1. Sustainability Strategy 2020 The Tata Group’s Vision for a Sustainable Future

2. Executive Summary
The dynamic global environment challenges companies to reassess balance between business and social priorities
A sustainability strategy creates an opportunity to generate and capture economic value
A strategic approach strengthens social impact and maximizes return on social investments through:
Targeted interventions
Innovation
Thought leadership
Public policy
Effective implementation enables Tata to achieve its strategy, by making changes to:
Structure
Culture
Measurement
Communication
The value generation potential is 2-3 % of net value
Sustainability is an opportunity to generate and capture economic value by addressing stakeholders’ social and environmental needs and expectations
The Tata Group is well positioned, but needs to be more strategic in its approach in order to capture the value generated
A sustainability strategy focused on targeted interventions, innovation to address stakeholders needs, thought leadership, and shaping of public policy, will enable The Tata Group to maximize the return of its social investments
To implement this strategy, The Tata Group needs to introduce changes in structure, culture, measurement, and communications
This approach carries potential for value generation of 2-3% of the net value of the group, an attractive opportunity
The ultimate impact of this strategy is that it will enable The Tata Group to continue being a visionary conglomerate, leading the economic and social transformation of the markets it operates in the long term 2

3. Targeted Interventions
A concerted sustainability strategy gives Tata a competitive advantage by generating social impact
FOCUS
Targeted Interventions
Innovation
Public Policy
Thought Leadership
Create an opportunity for shared value
Leverage unique capabilities
Enable a measurable ROI
Yield magnified returns with small investments
Create opportunities in uncontested markets
Reinforce Tata culture
Increase social impact and return
Influence the debate and minimize tensions
Improve ability to conduct business `
Set the standard and raise the bar
Compel followers
Reinforce brand with strengthened reputation 3

4. An effective implementation is necessary to achieve sustainability goals
Coordination and integration
Engrain sustainability mindset in the organization
Appoint a Chief Sustainability Officer
Form a permanent Sustainability Task Force
Cultivate stakeholder relationships
Exploit common initiatives
Empower and align employees to new vision
Incentivize and reward sustainability efforts
Foster long-term talent recruitment and development
Structure
Culture
Improve social impact
measurement
Publicize Tata’s
sustainability leadership
Measurement
Communication
Quantify social impact and translated to financial value creation
Understand financial and non-financial costs of initiatives
Prioritize and align strategies
Create brand equity and goodwill
Motivate employees and community
Enhance investor relationships
Communicate quantifiable impact 4

5. Tata can implement its sustainability plan to achieve its 10-year vision
Create Sustainability Task Force 1
Define & Convey Strategic Sustainability Vision 2
Set strategic priorities 3
Define metrics for evaluating impact 4
Identify partners to create greatest impact 5
Adjust investments based on impact 6
Demonstrate financial and social impact 7
Month 1
Month 2
Month 3
Month 4-6
Month 7
Quarterly
Annually
Appoint sustainability leader who sits on corporate executive board, establish sustainability task force
Define annual social, economic & environmental initiatives in each region; Consider opportunities for shaping political agenda
Develop relationships with relevant NGOs, industry associations, businesses, and lobbyists
Announce quick wins that align with new strategy
Strategy group becomes responsible for innovation
Distribute report annually to shareholders and employees, beginning in Year Five
Demonstrates global commitment to sustainability
Reinforces message that sustainability is key component of the business
Able to assess strategic investments with greatest impact on ongoing basis
Instills standardized measurement and reporting to define social impact
Allows group to make strategic investments regionally
Builds relationships in the community while delivering impact
Signals value to shareholders and stockholders
Devise ways to measure and quantify impact and to translate this impact into financial return
Reinforce linkage between sustainability initiatives, employee value and innovation 5

6. Identify Sustainability Determine Relevance for Tata
The valuation framework incorporates analytical tools to surmount the traditional challenges faced in valuing sustainability
Valuation
Challenges
How does sustainability
translate into value
for a company?
To what extent do these
value generating
opportunities apply?
What should be a
reasonable impact target
for Tata Group?
Phase 1:
Identify Sustainability
Impact Levers
Phase 2:
Determine Relevance for Tata
Phase 3:
Quantify and Validate
Impact Estimation
Valuation
Framework 1
Stakeholder Mapping
Business Model
Relevance Grid 4
“Sanity Check” 7 3
Theoretical Potential
Impact 6
Impact Potential for
Tata Group 8
Impact Estimation
Elements of Value 2
Geography Focus 5 6

7. The Theoretical Potential Impact Matrix summarizes how sustainability initiatives affect stakeholders and move the levers of a company’s value
Theoretical Potential Impact Matrix
High impact
Low impact
Value
Lever
Customers / Community
Employees
Value Chain
Regulators / Watchdogs
Investors and Risk Assessors
Future Generations
Brand (growth)
Better understanding of customer needs
Ambassadors for growth – motivation for innovation
Communication on market opportunities
Access to markets
Socially conscious capital
Expanding customer base in the future
Margins
Higher willingness to pay
Reduced absenteeism and turnover
Reduced conflict, ease of negotiations
Reduced compliance costs
Lower reporting costs
Lower cost of acquisition
Cost of Debt
Lower volatility
of revenues because of brand loyalty
Better use of cash flows
Cash flow optimization in the value chain
Lower threat of expropriation
Reduced volatility of cash flows
Stability of growth in the long term
Cost of Equity
Lower impact of market swings = lower beta
Reduced risks of employee conflict
Faster reaction to market swings –beta swings
Reduction of
country risk and favorable regulation
Tension because of perception of sub-optimal investing
Reduced risk of environmental crisis
Program Cost
Constant and costly engagement
Highest priority engagement
Marginal increased engagement
High level interaction
Reporting interaction
High cost, low level of market feedback
Source: Team Analysis 7

