Management Control System Of Tata Motors

Project Report
MCS (Section C)
Group Members: Bikash Jaiswal Chaitalee Kumari Charu Attri Chayan Jain Cherag S Rana Garveet Modi

Acknowledgement
We would like to express our gratitude towards Prof. C Padmavathi for guiding us and supporting us. She not only illuminated the way to select the apt company but also helped us work on the appropriate sub titles in order to understand the Management Control systems being put in to place by TATA Motors. All of us were able to understand the pros and cons of every decision and control methodology undertaken by the company, all because of the clarity brought in by the teachings of maam. It would not have been possible to truly appreciate the significance of having these systems in place without a well synchronized team and an encouraging faculty.

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Contents
Introduction............................................................................................................................................. 4 Code Of Conduct ..................................................................................................................................... 5 Organisational Structure .......................................................................................................................... 7 Information Management Systems Used At Tata Motors ....................................................................... 10 Quality Control and R&D ...................................................................................................................... 11 Human Capital ...................................................................................................................................... 15 Work Environment ............................................................................................................................ 16 Labour Relations ............................................................................................................................... 17 Training And Development ............................................................................................................... 17 Performance Evaluation Of Tata Motors: ........................................................................................... 19 Risk and Concerns ................................................................................................................................. 21 Internal Control Systems And Their Adequacy ...................................................................................... 22 Audit Committee ............................................................................................................................... 22 Grievance .......................................................................................................................................... 24 Investors Grievance Committee ........................................................................................................ 25

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Introduction
TATA MOTORS, Indias largest motor company was founded by Mr. JRD Tata in 1945 with its headquarters in Mumbai. The company has shown consolidated revenues of INR 1, 65,654 crores for the financial 2011-12. It is the world's fourth largest truck and bus manufacturer. The company's manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand), Sanand (Gujarat) and Dharwad (Karnataka). Tata Motors is also expanding its international footprint, established through exports since 1961. The company's commercial and passenger vehicles are already being marketed in several countries in Europe, Africa, the Middle East, South East Asia, South Asia, CIS, Russia and South America. The companys vision is to be ''best in the manner in which we operate, best in the products we deliver, and best in our value system and ethics.'' The companys Mission is Leadership with trust. and its objectives are enlisted as: Employee Focus: Make the organization a Great Place to work Community Focus: Be a responsible corporate citizen Supplier Focus: Treat Suppliers as partners Shareholders Focus: Demonstrate superior results Customer Focus: Improve Customer Satisfaction.

Tata Motors is equally focussed on environment-friendly technologies in emissions and alternative fuels. It has developed electric and hybrid vehicles both for personal and public transportation. It has also been implementing several environment-friendly technologies in manufacturing processes, significantly enhancing resource conservation. Tata Motors is committed to improving the quality of life of communities by working on four thrust areas employability, education, health and environment. The activities touch the lives of more than a million citizens. The company's support on education and employability is focused on youth and women. They range from schools to technical education institutes to actual facilitation of income generation. In health, our intervention is in both preventive and curative health care. The goal of environment protection is achieved through tree plantation, conserving water and creating new water bodies and, last but not the least, by introducing appropriate technologies in our vehicles and operations for constantly enhancing environment care.

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Code Of Conduct
Tata has 25 codes called clauses for its conduct with various parties i.e. nations in which it operate, the public, the government, the customer, the employees, the stakeholders etc. 1. Financial reporting and records- Tata Motors shall prepare and maintain its accounts fairly and accurately and in accordance with the accounting and financial reporting standards which represent the generally accepted guidelines, principles, standards, laws and regulations of the country in which the company conducts its business affairs. 2. Competition- Tata Motors shall fully support the development and operation of competitive open markets and shall promote the liberalization of trade and investment in each country and market in which it operates. 3. Government agencies- Tata Motors shall comply with government procurement regulations and shall be transparent in all its dealings with government agencies. 4. Quality of products and services- A Tata company shall be committed to supply goods and services of world class quality standards, backed by after-sales services consistent with the requirements of its customers, while striving for their total satisfaction. The quality standards of the companys goods and services shall meet applicable national and international standards. 5. Corporate citizenship- Tata Motors shall be committed to good corporate citizenship, not only in the compliance of all relevant laws and regulations but also by actively assisting in the improvement of quality of life of the people in the communities in which it operates. 6. Use of the Tata brand- The use of the Tata name and trademark shall be governed by manuals, codes and agreements to be issued by Tata Sons. The use of the Tata brand is defined in and regulated by the Tata Brand Equity and Business Promotion agreement. 7. Ethical conduct- Every employee of a Tata company, including full-time directors and the chief executive, shall exhibit culturally appropriate deportment in the countries they operate in, and deal on behalf of the company with professionalism, honesty and integrity, while conforming to high moral and ethical standards. Such conduct shall be fair and transparent and be perceived to be so by third parties. 8. Regulatory compliance- Employees of a Tata company, in their business conduct, shall comply with all applicable laws and regulations, in letter and spirit, in all the territories in which they operate. If the ethical and professional standards of applicable laws and regulations are below that of the Code, then the standards of the Code shall prevail.

