Tata Motors Ltd Management Discussions

Macro-Economic Environment

Indian Economy

Real GDP or GDP at Constant Prices is estimated to attain a level of H192 lakh crore in FY26, against the First Revised Estimate GDP for the year FY25 of H178 lakh crore.

The total expenditure that the government is expected to spend in FY27 H54 lakh crore, compared to the last financial year growth trajectory of around 10.1%.

Real GDP has been grew by 7.6% in FY26 against the growth rate of 6.5% during FY25. Nominal GDP is expected to grow at 8.0% in FY26.

India witnessed significant policy-led milestones for the Commercial Vehicles Industry, supported by NITI Aayog driven reform initiatives focused on GST reform 2.0, logistics efficiency and fleet modernization, thereby strengthening industry growth momentum.

The Indian commercial vehicle market is expected to see steady growth, supported by infrastructure development, increased logistics demand, and replacement cycles. Government initiatives such as the Production Linked Incentive (PLI) scheme are likely to drive investments in electric and alternative fuel commercial vehicles. The sector will continue to focus on emission reduction, fuel efficiency, and the adoption of advanced technologies, including telematics and fleet management solutions.

Global Economy

In FY26, global economic growth is expected to remain subdued, shaped by lingering inflationary pressures, elevated interest rates in key developed markets, and continued geopolitical uncertainties. While easing inflation and potential monetary policy normalization may offer some support, cautious consumer spending and fragile global trade dynamics are likely to persist. As a result, global growth is projected to remain modest, with only a gradual recovery from the slowdown observed in 2025.

US economy is expected to remain resilient, supported by strong services activity and a stable labour market, though growth may moderate due to higher interest rates. Europe, including the UK, is likely to see subdued growth amid geopolitical tensions and high energy costs. Chinas growth is expected to stay moderate due to real estate and industrial challenges. The Asia-Pacific region is projected to be the fastest-growing, driven by robust domestic demand.

Business of the company

Tata Motors Limited (formerly TML Commercial Vehicles Limited), incorporated on June 23, 2024, and its subsidiaries, associates, joint ventures and joint operations, collectively referredtoas("theCompany"or"TML"),designs,manufactures, and sells a wide range of automotive vehicles. The Company also manufactures engines for industrial applications.

The Board of Directors has at its meeting held on August 1, 2024, approved a Composite Scheme of Arrangement amongst Tata Motors Passenger Vehicles Ltd (formerly Tata Motors Ltd) ("TMPVL"), Tata Motors Ltd (formerly TML Commercial Vehicles Ltd), Tata Motors Passenger Vehicles Ltd and their respective shareholders under Sections 230-232 of the Companies Act, 2013, which, inter alia, provides for: ? ?demerger, transfer and vesting of the commercial vehicles business of TMPVL along with related investments ("demerged undertaking") to the Company on a going concern basis; and ? ?amalgamation of Tata Motors Passenger Vehicles Ltd with

TMPVL with an objective of consolidating the passenger vehicles business.

The above Composite Scheme of Arrangement was approved by NCLT ("Scheme") is effective from October 1, 2025 with appointed date of July 1, 2025.

Company Operations

Automotive operations are the Companys most significant segment, which include:

All activities relating to the development, design,

? ?manufacture, assembly and sale of vehicles as well as related spare parts and accessories, and

Distribution and service of vehicles.

Theautomotiveoperationconsistoffollowinglineofbusinesses:

Heavy Commercial Vehicles (HCV)

Intermediate and Light Medium Commercial Vehicles (ILMCV)

SCV and Pickup (SCV)

CV Passenger Vehicle

A. Volumes

Tata Motors maintained its leader position in Indias CV market, with broad-based growth across HCV, ILMCV, SCV and pickup, and passenger carriers, which was characterized by increased competition during the year. International expansion boosted share in overseas markets, particularly in Passenger and HCV exports.

The total vehicle sales for FY26 and FY25 are set forth in the table below:

Particulars	FY26		FY25
	Units	%	Units	%
Heavy Commercial Vehicles	128,292	29.5%	113,406	29.5%
Intermediate and Light Medium Commercial Vehicles	86,224	19.8%	71,620	18.6%
SCV and Pick Up	159,398	36.6%	144,283	37.5%
CV Passenger Vehicles	61,313	14.1%	55,395	14.4%
Total	435,227	100.0%	384,704	100.0%

Tata and other brand vehicles

The following table sets forth our total wholesale sales worldwide of Commercial Vehicles:

	FY26	FY25
Commercial Vehicle Sales
	Units	Units
In India	399,907	358,431
Outside India	35,320	26,273
Total	435,227	384,704

The following table sets forth our market share in various categories in the Indian market based on VAHAN Registration volumes:

	FY26	FY25
	%	%
Heavy Commercial Vehicles	55.0	53.9
Intermediate and Light Medium	39.5	39.3
Commercial Vehicles
SCV and Pick Up	26.8	29.0
CV Passenger Vehicles	36.4	37.6
Total Commercial Vehicles	35.7	37.1

Source: Society of Indian Automobile Manufacturers Report (SIAM) and our internal analysis.

