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Titan Company Ltd (INDUSTRY : Diamond, Gems and Jewellery)

  • BSE Code: 500114
  • NSE Symbol: TITAN
  • ISIN Demat: INE280A01028
  • Book Value ( ₹ ) 105.57
  • Face Value ( ₹ ) 1
  • Market Cap ( ₹ Cr. ) 190,789.68
  • P/E (TTM): 86.03
  • EPS (TTM): 24.98
  • Div Yield (%): 0.35

To the Members of Titan Company Limited

The Directors are pleased to present the Thirty Seventh Annual Report and the Audited Financial Statements for the year ended 31st March 2021:

1. Financial Results

Standalone Consolidated
2020-21 2019-20 2020-21 2019-20
Revenue from Operations 20,602 20,010 21,644 21,052
Other Income 181 146 186 153
Total Income 20,783 20,156 21,830 21,205
Expenditure 18,901 17,592 19,920 18,585
Profit before exceptional items, finance costs, depreciation and taxes 1,882 2,564 1,910 2,620
Finance Costs 181 149 203 166
Depreciation/Amortisation 331 310 375 348
Profit before share of profit/(loss) of an associate and joint venture and exceptional items and taxes 1,370 2,105 1,332 2,106
Share of profit/(loss) of an associate and Jointly controlled entity - - (5) (4)
Profit before exceptional items and taxes 1,370 2,105 1,327 2,102
Exceptional items 137 - - -
Profit before taxes 1,233 2,105 1,327 2,102
Income taxes
- Current 351 552 360 570
- Deferred 5 36 (7) 39
Profit for the year 877 1,517 974 1,493
Attributable to
- Shareholders of the Company 877 1,517 973 1,501
- Non-controlling interests - - 1 (9)
Profit brought forward 3,757 2,876 3,592 2,759
Adjustment of transition to Ind AS 116 on opening retained earnings - (156) - (159)
Deferred tax on Ind AS 116 transition impact - 55 - 55
Acquisition of non-controlling interest in subsidiary - - (30)
Dividend on Equity Shares (excluding tax) (355) (444) (355) (444)
Tax on dividends - (91) - (91)
Closing Balance in Retained Earnings 4,279 3,757 4,210 3,592

1 a) Standalone Numbers:

During the year under review, the Companys total revenue grew by 3% to Rs.20,602 crore compared to Rs.20,010 crore in the previous year.

Profit before tax declined by 41% to Rs.1,233 crore and the net profit decreased by 42% to

Rs.877 crore.

The Watches and Wearables Division of the Company recorded revenue of Rs.1,580 crore, a decline of 40%. The revenue from Jewellery Division grew by 3% touching Rs.17,274 crore (excluding sale of bullion of Rs.1,357 crore). The revenue from Eyewear Division declined by 31% to Rs.375 crore. New Businesses, viz. Indian Dress Wear Division and Fragrances and Accessories Division recorded revenue of Rs.98 crore, a decline of 43% over the previous year. While the Indian Dress Wear Division declined by 30%, the Fragrances and Accessories Division recorded a decrease of 51%.

With the declaration of COVID-19 as a pandemic in mid-March 2020, the performance of various Divisions were affected during the first half of the last financial year due to store closures consequent upon declaration of national lockdown by the Government and subsequent state-wise lockdowns. Watches & Wearables and Eyewear revenue declined whereas Jewellery Division grew marginally by 3%, (excluding sale of bullion during the year). There was a substantial increase in the procurement of gold through Gold on Lease resulting in considerable increase in the cash balances and no borrowings at the end of the year. The Management Discussion and Analysis report, which is attached, dwells into the performance of each of the business divisions and the outlook for the current year.

1 b) Consolidated Numbers

At the consolidated level, the revenue stood at

Rs.21,644 crore as against Rs.21,052 crore in the previous year. The details of the performance of the Companys subsidiaries are covered below in point 17 of this Report.

2. International Operations

The impact of the pandemic on this business was significant as secondary sales dried up leading to virtually zero primary sales to the Companys distributors in the first half of the year. As some normalcy returned in the second half of the year, efforts were focused on targeted expansion and maximizing returns from markets that performed better. New products, new distribution channels and a focus on e-commerce enabled a reasonable recovery in the second half of the year.

