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Directors Report of Tata Steel Ltd.

Mar 31, 2017

To the Members,

The Directors take pleasure in presenting the 2nd Integrated Report (prepared as per the framework set forth by the International Integrated Reporting Council) and the 110th Annual Accounts on the business and operations of the Company, along with the summary of standalone and consolidated financial statements for the year ended March 31, 2017.

A. FINANCIAL RESULTS

(Rs. crore)

Particulars

Tata Steel Standalone

Tata Steel Group

2016-17

2015-16

2016-17

2015-16

Gross revenue from operations

53,260.96

42,697.44

1,17,419.94

1,06,339.92

Total expenditure before finance cost, depreciation (net of expenditure transferred to capital)

41,385.01

35,085.65

1,00,412.12

98,371.59

Operating Profit

11,875.95

7,611.79

17,007.82

7,968.33

Add: Other income

414.46

391.16

527.47

412.22

Profit before finance cost, depreciation, exceptional items and taxes

12,290.41

8,002.95

17,535.29

8,380.55

Less: Finance costs

2,688.55

1,848.05

5,072.20

4,221.41

Profit before depreciation, exceptional items and taxes

9,601.86

6,154.90

12,463.09

4,159.14

Less: Depreciation

3,541.55

2,962.28

5,672.88

5,306.35

Profit/(Loss) before share of profit/(loss) of joint ventures & associates, exceptional items & tax

6,060.31

3,192.62

6,790.21

(1,147.21)

Share of profit / (loss) of Joint Ventures & Associates

-

-

7.65

(110.42)

Profit/(Loss) before exceptional items & tax

6,060.31

3,192.62

6,797.86

(1,257.63)

Add/(Less): Exceptional Items

(703.38)

(1,649.28)

(4,324.23)

3,990.38

Profit before taxes

5,356.93

1,543.34

2,473.63

2,732.75

Less: Tax Expense

1,912.38

587.69

2,778.01

689.96

(A) Profit/(Loss) after taxes - from Continuing operations

3,444.55

955.65

(304.38)

2,042.79

Profit/(loss) before tax from Discontinued operations

-

-

(770.86)

(2,485.45)

Less: Tax expense of Discontinued Operations

-

-

8.01

54.43

Profit/(Loss) after tax from Discontinued Operations

-

-

(778.87)

(2,539.88)

Profit/(Loss) on Disposal of Discontinued Operations

-

-

(3,085.32)

-

(B) Net Profit/(loss) after tax - from Discontinued operations

-

-

(3,864.19)

(2,539.88)

(C) Net Profit/(Loss) for the Period [ A B ]

3,444.55

955.65

(4,168.57)

(497.09)

Total Profit/(Loss) for the period attributable to:

Owners of the Company

-

-

(4,240.80)

(382.78)

Non controlling interests

-

-

72.23

(114.31)

(D) Total other comprehensive income

675.79

(3,407.13)

(563.06)

(1,898.17)

(E) Total comprehensive income for the period [ C D ]

4,120.34

(2,451.48)

(4,731.63)

(2,395.26)

Retained Earnings: Balance brought forward from the previous year

10,075.75

6,852.56

(2,415.49)

(5,925.75)

Add: Profit for the period

3,444.55

955.65

(4,240.80)

(382.78)

Less: Distribution on Hybrid perpetual securities

266.10

266.17

266.10

266.17

Add: Tax effect on distribution of Hybrid perpetual securities

92.09

92.11

92.09

92.11

Add: Other Comprehensive Income recognised in Retained Earnings

(142.42)

(3.28)

(3,549.43)

1,644.93

Add: Other movements within equity

1.75

3,371.15

(142.57)

3,348.44

Balance

13,205.62

11,002.02

(10,522.30)

(1,489.22)

Which the Directors have apportioned as under to:-

(i) Dividend on Ordinary Shares

776.97

776.97

776.97

776.97

(ii) Tax on dividends

147.74

149.30

147.74

149.30

Total Appropriations

924.71

926.27

924.71

926.27

Retained Earnings: Balance to be carried forward

12,280.91

10,075.75

(11,447.01)

(2,415.49)

The Company has adopted Indian Accounting Standard (‘Ind AS’) with effect from April 1, 2016 and accordingly these financial results along with the comparatives have been prepared in accordance with the recognition and measurement principles stated therein, prescribed under Section 133 of the Companies Act, 2013 read with the relevant rules issued thereunder and the other accounting principles generally accepted in India.

Note:

During the year, the exceptional items primarily include:

a) Provision for demands and claims (Rs.218 crore), charge on account of Employee Separation Scheme (‘ESS’) under Sunehere Bhavishya Ki Yojana (‘SBKY’) scheme (Rs.207 crore), provision for advances given for repurchase of Equity shares in Tata Teleservices Ltd. from NTT DoCoMo Inc. (Rs.125 crore) at Tata Steel India.

b) Impairment Charges (Rs.268 crore) in respect of property, plant and equipment (including CWIP) and intangible assets mainly relating to European & South-East Asian Operations.

c) Restructuring and other provisions (Rs.3,614 crore) primarily include curtailment charge relating to closure of Tata Steel Europe’s British Steel Pension Scheme (‘BSPS’) to future accrual.

d) Profit on sale of investments in subsidiaries, associates and joint ventures (Rs.23 crore) and Profit on sale of assets of a subsidiary in South-East Asia on liquidation (Rs.86 crore).

The exceptional items in Financial Year 2015-16 primarily represents:

a) Provision for demands and claims (Rs.880 crore), charge on account of Employee Separation Scheme (‘ESS’) under Sunehere Bhavishya Ki Yojana (‘SBKY’) scheme (Rs.556 crore), provision in respect of advances related to a project which the Company has decided to discontinue (Rs.73 crore) at Tata Steel India.

b) Impairment Charges (Rs.1,530 crore) in respect of property, plant and equipment (including CWIP) and intangible assets mainly at certain Subsidiaries, Tata Steel Europe & Tata Steel India.

c) Net gain (Rs.6,983 crore) primarily on account of changes to BSPS and Stichting Pensioenfonds Hoogovens (‘SPH’) scheme and other restructuring exercise relating to the European operations.

d) Profit on sale of investments in subsidiaries, associates and joint ventures (Rs.47 crore).

1. Dividend

The Board recommended a dividend of Rs.10 per Ordinary Share on 97,12,15,889 Ordinary Shares of Rs.10 each for the year ended March 31, 2017. (Financial Year 2015-16: Rs.8 per Ordinary Share on 97,12,15,439 Ordinary Shares of Rs.10 each).

The dividend on Ordinary Shares is subject to the approval of the shareholders at the Annual General Meeting (‘AGM’) scheduled to be held on August 8, 2017. The dividend will be paid on and from August 10, 2017. The total dividend pay-out works out to 34% (Previous Year: 97%) of the net profit for the standalone results.

The Register of Members and Share Transfer Books will remain closed from July 22, 2017 to August 8, 2017 (both days inclusive) for the purpose of payment of the dividend for the Financial Year ended March 31, 2017 and the AGM.

2. Dividend Distribution Policy

The Securities and Exchange Board of India (‘SEBI’) vide its notification dated July 8, 2016, requires the top 500 listed entities (based on the market capitalization calculated as on March 31 of every financial year) to formulate a dividend distribution policy and disclose the same in their annual reports and on their websites.

In terms of the above requirement, the Board of Directors of the Company have formulated a Dividend Distribution Policy (‘the Policy’). As per the policy, the Company endeavours to pay dividend up to 50% of profit after tax of the Company (as determined by the Board of Directors and approved by the shareholders) subject to the applicable rules and regulations. The detailed policy is annexed to this report (Annexure 1) and is also available on our website www.tatasteel.com

3. Transfer to Reserves

The Board of Directors has decided to retain the entire amount of profits in the profit and loss account.

4. Capex and Liquidity

During the year, the Company on a consolidated basis spent Rs.7,716 crore on capital projects across India, Europe, South-East Asia, Canada and Africa largely towards essential sustenance and replacement as also on growth projects in India and Netherlands. Despite this significant spend, the Company was able to keep the gross debt level stable during the year.

The Company’s liquidity position remains strong at Rs.19,777 crore as on March 31, 2017, which includes undrawn lines.

5. Management Discussion and Analysis

The Management Discussion and Analysis as required by the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations’) is incorporated herein by reference and forms an integral part of this report. (Annexure 2)

B. INTEGRATED REPORT

In keeping with the Company’s valued tradition - “thinking about society and not just the business’, the Company, in the previous reporting year, moved from compliance based reporting to governance based reporting. The Company adopted the framework developed by the International Integrated Reporting Council and presented to its stakeholders the 1st Integrated Report for the period ended May 2016.

The Board is happy to present the 2nd Integrated Report which endeavours to comprehensively articulate the measures that contribute to long-term sustainable value and the role the Company plays in the society.

C. EXTERNAL ENVIRONMENT

1. Macro-Economic Environment

During the Financial Year 2016-17, the global economy continued its modest pace of growth at 3% amidst weak international trade, subdued industrial production and investment. The advanced economies witnessed recovery in manufacturing and trade other than industrial production at different points in time. The emerging and developing economies grew at a diverse pace due to the global trade related policy measures and commodity price movement.

The United States of America (‘USA’) witnessed economic growth of 1.6%, slowest in the past three years. Better than expected economic indicators such as lower unemployment, business activity and improved sentiment post the Presidential elections did not translate into increased spending. Eurozone continued its 14th consecutive quarter of growth of 1.8%, as business confidence continued to remain resilient despite Britain’s vote to leave the European Union (‘EU’). In Japan, strong domestic demand and net exports helped achieve growth of 1%. Among the emerging and developing economies, China continued to maintain its growth rate at ~7%, aided by policy support, while growth in India slowed down to 7.1% due to the temporary impact of demonetization on key sectors including construction and financial services. Growth in Middle East and sub-Saharan Africa was impacted by geo-political/ domestic conflicts. The rise in commodity prices in latter part of the year helped trigger cyclical recovery in certain regions and thus helped overall global growth.

2. Economic Outlook

According to International Monetary Fund (‘IMF’), global growth is projected to rise to 3.5% in 2017 and 3.6% in 2018, moving closer to the long-term growth trend of 4%. The outlook indicates a likely up cycle of modest recovery after three successive shocks - the global financial crisis of 2007-09, the Eurozone crisis of 2009-13 and decline in commodity prices during 2014-15. However, the uncertainty with respect to sustainable growth remains. While the continued recovery and gradual closing of output gaps are likely to maintain growth momentum in the advanced economies over the next few years, supportive policy and adjusting to current price levels by commodity exporting countries are expected to aid growth in emerging and developing economies.

US growth is expected to recover as investments increase and domestic policies aid growth. The euro area recovery is expected to proceed at a broadly similar pace in 2017-18 as in 2016. The modest recovery is projected to be supported by a mildly expansionary fiscal stance, accommodative financial conditions and a weaker euro. The medium-term outlook for the euro area is likely to be impacted by weak productivity, adverse demographics, and, in some countries, unresolved legacy problems of public and private debt overhang, with a high level of non-performing loans. Further, uncertainty about the European Union’s future relationship with the United Kingdom (‘UK’) is expected to weigh on economic activity. China is expected to continue its gradual economic transition to a more service economy and coupled with partial recovery in commodity prices, it is expected to drive growth in certain emerging and developing economies.

As per IMF, India is expected to grow at 7.2% in 2017 and surpass the UK and France in 2017 to become the world’s fifth largest economy. The macro-economic stability with inflation below 5% continues to be the foundation of economic success which is reflected by growth in its key sectors - agriculture, industrial and services. Government initiatives like Make-in-India, Invest India, Start Up India and e-biz Mission Mode Project under the national e-governance plan are helping to improve ease of doing business in the country. In addition, the biggest tax reform since Independence, Goods and Services Tax (‘GST’) will help simplify India’s tax regime and is likely to boost GDP and reduce inflation in the long-term despite the threat of a potential slowdown in economic activity during the transition to the GST in the near term.

