TTM Tata Motors Ltd

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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EXHIBIT 1 TO FORM 6-K

SUPPLEMENTAL INFORMATION REGARDING THE JAGUAR AND LAND ROVER BUSINESS

OF TATA MOTORS LIMITED

This Exhibit sets forth selected recent developments, financial data, discussion and analysis of results of operations, employee and management information, and other information relating to the Jaguar and Land Rover business of Tata Motors Limited (“TML”). Unless the context indicates otherwise, references to the following terms in this Exhibit have the meanings ascribed to them below:

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I. R ECENT D EVELOPMENTS

Members of JLR Board

On December 19, 2016, Mr. Cyrus Mistry stood down from JLR’s board of directors and from the board of directors of TML. A replacement is expected to be identified and appointed in due course.

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JLR has begun the process of preparing financial results for the quarter ended December 31, 2016. It expects these financial results to reflect the sales volumes above and recent profit and margin trends. Free cash flow after investment and before financing is expected to be positive in the quarter ended December 31, 2016. JLR expects to finalize and release these results in February 2017, together with TML’s results for the same period.

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The reconciliation of EBITDA to JLR’s profit for the period line item is:

The reconciliation is set out below:

The reconciliation is set out below:

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The reconciliation is set out below:

Product and other investment can also be presented as cash outflows relating to tangible assets (net of proceeds from disposals of tangible assets), intangible assets, expensed R&D and investment in joint ventures.

Explanation of Income Statement Line Items

JLR’s income statement includes the following items.

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Internal Controls

Upon an evaluation of the effectiveness of the design and operation of JLR’s internal controls over financial reporting conducted as part of the corporate governance and public disclosure obligations of TML, JLR concluded that there was a material weakness, such that its internal controls over financial reporting were not effective as at March 31, 2015 and as at March 31, 2014. A material weakness, under the applicable auditing standards established by the Public Company Accounting Oversight Board (“PCAOB”) in the United States, is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness identified with respect to the year ended March 31, 2015 consisted of a deficiency of the design of the review controls relating to complex derivative instruments designated in hedge relationship during the year ended March 31, 2015. Such review controls were not sufficiently direct and precise, and, as a result, an inappropriate method for prospective hedge effectiveness testing was used at inception for these foreign exchange and commodities derivative instruments. JLR’s management determined that these complex derivative instruments did not qualify for hedge accounting in accordance with IAS 39. As a result of the deficiency, changes in the fair value of these complex derivative instruments were initially recorded in the hedging reserve as part of other comprehensive income. Following identification of the deficiency, the amount has been appropriately recorded in JLR’s consolidated income statement for the year ended March 31, 2015, and not under other comprehensive income. Following the identification of the deficiency relating to complex derivatives designated in hedge transactions described above in the first quarter of Fiscal 2016, JLR’s management designed and implemented a preventive control consisting of a review at inception of all complex derivative instruments designated in hedge relationships by technical accounting specialists. This control was subject to formal remediation testing. The specific remediation actions taken by JLR’s management included (i) the design and implementation of a daily review by internal financial instrument specialists of all derivative instruments designated in a hedge relationship at inception or thereafter if a hedge relationship is re-designated to ensure that the designation, documentation and method of hedge effectiveness testing is appropriate before any changes relating to the value of such instrument are accounted and (ii) implementation of an additional weekly detective control to review appropriateness of hedge accounting for all complex derivative instruments by internal technical accounting specialists. Based upon the measures JLR adopted to remedy this material weakness and the results of its tests of their effectiveness, JLR concluded that this material weakness was remediated as of March 31, 2016.

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The material weakness identified with respect of the year ended March 31, 2014 consisted of a deficiency in the design and operating effectiveness of controls over the change management procedures relating to an information technology system and as a result an inappropriate change to a raw materials system data table in the year ended March 31, 2014 was not prevented or detected on a timely basis. The inappropriate change to the raw materials system data table resulted in an overpayment to one of JLR’s suppliers subsequent to March 31, 2014. The overpayment was promptly recovered from the supplier and as a result there was no financial loss and there were no misstatements identified in the financial statements as at and for the year ended March 31, 2014. Specific remediation actions taken by JLR’s management immediately following the identification of the deficiency relating to the foregoing material weakness in internal control over financial reporting included (i) the training of staff around the change management procedures and controls over JLR’s IT systems, (ii) the design and implementation of additional management processes and controls to identify invalid data table changes and (iii) the strengthening of controls in respect of payment authorization. Based upon the measures JLR adopted to remedy this material weakness and the results of its tests of their effectiveness, JLR concluded that this material weakness was remediated as at March 31, 2015.

