secured :
10.25% Non-Convertible Debentures (2025) # April 30, 2025 150.00
10.25% Non-Convertible Debentures (2024) # April 30, 2024 150.00
10.25% Non-Convertible Debentures (2023) # April 30, 2023 100.00
10.25% Non-Convertible Debentures (2022) # April 30, 2022 100.00
9.95% Non-Convertible Debentures (2020) March 2, 2020 200.00
# The Company has exercised call option to redeem in full, at the end of 8th year from the date of allotment i.e. on April
30, 2018, hence classified as other financial liabilities-current.
(` in crores)
Non-Convertible Debentures (NCDs) Redeemable on Principal
(b) Unsecured :
9.77% Non-Convertible Debentures (2024) September 12, 2024 200.00
9.81% Non-Convertible Debentures (2024) August 20, 2024 300.00
9.35% Non-Convertible Debentures (2023) November 10, 2023 400.00
9.60% Non-Convertible Debentures (2022) October 29, 2022 400.00
7.71% Non-Convertible Debentures (2022) March 3, 2022 500.00
7.50% NCD due 2022(E27H Series) June 22, 2022 500.00
9.02% Non-Convertible Debentures (2021) December 10, 2021 300.00
7.50% Non-Convertible Debentures (2021) October 20, 2021 300.00
7.84% Non-Convertible Debentures (2021) September 27, 2021 500.00
8.40% Non-Convertible Debentures (2021) May 26, 2021 300.00
7.40% NCD due 2021(E27I Series Tranche 2) June 29, 2021 500.00
9.73% Non-Convertible Debentures (2020) October 1, 2020 400.00
9.70% Non-Convertible Debentures (2020) June 18, 2020 150.00
9.75% Non-Convertible Debentures (2020) May 24, 2020 100.00
9.90% Non-Convertible Debentures (2020) May 7, 2020 150.00
7.28% NCD due 2020(E27I Series Tranche 1) July 29, 2020 500.00
9.71% Non-Convertible Debentures (2019) October 1, 2019 300.00
8.00% Non-Convertible Debentures (2019) August 1, 2019 400.00
10.00% Non-Convertible Debentures (2019) May 28, 2019 110.00
9.69% Non-Convertible Debentures (2019) March 29, 2019 * 200.00
8.25% Non-Convertible Debentures (2019) January 28, 2019 * 300.00
10.30% Non-Convertible Debentures (2018) November 30, 2018 * 190.00
8.13% Non-Convertible Debentures (2018) July 18, 2018 * 400.00
Debt issue cost (2.63)

* Classified as other financial liabilities-current being maturity before March 31, 2019.

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Notes Forming Part of Financial Statements

(iii) Schedule of repayment of Senior Notes:
(` in crores)
Redeemable on Currency Amount (in As at March As at March
million) 31, 2018 31, 2017
4.625% Senior Notes April 30, 2020 USD 500 3,238.86 3,230.54
5.750% Senior Notes October 30, 2024 USD 250 1,619.43 1,595.81
4,858.29 4,826.35
(iv) The Buyer’s line of credit from banks amounting to ` 1,500 crores is repayable within a maximum period of four years from
the drawdown dates. All the repayments are due from quarter ending September 30, 2018 to March 31, 2021. The Buyer’s
line of credit of ` 500 crores classified under other financial liabilities-current being maturity before March 31, 2019.
II. Information regarding short-term borrowings
Loans, cash credits, overdrafts and buyers line of credit from banks are secured by hypothecation of existing current assets of the
Company viz. stock of raw materials, stock in process, semi-finished goods, stores and spares not relating to plant and machinery
(consumable stores and spares), bills receivable and book debts including receivable from hire purchase / leasing and all other
moveable current assets except cash and bank balances, loans and advances of the Company both present and future.
III. Collateral
Inventory, trade receivables, other financial assets, property, plant and equipment with a carrying amount of ` 4,415.30 crores
and ` 4,460.45 crores are pledged as collateral/security against the borrowings as at March 31, 2018 and 2017, respectively.
25. Other financial liabilities – non-current
(` in crores)
As at As at
March 31, 2018 March 31, 2017
(a) Derivative financial instruments - 0.55
(b) Liability for financial guarantee contracts - 995.08
( c) Liability towards employee separation scheme 82.26 71.84
(d) Others 129.02 62.76
Total 211.28 1,130.23

26. Other financial liabilities – current

As at As at
March 31, 2018 March 31, 2017
(a) Current maturities of long-term borrowings (refer note below) 2,208.06 512.37
(b) Liability for financial guarantee contracts 977.26 1,050.00
( c) Interest accrued but not due on borrowings 500.06 449.73
(d) Liability for capital expenditure 129.86 120.63
(e) Deposits and retention money 186.44 206.26
(f) Derivative financial instruments 1.29 9.38
(g) Deferred payment liability - 70.08
(h) Liability towards Investors Education and Protection Fund under Section 125 of the
Companies Act, 2013 not due
(i) Unpaid dividends 10.73 13.48
(ii) Unpaid matured deposits and interest thereon 11.88 14.09
(iii) Unpaid debentures and interest thereon 0.18 0.18
(i) Others 65.40 39.74
Total 4,091.16 2,485.94
Details of Current maturities of long-term borrowings :
(i) Non Convertible Debentures (Unsecured) (refer note I (ii) (b)) 1,089.86 450.00
(ii) Non Convertible Debentures (Secured) (refer note I (ii) (a)) 500.00 -
(iii) Finance lease obligations 5.78 8.36
(iv) Loans from Banks (refer note I (i) (d)) 112.42 34.94
(v) Buyer’s line of credit (Capex) (refer note I (i) (b)) 500.00 19.07
Total 2,208.06 512.37

73rd Annual Report 2017-18 221

Notes Forming Part of Financial Statements
27. Provisions-non current
(` in crores)
As at As at
March 31, 2018 March 31, 2017
(a) Employee benefits obligations 622.88 628.09
(b) Warranty 364.35 247.43
( c) Annual maintenance contract (AMC) 9.26 16.66
(d) Others 12.99 -
Total 1,009.48 892.18

28. Provisions-current
As at As at
March 31, 2018 March 31, 2017
(a) Employee benefits obligations 32.17 24.05
(b) Warranty 739.12 419.39
( c) Annual maintenance contract (AMC) 46.20 33.73
(d) Others 45.43 -
862.92 477.17

Note
AMC and Warranty provision movement
Year ended March 31, 2018
AMC Warranty
Balance at the beginning 50.39 666.82
Provision made during the year 15.74 907.39*
Provision used during the year (10.67) (450.55)
Impact of discounting - (20.19)
Balance at the end 55.46 1,103.47
Current 46.20 739.12
Non-current 9.26 364.35
* Include estimated recovery from suppliers of ` 141.21 crores.

29. Income taxes

The reconciliation of estimated income tax to income tax expense is as follows:
(` in crores)
Year ended Year ended
March 31, 2018 March 31, 2017
Profit/(loss) before tax (946.92) (2,353.27)
Income tax expense at tax rates applicable to individual entities (327.71) (814.42)
Additional deduction for patent, research and product development cost (198.58) (700.15)
Items (net) not deductible for tax/not liable to tax :
- foreign currency (gain)/loss relating to loans and deposits (net) 8.12 -
- interest and other expenses relating to borrowings for investment 20.95 21.46
- Dividend from subsidiaries, joint operations, associates and investments measured at fair (77.04) (57.37)
value through other comprehensive income
- Provision for impairment of capital work in progress 34.61 -
Undistributed earnings of joint operations 54.85 28.97
Deferred tax assets not recognised as realization is not probable 699.49 1,700.51
Utilization/credit of unrecognised tax losses, unabsorbed depreciation and other tax benefits (130.10) (62.57)
Reversal of tax provision for previous years (2.45) (15.78)
Others 5.79 (24.32)
Income tax expense reported 87.93 76.33

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Notes Forming Part of Financial Statements

Significant components of deferred tax assets and liabilities for the year ended March 31, 2018 are as follows:

Opening Recognised MAT Credit Recognised Closing

balance in profit or utilised in/reclassified balance
loss from OCI
Deferred tax assets:
Unabsorbed depreciation 2,546.16 (4.62) - - 2,541.54
Business loss carry forwards 1,578.01 (21.43) - - 1,556.58
Expenses deductible in future years:
- provisions, allowances for doubtful receivables
and others 977.61 (367.45) - - 610.16
Compensated absences and retirement benefits 116.55 13.30 - (6.27) 123.58
Minimum alternate tax carry-forward 29.78 (15.21) (12.23) - 2.34
Intangible assets 6.57 - - 6.57
Derivative financial instruments - 7.87 - 6.77 14.64
Unrealised profit on inventory - 1.58 - - 1.58
Others 129.44 (56.76) - - 72.68
Total deferred tax assets 5,384.12 (442.72) (12.23) 0.50 4,929.67
Deferred tax liabilities:
Property, plant and equipment 2,676.75 (97.00) - - 2,579.75
Intangible assets 2,739.64 (375.54) - - 2,364.10
Undistributed earnings in joint operations 63.24 53.02* - - 116.26
Derivative financial instruments 22.61 (22.61) - - -
Others 29.46 (5.29) - - 24.17
Total deferred tax liabilities 5,531.70 (447.42) - - 5,084.28
Deferred tax liabilities (147.58) 4.70 (12.23) 0.50 (154.61)

* Net off ` 1.83 crores reversed on dividend distribution by joint operations.

