Tata Motors

The Directors present their Sixty-Third Annual Report and the Audited
 Statement of Accounts for the year ended March 31, 2008.
 
 1.  FINANCIAL RESULTS
 
 Financial Year
 
                                                        (Rs. in crores)
                                                2007-2008     2006-2007
 
 (i)    Gross Revenue                            33093.93      31819.48
 (ii)   Net Revenue (excluding excise duty)      28730.82      27470.03
 (iii)  Total Expenditure                        25638.50      24157.66
 (iv)   Operating Profit                          3092.32       3312.37
 (v)    Other Income                               483.18        245.19
 (vi)   Profit before Depreciation Interest 
        and Tax                                   3575.50       3557.56
 (vii)  Interest and Discounting Charges
 (a)    Gross Interest and Discounting Charges     541.56        389.86
 (b)    Transfer to Capital Account/Interest 
        Received                                  (259.19)       (76.79)
 (c)    Net Interest and Discounting Charges       282.37        313.07
 (viii) Product Development Expenses                64.35         85.02
 (ix)   Depreciation                               652.31        586.29
 (x)    Profit Before Tax                         2576.47       2573.18
 (xi)   Tax Expense                                547.55        659.72
 (xii)  Profit After Tax                          2028.92       1913.46
 (xiii) Balance Brought Forward from 
        Previous Year                             1013.83        776.76
 (xiv)  Amount Available for Appropriation        3042.75       2690.22
 APPROPRIATIONS
 (a)   General Reserve                            1000.00       1000.00
 (b)   Dividend (including tax)                    659.68        676.32
 (c)   Residual dividend paid for 2005-06
      (including tax)                                 -            0.07
 (d)   Balance carried to Balance Sheet           1383.07       1013.83
 
 Note : Figures for the previous year have been regrouped/reclassifed
 where necessary
 
 2.  DIVIDEND
 
 Considering the Company’s financial performance and growth plans, the
 Directors have recommended payment of a dividend of Rs.15/- per share
 on 38,56,18,723 Ordinary Shares fully paid up for the Financial Year
 2007-08 (previous year – Rs.15/- per share).
 
 3.  OPERATING RESULTS AND PROFITS
 
 The year 2007-08 was a historic year for the Company marked with two
 significant events viz., the unveiling of Tata Nano - the world’s least
 expensive car and the signing of the definitive agreement with Ford
 Motor Company for purchase of Jaguar and Land Rover, which has since
 been completed on June 2, 2008.
 
 During the year, the Company recorded its highest ever sale of 5,85,649
 vehicles and grew its turnover to Rs. 33,094 crores to remain as
 India’s largest automobile company by revenue. The Company maintained
 its leadership position in the commercial vehicle segment and was among
 the top three players in the passenger vehicle segment, although it
 lost some market share. A number of new products were launched during
 the later half of the fiscal year which would help the Company regain
 its lost market share.
 
 The Company’s margins were under pressure during the year due to rising
 interest rates, constraints in availability of vehicle financing from
 outside sources and unprecedented increase in prices of raw materials.
 The EBIDTA margin at 10.8% was lower than last year as increase in
 input costs could only be partially absorbed by the market. The Profit
 Before Tax at Rs. 2,576 crores was 0.1% higher than last year. The
 Profit After Tax at Rs. 2,029 crores, was 6.1% higher than last year.
 
 4.  COMMERCIAL VEHICLES
 
 The commercial vehicle industry (including exports) witnessed a
 moderation in growth in FY 07-08.  The domestic market which accounts
 for nearly 90% of total commercial vehicle sales was impacted by
 reduction in economic activity, poor credit availability, hardening of
 interest rates and increase in fuel prices. It grew by 6.9% as compared
 to 33% growth in the previous year.
 
 The Company reported a total sale of 3,52,785 commercial vehicles in
 the domestic and overseas markets representing a growth of 5.5% over
 last fiscal. However, the Company’s market share in the domestic
 commercial vehicle market declined by 1.3% to 62.7% due to non
 availability of certain components/ parts in the earlier part of the
 year and constraints in the availability of vehicle finance from banks
 and NBFCs. Though in-house vehicle financing was strengthened, the
 Company was unable to fully offset the decrease in credit availability
 from outside sources.
 
 In the M&HCV segment, the Company revamped its commercial vehicles
 portfolio and introduced a wide range of new products such as multi
 axle and heavy duty trucks, tractor trailers and fully built solutions
 like tip trailers, customised factory built load bodies etc. in the
 second half of the year. These introductions helped the Company to gain
 market share in the tractor trailer and multi axle vehicle sub-segments
 and the full potential of these new products would be realized going
 forward. The Company also developed new products for the M&HCV
 passenger carrier sub-segment and displayed in the Auto Expo 2008, a 28
 seater bus and an air conditioned low floor bus developed through its
 joint venture - Tata Marcopolo Motors Limited.
 
