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Tata Steel Ltd.

BSE: 500470 Sector: Metals & Mining
NSE: TATASTEEL ISIN Code: INE081A01012
BSE 00:00 | 05 Mar 733.30 -24.80
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NSE 00:00 | 05 Mar 733.30 -24.65
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OPEN 750.00
PREVIOUS CLOSE 758.10
VOLUME 880587
52-Week high 782.00
52-Week low 250.90
P/E 12.61
Mkt Cap.(Rs cr) 82,606
Buy Price 733.30
Buy Qty 273.00
Sell Price 733.30
Sell Qty 163.00
OPEN 750.00
CLOSE 758.10
VOLUME 880587
52-Week high 782.00
52-Week low 250.90
P/E 12.61
Mkt Cap.(Rs cr) 82,606
Buy Price 733.30
Buy Qty 273.00
Sell Price 733.30
Sell Qty 163.00

Tata Steel Ltd. (TATASTEEL) - Director Report

Company director report

To the Members

Your Directors take pleasure in presenting the 5th Integrated Report(prepared as per the framework set forth by the International Integrated ReportingCouncil) and the 113th Annual Accounts on the business and operations of Tata SteelLimited ('Company') along with the summary of standalone and consolidatedfinancial statements for the year ended March 31 2020.

A. Financial Results

Standalone

Consolidated

2019-20 2018-19 2019-20 2018-19
Revenue from operations 60435.97 70610.92 139816.65 157668.99
Total expenditure before finance cost depreciation (net of expenditure transferred to capital) 45574.40 50047.98 122353.59 128285.65
Operating Profit 14861.57 20562.94 17463.06 29383.34
Add: Other income 404.12 2405.08 1843.49 1420.58
Profit before finance cost depreciation exceptional items and taxes 15265.69 22968.02 19306.55 30803.92
Less: Finance costs 3031.01 2823.58 7533.46 7660.10
Profit before depreciation exceptional items and taxes 12234.68 20144.44 11773.09 23143.82
Less: Depreciation and amortisation expenses 3920.12 3802.96 8440.73 7341.83
Profit/(Loss) before share of profit/(loss) of joint ventures & associates exceptional items & tax 8314.56 16341.48 3332.36 15801.99
Share of profit/(loss) of Joint Ventures & Associates - - 187.97 224.70
Profit/(Loss) before exceptional items & tax 8314.56 16341.48 3520.33 16026.69
Add/(Less): Exceptional Items (1703.58) (114.23) (3752.05) (120.97)
Profit before taxes 6610.98 16227.25 (231.72) 15905.72
Less: Tax Expense (132.82) 5694.06 (2568.41) 6718.43
(A) Profit/(Loss) after taxes - from Continuing operations 6743.80 10533.19 2336.69 9187.29
Profit/(loss) before tax from Discontinued operations - - (1120.74) (98.60)
Less: Tax expense of Discontinued Operations - - 15.51 (9.64)
Profit/(Loss) after tax from Discontinued Operations - - (1136.25) (88.96)
Profit/(Loss) on Disposal of Discontinued Operations - - (27.98) -
(B) Net Profit/(loss) after tax - from Discontinued operations - - (1164.23) (88.96)
(C) Net Profit/(Loss) for the Period [ A + B ] 6743.80 10533.19 1172.46 9098.33
Total Profit/(Loss) for the period attributable to:
Owners of the Company - - 1556.54 10218.33
Non-controlling interests - - (384.08) (1120.00)
(D) Total other comprehensive income (648.87) (50.22) 4482.83 7.79
(E) Total comprehensive income for the period [ C + D ] 6094.93 10482.97 5655.29 9106.12
Retained Earnings: Balance brought forward from the previous year 27694.90 18700.25 14056.43 7801.99
Add: Profit for the period 6743.80 10533.19 1556.54 10218.33
Less: Distribution on Hybrid perpetual securities 266.15 266.12 266.15 266.12
Add: Tax effect on distribution of Hybrid perpetual securities 66.97 92.99 66.97 92.99
Add: Other Comprehensive Income recognised in Retained Earnings (345.18) 3.88 4459.24 (425.92)
Add: Other movements within equity - 1.49 40.32 (1995.47)
Balance 33894.34 29065.68 19913.35 15425.80
Which the Directors have apportioned as under to:-
(i) Dividend on Ordinary Shares 1489.67 1145.92 1488.13 1144.76
(ii) Tax on dividends 297.71 224.86 297.40 224.61
Total Appropriations 1787.38 1370.78 1785.53 1369.37
Retained Earnings: Balance to be carried forward 32106.96 27694.90 18127.82 14056.43

Notes:

(1) On January 28 2019 T S Global Holdings Pte. Ltd. ('TSGH')(an indirect wholly-owned subsidiary of the Company) entered into definitive agreementswith HBIS Group Co. Ltd. ('HBIS') to divest its entire equity stake in NatSteelHoldings Pte. Ltd. ('NSH') and Tata Steel (Thailand) Public Company Ltd. ('TSTH').During the year under review TSGH decided not to pursue the proposed transaction withHBIS for want of regulatory approvals.

As on March 31 2020 active discussions and engagement with otherpotential buyer(s) demonstrate that the Management of the Group is committed to sell thedisposal group and there is an active programme for completing the sale.

In accordance with Ind AS 105 "Non-current Assets Held for Saleand Discontinued Operations" the assets and liabilities of businesses forming partof the disposal group have been classified as held for sale.

(2) During the year under review exceptional items (ConsolidatedAccounts) primarily represent:

a) Impairment charges '3197 crore in respect of property plant andequipment (including capital work-in-progress and capital advances right of use assetsand intangible asset) primarily at Tata Steel Europe ('TSE') Global mineralentities Tata Steel Special Economic Zone Limited and at Tata Steel BSL Limited ('TSBSL')along with impairment of Goodwill at Bhubaneshwar Power Private Limited.

b) Restructuring provisions amounting to '161 crore at TSE.

c) Expenses incurred on stamp duty and registration fees for a portionof land parcels and mines acquired as part of business combination '27 crore and provisionfor coal block performance guarantee '134 crore at Tata Steel Long Products Limited(formerly Tata Sponge Iron Limited).

d) Provision for impairment of doubtful capital advances amounting to'42 crore at TSBSL.

e) Fair valuation loss on investment in preference shares held at oneof the associate companies amounting to '250 crore at Tata Steel Limited (Standalone).

f) Provision for demands and claims amounting to '196 crore relating tocertain statutory demands and claims on environment and mining matters including '86 crorerelating to SVLDRS - Sabka Vishwas Legal Dispute Resolution Scheme at Tata Steel Limited(Standalone).

g) Provision for Employee Separation Scheme ('ESS') underSunehere Bhavishya Ki Yojana ('SBKY') scheme amounting to '107 crore at Tata SteelLimited (Standalone).

Partly offset by

h) Restructuring and write back of provisions which primarily includeswrite-back of liabilities no longer required at Tata Steel BSL Limited '154 crore andsettlement credit received at The Indian Steel & Wire Products Ltd. '18 crore.

i) Profit on sale of subsidiaries amounting to '149 crore and profit onliquidation of group companies amounting to '41 crore at TSE.

j) Gain on recovery of advances earlier provided for amounting to '1crore at Tata Steel Limited (Standalone).

The exceptional items (Consolidated Accounts) in Financial Year 2018-19primarily include:

a) Provision of'172 crore in respect of advances with public bodiespaid under protest by Tata Steel BSL Limited.

b) Impairment charges '10 crore in respect of property plant andequipment (including capital work-in-progress and capital advances) and intangible assetsat TSBSL.

c) Provision for demands and claims amounting to '329 crore relating tocertain statutory demands and claims on environment and mining matters at Tata SteelLimited (Standalone).

d) Provision for Employee Separation Scheme ('ESS') under

Sunehere Bhavishya Ki Yojana ('SBKY') scheme amounting to '35crore at Tata Steel Limited (Standalone).

Partly offset by:

e) Profit on sale of non-current investments amounting to

'180 crore primarily in TRL Krosaki Refractories Limited (an associateof the Company) and certain other subsidiaries and joint ventures.

f) Restructuring and write back of provisions amounting to

'245 crore which primarily include write-back of liabilities no longerrequired at TSBSL and arbitration settlement at Tata Steel Utilities and InfrastructureLimited (formerly Jamshedpur Utilities & Services Company Limited) partly offset bycharge at TSE.