As at March 31, 2018, unrecognised deferred tax assets amount to ` 2,102.72 crores and ` 5,511.61 crores which can be carried
forward indefinitely and up to a specified period, respectively. These relate primarily to depreciation carry forwards, other deductible
temporary differences and business losses. The deferred tax asset has not been recognised on the basis that its recovery is not
probable in the foreseeable future.
Unrecognised deferred tax assets expire unutilised based on the year of origination as follows:
(` in crores)
March 31,
2021 272.13
2022 26.13
2023 1,160.42
Thereafter 4.052.93

73rd Annual Report 2017-18 223

Notes Forming Part of Financial Statements
Significant components of deferred tax assets and liabilities for the year ended March 31, 2017 are as follows:
(` in crores)
Opening Effect of Recognised Recognised Closing
balance merger with in profit or in/reclassified balance
TML Drivelines loss from OCI
Deferred tax assets:
Unabsorbed depreciation 1,984.14 - 562.02 - 2,546.16
Business loss carry forwards 1,531.47 - 46.54 - 1,578.01
Expenses deductible in future years:
- provisions, allowances for doubtful receivables
and others 1,440.93 - (463.32) - 977.61
Compensated absences and retirement benefits 111.36 3.98 4.33 (3.12) 116.55
Minimum alternate tax carry-forward 16.82 - 12.96 - 29.78
Intangible assets 7.47 - (0.90) - 6.57
Others 93.88 3.50 32.06 - 129.44
Total deferred tax assets 5,186.07 7.48 193.69 (3.12) 5,384.12
Deferred tax liabilities:
Property, plant and equipment 2,663.29 49.17 (35.71) - 2,676.75
Intangible assets 2,519.18 4.04 216.42 - 2,739.64
Undistributed earnings in joint operations 36.88 - 26.36* - 63.24
Derivative financial instruments 3.91 - 10.63 8.07 22.61
Others 34.20 - (4.74) - 29.46
Total deferred tax liabilities 5,257.46 53.21 212.96 8.07 5,531.70
Deferred tax liabilities (71.39) (45.73) (19.27) (11.19) (147.58)
* Net off ` 1.83 crores reversed on dividend distribution by joint operation.

30. Other non-current liabilities

As at March 31, As at March 31,
2018 2017
(a) Deferred revenue (refer note below) 253.09 270.40
(b) Employee Benefit Obligations - Funded 20.34 42.79
( c) Others 17.66 8.05
291.09 321.24

31. Other current liabilities

As at March 31, As at March 31,
2018 2017
(a) Advances received from customers 896.35 850.40
(b) Statutory dues (GST,VAT, Excise, Service Tax, Octroi etc) 781.12 803.11
( c) Deferred revenue (refer note below) 188.23 157.65
(d) Others 51.90 59.64
1,917.60 1,870.80
Note:
Deferred revenue includes ` 187.67 crores as at March 31, 2018 ( ` 227.92 crores as at March 31, 2017) grants relating to property,
plant and equipment related to duty saved on import of capital goods and spares under the Export Promotion Capital Goods (EPCG)
scheme. Under such scheme, the Company is committed to export prescribed times of the duty saved on import of capital goods over
a specified period of time. In case such commitments are not met, the Company would be required to pay the duty saved along with
interest to the regulatory authorities.

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Notes Forming Part of Financial Statements

32. Revenue From Operations
(` in crores)
Year ended Year ended
March 31, 2018 March 31, 2017
(a) Sale of products (including excise duty) (note 1 and 2 below) 57,868.04 47,709.39
(b) Sale of services 365.17 367.44
( c) Finance revenues 1.12 1.94
(d) Other operating revenues (note 3 below) 1,390.36 975.72
Total 59,624.69 49,054.49

Note:
(1) Includes exchange gain/(loss) (net) on hedges reclassified from hedge reserve to (0.93) (0.73)
statement of profit or loss
(2) Consequent to the introduction of Goods and Service Tax (GST) with effect from July 1, 2017, Central Excise, Value Added Tax
(VAT), etc have been replaced by GST. In accordance with Ind AS 18 on Revenue and Schedule III of the Companies Act, 2013,
GST, GST Compensation Cess, etc. are not included in Revenue from Operations for applicable periods. In view of the aforesaid
restructuring of indirect taxes, Sale of products for the year ended March 31, 2018 is not comparable with year ended March 31,
2017. Following additional information is being provided to facilitate such comparison:

Year ended Year ended

March 31, 2018 March 31, 2017
(a) Sale of products 57,868.04 47,709.39
(b) Excise duty (1,168.14) (4,623.54)
( c) Sale of products (net of excise duty) (a-b) 56,699.90 43,085.85

(3) Other operating revenue includes export and other incentives from governments (referred to as ”incentives”) of ` 829.13 crores
and ` 419.87 crores for the year ended March 31, 2018 and 2017, respectively.

33. Other income

Year ended Year ended
March 31, 2018 March 31, 2017
(a) Interest income 397.71 187.90
(b) Dividend income (note 1 below) 1,054.69 672.65
( c) Profit on sale of investments at FVTPL 103.17 116.76
(d) MTM – Investments measured at FVTPL 2.03 3.75
1,557.60 981.06
Note:
(1) Includes :
(a) Dividend from subsidiary companies and associates 999.25 669.48
(b) From investment measured at FVTOCI 14.49 4.45
( c) Exchange gain / (loss) 40.95 (1.28)

34. Employee benefits expense

Year ended Year ended
March 31, 2018 March 31, 2017
(a) Salaries, wages and bonus 3,311.57 3,179.05
(b) Contribution to provident fund and other funds 236.16 209.11
( c) Staff welfare expenses 419.00 376.19
Total 3,966.73 3,764.35

73rd Annual Report 2017-18 225

Notes Forming Part of Financial Statements
35. Finance costs
(` in crores)
Year ended Year ended
March 31, 2018 March 31, 2017
(a) Interest 1,650.35 1,649.68
Add: Exchange fluctuation considered as interest cost 6.24 -
Less: Interest capitalised* (396.11) (451.00)
1,260.48 1,198.68
(b) Discounting charges 483.95 370.33
Total 1,744.43 1,569.01
* The weighted average rate for capitalisation of interest relating to general borrowings was approximately 7.43 % and 7.63 % for the
years ended March 31, 2018 and 2017, respectively.

36. Other expenses

Year ended Year ended
March 31, 2018 March 31, 2017
(a) Processing charges 1,240.88 1,004.45
(b) Consumption of stores & spare parts 639.35 653.61
( c) Power and fuel 545.12 483.48
(d) Freight, transportation, port charges etc. 1,703.15 1,536.77
(e) Publicity 720.18 848.36
(f) Warranty expenses 766.18 493.33
(g) Information technology/computer expenses 711.95 762.39
(h) Allowances made/(reversed) for trade and other receivables (109.19) 133.72
(i) Assets Scrapped/ Written Off 995.47 141.45
(j) Works operation and other expenses (note below) 2,021.18 2,278.34
Total 9,234.27 8,335.90
Note:
Works operation and other expenses include:
(a) Auditors’ Remuneration (excluding service tax): #
(i) Audit Fees 7.34 8.16
(ii) Audit Fees for financial statements as per IFRS
(including SOX certification) 3.72 3.59
(iii) In other Capacities :
Tax Audit / Transfer Pricing Audit 0.89 0.75
Taxation Matters 0.45 0.08
(iv) Other Services * 4.47 1.51
(v) Reimbursement of travelling and out-of-pocket expenses 0.86 0.88
* Includes payment to an affiliate firm of statutory auditors
#
The above amount includes ` 10.84 crores paid to predecessor Auditor, Deloitte
Haskins and Sells LLP and its affiliates for the year ended March 31, 2018. 4.10 0.56
(b) Cost Auditors’ Remuneration (excluding service tax) :
(i) Cost Audit Fees 0.20 0.20
(ii) Reimbursement of travelling and out-of-pocket expenses 0.01 -
( c) Works operation and other expenses for the year ended March 31, 2018 includes ` 21.44 crores (` 25.94 crores for the year
ended March 31, 2017) spent by Tata Motors Ltd on standalone basis excluding interest in the joint operations, towards various
schemes of Corporate Social Responsibility (CSR) as prescribed under Section 135 of the Companies Act, 2013. No amount has
been spent on construction / acquisition of an asset of the Company. The prescribed CSR expenditure required to be spent in
the year 2017-18 as per the Companies Act, 2013 is ` Nil, in view of average net profits of the Company being ` Nil (under section
198 of the Act) for last three financial years.

226
INTEGRATED REPORT  1-65 STATUTORY REPORTS  66-184 FINANCIAL STATEMENTS  185-353

Notes Forming Part of Financial Statements

37. a) Exceptional debit of ` 962.98 crores is related to provision for impairment of certain capital work-in-progress and intangibles
under development. The company reviewed product development programs and capital work-in-progrees and consequently
provided for impairment during the year ended March 31, 2018.
b) Exceptional debit of ` 147.93 crores for the year ended March 31, 2017, relates to provision for inventory of BS III vehicles as
at March 31, 2017. This does not include higher level of customer discounts and variable marketing expenses in March 2017, to
support higher level of retail sales, which have been netted off against ‘Revenue from operations.

38. Commitments and contingencies

In the ordinary course of business, the Company faces claims and assertions by various parties. The Company assesses such claims
and assertions and monitors the legal environment on an ongoing basis, with the assistance of external legal counsel, wherever
necessary. The Company records a liability for any claims where a potential loss is probable and capable of being estimated and
discloses such matters in its financial statements, if material. For potential losses that are considered possible, but not probable,
the Company provides disclosure in the financial statements but does not record a liability in its accounts unless the loss becomes
probable.
The following is a description of claims and assertions where a potential loss is possible, but not probable.The Company believes that none
of the contingencies described below would have a material adverse effect on the Company’s financial condition, results of operations or
cash flows.

Litigation
The Company is involved in legal proceedings, both as plaintiff and as defendant. There are claims which the Company does not
believe to be of material nature, other than those described below.

Income Tax
The Company has ongoing disputes with income tax authorities relating to tax treatment of certain items. These mainly include
disallowed expenses, the tax treatment of certain expenses claimed by the Company as deductions and the computation of, or
eligibility of, the Company’s use of certain tax incentives or allowances.
Most of these disputes and/or disallowances, being repetitive in nature, have been raised by the income tax authorities consistently
in most of the years.
The Company has a right of appeal to the Commissioner of Income Tax (Appeals), or CIT (A), the Dispute Resolution Panel, or DRP,
and to the Income Tax Appellate Tribunal, or ITAT, against adverse decisions by the assessing officer, DRP or CIT (A), as applicable.
The income tax authorities have similar rights of appeal to the ITAT against adverse decisions by the CIT (A) or DRP. The Company has
a further right of appeal to the Bombay High Court or the Supreme Court against adverse decisions by the appellate authorities for
matters involving substantial question of law. The income tax authorities have similar rights of appeal.

As at March 31, 2018, there are matters and/or disputes pending in appeal amounting to ` 60.89 crores (` 148.60 crores as at March
31, 2017).

