Director's Report
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Titan Company LtdIndustry : Diamond Cutting / Jewellery
BSE Code:500114
ISIN Demat:INE280A01028
Book Value(Rs):58.50
NSE Symbol:TITAN
Div & Yield %:0.46
Market Cap (Rs Cr.):73149.14
P/E(TTM):56.24
EPS(TTM):14.65
Face Value(Rs):1
  Change Company 

To the Members of Titan Company Limited

The Directors are pleased to present the Thirty Fourth Annual Report and the Audited Financial Statements for the year ended 31st March, 2018:

1. FINANCIAL RESULTS

( Rs in Crores)

Standalone

Consolidated

Particulars

2017-2018

2016-2017

2017-2018

2016-2017

Revenue from Operations

15,656

12,999

16,156

13,383

Other Income

86

65

89

70

Total Income

15,742

13,064

16,245

13,453

Expenditure

13,922

11,804

14,511

12,227

Profit before exceptional items, finance costs, depreciation and taxes

1,820

1,260

1,734

1,226

Finance Costs

48

37

53

37

Depreciation / Amortisation

110

93

131

111

Profit before exceptional items and taxes

1,662

1,130

1,550

1,078

Exceptional items (VRS)

91

97

17

103

Profit before taxes

1,571

1,033

1,533

975

Income taxes
- Current

446

300

450

302

- Deferred

-38

-29

-22

-26

Profit after taxes for the year

1,163

762

1,105

699

Share of profit/(Loss) of a associate and

-

-

-3

-2

Jointly controlled entity
Profit for the year

1,163

762

1,102

697

Attributable to
- Shareholders of the Company

1,163

762

1,130

711

- Non-controlling interests

-

-

-28

-14

Profit brought forward

1,268

1,012

1,190

984

Appropriations
Dividend on Equity Shares (excluding tax)

-231

-

-231

-

Tax on dividends

-47

-

-47

-

Transfer to general reserve

-250

-506

-250

-505

Closing Balance in Retained Earnings

1,903

1,268

1,792

1,190

During the year under review, the Company's revenue grew by 20.50 % to ` 15,656 crores compared with

` 12,999 crores in the previous year. Profit before tax grew by 52.60 % to ` 1,571 crores and the net profit increased 52.60 % to ` 1,163 crores.

The Watches business of the Company recorded revenue of ` 2,126 crores, a growth of 3.55% which was achieved through meticulous planning and execution of key initiatives. The revenue from Jewellery segment grew by 24.30% touching ` 13,036 crores. The revenue from Eyewear segment was fiat at ` 415 crores. The revenue from other segments recorded a sale of ` 95 crores, a growth of 45.90%.

The year witnessed aggressive expansion of the Company's retail network with a net addition of 114 stores. As on 31st March 2018, the Company had 1,480 stores, with over 1.9 million square feet of retail space delivering a retail turnover of over ` 15,656 crores.

The Management Discussion and Analysis report, which is attached, dwells into the performance of each of the business division and the outlook for the current year.

2. N I TERNATIONAL OPERATIONS

Despite challenges, Watches export almost delivered the budgeted bottom-line. While Far East markets like Vietnam, Thailand, Philippines responded with high double digit growths to the several marketing innovations, the steep decline in higher contributing, economically troubled Middle East markets left the overall business with a 14% decline for the year. A comprehensive plan to address this is underway through diversification into the consumer and market pools through more cost-effective channels like e-commerce. Amazon tie-up in USA is seeding well and holds promise.

3. DIVIDEND

The Directors are pleased to recommend the payment of dividend on equity shares at the rate of 375% (i.e. ` 3.75 per equity share of ` 1 each), subject to approval by the shareholders at the Annual General Meeting (AGM).

4. TRANSFER TO GENERAL RESERVE

An amount of ` 250 crores is proposed to be transferred to the general reserve.

