While the start of the new fiscal has continued from the moderate performance of last year, there is a cautious optimism that FY 2013-14 would see the start of the revival in the global and domestic economies. The Indian economy is also expected to look up marginally from growth in GDP of 5% in the last year.
Within the market however, there are certain segments which would react quicker to a revival in sentiment than others. The M&HCV segment would recover later than others and is expected to see an upswing only after a few more conscious monetary and fiscal policy moves from the Government and RBI, as well as growth in infrastructure projects spending.
While current account deficit and fiscal deficit will continue to be priorities for the Government, striking a balance between controlling expenditure and encouraging growth will be key for this year.
On the background of pressure on volumes in India and limited headroom in pricing due to the intensely competitive market dynamics, the focus will be on effective cost management- both direct and indirect to maintain margins. Even in this challenging environment, as envisioned in its Mission statement, the Company is looking to 'passionately anticipate' and provide vehicles and solutions that 'excite customers globally'. The objective remains to be the 'most admired' Company by all our stakeholders.
One of the key elements of this strategy would be to improve the relationship with the customer – the experience the customer has with the Company at each touch point from sale to service and replacement sales experiences. This would include improving the physical look of the setup, setting up right processes and forums for speedy resolution of customer issues.
The Company will also actively pursue growth in the right International markets and look to consolidate its position in markets where it is already present.
While Europe remains uncertain in the short term, JLR will continue to focus on growth from other markets, in particular the emerging markets. With entry been established in China last year, growing and consolidating presence in this market would be key to JLR's strategy for the coming year. Investment in new products and technologies along with enhancing capacity as required in the right geographies would continue for both Jaguar and Land Rover.
|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.
|Some significant features of the internal control of systems are:
- Preparation and monitoring of annual budgets for all operating and service functions;
- 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;
- 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. The scope and authority of the Internal Audit division is derived from the Audit Charter approved by the Audit Committee;
- Audit Committee of the Board of Directors, comprising independent directors, which is functional since August 1988, regularly reviews the audit plans, significant audit findings, adequacy of internal controls, compliance with Accounting Standards as well as reasons for changes in accounting policies and practices, if any;
- A comprehensive information security policy and continuous upgrades to IT system;
- Documenting of major business processes and testing thereof including financial closing, computer controls and entity level controls. as part of compliance programme towards Sarbanes-Oxley Act, as required by the listing requirements at New York Stock Exchange;
- Anti-fraud programmes.
The Board takes responsibility for the overall process of risk
management in the organisation. Through an Enterprise
Risk Management programme, each Business Unit addresses
opportunities and the attendant risks through an institutionalized
approach aligned to the Company's objectives. This is also facilitated
by internal audit. The business risk is managed through cross
functional involvement and communication across businesses.
The results of the risk assessment and residual risks are presented
to the senior management. The Audit Committee reviews reports
covering operational, financial and other business risk areas.
|HUMAN RESOURCES/INDUSTRIAL RELATIONS
Tata Motor's Group considers its human capital as a critical factor to
its success. Under the aegis of Tata Sons and the Tata Sons promoted
entities, the Company has drawn up a comprehensive human
resource strategy (the "Human Resource" strategy) which addresses
key aspects of human resource development such as:
- Code of conduct and fair business practices.
- A fair and objective performance management system
linked to the performance of the businesses which identifies
and differentiates high performers while offering separation
avenues for non-performers.
- Creation of a common pool of talented managers across
Tata Sons and the Tata Sons promoted entities with a view
to increasing their mobility through inter-company job
- Evolution of performance based compensation packages to
attract and retain talent within Tata Sons and the Tata Sons
- Development of comprehensive training programs to
impart and continuously upgrade the industry/function
In line with the Human Resource strategy, the Company, in
turn, has implemented various initiatives in order to build
organizational capability that will enable the Company to sustain
competitiveness in the global market place. The focus is to attract
talent, retain the better and advance the best. Some of the
initiatives to meet this objective include:
- Extensive process mapping exercise to benchmark and align
the human resource processes with global best practices.
- Introduction of a globally benchmarked employee
- Succession planning through identification of second level of
managers for all units, locations, functions.
