TO THE MEMBERS OF TATA MOTORS LIMITED
The Directors present their Seventy Fourth Annual Report along with the AuditedFinancial Statement of Accounts for the Financial Year 2018-19.
|FINANCIAL RESULTS || |
(Rs in crores)
| || |
| ||FY 2019 ||FY 2018 ||FY 2019 ||FY 2018 |
|Revenue from operations ||69202.76 ||58689.81 ||301938.40 ||292340.64 |
|Total expenditure ||63476.23 ||55824.11 ||272143.59 ||258536.37 |
|Operating profit ||5726.53 ||2865.70 ||29794.81 ||33804.27 |
|Other Income ||2554.66 ||2492.48 ||2965.31 ||3957.59 |
|Profit before interest foreign exchange depreciation amortization exceptional item and tax ||8281.19 ||5358.18 ||32760.12 ||37761.86 |
|Finance cost ||1793.57 ||1744.43 ||5758.60 ||4681.79 |
|Profit before depreciation amortization exceptional item foreign exchange and tax ||6487.62 ||3613.75 ||27001.52 ||33080.07 |
|Depreciation amortization and product development/ engineering expenses ||3670.40 ||3576.87 ||27815.20 ||25085.46 |
|Foreign exchange (gain)/loss (net) ||215.22 ||17.14 ||905.91 ||(1185.28) |
|Profit/(loss) before exceptional items and tax ||2602.00 ||19.74 ||(1719.59) ||9179.89 |
|Exceptional Items - (gain) / loss (net) ||203.07 ||966.66 ||29651.56 ||(1975.14) |
|Profit/(loss) before tax ||2398.93 ||(946.92) ||(31371.15) ||11155.03 |
|Tax expenses (net) ||378.33 ||87.93 ||(2437.45) ||4341.93 |
|Profit/(loss) after tax ||2020.60 ||(1034.85) ||(28933.70) ||6813.10 |
|Share of profit of joint venture and associates (net) ||- ||- ||209.50 ||2278.26 |
|Profit/(loss) for the year ||2020.60 ||(1034.85) ||(28724.20) ||9091.36 |
|Other comprehensive income/(loss) ||(23.43) ||43.22 ||(5575.77) ||29562.51 |
|Total Other comprehensive income/(loss) for the year ||1997.17 ||(991.63) ||(34299.97) ||38653.87 |
|Attributable to: || || || || |
|Shareholders of the Company ||- ||- ||(34401.73) ||38524.52 |
|Non-controlling interest ||- ||- ||101.76 ||129.35 |
* These include the Company's proportionate share of income and expenditure in its twojoint operations namely Tata Cummins Pvt. Ltd. and Fiat India Automobiles Pvt. Ltd.
In view of inadequate profits for FY 2018-19 no dividend is permitted to be paid tothe Members as per the provisions of the Companies Act 2013 ('the Act') and the Rulesframed thereunder.
TRANSFER TO RESERVES
The Board of Directors has decided to retain the entire amount of profits for FY2018-19 in the Profit and Loss Account.
FINANCIAL PERFORMANCE AND STATE OF THE COMPANY'S AFFAIRS
Operating Results and Profits
The Indian economy in FY 2018-19 started with a healthy 8.2% growth in the firstquarter on the back of domestic resilience. Growth eased to 7.3% in the subsequent quarterdue to rising global volatility largely from financial volatility normalized monetarypolicy in advanced economies externalities from trade disputes and investment rerouting.Further the Indian rupee depreciated because of the crude price shock and conditionsexacerbated as recovery in some advanced economies caused faster investment outflows.
Global growth is moderating as the recovery in trade and manufacturing activity islosing its steam. Despite ongoing negotiations trade tensions among major economiesremain elevated. Growth in the United States has remained solid bolstered by fiscalstimulus. In contrast activity in the Euro Area has been somewhat weaker than previouslyexpected owing to slowing net exports. China registered growth of 6.5% in 2018. A reboundin private fixed investment helped offset a decline in public infrastructure and otherstate spending. However industrial production and export growth have deceleratedreflecting easing global manufacturing activity. Japan's economy also saw annualizedgrowth of 0.8% due to bad weather and natural disasters. The GDP rate of Russia sloweddown to 0.8% in 2018. At a growth rate of 1.2% South Africa's economic expansion wouldstill be above the 0.8% level at which the economy expanded in 2018. The Middle Easteconomy growth looks uncertain with the cut in oil production in compliance with OPEC+deal and geopolitical risks will continue to cap the growth.
The Tata Motors Group registered a growth of 3.3% in income from operations to'301938 crores in FY 2018-19 as compared to '292341 crores in FY 2017-18. This was dueto better sales volume in the business in India and due to favorable translation impactfrom Great Britain Pound ('GB') to Indian Rupee (T) of '14517 crores. Earnings beforeother income interest and tax were Rs 3774 crores in FY 2018-19 compared to Rs 11788crores in FY 2017-18. The decrease was primarily driven by the performance of Jaguar LandRover business including higher depreciation and amortization and fixed marketingexpenses / selling costs. The Company's net loss (attributable to shareholders of theCompany) was Rs 28826 crores in FY 2018-19 as compared to a profit of Rs 8989 crores inFY 2017-18. In FY 2018-19 the Company has taken an impairment charge of Rs 27838 croresfor Jaguar Land Rover due to weak sales and profitability change in the marketconditions especially in China and technology disruptions.
Tata Motors Limited recorded revenue from operations (including joint operations) of Rs69203 crores in FY 2018-19 17.9% higher from Rs 58690 crores in FY 2017-18. Growth indemand of Medium and Heavy Commercial Vehicle ('M&HCV') and Light Commercial Vehicle('LCV') new product offerings in passenger cars and Utility Vehicles ('UV') resulted inincrease in EBITDA margins to 7.4% in FY 2018-19 as against 4.1% in FY 2017-18. ProfitBefore and After Tax (including joint operations) for FY 2018-19 were at Rs 2399 croresand Rs 2021 crores respectively as compared to Loss Before and After Tax (includingjoint operations) of Rs 947 crores and Rs 1035 crores respectively for FY 2017-18.
Jaguar Land Rover ('JLR') (as per IFRS) recorded revenue of GB24.2 billion in FY2018-19 compared to GB25.8 billion in FY 2017-18 down by 6.2% broadly in line with thedecline in wholesales (excluding CJLR) which were down 6.9% primarily as a result of thechallenging conditions in China.
Consolidated EBITDA for FY 2018-19 was GB2.0 billion lower compared GB2.8 billionfor FY 2017-18 as a result of the lower wholesales higher incentive and warranty costspartially offset by Project Charge cost efficiencies and favourable realised foreignexchange movements. The Loss Before Interest and Tax ('EBIT') was GB(180) million in FY2018-19 compared to EBIT of GB971 million in FY 2017-18 due to the lower EBITDA higherdepreciation and amortisation and lower profits from the China joint venture.
The Loss Before Tax excluding exceptional items in FY 2018-19 was GB(358) millioncompared to Profit Before Tax excluding exceptional items of GB1.1 billion in FY2017-18 primarily reflecting the lower EBIT higher interest costs and unfavourablerevaluation of hedges and foreign currency debt in FY 2018-19 compared to favourablerevaluation in the prior year. Exceptional charges totalled 3.3 billion for FY 2018-19including a 3.1 billion asset impairment in Q3 and a further 149 million for employeeseparation charges in Q4.