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III. D ISCUSSION AND A NALYSIS OF R ESULTS OF O PERATIONS

General Trends of JLR’s Recent Performance

Revenues were £11,414 million for the six months ended September 30, 2016, as compared to £9,833 million for the six months ended September 30, 2015 and EBITDA was £1,287 million in the six months ended September 30, 2016, as compared to £1,410 million in the six months ended September 30, 2015. EBITDA was lower in the six months ended September 30, 2016 compared to the six months ended September 30, 2015 primarily due to unfavorable foreign exchange revaluation of current assets and liabilities, primarily as a result of the weakening British pound post-Brexit, one-time provision for new customer quality programs and a lower market incentive received in the three months ended June 30, 2016 compared to the incentive received in the three months ended September 30, 2015. Profit before tax was £679 million in the six months ended September 30, 2016, compared to £481 million in the six months ended September 30, 2015. The higher profit before tax in the six months to September 30, 2016 reflects the lower EBITDA (down £123 million), higher depreciation and amortization (up £115 million) and unfavorable unrealized foreign exchange revaluation (down £77 million), offset by favorable commodity hedge revaluation (up £123 million) and lower net finance expense (down £10 million), as well as profits received from JLR’s China Joint Venture of £78 million (up £85 million) and £50 million of Tianjin related recoveries in the six months ended September 30, 2016 compared to the non-recurring charge in six months ended September 30, 2015 (up £295m). JLR’s profit after tax (and after exceptional items) was £548 million in the six months ended September 30, 2016, up from £400 million in the same period in 2015.

JLR generated negative free cash flow (before financing) of £563 million in the six months ended September 30, 2016, reflecting EBITDA of £1,287 million which was more than offset by its total investment spending of £1,476 million as well as £485 million of unfavorable movements in working capital (down from negative working capital of £960 million in the six months ended September 30, 2015) and other non-cash accruals, primarily reflecting higher inventories accumulated to support the global launch of the Jaguar F-PACE and the launch of the Jaguar XE into the US market, as well as the accumulated inventory of the current Land Rover Discovery model to support the run-out program. Free cash flow before financing in the three months ended September 30, 2016 was positive £70 million after £784 million of total investment spending, primarily reflecting EBITDA of £615 million and £182 million favorable working capital, non-cash accrual and other movements, as compared to negative free cash flow before financing of £220 million in the three months ended September 30, 2015. Net cash generated by operating activities in the six months ended September 30, 2016 was £702 million, compared to £345 million for the same period in 2015. After the negative free cash flow of £563 million, finance expenses of £69 million (down from £75 million in the six months ended September 30, 2015), a £32 million reduction in debt (up from £22 million in the six months ended September 30, 2015) and a £150 million dividend paid to TML during the six months ended September 30, 2016 (unchanged from September 30, 2015), JLR had total cash of £3,837 million (up slightly from £3,749 million as at June 30, 2016), comprising £2,382 million of cash and cash equivalents and £1,455 million of financial deposits. At September 30, 2016, JLR also had an undrawn committed revolving credit facility of £1,870 million.

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Recent Retail Volumes

Total retail volumes in the six months ended September 30, 2016 reached a record for the first half of the Fiscal year of 275,212 units (including sales from JLR’s China Joint Venture), an increase of 22.3% compared to the six months ended September 30, 2015, with sales volumes up across all key regions. This increase in retail volumes was primarily driven by the introduction of the new Jaguar F-PACE and strong sales of the Jaguar XE, Land Rover Discovery Sport, Land Rover Discovery and the Range Rover Evoque. By brand, Land Rover retailed 201,700 units in the six months ended September 30, 2016, up 9.4% compared to the six months ended September 30, 2015. Jaguar retailed 73,512 units in the six months ended September 30, 2016, up 80.4% compared to the six months ended September 30, 2015.

Retail volumes in Europe (excluding the United Kingdom and Russia) were 63,720 units in the six months ended September 30, 2016, compared to 51,991 units during the same period in 2015, an increase of 22.6%, as sales across all models (excluding Jaguar F-TYPE) increased year-on-year.

Retail volumes in North America were 54,794 units in the six months ended September 30, 2016, compared to 42,679 units in the same period in 2015, an increase of 28.4%, primarily driven by the introduction of the Jaguar F-PACE, XE and the new XF as well as continuing strong sales of the Land Rover Discovery and Discovery Sport.

Retail volumes in the United Kingdom were 57,900 units in the six months ended September 30, 2016, compared to 46,933 units in the same period in 2015, an increase of 23.4%, primarily driven by the introduction of the Jaguar F-PACE and strong sales of the Land Rover Discovery, Discovery Sport and the Range Rover Evoque.

