Suggested List of Items to be included in the Report on Corporate

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Even before the introduction of regulatory requirements in this regard your company, as a good corporate citizen, had established systems to encourage and


Report on Corporate Governance for 2005-06

1. Company’s Philosophy on Code of Governance

The corporate governance policies followed by your Company is aimed at ensuring

    transparency in all dealings and in the functioning of the management and the Board.

    These policies seek to focus on enhancement of long-term shareholder value without

    compromising on integrity, social obligations and regulatory compliances. The Company

    operates within accepted standards of propriety, fair play and justice and aims at creating

    a culture of openness in relationships between itself and its stake-holders. It has set up a

    system which enables all its employees to voice their concerns openly and without any

    fear or inhibition.

As a global player the corporate governance practices followed by your company are

    compatible with international standards. Even before the introduction of regulatory

    requirements in this regard your company, as a good corporate citizen, had established

    systems to encourage and recognize employee participation and volunteering in

    environmental and social initiatives that contribute to organizational sustainability,

    systematic training, learning and personal growth, conservation of energy and other scarce

    resources, promoting safety and health of its employees and of the neighbouring

    community , conservation of wildlife in and around our estates etc. These actions are not

    intended for image-building or publicity but have become integral part of your company’s

    operating plans.

2. Board of Directors

    STAs on 31 March 2006 the composition of the Board of Directors is given in the table below .The Chairman of the Board is a non-executive director and more than 38%(as against the

    requirement of 33.33%) of the Board comprise of non-executive independent directors. The Board

    has also appointed an Alternate Director in the case of the foreign Director.

    A. Composition & Category of Directors , Attendance of each Director at the Board

    Meetings and the last AGM, Number of other Boards or Board Committees in which

    he/she is a Member or Chairperson Number of Board Meetings held, dates on which



    stComposition of Board of Directors as on 31 March 2006

     Category Number of Directors Percentage Promoter’s representatives 4 30.77 Managing & Executive directors 3 23.08 Non-Executive Independent 5 38.46 directors

    Other non-executive director 1 7.69

     13 100.00

Details of attendance of Directors at Board Meetings and at the last Annual General

    Meeting with particulars of their other Directorships and Chairman/Memberships of

    stBoard Committees (excluding Tata Tea Ltd) showing the position as on 31 March, 2006 are given in the following table: Name of Director Position Attendance at Directorships and Chairman/

     Membership of Board

    Committees in other companies Board Last

    Meetings AGM Committee Committee Director


    Mr. R. N. Tata C,NED & 7 Yes 13 - -


    Mr. R. K. Krishna VC, NED 7 Yes 11 1 1

    Kumar & PR

    Mr. N. A. Soonawala NED & PR 8 Yes 6 - 3

    Mr. A. S. Bam NED & I 8 Yes - - -

    Mr. Y. H. Malegam NED & I 8 Yes 10 4 2

    Mr. D. B. Engineer NED & I 8 Yes 11 4 2

    Mr. D. N. Ghosh NED & I 7 Yes 7 1 1

    Mr. F. K. Kavarana NED& PR 7 Yes 9 2 3

    Mr. U. M. Rao NED & I 8 Yes 3 1 1

    Mr. K. Pringle NED 3 No - - -

    Mr. P. T. Siganporia MD 8 Yes 3 - -

    Mr. V Venkiteswaran ED 5 Yes - - -

    Ms S Talwar ED 8 Yes 1 - -

C : Chairman; VC : Vice Chairman; NED : Non-Executive Director; I : Independent Director; MD: Managing Director; ED : Executive Director ; PR :promoter’s Representative

The Board has also appointed Mr. P D Unsworth as an alternate director for Mr. K Pringle.

Other Directorships do not include Alternate Directorships, Directorships of private limited

    companies and of companies incorporated outside India.

Other than the Managing and Wholetime Directors all Directors are liable to retire by



Minutes of the meetings of all the statutory Board Committees are circulated to all the


Particulars about a Director proposed for re-appointment as well as the Directors who are

    retiring by rotation and eligible for reappointment have been given in the attachment to

    the Notice and Explanatory Statement.

    stMr A S Bam and Mr. D N Ghosh have retired from the Board effective from 1 April, 2006.

The company has received declarations on six criteria of independence as prescribed in

    clause 49 .I.A(iii) of the Listing Agreement from the non-executive directors of the company

    who have been classified as Independent directors.