Free cash flow was negative 1.3 billion for FY19 (including 1.4 billion positivefree cash flow in Q4) after lower investment of 3.8 billion and 403 million of workingcapital inflows. As at 31 March 2019 JLR had 3.8 billion of cash and a 1.9 billionundrawn credit facility resulting in 5.7 billion of total liquidity.
TMF Holdings Limited ('TMFHL') the Company's captive financing subsidiary reportedconsolidated revenues of Rs 3975 crores (FY 2017-18: Rs 2908 crores) and Profit AfterTax of Rs 164 crores in FY 2018-19 (FY 2017-18: Rs 76 crores).
Tata Daewoo Commercial Vehicle Company Limited South Korea ('TDCV') (as per KoreanGAAP) registered revenues of KRW 651.36 billion a drop of 25.0% over FY 2017-18. TheLoss After Tax was KRW 28.02 billion as compared to Profit After Tax of KRW 33.66 billionin FY 2017-18. Lower profitability was mainly due to lower sales and lower absorption offixed costs partially offset by material cost reduction.
Vehicle Sales and Market Shares
The Tata Motors Group sales for the year stood at 1274072 vehicles up by 4.3% ascompared to FY 2017-18. Global sales of all Commercial Vehicles were 527286 vehicleswhile sales of Passenger Vehicles were at 746786 vehicles.
Tata Motors recorded sales of 679288 vehicles a growth of 16.2% over FY 2017-18higher than the Indian Auto Industry grew by 5.9%. The Company's market share increased to15.5% in FY 2018-19 from 14.1% in FY 2017-18. The Company's exports on standalone basiswere marginally higher by 1.4% to 53140 vehicles in FY 2018-19 as compared to 52404vehicles in FY 2017-18.
Commercial Vehicles ('CV')
The CV Industry started FY 2018-19 on a very strong note which continued through firsthalf before being impacted by the implementation of the increased Axle load norm. Thisresultant drop in demand along with increase in parc capacity the liquidity crunchtriggered by the NBFC crisis coupled with other factors dampened the demand largely insecond half. However overall FY 2018-19 was a year of robust growth for the CV industry.Tata Motors CV Business sales in the domestic market for FY 201819 witnessed a robustgrowth of 17.2% with 468788 units sold. The market share of Tata Motors for FY 2018-19was 45.1%. All the four segments showed strong growth with three out of four segmentsinching up their market share.
Some of the highlights for the year were:
M&HCV volumes grew by 12.3% in FY 2018-19. Several new products and variantsacross the Prima and Signa platforms were launched. These include LPT 1618 5L Turbotronn -the first 4 cylinder engine offering in M&HCV range SIGNA 4923.T and 4823.T - India'sfirst range of 16 wheeler trucks with 49T and 47.5T GVW the entire range of IncreasedAxle Load range of products from 18.5T to 55T GVW across trucks tractors and new range ofTippers: - 1913.T and 1918.T 2818.T 3518.T 4223.T 4623.S 5523.S 2823.TK/K 1918K1923K. Tata Motors inched up its market share by 0.7% in this segment with a growth forthe first time after 10 years.
ILCV volumes registered a strong growth of 23% in the FY 2018-19. Tata Motorsreinforced its position through the introduction of the Ultra 1518.T Ultra 1412 UltraT.7 with smaller cabin design suitable for intercity operations in domestic andinternational markets. In addition the launch of LPT407/27 FE LPT 1412SLP LPT 1212CRXLPT1512 CRX SFC 909 LPT 909/49 CNG and India's first 13.8T CNG vehicle LPT1412 CNG inthe regular ICV range helped Tata Motors establish itself as No. 1 in ICVs sub-segment.Tata Motors also launched specialized e-commerce containers range with advanced featureslike surveillance cameras OTP based Lock Load sensors etc. in the year. Tata Motorsmarket share in the segment was up by 0.5% compared to FY 2017-18.
SCV & Pickup Volumes grew by 23.9% in FY 2018-19. The launch of Tata AceGold with the legendary facia popular among the target customer group added to theCompany's strength in the Ace family. The market share was up by 0.7% compared to FY2017-18.
Volumes in the CV passenger segment grew by 3.5% in FY 2018-19. The introductionof 15 seater and 12 seater Winger helped to cater to the ever increasing tour and travelsegment. The year also saw introduction of 1623 a 230 HP 12 meter bus typically used forintercity coaches. In addition EGR vehicles on the 1515 range and 1212 a bus meant tocater to the higher seating capacity rugged application very prevalent in the countrytoday were launched. On the other end of the spectrum 407 on the smaller wheel base (2900WB) was introduced as a perfect fit to intra-city congested roads for both school andstaff applications.
Reiterating its commitment to greener fuel options the Company started deliveryof electric buses to various State Transport Units.
The Company significantly improved the ability to provide customers withend-to-end support and comfort through enhancing value added services under a umbrellabrand of "Sampoorna Seva". The key elements include 6 Year 6 lakh km warranty onthe entire range of M&HCVs Tata Alert breakdown assistance service available across 3million kilometers of Indian roads and Tata Delight Loyalty Program.
Non-vehicle business revenue for CVBU from spares prolife and aggregatesincreased by 21.6% in FY 2018-19. Tata Motors Genuine Oil ('TMGO') launched last yearreached 17000 KL of sale helping to bring down the Total Cost of Ownership for itscustomers.
Passenger Vehicles ('PV')
The domestic PV Industry grew by 2.8% during FY 2018-19 registering a volume of 3.35million vehicles. Barring the first quarter industry de-grew consecutively for threequarters. Overall the Industry performance was affected by delay in availability ofretail finance higher interest rate higher acquisition price because of requirement ofbuying three year insurance at the time of purchase negative sentiment in market andpostponement of purchase decisions. As a result the retail sales was far belowexpectations. This led to higher stock at dealerships and dealers faced the challenge ofthe working capital rotation.
The festival seasons during the year did not give the expected impetus. The beginningof the festive season was washed out due to unprecedented floods in Kerala. DuringNavaratri and Diwali the market was expected to bounce back and infuse positive energyinto the system. But just before this festive season the liquidity was severely impactedbecause of NBFC crisis. The festive season reported a 14% de-growth one of the worstfestive sales performance in the recent past.
Whilst market situation remained challenging throughout the year Tata Motors PVbusiness outperformed the market. The Company registered a 13.9% overall growth in FY2018-19 with a total volume of 210500 units. The market share for the year was 6.3% animprovement of 60 basis points from FY 2017-18. The growth rate 13.9% for the Company isahead of the industry. This is the highest unit sales and market share over the last 5years.
Tiago registered a growth of 17% in its 3rd year of market presence with 200000 +customers. Nexon was awarded with 5 star safety rating by GNCAP the only car in Indiawith 5 star safety rating and established itself as the second most selling SUV withannual sales of over 55000 units.
To counter the market slowdown the Company did four critical product interventionswithin 51 days in festival season namely Tiago NRG Nexon KRAZ Tigor Refresh andTiago/Tigor JTP range of products. These interventions helped to attract additional set ofcustomers and continue the market buzz. On January 23 2019 the Tata Harrier was launchedand the initial response from customers is overwhelming.
