FROM PUBLISHED ACCOUNTS

1.

Government Grants

[Refer Note 3.5 and 14(f) to the standalone financial
statements]

The Company obtains various grants from Government authorities
in connection with manufacturing and sales of two-wheelers. There are certain
specific conditions and approval requirements attached to the grants.

Management evaluates, at the end of each reporting period,
whether the Company has complied with the relevant conditions attached to
each grant and whether there is a reasonable assurance that the grants will
be received, in order to determine the timing and amounts of grants to be
recognised in the financial statements.

We identified the recognition of Government grants as a key
audit matter because of the significance of the amount of grants and due to
significant management judgement involved in assessing whether the conditions
attached to grants have been met and whether there is reasonable assurance
that grants will be received.

In view of the significance of the matter, we applied the
following audit procedures in this area, among others, to obtain sufficient
appropriate audit evidence:

n assessed the
appropriateness of the accounting policy for Government grants as per the
relevant accounting standard;

n evaluated the design and
implementation of the Company’s key internal financial controls over
recognition of Government grants and tested the operating effectiveness of
such controls on selected transactions;

n inspected, on a sample
basis, documents relating to the grants given by the various Government
authorities and identifying the specific conditions and approval requirements
attached to the respective grants;

n evaluated the basis of
management’s judgement regarding fulfilment of conditions attached to the
grants and reasonable assurance that grants will be received. This included
examining, on a sample basis, the terms of the underlying documentation,
correspondence with the

1.

(continued)

Government authorities and whether corresponding sales were made
in respect of such grants;

n assessed the adequacy and
appropriateness of the disclosures made in accordance with the relevant
accounting standard.

1.

Defined Benefit Obligation

The valuation of the retirement benefit schemes in the Company
is determined with reference to various actuarial assumptions including
discount rate, future salary increases, rate of inflation, mortality rates
and attrition rates. Due to the size of these schemes, small changes in these
assumptions can have a material impact on the estimated defined benefit
obligation

We have examined the key controls over the process involving
member data, formulation of assumptions and the financial reporting process
in arriving at the provision for retirement benefits. We tested the controls
for determining the actuarial assumptions and the approval of those
assumptions by senior management. We found these key controls were designed,
implemented and operated effectively, and therefore determined that we could
place reliance on these key controls for the purposes of our audit.

We tested the employee data used in calculating the obligation
and where material, we also considered the treatment of curtailments,
settlements, past service costs, re-measurements, benefits paid and any other
amendments made to obligation during the year. From the evidence obtained we
found the data and assumptions used by

1.

(continued)

management in the actuarial valuation for retirement benefit
obligations to be appropriate.

The Group held an investment in a material foreign subsidiary.
The Holding Company’s Board of Directors and management have concluded that
admission of this subsidiary in the rehabilitation proceedings with the Seoul
Bankruptcy Court under the Debtor Rehabilitation and Bankruptcy Act of South
Korea on 28^th December, 2020 and uncertainty on outcome of the
rehabilitation proceedings impacts the Holding Company’s ability to retain
control of the subsidiary.

Our audit procedures include:

• Read the documents in
relation to admission of the subsidiary in the rehabilitation proceedings and
made inquiries with the Company’s management to understand the implications
of the rehabilitation proceedings;

• Assessed the Group’s evaluation of
degree of control / significant influence based on proceedings in the
rehabilitation process and the requirements

(continued)

The Holding Company’s Board of Directors and management
determined that the Holding Company lost control as defined in Ind AS 10 Consolidated
Financial Statements due to reasons which are described in the accounting
policies on the basis of consolidation. The business operations of the
erstwhile subsidiary have been classified as discontinued operations in the
consolidated financial statements.

On de-consolidation of the subsidiary, the Company has
de-recognised its net liability relating to the subsidiary. The Company
recognised operating losses and an impairment / provision aggregating to Rs.
3,252 crores in relation to this erstwhile subsidiary. Further, the Company
has recorded a gain on de-consolidation of the subsidiary of Rs, 1,063
crores. The impairment / provision has been determined based on best estimate
assumptions of the erstwhile subsidiary’s valuation and considering the
uncertainty of the rehabilitation process. These amounts have been reported
as results of discontinued operations in the consolidated financial
statements.

Refer Note 2(u) – significant accounting policy for discontinued
operation.

