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Tata Investment Corporation Ltd.

BSE: 501301 Sector: Financials
NSE: TATAINVEST ISIN Code: INE672A01018
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OPEN 838.05
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VOLUME 3697
52-Week high 954.60
52-Week low 544.00
P/E 23.16
Mkt Cap.(Rs cr) 4,620
Buy Price 838.40
Buy Qty 484.00
Sell Price 0.00
Sell Qty 0.00
OPEN 838.05
CLOSE 836.95
VOLUME 3697
52-Week high 954.60
52-Week low 544.00
P/E 23.16
Mkt Cap.(Rs cr) 4,620
Buy Price 838.40
Buy Qty 484.00
Sell Price 0.00
Sell Qty 0.00

Tata Investment Corporation Ltd. (TATAINVEST) - Director Report

Company director report

TO

THE MEMBERS

The Directors present their Eightieth Annual Report with the Audited FinancialStatements for the year ended 31st March 2017.

1. FINANCIAL RESULTS :

Standalone Consolidated
Previous Year Previous Year
(Rs. in crores) (Rs. in crores) (Rs. in crores) (Rs. in crores)
Dividend Interest & Other Income 123.56 137.02 121.96 130.01
Profit on Sale of long term Investments (net) 147.81 115.05 147.81 117.69
Total Revenue 271.37 252.07 269.77 247.70
Profit before tax 240.08 234.22 237.17 228.91
Less: Provision for tax 37.70 31.61 38.35 31.66
Profit after tax 202.38 202.61 198.82 197.25
Share of Profits of Associates - - 1.65 (2.87)
Minority Interest - - (0.07) (0.02)
Profit for the year 202.38 202.61 200.40 194.36
Balance brought forward from the previous year 335.21 285.85 410.20 369.17
The Directors have made the following appropriations -
Dividend on Ordinary Shares (Refer para 3) - 93.66 - 93.66
Tax on Dividend (Refer para 3) - 19.07 - 19.07
Statutory Reserve 40.48 40.52 41.05 40.67
40.48 153.25 41.05 153.40
Surplus as per Statement of Profit and Loss 497.11 335.21 569.50 410.20
Earnings Per Share
Basic and Diluted (Rs.) 36.73 36.77 36.37 35.28

2. OPERATIONS :

The Standalone Operating Income of the Company is derived from a mix of dividend andinterest income supplemented by Profit on sale of investments. The Profit fromsale of long term investments for the year ended 31st March 2017 is Rs. 147.81 crores ascompared to Rs. 115.05 crores for the previous year. The standalone Profit before tax forthe year under review is Rs. 240.08 crores as against Rs. 234.22 crores in the previousyear whereas the Profit after tax for the year under review stands at Rs. 202.38 asagainst Rs. 202.61 crores as on 31st March 2016. The Consolidated Profit for the year amountedto Rs. 200.40 crores as compared to Rs. 194.36 crores in the previous year.

Shareholders may note that the dividend earned by the company during the financial year2015-16 includes interim dividends received in the last quarter from its investeecompanies which have not further proposed any final dividend at the time ofdeclaring their annual results in the financial year 2016-17. This has impacted thedividend income earned for the current year which stands at Rs. 72.35 crores ascompared Rs. 86.44 crores in the previous year.

The basic and diluted earnings per share (EPS) computed in accordance with the‘Accounting Standard 20' is Rs. 36.73 per share as at 31st March 2017 against Rs.36.77 per share as at 31st March 2016.

The total number of companies held in the equity / bond portfolio of the Company standsat 111 as on 31st March 2017 out of which 87 are Quoted and 24 are Unquoted companies.

3. DIVIDEND :

The Directors are pleased to recommend a dividend of Rs. 18 per share (180%) on thepaid up capital of Rs. 55.10 crores [previous year - Interim Dividend Rs. 17 per share(170%)].

