Explanatory Statement

(Pursuant to Section 102 of the Companies Act, 2013)

As required by Section 102 of the Companies Act, 2013, (hereinafter referred to as "the Act") the following Explanatory Statements set out all material facts relating to the business mentioned under Item Nos. 5 to 13 of the accompanying Notice dated 14th May, 2014.

Item No. 5:

This explanatory statement is provided though strictly not required as per Section 102 of the Act.

Deloitte Haskins & Sells (DHS), (Firm's Registration No. 117366W/W-100018), Chartered Accountants (CAs), Mumbai were appointed as the statutory auditors of the Company for financial year 2013-14 at the Annual General Meeting (AGM) of the Company held on 14th August, 2013. DHS converted itself into a Limited Liability Partnership (LLP) under the provisions of the Limited Liability Partnership Act, 2008 and is now known as Deloitte Haskins & Sells LLP (DHS LLP) with effect from November 20, 2013. In terms of the Ministry of Corporate Affairs, Government of India, General Circular No. 9/2013 dated April 30, 2013, if a firm of CAs, being an auditor in a company under the Companies Act, 1956, is converted into an LLP, then such an LLP would be deemed to be the auditor of the said company. The Board of Directors of the Company has taken due note of this change. Accordingly, the audit of the Company for financial year 2013-14 was conducted by DHS LLP.

DHS LLP have been the Auditors of the Company since 2006-07 and will be completing a term of seven years in August 2014. Prior to this, Messrs. S. B. Billimoria & Co. (SBB) and Messrs. A. F. Fergusson (AFF) were the Joint Auditors of the Company. SBB & AFF were associates of DHS LLP. As per the provisions of Section 139 of the Act, no listed company can appoint or re-appoint an audit firm as auditor for more than two terms of five consecutive years. Section 139 of the Act has also provided a period of three years from the date of commencement of the Act to comply with this requirement.

In view of the above, DHS LLP, being eligible for re-appointment and based on the recommendation of the Audit Committee, the Board of Directors has, at its meeting held on 14th May, 2014, proposed the appointment of DHS LLP as the statutory auditors of the Company for a period of three years to hold office from the conclusion of this AGM till the conclusion of the hundred and tenth AGM of the Company to be held in the year 2017 (subject to ratification of their appointment at every AGM).

The Board commends the Resolution at Item No. 5 for approval by the Members.

None of the Directors or Key Managerial Personnel or their respective relatives are concerned or interested in the Resolution at Item No. 5 of the Notice.

Item Nos. 6 & 7:

Mr. T. V. Narendran was appointed as an Additional Director by the Board with effect from 19th September, 2013.

In terms of Section 161(1) of the Companies Act, 2013 and Article 121 of the Company's Articles of Association, Mr. T. V. Narendran holds office as Director only till the date of the forthcoming Annual General Meeting, but is eligible for appointment. Notice has been received from a member as required by Section 160 of the Act, signifying its intention to propose the candidature of Mr. T. V. Narendran for the office of Director.

Mr. T. V. Narendran, born in 1965, is a Mechanical Engineer from REC (NIT), Trichy and MBA from IIM Calcutta. He is a Chevening Scholar and has also attended the Advanced Management Programme in CEDEP-INSEAD, Fontainebleau, France. Mr. T. V. Narendran joined Tata Steel in 1988 and has held various positions in the Tata Steel Group.

The Board considers it desirable that the Company should continue to avail itself of the services of Mr. T. V. Narendran as Director and accordingly commends the Resolution at Item No. 6 for approval by the Members.

The Board of Directors has also appointed Mr. T. V. Narendran as the Managing Director – Designate, India & South East Asia of the Company for a period of 5 years with effect from 19th September, 2013, subject to the approval of the shareholders. With effect from 1st November, 2013, he is designated as Managing Director, India an South East Asia.

On the recommendation of the Remuneration Committee, the Board, at its meeting held on 13th November, 2013 approved the terms and conditions of Mr. T. V. Narendran's appointment, subject to the approval of the shareholders.

