Tata Motors : JLR Annual Report 2020-21

JAGUAR LAND ROVER

AUTOMOTIVE PLC

Annual Report 2020/21

CONTENTS

FISCAL YEAR 2020/21 AT A GLANCE

WE ARE A GLOBAL AUTOMOTIVE MANUFACTURER WITH DISTINCT BRANDS,

JAGUAR AND LAND ROVER.

OUR NEW STRATEGY IS THE REIMAGINING OF THE FUTURE OF MODERN LUXURY BY DESIGN THROUGH A CANVAS OF TRUE SUSTAINABILITY AND A NEW BENCHMARK IN QUALITY. WE WILL BECOME THE CREATOR OF THE WORLD'S MOST DESIRABLE, LUXURY VEHICLES AND SERVICES FOR THE MOST DISCERNING OF CUSTOMERS.

R E TA I L S A L E S 1

W H O L E S A L E S 1

439,588 UNITS

FY 2020/21: 439,588

FY 2019/20: 508,659

FY 2018/19: 578,915

347,632 UNITS

FY 2020/21: 347,632

FY 2019/20: 475,952

FY 2018/19: 507,895

S T R AT E G I C R E P O R T

3	F i s c a l y e a r	2 0 2 0 / 2 1 a t a g l a n c e
4	C h a i r m a n 's	s t a t e m e n t
5	C h i e f E x e c u t i v e O f f i c e r 's s t a t e m e n t

6O u r s t r a t e g y

1 0R e f o c u s

1 1O u r b u s i n e s s m o d e l 1 2O u r a c h i e v e m e n t s

4 0	I n v e s t o r r e l a t i o n s e n g a g e m e n t
4 0	J a g u a r L a n d R o v e r 's a p p r o a c h t o t a x

D I R E C T O R S ' R E P O R T

4 2D i r e c t o r s ' r e p o r t

F I N A N C I A L S TAT E M E N T S

R E V E N U E

£19.7 BN

FY 2020/21: £19.7bn

FY 2019/20: £23.0bn

FY 2018/19: £24.2bn

P R O F I T/ ( L O S S ) B E F O R E TA X

A N D E X C E P T I O N A L C H A R G E S 1 , 2

£0.7 BN

FY 2020/21: £0.7bn

FY 2019/20: £(0.4)bn

FY 2018/19: £(0.4)bn

1 4	O u r e n v i r o n m e n t a l a n d s o c i a l
	r e s p o n s i b i l i t y
1 8	G l o b a l r e t a i l s a l e s
2 0	C h i e f F i n a n c i a l O f f i c e r 's s t a t e m e n t
2 1	O u r f i n a n c i a l p e r f o r m a n c e
2 4	O u r a p p r o a c h t o r i s k s
2 6	P r i n c i p a l r i s k s
2 8	I n t r o d u c t i o n t o g o v e r n a n c e
3 4	L e a d e r s h i p
3 6	E f f e c t i v e n e s s
3 8	A c c o u n t a b i l i t y

4 6	I n d e p e n d e n t a u d i t o r 's r e p o r t
5 4	C o n s o l i d a t e d i n c o m e s t a t e m e n t
5 4	C o n s o l i d a t e d s t a t e m e n t o f
	c o m p r e h e n s i v e i n c o m e a n d e x p e n s e
5 5	C o n s o l i d a t e d b a l a n c e s h e e t
5 6	C o n s o l i d a t e d s t a t e m e n t o f
	c h a n g e s i n e q u i t y
5 7	C o n s o l i d a t e d c a s h f l o w s t a t e m e n t
5 8	N o t e s ( f o r m i n g p a r t o f t h e c o n s o l i d a t e d
	f i n a n c i a l s t a t e m e n t s )
1 2 6	P a r e n t c o m p a n y f i n a n c i a l s t a t e m e n t s

F R E E C A S H F L O W 1	N E T D E B T 1
£0.2 BN	£1.9 BN
FY 2020/21: £0.2bn
	FY 2020/21: £1.9bn
FY 2019/20: £(0.8)bn		FY 2019/20: £2.2bn
		£0.7bn
FY 2018/19: £(1.3)bn	FY 2018/19:

1 Please see note 3 of the financial statements on page 73 for alternative performance measures, some of which have been restated compared to the prior year, most notably Free cash flow, Adjusted EBITDA and Adjusted EBIT.