However, structural issues continue to pose a significant risk to the growth cycle. Firstly, initiative of the US Government of advancing ‘Buy American Hire American’ and political trends in Europe and elsewhere suggest a rising wave of protectionism which may lead to reversals of trade liberalization and geo-political conflicts. Secondly, economic policy uncertainty continues to be high, given USA’s expansive pro-growth reforms and China taking lead in globalization 2.0. This poses a risk of high level of volatility in the financial markets. Thirdly, debt and deficits among emerging market and developing economies are on the rise making them susceptible to increase in borrowing costs. Fourthly, outcome of the Brexit negotiations is likely to impact the pace of recovery in UK as well as Eurozone economy.

D. STEEL INDUSTRY

1. Global Steel Industry

Global steel markets recovered during Financial Year 2016-17 registering better than estimated production & demand growth. During the year, the global steel demand grew by 1% to 1.52 billion tonnes on the back of stronger than expected demand growth in China (1.3%) coupled with optimism on supply-side structural reforms and restocking. The crude steel production was 1.63 billion tonnes, up by 0.8% compared to the previous year. China remains the world’s largest crude steel producer with the production at 0.8 billion tonnes. China’s apparent steel consumption has continued to remain structurally below its production level leading to exports of 0.1 billion tonnes in spite of global protectionism. The global capacity utilization ratio remained around 70% in spite of proactive measures being undertaken in China and Europe. For instance, Chinese Government intends to reduce steel production capacity by 100-150 million tonnes by 2020, and has also announced merger of two major Chinese steel producers in the previous year.

The overcapacity of steel production in the developing world particularly in China has weighed on global steel prices for quite some time. During the year under review, the raw material prices remained volatile especially for coking coal due to supply related issues. In addition, prolonged oversupply in iron ore has led to lower level for raw material prices despite steel realizations getting support from cost push as raw material prices fluctuated on supply issues in the second half of 2016. However, regulatory measures announced by the Indian Government during the year have continued to aid domestic steel prices. The Indian steel industry has increased its capacity in the recent years, though the demand growth has remained muted. This has resulted in financial stress in the balance sheet of the steel players. The Government of India and the Reserve Bank of India is currently deeply engaged to find a structural solution to the above issue. The domestic crude steel capacity rose to 122 million tonnes, an increase of 11% year-on-year while the production of finished steel was around 101 million tonnes. The Financial Year 2016-17, saw a modest consumption growth of 3% due to low growth in construction sector and impact of demonetisation and a sharp decline in imports as domestic supply rebounded to the extent that India became a net exporter of steel, after a gap of three years.

In Europe, anti-dumping legislation, currency movement, growth in apparent demand and low inventory levels have led to an increase in demand by 2% to 155 million tonnes compared to 2015. During the year, the total activity in the steel end use sectors especially automotive rose by 1.7%, similar to the previous two years.

2. Outlook For Steel Industry

As per the World Steel Association (‘WSA’), global steel demand is expected to grow at 1.3% in 2017 to 1.54 billion tonnes and a further 0.9% in 2018 to 1.55 billion tonnes. Recovery in developed economies and accelerating growth in emerging and developing markets especially Russia, Brazil and India is expected to aid demand growth and keep inventory levels low which in turn is expected to support global steel prices. However, low level of capacity reduction than targeted by nations and continued oversupply in raw materials especially iron ore are likely to weigh down on the prices in the absence of effective trade measures and/ or increase in steel demand.

China’s steel demand which accounts for 45% of global steel demand is expected to be flat this year at 681 million tonnes while falling by 2% to 667 million tonnes in 2018. However, as per WSA, steel demand in emerging and developing economies excluding China is expected to grow at 4-5% per annum in the next two years to 475 million tonnes. In addition, the advanced economies are expected to grow at 1% for the next two years.

India’s prospects continue to remain bright albeit with few shortterm headwinds in the form of imports and surplus capacity. Proactive policy measures by the Government are expected to address most of these concerns. For instance, a Steel Price Monitoring Committee was formed by the Government with an aim to monitor price rationalization, analyse price fluctuations and advise all concerned regarding any irrational price behaviour of steel commodity. As per WSA, steel demand in India is expected to grow at 6-7% per annum in the next two years, compared to 4% in 2016.

European prospects for 2017 and 2018 are mildly positive. As per WSA, EU is expected to grow at 0.5-1.5% per annum in the next two years due to improving domestic demand with private consumption as key driver in 2017 and investment taking over the lead in 2018. The Government measures to counter cheap imports would support domestic prices in the near term. In addition, weaker euro is expected to improve domestic competitiveness against imports.

E. OPERATIONS AND PERFORMANCE

1. Tata Steel Group

During the year under review, the Tata Steel Group (‘the Group’) recorded total deliveries of 23.88 million tonnes (previous year - 23.54 million tonnes). The steel deliveries increased at Tata Steel India by 15%, primarily due to ramp up of the Kalinganagar Steel Plant. This increase was offset by lower deliveries at Tata Steel Europe by 9% due to sale of the long products business and closure of Llanwern mill to focus on higher value sales mix.

During the year, the turnover for the Group was at Rs.1,17,420 crore, an increase of 10% over the previous year. The growth is largely driven by strong performance from Indian Operations with volume growth in steel and ferro alloys business and supportive global pricing environment. The Group EBITDA was Rs.17,025 crore, an increase of 114% compared to previous year EBITDA of Rs.7,951 crore. This improvement comes on the back of strong global market conditions, strong volume growth in India and the impact of the implementation of transformation program and restructuring efforts in Europe to improve the underlying performance.

During the year, the industry witnessed recovery in steel prices mainly driven by increase in coking coal and iron ore prices improvement in underlying global demand and lower seaborne imports. However, the timing and extent of continued price recovery or the sustenance of the current demand cycle is uncertain. In response to recent declines and higher volatility in steel and raw material prices, the Company has implemented a number of cost-saving measures intended to improve operating income as well as measures to enhance cash generation from the business.

The Group reported a consolidated loss after tax (including discontinuing operations) of Rs.4,169 crore as against a loss of Rs.497 crore in the previous year. The year’s loss includes an exceptional charge of Rs.4,324 crore mainly due to British Steel Pension Scheme (‘BSPS’) curtailment charges, while an exceptional gain of Rs.3,990 crore was recorded in the Financial Year 2015-16.

2. India

In Financial Year 2016-17, Tata Steel India deliveries grew by 15%, significantly better than the broader market and reached a level of 11 million tonnes (previous year - 9.5 million tonnes). This is a testament of the strength of the business model of the Indian operations, the strength of the business relationships, the power of the product brands and the robustness of the distribution channel. The Company’s sales to the automotive segment increased by approximately 9% over previous year, as the Company continued to partner with its automotive customers in the drive towards localization. New model launches, aided by a strong growth in the passenger vehicle segment, also helped the Company to increase the market share in the automotive space. Similarly, the Company’s Industrial Products, Projects and Exports vertical witnessed a 47% year-on-year growth.

The Company’s branded products portfolio has been growing strongly and the Company continues to invest in this portfolio with the aim of gaining greater market share. In India, the Company launched 31 new products and the branded products contributed to around 45% of the revenue.

The newly launched ‘Services & Solutions’ business is performing as per plan and the Company is optimistic about its potential to generate 20% of its revenue in the future. The Company is already engaged in development of several solution products based on steel, including doors, windows, modular housing, toilets and water ATMs etc. The Company is also foraying into furniture space and the products would have wood or wood-like finish but blended steel structure.

During the year, revenues from Indian operations increased to Rs.53,261 crore (previous year - Rs.42,697 crore). The EBITDA was Rs.11,953 crore, 53% higher than the previous year EBITDA of Rs.7,792 crore. The Profit after tax was also higher at Rs.3,445 crore (previous year - Rs.956 crore). During the year, the various improvement initiatives including Shikhar25 contributed improvement savings of over Rs.3,400 crore.

The strong performance during the year under review is due to supportive realisations and strong growth in deliveries due to ramp up ofthe Kalinganagar plant. The Kalinganagar operations continues to ramp up well both in terms of quantity and quality. The plant crossed 2.2 million tonnes of Hot Metal and 1.5 million tonnes of Hot Rolled Coil production since commissioning in May 2016. Moreover, the performance of the Ferro Alloys & Minerals division registered sharp improvement backed by improved market conditions. The full year operating profit of the division at Rs.1,165 crore was higher by Rs.1,040 crore compared to the previous year.

3. Europe

During the year, the mild steel demand growth in the European Union was fully absorbed by imports, with import volumes at historically high levels, although anti-dumping measures provided some relief in the market prices, supported by lower raw material costs.

Several strategic and critical re-structuring initiatives were undertaken in TSE during the year, such as the sale of Long Products business to Greybull Capital LLP, closure of Llanwern Mill in the UK, right sizing of manpower, announcement of collaboration with strategic players, sale of Speciality Steel business to Liberty House and closure of the defined Benefit Pension Scheme to the future accruals.

On the operational front, TSE launched a number of new digital services to transform the customer experience and deliver value viz. Tata Steel in Europe Customer Portal, Tata Steel in Europe eShop, Connecting Systems and Building Information Modelling.

TSE also launched 20 new products and was able to increase the share of differentiated products to 37% and of new products to 8%. TSE’s focus remains on developing differentiated products and services like Serica and MagiZinc products which improve car body appearance and performance.

The Hot Strip Mill at Port Talbot in the UK broke its previous financial year volume record of 3.22 kt to produce 3.32 kt in the current financial year. The Galvanising Line 3 in IJmuiden, Netherlands broke its previous financial year volume record of 552 kt to produce 562 kt in the current financial year. The customer complaints for the year in the Strip Products business in Mainland Europe were the lowest at 0.18%.

During the year, the revenues remained flat at Rs.52,085 crore compared to previous year - at Rs.53,555 crore while the EBITDA improved very significantly to Rs.4,705 crore from the EBITDA loss of Rs.513 crore in the previous year. The strong performance is due to stronger market conditions during the year, focussed transformation program in the UK and sustainable profit program in the Netherlands, including the supply chain transformation programme which went live during the year.

During the year, TSE was recognized as the best supplier of steel and nominated for future supplies by Renault, Ford and Toyota. TSE was also awarded the “Quality through Excellence award” by Volvo, a first time award given to a steel supplier. The ‘PeopleLink’ project team within TSE was selected as the Gold Winner of the SAP UKI Quality Awards in the HR Cloud Category.

4. South-East Asia

During the year, the performance in South-East Asia was strong on the back of continued thrust by the Government on infrastructure projects, particularly in Thailand. The revenues stood at Rs.8,245 crore (previous year - Rs.7,851 crore), the EBITDA was Rs.528 crore (previous year - Rs.222 crore) and the Profit after tax was Rs.175 crore (previous year - loss of Rs.237 crore). The improvement in performance is mainly attributable to improved realizations, better spread management and cost rationalization initiatives.

NatSteel Holdings (‘NSH’) operations improved significantly. Domestic market demand for steel bars remained weak in Financial Year 2016-17 due to sluggish construction market. Continuous cost reduction initiatives, including re-alignment of optimal capacity level with demand achieved a fixed cost saving of S$20m. Mothball of NatSteel Xiamen (‘NSX’) operations in mid Financial Year 2015-16 had improved EBITDA. Further, during the year, NSX sold its land and other assets and has realized Rs.86 crore.

During the year, Tata Steel Thailand (‘TSTH’) delivered better performance on all fronts as compared to previous year. TSTH achieved reduction in conversion costs both at steel plant and rolling mill stage. TSTH is committed to deliver value added products and services to its customers. In this regard sale of High Tensiles, Siesmic and cut and bend Rebars surpassed the previous records. TSTH invested in phase 3 of state-of-the art cut and bend facility at NTS plant and completed the project in March 2017.

During the year, sale of new products at TSTH touched new heights. Wire rods business saw a significant improvement in the second half of the financial year due to higher import prices from China, anti-dumping duties announced by Thai Government and strong customer relationship. During the year, TSTH collected more than a million tonnes of domestic scrap and also developed billet sources from India, Russia, South America and other regions.

F. STRATEGY

While Financial Year 2015-16 saw a contraction in global steel demand, steel demand grew by 1% in the Financial Year 2016-17 largely driven by strong growth in India and South-East Asia. Despite a recovery in steel prices on the back of better than expected Chinese steel demand, concerns regarding excess capacity and uncertainty in Chinese steel demand over the medium-term persist and contribute towards increased volatility in prices.