In terms of revised Accounting Standard (AS) 4 ‘Contingencies and Events occurringafter Balance Sheet date' as notified by the Ministry of Corporate Affairs throughamendment to Companies (Accounting Standard) Amendment Rules 2016 the Company hasnot appropriated proposed dividend (including tax) from the Surplus as per Statement ofProfit and Loss for the year ended 31st March 2017. The recommended dividend will beaccounted for when approved by the shareholders.

4. VALUE CREATED :

Shareholders will recall that for the first time in the Annual Report of 31st March2015 the Company had shared the "Value Created" over a 15 year period.The table below analyses the performance of the Company's portfolio rolling overthe period to the 15 year prior to the closing of the current financial year 31st March2017. "Value Created" is a measure which evaluates the wealth created netof the capital invested by the shareholders. "Value Created" is the RealisableValue of Investments as on 31st March to which is added Net Current Assets and Fixedassets while any contribution from shareholders is reduced (i.e. equity and sharepremium).

The following table shows the Value Created over 15 year period and comparative returnsto the Benchmark.

Year End 31st March Realisable Value of Investments (A) Net Current Assets (B) Shareholder Funds (Equity + Share Premium) (C) Value Created (A)+(B)-(C) BSE 200
(Rs. crs) (Rs. crs) (Rs. crs) (Rs. crs)
2002 499.82 37.80 68.94 468.68 394
2017 8418.64 24.52 806.81 7636.35 3992
Nos of times (X) 16.29 10.13
CAGR 20.46% 16.69%

[ Note : The realisable value of investments as on 31st March 2002includes value of unquoted investments at cost. ]

Shareholders will be pleased to note that the "Value Created" has recorded aCompounded Annual Growth rate (CAGR) of 20.46% vis--vis the BSE 200 CAGR of 16.69% for the 15 year period 31st March 2002 to 31st March 2017. It is heartening that thisperformance has been achieved while the management has endeavoured to reduce the risk tothe portfolio with a prudent allocation to unlisted equity and fixed income securities.The Company has consistently declared dividend which over the last 15 years has aggregatedRs. 1044 crores. Thus if the value of dividend distributed were to be added to ValueCreated the multiplier and returns of the portfolio would stand enhanced to the extentthe value was distributed to the shareholders.

5. MANAGEMENT DISCUSSION & ANALYSIS :

A summarised position of the Company's portfolio of investments is given below:-

As on 31.03.2017 As on 31.03.2016
(Rs. in crores) (Rs. in crores)
QUOTED INVESTMENTS (Non-Current)
Net Book value 1993.56 1824.32
Market value 7181.38 5527.13
UNQUOTED INVESTMENTS (Non-Current)
Net Book value 426.53 373.03
Estimated value (please see para below) 1237.26 1130.45
TOTAL BOOK VALUE
Net Book value of all investments 2420.09 2197.35
TOTAL MARKET VALUE
Total market value of quoted investments and estimated value of unquoted investments 8418.64 6657.58
BANK DEPOSITS AND INTERCORPORATE DEPOSITS 10.00 20.00
TOTAL NUMBER OF COMPANIES 111 110
Net Asset Value (NAV) - Per Share
Before tax (Rs.) 1530 1215
After tax (Rs.) 1300 1045

The NAV is computed on the basis of the market value of quoted investments NAVs ofunquoted mutual funds most of the other equity investments in unlisted companiestaken on the basis of the last available independent valuations based on the balancesheets available as at 31st March 2017 and the remaining relatively small balance ofunquoted investments taken at respective book values.

The Directors confirm that all the investments classified as non-current investments /trade investments as per the Schedule III of the Companies Act 2013("Act") have been made with the intent to hold for long term appreciation toenhance the income from dividends and are not held for trade.

The Company continues to remain invested in leaders in sectors which we believe havepotential to remain value accretive over the long term. The Company continues toinvest for the long term while availing opportunities to realize gains endeavouringto maintain its policy of consistent dividend distribution.

The Company invests in Tata and Non-Tata companies both listed and unlisted thoughinvestments in Tata companies constitute a larger portion and may be considered of alonger term and strategic in nature.