2 Please see note 4 of the financial statements on page 76 for more information relating to exceptional items. Of the £1,523 million of exceptional charges in FY21, £1,486 million were incurred as a result of announcing the Reimagine strategy in February 2021, comprising £952 million of non- cash write downs and £534 million of restructuring and other costs

JAGUAR LAND ROVER AUTOMOTIVE PLC		3
Annual Report 2020/21

CHAIRMAN'S STATEMENT

CHIEF EXECUTIVE OFFICER'S STATEMENT

The previous year has been amongst the most challenging to- date with the Covid-19 pandemic causing grief and suffering to humanity at large while adversely impacting the global economy. For Jaguar Land Rover this resulted in a lower consumer demand along with disruptions in production, supply chain and retail networks. This was further exacerbated by the uncertainty over future trading relations with the EU post Brexit.

In this context, I am happy to share that the company has delivered a resilient performance during the year. Its financial and market performance notwithstanding, Jaguar Land Rover with its famous British brands made a critical contribution to the Tata Group's worldwide efforts to help our communities and our people.

Despite a 14% drop in revenue to £19.7 billion, the business improved its EBIT margins by 250 basis points to 2.6% and generated positive free cash flows of £185 million. Retail sales declined 14% for the year with China being the exception growing at a strong 23%. The all-new Land Rover Defender was a standout performer retailing 45.2K units for the full year as well as winning the 2021 World Car Design of the Year.

During the year, we had a smooth CEO transition where Thierry Bolloré took over as the CEO of Jaguar Land Rover from Professor Sir Ralf Speth. I would like to thank Professor Sir Ralf Speth for his invaluable contributions to make Jaguar Land Rover what it is today. During his tenure the company grew its revenues by over 3.5x and its EBITDA by over 6x. Under his leadership, Jaguar Land Rover has become a differentiated luxury OEM with two fabled well-invested brands, a talent base that is world class and a set of skills and capabilities that will serve us well for the future.

Thierry has very quickly moved into his role and worked closely with the team and the Board to develop the future strategy. Jaguar Land Rover under his leadership, has now unveiled its new Reimagine strategy to make the company a world leader in electrified luxury vehicles, sustainability, manufacturing efficiency and new automotive technologies to deliver a strong market performance which shall create long-term shareholder value.

I am very excited by this new aspiration of the company which will help it cement its place as a sustainable mobility leader. We are also working together to drive greater collaboration and synergies within the Tata Group in areas like clean energy, connected services, data and software development.

Looking into the next year and beyond, I am happy that we have come out of the pandemic much stronger, with a future ready strategy that we will execute flawlessly. Our portfolio is fresh,

and our performance is improving consistently. We have the foundations in place for a sustained, cash accretive growth.

I look forward with confidence to Jaguar Land Rover's profitable, growing, and electric future and I would like to thank all our colleagues and partners for their continued hard work in making this a reality.

NATARAJAN CHANDRASEKARAN

CHAIRMAN

Jaguar Land Rover Automotive plc 28 May 2021

In September 2020 it was my privilege to become Chief Executive Officer of Jaguar Land Rover.

My view of the company from afar was always one of unique- ness, of Britishness, and of immense brand equity. From inside, the clarity of that view is even sharper.

Nobody could have anticipated the tragic events of the past year. I'm deeply proud of our people and the way we worked together to support our communities throughout the year. The tremendous resilience of my Jaguar Land Rover colleagues is truly inspiring.

Even without the impacts of Covid-19, the business faced challenges that could be considered major risks. However, the pathway navigated during the final two quarters is evidence of our fundamentally strong, re-emerging business.

Of course, there are still many hurdles to overcome, including the current global shortage of semiconductors, but we now have a clear view of the road ahead with our Reimagine strategy; a future of modern luxury by design.

Reimagine allows us to confidently transform the business and its distinct brands, to over satisfy our customers, and reward both our investors and our people.

We will simplify our architecture strategy and reorganise our manufacturing footprint, placing quality and sustainability at the heart of everything we do. We are now becoming a more agile organisation that plays to our human-centric strengths.