The following table sets forth our total domestic wholesales and retails of Commercial Vehicles: -

	Wholesale Volume (In Units)			Retail Volume (In Units)
	FY26	FY25	% Change	FY26	FY25	% Change
Commercial Vehicles	399,907	358,431	11.6%	392,295	361,144	8.6%

Commercial Vehicles in India

	Commercial Vehicles Sales
Category	FY26 (In Units)	FY25 (In Units)	% Change
Heavy Commercial Vehicles (HCV)	120,058	106,485	12.7%
Intermediate and Light Medium Commercial Vehicles (ILMCV)	74,461	62,258	19.6%
SCVs and Pickup (SCVPU)	150,410	138,913	8.3%
CV Passenger Vehicles	54,978	50,775	8.3%
Total	399,907	358,431	11.6%

In FY26, Tata Motors commercial vehicle business delivered highest-ever growth with strong volumes, profitability, and product innovation including the launch of 17 next-generation trucks and major international orders.

HCVs in India

Our volumes rose by 12.7% in this segment. FY26 volumes improved driven by a recovery in infrastructure and construction activity in H2, supported by improved freight availability and replacement demand.Strengthening of the portfolio with higher-tonnage,fuel-efficient models and continued focus on alternate fuel offerings also aided growth.

ILMCVs in India

Our sales in the ILMCVs in India increased by 19.6%. The segment recorded strong growth led by sustained demand in the MCV sub-segment, supported by e-commerce, urban distribution, and revival in industrial activity. Targeted product enhancements, higher payload variants, and improved key account engagement contributed to volume expansion.

SCVs and Pickups in India

Volume grew by 8.3%, the growth was driven by steady demand from last mile logistics, intra-city transportation and rural markets. Portfolio refreshes, improved customer value propositions, and better channel reach helped sustain momentum despite ongoing financing constraints in select customer cohorts.

Passenger Vehicles in India

Our sales in the CV passenger vehicles in India increased by 8.3%. Growth was supported by stable demand from State Transport Undertakings and private operators, aided by replacement demand, fleet expansion in select states, and continued traction in electric and alternative fuel buses. Product offerings aligned to urban and intercity applications further supported volumes.

Commercial Vehicles - Exports

With a global footprint spanning 52 countries - including those in the South Asian Association for Regional Cooperation (SAARC), Africa, the Middle East, Southeast Asia, and Latin America - we offer a diverse range of vehicles, including trucks, buses, pickups, and small commercial vehicles. Since our founding In 1961, international business has been a core part of our strategy, and we remain committed to building, strengthening, and expanding our relationships around the world. Overall sales in International Business (IB) markets grew by 54% in FY26 compared to FY25. The SAARC region recorded a

70% increase, while the Sub-Saharan region experienced a significant 25% year-on-year growth in shipments. Non-SAARC markets accounted for 48% of total shipments in FY26, compared to 53% in FY25. Notably, Heavy Duty

Truck Range - Prima and Large Bus meeting Euro 6 standards were launched in UAE. MCV Bus were launched in Bangladesh and Qatar.

B. Financial Performance

The Commercial Vehicles business recorded strong financial performance during FY26, with highest ever Revenue of H83,855 crores, and highest ever EBITDA of H10,314 crores and Profit After Tax of H3,030 crores. The performance was driven by higher volumes, improved realizations, operating efficiencies and prudent cost control measures.

The following table sets forth selected items from our consolidated statements of income for the year indicated and shows these items as a percentage of total revenue i) Income Statement

(Rs. in crores)

	Year Ended March 31,2026	From June 23,2024 to March 31,2025*	Year Ended March 31,2026	From June 23,2024 to March 31,2025*
			% To Revenue
Revenue from operations
Revenue	83,390	57,788
Other operating revenue	465	429
Total revenue from operations	83,855	58,217
Other Income	1,124	877	1.3%	1.5%
Total Income	84,979	59,094
Expenses :
Cost of material consumed (Including purchases &	56,732	39,196	67.7%	67.3%
change-in stock)
Employee Cost	5,804	4,223	6.9%	7.3%
Finance Costs	874	1,079	1.0%	1.9%
Product development / Engineering expenses	789	814	0.9%	1.4%
Depreciation and Amortisation	1,945	1,690	2.3%	2.9%
Foreign exchange (gain)/loss (net)	(100)	91	(0.1%)	0.2%
Other Expenses	11,689	8,672	13.9%	14.9%

 

				(Rs. in crores)
	Year Ended March 31,2026	From June 23,2024 to March 31,2025*	Year Ended March 31,2026	From June 23,2024 to March 31,2025*
			% To Revenue
Fair value loss on equity investments measured at FVTPL	2,418	-	2.9%	0.0%
Amount Capitalised	(1,094)	(951)	(1.3%)	(1.6%)
Total Expenditure	79,057	54,814
Profit/(loss) before share of profit/(loss) in equity accounted investees, exceptional items and tax	5,922	4,280
Share of profit /(loss) of associates (net)	169	125
Profit before tax(before exceptional items)	6,091	4,405
Exceptional Item loss/(gain)	1,428	317	1.7%	0.5%
Profit before Tax	4,663	4,088
Tax expenses	1,633	893
Profit for the year	3,030	3,195
Underlying EBITDA	10,314	6,595	12.3%	11.3%
Underlying EBIT	8,538	5,030	10.2%	8.6%

Underlying EBITDA is defined to include the product development expenses charged to P&L and realised FX and commodity hedges but excludes the fair value loss on equity investments measured at FVTPL, the revaluation of foreign currency debt, revaluation of foreign currency other assets and liabilities, MTM on FX and commodity hedges, other income (except government grant) as well as, exceptional items.