1. Dividend Distribution Policy

In terms of Regulation 43A of the Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 ('SEBIListing Regulations') the Board of Directors of the Company ('the Board')formulated and adopted the Dividend Distribution Policy ('the Policy'). As per thePolicy the Company after considering various external factors that may have an impact onthe business as well as internal factors such as the long-term growth strategy of theCompany and the liquidity position including working capital requirements and debtservicing obligations will endeavour to pay dividend up to 50% of profit after tax of theCompany subject to the applicable rules and regulations.

The Policy is annexed to this report (Annexure 1) and is alsoavailable on our website at https://www.tatasteel.com/media/6086/dividend-policy-final.pdf

2. Dividend

The Board has recommended a dividend of '10 per fully paid-up Ordinary(equity) Share on 1126490211 fully paid-up Ordinary Shares of face value '10 each forthe year ended March 31 2020. (Dividend for Financial Year 2018-19: '13 per fully paid-upOrdinary Share on 1126489680 fully paid-up Ordinary Shares of face value '10 each).

The Board has also recommended a dividend of '2.504 per partly paid-upOrdinary (equity) Share on 77636788 partly paid-up Ordinary Shares of face value '10(paid up '2.504 per share) each for the year ended March 31 2020. [Dividend for FinancialYear 2018-19: '3.25 per partly paid-up Ordinary Share on 77636705 partly paid-upOrdinary Shares of face value '10 each (paid-up '2.504 per share)].

The Board has recommended dividend based on the parameters laid down inthe Dividend Distribution Policy and will be paid out of profits for the year.

The dividend on Ordinary Shares (fully paid-up as well as partlypaid-up) is subject to the approval of the Shareholders at the Annual General Meeting ('AGM')scheduled to be held on Thursday August 20 2020.

The dividend once approved by Shareholders will be paid on and fromMonday August 24 2020. If approved the dividend would result in a cash outflow of'1145.93 crore. The dividend on Ordinary

Shares (fully paid-up as well as partly paid-up) is 100% of the paid-upvalue of each share. The total dividend pay-out works out to 16.99% (Previous Year: 17%)of the net profit of the standalone results.

Pursuant to the Finance Act 2020 dividend income is taxable in thehands of the shareholders effective April 1 2020 and the Company is required to deducttax at source from dividend paid to the Members at prescribed rates as per the Income TaxAct 1961.

The Register of Members and Share Transfer Books of the Company (forfully paid-up as well as partly paid-up shares) will remain closed from Saturday August8 2020 to Thursday August 20 2020 (both days inclusive) for the purpose of payment ofthe dividend for the Financial Year ended March 31 2020.

3. Transfer to Reserves

The Board of Directors has decided to retain the entire amount ofprofit for Financial Year 2019-20 in the statement of profit and loss.

4. Capex and Liquidity

During the year under review the Company on a consolidated basisspent '10398 crore on capital projects across India Europe and Canada largely towardson-going projects in India (Kalinganagar plant and Tata Steel BSL Limited) essentialsustenance and replacement schemes.

The Company's liquidity position remains strong at '17745 crore as onMarch 31 2020 comprising '11549 crore in cash and cash equivalent and balance inundrawn credit lines.

5. Management Discussion and Analysis

The Management Discussion and Analysis as required in terms of the SEBIListing Regulations is annexed to the report (Annexure 2).

B. Integrated Report

In keeping with the Company's valued tradition of "thinking aboutsociety and not just the business" in 2016 we transitioned from compliance-basedreporting to governance-based reporting by adopting the <IR> framework developed bythe International Integrated Reporting Council.

We present to you our 5th Integrated Report which highlights themeasures taken by the Company that contribute to long-term sustainability and valuecreation while embracing different skills continuous innovation sustainable growth anda better quality of life.

C. Operations and Performance

1. Tata Steel Group

During the year under review the Tata Steel Group ('the Group')recorded total deliveries of 26.68 MnT (previous year: 26.80 MnT). The steel deliveriesdecreased at Tata Steel Limited by 2.9% and at Tata Steel Europe by 4%. This decrease wasoff-set by higher

deliveries at Tata Steel BSL Limited ('TSBSL') by 16%. Theincrease at TSBSL is due to ramp-up of operations. Further in the previous Financial Year2018-19 deliveries prior to the acquisition of TSBSL on May 18 2018 under Insolvency andBankruptcy Code were not included. Further the acquisition of the steel business of UshaMartin Limited by Tata Steel Long Products Limited ('TSLP') (formerly Tata SpongeIron Limited) on April 9 2019 also increased the total deliveries of the Group by 0.51MnT. The turnover for the Group was at '139817 crore during the Financial Year 2019-20(previous year: '157669 crore) a decrease of 11% over the previous year due to declinein realisations across geographies along with lower deliveries. Further the EBITDA forthe Group was '17735 crore during the Financial Year 2019-20 as compared to '29770 crorein the previous year.

During the year under review the Group reported a consolidated profitafter tax (including discontinued operations) of '1172 crore as against a profit of'9098 crore in the previous year. The decrease was mainly due to lower operating profitsattributable to decline in the steel prices during the year higher exceptional chargepartly offset by lower tax expenses primarily on account of re-measurement of deferred taxliabilities based on the new lower rate of Income tax prescribed under Section 115BAA ofthe Income Tax Act1961 along with creation of deferred tax assets at some of its foreignentities.

2. India

During the year under review total deliveries at Tata Steel Limited(Standalone) were at 12.32 MnT (previous year: 12.69 MnT) recording a decrease of 2.9%over the previous year. Turnover was '60436 crore (previous year: '70611 crore)decrease of 14.4% than that of the previous year. EBITDA from Tata Steel Limited(Standalone) was '15096 crore (previous year: '20744 crore) 27.2% lower than that ofthe previous year.

During the year under review the crude steel production in Indiaincreased by 8% to 18.20 MnT with ramp up at TSBSL and acquisition of steel business ofUsha Martin Limited by TSLP. TSBSL achieved best ever crude steel production and sales at4.46 MnT and 4.14 MnT respectively due to improved maintenance practices higher capacityutilisations and marketing synergies. TSLP which acquired steel making facility of UshaMartin Limited during the year achieved crude steel production of 0.58 MnT whiledeliveries stood at 0.51 MnT.

Total deliveries of Tata Steel from its Indian operations (includingTSBSL and TSLP) stood at 16.97 MnT i.e. 4% higher than the previous year. The turnover andEBITDA (excluding inter-company eliminations and adjustments) was '82125 crore and'17650 crore respectively.

During the year under review Sukinda Chromite mine and GomardihDolomite mine leases expired on March 31 2020 as per the mining regulations . Tata SteelMining Limited (formerly T S Alloys Limited) a wholly-owned subsidiary of the Companyhas won the Sukinda Chrome ore mines in the auction and the lease grant process isunderway. Further Tata Steel Mining Limited also signed 50 year

leases for Kamarda and Saruabil Chrome mines. With these mines TataSteel Mining Limited is well placed to cater to its global customer base as well asrequirements of the Group.

3. Europe

During the year under review liquid steel production from Europeanoperations was 10.26 MnT (previous year: 10.31 MnT). Deliveries from European operationsdecreased by 4% to 9.29 MnT primarily due to overall weakness in economic activities.Turnover from operations was '55939 crore (previous year: '64777 crore). The decrease inturnover was primarily due to sharp decline in European steel prices and lower deliveriesresulting in loss of '664 crore at the EBITDA level.

The Company is committed to make its European operations simplerleaner and sustainable. It has launched a transformation programme to generate savingsacross multiple initiatives.

4. Impact of COVID-19

The outbreak of COVID-19 pandemic has led to an unprecedented healthcrisis and has disrupted economic activities and global trade while weighing on consumersentiments. Consequently the global steel demand is expected to be sharply lower in 2020.

The Government of India had imposed a stringent nationwide lockdownwith effect from March 25 2020 which has severely impacted manufacturing activities.Though the Steel and Mining sectors were exempt from the lockdown measures they weresubject to certain guidelines. Steel demand was affected as key steel consuming sectorsstruggled to operate amidst weakening economic activities working capital constraintsshortage of manpower and logistical issues.

In Europe the outbreak of COVID-19 has further accentuated thesustained weak steel demand. The share of steel imports to total consumption in theEuropean Union continues to remain at elevated levels which is a cause of concern.

The risk-intelligent culture embedded across the Company has helped indeveloping and adopting a multi-pronged strategy to effectively respond to the evolvingpandemic situation. The health and safety of our employees and the communities in which weoperate continues to be the foremost priority of the Company. The Company is focussed onrunning operations safely and efficiently to service our customers. The operations havebeen aligned with the prevailing market conditions by reducing upstream operations whilecurtailing downstream operations. Cross-functional teams worked to manage supply chain andlogistics issues within the constraints imposed by the lockdown to ensure that plant couldoperate as planned. With domestic markets closed due to the lockdown there was a shift toexport sales which were ramped up sharply. The Company is also focussed on liquiditymanagement to face any future disruption in business conditions. Funds were raised tomanage liquidity considering the heightened uncertainty over the extent of impact onunderlying demand conditions.

