INSTITUTE FOR PROFESSIONAL EDUCATION AND RESEARCH

BHOPAL

TRIM-3 2011-2013 Report on Impact of Corporate Governance on TATA Motors Limited

Tata Motors Limited is India's largest automobile company, with consolidated revenues of INR 1,23,133 crores (USD 27 billion) in 2010-11. It is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. The company is the world's fourth largest truck manufacturer, and the world's third largest bus manufacturer. The company's over 25,000 employees are guided by the vision to be ''best in the manner in which we operate, best in the products we deliver, and best in our value system and ethics.'' Established in 1945, Tata Motors' presence indeed cuts across the length and breadth of India. Over 6.5 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The company's manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand), Sanand (Gujarat) and Dharwad (Karnataka). Following a strategic alliance with Fiat in 2005, it has set up an industrial joint venture with Fiat Group Automobiles at Ranjangaon (Maharashtra) to produce both Fiat and Tata cars and Fiat power trains. The company's dealership, sales, services and spare parts network comprises over 3,500 touch points; Tata Motors also distributes and markets Fiat branded cars in India. The foundation of the company's growth over the last 65 years is a deep understanding of economic stimuli and customer needs, and the ability to translate them into customer-desired offerings through leading edge R&D. With over 4,500 engineers and scientists, the company's Engineering Research Centre, established in 1966, has enabled pioneering technologies and products. The company today has R&D centers in Pune, Jamshedpur, Lucknow, Dharwad in India, and in South Korea, Spain, and the UK. It was Tata Motors, which developed the first indigenously developed Light Commercial Vehicle, India's first Sports Utility Vehicle and, in 1998, the Tata Indica, India's first fully indigenous passenger car. Within two years of launch, Tata Indica became India's largest selling car in its segment. In 2005, Tata Motors created a new segment by launching the Tata Ace, India's first indigenously developed mini-truck. In January 2008, Tata Motors unveiled its People's Car, the Tata Nano, which India and the world have been looking forward to. The Tata Nano has been subsequently launched, as planned, in India in March 2009. A development, which signifies a first for the global automobile industry, the Nano brings the comfort and safety of a car within the reach of thousands of families. Designed with a family in mind, it has a roomy passenger compartment with generous leg space and head room. It can comfortably seat four persons. Its mono-volume design will set a new benchmark among small cars. Its safety performance exceeds regulatory requirements in India. Its tailpipe emission performance too exceeds regulatory requirements. In terms of overall pollutants, it has a lower pollution level than two-wheelers being manufactured in India today. The lean design strategy has helped minimize weight, which helps maximize performance per

unit of energy consumed and delivers high fuel efficiency. The high fuel efficiency also ensures that the car has low carbon dioxide emissions, thereby providing the twin benefits of an affordable transportation solution with a low carbon footprint. In May 2009, Tata Motors ushered in a new era in the Indian automobile industry, in keeping with its pioneering tradition, by unveiling its new range of world standard trucks called Prima. In their power, speed, carrying capacity, operating economy and trims, they will introduce new benchmarks in India and match the best in the world in performance at a lower life-cycle cost. In October 2010, Tata Motors launched the Tata Aria, the first Indian four-wheel drive crossover. The Tata Aria redefines several benchmarks with its design and technologies, offering class leading features that take comfort and safety to a new height.

Corporate Governance: A narrow definition given by SEBI (Securities and Exchange Board
of India). Corporate governance is the acceptance by management of the inalienable rights of shareholders as the true owners of the corporation and of their own role as trustees on behalf of the shareholders. It is about commitment to values, about ethical business conduct and about making a distinction between personal and corporate funds in the management of a company.