The Company continues to pursue its vision to become the global benchmark in ‘value creation’ and ‘corporate citizenship’ in the steel industry and aims to develop long-term partnerships with customers in the chosen markets. It endeavours to make the most of the growing demand for steel by investing in new facilities. Expansion plans for both - Kalinganagar and Jamshedpur sites are in development. Along with volume growth, the Company is committed to move towards more value added products and offer services and solutions to further enhance revenues and reduce the linkage of revenues to volatile steel prices.

The Company has identified Digital as a driver to enhance customer centricity, productivity and sustainable performance. A large number of projects across the value chain have been identified where value can be created via utilization of existing and emerging digital technologies. The Company is working on leveraging its online presence to enhance customer experience via creation of platform to onboard stakeholders, facilitate peer reviews and ease access. Capabilities in data analytics are being built via its Analytics Centre of Excellence. Jamshedpur has been LORAWAN (Low Power WAN) enabled allowing the Company to explore Internet of things (‘IOT’).

In the medium-term, the Company expects the external environment to remain challenging. In response, the Company is working towards rationalizing it’s existing operations and designing new facilities to maximize productivity and improve cost competitiveness. It has set the following five priorities for the medium-term to help attain its vision and goals - (a) Customer Focus, (b) Innovation, (c) Operational Excellence, (d) Responsible behaviour and (e) People.

Customer focus: The Company has plans in place to keep pace with the growing needs of customers across sectors with a special focus on automotive and attractive segments in the construction sector eg. Individual House Builder. New facilities planned will ensure that shift of demand to wider, lighter and high strength steel in the automotive sector is adequately met. The Company is also expanding its presence in other attractive segments like Oil & Gas and Lifting & Excavation enabled by it’s new plant at Kalinganagar. The Company also aims to leverage its brands to increase revenues from B2C sales -including increasing reach in rural markets. It further aims to enhance value for customers through services and solutions and value added products.

Innovation: The focus area for research is to develop new and differentiated products and services for customer segments, reduce carbon footprint, optimally use inferior raw materials, utilize solid waste and move towards a system of Zero Water Discharge. The Company conducts research programmes through strategic collaboration with academic institutions in India and overseas. It has made a breakthrough in low cost graphene production and graphene based coating solutions for steel. Going ahead it is investing in scaling these solutions and developing other applications.

Operational excellence: It is the Company’s endeavor to establish best-in-class facilities and it constantly invests to upgrade its manufacturing and distribution facilities in order to improve performance and cost competitiveness. The focus areas are achieving superior steel properties, higher efficiency in iron ore & coal beneficiation, lower carbon rate in iron-making, optimized product mix, reducing waste generation, energy efficient processes and higher material utilisation.

Responsible behaviour: The Company acts responsibly towards the environment, focusing on sustainable usage of raw materials, water and energy conservation, waste utilization, emissions reduction and land reclamation. It explores and supports the development of breakthrough technologies to deal with the challenge of carbon emissions. Reduction of CO2 emissions through energy conservation remains the prime corporate strategy to ensure business sustainability while mitigating climate change. Jamshedpur Steel Works is the National Benchmark in CO2 emission intensity and Specific Energy Consumption within Steel Sector (Coal based Integrated Works, BF-BO). The Company supports the communities it operates by promoting sports & education, sustainable livelihood, health and ethnicity. It also supports the economic, environmental and social development of its communities through financial support, provision of materials and the time and enthusiasm of its employees.

People: The safety of the people who work on the Company’s sites is number one priority. The Company is committed to the people who are instrumental to its success. Committed to Zero is Company’s top priority, with the target of having Zero Lost Time Injuries (‘LTIs’). The Company has taken safety and health strategic initiatives on capability building, leadership development, contractor safety, process risk, rail & road safety and employee health. The Company fosters teamwork, nurtures talent, enhances leadership capability and encourages employees to act with pace, pride and passion. There is an increased focus on encouraging diversity and inclusion in terms of gender and representation of the underprivileged sections of the community as well as people who are specially abled.

G. KEY DEVELOPMENTS

1. India

Kalinganagar Steel Plant

During the year, the Company commenced commercial production at its Kalinganagar Steel Plant. The facility produces flat steel for high-end applications enabling the Company to expand its product portfolio in the ship building, defence equipment, energy & power, infrastructure and aviation sectors. This plant will help the Company to consolidate its leadership position in the domestic automotive segment. Tata Steel Kalinganagar (‘TSK’) has achieved one of the fastest ramp-up in a Greenfield project in India. Crude steel production in Financial Year 2016-17 was 1.68MnTPA while, crude steel capacity was ramped up to 88% with the Coke Plant & Hot Strip Mill reaching 100% capacity in Financial Year 2016-17. The Coke Plant at Kalinganagar achieved 1.5 million tonnes of gross coke production and generated revenue worth Rs.70 crore through the sale of coal tar during Financial Year 2016-17. The facility dispatched first rake of HR coils on June 8, 2016 and first rake of Ferro-shots on September 12, 2016. During the year, the Sinter Plant at Kalinganagar achieved production of 2 million tonnes of net Sinter. The Blast Furnace achieved 2 million tonnes of hot metal production and started Top Recovery Turbine. It achieved lowest ever monthly average coke rate in all coke operation of 532 kg/t of hot metal. The Hot Strip Mill at Kalinganagar, achieved production of 1.5 million tonnes of HR coil and crossed ABP target of 1.54 million tonnes in Financial Year 2016-17 by achieving production of 1.78 million tonnes. The capacity of the Plant can be expanded further to meet the customer needs and make Tata Steel more profitable and sustainable in the future.

Acquisitions

Brahmani River Pellets Limited

In order to make the Kalinganagar Steel Plant more competitive, in December 2016, the Company executed a definitive agreement to acquire 100% equity shares of Brahmani River Pellets Limited (‘BRPL’) for a value of Rs.900 crore plus closing adjustments. BRPL owns a 4MnTPA pellet plant in Jajpur, Odisha and 4.7MnTPA iron ore beneficiation plant in Barbil, Odisha connected through a 220 km underground slurry pipeline. The above transaction is currently pending regulatory approvals.

Subarnarekha Port Private Limited

Logistics is a critical element in the supply-chain of an integrated steel facility. Considering the future logistics needs of the Indian Operations, in January 2017, the Company executed a definitive agreement to acquire 51% equity stake in Creative Port Development Private Limited for the development of Subarnarekha Port at Odisha through a wholly-owned subsidiary,

Subarnarekha Port Private Limited. Given the location of the proposed port, the acquisition will enhance competitive position of Indian operations and de-risk the in-bound and out-bound supply-chain. This is a greenfield project and currently the Company is undertaking detailed feasibility studies.

Divestments

TM Harbour Services Pvt. Ltd

On December 7, 2016, TM International Logistics Limited, a Tata Steel Group company divested its entire stake in its wholly-owned step down subsidiary TM Harbour Services Pvt. Ltd. (‘TMHSPL’) to Adani Ports and Special Economic Zone Limited for a total consideration of Rs.106.27 crore. TMHSPL was engaged in the business of providing Tug services at Dhamra Port and owned 3 tug boats.

Issue of Debt Securities

On October 4, 2016, the Company allotted 8.15% 10,000 Unsecured, Redeemable, Non-Convertible Debentures having a face value of Rs.10 lakh each for an amount aggregating to Rs.1,000 crore on private placement basis to identified investors.

Credit Ratings

In October 2016, Brickworks revised the rating for Non-Convertible Debentures from BWR ‘AA ’/ Outlook Stable to BWR ‘AA’/ Outlook Negative as well as downgraded the ratings for Perpetual Hybrid Securities from BWR ‘AA’/ Outlook stable to BWR ‘AA’/ Outlook negative.

As per the Ratings Agency, the change in ratings was due to the uncertainty consequent to the change in top management at the Tata Group level which could in turn slow down vital decisions such as cost cutting and deleveraging the Balance Sheet concerning the unprofitable UK operations and restructuring of the European business.

In January 2017, CARE has revised the ratings for Non-Convertible Debentures and long-term rupee loans from CARE ‘AA ’/ Outlook stable to CARE ‘AA’/ Outlook stable and for Perpetual Hybrid Securities from CARE ‘AA’/ Outlook stable to ‘AA-’ / Outlook stable. This revision in rating was triggered due to uncertainties relating to the restructuring of the Company’s UK business.

2. Europe

British Steel Pension Scheme

On March 7, 2017, Tata Steel UK (‘TSUK’), a wholly-owned indirect subsidiary of Tata Steel Limited and the principal sponsor of the British Steel Pension Scheme (‘BSPS’) completed consultation with its employees with regard to the closure of the defined benefit section of the BSPS to future accruals with effect from April 1, 2017. This followed an agreement between TSUK and the trade unions in December 2016 in the same regard, where it was also agreed that subject to the structural de-risking and de-linking of the BSPS from the business, TSUK will continue the existing blast furnace configuration of Port Talbot until 2021 and, based on achieving the necessary financial performance and cash flows as per the transformation plan of the UK business, it will also continue its investment to enhance its competitive position in European steel industry. An employment pact was also offered until 2021.

Subsequently, after prolonged and intense discussions and negotiations with the BSPS Trustee(s), The Pensions Regulator (‘TPR’) and the Pension Protection Fund (‘PPF’), the key commercial terms of a Regulated Apportionment Arrangement (‘RAA’) were agreed in-principle between TSUK and the BSPS Trustee(s). These terms are in line with the published principles of TPR and PPF. However, as of May 16, 2017, the RAA remains subject to detailed documentation, formal approval by TPR, non-objection from the PPF and the formal agreement of the individual entities who would be party to the RAA. These parties are in positive discussions and are hopeful of reaching final agreement shortly. If an agreement is reached and the necessary approvals are obtained, the RAA will become effective once agreed conditions are satisfied, including the payment by a member of the Tata Steel Group of an agreed settlement amount of GBP 550 million to the BSPS and the provision of a 33% equity stake in TSUK.

TSUK has also agreed in principle, that subsequent to the RAA, TSUK would sponsor a closed new pension scheme (the ‘New Scheme’). TSUK sponsorship of the New Scheme is conditional upon satisfaction of certain qualifying conditions. If those conditions are satisfied, members of the BSPS would be offered an option to transfer to the New Scheme. The New Scheme would have lower future annual increases for pensioners and deferred members than the BSPS and therefore an improved funding position which would pose significantly less risk for TSUK. There is presently no certainty with regards to the eventual existence, size, terms or form of the New Scheme and the funding position and membership of any New Scheme would be dependent on a voluntary membership transfer exercise.

Divestments

Sale of Long Products Europe Business

TSUK signed an agreement on April 11, 2016, to sell its Long Products Europe Business to Greybull Capital LLP for a nominal consideration. On May 31, 2016, TSUK completed the sale of Long Products Europe business, which will trade under the name of British Steel. The Long Products business in the UK includes the Scunthorpe steelworks, two mills in Teesside, an engineering workshop in Workington, a design consultancy in York, associated distribution facilities as well as a rail mill in northern France. With this, Tata Steel Europe crude steel capacity stood at 12.9 million tonnes.

TSUK’s Speciality Steel Business

As an overall restructuring strategy of the UK portfolio, TSUK (an indirect subsidiary of the Company) signed a Letter of Intent on November 28, 2016 and a definitive sale agreement on February 9, 2017 with Liberty House Group for sale of Speciality Steel business for a total consideration of GBP 100 million. The sale covers several South Yorkshire based assets including electric arc steelworks and bar mill at Rotherham, the steel purifying facility in Stocksbridge, a mill in Brinsworth and service centres in Bolton and Wednesbury, UK and in Suzhou and Xi’an, China. The sale was completed on May 2, 2017. Speciality Steel business directly employed about 1,700 people making steel for aerospace, automotive and the oil and gas industries. With this, Tata Steel Europe crude steel capacity stands at 12.1 million tonnes.

3. Canada

Tata Steel Minerals Canada

Tata Steel Minerals Canada Ltd. (‘TSMC’) is engaged in development of iron ore deposits in Quebec and Newfoundland & Labrador in Canada. The investment is deployed towards setting up mining operations and multiple processing facilities including the state-of-the-art beneficiation plant. The project has also enabled the development of infrastructure facilities including rail, roads, telecommunications and port that has had significant positive impact in the socio-economic landscape in Quebec, Newfoundland and Labrador.