D. Key Developments Amalgamation and Joint Venture

Amalgamation of Bamnipal Steel Limited and Tata Steel BSL Limited intoand with Tata Steel Limited

During the year under review the Board of Directors of the Company atits meeting held on April 25 2019 approved the amalgamation of Bamnipal Steel Limitedand Tata Steel BSL Limited into and with the Company by way of a composite scheme ofamalgamation.

The Company received a 'no objection' to the scheme from the NationalStock Exchange of India Limited and BSE Limited on August 26 2019 and has filed anapplication before the National Company Law Tribunal Mumbai Bench for necessarydirections. The amalgamation is subject to approval from shareholders and other regulatoryauthorities.

Joint Venture between Tata Steel and thyssenkrupp AG

During the year under review the Company and thyssenkrupp AG decidednot to pursue the proposed transaction to form a joint venture to combine their steelbusinesses in Europe. The decision was taken after careful evaluation of the viability ofthe proposal in light of the feedback received from the European Commission ('EC').Thereafter on June 11 2019 EC formally announced its decision to prohibit the proposedjoint venture.

Acquisitions & Investments

Acquisition of Bhushan Energy Limited

During the year under review Tata Steel BSL Limited ('TSBSL')an indirect subsidiary of the Company completed the acquisition of controlling stake inBhushan Energy Limited (now Angul Energy Limited) ('BEL') pursuant to theResolution Plan as approved by the National Company Law Tribunal (Principal Bench NewDelhi) vide its Order dated May 30 2019 under Corporate Insolvency and ResolutionProcess of the Insolvency and Bankruptcy Code 2016. Consequently BEL became a subsidiaryof TSBSL effective June 1 2019.

Investment in Tata Steel Long Products Limited

Pursuant to the Rights Issue of Tata Steel Long Products Limited(formerly Tata Sponge Iron Limited) ('TSLP') on July 24 2019 the Companyacquired 25843967 Equity Shares of face value of '10 each of TSLP at a price of '500per equity share (including a premium of '490 per equity share) aggregating to '1292.20crore. As a result of this the Company's holding in TSLP increased from 54.50% to 75.91%.The name change of TSLP from Tata Sponge Iron Limited to Tata Steel Long Products Limitedis effective August 20 2019.

BOARDS RtrOR I (CON ID.)

Divestments

NatSteel Holdings Pte. Ltd. ('NSH') and Tata Steel (Thailand) PublicCompany Ltd. ('TSTH')

During the year under review T S Global Holdings Pte. Ltd. ('TSGH')an indirect wholly-owned subsidiary of the Company for want of regulatory approvalsdecided not to pursue the proposed

transaction with HBIS Group Co. Ltd. ('HBIS') to divest itsentire equity stake in NSH (100%) and TSTH (67.9%) to a company in which 70% equity stakewould be held by an entity controlled by HBIS and the balance 30% by TSGH.

The Company is in discussions with other investor(s) in continuation ofits strategy to find a partner for the South-East Asian business.

Financing

Issuances of Debt Securities

During the Financial Year 2019-20 and till date of the report theCompany has allotted the following Unsecured Rated Listed Redeemable Non-ConvertibleDebentures ('NCDs') of face value of '1000000 each to identified investors onprivate placement basis:

Particulars of Allotment Date of Allotment Tenure Date of Maturity
6700 - 7.70% NCDs aggregating to '670 crore March 13 2020 5 years March 13 2025
10250 - 7.85% NCDs aggregating to '1025 crore April 17 2020 3 years April 17 2023
5100 - 7.85% NCDs aggregating to '510 crore April 22 2020 3 years April 21 2023
10000 - 7.70% NCDs (floating coupon) aggregating to '1000 crore April 27 2020 3 years April 27 2023
Series A: 5000 - 7.85% NCDs (floating coupon) aggregating to '500 crore; Series B: 5000 - 7.95% NCDs aggregating to '500 crore April 30 2020 3 years 3 years 6 months April 28 2023 October 30 2023
10000 - 8.25% NCDs aggregating to '1000 crore May 20 2020 3 years May 19 2023
4000 - 8.08% NCDs (floating coupon) aggregating to '400 crore June 3 2020 3 years June 2 2023

Refinancing at Tata Steel Netherlands

During the year under review Tata Steel Netherlands Holdings B.V. ('TSNHBV')an indirect wholly-owned subsidiary of the Company executed agreements for therefinancing of its bank debt. TSNHBV has raised term loan facilities of EUR 1.75 billion.This represents a reduction of EUR 500 million versus the external debt outstanding inTata Steel Europe as of March 2019 enabling the standalone European business to have amore robust balance sheet while it is also putting in significant efforts at restructuringand improving its operating performance.

Credit Rating

In April 2020 S&P Global Ratings ('S&P') revised theissuer credit rating of the Company as well as the long-term foreign currency issuercredit rating for ABJA Investment Co. Pte. Ltd. a wholly-owned subsidiary of the Companyfrom 'BB-'/Outlook: Stable to 'B+'/Outlook: Negative. S&P also revised the issuercredit rating of Tata Steel UK Holdings Ltd. an indirect subsidiary of the Company from'B+'/Outlook: Stable to 'B'/Outlook: Negative. The revision in ratings was primarily onaccount of COVID-19 pandemic related disruptions and the consequent economic effects.

Similarly in April 2020 Moody's Investor Service ('Moody's')revised the outlook for the Company's Corporate Family Rating from Stable to Review forDowngrade and affirmed the rating 'Ba2'. Moody's has also revised the Corporate FamilyRating of Tata Steel UK Holdings Ltd. from 'B2'/Outlook: Stable to 'B3'/Outlook: Reviewfor Downgrade. The revision was also triggered in anticipation that the Company would facechallenges due to the COVID-19 pandemic led economic downturn coupled with the weak creditprofile of the Company.

E. Sustainability

The Company is committed to steel production using the most efficientroutes minimising waste generation and mitigating impact on natural capital. Thesustainability approach of the Company emphasises integrated thinking and balances theimpact and outcome of six capitals viz. Financial Manufactured Intellectual HumanSocial and Relationship and Natural. Aspirations of taking our carbon emissions to <2tCO2/tcs attaining zero waste reducing specific water consumption to <3 m3/tcsand doubling our CSR reach by 2025 are significant facets of this strategy.

New initiatives undertaken by the Company in the Financial Year 2019-20find their genesis in our aspiration of minimising the carbon footprint. The Companyundertook third party studies which helped in identifying a renewable energy potential of~180 MW across locations. This will help the Company in increasing the proportion of therenewable energy in its power mix.

The Company is a signatory to the Task Force of Climate RelatedFinancial Disclosure for climate change and is in the process of identifying transitionrisks to decarbonise its operations over a period. Several transition risks andopportunities have been identified as part of this assessment. Specific mitigation andcontingency plans for each of the identified risks are being integrated with Company'slong-term strategy.

The Company is committed to serve its customers through a portfolio ofeco-friendly products and disclosure of the impact of the products on environment by usingLife Cycle Assessment ('LCA') methodology. In Europe almost entire product rangeof the European operations is certified to be at the BES 6001 sustainable sourcingstandard. During the year under review

Tata Steel Europe received a 'Steelie' award from World SteelAssociation for 'Excellence in Life Cycle Assessment' in recognition of its development ofa sustainability development tool for use in the new product development processes in itsEuropean operations. Tata Steel Europe has also published Environmental ProductDeclarations ('EPD') setting out the environmental characteristics of productsthroughout their life-cycle for a large number of its products manufactured in Europe.Further the Company will strive to maintain its global leadership by publishing EPDs onan increased proportion of its global product offering.

The Company identified supply chain sustainability as a key materialissue in the materiality exercise conducted in the Financial Year 2018-19. In order totake this forward the Tata Steel Responsible Supply Chain Policy was adopted in February2020. The expectations with respect to sustainability from supply chain partners viz.vendors Steel Processing Centres and distributors as well as the way the Company wouldengage with them on the subject have been laid down in the aforesaid policy.

In order to augment the effort of the Company towards conservation ofbiodiversity at its operational sites the Company constituted a Centre of Excellence forBiodiversity Management to strategically formulate and implement Biodiversity ManagementPlan. During the year under review more than 4 lakh trees were planted across locationsusing eco-restoration methodology and Miyawaki plantation techniques.

