ENVIRONMENT:

The Company believes that respect for the environment is critical to the success of its business and strives for continuous improvement in environmental performance. The Group approach towards environmental protection is guided by the Founder's Vision, Environmental Policy, Tata Group Climate Change Policy, commitment towards a sustainable planet and a clean environment as well as a healthy workplace for employees. All key sites involved in mining and manufacturing are certified under EMS ISO 14001, the international environmental management standard.

The Company focuses on environmental management not only to comply with the applicable regulatory regime but also strives to contribute positively to the communities around its operations through varied community initiatives, encouraging biodiversity and nature conservation. The Company's products are part of the solution to climate change as steel has inherent environmental advantages by being durable, adaptable, reusable and recyclable. CO2 and other emissions in steel production are therefore offset by reductions in emissions through the life cycle of steel products achieved through effective product development & design and through recycling at end of life.

The Group continues to invest substantially in short to medium term CO2 emissions, reduction and energy efficiency improvement programme.

The Company continues to participate in the World Steel Association Climate Action programme and has further endorsed the United Nations global compact's CEO water mandate.

Indian Operations:

The regulatory framework in India is transforming. In March 2012, new set of emissions and effluent standards applicable to Iron and Steel facilities were notified by the Government of India. Tata Steel India has started gearing up to meet this challenge to the new set of norms.

A new facility for waste storage and processing started during the year enabled enhanced solid waste utilisation at Jamshedpur Steel Works to 84% from 75% achieved in 2011-12. The projects under 'Zero Effluent Discharge' are being commissioned in phases to reduce discharges from operations of water substantially.

The CO2 emission level for Jamshedpur Steel Works in the Financial Year 2012-13 was 2.52 tCO2/tcs that was in the similar level as in the previous year. The Company is examining means to reduce energy consumption and CO2 emissions to retain its position as the Indian benchmark in CO2 emissions in the Iron and Steel sector (BF-BOF route) by increasing process efficiency, scrap utilisation and reduction of alumina of iron ore and ash in coal through beneficiation.

Overseas Operations

European Operations (Tata Steel Europe – TSE):

CO2 emissions in TSE during the Financial Year 2012-13 were 1.90 tCO2/tcs (compared with 1.93 tCO2/tcs in 2011-12) and the compliance with the environmental permit conditions across TSE continued to be at a very high level during the financial year.

TSE met its environmental obligations in Phase 1 (2005 to 2007) and Phase 2 (2008 to 2012) of the EU ETS and expects to do the same in Phase 3 (2013 to 2020).

TSE currently participates in a voluntary agreement with the Dutch government regarding energy efficiency improvements over the period 2013 to 2016 (with the previous agreement extending from 2009 to 2012 inclusive). The primary requirement of the agreement is an energy efficiency improvement of 2% per annum, covering both energy used within the manufacturing process and energy saved across the product life cycle.

In the United Kingdom (UK), as a result of achieving the 2010 (the most recent milestone year) target within the Tata Steel Climate Change Levy ('CCL') agreement, TSE has continued to benefit from the reduced rates in relation to the CCL. The UK government has reviewed the CCL agreement system and a revised system, which is smaller in scope that eliminates any overlap with EU ETS, is being applied from 2013 onwards. In this regard, a specific energy reduction target of -7% by 2020 (compared to 2008) has been agreed with the UK Government. Achievement of this target and the various intermediate milestone year targets will allow TSE to continue to benefit from reduced rates of CCL.

Tata Steel Europe is also working with other steelmakers in Europe on major research and development project, ULCOS (ultra low CO2 steelmaking), which aims to develop breakthrough technologies which can reduce CO2 emissions per tonne of steel produced by at least 50%. In this regard, HIsarna TM, a smelting reduction technology which offers the potential to eliminate the sinter, pellet and coke production steps from the primary iron making process and which in principle offers a 20% energy (and CO2) reduction opportunity without carbon capture and storage, is being piloted in IJmuiden, the Netherlands, jointly with other partners with a successful second campaign undertaken during 2012. A third campaign will be carried out in 2013.

