2 Material accounting policies
(a) Statement of compliance
These financial statements have been prepared
in accordance with Indian Accounting Standards
("Ind AS") as notified under the Companies (Indian
Accounting Standards) Rules, 2015 read with
Section 133 of the Companies Act, 2013 (the "Act")
as amended from time to time.
(b) Basis of preparation
These financial statements have been prepared
on historical cost basis except for certain financial
instruments which are measured at fair value at
the end of each reporting period as explained
in the accounting policies below. All amounts
have been rounded to the nearest crores, unless
otherwise indicated. "0" refers to amounts less
than R 0.50 crore.
Joint operations :
Certain of the Company's activities, are conducted
through a joint operation, which is a joint
arrangement whereby the parties that have joint
control of the arrangement have rights to the
assets, and obligations for the liabilities, relating
to the arrangement. As per Ind AS 111 - Joint
arrangements, in its separate financial statements,
the Company being a joint operator has recognised
its share of the assets, liabilities, income and
expenses of these joint operations incurred jointly
with the other partners, along with its share of
income from the sale of the output and any assets,
liabilities and expenses that it has incurred in
relation to the joint operation.
Although not required by Ind AS, the Company has
provided in note 47 additional information of Tata
Motors Limited on a standalone basis excluding its
interest in its Joint Operation viz. Tata Cummins
Private Limited (including its subsidiary company).
(c) Use of estimates and judgments
The preparation of financial statements in
conformity with Ind AS requires management
to make judgments, estimates and assumptions,
that affect the application of accounting policies
and the reported amounts of assets, liabilities
and disclosures of contingent assets and liabilities
at the date of these financial statements and the
reported amounts of revenues and expenses for
the periods presented. Actual results may differ
from these estimates and judgements.
Estimates
Estimates and underlying assumptions are reviewed
at each balance sheet date. Revisions to accounting
estimates are recognised in the period in which the
estimate is revised and future periods affected.
In particular, information about significant areas
of estimation uncertainty and critical judgments
in applying accounting policies that have the
most significant effect on the amounts recognised
in the financial statements are included in the
following notes:
i) Note 3 and Note 5 - Property, plant and
equipment and Intangible assets- useful life
and impairment
ii) Note 27 - Provision for product warranty
iii) Note 33(B) - Assets and obligations relating to
employee benefits
Judgements
i) Revenue recognition: The Company uses
judgement to determine when control of its
goods, primarily vehicles and parts, pass to
the customer. This is assessed with reference
to indicators of control, including the risks
and rewards of ownership and legal title
with reference to the underlying terms of
the customer contract. Refer to note 31 for
further information.
ii) Capitalisation of product engineering
costs: The Company applies judgement
in determining at what point in a vehicle
programme's life cycle the recognition
criteria under Ind AS 38 are satisfied, and in
determining the nature of the cost capitalised.
Refer to note 5 for further information.
(d) Cost recognition
Costs and expenses are recognised when incurred
and are classified according to their nature.
Expenditure are capitalized where appropriate, in
accordance with the policy for internally generated
intangible assets and represents employee costs,
stores and other manufacturing supplies, and other
expenses incurred for construction and product
development undertaken by the Company.
Material and other cost of sales as reported in the
statement of profit and loss is presented net of
the impact of realised foreign exchange relating to
derivatives hedging cost exposures.
(e) Segments
The Company primarily operates in the automotive
business and has a single segment of commercial
vehicles. The Company has opted for an exemption
as per para 4 of Ind AS 108. Segment information is
thus given in the consolidated financial statements
of the Company.
(f) Foreign currency
These financial statements are presented in Indian
rupees, which is the functional currency of Tata
Motors Limited.
Transactions in foreign currencies are recorded
at the exchange rate prevailing on the date of
transaction. Foreign currency denominated
monetary assets and liabilities are re-measured
into the functional currency at the exchange rate
prevailing on the balance sheet date.