In October 2016, TSMC signed the definitive agreements with Government of Quebec’s investment entities, Resource Quebec and Investment Quebec respectively for providing C$175 million financial assistance in the form of equity and debt. With this investment, the Government of Quebec holds 18% stake in TSMC and the balance is held between the Company (77.66%) and New Millennium (4.32%), a publicly owned Canadian mining company.

On March 24, 2017, TSMC signed a multi-user-concept based non-binding MOU between PPP’s partners: Society of Plan Nord (‘SPN’) and other mining players, which will facilitate the connectivity of the existing material handling facilities at Point Noire to the new Multi User Deep Sea Terminal (‘MUD’) and further enable detailed assessment of improvements to the infrastructure, cost-efficient Port operations, scalability in volume and asset allocation among others. The Company has been awarded John T Ryan Award for Safe Mining for two consecutive years - 2015 and 2016 by the Canadian Institute of Mining, Metallurgy and Petroleum (‘CIM’).

4. South-East Asia Divestments

Kalzip Guanzhou Limited

In March 2017, Kalzip Guanzhou Limited, a wholly-owned subsidiary of the Company, divested its entire stake to Shanghai Qinheng International Trace Co. Ltd. for a net consideration of Euro 5.2 million. Kalzip Guanzhou Limited was engaged in the business of supplying aluminum roofs for construction projects in China.

H. SUSTAINABILITY

In the words of the Company’s founder, J N Tata - ‘In a free enterprise the community is not just another stakeholder in business, but is in fact the very purpose of its existence.’

This belief has been embedded in the Company’s vision and values as it continues to strike a balance between value creation and being a leader in corporate citizenship. Sustainability is at the very heart of what the Company does. As one of the world’s leading steel producers, the Company is dedicated to both managing its operations responsibly and striving towards continuous improvement. The Company is committed to designing more sustainable products which are lighter, long lasting and require fewer resources to be produced. The Company’s steel goes into the world’s most sustainable buildings and transport infrastructure and supports the performance of the most efficient vehicles in the market. Above all, the Company operates in a way that is safe for all employees and respectful to the environment. The Company’s endeavour is to act with utmost responsibility and care towards the communities surrounding it which are impacted by its operations.

The Company’s sustainability approach as articulated in the Sustainability Policy reinforces the triple bottom-line approach in its systems and processes. The Company has also established various platforms for engaging with its stakeholders to recognize their concerns and opinions that are then prioritized and embedded in its business objectives and strategies. The Company is actively associated with various industry bodies like Confederation of Indian Industry (‘CII’), Global Reporting Initiative (‘GRI’), International Integrated Reporting Council (‘IIRC’) and the Taskforce on Climate-related Financial Disclosures (‘TCFD’) of the Financial Stability Board in order to mainstream the best practices on sustainability in different functions and processes across the organization.

The Company has a dedicated Corporate Sustainability Group that tracks the global best practices related to sustainability and facilitates its incorporation in the key processes of the Company. The Group also drives various external assessments and makes comprehensive disclosures on sustainability to stakeholders. In December 2016, the Jamshedpur Works underwent the GreenCo assessment conducted by CII-Green Business Council and was awarded with Platinum rating (the highest rating on the GreenCo rating scale) thus making it the first and only Integrated Steel Plant to be awarded the Platinum rating. Globally, the Company has been adjudged as the Industry Leader by the Dow Jones Sustainability Index (the most trusted and widely accepted rating by investors globally) for the year 2016.

Aligned with the UN Global Sustainable Development Goals, the Company is now taking on the challenge of further reducing its carbon and water footprints and enhancing the impact of its CSR activities in the Company’s areas of presence.

1. Environment

Respecting and safeguarding the environment is a fundamental principle held by all Tata Group companies. The Company has implemented environmental management systems that meet the requirements of international standard ISO14001 at all its leading manufacturing sites. These systems provide the Company with a framework for managing compliance and achieving continuous improvement. The Group-wide leadership in environmental matters is provided by the Board’s Safety, Health and Environment Committee and its overall performance is subject to on-going and detailed scrutiny of the Board of Directors.

The Company’s first priority is to be fully compliant with conditions for environmental permits and with other legal requirements that are applicable within the jurisdictions in which it operates. The Company’s efforts are channelized towards adopting sustainable practices and ensuring continuous improvement in environmental performance. It continues to focus on operational excellence aimed at resource efficiency through “Recovery, Reuse and Recycle” approach to minimize the ecological footprint.

In India, during the previous financial year, the Company adopted the maiden Biodiversity Policy and revised the Energy Policy to include therein Renewable & Non-Conventional Energy. The Company is member of World Steel Association Environment Policy Committee, Central Pollution Control Board’s National Taskforce, Indian Steel Association and various other organizations and it continues to pursue advocacy on policy and regulatory issues through these forums. During the year, the Company actively participated in the Taskforce of Climate related Financial Disclosure (‘TCFD’) formed by the Financial Stability Board aiming to make markets more efficient and economies more stable and resilient through increased disclosure and transparency. The Company is engaging with International Union for Conservation of Nature (‘IUCN’), the world’s largest global environmental network, to implement biodiversity conservation plans at its mining locations. The Company has completed a pilot program on natural capital valuation as part of its capacity building program. It also has a dedicated Research & Development team to work on Life Cycle Assessment. The Company has commenced valuation of carbon emissions with the introduction of shadow price at US$ 15/tCO2e which will enable it to consider the environmental aspects of projects before it decides to pursue them. This is being used for appraisal of all capital expenditure proposals including growth plans.

In Europe, the Company is a leading member of ULCOS (Ultra-Low CO2 Steel-making) - a pioneering partnership of 48 companies and organizations from 15 European countries that recently completed the first phase of a co-operative research initiative to achieve a step change in CO2 emissions from steel-making. The ultimate and ambitious aim of the ULCOS project, which began in 2004 and which is supported by the European Commission, is to reduce CO2 emissions per tonnes of steel produced by at least 50% by 2050.

2. Climate Change

Climate change is one of the most pressing issues the world faces today. Climate change is a global phenomenon which requires global measures in the long-term to effectively deal with this real threat to sustainable human life. Tata Steel aims to play a leadership role in addressing challenges of climate change. Climate change is the defining issue of the early 21st Century and the Company recognizes that it has an obligation to minimize its own contribution to climate change. However, the Company also understands that steel products will be an integral part of the solution to climate change and that local, short-term action will not necessarily help to tackle this global, long-term issue. Considering all these factors, the Company has formulated a climate change strategy based on 5 key themes as listed below:

Emissions Reduction: The Company will continue to improve its current processes to increase its energy efficiency and to reduce its carbon footprint. The Company targets to reduce its carbon dioxide emissions per tonnes of liquid steel by at least 20% compared to 1990 levels.

Investing in Technology: The Company will continue to invest in long-term breakthrough technologies through initiatives such as ULCOS.

Market Opportunities: The Company endeavors to develop such new products and services that reduces the environmental impact over its products’ life-cycles and helps its customers to reduce their carbon footprints.

Employee Engagement: The Company will actively engage its workforce and encourage everyone to contribute to its strategy.

Lead by Example: The Company will further develop its pro-active role in global steel sector initiatives through the World Steel Association.

3. Health and Safety

Health and safety remains the Company’s top most priority and the Company aspires to be the industry benchmark in safety. The Company has made some significant achievements through the ‘Committed to Zero’ programme. The Company’s strategic efforts are directed towards ensuring committed leadership, engaged employees and effective systems in order to minimize risk. At the Group level, the Company has achieved 39% decline in Lost Time Injury Frequency Rate (‘LTIFR’) from 2010.

The Company also continues to focus on its competency development programs in health and safety leadership. In collaboration with Ashome Hill, UK, safety and health excellence programmes were conducted for leaders across levels of the Company and Members of the Union from all locations of Tata Steel India. A total of 3,200 Officers and 505 union committee members were trained. This programme has been utilized in all regions and was recognized as H&S excellence by World Steel Association in October 2016. Leadership engagement at the shop floor has improved by way of safety line walks with ‘Find It - Own It - Fix It’ approach.

Alongside leadership, the Company’s strategic priorities include contractor management, process safety management, industrial hygiene and road & rail safety management. Five high-hazard departments have started the Process Safety Centre of Excellence in collaboration with the TSE team. Similarly, two departments have started quantitative and qualitative study on Industrial Hygiene with cross learning from TSE.

NSH also achieved a 22% decline in LTIFR as compared to previous year while TSTH finished the year with zero loss time injury to any employee or contract workmen. Deploying long-term safety improvement plan, regular sharing of best practices and learning from incidents from other companies in the Tata Group has strengthened the occupational safety, health and environment process in both TSTH and NSH.

4. Research and Development

The Company has best-in-class research facilities to develop and deliver high quality value added products for its customers and significant process improvements for its business units. During the year, the Company undertook several initiatives in India to help the business units achieve their goals and some of these initiatives have been successfully executed at the plant level. JK DM Cyclone is one such initiative which has been operational since November 2016 in stream No. 1 of washery#3 at West Bokaro. The JK DM Cyclone process helps in better separation of clean coal from middlings. This process is expected to reap an annual benefit of approximately Rs.10 crore in one washery on complete implementation and is now considered to be a global benchmark. Another such initiative is the setting up of the Nano Membrane UHLA Desalination pilot plant in Haldia for removal of chloride by tailor made ion through selectively charged Nano filtration membrane. This initiative, being a first of its kind, has helped to reduce the operational cost by at least 50%. The Company has undertaken many other research initiatives during the year which are expected to provide fruitful solutions in the future.

In Europe, the Company is continuously engaged in various research and technology initiatives. To illustrate, the Company invests in short to medium term energy efficiency improvements aimed at reduction in CO2 emission through HIsarna project i.e. a collaborative project amongst the major steelmakers in Europe to develop a more flexible new smelting reduction technology to produce steel from lower grade raw materials without the need for coke making or agglomeration processes.

In Singapore, the Company is focusing on solution driven value propositions and piloting Building Information Modeling (‘BIM’) as well as Developing Mobile Apps for select customers for complete visibility of the projects across the value chain leading to increased productivity & efficiency. R&D activities are mostly focusing on developing advanced wire materials for construction and automotive applications. The Company is building a new Research and Development Centre at wire factory in Thailand which will focus on development of new wire and related products for the group.

The Company is also exploring ways to make Graphene based value-add products, with a focus on development of high value niche market segments for coated products.

Further, during the year, the Company’s process technology program focused on creating robust and stable manufacturing processes, making better use of raw materials and finding solutions to quality issues and thereby also supporting its differentiated product strategy.

5. New Product Development

The Company recognizes that to become a long-term partner to its customers, it must develop an in-depth understanding of their needs. Above and beyond meeting certification and legislative requirements, customers are also seeking to improve the sustainability performance of their operations and products. There is a growing emphasis on being able to rely on a responsible supplier.

The Company is responding to customer needs by including sustainability principles in its new product development process, focusing on lowering greenhouse gas emissions over the full life cycle of steel products, reducing water consumption, avoiding the use of hazardous and potentially toxic chemicals, optimising resource efficiency and reducing waste in production, improving the circularity of products, ensuring responsible supply and increasing the social value of products and optimising total cost of ownership.

During the year, in India the Company’s efforts in the area of new product development has been directed towards increasing customer satisfaction and having products with differentiated quality. About 37 new products were developed in the Flat Products area, the major ones being in the hot rolled category. The most noteworthy amongst these is the DP600 low Si, which is expected to reduce scale issues and thereby increase customer satisfaction. The HS800 in 5 mm section has been specifically developed for commercial vehicles in the automotive segment and is in the final stage of trials. The IF390 in cold rolled category is another significant example of a new product of a high strength grade developed for automotive customers. The focus at the Company’s Kalinganagar facility has been to develop and increase the sales of value added products by leveraging the plant’s superior capabilities. In the Long products area, it has been making concerted efforts to increase productivity. During the year, it has developed high strength SAW Wire Rods, Low Manganese High carbon Wire Rods and Couplers for Construction segment. In India, the Company launched 31 new products during the year.

