Professional Documents
Culture Documents
On
"Overview
By
Submitted to "UNIVERSITY OF PUNE" In partial fulfilment of the requirement for the award of the degree of Master of Business Administration (MBA)
Through All India Shri Shivaji Memorial Society's Institute of Management (MBA), Pune 411001
EXECUTIVE SUMMARY:
Tata Motors Ltd. is Indias largest automobile company. It is the leader by far in commercial vehicles in each segment, and the second largest in the passenger car market with winning products in the compact, midsize car and utility vehicle segments. The company is the worlds fifth largest medium and heavy commercial vehicle manufacturer and the world's second largest medium and heavy bus manufacturer. The combined group turnover for the year ended 31st March 2008 was Rs. Crores. A subsidiary company, in business matters, is an entity that is controlled by other entity. The controlled entity is called a subsidiary company, and the controlling entity is called holding company. Subsidiaries are a common feature of business life and most if not all major businesses organize their operations in this way . The reason for this distinction is that a lone company cannot be a subsidiary of any organization; only an entity representing a legal fiction as a separate entity can be a subsidiary. Subsidiaries are separate, distinct legal entities for the purposes of taxation and regulation. For this reason, they differ from divisions, which are businesses fully integrated within the main company, and not legally or otherwise distinct from it As per 31st March 2008, Tata Motors Ltd had 30 subsidiaries as per the Indian GAAP Financials including the ultimate subsidiaries. As on 31 st March 2008, the total investment made by TML in these subsidiaries aggregated to Rs.2249.71 crores. Guided by the Financials, I have identified 11 subsidiaries as the major ones and have confined my further analyses to these 11 companies. Out of the total 30 subsidiaries, I have selected these 11 ones because of the various reasons like- the contribution in the Tata Motors production process, their diversified nature of business, and some are the subsidiary of the subsidiary company. The TML subsidiary companies like Tata Daewoo Commercial Vehicles Co. Ltd is another major manufacturer of commercial vehicles in Korea, HV Axles and HV Transmissions supply automobile component, Tata Technologies Ltd Company provides high-tech cost effective IT and E&D consultancy etc.
This project helped to understand the accounting procedure followed to record inter-company transactions and also the reasons for TML to form these subsidiaries.
Acknowledgement
I hereby take the opportunity to express my gratitude towards those who have made great contribution in completion of this project on An Overview on the TATA
INDEX
SR.N O. 1. 2. 2. 3.
PARTICULARS OBJECTIVE AND SCPOE OF THE PROJECT RESEARCH METHODOLOGY COMPANY PROFILE THEOROTICAL BACKGROUND SUBSIDIARY- MEANING THE HOLDING AND SUBSIDIARY ARRANGEMENTS OVERVIEW OF TML SUBSIDIARIES FINANCIAL DETAILS OF THE SUBSIDIARIES PERFORMANCE OF THE SUBSIDIARY COMPANYFINANCIAL ANALYSIS PROCESS OF TML OVERSIGHT ON THE SUBSIDIARY COMPANIES FINDINGS AND SUGGESTIONS
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BIBLOGRAPHY
Title of the Project: An Overview on the TATA Motors Subsidiary and their Accounting Procedures Objective of the project:
To know accounting procedure followed by the Holding (Parent) company in maintaining the records of the subsidiary company To get well acquainted with the Accounting Standards relating the accounting records of the subsidiaries. To understand the reasons for investing in that particular subsidiary.
