Board's Report

  2. Statutory Reports
  3. Board's Report

During FY 2018-19, JLR issued €500 million senior notes due in 2026 at a coupon of 4.50% per annum. JLR also raised US$ 1,000 million through syndicated loan. The proceeds were for general corporate purposes, including support for JLR’s ongoing growth and capital spending requirements.

At TMFHL and its subsidiaries, the borrowings as on March 31, 2019 stood at Rs.37,814 crores (as at March 31, 2018: Rs.27,470 crores). Cash and bank balances and investments in mutual funds stood at Rs.2,119 crores (as at March 31, 2018: Rs.1,206 crores). TMFHL and its subsidiaries, raised Rs.2,066 crores by issuing NCDs. Bank borrowings through secured term loans continued to be a major source of funds for long-term borrowing and raised Rs.6,306 crores during FY 2018-19. TMFL has also done securitization of Rs.3,862 crores in FY 2018-19.

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.

Credit Rating : During FY 2018-19, the Company’s rating for foreign currency borrowings was downgraded to “Ba2” / Negative by Moody’s and to “B+” / Watch Negative by Standard & Poor’s. For borrowings in the local currency, Non-Convertible debentures and long term bank facilities i.e. (Buyers Credit and Revolving Credit Facility), the ratings were downgraded by CARE to “AA” / Stable and the ratings were retained with a change in outlook by CRISIL at “AA / Negative and by ICRA at “AA / Negative”. During the year, JLR’s rating was downgraded by Moody’s at “Ba3” / Negative and by Standard & Poor’s at “B+” / Watch Negative on account of weak performance and challenging external environment at JLR.

During FY 2018-19, for TMFHL and its subsidiaries, CRISIL and ICRA has maintained its rating and changed its outlook on longterm debt instruments and long term bank facilities to “AA / Negative”. Further CARE has changed the ratings on long term debt and long term bank facilities to CARE AA / Stable.

Material Changes and Commitment Affecting the Financial Position

There are no material changes affecting the financial position of the Company subsequent to the close of the FY 2018-19 till the date of this report.

CONSOLIDATED FINANCIAL STATEMENT

The consolidated financial statement of the Company and its subsidiaries for FY 2018-19 are prepared in compliance with the applicable provisions of the Act and as stipulated under Regulation 33 of the SEBI Listing Regulations as well as in accordance with the Indian Accounting Standards notified under the Companies (Indian Accounting Standards) Rules, 2015. The audited consolidated financial statement (condensed) together with the Auditor’s Report thereon form part of this Annual Report. Pursuant to Section 129(3) of the Act, a statement containing the salient features of the Financial Statement of the subsidiary companies is attached to the Financial Statement in Form AOC-1. Pursuant to the provisions of Section 136 of the Act, the Company will make available the said financial statement of the subsidiary companies upon a request by any member of the Company or its subsidiary companies. These financial statements of the Company and the subsidiary companies will also be kept open for inspection by any member at the Registered Office of the Company and would be available on the Company’s website URL: https://www.tatamotors.com/ investors/annual-reports/.

SUBSIDIARY, JOINT ARRANGEMENTS AND ASSOCIATE COMPANIES

The Company has 99 subsidiaries (12 direct and 87 indirect), 10 associate companies, 3 joint ventures and 2 joint operations as at March 31, 2019, as disclosed in the accounts.

Name of the companies which have become subsidiaries, associates or joint ventures during the year:


Subsidiaries

  • Spark44 Taiwan Limited (Taiwan) was incorporated with effect from May 7, 2018.
  • Spark44 Colombia S.A.S. (Colombia) was incorporated with effect from May 10, 2018.
  • Jaguar Land Rover Classic USA LLC was incorporated with effect from June 1, 2018 (dormant).
  • Jaguar Land Rover Hungary KFT was incorporated with effect from July 30, 2018.
  • Jaguar Land Rover Classic Deutschland GmbH was incorporated with effect from August 10, 2018.
  • InMotion Ventures 4 Limited was incorporated with effect from January 4, 2019.

Associates

  • Tata Toyo Radiator Limited was converted from a joint venture to subsidiary company with effect from July 1, 2018.
  • Loginomic Tech Solutions Private Limited ('TruckEasy') stake acquired with effect from July 10, 2018.
  • Automotive Skill Training Pvt. Ltd. converted into Private Limited Company from Section 25 Company with effect from December 10, 2018 (formerly Automotive Skills Training Foundation)
  • TitanX Engine Cooling, Poland incorporated with effect from April 25, 2018.

