Dear Shareholders,

Almost seven years after the world economy emerged from the most severe and impactful post-war recession, a return to healthy and stable global economy still remains elusive. The downside risks to the global growth remains at all-time high. During FY16, the global economy had an uneven growth with a few developed economies demonstrating resilience while the Euro Area and Japan has been tentative. Amongst the emerging economies, while India has relatively outperformed its peers, China continues to show moderation in its economic performance. The sharp decline in oil and commodity prices have also impacted the economy of many commodity producing countries. The medium to long-term economic outlook in India continues to look promising and it is heartening to see the Government’s drive to continue to liberalise the economy and focus on social sector spending in building both hard and soft infrastructure. These are critical initiatives to make the nation’s economy more productive and resilient in the future. The recent initiative to assess and rank the States on ease of doing business has ignited the spirit of competitive federalism that will certainly make India an attractive destination for new business and investments not only from within India but from across the globe. As a foundation industry for any nation, the Indian Steel industry will be encouragingly watching these developments and would be futureready to serve the nation with globally competitive products and services. In recent years, the global steel industry has been impacted by significant oversupply in certain geographies, declining demand, falling spreads between steel prices and raw material prices and volatile currency movements. Some of these issues are structural as the world is readjusting to lower commodity prices and slow growth.

Under these circumstances, it would be vital for the industry to look at supply side restructuring to rebalance the demand-supply equation especially in countries and regions where the oversupply situation is structurally acute. The supply side discipline is critical for the future sustenance and viability of the steel industry. As the world adjusts to structurally lower commodity prices for a longer period of time, consolidation of the steel industry would remain a key theme, especially in geographies where the demand is unlikely to grow structurally in the near future.

Consolidation of businesses would provide an opportunity to the steel industry to remain relevant and competitive in terms of costs and value to the customers and enable investments in product innovation, technology and supply chain efficiencies. It is important for national governments to ensure a level playing field for fair competition against unfairly priced imports and I would like to compliment the Government of India for responding effectively to put in place an appropriate deterrent mechanism against such imports during the second half of the previous financial year.

Our Indian operations continue to be the foundation of the Tata Steel Group. During FY16, the Jamshedpur operations achieved highest-ever crude steel production and sales for the year along with several best-ever operating and commercial milestones.

Having said that, I would like to highlight that while the above measures are short-term support against unfairly priced imports, the long-term competitiveness of the steel industry in India will depend on the cost of doing business including regulatory costs, infrastructure efficiency for inbound and outbound transportation of raw material and finished goods, as also the availability of energy at competitive costs. We have seen significant increase in levies, duties and regulatory costs in the mining sector in India in the recent years and also infrastructural challenges especially in logistics. If this trend continues in the future, it will seriously impact the longterm attractiveness for investments in the steel manufacturing sector and the country’s ambition to be a 300 MnTPA steel producing nation in the next decade will be at risk.

The Indian operations of Tata Steel continue to be the foundation of the Tata Steel Group. During the year under review, the Jamshedpur operations achieved highest-ever crude steel production and sales for the year along with several best-ever operating and commercial milestones. The Company is also undertaking a programme to structurally enhance the business performance through operating improvement initiatives, right sizing of manpower to enhance employee productivity and new product development. The year under review was also very critical for Tata Steel as it completed the project execution of the state-of-the-art 3 MnTPA greenfield project in Kalinganagar, Odisha. This is the first phase of the greenfield site and has the potential to grow further in the future. The Board has approved the commercial production of the facilities this month and over the next financial year, the operations will be ramped up to reach its capacity over the next 18 months. The combination of Jamshedpur and Kalinganagar operations will enable Tata Steel to enhance its product portfolio with enriched products and solutions and also expand its customer footprint to new segments of the market. While investing to build physical assets, the Company continues to make meaningful contributions towards developing social capital especially in communities in and around the place of its business. Building a sustainable society remains the core purpose of our business and the focus during the year continued to be on health, livelihood, education, sports, ethnicity and disaster relief.

I would also like to take this opportunity to mention that the business performance of the subsidiaries of Tata Steel in India and South East Asia has significantly improved. Following the exit of the business from China and several other restructuring initiatives, NatSteel and Tata Steel Thailand have significantly improved their underlying performance during the year. Similarly, the performances of other subsidiaries and joint venture companies like Tata Metaliks, Tata Bluescope, Tinplate Company of India and Tata Steel Processing and Distribution improved significantly compared to the previous year.

During FY16, the European steel industry continued to face several challenges including significant third country imports especially to the UK, a sharp drop in the market spread between steel prices and raw material price basket and very volatile currency movements. The adverse operating environment in Europe deeply impacted the consolidated financial performance of Tata Steel for the year under review. While our Management team and employees took significant initiatives to improve the operating performance, market challenges offset the benefits of internal improvement efforts leading to significant profit erosion and impairment of assets. You would recall, I had mentioned in my message in the previous year that should the underlying business and operating environment not improve in the UK, the business has to undergo further restructuring going forward. Consequently, based on the periodic performance review of the business during the year and an assessment of the business conditions and the challenges faced by Tata Steel UK, the Board of Tata Steel advised its European subsidiary to undertake several structural decisions, most notably, the restructuring and divestment of the Long Products business in Europe and restructuring the operating sites of the Bar business and the downstream operations in Llanwern in the UK. These actions were absolutely critical for the future of the UK business, but more needs to be done to provide a sustainable business going forward.

In the wider interest and financial sustenance of the Tata Steel Group, the Board also reviewed the UK business in its entirety and advised its European subsidiary - Tata Steel Europe, to look at all options of restructuring including a potential divestment of the whole or parts of the business. The above process is currently on-going and the alternate options are being closely reviewed even as the business is being currently supported by the parent for investments and funding requirements. I would also like to mention here that under the current fragile business conditions for steel industry in Europe, especially in the UK, exposure to defined benefit schemes significantly impacts the future viability of the underlying business. The Company has been in close and intense discussions with several stakeholders including the Pension Trustees, the Unions and the relevant bodies in the Government of UK and the Welsh Government to find a sustainable solution to the pensions that does not impact the continuing business of Tata Steel UK.

Our Netherlands business generated bulk of the operating earnings in the previous year for Tata Steel Europe. However, it has the potential to improve its performance to a much higher level and with new investments in its steel making and rolling facilities as well as other restructuring and improvement measures that have currently been initiated, I am certain the employees and management of Tata Steel Netherlands will work towards delivering enhanced value for the shareholders of Tata Steel in the future.

In February 2016, Dr. Karl Koehler stepped down as the CEO and Managing Director of Tata Steel Europe and also from the Board of Tata Steel. On behalf of the Board, I would like to place on record the Board’s appreciation of Karl’s contribution to the Company during his tenure. Mr. Koushik Chatterjee, Group Executive Director (Finance and Corporate) was appointed by the Board as the Executive Director for the European business of Tata Steel in addition to his current responsibilities and Mr. Hans Fischer was appointed CEO of Tata Steel Europe.

Finally, I would like to take this opportunity to thank you as the shareholders of the Company for your support and motivation to the Company during the year. I would also like to thank the lenders, suppliers, customers, various national and provincial governments with whom we have been working, the employees, the Unions and associates across all Tata Steel Group companies who have stood by the Company and I look forward to their continued support in the future.

Yours Sincerely,

Cyrus P. Mistry

May 25, 2016