Retail volumes in China were 55,210 units in the six months ended September 30, 2016, compared to 41,428 units in the same period in 2015, an increase of 33.3%, reflecting the introduction of the Jaguar F-PACE and stronger sales of the Jaguar XE as well as improved sales of the Range Rover and continuing strong sales of Land Rover Discovery Sport, which is locally manufactured by JLR’s China Joint Venture. Retail sales of the long-wheel base Jaguar XFL, which is also locally manufactured by JLR’s China Joint Venture, began in September 2016 with retail volumes of 594 units in the month ended September 30, 2016.

Retail volumes in Overseas markets were 43,588 units in the six months ended September 30, 2016, compared to 42,074 units in the same period in 2015, an increase of 3.6%, primarily driven by the introduction of the Jaguar F-PACE as well as increased sales of the Jaguar XE and the Land Rover Discovery Sport.

Recent Macroeconomic Trends

The Brexit vote has led to uncertainty with respect to the trading arrangements between the United Kingdom, the EU and other countries. The High Court of England and Wales ruled on November 3, 2016 that a parliamentary vote will be required for the United Kingdom to invoke Article 50 of the Lisbon Treaty in order to trigger its exit from the European Union. This ruling (which is subject to appeal before the United Kingdom Supreme Court) has led to increased uncertainty on the launch and duration of the negotiations. Depending on the terms of the withdrawal of the United Kingdom from the European Union, the new or modified trading agreements could affect export volumes and result in a decline in trade.

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Furthermore, JLR is exposed to currency movements versus the British pound, its reporting currency. Revenue exposures are primarily sensitive to movements in the US dollar, Chinese yuan and emerging market currencies (notably the Russian rouble and Brazilian real) while its cost exposures are particularly sensitive to movements in the euro, since JLR sources over 50% of its components from the European Union. The US dollar, Chinese yuan and the euro were generally stronger against the British pound over the six months ended September 30, 2016, compared to the six months ended September 30, 2015. The strengthening of these exchange rates over the six months ended September 30, 2016 was generally more favorable for JLR’s underlying US dollar and Chinese yuan denominated net income exposures and less favorable for its euro denominated net cost exposures. However, JLR has a well-established hedging program in place that partially counteracts the volatility in the underlying currency exposure to the movements in the US dollar, euro, Chinese yuan and other currencies. Movements in its foreign exchange hedging derivatives are generally offset by favorable movements in the underlying foreign currency exposures as JLR generally hedges only a portion (and not all) of the underlying exposure.

JLR is also exposed to changes in commodity prices, notably aluminum, copper, platinum and palladium. Commodity prices were generally more favorable in the six months ended September 30, 2016 compared to the same period in 2015.

JLR has hedging policies in place in order to mitigate the impact of exchange rate and commodity price volatility on its results. These hedging policies permit the use of financial derivatives such as forward contracts and options to manage risks relating to exchange rates, as well as swaps and fixed-price supply contracts to manage risks relating to commodity price volatility.

Results of Operations

The tables and discussions set out below provide an analysis of selected items from JLR’s consolidated statements of income for each of the periods described below.

Six months ended September 30, 2016 compared to six months ended September 30, 2015

The following table sets out the items from JLR’s consolidated statements of income for the periods indicated and the percentage change from period to period.

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Revenue

Revenue increased by £1,581 million to £11,414 million in the six months ended September 30, 2016 from £9,833 million in the six months ended September 30, 2015, an increase of 16.1%, primarily driven by the increase in wholesale volumes.

Material and other cost of sales

JLR’s material and other cost of sales (excluding the exceptional charge related to the explosion at the Port of Tianjin) increased to £6,754 million in the six months ended September 30, 2016, up 16.0% from £5,822 million in the six months ended September 30, 2015. This increase is predominantly attributable to the increase in wholesale volumes.

As a percentage of revenue, material and other costs of sales before exceptional item accounted for 59.2% of JLR’s revenue in the six months ended September 30, 2016, which is unchanged from the six months ended September 30, 2015.

Change in inventories of finished goods and work in progress : In the six months ended September 30, 2016, JLR added £688 million to its inventory of finished goods and work in progress. This increase in inventories at September 30, 2016 compared to March 31, 2016 was principally related to seasonality and launch-related accumulated inventory driven by higher production of the F-PACE and launch of the Jaguar XE into the US market as well as accumulated inventory of the current Land Rover Discovery model to support the run-out program ahead of the launch of the all-new Land Rover Discovery.

