TO THE MEMBERS OF TATA MOTORS LIMITED
The Directors present their Seventy Third Annual Report along with the AuditedStatement of Accounts for Fiscal 2018.
FINANCIAL PERFORMANCE SUMMARY (Rs in crores)
| ||Tata Motors ||Tata Motors Group |
| ||(Standalone)* ||(Consolidated) |
| ||Fiscal 2018 ||Fiscal 2017 ||Fiscal 2018 ||Fiscal 2017 |
|FINANCIAL RESULTS || || || || |
|Revenue from operations ||59624.69 ||49054.49 ||295409.34 ||274492.12 |
|Total expenditure ||55824.11 ||47242.28 ||258536.37 ||237579.76 |
|Operating profit ||3800.58 ||1812.21 ||36872.97 ||36912.36 |
|Other Income ||1557.60 ||981.06 ||888.89 ||754.54 |
|Profit before interest foreign exchange depreciation amortization exceptional item and tax ||5358.18 ||2793.27 ||37761.86 ||37666.90 |
|Finance cost ||1744.43 ||1569.01 ||4681.79 ||4238.01 |
|Profit before depreciation amortization exceptional item foreign exchange and tax ||3613.75 ||1224.26 ||33080.07 ||33428.89 |
|Depreciation amortization and product development/ engineering expenses ||3576.87 ||3491.60 ||25085.46 ||21318.56 |
|Foreign exchange (gain)/loss (net) ||17.14 ||(252.78) ||(1185.28) ||3910.10 |
|Profit/(loss) before exceptional items and tax ||19.74 ||(2014.56) ||9179.89 ||8200.23 |
|Exceptional Items - (gain) / loss (net) ||966.66 ||338.71 ||(1975.14) ||(1114.56) |
|Profit/(loss) before tax ||(946.92) ||(2353.27) ||11155.03 ||9314.79 |
|Tax expenses (net) ||87.93 ||76.33 ||4341.93 ||3251.23 |
|Profit/(loss) after tax ||(1034.85) ||(2429.60) ||6813.10 ||6063.56 |
|Share of profit of joint venture and associates (net) ||- ||- ||2278.26 ||1493.00 |
|Profit/(loss) for the year ||(1034.85) ||(2429.60) ||9091.36 ||7556.56 |
|Other comprehensive income/(loss) ||43.22 ||94.21 ||29562.51 ||(27494.57) |
|Total Other comprehensive income/(loss) for the year ||(991.63) ||(2335.39) ||38653.87 ||(19938.01) |
|Attributable to: || || || || |
|Shareholders of the Company ||- ||- ||38524.52 ||(20005.94) |
|Non-controlling interest ||- ||- ||129.35 ||67.93 |
* 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.Effective April 30 2018 the Company completed the merger of TML Drivelines Ltd. Fiscal2017 has been restated for accounting the said merger. The appointed date of merger wasApril 1 2017.
In view of the losses for Fiscal 2018 no dividend is permitted to be paid to theMembers as per the provisions of the Companies Act 2013 (the Act') and the Rulesframed thereunder.
TRANSFER TO RESERVES
Due to losses in Fiscal 2018 resulting in debit balance in retained earnings noamount has been transferred to the Debenture Redemption Reserve.
OPERATING RESULTS AND PROFITS
The year 2017 for India was marked by a number of key structural initiatives to buildstrength across macro-economic parameters for sustainable growth in the future. The growthin the first half of the year suffered despite global tailwinds. However the weaknessseen at the beginning of 2017 seems to have bottomed out with the onset of 2018.Currently the Indian economy seems to be on the path to recovery from the effects ofdemonetization transition into BS-IV emission norms and the introduction of the Goods andService Tax with indicators of industrial production stock market index auto sales andexports having shown some uptick.
The year 2017 saw global economy accelerating although UK economy evidently sloweddown while the US economy continued to grow at a modest pace. The Chinese economycontinued to grow strong however the Euro zone and Japan showed signs of accelerationlike many of the major emerging economies such as Turkey and Russia. The US economy grewat 2.7% in 2017 supported by broad-based strength in domestic demand especiallyinvestment. The Eurozone grew at a faster rate then in a decade in 2017 by 2.4% highestsince 2007 reflecting the strong consumption investment and exports. The UK bycontrast was growing by 1.8% in 2017 down from 2016's 1.9% rate and the weakestexpansion since 2012 mainly reflecting the impact of higher inflation in the wake of the2016 Brexit vote and weaker investment from companies due to uncertainty of future tradearrangements. China registering growth of 6.9% in 2017 and had remained solid this year.Activity continued to shift to consumption while investment growth rates remain wellbelow those in recent years. Industrial production has stabilized following significantcuts in overcapacity sectors implemented over the past 2 years.
During 2017 prices of base metal also strengthened with the strong growth ininfrastructure sector in major countries around the globe. Crude prices remained rangebound in major part of 2017 although it started to give a signal of upward breakouttowards fourth quarter of Fiscal 2018. Brent crude started sharp rally in the middle of2017 around US$44/bbl and has rallied all the way to US$79/bbl. The tensions in the MiddleEast and West Asia would only add to the increase in oil prices. The US shale output wasalso expected to grow just by 1.1 million bpd and the year 2018 could be the year of oildeficit to the tune of 7.5 lacs bpd.
The Tata Motors Group registered a growth of 7.6% in income from operations toRs 295409 crores in Fiscal 2018 as compared to Rs 274492 crores in Fiscal 2017. Thiswas due to growth in the business in India higher wholesale volumes in Jaguar and LandRover offset by negative translation impact from Great Britain Pound (GB') toIndian Rupee (`') of Rs 3192 crores. The consolidated EBITDA margins for Fiscal2018 stood at 10.6%. EBIT was lower due to non-recurrence of Tianjin recoveries offset byfavourable foreign currency revaluation and pension credit at Jaguar Land Rover.Consequently Profit Before Tax and Profit After Tax [post share of profit of jointventures and associates (net)] were Rs 11155 crores and Rs 9091 crores respectively.
Tata Motors Limited recorded revenue from operations (including joint operations)of Rs 59625 crores in Fiscal 2018 21.6% higher from Rs 49054 crores in Fiscal 2017.Growth in demand of Medium and Heavy Commercial Vehicle (M&HCV) and Light CommercialVehicle (LCV) new product offerings in passenger cars and Utility Vehicles (UV) resultedin increase in EBITDA margins to 5.8% in Fiscal 2018 as against 3.4% in Fiscal 2017. LossBefore and After Tax (including joint operations) for Fiscal 2018 were at Rs 947 croresand Rs 1035 crores respectively as compared to Loss Before and After Tax (includingjoint operations) of Rs 2353 crores and Rs 2430 crores respectively for Fiscal 2017.There will be significant disruptions in the Auto Industry necessitating a review of theCompany's tangible and intangible assets to ensure "Fit for Future".Accordingly an exceptional provision for impairment of Rs 963 crores has been taken inFiscal 2018.
Jaguar Land Rover (JLR') (as per IFRS) recorded a 5.9% higher revenueof GB25.8 billion in Fiscal 2018 compared to GB24.3 billion in Fiscal 2017 driven byhigher sales volumes and favourable mix. Consolidated EBITDA for Fiscal 2018 was GB3.3billion marginally higher as compared to EBITDA of GB3.0 billion for Fiscal 2017 asthe higher revenue was offset by higher marketing expense higher incentives and certainengineering charges. EBIT was GB974 million in Fiscal 2018 compared to GB1.5 billionin Fiscal 2017 due to higher depreciation and amortisation related to new productlaunches which was partially offset by higher profits from our China Joint Venture.
Profit Before Tax (PBT') in Fiscal 2018 was GB1.5 billion marginally lower thanPBT GB1.6 billion in Fiscal 2017 due to lower EBIT and the non-recurrence of Tianjinrecoveries from Fiscal 2017 offset by more favourable foreign currency revaluation of debtand hedges as well as the GB437 million pension credit realised in first quarter ofFiscal 2018.
GB437 million pension realised in first quarter of Fiscal 2018 was partially offsetby engineering charges (Fit for Future) in fourth quarter of Fiscal 2018.
TMF Holdings Limited (TMFHL') (earlier known as Tata Motors Finance Limited)(consolidated) (as per Indian GAAP) the Company's captive financing subsidiary reportedrevenues of Rs 2876 crores (Fiscal 2017: Rs 2721 crores) and Profit After Tax of Rs 217crores in Fiscal 2018 as compared to Loss After Tax of Rs 1182 crores in Fiscal 2017.