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9. Reporting concerns- Every employee of a Tata company shall promptly report to the management, and / or third-party ethics helpline, when she / he becomes aware of any actual or possible violation of the Code or an event of misconduct, act of misdemeanor or act not in the companys interest. Such reporting shall be made available to suppliers and partners, too.

Environmental Policy & Culture

Tata Motors reaffirms to minimize the adverse impacts of its products, operations and services on its environment. Towards this end, it shall strive to: Establish sound environmental objectives and targets and a process of reviewing them. Comply with all legal/regulatory and other environmental requirements. Reduce the emission levels of vehicles in full compliance with regulatory norms and proactively work with the Government, industry, other related industries to bring in internationally best practices. Use the environmentally sustainable technologies and practices for prevention of pollution and continual improvement in environmental performance. Conserve natural resources and energy by minimizing their consumption and wastage. Minimize waste generation, enhance recovery and recycling of material and develop ecofriendly waste disposal practices. Build awareness of our workforce, customers and vendors on environmental issues. Tata Motors adopts eco-friendly technique, extensive R & D.

This 68-year old companys Board of Directors are all experts and experienced in their respective fields and based on this experience & expertise they make decisions which are best for the comapny. It also comes up many innovative products and uses the latest technology for the customers based on the market demand. As a result, Tata Motors manufactures many types of cars catering all segments of customers. This culture is also reflected by the numerous national and international awards won by the company. They remain ethical in their work practices and produce world-class cars.

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Organisational Structure

Tata Motors has a relatively flat structure, operating with less levels of organisational structure and thus having narrow span of control. At corporate level, the span of control varies from 1:5 to 1:7. While at the middle and lower level management it varies as 1:10. This indicates that the organisational structure is somewhere between flat and hierarchical structure. Also, there is a very great scope of growth along with the company. On an average a normal middle level employee is promoted every 3-5 years. An employee with exceptional record and good performance is promoted on an average of two years. Based on the divisions, Tata Motors has a mixed organisational structure. There are two main divisions based on product type viz. Commercial vehicle and Passenger cars division. Both these divisions have been subdivided as per geographical location into north, south, east, and west zone.

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Passenger Cars Micro (Nano), Compact (Indica, Indigo), Midszie (Indigo Manza).

Commercial Vehicles Small Commercial Vehicle Pick-up Vehicle Light Commercial Vehicle (LCV) Utility Vehicle (Sumo, Safari, Ace) Premium and Luxury SUV (Land, Range Rover) Premium and Luxury Car Vans (Winger) Buses & Coaches

The Board of Directors along with its Committees provide leadership and guidance to the Companys management and directs, supervises and controls the performance of the Company. The Board has constituted a set of Committees with specific terms of reference/scope to focus effectively on the issues and ensure expedient resolution of diverse matters. The Committees operate as empowered agents of the Board as per their Charter/terms of reference. The work distributed is based on strategic activities or operational/ routine assignments. The strategic level activities are taken up by top management. The operational activities are distributed to middle and lower level. This becomes the base of their yearly performance as well. As such Tata Motors is more of a product oriented organisation. One evolves as an ideal leader with experience. Under The Chairman Emeritus Mr Ratan N Tatas able leadership, the groups revenues grew manifold, totalling over $100.09 billion in 2011-12, and is responsible for transforming Tata Motors Ltd. into a Group strategy think-tank. Mr Tata joined Tata Motors Board in 1981, became Executive Chairman in 1988 and Non Executive Chairman in 2001. Earlier Tata Motors was considered less reliable, but after a slew of successful launches and effort to internationalise the company and focus on R&D- the company gained considerable edge over other companies in the automobile industry. Tata Motors follows Tata Code of Conduct & Authority Matrix which helps them to identify different responsibilities and decision making powers of an individual both functionally and financially.