Customer satisfaction remained as the centre of business. The Company ranked a clear2nd in JD Power customer satisfaction survey. In FY 2017-18 the Company shared the 2ndrank with Maruti Suzuki. Non-vehicular business revenue improved 15% over last financialyear. The Net Promoter Score of PV business significantly improved from a negative scoreof 13 in FY 2014-15 to a positive score of 18 in FY 2018-19 signifying improvement inbrand perception. This helped the Company to gain pricing power across models and exercisepricing leadership.
The Company exported 53140 vehicles (FY 2017-18: 52404 vehicles).
Export of CV marginally increased by 2% in FY 2018-19 with 51119 units compared to50106 units in FY 2017-18. New regulations and political uncertainty in Sri Lanka andslump in Middle East impacted industry volumes in these markets. However our marketshare in both these markets improved for commercial vehicles. Market share in most of thefocused markets either improved or have been strong and the Company successfully baggedseveral prestigious orders.
Export of PV stood at 2021 units compared to 2298 units in FY 2017-18. Two largemarkets remain non-operational - Sri Lanka due to high import duties tight retailfinancing and South Africa due to the closure of the distribution channel. Launch of newmodels in Nepal and Bangladesh helped the Company to achieve rank No. 4 and No. 3 in therespective markets.
Retail sales were 578915 vehicles in FY 2018-19 down 5.8% year on year primarilyreflecting weaker market conditions in China which was partially offset by strong growthin the UK and North America.
The introduction of new and refreshed models led by the Jaguar E-PACE award winningI-PACE Range Rover Velar and the refreshed Range Rover and Range Rover Sport were offsetby lower sales of more established models mainly in China and the run-out of the firstgeneration Range Rover Evoque in the third quarter with sales of the new Evoque beginningto ramp up through the fourth quarter. By region sales were up strongly in the UK by 8.4%and in North America by 8.1% and retails were also higher in Overseas markets by 2.4%.Retails sales in Europe declined 4.5% year on year on account of continuing dieseluncertainty Brexit and the change to more stringent World Harmonised Light VehicleTesting Procedure ('WLTP') emissions testing regime. Retail sales in China (includingsales from the joint venture) were down 34.1% year on year due to trade tensions with theUS slowing economic growth and uncertainty driven by import duty changes effective fromJuly 2018 inventory reduction and corrective actions in China.
The total wholesale volumes (excluding sales from the China Joint Venture) at 507895units were down 6.9% as compared to the 545298 units in FY 2017-18 generally reflectingthe trends seen in the retail sales above.
Some of the key highlights of FY 2018-19 were:
JLR's first battery electric vehicle the Jaguar I-PACE went on sale in June2018 (2019 World Car of the Year 2019 World Car Design of the Year 2019 World Green Car2019 European Car of the Year).
E-Pace launched and on sale from the China joint venture in September 2018.
All new Range Rover Evoque with hybrid options went on sale in Q4.
Refreshed Jaguar XE launched in Q4 with exterior updates and significantlyimproved infotainment.
Announced the reveal of the All New Land Rover Defender for later in 2019.
Project Charge announced to deliver 2.5 billion of cost cash and profitimprovements by the end of FY 2020; and Project Accelerate announced to support long termsustainable profitable growth.
Manufacturing plant in the city of Nitra in Slovakia commenced production of theLand Rover Discovery in October 2018.
Land Rover celebrated it's 70 year anniversary.
JLR completed it's first self-driving journey as part of autonomous drivingtrials with the UK Autodrive project in Q2.
Announced 6 cylinder Ingenium 3.0 litre petrol engine to be manufactured at theEngine Manufacturing Centre in Wolverhampton UK to be introduced in Range Rover Sport.
Announced the production of next-generation Electric Drive Units ('EDU') at theEngine Manufacturing Centre in Wolverhampton later this year.
Announced that the batteries to power the EDU's will be assembled at a newBattery Assembly Centre located at North Warwickshire in the UK.
During FY 2018-19 sold 6672 commercial vehicles lower by 24.8% over FY 2017-18mainly due to decrease in sales in domestic sales. TDCV sold 4371 commercial vehicles inthe domestic market lower by 36.3% as compared to sales in FY 2017-18 primarily due tolower industry volumes and aggressive discounting and marketing strategies primarilydriven by the imported brands. The market share for both HCV and MCV segments put togetherwas 21.1% as compared to 26.5% in FY 2017-18. However TDCV could increase its exportsales to 2301 commercial vehicles 14.4% higher compared to 2011 commercial vehicles inFY 2017-18.
It is the vehicle financing arm under the brand "TMF Holdings Limited".TMFHL's disbursements (including refinance) increased by 42.8% at Rs 21993 crores in FY2018-19 as compared to Rs 15406 crores in FY 2017-18. New Vehicle disbursements are donethrough its subsidiary Tata Motors Finance Ltd ('TMFL'). TMFL financed 216015 vehiclesreflecting an increase of 23.3% over 175128 vehicles financed in FY 2017-18.Disbursements for CV increased by 39.6% and were at Rs 15978 crores (142187 units) ascompared to Rs 11448 crores (115689 units) in FY 2017-18 mainly due to gain in marketshare (28.3% in FY 2018-19 vs. 26.1% in FY 2017-18). Disbursements of PV increased by28.5% to Rs 3013 crores (46500 units) from a level of Rs 2345 crores (42619 units).Used Vehicle disbursements done through Tata Motors Finance Solutions Limited ('TMFSL') a100% Subsidiary of TMFHL were at Rs 3002 crores (27328 vehicles) as compared to Rs 1614crores (16820 vehicles) during FY 2017-18.
Tata Motors (Thailand) Limited ('TMTL')
TMTL wholesales in FY 2018-19 was 633 units as compared to 682 units in FY 2017-18. TheThai Commercial Automobile Industry has witnessed a growth of 22% in FY 2018-19 comparedto 14% growth in the year before however as part of ongoing review TMTL have undertakena reassessment of its business model in Thailand to ensure it is sustainable over the longterm. As a part of the restructuring the Company has ceased the current manufacturingoperations in the financial year and are in the process of scaling down the operationsincluding reduction of manpower. The Company shall address the Thailand market with arevamped product portfolio suitable to local market needs delivered through a CBUdistribution model. TMTL bagged a prestigious order from Royal Thai Army to supply 614units of the 1.25 ton Tata Truck.
During the year the free cash flows for Tata Motors Group were negative Rs 16346crores (FY 2017-18: negative Rs 11191 crores) post spend on capex design anddevelopment of Rs 35236 crores. Tata Motors Group's borrowing as at March 31 2019 stoodat Rs 106175 crores (as at March 31 2018: Rs 88951 crores). Cash and bank balances andinvestments in mutual funds stood at Rs 42086 crores (as at March 31 2018: Rs 48974crores). The consolidated net automotive debt to equity ratio stood at 0.47 as at March31 2019 as compared to 0.15 as at March 31 2018.