Impact of Corporate Governance in TATA motors limited: The Corporate Governance

of company has been strengthening with the implementation of TATA business excellence model, few years ago. The balance scorecard methodology for tracking progress on long term strategic objective and the TATA code of conduct articulates the values, ethics and business principles and serves as a guide to the company its directors and employees and an appropriate mechanism to report any concern pertaining to non-adherence to the said Code and addressing the same is also in place. The Company is in full compliance with the requirements of Corporate Governance under Clause 49 of the Listing Agreement with the Indian Stock Exchanges (the Listing Agreement). Company comprises with 25 codes of conduct clause serves as the ethical road map for Tata employees and companies, and provides the guidelines by which the group conducts its businesses. a) Board composition and diversity in the year 2009-10: The Board of Directors along with its committees provides leadership and guidance to the Company's management and directs, Supervises and controls the performance of the Company. Mr. Carl-Peter Forster was appointed as Tata Motors Group CEO &Managing Director of the Company W.E.f. April 1, 2010. The Board currently comprises of twelve Directors out of which ten Directors (83.33%) are Non-Executive Directors. In the year of 2010-11: The Board of Directors along with its Committees provides leadership and guidance to the Company's management and directs, supervises and controls the performance of the Company. The Board currently comprises 13 Directors out of which eleven Directors (84.62%) are Non-

Executive Directors. The Company has a Non-Executive Chairman and the seven Independent Directors comprise more than half the total strength of the Board. All the Independent Directors have confirmed that they meet the 'independence' criteria as mentioned under Clause 49 of the Listing Agreement.

b) % of Independent Directors on Board In the year 2009-10 % of Independent directors on Board are:

Name of the Director Ratan N Tata Ravi Kant N A Soonawala J J Irani R Gopalakrishnan N N Wadia S M Palia R A Mashelkar S Bhargava N Munjee V K Jairath Carl -Peter Forster P M Telang

Category Non-Executive Chairman Non-Executive, Vice Chairman Non-Executive Non-Executive Non-Executive Non-Executive, Independent Non-Executive, Independent Non-Executive, Independent Non-Executive, Independent Non-Executive, Independent Non-Executive, Independent Group CEO & Managing Director Managing Director - India Operations

There are 13 members in board of director and out of which 6 are independent directors, which turns into percentage around 46.

In the year 2010-11% of Independent Directors on Board are: Name of the Director Category Non-Executive Chairman Non-Executive, Vice Chairman Non-Executive Non-Executive Non-Executive, Independent Non-Executive, Independent Non-Executive, Independent Non-Executive, Independent Non-Executive, Independent Non-Executive, Independent Group CEO & Managing Director Managing Director - India Operations Non-Executive, Independent Non-Executive

Ratan N Tata Ravi Kant J J Irani R Gopalakrishnan N N Wadia S M Palia R A Mashelkar S Bhargava N Munjee V K Jairath Carl -Peter Forster P M Telang R Sen Ralf Speth

There are 13 members in board of director and out of which 6 are independent directors, which turns into percentage around 46 as in the year of 2009-10. New members have been introduce this time in Board of Director.

Independent Directors definition: The definition of independent directors varies between that
laid down under section 292A of the Companies Act 1956 and as per clause 49 of the 'listing agreement' issued by SEBI. Independent directors according to Companies Act are defined as persons who:

Are not relatives of the chairman, managing director, whole time director, or the company secretary. Should not have been auditors, internal auditors, legal advisors or consultants to the company during any of the preceding three financial years. Should not have been suppliers, vendors or customers of the company. Should not hold below two per cent of the shares of the company, presently or in past. Should not have held any position in the company. Should not have been a director for a continuous period of nine years.

Nominee directors of banks or FIs cannot be considered independent director.

