Management Discussion and Analysis

II) Internal Controls & Systems

The Company has in place adequate internal control systems and procedures commensurate with the size and nature of its business. The effectiveness of the internal controls is continuously monitored by the Corporate Audit Division of the Company. The Corporate Audit’s main objective is to provide to the Audit Committee and the Board of Directors, an independent, objective and reasonable assurance of the adequacy and effectiveness of the organisation’s risk management, control and governance processes. The Corporate Audit Group also follows up on the implementation of corrective actions and improvements in business processes after review by the Audit
Committee and Senior Management.

The scope and authority of the Corporate Audit Division is derived from the Audit Charter approved by the Audit Committee. The Charter is designed in a manner that the Audit Plan is focused on the following objectives:

• Review of the identification and management of Risks.
• All operational and related activities are performed efficiently and effectively.
• Significant financial, managerial and operating information is relevant, accurate, reliable and is provided timely.
• Resources are acquired economically, used efficiently and safeguarded adequately.
• Employees’ actions are in accordance with the Company’s policies, procedures, Tata Code of Conduct and applicable laws and regulations.
• Significant legislative and regulatory provisions impacting the organisation are recognised and addressed appropriately.
• Opportunities identified during audits, for improving management control, business targets and profitability, process efficiency and the organisation’s image, are communicated to the appropriate level of management.
• Shareholders’ and other Stakeholders’ wealth and welfare are preserved, protected and enhanced.

The audit activities are undertaken as per the Annual Audit Plan developed by Corporate Audit based on the risk profile of business processes/sub-processes of various functions. The Audit Plan is approved by the Audit Committee who regularly review compliance to the Plan.

During the year, the Audit Committee met regularly to review the reports submitted by the Corporate Audit Division. All significant audit observations and follow-up actions thereon are reported to the Audit Committee.

The Audit Committee also met the Company’s Statutory Auditors to ascertain their views on the adequacy of internal
control systems in the Company and their observations on financial reports. The Audit Committee’s observations and suggestions were acted upon by the Management.

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