COMPANY PROFILE
COMPANY PROFILE:
The Tata family of enterprises comprises 98 companies in seven business sectors. This section lists all these companies under the sectors in which they operate, besides the two promoter companies of the Group. Visitors can, by clicking on the relevant links, get a profile of individual companies, their subsidiaries (if any), their products and services, contact details, etc Tata Motors Limited, formerly known as TELCO (TATA Engineering and Locomotive Company), is a multinational corporation headquartered in Mumbai, India. It is India's largest passenger automobile and commercial vehicle manufacturing company. Part of the Tata Group, it is one of the world's largest manufacturers of commercial vehicles. The OICA ranked it as the world's 20th largest automaker, based on figures for 2006. Tata Motors was established in 1945, when the company began manufacturing locomotives. The company manufactured its first commercial vehicle in 1954 in collaboration with Daimler-Benz AG, which ended in 1969. Tata Motors was listed on the NYSE in 2004, and by 2005 it was ranked among the top 10 corporations in India with an annual revenue exceeding INR 320 billion. In 2004, it bought Daewoo's truck manufacturing unit, now known as Tata Daewoo Commercial Vehicle, in South Korea. It also, acquired a 21% stake in Hispano Carrocera SA, giving it controlling rights in the company. Tata Motors launched their much awaited Tata Nano, noted for its Rs 100,000 price-tag, in January 2008. In March 2008, it finalized a deal with Ford Motor Company to acquire their British Jaguar Land Rover (JLR) business, which also includes the Rover, Daimler and Lanchester brand names. The purchase was completed on 2008-06-02 Tata Motors has its manufacturing base in Jamshedpur, Lucknow, Pune, Singur and Dharwad. The Tata family of companies shares a set of five core values: integrity, understanding, excellence, unity and responsibility. These values, which have been part of the Group's beliefs and convictions from its earliest days, continue to guide and drive the business decisions of Tata companies. The Group and its enterprises have been steadfast and distinctive in their adherence to business ethics and their commitment to corporate social responsibility. This is a legacy that has earned the Group the trust of many millions of stakeholders in a measure few business houses anywhere in the world can match.
SUBSIDIARY COMPANIES: MEANING & INTRODUCTION: Meaning of holding company and subsidiary
according the Companies Act, 1956:
Holding company are those that are able to nominate the majority of the direction of some other companies, such other companies are known as subsidiary companies. A company controlled by another company. A company is deemed to be a subsidiary of another if (but only if): (a) That other (I) is a member of it and controls the composition of its board of directors; or (II) Holds more than half in nominal value of its equity share capital; or (b) The first-mentioned company is a subsidiary of any company which is that others subsidiary. "Equity share capital" means its issued share capital excluding any part of it which, neither as respects dividends nor as respects capital, carries any right to participate beyond a specified amount in a distribution. The composition of a company`s board of directors is deemed to be controlled by another company if (but only if) that other company by the exercise of some power exercisable by it without the consent or concurrence of any other person can appoint or remove the holders of all or a majority of the directorships. For the purposes of this Act, a company shall, subject to the provisions of subsection (3), be deemed to be a subsidiary of another if, but only if,(a) That other controls the composition of its Board of directors; or (b) that other-(i) where the first-mentioned company is an existing company in
respect of which the holders of preference shares issued before the commencement of this Act have the same voting rights in all respects as the holders of equity shares, exercises or controls more than half of the total voting power of such company; (ii) where the first-mentioned company is any other company, holds more than half in nominal value of its equity share capital; or] (c) The first-mentioned company is a subsidiary of any company which is that other's subsidiary. Illustration Company B is a subsidiary of Company A, and Company C is a subsidiary of Company B. Company C is a subsidiary of Company A, by virtue of clause (c) above. If Company D is a subsidiary of Company C, Company D will be a subsidiary of Company B and consequently also of Company A, by virtue of clause (c) above; and so on. (2) For the purposes of sub-section (1), the composition of a company's B if, that other company by the exercise of some power exercisable by it at its discretion without the consent or concurrence of any other person, can appoint or remove the holders of all or a majority of the directorships; but for the purposes of this provision that other company shall be deemed to have power to appoint to a directorship with respect to which any of the following conditions is satisfied, that is to say:(a) that a person cannot be appointed thereto without the exercise in his favour by that other company of such a power as aforesaid; (b) that a person's appointment thereto follows necessarily from his appointment as director or manager of, or to any other office or employment in, that other company; or [(c) that the directorship is held by an individual nominated by that other company or a subsidiary thereof.]