- Implementation of a "Fast Track Selection Scheme", which is a
system for identifying potential talent in the areas of general,
commercial and operations management and offering
them opportunities for growth within the organization.
The Company's human resources team has been invited to
replicate this system in other Tata Companies.
- The Company "Talent Management Scheme" which includes
the identification of high performers and high potentials
through various routes such as our Performance Management
System and Development Centers. Subsequent to the
identification process, we provide them with challenging
assignments for faster development.
- Introduction of performance rating based salary review
and quality linked variable payment for supervisory
category of employees.
- Restructuring the top level organization and creation of new
verticals for greater functional focus and moving towards
creating a matrix organization.
- Creation of a powerful employer brand to attract talent - "Lead
the Future" has become the Company's Employee Value
- Driving cultural transformation - The Company has reframed
the mission, vision, values and culture of the organization and
introduced the concept of ACES - Accountability, Customer
& Product focus, Excellence and Speed.
- Extensive brand building initiatives at university campuses to
increase recruiting from premium universities.
- JLR launched a new "Team Talk Online" portal to its production
workers, which provides them with business updates
alongside information on employee benefits, training and
We employed approximately 62,716 and 58,618 (includes Tata
Motor Group) permanent employees as of March 31, 2013 and
2012 respectively. The average number of temporary employees
for the FY 2012-13, was approximately 39,009.
The following table set forth a breakdown of persons employed
by our business segments and by geographic location as of
March 31, 2013.
||No of Employees
||No of Employees
Training and Development: The Company is committed to
building the competencies of its employees and improving their
performance through training and development. The Company
focus is on identifying gaps in its employees' competencies and
preparing employees for changes in competitive environments,
as well as to meet organizational challenges.
Some of the focus areas in training in the last year centered on
leadership, innovation management and internationalization
besides other training programmes to drive a change in the
Company's employees' outlook as it continue to develop as a
global competitor. Developmental initiatives for the Company's
senior leadership were undertaken through international
programs at various premier institutions around the world.
Certain employees have also been selected for the Fulbright
fellowships for leadership in management. In addition, in
order to emphasize the sharing of skills across our locations
and functions extensive technical training programs were
organized in Pune, Jamshedpur and Lucknow. The technical
exposure was enhanced further through international training
and participation at international seminars.
At Jamshedpur, Pune and Lucknow in India, the Company has
also established training divisions that impart basic skills in various
trades like milling, grinding and welding to its young apprentices.
The Company received the National Best Training Establishment
award from the Government of India for the eighth time.
The Tata Motors Academy has created a couple of path-breaking
branded initiatives in the Learning and Development space.
"iTeach" which was created as an innovative practice of getting
line managers to take ownership in sharing their knowledge and
experience gained a lot of traction. The Company has switched to
e-enabled learning through LMS (Learning Management System).
Programs like "Autonova", "Project Leap" were introduced in the
JLR launched a new Higher Apprenticeship programme offering
55 places this year in key pathways, in addition to its current
intermediate and advanced apprenticeship portfolio, which
currently has over 1,500 apprentices on programme in 2012. JLR
has excelled in its rating movement in the Times Top 100 Graduate
Employers, moving from 60th ranking in 2011 to 26th in 2012. This
was then followed by a move in the Guardian Top 300 Graduate
Employers from a position of 127th in 2011 to 30th in 2012.
Union Wage Settlements: All employees in India belonging
to the operative grades are members of labor unions except
at Sanand & Dharwad plants. The Company has generally
enjoyed cordial relations with its employees at its factories
Employee wages are paid in accordance with wage agreements
that have varying terms (typically three years) at different locations.
The expiration dates of the wage agreements with respect to
various locations/subsidiaries are as follows:
||Wage Agreement valid until
||August 31, 2015
||March 31, 2013*
||March 31, 2013*
||December 31, 2015
|| March 31, 2014
||March 31, 2015
|Jaguar Land Rover
||October 31, 2014
||December 31, 2012*
A cordial industrial relations environment has been maintained in
all the Company's manufacturing units.