Tata Daewoo Commercial Vehicle Company Limited (TDCV') (as per Korean GAAP)South Korea registered revenues of KRW 868.26 billion a drop of 15.8% in Fiscal 2018 overthe Fiscal 2017 mainly due to lower domestic sales. The Profit After Tax was KRW 33.66billion compared to KRW 50.25 billion of Fiscal 2017. Lower profitability was mainly dueto the impact of lower domestic sales which was partially set-off by material costreduction.
VEHICLE SALES AND MARKET SHARES
The Tata Motors Group sales for the year stood at 1221124 vehicles up by11.9% as compared to Fiscal 2017. Global sales of all Commercial Vehicles (CV) were456552 vehicles while sales of Passenger Vehicles (PV) were at 764572 vehicles.
Tata Motors recorded sales of 584564 vehicles a growth of 21.9% over Fiscal 2017higher than the Indian Auto Industry grew by 10%. The Company's market share increased to14.1% in Fiscal 2018 from 12.7% in Fiscal 2017. The Company's exports on standalone basiswere lower by 18.4% to 52404 vehicles in Fiscal 2018 as compared to 64221 vehicles inFiscal 2017.
The CV market after a turbulent start in the year 2017 as a result of announcement ofBS-III to BS-IV changeover and concerns over Goods and Services Tax (GST) recoveredstrongly representing a growth of 21.7% in Fiscal 2018. The Company sold 399821 vehicleswithin the domestic market representing a growth of 23.3% over Fiscal 2017. The marketshare of CVBU for Fiscal 2018 was 45.1%. All segments with the exception of buses showedstrong growth in Fiscal 2018. Some of the highlights for the year were:
M&HCV volumes grew by 15.5% in Fiscal 2018. Several new products werelaunched across the SIGNA PRIMA and conventional platforms SIGNA 4923.S with BellCrank suspension SIGNA 3718 SIGNA 3718.TK Prima 2530.K Scoop
Prima Lx 3125.K 23cm LPK 2523 ULTIMAAX LPK 2518 7 Cum RMC Bogie.
ILCV volumes registered a strong 35.6% growth in Fiscal 2018. The introductionof the ULTRA 1518 marked the Company's entry in the 15T segment previously dominated bycompetition. New products such as LPT 407/38 ILCV Tippers and ILCV CNG products havehelped grow volumes significantly.
SCV Volumes grew by 37.3%. The XL series of SCVs consisting of the Zip XL MegaXL and Ace XL models was launched with a 15% longer load body delivering improved TotalCost of Ownership (TCO') to our customers.
Volumes in the CV passenger segment marginally increased by 0.2% from Fiscal2017. The Magic Express passenger SCV was launched in second quarter of Fiscal 2018 andwas well received helping this segment gain 9% market share in the year. The Net PromoterScore (NPS') stood at positive (+57) for Fiscal 2018.
Reiterating its commitment to greener fuel options the Company won orders forelectric buses in 6 out of the 9 cities for which tenders were released across theCountry garnering around 60% share. The Company also supplied the country's first dieselhybrid buses for the city of Mumbai with 25 units being flagged off by the Chief Ministerof Maharashtra in March 2018.
The Company became the first Original Equipment Manufacturer (OEM) in India todeploy Advanced Driver Assistance Systems (ADAS) systems in its PRIMA and SIGNA range.This package included Electronic Stability Control (ESC) Automatic Traction Control(ATC) Hill Start Aid (HSA) a Collision Mitigation System (CMS) and a Lane DepartureWarning System (LDWS).
The Company significantly improved the ability to provide customers with end toend support and comfort through enhancing the value added services under a common brand of"Sampoorna Seva". The key elements include 6 Year 6 lakh kmwarranty on the entire range of M&HCVs Tata Alert breakdown assistance serviceavailable across 3 million kilometers of Indian roads and Tata Delight Loyalty Program.
Tie up with Indian Oil to launch Tata Motors Genuine Oil (TMGO) a single brandof affordable lubricating oils that is guaranteed by the Company for use across the rangeof CVs.
Sales Kraft Value Selling and Negotiation training module wasdeveloped along with Mercuri Goldman to improve the negotiation skills of the frontlinesales team aimed to improve net sales realization. Over the course of 3 phases theentire M&HCV sales team has been trained. In the next phase of the program thismodule is being extended to the dealer sales teams.
The Company participated in the SIAM Auto Expo 2018 where 15 vehicles and 1 newengine from the CV portfolio were showcased. Some of the key products displayed were:
The SIGNA 4323 India's first 6-axle rigid truck with a 30-tonpayload the highest in the market and 4.5 tons higher than the nearest competitor.
The special PRIMA 4930.S technology demonstrator which displayed some ofour latest advanced safety features like LDWS Advanced Emergency Braking System (AEBS)HSA and rear view cameras
The ULTRA T.7 an elegant 4.2 ton payload LCV with a 1.9-meter wide cabinfor easier maneuverability on the narrow roads of urban and rural India.
The Tata INTRA compact truck which is set to re-define the SCV segment in thecountry
The MAGNA Bus the first bus body code compliant two-axle OEM coachwith world-class design and engineering inputs from our partner Marcopolo Brazil.
The Turbotronn Engine Family - a brand new next generationstate-of-the-art diesel engine family that offers best in class fuel economy excellentperformance better reliability and durability as well as lower TCO to our customers.
A range of Electric commercial vehicles including the
Starbus Electric Magic EV and Iris EV.
CV won numerous awards for its various innovative products and initiatives someof which are mentioned below:
At the prestigious Apollo CV Awards CVBU won:
- Small People Mover of the Year for the Tata Magic Express
- M&HCV People Mover of the Year for the Tata Magna Bus
- HCV Tractor Cargo Carrier of the Year for the Tata SIGNA 4923.S
- Special Recognition award for the Tata Starbus Hybrid
Brand Equity YouTube Leader board No 1. In Top 10 ads onYouTube in India that resonate most with the audience - February 2018.
World Digital Marketing Congress (WDMC) - Best Digital Integratedmarketing campaign for Tata Ace - Keep Loading campaign. Global Digital marketing awards.This is one of the first industry awards in the year.
Abby's Best use of Digital media Bronze Award for Bestuse of Digital display advertising
Digital Industry Awards 2017 - Best Use of Social Media in a DigitalCampaign for Tata T1 Prima Truck Racing Championship 2017 for the year's Digital IndustryAwards
Use Dipper At Night Campaign an innovative campaign to bringawareness amongst the truck driver community of safe practices continues to be extremelywell received and acknowledged winning the Silver WARC Prize for Asian Strategy and awardfor the Best Channel Thinking.
Tata Yodha This media campaign won the Bronze award at theprestigious Effies in India.
In order to promote various applications on the Company's products a series ofcampaigns were organized on Pan India:
M&HCV Truck World - Organized 6 Truck World Exhibitions with afull range of over 35 different models displayed. The events were also used to highlightnew product launches. This has been backed up with 10000+ market activations including3100+ customer meets and 1600+ Fuel Trials.
ILCV Expos 53 ILCV Expos showcasing the complete ILCV rangeof the Company were conducted across 17 states with 18500 customers in attendance.
XL Series Launch Activities 44 large and 114 small format XLRange launch events were conducted across 19 states attended by over 28000 potentialcustomers.
UP Yoddha Kabaddi Team Tied up with the Pro Kabaddi Leagueteam UP Yoddha to promote the Tata Yodha range of pickups. This association was amplifiedthough a concentrated promotion campaign including digital and Below The Line (BTL')activities.
HAMARE BUS KI BAT HAI - a unique outreach program for schoolstaff to upgrade their soft skills touched more than 1500 schools in Fiscal 2018 alone.This meant touching more than 46000 school staff in 800+ locations.
Bandhan Key Customer Meets 7 large format key customer meetswere organized in strategic markets across the country with seniors CVBU leadership inattendance.
During Fiscal 2018 the Lucknow and Pantnagar plants were certified for WordClass Quality (WCQ) Level 3. The Incident Per Thousand Vehicles (IPTV') hasdecreased significantly over the last 3 years.
The domestic PV industry grew by 7.3% during Fiscal 2018 registering a volume of 3.25million vehicles. The growth in industry was mainly driven by growth in overall economy ofIndia coupled with easing financing cost. This growth was driven by top 4 manufacturersonly.