The first international Tanishq store in Meena Bazaar, Dubai was opened in October 2020 in the midst of the pandemic but did exceedingly well. The store is loved by discerning customers for its differentiated merchandise and superlative customer experience. Further efforts will also be made to expand the brands presence in the GCC region and around the world. Considering this, the Company plans to enter into North America for which ground work has been initiated.

3. COVID- 19

The COVID-19 pandemic has emerged as a global challenge, creating disruption across the world. The businesses and business models have transformed to create a new work order.

The revenue impact of the pandemic played out broadly along the anticipated lines with varying levels of impact and a positive surprise in the Jewellery business.

The physical and emotional well-being of employees continues to be a top priority for the Company, with several initiatives taken to support employees and their families during the pandemic. The Company has extended counselling and self-help services providing mental & emotional support to employees. The Company has reimagined employee engagement by embracing virtual technologies. Initiatives were taken to reduce stress and the feeling of isolation, hosted inspirational leaders, mental health experts and finance experts to boost the morale of employees.

After registering tepid business during the first half of the year due to COVID-19, the Company witnessed strong business momentum as the COVID-19 impact on the consumer sentiments seemed to fade during the second half of the year. After recording the best revenue in the third quarter, which was a festive season, the Company again recorded very strong revenues in the last quarter across all businesses. The strong performance in the financial year had been the result of the agility in navigating through the crisis and uncertainty of ground situations, along with innumerous grass root innovations to serve consumer needs and leveraging digital channels to reach-out to them effectively. While the Jewellery Division has emerged very strongly from the crisis and witnessed strong growth in the last two quarters, the

Watches & Wearables and the Eyewear Divisions have also made very good progress on recovery. The Company continued with its retail network expansion during the year across the Watches & Wearables, Jewellery and Eyewear businesses.

In line with the Companys philosophy to support its ecosystem, during the year, the Company had granted loans to the extent of Rs.97 crore to its franchisees and vendors to support them during the pandemic crisis, out of which an amount of Rs.3 crore is outstanding as of 31st March 2021.

4. Dividend

The Directors are pleased to recommend the payment of dividend on equity shares at the rate of 400% (i.e.

Rs.4 per equity share of Rs.1 each), subject to approval by the shareholders at the ensuing Annual General Meeting (AGM) and payment is subject to deduction of tax at source as may be applicable.

5. Transfer to General Reserve

As permitted under the provisions of the Companies Act, 2013, the Board do not propose to transfer any amount to general reserve and has decided to retain the entire amount of profit for Financial Year 2020-21 in the profit and loss account.

6. Finance

The year saw all the businesses being impacted by the COVID-19 pandemic with slow-down in operations and sales. The Companys War on Waste initiative to control the costs, gave very good results in reducing costs significantly. Further, the Companys particular focus on conserving cash ensured that adequate liquidity was available despite the pandemic. Substantial increase in the procurement of gold through Gold on Lease resulted in huge cash generation for the year resulting in a very comfortable cash position at the end of the year. During the year under review, ICRA upgraded the Companys long term rating from AA+ to AAA with stable outlook. The Company had issued Commercial Papers (CP) totalling Rs.1,500 crore with three month tenure during the first and second quarters of the year and redeemed the same on the respective due dates. There were no outstanding CPs as of 31st March 2021. During the year, the Company had sold its excessive bullion thereby increasing the efficiency in inventory management and cash flow situation.

7. Public Deposits

The Jewellery Division of the Company was successfully operating customer acquisition schemes for jewellery 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 the Rules made there under (‘Deposit Regulations) the scope of the term "deposit" was enlarged and therefore a view was taken that the jewellery 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 in 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 10% of the aggregate of the paid-up share capital, securities premium account and free reserves from its Members & 25% of the aggregate of the paid-up share capital, securities premium account and free reserves from the Public after prior approval by way of special resolutions passed by the Members in this regard. Requisite approval was obtained from the Members of the Company and a new programme for customers to purchase jewellery (under the Jewellery Purchase Plan) was launched in November 2014 in compliance with the Deposit Regulations.

The details relating to deposits, covered under Chapter V of the Act are as under:

(a) accepted during the year: Rs.1,909 crore

(b) remained unpaid or unclaimed as at the end of the year: Rs.1,075 crore

(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.

