The following Explanatory Statement, pursuant to Section 173 of the Companies Act, 1956 ("the Act"), sets out all material facts relating to the business mentioned at Item Nos. 6 to 10 of the accompanying Notice dated May 29, 2013:
Item No. 6: The Board of Directors ('the Board') appointed Ms Falguni S Nayar as an Additional Director of the Company on May 29, 2013, pursuant to Section 260 of the Act and Article 132 of the Articles of Association of the Company. Under Section 260 of the Act, Ms Nayar ceases to hold office at this Annual General Meeting but is eligible for appointment as a Director. Notice under Section 257 of the Act has been received from a Member signifying his intention to propose Ms Nayar's appointment as a Director. Ms Nayar holds a B.Com, PGDM (from IIM, Ahmedabad) and has been an investment banker having spent over 19 years with Kotak Mahindra Bank with the last 6 years as Managing Director and CEO of Kotak Investment Bank. Prior to this, she was with A F Ferguson & Co. as Manager. She is currently the founder and CEO of Nykaa.com, an online shopping website for beauty and wellness products. Brief Information of Ms Nayar is given in the Annexure attached to the Notice.
The Board considers it desirable that the Company should continue to avail of the services of Ms Nayar and accordingly commends the Resolution at Item No. 6 for approval by the Members.
Ms Nayar is not related to any other Director of the Company. Ms Nayar is concerned or interested in Item No. 6 of the Notice.
Item Nos. 7 and 8: Mr Karl Slym was appointed as Additional Director and the Managing Director of the Company w.e.f. September 13, 2012 and was entrusted with the overall responsibility of Tata Motors' operations in India and international markets which, inter alia, included South Korea, Thailand, Spain, Indonesia and South Africa. Jaguar Land Rover would continue to be managed independently.
Mr Slym has been the Executive Vice President and Board member of SGMW Motors China, (a General Motors Joint Venture), prior to which, he was the President, Managing Director and Board Member of General Motors in India from 2007 to 2011. He has had a 17 years' career in General Motors in various positions in different geographies. Before joining General Motors, Mr Slym, worked for Toyota U.K. He is an alumnus of Stanford University and a Sloan Fellow. Mr Slym, a British resident and national, holds a valid employment Visa and registration certification issued by the Foreigners Regional Registration Office, Mumbai. Brief information of Mr Slym is given in the Annexure attached to the Notice.
Taking into consideration the size and complexity of the Company's global operations, the enormous responsibility for oversight of the Tata Motors' Group (excluding Jaguar Land Rover business) and the qualifications and accomplishments of Mr Slym, the Board vide Resolution dated August 14, 2012 subject to the approval of the Members and the Central Government, appointed Mr Slym as an Additional Director and also the Managing Director ("Mr Slym or the Managing Director") of the Company.
Under Section 260 of the Act, Mr Slym ceases to hold office at this Annual General Meeting but is eligible for appointment as Director. Notice under Section 257 of the Act has been received from a Member signifying his intention to propose Mr Slym's appointment as a Director and the Members' approval is sought for the said proposal, vide Resolution at Item No. 7.
Pursuant to Section 302 of the Act, an Abstract of the main terms and conditions of Mr Slym's appointment dated August 28, 2012 was sent to the Members for their information. An application has also been made to the Central Government in respect of the said appointment and remuneration to be paid to Mr Slym and the appointment is subject to receipt of the said approval.
The terms of appointment and remuneration as approved by the Board include:-
- Tenure of Appointment: 5 years commencing from September 13, 2012, the date of appointment.
- Nature of duties: The Managing Director shall, devote his whole time and attention to the business of the Company and carry out such duties as may be entrusted to him by the Board from time to time and separately communicated to him. Subject to the superintendence, control and directions of the Board, the Managing Director be entrusted with substantial powers of management which are in connection with and in the best interest of the business of the Company and the business of any one or more of its associated companies and/or subsidiaries, including performing duties as assigned by the Board from time to time by serving on the boards of such associated companies and/or subsidiaries or any other executive body or any committee of such a company.
(a) Salary: US$18,500/- p.m. (rupee equivalent at the applicable rate on the date of payment); (b) Bonus, incentive remuneration, if any, and/or commission based on certain performance criteria to be laid down by the Board; (c) Benefits, perquisites, allowances as may be determined by the Board from time to time.
Minimum Remuneration: Notwithstanding anything to the contrary herein contained, wherein any financial year during the currency of the tenure of the Managing Director, the Company has no profits or its profits are inadequate, the Company will pay to the Managing Director remuneration by way of salary, bonus, incentive remuneration, perquisites and allowances, as specified above.
- Other terms of appointment:
- The Managing Director, so long as he functions as such, shall not become interested or otherwise concerned, directly or through his spouse and/or children, in any selling agency of the Company.