We will create a knowledge-sharing collaborative ecosystem with the very best partners in global industry to leapfrog forward in clean energy, software and digitalisation.

Jaguar Land Rover will focus on value creation through a profit -over-volume approach. Our goal is to deliver double-digit EBIT margin and become one of the world's most profitable luxury manufacturers.

Reimagine will see us journey towards net zero carbon by 2039. Both our brands will be transformed by electrification, with six new all-electric Land Rover models in the next five years and Jaguar completely reimagined as a pure electric brand, from 2025.

Reimagine is our clear strategy. Driving it forward is our Refocus programme, which will generate sustainable, long-term value through operational excellence.

To help deliver our vision, we have created four new roles on the Jaguar Land Rover Limited Board of Directors during the last financial year.

Nigel Blenkinsop joins as Executive Director of Company Quality & Customer Satisfaction; Dave Owen oversees a new Supply Chain function; and Nick Collins assumes responsibility for all

programme development and product lifecycles, as Vehicle Programmes lead.

Finally, to reinforce the importance of carefully curated brand values and design excellence in the success of modern luxury, Professor Gerry McGovern joins the Jaguar Land Rover Limited Board of Directors for both brands as Chief Creative Officer.

Ultimately, our will is to become the creator of the world's most desirable luxury vehicles and products, for the most discerning of customers.

Our plan is not to catch up; our plan is to lead.

THIERRY BOLLORÉ CHIEF EXECUTIVE OFFICER Jaguar Land Rover Automotive plc 28 May 2021

JAGUAR LAND ROVER AUTOMOTIVE PLC		5
Annual Report 2020/21

OUR STRATEGY

OUR VISION IS CLEAR: TO BECOME THE CREATOR OF THE WORLD'S MOST DESIRABLE LUXURY VEHICLES AND SERVICES, FOR THE MOST DISCERNING OF CUSTOMERS.

Jaguar Land Rover is unique in the global automotive industry.

We create peerless models, from an unrivalled understanding of modern luxury, a rich brand equity and spirit of Britishness.

In February 2021, we announced our new global strategy, harnessing those ingredients today to reimagine our business, its brands and our customer experience for tomorrow.

MODERN LUXURY BY DESIGN

In Jaguar and Land Rover, we have distinct British brands steeped in a history of timeless designs that emotionally resonate with our customers; brand equity built over decades.

This past year, we have marked the 50th anniversary of Range Roverand seen our iconic Land Rover Defender reborn in its 73rd year, with an all-new family of vehicles on sale in nearly 100 countries around the world.

Our Reimagine strategy will release the full potential of our brands, by leapfrogging forward in technology, placing quality and sustainability at the heart of everything we do.

At the core of this is the rapid electrification of both Jaguar and Land Rover.

Over the next five years, Land Rover will welcome six all-electric variants, with the first arriving in 2024. In this time, Jaguar will have undergone a complete renaissance, emerging as a pure electric luxury brand, from 2025.

By the end of the decade, full-BEV powertrains are expected to represent around 60% of total Jaguar Land Rover sales.

QUALITY & EFFICIENCY

To enable this accelerated shift in electrification, we will establish new benchmark standards in quality and efficiency for the luxury sector and central to this is our new architecture strategy.

We will migrate from six different architectures today, to just three by the end of the decade.

Land Rover will use the forthcoming Flexible Modular Longitudinal Architecture (MLA-Flex). This will deliver electrified Internal Combustion Engines (e.g. plug-in hybrids and mild-hybrids) initially, but also allows for full battery-electric capability, as we evolve our future product line-up.

Joining MLA will be our new Electric Modular Architecture (EMA). It is born from an obsession for simplicity - native-BEV and agnostic to battery chemistry, to advance with future technology.

It has also been engineered to accommodate small capacity, high performance electrified ICE - true electric-first flexibility, allowing us to offer BEV, PHEV and MHEV vehicles with exceptional range and performance.

For Jaguar, we are creating a radical new market position; one that is aspirational and technologically engaging for the discerning modern luxury customer.

And in this, we will be led by design. Truly desirable and compelling vehicles will reimagine the original Jaguar spirit, in an absolutely modern way.

For that reason, all new Jaguars will be created on a completely separate architecture, from 2025 and for this, we are consulting now with potential partners.