B. Non-executive directors’ compensation and disclosures

The non-executive directors including Independent directors are paid Sitting fees for

    attending the meetings of the Board and committees of the Board. Currently a fee of

    Rs.10,000 per meeting per director is paid for attending meetings of the Board, Audit and

    Executive committees. For meetings of all other committees of the Board a Sitting fee of

    Rs.5,000 is paid. Within the ceiling of 1% of net profits of the company computed under

    the applicable provisions of the Companies Act, 1956 the non executive directors

    including Independent directors are also paid a commission the amount whereof is

    determined by the Board. The basis of determining the specific amount of commission

    payable to a non-executive director is related to his attendance at meetings, contribution

    at meetings as perceived by the Chairman/Vice Chairman and the extent of consultations

    with the director outside the meetings. The shareholders of the company had approved

    payment of commission to the non-executive directors at the Annual General Meeting held

    thston 8 September 2003 which is valid upto the financial year ending 31 March 2009.No

    Stock option has been granted to the non-executive directors.

C. Other provisions as to Board and Committees

    thstthDuring 2005-06, the Board met eight times on 12 April, 2005, 31 May, 2005, 9 June,

    thth2005, 25th July, 2005, 9 August , 2005, 28 October, 2005, 30th January, 2006 and th14 March , 2006. The maximum time gap between two board meetings was less than four

    months. As will be noted from the table given above no director is member of more than

    10 board committees or chairman of more than 5 board committees across all companies

    where he/she is a director.

Chairmanship/Membership of Board Committees include membership of Audit and

    Investors/Shareholders Grievance Committees of Indian public limited companies only as

    clarified by SEBI.


The Board has reviewed compliance by the company with all applicable laws and steps

    taken by the company to rectify instances of non-compliances. Where permitted

    rectification of instances of non-compliance is being carried out in a phased manner

    keeping in view the cost implications.

D. Code of Conduct

Tata Code of Conduct is a comprehensive written code which is applicable to all

    employees including the Managing and Executive Directors. A condensed code of conduct

    applicable to the non-executive directors was laid down by the Board. Both the Tata Code

    of Conduct and the Code of Conduct for non-executive directors have been posted on the

    website of the company.

In respect of financial year 2005-06 all Board members and Senior Management personnel

    of the company have affirmed compliance with the code as applicable to them.

3. Audit Committee

i. Brief description of the terms of reference

A qualified and independent audit committee has been set up by the Board. The terms of

    reference of the Audit Committee include:

    a. Review of the quarterly and half yearly financial results with the management and

    the statutory auditors;

    b. Review with the management and statutory auditors of the annual financial

    statements before submission to the Board;

    c. Review with the management, statutory auditors and the internal auditors about the

    nature and scope of audits and of the adequacy of internal control systems;

    d. Consideration of the reports of the internal auditors and discussion about their

    findings with the management and suggesting corrective actions wherever necessary;

    e. Review of the financial reporting process and disclosure of financial information;

    f. Review of the adequacy of the internal audit function;


    g. Look into the reasons for any substantial defaults in payment to the depositors,

    debenture-holders, shareholders (in case of non-payment of declared dividend) and

    creditors, if any;

    h. Recommending the appointment and removal of External Auditors, fixation of audit

    fee and approval for payment for any other services;

    i. Authority to investigate into any matter covered by section 292A of the Companies

    Act, 1956;

j. Reviewing the company’s financial and risk management policies.

ii. Composition, name of members and Chairperson

    stAs on 31 March, 2006, the Audit Committee of the Board consisted of three Directors,

    namely Mr. Y. H. Malegam, Mr. R. K. Krishna Kumar and Mr. U. M. Rao. Mr. Y. H.

    Malegam, the Chairman of the Committee, has expert knowledge of finance and

    accounting. All members of the Audit Committee are Non-Executive Directors and two of

    them including the Chairman are Independent Directors. All the members of the Audit

    committee are financially literate as defined in clause 49.II.(A).(ii) of the Listing agreement.

iii. Meetings and attendance during the year

During 2005-06, the Audit Committee met eight times and all the members of the

    committee were present in these meetings. The Committee Meetings are attended by

    invitation by the Managing Director, Executive Directors, Vice President-Finance, Chief

    Internal Auditor, the Finance Director of the Tetley Group, the Statutory Auditors and the