8. 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 for the likely impact affecting financial position between end of the financial year and the date of the report except for the impact arising out of the continuance of the COVID-19 pandemic which has risen exponentially in the second wave till the date of signing of this Report.

Please refer Note 37 of Notes to the standalone financial statements for further details in respect of impact of COVID-19 on the financial statements of the Company

9. 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 Companys operations in future.

10. Particulars of Loans, Guarantees and Investments

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Act are given in the notes to the financial statements.

During the year under review, the Company had invested

Rs.28 crore (CHF 3.61 million) as application money towards equity stake in Favre Leuba AG (FLAG).

The Company had provided Corporate Guarantee of

Rs.66 crore to Titan Holdings International FZCO in two tranches and a Corporate Guarantee of Rs.7 crore to Titan Global Retail LLC during the year.

11. Integrated Report

The Company has, over the last three years, taken steps to move towards Integrated Reporting in line with its commitment to voluntarily disclose more information to the stakeholders on all aspects of the Companys business. Accordingly, the Company had introduced key content elements of Integrated Reporting <IR> aligned to the International Integrated Reporting Council Framework (IIRC) in the Annual Report of the previous year and has disclosed more qualitative data in the Annual Report of this year. Similar to earlier years, the relevant information has been provided in this years Annual Report as well.

12. Adequacy of Internal Controls and Compliance with Laws

The Company, during the year has reviewed its Internal Financial Control systems and has continually contributed to establishment of more robust and effective internal financial control framework, prescribed under the ambit of Section 134(5) of the Act. 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.

The control criteria ensures the orderly and efficient conduct of the Companys business, including adherence to its policies, safeguarding of its assets, prevention and detection of frauds and errors, 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 2021.

There were no instances of fraud which necessitates reporting of material misstatement to the Companys operations.

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

13. Board Meetings

During the year under review, seven Board meetings were held, details of which are provided in the Corporate Governance Report.

14. Audit Committee and other Board Committees

The details pertaining to the composition of the Audit Committee and its role is included in the Corporate Governance Report, which is a part of this Annual Report. In addition to the Committees mentioned in the Corporate Governance Report, the Company has a Corporate Social Responsibility Committee, the details of which are covered in Annexure II to this Report.

15. Risk Management

Pursuant to the requirement of Regulation 21 of the SEBI (Listing Obligations and Disclosure Requirements)

Regulations, 2015 (the "SEBI LODR"), the Company has constituted a Risk Management Committee (RMC), consisting of Board members and senior executives of the Company.

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 RMC 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 Company has a robust process for managing the top risks, overseen by the Risk Management Committee (RMC) of the Board. As part of this process, the Company has identified the risks with the highest impact and then assigned them a likely probability of occurrence. Mitigation plans for each risk have also been put in place and are reviewed by the Management every six months before presenting to the RMC.

16. Related Party Transactions

There are no materially significant Related Party Transactions made by the Company with Promoters, Directors, Key Managerial Personnel 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 required. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseen and repetitive in 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 the purpose of identification and monitoring of such transactions. The Policy on Related Party Transactions as approved by the Board is uploaded on the Companys website. None of the Directors have any pecuniary relationships or transactions except to the extent of sitting fees and commission paid to the Directors and to Mr. Bhaskar Bhat to whom the Company pays monthly pension as approved by the Board of Directors consequent upon his retirement as Managing Director of the Company in the month of September 2019.

The details of the transactions with related parties during the year 2020-21 are provided in the accompanying financial statements. There were no transactions during the year which would require to be reported in Form AOC-2.

17. Subsidiaries/Joint Venture/Associate Company

As on 31st March 2021, the Company had the following subsidiaries/Associate/Joint Venture:

Sl. No. Name of the Subsidiary/ Associate/ Joint Venture Relationship
1 Favre Leuba AG, Switzerland Subsidiary
2 Titan Watch Company Limited, Hong Kong Step-down Subsidiary
3 Titan Engineering & Automation Limited Subsidiary
4 CaratLane Trading Private Limited Subsidiary
5 Green Infra Wind Power Theni Limited Associate
6 Titan Holdings International FZCO, Dubai Subsidiary
7 Titan Global Retail LLC, Dubai Step-down Subsidiary
8 Titan Commodity Trading Limited Subsidiary
9 StudioC Inc. USA Step-down Subsidiary

The Company held a 49% equity stake in Montblanc India Retail Private Limited (Montblanc India), a joint venture entered into with Montblanc Services B.V., the Netherlands for operation of retail boutiques in India for Montblanc products. As part of the Companys consolidation strategy to focus on its primary business and proprietary brands, the Company, during the year, took a strategic decision to divest its entire shareholding in Montblanc India to its Joint Venture partner and accordingly the divestment was completed on 12th March 2021 at a consideration of Rs.43 crore by exercising Put Option under the joint venture agreement. Consequently, the Company has recognised profit on sale of investment amounting to Rs.4 crore under the head "Other income" during the year ended 31st March 2021.