Customs, Excise Duty and Service Tax

As at March 31, 2018, there are pending litigation for various matters relating to customs, excise duty and service taxes involving
demands, including interest and penalties, of ` 1,491.36 crores (` 1,425.12 crores as at March 31, 2017). These demands challenged
the basis of valuation of the Company’s products and denied the Company’s claims of Central Value Added Tax, or CENVAT credit on
inputs. The details of the demands for more than ` 20 crores are as follows:
The Excise Authorities have raised a demand for ` 90.72 crores as at March 31, 2018 (` 90.72 crores as at March 31, 2017), on account
of alleged undervaluation’s of ex-factory discounts given by Company on passenger vehicles through invoices. The matter is being
contested by the Company before the Bombay High Court.
As at March 31, 2018, the Excise Authorities have raised a demand and penalty of ` 239.95 crores, (` 218.23 crores as at March 31,
2017), due to the classification of certain chassis (as dumpers instead of goods transport vehicles) which were sent to automotive
body builders by the Company, which the Excise Authorities claim requires the payment of the National Calamity Contingent Duty, or

73rd Annual Report 2017-18 227

Notes Forming Part of Financial Statements
NCCD. The Company has obtained a technical expert certificate on the classification. The appeal is pending before the Custom Excise
& Service Tax Appellate Tribunal.
The Excise Authorities had denied the Company’s claim of a CENVAT credit of ` 36.03 crores as at March 31, 2018 (` 24.96 crores as
at March 31, 2017) claimed by the Company from financial year 1992 to 2013, on technical grounds. The matter is being contested by
the Company before the appellate authorities.
As at March 31, 2018, the Excise Authorities had levied penalties and interest amounting to ` 679.88 crores (` 679.88 crores as at
March 31, 2017) with respect to CENVAT credit claimed by the Company from March 2010 to November 2012, on inputs, stating that
vehicles manufactured at Uttarakhand plant are “Exempted Products” and the Company may not claim a CENVAT credit on these
vehicles. The Company has challenged this demand as NCCD and the automobile cess is assessed on those vehicles, which are
“duties of excise”. Therefore, the Company asserts that these vehicles are not “Exempted Products”. The matter is being contested by
the Company before the appellate authorities.
As at March 31, 2018, the Excise Authorities have raised a demand amounting to ` 29.54 crores (` 29.54 crores as at March 31, 2017)
on pre-delivery inspection charges and free after-sales service charges incurred by dealers on Company’s products on the alleged
grounds that the pre-delivery inspection charges and free after-sales services are provided by the dealer on behalf of the Company
and should be included in excisable value of the vehicle. The case is pending before Tribunal.
As at March 31, 2018, the Exicse Authorities have confirmed demand & penalty totalling to ` 90.88 crores (` Nil as at March 31, 2017)
towards vehicles allegedly sold below cost of production with an intention to penetrate the market. The matter is being contested by
the Company before appellate authorities.
As at March 31, 2018, the Exicse Authorities have filed Appeal before appellate authority against the Order of adjudicating authority
allowing Cenvat credit of service tax of ` 36.15 crores (` 36.15 crores as at March 31, 2017) availed on consulting engineers services.

Sales Tax

The total sales tax demands (including interest and penalty), that are being contested by the Company amount to ` 949.54 crores as
at March 31, 2018 (` 965.80 crores as at March 31, 2017). The details of the demands for more than ` 20 crores are as follows:
The Sales Tax Authorities have raised demand of ` 269.38 crores as at March 31, 2018 (` 208.59 crores as at March 31, 2017)
towards rejection of certain statutory forms for concessional lower/nil tax rate (Form F and Form C) on technical grounds such as
late submission, single form issued against different months / quarters dispatches / sales, etc. and denial of exemption from tax in
absence of proof of export for certain years. The Company has contended that the benefit cannot be denied on technicalities, which
are being complied with. The matter is pending at various levels.
The Sales Tax Authorities have denied input tax credit and levied interest and penalty thereon due to varied reasons aggregating to
` 435.96 crores as at March 31, 2018 (` 305.46 crores as at March 31, 2017). The reasons for disallowing credit was mainly due to
Taxes not paid by Vendors, incorrect method of calculation of set off as per the department, alleging suppression of sales as per the
department etc. The matter is contested in appeal.

Sales tax demand aggregating ` 95.75 crores as at March 31, 2018 (` Nil as at March 31, 2017) has been raised by Sales Tax Authorities
for non submission of Maharashtra Trial Balance. This is relating to VAT assessment for the financial year 2010 to 2013. The matter is
contested in appeal.

The Sales Tax Authorities have raised demand for Entry Tax liability at various states amounting to ` 23.92 crores as at March 31, 2018
(` Nil as at March 31, 2017) . The company is contesting this issue.

Other Taxes and Dues

Other amounts for which the Company may contingently be liable aggregate to ` 205.19 crores as at March 31, 2018 (` 221.14 crores
as at March 31, 2017). Following are the cases involving more than ` 20 crores:
The municipal authorities in certain states levy octroi duty (a local indirect tax) on goods brought inside the municipal limits at rates
based on the classification of goods. Demands aggregating ` 61.65 crores as at March 31, 2018 (` 61.65 crores as at March 31, 2017)
had been raised demanding higher octroi duties on account of classification disputes relating to components purchased for the
manufacture of vehicles and retrospective increase in octroi rates relating to past periods. The dispute relating to classification is
presently pending before the Bombay High Court and the other dispute is pending before the Supreme Court.
228
INTEGRATED REPORT  1-65 STATUTORY REPORTS  66-184 FINANCIAL STATEMENTS  185-353

Notes Forming Part of Financial Statements

As at March 31, 2018, property tax amounting to ` 56.84 crores (` 53.70 crores as at March 31, 2017) has been demanded by the local
municipal authorities in respect of vacant land of the Company in the plants in Pimpri, Chinchwad and Chikhali. The Company has filed
Special Leave Petition (SLP) before the Supreme Court against an unfavorable decision of the Bombay High Court. The Supreme Court
has disposed of the SLP and remanded the matter back to the local municipal corporation for fresh adjudication.
As at March 31, 2018, Sales tax / VAT amounting to ` 30.54 crores (` 29.95 crores as at March 31, 2017) has been demanded by local
authorities on dealers in respect of spare parts used for carrying out warranty repairs. The dispute is pending before the Supreme
Court.

Commitments
The Company has entered into various contracts with vendors and contractors for the acquisition of plant and machinery, equipment
and various civil contracts of a capital nature amounting to ` 2,096.64 crores at March 31, 2018 (` 1,606.45 crores as at March 31,
2017), which are yet to be executed.
The Company has entered into various contracts with vendors and contractors for the acquisition of intangible assets of a capital
nature amounting to ` 466.01 crores as at March 31, 2018, (` 420.06 crores as at March 31, 2017), which are yet to be executed.

39. Earnings per Share (“EPS”)

(` in crores)
Year ended Year ended
March 31, 2018 March 31, 2017
(a) Profit/(loss) after tax ` crores (1,034.85) (2,429.60)
(b) The weighted average number of Ordinary shares for Basic EPS Nos. 2,88,73,48,357 2,88,72,18,310
( c) The weighted average number of ‘A’ Ordinary shares for Basic EPS Nos. 50,85,02,336 50,84,83,714
(d) The nominal value per share (Ordinary and ‘A’ Ordinary) ` 2 2
(e) Share of profit / (loss) for Ordinary shares for Basic EPS ` crores (879.89) (2,065.78)
(f) Share of profit / (loss) for ‘A’ Ordinary shares for Basic EPS * ` crores (154.96) (363.82)
(g) Earnings per Ordinary share (Basic) ` (3.05) (7.15)
(h) Earnings per ‘A’ Ordinary share (Basic) ` (3.05) (7.15)
(i) Profit after tax for Diluted EPS ` crores # #
(j) The weighted average number of Ordinary shares for Basic EPS Nos. # #
(k) Add: Adjustment for Options relating to warrants and shares held in Nos.
abeyance # #
(l) The weighted average number of Ordinary shares for Diluted EPS Nos. # #
(m) The weighted average number of ‘A’ Ordinary shares for Basic EPS Nos. # #
(n) Add: Adjustment for ‘A’ Ordinary shares held in abeyance Nos. # #
(o) The weighted average number of ‘A’ Ordinary shares for Diluted EPS Nos. # #
(p) Share of profit for Ordinary shares for Diluted EPS ` crores # #
(q) Share of profit for ‘A’ Ordinary shares for Diluted EPS * ` crores # #
( c) Earnings per Ordinary share (Diluted) ` (3.05) (7.15)
(s) Earnings per ‘A’ Ordinary share (Diluted) ` (3.05) (7.15)

* ‘A’ Ordinary Shareholders are entitled to receive dividend @ 5% points more than the aggregate rate of dividend determined by
the Company on Ordinary Shares for the financial year.
# Since there is a loss for year ended March 31, 2018 and 2017 potential equity shares are not considered as dilutive and hence
Diluted EPS is same as Basic EPS.
73rd Annual Report 2017-18 229
Notes Forming Part of Financial Statements
40. Capital Management
The Company’s capital management is intended to create value for shareholders by facilitating the meeting of long-term and short-
term goals of the Company.
The Company determines the amount of capital required on the basis of annual operating plans and long-term product and other
strategic investment plans. The funding requirements are met through equity, non-convertible debentures, senior notes and other
long-term/short-term borrowings. The Company’s policy is aimed at combination of short-term and long-term borrowings.
The Company monitors the capital structure on the basis of total debt to equity ratio and maturity profile of the overall debt portfolio
of the Company.
Total borrowings includes all long and short-term borrowings as disclosed in notes 23, 24 and 26 (a) to the financial statements.
Equity comprises all components excluding (profit)/loss on cash flow hedges.
The following table summarizes the capital of the Company:
(` in crores)
Year ended Year ended
March 31, 2018 March 31, 2017
Equity 20,161.13 21,139.97
Short-term borrowings and current maturities of long-term borrowings 5,307.93 5,670.89
Long-term borrowings 13,155.91 13,686.09
Total borrowings 18,463.84 19,356.98
Total capital (Debt + Equity) 38,624.97 40,496.95

Total equity as reported in balance sheet 20,170.98 21,162.61

Hedging reserve 3.14 (11.26)
Cost of Hedge reserve (12.99) (11.38)
Equity as reported above 20,161.13 21,139.97

230
 Notes Forming Part of Financial Statements

41. Disclosures on financial instruments

This section gives an overview of the significance of financial instruments for the Company and provides additional information on balance sheet items that contain financial
INTEGRATED REPORT  1-65

73rd Annual Report 2017-18

instruments.
The details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised,
in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2 to the financial statements.