(3) In determining whether one company is a subsidiary of another,(a) any shares held or power exercisable by that other company in a fiduciary capacity shall be treated as not held or exercisable by it; (b) subject to the provisions of clauses (c) and (d), any shares held or power exercisable(i) by any person as a nominee for that other company (except where that other is concerned only in a fiduciary capacity); or (ii) by, or by a nominee for, a subsidiary of that other company, not being a subsidiary which is concerned only in a fiduciary capacity, shall be treated as held or exercisable by that other company; (c) any shares held or power exercisable by any person by virtue of the provisions of any debentures of the first-mentioned company or of a trust deed for securing any issue of such debentures shall be disregarded; (d) any shares held or power exercisable by, or by a nominee for, that other or its subsidiary [not being held or exercisable as mentioned in clause (c)] shall be treated as not held, or exercisable by that other, if the ordinary business of that other or its subsidiary as the case may be, includes the lending of money and the shares are held or the power is exercisable as aforesaid by way of security only for the purposes of a transaction entered into in the ordinary course of that business. (4) For the purposes of this Act, a company shall be deemed to be the holding company of another if, but only if, that other is its subsidiary. (5) In this section, the expression "company" includes any body corporate, and the expression "equity share capital" has the same meaning as in sub-section (2) of section 85. (6) In the case of a body corporate which is incorporated in a country outside India, a subsidiary or holding company of the body corporate under the law of such country shall be deemed to be a subsidiary or holding company of the body corporate within the meaning and for the purposes of this Act also, whether the requirements of this section are fulfilled or not. (7) A private company, being a subsidiary of a body corporate incorporated outside India, which, if incorporated in India, would be a public company within the
meaning of this Act, shall be deemed for the purposes of this Act to be a subsidiary of a public company if the entire share capital in that private company is not held by that body corporate whether alone or together with one or more other bodies corporate incorporated outside India.] 1. Subs. by Act 65 of 1960, sec. 3, for clause (b) (w.e.f. 28-12-1960). 2. the words , managing agent, secretaries and treasurers omitted by Act 53 of 2000, sec. 4 (w.e.f. 13-12-2000). 3. Subs. by Act 65 of 1960, sec. 3, for clause (c) (w.e.f. 28-12-1960). 4. Ins. by Act 65 of I960, sec. 3 (w.e.f. 28-12-1960). The holding company usually holds the majority of the paid up equity capital. A company may itself a holding company and at the same time, be a subsidiary of other company. A company may be formed and then it may proceed to float the other company inviting others to join but holding the majority of shares in these companies. Such a holding company is known as parent company. When existing companies wishing to avoid competition, float company which then proceeds to acquire the majority of shares in the existing company, the name given to the holding company is offspring company. Holding companies have been used extensively to further the combination movement. It was found to be useful in bringing a number of companies under one control. Advantages of Holding Companies are as follows. 1) Subsidiary companies maintain their separate identity as such, they maintain their goodwill. 2) The public may not be aware of the existence of combination among the various companies and, therefore, the fruits of monopoly or near monopoly may be enjoyed without resentment in the minds of the people. This, however is a clearly a disadvantage from the social point of view, because if there is a monopoly, the public ought to know.
3) The person controlling the holding company needs to invest a comparatively small amount in order to control subsidiary companies. For e.g. A is a holding company, has two subsidiaries ,B and C and B and C in turn have three subsidiaries each, the persons who have the majority of shares in A will be able to control eight other companies had these companies amalgamated ,a much larger amount would have been required in order to control the concern. (This is again a disadvantage from the social point of view, because it may lead to irresponsibility.) 4) By maintaining the separate identity of various companies, it would be possible to carry forward losses for income tax purposes. 5) Each subsidiary company has to prepare its own accounts and, therefore the financial position and profitability of each undertaking is known. 6) Should it be found desirable that the control of the holding company should be given up, it can be easily arranged, all that is required is that the shares in the subsidiary companies should be disposed off in the market.