Purchase of products for sale : In the six months ended September 30, 2016, JLR spent £639 million on parts and accessories supplied by third parties and used in its finished vehicles and parts, compared to £520 million in the six months ended September 30, 2015, representing an increase of 22.9%, primarily driven by the increase in wholesale volumes.

Raw materials and consumables : JLR consumes a number of raw materials in the manufacture of vehicles, including steel, aluminum, copper, precious metals and resins. The cost of raw materials and consumables in the six months ended September 30, 2016 was £6,753 million compared to £5,922 million in the six months ended September 30, 2015, an increase of £832 million, or 14%. The increase in the total cost of raw materials and consumables was primarily attributable to the increase in production and wholesale volumes. Raw materials and consumables as a percentage of revenue decreased to 59.2% for the six months ended September 30, 2016, as compared to 60.2% for the six months ended September 30, 2015, due to an increase in revenue resulting mainly from an improvement in model and market mix.

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Employee cost

JLR’s employee cost increased by 9.1% to £1,190 million in the six months ended September 30, 2016 from £1,091 million in the six months ended September 30, 2015. The increase was primarily attributable to an increase in manufacturing headcount to accommodate higher production volumes.

Other expenses

Other expenses increased to £2,453 million in the six months ended September 30, 2016 from £2,088 million in the same period in 2015 primarily due to increases in publicity and distribution costs as well as a rise in warranty costs all primarily driven by increased wholesale volumes.

Net impact of commodity derivatives

In the six months ended September 30, 2016, JLR recorded a net gain on commodity derivatives of £39 million as a result of a modest increase in general commodity prices during the six months ended September 30, 2016. In the six months ended September 30, 2015, JLR recorded a net loss on commodity derivatives of £73 million as a result of falling commodity prices during the six months ended September 30, 2015.

Development costs capitalized

JLR capitalizes product development costs incurred on new vehicle platforms, engines, transmissions and new products in accordance with IFRS. The following table shows the R&D costs recognized in JLR’s income statement and the share of capitalized development costs and amortization of capitalized development costs in the six months ended September 30, 2016 and 2015:

The capitalization ratio of development costs depends on the production cycle that individual models pass through in different periods.

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Capitalized development costs increased to £693 million in the six months ended September 30, 2016 from £621 million in the six months ended September 30, 2015, due to costs associated with the development of the 2017 Model Year Range Rover Evoque and the new Discovery Sport.

Other income (net)

JLR’s other income decreased to £120 million in the six months ended September 30, 2016, compared to £129 million in the six months ended September 30, 2015. The decrease is primarily attributable to lower incentives received by a foreign subsidiary offset by an increase in royalty income from its China Joint Venture.

Depreciation and amortization

JLR’s depreciation and amortization increased to £798 million in the six months ended September 30, 2016, compared to £683 million in the six months ended September 30, 2015. The majority of the increase relates to the launch of new models, primarily the Jaguar F-PACE and the 2017 Model Year Range Rover Evoque.

Foreign exchange loss (net)

JLR recorded a higher foreign exchange loss of £501 million in the six months ended September 30, 2016, compared to the loss of £64 million in the six months ended September 30, 2015, primarily attributable to the weakening of the British pound (post Brexit) against major currencies, primarily the US dollar, euro and Chinese yuan. The foreign exchange impact on JLR’s results from operations in the six months ended September 30, 2016 compared to the six months ended September 30, 2015 reflects the following:

Finance income

JLR’s finance income decreased to £17 million in the six months ended September 30, 2016 from £18 million in the six months ended September 30, 2015 due to the decrease in deposit yields compared to the six months ended September 30, 2015.

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Finance expense (net of capitalized interest)

JLR’s finance expense (net of capitalized interest) decreased to £36 million in the six months ended September 30, 2016 from £47 million in the six months ended September 30, 2015, as a result of increased capitalized interest.

Share of profit/(loss) from equity accounted investees

JLR’s share of profits from equity accounted investees of £78 million in the six months ended September 30, 2016 relates to its China Joint Venture, and has increased compared to a £7 million loss on the same joint venture during the six months ended September 30, 2015 due to increased production and sales by its China Joint Venture as they began local production of two more models (Land Rover Discovery Sport and the long wheel base Jaguar XFL) for the Chinese market, in addition to the locally produced Range Rover Evoque.

Income tax expense

Income tax expense was £131 million in the six months ended September 30, 2016, compared to £81 million in the six months ended September 30, 2015. This increase was primarily attributable to higher profits before tax in the six months ended September 30, 2016 compared to the same period in 2015. The effective tax rate for the six months ended September 30, 2016 was 19.3% compared to 16.8% for the same period in 2015.

