SUBSIDIARY, JOINT VENTURES AND ASSOCIATE COMPANIES
The Company has 78 subsidiaries (14 direct and 64 indirect) as at March 31, 2017, as disclosed in the accounts.
During the year, the following changes have taken place in subsidiary companies:
Subsidiary companies formed/acquired:
- Jaguar Land Rover Colombia S.A.S was incorporated with effect from August 22, 2016
- InMotion Ventures 1 Limited was incorporated with effect from October 25, 2016
- InMotion Ventures 2 Limited was incorporated with effect from October 25, 2016
- InMotion Ventures 3 Limited was incorporated with effect from October 25, 2016
Companies ceasing to be subsidiary companies / ceased operations:
- JDHT Limited dissolved with effect from December 27, 2016
- Silkplan Limited dissolved with effect from January 17, 2017
- Tata Technologies (Canada) Inc. dissolved with effect from December 13, 2016
Name changes
- Jaguar Land Rover Automotive Trading (Shanghai) Company Limited was renamed as Jaguar Land Rover (China) Investment Co. Limited with effect from November 1, 2016
- Cambric Manufacturing Technologies (Shanghai) Company Limited was renamed Tata Manufacturing Technologies (Shanghai) Limited with effect from February 22, 2017
Re-structuring
The Scheme of Arrangement between Tata Motors Finance Limited and Sheba Properties Limited, subsidiaries of the Company, was approved by the Hon'ble National Company Law Tribunal effective from May 9, 2017. Besides the above, JLR continued to integrate / restructure legal entities for manufacturing and for exporting globally as combined brand legal entities. Other than the above, there has been no material change in the nature of the business of the subsidiary companies.
Associate Companies
As at March 31, 2017, the Company has 8 associate companies and 7 joint ventures. One of these joint ventures has 14 wholly owned subsidiaries and details of the same are disclosed in the accounts. The Company has adopted a Policy for determining Material Subsidiaries in line with Regulation 16 of the SEBI Listing Regulations. The Policy, as approved by the Board, is uploaded on the Company's website (URL: www.tatamotors.com/investors/pdf/material.pdf).
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act, read along with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed as Annexure - 2.
CORPORATE GOVERNANCE
At the Company we constantly strive to evolve and follow up on the Corporate Governance guidelines and best practices. Our purpose has always been transparency, long term shareholder value and respect to the minority shareholders. The Company discloses timely and accurate information regarding its operations and performance.
During the second half of the year under review the Company witnessed leadership change at Tata Sons (our promoter). During this period there were allegations made regarding the ethics and governance of the Company. Clarifications were also sought by the Regulators with respect to certain business decisions and governance processes. The Company would like to categorically deny the references and would like to impress upon you that it has robust systems and processes in place to ensure compliance to all regulatory requirements. The Company's Board exercises its independence both in letter and in spirt. The Directors have always acted in the best interest of the Company and will continue to do so.
The Board closely monitored the events during this period and allegations made. The Audit Committee of the Board reviewed all the issues that were brought up including correspondence between the Regulators and the Company on the issues raised in the representations made by Mr Cyrus P Mistry and Mr Nusli Wadia in terms of Section 169 of the Act and allegations made in this regard in the proceedings before the National Company Law Tribunal initiated against our Promoter. The Company has filed responses to the Regulators denying all such allegations. In such responses, the Company has reiterated that the Company is in compliance of the governance processes and requirements in all such cases. The Committee reviewed the various compliances and disclosures and the rigour applied when strategic decisions were taken and the detailed responses to the Regulators by the Company denying such allegations. After due deliberations with relevant officials and review of relevant documents and on the basis of a detailed review of these by a reputed independent Legal Counsel, the Committee expressed its confirmation of the responses by the Company to the Regulators. It follows that the aforesaid allegations against your Company and its governance were incorrect and such statements were made without exercising proper care.
A separate section on Corporate Governance and the certificate from the Practicing Company Secretary confirming compliance of Corporate Governance norms as stipulated in Regulation 34 read along with Schedule V of the SEBI Listing Regulations, giving information pertaining to the Board, Committee of the Board and other details of relevance forms part of this Report.