 In the LCV segment, the Company introduced two new products – Magic and
 Winger, which hold a strong potential to shape the future of commercial
 passenger transportation in India. Magic is expected to emerge as a
 safe and comfortable mode of public transport in urban and rural areas.
 Alongwith the goods carrier version, Magic helped the Company to
 achieve a sale of over 1,00,000 vehicles on the Ace platform in a year
 for the first time since the inception of Ace. Winger, India’s only
 maxi van offering could become the preferred mode for intra-city and
 long distance passenger transportation in coming years.  The Company
 also unveiled the 1 Ton and CNG variant of Ace, Cargo Panel van, Xenon
 XT - a lifestyle pickup truck and Winger Executive office concept
 vehicle in the Auto Expo 2008 and commenced production of TATA Ace from
 its manufacturing facility at Uttarakhand. Though the Company’s market
 share in the LCV segment declined by 1.1% to 64.3%, introduction of new
 products would help the Company to grow its market share in the coming
 years.
 
 The Company showcased its new range of tactical and armoured vehicles
 for military and para-military forces in the Defence Expo 2008. These
 include TATA Light Specialist Vehicle, Light Armoured Troop Carrier,
 TATA 8x8 HMV and the armoured TATA Safari.
 
 The Company’s commercial vehicle exports grew by 11.8% to 39,850
 vehicles. M&HCV exports accounting for 35% of the Company’s total
 commercial vehicle exports grew by 13%. In March’08, the Company
 introduced TATA Xenon- 1 Ton pickup truck in Thailand through its
 subsidiary Tata Motors (Thailand) Ltd.  This vehicle is assembled in
 Thailand and is distributed through a network of over 20 authorised
 dealers.  The Company’s non-vehicular business recorded a 32% growth in
 revenues mainly due to growth in the spare parts business. The
 Company’s Commercial Vehicle Pune plant received Rajiv Gandhi National
 Quality Award for the year 2007.
 
 5.  PASSENGER VEHICLES
 
 In a challenging year for the Company, sales declined by 5.4% after six
 consecutive years of growth. The Company recorded a sale of 2,32,864
 vehicles (including 3,297 Fiat cars) in the domestic and overseas
 markets and continued to be amongst the top three players in the Indian
 passenger vehicle market with a market share of 14.2%. The market share
 declined from 16.6% in the previous year mainly on account of launch of
 several new introductions by competition (the Car Industry volumes,
 infact, declined by 4.4%, excluding new products introduced) and the
 delays in the introduction of the Company’s new Indica, which is now
 due for launch later this year. The Company’s passenger vehicle exports
 at 14,809 nos. declined by 16.9% over the previous year mainly due to
 softening of some key markets. However, the year 2007-08 was a
 milestone year for the car business as the one millionth passenger car
 rolled off from the Indica platform in the ninth year since
 commencement of production.
 
 The TATA Indica sales at 1,35,642 nos. declined marginally over the
 previous year due to the car being in the mature phase of its life
 cycle and new launches by competition. Despite its maturity, the Indica
 remained the second largest selling car in the industry. During the
 year, the Company expanded the Indica range by introducing a new
 variant of the current Indica with dual airbags and ABS (Anti lock
 Braking System) and adding a DICOR (Direct Injection Common Rail)
 diesel engine variant. The Company displayed the next generation Indica
 in the Auto Expo 2008 which received an exciting response.
 
 The TATA Indigo range witnessed the introduction of the Indigo XL
 Classic variant and the Indigo CS (Compact Sedan). The Indigo CS is a
 sub 4 meter sedan with a foot print and price point of a large
 hatchback but the appeal of a sedan and has been received very well in
 the market post its launch in the last quarter of the year. The TATA
 Indigo range with a total sale of 31,416 nos. continued as the highest
 selling brand in the entry mid size segment in its sixth year of
 launch, despite new launches from competition, although it continued to
 decline in a slow segment.
 
 The new products to be launched in the Indica and Indigo range have
 been delayed, whilst the Indigo CS and the XL Classic Variant were
 launched in the last quarter of the year, the new Indica is being
 introduced in FY 2008-09.
 
 The TATA Safari and TATA Sumo recorded a sale of 47,700 nos. during the
 year. The Company expanded its Utility Vehicle range by launching a new
 2.2L Safari DICOR, Sumo Victa DI and the Sumo Grande during the year.
 Safari, achieved its highest ever sale of 19,078 vehicles during the
 year.
 
 The Company’s sales of Fiat branded products increased by 148.3% to
 3,297 vehicles aided by the launch of the facelifted Palio and later
 the multijet diesel version in the last quarter. In October’07, the
 Company concluded its joint venture with Fiat for the manufacture of
 passenger cars, engines and transmission. The venture has planned a
 total investment of over Rs 4,000 crores. The Company took the lead in
 supporting the Magic India Discovery Drive initiative of Ferrari
 alongwith other TATA companies and Fiat.
 