The continued focus on 'Sustainability' has helped the operations ofthe Company in India as well as Europe to be recognised as two of the six SustainabilityChampions by World Steel Association for three consecutive years. Also the JamshedpurWorks was awarded the 'GreenCo Star Performer' award for sustained excellence inenvironmental management and the Global Wires division of the Company was awarded the'GreenCo Gold Rating' for excellence in environmental management by the CII GreenBusiness Centre.

Environment

The Company is committed to responsible use and protection ofenvironment through resource conservation pollution control and sustainable practicesfor waste management. The Company focusses on operational excellence through"Prevent Minimise Recover Reuse and Recycle" approach. The Company continuesits pursuit of establishing best-in-class facilities and channelising its investment toupgrade manufacturing and distribution facilities to improve operational and environmentalperformance.

The Company has implemented environmental management systems inaccordance with international standard ISO 14001 which provides the necessary frameworkfor managing compliance and improving environmental performance. The Company maintainsaccredited laboratories for environmental performance assessment.

The Safety Health & Environment Committee of the Board providesoversight and necessary guidance on environmental matters. The Company has dedicatedEnvironment Management teams at all its

operating locations. The Company endeavours to practice responsibleadvocacy on regulatory issues and actively participates in World Steel AssociationEnvironment Policy Committee World Economic Forum Central Pollution Control Board'sNational Taskforce in India Eurofer (the European Confederation of Iron and SteelProducers) and various other organisations. The Company engages with variousorganisations such as Confederation of Indian Industry-Centre of Excellence forSustainable Development Confederation of Indian Industry-Sohrabji Godrej Green BusinessCentre the Indian Institute of Metals The Energy and Resources Institute The Federationof Indian Chambers of Commerce and Industry Federation of Indian Mineral Industries andInsolvency and Bankruptcy Board of India amongst others on diverse issues.

Climate Change

Climate change is one of the most pressing issues the world faces todayand the Company recognises its obligation to work towards mitigation of climate changerelated risks and strives to address the challenges of transitioning to a lower carbonregime. The Company firmly believes that steel is an integral part of the solution fortransitioning to lower carbon economy because of its unique property of infiniterecyclability.

The Company aspires to achieve global benchmark levels of < 2 tCO2/tcsemissions by 2025 for Indian operations and to become carbon neutral by 2050 in Europe.The Company's site in IJmuiden in the Netherlands is one of the most carbon efficientintegrated steelworks in the world while the Company's integrated steelworks atJamshedpur is the most efficient steel plant in India. The Company has established EnergyEfficiency and Carbon Reduction programmes at all its Steel Plants in the Netherlands UKand India to pursue short-term energy efficiency initiative and to work on long-termdecarbonisation initiatives. The Research & Development team is collaborating withtechnology companies and academia to work on wide range technologies which inter aliaincludes carbon capture use and storage ('CCUS') hydrogen-based steelmaking andnew smelting technologies. The Company has set up a Steel Recycling business in anendeavour to bring good practices in Indian scrap market and make more scrap available forconversion to steel.

The Company continues to work on developing HIsarna a new smeltingreduction technology to produce steel without the need for coke making or agglomerationprocesses thereby improving efficiency reducing energy consumption and reducing CO2emissions. The pilot plant is located at the Company's IJmuiden site in the Netherlands.The Company is exploring to scale up HIsarna in India to pursue the development of astrategic roadmap to achieve quantum reduction over 2030 and 2050 horizons.

Health and Safety

Health and Safety Management remains the Company's foremost priorityand we are committed to achieve 'Zero Harm' by 2025. In pursuit of this objective theCompany has been working on six strategies viz. build safety leadership capability at alllevels to achieve zero harm achieve zero harm to contract employees

by strengthening deployment of contractor safety management standardimprove competency and capability for hazard identification & risk management improveroad & rail safety across the Company excellence in process safety management andestablish industrial hygiene and improve occupational health.

During the year under review the Company undertook several initiativesto improve the health and safety standards of its employees including rolling out areward and recognition policy for Indian operations to encourage positive safety behaviouramong employees commissioning a 'safety leadership development centre' to enhance thecompetency of the workforce and provide safety induction training and establishing'Tactical Centre' for business continuity management during emergency situations. Groupcompanies including Tata Steel Europe formed HSE Performance Improvement Teams to improvesafety at workplace through learning and sharing of best practices.

A focussed effort was also made to improve the deployment of competentcontract workforce in high hazard operations. For effective learning and deployment ofSafety Standard across organisation ten Safety Standards were simplified and e-learningmodules were developed.

Contractor employee's fatality remains the topmost safety concern forthe Company. It is with deep regret that the Company reports three fatalities in Indiainvolving our contractor partners. During the year under review three distinct Safetycampaigns viz. 'Zero Harm' ECAUP (Elimination of Commonly Accepted Unsafe Practice) and'Fall from Height' were launched across locations to address gaps and improve safetyawareness. Monthly review of red risk incidents by the Senior Leadership helped inachieving ~44% reduction of high potential incidents vis-a-vis previous year. Further theinitiative to roll out Process Safety through 'Centre of Excellence' methodology gainedmomentum. Currently the process safety has been rolled out to 46 departments and thebalance departments will be covered in the Financial Year 2020-21. The Company has beenawarded for the best practice on 'Managing Process Safety Critical Equipment for BarrierEffectiveness' at the World Steel Safety and Health Recognition function held at Mexico in2019.

The Company is leveraging digital technology through usage of SmartSafety Wearable' developed in-house in collaboration with Tata Communications for onlinetracking of health parameters of workers who are in isolated workplaces at Jamshedpur. Inorder to improve safe behaviour on road a video analytic system was installed atJamshedpur including the first Automatic Number Plate Recognition ('ANPR') system.Further to strengthen CCTV visualisation local command centres were established acrossvarious locations.

Towards Occupational Health the Company has implemented IndustrialHygiene hazard control measures to minimise the exposure level at Jamshedpur. Theme basedhealth awareness campaigns on heat stress hypertension diabetes and obesity wereorganised

across India covering 15000 employees and contract employees. In orderto develop competency in first-aid and Cardiopulmonary resuscitation (CPR) ~7600employees were trained across India. High risk cases of about 52% relating to life stylediseases have been transformed to moderate or low risk category.

During the year under review the Company has also undertaken otherinitiatives such as leadership coaching and site interventions at both integrated sitesputting in place new governance and review structures accelerating the deployment ofstandards and codes of practices around coil banding and initiative towards a moredigital approach to support site health and safety teams and the development of managementsystems in line with ISO 45001.

At Tata Steel Europe Health and safety continues to be of utmostpriority. It is with deep regret that the Company reports two fatalities in Europe duringthe year. In consultation with the senior leadership several measures including a healthand safety transformation plan which focusses upon five key areas viz. transformationalleadership collaborative development and deployment digitally enabled company widesupport standards and integration and workforce engagement have been developed.

Research and Development

I n line with the aspiration to be amongst the top five innovationdriven steel companies globally the Company has ushered in Technology Leadership Areas ('TLAs').Cross-functional teams have been constituted and projects have commenced based on TLAs.During the year under review the Research and Development ('R&D') conducted bythe Company has demonstrated a process at lab scale for rapid heating of non-coking coalto coke through microwave energy. The Company also targets to upscale the technology forcontinuous coke making. Further with an aim to create 'Value from Waste' the Companyestablished a process for using water-cooled and air-cooled ferrochrome slag material inapplications such as bitumen road concrete and fly ash slag bricks.

Conservation of the environment and sustainability has always been animportant area for the Company. Accordingly the Company has installed a pilot plant ofthe scale 5 Tonnes per Day (TPD) at one of our steelmaking plants to capture CO2 fromBlast Furnace gas. Further the Company has also developed an advance oxidation processfor cyanide removal and the fabrication and installation of the commercial plant of thecapacity @ 100 m3/hr is under progress. Amongst the notable customercollaborations the Company has worked jointly with a leading automotive player indesigning the tipper body using a new grade of high strength steel which has resulted inreduction of the weight of the tipper body by 200 kg without compromising on its strength.

In Europe R&D has contributed to various new products andimplementation of new process control models and other process improvements. The Companyhas introduced the Valast range

of abrasion resistant grades the new Cr6+ free TCCT (TrivalentChromium Coating Technology) as replacement for ECCS (Electrolytic Chrome Coated Steel)and CFPA (Chromium Free Passivation Alternative) products for packaging and MagiZinc fullfinish. The Company also worked towards continuously optimising coal blending improvingsafety and preventing damage by prediction of coiling through a new model CISCA (CoolingInduced Shape Change Algorithm) and automatically detecting of stickers in the casters atan early stage. Further R&D has also been vital in getting many potential newproducts to reach higher Technology Readiness Levels throughout the year and to supportthe customer interactions on a technical level.