    Management Auditors. The Company Secretary acts as the Secretary of the Audit


4. Remuneration Committee

i. Brief description of terms of reference

The Board has set up a Remuneration/ESOS Compensation committee. This Committee is

    responsible for recommending to the Board, the remuneration package of Managing and

    Whole-time Directors including their annual increment and commission after reviewing

    their performance.

ii. Composition, name of members and Chairperson

    stThe committee was reconstituted in January 2006 and as on 31 March, 2006 the

    Remuneration/ESOS Compensation Committee consisted of 3 non-executive Directors


    with Mr. D. B. Engineer as Chairman and Mr. N. A. Soonawala and Mr. R. K. Krishna

    Kumar as members. Prior to the reconstitution Mr D .N . Ghosh was the Chairman of the

    committee and it had 4 members.

iii. Attendance during the year

    The Remuneration Committee met once during 2005-06 which was attended by all the


iv. Remuneration policy

The remuneration policy followed by the Company takes into consideration performance

    of the company during the year and of the Managing and Whole-time Directors on

    certain parameters, such as condition of the industry, achievement of budgeted targets,

    growth & diversification , remuneration in other companies of comparable size and

    complexity ,performance of the directors at meetings of the Board and of the Board

    committees etc.

v. Details of remuneration to all the directors

     Mr. P T Mr V Ms S Mr A

    Siganporia Venkiteswaran Talwar Mazumdar

    Rs. Lakhs Rs Lakhs Rs Lakhs Rs Lakhs Salary 24.00 19.20 19.20 3.80 Allowances & 27.19 19.66 22.38 5.30 Perquisites

    Contribution to 8.48 6.78 6.78 1.35 Retiral funds

    Commission(relating 40.00 25.00 19.00 20.00 to previous year)

    Stock option - - - -

    stService Contract 5 years from 5 years Upto 31Retired

    ststth1December from 1 July 2004 from 17

    2006 July 2004 June 2005 Notice period 6 months 3 months 3 months 3 months

    Sitting fees No of shares Non-executive directors’- Commi

    paid held as on Remuneration Paid in 2005-ssion Rs Lakhs 31.3.06 06 Rs.


    2040 0.70 Mr R N Tata 7.93

    2.15 9000 Mr R K Krishnakumar 12.68

    1.35 Mr N A Soonawala 7.42

     0.80 Mr A S Bam 2.02

    1.60 3196 Mr Y H Malegam 6.50

    1.15 Mr D B Engineer 2.02

     0.80 Mr D N Ghosh 2.02

    1.00 Mr F K Kavarana 2.02

    2.10 Mr U M Rao 4.70

     0.50 Mr. K Pringle 2.69

     0.30 Mr P D Unsworth -


     Notes: 1.The resolutions appointing these directors do not provide for payment of severance fees.

     2. The above excludes Rs.15.93 lakhs being post-retirement pension benefit paid to a former

     Managing Director .

5. Shareholders/Investors’ Grievance Committee

i. Name of the Non-Executive Director heading the Committee

The Board had constituted in 2000 a Shareholders/Investors Grievance Committee under the

    Chairmanship of Mr. D. B. Engineer with Mr. U. M. Rao as member. The committee was

    reconstituted in January 2006 when Mr F. K. Kavarana joined the committee as its Chairman .

    Mr Engineer and Mr Rao continue as members of the committee. The Committee has held four

    thththmeetings during 2005-06 on 8 August, 2005, 28 October, 2005, 30 January 2006 and 14th March , 2006.The representatives of the Registrars were present in all the meetings. The

    Committee oversees the performance of the Registrar and Share Transfer Agent and recommends

    measures for overall improvement of the quality of investor services. To expedite the process of

    share transfers the Board has delegated the power of share transfer to the Registrars and share

    transfer agent and share transfer formalities are approved by them on a fortnightly basis.

    ii. Name and designation of Compliance Officer

    Mr. D. K. Sen, Vice President & Secretary is the Compliance Officer.

iii. Number of shareholders’ complaints received so far,Number not solved to the

    satisfaction of shareholders and Number of pending complaints

Given below is the position of queries/complaints and other correspondences received and

    attended to during 2005-06 in respect of equity shares and fixed deposits :-

     Equity Shares Fixed Deposits For non-receipt of dividend/interest, shares 1074 2 lodged for transfer, Deposit receipt,

    repayment cheques

    Queries/Complaints redressed 1074 2

    Pending queries/complaints as on 31.3.2006 Nil Nil

    Other Letters received from shareholders andDepositors and replied 3782 Nil

During 2005-06 the company/Registrars had received 14 complaints from the

    Shareholders all of which have been resolved

Every letter received from the investors is replied and the response time during 2005-