5. FINANCE

The Company expects macro economic situation to improve with real GDP growth around 7.5% for the fiscal year 2018-19. The impact that the twin measures of demonetisation and introduction of GST had on the economy seem to be over. Compliance under GST has settled down and one of the impacts it has had on the Balance Sheet is the increase in working capital as IGST is now paid on stocks lying in the stores or at warehouses. High gold prices and stricter regulation have impacted growth in the jewellery industry and the company expects to grow through gains in market share.

6. PUBLIC DEPOSITS

The Jewellery Division of the Company was successfully operating customer schemes for jewelry purchases for many years. When the Companies Act, 2013 (the "Act") became substantially effective from 1st April 2014, the Company had around seven lakh subscribers contributing to these schemes. However, these schemes were exempt under the Companies Act, 1956 relating to acceptance of public deposits as such schemes were not covered in the definition of deposits. Under the Act and Regulations made there under (‘Deposit Regulations') the scope of the term "deposit" was enlarged and therefore a view was taken that the jewelry purchase schemes offered by the Company to its customers would be treated as public deposits. Thereupon, the Company discontinued fresh enrolment of subscribers and initiated steps to close the erstwhile customer schemes, which were wound down by 31st August 2014.

Under the Deposit Regulations as amended from time to time, a company is permitted to accept deposits subject to applicable provisions, to the extent of 35% of the aggregate paid-up share capital and free reserves from public including a ceiling of 10% of the aggregate paid-up share capital and free reserves from Members of the company, after prior approval by way of a special resolution passed by the Members in this behalf. Requisite approval was obtained from the Members of the Company and a new customer scheme for jewelry purchase was launched in November 2014 in compliance with the Deposit Regulations.

The details relating to deposits, covered under Chapter V of the Companies Act, 2013 are as under: (a) accepted during the year: ` 1,684.82 crores (b) remained unpaid or unclaimed as at the end of the year: ` 1,038.51 crores

(c) whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved- (i) at the beginning of the year: Nil (ii) maximum during the year: Nil (iii) at the end of the year: Nil There are no deposits that have been accepted by the Company that are not in compliance with the requirements of Chapter V of the Act.

7. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN END OF THE FINANCIAL YEAR AND DATE OF REPORT

There have been no material changes and commitments affecting financial position between end of the financial year and the date of the report.

8. SIGNIFICANT AND MATERIAL ORDERS

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.

9. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

The particulars of loans, guarantees and investments have been disclosed in the financial statements. The particulars of loans given as part of treasury operations of the Company bearing interest ranging from 7.30 % to 10.25 % p.a. are provided in Note 35 of the Standalone Financial Statements covered in the Annual Report.

10. CONTRIBUTION TO EXCHEQUER

During the year under review, the Company made payments aggregating ` 2,361 crores by way of taxes (central, state and local) and duties as against ` 1,043 crores in the previous year.

11. ADEQUACY OF INTERNAL CONTROLS AND COMPLIANCE WITH LAWS

The Company during the year has reviewed its Internal Financial Control (IFC) systems and has continually contributed to establishment of more robust and effective IFC framework, prescribed under the ambit of Section 134(5) of Companies Act, 2013. The preparation and presentation of the financial statements is pursuant to the control criteria defined considering the essential components of Internal Control - as stated in the "Guidance Note on Audit of Internal Financial Controls

Over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI)".

The control criteria ensures the orderly and efficient conduct of the Company's business, including adherence to its policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

Based on the assessment carried out by the Management and the evaluation of the results of the assessment, the Board of Directors are of the opinion that the Company has adequate Internal Financial Controls system that is operating effectively as at 31st March, 2018.

There were no instances of fraud which necessitates reporting of material misstatement to the Company's operations.

There has been no communication from regulatory agencies concerning non-compliance with or defficiencies in financial reporting practices.

12. AUDIT COMMITTEE

The details pertaining to the composition of the audit committee are included in the Corporate Governance Report, which is a part of this report.

13. RISK MANAGEMENT

Pursuant to the requirement of Regulation 21 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the "Listing Regulations"), the Company has constituted a Risk Management Committee.

The Company has in place a Risk Management framework to identify, evaluate business risks and challenges across the Company both at corporate level as also separately for each business division.