7) The subsidiary companies may be forced to appoint persons of the choosing of holding companies as directors or other officers at unduly high remuneration. Whatever the advantages and disadvantages, the holding company has come to stay and the law now wisely tries to regulate its working. The law has defined a holding company and a subsidiary company. Private companies, subsidiary to a public company do not enjoy the privileges given to private companies. Also the law compels the holding company to give the information about the subsidiary companies.
OVERVIEW OF
A glance At
TATA Motors
Subsidiary Companies
Company name
Registered Address
1589-1,SoryongDong,Gunsan, Jeollabuk-do,573715,South Korea. Jubilee Bldg,45, Museum Road, Bangalore-560025.
Nature of Business
Manufacturing of commercial vehicles. Manufactures major construction equipments like Excavators, backhoe loaders, cranes etc Company provides high tech cost effective IT and E&D consultancy. Supplies axles for heavy and medium commercial vehicles. Supplies transmission for heavy and medium commercial vehicles. Company is engaged in business of machine tools, equipments, material handling system and fluid power solutions.
2.
3.
4.
5.
HV Transmission Ltd
6.
Plot no. 25, Rajiv Gandhi InfoTech Park, Hinjawadi, Pune. Nanavati Mahalaya, 18 Homi Mody Street, Hutatma Chowk, Mumbai400001. Nanavati Mahalaya, 18 Homi Mody Street, Hutatma Chowk, Mumbai400001. PDO Building, Tata Motors Campus, Chinchwad, Pune411033.
7.
Sr .n o
8.
Company name
Registered Address
Nature of Business
Investment company.
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11.
Nanavati Mahalaya, 18 Homi Mody Street, Hutatma Chowk, Mumbai400001. Nanavati Mahalaya, 18 Homi Mody Street, Hutatma Chowk, Mumbai400001. Building 6, Monarch Court, Emerald Park, Emersons Green, Bistol, BS16 7FH. 41370 Bridge Street, novi, MI 48375-1302.
P ROFILE
Tata Daewoo is the second largest heavy duty commercial vehicle manufacturer of Korea, producing Cargo, Dumpers, Tractors, Mixers and special
purpose vehicles. Earlier a member of Daewoo Group, one of the largest conglomerate of Korea, it was acquired by Tata Motors in March04.
On the first of June04, Daewoo Commercial Vehicle Company was re-christened as Tata Daewoo Commercial Vehicle Company and committed itself to further strengthen the Tata Brand which will help it and Tata Motors to improve their reach and penetration in the domestic and global market. Tata Daewoo has the production capacity of 20,000 units of medium & heavy-duty trucks with state-of-the-art facilities. It was the first heavy-duty truck manufacturer in Korea to be awarded ISO 9001 Certificate way back in September96. It was awarded ISO 14001 Certificate in October97, in recognition of its environment friendly operations.
NOVU
Tata Technologies Limited, a company in the Tata Group operates in the field of Automotive Industry providing Engineering and Design (E&D) solutions. The company took over a much larger player in the field namely INCAT, a Europe based company, in 2005. The company operates in US and Europe through its wholly owned subsidiaries in Detroit, Denver and London respectively. also has a presence in Thailand. The Tata Technologies Group helps
great manufacturers create great products.
It
Services of TTL:
Plant Automation: TTL helps its customers in the automotive and aerospace
sectors achieve maximum cost-saving and improved time to market through the application of automation in the production environment. Our expertise includes Plant controls, through-put optimisation, interface between MES and ERP, digital factory simulations, telematics and Embedded System.
PROFILE
HV Axles Ltd., a wholly owned subsidiary of Tata Motors, was established on 13th March 2000 and acquired the axle division of the then Tata Engineering company at Jamshedpur on 30th March 2000. Starting operations in 1954 today HVAL is currently the market leader in medium & heavy commercial vehicle axles in India with an installed capacity of over two lakh axles per annum.