Exchange differences arising on settlement of
transactions and translation of monetary items
are recognized in the statement of Profit or Loss
except to the extent, exchange differences which
are regarded as an adjustment to interest costs
on foreign currency borrowings, are capitalized as
part of borrowing costs.
(g) Going concern
The Company's financial statements have been
prepared on a going concern basis.
The Company has performed an assessment of
its financial position as at March 31, 2025 and
forecasts of the Company for a period of eighteen
months from the date of these financial statements
(the 'Going Concern Assessment Period' and the
'Foreseeable Future').
In developing these forecasts, the Company has
modelled a base case, which has been further
sensitised using severe but plausible downside
scenarios. It also accounts for other end-market
and operational factors throughout the Going
Concern Assessment Period. This has been further
sensitized using more severe but plausible scenarios
considering external market commentaries and
other factors impacting the global economy and
automotive industry. Management do not consider
more extreme scenarios than the ones assessed to
be plausible.
In evaluating the forecasts, the Company has
taken into consideration both the sufficiency of
liquidity to meet obligations as they fall due as well
as potential impact on compliance with financial
covenants during the forecast period. These
forecasts indicate that, based on cash generated
from operations, the existing funding facilities and
inter corporate deposits from subsidiaries, the
Company will have sufficient liquidity to operate
and discharge its liabilities as they become due,
without breaching any relevant covenants and the
need for any mitigating actions.
Based on the evaluation described above,
management believes that the Company has
sufficient financial resources available to it at the
date of approval of these financial statements and
that it will be able to continue as a 'going concern'
in the foreseeable future and for a period up to
September 30, 2026.
(h) Impairment
At each balance sheet date, the Company assesses
whether there is any indication that any property,
plant and equipment and intangible assets with
finite lives may be impaired. If any such impairment
exists the recoverable amount of an asset is
estimated to determine the extent of impairment,
if any. Where it is not possible to estimate the
recoverable amount of an individual asset, the
Company estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
Intangible assets not yet available for use, are
tested for impairment annually at each balance
sheet date, or earlier, if there is an indication that
the asset may be impaired.
Recoverable amount is the higher of fair value less
costs to sell and value in use. In assessing value in
use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate
that reflects current market assessments of the
time value of money and the risks specific to the
asset for which the estimates of future cash flows
have not been adjusted.
If the recoverable amount of an asset (or cash¬
generating unit) is estimated to be less than its
carrying amount, the carrying amount of the
asset (or cash-generating unit) is reduced to
its recoverable amount. An impairment loss is
recognised immediately in the statement of Profit
and Loss.
An asset or cash-generating unit impaired in prior
years is reviewed at each balance sheet date
to determine whether there is any indication
of a reversal of impairment loss recognized in
prior years.
(i) Recent accounting pronouncements
Ministry of Corporate Affairs ("MCA") notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards)
Rules as issued from time to time. During the year
ended March 31, 2025, MCA has notified Ind AS
117 - Insurance Contracts and amendments to Ind
As 116 - Leases, relating to sale and lease back
transactions, applicable from April 1, 2024. The
Company has assessed that there is no significant
impact on its financial statements.
On May 9, 2025, MCA notifies the amendments to
Ind AS 21 - Effects of Changes in Foreign Exchange
Rates. These amendments aim to provide clearer
guidance on assessing currency exchangeability
and estimating exchange rates when currencies
are not readily exchangeable. The amendments are
effective for annual periods beginning on or after
April 1, 2025. The Company is currently assessing
the probable impact of these amendments on its
financial statements.
3 Property, plant and equipment
(a) Accounting policy
Property, plant and equipment are stated at cost
of acquisition or construction less accumulated
depreciation and impairment, if any.
Freehold land is measured at cost and is not depreciated.
Cost includes purchase price, non-recoverable taxes
and duties, labour cost and direct overheads for self-
constructed assets and other direct costs incurred up to
the date the asset is ready for its intended use.
Subsequent expenditure relating to property, plant and
equipment is capitalised only when it is probable that
future economic benefits associated with these will flow
to the Company and the cost of the item can be measured
reliably. Repairs and maintenance costs are recognized
in the statement of profit and loss when incurred.