(a) Financial assets and liabilities

The following table presents the carrying amounts and fair value of each category of financial assets and liabilities as at March 31, 2018.
(` in crores)
Financial assets Cash, and other Investments - Investments - Derivatives other Derivatives Total carrying Total fair value
financial assets FVTOCI FVTPL than in hedging in hedging value
at amortised cost relationship relationship
(a) Investments - non-current - 310.19 - - - 310.19 310.19
(b) Investments - current - 303.84 1,517.03 - - 1,820.87 1,820.87
( c) Trade receivables 3,479.81 - - - - 3,479.81 3,479.81
STATUTORY REPORTS  66-184

(d) Cash and cash equivalents 546.82 - - - - 546.82 546.82

(e) Other bank balances 248.60 - - - - 248.60 248.60
(f) Loans and advances - non-current 143.96 - - - - 143.96 143.96
(g) Loans and advances - current 140.27 - - - - 140.27 140.27
(h) Other financial assets - non-current 593.27 - - 200.13 - 793.40 793.40
(i) Other financial assets - current 604.10 - - 26.15 16.06 646.31 646.31
Total 5,756.83 614.03 1,517.03 226.28 16.06 8,130.23 8,130.23

Financial liabilities Derivatives Derivatives Other financial Total carrying Total fair value
other than in hedging liabilities value
in hedging relationship
relationship
(a) Long-term borrowings (including Current maturities of long-term
borrowings) - - 15,363.97 15,363.97 15,643.29
(b) Short-term borrowings - - 3,099.87 3,099.87 3,099.87
FINANCIAL STATEMENTS  185-353

( c) Trade payables - - 9,411.05 9,411.05 9,411.05

(d) Acceptances - - 4,814.58 4,814.58 4,814.58
(e) Other financial liabilities - non-current - - 211.28 211.28 211.28
(f) Other financial liabilities - current 0.30 0.99 1,881.81 1,883.10 1,883.10
Total 0.30 0.99 34,782.56 34,783.85 35,063.17

231
232
Notes Forming Part of Financial Statements

The following table presents the carrying amounts and fair value of each category of financial assets and liabilities as at March 31, 2017.
(` in crores)
Financial assets Cash, and other Investments - Investments - Derivatives other Derivatives Total carrying Total fair value
financial assets FVTOCI FVTPL than in hedging in hedging value
at amortised cost relationship relationship
(a) Investments - non-current - 528.37 - - - 528.37 528.37
(b) Investments - current - - 2,437.42 - - 2,437.42 2,437.42
( c) Trade receivables 2,128.00 - - - - 2,128.00 2,128.00
(d) Cash and cash equivalents 228.94 - - - - 228.94 228.94
(e) Other bank balances 97.67 - - - - 97.67 97.67
(f) Loans and advances - non-current 391.46 - - - - 391.46 391.46
(g) Loans and advances - current 215.96 - - - - 215.96 215.96
(h) Other financial assets - non-current 5.57 - - 190.75 - 196.32 196.32
(i) Other financial assets - current 41.19 - - 65.73 34.62 141.54 141.54
Total 3,108.79 528.37 2,437.42 256.48 34.62 6,365.68 6,365.68

Financial liabilities Derivatives Derivatives Other financial Total carrying Total fair value
other than in hedging liabilities value
in hedging relationship
relationship
(a) Long-term borrowings (including Current maturities of long-term
borrowings) - - 14,198.46 14,198.46 14,700.97
(b) Short-term borrowings - - 5,158.52 5,158.52 5,158.52
( c) Trade payables - - 7,082.95 7,082.95 7,082.95
(d) Acceptances - - 4,379.29 4,379.29 4,379.29
(e) Other financial liabilities - non-current 0.55 - 1,129.68 1,130.23 1,130.23
(f) Other financial liabilities - current 9.38 - 1,964.19 1,973.57 1,973.57
Total 9.93 - 33,913.09 33,923.02 34,425.53
INTEGRATED REPORT  1-65 STATUTORY REPORTS  66-184 FINANCIAL STATEMENTS  185-353

Notes Forming Part of Financial Statements

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value,
grouped into Level 1 to Level 3, as described below.
Quoted prices in an active market (Level 1): This level of hierarchy includes financial assets that are measured by reference to quoted
prices (unadjusted) in active markets for identical assets or liabilities. This category consists of quoted equity shares, quoted corporate
debt instruments and mutual fund investments.
Valuation techniques with observable inputs (Level 2): This level of hierarchy includes financial assets and liabilities, measured using
inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e; as prices) or
indirectly (i.e; derived from prices). This level of hierarchy include Company’s over-the-counter (OTC) derivative contracts.
Valuation techniques with significant unobservable inputs (Level 3): This level of hierarchy includes financial assets and liabilities
measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in
part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions
in the same instrument nor are they based on available market data.
There has been no transfers between level 1, level 2 and level 3 for the year ended March 31, 2018 and 2017.
Costs of certain unquoted equity instruments has been considered as an appropriate estimate of fair value because of a wide range of
possible fair value measurements and cost represents the best estimate of fair value within that range. These investments in equity
instruments are not held for trading. Instead, they are held for medium or long term strategic purpose. Upon the application of Ind AS
109, the Company has chosen to designate these investments in equity instruments at FVTOCI as the directors believes this provides
a more meaningful presentation for medium or long term strategic investments, than reflecting changes in fair value immediately in
profit or loss.
Derivatives are fair valued using market observable rates and published prices together with forecast cash flow information where
applicable.
(` in crores)
As at March 31, 2018
Level 1 Level 2 Level 3 Total
Financial assets measured at fair value
(a) Investments 1,820.87 - 310.19 2,131.06
(b) Derivative assets - 242.34 - 242.34
Total 1,820.87 242.34 310.19 2,373.40
Financial liabilities measured at fair value
(a) Derivative liabilities - 1.29 - 1.29
Total - 1.29 - 1.29

As at March 31, 2017

Level 1 Level 2 Level 3 Total
Financial assets measured at fair value
(a) Investments 2,655.60 - 310.19 2,965.79
(b) Derivative assets - 291.10 - 291.10
Total 2,655.60 291.10 310.19 3,256.89
Financial liabilities measured at fair value
(a) Derivative liabilities - 9.93 - 9.93
Total - 9.93 - 9.93

73rd Annual Report 2017-18 233

Notes Forming Part of Financial Statements
The following table provides an analysis of fair value of financial instruments that are not measured at fair value on recurring basis,
grouped into Level 1 to Level 3 categories:
(` in crores)
As at March 31, 2018
Level 1 Level 2 Level 3 Total
Financial assets not measured at fair value
(a) Investments - - - -
Total - - - -
Financial liabilities not measured at fair value
(a) Long-term borrowings (including Current maturities of long- 4,952.01 10,691.28 - 15,643.29
term borrowings)
(b) Short-term borrowings - 3,099.87 - 3,099.87
Total 4,952.01 13,791.15 - 18,743.16

As at March 31, 2017

Level 1 Level 2 Level 3 Total
Financial assets not measured at fair value
(a) Investments - - - -
Total - - - -
Financial liabilities not measured at fair value
(a) Long-term borrowings (including Current maturities of long- 5,047.12 9,653.85 - 14,700.97
term borrowings)
(b) Short-term borrowings - 5,158.52 - 5,158.52
Total 5,047.12 14,812.37 - 19,859.49
The short-term financial assets and liabilities are stated at amortised cost which is approximately equal to their fair value.
The fair value of borrowings which have a quoted market price in an active market is based on its market price and for other borrowings
the fair value is estimated by discounting expected future cash flows, using a discount rate equivalent to the risk-free rate of return,
adjusted for the credit spread considered by the lenders for instruments of similar maturity.
Management uses its best judgment in estimating the fair value of its financial instruments. However, there are inherent limitations
in any estimation technique. Therefore, substantially for all financial instruments, the fair value estimates presented above are not
necessarily indicative of all the amounts that the Company could have realised or paid in sale transactions as of respective dates.
As such, the fair value of the financial instruments subsequent to the respective reporting dates may be different from the amounts
reported at each year end.

234
INTEGRATED REPORT  1-65 STATUTORY REPORTS  66-184 FINANCIAL STATEMENTS  185-353

Notes Forming Part of Financial Statements

Offsetting
Certain financial assets and financial liabilities are subject to offsetting where there is currently a legally enforceable right to set
off recognised amounts and the Company intends to either settle on a net basis, or to realise the asset and settle the liability,
simultaneously.
Certain derivative financial assets and financial liabilities are subject to master netting arrangements, whereby in the case of
insolvency, derivative financial assets and financial liabilities will be settled on a net basis.
The following table discloses the amounts that have been offset, in arriving at the balance sheet presentation and the amounts that
are available for offset only under certain conditions as at March 31, 2018:
(` in crores)
Gross Gross amount Net amount Amounts subject to an Net amount
amount recognised as presented in enforceable master netting after
recognised set off in the the balance arrangement offsetting
balance sheet sheet Financial Cash
instruments collateral
Financial assets
(a) Derivative financial
instruments 242.34 - 242.34 - - 242.34
(b) Trade receivables 3,670.42 (190.61) 3,479.81 - - 3,479.81
( c) Loans and advances-current 157.36 (17.09) 140.27 - - 140.27
Total 4,070.12 (207.70) 3,862.42 - - 3,862.42
Financial liabilities
(a) Derivative financial
instruments 1.29 - 1.29 - - 1.29
(b) Trade payables 9,618.75 (207.70) 9,411.05 - - 9,411.05
Total 9,620.04 (207.70) 9,412.34 - - 9,412.34
The following table discloses the amounts that have been offset in arriving at the balance sheet presentation and the amounts that
are available for offset only under certain conditions as at March 31, 2017:

Gross Gross amount Net amount Amounts subject to an Net amount

amount recognised as presented in enforceable master netting after
recognised set off in the the balance arrangement offsetting
balance sheet sheet Financial Cash
instruments collateral
Financial assets
(a) Derivative financial
instruments 291.10 - 291.10 (6.07) - 285.03
(b) Trade receivables 2,209.19 (81.19) 2,128.00 - - 2,128.00
( c) Loans and advances-current 256.68 (40.72) 215.96 - - 215.96
Total 2,756.97 (121.91) 2,635.06 (6.07) - 2,628.99
Financial liabilities
(a) Derivative financial
instruments 9.93 - 9.93 (6.07) - 3.86
(b) Trade payables 7,204.86 (121.91) 7,082.95 - - 7,082.95
Total 7,214.79 (121.91) 7,092.88 (6.07) - 7,086.81

73rd Annual Report 2017-18 235

Notes Forming Part of Financial Statements
( c) Financial risk management
In the course of its business, the Company is exposed primarily to fluctuations in foreign currency exchange rates, interest rates,
equity prices, liquidity and credit risk, which may adversely impact the fair value of its financial instruments.
The Company has a risk management policy which not only covers the foreign exchange risks but also other risks associated
with the financial assets and liabilities such as interest rate risks and credit risks. The risk management policy is approved by the
board of directors. The risk management framework aims to:
• Create a stable business planning environment by reducing the impact of currency and interest rate fluctuations on the
Company’s business plan.
• Achieve greater predictability to earnings by determining the financial value of the expected earnings in advance.