Free cash flows were Rs 1539 crores (FY 2017-18: Rs 1339 crores) standalone basiswith joint operations of the Company. Spend on capex design and development were Rs 4753crores (net). The borrowings of the Company as on March 31 2019 stood at Rs 18640 crores(as at March 31 2018: Rs 18464 crores). Cash and bank balances including mutual fundsstood at Rs 2981 crores (as at March 31 2018: Rs 2312 crores). Additionally theCompany has undrawn committed lines of Rs 1500 crores.
During FY 2018-19 the Company raised unsecured term loans amounting to Rs 1500 croresfrom Banks for general corporate purpose.
The Company successfully completed liability management exercise by part refinancing ofUS$ 500 million notes due for repayment on April 30 2020. The Company raised ECB of US$237.468 million maturing in June 2025 which was used to repay the bonds through thetendering process.
Deposits: The Company has not accepted any public deposits during FY 2018-19. Therewere no over dues on account of principal or interest on public deposits other than theunclaimed deposits as at the end of FY 2018-19 which is Rs 7.30 crores (Previous year Rs10.80 crores).
At JLR post spend on capital expenditure design and development of GB3373 million('30325 crores) [FY 2017-18: GB4186 million ('35776 crores)] the free cash flows werenegative GB1267 million ('9962 crores) for FY 2018-19. The borrowings of JLR as onMarch 31 2019 stood at GB4511 million ('40829 crores) [as at March 31 2018:GB3731 million ('34238 crores)]. Cash and financial deposits stood at GB3775million ('34168 crores) [as at March 31 2018: GB4657 million ('42977 crores)].Additionally JLR has undrawn committed long term bank lines of GB1935 million (JLRdata as per IFRS).
During FY 2018-19 JLR issued 500 million senior notes due in 2026 at a coupon of4.50% per annum. JLR also raised US$ 1000 million through syndicated loan. The proceedswere for general corporate purposes including support for JLR's ongoing growth andcapital spending requirements.
At TMFHL and its subsidiaries the borrowings as on March 31 2019 stood at Rs 37814crores (as at March 31 2018: Rs 27470 crores). Cash and bank balances and investments inmutual funds stood at Rs 2119 crores (as at March 31 2018: Rs 1206 crores). TMFHL andits subsidiaries raised Rs 2066 crores by issuing NCDs. Bank borrowings through securedterm loans continued to be a major source of funds for long-term borrowing and raised Rs6306 crores during FY 2018-19. TMFL has also done securitization of Rs 3862 crores in FY2018-19.
Tata Motors Group has undertaken and will continue to implement suitable steps forraising long term resources to match fund requirements and to optimise its loan maturityprofile.
Credit Rating : During FY 2018-19 the Company's rating for foreign currency borrowingswas downgraded to "Ba2" / Negative by Moody's and to "B+" / WatchNegative by Standard & Poor's. For borrowings in the local currency Non-Convertibledebentures and long term bank facilities i.e. (Buyers Credit and Revolving CreditFacility) the ratings were downgraded by CARE to "AA" / Stable and the ratingswere 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 Negativeon account of weak performance and challenging external environment at JLR.
During FY 2018-19 for TMFHL and its subsidiaries CRISIL and ICRA has maintained itsrating and changed its outlook on longterm debt instruments and long term bank facilitiesto "AA / Negative". Further CARE has changed the ratings on long term debt andlong 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 Companysubsequent 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 2018-19are prepared in compliance with the applicable provisions of the Act and as stipulatedunder Regulation 33 of the SEBI Listing Regulations as well as in accordance with theIndian Accounting Standards notified under the Companies (Indian Accounting Standards)Rules 2015. The audited consolidated financial statement (condensed) together with theAuditor's Report thereon form part of this Annual Report. Pursuant to Section 129(3) ofthe Act a statement containing the salient features of the Financial Statement of thesubsidiary companies is attached to the Financial Statement in Form AOC-1. Pursuant to theprovisions of Section 136 of the Act the Company will make available the said financialstatement of the subsidiary companies upon a request by any member of the Company or itssubsidiary companies. These financial statements of the Company and the subsidiarycompanies will also be kept open for inspection by any member at the Registered Office ofthe 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 3joint ventures and 2 joint operations as at March 31 2019 as disclosed in the accounts.
During FY 2018-19 the following changes have taken place in subsidiary / associates /joint venture companies:
Name of the companies which have become subsidiaries associates or joint venturesduring the year:
Spark44 Taiwan Limited (Taiwan) was incorporated with effect from May 7 2018.
Spark44 Colombia S.A.S. (Colombia) was incorporated with effect from May 102018.
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 fromAugust 10 2018.
InMotion Ventures 4 Limited was incorporated with effect from January 4 2019.
Tata Toyo Radiator Limited was converted from a joint venture to subsidiarycompany with effect from July 1 2018.
Loginomic Tech Solutions Private Limited ('TruckEasy') stake acquired witheffect from July 10 2018.
Automotive Skill Training Pvt. Ltd. converted into Private Limited Company fromSection 25 Company with effect from December 10 2018 (formerly Automotive Skills TrainingFoundation)
TitanX Engine Cooling Poland incorporated with effect from April 25 2018.
Name of the companies which have ceased to be subsidiaries associates or jointventures during the year:
TML Drivelines Limited merged with the Company with effect from April 30 2018and consequently Authorised Share Capital of the Company increased from Rs 3900 crores toRs 4000 crores.
The Jaguar Collection Limited (dormant) dissolved with effect from June 192018.
Entire shareholding in TAL Manufacturing Solutions Limited ('TAL') sold to TataAdvanced Systems Limited with effect from March 29 2019 after acquisition of thenon-aerospace business from TAL.
Serviplem S.A.U. liquidated with effect from February 6 2019. Restructuring
Shareholding in Tata Technologies Limited ('TTL') decreased from 72.29% to72.28% on account of further allotment of 6188 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 2500000 shares to TML Holdings Pte. Ltd. with effectfrom April 2 2018 and from 95.81% to 95.87% on account of further allotment of 548000shares to TML Holdings Pte. Ltd. with effect from November 22 2018.
Shareholding in Trilix S.r.l. increased from 80% to 100% with effect fromDecember 6 2018.
Transfer of Defense Undertaking to Tata Advanced Systems Limited: The Company proposesto transfer the value added segment of Defence vehicles business and specialized Defenceprojects (excluding FICV) ('Defense Undertaking') pursuant to a Scheme of Arrangement as agoing concern on a slump sale basis to Tata Advanced Systems Limited ('TASL') a whollyowned subsidiary of Tata Sons Private Limited at an enterprise value of Rs 209.27 croresarrived at using the Net Asset Value Method. The total consideration receivable from thesaid transfer has been negotiated for an upfront consideration of Rs 100 crores (to beadjusted for design and development spent and changes in working capital) plus a futureconsideration of 3% of the revenue generated from identified Specialized Defence Projectsfor upto 15 years from the financial year ended FY 2020 subject to a maximum of Rs 1750crores. Your Company has received No Objection from the Stock Exchanges SEBI and theCompetition Commission of India for the said transfer and requisite approvals from theCompany's shareholders National Company Law Tribunal ('NCLT') the Ministry of Defenceand other statutory authorities are under process.
The Company has adopted a Policy for determining Material Subsidiaries which has beenamended during the year in line with Regulation 16 of the SEBI Listing Regulations. ThePolicy 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 businessof the subsidiary companies.