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Coordination and Communication

One of the other dimensions is coordination. In Tata Motors, they are having newsletters and house magazines published monthly for each division and are circulated throughout the company. Also, regular emails and correspondence from Chairman, MD and CFO are circulated on regular basis. The management interact with the employees on a regular basis. The higher level management is always accessible to the lower level. This helps them to gather, share & spread the knowledge & ideas very easily from level to level. The lower management have meeting with employees on day to day basis. Also, there is a ManCom meeting with where all the departments come together. All the departments of TATA Motors are interconnected with intra networking system, as well as all the divisions are connected with internetworking system. This facilitates the easy and fast flow of information and communication among the various employees, vendors, suppliers and the management. The employees remain connected to the company all the time and get all the latest updates and happenings through the various articles about the wellbeing of employees, promotions, deaths, etc. periodically. Tata Motors welcomes new ideas from the employees and they are rewarded suitably. They have suggestion boxes to invite new ideas.

Board of Directors Mr. Cyrus P. Mistry (Chairman) Mr. Ravi Kant (Vice-Chairman) Mr. Nusli N. Wadia Mr. S. M. Palia Dr. R. A. Mashelkar Mr. Nasser Munjee Mr. Subodh Bhargava Mr. V. K. Jairath Dr. Ralf Speth Mr Karl Slym (Managing Director) Mr. R Pisharody (Executive Director) Mr. S B Borwankar (Executive Director)

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Information Management Systems Used At Tata Motors

(1) SAP ERP There was no real time data available between various departments. The Information flow across the sales, finance and production planning was very cumbersome. Hence to coordinate the information sharing need of the company within and with the dealers, ERP was implemented. It helped in making the order to delivery process more efficient and handle warranty claims more efficiently, hence improving relations with the customer. Supplier Collaboration Knowledge Management Monitoring And control

With the SAP ERP Solution in place, Tata Motors has experienced significant benefits in productivity and cost control. The number of servers as well as the number of different applications run on them has been greatly reduced. The disaster recovery management is being done only for one entity rather than for every application. Non-value-add activities have been lowered. The implementation of a single SAP instance forced a much required change in the organization. Currently, they are exploring the possibility of a shared services platform for HR too.

(2) SIEBEL IBM provided TATA MOTORS with the infrastructure solution. This was a simple IT infrastructure with low cost of ownership which helped the company in enhancing the customer experience and better capacity planning. Siebel Automotive, a comprehensive suite of business applications, provides a single, 360degree view of the customer to all who need it; facilitates coordination between Tata and its dealers; and enables Tata to track each vehicle throughout its life cycle. Siebel Automotive has been closely integrated with a wide array of back-office applications.

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Quality Control and R&D

One of the Companys principal goals is to enhance its status as a leading manufacturer of automotive vehicles by investment in products, R&D, quality improvement and quality control. Quality Management at TATA Motors Tata Motors is committed to maximizing customer satisfaction and strives to achieve the goal of excellence, by continual improvement, through ongoing going design and development, manufacture and sale of reliable, safe, cost-effective, quality products and services of international standards, using environmentally sustainable technologies, for improving levels of efficiency and productivity within its premises and ancillaries.

Awards Won For Efficient Quality Control: Lucknow plant won - The Greentech Environment Silver Award 2011 - The Golden Peacock National Quality Award 2011 Measures Taken up to Maintain the Quality of Products: To control the quality of its cars TATA Motors applies various stringent measures during the pre-manufacturing stage as well as post-manufacturing stage.

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(1) During the manufacturing stage regular quality audits are held by the in-house auditors in all the shops. All the process sheets, spot plans, control plan etc are displayed near the work place. (2) In the post manufacturing stage once the vehicle comes out of the assembly line it passes through stringent testing standards such as shower test, wheel balancing etc. On successful completion of testing, the car is ready to be dispatched after Pre Delivery Inspection (PDI). Techniques Used to implement quality control: (1) Tata Motors is the first Indian Company to introduce the Balance Scorecard System in automotive sector in India.The scorecard incorporates SQDCM (Safety, Quality, Delivery, Cost and Morale)The implementation of the Balanced Scorecard has enabled greater focus on different elements of operational performance. Defining, cascading and communicating strategies across the organization have brought about transparency and alignment. (2) Apart from Balance scorecard half yearly review of the employees is done on the basis of attendance, kaizen at work place etc. (3) Value Engineering: Continuous efforts are made to reduce the cost of service in TATA Motors. Rejection of input parts received from vendors is very closely monitored in all the departments. The vendors are penalised if rejection exceeds beyond the defined limits. Apart from rejection of regular parts some stations are identified as CTQ (Critical to Quality) Stage. Special care is taken of the components added on these stations. Any negligence on these stations may lead to a customer claiming replacement of the vehicle. This team also works for searching energy efficient alternatives, methods and eco-friendly technology, by adopting effective maintenance & work. The consumption of electricity, water, LPG, Compressed air etc is continuously monitored and steps are taken to reduce the consumption of these resources. Material Management: Tata Motors uses SAP Material Management (MM) module for: Materials planning and control purchasing, goods receiving, inventory management & Invoice Verification