Name of the companies which have ceased to be subsidiaries, associates or joint ventures during the year:

Subsidiaries

  • TML Drivelines Limited merged with the Company with effect from April 30, 2018 and consequently Authorised Share Capital of the Company increased from Rs.3,900 crores to Rs.4,000 crores
  • The Jaguar Collection Limited (dormant) dissolved with effect from June 19, 2018.
  • Entire shareholding in TAL Manufacturing Solutions Limited ('TAL') sold to Tata Advanced Systems Limited with effect from March 29, 2019 after acquisition of the non-aerospace business from TAL.

Associates

  • Serviplem S.A.U. liquidated with effect from February 6, 2019

Restructuring

  • Shareholding in Tata Technologies Limited ('TTL') decreased from 72.29% to 72.28% on account of further allotment of 6,188 shares with effect from April 20, 2018.
  • Shareholding in Tata Motors (Thailand) Limited increased from 95.49% to 95.81% on account of further allotment of 2,500,000 shares to TML Holdings Pte. Ltd. with effect from April 2, 2018 and from 95.81% to 95.87% on account of further allotment of 548,000 shares to TML Holdings Pte. Ltd. with effect from November 22, 2018.
  • Shareholding in Trilix S.r.l. increased from 80% to 100% with effect from December 6, 2018.

Transfer of Defense Undertaking to Tata Advanced Systems Limited: The Company proposes to transfer the value added segment of Defence vehicles business and specialized Defence projects (excluding FICV) ('Defense Undertaking') pursuant to a Scheme of Arrangement as a going concern on a slump sale basis to Tata Advanced Systems Limited ('TASL'), a wholly owned subsidiary of Tata Sons Private Limited, at an enterprise value of Rs.209.27 crores arrived at using the Net Asset Value Method. The total consideration receivable from the said transfer has been negotiated for an upfront consideration of Rs.100 crores (to be adjusted for design and development spent and changes in working capital) plus a future consideration of 3% of the revenue generated from identified Specialized Defence Projects for upto 15 years from the financial year ended FY 2020 subject to a maximum of Rs.1,750 crores. Your Company has received No Objection from the Stock Exchanges, SEBI and the Competition Commission of India for the said transfer and requisite approvals from the Company’s shareholders, National Company Law Tribunal ('NCLT'), the Ministry of Defence and other statutory authorities are under process

The Company has adopted a Policy for determining Material Subsidiaries which has been amended during the year in line with Regulation 16 of the SEBI Listing Regulations. The Policy, as approved by the Board, is available on the Company’s website URL: https://investors.tatamotors.com/pdf/material.pdf.

Other than the above, there has been no material change in the nature of the business of the subsidiary companies.

RISK MANAGEMENT

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 objective. This is facilitated by internal audit. The Business risk is managed through crossfunctional involvement and communication across businesses. The result of the risk assessment are presented to the senior management. The Risk Management Committee reviews business risk areas covering the top operational, financial, strategic and regulatory risks.

INTERNAL FINANCIAL CONTROL SYSTEMS AND ADEQUACY

The Board has adopted policies and procedures for governance of orderly and efficient conduct of its business, including adherence to the Company’s policies, safeguarding its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures. The Company’s internal control systems commensurate with the nature of its business, the size and complexity of its operations.

The Company has an independent in-house Internal Audit ('IA') department that functionally reports to the Chairman of the Audit Committee, thereby maintaining its objectivity. Remediation of deficiencies by the IA department has resulted in a robust framework for internal controls. These are detailed in the Management Discussion and Analysis Report, which forms part of this Report.

HUMAN RESOURCES

The Tata Motors Group employed 82,797 permanent employees as of FY 2018-19 (FY 2017-18: 81,090 employees). The Company employed 27,572 permanent employees as of FY 2018-19 (FY 2017-18: 24,989 employees).

The Company has labour unions for operative / worker grade employees at all its plants across India, except the Dharwad Plant. The Company has generally enjoyed cordial relations with its employees and unions at its factories and offices and have received unions’ support in the Company’s implementation of reforms that impact safety, quality, cost and productivity improvements across all locations. Employee wages are being paid in accordance with wage agreements that have varying terms (typically three to four years) at different locations.