MISSION: To provide superior value for money to customers through quality and
cost effective Axles and related Products & Services. To achieve sustainable growth by continuously seeking new business opportunities/challenges, employing contemporary technologies and maintaining a high performance work culture.
APPLICATION AREAS
HVAL manufactures a wide variety of axles for medium and heavy commercial vehicle applications spanning a GVW range from 11tonnes to 40 tonnes. Typical applications include buses, tippers and tractor- trailers including tag axles for multi-axle vehicles. Variants include axles with differential lock and ABS brakes. Our Live front axles range support needs of the army and paramilitary organizations as also sand vehicles.
Live Front Axles
HVAL also manufactures a range of trailer axles suitable for use in trailers.
Profile: HV Transmissions Limited is a leading manufacturer of automotive transmissions, components & engineering applications for a wide range of medium & heavy commercial vehicles. HVTL was established on 13th March 2000 as a major subsidiary of Tata Motors by taking over operations of Tata Motors erstwhile
Gearbox Division.
Auxiliary Gear Box
The Company provides products and services of superior quality, matching with the current economic and business trends in Medium and Heavy Commercial Vehicle markets. HVTL's core competencies are emphasized through excellence in engineering, manufacturing standards & ultimate utilization of human potential.
To
achieve
sustainable
growth
by
continuously
seeking
new
business
opportunities/challenges, employing contemporary technologies and maintaining a high performance work culture.
TAL Manufacturing Solutions is a company focused on offering cost-effective and total solutions in the field of manufacturing engineering. A pioneer in its area of expertise, TAL's international-standard technology and its talented team of professionals make it a premier player in the machine tools and equipment-building industry.
ADVANTAGE TAL TAL has designed, built and installed more than 1,500 machine tools for the production shops of Tata Motors' automobile and other divisions, and it has been responsible for putting up the manufacturing facilities of the Indica car plant.
ENGINEERING SOLUTIONS
Material handling
MATERIAL HANDLING-TAL offers a range of special purpose conveyors suitable to handle a wide variety of materials effectively in any industry involving manufacturing processes. Our integrated material handling systems have a proven track record of facilitating processes in the automobile and heavy engineering sectors. METAL CUTTING-Our Metal Cutting - Machine Tools forms the bedrock of the industrial sector. Our range of standard and customised machines is capable of handling a wide variety of applications across various manufacturing industries. Built to perform 24 X 7, these machines offer the best available technologies. These machines offer not only Precision, Accuracy and Reliability but also provide adequate safeties to create risk free working environment. FLUID POWER SOLUTIONS-TAL offers a range of hydraulic solutions to cater to the construction equipment industry. Our products are
Fluid Power Solutions Metal
cost effective hydraulic aggregate solutions for automation and motion control.
SOLUTIONS-With technology to match international standards and a highly
talented team of professionals, the company is today recognized as one of the premium companies for providing complete engineering Solutions. We design and build machine tools, equipments, test rigs, fixtures, material handling systems, assembly and process lines for a wide range of industrial applications
and integrate them to deliver complete manufacturing solutions. Our broadbased portfolio: metal cutting, equipments, material handling systems,
fluid power solutions.
EQUIPMENTS-TAL offers a range of special purpose conveyors suitable to handle a wide variety of materials effectively in any industry involving manufacturing processes. Our integrated material handling systems have a proven track record of facilitating processes in the automobile and heavy engineering sectors.
Concorde Motors is a 100% subsidiary of TATA Motors Ltd having fully integrated car dealership
network of international standard at Bangalore, Chennai & Hyderabad, retailing the passenger car range manufactured by Tata Motors Limited Indias Largest Automobile Manufacturer.
Satisfaction
Concorde
Profile: Geared with the objective to establish and operate auto retail dealerships of
international standards, we were looking at creating an organization powered by performance and customer satisfaction. In the drivers seat of Concorde Motors (India) Ltd is TATA Motors Ltd. - Indias largest manufacturer of commercial vehicles, a major producer of passenger vehicles. From the very start of this race, the vision has been to establish them as one of Indias leading integrated motor retail networks of TATA cars.
the Indian retail motor industry, built upon an organization that understands the customers needs and exceeds expectations at every moment of truth, creating trust and customer loyalty and in turn sustainable growth and value for our shareholders. The Concorde Way: Customer service of world class standard Consistent quality, continuously improved Code of ethics without compromise.
