Board's Report

  2. Statutory Reports
  3. Board's Report

SUBSIDIARY, JOINT VENTURES AND ASSOCIATE COMPANIES

The Company has 96 subsidiaries (14 direct and 82 indirect) as at March 31, 2018, as disclosed in the accounts.

The Scheme of Amalgamation between one of the direct subsidiaries viz TML Drivelines Limited with the Company was approved by the Hon’ble National Company Law Tribunal and a certified true copy was received on April 26, 2018 and the said scheme was operative from April 30, 2018. The financial statements of this subsidiary was merged with the standalone financial statements of the Company from the Appointed Date with effect from April 1, 2017.

During Fiscal 2018, the following changes have taken place in subsidiary / associates / joint venture companies:

Subsidiary companies formed/acquired:

  • Jaguar Land Rover Ireland (Services) Limited was incorporated with effect from July 28, 2017.
  • Jaguar Land Rover Taiwan Company Limited was incorporated with effect from November 17, 2017.
  • Servicios GDV Mexico S.A. de C.V. was incorporated on October 2, 2017.
  • GDV Imports Mexico SAPI de C.V. was acquired on October 2, 2017.
  • Tata Technologies Europe Limited incorporated 100% stake in Escenda Engineering AB with effect from May 1, 2017.

Companies ceasing to be subsidiary companies / ceased operations:

  • Cambric UK Limited dissolved with effect from May 23, 2017.
  • Midwest Managed Services Inc. merged into Tata Technologies Inc with effect from February 28, 2018.
  • TML Drivelines Limited merged with the Company and the Scheme of Merger and Arrangement was operative from April 30, 2018.

Name changes

  • Tata Motors Finance Limited was renamed TMF Holdings Limited with effect from June 17, 2017.
  • Sheba Properties Limited was renamed Tata Motors Finance Limited with effect from June 30, 2017.
  • Servicios GDV Mexico S.A. de C.V. was renamed Jaguar Land Rover Servicios México, S.A. de C.V. with effect from December 11, 2017.
  • GDV Imports Mexico SAPI de C.V. was renamed Jaguar Land Rover México, S.A.P.I. de C.V. with effect from December 11, 2017.
  • Cambric Manufacturing Technologies (Shanghai) Co. Limited was renamed Tata Manufacturing Technologies (Shanghai) Co. Limited with effect from April 1, 2017.

Re-structuring

Shareholding in Tata Motors (Thailand) Limited increased from 95.28% to 95.49% with effect from June 6, 2017. Shareholding in Spark44 (JV) Limited increased from 50% to 50.50% with effect from August 31, 2017, making it and its 14 downstream companies indirect subsidiaries of the Company. 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, 2018, the Company has 9 associate companies, 4 joint ventures and 2 joint operations.

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: http://investors.tatamotors.com/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.

DIRECTORS

Appointment/Re-appointment

The Company has on the recommendation of NRC and in accordance with provisions of the Act and SEBI Listing Regulations, appointed Ms Hanne Sorensen (DIN: 08035439) as Additional and Independent Director on the Board for a tenure of 5 years with effect from January 03, 2018, subject to approval of Members at the Annual General Meeting (AGM). She shall hold office as Additional Director upto the date of the forthcoming AGM and is eligible for appointment as a Director.

As reported in the previous year, Mr Om Prakash Bhatt (DIN: 00548091) was appointed as Additional and Independent Director on the Board for a tenure of 5 years with effect from May 9, 2017, pursuant to Section 161 of the Act, read along with Rules framed thereunder, the Members had vide Ordinary Resolution approved at the AGM held on August 22, 2017, the appointment of Mr Bhatt as an Independent Director.

In accordance with provisions of the Act and the Articles of Association of the Company, Mr Guenter Butschek, Chief Executive Officer and Managing Director (DIN: 07427375) is liable to retire by rotation and is eligible for re-appointment.

The disclosures required pursuant to Regulation 36 of the SEBI Listing Regulations, Clause 1.2.5 of the Secretarial Standard are given in the Notice of AGM, forming part of the Annual Report and Schedule V of the SEBI Listing Regulations are given in the Corporate Governance Report, forming part of the Annual Report. Attention of the Members is also invited to the relevant items in the Notice of the AGM.

Cessation

Mr Ravindra Pisharody (DIN: 01875848) vide letter dated June 5, 2017, tendered his resignation as Executive Director (Commercial Vehicles) of the Company, but continued to serve his term of office for another 6 months in lieu of his contractual severance notice period, ensuring seamless transition in the business operations of the Company. Mr Pisharody concluded his contractual severance notice period on September 30, 2017.

Dr Raghunath Mashelkar, Independent Director (DIN: 00074119), on attaining the age of 75 years retired on December 31, 2017, in accordance with Governance Guidelines on Board Effectiveness.

The Board of Directors places on record their appreciation for contributions made by Mr Pisharody and Dr Mashelkar 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 2018 are:

  • Mr Guenter Butschek, Chief Executive Officer and Managing Director.
  • Mr Satish Borwankar, Executive Director and Chief Operating Officer.
  • Mr Pathamadai Balachandran Balaji, Group Chief Financial Officer (with effect from November 14, 2017)
  • Mr Hoshang Sethna, Company Secretary
  • Mr. Ravindra Pisharody, Executive Director – Commercial Vehicles (upto September 30, 2017)
  • Mr C Ramakrishnan, Group Chief Financial Officer (upto September 30, 2017)

During the year, Mr C Ramakrishnan concluded his tenure as a Group Chief Financial Officer and KMP with effect from September 30, 2017 and the Board of Directors, pursuant to the said cessation, approved appointment of Mr P.B. Balaji as Group Chief Financial Officer and KMP of the Company with effect from November 14, 2017.