The Company's PV business registered a growth of 19.0% with total volumes of 184743vehicles. The market share of the Company for Fiscal 2018 was 5.7%. The Company sold134860 cars with a marginal de-growth of 1.2% and 49883 Utility Vehicle (UV) with agrowth of 165.6% as compared with Fiscal 2017. The growth in UV segment was driven bystrong demand for Nexon and Hexa. The sharp increase in sales was achieved despite a sharpdecline in the Fleet Segment in which the Company has been traditionally a big player.Focus on individual customers helped in increasing share of individual customers to over85%. In the field of customer service the Company ranked second in J D Power CustomerSatisfaction Index Survey which is a significant improvement over last few years. DealerNetwork upgradation and working capital availability were prevailing constrains in PVsales and the Company has been working with TMF Holdings Limited its financing arm andother banks to plug these gaps.
During Fiscal 2018 the Company launched two new products namely Nexon and Tigor. Apartfrom these two main launches Tiago Wizz Tiago AMT Tigor AMT Hexa Downtown and Zestlimited editions were launched. All the newly launched cars experienced strong demand andwide acceptance from the market. After almost 6 years one of the Company's productsnamely Tiago figured among top 10 brands in car industry becoming the second highestselling model in compact car segment. Apart from these regular models the Company madesignificant progress in electrical vehicles. The Company won the tender for supply of10000 electric cars to Energy Efficiency Services Limited (EESL').
The PV business has seen a sharp transformation in NPS from a negative score (-13) inFiscal 2015 to positive score (14) in Fiscal 2018 significantly improving brandperception and pricing power of the PVs. During Fiscal 2018 the Pune and Sanand PV plantswere certified for WCQ Level 3 while UV plant certified for WCQ Level 2. The warranty IPTVis at all time lowest level. Both these parameters are indicators of continued focus onquality improvement.
The Company exported 52404 vehicles (Fiscal 2017: 64221 vehicles) comprising 50106units of CV and 2298 units of PV during Fiscal 2018. Export of CV dropped by 16.7% inFiscal 2018 with 50106 units exported compared to 60184 units in Fiscal 2017. The primereason for the drop in numbers was the drop in Total Industry Volumn (TIV) in two of ourkey markets Nepal (by 34% due to duty changes) and Sri Lanka (by 39% due to liquiditycrisis). Export shipments to Bangladesh achieved record shipments and retails. MarketShare in all SAARC markets either improved or have been strong. Political distresses inthe Middle East Kenya and South Africa and economic slowdown and currency devaluations invarious markets in Africa affected volumes in these regions in Fiscal 2018. The shipmentsto ASEAN doubled in Fiscal 2018 as compared to Fiscal 2017 making it our fastest growingregion. In Fiscal 2018 the Company successfully bagged several prestigious ordersincluding 250 units of Xenon pickups 200 units of LPTA 715 from the Myanmar Armed forces[making Myanmar Armed Forces the biggest customer of Xenon globally (1950 units)] 540units of buses from ILOC Senegal 209 units from GVK EMRI Sri Lanka. Some of the keyevents in Fiscal 2018 were the launch of Prima in Philippines Signa in Sri Lanka Yodhain Nepal Ultra buses in Tanzania Ultra range in South Africa and unveiling of Ultra inThailand and Indonesia. The complete CR range of ILCV was launched in Nepal.
Export of PV stood at 2298 units compared to 4037 units in the Fiscal 2017. Two largemarkets remain non-operational mainly Sri Lanka due to high import duties tight retailfinancing and South Africa due to the closure of the distribution channel.
During Fiscal 2018 launch of new models in Nepal and
Bangladesh helped the Company to accrue 44% of its PV export volumes from launches. TheCompany successfully launched the Hexa Tigor and Nexon in Nepal where the Tigor andNexon were both Number One' sedan and CUV respectively. The Tata Motors' brandranked Number Three' in the PV segment in Nepal despite being present only in alimited number of high volume segments. In Bangladesh the Tiago AMT was ranked asNumber One' hatchback.
JAGUAR LAND ROVER
Jaguar Land Rover (JLR) achieved record retail sales of 614309 in Fiscal 2018marginally higher by 1.7% compared to Fiscal 2017 primarily driven by the introduction ofthe Range Rover Velar Jaguar E-PACE the all new Land Rover Discovery coupled with soliddemand for the long-wheel base Jaguar XFL in China and the award-winning Jaguar F-PACE.Year-on-year the higher retail sales volumes by 19.9% in China 4.7% in North America and3.4% in overseas markets were offset by lower sales in the UK by 12.8% and in Europe by5.3% primarily driven by ongoing uncertainty surrounding diesel.
The total wholesale volumes (excluding sales from the China Joint Venture) were 545298in Fiscal 2018 up 2.0% compared to the 534746 units in Fiscal 2017. The growth inwholesales primarily reflected the introduction of new models offset by lower wholesalesof older models notably the Jaguar XE and XF Land Rover Discovery Sport Range RoverEvoque and other models (including Range Rover and Range Rover Sport on account of themodel year changeover). Some of the key highlights of Fiscal 2018:
All new Land Rover Discovery launched in the US and China in May 2017
The new Jaguar XF Sportbrake unveiled in June 2017 with sales following shortly
The Range Rover Velar commenced retail sales in July 2017 (Winner of World CarDesign of the Year)
Jaguar's new compact performance SUV the E-PACE commenced sales from November2017
Refreshed Range Rover and Range Rover Sport models (including plug in hybrids)were launched at the end of calendar 2017
Production of the new long wheel base Jaguar XEL commenced at our China JointVenture and went on sale in December 2017
JLR announced that all models would offer an electrified option from 2020
The Range Rover Velar Jaguar F-PACE and E-PACE were all awarded a 5 star EuroNCAP rating in Fiscal 2018
JLR's first battery electric vehicle the Jaguar I-PACE was launched in March2018
Production of JLR's 4 cylinder 2 litre ingenium petrol engine commencedproduction at our China joint venture in July 2017 for locally manufactured JLR vehiclesin China
Construction of the manufacturing plant in the city of Nitra in Slovakiaadvanced during Fiscal 2018 and the all new Discovery will be the first vehicle to beproduced at the new plant from the end of calendar year 2018
InMotion Ventures announced $25m investment in rideshare company LYFT in June2017
JLR is taking part in the UK's first road tests for autonomous vehicles
Long term strategic partnership with Waymo announced in March to develop aself-driving I-PACE for Waymo's driverless transportation service with 20000 unitsjoining Waymo's fleet over 2020 and 2021
JLR confirmed plans to open a software engineering centre and create 150 jobs inShannon Republic of Ireland in 2018
TATA DAEWOO COMMERCIAL VEHICLES COMPANY LIMITED
Tata Daewoo Commercial Vehicles Company Limited (TDCV) during Fiscal 2018 sold 8870commercial vehicles lower by 14.0% over Fiscal 2017 mainly due to decrease in domesticsales. TDCV sold 6859 commercial vehicles in the domestic market lower by 22.0% ascompared to sales in Fiscal 2017 primarily due to lower industry volumes and aggressivediscounting and marketing strategies of importers considering their higher ordering level.The market share for both HCV and MCV segments put together was 26.5% as compared to 29.6%in Fiscal 2017. The export market scenario continued to remain challenging in Fiscal 2018with factors like local currency depreciation against the US Dollar continuing statutoryregulations to reduce imports the slowdown in Chinese economy impacting commodityexporting countries and increased dealer inventory. However TDCV could increase itsexport sales to 2011 commercial vehicles 32.1% higher compared to 1522 commercialvehicles in Fiscal 2017.
TATA MOTORS (THAILAND) LIMITED
Tata Motors (Thailand) Limited (TMTL) domestic retail sales in Fiscal 2018 was 958units as compared to 1094 units in Fiscal 2017. Offtake was 682 units in Fiscal 2018 ascompared to 1332 units in Fiscal 2017. The Thai Automobile Industry has witnessed agrowth of 13.6% in Fiscal 2018 compared to flat growth last year the addressable segmentof TMTL declined by 3% compared to 14% growth last year. Fiscal 2018 saw the launch ofUltra Truck models. Super Ace was well received in the market resulting in market shareimprovement to 8.9% compared to 4.6% in Fiscal 2017. During the year TMTL received itsfirst order from Royal Thai Army to supply 1.25 ton Tata Trucks.