Tata Motors Finance Limited (Formerly known as TML Financial Services Limited). Tata Motors has set up a new subsidiary for its vehicle financing operations. The new entity, TML Financial Services Ltd. (TMLFSL), is a 100% subsidiary and will function as an NBFC (Non Banking Finance Company), for which it has received the necessary approval from the Reserve Bank of India. TMLFSL will support and enhance the vehicle financing activities of Tata Motorfinance. Tata Motors Finance Limited (TMF), a wholly owned subsidiary company of Tata Motors Limited, was incorporated on June 1, 2006 with the objective of
becoming a preferred financier for customers of Tata Motors Limited and its channel partners. TMF is registered with RBI as a
Systemically Important Non-Deposit taking NBFC and is classified as an Asset Finance Company. TMF commenced operations in September 2006 and for the period ended March 31, 2007, it made disbursements close to Rs.4,000 crores recording a PAT of Rs.12.79 crores. TMF has a paid-up capital of Rs.450 crores and a net worth of Rs.560.54 crores. Tata Motorfinance (TMF), the auto financing arm for Tata Motors, came into existence in June 2003. This was a common front-end, jointly formed by BHPC (Bureau for Hire Purchase and Credit) of Tata Motors and the asset financing arm of Tata Finance. This company was a virtual entity, with both the divisions maintaining their legal identity, and was in the market for exclusively financing Tata Motors vehicles. Subsequently Tata Finance was merged with Tata Motors and in April 2005 TMF became a division of Tata Motors. -We aspire to be a preferred financier by choice for Tata Motors customers & dealers across all its products. Tata Motorfinance would be the top-of-themind choice for all stakeholders when it comes to Tata Motors products. We wish to set a benchmark in captive finance nationally and internationally.
INCAT, a Tata Technologies Company, is the worlds leading independent global professional services company engaged in Engineering & Design Services, Product Lifecycle Management, Enterprise Solutions and Plant Automation. INCAT focuses on helping manufacturers improve revenue and profit by realizing superior products. Combining high-end onshore strengths with offshore delivery capabilities offers clients in the automotive, aerospace and general manufacturing industries an unmatched portfolio of product optimization services together with a unique global delivery capability. INCAT enables the worlds leading manufacturers, and their Tier-One suppliers, to realize product superiority through Product Lifecycle Management (PLM), Engineering and Design (E&D), Manufacturing, and IT technology and services for the automotive, aerospace and general manufacturing industries. INCAT, a Tata Technologies Company, ensures that our customer organizations maximize their investment in software technology with world-class training for the skilled professionals who put the technology to work.
Name of the company Tata Daewoo CV Co. Ltd Tata Construction Equipment Co. Ltd Tata Technologies Ltd HV Axles Ltd HV Transmissions Ltd TAL Manufacturing solutions Ltd Concorde Motors (India) Ltd. Sheba properties Ltd. Tata Motors Finance Ltd.
INCAT System
178.94
81.71
INCAT Ltd
0.08
81.88
The above table shows whether TATA Motors Ltd have invested in the subsidiary company at premium, at par or at discount.
FINANCIA L ANALYSIS
OF THE SUBSIDIARY COMPANIES
PROCESS OF
TML
OVERSIGHT ON THE SUBSIDIARY COMPANIES:
CHECK LIST PREPARED TO MAINTAIN THE SUBSIDIARY ACCOUNTS Tata Motors Ltd maintains various check-list to update and maintain the financial transactions periodically, viz., monthly, quarterly or as and when required. These check list are broadly of three types
1. Check-list for Entity Level Control- covering the major critical areas of the
whole organisation
2. Book Close or Process Level Control- the detailed check list covering the
transaction records carried on in the major functional area of the organisation. The objectives of these check list are: The primary objective is to see whether the flow, of cash as well as work, is going at the desired direction or not. 1. Control in the organisation wherein you report a fair reporting mechanism.