DIRECTORS
Appointment
The Company has, on the recommendation of Nomination & Remuneration Committee (NRC) and in accordance with provisions of the Act and SEBI Listing Regulations, appointed Mr Natarajan Chandrasekaran (DIN: 00121863) as Additional Director and Chairman of the Board with effect from January 17, 2017 and Mr Om Prakash Bhatt (DIN: 00548091) was appointed as Additional and Independent Director, for a tenure of 5 years on May 9, 2017, subject to approval of Members at the forth coming Annual General Meeting (AGM) of the Company. They shall hold office as Additional Directors upto the date of the AGM and are eligible for appointment as Directors.
As reported in the previous year, Mr Guenter Butschek was appointed as Chief Executive Officer and Managing Director of the Company for a term of 5 years w.e.f. February 15, 2016. The Members have vide Special Resolution passed at the AGM held on August 9, 2016 approved of the said appointment and payment of minimum remuneration in case of inadequacy of profits or no profits in any financial year. An application to the Central Government has been filed by the Company and the approval is awaited.
Re-appointment
In accordance with provisions of the Act and the Articles of Association of the Company, Dr Ralf Speth (DIN: 03318908) is liable to retire by rotation and is eligible for re-appointment.
The disclosures required pursuant to Regulation 36 of SEBI Listing Regulations are given in the Notice of the AGM, forming part of the Annual Report and disclosure pursuant to Schedule V, Part II, proviso of Section II B(iv)IV of the Act and Schedule V of the SEBI Listing Regulations is disclosed in the Corporate Governance Report, forming part of the Annual Report.
Attention of the Members is invited to the relevant item in the Notice of the AGM and the Explanatory Statement thereto.
Cessation
Mr Cyrus P Mistry, Non-Executive Director and Chairman, (DIN: 00010178) (resigned with effect from December 19, 2016. Based on the requisition of Tata Sons Limited, the shareholders at the Extraordinary General Meeting of the Company held on December 22, 2016 voted in favour of removal of Mr N N Wadia as an Independent Director (DIN: 00015731) Mr Wadia ceased to be a Director of the Company with effect from December 22, 2016.
Mr Subodh Bhargava, Independent Director, (DIN: 00035672) retired on March 29, 2017 on attaining the age of 75 years, in accordance with Governance Guidelines on Board Effectiveness.
The Board places on record their appreciation for the contribution of these Directors during their tenure.
Independent Directors
All Independent Directors of the Company have given declarations under Section 149(7) of the Act, that they meet the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16 of the SEBI Listing Regulations.
KEY MANAGERIAL PERSONNEL
The Key Managerial Personnel (KMPs) of the Company during Fiscal 2017 are:
- Mr Guenter Butschek, Chief Executive Officer and Managing Director
- Mr Ravindra Pisharody, Executive Director (Commercial Vehicles)
- Mr Satish Borwankar, Executive Director (Quality)
- Mr C Ramakrishnan, Group Chief Financial Officer
- Mr Hoshang Sethna, Company Secretary
During the year, there was no change in the KMPs of the Company.
GOVERNANCE GUIDELINES
During the year under review, the Company adhered to the Governance Guidelines on Board Effectiveness. The Governance Guidelines cover aspects related to composition and role of the Board, Chairman and Directors, Board diversity, definition of independence, Director term, retirement age and Committees of the Board. It also covers aspects relating to nomination, appointment, induction and development of Directors, Director remuneration, Subsidiary oversight, Code of Conduct, Board Effectiveness Review and Mandates of Board Committees.
Selection and procedure for nomination and appointment of Directors
The NRC is responsible for developing competency requirements for the Board based on the industry and strategy of the Company. The Board composition analysis reflects in-depth understanding of the Company, including its strategies, environment, operations, financial condition and compliance requirements.
The NRC conducts a gap analysis to refresh the Board on a periodic basis, including each time a Director's appointment or re-appointment is required. The Committee is also responsible for reviewing and vetting the CVs of potential candidates vis-à-vis the required competencies, undertake a reference and due diligence and meeting potential candidates, prior to making recommendations of their nomination to the Board. At the time of appointment, specific requirements for the position, including expert knowledge expected, is communicated to the appointee.