TATA MOTORS (SA) (PTY) LIMITED
Tata Motors (SA) (Pty) Ltd (TMSA) sold 773 chassis in the South African market inFiscal 2018 compared to 697 chassis in Fiscal 2017 and exported 42 chassis in Fiscal 2018compared to 6 chassis to Mozambique during Fiscal 2017. TMSA commenced manufacturing ofthe Ultra 814 and is in the process of assembling new range of TDCV models in SouthAfrica in Fiscal 2019.
TMF HOLDINGS LIMITED
TMF Holdings Limited (TMFHL) a wholly owned subsidiary of the Company is thevehicle financing arm under the brand "TMF Holdings Limited". TMFHL's totaldisbursements (including refinance) increased by 65.7% at Rs 15406 crores in Fiscal 2018as compared to Rs 9298 crores in Fiscal 2017. TMFHL financed a total 175128 vehiclesreflecting an increase of 47.3% over 118883 vehicles financed in Fiscal 2017.Disbursements for CV increased by 60.6% and were at Rs 11448 crores (115689 units) ascompared to Rs 7127 crores (77898 units) of Fiscal 2017 mainly due to higherdisbursements in the M&HCV segment. Disbursements of PV increased by 14.3% to Rs 2345crores (42619 units) from a level of Rs 1542 crores (34126 units). Disbursementsachieved under refinance through Tata Motors Finance Services Limited (TMFSL) a 100%Subsidiary of TMFHL were at Rs 1614 crores (16820 vehicles) as compared to Rs 628 crores(6859 vehicles) during Fiscal 2017. TMFHL has increased its reach by opening limitedservices branches (called Spoke and Collections branches) exclusively in Tier 2 and 3towns which has helped in reducing the turnaround time to improve customer satisfaction.TMFHL had 267 branches at the end of Fiscal 2018. The book size of TMFHL's corporatelending business which includes providing finance to the Company's dealers and vendorsincreased by 179.6% from Rs 1150 crores in Fiscal 2017 to Rs 3215 crores in Fiscal 2018.
The gross NPA has decresed from 17.9% to 4% from Fiscal 2017 to Fiscal 2018 showingthe improvement in credit quality of its portfolio.
MATERIAL CHANGES & COMMITMENT AFFECTING THE FINANCIAL POSITION
There are no material changes affecting the financial position of the Companysubsequent to the close of the Fiscal 2018 till the date of this report.
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.
The Risk Management Committee (RMC) is entrusted with responsibility to assist theBoard in (a) overseeing the Company's risk management process and controls risk toleranceand capital liquidity and funding (b) setting strategic plans and objectives for riskmanagement and review of risk assessment of the Company (c ) review the Company's riskappetite and strategy relating to key risks including credit risk liquidity and fundingrisk market risk product risk and reputational risk as well as the guidelines policiesand processes for monitoring and mitigating such risks.
The Committee operates as per its Charter approved by the Board and within the broadguidelines laid down in it. The Company has a Risk Management Policy in accordance withthe provisions of the Act and SEBI (Listing Obligations and Disclosure Requirements)Regulation 2015 ("SEBI Listing Regulations"). It establishes various levels ofaccountability and overview within the Company while vesting identified managers withresponsibility for each significant risk.
The Board takes responsibility for the overall process of risk management in theorganisation. Through Enterprise Risk Management Programme business units and corporatefunctions address opportunities and the attendant risks with an institutionalized approachaligned to the Company's objectives. This is facilitated by internal audit. The businessrisk is managed through cross functional involvement and communication across businesses.The results of the risk assessment are thoroughly discussed with the Senior Managementbefore being presented to RMC.
INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENT
Details of internal financial control and its adequacy are included in the ManagementDiscussion and Analysis Report which forms part of this Report.
The Tata Motors Group employed 81090 permanent employees as of Fiscal 2018 (Fiscal2017: 79558 employees). The Company employed 24989 permanent employees as of Fiscal 2018(Fiscal 2017: 26035 employees). The Tata Motors Group has generally enjoyed cordialrelations with its employees and workers.
The Company has labour unions for operative / worker grade employees at all the plantsacross India except the Dharwad Plant. The Company has generally enjoyed cordialrelations with its employees and unions at its factories and offices and have receivedunion support in the Company's implementation of reforms that impact safety quality costand 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. With an objective of improving Organization Effectiveness theCompany undertook a structure change exercise with key guiding principles of Empowermentto the Business Units with clear accountability for business results strong functionalleadership and oversight for an effective maker-checker concept improved and speedierdecision making agility and quick responsiveness to market and strong cross functionalalignment to drive quick issue resolution. The exercise has delayered the organization to5 managerial levels below ExCom making the organization lean and agile whilerationalizing the span of control for key roles increasing customer facing roles andproviding scope for merit and vacancy based career development. The new organizationstructure went live on April 01 2017. As part of the structure change a new product lineorganization has been created with complete P&L responsibility. Transactional roleshave been identified across functions for transition to shared services and thereforefocus on core activities. Volumetric study has been performed to identify optimum manpowerat each level bringing the organizational spread closer to global standards. Thiscombined with the Job Evaluation exercise and Management Audit helped in establishingclear job description for each role and identifying the right talent for the roles.Placement of Individuals in these roles done through externalassessment(formidandseniorlevelroles)andinternalassessments (for junior level roles) wereconducted by ExCom and respective Senior Leadership teams. Individuals based on theirperformance and the experience they bring to the role have been given bands within thelevels. This will help us provide an opportunity to employees to progress from one band toanother within the same level thus managing career aspiration of individuals in the longrun in line with the promotion and progression policy.
Management is keen on ensuring smooth implementation of the new vision mission andstructure. Multiple FGDs were conducted during Fiscal 2018 with different cross section ofemployees and few course corrections like providing level wise designation concept ofpersonal levels protection of benefits etc. was undertaken based on feedback receivedfrom employees.
Tata Motors Limited Employees Stock Option Scheme 2018 ("TML ESOP Scheme2018" / "the Scheme")
The Board of Directors on the recommendation of the Nomination and RemunerationCommittee and pursuant to the provisions of the Act and the Securities and Exchange Boardof India (Share Based Employee Benefits) Regulations 2014 had at its meeting held on May23 2018 proposed adoption of Tata Motors Limited Employees Stock Option Scheme 2018("TML ESOP Scheme 2018" / "the Scheme") in order to ring fence andincentivize key talent approximately aggregating to 200 employees forming 2% of thewhite collar population for driving the long term objectives of the Company and ensuringthat employee payoffs match the long gestation period of certain key initiatives and atthe same time fostering ownership behavior and collaboration amongst employees.
Members' approval to the Scheme is sought by way of Special Resolution at Item No. 7of the Notice. The salient features of the Scheme are as provided in the explanatorystatement of the Notice.
Safety & Health Performance & Initiatives
The Company is committed to provide a safe and healthy working environment for itsemployees and associates. It was ensured that none of our employees or workers aresubjected to high incident or high risk disease related to their individual occupation. Acompany-wide occupational health and safety policy exist in order to ensure increasedvigilance and awareness on health and safety. It was recognised that to achieve the targetin safety it was crucial to internalize safety and engage with our employees.
The Indian operations achieved improved performance with Total Recordable CaseFrequency Rate (TRCFR) being 1.14 against the target of 1.47 for the Fiscal 2018 theoverall Safety Performance improved but recorded one fatality during Fiscal 2018. Themanufacturing plants across the Country are certified to ISO 14001 - EnvironmentManagement Systems and OHSAS 18001 Occupational Health & Safety ManagementSystem. The CV manufacturing plants of the Company across India are certified to ISO 50001- Energy Management System. The Company has undertaken several initiatives for resourceconservation such as re-cycling of treated effluents back to process energy materialrecovery and co-processing from hazardous wastes through cradle to grave waste managementprinciples and rainwater harvesting. Manufacturing plants generate in-house renewablepower besides sourcing off-site green power. All the Company's sites are certified forGreenCo except for the Sanand plant which is participating for GreenCo in June 2018.
The Company places equal emphasis on safety processes behavioral safety and strives tocreate a positive safety culture towards achieving the ultimate goal of ZeroInjury'. Safety is a primary focus area in daily management and safety parameters are partof the scorecard for Senior Leaders. Sessions on Road Safety were conducted at all officesacross India engaging 1000+ employees along with mentoring of Flexi Work Force under "MYBUDDY" program by Permanent Blue Collar Work force / Group leaders.