The Board takes responsibility for the overall process of risk management throughoutthe organization. Through an Enterprise Risk Management programme the Company's businessunits and corporate functions address risks through an institutionalized approach alignedto the Company's objective. This is facilitated by internal audit. The Business risk ismanaged through crossfunctional involvement and communication across businesses. Theresult of the risk assessment are presented to the senior management. The Risk ManagementCommittee reviews business risk areas covering the top operational financial strategicand regulatory risks.
INTERNAL FINANCIAL CONTROL SYSTEMS AND ADEQUACY
The Board has adopted policies and procedures for governance of orderly and efficientconduct of its business including adherence to the Company's policies safeguarding itsassets prevention and detection of frauds and errors accuracy and completeness of theaccounting records and timely preparation of reliable financial disclosures. The Company'sinternal control systems commensurate with the nature of its business the size andcomplexity of its operations.
The Company has an independent in-house Internal Audit ('IA') department thatfunctionally reports to the Chairman of the Audit Committee thereby maintaining itsobjectivity. Remediation of deficiencies by the IA department has resulted in a robustframework for internal controls. These are detailed in the Management Discussion andAnalysis Report which forms part of this Report.
The Tata Motors Group employed 82797 permanent employees as of FY 2018-19 (FY 2017-18:81090 employees). The Company employed 27572 permanent employees as of FY 2018-19 (FY2017-18: 24989 employees).
The Company has labour unions for operative / worker grade employees at all its plantsacross India except the Dharwad Plant. The Company has generally enjoyed cordialrelations with its employees and unions at its factories and offices and have receivedunions' support in the Company's implementation of reforms that impact safety qualitycost and productivity improvements across all locations. Employee wages are being paid inaccordance with wage agreements that have varying terms (typically three to four years) atdifferent locations.
In line with the Company's philosophy of continuously harnessing employee potential anddeveloping them to become more capable professionals and future leaders in FY 2018-19 wehave partnered with Symbiosis International (Deemed University) and launched a 2 yearManagement Program ('EPGDBM') with curriculum around operations finance peoplemanagement supply chain & marketing and 90 employees joined in the 1st batch. Toenable comprehensive development of white collar workforce the Company has created 4Learning Academies - Commercial Excellence Management Development Operations Excellenceand Product Leadership. During FY 2018-19 8443 permanent white collar employees weretrained under these academies on various functional and managerial aspects. To develop itsblue collar workforce the Company trained 11721 employees in technician's skilldevelopment quality management and productivity improvement.
Inclusion and Diversity
The Company believes that with diversity and inclusion at workplace it can leveragethe multiplicity of skillsets in all its operations. The Company has established policiesand a supportive work environment especially for its women employees and for employeesfrom different backgrounds age-groups and ethnicities as well.
The Company also endorses the initiative from Tata Group - Second Career InitiativeProgram ('SCIP') to offer an opportunity to returning mothers who would like to restarttheir professional careers. Rs GearUp' initiative for mid-level women managers is designedto provide management development inputs focussed on leadership skills to make them readyas future leaders. Company's Human Resource ('HR') policy framework including maternityleave policy sabbatical and half-day-half-pay policy and flexible timings helpsemployees to establish a work-life balance. The company employed 3.5% permanent womenemployees 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 aPolicy on Prevention Prohibition and Redressal of sexual harassment at workplace in linewith the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules thereunder. Internal ComplaintsCommittee ('ICC') is in place for all works and offices of the Company to redresscomplaints received regarding sexual harassment. All women associates (permanenttemporary contractual and trainees) as well as any women visiting the Company's officepremises or women service providers are covered under this Policy.
During FY 2018-19 the Company had received 11 complaints on sexual harassments 10 ofwhich have been substantiated and appropriate actions taken. The remaining 1 complaint wasreceived during mid March and is being investigated. There were no complaints pending formore than 90 days. The Company organized 103 workshops or awareness programs againstsexual harassment.
Tata Motors Limited Employees Stock Option Scheme
In order to ring fence and incentivize key talent for driving long term objectives ofthe Company and ensuring that employee payoffs match the tong gestation period of certainkey initiatives whilst simultaneously fostering ownership behavior and collaborationamongst employees the Tata Motors Limited Employees Stock Option Scheme 2018 ('TML ESOPScheme 2018' / 'the Scheme') was implemented during the year. Based on the approval of theshareholders at the Annual General Meeting held on August 3 2018 aggregate 7812427number 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 wereno ESOP that vested or any shares issued on vesting during the year. The Scheme is incompliance with the Securities and Exchange Board of India (Share Based Employee Benefits)Regulations 2014. Appropriate disclosures prescribed under the said Regulations withregard 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 Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed to the Report as Annexure - 1.
Statement containing particulars of top 10 employees and the employees drawingremuneration in excess of limits prescribed under Section 197 (12) of the Act read withRule 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 provisoto Section 136(1) of the Act the Report and Accounts are being sent to the shareholdersexcluding the aforesaid Annexure. The said Statement is also open for inspection at theRegistered Office of the Company. Any member interested in obtaining a copy of the samemay write to the Company Secretary. None of the employees listed in the said Annexure arerelated to any Director of the Company.
BUSINESS RESPONSIBILITY REPORT
Pursuant to Regulation 34(2)(f) of the SEBI Listing Regulations the BusinessResponsibility Report (BRR) on initiatives taken from an environmental social andgovernance perspective in the prescribed format is available as a separate section of theAnnual 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 levelengagement in Safety the Organization has taken huge strides to improve SafetyOrganization Structure and build strong safety systems with a vision of achieving 'ZeroInjury at Workplace'.
For FY 2018-19 Tata Motors including its subsidiaries achieved the Safety PerformanceTarget with Total Recordable Case Frequency Rate ('TRCFR') being 0.80 against the targetof 1.01. For Indian Operations also Tata Motors Safety Performance was well withintargets with Total Recordable Case Frequency Rate ('TRCFR') being 0.60 against the targetof 0.89. Unfortunately 3 fatalities were recorded - one each at a manufacturing locationworkshop ('DTC') and a road incident. Robust incident investigation has been carried outfor all 3 incidents and horizontal deployment of recommendations has been completed.
As a part of our robust governance mechanism the Company has dedicated committees andvarious functional teams to ensure safety and implementation of our safety standards.Safety Health and Sustainability ('SHS') committee of Board reviews the Company's safetyperformance every quarter. Plant level sub-committees for safety are formed whofunctionally report to corporate level sub-committees. The reviews happen at multi levels- factory level by Factory Implementation committee plant level Apex committee orsub-committee the SHS council and finally by the SHS committee. For non plant andservices areas focussed monthly reviews happen at regional offices and with CustomerService teams. Similar mechanism is also in place at workshop warehouses and even atoffice locations.
Training and awareness across organisation continues to be considered as a key elementof Safety Strategy. Aspects such as Safety Management Fundamentals IncidentInvestigations Contractor Safety Management Actions Employees Can Take ('AECT') etc. areconsidered in training programmes for key leaders 500+ internal trainers new joinees ininduction progammes as also refreshers to existing employees.