(continued)

of the relevant accounting standards;

• Obtained management’s best estimate of
the recoverable amounts and tested the key assumptions with respect to
discount rate and expectation of recovery of the assets. Performed
sensitivity analysis of the key assumptions, such as discount rates, expected
time and extent of the subsidiary’s ability to repay used in assessment of
the recoverable value of the assets;

• Inquired and assessed the tax impact of these matters with the
management;

• Evaluated the impact of the auditors’ opinion of the erstwhile
subsidiary on our audit opinion on the consolidated financial statements;

• Inquired with management on the
implications of events after the date of financial statements to corroborate
the impact of the developments with respect to bankruptcy proceedings with
the assessment of degree of control / significant influence and assessment of
recoverable value of the Company’s assets; and

• Assessed the appropriateness and adequacy
of the disclosures in the financial statements, including those relating to
discontinued operations.

Provision towards various restructuring and
transformational projects – Refer Note 42

The Company is undergoing major transformation with regard to
structural and cyclical

Our principal audit procedures performed, among other
procedures, included the following:

1. We obtained an understanding of the management’s processes
for assessing the requirements

(continued)

changes in automotive market and emerging opportunities in the
electro mobility and mobility segment. A provision of Rs. 2,458 million is
made towards such restructuring and transformational costs (included as
exceptional item in the Statement of Profit and Loss).

We consider provision towards restructuring and transformational
costs to be a key area of focus for our audit due to:

• the amount involved

• the management’s assessment of the obligation which is based
on past settlements and best estimates of current expectations.

(continued)

of provisions.

2. We evaluated the design and implementation of relevant
controls and carried out testing of management’s controls over recognising
provisions including the assessment of estimate involved and the timing of
utilisation of provisions.

3. We evaluated the management’s plan for restructuring and
transformation projects which gives rise to a constructive obligation
resulting in recognition of provisions.

4. We tested the basis of provision and verified the
arithmetical accuracy of the computations.

5. We evaluated that the provisions made are within the
approvals obtained for the restructuring and transformational projects.

6. We assessed the accounting principles applied by the Company
to measure and recognise the provisions and adequacy of disclosures in
accordance with the Indian Accounting Standards, applicable regulatory
financial reporting framework and other accounting principles generally
accepted in India.

Appropriateness of provision
for Contribution made to Investor Protection Fund Trust (IPFT)

[Refer Note 49 to the Consolidated Financial Statements]

During the year ended 31^st March, 2021, in order to
enhance the effectiveness of the 
Investor Protection Fund (IPF)

Our audit procedures related to contribution to IPFT included:

• Obtaining details of SEBI communication in respect of
contribution to NSE IPFT.

• Testing the underlying supporting documentation for
contribution made to NSE IPFT.

(continued)

of the Stock Exchange, SEBI has comprehensively reviewed the
existing framework in consultation with Stock Exchanges. Basis such review,
SEBI decided to augment NSE IPF’s Corpus and assessed required IPF Corpus to
be Rs. 1,500 crores. The Holding Company was directed to transfer the
requisite amount to bring the Corpus to Rs. 1,500 crores.

The Holding Company has paid Rs. 1,701 crores to NSE IPFT during
the year ended 31^st March, 2021. Additionally, the Holding Company
has also provided Rs. 121.05 crores in relation to the investors’ claims
related to defaulted members, which are yet to be processed by NSE IPFT. This
provision has been estimated by applying past historical experience of claims
admitted and paid to the outstanding claims of investors through the date of
approval of these Consolidated Financial Statements, including

the maximum amount that can

(continued)

• Obtaining confirmation from NSE IPFT with respect to amount of
contribution made and details relating to investors’ claims.

• Evaluating the method used by Management in estimating the
provision to be made in the Standalone Financial Statements in respect of
investors’ claims yet to be processed and paid by the NSE IPFT.

• Assessing the assumptions used in estimating the above
provision such as past experience, including their potential impact on the
range of possible outcomes on the amount of provision to be recognised in the
Standalone Financial Statements.

• Assessed the adequacy of presentation and disclosures made in
respect of these matters in the Consolidated Financial Statements.

(continued)

be paid to each investor in accordance with the bye-laws of NSE
IPFT.

Accordingly, an amount of Rs. 1,822.05 crores has been
recognised as an exceptional expense in the statement of profit and loss for the
year ended 31^st March, 2021 considering the materiality of the
amount, nature and incidence of this transaction.

This area is considered as a key audit matter, considering these
transactions arising from regulatory development during the current period
had a significant effect on the Consolidated Financial Statements.
Additionally, evaluation of these matters requires management judgement and
estimation to determine the measurement of provisions to be recognised,
presentation of these transactions and related disclosures to be made in the
Consolidated Financial Statements.

(continued)

Based on our above procedures, we considered the estimate for
provision of contribution to be made by the Holding Company to NSE IPFT and
related disclosures and presentation made in respect of these transactions in
the Consolidated Financial Statements to be reasonable.