Underlying EBIT is defined as reported Underlying EBITDA plus profit from equity accounted investee less depreciation and amortization.

Segment Review:

Companys Earnings before other income (excluding incentives) , finance cost, Forex, exceptional items and Tax is H8,414 crores in FY26 driven by robust growth across all the segments, better product mix, efficient cost management, have resulted in profits for the year.

Our operations are further divided into three reporting segments as follows:-

(Rs. in crores)

Particulars	Total Revenues		Earnings before other income, (excluding incentives), finance cost, Forex (net), exceptional items & Tax
	Year Ended	From June 23,2024 to	Year Ended	From June 23,2024 to
	March 31,2026	March 31,2025	March 31,2026	March 31,2025
Commercial	82,611	57,244	8,727	5,172
Unallocable	278	323	(448)	(346)
Others	968	650	135	72
Inter-Segment	(2)	-	-	-
Eliminations
Total	83,855	58,217	8,414	4,898

Other operations

Our other operations business segment mainly include insurance broking services.

Following table sets forth selected data regarding our other operations for the periods indicated (before inter-segment eliminations).

Particulars	Year Ended March 31,2026	From June 23,2024 to March 31,2025
Total Revenues (Rs. in crores)	968	650
Earnings before other income, interest & Tax	135	72
Earnings before other income, interest & Tax (% of revenue)	13.9%	11.1%

Geographical Breakdown

The following chart sets forth our revenue from key geographical markets:

*From June 23,2024 to March 31,2025

Our revenues from sales of vehicles and spare parts of Commercial Vehicles manufactured in India H73,698 crores in FY26.

The breakup of sales of vehicles manufactured by Tata Motors Limited:

(Rs. in crores)

Category	Year Ended March 31,2026	From June 23,2024 to March 31,2025
Heavy	37,199	25,041
Commercial
Vehicles
Intermediate and	11,212	7,011
Light Medium
Commercial
Vehicles
CV Passenger	8,807	6,073
Vehicle
SCV and Pick Up	7,558	5,128

Cost of material consumed:

Raw Materials, Components and Purchase of Products for Sale (including change in inventories of finished goods and work-in-progress)

(Rs. in crores)

Particulars	Year Ended March 31,2026	From June 23,2024 to March 31,2025
Consumption of	56,732	39,197
Material
% of Revenue	67.7%	67.3%
from operation

Material costs, as a percentage of revenue, broadly remained in line with the previous year despite an increase in input costs, supported by improved realizations and operational efficiencies.

Employee Cost:

Particulars	Year Ended March 31,2026	From June 23,2024 to March 31,2025
Employee Cost	5,804	4,223
% of Revenue	6.9%	7.3%
from operation

Employee costs declined as percentage of revenue in the current year, reflecting operating leverage and improved scale efficiencies.

Particulars	Headcounts
	FY26	FY25
Permanent	23,903	23,995
Flexi	23,274	16,581
	47,177	40,576

 

Other Expenses:
		H ( in crores)
Particulars	Year Ended March 31,2026	From June 23,2024 to March 31,2025
Other Expenses	11,689	8,672
% of Revenue	13.9%	14.9%
from operation

Other expenses improved as a percentage of revenue in the current year, reflect optimize cost management, enhanced operating efficiencies, and benefits of scale aligned with higher business volumes.

The major components of expenses are as follows:

(Rs. in crores)

	Year Ended	From June 23,2024
	March 31,2026	to March 31,2025
Works operation and other expenses	4,266	3,140
Warranty charges	2,230	1,699
Freight, transportation, port charges, etc.	1,373	936
Processing charges	1,205	897
Information technology/ computer expenses	920	823
Power and fuel	627	457
Stores, spare parts and tools consumed	568	343
Publicity	381	323
MTM (gain)/loss on commodity derivatives	69	5

 

		( Rs. in crores)
	Year Ended March 31,2026	From June 23,2024 to March 31,2025
Provision and write off of sundry debtors and advances (net)	50	49
Other Expenses	11,689	8,672
Depreciation and Amortization:
Our depreciation and amortization is as follows:

 

		(Rs. in crores)
Particulars	Year Ended March 31,2026	From June 23,2024 to March 31,2025
Depreciation	1,111	847
Amortization	725	746
Amortization of	109	97
Leased Assets (RTU)
Total	1,945	1,690
In FY26, Depreciation and amortization expenses declined, primarily due to the completion of amortization period of certain assets.

 

Finance Cost (interest expenses):
Particulars	Year Ended March 31,2026	From June 23,2024 to March 31,2025
Finance Costs	874	1,079
% of Revenue	1.0%	1.9%
from operation

Our net interest expense (after capitalization) improved in

FY26 as a percentage of total revenues. This improvement was primarily driven by a reduction in borrowings, which lowered overall interest expense.

Exceptional Item (gain)/loss (net):

Company recognized exceptional items arising on account of demerger, statutory new labour code impact and related transitional adjustments undertaken during the year.

(Rs. in crores)

Particulars	Year Ended March 31,2026	From June 23,2024 to March 31,2025
Stamp duty charges recognised	962	-
Statutory impact of new labour code	389	-
Provision for employee pension scheme	18	137
Employee separation cost	2	42
Impairment of property, plant and equipment	-	32
Others (Net)	57	106
Total	1,428	317

Tax expenses / (credit):

Our income tax expense is H1,633 crores in FY26, resulting in consolidated effective tax rate of 35.01% in FY26. Current tax expense for FY26 is H1,068 crores and deferred tax expense for FY26 is H565 crores.

