Tata Motors

Dear Shareholder,
 
 The collapse of the global financial sector, the consequent lack of
 access to credit and working capital, along with the meteoric rise in
 commodities and fossil fuel prices, have collectively had an
 unprecedentedly devastating effect on the global automotive sector.
 
 The passenger car and utility vehicle segments have been particularly
 hard hit and almost all automobile companies have been facing operating
 losses in at least the second half of the year under review. The most
 visible disruption in the industry was, without doubt, the collapse of
 two of the three major U.S. car makers that filed for bankruptcy and
 have emerged as new companies with sizeable Federal funds and with
 substantial equity held either by the U.S. government or the unions.
 
 Worldwide car sales are down 5% as compared to the previous year. The
 automobile industry the world over is rationalizing production
 facilities, reducing costs wherever possible, consolidating brands and
 dropping model lines and deferring R&D projects to conserve funds. The
 crisis goes beyond the car makers in both directions - upstream, it
 affects steel producers and downstream, it affects thousands of
 suppliers and small technology companies. Countless jobs will have been
 lost this year and major projects will probably be put on hold,
 awaiting better times.
 
 The worst-hit are automobile companies in the U.S, Europe and Japan,
 where sales of new cars have declined by 16% in the second half of the
 year and where stimulus packages designed to rekindle demand have only
 been partially successful. Russia has also seen major declines in the
 demand for cars. Thus, one of the major foundations of these nations
 industrial base has been de-established.  The sales of new cars in
 these countries have slumped by 24% in the quarter of October to
 December 2008 as compared to the corresponding period of the previous
 year.
 
 The Chinese and Indian domestic market for cars have been exceptions.
 While China has witnessed a significant reduction in its
 automotive-related exports and supplies to automobile companies, the
 Chinese domestic car market has grown by 7%. In India the passenger car
 market has remained more or less flat compared to the previous year.
 However, the economic downturn in India which has affected spending in
 infrastructure, construction and general road transport, has, in turn,
 seriously affected the commercial vehicle sector. Sales of Medium and
 Heavy commercial vehicles have declined by 33% while the demand for
 LCVs has actually increased. Thankfully, there are signs of a revival
 in the commercial vehicle sector, but it will still be a long and
 arduous road to recovery.
 
 While Tata Motors standalone Indian operations profits declined by
 51% over the previous year, the Company still posted a net profit of
 Rs. 1001.26 crores (US$ 218 million). This of course reflects a strong
 first half year, and a lower second half year with a particularly
 difficult third quarter, when the full impact of the collapse of the
 commercial vehicle sector was felt.
 
 The global slowdown also had a significant impact on the Jaguar Land
 Rover company which Tata Motors acquired in June 2008. Sales of the
 Jaguar and Land Rover brands declined by 20% and 51% respectively from
 October 2008 - March 2009 as compared to the corresponding period in
 the previous year as the demand for premium vehicles declined.
 
 The Year in Review
 
 - Jaguar Land Rover (JLR)
 
 This has been the first year since the acquisition of the Company by
 Tata Motors and the working relationship has been evolving
 continuously. Tata Motors recognized that these two global brands,
 namely, Jaguar and Land Rover, needed to retain their identity, design
 and technical independence as also their image in the marketplace,
 while at the same time integrate with the management of Tata Motors,
 and find synergies in the capabilities and facilities between the two
 companies. Considerable progress has been made in identifying sources
 of components from India, recognizing engineering and Computer Aided
 Design capabilities within Tata Motors and marketing synergies in
 various geographies. Tata Motors on the other hand has recognized the
 high level of technology and skills embedded in JLR which could be of
 great value to both companies.
 
 Important new technology development programs at JLR include the
 development of a hybrid powertrain which will be introduced in future
 models of Jaguar and Land Rover. JLR is also planning to have all its
 future cars constructed with light weight aluminum bodies resulting in
 considerable savings in weight, and reduction in CO2 emissions.
 
 - Jaguar
 
 Jaguar has a history of producing beautiful fast cars. All the new
 cars meet that goal in terms of high performance, great road handling
 and reliability. Jaguar also has a sporting heritage and has produced
 winning racing cars at major sports car endurance races for some time.
 This heritage transcended into road cars and the last iconic roadster
 made was the XK E-type, which many people still consider unbeatable.
 Our collective aim is to create the next iconic sports car in Jaguar to
 rekindle the glory of this venerable brand.
 