 The Company continued to figure as the most trusted car company for the
 third year in succession in the Readers’ Digest survey. The Indica and
 the Sumo continue to stand out among the ‘Most Trusted Brands’ in the
 annual survey of the Economic Times Brand Equity. The Passenger Car
 Business Unit of the Company was conferred the ‘Handa Golden Key Award
 2007’ for the ‘Best Value Engineering Organization’ by the Indian
 National Value Engineering Society.
 
 6.  TATA NANO
 
 The Company unveiled the TATA Nano, the world’s least expensive car to
 an overwhelming response at the Auto Expo 2008 in New Delhi.
 Subsequently, the car was also unveiled at the Geneva Motor Show and
 received international acclaim. The development of the TATA Nano has
 given the Tata Group the 6th rank in the Business Week-B&G 2008 listing
 of the world’s 25 most innovative Companies. The construction of a
 manufacturing facility for the Tata Nano at Singur is in progress.
 
 7.  ACQUISITION OF JAGUAR AND LAND ROVER
 
 On June 2, 2008, Tata Motors completed the acquisition of businesses of
 Jaguar and Land Rover (part of Premier Automotive Group of Ford Motor
 Co.) for US$ 2.3 billion (on a cash free, debt free basis). Both are
 iconic British brands purchased by Ford in 1989 and 2000 respectively.
 Out of the purchase consideration paid to Ford, Ford has contributed
 around US$ 600 million into the Jaguar Land Rover pension schemes (in
 UK).
 
 Jaguar and Land Rover (JLR) are in the business of development,
 manufacture and sale of high end luxury cars and SUVs respectively. JLR
 has 3 manufacturing plants, 1 component manufacturing facility and 2
 state of the art design and engineering centers in the UK, with 16,000
 employees across the world, sales in more than 100 countries and have
 over 2,200 dealers. Their combined volume for the calendar year 2007
 was around 288,000 vehicles. JLR achieved revenues of US$ 14.94 billion
 for the year ended December 31, 2007 with a PBIT (excluding special
 items) of US$ 650 million. For the quarter ended March 31, 2008, with
 the launch of the acclaimed XF model by Jaguar in January 2008, JLR
 business achieved revenues of US$ 4.15 billion (against revenues of US$
 3.54 billion for the corresponding period in 2007) and PBIT (excluding
 special items) of US$ 417 million (as against PBIT of US$ 289 million
 for the corresponding period in 2007).
 
 Acquisition of JLR provides the Company with a strategic opportunity to
 acquire iconic brands with a great heritage and global presence, and
 increase the Company’s business diversity across markets and product
 segments.
 
 8.  TATA MOTOR FINANCE - CUSTOMER FINANCING INITIATIVES
 
 Tata Motors Finance Limited and the Vehicle financing division of the
 Company which operate under the brand name “Tata Motorfinance (TMF)”
 financed 1,77,437 new vehicles, a growth of 7.3% over 1,65,376 in the
 previous year. With disbursals of Rs. 9,620 crores, a growth of 2.2%
 over Rs. 9,415 crores in the previous year, TMF emerged as the second
 largest commercial vehicle financer in the domestic market.
 
 During the year, TMF extended support to the Company’s vehicle sales by
 financing 34% of the total domestic sales, compared to 31.4% in the
 previous year. Given this growth, TMF is on course to become a strong
 captive financing arm to support the vehicle sales business as well as
 to de-risk the cyclical revenue stream of the automotive business. The
 extensive network of TMF will also complement the dealer network of
 vehicles sales, thus widening the reach of the Company. In the
 Commercial vehicle financing, TMF achieved a market share of 34%, with
 total disbursements at Rs. 6,300 crores, recording a 2.9% growth and
 financed 1,07,668 units, an increase of 7.6% over the previous year. In
 the Passenger Vehicle financing segment, TMF achieved a market share of
 32.5%, with total disbursements at Rs. 2,228 crores, recording a 7.8%
 growth and financed 69,769 units, an increase of 6.9% over the previous
 year. With a view to focus on its core business of financing of TATA
 commercial and passenger vehicles, the Construction Equipment financing
 activity together with loan portfolio was sold by the Company in
 September, 2007.
 
 9.  HUMAN RESOURCES & INDUSTRIAL RELATIONS
 
 During the year, the Company entered into a three year wage settlement
 with its unions at Jamshedpur and Pune, Passenger Car Business. The
 negotiation for wage settlement at Lucknow plant is underway and is
 expected to be signed shortly. Company’s cordial industrial relations
 were maintained at all of the Company’s plants and offices. There has
 been consistent improvement in productivity across all the plants.
 
 The permanent employees’ strength of the Company as on March 31, 2008
 was 23,230, while that of the Company’s subsidiaries was 9,972.
 Recruitments across all levels, extensive training and skill
 enhancement activities were carried out especially at the new
 locations, in line with the Company’s expansion and growth plans.
 
 The Company was given the award of India’s Best Managed Company for
 2007-08 in the automotive sector by Business Today based on a study
 conducted by Ernst and Young.
 