In Europe, the Company launched 20 new products in the year. These launches include major developments for the automotive, construction, engineering and packaging markets. Prominent examples of product launches include XPF800 and Trimawall®. XPF800 is its new range of breakthrough steels aimed at helping car makers reduce the weight of undercarriages and increase fuel efficiency. Trimawall® caters to the construction segment, offering a foam insulated wall sandwich panel with a completely flat outer surface, providing customers with an architecturally state-of-the-art flat panel. In the last five years, Tata Steel Europe has introduced over 160 new products. The share of differentiated products in Financial Year 2016-17 increased by 3% as compared to previous year and reached 37% of prime sales. These differentiated products give customers enhanced capabilities for specific applications and are manufactured by only a few steel producers.

In Singapore, the Company’s operations got certification for Malaysia Authorities’ New Standard for bars requiring 5m cycle of fatigue tests for export of bars to Malaysia and also rolled out grade 600 bars, Steel Carpet and Fan Mesh to multiple projects in Singapore construction sector. The wire units in Thailand (Siam Industrial wires and TSN wires) launched zinc aluminium for fishery tools & poultry cages, low carbon automotive wires, barbed wires, sprig wires and galvanised PC strand for rock engineering in local Thai markets as well as international markets. In continuation of its efforts towards branding its products, SENTEC brand was launched for galvanised wires.

6. Customer Relationship

The Company endeavors to build sustainable long-term value-creating partnerships with its customers and channel partners through a wide range of product offerings, innovative services and unique solutions.

In India, the Company’s customers are segmented into three categories i.e. B2B, B2C and B2ECA (‘Emerging Corporate Accounts’). These categories are then micro-segmented based on applications and buying behavior. The Company’s focus is to understand the expectations and requirements of current and potential customers/market segments, to deliver customer-specific products & services and to provide collaborative value-creating solutions.

The Company engages with B2B customers through cross-functional customer service teams to generate value-creating ideas, develop new products and focus on quality improvements thereby helping to achieve operational excellence. By leveraging its investments in Research & Development facilities, the Company has deepened its engagement with key automotive customers to provide cost and weight reduction solutions and advanced product application support. This has enabled the Company to partner with its customers for their future product launches. The Company has also enhanced its engagement with Emerging Corporate Accounts by facilitating direct interactions with Subject Matter Experts (‘SMEs’) through programs such as “ECafez Webinars” and “Skills4 India”

The Company’s B2C brands have embraced digital solutions to substantially enhance the consumer buying experience. Tata Tiscon has built an online e-sales platform to reach out to around 2.5 lakh consumers. To overcome the cash crunch post demonetization in November 2016, the Company’s B2C brands have installed over 1,500 Point-of-Sales (‘POS’) machines across its dealer network. To reach out to the rural consumers at the last mile, intensive mobile marketing campaigns were conducted under the program of “Ek Kadam Parivartan ki Ore” where the consumers were educated about the benefits of Tata Shaktee vis-a-vis other roofing solutions prevalent in the region. The Group Rural Action Mission (‘GRAM’) focuses on harnessing synergies with other group companies for creating rural consumers awareness and lead generation programs.

Knowledge-sharing platforms such as “Driving Steel”, “Wired 2 Win”, “Steelopedia” are organized to provide insights on current and future industry trends and promotes new services & solution offerings. The senior leadership team frequently interacts with strategic and key customers in customer meets, seminars, during plant visits undertaken by the customers and celebration events to commemorate the milestones achieved.

In Europe, the Company aims to develop long-term partnerships with customers by unlocking the potential of steel. The Company is focused on strengthening customer relationships by continuously introducing new, innovative and high quality steel products, jointly developing smart solutions for products and services to unlock customer value and creating new partnerships to optimize the supply chain. A number of new digital services have been launched to make it easier for customers to do business including eShop and Electronic Data Interchange (‘EDI’) connections.

To increase customer focus, the Company is convinced that advancing strategy of customer intimacy, building strong partnerships with satisfied loyal customers will be as important as any other factor to shape a successful, sustainable future for the business. To do so, insights gained from the Tata Business Excellence Model assessment, an Employee Survey and a Customer Satisfaction Survey were taken and integrated into a consistent, cross-functional approach across Europe. The Journey to Commercial Excellence programme is central to the ambition to develop a culture that is customer focused and performance driven. To develop a service based decisive competitive advantage, the Company is focusing on increasing its delivery performance to the market. This business change is being supported by transformation of IT under the Supply Chain Transformation programme. The first phase of this initiative went live in September 2016. Tata Steel UK is pursuing a transformation programme “Delivering Our future” to increase customer value and reduce operating costs.

In Singapore, the Company’s Reinforcing Knowledge Cluster team is working very closely with customers and project managers for driving solutions and services. The Company continues to strengthen its relationship through various projects in Singapore as well as with international customers through Customer Value Management.

During the year, the Company entered the B2C wire markets in Thailand and Indonesia with the appointment of distributors and retailers to serve the wire customers at the retail level. In Vietnam, Retail Value Management remains the key focus in Independent House Builders (‘IHB’) segment.

In Thailand, customer relationship was strengthened further through dedicated Customer Service Teams. The Company also engaged with Engineering Institute of Thailand and leading Universities in the country for research and promotion of specialized Rebars.

7. Human Resources Management & Industrial Relations

From its foundation over a century ago, Tata Steel Group’s employment philosophy and practices have been based on the recognition that its people are the primary source of its competitiveness.

The Group consistently abides by human resources policy that is found on a set of following principles: equality of opportunity, continuing personal development, fairness, mutual trust and teamwork. These principles are, in turn, underpinned by the five Tata Group core Values of Pioneering, Integrity, Excellence, Unity and Responsibility. The Company also believes as a matter of principle that, diversity within its workforce greatly enhances its overall capabilities. The Company is an equal opportunity employer and it does not discriminate on the basis of race, caste, religion, colour, ancestry, gender, marital status, sexual orientation, age, nationality, ethnic origin or disability. All decisions relating to promotion, compensation and any other forms of reward and recognition are based entirely on performance and merits.

The Company’s ambition is to be a modern employer offering employees long-term prospects for a meaningful professional career. This is why the Company’s collective labour agreement focuses on four aspects: health & vitality, career development & skills, employee productivity and employment conditions.

During the year, the Company focused on improvement in areas related to diversity & inclusion and training & development. Many initiatives were undertaken to bring about a change in the mindset of the workforce regarding these aspects.

In India, the Company’s efforts to improve gender diversity included ‘Women of Mettle’, an engagement and scholarship program for recruiting women talent from technical schools, revision of maternity benefits, work from home option, extension of additional privilege leave to non-officer lady employees and many other measures taken to retain and attract its women employees and cater to their needs for adequate balance between work and personal duties. Under the Company’s Affirmative Action programs, it introduced the Tata Steel scholarship program under which it gave pre-placement offers to 17 Affirmative Action candidates who hold under-graduate degree in engineering.

The Company’s focus on learning & development underwent a shift in pedagogy this year. The Company introduced various e-learning courses on managerial and functional competencies through the Skillsoft learning platform. It also rolled out other initiatives such as ‘Lunch & Learn, ‘NPTEL technical skill modules’, modules on Internet of Things/Big Data, etc. In continuation with the previous years, 17 new academies were rolled out during the year to institutionalize the academy approach of learning and development. During the year, the Company also commenced a program called Felt Leadership Training, wherein senior leaders as trainers share with the workforce their learning and experiences on matters pertaining to health and safety.

The Company is concentrating its efforts on leveraging digitalization to enhance Productivity, Predictability, Capability, Stakeholder Experience and Safety in its business through constant discussions with the members of the Unions.

The Company’s achievements in Human Resource Management were recognized through several accolades. Business Today has, for the 2nd time in a row, declared the Company as the ‘Best Place to Work’ in the Core Sector. The Company has also been certified as a ‘Great Place to Work’ as per the Great Place to Work study conducted for the year 2017. The Company bagged the BML Munjal Award for Business Excellence through Learning & Development under Sustained Excellence Category and was also adjudged Best Training Establishment of India by CII in 28th National Works Skill Competition held in Bangalore. During the year, Capability Development group also secured the certification of ISO 9001:2015 Quality Management System standard.

TSE promotes a healthy work environment and lifestyle through various initiatives such as central and local fitness programmes, training to prevent and deal with stress and local labour conditions improvement initiatives. The career development and skills initiative is focused in stimulating long-term employability and creating a flexible workforce through career counselling, pension advice and ‘Matching’ bureau to identify options for part-time working. TSE also emphasises on employment conditions and industrial relations by focusing on creating modern employment conditions that ensure healthy long-term employability. This is achieved through flexible working hours at the Hot Strip Mill and reviewing overtime arrangements.

The Tata Steel Academy in Europe focuses on strengthening the organisation’s competitive advantage by enabling its people to achieve the highest standards of technical and professional expertise. The Academy uses an approach known as ‘blended learning’ - a mix of practical, computer-based and classroom training. The majority of training remains ‘on the job’, but is structured through the creation of 12 distinct faculties focused on leadership, health & safety, sales & marketing, manufacturing, engineering, technical, supply chain, finance, HR, IT, procurement and total quality management.

The Company’s South-East Asian entities focused initiatives towards enhancing technical knowledge in the areas of steel making, rolling and maintenance with the support of external experts. Regular best practices sharing with other companies in Tata Group facilitated horizontal deployment. Coaching and mentoring ability of the leadership team was also enhanced.

The Company continues to be very constructively engaged with the Unions in all geographies where it operates including the Tata Workers Union in Jamshedpur, the European Works Council for the TSE and all other unions in different parts of the world. Employees and unions are very important stakeholders for the Company and the Management team is in continuous engagement through the year to ensure seamless and transparent communication on all important issues that relates to the employees and the future of the Company.

8. Corporate Social Responsibility

The Company’s vision is to be a global benchmark in ‘value creation’ and ‘corporate citizenship’. The objective of the Company’s Corporate Social Responsibility (‘CSR’) initiatives is to improve the quality of life of communities through long-term value creation for all stakeholders. This objective is in alignment with the Tata Group core purpose.

For decades, the Company has pioneered various CSR initiatives. The Company continues to remain focused on improving the quality of life and engaging communities through health, education, sports and infrastructure development. During the year, it spent Rs.194 crore on CSR activities. The Annual Report on CSR activities, in terms of Section 135 of the Companies Act, 2013, is annexed to this report (Annexure 3).

The Company has always had a very visible presence in its communities. In Europe, the Company is committed to working with local communities to support their social and economic wellbeing. The Company puts future generations at the centre of its local community strategy, which has three anchors: education & learning, health & well-being and environment & sustainability. The Company has formed education and learning partnerships with local organisations. The Company works with them and aims to increase the social skills and confidence of young people, boost pupils’ level of understanding about the steel industry and improve understanding & ambition of students - particularly girls - in STEM (Science, Technology, Engineering and Math) subjects. The Company also runs, its own vocational school in IJmuiden. Every year, about 100 students start their education in mechanics, electro or process technology.

The Company has partnerships with organizations such as Age Cymru and Young Careers Network whose work helps to combat some of the issues such as lack of access to good health, protection from crime and clean & safe environment. The Company also helps fund Port Talbot Women’s Aid in their on-going work with children affected by domestic violence. The Company has had a long-standing partnership with the Triathlon Trust in the UK and hosted free-to-access junior triathlons for 8-14 year olds across the country. It also is a partner in the Steel Valley Project which aims to help people understand and care for their local environment to create healthy and sustainable communities.

In Singapore, the Company organizes monthly outings with its beneficiaries, namely, The Society for the Physically Disabled, Fernvale Gardens School catering to children with intellectual disability. The Company has also partnered with the initiative ‘Food from the Heart’, a non-profit voluntary group which distributes food to those in need.

In Thailand, initiatives in the area of education such as ‘Grow Smart with Tata Steel’ reached 248 schools in 52 provinces. As a responsible citizen, the Company along with its employees also supported the Government relief initiatives post the floods in Southern Thailand.

I. CORPORATE GOVERNANCE

The Company constantly endeavours to follow the corporate governance guidelines and best practices sincerely and disclose the same transparently. The Board is conscious of its inherent responsibility to disclose timely and accurate information regarding the Company’s operations, performance, material corporate events as well as on the leadership and governance matters relating to the Company.