The Company continued Campaign 'i-drive safe' - an initiative on building a safedriving culture amongst its employee and associates and have trained them in DefensiveDriving. Road Safety Month campaign was observed in February 2019 with the theme 'RoadSafety is Life Safety' which included Road Safety Celebrations conducted in all locationincluding all Plants Offices Dealerships Warehouses and Vendors.
The manufacturing plants across the Country are certified to ISO 14001:2015 -Environment Management Systems and OHSAS 18001 - Occupational Health & SafetyManagement System. All 7 plants are certified for Food Safety Management System ISO22000:2005. The CV manufacturing plants of the Company across India are certified to ISO50001 - Energy Management System. Guided by its Environmental Policy Climate ChangePolicy and Environmental Procurement Policy the Company is focused on minimising theenvironmental impact of its products processes and services throughout the life-cycle.Manufacturing Plants track energy and environmental performance in a periodic andstructured manner at Head-Operations level. The Company actively benchmarks its energy andenvironmental performance between our own Plants as well as peers and adopts bestpractices across Plant locations for maximum impact. All the Company's sites have obtainedCII-GreenCo Rating and 2 Plants have achieved Platinum rating in FY 2018-19.
The Company continued to drive a number of initiatives to reduce its environmentalfootprint in FY 2018-19. Our GreenHouse Gas (GHG) mitigation approach includes drivingEnergy Conservation in manufacturing operations and generation / procurement of renewableenergy. The Company consumed 94.2 million units of renewable electricity in its operations(16.1 % of total power consumption) compared to 99.38 million units in FY 201718 (20.76%of total power consumption). The proportion of renewable power in previous financial yearwas greater due to allocation of wind power arrears. RE capacity was enhanced by 2MWpRoof-top Solar PV Project at Lucknow and Pimpri Pune Plants and 0.5MW at Chinchwad Pune inFY 2018-19 which will help offset GHG emissions in the FY 2019-20. Taking this furtherthe Company has signed a Power Purchase Agreement ('PPA') with Tata Power Renewable EnergyLtd. ('TPREL') for setting up an additional 7 MWp capacity of roof and ground mountedsolar photovoltaic ('PV') installations across Jamshedpur Pantnagar and Dharwad Plants.
The Company monitors water sourcing practices at its manufacturing Plants and continuedto work on lowering water consumption through water conservation in operations re-cyclingtreated effluent for re-use in process and harvesting rainwater. A total of 977656 m3 ofwater was conserved through these efforts in FY 2018-19 which is 13.8% of total waterconsumption as compared to 17.3% in FY 2017-18.
Hazardous wastes are disposed in accordance with authorizations issued by theAuthorities in the States we operate. These include destruction of hazardous waste at costby landfilling and incineration at Approved Common Treatment Storage and DisposalFacilities; energy and material recovery from hazardous wastes through co-processing incement plants; and material conversion through approved re-cyclers for hazardous wastessuch as spent thinner paint sludge and sealant.
The Company commenced an initiative across Plants in FY 201819 called "Value fromHazardous Waste" aimed at diverting hazardous waste from landfill / incineration atapproved sites and instead derive value from the same. This initiative aims to ultimatelyachieve 'Zero Waste to Landfill' status from manufacturing operations. The quantum ofhazardous waste diverted from landfill / incineration was higher by 15.5% over FY 2017-18.However due to higher waste generation on the back of higher volumes hazardous wastesent for disposal to Common Treatment Storage and Disposal Facilities also increased by41.2%.
The Company has also initiated actions to minimise the consumption of flexible plasticpackaging in its operations. While plastic packaging used for dispatch of auto partsbetween Plants and to Warehouses has been significantly reduced work is ongoing onplastic packaging used by our Suppliers. This is being done by elimination of plasticpackaging where feasible and converting expendable (single-use) plastic packaging toreturnable (multiple- use) packaging.
On Sustainability we continued implementation of sustainable supply chain initiativesduring FY 2018-19. 115 suppliers have been trained and provided handholding to improvesustainability performance and assessed towards sustainability expectations.
Circular economy natural capital evaluation of key dependencies design forenvironment biodiversity assessment life cycle assessment of products climateadaptation study were some of the other initiatives the Company has taken in sustainingits business and planet.
JLR continues to drive health and safety through Destination Zero - A Journey to ZeroHarm. The ambition is reflected in the JLR commitment with the key statement being"Our most valuable asset is our people nothing is more important than their safetyand wellbeing. Our co-workers and families rely on this commitment. There can be nocompromise". The concept of Destination Zero Harm enables the consistent message onsafety to continue to be highly visible in the business.
The development of focused plans has ensured that each functional area aligned atBoard level has a specific 'Destination Zero' Harm Plan. These have assisted eachfunctional area to tailor their own plan of activities to lead improved safety andwellbeing within their own area of responsibility sponsored from the most senior levelfunctionally.
To support the wider ambition of zero harm as well as focusing on incidents JLR alsocontinued to mature the approach to wellbeing activities with a focus on mental health andthe continuation of programmes designed to support open discussions on matters of mentalhealth as well as other support interventions to assist in improved wellbeing both inmental and physical health.
Performance on Lost Time Injuries ('LTI') remained relatively stable especially withinmanufacturing. Many locations within the sites celebrated sustained zero lost timeinjuries. The performance on safety was assisted in part through various activities takenduring the year such as improving quality of safety behavioural observationsintroduction of revised internal audit programme called SHARP effective implementation ofexisting safety management programs safety and wellbeing weeks robust safety trainingleadership training and driving assessments etc.
The business has gone through OHSAS 18001 - surveillance visits in 2018-19 within allthe UK locations and maintained its accreditation to this standard through a series ofexternal assessments. It has now started the cycle of assessments to migrate to the newInternational Standard ISO 45001 with accreditation to ISO 45001 expected at the end ofthe assessment period in 2019-20.
TDCV's Safety Index continued to improve from 1.24 to 0.52 in FY 2018-19. TDCV hasimplemented reinforced High-risk Control Program [LockOut Energy Control ('LOEC')Pedestrian and InPlant Vehicle ('PIV') and Confined Space entry] and operated the standingcommittee (PIV Committees and LOEC Committee) from 2018. In addition TDCV has assignedemergency medical technicians ('EMTs') to designated places and conducted trainingsessions for all the employees to ensure a prompt response to any emergency situationswithin the company.
CORPORATE SOCIAL RESPONSIBILITY
The brief outline of the Corporate Social Responsibility (CSR) Policy of the Companyand the initiatives undertaken by the Company on CSR activities during the year in theformat prescribed in the Companies (CSR Policy) Rules 2014 are set out in Annexure - 2 ofthis Report. The Policy is available on Company's website at URL:https://investors.tatamotors.com/pdf/csr-policy.pdf.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNING AND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Act read along with Rule 8of the Companies (Accounts) Rules 2014 is annexed herewith as Annexure - 3.
EXTRACT OF ANNUAL RETURN
Pursuant to Sections 92 & 134(3) of the Act and Rule 12 of the Companies(Management and Administration) Rules 2014 the extract of Annual Return in Form MGT-9 isprovided in Annexure -4 to this Report and is also available on the Company's website URL:https://www.tatamotors.com/investors/annual-return/.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with provisions of the Act and the Articles of Association of theCompany Mr N Chandrasekaran Non-Executive Chairman (DIN:00121863) is liable to retire byrotation and is eligible for re-appointment.