 10.  FINANCE
 
 With significant increase in the Company’s capital expenditure
 programmes and the growing business requirement, the overall borrowings
 of the Company stood at Rs. 6,280.52 crores at a Debt : Equity ratio of
 0.80:1.
 
 During the year, the Company successfully raised US$ 490 million via
 the issue of Convertible Alternate Reference Securities which is an
 innovative convertible instrument and would enable the Company to offer
 the investors a right to convert these into differential voting shares
 and/or other qualifying securities.
 
 The Company has managed the currency risks on exports amidst sharp
 appreciation of the Rupee in 07-08. Due to the appreciation of the
 rupee, the net foreign exchange gain on revaluation of foreign currency
 borrowings, deposits and loans given stood at Rs. 137.61 crores for FY
 07-08 as against Rs.65.21 crores in the previous year.
 
 JLR is being acquired through special purpose vehicles incorporated in
 UK and Singapore and the acquisition cost is being financed upfront
 through a syndicated bridge loan facility of US$ 3 billion. The Company
 has issued a Corporate Guarantee in favour of its said UK SPV for this
 purpose. The repayment of the said facility is proposed to be
 undertaken through a long term funding plan involving, amongst others,
 a right issue of equity/equity related instrument to its shareholders,
 and issue of securities in the international market. The Company is
 undertaking a Postal Ballot to obtain the approval of the members to
 enable the Company to raise these resources, the details of which are
 included in the Corporate Governance Report.
 
 Post the JLR announcement and subsequently, the Company’s rating for
 foreign currency borrowings was revised by Standard & Poor from BB
 +/Stable to BB/Negative and by Moodys’ from Ba1 to Ba2. For borrowing
 in local currency the rating was revised from AA+/Stable to AA
 Negative/Stable by Crisil and from LAA+/Stable to LAA/Negative by ICRA.
 
 11.  INFORMATION TECHNOLOGY AND RESEARCH AND DEVELOPMENT INITIATIVES
 
 The Company continued to strengthen the IT capabilities in all areas of
 its business which were used extensively in design, manufacuturing and
 customer interface functions. The Company used Digital Product
 Development, Digital Manufacturing Solutions and better integration
 with vendors in order to improve significantly its product development
 processes and capabilities. During the year the ERP system- SAP was
 also deployed in some of its subsidiaries and the Fiat joint venture.
 Significant improvements and use of analytics were also incorporated in
 the Company’s CRM/Dealer Management Systems.
 
 The Company continued to pursue research and development initiatives in
 product development, environmental technology and vehicle safety areas.
 The Company widened the scope of its research and development activity
 from inhouse product and technology development to managing research
 and development process across various internal and external agencies,
 including its research and development centres in Korea, Spain and the
 United Kingdom, as well as at various aggregate parts suppliers and
 outsourcing partners. The Company’s reasearch and development
 initiatives include developing vehicles running on alternative fuels,
 including CNG, LPG and bio-diesel and pursuing alternative fuel options
 such as ethanol blending and development of vehicles fuelled by
 hydrogen. The Company is also pursuing various initiatives in engine
 management systems, vehicle network architecture, vehicle tracking and
 telematics.
 
 12.  SUBSIDIARY AND ASSOCIATE COMPANIES
 
 SUBSIDIARY COMPANIES
 
 For the Financial Year ended March 31, 2008, the Company’s
 subsidiaries, on an aggregate basis, have significantly improved on
 their financial performance. A brief profi.le of the subsidiary
 companies and their main financial parameters for 2007-08, are provided
 in the Annexure hereto. Brief details of the Company’s existing
 subsidiaries are given below. In respect of foreign subsidiary
 companies, figures in Rupees are converted from applicable respective
 foreign currencies at appropriate rates at the year end.
 
 Concorde Motors (India) Limited (CMIL), a 100% subsidiary of the
 Company engaged in sales and service of TATA and FIAT passenger cars
 recorded a turnover of Rs.  625.20 crores (Previous year : Rs. 623.27
 crores) and Profit After Tax of Rs. 5.33 crores (Previous year: Rs.
 11.76 crores). CMIL has declared a dividend of Rs. 2.50 per share for
 the FY 2007-08 (previous year Rs.  7.50 per share) and Rs. 7/- per
 share for the FY 2007-08 on the 7% Cumulative Redeemable Preference
 Shares.
 
 HV Transmissions Limited (HVTL) and HV Axles Limited (HVAL), 85%
 subsidiary companies of the Company, are engaged in the business of
 manufacture of gear boxes and axles for Heavy & Medium commercial
 vehicles (M&HCV), with production facilities and infrastructure based
 at Jamshedpur. Major capacity expansion and modernisation initiatives
 have been undertaken at HVTL and HVAL to meet the growing demand for
 gear boxes and axles for M&HCVs over the years. Both HVTL and HVAL have
 manufactured new variants of gear boxes and axles during the year for
 application in the Company’s new products.
 