Profit for the period

JLR’s consolidated profit for the period of the six months ended September 30, 2016 was £548 million, compared to a consolidated profit for the period of £400 million in the six months ended September 30, 2015 as a result of the factors identified above.

Fiscal 2016 compared to Fiscal 2015

The following table sets out the items from JLR’s consolidated statements of income for the periods indicated and the percentage change from period to period.

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Revenue

Revenue increased by £342 million to £22,208 million in Fiscal 2016 from £21,866 million in Fiscal 2015, an increase of 1.6%. This increase is primarily attributable to higher wholesale volumes primarily driven by the success of the Jaguar XE and Discovery Sport and higher sales in the United Kingdom, North America and Europe partially offset by lower volumes in China.

Material and other cost of sales

JLR’s material and other cost of sales before exceptional item, related to vehicles destroyed or damaged in the explosion at the Port of Tianjin in August 2016, decreased to £13,146 million in Fiscal 2016 from £13,185 million in Fiscal 2015. This decrease is predominantly attributable to favorable operational foreign exchange movements primarily driven by a weaker euro against the British pound during Fiscal 2016 compared to Fiscal 2015.

As a percentage of revenue, material and other cost of sales accounted for 59.9% of JLR’s revenue in Fiscal 2016, as compared to 60.3% in Fiscal 2015. This slight reduction as a percentage of revenue was primarily driven by a weaker euro against the British pound during Fiscal 2016 compared to Fiscal 2015, partially offset by an increase in wholesale volumes.

Change in inventories of finished goods and work in progress : In Fiscal 2016, JLR added £257 million to its inventory of finished goods and work in progress, compared to £236 million in Fiscal 2015, an increase of 8.9%. This increase of inventories at March 31, 2016 compared to March 31, 2015 was principally the result of accumulated inventory relating to the F-PACE launch. Inventories of finished goods include £250 million, relating to vehicles sold to rental car companies, fleet customers and others with guaranteed repurchase arrangements. In Fiscal 2016, JLR recorded an inventory write-down expense of £230 million of which, £157 million related to vehicles destroyed and damaged in the explosion at the Port of Tianjin, as compared to a write-down expense of £40 million in Fiscal 2015 related to inventories. The write-down is included in material and other cost of sales.

Purchase of products for sale : In Fiscal 2016, JLR spent £876 million on parts and accessories supplied by third parties and used in its finished vehicles and parts, compared to £864 million in Fiscal 2015, representing an increase of 1.4%. This increase was partially attributable to increase in wholesale volumes.

Raw materials and consumables : JLR consumes a number of raw materials in the manufacture of vehicles, including steel, aluminum, copper, precious metals and resins. The cost of raw materials and consumables in Fiscal 2016 was £12,684 million, compared to £12,557 million in Fiscal 2015, representing an increase of £127 million, or 1.0%. The increase in the total cost of raw materials and consumables was primarily attributable to increases in manufacturing volumes. Raw materials and consumables as a percentage of revenue decreased to 57.1% for Fiscal 2016, as compared to 57.4% for Fiscal 2015.

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Employee cost

JLR’s employee cost increased by 17.4% to £2,321 million in Fiscal 2016 from £1,977 million in Fiscal 2015. The increase was primarily attributable to an increase in manufacturing and engineering headcount to support the development of new models and technologies. Average employee headcount increased from 32,127 to 37,005, or 15.2%, from March 31, 2015 to March 31, 2016. In Fiscal 2016, the average number of employees on a non-agency basis and agency basis was 29,789 and 7,216 respectively, compared to 24,902 and 7,225 in Fiscal 2015.

Other expenses

Other expenses increased to £4,674 million in Fiscal 2016 from £4,109 million in Fiscal 2015, primarily reflecting an increase in distribution costs due to an increase in volumes and a rise in warranty costs resulting from higher wholesale volumes, as well as one-time reserves and charges of £166 million, including a US recall of potentially faulty passengers airbags supplied by Takata, doubtful debts and previously capitalized investment.

Net loss on commodity derivatives

In Fiscal 2016, JLR recorded a net loss of £113 million on commodity derivatives compared to a net loss of £38 million in Fiscal 2015 as a result of weakening commodity prices in Fiscal 2016 compared to Fiscal 2015.

Development costs capitalized

JLR capitalizes product development costs incurred on new vehicle platforms, engines, transmissions and new products in accordance with IFRS. The following table shows the R&D costs recognized in JLR’s income statement and the share of capitalized development costs and amortization of capitalized development costs in Fiscal 2016 and Fiscal 2015:

The capitalization ratio of development costs depends on the production cycle that individual models pass through in different periods.