The Company endeavours to evaluate opportunities considering the macro economicconditions both globally and domestically.

Global Events Markets and Risks

The year 2016 was undoubtedly a year of momentous referendums. In perhaps the worlds'most mature democracies namely UK and USA the electorate surprised the world withtheir vote for Brexit and for President Trump respectively. Both referendums have givenmandates which may change the contours of global trade relations in the developed worldin the years to come. Mr. Trump in the first few days of his Presidency vide an executiveorder revoked US's participation in the Trans-Pacific Partnership (TPP) deal which hadtaken more than seven years to negotiate and was considered the largest regional tradedeal in history and a cornerstone of the Obama administration. Mr. Trump promises atougher line with China. In all the odds are that President Trump's foreign policydecisions will dominate the news in 2017 and possibly redefine America's relations withthe world.

North Korea continues to forge ahead with acts of aggression. In January 2016 itconducted its fourth nuclear test since 2006 and followed that up with a series ofballistic missile tests. Then on September 9 2016 it conducted its fifth nucleartest producing an explosive yield of 10 kilotons the highest recorded so far. NorthKorea can already strike Japan and South Korea. It perhaps now commands the highest ratingin any statement of geopolitical risk.

While the news media analysed these events with trepidation and analysts flagged therisks and uncertainties the S&P 500 appreciated 9.5% for the calendar year followedby a further 5.5% since the quarter ended 31st March 2017. The bull market in the US isnow eight years in build up after the crash during the financial crisis of 2009. Theerstwhile peak of the S&P 500 in 2007 of 1526 was quietly breached on Jan 1 2013 andhas since then besides a short correction during a few months in 2015 had a relentlessupward march clocking a new peak at 2399 by 8th May 2017.

The US seems to be the driver of global equity markets. Undoubtedly the world'slargest basket of wealth is managed in the US and therefore allocations are drivenby the views of Fund Managers in the US. A vibrant US market motivates fundmanagers to allocate larger funds to other markets in search of new opportunities and as ameans of diversification. Equity investors look for growth and global marketcapitalisation has grown with substantial growth in GDP.

The following illustration shows how the gradient of Global GDP growth has becomesteeper since the beginning of the 21st century and has remained so for the lastfew years. This is remarkable given that universally all economies faced the shockof the global financial crisis in the first decade of the century itself and thereafterhad to revive in the aftermath of economic and financial uncertainty. Strange as itmay be the world GDP has continued to grow admirably in the last decade even after thefinancial crisis while economists and central bankers have remained perturbed with whatthey consider low rates of growth.

Going forward perhaps the biggest risk to equity markets are the extended valuationsin the US markets. The S&P 500 EPS over the last decade has remained in a narrow bandof 85 -110 whereas the value of the S&P has appreciated significantlyespecially in the last five years. The S&P EPS has fallen in the last three years asis seen in the following illustration. Further since 2010 US companies haveborrowed funds to do share buybacks which according to some research reportsaggregated $3.25 trillion for the S&P 500 companies and net of issuances has reducedthe number of shares issued by about 9.3%. Thus in essence if the number ofshares had remained the same the EPS would be lower by about 11% reflecting ahigher degrowth in this period of rampant exuberance.

In contrast in India the appreciation in the BSE 200 over the last decade has largelybeen supported by consistent growth in earnings albeit the growth has been lower in thelast few years. Macro economic parameters in India have also seen a sharpimprovement in the last three years with current account deficit fiscal deficits andinflation falling sharply.

The government embarked upon the most courageous reform measure of Demonetization inNov 2016. The people of India especially the poor and those in the rural areas showedincredible patience and forbearance. In the six months post December 2016 thesystem has come back to normal leaving a bonus in the hands of banks in the form ofadditional CASA. Lower withdrawals of funds as compared to the funds depositedaggregating a few hundred thousand cores has left substantial liquidity withbanks. Demonetization was the government's Trishul against corruption which may or maynot succeed but it definitely has changed the people's mindset to the use of alternatemeans of transacting.