During the year 2020-21, Favre Leuba AG (FLAG), a wholly owned subsidiary in Switzerland, had registered a turnover of CHF 1.04 million i.e., Rs.8 crore against the previous years figures of CHF 0.89 million, i.e.

Rs.6 crore and loss of CHF 7.34 million, i.e. Rs.58 crore (2019-20: CHF 7.19 million, i.e. Rs.51 crore). During the year Financial Year 2020- 21, the Company had invested CHF 3.61 million (Rs.28 crore) in FLAG as share application money. During the year, the Company had decided to significantly scale down the operations of FLAG due to the adverse impact on its operations post the COVID-19 pandemic. Consequent to this, the Company performed an impairment testing of its investments in FLAG and made an additional provision of Rs.137 crore towards impairment of investment in FLAG.

Titan Watch Company Limited is a subsidiary of Favre Leuba AG and hence is a step- down subsidiary of the Company. It has a capital of HK $ 10,000 and no Profit and Loss account has been prepared.

During the year, Titan Engineering & Automation Limited (TEAL) generated income of Rs.354 crore against the previous years figures of Rs.462 crore, a decrease of 24% and the profit before tax was at Rs.40 crore against the previous years figures of

Rs.78 crore. The performance of TEAL was substantially hit due to the challenges faced by the Aerospace & Defence and Automation Divisions on account of COVID-19 pandemic. The TEAL Board has recommended a dividend of Rs.5 per share on the face value of Rs.10 per share aggregating to Rs.24 crore (subject to applicable taxes) for Financial Year 2020-21.

CaratLane Trading Private Limited (CaratLane) is engaged in the business of manufacturing of jewellery products and has significant online and offline presence. During the last financial year, CaratLane recorded double digit growth in retail sales, with great emphasis on omni-selling. CaratLane added 25 stores in the year to take the store count to 117. During the year 2020-21, CaratLane registered a turnover of Rs.716 crore (previous year: Rs.621 crore) and recorded a profit of Rs.2 crore for the first time as against the previous years loss of Rs.27 crore. Titan Holdings International FZCO (Titan Holdings) which was formed on 22nd October 2019 as a Free Zone Company with a view to carry out business activities and invest in the share capital of any other companies/entities either as a joint venture partner or as its wholly owned subsidiary company for carrying out business activities. Titan Holdings incurred a loss of AED 0.60 million ( Rs.1 crore) against previous years loss of AED 0.31 million (Rs.0.59 crore).

During the year, Titan Global Retail LLC started its operations through the store opened in Dubai in October 2020 and registered a turnover of AED 19.20 million

`( 39 crore) and incurred a loss of AED 2.47 million ( Rs.5 crore) against previous years loss of AED 0.41 million (Rs.0.79 crore).

Titan Commodity Trading Limited (TCTL) was incorporated as a Wholly-Owned Subsidiary during the year with the objective of carrying on the business of trading in various commodities and products by acquiring or registering as a member of various commodity exchange/s and to acquire and build technology to facilitate trading, dealing, buying and selling of all types of direct commodities or commodity futures and other precious materials. Subsequently, TCTL is registered as a Trading Member on the Multi Commodity Exchange of India Limited. As of 31st March 2021, the Company had not started operations.

During the year, StudioC Inc. USA was incorporated as a 100% subsidiary of CaratLane, with the objective of retailng of jewellery in North America. However, the Company has not started any operations as of 31st March 2021.

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

None of these subsidiary companies declared a dividend for Financial Year 2020-21 except TEAL. The annual accounts of these subsidiary companies/JV company were consolidated with the accounts of the Company for Financial Year 2020-21.

18. 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, 2014 are furnished in Annexure-I to the Boards Report.