During FY26, Company has utilised deferred tax asset on business loss and unabsorbed depreciation of H617 crores.

There is tax charge on distributed and undistributed earnings of subsidiaries, joint operations and equity accounted investees amounting to H174 crores in FY26.

Profit after tax:

Our consolidated net profit in FY26 is H3,030 crores.

ii. Balance Sheet

Below is a break up of major items and variations in our consolidated balance sheet as at March 31, 2026, and March 31,

2025, included elsewhere in this annual report.

(Rs. in crores)

	As at March 31,
	2026	2025
ASSETS
(a) Property, plant and equipment and intangible assets	15,988	15,539
(b) Financial assets (Inc. investment in equity accounted investees)	29,248	25,012
(c) Inventories	5,448	4,625
(d) Other assets	1,375	1,344
(e) Tax assets (net) - (Current/Non-Current)	249	330
(f) Assets classified as held-for-sale	1	1
TOTAL ASSETS	52,309	46,851
EQUITY AND LIABILITIES
EQUITY	12,734	10,533
LIABILITIES
(a) Financial liabilities	22,798	25,589
(b) Other liabilities	9,404	4,996
(c) Provisions	5,900	4,819
(d) Deferred tax liabilities (net)	1,414	888
(e) Current tax liabilities (net)	59	26
TOTAL LIABILITIES	39,575	36,318
TOTAL EQUITY AND LIABILITIES	52,309	46,851

The increase by 11.7% in assets and by 9.0% in liabilities as at March 31, 2026, considers below.

Property, plant and equipment: PPE increased marginally from H10,886 crores as at March 31, 2025, to H11,036 crores as at

March 31, 2026 due to new additions of capex spend offset by depreciation.

Intangible Assets: Intangible assets increased by 9.3% from H3,135 crores as at March 31, 2025, to H3,428 crores as at March

31, 2026. This increase is mainly due to higher capitalization of product development costs.

Inventories: As at March 31, 2026, inventories were at H5,448 crores, compared to H4,625 crores as at March 31, 2025, an increase of 17.8%. The increase was majorly in finished goods inventory by H397 crores and raw materials by H327 crores. Other assets: Our other assets increased by 2.3% to H1,375 crores as at March 31, 2026, from H1,344 crores as at

March 31, 2025.

Provisions: Provisions increased by 22.4% to H5,900 crores as at March 31, 2026 from H4,819 crores as at March 31, 2025.

Majorly increase on account of warranty provisions around H825 crores.

Trade Payable (including Acceptances): These were H15,704 crores as at March 31, 2026, compared to H14,376 crores as at March

31, 2025, an increase of 9.2%.

Other Liabilities: Increased by 88.3% to H9,404 crores as at March 31, 2026, compared to H4,996 crores as at March 31, 2025.

Further increase on account of customer advances aroundH3,600 crores.

Financial Liabilities: Financial liabilities were H22,798 crores as at March 31, 2026, compared to H25,589 crores as at March 31,

2025. Reduction was due to repayment of long-term borrowings of H3,491 crores and short-term borrowings of H963 crores.

iii. Cash Flow

The following table sets forth selected items from consolidated cash flow statement:

Particulars	Year Ended March 31, 2026	From June 23, 2024 to March 31, 2025*
Cash from operating activity	14,981	8,547
Profit/Loss for the year/period	3,030	3,195
Adjustments for cash flow from operations	6,236	3,534
Changes in working capital	6,657	1,838
Direct taxes paid	(942)	(20)
Cash used in investing activity	(3,451)	(3,884)
Payment for Assets (net of sales proceeds)	(2,103)	(1,542)
Net investments, short term deposit and loans given	(1,958)	(2,803)
Dividend and interest received	610	461
Net cash used in financing activities	(5,223)	(7,970)
Interest paid	(884)	(1,006)
Net Borrowings (net of issue expenses)	(4,339)	(6,964)
Net increase / (decrease) in cash and cash equivalent	6,307	(3,307)
Free Cash Flow	12,438	5,880

*FCF means cash flow from operating activities less payment for property, plant and equipment and intangible assets, add proceeds from sale of property, plant and equipment, excluding M&A linked asset purchase less interest paid, add interest received, add dividend from equity accounted investees of core auto entities and less Investment in Equity Accounted investees of core auto entities.

The Company generated a cash inflow of H14,981 crores from operating activities during FY26, primarily driven by a profit of H3,030 crores, adjusted by non-cash and other items amounting to H6,236 crores and working capital changes of H6,657 crores (majorly on account of changes in trade payables by H1,237 crores, contract liabilities by 3,265 crores and statutory dues by 619 crores), partially offset by direct tax payments of H942 crores.

Investing activities resulted in a net cash outflow of H3,451 crores, mainly due to capital expenditure on assets (net of sales proceeds) amounting to H2,103 crores and investments in short-term deposits to H1,958 crores (primarily on account of investment in certificate of deposits of H2,712 crores, which is compensated by realization of deposits with banks of H358 crores (net) and redemption of mutual funds of H594 crores) and dividend and interest income of H610 crores.

Financing activities also reflected a net cash outflow of H5,223 crores, driven by repayment of borrowings and lease liability (net of proceeds) of H4,339 crores and interest payments of H884 crores.