 HVTL recorded a turnover of Rs.191.98 crores (an increase of 9.39%), a
 PAT of Rs. 47.44 crores (an increase of 5.53%) and has declared a
 dividend of Rs.5/- per share for the FY 2007-08 (previous year Rs. 5/-
 per share). HVAL recorded a turnover of Rs. 203.24 crores (an increase
 of 3.34%), a PAT of Rs. 63.41 crores (an increase of 9.52%) and has
 declared a dividend of Rs. 5/- per share for the FY 2007-08 (previous
 year Rs. 5/- per share).
 
 During the year, the Company divested 15% of its stake in HVTL and HVAL
 to Tata Capital Limited for an aggregate consideration of Rs. 164.25
 crores and also sold the Intellectual Property Rights (IPR) for
 technology/design to HVTL and HVAL, which will facilitate these
 companies in pursuing their strategic growth through further
 development of technology and products for the Company and other
 customers in a focused manner.
 
 Sheba Properties Limited is a 100% owned investment Company. The income
 of the Company was Rs. 21.37 crores (Previous Year: Rs.19.97 crores)
 and Profit After Tax was Rs.16.22 crores (Previous Year: Rs.13.50
 crores).
 
 TAL Manufacturing Solutions Limited (TAL) is a 100% subsidiary of the
 Company engaged in the business of Machine tools, Equipments, Material
 handling systems and Fluid power solutions. During the year, it has
 ventured into the Aerospace business by signing an agreement with
 Boeing Corporation, USA for manufacturing structural components for
 Boeing’s 787 Dreamliner airplane program at a state- of-the-art
 manufacturing facility being set-up in Nagpur, India. In one of its key
 achievement of the year, TAL has signed sales and service agreement
 with HELLER, Germany, a global renowned manufacturer of high-end
 Machining centers. During the year, TAL recorded a turnover of Rs.
 220.58 crores (Previous Year: Rs.143.94 crores) and a Profit after Tax
 of Rs.12.02 crores (Previous Year: Rs. 8.31 crores), a growth of 45%.
 TAL has wiped out its accumulated losses during the year and carried
 forward a profit of Rs.1.05 crores.
 
 Tata Daewoo Commercial Vehicle Company Limited (TDCV), Korea, a 100%
 subsidiary of the Company is the second largest manufacturer of heavy
 and medium commercial vehicles in Korea. During the year under review,
 TDCV registered further growth both in the domestic market and exports.
 In volume terms, sales of 11,899 units in FY 07-08 were higher by 38%
 compared to that of 8,588 units in FY 06-07. This enabled TDCV to
 improve its market share from 24.3% to 32.3% in the HCV segment and
 from 28.2% to 34.8% in the MCV segment. TDCV exported 3,000 units of
 HCVs in FY 08 (2,715 units previous year) and continued to be the
 largest exporter from Korea in this segment.
 
 TDCV recorded a turnover of Rs.2,865.02 crores which was higher by 45%
 compared to Rs. 2,248.81 crores for the previous year. The Profit
 before Tax at Rs. 212.03 crores registered an increase of 81% compared
 to Rs.133.31 crores. After providing for tax, the profit was Rs. 153.11
 crores against Rs.97.46 crores in the previous year, an increase of
 78%. In March 2008, TDCV paid an interim dividend at 20% on common
 shares. This was followed by a final dividend at 80% on common shares
 for FY 2007-08.
 
 Tata Marcopolo Motors Ltd. (TMML) is engaged in the business of
 manufacture and sale of fully built buses and coaches in which the
 Company has a 51% holding with the balance 49% being held by Marcopolo
 S. A., Brazil. The Company started its commercial production from
 November 2007 and has sold 190 low entry CNG buses. TMML recorded a net
 turnover of Rs. 6.57 crores and loss after tax is Rs. 3.83 crores.
 
 Tata Motors (SA) Proprietary Limited (TMSA), a joint venture company
 was incorporated during the year in which the Company holds 60% with
 the balance 40% being held by the Tata Africa Holdings (SA) (Pte. )
 Limited. TMSA has been formed for manufacturing and assembly operations
 of the Company’s Light and Heavy Commercial Vehicles and Passenger Cars
 in South Africa. TMSA is yet to start operations.
 
 Tata Motors (Thailand) Limited (TMTL) is a 70:30 joint venture between
 the Company and Thonburi Automotive Assembly Plant Co., for
 manufacture, assembly and marketing pickup trucks. The joint venture
 enables the Company to address the ASEAN and Thailand markets, the
 later being the second largest pickup market in the world after the
 USA. While TMTL has begun setting up operations in the FY 2007-08, the
 manufacturing of vehicles began only during March ’08 with revenues
 from sales and other income at Thai Baht 7 million (equivalent to Rs.
 0.90 crore) for the period ended March 31, 2008.
 