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The increase in capitalized R&D expenditure to £1,242 million in Fiscal 2016 from £1,158 million in Fiscal 2015, representing an increase of 7.3% reflects higher product development costs (included as employee costs and engineering costs in other expenses), associated with the development of the F-PACE, new Jaguar XF model, Jaguar XE, AJ200 diesel and gasoline engines and Evoque Model Year 2016 and other current and future products.

Other income (net)

JLR’s other income (excluding net loss from unrealized commodity derivatives) increased to £241 million in Fiscal 2016, compared to £181 million in Fiscal 2015, which is primarily attributable to increase in royalty income from its China Joint Venture.

Depreciation and amortization

JLR’s depreciation and amortization increased to £1,418 million in Fiscal 2016 from £1,051 million in Fiscal 2015. The increase primarily reflects the depreciation and amortization of capitalized product development costs related to the launch of new products such as the Jaguar XE, Evoque Model Year 2016, Discovery Sport and AJ200 engines.

Foreign exchange gain/(loss) (net)

JLR registered a foreign exchange loss of £317 million in Fiscal 2016, as compared to a loss of £138 million in Fiscal 2015, primarily driven by realized hedging losses as a result of the appreciation of the US dollar and Chinese yuan and a generally strengthening euro against the British Pound which led to unfavorable revaluation of current assets and liabilities, mainly euro-denominated payables.

Finance income

JLR’s finance income decreased to £38 million in Fiscal 2016, as compared to £48 million in Fiscal 2015. The decrease was due to lower average yields on cash deposits in Fiscal 2016 compared to Fiscal 2015.

Finance expense (net of capitalized interest)

JLR’s finance expense (net of capitalized interest) decreased to £90 million in Fiscal 2016, as compared to £135 million in Fiscal 2015. This decrease was primarily attributable to a lower redemption premium paid on repurchased bonds in Fiscal 2016 of £2 million compared to £77 million in Fiscal 2015, as well as the subsequent issue of new bonds at lower interest rates. This decrease was partially offset by lower capitalized interest in Fiscal 2016 of £74 million compared to £116 million in Fiscal 2015.

Share of profit/(loss) from equity accounted investees

JLR’s share of gain from equity accounted investees of £64 million in Fiscal 2016 relates to its China Joint Venture, and has increased compared to a £6 million loss during Fiscal 2015, primarily due to increased production and sales of the locally manufactured Range Rover Evoque and the introduction of the locally manufactured Land Rover Discovery Sport, which went on sale in November 2015.

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Income tax expense

JLR had an income tax expense of £245 million in Fiscal 2016, as compared to £576 million in Fiscal 2015, reflecting a lower effective tax rate of 15.7% of profit before tax in Fiscal 2016. This decrease in the tax charge was primarily attributable to lower profits in Fiscal 2016 as well as the reduction in future UK corporate tax rates, which gave a rise to £63 million reduction in deferred tax and a £74 million deferred tax credit available under UK Patent Box tax legislation.

Profit for the period

JLR’s consolidated profit for Fiscal 2016 was £1,312 million, as compared to £2,038 million in Fiscal 2015, as a result of the factors identified above.

Fiscal 2015 compared to Fiscal 2014

The following table sets out the items from JLR’s consolidated statements of income for the periods indicated and the percentage change from period to period.

Revenue

Revenue increased by £2,480 million to £21,866 million in Fiscal 2015 from £19,386 million in Fiscal 2014, an increase of 12.8%. This increase is primarily attributable to higher wholesale volumes as well as a more favorable product and market mix with a significant proportion of the revenues derived from China and the UK. The increase is also due to the success of the Range Rover, Range Rover Sport and Jaguar F-TYPE, partially offset by lower sales of Jaguar XF and Jaguar XJ and the production transition from Land Rover Freelander to Land Rover Discovery Sport.

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Material and other cost of sales

JLR’s material and other cost of sales increased to £13,185 million in Fiscal 2015 from £11,904 million in Fiscal 2014. This increase is predominantly attributable to the higher volumes produced across its range of vehicles and an increase in duties, mainly due to increased sales in China. However, as a percentage of revenue, material and other cost of sales accounted for 60.3% of its revenue in Fiscal 2015, as compared to 61.4% in Fiscal 2014. This reduction as a percentage of revenue was due to an improvement in model and market mix. JLR also experienced favorable foreign exchange rates, notably, due to a weaker euro against the British pound. In addition, as a percentage of revenue, duties decreased to 9.9% in Fiscal 2015 from 10.4% in Fiscal 2014, due to higher sales in China of its 2.0-liter engines, which attracts a lower duty.