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Research & Development The Company is committed to continued investment in new technologies, including developing sustainable technologies to improve fuel economy and reduce CO2 Emissions. The Company is the largest investor in automotive R&D in United Kingdom. The Companys environmental vehicle strategy focuses on new propulsion technology, weight reduction and reducing parasitic losses through the driveline. R&D Structure at TATA MOTORS: For new product development, there is a separate department Engineering Research Centre (ERC) which is separate from the plants R and D department. ERC develops new models, tests them, evaluate the results, make necessary changes and hand them over to the plant for manufacturing. However, each of the three plants of Tata Motors have an independent R and D department which works for improvement of the products being manufactured by that plant. In this perspective, these in plant are more interesting. The R&D dept. of each plant is divided into two parts. One part of R and D deals with overall process development and the second part deals with product improvement, like improving the design of a spare part or a sub-assembly. Its work mainly comprises of some reverse engineering and minor alterations of the parts. The triggers for product improvement come mainly from two places: Dealers: The dealers are most aware about the market conditions. Sometimes they give input to the company that one of the competitors model is doing better than Tatas cars in some parameters. Then this division try to analyse the competitors model and try to pin point the causes for its better performance. Service Persons: They often report the recurring problem in the Tatas models. In that case the product improvement team tries to find out the cause of the problem. In general the problem could be either of two kinds: wrong usage by the end user like not using clean water in the radiator, or there could be manufacturing flaws. In case of wrong usage the message is given to the sales department

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The process improvement teams task is to improve the manufacturing process of the plant. They either may react to the triggers mentioned above or if sometimes some process goes completely out of control of the shop floor workers or the cost of manufacturing needs to be reduced to retain the profitability, then process improvement team is called for rescue. So this team generally starts working with a major problem in hand.
Product In Plant R and D R&D in Tata Motors ERC
(Central level)

Improvement

Process Improvement

Research and Development Structure at Tata motors

So, the in plant R and D of Tata Motors plants can be classified more as a reactive research than a proactive one. The basic criteria for selecting or rejecting an idea in the in plant R and D are effectiveness of the idea on the cause, its ease of implementation i.e. the disruption to the manufacturing process should be minimum possible and cost effectiveness. Here an optimum combination of Effectiveness & Ease of implementation is desired first and then cost effectiveness is the distinguishing factor. (3)Apart from the ideas generated by the R and D dept., Tata Motors also encourage new and innovative ideas generated by the shop floor level employees. R and D screen these ideas and reward the workable ones. They also hand out handsome reward to the shop floor workers up to Rs. 30,000. The ideas generated by the shopfloor workers are also a very significant source of improvement for the Tata Motors plants.

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Human Capital
Tata Motors has a safety and health policy, which encompasses all regulatory norms along with international labor orgazational recommendations. Tata Motors has a process for reporting, recording, analysis and action on accidents and unsafe conditions. The safety issues are addressed through the management and union arrangement. Safety has been an important concern for Tata motors and the company is taking steps to reduce the injuries and accidents. Tata Motors manufacturing unit at Jamshedpur and Pune have been certified social accountability 8000 compliant. A zero accident plan was launched in 2007-08, where in area ownership was developed by teams comprising of management and supervisory grade workers called bay owners. These bay owners must meet twice a week and conduct audits and organized awareness building programs. Positive Environment & Employee Welfare A good quality of work life is maintained through various welfare measures such as: Canteen/transport facility for employees. Higher education is encouraged which in turn helps employees for career progression as well. Various loan schemes are operational for housing, car and facilities. Safety training is compulsory to ensure a culture of safety among workers. Safety audits are conducted to ensure the effectiveness of the process and the upkeep of the safety equipment is regularly carried out. Personal safety and work place safety is ensured through well defined process. The disaster recovery plan / risk mitigation plans are also in place. Tata Motors have supported the deserving candidates by providing scholarships. They have promoted and supported hospitals and schools. They have also involved themselves in municipality firms. Providing vehicle loans and also housing loans advances. Better pension schemes.