 Tata Motors European Technical Centre plc. (TMETC), a 100% subsidiary
 of the Company is engaged in the business of design engineering and
 development of products for the automotive industry. Working
 synergistically with the Company, TMETC provides it with design
 engineering support and development services, complementing and
 strengthening the Company’s skill sets and providing European standards
 of delivery to the Company’s passenger vehicles. During the year ended
 March 31, 2008, TMETC earned gross revenues of Rs.127.95 crores
 (2006-07: Rs. 60.34 crores) and an operating profit of Rs. 11.43 crores
 (2006-07: Rs. 7.08 crores).
 
 Tata Motors Finance Limited (TMFL), a wholly owned subsidiary of the
 Company, is registered with RBI under Section 45-IA of the RBI Act
 1934, as a Non- Banking Finance Company and has been classified as an
 “Asset Finance Company”. The name of TMFL was changed from “TML
 Financial Services Limited” to “Tata Motors Finance Limited” with
 effect from August 28, 2007. Total Income at Rs. 836.95 crores during
 the year under review was 423% higher than in 2006-07 and Profit Before
 Tax at Rs. 50.26 crores was 150% more than the previous period. As
 commencement of the operations started from September 1, 2006, these
 figures are not comparable. With a view to focus on its core business
 of financing of Tata Commercial and Passenger Vehicles, TMFL transfered
 its activities pertaining to construction equipment financing and small
 and medium enterprises financing.
 
 Tata Motors Insurance Broking & Advisory Services Limited (TMIBASL),
 [formerly known as Tata Motors Insurance Services Limited], a 100%
 subsidiary of the Company, proposes to undertake the business of direct
 insurance broking. TMIBASL has received a License from the Insurance
 Regulatory and Development Authority (IRDA) to act as a Direct Broker
 under the IRDA Act on May 13, 2008. In compliance with the regulations
 of the IRDA, its name was changed to “Tata Motors Insurance Broking &
 Advisory Services Ltd.” on April 30, 2008. Pending the issue of license
 by the IRDA and other formalities relating thereto, no business
 activity was carried out during the period from October 2005 to March
 2008. For the year under review, TMIBASL earned revenues of Rs. 0.10
 crore (2006-07: Rs. 0.08 crore) and recorded a Loss of Rs. 0.04 crore
 (2006-07: loss of Rs. 0.16 crore).
 
 Tata Technologies Limited (TTL), in which the Company has a 81.71%
 holding, provides through its operating companies, INCAT and Tata
 Technologies iKS, specialized Engineering & Design Services (E&D),
 Product Lifecycle Management (PLM) and product-centric IT services to
 leading global manufacturers. It responds to customers’ needs through
 its 13 subsidiary companies in three continents and through its three
 offshore development centers. Its customers are among the world’s
 premier automotive, aerospace and consumer durable manufacturers. The
 year marks an important milestone in the growth history of the Company
 with consolidated revenues crossing the Rs. 1000 crores threshold.
 
 INCAT is the world’s leading independent provider of E&D, Product &
 Information Lifecycle Management, Enterprise Solutions and Plant
 Automation. INCAT’s services include product design, analysis and
 production engineering, Knowledge Based Engineering, PLM, Enterprise
 Resource Planning and Customer Relationship Management systems. INCAT
 also distributes, implements and supports PLM products from leading
 solution providers in the world such as Dassault Systèms, UGS and
 Autodesk. With a combined global work force of more than 3,000
 employees, INCAT has operations in the United States (Novi, Michigan),
 Germany (Stuttgart) and India (Pune).
 
 Tata Technologies iKS is a global leader in engineering knowledge
 transformation technology. For over 15 years, iKS has enabled
 engineering knowledge transformation through ‘i get it’, which is the
 only web application in the world offering 1,00,000 hours of
 engineering knowledge for AutoCAD, INVENTOR, Solid Works, Solid Edge,
 UG/NX, Teamcenter, COSMOS Works, and CATIA on a single delivery
 platform application.
 
 TTL had 13 subsidiary companies as at March 31, 2008. A few companies
 out of these subsidiaries are being wound-up, liquidated or merged as
 also various restructuring initiatives are being taken with the
 objective of bringing in operating efficiencies by sharpening focus on
 its services and product business, fixing territorial responsibility
 for top and bottom line growth and establishing a global delivery
 centre supporting the overall business. The consolidated revenue for
 the TTL Group was Rs. 1100 crores, an increase of 15% against Rs. 957
 crores in the previous year. The profit before tax was Rs. 51 crores as
 against Rs. 25 crores in the previous year, recording a growth of 104%.
 The profit after tax was Rs. 30 crores against Rs. 16.28 crores in the
 previous year.
 