Criteria for Determining Qualifications, Positive Attributes and Independence of a Director
The NRC has formulated the criteria for determining qualifications, positive attributes and independence of directors in terms of provisions of Section 178 (3) of the Act and Regulation 19 read along with Schedule II of SEBI Listing Regulations, which is annexed as Annexure - 3.
REMUNERATION POLICY
The Company has in place a Remuneration Policy for the Directors, Key Managerial Personnel and other employees, pursuant to the provisions of the Act and Regulation 19 of SEBI Listing Regulations, the same is annexed as Annexure - 4.
BOARD EVALUATION
The annual evaluation process of the Board of Directors ("Board"), Committees and individual Directors was carried out in the manner prescribed in the provisions of the Act, Guidance Note on Board Evaluation issued by Securities and Exchange Board of India on January 5, 2017 and as per the Corporate Governance requirements prescribed by SEBI Listing Regulations.
The performance of the Board, Committees and individual Directors was evaluated by the Board seeking inputs from all the Directors. The performance of the Committees was evaluated by the Board seeking inputs from the Committee Members. The "NRC" reviewed the performance of the individual Directors, a separate meeting of Independent Directors was also held to review the performance of Non-Independent Directors; performance of the Board as a whole and performance of the Chairperson of the Company, taking into account the views of Managing Director / Executive Directors and Non-Executive Directors. This was followed by a Board meeting that discussed the performance of the Board, its Committees and individual Directors.
The criteria for performance evaluation of the Board included aspects like Board composition and structure; effectiveness of Board processes, information and functioning, etc. The criteria for performance evaluation of Committees of the Board included aspects like composition and structure of the Committees, functioning of Committee meetings, contribution to decision of the Board, etc. The criteria for performance evaluation of the individual Directors included aspects on contribution to the Board and Committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, integrity etc. In addition, the Chairman was also evaluated on the key aspects of his role.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
The details of the Familiarisation Programme for Independent Directors with the Company in respect of their roles, rights, responsibilities in the Company, nature of the industry in which Company operates, business model of the Company and related matters are put up on the website of the Company at (URL:www.tatamotors.com/investors/pdf/familiarisation-programme-independent-directors.pdf).
VIGIL MECHANISM
The Company has adopted a Whistle Blower Policy establishing vigil mechanism, to provide a formal mechanism to the Directors and employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee. The policy of vigil mechanism is available on the Company's website at (URL: www.tatamotors.com/investors/pdf/whistle-blower-policy.pdf).
PARTICULARS OF EMPLOYEES
Disclosure pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to the Report as Annexure - 5.
The statement containing particulars of top 10 employees and the employees drawing remuneration in excess of limits prescribed under Section 197 (12) of the Act read with Rule 5 (2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in a seperate Annexure forming part of the Report. In terms of proviso to Section 136(1) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. The said statement is also open for inspection at the Registered Office of the Company. Any member interested in obtaining a copy of the same may write to the Company Secretary.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure - 6 of this Report in the format prescribed in the Companies (CSR Policy) Rules, 2014. The Policy is available on Company's web-site at (URL: www.tatamotors.com/investors/pdf/csr-policy-23july14.pdf).
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY THE COMPANY
The details of Loans, Guarantees or Investments made during Fiscal 2017 are given below:
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All contracts/ arrangements/ transactions entered by the Company during the year with related parties were on an arms' length basis, in the ordinary course of business and were in compliance with the applicable provisions of the Act and SEBI Listing Regulations. The prior approval of the Audit Committee was sought for all related party transactions. The Company has adopted a Policy on Related Party Transactions which even provides for the parameters to grant Omnibus Approval(s) by the Audit Committee and is available on the website at (URL:www.tatamotors.com/investors/pdf/rpt-policy.pdf).
A statement on related party transactions specifying the details of the transactions, pursuant to each omnibus approval granted, have been placed on a quarterly basis for review by the Audit Committee.
During the Fiscal 2017, there have been no related party transactions of the Company with its Directors and Key Managerial Personnel or their relatives, its holding, subsidiary or associate companies as prescribed under Section 188 of the Act and SEBI Listing Regulations. Also there are no material transactions with any related party that are required to be disclosed under Form AOC-2.