The variability in wage settlements was built in by introducing
vehicles and profit linked payment scheme based on the index of
various parameters such as quality, productivity, operating profit
and individual's performance and attendance.
Operatives and Union support in implementation of programmes
towards quality, cost and productivity improvements across all
locations is commendable.
TDCV Union Employees had filed a lawsuit against TDCV in March
2011, for including some elements of non- ordinary salary and
bonus as part of ordinary wages. The District Court gave a judgment
in their favour on January 2013, and raised a demand on TDCV for
the period December 2007 to May 2011, for KRW 17.2 billion and
interest for the unpaid period. TDCV has filed an appeal to the High
Court against the order.
|RESEARCH AND DEVELOPMENT:
Over the years, the Company has devoted significant resources
towards our research and development activities. The Company's
research and development activities focus on product development,
environmental technologies and vehicle safety. The Company's
Engineering Research Centre, or ERC, established in 1966, is
one of the few in-house automotive research and development
centers in India recognized by the government. ERC is integrated
with all of the Tata Motors Global Automotive Product Design
and Development Centers in South Korea, Spain, Italy and the
United Kingdom. In addition to this, the Company leverages key
competencies through various engineering service suppliers and
design teams of its suppliers.
The Company has a state of the art crash test facility for evaluating
occupant safety. The Company has a full vehicle level crash test
facility, sled test facility for simulating the crash environment
on subsystems, a pedestrian safety testing facility, a pendulum
impact test facility for goods carrier vehicles. This facility is also
supported with CAE Infrastructure to simulate tests in digital
environment. The Company has a hemi-anechoic chamber
testing facility for developing vehicles with lower noise and
vibration levels and an engine emission and performance
development facilities, to develop products meeting international
standards. The Company also has an eight poster road load
simulator for vehicle structural durability validation of M&HCV.
Other key facilities include a full vehicle environmental testing
facility, heavy duty dynamometers and aggregate endurance
The Company's product design and development centers are
equipped with sophisticated hardware, software and other
information technology infrastructure, designed to create a
digital product development and virtual testing and validation
environment, resulting in reduction of product development cycletime.
These centers are growing with increased vehicle development
programs in breadth and depth of technology. Rapid prototype
development systems, testing cycle simulators, advanced
emission test laboratories and styling studios are also a part
of our product development infrastructure. The Company
has aligned our end-to-end digital product development
objectives and infrastructure, with its business goals and have
made significant investments to enhance the capabilities
especially in the areas of product development through
Computer Aided Design/Computer Aided Manufacturing/Computer Aided Engineering/Knowledge Based Engineering/Product Lifecycle Management and specific engineering
review processes like Digital Mockup (DMU). In order to track
various issues arising in vehicle design and development
processes, the Company has institutionalized 'issue tracking'
work flow based systems in various domains to manage them
The Company's research and development activities also focus
on developing vehicles running on alternative fuels, including
CNG, liquefied petroleum gas, bio-diesel and compressed air
and electric cars. The Company is continuing to develop green
vehicles. The Company is pursuing alternative fuel options
such as ethanol blending for development of vehicles fuelled
The Company is also pursuing various initiatives, such as the
introduction of Premium Lightweight Architecture (PLA), to
enable its business to comply with the existing and evolving
emissions legislations in the developed world, which it
believes will be a key enabler of both reduction in CO2 and
further efficiencies in manufacturing and engineering.
Initiatives in the area of vehicle electronics such as engine
management systems, in-vehicle network architecture
and Multiplexed Wiring, Electronic Stability programs,
Automated and Automatic transmission systems, telematics
for communication and tracking and other emerging
technological areas are also being pursued, which could
possibly be deployed on our future range of vehicles. Likewise
various new technologies and systems that would improve
safety, performance and emissions of our product range are
under implementation on our passenger cars and commercial
For providing prompt service to the customer, development
of enterprise level vehicle diagnostics system for achieving
speedy diagnostics of complex electronics of modern vehicles
has been underway. Also the initiative in telematics has further
spanned into a fleet management, driver information and navigation
systems, and vehicle tracking system using GNSS (Global Navigation
The Company established a wholly owned subsidiary, TMETC, in
2006, to augment the abilities of its Engineering Research Centre
with an objective to obtain access to leading-edge technologies
to support the product development activities. In October 2010,
the Company also acquired a design house in Italy, Trilix Srl, that
has been working with the Company on many of its projects and
are now a part of Tata Motors Design organization.
