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Business Environment



Miss Impreet Kaur
Rohan Sinha


Tata Motors Limited

Since Tata Motors is a part of a large conglomerate company it needs to have a strong
corporate governance to ensure that its employees act ethically and the business continues to
run smoothly especially during the ever changing and dynamic global economy. “Tata
Group’s corporate governance is founded upon a rich legacy of fair, ethical, and transparent
governance practices” ( One of the more important parts of this is
the transparency of the company people have a right to know what the company is doing not
only to ensure ethical practices, but for the insurance of their many shareholders whom have
a right to know the inner workings of the company

Tata has created some models for employees to guide themselves through everyday business
practices to ensure that the corporate governance is continuously being upheld. The Tata
business excellence model is upheld by Tata quality management services. Quality
management is an in-house group dedicated to helping the various Tata companies achieve
their business objectives through specific processes. The two main processes that the quality
management services employees focus on are business excellence and business ethics. These
two objectives have helped build Tata into the strong, dynamic company it is today. These
models are entrenched in the company’s ethnical standards and Tata feels strongly about
enforcing both throughout the company. “Tata quality management services plays the role
of supporter and facilitator in the journey that Tata enterprises undertake to reach the peaks
of business eminence while, at the same time, adhering to the highest ethical standards”

To further prove their commitment to quality and ethical practices Tata has introduced
annual quality awards for those companies conducting business with the utmost quality.
These awards are called the JRD quality value awards named after the late chairmen JRD
Tata. These awards are presented annually on July 29th, the birthday of JRD Tata. Tata has
committed to ensuring quality and ethical standards not only within Tata Motors, but
throughout their many other branches and sectors of the Tata Group. They have done so by
benchmarking quality standards through the Tata business excellence model

as well as providing incentives for companies to strive to improve the quality of their service,
by awarding JRD quality management awards.

Tata Motors have increased its earnings over the years through their various acquisitions and
joint ventures with truck manufacturers in Southeast Asia. Gross profit in the year 2006 was
1,160.9 million and increased to 1,510.1 million in the year 2007. Earnings after taxes also
increased significantly between 2006 and 2007 increasing from 336.6 million to 405.5
million in 2007. After a large drop in revenues from 2004 to 2005 when the company first
went public on the NYSE it has been increasing revenues greatly annually, from 4,422.0
million in 2005 to 7,354.0 in 2007.

Tata Motors is able to maintain, as well as increase, their market share by capitalizing on
their core competencies. Tata Motors is active, competitive, and dynamic in all aspects of
the automotive industry, which means that there must be many different activities going on
in all areas of the company. As a result of the ever evolving automotive industry Tata Motors
must always be changing and one way to stay at the forefront of the industry is to make
continuous improvements in technology through research and development. One way that
Tata Motors has done this is by producing one of the most efficient and low cost vehicles on
the market. Acquisitions, mergers, and expansion is another core competency that Tata
Motors has is embedded in their company structure and philosophy. Another core
competency that Tata Motors holds is being located in the India. This location has allowed
them to understand not only the Indian market but also the dynamics of emerging and
developing markets. This market understanding and knowledge allows Tata Motors to
manufacture their products at lower costs, sell them to emerging markets while making
profits as well as take advantage of the strong labor base in India.
Ashok Leyland

The Board of Directors and the Management of Ashok Leyland are committed to the
enhancement of shareholder value.

> through sound business decisions, prudent financial management and high standards of
ethics throughout the organization.
> by ensuring transparency and professionalism in all decisions and transactions.
> achieving excellence in Corporate Governance by conforming to, and exceeding
wherever possible, the prevalent mandatory guidelines on Corporate Governance and by
regularly reviewing the Board processes and the Management systems for further
The company has adopted a Code of Conduct for the members of the Board and senior
management, who have all affirmed in writing their adherence to this Code.


Another significant step has been the appointment of an Ombudsman to deal with any
references, complaints or grievances about the Company, its employees or its dealings.

If the suppliers, employees or customers have any suggestions on governance issues or

grievances or complaints on Ashok Leyland's practices - inclusive of its executives in
various functions - which they feel ought to be raised with the Ombudsman and not with the
usual channels of business, they may do so.

It is advised that the regular business dealings should be through the usual business
functional channels. The Ombudsman will not deal with them under normal circumstances.