During the second half of the year under review, the Company faced challenges owing to leadership change at Tata Sons (the Promoter). Amidst the leadership transition, there were references to involvement of Tata Trusts and Tata Sons in the business and operations of the Company. The Board likes to categorically state that the Company upholds the highest standards of corporate governance, has very robust processes and has a duly constituted and independent Board of Directors (‘Board’) that conducts itself independently keeping in line the best tradition of a Tata company. The Board, at all times exercises its independence both, in letter and in spirit and the Directors fully understand their fiduciary duties. The Directors have always acted in the best interest of the Company and will continue to do so in the future. It is equally important to state that the Company has a professional and competent leadership team for the management of the business. The Board guides, supports and compliments the Management team towards achieving the set objectives to make the enterprise more sustainable and valuable in the future.

During the course of the leadership transition in Tata Sons, clarifications were also sought by Regulators with respect to sharing of information with the Chairman Emeritus and the Board of Tata Sons. The Board would like to state clearly that the Company has robust systems and processes in place to ensure compliance with applicable rules and regulations on sharing of information. The Board confirms that the Company has acted in accordance with the applicable regulatory framework at all times. The Company ensures that confidential information is handled with due care and is shared on a need-to-know basis in furtherance of legitimate purpose of Company’s business.

Certain allegations were also made to investment decisions with respect to acquisition of Corus Group Plc (‘Corus’) in 2007 and its subsequent performance. The Board wishes to place on record that the acquisition and subsequent financing arrangements were undertaken following due governance processes and under the supervision and oversight of the Board. The acquisition of Corus was based on the long-term strategy of the Company to pursue growth through international expansion and enhance the portfolio of value-added products. The Board discussed the acquisition proposal and financing requirements at various meetings held between October 12, 2006 and April 17, 2007 and approved the same without dissent from any Member of the Board. Being a responsible listed company, necessary disclosures were made in this regard to the Regulators.

The performance of Corus in the two years post acquisition validated the Company’s growth strategy. The ‘black swan’ event in the form of the global financial crisis structurally impacted the underlying demand across many geographies and had a significant impact across the global steel industry and more specifically to the European steel industry which witnessed 30% structural reduction in demand. In response to the above challenges, the Management of the Company has undertaken several strategic and operational interventions to ensure the future sustenance of the European business including restructuring of the portfolio, investment in improving asset quality and reliability, manpower rightsizing to improve productivity, focusing on significantly enhancing the product portfolio and differentiate offering to the customers and new product development. The Board did undertake detailed review and based on such review supports the Management in all its endeavours. The macroeconomic condition and its impact on the Company’s European operations in general, on the UK operations in particular and the various interventions of the Board were disclosed each year in the Directors’ Report between Financial Years 2009 through 2016.

Certain questions were also raised on independence of Mr. Jacobus Schraven, Mr. Andrew Robb and Ms. Mallika Srinivasan. The Board reviewed the issues raised, sought advice from eminent jurists/legal counsels. Based on the review of documents and the advice so received, the Board was fully satisfied of the independence of these directors. All three Directors are eminent personalities with extraordinary business acumen and exhibit very high sense of integrity. The three Directors during their tenure have added enormous value to the Board deliberations and the Board has immensely benefitted from their knowledge, experience and insights.

The Board closely monitored the events that unfolded during the leadership transition. The Audit Committee of the Board (‘Committee’) reviewed the aforementioned issues including the correspondence between the Regulators and the Company including the queries raised on the representations made by Mr. Cyrus P. Mistry and Mr. Nusli N. Wadia in terms of Section 169 of the Companies Act, 2013 and allegations made in this regard in the proceedings before the National Company Law Tribunal initiated against the Promoter. The Committee also reviewed the Company’s interventions, the processes implemented and followed with respect to various compliances and disclosures and the rigours applied when such strategic investment decisions were taken. After due deliberations with relevant stakeholders and review of relevant documents, the Committee expressed its confidence in the Company’s processes to ensure compliance with the provisions of SEBI Regulations. The Committee noted that appropriate procedures were followed by the Company in preparing its financial statements and addressing the business risk issues and that there has been compliance with all legal requirements and corporate governance standards. It follows therefore to conclude that the Company at all points has followed the due corporate governance process and the Board and Management of the Company has conducted the business with due care and in the best interest of the Company.

1. Extra-Ordinary General Meeting

Upon the Requisition and Special Notice received from Tata Sons Limited, Company’s Principal Shareholder, the Company convened an Extra-Ordinary General Meeting (‘EGM’) on December 21, 2016. The Requisitionist placed proposals for removal of Mr. Cyrus P. Mistry and Mr. Nusli N. Wadia as Directors of the Company.

The Company held the EGM at 3:00 PM (IST) on December 21, 2016. A total of 1,868 shareholders (including 5 authorised representatives of the Promoter and Promoter Group) were present in person and through proxies.

Resolution No. 1 in the notice convening the EGM relating to removal of Mr. Cyrus P Mistry was dropped at the EGM since the same was rendered infructuous upon the resignation submitted by Mr. Mistry on December 19, 2016.

The Meeting considered Resolution No. 2, relating to removal of Mr. Nusli N. Wadia as a Director of the Company. Mr. Wadia was not present at the meeting but had sent a communication to the Company Secretary and had requested that the same be read out to the shareholders. The Company Secretary read the said communication verbatim.

A total of 88 members spoke at length at the meeting. At the end of the meeting, the Chairman of the Meeting, Mr. O P Bhatt, Independent Director, responded to all the questions raised by the Members. The meeting concluded at 9:30 PM (IST).

The result of the shareholders vote is given below:

Category

Total Votes polled

Votes cast in favour

Votes cast against

No. of votes

%

No. of votes

%

No. of votes

%

Promoters

29,59,17,367

97.18

29,59,17,367

100.00

-

-

Institutions

31,99,25,078

75.02

26,38,77,467

82.48

5,60,47,611

17.52

Retail Shareholders

96,14,960

4.00

81,21,947

84.47

14,93,013

15.53

All Shareholders

62,54,57,405

64.40

56,79,16,781

90.80

5,75,40,624

9.20

Pursuant to the Listing Regulations, the Corporate Governance Report and the Auditors’ Certificate regarding compliance of conditions of Corporate Governance are annexed to this report (Annexure 4).

2. Board Meetings

For seamless scheduling of meetings, a calendar is prepared and circulated in advance. The Board has also adopted an activity guidance giving them visibility on the upcoming topics for discussions.

The Board met 11 times during the year, the details of which are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and the Listing Regulations.

3. Selection of New Directors and Board Membership Criteria

The Nomination and Remuneration Committee (‘NRC’) works with the Board to determine the appropriate attributes, skills and experience for the Board as a whole and its individual members with the objective of having a Board with diverse backgrounds and experience in business, government, education and public service. Characteristics expected of all Directors include independence, integrity, high personal and professional ethics, sound business judgment, ability to participate constructively in deliberations and willingness to exercise authority in a collective manner. The Policy on appointment & removal of Directors and determining Directors’ independence was adopted by the Board on March 31, 2015 and was annexed to the Board Report of Financial Year 2014-15. During the year, there have been no changes to the Policy. Hence, the same is not annexed to this Report, but is available on the website at www.tatasteel.com

4. Familiarization Programme for Independent Directors

All new Independent Directors (‘IDs’) inducted on the Board go through a structured orientation programme. Presentations are made by Executive Directors and Senior Management giving an overview of our operations to familiarize the new IDs with the Company’s business operations. The new IDs are given an orientation on the Company’s products, group structure and subsidiaries, Board constitution and procedures, matters reserved for the Board, and the major risks and risk management strategy.

Details of orientation given to the existing IDs in areas of strategy, operations & governance, safety, health and environment, industry & regulatory trends, competition and future outlook are provided in the Corporate Governance Report and is also available on the website at www.tatasteel.com

5. Evaluation

The Board evaluated the effectiveness of its functioning, that of the Committees and of individual Directors. The Board, through NRC, sought the feedback of Directors on various parameters such as:

- Degree of fulfillment of key responsibilities towards stakeholders (by way of monitoring corporate governance practices, participation in the long-term strategic planning, etc.);

- The structure, composition and role clarity of the Board and Committees;

- Extent of co-ordination and cohesiveness between the Board and its Committees;

- Effectiveness of the deliberations and process management;

- Board/Committee culture and dynamics; and

- Quality of relationship between Board Members and the Management.

The Chairman of the Board had one-on-one meetings with the IDs and the Chairman of NRC had one-on-one meetings with the Executive and Non-Executive Directors. These meetings were intended to obtain Directors’ inputs on effectiveness of the Board/Committee processes.

The Board considered and discussed the inputs received from the Directors. Also, the IDs at their meeting reviewed the performance of the Board, Chairman of the Board and that of Non-Executive Directors.

The evaluation process endorsed the Board Members’ confidence in the ethical standards of the Company, the resilience of the Board and Management in navigating the Company during challenging times, cohesiveness amongst the Board Members, constructive relationship between the Board and the Management and the openness of the Management in sharing strategic information to enable Board Members to discharge their responsibilities.

In the coming year, the Board intends to enhance focus on diversity of the Board through the process of succession planning, strategic plan for portfolio restructuring of Tata Steel Europe and exploring new drivers of growth for the Group.

6. Compensation Policy for the Board and Senior Management

Based on the recommendations of NRC, the Board has approved the Remuneration Policy for Directors, Key Managerial Personnel (‘KMP’) and all other employees of the Company. As part of the policy, the Company strives to ensure that:

- the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company successfully;

- relationship between remuneration and performance is clear and meets appropriate performance benchmarks; and

- remuneration to Directors, KMP and Senior Management involves a balance between fixed and incentive pay, reflecting short, medium and long-term performance objectives appropriate to the working of the Company and its goals.

The Remuneration Policy for Directors, KMP and other Employees was adopted by the Board on March 31, 2015 and was annexed to the Board Report of Financial Year 2014-15. During the year, there have been no changes to the Policy. Hence, the same is not annexed to this Report, but is available on our website at www.tatasteel.com

7. Particulars of Employees

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this report.

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits set out in the said Rules forms part of the report (Annexure 5).

8. Independent Directors’ Declaration

The Company has received the necessary declaration from each ID in accordance with Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence as laid out in Section 149(6) of the Companies Act, 2013 and the Listing Regulations.

9. Directors

The year under review saw major changes to the Board of Directors (‘Board’), including that of the position of the Chair of the Board.

The Board, on November 25, 2016, appointed Mr. O. P. Bhatt as the Chairman of the Board in place of Mr. Cyrus P. Mistry. The Board appointed Mr. Bhatt as the Chairman keeping in mind the principles of good corporate governance and to provide impartial leadership to the Company in its preparation and conduct of the EGM. The Company convened and held the EGM on December 21, 2016 upon the Requisition and Special Notice received from Tata Sons, Company’s Principal Shareholder (‘Requisitionist’). The Requisitionist placed proposals for removal of Mr. Cyrus P. Mistry and Mr. Nusli N. Wadia as Directors of the Company.

The appointment of Mr. Bhatt as the Chairman was also to ensure stability to the Company and in the larger interest of Company’s stakeholders, including but not limited to employees, trading partners, financial stakeholders and local community around Company’s operations. Mr. Bhatt served as the Chairman of the Board through December 22, 2016.

The Board placed on record its deep appreciation towards Mr. Bhatt for his leadership during challenging times.

Inductions to the Board

On the recommendations of the Nomination and Remuneration Committee, the Board appointed:

- Mr. N. Chandrasekaran as Additional (Non-Executive) Director of the Company effective January 13, 2017 and as the Chairman of the Board effective February 7, 2017. Mr. Chandrasekaran brings to the Board his extensive and outstanding experience in successfully leading and managing a large and valuable global corporation.

- On February 7, 2017, the Board appointed Dr. Peter (Petrus) Blauwhoff as Additional (Independent) Director of the Company. The appointment was effective immediately. Dr. Blauwhoff brings a wealth of experience to the Board with his knowledge of the global manufacturing industry, technology focus in general and of the energy, oil and gas business in particular. Dr. Blauwhoff brings valuable insights and guidance in the areas of safety, health and environment. On March 29, 2017, the Board appointed Mr. Aman Mehta as Additional (Independent) Director of the Company. The appointment was effective immediately. Mr. Mehta brings a wealth of experience to the Board with his extensive experience in the field of banking & finance and proven track record of successfully managing large multinational enterprises.

