MATERIAL CHANGES & COMMITMENT AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There are no material changes affecting the financial position of the Company subsequent to the close of the Fiscal 2016 till the date of this report.
SHARE CAPITAL
During the Fiscal 2016, the Company had issued on a Rights basis Ordinary Shares (including the rights offering to ADR holders) and 'A' Ordinary Shares aggregating Rs. 7,500 crores. The particulars as required under Section 134 of the Companies Act, 2013 ("Act") read with Rule 4 of the Companies (Share Capital and Debentures) Rules, 2014 on issue of equity shares with differential voting rights on Rights basis during the Fiscal Year is annexed as Annexure 1.
SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
There are no significant material orders passed by the Regulators or Courts or Tribunal which would impact the going concern status of the Company and its future operation. However, Members attention is drawn to the Statement on Contingent Liabilities and commitments in the Notes forming part of the Financial Statement.
RISK MANAGEMENT
The Risk Management Committee (RMC) comprising of 4 Independent Directors, has been entrusted with responsibility to assist the Board in (a) overseeing the Company's risk management process and controls, risk tolerance and capital liquidity and funding; (b) setting strategic plans and objectives for risk management and review of risk assessment of the Company (c) review the Company's risk appetite and strategy relating to key risks, including credit risk, liquidity and funding risk, market risk, product risk and reputational risk as well as the guidelines, policies and processes for monitoring and mitigating such risks.
The Committee operates as per its Charter approved by the Board and within the broad guidelines laid down in it. The Company has a Risk Management Policy in accordance with the provisions of the Act and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Listing Regulations). It establishes various levels of accountability and overview within the Company, while vesting identified managers with responsibility for each significant risk.
The Board takes responsibility for the overall process of risk management in the organisation. Through Enterprise Risk Management Programme, Business Units, Corporate functions address opportunities and the attendant risks through an institutionalized approach aligned to the Company's objectives. This is facilitated by Internal Audit. The business risk is managed through cross functional involvement and communication across businesses. The results of the risk assessment and residual risks are thoroughly discussed with the Senior Management before being presented to RMC.
INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENT
Details of internal financial control and its adequacy are included in the Management Discussion and Analysis Report, which forms part of this Report.
HUMAN RESOURCES
The Tata Motors Group employed 76,598 permanent employees (previous year: 73,485 employees) as of the year end. The Company employed 26,569 permanent employees (previous year: 27,997 employees) as of the year end. The Tata Motors Group has generally enjoyed cordial relations with its employees and workers.
All employees in India belonging to the operative grades are members of labour unions except at our Sanand and Dharwad plants. All the wage agreements have been renewed in a timely manner and are all valid and subsisting. Operatives and Unions support in implementation of reforms that impact quality, cost erosion and improvements in productivity across all locations is commendable.
Safety & Health – Performance and Initiatives
As part of Company's Safety Excellence Journey which aims to achieve ultimate goal of Zero Injuries to its employees and all stakeholders associated with the Company's operations, Company provides a safe and healthy workplace focusing on creating right Safety Culture across the organization.
The Company has identified four drivers behaviors which will help keep moving in this journey and attain Zero Injury viz. the drivers are engaged at all levels; governance; robust safety processes and improving safe behaviors.
The Company's India operation, has achieved improved performance with Lost Time Injury Frequency Rate (LTIFR) being 0.17 for the Fiscal 2016, a reduction in injury rate by 15% over Fiscal 2015. While overall safety performance has improved but there was one fatality during the year, involving a customer sales employee in a road incident while on the job.
All Manufacturing Plants in India of the Company are certified to ISO 14001 - Environment Management Systems and are also certified to OHSAS 18001 – Occupational Health & Safety Management System. Further, all CV Manufacturing Plants in India are certified to ISO 50001 - Energy Management System. The Company has undertaken several initiatives for resource conservation such as re-cycling of treated effluents back to process, energy and material recovery from hazardous wastes and rainwater harvesting. Manufacturing plants also generate in-house renewable power and source off-site green power where available.
The Senior Leadership is fully committed and engaged in safety and health journey and has set up a very robust Governance and Engagement model at various level right from having Safety Health and Environment Committee at Board, Business, Site, Corporate, Sub-committees and Factory Implementation Committees.
