Select the option that expresses the given sentence in reported speech.

"Our teacher returned from Mumbai last month", she said.

She said that their teacher had returned from Mumbai the previous month.

The correct option is: She said that their teacher had returned from Mumbai the previous month.

The other options are incorrect:

• She said that her teacher had returned from Mumbai the earlier month. This is incorrect because the speaker is referring to their teacher, not their own teacher.
• Her teacher returned from Mumbai last month, she said. This is incorrect because it is direct speech, not indirect speech.
• She said that their teacher returned from Mumbai the previous month. This is incorrect because the reporting verb should be "said".