(i) Market risk

Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a
change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the
interest rates, foreign currency exchange rates, equity price fluctuations, liquidity and other market changes. Future specific
market movements cannot be normally predicted with reasonable accuracy.

(i) (a) Foreign currency exchange rate risk:

The fluctuation in foreign currency exchange rates may have potential impact on the income statement and equity,
where any transaction references more than one currency or where assets/liabilities are denominated in a currency
other than the functional currency.
Considering the countries and economic environment in which the Company operates, its operations are subject to risks
arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in U.S. dollar,
Euro and Thai Baht against the respective functional currencies of the Company.
The Company, as per its risk management policy, uses foreign exchange and other derivative instruments primarily
to hedge foreign exchange and interest rate exposure. Any weakening of the functional currency may impact the
Company’s cost of exports and cost of borrowings and consequently may increase the cost of financing the Company’s
capital expenditures.
The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate
risks. It hedges a part of these risks by using derivative financial instruments in accordance with its risk management
policies.
The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate
exposure of a currency and a simultaneous parallel foreign exchange rates shift in the foreign exchange rates of each
currency by 10%.
The exposure as indicated below is mitigated by some of the derivative contracts entered into by the Company as
disclosed in (iv) derivative financial instruments and risk management below.

The following table sets forth information relating to foreign currency exposure (other than risk arising from derivatives
disclosed at clause (iv) below) as of March 31, 2018:
(` in crores)
U.S. dollar Euro GBP THB Others 1 Total
Financial assets 591.30 18.14 95.09 128.80 27.69 861.02
Financial liabilities 6,157.54 175.97 523.79 3.15 29.87 6,890.32
1 Others mainly include currencies such as the Russian rouble, Japanese yen, Swiss franc, Australian dollars, South
African rand, Thai baht and Korean won.
10% appreciation/depreciation of the respective foreign currencies with respect to functional currency of the
Company would result in decrease/increase in the Company’s net profit/(loss) before tax by approximately ` 86.10
crores and ` 689.03 crores for financial assets and financial liabilities respectively for the year ended March 31,
2018.

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Notes Forming Part of Financial Statements

The following table sets forth information relating to foreign currency exposure (other than risk arising from
derivatives disclosed at clause (iv) below) as of March 31, 2017:
(` in crores)
U.S. dollar Euro GBP THB Others 2 Total
Financial assets 395.23 11.03 34.53 95.25 16.22 552.26
Financial liabilities 5,974.81 150.24 374.84 8.17 26.17 6,534.23
2 Others mainly include currencies such as the Russian rouble, Japanese yen, Swiss franc, Australian dollars, South
African rand, Thai baht and Korean won.
10% appreciation/depreciation of the respective foreign currencies with respect to functional currency of the
Company would result in decrease/increase in the Company’s net profit/(loss) before tax by approximately ` 55.23
crores and ` 653.42 crores for financial assets and financial liabilities, respectively for the year ended March 31,
2017.
(Note: The impact is indicated on the profit/(loss) before tax basis.)

(i) (b) Interest rate risk

Interest rate risk is measured by using the cash flow sensitivity for changes in variable interest rates. Any movement in
the reference rates could have an impact on the Company’s cash flows as well as costs.

The Company is subject to variable interest rates on some of its interest bearing liabilities. The Company’s interest
rate exposure is mainly related to debt obligations. The Company also uses a mix of interest rate sensitive financial
instruments to manage the liquidity and fund requirements for its day to day operations like short term loans.

As at March 31, 2018 and 2017, financial liability of ` 3,239.35 crores and ` 3,418.97 crores, respectively, was subject to
variable interest rates. Increase/decrease of 100 basis points in interest rates at the balance sheet date would result in
decrease/increase in profit/(loss) before tax of ` 32.39 crores and ` 34.19 crores for the year ended March 31, 2018 and
2017, respectively.
The model assumes that interest rate changes are instantaneous parallel shifts in the yield curve. Although some assets
and liabilities may have similar maturities or periods to re-pricing, these may not react correspondingly to changes in
market interest rates. Also, the interest rates on some types of assets and liabilities may fluctuate with changes in
market interest rates, while interest rates on other types of assets may change with a lag.
The risk estimates provided assume a parallel shift of 100 basis points interest rate across all yield curves. This
calculation also assumes that the change occurs at the balance sheet date and has been calculated based on risk
exposures outstanding as at that date. The period end balances are not necessarily representative of the average debt
outstanding during the period.
This analysis assumes that all other variables, in particular foreign currency rates, remain constant.
(Note: The impact is indicated on the profit/(loss) before tax basis).

(i) ( c) Equity Price risk

Equity Price Risk is related to the change in market reference price of the investments in equity securities.
The fair value of some of the Company’s investments measured at fair value through other comprehensive income
exposes the Company to equity price risks. These investments are subject to changes in the market price of securities.
The fair value of Company’s investment in quoted equity securities as of March 31, 2018 and 2017 was ` 303.84 crores
and ` 218.18 crores, respectively. A 10% change in equity price as of March 31, 2018 and 2017 would result in an impact
of ` 30.38 crores and ` 21.82 crores, respectively.
(Note: The impact is indicated on equity before consequential tax impact, if any).

73rd Annual Report 2017-18 237

Notes Forming Part of Financial Statements
(ii)
Credit risk
Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual
terms or obligations. Credit risk encompasses both the direct risk of default and the risk of deterioration of creditworthiness
as well as concentration risks.
Financial instruments that are subject to concentrations of credit risk, principally consist of investments classified as fair
value through profit and loss, trade receivables, loans and advances and derivative financial instruments. None of the
financial instruments of the Company result in material concentrations of credit risks.

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was
` 7,819.91 crores and ` 6,069.96 crores as at March 31, 2018 and 2017, respectively, being the total of the carrying amount
of balances with banks, short term deposits with banks, trade receivables, finance receivables, margin money and other
financial assets excluding equity investments.
Financial assets that are neither past due nor impaired
None of the Company’s cash equivalents, including time deposits with banks, are past due or impaired. Regarding trade
receivables and other receivables, and other loans or receivables that are neither impaired nor past due, there were no
indications as at March 31, 2018, that defaults in payment obligations will occur.
Credit quality of financial assets and impairment loss
The ageing of trade receivables as of balance sheet date is given below. The age analysis has been considered from the due
date.
(` in crores)
As at March 31, 2018 As at March 31, 2017

Trade receivables Gross Allowance Net Gross Allowance Net

Period (in months)

(a) Not due 1,674.79 (8.10) 1,666.69 915.10 (9.59) 905.51

(b) Overdue up to 3 months 1,133.46 (33.60) 1,099.86 841.67 (15.83) 825.84

( c) Overdue 3-6 months 144.00 (12.50) 131.50 138.47 (11.36) 127.11

(d) Overdue more than 6 months 1,071.06 (489.30) 581.76 925.93 (656.39) 269.54 1

TOTAL 4,023.31 (543.50) 3,479.81 2,821.17 (693.17) 2,128.00

1
Trade receivables overdue more than six months include ` 462.22 crores as at March 31, 2018 (` 212.29 crores as at
March 31, 2017) outstanding from state government organizations in India, which are considered recoverable.
Trade receivables consist of a large number of various types of customers, spread across geographical areas. Ongoing
credit evaluation is performed on the financial condition of these trade receivables and where appropriate allowance
for losses are provided. Further the Company, groups the trade receivables depending on type of customers and
accordingly credit risk is determined.

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Notes Forming Part of Financial Statements

(iii)
Liquidity risk
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk
management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements.
The Company has obtained fund and non-fund based working capital lines from various banks. Further, the Company has
access to funds from debt markets through commercial paper programs, non-convertible debentures, senior notes and
other debt instruments. The Company invests its surplus funds in bank fixed deposit and liquid and liquid plus schemes
of mutual funds, which carry no/low mark to market risks. The Company has also invested 15% of the non-convertible
debentures (taken/issued by the Company) falling due for repayment in the next 12 months in bank deposits, to meet the
regulatory norms of liquidity requirements.
The Company also constantly monitors funding options available in the debt and capital markets with a view to maintaining
financial flexibility.
The table below provides details regarding the contractual maturities of financial liabilities, including estimated interest
payments as at March 31, 2018:
(` in crores)
Financial liabilities Carrying Due in 1st Due in 2nd Due in 3rd to Due after Total
amount Year Year 5th Year 5th Year contractual
cash flows

(a) Trade payables 9,411.05 9,411.05 - - - 9,411.05

(b) Acceptances 4,814.58 4,814.58 - - - 4,814.58

( c) Borrowings and interest thereon 18,963.90 6,238.08 2,006.03 10,638.87 3,570.94 22,453.92

(d) Other financial liabilities 1,593.03 1,401.69 83.97 86.30 73.47 1,645.43

(e) Derivative liabilities 1.29 1.29 - - - 1.29

Total 34,783.85 21,866.69 2,090.00 10,725.17 3,644.41 38,326.27

The table below provides details regarding the contractual maturities of financial liabilities, including estimated interest
payments as at March 31, 2017:

Financial liabilities Carrying Due in 1st Due in 2nd Due in 3rd Due after Total
amount Year Year to 5th Year 5th Year contractual
cash flows

(a) Trade payables 7,082.95 7,082.95 - - - 7,082.95

(b) Acceptances 4,379.29 4,379.29 - - - 4,379.29

( c) Borrowings and interest thereon 19,806.71 7,056.76 2,662.85 10,158.67 5,003.70 24,881.98

(d) Other financial liabilities 2,644.14 1,493.66 1,019.23 56.56 73.13 2,642.58

(e) Derivative liabilities 9.93 9.38 - - 0.55 9.93

Total 33,923.02 20,022.04 3,682.08 10,215.23 5,077.38 38,996.73

73rd Annual Report 2017-18 239

Notes Forming Part of Financial Statements
(iv) Derivative financial instruments and risk management
The Company has entered into a variety of foreign currency, interest rates and commodity forward contracts and options to
manage its exposure to fluctuations in foreign exchange rates, interest rates and commodity price risk. The counterparty is
generally a bank. These financial exposures are managed in accordance with the Company’s risk management policies and
procedures.
The Company also enters into interest rate swaps and interest rate currency swap agreements, mainly to manage exposure
on its fixed rate or variable rate debt. The Company uses interest rate derivatives or currency swaps to hedge exposure to
exchange rate fluctuations on principal and interest payments for borrowings denominated in foreign currencies.
Specific transactional risks include risks like liquidity and pricing risks, interest rate and exchange rate fluctuation risks,
volatility risks, counterparty risks, settlement risks and gearing risks.
Fair value of derivative financial instruments are determined using valuation techniques based on information derived from
observable market data.
The fair value of derivative financial instruments is as follows:
(` in crores)
As at March As at March
31, 2018 31, 2017
(a) Foreign currency forward exchange contracts and options 245.74 276.81
(b) Commodity Derivatives (4.69) 4.37
Total 241.05 281.18

The gain/loss due to fluctuation in foreign currency exchange rates on derivative contracts, recognised in the income
statement was ` 6.31 crores (loss) and ` 85.41 crores (loss) for the years ended March 31, 2018 and 2017, respectively.
The gain/(loss) on commodity derivative contracts, recognised in the income statement was ` 6.07 crores and ` 9.06 crores
for the years ended March 31, 2018 and 2017, respectively.

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Notes Forming Part of Financial Statements

42. Related-party transactions
The Company’s related parties principally consist of subsidiaries, joint operations, associates and their subsidiaries, Tata Sons Ltd,
subsidiaries and joint ventures of Tata Sons Ltd. The Company routinely enters into transactions with these related parties in the
ordinary course of business. The Company enters into transactions for sale and purchase of products and services with its related
parties.
The following table summarizes related-party transactions and balances for the year ended / as at March 31, 2018:
(` in crores)
Subsidiaries Joint Associates Tata Sons Total
Operations and its Ltd, its
subsidiaries subsidiaries
and joint
ventures
Purchase of products 1,217.67 3,163.05 2,595.40 170.71 7,146.83
Sale of products 5,918.05 545.49 199.80 453.26 7,116.60
Services received 2,548.55 - 8.82 256.29 2,813.66
Services rendered 221.54 4.31 13.05 1.59 240.49
Bills discounted - - - 4,135.03 4,135.03
Purchase of property, plant and equipment 41.25 - 62.43 0.18 103.86
Purchase of investments - 2.50 - - 2.50
Interest (income)/expense, dividend (income)/paid,
net (931.25) (4.56) (9.43) 3.93 (941.31)
Finance given (including loans and equity) - - - - -
Finance given, taken back (including loans and
equity) 60.00 - - - 60.00
Finance taken (including loans and equity) 1,773.55 - 489.00 - 2,262.55
Finance taken, paid back (including loans and
equity) 1,746.80 - 489.00 - 2,235.80
Assets / deposits given as security 2.35 - - - 2.35

Amounts receivable in respect of loans and interest

thereon 637.37 - - - 637.37
Amounts payable in respect of loans and interest
thereon 147.75 - 56.00 2.10 205.85
Trade and other receivables 564.28 - 61.18 61.59 687.05
Trade payables 1,592.08 184.81 149.57 67.43 1,993.89
Acceptances - - - 220.16 220.16
Assets / deposits given as security 2.54 - - 3.00 5.54
Deposit taken as security 3.31 - - - 3.31
Provision for amount receivable (including loans) 639.49 - - - 639.49

Note: With the introduction of GST from July 01, 2017, the related party transactions reported does not include indirect tax component.
The previous period figures to that extent is not comparable.

73rd Annual Report 2017-18 241

Notes Forming Part of Financial Statements
The following table summarizes related-party transactions and balances for the year ended / as at March 31, 2017:
(` in crores)
Subsidiaries Joint Associates Tata Sons Total
Operations and its Ltd, its
subsidiaries subsidiaries
and joint
ventures
Purchase of products 1,036.85 2,275.75 2,056.84 65.46 5,434.90
Sale of products 4,541.55 323.72 248.20 452.62 5,566.09
Services received 1,803.86 0.07 10.89 256.98 2,071.80
Services rendered 216.14 16.11 13.03 4.64 249.92
Bills discounted - - - 3,202.77 3,202.77
Purchase of property, plant and equipment 49.06 - 13.79 0.02 62.87
Interest (income)/expense, dividend (income)/paid, net (648.91) (12.12) (11.07) 36.52 (635.58)
Finance given (including loans and equity) 222.26 - - - 222.26
Finance given, taken back (including loans and equity) 30.00 132.50 - - 162.50
Finance taken (including loans and equity) 1,358.00 329.00 - - 1,687.00
Finance taken, paid back (including loans and equity) 1,397.00 300.00 - - 1,697.00
Deposits taken as security 3.31 - - - 3.31

Amounts receivable in respect of loans and interest

thereon 692.48 - - 5.33 697.81
Amounts payable in respect of loans and interest
thereon 121.00 - 56.00 0.64 177.64
Trade and other receivables 231.02 - 46.26 36.14 313.42
Trade payables 1,014.18 123.95 39.63 49.54 1,227.30
Assets / deposits given as security 2,502.35 - - 3.00 2,505.35
Deposit taken as security 3.31 - - - 3.31
Provision for amount receivable (including loans) 639.49 - - - 639.49

Details of significant transactions are given below:

Particulars Nature of relationship Year ended Year ended
March 31, 2018 March 31, 2017
i) Bill discounted
Tata Sons Ltd, its subsidiaries and
Tata Capital Ltd
joint ventures 4,135.03 3,202.77
ii) Dividend Income
TML Holding Pte Ltd Subsidiary 789.85 507.64

Compensation of key management personnel:

Year ended Year ended March
March 31, 2018 31, 2017
Short-term benefits 39.49 30.40
Post-employment benefits* 1.88 2.04
The compensation of CEO and Managing Director is ` 26.42 crores and ` 22.55 crores for the year ended March 31, 2018 and 2017
respectively.
* Excludes provision for encashable leave and gratuity for certain key management personnel as a separate actuarial valuation is not
available.
Year ended March 31, 2018 Year ended March 31, 2017
Other transactions with key management personnel:
Dividend paid - - **
** less than ` 50,000/-
Refer note 44 for list of subsidiaries of the Company.
Refer note 45 for information on transactions with post-employment benefit plans.

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Notes Forming Part of Financial Statements

43. Disclosures required by Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015 and Section 186 (4) of the Companies Act, 2013
(a) Amount of loans / advances in nature of loans outstanding from subsidiaries as at March 31, 2018, on a standalone basis.
(` in crores)

Outstanding Maximum
as at March amount
31, 2018/ outstanding
March 31, during the
2017 year

Name of the Company

Tata Motors European Technical Centre Plc., UK 39.22 39.22

[Tata Motors European Technical Centre has utilised this loan for investment in National Automotive
Innovation Centre set up jointly with University of Warwick and Jaguar Landrover Ltd and carried an
interest rate of 12 months LIBOR + 3% prevailing rate (4.7076% p.a-5.6492% p.a] 34.39 40.56

Tata Hispano Motors Carrocera S.A. 539.40 539.40

(Tata Hispano Motors Carrocera S.A. has utilised this loan for meeting its capex requirement and
general corporate purposes, which is fully provided). 539.40 539.40

Tata Hispano Motors Carroceries Maghreb SA 58.39 58.39

(Tata Hispano Motors Carroceries Maghreb SA has utilised this loan for general corporate purposes,
which is partly provided). 58.39 58.39

Concorde Motors (India) Ltd - 50.00

(Inter Corporate Deposit utilised for working capital finance at the rate of interest of 9% p.a to 10.00%
p.a. having Call / Put option). 50.00 50.00

Tata Marcopolo Motors Ltd - 10.00

(Inter Corporate Deposit utilised for working capital finance at the rate of interest of 9.00% p.a. to
10.00% p.a having Call / Put option). 10.00 25.00

(b) Details of Investments made are given in notes 6, 7, 8 and 9

73rd Annual Report 2017-18 243

Notes Forming Part of Financial Statements
44. Details of significant investments in subsidiaries, joint ventures and associates

% direct holding

Name of the Company Country of As at March As at March

incorporation/ 31, 2018 31, 2017
Place of
business

Subsidiaries

TAL Manufacturing Solutions Ltd India 100.00 100.00

Concorde Motors (India) Ltd India 100.00 100.00

Tata Motors Insurance Broking & Advisory Services Ltd India 100.00 100.00

Tata Motors European Technical Centre Plc UK 100.00 100.00

Tata Technologies Ltd India 72.29 72.32

Tata Motors Finance Ltd India 100.00 100.00

Tata Marcopolo Motors Ltd India 51.00 51.00

TML Holdings Pte Ltd Singapore 100.00 100.00

TML Distribution Company Ltd India 100.00 100.00

Tata Hispano Motors Carrocera S.A Spain 100.00 100.00

Tata Hispano Motors Carroceries Maghreb S.A Morocco 100.00 100.00

Trilix S.r.l Italy 80.00 80.00

Tata Precision Industries Pte Ltd Singapore 78.39 78.39

Joint Ventures

JT Special Vehicle (P) Ltd India 50.00 50.00

Associates

Automobile Corporation of Goa Ltd India 46.44 46.44

Nita Co. Ltd Bangladesh 40.00 40.00

Tata AutoComp Systems Ltd India 26.00 26.00

Tata Hitachi Construction Machinery Company Private Ltd India 39.74 39.74

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Notes Forming Part of Financial Statements