The top tier of risks for the Company is captured by the operating management after extensive deliberations on the nature of the risk being a gross or a net risk and thereafter in a prioritized manner presented to the Board for their inputs on risk mitigation/ management efforts. Based on this framework, a Risk Management policy has been adopted.

The Board engages in the Risk Management process and has set out a review process so as to report to the Board the progress on the initiatives for the major risks of each of the businesses that the Company is into.

The Risk Register of each Business gets updated on an annual basis and is placed for due discussions at Board meetings and appropriateness of the mitigation measures to ensure that the risks remain relevant at any point in time and corresponding mitigation measures are optimized.

The Board Audit Committee (BAC) has been engaged in reviewing the Information Technology initiatives and governance mechanisms pertaining to information security. The BAC also reviewed the new IT controls incorporated to comply with IFC requirements mandated by the Companies Act, 2013.

14. RELATED PARTY TRANSACTIONS

There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interests of the Company at large. All related party transactions are placed before the Audit Committee and the Board for approval, if applicable. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are verified by the Internal Auditor and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval, if applicable, on a quarterly basis. The Company has developed an Internal Guide on Related Party Transactions Manual and prescribed Standard Operating Procedures for purpose of identification and monitoring of such transactions. The Policy on Related Party Transactions as approved by the Board is uploaded on the Company's website. None of the Directors has any pecuniary relationships or transactions vis--vis the Company. There were no transactions during the year which would require to be reported in Form AOC-2.

15. SUBSIDIARIES / JOINT VENTURE / ASSOCIATE COMPANY

As on 31st March 2018, the Company had the following subsidiaries/ Associate/ Joint Venture:

Name of the Subsidiary/
Relationship
Associate/ Joint Venture
1 Titan TimeProducts Limited, Goa (TTPL) Subsidiary
2 Favre Leuba AG, Switzerland Subsidiary
3 Titan Watch Company Limited, Hong Kong Subsidiary
4 Titan Engineering & Automation Limited (TEAL) Subsidiary
5 Carat Lane Trading Private Limited Subsidiary
6 Green Infra Wind Power Theni Limited Associate
7 Montblanc Retail India Private Limited Joint Venture

During the year 2017-18, TTPL sold a total number of 35,82,992 ECBs and micro assemblies (previous year: 32,84,030 nos.). Sales income during the year was

` 39.76 crores against the previous year's figure of ` 37.08 crores and the profit before tax was ` 1.83 crores against the previous year's figures of ` 1.17 crores . The quality, delivery and competitive price of the products continue to be well-received by the Holding Company and external customers.

During the year 2017-18, Favre Leuba AG had registered a turnover of CHF 0.9 million i.e ` 6.05 crores against the previous year's figures of CHF 1.27 million, i.e ` 8.61 crores and loss of CHF 7.5 million, i.e ` 50.21 crores (2016-17: 4.31 million, i.e. ` 29 crores).

Titan Watch Company Limited is a subsidiary of the Company's subsidiary Favre Leuba AG and hence is a subsidiary of the Company. It has a capital of HK $ 10,000 and no Profit and Loss account has been prepared as it has not yet commenced business.

TEAL was incorporated on 24th March 2015 to acquire the Precision Engineering Business of the Company through a court approved Scheme of Arrangement which was approved by the Hon'ble High Court of Judicature at Madras vide its order dated 12th December 2016. During the year 2017-18 TEAL generated sales income of ` 252.13 crores against the previous year's figures of

` 244.60 crores and the profit before tax was ` 19.70 cores against the previous year's figures of ` 9.98 crores.

Carat Lane Trading Private Limited (Carat Lane) is engaged in the business of manufacture of jewellery products and has significant online presence. During the year 2017-18 Carat Lane has registered a turnover of ` 290.18 crores (previous year : ` 177.84 crores) and the loss amounted to ` 83.87 crores against the previous year's figures (loss) of ` 41.01 crores.