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Work Environment
EMPLOYEE BENEFITS:1.) GRATUITY: - The Company has an obligation towards graduate, a defined benefit retirement plan covering eligible employees. The plan provides for a lump sum amount for the employees at retirement, death or while in employment or while termination of employment of an amount equivalent to 15 to 30 days salary payable for each completed year of service. This occurs on completion of five years of service. The company makes an annual contribution to graduity fund established as trust. The company accounts for the liability for graduity benefits payable in the future based on an independent actuarial valuation. 2.) SUPERANNUATION : - The company has two superannuation plans, a defined benefit plan and a defined contribution plan. Based on the number of years of service the employees are benefited from the schemes. The company maintains a separate irrevocable trust for employees covered and entitled to benefits. The company recognizes such contribution as an expense when incurred. The company has no further obligation beyond this contribution. 3.) BHAVISHYA KALYAN YOJNA (BKY) :- this is an unfunded defined benefit plan. The benefits of the plan accrue to an eligible employee at the time of death or permanent disablement, while in service, either as a result of an injury or as certified by the companys medical board. The company accounts for the liability for BKY benefits payable in future based on an independent actuarial valuation. 4.) POST-RETIREMENT MEDICAL SCHEME: - under this scheme, employees get medical benefits subject to a certain limit. The limit depends on the grade and location at the time of retirement. For the employees who have left before retirement due to some valid reasons are also entitled to avail this facility 5.) PROVIDENT FUND: - The eligible employees of the company are entitled to receive benefits under the provident fund, in which both employee and the company make monthly contributions at a specific percentage of the covered employees salary. The contributions as specified under the law are paid to the provident fund and pension fund under the states pension scheme. 6.) COMPENSATED ABSENCES: - the company provides for the encashment of the leaves or leave with pay subject to certain rules. The employees are entitled to accumulated leave subject to certain limits, for further encashment.

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Labour Relations
Tata Motors believes in mutual growth and sustainable development of its employees and strives to promote cordial and harmonious industrial relations by giving employees adequate platforms to voice themselves and be a vital part o the decision making process. Employees are encouraged to join trade unions, as they believe that the grievances can be resolved better through bipartite forums. They believe in collaborative approach where they resolve problems by negotiation. By this they create a win win situation. The agreement of the employees included health and safety provisions along with compensation structures in the form of a MOU between the management and representing union as per the provision of the applicable labor legislations. The MOU is signed every three years after negotiations between representing committees of the union and the management.

Training And Development

All employees are evaluated based on performance and merit. The company has customized the performance management system for the requirements of different categories of the employees managerial, supervisors and bargainable employees. In the performance management system, individual performance plans are cascaded from the balance score card down to the smallest work unit, bringing business and customer focus to all levels and team. Half yearly reviews are held to ensure resources; targets and training are in alignment with business needs. Employees have an opportunity to develop their own view of their performance and discuss it with their supervisor. Formal evaluation ratings are assigned at the end of the year. They instilled a high performance culture. The process of training and development is reviewed periodically for status of successors and for process improvements. In case a successor is not identified from the department and talent pool, an internal advertisement is released. If the position cannot be filled internally, a suitable candidate is selected through external advertisement. All the employees have the opportunity to advance in their careers. The company administers career progression through the PMS system for managerial employees. All employees have the opportunity of moving to higher levels. This is based on their personal preparation and desire to move.

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Proper training and motivation is delivered in order to keep the employees active. The policies for female employees are also drafted and rules are made stringent regarding sexual harassment. Tata motors follow a policy on equal opportunity and non-discrimination in employment. The employment of candidates is solely done on the basis of merit and the growth opportunities will be entirely based on an individuals merit. Human Resource Policies And Practices of Tata Motors Employees are the driving force that enables Tata motors to create value in the work that they do. They understand that the most essential factor determining their success is motivated employees and communication plays an important role in understanding their needs. They undertake employee engagement initiatives which help them understand their needs and address their concerns. Various formal and informal methods are employed to determine employee satisfaction which helps them in identification of critical issues and devising action plans to assist their workforce. HR Practices regarding recruitment: As a responsible organization, they prefer to hire their non management cadre employees from local communities, thereby uplifting the economic status of the areas where they operate. They are also guided by the respective state laws regarding local hiring of non management workforce. They hire their management cadre employees purely based on merit. The recruitment process is unique as it entails identifying talent from the pool through various practices. Some of them can be enlisted as follows:
Opportunities for employee wards - domain wise written test, assessment centre, personal

interview.
They also select talent through Lateral Recruitment process which involves interview by HR,

subject matter expert and personal interviews.