AUDIT
Statutory Audit
In the 69th Annual General Meeting held on July 31, 2014, M/s. Deloitte Haskins & Sells LLP, (DHS), Chartered Accountants (ICAI Firm Registration No. 117366W/W-100018) was re-appointed as Statutory Auditors of the Company for a tenure of 3 year, subject to ratification of their appointment by Members at every subsequent AGM. DHS tenure of 3 year as Statutory Auditors concludes at this ensuing AGM.
The report of the Statutory Auditors is enclosed to this Report and contains no qualification, reservation or adverse remark. The observations made in the Auditors' Report are self-explanatory and therefore do not call for any further comments.
The Board of Director of the Company has on the recommendation of the Audit Committee and a per Section 139 of the Act it is proposed to appoint M/s B S R & Co. LLP, Chartered Accountants (B S R LLP) (ICAI Firm No. 101248W/W – 100022) for a tenure of 5 year, to hold office from the conclusion of the ensuing AGM till the conclusion of the 78th AGM of the Company to be held in the year 2022, subject to ratification of their appointment at every subsequent AGM, at such remuneration as approved by the Members at this AGM. Further, B S R LLP have under Section 139(1) of the Act and the Rules framed thereunder, furnished a certificate of their eligibility and consent for appointment.
The Board commend to seek consent of its Members on appointment of BSR LLP as Statutory Auditors for tenure of 5 year, to examine and audit the accounts of the Company during the said period.
Cost Audit
As per Section 148 of the Act, the Company is required to have the audit of its cost records conducted by a Cost Accountant in Practice. The Board of Directors of the Company has on the recommendation of the Audit Committee, approved the appointment of M/s Mani & Co., a firm of Cost Accountants in Practice (Registration No.000004) as the Cost Auditors of the Company to conduct cost audits pertaining to relevant products prescribed under the Companies (Cost Records and Audit) Rules, 2014 for the year ending March 31, 2018. The Board of Director on recommendation of the Audit Committee approved remuneration of Rs. 5 lakhs plus out of pocket expenses, subject to ratification of their remuneration by the Members at the forthcoming AGM.
M/s Mani & Co. have, under Section 139(1) of the Act and the Rules framed thereunder furnished a certificate of their eligibility and consent for appointment.
M/s Mani & Co., have vast experience in the field of cost audit and have conducted the audit of the cost records of the Company for the past several years under the provisions of the erstwhile Companies Act, 1956.
Secretarial Audit
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors on recommendation of the Audit Committee appointed M/s Parikh & Associates, a firm of Company Secretaries in Practice to conduct the Secretarial Audit of the Company for the year ended March 31, 2017. The Report of the Secretarial Audit is annexed herewith as Annexure- 7.
The Board provides clarification on Auditor's observation(s) contained in the Report:
- the Company has provided adequate responses on queries / observations raised by the Central Government and their approval is awaited.
- As at March 31, 2017, NRC had recommended to the Board appointment of Mr Om Prakash Bhatt, as Additional and Independent Director. The Board considered the recommendation of NRC and appointed Mr O P Bhatt as Additional and Independent Director on May 9, 2017.
DIRECTORS' RESPONSIBILITY STATEMENT
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, cost, external agencies and secretarial auditors, including audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company's internal financial controls were adequate and effective during Fiscal 2017.
Accordingly, pursuant to Section 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability, confirm that:
- in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;
- they have, selected such accounting policies and have applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for that period;
- they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
- they have prepared the annual accounts on a going concern basis;
- they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and were operating effectively*; and
- they have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.
*please refer to the Section "Internal Control Systems and their Adequacy in the Management Discussion and Analysis".
ACKNOWLEDGEMENT
The Directors wish to convey their appreciation to all of the Company's employees for their enormous personal efforts as well as their collective contribution to the Company's performance. The Directors would also like to thank the employee unions, shareholders, customers, dealers, suppliers, bankers, Government and all the other business associates for the continuous support given by them to the Company and their confidence in its management.
On behalf of the Board of Directors
N CHANDRASEKARAN
Chairman
(DIN: 00121863)
Mumbai,
May 23, 2017