The Ombudsman is Mr.T. AnanthaNarayanan, a former Executive Director of the

Company, with an excellent understanding of Ashok Leyland as an organization and its
functioning, having been with the company for nearly 30 years.
1. Philosophy on Corporate Governance
The Board of Directors and the Management of Ashok Leyland commit themselves to:
• strive towards enhancement of shareholder value through
— sound business decisions
— prudent financial management and
— high standards of ethics throughout the organization
• ensure transparency and professionalism in all decisions and transactions of the Company
• achieve excellence in Corporate Governance by
— conforming to and exceeding wherever possible, the prevalent mandatory guidelines on
Corporate Governance
— regularly reviewing the Board processes and the management systems for further
improvement. The Company has adopted a Code of Conduct for members of
the Board and senior management. All Directors have affirmed in writing their adherence to the
above Code. The full text of the Code is furnished at the end of this Report, and is also
displayed at the Company’s website

(other constituents of the report)

2. Board of Directors
i) Non-Executive Directors
Promoter Group
Mr A K Das (Alternate : Mr P Banerjee)
Mr D G Hinduja (Co-Chairman) (Alternate : Mr Y M Kale)
Mr F Sahami
Mr A Spare
Dr V Sumantran
Mr D J Balaji Rao
Mr P N Ghatalia
Mr Ramachandran R Nair (Nominee of LIC)
Mr Shardul S Shroff
Mr R J Shahaney
ii) Executive Directors
Managing Director
Mr R Seshasayee
Whole-time Director & Chief Operating Officer
Mr Vinod K Dasari
None of the Directors is related to each other

3. Audit committee
The composition of the Audit Committee is:

Independent Directors

Mr P N Ghatalia - Chairman

Mr D J Balaji Rao

Promoter Director

Mr F Sahami

All the members of the Audit Committee have expertise in finance as well as in general
management. Mr. P N Ghatalia and Mr F Sahami had been senior partners in leading firms of
Chartered Accountants. Mr. D J Balaji Rao had been.
Deputy Managing Director of the then ICICI Ltd., (now ICICI Bank) and Managing Director of
Infrastructure Development Finance Company Ltd.

4. Remuneration committee
The Remuneration Committee consists of Mr. D J Balaji Rao, Independent Director, as the
Chairman of the Committee, with Mr R J Shahaney and Mr F Sahami being the other members.

Mr A R Chandrasekharan, Executive Director and Company Secretary is the Secretary to the


5) Shareholders/investors grievance committee

The Shareholders/Investors Grievance Committee was constituted in 2000. Mr R J Shahaney is
the Chairman of the Committee; Mr D J Balaji Rao, Independent Director, and Mr R Seshasayee,
Managing Director are the other members. This Committee approves issue of new share
certificates and looks into investor relations/grievances on a periodical basis. The Managing
Director approves the share transfers/transmissions on a fortnightly basis and the same is
reported to the Committee on a quarterly basis. Mr A R Chandrasekharan, Executive Director
and Company Secretary is the Secretary to the Committee and is also the Compliance Officer
nominated for this purpose.

6) General body meetings

Details of location and time of holding the last three AGMs.
Year Location Date & Time

57th AGM - 2006 Kamaraj Memorial Hall, August1,2006

492 Anna Salai, 10.00 a.m.
Teynampet, Chennai - 600 006

58th AGM – 2007 Narada Gana Sabha, July 20, 2007

314 TTK Road, Chennai - 600 018 10.25 a.m.

59th AGM - 2008 Kamaraj Memorial Hall, July 30, 2008

492 Anna Salai, 10.30 a.m.
Teynampet, Chennai - 600 006

7) Disclosures
There have been no materially significant related party transactions with the Company’s
Promoters, Directors, the Management, their Subsidiaries or relatives which may have potential
conflict with the interests of the Company. The necessary disclosures regarding the transactions
with related parties are given in the Notes to the Annual Accounts for the year 2008-09.
There have been no instances of non-compliance by the Company on any matters related to the
capital markets, nor have any penalty/strictures been imposed on the Company by the Stock
Exchanges or SEBI or any other statutory authority on such matters during the last three years.
The Company had no subsidiary company as on March 31, 2009.

8) Means of communication
Investor mailer is being sent since 2001 as an enclosure to the half-yearly results and the same is
available on the Company’s website

Effectiveness of Corporate Governance:

The governance of both the companies here are quite comprehensive and are
indicative of the successes these companies have milked. Important groups of
people who directly or indirectly are affected by the governance of any company
are customers, lenders, employees and owners. The corporate group of Tata
Motors has satisfied owners, customers and lenders but not employees as much as
Ashok Leyland has satisfied their employees according to report. No wonder both
the companies are well governed and managed and there cannot be more than a
thread-width of difference. Tata motors has excelled as one of the world’s most
competent firms unlike Ashok Leyland which has managed to get limited market
overall. The transparency policies and grievance redress policies are appreciable of
both the corporate giants.