Group Migration Policy for their employees, which enable the group employees to explore

opportunities to work at Tata Motors from other group companies.

They provide career opportunities for down the line people & internal job postings ensuring

that the best talent pool deserves the right opportunity in bringing the best practices in company
Campus Selection - B schools, T Schools - written test, psychometric test, personal interview. Shadow recruitment for niche senior talent.

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Performance Evaluation Of Tata Motors: The performance evaluation systems are aligned to the business results and identify high performing individuals. 100 percent of management cadre employees undergo performance evaluation and career development reviews annually. They promote equal opportunity by employing candidates purely on the basis of merit. Remuneration is solely provided on the basis of rank and merit. They also abide by all the legal requirements of wage payments. They are transparent in our communications with union members and have discussions with respect to occurrence of all operational changes. Providing equal opportunity: Tata Motors is proud of the fact that more than 700 women colleagues work at the shop floor across functions and locations. At Pantnagar, women operate heavy as well as high precision machines and components at the Pantnagar powertrain shop. The Prima (world truck) assembly line also has a dedicated all-women section to work on the fitting and testing of electrical components. Rewarding union employees: Their excellent union-management relationship is built on a foundation of mutual respect and trust and the union shares the managements objective of business growth and provides unwavering support. They have encouraged constructive and co-operative union relations through a participative culture. Senior leaders communicate and engage with non-management employees through approaches such as sunrise meetings and union meetings. To recognize their contribution to the firm, they offer a medical benefit scheme for their PCBU union employees in Pune which entitles the employees to get their medical expenses reimbursed till a period of 15 Years from retirement (inclusive of voluntary retirement on medical grounds). Vehicle and profit linked payment Scheme In the year 2011 the company has started the vehicle and profit linked payment scheme (VPLP) scheme at PCBU Pune. This scheme is designed to pay the unionized employees a bonus based on parameters like quality and productivity, companys performance (measured in terms of operating profit) and the individuals performance. Under this scheme, the performance is Scored for a total of 100 marks and a detailed category wise weightage is provided to each of the employees as part of the agreement.

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Employee engagement The company has adopted advance tool and methodology to measure employee engagement (across all employee workgroups and segments) including enterprise level factors affecting employee engagement, satisfaction and morale. This survey is done periodically for all nonunionised employees and on sample basis for unionised employees. The survey helps to design specific action plans which strike the desired balance between business needs and employee well being. The findings are analyzed and action plans are put in place at three levels - organization, division and HR to assist workforce engagement. The reward and recognition process is adopted to create desired high performance behavior. For non managerial workforce, awards like safety award for zero accidents over a period of time coupled with regular attendance, good attendance award and long service award are in place. Employees are also encouraged to participate in various other award schemes run by various governmental / nongovernmental organizations. FURURE HR POLICIES OF TATA MOTORS: To support the expansion of the existing facilities, we have planned the following initiatives: Recruitment and selection: The process involves Reporting officers/ Heads of the process in counseling and training for their colleagues

Identifying talent and working with virtual offices Video simulations to assess the skills required for the job Employer Branding: Employer to brand the organisation as a preferred employer People centric - considering employees as customers

For our newly joined officers, we are working on a policy to ease their settling down process in the organisation. To entertain our customers at Marketing and Sales locations, we are working on policy on Club Membership.

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Risk and Concerns

1. Interest rates and other inflationary trends: Due to anti inflationary monetary policy pursued by the RBI, the interest rates continued to be at higher levels and affected the growth of EMI-driven products in India. The impact of high inflation, interest rates, rising wages and raw material costs, coupled with suppressed aggregate demand in the economy, severely impacted the rate of industrial growth. 2. Fuel Prices: The fuel prices or levies adversely impacts the demand of passenger vehicles in India. Increases in fuel costs also pose a significant challenge to automobile manufacturers worldwide, especially in the commercial and premium vehicle segments where increased fuel prices have an impact on demand. The Companys product programs initiatives are aimed at improving fuel efficiency of its products and development of alternate fuel solutions. 3. Input Costs / Supplies: While the Company continues to pursue cost reduction initiatives, an increase in price of input materials could severely impact our profitability to the extent such increase cannot be absorbed by the market through price increases and / or could have a negative impact on the demand. Also, because of intense price competition and fixed costs, the Company may not be able to adequately address changes in commodity prices even if they are foreseeable. 4. Restrictive covenants in financing agreements: Some of the Companys financing and debt arrangements set limits on and/or require the Company to obtain lender consents before, among other things, pledging assets as security. In addition, certain financial covenants may limit the Companys ability to borrow additional funds or to incur additional liens. 5. Environmental Regulations: As an automobile company, the Company is subject to extensive governmental regulations regarding vehicle emission levels, noise, safety and levels of pollutants generated by our production facilities. These regulations are likely to become more stringent and compliance costs may significantly impact the future results of operations. 6. Exchange and interest rate fluctuations: The Companys operations are subject to risk arising from fluctuations in exchange rates with reference to countries in which it operates. Moreover, the Company has outstanding foreign currency denominated debt and is sensitive to fluctuations in foreign currency exchange rates. During the year, the depreciation of the Indian Rupee against the US dollar adversely impacted the borrowing cost and consequently, the results of operations. In order to overcome the exchange and interest rate fluctuations the company is involved in currency hedging.