Interest cost incurred is capitalised up to the date the
asset is ready for its intended use for qualifying assets,
based on borrowings incurred specifically for financing
the asset or the weighted average rate of all other
borrowings, if no specific borrowings have been incurred
for the asset.
Depreciation is provided on the Straight Line Method
(SLM) over the estimated useful lives of the assets
considering the nature, estimated usage, operating
conditions, past history of replacement, anticipated
technological changes, manufacturers' warranties
and maintenance support. Taking into account these
factors, the Company has decided to retain the useful
life hitherto adopted for various categories of property,
plant and equipments, which are different from those
prescribed in Schedule II of the Companies Act, 2013.
The useful lives are reviewed at each year end. Changes
in expected useful lives are treated as change in
accounting estimates.
Depreciation is not recorded on capital work-in-progress
until construction and installation are complete and the
asset is ready for its intended use.
An item of property, plant and equipment is derecognized
on disposal. Any gain or loss arising from derecognition
of an item of property, plant and equipment is included
in the statement of profit and loss.
4 Leases
(a) Accounting policy
Lessee:
At inception of a contract, the Company assesses whether a contract is, or contain a lease. A contract is, or contains,
a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company
assesses whether:
• The contract involves the use of an identified asset -this may be specified explicitly or implicitly, and should be
physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a
substantive substation right, then the asset is not identified;
• The Company has the right to substantially all of the economic benefits from the use of the asset throughout the
period of use; and
• The Company has the right to direct the use of the asset. The Company has this right when it has the decision
making rights that are most relevant to changing how and for what purposes the asset is used. In rare cases
where the decision about how and for what purpose the asset is used is predetermined, the Company has the
right to direct the use of the asset if either:
• The Company has the right to operate the asset; or
• The Company designed the asset in a way that predetermines how and for what purposes it will be used.
As a practical expedient, accounting standards permit a lessee not to separate non-lease components, and instead
account for any lease and associated non-lease components as a single arrangement. The Company has not used this
practical expedient. At inception or on reassessment of a contract that contains a lease component, the Company
allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use
asset is initially measured at cost, which comprises of the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct costs incurred and estimated dilapidation
costs, less any lease incentives received. The right-of-use asset is subsequently amortised using the straight-line
method over the shorter of the useful life of the leased asset or the period of lease. If ownership of the leased asset
is automatically transferred at the end of the lease term or the exercise of a purchase option is reflected in the lease
payments, the right-of-use asset is amortised on a straightline basis over the expected useful life of the leased asset.
The lease liability is initially measured at the present value of the lease payments that are not paid at commencement
date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's
incremental borrowing rate. The lease liability is measured at amortised cost using the effective interest method. It is
re-measured when there is a change in future lease payments.
Lease payments include fixed payments, including in-substance fixed payments, amounts expected to be payable
under a residual value guarantee, the exercise price of a purchase option if the Company is reasonably certain to
exercise that option and payment of penalties for terminating the lease if the lease term considered reflects that
the Company shall exercise termination option. The Company also recognises a right of use asset which comprises
of amount of initial measurement of the lease liability, any initial direct cost incurred by the Company and estimated
dilapidation costs.
Payment made towards short term leases (leases for which non-cancellable term is 12 months or lesser) and low
value assets (lease of assets worth less than ^0.03 crores) are recognised in the statement of Profit and Loss as rental
expenses over the tenor of such leases.
Lessor:
At the inception of a lease, the lease arrangement is classified as either a finance lease or an operating lease, based
on contractual terms and substance of the lease arrangement. Whenever the terms of the lease transfer substantially
all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are
classified as operating leases.
Amounts due from lessees under finance leases are recognised as receivables at the amount of the Company's net
investment in the leases. Finance income is allocated to accounting periods so as to reflect a constant periodic rate of
return on the Company's net investment outstanding in respect of the leases.