The disclosures required pursuant to Regulation 36 of the SEBI Listing Regulations andClause 1.2.5 of the Secretarial Standard are given in the Notice of AGM forming part ofthe Annual Report.
In terms of Section 149 of the Act and the SEBI Listing Regulations Mr Nasser MunjeeMr Vinesh Kumar Jairath Ms Falguni Nayar Mr Om Prakash Bhatt and Ms Hanne Sorensen arethe Independent Directors of the Company as on date.
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(1)(b) of the SEBI Listing Regulations. In terms ofRegulations 25(8) of the Listing Regulations the Independent Directors have confirmedthat they are not aware of any circumstance or situation which exists or may bereasonably anticipated that could impair or impact their ability to discharge theirduties with an objective independent judgement and without any external influence.
Mr Nasser Munjee Mr Vinesh Kumar Jairath and Ms Falguni Nayar were appointed asIndependent Directors at the 69th AGM of the Company held on July 31 2014 for period of 5years and are holding office till July 30 2019. The Board hereby places on record itsappreciation for their valuable contribution and guidance during their tenure asIndependent Director.
Key Managerial Personnel
In terms of Section 203 of the Act the Key Managerial Personnel (KMPs) of the Companyduring FY 2018-19 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
Mr Hoshang Sethna Company Secretary
The tenure of Mr Satish Borwankar Executive Director and Chief Operating Officer of theCompany ends on July 15 2019. Mr Borwankar started his career with the Company in 1974 asa Graduate Engineer Trainee and has served in various operating functions likemanufacturing quality vendor development and strategic sourcing rising through theranks to become its Executive Director and Chief Operating Officer. The Board of Directorshereby places on record its appreciation for the invaluable contributions made by MrBorwankar during his tenure.
At the Company we ensure that we evolve and follow the corporate governance guidelinesand best practices sincerely to boost long-term shareholder value and to respect minorityrights. The Company considers it an inherent responsibility to disclose timely andaccurate information regarding its operations and performance as well as the leadershipand governance of the Company.
A separate section on Corporate Governance and the certificate from the PracticingCompany Secretary confirming compliance of Corporate Governance norms as stipulated inRegulation 34 read along with Schedule V of the SEBI Listing Regulations givinginformation pertaining to the Board and its Committees transfers to IEPF authority etc.form part of this Report.
MEETINGS OF THE BOARD
During the year the Board of Directors met 7 times. For details please refer to theCorporate Governance Report which forms part of this Annual Report.
COMMITTEES OF THE BOARD
The Committees of the Board focus on certain specific areas and make informed decisionsin line with the delegated authority.
The following Committees constituted by the Board function according to theirrespective roles and defined scope:
Nomination and Remuneration Committee
Corporate Social Responsibility Committee
Stakeholders Relationship Committee
Risk Management Committee
Safety Health and Sustainability Committee
Details of composition terms of reference and number of meetings held for respectivecommittees are given in the Corporate Governance Report which forms a part of thisReport. Further during the year under review all recommendations made by the AuditCommittee have been accepted by the Board.
The annual evaluation process of the Board of Directors individual Directors andCommittees was conducted in accordance with the provision of the Act and the SEBI ListingRegulations.
The Board evaluated its performance after seeking inputs from all the directors on thebasis of criteria such as the Board composition and structure effectiveness of boardprocesses information and functioning etc. The performance of the Committees wasevaluated by the Board after seeking inputs from the committee members on the basis ofcriteria such as the composition of committees effectiveness of committee meetings etc.The above criteria are as provided in the Guidance Note on Board Evaluation issued by theSecurities and Exchange Board of India.
The Chairman of the Board had one-on-one meetings with the Independent Directors andthe Chairman of NRC had one-on-one meetings with the Executive and Non-ExecutiveNon-Independent Directors. These meetings were intended to obtain Directors' inputs oneffectiveness of the Board/Committee processes.
The Board and the NRC reviewed the performance of individual directors on the basis ofcriteria such as the contribution of the individual director to the board and committeemeetings like preparedness on the issues to be discussed meaningful and constructivecontribution and inputs in meetings etc.
In a separate meeting of independent directors performance of NonIndependent Directorsand the Board as a whole was evaluated. Additionally they also evaluated the Chairman ofthe Board taking into account the views of Executive and Non-Executive Directors in theaforesaid meeting. The above evaluations were then discussed in the Board meeting andperformance evaluation of Independent Directors was done by the entire Board excludingthe Independent Director being evaluated.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
All Board members of the Company are afforded every opportunity to familiarizethemselves with the Company its management its operations and above all the Industryperspective and issues. They are made to interact with senior management personnel andproactively provided with relevant news views and updates on the Company and sector. Allthe information/documents sought by them is/are also shared with them for enabling a goodunderstanding of the Company its various operations and the industry of which it is apart.
The details of the Familiarisation Programme for Independent Directors with the Companyin respect of their roles rights responsibilities in the Company nature of the industryin which Company operates business model of the Company and related matters are availableon the Company's website URL: https://investors.tatamotors.com/pdf/familiarisation-programme- independent-directors.pdf.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The Company's policy on directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Act (salient features) has been briefly disclosedhereunder and in the Corporate Governance Report which is a part of this Report.
Selection and procedure for nomination and appointment of Directors
The Nomination and Remuneration Committee ('NRC') is responsible for developingcompetency requirements for the Board based on the industry and strategy of the Company.The Board composition analysis reflects in-depth understanding of the Company includingits strategies environment operations financial condition and compliance requirements.
The NRC conducts a gap analysis to refresh the Board on a periodic basis includingeach time a Director's appointment or reappointment is required. The NRC reviews and vetsthe profiles of potential candidates vis-a-vis the required competencies undertakes duediligence and meeting potential candidates prior to making recommendations of theirnomination to the Board.
Criteria for determining qualifications positive attributes and independence of aDirector
In terms of the provisions of Section 178(3) of the Act and Regulation 19 of the SEBIListing Regulations the NRC has formulated the criteria for determining qualificationspositive attributes and independence of Directors the key features of which are asfollows:
Qualifications - The Board nomination process encourages diversity of thoughtexperience knowledge age and gender. It also ensures that the Board has an appropriateblend of functional and industry expertise.
Positive Attributes - Apart from the duties of Directors as prescribed in theAct the Directors are expected to demonstrate high standards of ethical behaviorcommunication skills and independent judgment. The Directors are also expected to abide bythe respective Code of Conduct as applicable to them.
Independence - A Director will be considered independent if he / she meets thecriteria laid down in Section 149(6) of the Act the Rules framed thereunder andRegulation 16(1)(b) of the SEBI Listing Regulations.
The Directors affirm that the remuneration paid to Directors KMPs and employees is asper the Remuneration Policy of the Company.
The said policy is also available on the Company's website URL:https://investors.tatamotors.com/pdf/directors-appointment- remuneration.pdf
The Company believes in the conduct of the affairs of its constituents in a fair andtransparent manner by adopting the highest standards of professionalism honestyintegrity and ethical behaviour. In line with the Tata Code of Conduct ('TCOC') anyactual or potential violation howsoever insignificant or perceived as such would be amatter of serious concern for the Company. The role of the employees in pointing out suchviolations of the TCOC cannot be undermined.