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Internal Control Systems And Their Adequacy

The Company has an adequate system of internal controls in place. It has documented procedures covering all financial and operating functions. These controls have been designed to provide a reasonable assurance with regard to maintaining of proper accounting controls, monitoring of operations, protecting assets from unauthorized use or losses, compliances with regulations and for ensuring reliability of financial reporting. The Company has continued its efforts to align all its processes and controls with global best practices in these areas as well. SIGNIFICANT FEATURES OF THE INTERNAL CONTROL SYSTEMS: State-of-the-art ERP, Supplier Relations Management and Customer Relations Management, connect its different locations, dealers and vendors for efficient and seamless information exchange. Preparation and monitoring of annual budgets for all operating and service functions. An on-going program for reinforcement of the Tata Code of Conduct. The Code covers integrity of financial reporting, ethical conduct, regulatory compliance, conflict of interests review and reporting of concerns. A well-established multi-disciplinary Internal Audit team, which reviews and reports to management and the Audit Committee about the compliance with internal controls and the efficiency and effectiveness of operations and the key process risks. Audit Committee of the Board of Directors, comprising independent directors, which is functional since August 1988. Anti-fraud program.

Audit Committee The Audit Committee functions according to its Charter that defines its composition, authority, responsibility and reporting functions in accordance with the Act, listing requirements and US regulations applicable to the Company and is reviewed from time to time. A) Reviewing the quarterly financial statements before submission to the Board, focusing primarily on: Compliance with accounting standards and changes in accounting policies and practices;

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Major accounting entries involving estimates based on exercise of judgment by Management; Audit qualifications and significant adjustments arising out of audit; Analysis of the effects of alternative GAAP methods on the financial statements; Compliance with listing and other legal requirements concerning financial statements; Overseeing the Companys financial reporting process and the disclosure of its financial information, including earnings, press release, to ensure that the financial statements are correct, sufficient and credible.

B). Reviewing with the management, external auditor and internal auditor, adequacy of internal control systems and recommending improvements to the management. C). Recommending the appointment/removal of the statutory auditor, cost auditor, fixing audit fees and approving non audit/consulting services provided by the statutory auditors firms to the Company and its subsidiaries; evaluating auditors performance, qualifications and independence. It shall also ensure that the cost auditors are independent, have arms length relationship and are also not otherwise disqualified at the time of their appointment or during their tenure. D). Reviewing the adequacy of internal audit function, coverage and frequency of internal audit, appointment, removal, performance and terms of remuneration of the chief internal auditor. E). Discussing with the internal auditor and senior management significant internal audit findings and follow-up thereon. F). Discussing with the external auditor before the audit commences, the nature and scope of audit, as well as conduct post-audit discussions to ascertain any area of concern. G). Reviewing the functioning of the Whistle-Blower and the legal compliance mechanism. H). Look into the reasons for any substantial defaults in payment to the depositors, debenture holders, shareholders (in case of nonpayment of declared dividend) and creditors, if any. I). Reviewing the effectiveness of the system for monitoring compliance with laws and regulations. J). Approving the appointment of CFO after assessing the qualification, experience and background etc of the candidate.

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Grievance Grievance is any discontent or dissatisfaction that affects organizational performance. As such it can be stated or unvoiced, written or oral, legitimate or ridiculous. If the dissatisfaction of employees goes unattended or the conditions causing it are not corrected, the irritation is likely to increase and lead to unfavorable attitude towards the management and unhealthy relations in the organization. The steps in grievance handling procedure are :1. Conference among the aggrieved employee, the supervisor, and the union steward. 2. Conference between middle management and middle union leadership. 3. Conference between top management and top union leadership. 4. Arbitration. Arbitration Arbitration is a procedure in which a neutral third party studies the bargaining situation, listens to both the parties and gathers information, and then makes recommendations that are binding on the parties. Arbitration has achieved a certain degree of success in resolving disputes between the labour and the management.