Change in inventories of finished goods and work in progress : In Fiscal 2015, JLR added £236 million to its inventory of finished goods and work in progress, compared to £356 million in Fiscal 2014, a decrease of 33.7%. This lower increase of inventories at March 31, 2015 compared to March 31, 2014 was principally the result of an increase in wholesale volumes.

Purchase of products for sale : In Fiscal 2015, JLR spent £864 million on parts and accessories supplied by third parties and used in its finished vehicles and parts, compared to £715 million in Fiscal 2014, representing an increase of 20.8%. This increase was primarily attributable to an increase in parts sales to service the increasing number of vehicles in the market.

Raw materials and consumables : JLR consumes a number of raw materials in the manufacture of vehicles, including steel, aluminum, copper, precious metals and resins. The cost of raw materials and consumables in Fiscal 2015 was £12,557 million, compared to £11,545 million in Fiscal 2014, representing an increase of £1,012 million, or 8.8%. The increase in the total cost of raw materials and consumables was primarily attributable to increases in volumes produced. Raw materials and consumables as a percentage of revenue decreased to 57.4% for Fiscal 2015, as compared to 59.6% for Fiscal 2014, due to an increase in revenues resulting mainly from an improvement in model and market mix.

Employee cost

JLR’s employee cost increased by 19.5% to £1,977 million in Fiscal 2015 from £1,654 million in Fiscal 2014. The increase was attributable to increase in headcount to support the growth of its business, as well as higher wages resulting from pay negotiations with the unions which concluded in November 2014. Average employee headcount increased from 27,953 to 32,127, or 14.9%, from March 31, 2014 to March 31, 2015. In Fiscal 2015, the average number of employees on a non-agency basis and agency basis was 24,902 and 7,225, respectively, compared to 23,111 and 4,824 in Fiscal 2014. JLR added approximately 1,250 manufacturing employees to support increased production in its manufacturing plants, primarily at Halewood, Solihull and EMC in Wolverhampton and approximately 900 engineers to support its continued product development. The majority of the increased employee cost for the engineers is capitalized under “development costs capitalized”.

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Other expenses

Other expenses increased to £4,109 million in Fiscal 2015 from £3,717 million in Fiscal 2014, due to expenses such as engineering, fixed marketing, warranty, freight, manufacturing and launch costs driven by the general growth of JLR’s business, including increased sales in China, as well as its growing product portfolio. The rise in engineering expenses, reflecting its increased investment in the development of new vehicles, is mainly capitalized under “development costs capitalized”.

Net loss on commodity derivatives

In Fiscal 2015, JLR recorded a net loss of £38 million on un-matured commodity derivatives as a result of losses on un-matured hedges during the period. In Fiscal 2014, JLR recorded a net loss of £18 million on un-matured commodity derivatives, as a result of a decrease in commodity input prices.

Development costs capitalized

JLR capitalizes product development costs incurred on new vehicle platforms, engines, transmissions and new products in accordance with IFRS. The following table shows the R&D costs recognized in its income statement and the share of capitalized development costs and amortization of capitalized development costs in Fiscal 2015 and Fiscal 2014:

The capitalization ratio of development costs depends on the production cycle that individual models pass through in different periods.

The increase to £1,158 million in Fiscal 2015 from £1,030 million in Fiscal 2014, representing an increase of 12.4%, reflects higher product development costs (included as employee costs and engineering costs in other expenses) associated with the development of the Jaguar F-TYPE, Jaguar F-PACE, Jaguar XE, the new Discovery Sport, the diesel hybrid Range Rover and Range Rover Sport, the “in-house” 2.0-liter diesel engine, the engine manufacturing plant in Wolverhampton and other future products.

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Other income (net)

JLR’s other income (excluding net loss from un-matured commodity derivatives) slightly increased to £181 million in Fiscal 2015, compared to £171 million in Fiscal 2014. During Fiscal 2014, legislation was enacted that allows UK companies to elect for the Research and Development Expenditure Credit (RDEC) on qualifying expenditures incurred since April 1, 2013, instead of the existing super-deduction rules. Accordingly, expenditures not relating to capitalized product development expenditure have been recognized as miscellaneous income in Fiscal 2015 and Fiscal 2014. Further, the increase of its other income was also due to earned commissions from sales of third-party products.

Depreciation and amortization

JLR’s depreciation and amortization increased to £1,051 million in Fiscal 2015 from £875 million in Fiscal 2014. The increase primarily reflects the depreciation and amortization of capitalized product development costs related to the launch of new products such as the Land Rover Discovery Sport, the Jaguar F-TYPE coupe and all-wheel-drive derivatives, the “in-house” 2.0-liter diesel engine and the engine manufacturing plant in Wolverhampton.