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial
direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased
asset and recognised on a straight-line basis over the lease term.
(b) The Company leases a number of buildings, plant and equipment, IT hardware and software assets, certain of which
have a renewal and/or purchase option in the normal course of the business. Extension and termination options
are included in a number of leases across the Company. The majority of extension and termination options held are
exercisable only by the Company and not by the respective lessor. The Company assesses at lease commencement
whether it is reasonably certain to exercise the extension or termination option. The Company re-assesses whether
it is reasonably certain to exercise options if there is a significant event or significant change in circumstances within
its control. It is recognised that there is potential for lease term assumptions to change in the future and this will
continue to be monitored by the Company where relevant. The Company's leases mature between 2026 and 2037.
The weighted average rate applied is 8.37% (2024: 8.57%).
The amortisation period for intangible assets with finite useful lives is reviewed at each year-end. Changes in expected
useful lives are treated as changes in accounting estimates.
Internally generated intangible asset
Research costs are charged to the statement of Profit and Loss in the year in which they are incurred.
Product development costs incurred on new vehicle platform, engines, transmission and new products are recognised
as intangible assets, when feasibility has been established, the Company has committed technical, financial and other
resources to complete the development and it is probable that asset will generate future economic benefits.
The cost of an internally generated intangible asset is the sum of directly attributable expenditure incurred from the
date when the intangible asset first meets the recognition criteria to the completion of its development.
Interest cost incurred is capitalised up to the date the asset is ready for its intended use for qualifying assets, based
on borrowings incurred specifically for financing the asset or the weighted average rate of all other borrowings if no
specific borrowings have been incurred for the asset.
Product development expenditure is measured at cost less accumulated amortisation and impairment, if any.
Amortisation is not recorded on product engineering in progress until development is complete.
Derecognition of intangible assets
An item of intangible assets is derecognized on disposal or when fully amortized and no longer in use. Any gain or loss
arising from derecognition of an item of intangible assets is included in the statement of profit and loss.
Original plan is considered as that plan which is approved and on the basis of which implementation progress is
evaluated. Such original plan includes management's estimates and assumptions w.r.t future business, economy /
industry and regulatory environments.
6 Investments in subsidiaries, joint ventures and associates measured at cost - non-current
(a) Accounting policy
Investments in Subsidiaries, Joint ventures and Associates are carried at cost less accumulated impairment losses, if
any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down
immediately to its recoverable amount. On disposal of investments in Subsidiaries, Joint ventures and Associates,
the difference between net disposal proceeds and the carrying amounts are recognised in the statement of profit
and loss.
15 Inventories
(a) Accounting policy
Inventories are valued at the lower of cost and net realisable value. Cost of raw materials, components and
consumables are ascertained on a moving weighted average basis. Cost, including fixed and variable production
overheads, are allocated to work-in-progress and finished goods determined on a full absorption cost basis. Cost of
inventories also include all other costs incurred in bringing the inventories to their present location and condition. Net
realisable value is the estimated selling price in the ordinary course of business less estimated cost of completion and
selling expenses.
18 Cash and cash equivalents
(a) Accounting policy
Cash and cash equivalents comprises cash on hand, demand deposits and highly liquid investments with an original
maturity of upto three months that are readily convertible into cash and which are subject to an insignificant risk of
changes in value.
(i) Rights, preferences and restrictions attached to shares :
• In respect of every Ordinary share of ^2 each (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.
• The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing
Annual General Meeting.
• 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.
• The Board of Directors, at its meeting held on July 25, 2023, approved (subject to, inter alia, obtaining the
regulatory and other approvals including from the Hon'ble National Company Law Tribunal ("NCLT")) a Scheme
of Arrangement ("Scheme") for reduction, through cancellation of the entire 'A' Ordinary Share capital
and in consideration thereof, issue and allotment of New Ordinary Shares in the Company, in the manner as
contemplated in the Scheme.