2. This checklist act as a deterrent to any fraud, they should reasonably detect and prevent the frauds. E.g. Purchase Order is raised with Rate along with quantity GRN is to be prepared for receipt of goods with correct quantity and quality. 3. This checklist control should address the fraud risk: E.g. P.O. and G.R.N. should not be prepared and issued by the same person-incharge. There should be a link, a chain that can act as internal audit, for the next process. 4. This check list also goes through the authorisation of the acts performed by the employees.
If an employee raised a P.O. the check list should have the authentication of the document. The SAP has made such provisions of this.
Comments
TML Comments
3. 4.
Company has Whistle Blow Policy duly approved by the Board. Ethics Counsellor appointed on approval of the Audit Committee Contact details of the Ethics Counsellor circulated to all the employees and the third party as well.
5.
6. 7.
Current organisational chart showing the reporting structure The formal job descriptions.
8.
Company has a well defined policy as to recruitment, gradation, appraisal, etc. to employees Business plans and budgets are
To look into ethics related complaints, the employees have. Details are displayed at prominent places and are also updated on the company websites Also the financial powers approved by the Board. And To specify all the jobs handled by reasonable details. We are trying to deploy VERSA to identify conflicting SOD situation Defined policies of all matters related to the employees. Budgets cover all
prepared, approved by Board and shared among all the operating managers.
2.
Management Information System is in place and communicated to the top authorities regarding any variances.
aspect of business and are revised once or twice as required, approved by Board. Actual performance is reported every month against the budget standards.
3.
Subsidiary Oversight:
TML nominates representatives to the Board of the Subsidiary Company among the members of senior management. Members of Senior Management suggest names of prospective representatives. Candidates are scanned by Executive Director Finance and Corporate Affairs and Managing Director. Final approval is taken from the Chairman of the Board. Subsidiary affairs are monitored through these representatives on the Board of subsidiaries. Most subsidiaries have Audit Committees, which are represented by member of senior management of Tata Motors who are on the Board of subsidiaries. Executive Committee of the Board of Tata Motors reviews all investment and borrowing decisions taken by subsidiary companies. Also, decisions pertaining to acquisitions, divestments and new business forays are reviewed by the Executive Committee of the Board as well as the Board of Tata Motors. The Assistant Company Secretary receives minutes of Board meetings of subsidiaries. These minutes are reviewed by the Company Secretary and Assistant Company Secretary and key issues are highlighted. Copy of these reviewed minutes along with a summary of important decisions taken by the Subsidiaries is circulated with the Board Papers. The Board Papers are received and reviewed by all Board Members. At the meeting the Board Member raises issues of concern at the subsidiary. The Board of Directors on a quarterly basis reviews subsidiary performance. On review if the Board feels that the subsidiary performance is not performing as per expectations, the Board explores opportunities for improving subsidiary performance such as restructuring, additional funding etc.
The Board determines the Action Plan and responsibility is assigned for implementation. Board of Directors action points is tracked through the Action Taken Report (ATR) of the Board.
Also, Executive Director Finance and Corporate Affairs, Vice President Accounts and Taxation and the Chief Internal Auditor are special invitees at all subsidiary company Audit Committee meetings.
The auditor for Tata Motors and its subsidiaries is the same. Also the Tata Motors policy for Approval of Services to be rendered by the Auditors and Oversight of Audit Work is applicable to all its subsidiary companies.