- On March 29, 2017, the Board appointed Mr. Deepak Kapoor as Additional (Independent) Director of the Company. The appointment was effective April 1, 2017. Mr. Kapoor brings to the Board his experience in successfully steering the Indian arm of a Global Consulting and Advisory firm during very challenging times and strengthening the firm’s footprint in India. The Board will also draw on his extensive global experience in the audit function as well as business advisory related work encompassing multiple industries.

The resolution(s) for confirming the above appointments will come before you at the ensuing Annual General Meeting (‘AGM’) scheduled to be held on August 8, 2017. We seek your support and hope you will enthusiastically vote in confirming the above appointments to the Board.

Re-appointments

As per the provisions of the Companies Act, 2013, Mr. D. K. Mehrotra and Mr. Koushik Chatterjee will retire at the ensuing AGM and being eligible, seek re-appointment. The Board recommends and seeks your support in confirming re-appointment of Mr. D. K. Mehrotra and Mr. Koushik Chatterjee.

The profile and particulars of experience, attributes and skills that qualify all of the above Directors for the Board membership is disclosed in the Notice convening the AGM.

Cessation

In accordance with the retirement policy applicable for the Company’s Board of Directors (Independent Directors to retire on attaining 75 years of age), Mr. Jacobus Schraven and Mr. Subodh Bhargava, Independent Directors, retired from the Board on February 7, 2017 and March 29, 2017 respectively. Mr. Cyrus P. Mistry resigned as the Member of the Board effective December 19, 2016. Mr. Nusli N. Wadia, in terms of a shareholder vote ceased to be the Member of the Board effective December 21, 2016.

The Board of Directors place on record their deep appreciation for the contribution of these Directors during their tenure.

10. Key Managerial Personnel

Pursuant to Section 203 of the Companies Act, 2013, the Key Managerial Personnel of the Company are - Mr. T. V. Narendran, Managing Director (India and South-East Asia), Mr. Koushik Chatterjee, Group Executive Director (Finance, Corporate & Europe) and Mr. Parvatheesam K, Company Secretary. During the year, there has been no change in the Key Managerial Personnel.

11. Audit Committee

The Audit Committee was constituted in the year 1986. The Committee has adopted a Charter for its functioning. The primary objective of the Committee is to monitor and provide effective supervision of the Management’s financial reporting process, to ensure accurate and timely disclosures, with the highest levels of transparency, integrity and quality of financial reporting.

The Committee met 7 times during the year, the details of which are given in the Corporate Governance Report. As on date of this Report, the Committee comprises Mr. O. P. Bhatt (Chairman), Mr. Ishaat Hussain, Mr. Andrew Robb and Mr. Aman Mehta.

12. Internal Control Systems

The Board of Directors of the Company is responsible for ensuring that Internal Financial Controls have been laid down in the Company and that such controls are adequate and operating effectively. The foundation of Internal Financial Controls (‘IFC’) lies in the Tata Code of Conduct (‘TCoC’), policies and procedures adopted by the Management, corporate strategies, annual business planning process, management reviews, management system certifications and the risk management framework.

The Company has IFC framework, commensurate with the size, scale and complexity of its operations. The framework has been designed to provide reasonable assurance with respect to recording and providing reliable financial and operational information, complying with applicable laws, safeguarding assets from unauthorized use, executing transactions with proper authorization and ensuring compliance with corporate policies. The controls, based on the prevailing business conditions and processes have been tested during the year and no reportable material weakness in the design or effectiveness was observed. The framework on IFC over Financial Reporting has been reviewed by the internal and external auditors.

The Company uses various IT platforms to keep the IFC framework robust and the Information Management Policy governs these IT platforms. The systems, standard operating procedures and controls are implemented by the executive leadership team and are reviewed by the internal audit team whose findings and recommendations are placed before the Audit Committee.

The scope and authority of the Internal Audit function is defined in the Internal Audit Charter. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee. The Internal Audit team develops an annual audit plan based on the risk profile of the business activities. The Internal Audit plan is approved by the Audit Committee, which also reviews compliance to the plan.

The Internal Audit team monitors and evaluates the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the report of internal audit function, process owners undertake corrective action(s) in their respective area(s) and thereby strengthen the controls. Significant audit observations and corrective action(s) thereon are presented to the Audit Committee.

The Audit Committee reviews the reports submitted by the Internal Auditors in each of its meeting. Also, the Audit Committee at frequent intervals has independent sessions with the external auditor and the Management to discuss the adequacy and effectiveness of IFC.

13. Risk Management

Risk is an essential part of business and taking risk is a fundamental driving force in business. In fact, it is the unique differentiator between companies who thrive and those who merely survive or otherwise. This has never been more important than in today’s VUCA (Volatility, Uncertainty, Complexity and Ambiguity) world.

There are several rapid, unprecedented and unpredictable changes taking place all the time. The size, scale and scope of these changes in today’s world are enormous. Many of these are driven by changes in technology and have consequential impacts on supply chain, manufacturing, assembling, logistics and costs. The geo-political environment is extremely volatile and regulatory framework uncertain which in-turn is leading to changes in the supply-demand equation, commodity prices, market forces and competition. The aforementioned uncertainties warrant robust process and framework to minimize the threats and capture opportunities to create sustainable value for the organization.

The Company follows a robust 5 step Enterprise Risk Management (‘ERM’) process to address the risks associated with its business. The ERM process framework has evolved and matured over the years and is based on international standards such as ISO 31000 and Committee of Sponsoring Organizations of the Treadway Commission (‘COSO’) with inputs drawn from the best practices of leading companies across industries.

The ERM is aimed at developing a “Risk Intelligent Organization” that supports risk informed business decisions, strengthens organizational risk resiliency and provides agility to the organization for preserving as well as enhancing long term value for all stakeholders.

In order to achieve the stated ERM objectives, the Company has constituted a robust governance structure comprising of three levels of risk management responsibilities as: Risk Oversight, Risk Infrastructure and Risk Ownership.

- The Risk Oversight function consists of the Board, Risk Management Committee (‘RMC’) and Group Risk Review Committee (‘GRRC’) that provide clear directions and guidelines for spearheading the ERM framework & policy across the organization. The RMC of Board assists the Board in framing the Risk Management Plan for the Company and reviewing and guiding the risk policy. It also reviews key risks to the Tata Steel Group and actions deployed by the Management with respect to their identification, impact assessment, mitigation and monitoring.

GRRC is a Management Committee comprising Senior Management personnel as its members. The GRRC has the primary responsibility of implementing the Risk Management Policy of the Company and achieving the stated objective of developing a risk intelligent culture that helps improve the Company’s performance.

- The Company has laid down a strong foundation for a successful risk management process by setting up the risk infrastructure in the form of a dedicated organizational unit called ERM headed by Group Head - Corporate Finance & Risk Management, who acts as the Chief Risk Officer (‘CRO’) of the Company.

- The ownership of risk tracking and mitigation rests with the senior executives of various functional units who as the risk owners review and monitor key risks of the division periodically in order to avoid any undue deviations or adverse events by designing and implementing suitable mitigation plans proactively. Regular and extensive reviews at business units lead to robust implementation of mitigation plans which ultimately create value for the business.

The robust governance structure has also helped in the integration of the ERM process with the Company’s strategy & planning processes where emerging risks are used as inputs in the strategy and planning process. Risk is also integrated with the capital allocation process and risk assessments form important considerations for key decisions on investment proposals for organic and inorganic growth.

During the year, the Company has undertaken various focused initiatives and process improvements aimed at strengthening, widening & deepening the scope and coverage of ERM across the Company. The risk maturity assessment process has been rolled out to the domestic and overseas subsidiaries and the process has been strengthened through a customized in-house built IT solution to facilitate real time reporting of risks, provide visibility, drill-down and appropriate escalation mechanisms across the Enterprise.

During the year, the Company undertook various external and internal training programs/sessions along with communication campaigns to promote awareness of the ERM process.

The Board is happy to report that the Company has been conferred the honour of the ‘Best Risk Management Practice’ in the category of Metals & Mining at the 3rd India Risk Management Awards 2017. This is indicative of the Company’s commitment towards cultivating a robust and proactive risk intelligent culture.

14. Vigil Mechanism

The Company’s Vigil Mechanism provides a formal mechanism for all Directors, employees and business associates to approach the Ethics Counselor / Chairman of the Audit Committee and make protective disclosures about the unethical behaviour, actual or suspected fraud or violation of the TCoC.

The Vigil Mechanism comprises 3 policies viz., the Whistle Blower Policy for Directors & Employees, Whistle Blower Policy for Business Associates and Whistle Blower Reward & Recognition Policy for Employees. The same is available on our website www.tatasteel.com

The Whistle Blower Policy for Directors & employees is an extension of the TCoC that requires every Director or employee to promptly report to the Management any actual or possible violation of the TCoC or any event wherein he or she becomes aware of that which could affect the business or reputation of the Company.

The Whistle Blower Policy for Business Associates provides protection to vendors from any victimization or unfair trade practices by the Company.

The Whistle Blower Reward and Recognition Policy for Employees has been implemented in order to encourage employees to genuinely blow the whistle on any misconduct or unethical activity taking place in the Company. The disclosures reported are addressed in the manner and within the time frames prescribed in the Whistle Blower Policy.

During the year, a series of communication awareness on the “Code of Conduct” of the Company were sent to business associates and “Neeti Katha” i.e. storytelling through snippet series were mailed to employees as part of the awareness campaign. Each snippet consisted of a short story based on situations related with accepting of gifts and hospitality from business associates.

As a tribute to late Mr. J R D Tata, for over a decade, the Company has been celebrating the month of July as Ethics Month. This practice has helped in reinforcing employee involvement and passion in driving the Management of Business Ethics. A workshop on Tata Values, Tata Code of Conduct and Governance process was initiated with an objective of training employees.

During the year, the Company also adopted the Conflict of Interest Policy. The policy requires employees to act in the best interest of the Company without any conflicts and declare conflicts, if any (real, potential or perceived), to the Ethics Counsellor.

During the year, the Company received 382 whistle-blower complaints of which 348 were investigated and appropriate action was taken. Investigations are underway for the remaining complaints.

15. Related Party Transactions

There have been no materially significant related party transactions between the Company and the Directors, the Management, the subsidiaries or the relatives except for those disclosed in the financial statements.

Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) along with the justification for entering into such contracts or arrangements in Form AOC-2 does not form part of the Report.

16. Disclosure as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition And Redressal) Act, 2013

The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder.

During the year, the Company received 26 complaints of sexual harassment, out of which 19 complaints have been resolved by taking appropriate actions. The remaining 7 complaints are under investigation.

17. Directors’ Responsibility Statement

Based on the framework of internal financial controls established and maintained by the Company, work performed by the internal, statutory, cost and secretarial auditors and external agencies including audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by the Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company’s internal financial controls were adequate and effective during Financial Year 2016-17.

Accordingly, pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability confirm:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) that we 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 or loss of the Company for that period;

c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) t hat the annual accounts have been prepared on a going concern basis;

e) that proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively; and

f) that proper internal financial controls were laid down and that such internal financial controls are adequate and were operating effectively.

18. Business Responsibility Report

The Securities and Exchange Board of India (‘SEBI’) requires companies to prepare and present to stakeholders a Business Responsibility Report (‘BRR’) in the prescribed format. SEBI, however, allows companies to follow an internationally recognized framework to report on the environmental and social initiatives undertaken by the Company. Further, SEBI has on February 6, 2017 advised Companies that are required to prepare BRR to transition towards an Integrated Report.

As stated earlier in the Report, the Company has followed the framework of the International Integrated Reporting Council to report on all the six capitals that it uses to create long-term stakeholder value. The Company’s Integrated Report has been assessed and Bureau Veritas (India) Private Limited has provided the required assurance. The Company has also provided the requisite mapping of principles between the Integrated Report, the Global Reporting Initiative (‘GRI’) and the Business Responsibility Report as prescribed by SEBI. The same is available on the website www.tatasteel.com.

19. Subsidiaries, Joint Ventures and Associates

The Company has 255 subsidiaries, 19 joint ventures and 22 associate companies as on March 31, 2017. During the year, the Board of Directors reviewed the affairs of material subsidiaries. The Company has, in accordance with Section 129(3) of the Companies Act, 2013 prepared consolidated financial statements of the Company and all its subsidiaries, which form part of the Integrated Report. Further, the report on the performance and financial position of each of the subsidiary, associate and joint venture and salient features of the financial statements in the prescribed Form AOC-1 is annexed to this report (Annexure 6).

