EXPLANATORY STATEMENT
The Explanatory Statement pursuant to Section 102 of the Companies Act, 2013 ("the Act"), given hereunder sets out all material facts relating to the special business mentioned at Item Nos. 4 & 5 of the accompanying Notice dated May 26, 2015. As additional information, the Explanatory Statement also contains material facts pertaining to ordinary business mentioned at Item No. 3 of the said Notice:
Item No. 3
This explanatory statement is provided though statutorily not required as per Section 102 of the Act.
In the Annual General Meeting of the Company held on July 31, 2014, Deloitte Haskins & Sells LLP (DHS) Chartered Accountants (ICAI Firm Registration No.117366W), Mumbai had been appointed as the statutory auditors of the Company for a period of 3 years to hold office from the conclusion of the sixty-ninth Annual General Meeting held on July 31, 2014 till the conclusion of the seventy-second Annual General Meeting of the Company to be held in the year 2017, subject to the ratification of their appointment at every Annual General Meeting by Members.
As per the requirement of the act, DHS have confirmed that the appointment if made would be within the limits specified under Section 141(3)(g) of the Act and it is not disqualified to be appointed as Auditor in terms of the provisions of Sections 139 and 141 of the Act and the Companies (Audit and Auditors) Rules, 2014.
In view of the above, DHS continuing to be eligible to act as Auditors of the Company and based on the recommendation of the Audit Committee at its meeting held on May 25, 2015 and pursuant to Rule 3 of the Companies (Audit and Auditors) Rules, 2014, the Board commends the Resolution at Item No. 3 for approval by the Members.
It may be noted that Board on the recommendation of the Audit Committee, had approved the payment of Rs. 4.50 crores to audit the standalone and consolidated financial statements and results prepared by the Company on quarterly basis for the financial year ended March 31, 2015. For further details on fees paid to the Auditors for services rendered by them, Members attention is drawn to the Notes forming part of the Financial Statements.
The Company has in place a policy for Pre-approval of services to be rendered by the Auditors across its subsidiaries by the Audit Committee to ensure that the Auditors function in an independent manner.
None of the Directors, Key Managerial Personnel or their relatives are concerned or interested, financially or otherwise in the Resolution at Item No. 3 of the Notice.
Item No. 4
Based on the recommendation of the Audit Committee, the Board had on May 26, 2015, approved the appointment and remuneration of M/s Mani & Co., the Cost Auditors (ICAI Firm Registration No 000004) to conduct the audit of the Cost records pertaining to relevant products prescribed under the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time for the Financial Year ending March 31, 2016 at a remuneration of Rs. 5,00,000/- (Rupees Five Lakhs) plus service tax, out-of-pocket, travelling and living expenses.
It may be noted that records of the activities under cost audit is no longer prescribed for "Motor Vehicles and certain parts and accessories thereof". However based on the recommondations of the Audit Committe the Board has also approved the appointment of M/s Mani & Co. for submission of reports to the Company on the cost records pertaining to these activities for a remuneration of Rs. 15,00,000/- (Rupees Fifteen Lakhs) for the financial year ending March 31, 2016.
In accordance with the provisions of Section 148 of the Act read along with Rule 14 of the Companies (Audit and Auditors) Rules, 2014 made thereunder, ratification for the remuneration payable to the Cost Auditors to audit the cost records of the Company for the Financial Year ending March 31, 2016 by way of an Ordinary Resolution is being sought from the Members as set out at Item No. 4 of the Notice.
The Board commends the Ordinary Resolution set out at Item No. 4 of the Notice for approval by the Members.
None of the Directors, Key Managerial Personnel or their relatives are, in any way, concerned or interested, financially or otherwise, in the resolution set out at Item No. 4 of the Notice.
Item No. 5
The Non-Convertible Debentures ("NCDs") issued on private placement basis is one of the cost effective sources of long term borrowings raised by the Company. The borrowings of the Company as on March 31, 2015 aggregate to approximately Rs. 21,134.30 crores, of which outstanding NCDs aggregate to Rs. 6,600 crores.
The Company had obtained approval of the Members' vide postal ballot on June 27, 2014:
- To borrow from time to time any sum(s) of monies which, together with the monies already borrowed by the Company (apart from temporary loans obtained or to be obtained from the Company's bankers in the ordinary course of business) upto an amount not exceeding Rs. 30,000 crores.
- To make offer(s) or invitation(s) to subscribe to the issue of NCDs on a private placement basis, in one or more tranches such that the aggregate amount does not exceed Rs. 3,500 crores during a period of one year from the date of passing of the said Resolution.
Out of the aforesaid Members' approval for issue of NCDs upto Rs. 3500 crores, the Company issued NCDs aggregating Rs. 2600 crores as of date at an average cost of 9.50% p.a. approximately The balance approval of Rs. 900 crores lapses on June 26, 2015. The Company redeemed/prepaid NCDs of face value aggregating Rs. 1550 crores during the financial year 2014-15.
In continuation of its efforts to strengthen its capital structure, the Company intends to augment the long term resources by substituting part of the short term liabilities with medium to long term resources. It is proposed to issue NCDs on a private placement basis aggregating upto Rs. 4,400 crores, in one or more series/tranches during the 12 month period with an intention to substitute the short term liabilities/borrowings and for financing, inter-alia part of the ongoing capital expenditure during the next 12 months as also for general corporate purposes. The Company intends to raise NCDs for a tenors ranging between 2 to 10 years and expects the coupon rate of NCDs to be lower than the SBI Base rate (currently at 9.70%) plus 50 bps, considering the current credit rating of 'AA' by ICRA Limited and 'AA+' by Credit Analysis and Research Ltd. (CARE).
Under Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 ("Rules"), a company making a private placement of its securities is required to obtain the approval of the Members by way of a Special Resolution for each offer or invitation before making such offer. However, incase of offer for NCDs, it shall be sufficient if the Company passes a previous Special Resolution only once in a year for all the offers or invitation for such debentures during the year.
The above proposal as set out in Item no. 5 of the Notice is in the interest of the Company and your Directors commend the same for approval by the Members.
None of the Directors, Key Managerial Personnel or their relatives are in any way concerned or interested, financially or otherwise in the resolution set out at Item No. 5 of the Notice.
By Order of the Board of Directors
H K SETHNA
Company Secretary
Mumbai, May 26, 2015
Registered Office:
Bombay House, 24, Homi Mody Street, Mumbai 400 001
Tel: +91 22 6665 8282 Fax: +91 22 6665 7799
Email: [email protected];
Website: www.tatamotors.com
CIN - L28920MH1945PLC004520