*Cash flow for the comparative period is for 9 months (June 23,2024 to March 31,2025), and hence not comparable with cashflow for year ended March 31, 2026.

iv. KEY FINANCIAL RATIOS

The details of the key financial ratios as follows:

Particulars	Year Ended March 31, 2026	From June 23,2024 to March 31, 2025*
Debt Equity Ratio (number of times)	0.38	0.87
Debt Service Coverage Ratio (number of times)	1.05	0.59
Interest Service Coverage Ratio (number of times)	10.65	6.40
Current ratio (number of times)	0.76	0.93
Long term debt to working capital (number of times)	(0.91)	5.00
Debtors turnover (in times)	28.98	18.80
Inventory turnover (in times)	11.26	6.72
Operating margin (%)	12.35%	13.21%
Net profit margin (%)	3.61%	5.49%

*Ratios for the comparative period is for 9 months (June 23,2024 to March 31,2025), and hence not comparable with ratios for year ended March 31, 2026.

C. Liquidity and Capital Resources

We finance our capital expenditures and research and development investments through cash generated from operations, cash and cash equivalents, and debt and equity funding. We also raise funds through the sale of capital investments, including divestments in stakes of subsidiaries on a selective basis. The key element of the financing strategy is maintaining a strong financial position that allows us to fund our capital expenditures and research and development investments efficiently even if earnings are subject to short-term fluctuations. Our policies for liquidity and capital resources are appropriate for automotive operations and are set with business specific sensitivity analysis and by benchmarking our competitors. These are reviewed periodically by the Board.

(I) Principal Sources of Funding Liquidity

Our funding requirements are met through a mix of equity, convertible or non-convertible debt securities and other long and short-term borrowings along with working capital limits from banks and financial institutions. We raise funds from debt markets through commercial paper programs, convertible and non-convertible debentures and other debt instruments. We regularly monitor funding options available in the debt and equity capital markets with a view to maintain financial flexibility. The following table sets forth our short-term and long-term debt position as of March 31, 2026:

( Rs. in crores)

Particulars	As of March 31,
	FY26	FY25
Short-term debt	678	1,617
(excluding current
portion of long-term
debt)
Current portion of long-	2,795	2,999
term debt
Long-term debt net of	1,344	4,540
current portion
Total Debt	4,817	9,156

The following table sets forth a summary of the maturity profile for our outstanding long-term debt obligations (including current maturities of long-term borrowings along with accrued interest) as of March 31, 2026.

Payment by Due Period	Rs. in crores
Within one year	3,657
After one year and upto two years	1,357
After two year and upto five years	11
Above five year	243
Total	5,269

The following table sets forth our total liquid assets, namely cash and cash equivalents, short-term bank deposits and investments in mutual funds including money market funds (under other Investment-Current)

(Rs. in crores )

	As of March 31,
	FY26	FY25
Cash and cash equivalent	6,899	1,033
Short-term deposits	3,593	1,195
Mutual fund investments	2,556	3,036
Total liquid assets	13,048	5,264

of H13,713 crore (Including investments in Tata Capital) as compared to a net debt of J 4,016 crore as at the end of FY25 at Consolidated level.

We will continue to invest in business to cater to increasing demand, launch new products and technologies and explore new business avenues. We expect to meet such requirements primarily out of own operating cash flows.

Despite significantly higher investments and global headwinds like tariffs, geopolitical scenario etc, our businesses aim to be self-sustaining and continue to maintain net cash position.

Long-term funding

In FY26, company has generated significant cash which has led to repayment of borrowings as detailed below :

1. During FY26, Tata Motors Limited continued its deleveraging efforts. The 5.875% Senior Notes aggregating to USD 127 million (balance as at March 31, 2025), originally issued on November 20, 2019, matured and were fully repaid in May 2025. In addition, unsecured bank term loans amounting to H567 crore were repaid during the year.

2. During FY26, TML infused equity in Smart City subsidiaries which has been utilised for repayment of outstanding balance term loans amounting to H953 crore, resulting in full repayment of external debt.

3. During FY26, Tata Motors Limited ("TML") exercising its call option with the holders of perpetual bonds of

TMF Holding Limited ("TMFHL") concurrently having put option. Accordingly, TML invested H500 crore in

TMFHL by subscribing to perpetual bonds during the year (H500 crore invested similarly in FY25), aggregating to H1,000 crore. Out of the aforesaid infusion, TMFHL repaid perpetual debt amounting to H700 crore through equity support from TML. In addition, TMFHL repaid zero-coupon debentures aggregating to H389 crore during the year.

4. During FY26, TML announced the proposed acquisition of IVECO Group NV (excluding Ivecos defence business) for a total consideration of approximately EUR 3.8 billion through its subsidiary TML CV Holding Pte Limited (TMLCVH) in Singapore and its step down subsidiary TML CV Holding B.V. (TMLCVB) in Netherlands. TMLCVB has arranged a committed Loan facility ("Loan") of EUR3.8 billion from a syndicate of lenders , with availability period of 12 months from the commitment date and a tenor of 1 year post drawdown, to fund the above mentioned acquisition. Loan is backed by Corporate

Guarantee (EUR 1.9 Bn) and Letter of Comfort (EUR 1.9 Bn) given by Tata Motors Limited.