19. Corporate Social Responsibility (CSR)

In compliance with Section 135 of the Act, the Company has undertaken CSR activities, projects and programs as provided in the CSR policy of the Company and as identified under Schedule VII of the Act and excluding activities undertaken in pursuance of its normal course of business. In addition to the projects specified as CSR activities under Section 135 of Act, the Company has also carried out several other sustainability/responsible business initiatives and projects. The Company has spent the entire 2% of the net profits earmarked for CSR projects during the Financial Year 2020-21. A report on CSR pursuant to Section 135 of the Act and Rules made thereunder is attached in Annexure-II.

In line with the amendments to the CSR Rules notified in January 2021, the Company has amended its CSR policy and the same has been uploaded on the website of the Company along with the Action Plan for the CSR activities for Financial Year 2021-22.

20. Annual Return

The link to access the Annual Return is https://www. Return%20for%202021.pdf

21. Dividend Distribution Policy

The Dividend Distribution Policy, as amended by the Board at its meeting held on 29th April 2021 is annexed as Annexure-III to this Report.

22. 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 Companys Code of Conduct and Insider Trading Code. The Whistle Blower Policy requires every employee to promptly report to the Management any actual or possible violation of the Code or an event an employee 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 Companys website at files/Whistle%20Blower%20Policy_1.pdf.

23. 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 Meetings of Board of Directors and General Meetings respectively, have been duly complied with.

24. Disclosures as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company continues to work towards ensuring a safe and secure workplace to all its employees. The

Company has matured in its practices and the awareness amongst employees in realizing their rights and responsibilities. Regular internal feedback mechanisms have shown encouraging signs of trust and confidence in the organization by various stakeholders (employees, partners and vendors).

The pandemic situation was an opportunity for the Internal Complaints Committee (ICC) members to adapt to the virtual reality quickly and increase the outreach. All stakeholders across geographies, viz. employees, contract and agency hires, vendors and associates are part of the virtual communication cascades. The regional heads or manufacturing/unit heads along with the leadership team also led the conversations with their respective teams on this subject. This has impacted positively with more and more stakeholders becoming familiar with the policy and gaining confidence to raise concerns with the locational committee members. About 81 such cascades covering over 3,000 stakeholders were held virtually. Other means of communication using short films, quizzes and games were continued to be shared on digital platforms.

During the financial year Financial Year 2020-21, the Company received 4 complaints on sexual harassment, 3 were disposed off with appropriate action taken and 1 complaint was pending as on 31st March 2021 which was disposed off as on the date of this report.

25. 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 Act (including any statutory modification(s) or re-enactment(s) for the time being in force).

26. Corporate Governance and Management Discussion and Analysis

As per SEBI LODR, Management Discussion and Analysis, Corporate Governance Report and Practicing Company Secretarys Certificate regarding compliance of conditions of Corporate Governance forms part of this Annual Report.

Pursuant to Regulation 34 of the SEBI LODR, the Management Discussion and Analysis is presented in a separate section forming part of this Annual Report. As required under the provisions of the SEBI LODR, the Audit Committee of the Company has reviewed the Management Discussion and Analysis report of the Company for the year ended 31st March 2021.

27. Business Responsibility Report

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

28. Directors and Key Managerial Personnel

Ms. Hema Ravichandar and Ms. Ireena Vittal were Independent Directors during part of the Financial Year 2020-21. Ms. Hema Ravichandar, Independent Director, retired from the Board with effect from 1st August 2020 upon completion of her second term as an Independent Director. Ms. Ireena Vittal resigned from the Board with effect from 1st October 2020 due to her increased preoccupation with her other professional commitments. The Board placed on record its appreciation for the valuable contribution and wise counsel rendered by Ms. Hema Ravichandar and Ms. Ireena Vittal during their tenure as a member of the Board.

Mr. Ashwani Puri, Mr. B Santhanam, Mr. Pradyumna Vyas and Dr. Mohanasankar Sivaprakasam were the Independent Directors during the entire financial year 2020-21. Ms. Sindhu Gangadharan and Mr. Sandeep Singhal were appointed as Independent Directors during the year. Ms. Sindhu Gangadharan was appointed as an Additional Director and Independent Director on the Board of the Company with effect from 8th June 2020 and subsequently approved by the shareholders at the thirty sixth Annual General Meeting held on 11th August 2020 as an Independent Director for a period of five years from 8th June 2020. Mr. Sandeep Singhal, on the basis of the recommendation of the Board Nomination and Remuneration Committee, was appointed as an Additional Director and Independent Director on the Board of the Company on 11th November 2020 for a period of five years subject to the approval of the shareholders in the ensuing Annual General Meeting.