R&D continues to help the Company in its drive to become moresustainable and environmentally friendly. The HIsarna project has demonstrated itspotential to solve certain issues faced by the steel industry in dealing with circularityand climate change. R&D will continue to support this development and be heavilyinvolved in the technical discussions for upscaling the process in India and IJmuiden.

New Product Development

During the year under review the Company developed 155 new products inIndia which inter alia include the JSH440WN & JSH590RN grades and S420MC forhigh strength automotive structural applications. The new grades of steel are targeted tobe used in upcoming automotive models. The Company was awarded the "InnovativeSupplier of the year 2019" for its customer centric approach and innovation in theproduct development.

In the long products segment the Company commercialised high strengthhigh ductility rebar grade - Fe600 HD. Further the Company also developed low N2 Steelgrade [WR3M] wire rod for welding electrode wire application through Electric Arc Furnace(EAF) route.

I n Europe 22 new products were launched during the year. Theselaunches include major developments for engineering automotive and construction markets.A notable example of product launch includes the Valast450 XPF 800 Tubes andCelsius460. Valast450 hot rolled abrasion resistant product offers the widest stripproduct with superior surface quality guaranteed impact strength and flexible lengthsheets at a competitive price to the yellow goods and heavy vehicles market. The XPF800Tubes offers customers a cost-effective alternative for manufacturing automotivecomponents such as twist beams. The Celsius460 NH Tube is the strongest hot formedstructural hollow section ever produced by the Company offering customers up to 20%weight saving with no weldability penalty. Further Packaging department has furtherdeveloped and commercialised its already launched polymer laminated steel Protact rangeof products.

Customer Relationship

During the year under review the Company continued to enhance itsrelationship with automotive manufacturers and their large value chain partners. Inaddition the Company also revived its

Customer Service Team ('CST') approach of nurturingrelationships with automotive manufacturers and continued to provide value upliftmentacross the Original Equipment Manufacturers ('OEM') supply chain ecosystem. TheCompany also extended its Early Vendor Involvement ('EVI') partnership for theupcoming models of the OEMs. The Company has offered solutions on weight reduction crashworthiness and vehicular design from material perspective to its customers through itsequipped Research and Development setup. In addition the Company continued to roll outits Value Analysis & Value Engineering ('VAVE') module and advanced materialdata for existing models and in-production support.

During the year under review 'Tata Tiscon' the Company's rebar brandincreased its footprint in the rural hinterland through active engagement with MasonCommunity under the MITR programme. The programme has over 25000 Active Masons in theCommunity who contribute to more than 25% volume for the brand. The Company through TataTiscon's Innovative Discovery programme engaged with over 7500 architects and engineers.These engagements were aimed at enhancing the Individual House Building constructionecosystem of the country.

During the year under review Tata Shaktee the Company's flagshipbrand in the field of galvanised corrugated sheets completed 20 years. The Companyreached out to almost 200000 people across more than 4000 villages across 16 states and65 districts of rural India through its on-ground bike campaign 'Gaon Gaon Shaktee KiChaon'. The campaign aimed at category conversion of 'Kachcha House' owners to TataShaktee GC Sheets and garnered over 1500 leads and registrations of over 55000 people.Tata Shaktee reached out to over 5000 farmers across 120 districts in India via 127 KisanMeets conducted on the occasion of Kisan Diwas. This programme also helped the Company toenhance its relationship with the fabricator community via Shakteeman the digitalFabricator Loyalty Scheme. The Company has introduced a reward based programme with theaim to increase the fabricator loyalty for Tata Shaktee.

The Company's e-selling platform 'Aashiyana' which caters to multipleB2C brands crossed a turnover of '316 crore as against '100 crore in the previous year.B2ECA (Business to Emerging Corporate Accounts) consisting of brands such as Tata Astrum(HR) Tata Steelium (CRCA) and Galvano (coated) is a ~4 MnTPA business and continues togrow. During the year under review the Company partnered with various institutions tobring together various thought leaders and ECAs to understand the upcoming technologies inthe microsegments we serve. Collaborative Reform with ECA for Advanced TechnicalEnhancement ('CREATE') was conducted with over 25 ECA customers to generate costand weight savings ideas via redesigning of components. A knowledge sharing platformECA-Talks was conceptualised where the senior leadership team of key ECA customers sharedcurrent trends and future expectations for their respective micro-segments. Further underthe Skilling India Initiative training programmes were organised for the workforce of

ECA customers to develop technical capabilities. Fabricators wereidentified as key influencers to scale up Tata Astrum Super (unique laser marked HotRolled coils) and several fabricator meets were conducted to strengthen brand awareness.Both COMPASS a digital supply chain visibility solution rolled for B2B and DigEca aninitiative that captures lead management for ECAs received traction from distributors& customers. DigEca has been rolled out to all ECAs to drive supply chain agility andimprove visibility to customers. The Company has also completed digital analytics basedprojects named Paras Amrit and Ascend pertaining to a digital method of market demandassessment and improvement in product value realisation.

In the B2B sector the Company has launched #Converse to Construct-Conversations that builds Tomorrow - a platform to interact and share ideas with differentstakeholders of the construction sector that would enable adoption of faster sustainableand modern construction practices in line with global benchmarks. The Company has alsocollaborated with the World Steel Association (through ConstructSteel forum) and IndianSteel Association to support them in their efforts to improve steel intensity inconstruction in India. In the Engineering Segment (Pre-Engineered Building Lifting &Excavation Construction & Projects and Oil & Gas) 'Building India Together' wasrolled out to drive customer engagement initiatives such as CST VAVE Technology Day andJoint Milestones celebration across key customer accounts across India.

During the year under review the Company's "Tata PraveshPioneers" programme was launched to capture customer testimonials encapsulating theirexperiences with the products and service. The Company also launched 'Griha Pravesh' anInfluencer Management Programme to build a web of influencers such as architectsinterior designers civil and structural engineers and to create Tata Pravesh footprintacross India.

The Company appointed dedicated Key Account Managers for Nest-inofferings for repeat customers in order to understand and meet customised requirementsas well as receive and implement their feedback. The Company has installed over 1800EzyNest (modular toilets) units for repeat customers as part of their CSR initiativesacross India with an AMC contract for many of them. Further the Company has also receivedAquaNest (water ATMs) orders from such customers. Nest-In effectively uses demo units andopen house visits to clear any customer concerns on quality and guide them on theaesthetics of Nestudio - a premium prefabricated living solution. The Company has listedall Nest-In offerings on the Government e-Marketplace portal where procurements are madeby Government Officers.

In Europe the Company partners with customers to help them excel intheir market co-creating more sustainable value throughout the entire value chain. Aspart of its Transformation Programme the Company has integrated its existing initiativeson 'Customer Excellence' and 'Future Value Chain' and undertaken initiatives to optimisethe mix and identify and capture additional opportunities

in the market. 'Commercial Excellence' improvements have beenacknowledged in the Tata Business Excellence Model assessment. The Company also has avalue chain transformation programme previously known as 'Future Value Chain' whichfocusses on driving service and quality improvements. European operations are increasingits focus on business development to achieve a balanced portfolio in terms of bothproducts and customer setup. The Company maintains its differentiation strategy whichaims to increase the proportion of high margin differentiated products. As part of thestrategy the Company has launched 22 new products in Europe during the year. Theselaunches include major developments for the engineering automotive packaging andconstruction markets. Along with products the Company also offers services such asElectronic Data Interchange Track and Trace Early Vendor Involvement Design andEngineering support Building Information Modelling Life Cycle Analysis and TechnicalSupport.

Corporate Social Responsibility

The objective of the Company's Corporate Social Responsibility ('CSR')initiatives is to improve the quality of life of communities through long-term valuecreation for all stakeholders. The Company has in place a CSR policy which providesguidelines to conduct CSR activities of the Company. The CSR policy is available on thewebsite of the Company at https://www.tatasteel.com/media/11804/tata-steel-csr-policy-latest-2019.pdf

For decades the Company has pioneered various CSR initiatives. TheCompany continues to remain focussed on improving the quality of life. During the yearunder review the Company addressed key development challenges faced by communities weserve thus reaching out to the lives of over 1.4 million people through innovativeinitiatives in health drinking water education livelihood sports infrastructuredevelopment amongst others. The Company's signature CSR programmes have been recognisedas models of positive change that address critical development issues at a greater scalein areas of school education maternal and neonatal health tribal identity and buildingof a multi thematic corridor of well-being connecting its areas of operations in Jharkhandand Odisha. The Company is working closely with tribal communities in its areas ofoperation in India. The Company has partnered with the State Governments of Jharkhand andOdisha and with various reputed national and international development organisations indelivering its programmes.