Pursuant to Section 177(9) of the Act and Regulation 4(2)(d) (iv) of the SEBI ListingRegulations a Whistleblower Policy and Vigil Mechanism was established for directorsemployees and stakeholders to report to the management instances of unethical behaviouractual or suspected fraud or violation of the Company's code of conduct or ethics policy.The Vigil Mechanism provides a mechanism for employees of the Company to approach theChief Ethics Counsellor ('CEC')/Chairman of the Audit Committee of the Company forredressal. The Company has revised the Whistleblower Policy in accordance with amendmentsmade to SEBI (Prohibition of Insider Trading) Regulations 2015.
It is affirmed that no personnel of the Company has been denied access to the AuditCommittee. The policy of vigil mechanism is available on the Company's website at URL:https://investors . tatamotors.com/Ddf/whistle-blower-Dolicy.Ddf.
M/s B S R & Co. LLP Chartered Accountants (ICAI Firm No. 101248W/W-100022) theStatutory Auditors of the Company hold office until the conclusion of Seventy Seventh AGMto be held in the year 2022. Pursuant to Section 141 of the Act the Auditors haverepresented that they are not disqualified and continue to be eligible to act as theAuditor of the Company.
The Report of the Statutory Auditor forming part of the Annual Report does not containany qualification reservation adverse remark or disclaimer. The observations made in theAuditor's Report are self-explanatory and therefore do not call for any further comments.
The Statutory Auditor of the Company has not reported any fraud as specified under thesecond proviso to Section 143(12) of the Act.
Members' approval is being sought vide item No. 5 of the Notice for authorizing theBoard of Directors to appoint Branch Auditors for the purpose of auditing the accountsmaintained at the Branch Offices of the Company abroad.
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Director appointed M/sParikh & Associates a firm of Company Secretaries in Practice to conduct theSecretarial Audit of the Company for year ended March 31 2019. The Report of theSecretarial Audit is annexed herewith as Annexure - 5. The said Secretarial Audit Reportdoes not contain any qualification reservations adverse remarks and disclaimer.
As per Section 148 of the Act the Company is required to have the audit of its costrecords conducted by a Cost Accountant. The Board of Directors of the Company has on therecommendation of the Audit Committee approved the appointment of M/s Mani & Co. afirm of Cost Accountants in Practice (Registration No.000004) as the Cost Auditors of theCompany to conduct cost audits for relevant products prescribed under the Companies (CostRecords and Audit) Rules 2014 for the year ending March 31 2020. The Board onrecommendations of the Audit Committee have approved the remuneration payable to the CostAuditor subject to ratification of their remuneration by the Members at the forthcomingAGM.
M/s Mani & Co. have under Section 139(1) of the Act and the Rules framedthereunder furnished a certificate of their eligibility and consent for appointment.
The cost accounts and records of the Company are duly prepared and maintained asrequired under Section 148(1) of Act.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All contracts/ arrangements/ transactions entered by the Company during the FY 2018-19with related parties were on an arm's length basis and in the ordinary course of business.There were no material related party transactions (RPTs) undertaken by the Company duringthe year that require shareholders' approval under Regulation 23(4) of the SEBI ListingRegulations or Section 188 of the Act. The approval of the Audit Committee was sought forall RPTs. All the transactions were in compliance with the applicable provisions of theAct and SEBI Listing Regulations.
Given that the Company does not have any RPTs to report pursuant to Section 134(3)(h)of the Act read with Rule 8(2) of the Companies (Accounts) Rules 2014 in Form AOC-2 thesame is not provided. The details of RPTs during FY 2018-19 including transaction withperson or entity belonging to the promoter/ promoter group which hold(s) 10% or moreshareholding in the Company are provided in the accompanying financial statements.
During the FY 2018-19 the Non-Executive Directors of the Company had no pecuniaryrelationship or transactions with the Company other than sitting fees commission andreimbursement of expenses as applicable.
The Policy on Related Party Transactions was amended during the year in line withamendment to the Act and SEBI Listing Regulations. The Revised Policy is available on theCompany's website URL: https://investors.tatamotors.com/pdf/rpt-policy.pdf
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The details of Loans and Investments made during FY 2018-19 are given below:
| || || ||(Rs in crores) |
|Name of Companies ||Nature of Transactions ||Loans ||Investment |
|JT Special Vehicle Private Limited ||Loan ||3.75 ||- |
|TAL Manufacturing Solutions Limited ||Acquisition of NonAerospace Business ||- ||0.1 |
|TMF Holdings Limited ||Call option exercised for Compulsorily convertible preference shares: Series A ||- ||130 |
|TMF Holdings Limited ||Equity Infusion ||- ||600 |
|Tata Precision Industries Singapore ||Loan ||0.5 ||- |
|Trilix S.R.L ||Acquisition of remaining 20% stake ||- ||7.97 |
During FY 2018-19 the Company has not given guarantee to any of its subsidiariesjoint ventures and associate companies.
The Company has devised proper systems to ensure compliance with the provisions of allapplicable Secretarial Standards issued by the Institute of Company Secretaries of Indiaand that such systems are adequate and operating effectively.
DIVIDEND DISTRIBUTION POLICY
Pursuant to Regulation 43A of SEBI Listing Regulations the Board of Directors of theCompany have formulated a Dividend Distribution Policy ('the policy'). The Policy wasamended by the Board to make it more dynamic yet simple.
The amended policy is annexed to this Report as Annexure - 6 and is also available onthe Company's website URL: https://investors .tatamotors.com/pdf/dividend-distribution-policy.pdf
SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
There are no significant material orders passed by the Regulators or Courts orTribunal which would impact the going concern status of the Company and its futureoperation. However Members attention is drawn to the Statement on Contingent Liabilitiesand Commitments in the Notes forming part of the Financial Statement.
DIRECTORS' RESPONSIBILITY STATEMENT
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutorycost secretarial auditors and external agencies including audit of internal financialcontrols over financial reporting by the Statutory Auditors and the reviews performed byManagement and the relevant Board Committees including the Audit Committee the Board isof the opinion that the Company's internal financial controls were adequate and effectiveduring FY 2018-19.
Accordingly pursuant to Section 134(5) of the Act the Board of Directors to the bestof their knowledge and ability confirm that:
(a) in the preparation of the accounts for the financial year ended March 31 2019 theapplicable accounting standards have been followed and that there are no materialdepartures;
(b) we have selected such accounting policies and have applied them consistently andmade judgments 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;
(c) proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
(d) the annual accounts have been prepared on a going concern basis;
(e) proper internal financial controls were laid down and that such internal financialcontrols are adequate and were operating effectively*; and
(f) proper systems were devised to ensure compliance with the provisions of allapplicable laws and such systems are adequate and operating effectively.
*ptease refer to the Section "internal Control Systems and their Adequacy"inthe Management Discussion and Analysis.
The Directors wish to convey their appreciation to all of the Company's employees fortheir contribution towards the Company's performance. The Directors would also like tothank the shareholders employee unions customers dealers suppliers bankersGovernments and all other business associates for their continuous support to the Companyand their confidence in its management.
On behalf of the Board of Directors
| ||N CHANDRASEKARAN |
| ||Chairman |
| ||(DIN: 00121863) |
|Mumbai May 20 2019 || |