 Telco Construction Equipment Company Limited (Telcon) is engaged in the
 business of development, manufacture and sale of construction equipment
 and allied services in which the Company has a 60% holding with the
 balance 40% being held by Hitachi Construction Machinery Company
 Limited, Japan.  With the increase in economic activity especially in
 the infrastructure sector, Telcon recorded its best performance to date
 having sold 7,698 machines (5,360 machines in 2006-07) with a gross
 revenue of Rs. 2,735 crores (Previous Year: Rs.1,828 crores), a Profit
 After Tax of Rs.324 crores (Previous Year: Rs.184 crores), an increase
 of 76% and declared an interim dividend of Rs. 5/- per share and a
 final dividend of Rs.  3/- per share (Previous Year: Final dividend of
 Rs. 4/- per share). In April 2008, Telcon acquired two Spanish
 Companies, namely Serviplem S.A and Comoplesa Lebrero S.A by acquiring
 79% and 60% shares of the respective companies.
 
 TML Distribution Company Limited (TDCL), a 100% subsidiary of the
 Company incorporated on March 28, 2008 would be engaged in the business
 of dealing and providing logistics support for distribution of the
 Company’s products throughout the Country. TDCL is yet to start
 operations.
 
 ASSOCIATE COMPANIES
 
 As on March 31, 2008, the Company had the following major associate
 companies:
 
 Automobile Corporation of Goa Limited (ACGL) in which the Company has a
 37.79% shareholding, was incorporated in 1980, jointly with EDC Limited
 (a Government of Goa enterprise). ACGL is a listed company engaged in
 manufacturing sheet metal components, assemblies and bus coaches and is
 the largest supplier of buses (mainly for exports) to the Company.
 
 Fiat India Automobiles Private Limited (FIAPL), is a Joint Venture with
 Fiat Auto S.P.A., Italy, to manufacture Fiat and Tata cars and
 powertrains at Ranjangaon. The new facility was inaugurated on April 2,
 2008 and is one more step towards confrming the strong motivation and
 understanding between the partners towards developing new opportunities
 in India and abroad.
 
 Hispano Carrocera S.A. (HC), a well-known Spanish bus manufacturing
 company, in which the Company had acquired a 21% stake in March 2005
 was another major step in the Company’s plans for globalization.
 Hispano has two manufacturing units, one in Spain which caters to the
 European market and the other one in Casablanca which caters to the
 Moroccan and other North African markets. HC is present in both the
 ‘city bus’ and ‘coach market’ segment in both the geographies. HC
 reported a production of 375 buses during the fiscal year 2007 on a
 consolidated basis.
 
 Nita Co. Ltd., Bangladesh, in which the Company holds 40% equity, is
 engaged in the assembly of TATA vehicles for the Bangladesh market.
 
 Tata AutoComp Systems Limited (TACO) is a holding company for promoting
 domestic and foreign joint ventures in auto components and systems and
 is also engaged in engineering services, supply chain management and
 after market operations for the auto industry. The Company’s
 shareholding in TACO is 50%.
 
 Tata Cummins Limited (TCL), in which the Company has a 50%
 shareholding, with Cummins Engine Co.  Inc., USA holding the balance.
 TCL is engaged in the manufacture and sale of high horse power engines
 used in the Company’s range of M/HCVs.
 
 Tata Precision Industries Pte. Ltd., Singapore, in which the Company
 has a 49.99% shareholding is engaged in the manufacture and sale of
 high precision tooling and equipment for the computer and electronics
 industry.
 
 13.  In accordance with the Statement of Accounting Standard on
 Consolidated Financial Statements (AS 21), Accounting Standard on
 Accounting for Investments in Associates (AS 23) and Accounting
 Standard on Accounting for Joint Ventures (AS 27), issued by the
 Institute of Chartered Accountants of India (ICAI), the above mentioned
 subsidiaries, associates and Joint Venture have been considered in the
 Consolidated Financial Statements of the Company. As may be seen from
 the consolidated statements, the consolidated revenue (net of excise)
 was Rs. 35,651.48 crores, an increase of 10.2% as against Rs. 32,361.20
 crores in the previous year. The Profit Before Tax was Rs. 3,086.29
 crores as against Rs.  3,088.00 crores in the previous year. The
 consolidated Profit After Tax, after considering an amount of Rs.
 851.54 crores (Previous Year: Rs. 883.21 crores) towards current and
 deferred tax, adjustment for share of minority interest and profit in
 associate companies, was Rs. 2,167.70 crores as against Rs.2,169.99
 crores in the previous year.
 
 14.  On an application made by the Company under Section 212(8) of the
 Companies Act 1956, the Central Government exempted the Company from
 attaching a copy of the Balance Sheet and the Profit and Loss Account
 of the subsidiary companies and other documents from being attached to
 the Annual Report of the Company. Accordingly, the said documents are
 not being attached with the Balance Sheet of the Company. A gist of the
 fnancial performance of the subsidiary companies is contained in the
 report. The Annual Accounts of the subsidiary companies are open for
 inspection by any member/investor and the Company will make available
 these documents/details upon request by any Member of the Company or to
 any investor of its subsidiary companies who may be interested in
 obtaining the same. Further, the annual accounts of the subsidiary
 companies will also be kept for inspection by any investor at
 Registered Office of the Company and at the Head Offices of the
 subsidiary company concerned.
 