All the Independent Directors have given declarations that they continue to meet the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16(1)(b) of the SEBI LODR and that they are not debarred from holding the office of director by virtue of any SEBI order or any other such authority. All the Independent Directors have confirmed that they are in compliance with Rules 6(1) and 6(2) of the Companies (Appointment and Qualification of Directors) Rules, 2014, with respect to registration with the data bank of Independent Directors maintained by the Indian Institute of Corporate Affairs.

The Board had, based on the recommendations of the Board Nomination and Remuneration Committee and pursuant to the performance evaluation of Mr. Ashwani Puri as a Member of the Board and considering that the continued association of Mr. Ashwani Puri would be beneficial to the Company, proposed to re-appoint Mr. Ashwani Puri as an Independent Director of the Company, not liable to retire by rotation, for a second term effective 3rd August 2021 up to 5th May 2026.

In accordance with the provisions of the Act and in terms of the Memorandum and Articles of Association of the Company, Mr. V. Arun Roy retires by rotation at the ensuing Annual General Meeting and has offered himself for re-appointment.

Subsequent to the end of financial year under review, Tamilnadu Industrial Development Corporation Limited (TIDCO) had withdrawn the nomination of Ms. Kakarla Usha, IAS as its nominee director and nominated Mr. Pankaj Kumar Bansal, IAS in her place. Accordingly, on 16th June 2021, the Board has appointed Mr. Pankaj Kumar Bansal, IAS as an Additional Director, who will hold office as Director up to this AGM and a resolution is placed in the ensuing AGM for his appointment as a director of the Company.

The Board placed on record its appreciation for the valuable contribution and wise counsel rendered by Ms. Usha Kakarla during her tenure as a member of the Board. Members attention is drawn to Item No. 4 of the Notice for the re-appointment of Mr. V. Arun Roy as a Director of the Company, liable to retire by rotation, Item No.5 of the Notice for the reappointment of Mr. Ashwani Puri as an Independent Director of the Company for the second term, Item No.6 of the Notice for the appointment of Mr. Sandeep Singhal as an Independent Director of the Company for a period of five years from 11th November 2020 and Item No. 7 for appointment of Mr. Pankaj Kumar Bansal, IAS as a Director, liable to retire by rotation. None of the Directors are related to each other within the meaning of the term "Relative" as per Section 2(77) of the Act.

29. Details of Key Managerial Personnel who were Appointed or have Resigned during the year

None of the Key Managerial Personnel were appointed or resigned during the year. Pursuant to the provisions of Section 203 of the Act, Mr. C K Venkataraman-Managing Director, Mr. S. Subramaniam - Chief Financial Officer and Mr. Dinesh Shetty – General Counsel & Company Secretary continue to be the Key Managerial Personnel of the Company.

30. 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 Companys internal financial controls are adequate and operating effectively.

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; and 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.

31. Board Evaluation

The performance evaluation of the Board, its Committees and individual Directors was conducted by the Board Nomination and Remuneration Committee (BNRC) and the Board. This was based on questionnaire responses and feedback with each Director. Based on the questionnaire, the performance of every Director was evaluated by the BNRC and presentation was made to the Board and an action plan was drawn accordingly. 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 and Guidance/ support to Management outside Board/ Committee Meetings.

Performance evaluation of Board and Committees:

Board structure and composition, Degree of fulfilment 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, Efficacy of communication with External Stakeholders and Committees – strengths and areas of improvement.

32. 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 Chairman of the Board.

33. 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 link to access the Remuneration Policy is R E M U N E R AT I O N % 2 0 P O L I C Y % 2 0 F O R % 2 0 DIRECTORS.pdf

34. Policy on Directors Appointment and Remuneration and other Details

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

The guidelines for selection of Independent Directors are as set out below: The BNRC oversees the Companys 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. The BNRC further has in place a process for selection and the attributes that would be desirable in a candidate and as and when a candidate is shortlisted, the BNRC will make a formal recommendation to the Board.