- The terms and conditions of appointment of Managing Director may be altered and varied from time to time by the Board as it may, in its discretion deem fit, irrespective of the limits stipulated under Schedule XIII to the Act or any amendments made hereafter in this regard in such manner as may be agreed to between the Board and the Managing Director, subject to such approvals as may be required.
- This appointment may be terminated by either party by giving to the other party six months' notice of such termination or the Company paying six months' remuneration in lieu of the Notice.
- The employment of the Managing Director may be terminated by the Company without notice or payment in lieu of notice:
- if the Managing Director is found guilty of any gross negligence, default or misconduct in connection with or affecting the business of the Company or any subsidiary or associated company to which he is required by the Agreement to render services; or
- in the event of any serious repeated or continuing breach (after prior warning) or non-observance by the Managing Director of any of the stipulations contained in the Agreement executed between the Company and the Managing Director; or
- in the event the Board expresses its loss of confidence in the Managing Director.
- In the event the Managing Director is not in a position to discharge his official duties due to any physical or mental incapacity, the Board shall be entitled to terminate his contract on such terms as the Board may consider appropriate in the circumstances.
- Upon termination by whatever means of the Managing Director's employment:
- the Managing Director shall immediately tender his resignation from offices held by him in any subsidiaries, associated companies and other entities without claim for compensation for loss of office.
- the Managing Director shall not without the consent of the Company at any time thereafter represent himself as connected with the Company or any of its subsidiaries or associated companies.
- Mr Slym's appointment shall be subject to the provisions of Section 283(1)(l) of the Act.
- If and when the Agreement expires or is terminated for any reason whatsoever, Mr Slym will cease to be the Managing Director and also cease to be a Director. If at any time, Mr Slym ceases to be a Director of the Company for any reason whatsoever, he shall cease to be the Managing Director and the Agreement shall forthwith terminate. If at any time, the Managing Director ceases to be in the employment of the Company for any reason whatsoever, he shall cease to be a Director and Managing Director of the Company.
- The terms and conditions of appointment with the Managing Director also include clauses pertaining to adherence with the Tata Code of Conduct, no conflict of interest with the Company and maintenance of confidentiality.
In compliance with the provisions of Sections 269, 309 and other applicable provisions of the Act read with Schedule XIII of the Act, the terms of remuneration specified above are now being placed before the Members for their approval vide Resolution at Item No. 8.
The Board commends the Resolutions at Item Nos. 7 and 8 for approval by the Members.
Mr Slym is not related to any other Director of the Company. Mr Slym is concerned or interested in Item Nos. 7 and 8 of the Notice.
Item No. 9: The Members had, at the Annual General Meeting held on July 24, 2008 approved, under the provisions of Section 309 of the Act, the payment of remuneration by way of commission to the non whole-time Directors of the Company, of a sum not exceeding 1% per annum of the net profits of the Company, calculated in accordance with the provisions of the Act, for a further period of five years commencing April 1, 2008.
Taking into account the responsibilities of the Directors, it is proposed that in terms of Section 309(4) of the Act, the non whole-time Directors be paid for each of the five financial years of the Company commencing from April 1, 2013, remuneration not exceeding 1% per annum of the net profits of the Company computed in accordance with the provisions of the Act. This remuneration will be distributed amongst all or some of the Directors in accordance with the directions given by the Board.
Accordingly, a fresh approval of the Members is sought by way of a Special Resolution for payment of commission to the non whole-time Directors for a period of five years commencing from April 1, 2013 as set out in the Resolution at Item No. 9 of the Notice.
All the Directors of the Company except the Managing Director and the Executive Directors of the Company may be deemed to be concerned or interested in the Resolution mentioned at Item No. 9 of the Notice to the extent of the remuneration that may be received by them.
Item No. 10: As per the norms pertaining to investments in India by persons resident outside India issued by the Reserve Bank of India vide notification No. FEMA 20/2000-RB dated May 3, 2000 under Foreign Exchange Management Act, 1999 (FEMA), investment in equity shares by FIIs, including their sub-accounts is limited to 24% of the Company's paid-up Share Capital. This limit can be increased to the sectoral cap/statutory ceiling by a company by passing a Special Resolution of its Members with a prior intimation to the Reserve Bank of India. Further, the RBI permits increase in limits to 100% in class-wise/category-wise share subject to demonstration of monitoring mechanism.
Consequent upon the approval of the Members vide postal ballot dated January 22, 2004, the Company had increased the said limit of 24% to 35% of paid-up ordinary share capital of the Company.
Subsequent to the above, the Company had through a rights issue in September 2008 and a Qualified Institutions' Placement in October 2010, inter alia, issued 'A' Ordinary Shares (AOS) which have a differential right on voting (one-tenth voting power as compared to Ordinary Shares) and dividend (5% more than the dividend declared on Ordinary Shares per annum). Considerable interest has been evinced by the FIIs in the AOS as may be observed from the table below:
(as on May 24, 2013)