Explanatory note on preparation of the Consolidated Financial Statement for the Year ending 31st march 2007
The Consolidated Financial Statement related to Tata Motors Limited (the Company), its subsidiary companies associates. Incorporation of the financial statement of subsidiary companies as per AS-21. Accounting of share of profit/loss of the Associates as per AS-23. The Consolidated financial Statements are prepared in accordance with the Accounting standard-21, issued by the Institute of Chartered Accountants of India, which are intended to present financial information about the parent and its subsidiaries as one single entity. The Consolidated Financial Statements include the account of those companies where Tata Motors directly or indirectly through subsidiaries holds more than one-half of the share holding of an enterprise. The Consolidated Financial Statements are consolidated by combining the financial statements of subsidiary companies on a line by line basis by adding together items like assets, liabilities, income and expenses.
The following are the consolidated adjustments made in respect of subsidiary companies: a) The excess of cost of investment over the share of subsidiary companys net worth which is allocable to Tata Motors has been considered as Goodwill and is shown as an asset in the consolidated financial statement. b) Where the share of net worth is the subsidiary company exceeds the investment cost of Tata Motors, it has been recognised as Capital Reserve and is shown under the head Reserves and Surplus. c) The share of profit or loss of other shareholders (minority) of each subsidiary is adjusted for calculating the amount shown as liability. d) All inter-company transactions are eliminated. e) All inter-company unrealised profits e.g. mark up on inventory, etc. Are also eliminated.
ii)
All unrealised inter-company profits are eliminated to the extend of our share in associates
iii)
All the shares of profit/loss in the Associate Company subsequent to the date of acquisition is accounted by adjusting the cost of investment.
Particulars
Purchase of Goods
Company name
Tata Cummins Ltd Automobile Corporation of Goa Ltd Tata AutoComp Systems Ltd Concorde Motors (India) Ltd Tata Cummins Ltd Hispano Carrocera S.A. TAL Manufacturing Solutions Ltd Sheba Properties Ltd H V Axles Ltd H V Transmissions Ltd H V Axles Ltd H V Transmissions Ltd Tata Technologies Ltd Tata Motors European Technical Centre PLC Tata Motors (Thailand) Limited H V Transmissions Ltd Fiat India Automobiles Pvt. Ltd. H V Axles Ltd Telco Construction Equi. Co. Ltd
Sale of Goods Purchase of Fixed Assets Purchase of Investments (Shares of M/s. Tata Steel) Sale of Fixed Assets
Receiving of Services
Rendering of Services
Finance Given (including loans and equity) Investment in Equity Inter Corporate Deposit Finance Taken (including loans and equity) Inter Corporate Deposit
Tata Motors Finance Limited Fiat India Automobiles Pvt. Ltd. Tata Motors Finance Limited Tata Technologies Ltd Tata Marcopolo Motors Limited Sheba Properties Ltd Telco Construction Equipment Co. Ltd Tata Daewoo Commercial Vehicle Co. Ltd H V Axles Ltd
H V Transmissions Ltd Tata Cummins Ltd Tata Technologies Ltd Tata Sons Limited Hispano Carrocera S.A. Tata Sons Limited
The Consolidated Financial Statement maintains and updates the transactions with the subsidiary companies monthly and are published in the quarterly reports of the TML. These entries includes the transactions with the holding company and its various branches and the dealing with the fellow subsidiary companies.
Bibliography:
Books and manuals referred: Management Accounting Financial Management and Holding Company Accounts By S. Nagaratam, Tenth Edition, III-Accounts of Holding Company, Page no. 479. Advanced Accounts By M. C. Shukla and T. S. Grewal, Seventh Edition, Vol.-II, Chapter VHolding Companies, Page no. 349. Accounting Standards By R. P. Rustagi, Second Edition. Tata Motors 63th Annual Report 2007-2008 Tata motors Report on Subsidiary Accounts 2007-08, 2006-07 and 2005-06. WEBLOGRAPHY: http://www.tatamotors/prifile.htm http://en.wikipedia.org/wiki/Tata_Motors#History (26th June, 2008 at 10.30 am) http://ir.tatamotors.com/performance/a_reports/pdf/2008/TML-2007-08.pdf - (30th June, 2008 at 11.30 pm) www.vakeelno1.com Publication- S. Chand & Co. Ltd Publication- S. Chand & Co. Ltd