The Company endeavors to absorb the best of technologies for its
product range to meet the requirements of a globally competitive
market. All of its vehicles and engines are compliant with the
prevalent regulatory norms in the respective countries in which
they are sold. The Company's strategy to invest and develop its
development capabilities have helped the Company in attaining
significant achievements such as the design and development
of India's first indigenously developed compact car, the segment
creating mini- truck – the 'Tata Ace' and the world's most affordable
family car — the Tata Nano. In collaboration with its subsidiary TDCV,
the Company developed the "World Truck", now referred to as 'Prima',
a sophisticated and contemporary M&HCV range with performance
standards similar to those in developed markets.
JLR's vehicles are designed and developed by award-winning
design teams, and it is committed to a programme of regular
enhancements in product design. JLR's two design and
development centres are equipped with computer-aided design,
manufacturing and engineering tools, and are configured for
competitive product development cycle time and efficient data
management. In recent years, JLR has refreshed the entire Jaguar
range under a unified concept and design language and continued
to enhance the design of Land Rover's range of all-terrain vehicles.
JLR's R&D operations look for synergies through sharing premium
technologies, powertrain designs and vehicle architecture. All of
JLR's products are designed and engineered primarily in the United
Kingdom. JLR endeavours to implement the best technologies
into its product range to meet the requirements of a globally
competitive market. JLR is currently developing vehicles which will
run on alternative fuels and hybrids and is also investing in other
programmes for the development of technologies to improve the
environmental performance of its vehicles including the reduction
of CO2 emissions.
The Company creates, owns, and maintains a wide array of
intellectual property assets that are among its valuable assets
throughout the world. The Company's intellectual property
assets include patents, trademarks, copyrights designs, trade
secrets and other intellectual property rights. Patents relate
to innovations and products; trademarks secured relate to
brands and products; copyrights are secured for creative
content; and designs are secured for aesthetic features
of products/components. The Company proactively and
aggressively seeks to protect its intellectual property in India
and other countries.
The Company owns a number of patents and has applied
for new patents which are pending for grant in India as well
as in other countries. It has also filed a number of patent
applications outside India under the Patent Cooperation
Treaty, which will be effective in different countries going
forward. The Company obtains new patents as part of our
ongoing research and development activities.
The Company own registrations for number of trademarks
and have pending applications for registration of
these in India as well as other countries. The registrations
mainly include trademarks for its vehicle models and other
promotional initiatives. The Company uses the "Tata" brand,
which has been licensed to us by Tata Sons Limited. The
Company's believes that establishment of the "Tata" word
mark and logo mark in India and world over, is material to our
operations. As part of acquisition of TDCV, the Company has
the perpetual and exclusive use of the "Daewoo" brand and
trademarks in Korea and overseas markets for the product
range of TDCV.
As part of the acquisition of Jaguar Land Rover business,
ownership /co-ownership of core intellectual property were
transferred to the Company. Additionally, perpetual royalty
free licenses to use other essential intellectual properties have
been licensed to the Company for use in Jaguar and Land
Rover vehicles. Jaguar and Land Rover own registered designs,
to protect the design of their vehicles in several countries.
In varying degrees, all its intellectual property is important
to the Company. In particular, the Tata brand is integral to
the conduct of our business, a loss of which could lead to
dilution of our brand image and have a material adverse
effect on our business.
Statements in the Management Discussion and Analysis
describing the Company's objective, projections, estimates,
expectations may be "forward-looking statements" within the
meaning of applicable securities laws and regulations. Actual results
could differ materially from those expressed or implied. Important
factors that could make a difference to the Company's operations
include, among others, economic conditions affecting demand /
supply and price conditions in the domestic and overseas markets
in which the Company operates, changes in the Government
regulations, tax laws and other statutes and incidental factors.