India today has perhaps the largest "digital network access'' in the world. 910million Aadhar holders can beam money to each other using various Apps. In December30th 2016 India launched BHIM (Bharat Interface for Money) which is a digital paymentsplatform using UPI (Unified Payments Interface). Now payments can be made from UPIaccounts to non-UPI accounts and people can use QR codes for instant payments. Habits maytake a few years to change but the system using QR code is simple and ingenious. Paymentscan now also be made using mobile phones just using fingerprints and an Aadhaarnumber.

The Indian consumer over time will find using these platforms far easier than cash.Imagine a domestic employee in Mumbai whose family lives in a far away village cannow send his salary to his wife using his mobile with a touch of a button. She canuse these funds to buy vegetables pay children school fees etc. In some countries likeAfrica mobile wallets exceed the number of bank accounts and number of mobiletransactions exceed the number of inter-bank transactions. Every year the growth involume and value of such transactions may perhaps increase the multiplier effect of money.

Electronic banking systems will allow the poor to store and protect money digitally.Mr. Bill Gates in his 2015 annual letter said that "by 2030 2 billion peoplewho don't have a bank account today will be storing money and making payment withtheir phones." A billion Indians may be included in this count.

GST is now a reality it will be implemented from July 1 2017. GST may causedisruption in the first few months. Manufacturers and traders most likely will facea grueling period of reorientation in their working capital requirements and inventorymanagement. It seems enterprises and individuals have reconciled to the fact that forsometime capital requirements will be substantially higher given that GST credits may bedelayed within the system. Going forward the system will reduce distribution andwarehousing costs for large manufacturers. It is not clear how traders and retailers willbenefit. Tax collection from the system should be higher as a percentage of GDP.

Global allocations of funds both for FIIs/FDI is selective and flow into markets wherethere is an interesting story to invest in. In the last three years India has been aninteresting story. Foreign investors have recognized that the present government'svision and endeavours are giving shape to a base which promises India to become adestination for consistent and attractive returns on capital invested. Domesticallocations of personal savings towards equities have also increased sharply in thelast two years.

(Rs. in crores)

Investment in Equity
2014-15 2015-16 2016-17
Net FII Inflows 110243 -4882 58326
Net MF Inflows 70367 74024 71029
Total Fund Based Flows 180610 69142 129355
FDI Inflows 189107 262321 291696
Total Equity Flows 369717 331463 421051

To summarize the Indian economy and markets are standing on stronger and excitingfundamentals. Equities have already begun to discount the prospects of higher growth inearnings with the BSE 200 appreciating 23% during the fiscal year ended March 2017. Havingmade these observations your Company continues to incrementally invest in companieswhich enjoy the benefits from India's growing market be it Auto FMCG Defence Bankingand Housing Finance. We will continue to look for opportunities both in the listedand unlisted space.

6. FIXED DEPOSITS :

The Company has not accepted any public deposits under the provisions of the Act.

7. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS :

The provisions of Section 186 of the Act pertaining to investment and lendingactivities is not applicable to the Company since the Company is an NBFC whoseprincipal business is acquisition of securities. During the year the Company has notprovided any guarantee.

8. CONSOLIDATED FINANCIAL STATEMENTS :

The Consolidated Financial Statements of the Company prepared in accordance with‘Accounting Standard 21' issued by the Institute of Chartered Accountants of Indiaform part of the Annual Report.

The annual accounts of the subsidiary company and related detailed information areavailable on the website of the Company and are kept at the Registered Office ofthe Company and its subsidiary company and will be available to investors seekinginformation at any time.

The consolidated financial results reflect the operations of Simto Investment CompanyLtd. (Subsidiary) and the following Associate Companies namely Tata AssetManagement Ltd. Tata Trustee Company Ltd. and Amalgamated Plantations Private Ltd.

The Company has adopted a Policy for determining material Subsidiaries in terms ofRegulation 16 (1) (c) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ("Listing Regulations"). The Policy as approved by theBoard is uploaded on the Company's website.