The Company's CSR efforts have been recognised through various awardsconferred on it. The most significant achievement has been the Maternal And NewbornSurvival Initiative receiving recognition in the inaugural National CSR Awards institutedby the Ministry of Corporate Affairs Government of India at New Delhi. During the yearunder review the Company spent '192.99 crore on CSR activities. The Annual Report on CSRactivities in terms of Section 135 of the

Companies Act 2013 ('the Act') and the Rules framed thereunderis annexed to this report (Annexure 3).

Tata Steel Europe conducts regular dialogues with local communities tounderstand and address their concerns relating to their activities and its impact on theenvironment as well as our sustainability goals and improvement targets. Local communitiesare part of the sustainable economy as we help each other to coexist and collaboratesuccessfully with a good understanding of the mutual benefits that we provide to oneanother. The Company runs regular programmes to invite the community to see our work aswell as enjoy and see the important wildlife and flora that flourish on its sites. TheCompany sponsors local activities and support charities. In IJmond the Company celebratedthe annual Tata Steel Chess Tournament that attracts thousands of players and spectatorsand boosts the local tourism economy in the off-season in January. The Company alsosponsors local sports teams and children's events most notably in recent years the TataKids of Steel triathlons that enthuse kids to be physically proactive. The Company alsoengages with communities as an existing and potential workforce running programmes toinvolve young people and girls in particular so that they can discover the interestingcareer opportunities that our organisation offers.

F. Corporate Governance

At Tata Steel we ensure that we evolve and follow the corporategovernance guidelines and best practices diligently not just to boost long-termshareholder value but also to respect the interests of the minority. We consider it ourinherent responsibility to disclose timely and accurate information regarding theoperations and performance leadership and governance of the Company.

I n accordance with our Vision the Group aspires to be the globalsteel industry benchmark for value creation and corporate citizenship. The Group expectsto realise its Vision by taking such actions as may be necessary in order to achieve itsgoals of value creation safety environment and people.

Pursuant to the SEBI Listing Regulations the Corporate GovernanceReport along with the Certificate from a Practicing Company Secretary certifyingcompliance with conditions of Corporate Governance is annexed to this report (Annexure4).

Meetings of the Board and Committees of the Board

The Board met five times during the year under review. The interveninggap between the meetings was within the period prescribed under the Act and the SEBIListing Regulations. The Committees of the Board usually meet the day before or on the dayof the formal Board meeting or whenever the need arises for transacting business. Detailsof composition of the Board and its Committees as well as details of Board and Committeemeetings held during the year under review are given in the Corporate Governance Report.

Selection of New Directors and Board Membership Criteria

The Nomination and Remuneration Committee ('NRC') works with theBoard to determine the appropriate characteristics skills and experience for the Board asa whole as well as for its individual members with the objective of having a Board withdiverse backgrounds and experience in business finance governance and public service.Characteristics expected of all Directors include independence integrity high personaland professional ethics sound business judgement ability to participate constructivelyin deliberations and willingness to exercise authority in a collective manner. TheCompany has in place a Policy on appointment & removal of Directors ('Policy').

The salient features of the Policy are:

• It acts as a guideline for matters relating to appointment andre-appointment of directors

• It contains guidelines for determining qualifications positiveattributes of directors and independence of a Director

• It lays down the criteria for Board Membership

• It sets out the approach of the Company on board diversity

• It lays down the criteria for determining independence of adirector in case of appointment of an Independent Director

During the year under review there has been no change to the Policy.The Policy is available on the website of the Company at https://www.tatasteel.com/media/6816/policy-on-appointment-and-removal- of-directors. pdf

Familiarisation Programme for Directors

As a practice all new Directors (including Independent Directors)inducted to the Board go through a structured orientation programme. Presentations aremade by the Senior Management giving an overview of the operations to familiarise the newDirectors with the Company's business operations. The new Directors are given anorientation on the products of the business group structure and subsidiaries Boardconstitution and procedures matters reserved for the Board and the major risks and riskmanagement strategy of the Company. Visits to plant and mining locations are organised forthe new Directors to enable them to understand the business better.

During the year under review no new Independent Directors wereinducted to the Board. Details of orientation given to the existing independent directorsin the areas of strategy operations & governance safety health and environment andindustry trends are available on the website of the Company athttps://www.tatasteel.com/investors/corporate-governance/ compliance/

Evaluation

The Board evaluated the effectiveness of its functioning that of theCommittees and of individual Directors pursuant to the provisions of the Act and SEBIListing Regulations.

The Board sought the feedback of Directors on various parametersincluding:

• Degree of fulfillment of key responsibilities towardsstakeholders (by way of monitoring corporate governance practices participation in thelong-term strategic planning etc.);

• Structure composition and role clarity of the Board andCommittees;

• Extent of co-ordination and cohesiveness between the Board andits Committees;

• Effectiveness of the deliberations and process management;

• Board/Committee culture and dynamics; and

• Quality of relationship between Board Members and theManagement.

The above criteria are broadly based on the Guidance Note on BoardEvaluation issued by the Securities and Exchange Board of India on January 5 2017.

The Chairman of the Board had one-on-one meetings with each IndependentDirector and the Chairman of NRC had one-on-one meetings with each Executive andNon-Executive Non-Independent Directors. These meetings were intended to obtainDirectors' inputs on effectiveness of the Board/ Committee processes.

In a separate meeting of Independent Directors performance ofNon-Independent Directors the Board as a whole and the Chairman of the Company wasevaluated taking into account the views of Executive Directors and Non-ExecutiveDirectors.

The Nomination and Remuneration Committee reviewed the performance ofthe individual directors and the Board as a whole.

In the Board meeting that followed the meeting of the independentdirectors and the meeting of Nomination and Remuneration Committee the performance of theBoard its committees and individual directors was discussed.

The evaluation process endorsed the Board Members' confidence in theethical standards of the Company the resilience of the Board and the Management innavigating the Company during challenging times cohesiveness amongst the Board Membersconstructive relationship between the Board and the Management and the openness of theManagement in sharing strategic information to enable Board Members to discharge theirresponsibilities and fiduciary duties.

In the coming year the Board intends to enhance focus onsustainability and digital interventions.

Remuneration Policy for the Board and Senior Management

Based on the recommendations of NRC the Board has approved theRemuneration Policy for Directors Key Managerial Personnel ('KMPs') and all otheremployees of the Company. As part of the policy the Company strives to ensure that:

• the level and composition of remuneration is reasonable andsufficient to attract retain and motivate Directors of the quality required to run theCompany successfully;

• relationship between remuneration and performance is clear andmeets appropriate performance benchmarks; and

• remuneration to Directors KMPs and Senior Management involvesa balance between fixed and incentive pay reflecting short medium and long-termperformance objectives appropriate to the working of the Company and its goals.

The salient features of the Policy are:

• It lays down the parameters based on which payment ofremuneration (including sitting fees and remuneration) should be made to IndependentDirectors and Non-Executive Directors.

• It lays down the parameters based on which remuneration(including fixed salary benefits and perquisites bonus/ performance linked incentivecommission retirement benefits) should be given to whole-time directors KMPs and restof the employees.

• It lays down the parameters for remuneration payable to Directorfor services rendered in other capacity

During the year under review there has been no change to the Policy.The Policy is available on the website of the Company at https://www.tatasteel.com/media/6817/remuneration-policv-of-directors -etc.pdf

Particulars of Employees

Disclosures pertaining to remuneration and other details as requiredunder Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are annexed to this report (Annexure5).

In terms of the provisions of Section 197(12) of the Act read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 a statement showing the names and other particulars of employeesdrawing remuneration in excess of the limits set out in the said Rules forms part of thisreport.

Directors

Re-appointments of Independent Directors

The shareholders of the Company at the AGM held on July 19 2019approved the re-appointment of Ms. Mallika Srinivasan (DIN:00037022) as IndependentDirector of the Company to hold office for a second term effective August 14 2019through May 20 2022. At the said AGM the shareholders also approved the re-appointmentof Mr. O. P. Bhatt (DIN:00548091) as Independent Director of the Company to hold officefor a second term effective August 14 2019 through June 9 2023.

Re-appointment of Director retiring by rotation

In terms of the provisions of the Act Mr. N. Chandrasekaran(DIN:00121863) Director of the Company retires at the ensuing AGM and being eligibleseeks re-appointment.