The Company continued Campaign 'i-drive safe' – an initiative on building a safe driving culture amongst its employee and associates and have trained them Defensive Driving. In excess of 19,103 employees and associates till date have been trained under this campaign, initiated few years ago.
In line with Safety and Health Policy, to enhance safety standards of its business partners, the Company engages supply chain for safety. The objective of such engagement is to raise the Safety standards of dealer workshops. Jagruti – Safety Awareness Building Campaign for Workshop Managers is a year-long campaign focused on building awareness on safety and understanding of the Company's expectations on Dealers Workshop Safety. This programme is collaboration of the Company, Castrol and training partner ICECD. The year-long campaign aims to cover works managers/representatives of 2,000 workshops (CV & PV) across India by January 2017. In Fiscal 2016, 21 sessions are conducted covering 565 workshops.
In health area, the Company under the 'Health Plus Because you matter!' initiative engaged employees on various subject of Health. Series of initiatives like awareness sessions, mailers, etc. have been conducted under this initiative. For Food Safety, HACCP Certification process has been started at plant canteens.
The Jaguar Land Rover business drives its health and safety ambition through its campaign - Destination Zero – A Journey to Zero Harm. This is overseen by the statements on the Jaguar Land Rover, 'Blueprint for Lasting Success' with the overall commitment that states "Our most valuable asset is our people, nothing is more important than their safety and wellbeing. Our co-workers and families rely on this commitment. There can be no compromise". The business maintains its accreditation to the external standard of OHSAS 18001, with all the UK locations accredited to the standard through a series of annual external assessments. The business has reviewed and re-launched its internal safety assessment process SHARP (Safety and Health Assessment Review Process) within its manufacturing locations. The Lost Time Case Rate in terms of incidents has remained steady with around 7.0% improvement over previous year's performance, against a backdrop of massive growth and increased headcount and volumes within the business. The activities deployed to deliver this ambition of Zero Harm are underpinned with everyone being encouraged to understand and take responsibility for their own and their fellow workers safety and wellbeing. Each functional area has ability to build their own plans of activities to drive the performance within their own area of responsibility. During last year the business has launched the Wellbeing Charter – an externally assessed framework to deliver excellence in wellbeing activities and strategies. This is a journey Jaguar Land Rover is embarking on, to achieve and sustain excellence in this subject. In the last quarter the business received its first recognition on this journey by being awarded the'Commitment Level' in the framework.
TDCV Korea achieved an improvement in Safety Index to 0.33 from 1.15 in Fiscal 2016. There has been continued leadership commitment and engagement with focus in areas safety communication, risk assessment, improving capabilities of employees for emergency situations.
TMTL, Thailand and TMSA, South Africa sustained good performance in area of Safety and Health during Fiscal 2016.
Prevention of Sexual Harassment
The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder for prevention and redressal of complaints of sexual harassment at workplace. The Company is committed to providing equal opportunities without regard to their race, caste, sex, religion, colour, nationality, disability, etc. All women associates (permanent, temporary, contractual and trainees) as well as any women visiting the Company's office premises or women service providers are covered under this Policy. All employees are treated with dignity with a view to maintain a work environment free of sexual harassment whether physical, verbal or psychological.
During the Fiscal 2016, the Company has received 7 complaints on sexual harassments, which have been substantiated and appropriate actions were taken. The Company organized 15 workshops or awareness program against sexual harassment. There were no complaints pending for more than 90 days during the year.
Similar initiatives on Prevention of Sexual Harassment are in place across the Tata Motors Group of companies.
BUSINESS RESPONSIBILITY REPORT
Pursuant to Regulation 34(2)(f) of the SEBI Listing Regulations, the Business Responsibility Report (BRR) initiatives taken from an environmental, social and governance perspective, in the prescribed format is available as a separate section of the Annual Report and also hosted on the Company's website www.tatamotors.com.
FINANCE
During the year, the free cash flows for Tata Motors Group were Rs. 6,543 crores, post spend on capex, design and development of Rs. 32,623 crores. Tata Motors Group's borrowing as at March 31, 2016 stood at Rs. 70,468 crores (as at March 31, 2015: Rs. 73,610 crores). Cash and bank balances and investments in mutual funds stood at Rs. 52,091 crores (as at March 31, 2015: Rs. 46,174 crores). With healthy profitability and cash flow generation, the Consolidated Net Automotive Debt to Equity Ratio stood at (0.01) as at March 31, 2016 as compared to 0.19 as at March 31, 2015.