Subsidiary Company

The Company has a subsidiary Simto Investment Company Ltd. ("Simto") which isregistered as a Non-Banking Financial Company with the Reserve Bank of India. In terms ofRegulation 16(1)(c) of the Listing Regulations Simto is not a material unlistedsubsidiary. Simto is engaged in investment activities which allocates capital in themarket to participate in activities other than making investments for the long term whichhas been the primary activity of the Company for many decades.

Simto has an Issued Capital of Rs. 1.53 crores with a net worth of Rs. 24.80 crores ason 31st March 2017. The market value of investments held by Simto is valued at Rs.55.07crores as on 31st March 2017.

Associate Companies

1. Tata Asset Management Ltd.

The Company holds 32.09% of the equity share capital of Tata Asset Management Ltd.whose principal activity is to act as an investment manager to Tata Mutual fund and thecompany is registered with Securities Exchange Board of India ("SEBI")under the SEBI (Mutual Fund) Regulations 1996. The consolidated turnover of the companyduring the year was Rs. 197.81 crores and Profit after tax for the year wasRs. 39.92crores. The company has a net worth of Rs. 213.02 crores as on 31st March 2017.

2. Tata Trustee Company Ltd.

The Company holds 50% of the equity share capital of Tata Trustee Company Ltd. which isacting as the Trustees to Tata Mutual Fund. During the year the turnover of thecompany was Rs. 9.98 crores and Profit after tax for the year was Rs. 5.94 crores. Thecompany has a networth of Rs. 15.38 crores as on 31st March 2017.

3. Amalgamated Plantations Private Ltd.

The Company holds 24.61% of the equity share capital of Amalgamated Plantations PrivateLtd. ("APPL") which is engaged in the business of cultivation andmanufacturing of tea and other allied agricultural products and packaging services.The turnover of APPL during the year was Rs. 659.79 crores and it registered a loss of Rs.57.41crores during the financial year 2016-17.

A statement containing the salient features of the financial statements of thesubsidiary company and associate companies is annexed to the Financial Statementsin Form AOC-1 "Annexure A".

9. BOARD AND COMMITTEE MEETINGS :

During the year six Board Meetings and four Audit Committee Meetings were held. Thedetails of the composition of the Board and its Committees and of the Meetings held andattendance of the Directors at such Meetings are provided in the CorporateGovernance Report. The Board has constituted an Audit Committee under the Chairmanship ofMr. H. N. Sinor the other members of the Committee being Mr. A. B. K. Dubash Mr. PP. Shah and Mr. F. N. Subedar. There have not been any instances during the yearwhen recommendations of the Audit Committee were not accepted by the Board.

10. DIRECTORS' RESPONSIBILITY STATEMENT :

Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory andsecretarial auditors including audit of internal financial controls over financialreporting by the statutory auditors and the reviews performed by Management and therelevant Board Committees including the Audit Committee the Board is of theopinion that the Company's internal financial controls were adequate and effectiveduring the financial year 2016-17.

Accordingly pursuant to Section 134(3)(c) and 134(5) of the Companies Act 2013 theBoard of Directors to the best of their knowledge and ability confirm that :

i) in the preparation of the annual accounts the applicable accounting standards havebeen followed and that there are no material departures;

ii) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of Affairs of the Company at the end of the financial year and ofthe Profit of the Company for that period;

iii) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;

iv) they have prepared the annual accounts on a going concern basis;

v) they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and are operating effectively;

vi) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.

11. RISK MANAGEMENT :

The Company has adopted a Risk Management Policy in accordance with the provisions ofthe Act and Regulation 17(9) of the Listing Regulations. It establishes various levels ofrisks with its varying levels of probability the likely impact on the business andits mitigation measures.

The Internal Auditor evaluates the execution of Risk Management Practices in theCompany in the areas of risk identification assessment monitoring mitigation andreporting. Asset Liability and Risk Management Committee oversees the RiskManagement and reports to the Audit Committee as well as the Board of Directors about riskassessment and management procedures and status from time to time.

