(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 and defined benefit plans which are
measured at fair value at the end of each reporting
period as explained in the accounting policies below.
The Company was incorporated on June 23, 2024
and the Financial Statements of the Company is
restated from the date of incorporation to give
the effect to the above mentioned Composite
Scheme of Arrangement (Refer Note 50). Though
the Company was incorporated on June 23, 2024,
the Statement of Profit and Loss has been prepared
from July 1, 2024 for practical purposes. All amounts
have been rounded to the nearest crores, unless
otherwise indicated. "0" refers to amounts less
than H0.50 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 (Formerly known as TML Commercial
Vehicles 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 judgements
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 in 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) Property, plant and equipment and Intangible
assets- useful life and impairment (Refer
Note 3 and Note 5)
ii) Recoverability/recognition of deferred tax
assets (Refer Note 28)
iii) Provision for product warranty (Refer Note 27)
iv) Assets and obligations relating to employee
benefits (Refer Note 33(B))
v) Fair valuation of investments
vi) Allowance for trade and other receivables
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.
iii) Identification and allocation of asset
(Refer Note 50)
(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) Foreign currency
These financial statements are presented in
Indian rupees, which is the functional currency of
Tata Motors Limited (Formerly TML Commercial
Vehicles 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.
(f) 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.
(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, 2026 based on
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, 2027.
(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
On August 13, 2025, Ministry of Corporate
Affairs ("MCA") notified the amendments to the
following standard:
Ind AS 1 - Presentation of Financial Statements
- Distinction between current and non-current
liability. These amendments provide clearer
guidance on classification of the liabilities as current
and non-current liability by including the additional
definition and considerations for classification of the
liability. The amendments also provide additional
disclosure requirements relating to material breach
of long-term loan arrangement.
The amendment relates to classification of the
non-current and current bifurcation of long-term
loan arrangement due to breach of covenants on
or before the end of reporting period. Due to this,
the loan is considered to be payable on demand
and is classified as current liability, unless the lender
agrees, by the end of the reporting period to provide
a period of grace of at least twelve months after the
reporting period within which the entity can rectify
the breach and during which the lender cannot
demand immediate repayment. The amendment is
applicable from April 1, 2026.
The Company is currently assessing the probable
impact of amendments which are applicable in its
annual financial statements.
Ind AS 7 - Cash flow statement - Supplier Financing
Arrangement. These amendments include additional
disclosure requirements for supplier financing
arrangements relating to cash and non- cash changes
(i.e. the effect of business combinations, exchange
differences or other transactions that do not require
the use of cash or cash equivalents) and disclosure
relating to the terms and conditions related to the
arrangement including disclosure of dissimilar terms
separately along with carrying amounts in line
items disclosed for which suppliers have received
payments from financial institution and range of
due dates. The amendment is applicable from April
1, 2025 with exemption to comparative period and
interim periods in which entity first applies the
amendments (Refer note 24).
Ind AS 107 - Financial Instruments Disclosure -
Additional disclosure relating to Supplier Financing
Arrangement - The liquidity risk disclosure will
also include the disclosure for supplier financing
arrangement which includes maturity analysis for
supplier financing arrangement and a description of
how the entity manages the liquidity risk inherent in
Supplier Financing Arrangement (Refer note 42).
Ind AS 12 - Income Taxes - Pillar Two - The
amendment includes in the scope of the Ind AS
12 the income tax paid on pillar two model rules
and disclosure for application of the exception.
Additional disclosure relating to current income taxes
related to Pillar Two income taxes and disclosure of
known or reasonably estimable information that
helps users of financial statements understand the
entity's exposure to Pillar Two income taxes arising
from that legislation when Pillar two legislation
is enacted but not yet effective. These disclosures
shall be supported by qualitative and quantitative
information. These amendments are effective from
April 1, 2025 but to be disclosed in annual financial
statements (Refer note 28).
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 untill 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 substitution 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, Ind AS 116 permits 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 H0.03 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.
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 2027 and 2037. The weighted
average rate applied is 8.54% (2025: 8.37%).
The amortisation period for intangible assets with finite useful lives is reviewed annually. 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.
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.
(B) Notes to reserves:
a) Retained earnings
Retained earnings are the profits that the Company has earned till date (including amounts allocated to the
Company pursuant to the Scheme (Refer note 50)), add/(less) any transfers from/(to) general 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.
b) Capital Reserve pursuant to the scheme
Capital reserve represents the difference between the assets and liabilities transferred to the Company pursuant to the
Scheme, after deducting the share capital to be issued pursuant to the scheme , Retained Earnings, General Reserve and
Other Comprehensive Income allocated to the Company pursuant to the Scheme. Refer Note 50.
c) Hedge Reserve
Effective portion of fair value gain/(loss) on all financial instruments designated in cash flow hedge relationship are
accumulated in hedge reserve.
d) Cost of hedge Reserve
Fair value gain/(loss) attributable to cost of hedge on all financials instruments designated in cash flow hedge relationship
are accumulated in cost of hedge reserve.
e) General Reserve
The general reserve represents amounts appropriated out of retained earnings based on the provisions of the Act prior
to its amendment, which is allocated to the Company pursuant to the Scheme. Refer Note 50.
f) Equity instruments through other comprehensive income
The Company has elected to recognise changes in the fair value of certain investments in equity securities in other
comprehensive income. These changes are accumulated within the FVOCI equity investments within equity. The
Company transfers amounts there from to retained earnings when the relevant equity securities are derecognised.
g) Dividend
Any dividend declared by Tata Motors Limited (Formerly TML Commercial Vehicles Limited) is based on the profits
available for distribution as reported in the statutory standalone financial statements of Tata Motors Limited 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 as stated in the statutory standalone financial
statements of Tata Motors Limited (Formerly TML Commercial Vehicles Limited) 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 year the net income reported in this Financial Statements may not be fully distributable.
For the year ended March 31, 2026, the Board of Directors has recommended a final dividend of J4.00 per fully paid
up Ordinary share of J2.00 each, subject to approval by the Shareholders at the Annual General Meeting, and if
approved, would result in a cash outflow of J1,473 crores. The Company did not pay any dividend during period ended
March 31, 2025.
I. Information regarding long-term borrowings
(i) Nature of security (on loans including interest accrued thereon) :
The term loan of J230 crores (recorded in books at J96 crores) is due for repayment from the quarter ending June
30, 2030 to December 31, 2040, along with a simple interest of 0.10% p.a. The loan is secured by bank guarantee
for the due performance of the conditions as per the terms of the agreement.
Supplier finance arrangements.
The Company participates in a supplier finance arrangement under which its suppliers may elect to receive early payment
of their invoices from a bank. Under the arrangement, the bank agrees to pay amounts due to participating suppliers in
respect of invoices owed by the Company and the Company repays the bank at a later date. The principal purpose of this
arrangement is to facilitate efficient payment processing and provide the willing suppliers early payment terms, compared
with the related invoice payment due date.
The Company has not derecognised the original trade payables relating to the arrangement because neither a legal release
was obtained nor was the original liability substantially modified on entering into the arrangement.
From the Company's perspective, the arrangement does not significantly extend payment terms beyond the normal terms
agreed with other suppliers that are not participating; however, the arrangement does provide participating suppliers
with the benefit of early payment. Additionally, the Company does not incur any additional interest towards the bank on
the amounts due to the suppliers. The Company therefore includes the amounts subject to the arrangement within trade
payables because the nature and function of these payables remains the same as those of other trade payables.
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