Benefits of having Grievance procedure: The grievance procedure provides a means for identifying practices, procedures, and administrative policies that are causing employee complaints so that changes can be considered. They reduce costly employment suits. A grievance procedure allows managers to establish a uniform labour policy. A grievance system can be a reliable mechanism to learn of, and resolve employee dissatisfaction. It can produce early settlements to disputes or provide for correction of contested employment issues.

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Investors Grievance Committee

The Investors Grievance Committee comprises two Independent Directors (including the Chairman of the Committee) and one Non-Executive Director. The Investors Grievance Committee of the Board is empowered to oversee the redressal of investors complaints pertaining to share/ debenture transfers, non-receipt of annual reports, interest/ dividend payments, issue of duplicate certificates, transmission (with and without legal representation) of shares and debentures matters pertaining to Companys fixed deposit programme and other miscellaneous complaints. On recommendations of the Investors Grievance Committee, the Company has taken various investor friendly initiatives like organising Shareholders visit to Company Works at Pune, sending reminders to investors who have not claimed their dues, sending nominations forms etc. On the recommendation of the Investors Grievance Committee, a survey on Shareholders satisfaction was conducted in December 2011/January 2012 to assess service quality delivery to its shareholders. 2287 shareholders responded to the survey. Overall the Company was rated high on all aspects with 7 out of 10 investors expressing delightrating a perfect 5 on the 5 point scale across various parameters measured in the survey. Placed below are the graphs depicting satisfaction levels on various parameters of service/quality related to the Investor interface with the Company. Compliance With Regulatory Requirements And Policies Review the effectiveness of the system for monitoring compliance with laws and regulations and the results of management's investigation and follow-up (including disciplinary action) of any instances of non-compliance. Review the findings of any examinations by regulatory agencies, and any auditor observations. Look into the reasons for substantial defaults in the payments to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors. Review the process of communicating the Tata Code of Conduct to employees and the mechanism for its adherence.

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Review the report of the Monitoring Agency appointed by the Company, to monitor the utilization of proceeds of such public / rights issue and make appropriate recommendations to the Board.

Obtain regular updates from management and company legal counsel regarding compliance matters.

The Ethics And Compliance Committee:It was constituted to formulate policies relating to the implementation of the Tata Code of Conduct for Prevention of Insider Trading (the Code), take on record the monthly reports on dealings in securities by the Specified Persons and decide penal action in respect of violations of the applicable regulations/the Code. Whistle Blower Mechanism:The Audit Committee and the Board have adopted a Whistle-Blower Policy which provides a formal mechanism for all employees of the Company to approach the Management of the Company (Audit Committee in case where the concern involves the Senior Management) and make protective disclosures to the Management about unethical behaviour, actual or suspected fraud or violation of the Companys Code of Conduct or ethics policy. The disclosures reported are addressed in the manner and within the time frames prescribed in the Policy. The Company affirms that no employee of the Company has been denied access to the Audit Committee. Investigation All Protected Disclosures reported under this Policy will be thoroughly investigated by the Ethics Counselor / Chairman of the Audit Committee of the Company who will investigate / oversee the investigations under the authorization of the Audit Committee. The decision to conduct an investigation taken by the Ethics Counselor / Chairman of the Audit Committee is by itself not an accusation and is to be treated as a neutral factfinding process. The outcome of the investigation may not support the conclusion of the Whistle Blower that an improper or unethical act was committed. The identity of a Subject and the Whistle Blower will be kept confidential to the extent possible given the legitimate needs of law and the investigation.

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Subjects will normally be informed of the allegations at the outset of a formal investigation and have opportunities for providing their inputs during the investigation Subjects shall have a duty to co-operate with the Ethics Counselor / Chairman of the Audit Committee or any of the Investigators during investigation to the extent that such co-operation will not compromise self-incrimination protections available under the applicable laws.

Subjects have a right to consult with a person or persons of their choice, other than the Ethics Counselor / Investigators and/or members of the Audit Committee and/or the Whistle Blower. Subjects shall be free at any time to engage counsel at their own cost to represent them in the investigation proceedings. However, if the allegations against the subject are not sustainable, then the Company may see reason to reimburse such costs.

Subjects have a responsibility not to interfere with the investigation. Evidence shall not be withheld, destroyed or tampered with, and witnesses shall not be influenced, coached, threatened or intimidated by the Subjects.

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