12. INTERNAL CONTROL SYSTEMS :

The Company maintains appropriate systems of internal controls including monitoringprocedures to ensure that all assets and investments are safeguarded against lossfrom unauthorised use or disposition. Company policies guidelines and procedures providefor adequate checks and balances and are meant to ensure that all transactions areauthorised recorded and reported correctly.

The Internal Auditors review the efficiency and effectiveness of these systems andprocedures. Added objectives include evaluating the reliability of financial andoperational information and ensuring compliances with applicable laws and regulations. TheInternal Auditors submit their Report periodically which is placed before and reviewed bythe Audit Committee.

13. INDIAN ACCOUNTING STANDARDS (Ind AS) :

Shareholders may note that as per notification from Ministry of Corporate Affairs dated16.02.2015 listed NBFC Companies having a net worth of Rs. 500 Crore or more are requiredto comply with Ind AS in the preparation of their financial statements for accountingperiods beginning on or after April 1st 2018 with the comparatives for the periods endingMarch 31st 2018.

Under Indian GAAP the use of fair value is limited to current investments which arerequired to be recognised at the lower of cost and fair value. Long term investments arealways recognised at cost less permanent diminution in value. Under Ind AS an entity willbe required to classify financial assets (which includes investments) and subsequently measureat either amortised cost or fair value on the basis of both the entity's business modelfor managing the financial assets and the contractual cash flow characteristics ofthe financial asset.

All equity investments within the scope of Ind AS 109 are to be measured on the balancesheet at fair value with the default recognition of gains and losses in Profit or lossunless an irrevocable election is made at initial recognition to measure it at FairValue through Other Comprehensive Income (FVTOCI) wherein only dividend income isrecognised in Profit or loss and consequently the gains/losses arising from sale ofequity investments would not be reflected in the Statement of Profit and Loss which couldlead to a significant reduction in the first year of adoption of Ind AS in the Statementof Profit and Loss on Quarterly/Yearly basis.

14. VIGIL MECHANISM / WHISTLE BLOWER POLICY :

The Company has adopted a Whistle Blower Policy to provide a formal mechanism to theDirectors and employees to report their concerns about unethical behaviour actualor suspected fraud or violation of the Company's Code of Conduct or Ethics policy.The Policy provides for adequate safeguards against victimisation of employees who availof the mechanism and also provide for direct access to the Chairman of the AuditCommittee. It is afirmed that no personnel of the Company has been denied access tothe Audit Committee.

15. RELATED PARTY TRANSACTIONS :

All Related Party Transactions that were entered into during the financial year were onan arm's length basis in the ordinary course of business and were in compliancewith the applicable provisions of the Act and the Listing Regulations. There were nomaterially significant Related Party Transactions entered by the Company with PromotersDirectors Key Managerial Personnel which may have a potential conflict with theinterest of the Company at large.

All Related Party Transactions are placed before the Audit Committee for approval.Prior omnibus approval of the Audit Committee is obtained for the transactionswhich are repetitive in nature. A statement of all Related Party Transactions is placedbefore the Audit Committee for its review on a quarterly basis specifying the naturevalue and terms and conditions of the transactions if any.

The Company has adopted a Related Party Transactions Policy. The Policy as approved bythe Board is uploaded on the Company's website at the web link:http://www.tatainvestment.com/images/RelatedParty_Policy.pdf.

There are no transactions to be reported in Form AOC-2.

The details of the transactions with Related Parties are provided in the accompanyingfinancial statements.

16. CORPORATE SOCIAL RESPONSIBILITY (CSR) :

In terms of Section 135 and Schedule VII of the Act the Board of Directors hasconstituted a CSR Committee under the Chairmanship of Mr. F N. Subedar Mr. A. B. K Dubashand Mr. A. N. Dalal are the other members of the Committee. During the financial year Mr.A. Chandra pursuant to his resignation as Director of the Company has ceased to be a Memberof CSR Committee and Mr. A. B. K. Dubash has been appointed as a member of the Committee.