In line with Safety and Health Policy to enhance safety standards of its businesspartners the Company engaged it's upstream and downstream supply chain in the safetyjourney. The objective of such engagement is to raise the safety standards at Supplier andDealer workshops. In addition to existing 16 safety standards new standards / guidelineslike Cell Phone Policy CCTV Policy Lone Working Standard Industrial Hygiene StandardEngineering Standards Vehicle Usage & Replacement Guidelines were developed androlled out to raise the level of safety.
The Company continued Campaign i-drive safe' an initiative onbuilding a safe driving culture amongst its employee and associates and have trained themin Defensive Driving. My Road My Discipline' Road Safety Week campaign duringApril 23 to 29 included Road Safety Celebrations conducted in all location including allPlants Offices Dealerships Warehouses and Vendors. senSHEtize'- ACompany's initiative on Women's Safety Awareness: more than 1800 women employees underwenttraining focused on Women's Safety and Self-defense in 60 session across offices &plants. Jagruti Safety Awareness Building Campaign for Workshop Managers isa year-long campaign focused on building awareness on safety and understanding of theCompany's expectations on Dealers Workshop Safety. Jagruti Safety Awareness campaign wasdone for channel partners PV and CV dealers covering Pan-India level.
In health area as per the age band specific health check-up of employees wasorganized and conducted. Health & well-being of aging workforce remained a primeconcern and various health awareness programs and exhibitions across all locations wereorganized. Jamshedpur Lucknow and Pantnagar plants were certified for Food SafetyManagement System ISO 22000:2005. Remaining plants i.e. Dharwad and Sanand plants will beundergoing certification process in Fiscal 2019. The Company continued to drive a numberof initiatives to reduce its environmental footprint in Fiscal 2018. Our GreenHouse Gas(GHG) mitigation approach included driving energy conservation in manufacturing operationsand generation / procurement of renewable energy. The Company consumed 99 million units ofrenewable electricity in its operations which was 21% of total power consumed. This is19% higher than renewable power consumed in Fiscal 2017. On Company's efforts to achieveZero Waste to Landfill' the hazardous waste disposed to Common Facilities (forlandfill / incineration) was lower by 18% over Fiscal 2017. The Company's approach tolowering the water consumption included driving water conservation in manufacturingoperations re-cycling treated effluent for re-use in process and harvesting seasonalrainwater. The Company's performance on effluent recycling improved by 15% over Fiscal2017.
On Sustainability supply chain sustainability was one of the major initiativesundertaken during Fiscal 2018. Over 50 suppliers have been trained and providedhandholding to improve sustainability performance and assessed towards sustainabilityexpectations. 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 toZero Harm. The Company's commitment is reflected in JLR commitment with the key statementbeing "Our most valuable asset is our people nothing is more important than theirsafety and wellbeing. Our co-workers and families rely on this commitment. There can be nocompromise". The concept of Humanising' safety metrics and ensuring transparentreporting enables the journey to zero harm to continue to be highly visible. To supportthe wider ambition of zero harm as well as focusing on incidents JLR also continued tomature the approach to wellbeing activities with a focus on mental health and the launchof the let's have the conversation' programme designed to support open discussionson matters of mental health. The development of focused plans has ensured that eachfunctional area aligned at Board level has a specific Destination Zero' Harm Plan.These have assisted each functional area to tailor their own plan of activities to leadimproved safety and wellbeing within their own area of responsibility. Performance on LossTime Injuries (LTI) continued to show improving trend consistent with overall businessimprovement. A notable improvement was seen in manufacturing locations with around 47%improvement against last Fiscal performance. Many of the sites continued to celebratesustained zero lose time injuries. The improved performance on safety was resultant ofvarious initiatives taken throughout the year such as improving quality of safetyobservations effective implementation of existing safety management programs robustsafety training and defensive driving etc.
The business has gone through OHSAS 18001 - surveillance visits in Fiscal 2018 withinall the UK locations and maintained its accreditation to this standard through a series ofexternal assessments. Plans for migration to the new International Standard ISO 45001 wasunderway. TMSA sustained good performance leadership commitment and employeeengagement in areas of Safety and Health during Fiscal 2018. TDCV Korea and TMTLThailand continued leadership commitment and engagement with focus in areas of safetycommunication risk assessment improving capabilities of employees for emergencysituations.
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 for prevention and redressalof complaints of sexual harassment at workplace. The Company is committed to providingequal opportunities without regard to their race caste sex religion colournationality disability etc. All women associates (permanent temporary contractual andtrainees) as well as any women visiting the Company's office premises or women serviceproviders are covered under this Policy. All employees are treated with dignity with aview to maintain a work environment free of sexual harassment whether physical verbal orpsychological.
During Fiscal 2018 the Company had received 13 complaints on sexual harassments 12 ofwhich have been substantiated and appropriate actions were taken. The remaining 1complaint was received during mid March and is being investigated. The Company organized148 workshops or awareness program against sexual harassment. There were no complaintspending for more than 90 days during the year.
Similar initiatives on Prevention of Sexual Harassment are in place across the TataMotors Group of companies.
BUSINESS RESPONSIBILITY REPORT
Pursuant to Regulation 34(2)(f) of the SEBI Listing Regulations the BusinessResponsibility Report (BRR) initiatives taken from an environmental social and governanceperspective in the prescribed format is available as a separate section of the AnnualReport and also hosted on the Company's website www.tatamotors.com
During the year the free cash flows for Tata Motors Group were negative Rs 11183crores post spend on capex design and development of (`35039 crores). Tata MotorsGroup's borrowing as at March 31 2018 stood at Rs 88951 crores (as at March 31 2017: Rs78604 crores). Cash and bank balances and investments in mutual funds stood at Rs 48974crores (as at March 31 2017: Rs 51119 crores). The consolidated net automotive debt toequity ratio stood at 0.15 as at March 31 2018 as compared to 0.13 as at March 31 2017.
Free cash flows were Rs 1339 crores for standalone operations of the Company. Spend oncapex design and development were Rs 2794 crores (net). The borrowings of the Company ason March 31 2018 stood at Rs 18464 crores (as at March 31 2017: Rs 19357 crores). Cashand bank balances including mutual funds stood at Rs 2312 crores (as at March 31 2017:Rs 2764 crores). During Fiscal 2018 the Company issued rated listed unsecured NCDs ofRs 1500 crores. At JLR post spend on capex design and development of GB4186 million(`35776 crores) the free cash flows were negative GB1045 million (`8931 crores) forFiscal 2018. The borrowings of the JLR as on March 31 2018 stood at GB3731 (`34238crore) [as at March 31 2017: GB3581 million (`28977 crores)]. Cash and financialdeposits stood at GB4657million (`42977 crores) [as at March 31 2017: GB5487million (`44400 crores)]. Additionally JLR has undrawn committed long term bank lines ofGB1935 million (JLR data as per IFRS). During Fiscal 2018 JLR issued US$500 millionsenior notes due in 2027 at a coupon of 4.50% per annum. The proceeds were for generalcorporate purposes including support for JLR's ongoing growth and capital spendingrequirements.
During Fiscal 2018 TMFHL and its subsidiaries Tata Motors Finance Limited and TMFSLraised Rs 3231 crores by issuing NCDs. Bank borrowings through secured and unsecured termloans continued to be a major source of funds for long-term borrowing and raised Rs 2330crores during Fiscal 2018. In Fiscal 2018 TMFHL Group short-term debt (net) increased byRs 5008 crores and long-term debt (net) increased by Rs 7 crores.
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.
During Fiscal 2018 the Company's rating for foreign currency borrowings was retainedto "Ba1"/Stable by Moody's and to "BB+"/ Stable by Standard &Poor's. For borrowings in the local currency the ratings was retained by CRISIL at"AA/ Positive" and by ICRA at "AA/ Positive". The Non-Convertibledebentures and long term bank facilities i.e. (Buyers Credit and Revolving CreditFacility) rating by CARE was retained at "AA+/Stable". During the year JLR'srating was retained by Moody's at "Ba1" with a change in outlook to Stable andwas retained by Standard & Poor's at "BB+/Stable". For TMFHL CRISIL hasmaintained its rating on long-term debt instruments and bank facilities to CRISIL"AA/ A1+/Positive" and ICRA has maintained its rating at "AA/Positive"
The Company has not accepted any public deposits during Fiscal 2018. There were no overdues on account of principal or interest on public deposits other than the unclaimeddeposits as at the end of Fiscal 2018.
EXTRACT OF ANNUAL REPORT
As provided under Section 92(3) of the Act the details forming part of the extract ofthe Annual Return in Form MGT 9 is annexed as Annexure - 1.