Foreign exchange gain/(loss) (net)

JLR registered a foreign exchange loss of £138 million in Fiscal 2015, as compared to a gain of £236 million in Fiscal 2014, as a result of (i) appreciation of the US dollar, which lead to unfavorable revaluation of foreign currency borrowings and (ii) unfavorable revaluation of unrealized foreign currency derivatives not eligible for hedge accounting under IAS 39.

Finance income

JLR’s finance income increased to £48 million in Fiscal 2015, as compared to £38 million in Fiscal 2014. The increase was largely due to higher average cash balances held in Fiscal 2015, compared to Fiscal 2014.

Finance expense (net of capitalized interest)

JLR’s finance expense (net of capitalized interest) decreased to £135 million in Fiscal 2015, as compared to £185 million in Fiscal 2014. In Fiscal 2014, its interest expense (net of capitalized interest) included a one-time write-down of the embedded derivative in connection with the repurchase and cancellation of its £500 million 8.125% Senior Notes due 2018 and $410 million 7.750% Senior Notes due 2018 (issued on May 19, 2011), partially offset by the subsequent tender offer premium.

Share of loss from equity accounted investees

JLR’s share of loss from equity accounted investees of £6 million in Fiscal 2015 relates to further set-up costs incurred in relation to its China Joint Venture, compared to a £7 million loss on the same joint venture during Fiscal 2014.

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Income tax expense

JLR had an income tax expense of £576 million in Fiscal 2015, as compared to £622 million in Fiscal 2014, reflecting a lower effective tax rate of 22.0% of profit before tax in Fiscal 2015. This decrease was primarily attributable to the release of certain withholding tax provisions due to the reduction in the China withholding tax rate to 5% as set out in the new UK-China tax treaty, which had a one-off impact on dividends.

Profit for the period

JLR’s consolidated profit for Fiscal 2015 was £2,038 million, as compared to £1,879 million in Fiscal 2014, as a result of the factors identified above.

Liquidity and Capital Resources

JLR finances its capital requirements through cash generated from operations and external debt, including long-term debt, and revolving credit, factoring and working capital facilities. In the ordinary course of business, JLR also enters into, and maintain, letters of credit, cash pooling and cash management facilities, performance bonds and guarantees and other similar facilities. JLR generated negative free cash flow (before financing) of £563 million in the six months ended September 30, 2016, reflecting EBITDA of £1,287 million which was significantly offset by its total investment spending of £1,476 million as well as £485 million of unfavorable movements in working capital (down from negative working capital of £960 million in the six months ended September 30, 2015) and other non-cash accruals, primarily reflecting higher inventories accumulated to support the global launch of the Jaguar F-PACE and the launch of the Jaguar XE into the U.S. market, as well as the accumulated inventory of the current Land Rover Discovery model to support the run-out program. Net cash generated by operating activities in the six months ended September 30, 2016 was £702 million, compared to £345 million for the same period in 2015, which was primarily driven by inventory build-up in the three months of Fiscal 2017. After the negative free cash flow of £563 million, finance expenses of £69 million (down from £75 million in the six months ended September 30, 2015), a £32 million reduction in debt (up from £22 million in the six months ended September 30, 2015) and a £150 million dividend paid to TML in the six months ended September 30, 2016 (unchanged from September 30, 2015), JLR had total cash of £3,837 million (up slightly from £3,749 million as at June 30, 2016), comprising £2,382 million of cash and cash equivalents and £1,455 million of financial deposits. At September 30, 2016, JLR also had an undrawn committed revolving credit facility of £1,870 million. The total amount of cash and cash equivalents includes £424 million held in subsidiaries of JLR outside the United Kingdom. The cash in some of these jurisdictions, e.g. South Africa and Brazil, is subject to certain restrictions on cash pooling, intercompany loan arrangements or interim dividends. However annual dividends are generally permitted and JLR does not believe that these restrictions have, or are expected to have, any impact on its ability to meet its cash obligations. JLR believes that it has sufficient resources available to meet its planned capital requirements. However, its sources of funding could be adversely affected by an economic slowdown or other macroeconomic factors, which are beyond its control. A decrease in the demand for its products and services could lead to an inability to obtain funds from external sources on acceptable terms or in a timely manner or at all.

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JLR’s borrowings

The following table shows details of JLR’s committed and uncommitted financing arrangements, as well as the amounts outstanding and undrawn, as at September 30, 2016.