The annual accounts of these subsidiary companies were consolidated with the accounts of Titan Company Limited for 2017-18. None of these subsidiary companies declared a dividend in 2017-18.

The Company holds a 49% equity stake in a joint venture entered into with Montblanc Services B.V., the Netherlands for operation of retail boutiques in India for Montblanc products.

The Company holds 26.79% stake in Green Infra Wind Power Theni Limited which supplies energy to the Company.

The statement containing salient features of the financial statement of subsidiaries/associate company/joint venture forms part of the Annual Report and furnished in the financial statements.

16. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars as prescribed under sub-section (3) (m) of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, are furnished in Annexure- I to the

Board's Report.

17. CORPORATE SOCIAL RESPONSIBILITY (CSR)

A report on CSR is attached in Annexure II.

18. EXTRACT OF ANNUAL RETURN

As provided under Section 92(3) of the Act, the extract of annual return is given in Annexure-III in the prescribed

Form MGT-9, which forms part of this Report.

19. DIVIDEND DISTRIBUTION POLICY

The Dividend Distribution Policy is annexed as

Annexure-IV.

20. VIGIL MECHANISM

The Company has a whistle blower mechanism wherein the employees can 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 Company's Code of Conduct. The Whistle Blower Policy requires every employee to promptly report to the Management any actual or possible violation of the Code or an event he becomes aware of that could affect the business or reputation of the Company. The disclosures reported are addressed in the manner and within the time frames prescribed in the policy. A mechanism is in place whereby any employee of the Company has access to the Chairman of the Audit Committee to report any concern. No person has been denied access to the Chairman to report any concern. Further, the said policy has been disseminated within the organisation and has also been posted on the Company's website.

21. SECRETARIAL STANDARDS

The Directors state that the applicable Secretarial Standards i.e SS-1 and SS-2, issued by the Institute of Company Secretaries of India, relating to Meeting of Board of Directors and General Meetings respectively have been duly complied with.

22. DISCLOSURES AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE ( P REVENTION, PROHIBITION AND REDRESSAL)

ACT, 2013

The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules thereunder for prevention and redressal of complaints of sexual harassment at workplace.

During the financial year 2017-18, the Company had received 11 complaints on sexual harassment, all were disposed-off with appropriate action taken and no complaint remains pending as of 31st March 2018.

23. DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB-SECTION (12) OF SECTION 143 OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT

The Statutory Auditors of the Company have not reported any fraud as specified under the second proviso of Section 143(12) of the Companies Act, 2013 (including any statutory modification(s) or re-enactment(s) for the time being in force).

24. CORPORATE GOVERNANCE

As per SEBI Listing Regulations, a Management Discussion and Analysis, Corporate Governance Report and Auditors' Certificate regarding compliance of conditions of Corporate Governance forms part of the Annual Report.

25. BUSINESS RESPONSIBILITY REPORTING

As per SEBI Listing Regulations, a Business Responsibility Report is attached and forms part of this Annual Report.

26. DIRECTORSANDKEYMANAGERIAL PERSONNEL

Mr. T.K. Balaji, Mrs. Hema Ravichandar, Prof. Das Narayandas, Mrs. Ireena Vittal, Ms. Vinita Bali and Mr. Ashwani Puri are the Independent Directors during the Financial Year 2017-18 and all have given declarations that they continue to meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 25 of the Listing Regulations.

Subsequently, Ms. Vinita Bali, Independent Director resigned from the Board effective 1st April 2018.

Mr. B Santhanam was appointed as an Additional Director and Independent Director on the Board of the Company on 10th May 2018. Member's attention is drawn to Item No. 4 of the Notice for appointment of Mr. B Santhanam as an Independent Director of the Company.

In accordance with the provisions of the Act and in terms of the Memorandum and Articles of Association of the Company, Mr. N N Tata retires by rotation at the Annual General Meeting.