 15.  ENERGY, TECHNOLOGY & FOREIGN EXCHANGE
 
 Details of energy conservation and research and development activities
 undertaken by the Company along with the information in accordance with
 the provisions of Section 217(1)(e) of the Companies Act, 1956, read
 with the Companies (Disclosure of Particulars in the Report of Board of
 Directors) Rules, 1988, are given as an Annexure to the Directors’
 Report.
 
 16.  DIRECTORS
 
 Mr Praveen P Kadle, who was the Executive Director (Finance & Corporate
 Affairs) of the Company, relinquished office on September 18, 2007, in
 view of his appointment as the Managing Director of Tata Capital
 Limited, a company promoted by Tata Sons Limited in the financial
 services space. Mr Kadle joined the Company as Sr. Vice President
 (Finance & Corporate Affairs) in October 1996 and was inducted on the
 Board of the Company in October 2001. Mr Kadle was also a Member of
 various Board Committees of the Company as also a representative of the
 Company on the Boards of some of the subsidiaries, associates and joint
 ventures. The Directors place on record their appreciation of the
 significant contributions made by Mr Kadle during his tenure as
 Executive Director (Finance & Corporate Affairs), the strategic
 direction he provided in the management of financial, IT and other
 Corporate matters and his role in the turnaround and growth of the
 Company.
 
 In accordance with the provisions of the Companies Act, 1956 and the
 Articles of Association of the Company, Mr Ratan N Tata and Mr R
 Gopalakrishnan are liable to retire by rotation and are eligible for
 re- appointment.
 
 Dr R A Mashelkar was appointed as an Additional Director, effective
 August 28, 2007. In accordance with the provisions of the Companies
 Act, 1956, Dr Mashelkar, in his capacity as an Additional Director,
 will cease to hold office at the forthcoming Annual General Meeting and
 is eligible for appointment.
 
 Attention of the Members is invited to the relevant items in the Notice
 of the Annual General Meeting and the Explanatory Statement thereto.
 
 17.  CORPORATE GOVERNANCE
 
 A separate section on Corporate Governance forming part of the
 Directors’ Report and the certificate from the Company’s auditors
 confirming compliance of Corporate Governance norms as stipulated in
 Clause 49 of the Listing Agreement with the Indian Stock Exchanges is
 included in the Annual Report.
 
 18.  PARTICULARS OF EMPLOYEES
 
 Information in accordance with sub-section (2A) of Section 217 of the
 Companies Act, 1956, read with the Companies (Particulars of Employees)
 Rules, 1975, and forming part of the Directors’ Report for the year
 ended March 31, 2008, is also given as an Annexure to this Report.
 
 19.  AUDIT
 
 Messrs Deloitte Haskins & Sells (DHS), who are the Statutory Auditors
 of the Company hold office until the ensuing Annual General Meeting. It
 is proposed to re-appoint them to examine and audit the accounts of the
 Company for the Financial Year 2008-09. DHS have, under Section 224(1)
 of the Companies Act, 1956, furnished a certificate of their
 eligibility for re-appointment.
 
 Cost Audit
 
 As per the requirement of the Central Government and pursuant to
 Section 233B of the Companies Act, 1956, the Company carries out an
 audit of cost accounts relating to motor vehicles every year. Subject
 to the approval of the Central Government, the Company has appointed
 M/s Mani & Co. to audit the cost accounts relating to motor vehicles
 for the Financial Year 2008-09.
 
 20.  DIRECTORS’ RESPONSIBILITY STATEMENT
 
 Pursuant to Section 217 (2AA) of the Companies Act, 1956, the
 Directors, based on the representation received from the Operating
 Management, confirm that:- - in the preparation of the annual accounts,
 the applicable accounting standards have been followed and that there
 are no material departures there from;
 
 - they have, in the selection of the accounting policies, consulted the
 Statutory Auditors and have applied them consistently and made
 judgments and estimates that are reasonable and prudent so as to give a
 true and fair view of the state of affairs of the Company at the end of
 the financial year and of the profit of the Company for that period;
 
 - they have taken proper and sufficient care, to the best of their
 knowledge and ability, for the maintenance of adequate accounting
 records in accordance with the provisions of the Companies Act, 1956,
 for safeguarding the assets of the Company and for preventing and
 detecting fraud and other irregularities;
 
 - they have prepared the annual accounts on a going concern basis.
 
 21.  ACKNOWLEDGEMENTS
 
 The Directors wish to convey their appreciation to all of the Company’s
 employees for their enormous personal efforts as well as their
 collective contribution to the Company’s record performance. The
 Directors would also like to thank the employee unions, shareholders,
 customers, dealers, suppliers, bankers and all the other business
 associates for the continuous support given by them to the Company and
 their confidence in its management.
 
                                    On behalf of the Board of Directors
 
                                                 RATAN N TATA
                                                   Chairman
 Mumbai, June 3, 2008