The main terms and conditions relating to the appointment of Mr. T. V. Narendran as the Managing Director, India and South East Asia (MD) are as follows:

  1. Period: From 19th September, 2013 to 18th September, 2018
  2. Nature of Duties:
    The MD 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 of Directors from time to time and separately communicated to him and such powers as may be assigned to him, subject to superintendence, control and directions of the Board in connection with and in the best interests of the business of the Company and the business of any one or more of its associated companies and/or joint venture companies and/or subsidiaries. This includes performing duties as assigned by the Board from time to time by serving on the boards of such associated companies and/or joint venture companies and/or subsidiaries or any other executive body or any committee of such a company for which he may be allowed to receive remuneration as may be determined by the Board of such associated companies and/or joint venture companies and/or subsidiaries, subject to compliance with the applicable provisions of the prevailing laws and regulations.
    1. Remuneration:
      1. Salary : Rs.6,00,000/- per month, in the scale of Rs.6,00,000 to Rs.9,00,000/- per month, with annual increments effective 1st April, each year, as may be decided by the Board, based on merit and taking into account the Company's performance for the year;
      2. Bonus/performance linked incentive, and/or commission based on certain performance criteria laid down by the Board;
      3. Benefits, perquisites and allowances as will be determined by the Board from time to time.
    2. Minimum Remuneration:

      Notwithstanding anything to the contrary herein contained where in any financial year during the currency of the tenure of MD, the Company has no profits or its profits are inadequate, the Company will pay him remuneration by way of salary, benefits and perquisites and allowances, bonus/performance linked incentive as approved by the Board and to the extent permitted under the Act.

    1. The MD shall not become interested or otherwise concerned, directly or through his spouse and/or children, in any selling agency of the Company.
    2. The terms and conditions of his appointment 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 to the Act, or any amendments made hereinafter in this regard in such manner as may be agreed to between the Board and him, subject to such approvals as may be required.
    3. The 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 thereof.
    4. The employment of the MD may be terminated by the Company without notice or payment in lieu of notice:
      1. If the MD is found guilty of any gross negligence, default or misconduct in connection with or affecting the business of the Company or any subsidiary or joint venture company or associated company to which he is required by the Agreement to render services; or
      2. In the event of any serious repeated or continuing breach (after prior warning) or non-observance by him of any of the stipulations contained in the agreement to be executed between the Company and him; or
      3. In the event the Board expresses its loss of confidence in him.
    5. Upon the termination by whatever means of the MD's employment:
      1. He shall immediately cease to hold offices held by him in any subsidiary or joint venture company or associated company and other entities without claim for compensation for loss of office.
      2. He 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 joint venture companies or associated companies.
    6. The MD is being appointed by virtue of his employment in the Company and his appointment is subject to the provisions of Section 167(1)(h) of the Act. He shall not be liable to retire by rotation.
    7. If and when the agreement expires or is terminated for any reason whatsoever, Mr. Narendran will cease to be the MD and also cease to be a Director. If at any time he ceases to be a Director of the Company for any reason whatsoever, he shall cease to be the MD and the agreement shall forthwith terminate. If at any time, he ceases to be in the employment of the Company for any reason whatsoever, he shall cease to be a Director and MD of the Company.
    8. The terms and conditions of appointment of MD also include clauses pertaining to adherence to the Tata Code of Conduct, intellectual property, non-competition, no conflict of interest with the Company and maintenance of confidentiality.

An abstract of the terms of remuneration of Mr. T. V. Narendran pursuant to Section 302 of the Companies Act, 1956 was sent to the Members in November 2013.

Mr. T. V. Narendran is interested and concerned in the Resolutions mentioned at Item Nos. 6 & 7 of the Notice. Other than Mr. T. V. Narendran, no other Director, Key Managerial Personnel or their respective relatives are concerned or interested in the Resolutions mentioned at Item Nos. 6 & 7 of the Notice.

In compliance with the provisions of Sections 196, 197 and other applicable provisions of the Act, read with Schedule V to the Act, the approval of the Members is sought for the appointment and terms of remuneration of Mr. T. V. Narendran as MD as set out above.

The Resolution regarding the appointment of the MD at Item No. 7 is commended for approval by the Members.