Tata Motors

1. Exchange and interest rate fluctuations:

The Company's operations are subject to risk arising from fluctuations in exchange rates with
reference to countries in which it operates. The Company imports capital equipment, raw
materials and components from, manufactures vehicles in, and sells vehicles into, various
countries, and therefore its revenues and cost have significant exposure to the relative
movements of the GBP, the US dollar, the Euro, the Chinese Renminbi, the Russian Ruble, the
Japanese Yen and the Indian Rupee.
The Company also has interest-bearing assets (including cash balances) and interest bearing
liabilities, which bear interest at variable rates. The Company is therefore exposed to changes in
interest rates in the various markets in which it borrows. Adverse interest rates and a weakening
of the Indian rupee against major foreign currencies may have an adverse effect on cost of
borrowing, which could have a significant adverse impact on the Company's results of
operations.
2. Underperformance of distribution channels and supply chains:
The Company products are sold and serviced through a network of authorized dealers and
service centers across the domestic market, and a network of distributors and local dealers in
international markets. The Company relies on third parties to supply raw materials, parts and
components used in the manufacture of products. Furthermore, for some of these parts and
components, the Company is dependent on a single source. Natural disasters and man-made
accidents, adverse economic conditions, decline in automobile demand, lack of access to
sufficient financing arrangements among others could have a negative financial impact on the
Company's suppliers and distributors, in turn impairing timely availability of components, or
increases in costs of components.
3. Changes in tax, tariff or fiscal policies and regulations:
Imposition of any additional taxes and levies designed to limit the use of automobiles could
adversely affect the demand for the Company's vehicles and the results of operations. Changes
in corporate and other taxation policies as well as changes in export and other incentives given
by the various Governments could also adversely affect the results of operations. For example,
the Company benefits from excise duty exemptions for manufacturing facilities in the State of
Uttarakhand. Given the limited availability of information in the public domain concerning the
GST the Company is unable to provide any assurance as to this and any of the aspect of tax
regime following implementation of the GST.
4. Restrictive covenants in financing agreements:
Some of the Company's financing agreements and debt arrangements set limits on or require it
to obtain lender consent before, among other things, pledging assets as security. In addition,
certain financial covenants may limit the Company's ability to borrow additional funds or to
incur additional liens. If the Company breaches its financing agreements, the outstanding

amounts due thereunder could become due and payable immediately or result in increased
costs.

Source: Tata Motors Annual Report 2013-14 and 2014-15

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Hindustan Motors
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