South East Asia Operations:

NatSteel Holdings and Tata Steel Thailand have continued to operate with a high level of compliance with the environmental regulations. During the Financial Year 2012-13 there was a focus on energy efficiency improvements. At NatSteel a system to recover waste heat from the reheating furnace was installed during the Financial Year 2012-13. This system will generate approximately 1MW of electrical power, thereby reducing reliance on external electricity supplies and reducing CO2 emissions by over 3000t/year. Furthermore, the site was certified to the international energy management standard, ISO 50001, during the year.

SUBSIDIARIES

The consolidated financial statements presented by the Company include financial information of its subsidiaries prepared in compliance with applicable Accounting Standards. The Ministry of Corporate Affairs, Government of India vide its Circular No. 5/12/2007-CL-III dated 8th February 2011 has granted general exemption under Section 212(8) of the Companies Act, 1956, from attaching the balance sheet, profit and loss account and other documents of the subsidiary companies to the balance sheet of the Company, provided certain conditions are fulfilled. Accordingly, annual accounts of the subsidiary companies and the related detailed information will be made available to the holding and subsidiary companies' investors seeking such information at any point of time. The annual accounts of the subsidiary companies will also be kept for inspection by any investor at its Head Office in Mumbai and that of the subsidiary companies concerned.

Details of major subsidiaries of the Company are covered in this Annual Report.

DIRECTORS

Mr. Ratan N. Tata joined the Board as a Non Executive Director in 1977 and was appointed as the Chairman in 1993. He stepped down as the Chairman and Director of the Company on 28th December, 2012 on reaching the age of 75 years and was appointed as 'Chairman Emeritus' by the Board on the same date. The Directors would like to place on record their sincere appreciation of Mr. Tata's relationship of nearly five decades with the Company during which his visionary leadership, strategic direction and stewardship contributed immensely in the growth of the Company and the Tata Steel Group.

Mr. Cyrus P. Mistry was appointed as Chairman of the Board with effect from 28th December, 2012.

Mr. S. M. Palia stepped down as a Director of the Company on 25th April, 2013 on reaching the age of 75 years. The Directors would like to place on record their sincere appreciation of the contributions made by Mr. S. M. Palia during his tenure on the Board since 1989.

In accordance with the provisions of the Companies Act, 1956, and the Company's Articles of Association, Mr. Nusli N. Wadia, Mr. Subodh Bhargava, Mr. Jacobus Schraven and Dr. Karl-Ulrich Koehler retire by rotation and are eligible for re-appointment.

Mr. D. K. Mehrotra, Chairman of Life Insurance Corporation of India was appointed as Additional Director by the Board with effect from 22nd October, 2012.

Mr. Koushik Chatterjee, was appointed as Additional Director designated as Executive Director and Group Chief Financial Officer of the Company with effect from 9th November, 2012.

Mr. O. P. Bhatt, former Chairman of State Bank of India was appointed as Additional Director by the Board with effect from 10th June, 2013.

Mr. D. K. Mehrotra, Mr. Koushik Chatterjee and Mr. O. P. Bhatt will hold office till the date of the forthcoming Annual General Meeting and notices have been received from a Member proposing the candidatures of Mr. D. K. Mehrotra, Mr. Koushik Chatterjee and Mr. O. P. Bhatt for being appointed as Directors of the Company.

PARTICULARS OF EMPLOYEES

The information required under Section 217(2A) of the Companies Act, 1956 and the Rules there under, in respect of the employees of the Company, is provided in the Annexure forming part of this Report. In terms of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the Members, excluding the aforesaid Annexure. The Annexure is available for inspection by Members at the Registered Office of the Company during business hours on working days up to the date of the ensuing AGM, and if any Member is interested in obtaining a copy thereof such Member may write to the Company Secretary, whereupon a copy would be sent.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, a Management Discussion and Analysis, Corporate Governance Report, Managing Director's and Auditors' Certificate regarding compliance of conditions of Corporate Governance are made a part of the Annual Report. A Business Responsibility Report on the Company's corporate sustainability initiatives is also included.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors, based on the representations received from the Operating Management, confirm that –

  1. in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;
  2. they have, in the selection of the Accounting Policies, consulted the Statutory Auditors and have applied them consistently and made judgements 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;
  3. they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
  4. they have prepared the annual accounts on a going concern basis.
On behalf of the Board of Directors
CYRUS P. MISTRY
Chairman
Mumbai, 11th June, 2013
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