INFORMATION TECHNOLOGY AND DIGITAL PRODUCT DEVELOPMENT INITIATIVES
a. Information Technology Initiatives
The Company has been a pioneer in adopting Information Technologies (IT) to enable theprocesses and create efficiencies in its systems. It has been working towards implementingthe components of its IT roadmap to create a digital ready platform for transformation. Itleverages its strong partnerships with product and services companies to harness thepotential of IT for ensuring execution of business initiatives towards a competitiveadvantage.
The major highlights of IT at the Company are:
Executed IT Cost Optimization across strategic out sourcing programs.
Implemented GST framework and IT enablement to support business transactions.
Enabled World Class Quality initiative of the Company through extending theimplementation of Manufacturing Execution System.
Digital initiatives like e-guru mobile app for dealers' sales force has helpedcreate customer awareness about our products
Focus on Supplier Relationship Transformation (SRT) through implementation ofSupplier systems and inauguration of SRT training centre
Continued greater collaboration with subsidiaries leveraging IT leadership
Strengthening information security through multiple initiatives such as NetworkAccess Control and preparation for ISO27000 framework
IT team has led the Tata Group CIO Forum enabling synergies across Tatacompanies in the areas of Digital Information Security and procurement In the Company ITwas all about digital. Right from conception of programs such as high fidelity technologybackends to connected vehicle roadmaps the span of technology has never been this vast.All of it was geared towards constant evolution in the mobility (commute) space andproviding the best in class technology experience to our end customers. Programs toenhance the sales executive interactions with customers capturing just in timeinformation from the ground driving analytics decision making with cloud services andpreparing for the next generation of customer relationship have been top focus areas.Providing customized technology experience in the full lifecycle of a product at allstakeholder touchpoints is a niche which technology is aiming to achieve going forward.Digital platforms and services married to unique business use cases was the way forward.The technology team was in continuous research process of evaluating the best use of stateof the art technologies for the benefit of our customers and providing a delight to allstakeholders.
With the readiness of our systems on the digital front the Company is well equiped inits exciting phase of transformation journey by using cutting edge technology to providecustomer centric products and services.
b. Digital Product Development Systems Initiatives
Significant improvements in key processes for product design and manufacturing planningdomain had been accomplished through modification of existing processes and identifyingfew manual processes and converting them in digital engineering domain for better agility.Achievements through various initiatives are listed below:
35 new knowledge based engineering applications were designed and implementedacross various product design and safety domains. They were integrated with various toolssuch as to predict problematic reflections for driver and analyze different parameters fordriver comfort defining datum strategy ensuring first time right panel datum informationfor tooling and dimensional variation analysis.
100+ new productivity tools were developed and implemented across variousproduct design and validation domains. These tools helped large number of designers toincrease their productivity significantly through identified levers such as quality checksfor design drawing automation and process automation. CAE tools for load body analysisNVH assembly model creation BIW static stiffness structural connectivity frequencyresponse and harmonic fatigue spot-weld failure prediction axle bracket weld etc arefew such examples. During concept evaluation phase of the product advanced conceptevaluation tool had been introduced and by this various design concepts includingsections shapes and load paths had been optimized.
Digital process of Requirements Management Design Verification and Validationwas implemented for various product development functions to keep check on productvalidation status. This process ensures conformance of vehicle performance targets.
Tool for design of Mastics and Sealants is developed and deployed for BodyEngineering.It's inbuilt feature of linking vehicle body panels with sealants helpsdesigner to quickly regenerate Mastics & Sealants for iterative design modifications.Application standardizes design methodology across vehicle platforms and provides moreaccurate weight and cost management of sealants at vehicle level.
High Performance Computing (HPC) solution throughput of CAE simulation usingGeneral Purpose Graphics Processing Unit (GPGPU) computation technology has resulted insignificant improvement for non-linear implicit simulations.
Smart review tools were deployed delivering insights into engineering changes ofvehicle data at each design release milestones enabling project teams to review changes.In this integrated approach of
3D Visualization issue management and change comparison was helpful in accurate designreviews identifying critical areas to focus and facilitated accurate decision making.
20 business processes were digitized by converting either paper based or emailbased processes into standardized online applications using homegrown pFirst platform.
Implementation of MOST time analysis based tool at all locations for MOP(Measure of Performance) improvement by identifying VA (Value Added) ENVA (EssentialNon-value Added) NVA (Non-value Added) activities and Lean Analytics.
For all new vehicle programs simulation and validation of criticalmanufacturing processes were carried out for detection of a potential problem in the earlystage.
Quality Application tools for mobility devices for monitoring real time partDesign and Commercial information of BOTS & CHAT software engines. (ProductivityImprovement)
Jaguar Land Rover (JLR):
JLR continue to develop the use of the latest Product Lifecycle Management (PLM)technologies to ensure JLR remains at the cutting edge of engineering and driveefficiencies into the process. The application of leading visualisation and systemsengineering technologies enable full engagement in the product creation process all withthe aim of producing cars and SUVs that the customers will love for life.
Tata Daewoo Commercial Vehicles (TDCV):
TDCV continued the focus on quality and agility in its digital product creationprocesses. PLM software system was upgraded to a higher version giving enhanced features.The PLM processes were also improved considering various business requirements andscenarios.
Tata Technologies Limited (TTL):
Tata Technologies Limited (TTL) has invested in state-of-the-art software and hardwaretechnologies in alignment with business goals and customer needs with the prime focus ondelivering world class business solutions to the stakeholders. These investments havestemmed from the pressing need of the hour to keep the organization abreast with thelatest technologies by enhancing and upgrading the digital eco-system.
TTL continued to augment and enhance the Virtual Desktop Infrastructure setup forengineering users to improve network and information security. It has also deployedUnified Communication Technology as part of enhanced collaboration platform. Thedeployment of Hyper Converged Infrastructure has resulted in better performance and highavailability computing for enterprise applications hosted on hybrid cloud. As part of O2C(Opportunity to Cash) a transformational program to standardize streamline andimprove the core processes and systems TTL has invested on Salesforce for SalesExcellence IPMS for Delivery Excellence and SAP Concur to refine travel and expensemanagement. Upgrade to SAP HANA has resulted in better performance of SAP platform.
TTL has defined an Information Security roadmap to address latest threats and risks.Deployment of NexGen antivirus virtual patching for servers certifying a delivery centrefor ISO 27001:2013 and monthly governance for critical accounts are some of theinitiatives taken up last year. The end goal was to have an integrated security enterprisearchitecture which can cut down on complexity and of course increase securityeffectiveness.
Tata Motors European Technical Centre (TMETC):
TMETC continued the use of best in class hardware and software systems to enhancequality and agility in its product conceptualization design and virtual validationdomain.
TECHNOLOGY AND ENVIRONMENT FRIENDLY INITIATIVES
The Company continued to develop alternate technologies for sustainable mobility. Thefleet of diesel series hybrid buses for Mumbai were delivered for operation. Six fuel cellbuses were built tested and one bus building was processed for demonstration and fourfuel cell buses were under testing. Electric buses were tested under several prototypes of9m and 12m developed by the Company which would be ideal for passenger to commute inecologically sensitive areas and urban centre. In addition a fleet of small commercialelectric vehicles were being built for last-mile passenger transport. The Company wasworking on several electrification hybridization and alternate fuel technologies whichwould be launched once the market is ready for them in addition to developingtechnologies that improve the footprint of conventional powertrains. Some of the keyinitiatives in this direction are mentioned below :
Development of LNG engines for city buses and medium duty trucks.
Development of engine as well as engine calibrations for various bio-fuelblends.
Development of semi-synthetic engine oil which has increased oil drainintervals and improved fuel economy by 1-3%.
Reduction of real drive emissions and emission by CO2 incorporating48 V Boost Recuperation System (BRS) in LCVs.
CONSOLIDATED FINANCIAL STATEMENTS
The Company announces its consolidated financial statement on a quarterly basis. Asrequired under the SEBI Listing Regulations consolidated financial statements of theCompany and its subsidiaries prepared in accordance with IndAS 110 issued by theInstitute of Chartered Accountants of India form part of the Annual Report and arereflected in the consolidated financial statements of the Company. Pursuant to Section129(3) of the Act a statement containing the salient features of the financial statementsof the subsidiary companies is attached to the Financial Statements in Form AOC-1. Pursuantto the provisions of Section 136 of the Act the Company will make available the saidfinancial statements of the subsidiary companies upon the request by any member of theCompany or its subsidiary companies. These financial statements of the Company and thesubsidiary companies will also be kept open for inspection by any member at the RegisteredOffice of the Company and could be available on the website of the Company.