 During the year Jaguar began deliveries on its new XF sedan, which
 received rave reviews in the marketplace and which has tremendously
 bolstered the Companys image. This has been followed by the
 introduction of new petrol and diesel engines which have also been
 extremely well received in the marketplace. In early July, the Company
 launched the new XJ, which will be the premier passenger sedan in the
 Jaguar range. The response to the first showing of this model has been
 very encouraging.
 
 - Land Rover/Range Rover
 
 Land Rover/Range Rover vehicles are, without doubt, the gold standard
 in off-road vehicles. They have been the mainstay of army and police
 vehicles in many countries, and have successfully merged luxury with
 ruggedness to produce a formidable, powerful vehicle, whether it be on
 the highway or over rough terrain. Several new models are under
 development and will be released in the market in the coming years.
 These will widen the project range and re-energise the range.
 
 The main challenge in JLR will be to sustain operations through this
 difficult period arising from the global financial meltdown. There is
 good reason to believe that the Companys new products and more
 aggressive marketing will see the Company through this period. It will
 however call for a change from some of the traditional practices and a
 commitment to encourage change and to major cost reduction and
 reduction of development and productionising time.
 
 - Tata Motors
 
 - Cars
 
 During the year under review Tata Motors launched several new products.
 The second generation Indica Vista was launched in August 2008 and has
 been receiving very high ratings from customers and automotive
 magazines. Amongst other products introduced in the market are the
 Indigo CS, Xenon Pickup truck and the new variant of the Safari. The
 second generation of Indigo is expected to be launched in the latter
 part of this year.
 
 The Companys plans of spearheading industrial investment in West
 Bengal by locating the manufacturing plant for the Nano in the state
 was thwarted by a local political party, citing injustice done to the
 residents of the area by the state government in the acquisition of
 land for the project. After facing continuous agitation, and even
 periodic violence by this particular party and its supporters, Tata
 Motors came to the conclusion that the only option would be to move out
 of West Bengal and relocate the Nano manufacturing facilities in
 another state.
 
 The State of Gujarat was decided upon, and in an impressive display of
 leadership and pragmatism by the Chief Minister and the State
 officials, all approvals were received in a scant three days. The
 equipment from the plant in West Bengal, which was 95 % complete, was
 dismantled and is being transported to Gujarat. The new plant is
 expected to be completed in the last quarter of this financial year. In
 the meantime, the Nano is being produced in other plant facilities so
 as to enable around 50,000- 60,000 cars to be available to customers
 over the next twelve months until the main new facility in Gujarat
 comes on line.
 
 - Commercial Vehicles
 
 The deferment of infrastructure projects and the slowdown in the mining
 sector have resulted in a tremendous drop in demand for medium and
 heavy vehicles. As stated earlier, the market for these vehicles
 declined by 33%. However, the Companys new “sub” 1 tonne Ace has been
 a runaway success.
 
 During the downturn, the Company has increased its market share in
 trucks. It has also been able to gain market share in the bus segment
 with newly developed vehicles from its facilities in Goa and its joint
 venture facility at Dharwad.
 
 To some, the year under review would be viewed with great despondency.
 The Company faces a major decline in demand across its product range,
 it must bear the burden of the major acquisition of JLR, and be faced
 with a major collapse in vehicle demand in Western Europe and the U.S.
 But to many in the Company this is yet another year of challenges with
 the excitement of meeting such challenges head-on.
 
 The spirit, commitment and dedication of the whole Tata Motors team at
 all its locations and across all levels is truly phenomenal and this
 continues to be the companys greatest asset. I feel confident that if
 we can sustain our operations through this difficult period, taking
 whatever steps we need to take to see the year through, we could
 overcome all the obstacles in our path. I feel strongly that in later
 years we can look back on the JLR acquisition and say to ourselves that
 this was a very worthwhile strategic acquisition and one which has
 brought us considerable technology and global presence.
 
 The Board joins me in expressing our deep appreciation to all the
 employees, the Unions and the management team for their support,
 cooperation and understanding. I would also like to express our
 appreciation of the support that we have always received from our
 shareholders and for the faith and confidence they have reposed in us
 throughout difficult periods. I do hope that we will be able to reward
 our shareholders for this show of faith at this time in the years to
 come.
 
                                                  Chairman 
 Mumbai, July 18, 2009