The CSR Committee of the Board has framed a CSR Policy and uploaded it on the websiteof the Company http://www. tatainvestment.com/images/CSR_Policy.pdf.

The Annual Report on CSR activities is annexed herewith as "Annexure B".

17. POLICY ON PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE :

The Company has adopted a policy on Prevention Prohibition and Redressal of SexualHarassment at the Workplace in line with the provisions of the Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013 and the Rulesthereunder. The Policy aims to provide protection to employees at the workplace andprevent and redress complaints of sexual harassment and for matters connected orincidental thereto with the objective of providing a safe working environmentwhere employees feel secure. The Company has also constituted an Internal ComplaintsCommittee known as the Prevention of Sexual Harassment ("POSH") Committee toinquire into complaints of sexual harassment and recommend appropriate action.

The Company has not received any complaint of sexual harassment during the financialyear 2016-17.

18. DIVIDEND DISTRIBUTION POLICY :

Securities and Exchange Board of India (‘SEBI') by its notification dated 8thJuly 2016 has amended the Listing Regulations by inserting a new Regulation 43Amandating the top 500 listed entities based on market capitalization calculated as on31st March of every financial year to formulate a Dividend Distribution Policy anddisclose the same in their Annual Report and on their website.

Accordingly the Board of the Company has adopted a Dividend Distribution Policy whichis annexed herewith as "Annexure C". The Policy is also available on thewebsite of the Company.

19. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS :

There are no significant and material orders passed by the Regulators / Courts whichwould impact the going concern status of the Company and its future operations.

20. DIRECTORS AND KEY MANAGERIAL PERSONNEL :

Pursuant to the provisions of the Act and the Company's Articles of Association Mr. N.N. Tata Director retires by rotation and being eligible offers himself forre-appointment.

All Independent Directors have given declarations that they meet the criteria ofIndependence as laid down under Section 149(6) of the Act and the Listing Regulations.

Mr. A. Chandra resigned as a Director from the Board of Directors with effect from 22ndSeptember 2016 and the Board of Directors place on record its sincere appreciationof his valuable support and guidance to the Board during his tenure.

There were no changes in the key managerial personnel of the Company during the year.

21. ANNUAL EVALUATION OF BOARD PERFORMANCE AND PERFORMANCE OF ITS COMMITTEES AND OFINDIVIDUAL DIRECTORS :

Pursuant to the provisions of the Act and Listing Regulations the Board has carriedout an annual evaluation of its own performance performance of the Directorsindividually as well as the evaluation of the working of its Committees.

The Nomination and Remuneration Committee has defined the evaluation criteriaprocedure and time schedule for the Performance Evaluation process for the Boardits Committees and individual Directors including the Chairman of the Company.

For evaluating the Board as a whole views were sought from the Directors on variousaspects of the Board's functioning such as degree of fulfillment of keyresponsibilities Board Structure and composition establishment delineation of responsibilitiesto various committees effectiveness of Board processes information and functioningBoard culture and dynamics quality of relationship between the Board and themanagement.

Similarly views from the Directors were also sought on performance of individualDirectors covering various aspects such as attendance and contribution at theBoard/Committee Meetings and guidance/support to the management outsideBoard/Committee Meetings. In addition the Chairman was also evaluated on key aspects ofhis role including setting the strategic agenda of the Board encouraging activeengagement by all Board members and promoting effective relationships and opencommunication communicating effectively with all stakeholders and motivating andproviding guidance to the Executive Director.

Areas on which the Committees of the Board were assessed included degree of fulfillmentof key responsibilities adequacy of Committee composition effectiveness ofmeetings Committee dynamics and quality of relationship of the Committee with theBoard and the Management.

The performance evaluation of the Independent Directors was carried out by the entireBoard. The performance evaluation of the Chairman and the Non Independent Directorswas carried out by the Independent Directors who also reviewed the performance ofthe Board as a whole. The Nomination and Remuneration Committee also reviewed theperformance of the Board its Committees and of individual Directors.