Short-term funding

As at March 31, 2026, the fund based working capital limits of TML stands at H4,000 crores of which H3,750 crores remained unutilized. Also, the non-fund based limits of TML stands at H4,500 crore. Certain limits outlined above can be used interchangeably between fund based and non fund based.The mentioned limits provided by consortium of banks are secured by hypothecation of entire current assets including, stocks of inventory whether lying in the Borrowers premises or in transit or at any other place, receivables, book debts including the proceeds thereof on realisation and all other movables which are in the nature of current assets of the Borrower, both present and future.The working capital limits are renewed annually. Additionally, TML has Board approval for raising short term unsecured debt upto H10,000 Cr as and when needed.The outstanding debt under this approval remains NIL as at March 31, 2026.

TML Smart City Mobility Solutions Limited and TML Smart City Mobility Solutions (J&K) Private Limited have secured fund based working capital limit of was H15 Cr and H10

Cr respectively which remained unutilized as on March 31, 2026. Also, the non-fund based limits of mentioned entities stands at H467 crore and H94 crore respectively.

Loan Covenants

Some of our existing financing arrangements requires prior lender consent beyond specified thresholds for, among other things, undertaking new projects, issuing new securities, changes in management, mergers, sales of undertakings, material impairments and investments in subsidiaries. In addition, certain negative covenants may limit our ability to borrow additional funds or to incur additional liens, and/ or provide for increased costs in case of breach. Certain financing arrangements also include financial covenants to maintain certain net- worth, liability and debt related ratios.

We monitor compliance with our financial covenants on an ongoing basis. We also review our refinancing strategy and continue to plan for deployment of long-term funds to address any potential non-compliance and seek any waivers, if required. For FY26, the Company is in compliance with all the covenants.

To effect the upcoming Merger of TML, TMFHL, TMFBSL, we require approval from various lenders and financial institutions.All approvals required so far have been timely received.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

We have an adequate system of internal controls in place. We have documented policies and procedures covering all financial and operating functions. These controls have been designed to provide a reasonable assurance regarding maintaining of proper accounting controls for ensuring reliability of financial reporting, monitoring of operations, and protecting assets from unauthorized use or losses, compliances with regulations.

We have continued our efforts to align all our processes and controls with global best practices.

Some significant features of the internal control of systems are:

The Audit Committee of the Board of Directors, comprising entirely of independent directors and functional since demerger, regularly reviews the audit plans, significant audit findings, adequacy of internal controls, compliance with accounting standards as well as reasons for changes in accounting policies and practices, if any;

Documentation of major business processes and testing thereof including financial closing, computer controls and entity level controls, as part of compliance program as required under the Companies Act, 2013;

Robust Enterprise Resource Planning, supplier relations management and customer relations management connect our different locations, dealers and vendors for efficient and seamless information exchange. We also maintain a comprehensive information security policy and undertakes continuous upgrades to our IT systems;

Detailed business plans for each segment, investment strategies, year-on-year reviews, annual financial and operating plans and monthly monitoring are part of the established practices for all operating and service functions;

A well-established, independent, multi-disciplinary Internal Audit team operates in line with governance best practices. It reviews and reports to management and the Audit Committee about compliance with internal controls and the efficiency and effectiveness of operations as well as the key process risks. The scope and authority of the Internal Audit division is derived from the Internal Audit Charter, duly approved by the Audit Committee; and Anti-fraud programs including whistle blower mechanisms are operative across the Company;

Adopted three Line of Defence model. The 1^st line of defence, ensures implementation of desired Internal Controls and Risk Management practices. The 2^nd line of defence assist in determination of Risk Capacity, Appetite, Process and Procedures and facilitate oversight, monitoring and reporting on Risk and Controls. The 3^rd line of defence is the internal audit, which provides

Independent and Objective assurance to the Audit

Committee on overall effectiveness of Risk Management, Internal Control and Compliance activities and recommendations on improvements required;

An ongoing program, for the reinforcement of the Tata Code of Conduct is prevalent across the organization. The Code covers integrity of financial reporting, ethical conduct, regulatory compliance, conflicts of interests review and reporting of concerns.

The Board takes responsibility for the overall process of risk management throughout the organization. Through an Enterprise Risk Management program, our business units and corporate functions address risks through an institutionalized approach aligned to our objectives. This is facilitated by internal audit. The Business risk is managed through cross functional involvement and communication across businesses. The results of the risk assessment are presented to the senior management. The Risk Management Committee reviews business risk areas covering operational, financial, strategic and regulatory risks.

There have been no changes in our internal control over financial reporting that occurred during the period covered by this annual report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

During FY26, we assessed the effectiveness of the Internal Control over Financial Reporting and has determined that our Internal Control over Financial Reporting as at March 31,

2026, is effective.

HUMAN RESOURCES / INDUSTRIAL RELATIONS

Our people remain the cornerstone of our organizational strength and a key driver of sustained business performance. Guided by a people philosophy anchored in trust, inclusion, capability building, and shared growth, we continue to invest in creating a workplace where individuals can thrive, contribute meaningfully, and grow with the organization. We are committed to fostering an inclusive and diverse culture that values different perspectives, and strengthens collaboration and innovation across the organization.

Building a future-ready workforce remains a strategic priority. Through continuous learning, leadership development, and multi-dimensional growth opportunities, we are enhancing capabilities for today while preparing talent for emerging business needs. Our focus on strengthening the talent pipeline-through internal mobility, succession planning, early career programs, multi-workforce models and skills-based development-supports long-term organizational resilience and agility.

We continue to advance a digital and data-driven HR ecosystem that enhances employee experience, enables informed decision-making, and improves workforce productivity through analytics-led insights and simplified people processes. By integrating technology with human-centric practices, we are shaping a responsive, high-performing organization.