35. 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 and the percentage increase in remuneration of each Director, Managing Director, Chief Financial Officer and Company Secretary in the financial year:

Sl. No. A] Name of the director Directors remuneration Ratio (times) _ % change1
1 Mr. N Muruganandam 3.02 -34.00
2 Mr. Arun Roy 3.49 -28.18
3 Ms. Kakarla Usha 2.73 NA1
4 Mr. N. N. Tata2 NA NA
5 Mr. Bhaskar Bhat 3.54 NA1
6 Ms. Hema Ravichandar3 2.17 NA1
7 Ms. Ireena Vittal4 3.28 NA1
8 Mr. Ashwani Puri 5.25 -30.68
9 Mr. B Santhanam 4.79 -20.90
10 Mr. Pradyumna Vyas 3.05 -16.59
11 Dr. Mohanasankar Sivaprakasam 4.26 NA1
12 Ms. Sindhu Gangadharan5 2.66 NA1
13 Mr. Sandeep Singhal6 1.21 NA1
14 Mr. C K Venkataraman 99.92 NA1
B] Key Managerial Personnel
15 Mr. S Subramaniam - 1.94
16 Mr. Dinesh Shetty - -2.56


Note : Aligning with the performance of the Company for Financial Year 2020-21, the Board approved payment of Commission to the non-executive Directors at 60% of the commission as eligible as per the criteria adopted by the Board.

1 The % change in remuneration is not comparable as the said directors held the position for a part of the year either in 2019-20 or in 2020-21.

2 In line with the internal guidelines, no payment is made towards commission to Mr. N N Tata, Non-Executive Director of the Company, as he is in full-time employment with another Tata Group Company

3 Ms. Hema Ravichandar ceased to hold office as an Independent Director of the Company with effect from 1st August 2020 upon completion of her second term as approved by the shareholders at the 35th Annual General Meeting of the Company.

4 Ms. Ireena Vittal resigned from the Company with effect from 1st October 2020.

5 Ms. Sindhu Gangadharan was appointed as an Independent Director on the Board effective 8th June 2020.

6 Mr. Sandeep Singhal was appointed as an Additional Independent Director on the Board effective 11th November 2020. ii) The percentage increase in the median remuneration of employees in the financial year: No increment was provided for the Financial Year 2020-21 as the sales and profits in Financial Year 2020-21 were projected to be significantly lower than the Financial Year 2019-20 levels due to the COVID-19 pandemic.

iii) The number of permanent employees on the rolls of company: 7,235 iv) 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: No increase was given during the previous year thereby there is no comparison with the managerial remuneration.

v) Affirmation that the remuneration is as per the Remuneration Policy of the Company: The Companys 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 that remuneration is as per the Remuneration Policy of the Company.

36. Information as per Rule 5(2) of the Chapter XIII, of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Rules forms part of this Report. Further, the Report and the Accounts are being sent to the Members excluding the aforesaid statement. In terms of Section 136 of the Act, the said statement will be open for inspection upon request by the Members. Any Member interested in obtaining such particulars may write to the Company Secretary.

37. Auditors a) Statutory Auditors

Pursuant to the provisions of Section 139 of the Act read with applicable Rules framed thereunder, M/s. BSR & Co., LLP have been appointed as Auditors for a term of five years, subject to ratification 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 ratification 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 V. Sreedharan & Associates, Practicing Company Secretary to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as Annexure-IV.

c) Cost Audit

The Company is not required to maintain cost records as per sub-section (1) of Section 148 of the Act.

38. Auditors Report and Secretarial Auditors Report

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

39. Disclosures of Transactions of the Listed Entity with any Person or Entity belonging to the Promoter/Promoter Group which hold(s) 10% or more Shareholding in the Listed Entity, in the format prescribed in the relevant Accounting Standards for Annual Results

Related Party Transactions with Promoter/ Promoter Group holding 10% or more shares

Tamilnadu Industrial Development Corporation Limited and Tata Sons Private Limited hold 10% or more shares in the Company. The details of transactions with promoter/ promoter group holding 10% or more shares have been disclosed in the financial statements which is part of the Annual Report.


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,
N Muruganandam C K Venkataraman
Chairman Managing Director
Chennai Bengaluru

28th June 2021