The Chairman of the Board provided feedback to the Directors as appropriate.Significant highlights learnings with respect to the evaluation were discussed at theBoard Meeting.

22. REMUNERATION POLICY :

The Board on the recommendation of the Nomination & Remuneration Committee hasframed a policy for selection and appointment of Directors Senior Management andtheir remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

23. AUDITORS :

STATUTORY AUDITORS :

As per the provisions of Section 139 of the Companies Act 2013 the term of Office ofM/s. Deloitte Haskins & Sells Chartered Accountants as the Statutory Auditorsof the Company will conclude from the close of the forthcoming Annual General Meeting ofthe Company.

The Board of Directors places on record its appreciation for the services rendered byM/s. Deloitte Haskins & Sells Chartered Accountants as the Statutory Auditors of theCompany.

Subject to the approval of the Members the Board of Directors of the Company hasrecommended the appointment of M/s. Kalyaniwalla & Mistry LLP CharteredAccountants (Firm Registration No. 104607W/W-100166) as the Statutory Auditors ofthe Company pursuant to Section 139 of the Companies Act 2013 for a period of five yearscommencing from the conclusion of this Annual General Meeting of the Company till theconclusion of the Eighty-fifth Annual General Meeting to be held in the year 2022subject to ratification of their appointment at every Annual General Meeting heldafter this Annual General Meeting if so required under the Act.

Members' attention is drawn to a Resolution proposing the appointment of M/s.Kalyaniwalla & Mistry LLP Chartered Accountants as Statutory Auditors of theCompany which is included at Item No. 5 of the Notice convening the Annual GeneralMeeting.

SECRETARIAL AUDITORS :

Pursuant to provisions of Section 204 of the Act and The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company has appointed M/s.Parikh & Associates Company Secretaries to undertake the Secretarial Audit ofthe Company. The Report of the Secretarial Audit Report is annexed herewith as"Annexure D"

The Auditor's Report and the Secretarial Audit Report for the financial year ended 31stMarch 2017 do not contain any qualification reservation adverse remark or disclaimer.

24. BUSINESS RESPONSIBILITY REPORT :

Regulation 34(2) of the Listing Regulations which was amended on 22nd December 2015 tocome into force from 1st April 2016 inter alia provides that the annual reportof the top 500 listed entities based on market capitalisation shall include a BusinessResponsibility Report (BRR).

A separate section on BRR as required under Regulation 34(2)(f) of the ListingRegulations is annexed herewith as "Annexure E".

25. EXTRACT OF ANNUAL RETURN :

The details forming part of the extract of the Annual Return in the form MGT-9 isannexed herewith as "Annexure F".

26. CONSERVATION OF ENERGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO :

Being an investment company and not involved in any industrial or manufacturingactivities the Company's activities involve very low energy consumption and has noparticulars to report regarding conservation of energy and technology absorption.However efforts are made to further reduce energy consumption.

During the year the Company's expenditure in foreign exchange is Rs. 3.93 lacs asmentioned in Note 8 to the Annual Report and the Company did not have any foreignexchange earnings during the year.

27. PARTICULARS OF EMPLOYEES AND REMUNERATION :

The information required under Section 197 (12) of the Act read with Rule 5(1) of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isannexed as "Annexure G" forming part of the Report.

The information required under Section 197(12) of the Act read with Rules 5(2) and (3)of The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is provided in the Annexure forming part of the Report. In terms of the firstproviso to Section 136 of the Act the Report and Accounts are being sent to theShareholders excluding the aforesaid Annexure. The said Annexure is open for inspection atthe Registered Office of the Company. Any Shareholder interested in obtaining thesame may write to the Company Secretary. None of the employees listed in the said Annexureis related to any Director of the Company.

A report on Corporate Governance in accordance with Schedule V of SEBI ListingRegulations is set out separately for the information of the shareholders.

On behalf of the Board of Directors
NOEL N. TATA
Chairman
Mumbai 24th May 2017