BUILDING AN EFFECTIVE ORGANISATIONAL CULTURE

A strong and effective organizational culture remains foundational to how we perform, collaborate and create long-term value. Guided by our Culture Credo, we continue to nurture a values-led, purpose-driven culture anchored in shared behaviors that shape everyday decisions and actions. Our leadership behaviors-Be Bold, Own It, Solve Together and Be Empathetic-serve as the bedrock of this culture, fostering accountability, agility, inclusion and collaboration across the organization.

During the year, we deepened this focus through our culture theme of Customer Focus and Collaboration, reinforcing the belief that stronger outcomes emerge when teams work across boundaries with shared ownership. A key enabler of this has been GEMs, which have strengthened the behavior of Solve Together by creating structured platforms for employees and teams to collaborate, surface ideas, solve problems collectively and contribute to continuous improvement. Through GEMs, collaboration is translated into action-bringing together diverse perspectives to address operational challenges, improve processes and generate value for customers and the business. This spirit of collaboration is also reflected through cross-functional initiatives, digital interventions and joint problem-solving forums that enable faster decision-making and stronger responsiveness. Programs such as Team Touchpoints, leadership dialogues and enterprise-wide forums further strengthen connection, trust and knowledge sharing across levels and functions. Complementing this, our multi-talent and inclusion initiatives demonstrate how collaboration extends beyond teams into building shared capability for the future. Reinforced through everyday acts of partnership-from teams stepping beyond functional boundaries to solve business challenges, to shopfloor-management collaboration through joint forums these practices continue to nurture a connected, customer-centric and resilient culture.

WORKFORCE TRANSFORMATION AND TALENT PIPELINE

To be future-ready, we have adopted a multi-talent approach to workforce models and building a strong talent pipeline through programs such as Kaushalya, Lakshya, ECP, Cadres,

GAT, Saksham, FTSS and TAS. This approach enables a resilient, diverse and future-skilled workforce, strengthens critical capability pipelines, and creates multiple pathways for early-career development, leadership succession and internal talent mobility. By integrating "Earn & learn" models, frontline capability building, specialist and leadership pipelines, and future-ready skilling, we are enhancing workforce agility, improving talent sustainability, and ensuring sustained readiness to support business transformation, innovation and long-term growth. A key pillar of this approach is the Kaushalya Program, a first-of-its-kind industry initiative that has enrolled over 9,000+ youth from rural backgrounds across plants, including 18% gender diversity representation, over 80 persons with disabilities, and 25% Affirmative Action (AA) representation. Through its sponsored Diploma-in-Engineering earn-and-learn model, the program expands access to inclusive employment, builds a skilled shopfloor talent pipeline, and advances diversity, social impact and long-term workforce sustainability.

CAPABILITY BUILDING FOR A FUTURE-READY

WORKFORCE

We continue to strengthen capabilities through an integrated learning ecosystem that combines higher education avenues in Digital & AI, Sustainability, Customer Excellence, Data Science and PhD, functional capability building and democratized access to learning. Our higher education programs create pathways for employees to enhance technical, managerial and domain expertise, while reinforcing long-term employability and growth. Targeted functional capability interventions, including ACESS, and focused skilling in Digital & AI, EV, Hydrogen and emerging technologies, are building critical capabilities aligned to business transformation and future mobility needs.

Through our Learning Experience Platform (LXP) pathways, learning is increasingly democratized-enabling employees across levels to access personalized, role-based and self-driven learning journeys anytime, anywhere. This is complemented by curated pathways, digital learning content and continuous upskilling opportunities that foster a culture of lifelong learning. Together, these interventions are helping build a learning organization, enhancing workforce agility, deepening future-critical capabilities, and preparing talent to lead innovation, resilience and sustainable growth.

TALENT MANAGEMENT & LEADERSHIP DEVELOPMENT

Our talent management approach is anchored in building a strong leadership pipeline , accelerating differentiated talent, and ensuring readiness for future business needs through build buy borrow philosophy. We identify, nurture and deploy talent across career stages, building robust pipelines for specialist, managerial and enterprise leadership roles, while also leveraging external talent where needed to strengthen critical capabilities.

Our disciplined succession planning approach (OTR) focuses on critical roles, leadership continuity and strengthening internal talent bench strength. This architecture operates at Unit, Business Unit and Company levels, ensuring leadership continuity, readiness for critical roles and strong internal bench strength. Our differentiated talent approach enables systematic identification of high-potential talent, focused development investments and internal mobility pathways that support both immediate business needs and long-term sustainability Our Leadership development approach spans levels and career stages through a host of focused interventions designed to build capability, readiness and leadership effectiveness. For senior leaders, interventions such as Leadership Trails, leadership assessments and executive coaching help deepen strategic thinking, enterprise leadership and transformational capability.

For mid-level managers, programs such as Leadership Quest and TGELS strengthen people leadership, business acumen and readiness for larger roles. For early talent, FTSS, Blue Mint and the Rise Series provide foundational development experiences to accelerate growth, build leadership mindsets and strengthen future pipelines.

Together, this integrated approach enables us to systematically identify high-potential talent, invest in differentiated development, and build a future-ready leadership bench. It strengthens internal mobility, supports succession depth, and ensures we continue to develop leaders equipped to drive transformation, innovation and sustained business performance.