8. The consolidated estimated impact for the Tata Group is $3.6 Billion
Impact Per Value Lever1
Net Impact on Tata Group Value1
US$ Millions
US$ Billions
Note (1): Based on detailed value estimation for 4 largest companies and extrapolation for other 92 companies based on revenues
Source: Tata Case; Tata Group Companies Reports, Team Analysis 8

9. Sustainability is a key component to Tata’s success
“A visionary company doesn't simply balance between idealism and profitability: it seeks to be highly idealistic and highly profitable.”
-Jim Collins, Built to Last: Successful Habits of Visionary Companies 9

10. APPENDIX 10

11. The Integrated Sustainability Plan & Implementation is a detailed approach to value creation and capture
Measurement:
Standardize reporting framework to measure impact of ROI
Harness stakeholder insights to identify opportunities
Adjust and refine initiatives
Structure:
Be sustainability leader
Create sustainability taskforce to foster integrated approach towards sustainability initiatives
Exploit common initiatives between company holdings
Culture:
Engrain mindset of sustainability in leadership
Incentivize leaders & employees
Attract top talent with core values
Recruit & train future leadership class
Communication:
Disseminate brand
Address stockholders – ROI& EVA
Promote stakeholder dialogue to get feedback on current initiatives
Context:
Post financial crisis environment
Increasing social & environmental awareness
Growing Consumer base in emerging economies
Public demands corporate responsibility
Vision:
To be recognized as the undeniable global leader in corporate sustainability by reinforcing core business operations while creating and capturing value for its shareholders
Corporate Strategy:
Conglomerate strategy
Market leader & expand into global markets
Acquisitions in key sectors
Strong social impact
Companies represent the Tata brand
Sustainability Strategy Goals:
Address stakeholder demands in each market
Generate new demand in uncontested market space
Translate stakeholder value into shareholder value
Collaborate with & leverage company innovations
Invest in human capital for long term change
Advocate core values in global business practice
Expand philanthropic efforts in markets where impact is greatest
Strategic Focus:
Revolutionize industry by raising corporate citizenship standards
Prioritize key social & economic investments to augment innovation
Foster innovation in business
Shape public policy 11

12. FOCUS: Tata must target interventions to maximize social impact and capture maximum value
Community Schools
Technology College
Social Value Created
Economic Value Captured
Social Value Created
Economic Value Captured
Creates an opportunity for shared value; strengthens Tata’s competitiveness while adding social value
Impact can be isolated and measured
Value is difficult to capture- High social impact, but does not directly increase Tata’s competitiveness
Impact is difficult to measure and translate into financial returns 12

13. Tata Must Innovate to find opportunities for maximum impact
Minimum Contribution to Tata’s Net Income Maximum Social Impact
Social Value Created
Economic Value Captured
Impact
Measurement
Publicity Value of Swach
1,620,000 search results
Assume access to the Swach can save lives at rate of 1%
16,360 lives saved
Assume access to the Swach can reduce absenteeism at rate of 1%
4,430,000 school days saved
Assume access to the Swach can reduce estimated economic losses due to health spending, loss of productivity and labor diversions costs by 1%
$ 284,000,000 saved 13

14. Phase 3: The impact per company is derived by conservatively affecting the value levers to the extent that a sustainability strategy is relevant
Example: Tata Consulting Estimated Impact
Lever
Impact Range
(Change from original value)
Current Value
(Estimated using Tata Financials)
New Value
Impact on Valuation
% Increase in Valuation
Brand (short and long term growth rates)
+1%-1.5%
36.5% years 1-5
3.0% years 6 +
37.0% years 1-5
629 MM
1.8%
Margins (Cash flow generation)
+0%-0.5%
1,065 MM
1,087 MM
154 MM
0.4%
Cost of Debt
-0%-0.5%
4.7%
0 MM
0.0%
Cost of Equity
+0.5%-0%
13.0%
-0 MM
-0.2%
Program Cost
(Capex + Opex)
+30%-50%
11 MM
15 MM
-36 MM
-0.1%
Source: Tata Case; Tata Group Companies Reports, Team Analysis 14

15. Phase 2: Tata Group’s ability to capture the potential for value generation depends on industry & geography focus for each company
Potential for Value Generation per Company
- Tata Group’s Largest Market Cap. Companies -
Higher Potential +
Breadth of Relevant Stakeholder Groups - - +
Geographic Expansion
Source: Tata Group Companies Annual Reports; Team Analysis

16. Vi = Σ Ct (1+gs) / (1+ki)t + Cx(1+gl)/((k-gl)(1+ki)(t+1))
Elements of Value n
Vc= Σ Vi
i = 1 x
Vi = Σ Ct (1+gs) / (1+ki)t + Cx(1+gl)/((k-gl)(1+ki)(t+1))
t = 1
Short Term Component
Long Term Component
Where:
Vc = Value of the conglomerate
Vi = Value of one of the organization
t = Period
x = End year of short term period affected by short term growth rate
Ct = Operating after tax cash flow of the company in year t
Cx = Operating after tax cash flow of the company in year x
gs = Short term growth rate of the cash flows
gl = Long term growth rate of the cash flows
ki = Cost of capital for organization i 16

17. Tata Group’s ability to capture the potential for value generation depends on industry & geography focus for each company
Business Model Relevance Grid
Geography Focus
Company
Customers / Community
Employees
Value Chain
Regulators / Watchdogs
Investors and Risk Assessors
Future Generations
Tata Consulting ✓ x
Tata Steel
Tata Motor
Tata Power
Local Revenue
International Revenue
Untapped Value 8%
92%
High
17%
83%
45%
55%
Medium
90%
10%
Low 17