The necessary resolution for re-appointment of Mr. N. Chandrasekaranforms part of the Notice convening the ensuing AGM scheduled to be held on August 202020.

The profile and particulars of experience attributes and skills thatqualify Mr. Chandrasekaran for Board membership are disclosed in the said Notice.

Independent Directors' Declaration

The Company has received the necessary declaration from eachIndependent Director in accordance with Section 149(7) of the Act and Regulations 16(1)(b)and 25(8) of the SEBI Listing Regulations that he/she meets the criteria of independenceas laid out in Section 149(6) of the Act and Regulations 16(1)(b) of the SEBI ListingRegulations.

In the opinion of the Board there has been no change in thecircumstances which may affect their status as independent directors of the Company andthe Board is satisfied of the integrity expertise and experience (including proficiencyin terms of Section 150(1) of the Act and applicable rules thereunder) of all IndependentDirectors on the Board. In terms of Section 150 read with Rule 6 of the Companies(Appointment and Qualification of Directors) Rules 2014 Independent Directors of theCompany have undertaken requisite steps towards the inclusion of their names in the databank of Independent Directors maintained with the Indian Institute of Corporate Affairs.

Key Managerial Personnel

In terms of Section 203 of the Act the Key Managerial Personnel of theCompany are Mr. T. V. Narendran Chief Executive Officer & Managing Director Mr.Koushik Chatterjee Executive Director & Chief Financial Officer and Mr. ParvatheesamKanchinadham Company Secretary & Chief Legal Officer (Corporate & Compliance).During the year under review there was no change in the Key Managerial Personnel.

Audit Committee

The Audit Committee was constituted in the year 1986. The Committee hasadopted a Charter for its functioning. The primary objective of the Committee is tomonitor and provide effective supervision of the Management's financial reporting processto ensure accurate and timely disclosures with the highest levels of transparencyintegrity and quality of financial reporting.

The Committee comprises Mr. O. P. Bhatt (Chairman) Mr. Aman Mehta Dr.Peter Blauwhoff Mr. Saurabh Agrawal and Mr. Deepak Kapoor. The Committee met 7 timesduring the year under review the details of which are given in the Corporate GovernanceReport.

During the year under review there were no instances when therecommendations of the Audit Committee were not accepted by the Board.

Internal Control Systems

The Company's internal control systems are commensurate with the natureof its business the size and complexity of its operations and such internal financialcontrols with reference to the Financial Statements are adequate.

Risk Management

The Enterprise Risk Management ('ERM') process which is basedon international standards such as Committee of Sponsoring Organisation of the TreadwayCommission ('COSO') and ISO 31000 is an integral part of the Company's strategy.The ERM framework includes identification of risks and risk owners for regular trackingmitigation and reporting of risks to help the Company meet its business objectives.Communication and training is an essential part of the framework. The framework alsorequires an integrated approach towards managing risks.

Risk governance is driven by the Board of Directors through the RiskManagement Committee ('RMC') of the Board. The RMC is responsible for reviewing andstrengthening the risk management policies and processes adopted by the Company. It alsoreviews the potential risks facing the Company and the progress of the mitigation plans.The Company has also set up a management committee called the Group Risk Review Committee('GRRC') which is responsible for the implementation of ERM process across theCompany. The GRRC is focussed on enhancing the risk culture within the Company and drivingthe mitigation of identified risks in an optimal manner.

A dedicated ERM team has been set up to ensure deployment of the ERMprocess across the organisation including Tata Steel Group Companies. The ERM team is ledby Group Head - Corporate Finance & Risk Management who acts as the Chief Risk Officer('CRO') of the Company. The CRO regularly reports to the RMC and the GRRC on theprogress of the implementation of ERM and the status of the potential risks based on theassessment of risks and the mitigation strategies.

The Company has adopted a bottom up and top-down approach to driveenterprise risk management. The bottom-up process includes identification and regularassessment of risks by respective business units and cross-functional teams across theCompany and planning of mitigation strategies in a structured manner. This is complementedby a top-down approach where the senior management identifies and assesses long-termstrategic and macro risks for the Company. Risks are consolidated under major risk themesat the organisational level to create focus areas and prioritise mitigation strategies.The ERM process is integrated with core processes such as Corporate Audit CorporateStrategy and Planning and Capital Allocation. Regular training and communication iscarried out across the Company to develop a uniform understanding of the risk process andrisk terminology. An in-house built IT system has been deployed across the organisation toenable recording and review of risks through live dashboards and real-time monitoring ofdata. The ERM process has matured over the years and is today embedded across the Company.

Over the years Tata Steel has made significant progress in its journeytowards risk intelligence. We are pleased to report that the Company has been adjudged'Firm of the Year - Metals & Mining' at the 6th CNBC-TV18 India Risk ManagementAwards.

Vigil Mechanism

The Company has a Vigil Mechanism that provides a formal channel forall its Directors employees and vendors to approach the Chairman of the Audit Committeeand make protected disclosures about the unethical behaviour actual or suspected fraud orviolation of the Tata Code of Conduct ('TCoC'). No person is denied access to theChairman of the Audit Committee. In addition Directors employees and vendors mayapproach the Chief Ethics Counsellor to make any such protected disclosure.

The Vigil Mechanism includes policies viz. the Whistle-blower Policyfor Directors & Employees the Whistle-blower Policy for Business Associates theWhistle-blower Protection Policy for Business Associates (vendors/customers) the Policyfor Receipts of Gift and Hospitality the Conflict of Interest Policy for Employees theAnti-Bribery & Anti-Corruption ('ABAC') policy and Anti-Money Laundering ('AML')policy.

The Whistle-blower Policies for Directors & Employees and BusinessAssociates are an extension of the TCoC that encourage every Director employee andBusiness Associate to promptly report any actual or possible violation of the TCoC or anyevent that he or she becomes aware of that could affect the business or reputation of theCompany. During the year under review the Company revised the Whistle-blower policy forDirectors and Employees to include 'reporting of incidents of leak or suspected leak ofUnpublished Price Sensitive Information (UPSI)' as required in terms of the provisions ofthe Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations2015 as amended.

The Whistle-blower Protection Policy for Business Associates includingvendors and customers provides protection to Business Associates from any victimisation orunfair trade practices by the Company.

During the year under review ABAC and AML policies were adopted. Thekey elements of the policies are risk assessment third party due diligence training& awareness and audit & reporting.

The Policy for Receipts of Gift and Hospitality requires its employeesto take the right decisions when they are offered gifts or hospitality while conductingbusiness or official transactions on behalf of the Company. The Policy is in consonancewith ABAC and AML policies.

The Company has also adopted a Conflict of Interest policy thatrequires employees to act in the best interest of the Company without any conflicts anddeclare conflicts if any (real potential or perceived).

The Whistle-blower Reward and Recognition Guidelines for employees hasbeen implemented to encourage employees to genuinely blow the whistle on any misconduct orunethical activity taking place in the Company. The disclosures reported are addressed inthe manner and within the time frames prescribed in the Whistle-blower Policy.

During the year under review the Company undertook a series ofcommunication and training programmes for internal stakeholders and vendors with the aimto create awareness amongst them about the Company's values TCoC and other ethicalpractices of the Company. An e-learning module on ABAC Policy was launched by the Companyin February 2020 to sensitise the employees on the relevant laws and policies. TheCompany also introduced a structured yet informal platform "Stay in Touch" forits employees to interact with Chief Ethics Counsellor to understand the issues andintegrate employees with the Company's Culture through an open discussion. The Companyalso undertook various theme based campaigns town hall and departmental events. 'NeetiKatha' i.e. story-telling through snippet series on scenarios of 'The ethics of travel'and 'Prevention of Sexual Harassment' were mailed to employees as part of the awarenesscampaign. The Company also celebrates the month of July as Ethics Month with allcommunication and programmes centered around the theme "Integrity Matters". Thispractice has helped in reinforcing employee involvement in driving the Management ofBusiness Ethics.

The Company has developed a robust system to raise concerns onunethical behaviour taken efforts to make stakeholders aware of such systems as well asof their responsibility to report such concerns and practice non-retaliation. The strongmechanism to address such concerns instills in our stakeholders the confidence to reportethical violations. The Company has also leveraged digitalisation for training andcommunication thereby resulting in greater clarity on the subject and system amongst thestakeholders.

The Company takes pride in winning the World's Most Ethical Companies ('WME')award for the 9th time.

During the year under review the Company received 881 whistle-blowercomplaints of which as on March 31 2020 602 complaints were investigated and appropriateactions were taken and investigations were underway for the remaining 279 complaints.