Mr. Ramesh Chand Meena was appointed as an Additional Director on the Board of the Company on 3rd January 2018, Mr. K. Gnanadesikan was appointed as an Additional Director on the Board of the Company on 1st February 2018. Ms. Shilpa Prabhakar Satish was appointed as an Additional Director on the Board of the Company on 29th March 2018 but subsequently resigned effective 10th May 2018. Member's attention is drawn to Item No. 5 of the Notice for the appointment of Mr. K. Gnanadesikan as a Director of the Company & Item No. 6 of the Notice for the appointment of Mr. Ramesh Chand Meena as a Director of the Company.

None of the Directors is related to each other within the meaning of the term "relative" as per Section 2(77) of the Act.

Five meetings of the Board were held during the year. For details of the meetings of the Board, reference may be made to the Corporate Governance Report, which forms part of the Annual Report.

27. DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR HAVE RESIGNED DURING THE YEAR

Pursuant to Section 134 of the Act read with Rule 8(5) (iii) of Companies (Accounts) Rules, 2014, the following Directors were appointed or resigned.

Mr. T. K. Arun, nominee of Tamilnadu Industrial Development Corporation Limited (TIDCO), retired from the services of TIDCO and consequently resigned from the Board effective 11th November 2017.

Mr. Ramesh Chand Meena nominee of TIDCO was appointed to the Board with effect from 3rd January 2018.

Mr. K Gnanadesikan, nominee of TIDCO was nominated as Chairman of the Board with effect from 1st February 2018 in place of Mr. Atulya Misra who resigned from the Board effective from 1st February 2018.

Ms. Shilpa Prabhakar Satish, nominee of TIDCO was appointed to the Board with effect from 29th March 2018 and subsequently resigned effective 10th May 2018.

None of the Key Managerial Personnel were appointed or resigned during the year. Pursuant to the provisions of Section 203 of the Act, Mr. Bhaskar Bhat-Managing Director, Mr. S. Subramaniam - Chief Financial Officer and Mr. A.R. Rajaram-Vice President - Legal & Company Secretary continue to be the Key Managerial Personnel of the Company.

28. DIRECTORS' RESPONSIBILITY STATEMENT

Based on the framework of Internal Financial Controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory and secretarial auditors and external consultants, including audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company's internal financial controls are adequate and operating effectively during FY 2017-18.

Accordingly, pursuant to the requirements of Section 134 (5) of the Act, the Directors hereby confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

ii. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. they have prepared the annual accounts on a going concern basis;

v. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

29. BOARD EVALUATION

The performance evaluation of the Board, its Committees and individual Directors was conducted and the same was based on questionnaire and feedback from all the Directors on the Board as a whole, its Committees and self-evaluation pursuant to the provisions of the Companies Act, 2013, SEBI Listing Regulations and the Guidance Note on Board's Evaluation issued by SEBI on 5th January, 2017.

The Chairperson of the Board Nomination and Remuneration Committee (BNRC) held separate discussions with each of the Directors of the Company and obtained their feedback on overall Board effectiveness as well as on each of the other Directors.

Based on the questionnaire and feedback, the performance of every Director was evaluated by the BNRC.

Some of the key criteria for performance evaluation, as laid down by the BNRC were as follows-

Performance evaluation of Directors:

• Contribution at Board / Committee meetings

• Guidance / Support to Management outside Board/ Committee Meetings

Performance evaluation of Board and Committees:

• Board structure and composition

• Degree of fulfillment of key responsibilities

• Establishment and delineation of responsibilities to Committees

• Effectiveness of Board Processes, Information and Functioning

• Board Culture and Dynamics

• Quality of relationship between the Board and Management

• Ef_cacy of communication with External Stakeholders

• Committees – strengths and areas of improvement

30. INDEPENDENT DIRECTORS

A separate meeting of the independent directors ("Annual ID Meeting") was convened, which reviewed the performance of the Board (as a whole), the non-independent directors and the Chairman. Post the Annual ID Meeting, the collective feedback of each of the

Independent Directors was discussed by the Chairperson of the BNRC with the Board covering performance of the Board as a whole, performance of the non-independent directors and performance of the Board Chairman.