45. Employee benefits
Defined Benefit Plan
Pension and post retirement medical plans
The following table sets out the funded and unfunded status and the amounts recognised in the financial statements for the pension
and the post retirement medical plans in respect of Tata Motors and joint operations:
(` in crores)
Pension Benefits Post retirement Medical Benefits
As at March As at March As at March As at March
31, 2018 31, 2017 31, 2018 31, 2017
Change in defined benefit obligations :
Defined benefit obligation, beginning of the year 860.35 813.84 169.31 148.60
Current service cost 56.64 54.11 8.89 7.47
Interest cost 60.26 61.88 12.01 11.55
Remeasurements (gains) / losses
Actuarial (gains) / losses arising from changes in demographic
assumptions (11.28) - (11.17) -
Actuarial (gains) / losses arising from changes in financial
assumptions 25.21 12.58 (2.65) 20.24
Actuarial (gains) / losses arising from changes in experience
adjustments 8.70 (6.89) (28.24) (10.31)
Transfer in/(out) of liability 1.58 - - -
Benefits paid from plan assets (105.49) (69.89) - -
Benefits paid directly by employer (5.34) (5.28) (9.60) (8.24)
Past service cost- plan amendments 7.55 - - -
Defined benefit obligation, end of the year 898.18 860.35 138.55 169.31
Change in plan assets:
Fair value of plan assets, beginning of the year 738.53 711.33 - -
Interest income 55.42 54.59 - -
Remeasurements gains / (losses)
Return on plan assets, (excluding amount included in net Interest
expense) (0.59) 23.81 - -
Employer’s contributions 110.28 18.69 - -
Transfer in/(out) of assets 1.58 - - -
Benefits paid (105.49) (69.89) - -
Fair value of plan assets, end of the year 799.73 738.53 - -

Pension Benefits Post retirement medical

Benefits
As at March As at March As at March As at March
31, 2018 31, 2017 31, 2018 31, 2017

Amount recognised in the balance sheet consists of

Present value of defined benefit obligation 898.18 860.35 138.55 169.31
Fair value of plan assets 799.73 738.53 - -
Net liability (98.45) (121.82) (138.55) (169.31)
Amounts in the balance sheet:
Non–current assets 0.82 4.26 - -
Non–current liabilities (99.27) (126.08) (138.55) (169.31)
Net liability (98.45) (121.82) (138.55) (169.31)

73rd Annual Report 2017-18 245

Notes Forming Part of Financial Statements
Total amount recognised in other comprehensive income consists of:
(` in crores)
Pension Benefits Post retirement medical
Benefits
As at As at As at As at
March 31, 2018 March 31, 2017 March 31, 2018 March 31, 2017
Remeasurements (gains) / losses ( 4.99) (28.21) (40.20) 1.86
(4.99) (28.21) (40.20) 1.86

Information for funded plans with a defined benefit obligation in excess of plan assets:

Pension Benefits
As at As at March 31,
March 31, 2018 2017

Defined benefit obligation 44.71 704.77

Fair value of plan assets 41.99 678.02

Information for funded plans with a defined benefit obligation less than plan assets:

Pension Benefits
As at As at
March 31, 2018 March 31, 2017

Defined benefit obligation 756.92 56.25

Fair value of plan assets 757.74 60.51

Information for unfunded plans:

Pension Benefits Post retirement medical

Benefits
As at As at As at As at
March 31, 2018 March 31, 2017 March 31, 2018 March 31, 2017
Defined benefit obligation 96.55 99.33 138.55 169.31

Net pension and post retirement medical cost consist of the following components:

Pension Benefits Post retirement medical

Benefits
Year ended Year ended Year ended Year ended
March 31, 2018 March 31, 2017 March 31, 2018 March 31, 2017
Service cost 56.64 54.11 8.89 7.47
Net interest cost / (income) 4.84 7.29 12.01 11.55
Past service cost- plan amendments 7.55 - - -
Net periodic cost 69.03 61.40 20.90 19.02

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Notes Forming Part of Financial Statements

Other changes in plan assets and benefit obligation recognised in other comprehensive income.

Pension Benefits Post retirement medical Benefits

Year ended Year ended Year ended Year ended
March 31, March 31, March 31, March 31,
2018 2017 2018 2017
Remeasurements
Return on plan assets, (excluding amount included in net Interest
expense) 0.59 (23.81) - -
Actuarial (gains) / losses arising from changes in demographic
assumptions (11.28) - (11.17) -
Actuarial (gains) / losses arising from changes in financial
assumptions 25.21 12.58 (2.65) 20.24
Actuarial (gains) / losses arising from changes in experience
adjustments on plan liabilities 8.70 (6.89) (28.24) (10.31)
Total recognised in other comprehensive income 23.22 (18.12) (42.06) 9.93
Total recognised in statement of profit and loss and other
comprehensive income 92.25 43.28 (21.16) 28.95

The assumptions used in accounting for the pension and post retirement medical plans are set out below:

Pension Benefits Post retirement medical Benefits

As at March As at March As at March As at March
31, 2018 31, 2017 31, 2018 31, 2017
Discount rate 6.75%-7.70% 6.75%-7.50% 7.70% 7.30%
Rate of increase in compensation level of covered employees 6.00%-8.00% 5.00%-8.00% NA NA
Increase in health care cost NA NA 6.00% 6.00%

Plan Assets
The fair value of Company’s pension plan asset as of March 31, 2018 and 2017 by category are as follows:

Pension benefits
As at As at
March 31, 2018 March 31, 2017
Asset category:
Cash and cash equivalents 6.5% 0.4%
Debt instruments (quoted) 65.2% 71.9%
Debt instruments (unquoted) 0.9% 5.4%
Equity instruments (quoted) 1.9% 1.5%
Deposits with Insurance companies 25.5% 20.8%
100.0% 100.0%
The Company’s policy is driven by considerations of maximizing returns while ensuring credit quality of the debt instruments. The
asset allocation for plan assets is determined based on investment criteria prescribed under the Indian Income Tax Act, 1961, and is
also subject to other exposure limitations. The Company evaluates the risks, transaction costs and liquidity for potential investments.
To measure plan asset performance, the Company compares actual returns for each asset category with published bench marks.
The weighted average duration of the defined benefit obligation as at March 31, 2018 is 14.5 years ( March 31, 2017 : 15.7 years).

73rd Annual Report 2017-18 247

Notes Forming Part of Financial Statements
The Company expects to contribute ` 77.61 crores to the funded pension plans in FY 2018-19.
The table below outlines the effect on the service cost, the interest cost and the defined benefit obligation in the event of a decrease/
increase of 1% in the assumed rate of discount rate, salary escalation and health care cost:

Assumption Change in assumption Impact on defined benefit Impact on service cost and
obligation interest cost
Discount rate Increase by 1% Decrease by ` 78.74 crores Decrease by ` 16.07 crores
Decrease by 1% Increase by ` 91.16 crores Increase by ` 17.42 crores

Salary escalation rate Increase by 1% Increase by ` 69.71 crores Increase by ` 15.91 crores
Decrease by 1% Decrease by ` 61.92 crores Decrease by ` 13.96 crores

Health care cost Increase by 1% Increase by ` 16.49 crores Increase by ` 3.78 crores
Decrease by 1% Decrease by ` 13.97 crores Decrease by ` 3.12 crores

The Company’s contribution to defined contribution plan aggregated to ` 182.20 crores and ` 163.30 crores for the years ended
March 31, 2018 and 2017 respectively.

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Notes Forming Part of Financial Statements

46 Additional information
The financial statements include the Company’s proportionate share of assets, liabilities, income and expenditure in its two Joint
Operations, namely Tata Cummins Private Limited and Fiat India Automobile Private Limited. Below are supplementary details of Tata
Motors Limited on standalone basis excluding interest in the aforesaid two Joint Operations:
A. Balance Sheet
(` in crores)
As at March As at March
31, 2018 31, 2017
I. ASSETS
(1) NON-CURRENT ASSETS
(a) Property, plant and equipment 16,030.88 16,325.13
(b) Capital work-in-progress 1,337.89 1,490.50
( c) Other intangible assets 3,198.53 2,723.94
(d) Intangible assets under development 3,811.03 5,330.49
(e) Investments in subsidiaries, joint arrangements and associates 15,607.64 15,987.06
(f) Financial assets
(i) Investments 310.19 528.37
(ii) Loans and advances 143.36 390.71
(iii) Other financial assets 784.46 190.54
(g) Non-current tax assets (net) 650.46 722.13
(h) Other non-current assets 1,419.52 1,536.27
43,293.96 45,225.14
(2) CURRENT ASSETS
(a) Inventories 4,925.47 5,185.58
(b) Investments in subsidiaries and associate (held-for-sale) 681.91 -
( c) Financial assets
(i) Investments 1,820.87 2,437.42
(ii) Trade receivables 2,960.93 1,922.88
(iii) Cash and cash equivalents 499.65 149.89
(iv) Bank balances other than (iii) above 180.38 86.67
(v) Loans and advances 136.37 215.64
(vi) Other financial assets 525.36 141.47
(d) Current tax assets (net) 73.88 129.49
(e) Assets classified as held-for-sale 223.33 -
(f) Other current assets 1,172.45 1,413.45
13,200.60 11,682.49
TOTAL ASSETS 56,494.56 56,907.63
II. EQUITY AND LIABILITIES
EQUITY
(a) Equity share capital 679.22 679.22
(b) Other equity 19,004.01 20,228.02
19,683.23 20,907.24
LIABILITIES
(1) NON-CURRENT LIABILITIES
(a) Financial liabilities
(i) Borrowings 12,517.97 13,064.52
(ii) Other financial liabilities 211.28 1,129.68
(b) Provisions 983.55 864.33
( c) Deferred tax liabilities (net) - 49.63
(d) Other non-current liabilities 97.90 86.61
13,810.70 15,194.77
(2) CURRENT LIABILITIES
(a) Financial liabilities
(i) Borrowings 2,880.34 4,832.20
(ii) Trade payables 8,667.13 6,850.76
(iii) Acceptances 4,814.58 4,379.29
(iv) Other financial liabilities 3,936.77 2,386.11
(b) Provisions 852.93 444.43
( c) Current tax liabilities (net) 14.76 70.06
(d) Other current liabilities 1,834.12 1,842.77
23,000.63 20,805.62
TOTAL EQUITY AND LIABILITIES 56,494.56 56,907.63