In line with the Company’s philosophy of continuously harnessing employee potential and developing them to become more capable professionals and future leaders, in FY 2018-19 we have partnered with Symbiosis International (Deemed University) and launched a 2 year Management Program ('EPGDBM') with curriculum around operations, finance, people management, supply chain & marketing and 90 employees joined in the 1st batch. To enable comprehensive development of white collar workforce, the Company has created 4 Learning Academies – Commercial Excellence, Management Development, Operations Excellence, and Product Leadership. During FY 2018-19, 8443 permanent white collar employees were trained under these academies on various functional and managerial aspects. To develop its blue collar workforce, the Company trained 11,721 employees in technician’s skill development, quality management and productivity improvement.

Inclusion and Diversity

The Company believes that with diversity and inclusion at workplace, it can leverage the multiplicity of skillsets in all its operations. The Company has established policies and a supportive work environment, especially for its women employees and for employees from different backgrounds, age-groups and ethnicities as well.

The Company also endorses the initiative from Tata Group – Second Career Initiative Program ('SCIP') to offer an opportunity to returning mothers who would like to restart their professional careers. ‘GearUp’ initiative for mid-level women managers is designed to provide management development inputs focussed on leadership skills to make them ready as future leaders. Company’s Human Resource ('HR') policy framework, including maternity leave policy, sabbatical and half-day-half-pay policy and flexible timings, helps employees to establish a work-life balance. The company employed 3.5% permanent women employees as of FY 2018-19. (FY 2017-18: 3.3%).

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. Internal Complaints Committee ('ICC') is in place for all works and offices of the Company to redress complaints received regarding sexual harassment. 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

During FY 2018-19, the Company had received 11 complaints on sexual harassments, 10 of which have been substantiated and appropriate actions taken. The remaining 1 complaint was received during mid March and is being investigated. There were no complaints pending for more than 90 days. The Company organized 103 workshops or awareness programs against sexual harassment.

Tata Motors Limited Employees Stock Option Scheme

In order to ring fence and incentivize key talent, for driving long term objectives of the Company and ensuring that employee payoffs match the long gestation period of certain key initiatives whilst simultaneously fostering ownership behavior and collaboration amongst employees, the Tata Motors Limited Employees Stock Option Scheme 2018 ('TML ESOP Scheme 2018' / 'the Scheme') was implemented during the year. Based on the approval of the shareholders at the Annual General Meeting held on August 3, 2018, aggregate 78,12,427 number of Options were granted to the Eligible Employees during the year under the Scheme.

During the financial year 2018-19, there has been no change in the Scheme. There were no ESOP that vested or any shares issued on vesting during the year. The Scheme is in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014. Appropriate disclosures prescribed under the said Regulations with regard to the Scheme are available on the Company's website URL: https://www.tatamotors.com/ investors/ESOP/

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 - 1.

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 this 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. None of the employees listed in the said Annexure are related to any Director of the Company.

BUSINESS RESPONSIBILITY REPORT

Pursuant to Regulation 34(2)(f) of the SEBI Listing Regulations, the Business Responsibility Report (BRR) on initiatives taken from an environmental, social and governance perspective, in the prescribed format is available as a separate section of the Annual Report and is also available on the Company’s website URL: https:// www.tatamotors.com/investors/business-responsibility-report/

SAFETY & HEALTH – PERFORMANCE & INITIATIVES

Tata Motors has been in a Safety Excellence journey since 7 years. With very high level engagement in Safety, the Organization has taken huge strides to improve Safety Organization Structure and build strong safety systems with a vision of achieving 'Zero Injury at Workplace'.

For FY 2018-19 Tata Motors, including its subsidiaries, achieved the Safety Performance Target with Total Recordable Case Frequency Rate ('TRCFR') being 0.80 against the target of 1.01. For Indian Operations also, Tata Motors Safety Performance was well within targets with Total Recordable Case Frequency Rate ('TRCFR') being 0.60 against the target of 0.89. Unfortunately 3 fatalities were recorded - one each at a manufacturing location, workshop ('DTC') and a road incident. Robust incident investigation has been carried out for all 3 incidents and horizontal deployment of recommendations has been completed.