The Hon'ble NCLT vide Order dated August 2, 2024 sanctioned the Scheme which was effective from September
1, 2024. Accordingly, the Company cancelled 50,85,02,896 'A' Ordinary shares of ^2.00 each (^102 crores) and
issued and allotted 35,59,52,028 New Ordinary Shares of ^2.00 each (^71 crores) to TML Securities Trust, in
terms of the Scheme. The resultant difference of ^31 crores is recorded in Securities Premium Account. TML
Securities Trust was able to credit New ordinary Shares to the respective 'A' Ordinary shareholders, except
173,389 New Ordinary Shares. Of these 86,411 new Ordinary Shares, have been transferred to Investor Education
and Protection Fund on March 13, 2025. Remaining 86,978 new Ordinary Shares, yet to be transferred to the
ultimate shareholders/beneficial owners by TML Securities Trust as on March 31, 2025, are consolidated in the
standalone financial statements. These 86,978 new Ordinary Shares are presently held in an escrow demat
account of the Company.
The total expenses of ^70 crores (including ^53 crores for the year ended March 31, 2025) incurred on the
cancellation of 'A' Ordinary Shares have been accounted through retained earnings.
The issue of new Ordinary Shares as consideration for reduction by way of cancellation of 'A' Ordinary Shares,
was considered to be 'Deemed Dividend' in the hands of 'A' Ordinary Shareholders in terms of the Income Tax
Act, 1961. The TDS liability of the Company on the aforesaid 'Deemed Dividend', amounting to ^1,073 crores,
has been funded through sale of requisite number of new Ordinary Shares, in the manner as contemplated in
the Scheme.
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 (DRR)
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. Transfers represent DRR on debentures issued before August 16, 2019
and pertaining to debentures repaid during the years ended March 31, 2025 and 2024. No DRR is required for
debentures issued after August 16, 2019.
c) Securities premium
The amount received in excess of face value of the equity shares is recognised in Securities Premium.
d) Retained earnings
Retained earnings are the profits that the Company has earned till date, add/(less) any transfers from/(to)
general reserve, securities premium and debenture redemption reserve, dividends or other distributions paid
to shareholders. Retained earnings includes re-measurement gain/(loss) on defined benefit obligations, net of
taxes that will not be reclassified to Profit and Loss.
e) Capital reserve
The capital reserve represents the excess of the identifiable assets and liabilities over the consideration paid/
received or vice versa in a common control sale/transfer of business/investment.
f) Share-based payments reserve
Share-based payments reserve represents amount of fair value, as on the date of grant, of unvested options and
vested options not exercised till date, that have been recognised as expense in the statement of profit and loss till date.
g) Dividends
Any dividend declared by Tata Motors Limited is based on the profits available for distribution as reported in
the statutory financial statements of Tata Motors Limited (standalone) prepared in accordance with Generally
Accepted Accounting Principles in India or Ind AS. Indian law permits the declaration and payment of dividend
out of profits for the year or previous financial year(s) as stated in the statutory financial statements of Tata
Motors Limited (Standalone) prepared in accordance with Generally Accepted Accounting Principles in India,
or Ind AS after providing for depreciation in accordance with the provisions of Schedule II to the Companies
Act. However, in the absence of the said profits, it may declare dividend out of free reserves, subject to certain
conditions as prescribed under the Companies (Declaration and Payment of Dividend) Rules, 2014. Accordingly,
in certain years the net income reported in this Financial Statements may not be fully distributable.
For the year ended March 31, 2025, the Board of Directors has recommended a final dividend of ^6.00 per fully
paid up Ordinary share of ^2.00 each, subject to approval by the Shareholders at the Annual General Meeting,
and if approved, would result in a cash outflow of ^2,209 crores. The Company has paid a final dividend of
^3.00 per fully paid up Ordinary shares and ^3.10 per fully paid up 'A' Ordinary shares and a special dividend of
^3.00 per fully paid up Ordinary share of ^2.00 each and ^3.10 per fully paid up 'A' Ordinary share of ^2.00 each
totalling to ^2,310 crores for the year ended March 31, 2024.
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