73rd Annual Report 2017-18 249

Notes Forming Part of Financial Statements
B. Statement of Profit and Loss
(` in crores)
Particulars Year ended Year ended
March 31, March 31,
2018 2017
I. Revenue from operations 57,258.60 48,273.97
II. Other Income 1,558.00 984.34
III. Total Income (I+II) 58,816.60 49,258.31
IV. Expenses
(a) Cost of materials consumed 35,011.52 27,387.84
(b) Purchases of products for sale 5,724.01 4,405.11
( c) Changes in inventories of finished goods, work-in-progress and products for sale 845.67 (194.51)
(d) Excise duty 733.95 4,508.46
(e) Employee benefits expense 3,767.86 3,607.16
(f) Finance costs 1,686.59 1,535.76
(g) Foreign exchange (gain)/loss (net) 10.99 (254.14)
(h) Depreciation and amortisation expense 2,851.27 2,830.84
(i) Product development/Engineering expenses 474.55 453.33
(j) Other expenses 8,907.44 8,133.14
(k) Amount capitalised (855.08) (941.60)
Total Expenses (IV) 59,158.77 51,471.39
V. Profit/(loss) before exceptional items and tax (III-IV) (342.17) (2,213.08)
VI. Exceptional items
(a) Provision for impairment of investment in a subsidiary - 123.17
(b) Employee separation cost 3.68 67.61
( c) Provision for impairment of capital-work-in progress and intangibles under development 962.98 -
(d) Others - 147.93
VII. Profit/(loss) before tax (V-VI) (1,308.83) (2,551.79)
VIII. Tax expense (net)
(a) Current tax 6.00 4.02
(b) Deferred tax (48.64) (8.58)
Total tax expense (42.64) (4.56)
IX. Profit/(loss) for the year from continuing operations (VII-VIII) (1,266.19) (2,547.23)
X. Other comprehensive income/(loss):
(A) (i) Items that will not be reclassified to profit and loss:
(a) Remeasurement gains and (losses) on defined benefit obligations (net) 16.71 12.72
(b) Quoted equity instruments through other comprehensive income 44.04 73.84
(ii) Income tax relating to items that will not be reclassified to profit and loss (5.78) (4.40)
(B) (i) Items that will be reclassified to profit and loss - gains and (losses) in cash flow
hedges (19.56) 23.32
(ii) Income tax relating to items that will be reclassified to profit and loss 6.77 (8.07)
Total other comprehensive income/(loss), net of taxes 42.18 97.41
XI. Total comprehensive income/(loss) for the year (IX+X) (1,224.01) (2,449.82)
XII. Earnings per equity share (EPS)
(a) Ordinary shares:
(i) Basic ` (3.73) (7.50)
(ii) Diluted ` (3.73) (7.50)
(b) ‘A’ Ordinary shares: -
(i) Basic ` (3.73) (7.50)
(ii) Diluted ` (3.73) (7.50)

250
 Notes Forming Part of Financial Statements

C. Statement of Changes in Equity for the year ended March 31, 2018

i) Equity Share Capital

INTEGRATED REPORT  1-65

73rd Annual Report 2017-18

(` in crores)
Particulars Equity
Share Capital
Balance as at April 1, 2017 679.22
Proceeds from issue of shares held in abeyance -*
Balance as at March 31, 2018 679.22
*less than ` 50,000/-

ii) Other Equity

Particulars Securities Capital Debenture Capital Retained earnings Other components of equity (OCI) Total other
premium redemption redemption reserve Undistributable Distributable Equity Hedging Cost of equity
account reserve reserve (on merger) (Ind AS 101) instruments reserve hedging
through OCI reserve
STATUTORY REPORTS  66-184

Balance as at April 1, 2017 19,213.93 2.28 1,085.94 (345.30) 627.03 (351.38) (27.12) 11.26 11.38 20,228.02
Profit/(loss) for the year - - - - - (1,266.19) - - - (1,266.19)
Other comprehensive income /(loss) for
the year - - - - - 10.93 44.04 (14.40) 1.61 42.18
Total comprehensive income/(loss) for the
year - - - - - (1,255.26) 44.04 (14.40) 1.61 (1,224.01)
Proceeds from issue of shares held in
abeyance 0.00* - - - - - - - - -
Balance as at March 31, 2018 19,213.93 2.28 1,085.94 (345.30) 627.03 (1,606.64) 16.92 (3.14) 12.99 19,004.01

* less than ` 50,000/-

FINANCIAL STATEMENTS  185-353

251
252
Notes Forming Part of Financial Statements

D. Statement of Changes in Equity for the period ended March 31, 2017

i) Equity Share Capital

(` in crores)
Particulars Equity
Share Capital
Balance as at April 1, 2016 679.18
Proceeds from issue of shares held in abeyance and amounts received on 0.04
unpaid calls
Balance as at March 31, 2017 679.22

ii) Other Equity

Particulars Securities Capital Debenture Capital Retained earnings Other components of equity (OCI) Total other
premium redemption redemption reserve Undistributable Distributable Equity Hedging Cost of equity
account reserve reserve (on merger) (Ind AS 101) instruments reserve hedging
through OCI reserve
Balance as at April 1, 2016 19209.42 2.28 1,042.15 - 709.36 1,572.34 (100.96) 7.39 - 22,441.98
Effect of merger of TML Drivelines - - (345.30) (82.33) 731.98 - - - 304.35
Balance as at April 1, 2016 19,209.42 2.28 1,042.15 (345.30) 627.03 2,304.32 (100.96) 7.39 - 22,746.33
Profit/(loss) for the year - - - - - (2,547.23) - - - (2,547.23)
Other comprehensive income /(loss) for
the year - - - - - 8.32 73.84 3.87 11.38 97.41
Total comprehensive income/(loss) for the
year - - - - - (2,538.91) 73.84 3.87 11.38 (2,449.82)
Proceeds from issue of shares held in
abeyance 4.51 - - - - - - - - 4.51
Transfer to Debenture redemption reserve - - 43.79 - - (43.79) - - - -
Dividend (including dividend tax) - - - - - (73.00) - - - (73.00)
Balance as at March 31, 2017 19,213.93 2.28 1,085.94 (345.30) 627.03 (351.38) (27.12) 11.26 11.38 20,228.02
INTEGRATED REPORT  1-65 STATUTORY REPORTS  66-184 FINANCIAL STATEMENTS  185-353

Notes Forming Part of Financial Statements

47. Other notes:
i) Micro, Small and Medium Enterprises Development Act, 2006

The information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been
determined to the extent such parties have been identified on the basis of information available with the Company. The amount
of principal and interest outstanding during the year is given below :
(` in crores)

As at As at
March 31, 2018 March 31, 2017

(a) Amounts outstanding but not due as at March 31, 141.59 125.11

(b) Amounts due but unpaid as at March 31, - Principal 0.69 -

( c) Amounts paid after appointed date during the year - Principal 95.50 88.32

(d) Amount of interest accrued and unpaid as at March 31, - Interest 2.55 1.72

(e) Amount of estimated interest due and payable for the period from
April 1,2018 to actual date of payment or May 23, 2018 (whichever is
earlier) - Interest 0.17 0.18

ii)
Expenditure incurred on Research and Development by Tata Motors Limited on standalone basis excluding interest in the joint
operations
(` in crores)
Particulars Year ended Year ended
March 31, 2018 March 31, 2017
(a) Revenue expenditure charged to the statement of profit and loss (Product 923.10 508.26
development / Engineering expenses, exceptional items and works, operations &
other expenses)

(b) Revenue expenditure capitalised to intangibles under development during the year 1,362.51 1,526.34

( c) Capital expenditure in relation to tangible fixed assets 111.91 65.59

Total 2,397.52 2,100.19

iii) Effective April 30, 2018, the Company completed the merger of TML Drivelines Ltd (TML Drivelines) pursuant to a scheme
of arrangement of merger. As TML Drivelines is a wholly owned subsidiary of the Company, the merger has been accounted
in accordance with “Pooling of Interest Method” laid down by Appendix C of Indian Accounting Standard 103 (Ind AS 103):
(Business combinations of entities under common control), notified under the Companies Act, 2013.

Accordingly, all assets, liabilities and reserves of TML Drivelines have been recorded in the books of account of the Company
at their existing carrying amounts and in the same form. To the extent that there are inter-company loans, advances, deposits,
balances or other obligations as between TML Drivelines and the Company, have been eliminated. The difference, between the
investments held by the Company and all assets, liabilities and reserves of TML Drivelines, has been debited to capital reserve.
Comparative accounting period presented in the financial statements of the Company has been restated for the accounting
impact of the merger, as stated above, as if the merger had occurred from the beginning of the comparative period in the
financial statements i.e. April 1, 2016.

73rd Annual Report 2017-18 253

Notes Forming Part of Financial Statements
iv) The Company’s certain assets related to defence business are classified as ”Held for Sale’’ as they meet the criteria laid out under
Ind AS 105.

v) The Company has a process whereby periodically all long term contracts (including derivative contracts) are assessed for
material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under
any law/accounting standards for material foreseeable losses on such long term contracts (including derivative contracts) has
been made in the books of account.

As per our report of even date attached For and on behalf of the Board

For B S R & Co. LLP N CHANDRASEKARAN [DIN: 00121863] N MUNJEE [DIN:00010180] GUENTER BUTSCHEK [DIN: 07427375]
Chartered Accountants Chairman CEO and Managing Director
Firm’s Registration No: 101248W/W-100022 V K JAIRATH [DIN:00391684]
S B BORWANKAR [DIN: 01793948]
F S NAYAR [DIN:00003633] ED and Chief Operating Officer
P B BALAJI
YEZDI NAGPOREWALLA O P BHATT [DIN:00548091] Group Chief Financial Officer
Partner
H K SETHNA [FCS: 3507]
Membership No. 049265 R SPETH [DIN:03318908]
Company Secretary
Mumbai, May 23, 2018
Directors Mumbai, May 23, 2018

254