TECHNOLOGY WITHIN

Beyond our vehicles, the other significant strategic pillar in Reimagine is a radical digital transformation of our business.

Data is the backbone of every vehicle we create, the quality of our manufacturing, our supply chain and the support and services we provide to our customers.

And here, being part of the Tata Group offers significant advantages. Others have to rely solely on external partnerships and compromise, but we have frictionless access to some of the world's leading players in technology, software and clean energy that will allow us to lean forward with confidence and at speed.

Through this, we will accelerate the ingredients for modern luxury by design, including our Advanced Driver Assistance Systems,

autonomous capability, connected services and Electric Vehicle infrastructure.

At the heart of every vehicle we create will be the next generation of our domain based electrical vehicle architecture - EVA continuum - developed with our colleagues at Tata Consultancy Services.

This delivers 'always on, always connected, always up-to-date',software-over-the-air and the ability for Level 2, 2+ and Level 4 autonomous travel.

Annual commitments of around £2.5bn will include investments in electrification technologies and the development of connected services, to enhance the journey and experiences of our customers, alongside data-centric technologies that will further improve their ownership ecosystem.

JAGUAR LAND ROVER AUTOMOTIVE PLC		7
Annual Report 2020/21

OUR STRATEGY

REFOCUS TO A MORE AGILE OPERATION

Through Reimagine, we will also right-size, reorganise and repurpose our footprint to become a more agile business.

We will retain all our core global manufacturing plants, with a simple vision: to design new benchmark quality standards for the luxury sector.

We will rationalise sourcing and accelerate investments in local circular economy supply chains, by consolidating the number of platforms and models being produced per plant.

Solihull will become the manufacturing base for the MLA-Flex architecture and the new Jaguar portfolio.

Halewood will welcome the new EMA architecture and we will continue to enhance the strategic benefits of our plants in Slovakia and China.

Castle Bromwich will continue to make our existing models to the end of their life. It will then be repurposed and benefit from our plans to realise efficiencies in our Midlands property portfolio. The value creation achieved by simplifying our manufacturing and our architecture strategy dramatically improves the utilisation of our facilities and our overall efficiency.

Beyond manufacturing, we are driving transformation through our recently launched Refocus programme (see page 10), which brings together existing and additional activity from across our organisation, to deliver value and efficiencies.

Our global engineering centre at Gaydon will become the consolidated home to all our management functions, for frictionless cooperation and agile decision-making, while we substantially reduce and rationalise our other non-manufacturing infrastructure.  

And agility is not just based on size: flatter management structures will empower employees to create and deliver at speed and with clear purpose.

A CLEAR VISION, TOWARDS 2039

Through our Reimagine strategy, we will drive towards a net zero carbon position, by 2039.

In doing so, we will reimagine the sustainability of luxury.

We are exploring hydrogen fuel-cell technology, to be ready for when the market matures and active development of these powertrains is already underway.

We will also create a new benchmark in environmentaland societalimpact for the luxury sector, accelerating pioneering innovations in materiality, engineering, manufacturing, services and circular economy investments. 

This will be focused in one team, working globally across the business, the brands and the customer experience. They will be empowered to build on existing initiatives, such as our championing of ultra-luxurious alternatives to leather, as well as investing in start-ups like blockchain technology firm, Circulor, which enables us to source premium materials with greater transparency as to the provenance, welfare, and compliance of suppliers.

Together, these actions will contribute to our targets of zero tailpipe emissions by 2036 and to be a Net Zero Carbon business by 2039, including our supply chain, products and global operations.

STRUCTURED TO SUCCEED

With Reimagine, we will transform Jaguar Land Rover, with a value creation approach, delivering quality and profit, over volume.

We will become a more agile business, with a simplified manufacturing operation.

We will deliver a new benchmark in environmental, societal and community impact for a luxury business, creating the world's most desirable luxury vehicles, against a canvas of true sustain- ability.

This will generate double-digit EBIT margins and positive cash- flow, with an ambition to achieve positive cash net-of-debt by 2025.

Ultimately, by reimagining the future of modern luxury, our ambition is to be one of the most profitable luxury manufacturers in the world.

JAGUAR LAND ROVER AUTOMOTIVE PLC		9
Annual Report 2020/21