SUBSIDIARY JOINT ARRANGEMENTS AND ASSOCIATE COMPANIES
The Company has 96 subsidiaries (14 direct and 82 indirect) as at March 31 2018 asdisclosed in the accounts. The Scheme of Amalgamation between one of the directsubsidiaries viz TML Drivelines Limited with the Company was approved by the Hon'bleNational Company Law Tribunal and a certified true copy was received on April 26 2018 andthe said scheme was operative from April 30 2018. The financial statements of thissubsidiary was merged with the standalone financial statements of the Company from theAppointed Date with effect from April 1 2017.
During Fiscal 2018 the following changes have taken place in subsidiary / associates /joint venture companies:
Subsidiary companies formed/acquired:
Jaguar Land Rover Ireland (Services) Limited was incorporated with effect fromJuly 28 2017.
Jaguar Land Rover Taiwan Company Limited was incorporated with effect fromNovember 17 2017.
Servicios GDV Mexico S.A. de C.V. was incorporated on October 2 2017.
GDV Imports Mexico SAPI de C.V. was acquired on October 2 2017.
Tata Technologies Europe Limited incorporated 100% stake in Escenda EngineeringAB with effect from May 1 2017.
Companies ceasing to be subsidiary companies / ceased operations:
Cambric UK Limited dissolved with effect from May 23 2017.
Midwest Managed Services Inc. merged into Tata Technologies Inc with effect fromFebruary 28 2018.
TML Drivelines Limited merged with the Company and the Scheme of Merger andArrangement was operative from April 30 2018.
Tata Motors Finance Limited was renamed TMF Holdings Limited with effect fromJune 17 2017.
Sheba Properties Limited was renamed Tata Motors Finance Limitedwith effect fromJune 30 2017.
Servicios GDV Mexico S.A. de C.V. was renamed Jaguar Land Rover ServiciosMxico S.A. de C.V. with effect from December 11 2017.
GDV Imports Mexico SAPI de C.V. was renamed Jaguar Land Rover Mxico S.A.P.I.de C.V. with effect from December 11 2017.
Cambric Manufacturing Technologies (Shanghai) Co. Limited was renamed TataManufacturing Technologies (Shanghai) Co. Limited with effect from April 1 2017.
Shareholding in Tata Motors (Thailand) Limited increased from 95.28% to 95.49% witheffect from June 6 2017. Shareholding in Spark44 (JV) Limited increased from 50% to50.50% with effect from August 31 2017 making it and its 14 downstream companiesindirect subsidiaries of the Company. Besides the above JLR continued to integrate /restructure legal entities for manufacturing and for exporting globally as combined brandlegal entities. Other than the above there has been no material change in the nature ofthe business of the subsidiary companies.
As at March 31 2018 the Company has 9 associate companies 4 joint venturesand 2 joint operations. The Company has adopted a Policy for determining MaterialSubsidiaries in line with Regulation 16 of the SEBI Listing Regulations. The Policy asapproved by the Board is uploaded on the Company's website (URL:http://investors.tatamotors.com/pdf/material.pdf).
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNING ANDOUTGOING
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 as Annexure - 2.
Appointment / Re-appointment
The Company has on the recommendation of NRC and in accordance with provisions of theAct and SEBI Listing Regulations appointed Ms Hanne Sorensen (DIN: 08035439) asAdditional and Independent Director on the Board for a tenure of 5 years with effect fromJanuary 03 2018 subject to approval of Members at the Annual General Meeting (AGM). Sheshall hold office as Additional Director upto the date of the forthcoming AGM and iseligible for appointment as a Director. As reported in the previous year Mr Om PrakashBhatt (DIN: 00548091) was appointed as Additional and Independent Director on the Boardfor a tenure of 5 years with effect from May 9 2017 pursuant to Section 161 of the Actread along with Rules framed thereunder the Members had vide Ordinary Resolution approvedat the AGM held on August 22 2017 the appointment of Mr Bhatt as an IndependentDirector. In accordance with provisions of the Act and the Articles of Association of theCompany Mr Guenter Butschek Chief Executive Officer and Managing Director (DIN:07427375) is liable to retire by rotation and is eligible for re-appointment. Thedisclosures required pursuant to Regulation 36 of the SEBI Listing Regulations Clause1.2.5 of the Secretarial Standard are given in the Notice of AGM forming part of theAnnual Report and Schedule V of the SEBI Listing Regulations are given in the CorporateGovernance Report forming part of the Annual Report. Attention of the Members is alsoinvited to the relevant items in the Notice of the AGM.
Mr Ravindra Pisharody (DIN: 01875848) vide letter dated June 5 2017 tendered hisresignation as Executive Director (Commercial Vehicles) of the Company but continued toserve his term of office for another 6 months in lieu of his contractual severance noticeperiod ensuring seamless transition in the business operations of the Company. MrPisharody concluded his contractual severance notice period on September 30 2017.
Dr Raghunath Mashelkar Independent Director (DIN: 00074119) on attaining the age of75 years retired on December 31 2017 in accordance with Governance Guidelines on BoardEffectiveness. The Board of Directors places on record their appreciation forcontributions made by Mr Pisharody and Dr Mashelkar during their tenure.
All Independent Directors of the Company have given declarations under Section 149(7)of the Act that they meet the criteria of independence as laid down under Section 149(6)of the Act and Regulation 16 of the SEBI Listing Regulations.
Key Managerial Personnel
The Key Managerial Personnel (KMPs) of the Company during Fiscal 2018 are:
Mr Guenter Butschek Chief Executive Officer and Managing Director
Mr Satish Borwankar Executive Director and Chief Operating Officer
Mr Pathamadai Balachandran Balaji Group Chief Financial Officer (with effectfrom November 14 2017)
MrHoshang Sethna Company Secretary
Mr. Ravindra Pisharody Executive Director Commercial Vehicles (uptoSeptember 30 2017)
Mr C Ramakrishnan Group Chief Financial Officer (upto September 30 2017)During the year Mr C Ramakrishnan concluded his tenure as a Group Chief Financial Officerand KMP with effect from September 30 2017 and the Board of Directors pursuant to thesaid cessation approved appointment of Mr P.B. Balaji as Group Chief Financial Officerand KMP of the Company with effect from November 14 2017.
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 number of Board meetings held Committee of the Boardand other details of relevance forms part of this Report.
During the year under review the Company adhered to the Governance Guidelines on BoardEffectiveness. The Governance
Guidelines cover aspects related to composition and role of the Board Chairman andDirectors Board diversity definition of independence Director term retirement age andCommittees of the Board. It also covers aspects relating to nomination appointmentinduction and development of Directors Director Remuneration Subsidiary oversight Codeof Conduct Board Effectiveness Review and Mandates of Board Committees.
Selection and procedure for nomination and appointment of Directors
The NRC is responsible for developing competency requirements for the Board based onthe industry and strategy of the Company. The Board composition analysis reflects in-depthunderstanding of the Company including its strategies environment operations financialcondition and compliance requirements.
The NRC conducts a gap analysis to refresh the Board on a periodic basis includingeach time a Director's appointment or re-appointment is required. The Committee is alsoresponsible for reviewing and vetting the CVs of potential candidates vis--vis therequired competencies undertake a reference and due diligence and meeting potentialcandidates prior to making recommendations of their nomination to the Board. At the timeof appointment specific requirements for the position including expert knowledgeexpected is communicated to the appointee.
Criteria for Determining Qualifications Positive Attributes and Independence of aDirector
The NRC has formulated the criteria for determining qualifications positive attributesand independence of directors in terms of provisions of Section 178 (3) of the Act andRegulation 19 read along with Schedule II of SEBI Listing Regulations which is annexed asAnnexure - 3.
The Company has in place a Remuneration Policy for the Directors Key ManagerialPersonnel and other employees pursuant to the provisions of the Act and Regulation 19 ofSEBI Listing Regulations the same is annexed as Annexure - 4.