Disclosure as per the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013

The Company has zero tolerance towards sexual harassment at theworkplace. The Company has adopted a policy on prevention prohibition and redressal ofsexual harassment at workplace in line with the provisions of the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013 and the Rules madethereunder.

The Company has complied with the provisions relating to theconstitution of the Internal Complaints Committee as per the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013.

During the year under review the Company received 34 complaints ofsexual harassment of which 26 complaints have been resolved by taking appropriate actionsand 8 complaints are under investigation.

Related Party Transactions

In line with the requirements of the Act and the SEBI ListingRegulations the Company has formulated a Policy on Related Party Transactions and thesame can be accessed on the Company's website athttps://www.tatasteel.com/media/5891/policy-on-related-party- transactions.pdf

During the year under review all related party transactions enteredinto by the Company were approved by the Audit Committee and were at arm's length and inthe ordinary course of business. Prior omnibus approval is obtained for related partytransactions which are of repetitive nature and entered in the ordinary course of businessand on an arm's length basis. The Company did not have any contracts or arrangements withrelated parties in terms of Section 188(1) of the Act. Also there were no materialrelated party contracts entered into by the Company. Accordingly the disclosure ofrelated party transactions as required under Section 134(3)(h) of the Act in Form AOC-2 isnot applicable to the Company for FY 2019-20 and hence does not form part of this report.

Details of related party transactions entered into by the Company interms of Ind AS-24 are disclosed in notes to the standalone/consolidated financialstatements forming part of this Integrated Report.

Directors' Responsibility Statement

Based on the framework of internal financial controls and compliancesystems established and maintained by the Company work performed by the internalstatutory cost and secretarial auditors and external agencies including audit ofinternal financial controls over financial reporting by the statutory auditors and thereviews performed by Management and the relevant Board Committees including the AuditCommittee the Board is of the opinion that the Company's internal financial controls wereadequate and effective during Financial Year 2019-20.

Accordingly pursuant to Section 134(5) of the Act the Board ofDirectors to the best of its knowledge and ability confirms that:

a) in the preparation of the annual accounts the applicable accountingstandards have been followed and that there are no material departures;

b) they have selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of theFinancial Year and of the profit of the Company for that period;

c) they have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

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

e) they have laid down internal financial controls to be followed bythe Company and that such internal financial controls are adequate and are operatingeffectively;

f) they have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.

Business Responsibility Report

The Securities and Exchange Board of India ('SEBI') requirescompanies to prepare and present to stakeholders a Business Responsibility Report ('BRR')in the prescribed format. SEBI however allows companies to follow an internationallyrecognised framework to report on the initiatives undertaken by the Company onenvironmental social and governance perspective. Further SEBI has on February 6 2017advised companies that are required to prepare BRR to transition towards an IntegratedReport.

As stated earlier in the Report the Company has followed the<IR> framework of the International Integrated Reporting Council to report on allthe six capitals that are used to create long-term stakeholder value. Our IntegratedReport has been assessed and KPMG has provided the required assurance. We have alsoprovided the requisite mapping of principles between the Integrated Report the GlobalReporting Initiative ('GRI') and the BRR as prescribed by SEBI. The same isavailable on our website www.tatasteel.com

Subsidiaries Joint Ventures and Associates

We have 220 subsidiaries and 50 associate companies (including 28 jointventures) as on March 31 2020. During the year under reviewthe Board of Directorsreviewed the affairs of material subsidiaries.

We have in accordance with Section 129(3) of the Act preparedConsolidated Financial Statements of the Company and all its subsidiaries which form partof the Integrated Report. Further the report on the performance and financial position ofeach subsidiary associate and joint venture and salient features of their FinancialStatements in the prescribed Form AOC-1 is annexed to this report (Annexure 6).

I n accordance with the provisions of Section 136 of the Act and theamendments thereto and the SEBI Listing Regulations the audited Financial Statementsincluding the consolidated financial statements and related information of the Company andfinancial statements of the subsidiary companies are available on our websitewww.tatasteel.com

The names of companies that have become or ceased to be subsidiariesjoint ventures and associates during the year under review are disclosed in an annexure tothis report (Annexure 7).

Auditors

Statutory Auditors

Members of the Company at the AGM held on August 8 2017 approved theappointment of Price Waterhouse & Co Chartered Accountants LLP (Registration No.304026E/E300009) Chartered Accountants as the statutory auditors of the Company for aperiod of five years commencing from the conclusion of the 110th AGM held on August 82017 until the conclusion of 115th AGM of the Company to be held in the year 2022.

In terms of the provisions relating to statutory auditors forming partof the Companies Amendment Act 2017 notified on May 7 2018 ratification of appointmentof Statutory Auditors at every AGM is no more a legal requirement. Accordingly the Noticeconvening the ensuing AGM does not carry any resolution on ratification of appointment ofStatutory Auditors.

The report of the Statutory Auditor forms part of the Integrated Reportand Annual Accounts 2019-20. The said report does not contain any qualificationreservation adverse remark or disclaimer. During the year under review the Auditors didnot report any matter under Section 143(12) of the Act therefore no detail is required tobe disclosed under Section 134(3)(ca) of the Act.

Cost Auditors

I n terms of Section 148 of the Act the Company is required tomaintain cost records and have the audit of its cost records conducted by a CostAccountant. Cost records are prepared and maintained by the Company as required underSection 148(1) of the Act. The Cost Audit Report of the Company for the Financial Yearended March 31 2019 was filed by the Company in XBRL mode on August 30 2019.

The Board of Directors of the Company has on the recommendation of theAudit Committee approved the appointment of M/s. Shome & Banerjee as the costauditors of the Company (Firm Registration No. 000001) for the year ending March 31 2021.

M/s. Shome & Banerjee have vast experience in the field of costaudit and have been conducting the audit of the cost records of the Company for the pastseveral years.

I n accordance with the provisions of Section 148(3) of the Act readwith Rule 14 of the Companies (Audit and Auditors) Rules 2014 the remuneration payableto the Cost Auditors as recommended by the Audit Committee and approved by the Board hasto be ratified by the Members of the Company. Accordingly appropriate resolution formspart of the Notice convening the AGM. We seek your support in ratifying the proposedremuneration of '20 lakh plus applicable taxes and reimbursement of out-of-pocket expensespayable to the Cost Auditors for the Financial Year ending March 31 2021.

Secretarial Auditors

Section 204 of the Act inter alia requires every listed companyto annex to its Board's report a Secretarial Audit Report given in the prescribed formby a Company Secretary in practice.

The Board had appointed Parikh & Associates (Registration No.P1988MH009800) Practicing Company Secretaries as the Secretarial Auditor to conductSecretarial Audit of the Company for the Financial Year 2019-20 and their report isannexed to this report (Annexure 8). There are no qualifications observationsadverse remark or disclaimer in the said Report.

Extract of Annual Return

The extract of the Annual Return in Form MGT-9 as per provisions ofthe Act and Rules thereto is annexed to this report (Annexure 9).

The extract of Annual Return in Form MGT-9 as per provisions of the Actand Rules thereto is also available on the Company's website athttps://www.tatasteel.com/media/12336/mgt-9.pdf

Significant and Material Orders passed by the Regulators or Courts

There has been no significant and material order passed by theregulators or courts or tribunals impacting the going concern status and the Company'sfuture operations. However Members' attention is drawn to the statement on contingentliabilities commitments in the notes forming part of the Financial Statements.

Particulars of Loans Guarantees or Investments

Particulars of loans guarantees given and investments made during theyear under review in accordance with Section 186 of the Act is annexed to this report (Annexure10).

Energy Conservation Technology Absorption and Foreign ExchangeEarnings and Outgo

Details of the energy conservation technology absorption and foreignexchange earnings and outgo are annexed to this report (Annexure 11).

Deposits

During the year under review the Company has not accepted any depositsfrom public in terms of the Act. Further no amount on account of principal or interest ondeposits from public was outstanding as on the date of the balance sheet.

Secretarial Standards

The Company has in place proper systems to ensure compliance with theprovisions of the applicable Secretarial Standards issued by The Institute of CompanySecretaries of India and such systems are adequate and operating effectively.

G. Acknowledgements

We thank our customers vendors dealers investors businessassociates and bankers for their continued support during the year. We place on recordour appreciation of the contribution made by employees at all levels. Our resilience tomeet challenges was made possible by their hard work solidarity co-operation andsupport.

We thank the Government of India the State Governments and theGovernments in the countries where we have operations and other regulatory authorities andgovernment agencies for their support and look forward to their continued support in thefuture.

On behalf of the Board of Directors
sd/-
N. CHANDRASEKARAN
Mumbai Chairman
June 29 2020 DIN: 00121863

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