SKILL DEVELOPMENT

Our approach to skill development for technicians is deliberately multilayered, aimed at building a future-ready, digitally enabled and continuously evolving shopfloor workforce. We begin with foundational digital literacy, where employees are introduced to basic digital tools and data awareness, helping them understand how technology complements their roles and strengthens operational effectiveness. This is followed by progressive upskilling through tiered programs that move from awareness sessions to hands-on exposure through

Diginova Labs and iFactory, enabling employees at different levels to advance at their own pace and build confidence in new technologies.

For role-specific pathways, particularly in repetitive or safety-critical roles, the focus is on leveraging automation and data to reduce drudgery, improve safety and enhance productivity.

Technicians are equipped to interpret machine data, monitor digital dashboards and contribute meaningfully to continuous improvement initiatives, strengthening both capability and engagement at the shopfloor. This integrated approach is helping embed digital, automation and Industry 4.0 readiness into frontline capability development.

Complementing this is Pragati, our higher education program for shopfloor technicians, which creates pathways for aspiring employees to pursue higher education, upgrade qualifications and apply for staff positions, thereby expanding career mobility and long-term growth opportunities. In parallel, initiatives such as the Earn & Learn Kaushalya program and other higher-education pathways embed Industry 4.0, digital and data analytics into learning curricula, ensuring broader exposure to future-critical skills. Together, these interventions are enabling our blue-collar workforce to build new-age skills, prepare for the future of mobility, and participate meaningfully in transformation while advancing aspiration, employability and inclusion.

INDUSTRIAL RELATIONS

We continue to maintain amicable and constructive industrial relations with our technicians and employee unions, anchored in a foundation of trust, transparency, open communication and mutual respect. With employee unions present across all plants except Dharwad, our industrial relations approach is built on sustained engagement, collaborative problem-solving and alignment on shared organizational priorities.

A significant reflection of this partnership was the successful signing of Long-Term Wage Settlements at four sites, including

Pantnagar, Pune and Jamshedpur, well ahead of schedule during the last financial year. Achieved through close collaboration and constructive dialogue with unions, these settlements reinforce the maturity of our engagement model and our shared commitment to stability, productivity and long-term value creation.

Supporting this approach is SDT, which serves as a key mechanism for organizational strategy alignment and employee engagement, enabling broader understanding of business priorities and strengthening participation at the shopfloor. This is complemented by structured joint forums for communication and connect, which provide regular platforms for dialogue, issue resolution and continuous engagement.

Location/subsidiaries	Wage Agreement valid until
Lucknow, Uttar Pradesh	31-March-2028
Pune, Maharashtra	31-August-2029
Pantnagar, Uttarakhand	31-March-2030
Jamshedpur, Jharkhand	31-March-2030

DIVERSITY, EQUITY AND INCLUSION

Diversity, Equity and Inclusion (DEI) remains a strategic imperative and a key enabler of innovation, performance and sustainable growth. We believe that diverse perspectives, lived experiences and inclusive workplaces strengthen creativity, improve problem-solving and enable better decisions, helping build a more resilient and future-ready organization. Our

DEI journey has steadily evolved from intent to institution- building, embedding inclusion as both a cultural value and a business priority.

We formalized this commitment through the introduction of DEIsha, our dedicated DEI brand identity, which serves as the anchor for all inclusion-related initiatives across the organization and provides a unifying platform to advance awareness, action and accountability. In FY25, this journey was strengthened through the launch of the Lighthouse Framework, designed to assess and advance progress across ten focus areas of DEI, bringing greater structure, measurement and focus to our inclusion agenda. In FY26, we continued to build on this foundation through additional interventions such as Allyship in Action, while further strengthening representation of women, AA and PWD employees across our workforce and operations.

A. SAKSHAM/SAMAVESH PROGRAM:

Saksham is a first-of-its-kind industry initiative designed to advance diversity, equity and inclusion by creating structured pathways for training, development and employment of persons with disabilities (PwD), particularly from socially disadvantaged backgrounds. Built on the philosophy of enabling talent beyond limitations, the program combines targeted outreach, capability building, accessible workplace design, and role- fit deployment to integrate specially abled talent across manufacturing roles. The program is deployed across all manufacturing locations, with dedicated batches of Saksham associates at each site, including 25%+ gender diversity representation, ensuring enterprise-wide adoption and intersectional inclusion. Based on evolving learnings, the model has progressed beyond employment to career advancement. At Dharwad site, this has led to an industry-first initiative of fully sponsoring a B.Tech in Engineering from BITS Pilani, expanding employability into long-term capability building.

B. Breaking the Steel Ceiling: The Rise of Jamshedpurs First Female Welders

In a quiet village once defined by economic hardship and limited horizons, a group of determined women has traded traditional roles for welding torches, rewriting the narrative of what is possible in Indias industrial heartland. These women, coming from economically weaker and socially backward communities, have become the first batch of 37 female welder trainees under the Kaushalya Program at TML Jamshedpur. Stepping into the

Body-in-White (BIW) shop across core welding processes a territory traditionally dominated by men What makes this journey remarkable is not only the skills they are acquiring, but the barriers they are dismantling challenging long-held stereotypes around gender, work and opportunity.

These initiatives are expanding access, building capability and demonstrating how inclusion can be meaningfully integrated into core operations. Complementing this are programs such as Kaushalya, which further strengthen representation through rural talent inclusion, gender diversity, persons with disabilities and broader social inclusion pathways.