    06 is shown in the following table :


     Number % Total number of correspondences received during 2005-06 4,856 100.00 Replied within 1 to 4 days of receipt 3,816 78.58 Replied within 5 to 7 days of receipt 496 10.21 Replied within 8 to 15 days of receipt 483 9.95 Replied after 15 days of receipt* 50 1.03 Received in last week of March 2006 and replied in April 2006 11 0.23

     4,856 100.00

*These correspondences involved issues requiring investigation or looking into very

    old records to be retrieved from godowns or information to be obtained from banks

    or others.

    Promptness in attending to correspondences of shareholders is shown in the following


    Correspondences of shareholders received and resolved/replied during 2005-06

    Pending as on 31st


    >15 Days

    8-15 Days

    5-7 Days

    1-4 Days

    1-4 Days5-7 Days8-15 Days >15 DaysPending as on 31st March,06


The shares of the Company are traded on dematerialised form. A table showing the

    requests received for dematerialisation/transfer during 2005-06 is given below:

     Transfers Transfers Demats Demats

     No. of requests No of shares No of requests No of shares

    Lodged 144,449 4,600 925,406 1,288

    Processed 1,035 120,694 4,065 833,965 Objections 230 21,496 474 84,766 Pending as on 31-3-2006 23* 2,259 61* 6,675

*These transfers and Demat requests were lodged in the last week of March 2006 and were processed in April, 2006

Note: 93.58% of the issued share capital of the company is held in dematerialized form as on


6. Other Board Committees

    thAt its meeting held on 30 January 2006 the Board has constituted following other Board

    committees besides the three committees mentioned above

    Name of Members Terms of reference No of meetings Committee held in 2005-06

    Business and strategy Executive Mr R N Tata-As the

    review, long terms financial Committee Chairman Committee has

    projections and cash flows, Mr R K been formed only

    capital/ revenue budgets and Krishnakumar recently no

    capital expenditure Mr N A Soonawala meeting was

    programmes, acquisition/ Mr U M Rao held upto

    divestment and business Mr P T Siganporia 31.3.2006

    restructuring proposals, Mr K Pringle

    senior management Mr V Venkiteswaran

    succession, planning and Ms S Talwar any other item that the Mr L Krishnakumar- Board may decide to CFO delegate

    To identify independent Nomination Mr R N Tata-As the

    directors to be inducted into Committee Chairman Committee has

    the Board from time to time Mr R K been formed only

    and take steps to refresh the Krishnakumar recently no

    composition of the Board Mr N A Soonawala meeting was

    from time to time. Mr Y H Malegam held upto

    Mr F K Kavarana 31.3.2006


    To look into the Ethics and Mr F K Kavarana-Two meetings on

    threquirements under Insider Compliance Chairman 11 May 2005

    thTrading Regulations committee Mr P T Siganporia and on 14

    including the Group March 2006

    guidelines on Insider

    Trading and Tata Code of


    Corporate Mr U M Rao-To monitor and provide Four meetings thguidance on company’s Sustainability Chairman held on 8

    policies on environment Reporting Mr P T Siganporia August

    management, social thcommittee Mr P C Tyagi- Expert 2005,28 responsibilities, health & member(Not a Board September, safety, product thmember) 2005, 12 stewardship, community December 2005 development, principles thand 6 March of managing branded 2006 operations, etc. The

    Committee will also

    provide guidance on

    welfare activities in and

    around Munnar

7. General Body Meetings

i. Location and time, where last three AGMs held,Whether any special resolutions

    passed in the pervious 3 AGMs

The last three Annual General Meetings of the Company were held as under :-

    No. of Special Year Location Date Time Resolutions

    approved at

    the AGM

     2002-03 Oberoi Grand, 8th September 10.30 4

    15 Jawaharlal Nehru 2003 a.m.

    Road, Calcutta 700013

    th2003-04 Same as above 8 September 10.30 Nil

    2004 a.m.

    th2004-05 Same as above 9 August 2005 10.30 2


    ii. Whether any special resolution passed last year through postal ballot details

    of voting pattern

    No Special resolution was passed by Postal Ballot during 2005-06.

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