Tata Motors AR

Notice

Board’s Report

Corporate Governance Report

Business Responsibility Report

Management Discussion & Analysis

167

FINANCIAL PERFORMANCE OF TATA TECHNOLOGIES LTD

The consolidated revenue of TTL in Fiscal 2017 increased 4.4%

2,801.95 crores, compared to

2,683.38 crores in Fiscal 2016.

The profit before tax decreased by 2.3% to

452.77 crores in Fiscal

2017, compared to

463.53 crores in Fiscal 2016. The profit after tax

decreased by 7.8% to

353.59 crores in Fiscal 2017, as compared to

383.56 crores in Fiscal 2016.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an adequate system of internal controls in place.

It has documented policies and procedures covering all financial

and operating functions. These controls have been designed to

provide a reasonable assurance with regard to maintaining of proper

accounting controls for ensuring reliability of financial reporting,

monitoring of operations, protecting assets from unauthorized

use or losses, compliances with regulations. The Company has

continued its efforts to align all its processes and controls with

global best practices.

Some significant features of the internal control of systems are:

The Audit Committee of the Board of Directors, comprising

of independent directors and functional since August 1988,

regularly reviews the audit plans, significant audit findings,

adequacy of internal controls, compliance with accounting

standards as well as reasons for changes in accounting policies

and practices, if any;

Documentation of major business processes and testing

thereof including financial closing, computer controls and

entity level controls, as part of compliance programme towards

Sarbanes-Oxley Act, as required by the listing requirements at

New York Stock Exchange;

An ongoing programme, for the reinforcement of the Tata

Code of Conduct is prevalent across the organization. The

Code covers integrity of financial reporting, ethical conduct,

regulatory compliance, conflicts of interest’s review and

reporting of concerns.

State-of-the-art Enterprise Resource Planning, supplier

relations management and customer relations management

connect the Company’s different locations, dealers and

vendors for efficient and seamless information exchange.

The Company also maintains a comprehensive information

security policy and undertakes continuous upgrades to its IT

systems;

Detailed business plans for each segment, investment

strategies, year-on-year reviews, annual financial and operating

plans and monthly monitoring are part of the established

practices for all operating and service functions;

A well-established, independent, multi-disciplinary Internal

Audit team operates in line with governance best practices. It

reviews and reports to management and the Audit Committee

about compliance with internal controls and the efficiency and

effectiveness of operations as well as the key process risks. The

scope and authority of the Internal Audit division is derived

from the Internal Audit Charter, duly approved by the Audit

Committee; and Anti-fraud programmes including whistle

blower mechanisms are operative across the Company.

The Board takes responsibility for the overall process of risk

management throughout the organization. Through an Enterprise

Risk Management programme, the Company’s business units and

corporate functions address 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 are presented to the senior management. The

Risk Management Committee reviews business risk areas covering

operational, financial, strategic and regulatory risks.

During Fiscal 2017, the Company conducted an assessment of the

effectiveness of the Internal Control over Financial Reporting and

has determined that the Company’s Internal Control over Financial

Reporting as at March 31, 2017 is effective.

HUMAN RESOURCES / INDUSTRIAL RELATIONS

The Company considers its human capital a critical factor to its

success. Under the aegis of Tata Sons and the Tata Sons promoted

entities, the Company has drawn up a comprehensive human

resource strategy, which addresses key aspects of human resource

development such as:

The code of conduct and fair business practices;

A fair and objective performance management system linked

to the performance of the businesses which identifies and

differentiates employees by performance level;

Creation of a common pool of talented managers across

Tata Sons and the Tata Sons promoted entities with a view

to increasing their mobility through job rotation among the

entities;

Evolution of performance based compensation packages to