31. REMUNERATION POLICY

The Board has, on the recommendation of the BNRC framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

32. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND OTHER DETAILS

In accordance with the agreement between the promoters, three Directors each may be nominated by Tata Sons Limited and Tamilnadu Industrial Development Corporation Limited.

The guidelines for selection of Independent Directors are as set out below:

The Board Nomination and Remuneration Committee ("Committee") oversees the Company's nomination process for Independent Directors and in that connection to identify, screen and review individuals qualified to serve as an Independent Director on the Board.

Process for selection

The Committee may act on its own in identifying potential candidates. The Committee shall review and discuss details pertaining to candidates and will conduct evaluation of candidates in accordance with the process that it sees fit and appropriate and thereafter pass on its recommendation for nomination to the Board, based on the following guidelines:

Attributes

i) The Committee shall seek candidates who is not a nominee or related to either Promoter of the Company. Such candidates shall possess integrity, leadership skills, managerial qualities, foresight abilities and competency required to direct and oversee the Company's management in the best interest of its stakeholders i.e. shareholders, customers, employees and communities it serves. ii) The candidate must be willing to regularly attend the meetings of the Board and develop a strong understanding of the Company, it's businesses and it's needs, to contribute his/ her time and knowledge to the Company and to be prepared to exercise his/her duties with skill and care. Besides these, the candidate should have an understanding of governance concepts and legal duties of a Director. iii) It is desirable that the candidate should have expertise to fill in the gap(s) identified by the Company in the current composition of the Board. iv) Ideally the candidate should possess experience of 5 years on the Board of a listed company. v) The candidate's age shall not exceed 70 years at the time of joining the Board. vi) Forthrightness and ability to possess foresight abilities in the Governance of a Corporate.

Board Composition

Keeping in mind that women constitute a majority of the Company's customers it would be desirable to have one-third of the Board's strength represented by woman members.

Procedure

1. The Committee may retain search firms or advisors as it deems appropriate to identify candidates.

2. Develop a list of potential candidates of Independent Directors which may be refreshed every year. The Committee to create a list of probable candidates from known sources or from the database of Ministry of Corporate Affairs, Government of India or Stock Exchanges.

3. The Committee may also consider profiles of suitable expatriates.

4. The candidate considered by the Committee as potentially qualified will be contacted to determine their interest in being considered to serve on the Board and if interested will be interviewed. As and when a candidate is shortlisted, the Committee will make a formal recommendation to the Board.

33. OTHER DISCLOSURES

The information required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below: i) The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:

Name of the director

Commission

Sitting fee

Total

Ratio

(`)

` ( )

(`)

(times)

A] Median Employee remuneration

6,20,580

B] Director's remuneration
1 Chairman (nominated by TIDCO)#

58,01,667

2,05,000

60,06,667

9.68

2 Mr. T. K. Arun@

26,74,667

1,80,000

28,54,667

4.60

3 Mr. Ramesh Chand Meena@

7,03,083

50,000

7,53,083

1.21

4 Ms. Shilpa Prabhakar Satish@

2,06,500

Nil

2,06,500

0.33

5 Mr. N. N. Tata^

Refer note below

2,20,000

2,20,000

0.35

6 Mr. Harish Bhat^

Refer note below

3,85,000

3,85,000

0.62

7 Mr. T. K. Balaji

56,05,000

4,30,000

60,35,000

9.72

8 Ms. Vinita Bali

74,31,000

3,95,000

78,26,000

12.61

9 Mrs. Ireena Vittal

64,31,000

4,85,000

69,16,000

11.14

10 Mrs. Hema Ravichandar

56,64,000

3,60,000

60,24,000

9.71

11 Prof. Das Narayandas

14,16,000

50,000

14,66,000

2.36

12 Mr. Ashwani Puri

61,36,000

3,85,000

65,21,000

10.51

13 Mr. Bhaskar Bhat*

3,97,44,000

-

6,61,30,366*

106.56

Note: Remuneration includes sitting fees and commission for Non-Executive Directors. Commission relates to financial year ended 31st March 2018, which will be paid during the FY 2018-19.