(c) Share prices of the firm ( 2009 to 2011) & financial performance of firm: Market price data - monthly high/low of the closing price and trading volumes on BSE/NSE depicting liquidity of the Companys Ordinary Shares and A Ordinary Shares on the said exchanges is given hereunder:Ordinary Shares Exchange National Stock Exchange of India Limited

Bombay Limited

Stock

MONTH Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11

HIGH 276.85 435.95 423 425 454.95 478.9 511 462.8 497.7 561.7 520 532 872.85 855.55 808.3 865.7 1047.6 1106.65 1194.25 1302.15 1365.6 1306.45 1250.8 1247.5

LOW 222.25 267.7 366 347.2 382 391.5 430 413.05 444 475.75 440.7 468.15 773.95 673.7 725.65 750.9 841.9 1008.55 1104.9 1153.9 1248.1 1145.7 1058.25 1117.95

No. of shares

HIGH 276.2 435 453.7 437.4 478.05 479 511 461.95 499 560 519.4 532 872.6 854.45 807.3 866.7 1048.3 1106.45 1196.05 1302.5 1365.15 1308.45 1248.6 1249

LOW 226.2 267 356 348 350 387.3 431.2 412 440 453 445 462.1 774.15 673.45 724.95 750.95 841.8 1010.75 1102.95 1154.25 1247.6 1147.05 1054.4 1117.45

No. of shares

17147536 21522510 19576154 12074924 24106892 15698165 8136586 11541487 13034385 9507436 14783186 8990876

101471162 111787192 92842012 60910683 109553011 61529022 55735635 67796791 88595099 60772907 75472511 48669066

Milestones

It has been a long legacy of Tata motors in reaching these milestones. Thus following are the milestone which Tata motors is being able to reach. 2009

Tata Marcopolo Motors, Dharwad plant begins production. Tata Motors launches Nano - The People's Car. Introduction of New World standard truck range. Launch of premium luxury vehicles - Jaguar XF, XFR and XKR and Land Rover Discovery 3, Range Rover Sport and Range Rover from Jaguar and Land Rover in India. Tata Nano wins the Indian Car of the Year (ICOTY) Award. Tata Motors launches the Sumo Grande MK II. Tata Motors begins distribution of Prima World truck. Tata Motors acquires remaining 79% in Hipo Carrocera. Tata Motors launches the next generation all-new Manza FREELANDER 2 launched in India. Tata Motors introduces the all new Tata 407 Pickup, Tata Super Ace and Tata Ace EX. First Jaguar Land Rover showroom opens in India. Mr. Ravi Kant to become Non-executive Vice-Chairman of Tata Motors on retirement, Mr.P.M. Telang to become Managing Director -India Operations. Tata Nano draws over 2.03 lakh bookings

2010

Tata Ace becomes India's first 1-lakh brand in goods commercial vehicles. Appointment of Mr. Carl-Peter Forster as Managing Director of Tata Motors. Jaguar Land Rover announces opening of its Dealership in New Delhi. Tata Motors to construct heavy truck plant in Myanmar under Government of India's Line of Credit. Tata Motors declared as the Commercial Vehicle Maker of the Year. Tata Motors Passenger Car Division launches Tata Motors Service Edge' for leading edge customer service. Tata Motors displays Tata Nano EV at the 80th Geneva Motor Show. Chief Minister of Punjab inaugurates Tata Motors supported State Institute of Automotive and Driving Skills. Jaguar Land Rover announces Dr. Ralf Speth as Chief Executive Officer.

Tata Motors appoints Mr. Carl-Peter Forster as Group CEO. Tata Motors Group displays the widest range of products and environment-friendly technologies at Auto Expo 2010. Tata Motors launches Magic Iris. On 26th April 2010, Tata Motors sold its 4 millionth Commercial Vehicle.

2011

Tata Motors unveils Assembly Plant in South Africa Jaguar Land Rover inaugurates new vehicle assembly plant in Pune India Jaguar celebrates 50 years of iconic E-Type Jaguar c-x75 scoops Louis Vuitton award in Paris Tata Pixel, new city car concept for Europe, displayed at the 81st Geneva Motor Show Range Rover Evoque wins Car Design of The Year Tata Motors introduces the new Tata Indica eV2, the most fuel efficient car in India with 25 kmpl mileage Tata Motors launches the Tata Magic IRIS, a 3-4 seater 4-wheel passenger carrier for public transportation Tata Motors launches the Tata Ace Zip, a 600-kg micro truck for deep-penetration goods movement Jaguar Land Rover inaugurates new vehicle assembly plant in Pune India Tata Nano begins international journey with Sri Lanka, as Tata Motors celebrates 50th year of its International Business

By the help of these initiatives, company is performing financially well. As these types of acquisition shows a strong financial position. And also it has many aspects like, fluctuating the shares price, attraction of investors and maintaining pace with competitors.