The Cash flows from operations were positive Rs. 2,346 crores for standalone operations of the Company. Spend on capex, design and development were Rs. 2,982 crores (net). The borrowings of the Company as at March 31, 2016 stood at Rs. 15,887 crores (as at March 31, 2015: Rs. 21,134 crores). Cash and bank balances including mutual funds stood at Rs. 2,188 crores (as at March 31, 2015: Rs. 945 crores).
The Company did a Rights Issue for Rs. 7,498 crores (US$1.2 billion) by allotting 15,04,90,480 Ordinary shares (including 3,20,49,820 shares underlying the ADRs) of Rs. 2 each at a premium of Rs. 448 per share, aggregating Rs. 6,772.07 crores and 2,65,09,759 'A' Ordinary shares of Rs. 2 each at a premium of Rs. 269 per share, aggregating Rs. 718.42 crores. As per the object of the Issue, the proceeds of Rs. 500 crores from the share issue have been used for funding expenditure towards plant and machinery, Rs. 1,500 crores towards research and product development, Rs. 4,000 crores towards repayment in full or in part of certain long-term and short-term borrowings and Rs. 1,401.10 crores towards general corporate purposes.
The Company prepaid Rs. 140 crores of its unsecured 10% NCD due in 2019 and Rs. 10 crores of its unsecured 10.30% NCD due in 2018.
At JLR, post spend on capex, design and development of GB£2,806 million (Rs. 27,673 crores), the free cash flows were GB£791 million (Rs. 7,550 crores) for Fiscal 2016. The borrowings of JLR as at March 31, 2016, stood at GB£2,500 million (Rs. 23,863 crores) [previous year: GB£2,550 million (Rs. 23,574 crores)]. Cash and financial deposits stood at GB£4,651 million (Rs. 44,394 crores) [previous year: GB£4,263 million (Rs. 39,411 crores)]. Additionally, JLR has undrawn committed long term bank lines of GB£1,875 million (JLR data as per IFRS).
TML Holdings Pte Ltd, Singapore, a 100% subsidiary of the Company, holding the investment in Jaguar Land Rover and other foreign subsidiaries has refinanced existing unsecured multi currency loan of US$600 million (US$250 million and SG$62.8 million maturing in November 2017 and US$210 million and SG$114 million maturing in November 2019) by a new syndicated loan of US$600 million (US$300 million maturing in October 2020 and US$300 million maturing in October 2022). Subsequently TML Holdings Pte Ltd, Singapore has also refinanced the existing SG$350 million 4.25% Senior notes due in May 2018 by a new syndicated loan of US$250 million maturing in March 2020.
Tata Motors Finance Limited has raised an amount aggregating to Rs. 434 crores by way of Non-Participating Cumulative Compulsorily Convertible Preference Shares which qualified as Tier 1 capital to meet growth and maintain capital adequacy ratio. There has been no fresh issuance of perpetual debt instruments or subordinated debt instruments/debentures towards Tier 1 and Tier 2 Capital in Fiscal 2016.
Tata Motors Group has undertaken and will continue to implement suitable steps for raising long term resources to match fund requirements and to optimise its loan maturity profile.
During the year, the Company's rating for Foreign Currency Borrowings was retained at "Ba2"/Stable by Moody's and was retained by Standard & Poors to "BB"/with change in outlook to Stable. For borrowings in the local currency, the ratings was retained by Crisil at "AA"/Stable and by ICRA at "AA"/Stable. The Non-Convertible Debentures and Long Term Bank facilities i.e. (Buyers Credit) rating by CARE was retained at "AA"/Stable. During the year, JLR's rating was retained by Moody's at "Ba2"/Positive and was retained by Standard & Poors at "BB"/with change in outlook to Stable for Tata Motors Finance, CRISIL has maintained its rating on long-term debt instruments and bank facilities to CRISIL "AA/A1+"/Stable and ICRA has maintained its rating at AA/Stable for long term.
FIXED DEPOSITS
The Company has not accepted any deposits from the public falling in the ambit of Section 73 of the Act and The Companies (Acceptance of Deposits) Rules, 2014.
EXTRACT OF ANNUAL RETURN
As provided under Section 92(3) of the Act, the details forming part of the extract of the Annual Return is annexed herewith in Form MGT 9 Annexure 2.