CORPORATE GOVERNANCE

At the Company, we ensure that we evolve and follow the corporate governance guidelines and best practices sincerely, to boost long-term shareholder value and to respect minority rights. The Company considers it an inherent responsibility to disclose timely and accurate information regarding its operations and performance, as well as the leadership and governance of the Company.

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, number of Board meetings held, Committee of the Board and other details of relevance forms part of this Report.

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-àvis 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.

Significant findings of the Fiscal 2018 Board effectiveness evaluation included providing regular updates to the Board on projects undertaken to support cost and productivity improvements along with a monthly information report thereon, inclusion of educative topics in the agenda on technology, governance, regulations whichcould impact business and continuing efforts to balance the Board agenda with focus on budgets, strategic issues. Critical suggestions to improve the Company’s business included, augmenting the succession pipeline, harmonizing interactions and integrating synergies that could be derived between the Company and JLR Group. The Board also monitors action taken on the findings and suggestions made in the process of the Board evaluation.

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: http://investors.tatamotors.com/pdf/familiarisation-programmeindependent-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 the 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 website at (URL: www.tatamotors.com/investors/pdf/csr-policy-23july14.pdf).

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 arm’s 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: http://investors.tatamotors.com/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 2018, there were 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 and therefore, the Company is not required to report in the prescribed Form AOC-2 and does not form part of the Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY THE COMPANY

The details of Loans, Guarantees or Investments made during Fiscal 2018 are given below:

Note: During Fiscal 2018, the Company has not given guarantee to any of its subsidiaries, joint ventures and associates companies.

Note: During Fiscal 2018, the Company has not given guarantee to any of its subsidiaries, joint ventures and associates companies.

AUDIT

Statutory Audit

In the 72nd Annual General Meeting (AGM) held on August 22, 2017 M/s B S R & Co. LLP, Chartered Accountants (B S R LLP) (ICAI Firm No. 101248W/W–100022) was appointed as Statutory Auditors of the Company for a tenure of 5 years subject to ratification of their appointment at every subsequent AGM. The Ministry of Corporate Affairs has vide notification dated May 7, 2018 obliterated the requirement of seeking Member’s ratification at every AGM on appointment of Statutory Auditor during their tenure of 5 years. B S R LLP have under Section 139(1) of the Act and the Rules framed thereunder furnished a certificate of their eligibility.

The report of the Statutory Auditor forming part of the Annual Report, does not contain any qualification, reservation, adverse remark or disclaimer. The observations made in the Auditor’s Report are selfexplanatory and therefore do not call for any further comments.

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. 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, 2019. The Board of Director on recommendation of the Audit Committee approved remuneration of `5 lakhs plus applicable taxes and 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.

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 Director appointed M/s Parikh & Associates, a firm of Company Secretaries in Practice to conduct the Secretarial Audit of the Company for year ended March 31, 2018. The Report of the Secretarial Audit is annexed herewith as Annexure- 7.

The Secretarial Audit Report does not contain any qualification, reservations, adverse remarks and disclaimer.

The Securities and Exchange Board of India (SEBI) have vide Order dated March 6, 2018 issued directions for the Company to conduct an internal inquiry within 3 months into the leakage of information relating to its financial results for the quarter ended December 2015, take appropriate actions against those responsible and to submit its report witin 7 days thereafter. The Company has appointed an expert to conduct an independent investigation to submit its report to the Audit Committee of the Company which will be submitted to SEBI in a timely manner.

The Company has paid a penalty of Rs.5.60 lakhs each levied by the BSE Limited and the National Stock Exchange of India Limited in respect of delay in filing of listing application for 266 Ordinary Share and 80 ‘A’ Ordinary Shares allotted out of shares held in abeyance on settlement of an inter-se dispute amongst the shareholders. This penalty has been paid ‘under protest’ subsequent to various representation made by the Company.

SECRETARIAL STANDARDS

The Institute of Company Secretaries of India had revised the Secretarial Standards on Meetings of the Board of Directors (SS-1) and Secretarial Standards on General Meetings (SS-2) with effect from October 1, 2017. The Company has devised proper systems to ensure compliance with its provisions and is in compliance with the same.

DIVIDEND DISTRIBUTION POLICY

Pursuant to SEBI’s notification dated July 8, 2016, the Board of Directors of the Company have formulated a Dividend Distribution Policy (“the policy”). The detailed policy is annexed to this Report as Annexure-8 and is also available on our website (URL: http://investors.tatamotors.com/pdf/dividenddistribution-policy.pdf )

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 2018.

Accordingly, pursuant to sub-section 3(c) ans 5 Section 134 of the Act, the Board of Directors, to the best of their knowledge and ability, confirm:

  1. that in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;
  2. that we 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;
  3. that 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;
  4. that the annual accounts have been prepared on a going concern basis;
  5. that proper internal financial controls were laid down and that such internal financial controls are adequate and were operating effectively*; and
  6. that 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 other business associates for their continuous support to the Company and their confidence in its management.

On behalf of the Board of Directors
N CHANDRASEKARAN
Chairman
(DIN: 00121863)

Mumbai,
May 23, 2018