The annual evaluation process of the Board of Directors ("Board") Committeesand individual Directors was carried out in the manner prescribed in the provisions of theAct Guidance Note on Board Evaluation issued by Securities and Exchange Board of India onJanuary 5 2017 and as per the Corporate Governance requirements prescribed by SEBIListing Regulations. The performance of the Board Committees and individual Directors wasevaluated by the Board seeking inputs from all the Directors. The performance of theCommittees was evaluated by the Board seeking inputs from the Committee Members. The NRCreviewed the performance of the individual Directors a separate meeting of IndependentDirectors was also held to review the performance of Non-Independent Directors;performance of the Board as a whole and performance of the Chairperson of the Companytaking into account the views of Managing Director / Executive Directors and Non-ExecutiveDirectors. This was followed by a Board meeting that discussed the performance of theBoard its Committees and individual Directors.
The criteria for performance evaluation of the Board included aspects like Boardcomposition and structure; effectiveness of Board processes information and functioningetc. The criteria for performance evaluation of Committees of the Board included aspectslike composition and structure of the Committees functioning of Committee meetingscontribution to decision of the Board etc. The criteria for performance evaluation of theindividual Directors included aspects on contribution to the Board and Committee meetingslike preparedness on the issues to be discussed meaningful and constructive contributionand inputs in meetings integrity etc. In addition the Chairman was also evaluated on thekey aspects of his role.
SignificantfindingsoftheFiscal2018Boardeffectivenessevaluation included providingregular updates to the Board on projects undertaken to support cost and productivityimprovements along with a monthly information report thereon inclusion of educativetopics in the agenda on technology governance regulations which could impact businessand continuing efforts to balance the Board agenda with focus on budgets strategicissues. Critical suggestions to improve the Company's business included augmenting thesuccession pipeline harmonizing interactions and integrating synergies that could bederived between the Company and JLR Group. The Board also monitors action taken on thefindings and suggestions made in the process of the Board evaluation.
Familiarisation programme for Independent Directors
The details of the Familiarisation Programme for Independent Directors with the 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 put up onthe website of the Company at (URL:http://investors.tatamotors.com/pdf/familiarisation-programme-independent-directors.pdf).
The Company has adopted a Whistle Blower Policy establishing vigil mechanism toprovide a formal mechanism to the Directors and employees to report their concerns aboutunethical behaviour actual or suspected fraud or violation of the Company's Code ofConduct or ethics policy. The Policy provides for adequate safeguards againstvictimization of employees who avail of the mechanism and also provides for direct accessto the Chairman of the Audit Committee. It is affirmed that no personnel of the Companyhas been denied access to the Audit Committee. The policy of vigil mechanism is availableon the Company's website at (URL:http://investors.tatamotors.com/pdf/whistle-blower-policy.pdf).
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 - 5. Thestatement 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 the Report. In terms of proviso toSection 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.
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 are setout in Annexure - 6 of this Report in the format prescribed in the Companies (CSRPolicy) Rules 2014. The Policy is available on Company's website at (URL:http://investors.tatamotors.com/ pdf/csr-policy.pdf).
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All contracts/ arrangements/ transactions entered by the Company during the year withrelated parties were on an arm's length basis in the ordinary course of business and werein compliance with the applicable provisions of the Act and SEBI Listing Regulations. Theprior approval of the Audit Committee was sought for all related party transactions. TheCompany has adopted a policy on Related Party Transactions which even provides for theparameters to grant omnibus approval(s) by the Audit Committee and is available on thewebsite at (URL: http://investors.tatamotors.com/pdf/rpt-policy.pdf). A statement onrelated party transactions specifying the details of the transactions pursuant to eachomnibus approval granted have been placed on a quarterly basis for review by the AuditCommittee. During the Fiscal 2018 there were no related party transactions of the Companywith its Directors and Key Managerial Personnel or their relatives its holdingsubsidiary or associate companies as prescribed under Section 188 of the Act and SEBIListing Regulations and therefore the Company is not required to report in the prescribedForm AOC-2 and does not form part of the Report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The details of Loans Guarantees or Investments made during Fiscal 2018 are givenbelow:
| || || ||(Rs in crores) |
|Name of Companies ||Nature of Transactions ||Loans ||Investment |
|TMF Holdings Limited ||Investment in shares ||- ||300.00 |
|Tata Steel Limited ||Investment in shares ||- ||41.63 |
|JT Special Vehicle Private Limited ||Investment in shares ||- ||2.50 |
During Fiscal 2018 the Company has not given guarantee to any of its subsidiariesjoint ventures and associates companies.
In the 72nd Annual General Meeting (AGM) held on August 22 2017 M/s B S R& Co. LLP Chartered Accountants (B S R LLP) (ICAI Firm No. 101248W/W100022) wasappointed as Statutory Auditors of the Company for a tenure of 5 years subject toratification of their appointment at every subsequent AGM. The Ministry of CorporateAffairs has vide notification dated May 7 2018 obliterated the requirement of seekingMember's ratification at every AGM on appointment of Statutory Auditor during their tenureof 5 years. B S R LLP have under Section 139(1) of the Act and the Rules framedthereunder furnished a certificate of their eligibility. The report of the StatutoryAuditor forming part of the Annual Report does not contain any qualificationreservation adverse remark or disclaimer. The observations made in the Auditor's Reportare self-explanatory and therefore do not call for any further comments.
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 pertaining to relevant products prescribed under theCompanies (Cost Records and Audit) Rules 2014 for the year ending March 31 2019. TheBoard of Director on recommendation of the Audit Committee approved remuneration of Rs 5lakhs plus applicable taxes and out of pocket expenses subject to ratification of theirremuneration by the Members at the forthcoming AGM. M/s Mani & Co. have under Section139(1) of the Act and the Rules framed thereunder furnished a certificate of theireligibility and consent for appointment.
M/s Mani & Co. have vast experience in the field of cost audit and have conductedthe audit of the cost records of the Company for the past several years.
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 2018. The Report of theSecretarial Audit is annexed herewith as
The Secretarial Audit Report does not contain any qualification reservations adverseremarks and disclaimer.
The Securities and Exchange Board of India (SEBI) have vide Order dated March 6 2018issued directions for the Company to conduct an internal inquiry within 3 months into theleakage of information relating to its financial results for the quarter ended December2015 take appropriate actions against those responsible and to submit its report witin 7days thereafter. The Company has appointed an expert to conduct an independentinvestigation to submit its report to the Audit Committee of the Company which will besubmitted to SEBI in a timely manner.
The Company has paid a penalty of Rs 5.60 lakhs each levied by the BSE Limited and theNational Stock Exchange of India Limited in respect of delay in filing of listingapplication for 266 Ordinary Share and 80 A' Ordinary Shares allotted out of sharesheld in abeyance on settlement of an inter-se dispute amongst the shareholders. Thispenalty has been paid under protest' subsequent to various representation made bythe Company.
The Institute of Company Secretaries of India had revised the Secretarial Standards onMeetings of the Board of Directors (SS-1) and Secretarial Standards on General Meetings(SS-2) with effect from October 1 2017. The Company has devised proper systems to ensurecompliance with its provisions and is in compliance with the same.
DIVIDEND DISTRIBUTION POLICY
Pursuant to SEBI's notification dated July 8 2016 the Board of Directors of theCompany have formulated a Dividend Distribution Policy ("the policy"). Thedetailed policy is annexed to this Report as Annexure-8 and is also available onour website (URL: http://investors.tatamotors.com/pdf/dividend-distribution-policy.pdf )
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 external agencies and secretarial auditors 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 Fiscal 2018.
Accordingly pursuant to sub-section 3(c) ans 5 Section 134 of the Act the Board ofDirectors to the best of their knowledge and ability confirm:
(a) that in the preparation of the annual accounts the applicable accounting standardshave been followed and that there are no material departures;
(b) that we have selected such accounting policies and have applied them consistentlyand made 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 loss of the Company for that period;
( c ) that proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;
(d) that the annual accounts have been prepared on a going concern basis;
(e) that proper internal financial controls were laid down and that such internalfinancial controls are adequate and were operating effectively*; and
(f) that proper systems to ensure compliance with the provisions of all applicable lawsand such systems are adequate and operating effectively.
*please refer to the Section "Internal Control Systems and their Adequacy in theManagement Discussion and Analysis".
The Directors wish to convey their appreciation to all of the Company's employees fortheir enormous personal efforts as well as their collective contribution to the Company'sperformance. The Directors would also like to thank the employee unions shareholderscustomers dealers suppliers bankers Government and all other business associates fortheir continuous support to the Company and their confidence in its management.
On behalf of the Board of Directors
| ||N CHANDRASEKARAN |
| ||Chairman |
| ||(DIN: 00121863) |
|Mumbai May 23 2018 || |