# Commission to the Chairman of the Company is paid to TIDCO (the Chairmanship was held by Mr. Atulya Misra upto 1st February 2018 and currently Mr. K Gnanadesikan is the Chairman.) ^ In line with the internal guidelines, no payment is made towards commission to Mr. N N Tata and Mr. Harish Bhat , Non Executive Directors of the Company, who are in full-time employment with other Tata Companies.

* Inclusive of salary, perquisites, Commission and retiral benefits. @ Paid to TIDCO

ii) The percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year:

Name

% Change

Chairman (nominated by TIDCO)

9%

Mr. Ramesh Chand Meena1

-

Mr. T.K. Arun2

-

Ms. Shilpa Prabhakar Satish3

-

Mr. N.N. Tata4

-

Mr. Harish Bhat4

-

Mr. T.K. Balaji

36%

Ms. Vinita Bali

107%

Mrs. Hema Ravichandar

28%

Prof. Das Narayandas

10%

Mrs. Ireena Vittal

56%

Mr. Ashwani Puri

81%

Mr. Bhaskar Bhat, Managing Director

14%

Mr. S.Subramaniam, Chief Financial Officer

14%

Mr. A.R Rajaram, Company Secretary

19%

1 Mr. Ramesh Chand Meena, nominee of TIDCO, was appointed on the Board with effect from 3rd January 2018, hence previous year figures are not comparable

2 Mr. T.K Arun, nominee of TIDCO, retired from the services of TIDCO and hence resigned from the Board effective 11th November 2017.

3 Ms. Shilpa Prabhakar Satish, nominee of TIDCO, was appointed on the Board with effect from 29th March 2018, , hence previous year figures are not comparable.

4 In line with the internal guidelines, no payment is made towards commission to Mr. N N Tata and Mr. Harish Bhat , Non Executive Directors of the Company, who are in full-time employment with other Tata Companies.

iii) The percentage increase in the median remuneration of employees in the financial year: 11 % iv) The number of permanent employees on the rolls of company: 6,856. v) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: The average percentage increase this year has been 11% across all levels. vi) Affirmation that the remuneration is as per the Remuneration Policy of the Company: The Company's Remuneration Policy is based on the principle of internal equity, competence and experience of the employee and industry standards. Through its compensation programme, the Company endeavours to attract, retain, develop and motivate a high performance and engaged workforce. The Company follows a compensation mix of fixed pay, benefits and performance based variable pay. Individual performance pay is determined by business performance and the performance of the individuals measured through the annual appraisal process. The Company affirms remuneration is as per the Remuneration Policy of the Company.

34. NF I ORMATION AS PER RULE 5(2) OF THE

CHAPTER XIII, THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.

35. AUDITORS a) Statutory Auditors

Pursuant to the provisions of Section 139 of the Act read with applicable Rules framed thereunder, M/s. B S R & Co. LLP Chartered Accountants (Firm Registration No.101248W/W-100022) have been appointed as Auditors for a term of five years, subject to rati_cation by the shareholders, from the conclusion of the 33rd Annual General Meeting till the conclusion of the 38th Annual General Meeting.

The Ministry of Corporate Affairs vide Notification dated 7th May 2018 notified several Sections of the Companies (Amendment) Act, 2017. In view of the said notification, the requirement of rati_cation of appointment of auditors, under Section 139 of the Companies Act, 2013, at each AGM is no longer required. Hence, the resolution to this item is not being included in the Notice to the AGM.

b) Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. KT Vijayakrishna, Practicing Company Secretary to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as Annexure-V.

36. AUDITOR'S REPORT AND SECRETARIAL AUDITOR'S REPORT

There are no disqualifications, reservations, adverse remarks or disclaimers in the auditor's report and secretarial auditor's report.

Acknowledgements

Your Directors wish to place on record their appreciation of the support which the Company has received from its promoters, shareholders, lenders, business associates, vendors, customers, media and the employees of the Company.

On behalf of the Board of Directors,

Bengaluru K. Gnanadesikan

10th May 2018 Chairman

   

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