(d) Corporate Social Reporting of the Firm: The Automotive sector, regulators point responsibility for this issue to vehicle producers and operators in the scrap car recovery industry.

In Europe the scrap car issue is driven by the End-of-Life Vehicle (ELV) Directive which sets dismantler standards to safely drain and recycle fluids as part of vehicle disposal; and sets targets to recover metal and non-metallic material such that a maximum of 5% of the vehicle weight becomes waste to landfill. Similar regulations have been introduced in Japan and Korea, and the Indian Government is also developing a similar regime in anticipation of many more old cars being scrapped in future. Tata Motors has taken these responsibilities seriously and already meets EU product design requirements such as: compliance to ELV heavy metals and other hazardous substance restrictions; and material code marking of plastic and rubber parts to aid economic recycling towards targets. A major issue for India is the lack of a specialized scrap car collection, treatment, dismantling and recovery infrastructure. Europe has had a century to develop their scrap car industry network but in the year 2000 still required the ELV Directive to make operator standards provide environmentally sound treatment, recycling and disposal of cars. Tata Motors is participating in Government consultations to ensure the Indian scrap car infrastructure is developed to meet sensible environmental standards from the outset. Approach: Tata Motors believes in technology for tomorrow. Our products stand testimony to this. Our annual expenditure on R&D is approximately 2% of our turnover. We have also set up two in-house Engineering Research Centers that house India's only Certified Crash Test Facility. Tata Motors has been making conscious effort in the implementation of several environmentally sensitive technologies in manufacturing processes. The Company uses some of the world's most advanced equipment for emission check and control. Tata Motors concern is manifested by a dual approach 1. Reduction of environmental pollution and regular pollution control drives 2. Restoration of ecological balance. Our endeavors towards environment protection are soil and water conservation programmers and extensive tree plantation drives. Tata Motors is committed to restoring and preserving environmental balance, by reducing waste and pollutants, conserving resources and recycling materials. Reducing Pollution: Tata Motors has been at the forefront of the Indian automobile industry's anti-pollution efforts by introducing cleaner engines. It is the first Indian Company to introduce vehicles with Euro norms well ahead of the mandated dates. Tata Motors' joint venture with Cummins Engine Company, USA, in 1992, was a pioneering effort to introduce emission control technology for India. Over the years, Tata Motors has also made investments in setting up of an advanced emission-testing laboratory.

With the intention of protecting the environment, Tata Motors has upgraded the performance of its entire range of four and six cylinder engines to meet international emission standards. This has been accomplished with the help of world-renowned engine consultants like Ricardo and AVL. These engines are used in Tata Motors vehicles in the Indian market, as well as in over 70 export markets. Tata Motors is constantly working towards developing alternative fuel engine technologies. It has manufactured CNG version of buses and followed it up with a CNG version of its passenger car, the Indica. Restoration of ecological balance: Tata Motors has set up effluent treatment facilities in its plants, to avoid release of polluted water into the ecosystem. In Pune, the treated water is conserved in lakes attracting various species of birds from around the world thus turning the space into a green belt. Tree plantation programmes involving villagers and Tata Motors employees, have turned acres of barren village green. Tata Motors has planted as many as 80,000 trees in the works and the township and more than 2.4 million trees have been planted in Jamshedpur region. Over half a million trees have been planted in the Pune region. Tata Motors has directed all its suppliers to package their products in alternate material instead of wood