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and financial statements of each of the subsidiary will be available on our website www.tatasteel.com. These documents will also be available for inspection during business hours at the Registered Office of the Company.

The names of companies that have become or ceased to be subsidiaries, joint ventures and associates are disclosed in the annexure to this report (Annexure 7).

20. Auditors Statutory Auditors

In terms of the provisions of the Companies Act, 2013 (‘Act’), statutory auditors need to be rotated on completion of two consecutive terms of five years each. For those of the companies that have firms audit their accounts for more than ten years as of April 1, 2014, the Act provided such companies a transition period of three years to comply with the provisions of the Act. The current statutory auditors, M/s Deloitte Haskins & Sells LLP (‘DHS LLP’) completed two consecutive terms as of April 1, 2014 and hence the Company availed the benefit of the transition period which came to an end on March 31, 2017. Accordingly, the Company would need to appoint a new audit firm to audit its books of account for the year ending March 31, 2018 and onwards.

The Management under the guidance ofthe Audit Committee initiated the process of selection of auditors and had detailed interactions with certain eligible audit firms and assessed them against a defined eligibility and evaluation criteria. The assessment was undertaken by a Steering Committee constituted for this purpose.

The Audit Committee of the Board considered the findings of the Steering Committee and has decided to appoint Price Waterhouse & Co Chartered Accountants LLP (‘PW’) as the statutory auditors of the Company for a period of five years commencing from the conclusion of the ensuing 110th Annual General Meeting scheduled to be held on August 8, 2017 through the conclusion of 115th Annual General Meeting of the Company to be held in the year 2022.

The Board, at its meeting held on May 16, 2017, considered the recommendations/decision of the Audit Committee with respect to the appointment of PW as the statutory auditor. Based on due consideration, the Board recommends for your approval the appointment of PW as the statutory auditor of the Company.

The Audit Committee and the Board of Directors considered the following factors in recommending the appointment of PW as the statutory auditor of the Company:

- Experience of the firm in handling audits of large global metal and mining corporations;

- Competence of the leadership and the proposed audit team of the firm in auditing the financial statements of the Company;

- Ability of the firm to seamlessly scale and understand the Company’s operations, systems and processes; and

- Geographical presence and ability of the firm in servicing the Company and its subsidiaries at multiple locations.

The Board seeks your support in approving the appointment of PW as the new statutory auditor of the Company.

DHS LLP, Chartered Accountants, are the auditors of the Company and will hold office until the conclusion of the ensuing AGM. On your behalf and on our own behalf we place on record our sincere appreciation for the services rendered by DHS LLP during its long association with the Company.

Cost Auditors

As per Section 148 of the Companies Act, 2013 (‘Act’), the Company is required to have the audit of its cost records conducted by a Cost Accountant in practice. In this connection, the Board of Directors of the Company has on the recommendation of the Audit Committee, approved the appointment of M/s Shome & Banerjee as the cost auditors of the Company for the year ending March 31, 2018.

In accordance with the provisions of Section 148(3) of the Act read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors as recommended by the Audit Committee and approved by the Board has to be ratified by the members of the Company. Accordingly, appropriate resolution forms part of the Notice convening the AGM. The Board seeks your support in approving the proposed remuneration of Rs.18 lakh plus out-of-pocket expenses payable to the Cost Auditors for the Financial Year ending March 31, 2018.

M/s Shome & Banerjee have vast experience in the field of cost audit and have conducted the audit of the cost records of the Company for the past several years under the provisions of the erstwhile Companies Act, 1956.

The due date for filing the Cost Audit Report of the Company for the Financial Year ended March 31, 2016 was September 30, 2016 and the same was filed in XBRL mode by the Cost Auditor on September 2, 2016.

Secretarial Auditors

Section 204 of the Companies Act, 2013 inter-alia requires every listed company to annex with its Board’s report, a Secretarial Audit Report given by a Company Secretary in practice, in the prescribed form.

The Board appointed Parikh & Associates, practicing Company Secretaries as Secretarial Auditor to conduct Secretarial Audit of the Company for the Financial Year 2016-17 and their report is annexed to this report (Annexure 8). There are no qualifications/ observations/reservations/adverse remarks in the said report.

The Board has also appointed Parikh & Associates as Secretarial Auditor to conduct Secretarial Audit of the Company for Financial Year 2017-18.

21. Extract of the Annual Return

The details forming part of the extract of the Annual Return in Form MGT 9 as per provisions of the Companies Act, 2013 and Rules thereto are annexed to this report (Annexure 9).

22. Significant and Material orders passed by the Regulators or Courts

There have been no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company’s operations. However, Members’ attention is drawn to the statement on contingent liabilities, commitments in the notes forming part of the Financial Statements.

23. Particulars of Loans, Guarantees or Investments

Particulars of loans, guarantees given and investments made during the year in accordance with Section 186 of the Companies Act, 2013 is annexed to this report (Annexure 10).

24. Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

Details of the energy conservation, technology absorption and foreign exchange earnings and outgo are annexed to this report (Annexure 11).

25. Deposits

During the year, the Company has not accepted any public deposits under the Companies Act, 2013.

J. ACKNOWLEDGEMENTS

We thank our customers, vendors, dealers, investors, business associates and bankers for their continued support during the year. We place on record our appreciation of the contribution made by employees at all levels. The Company’s resilience to meet challenges was made possible by their hard work, solidarity, co-operation and support.

We thank the Government of India, the State Governments where we have operations and other government agencies for their support and look forward to their continued support in the future.

On behalf of the Board of Directors

sd/-

N. Chandrasekaran

Mumbai Chairman

May 16, 2017 (DIN: 00121863)


Mar 31, 2015

To the Members,

The Directors take pleasure in presenting the 108th Annual Report on the business and operations of your Company along with the standalone and consolidated summary financial statements for the year ended 31 March, 2015.

A. FINANCIAL RESULTS

Rs crores Tata Steel Standalone 2014-15 2013-14

Net revenue from operations 41,785.00 41,711.03

Total expenditure before finance cost, depreciation (net of expenditure 31,776.20 28,894.13 transferred to capital)

Operating Profit 10,008.80 12,816.90

Add: Other income 582.78 787.64

Profit before finance cost, depreciation, exceptional items and taxes 10,591.58 13,604.54

Less: Finance costs 1,975.95 1,820.58

Profit before depreciation, exceptional items and taxes 8,615.63 11,783.96

Less: Depreciation 1,997.59 1,928.70

Profit before exceptional items and taxes 6,618.04 9,855.26

Add/(Less): Profit on sale of non-current investments 806.10 -

Add/(Less): Profit on sale of non-current assets 1,146.86 -

Add/(Less): Provision for diminution in the value of investment/doubtful (62.11) (141.76) advances/impairment of non-current assets

Profit before taxes 8,508.89 9,713.50

Less: Provision for current taxation 1,908.60 3,098.02

Less: Provision for MAT credit (117.21) -

Less: Provision for deferred taxation 278.38 203.29

Profit/(Loss) after taxes 6,439.12 6,412.19

Add: Share of profit of associates - -

Add/(Less): Minority interest - -

Profit/(Loss) after tax, minority interest and share of profit of associates - -

Distribution on hybrid perpetual securities 266.11 266.04

Tax effect on distribution of hybrid perpetual securities (90.45) (90.43)

6,263.46 6,236.58

Add: Balance brought forward from the previous year 29,430.58 24,616.17

Add: Profit and Loss account balance relating to acquisitions - 256.45

Add: Adjustments on account of transitional adjustments (127.80) -

Balance 35,566.24 31,109.20

Which the Directors have apportioned as under to:-

(i) Dividend on Preference Shares - -

(ii) Proposed dividend on Ordinary Shares 776.97 971.21

(iii) Tax on dividends 153.02 66.19

(iv) General Reserve 643.91 641.22

(v) Statutory Reserve - -

(vi) Special Reserve - -

(vii) Capital Redemption Reserve - -

Total 1573.90 1678.62

Balance to be carried forward 33,992.34 29,430.58

Tata Steel Group 2014-15 2013-14

Net revenue from operations 1,39,503.73 1,48,613.55

Total expenditure before finance cost, 1,26,967.98 1,32,202.54 depreciation (net of expenditure transferred to capital)

Operating Profit 12,535.75 16,411.01

Add: Other income 796.18 516.81

Profit before finance cost, depreciation, 13,331.93 16,927.82 exceptional items and taxes

Less: Finance costs 4.847.75 4,336.83

Profit before depreciation, exceptional 8,484.18 12,590.99 items and taxes

Less: Depreciation 5,943.60 5,841.22

Profit before exceptional items and taxes 2,540.58 6,749.77

Add/(Less): Profit on sale of non-current 1,315.34 18.20 investments

Add/(Less): Profit on sale of non-current 1,146.86 - assets

Add/(Less): Provision for diminution in the (6,390.87) (45.84) value of investment/doubtful advances/ impairment of non-current assets

Profit before taxes (1,388.09) 6,722.13

Less: Provision for current taxation 2,214.71 3,482.64

Less: Provision for MAT credit (117.32) (0.21)

Less: Provision for deferred taxation 470.02 (424.27)

Profit/(Loss) after taxes (3,955.50) 3,663.97

Add: Share of profit of associates 16.69 0.84

Add/(Less): Minority interest 13.29 (69.92)

Profit/(Loss) after tax, minority interest (3,925.52) 3,594.89 and share of profit of associates

Distribution on hybrid perpetual securities 266.11 266.04

Tax effect on distribution of hybrid perpetual (90.45) (90.43) securities (4,101.18) 3,419.28

Add: Balance brought forward from the 8,848.24 7,039.38 previous year

Add: Profit and Loss account balance relating to - 222.48 acquisitions

Add: Adjustments on account of transitional (136.24) - adjustments

Balance 4,610.83 10,681.14

Which the Directors have apportioned as under to:-

(i) Dividend on Preference Shares - 0.10

(ii) Proposed dividend on Ordinary Shares 776.97 971.21

(iii)Tax on dividends 164.20 80.22

(iv) General Reserve 729.77 730.16

(v) Statutory Reserve 66.63 -

(vi) Special Reserve 1.20 1.60

(vii)Capital Redemption Reserve 46.31 49.62

Total 1785.08 1832.02

Balance to be carried forward 2.825.75 8,848.23

Note:

The Company recognised a non-cash write-down of goodwill and assets in the consolidated financial results in Q4 FY ''15 of Rs. 4,951 crores, mainly related to the Long Products UK business in Tata Steel Europe, which is now fully impaired.

The impairment also included a write-down of investments in overseas raw materials projects in Mozambique and Ivory Coast and the Taconite iron ore project in Canada primarily because the economic viability of these projects remains uncertain at the current level of commodity prices. Additionally, the Company undertook a non-cash impairment charge of Rs. 1,577 crores in the first quarter of the Financial Year 2014-15 related to its investment in the Mozambique Coal Project. The total impairment charge for Financial Year2014-15 is Rs. 6,391 crores in the consolidated financial results after offsetting it with the reversal of impairments taken on account of Gopalpur land in the earlier years. The Company''s liquidity position and financial covenants are unaffected by the above non-cash write-down.

Transfer to Reserves

We propose to transfer Rs. 643.91 crores to the general reserve. An amount of Rs. 33,992.34 crores is proposed to be retained in the profit and loss account.

Dividend

The Board recommended a dividend of Rs. 8 per Ordinary Share on 97,12,15,439 Ordinary Shares of Rs. 10 each for the year ended 31 March, 2015. (Financial Year 2013-14: Rs. 10 per Ordinary Share on 97,12,15,405 Ordinary Shares of Rs. 10 each).

The dividend on Ordinary Shares is subject to the approval of the shareholders at the Annual General Meeting (AGM) scheduled on 12 August, 2015. The total dividend pay-out works out to 14% (Financial Year 2013-14: 16%) of the net profit for the standalone results.

The Register of Members and Share Transfer Books will remain closed from 25 July, 2015 to 12 August, 2015 (both days inclusive) for the purpose of payment of the dividend for the Financial Year ended 31 March, 2015 and the AGM.

Capex and Liquidity

During the year, the Company spent Rs. 13,492 crores on capex, deploying a large proportion towards the phase 1 of 3 million tonnes Greenfield Kalinganagar Project, Odisha. Despite this significant spend, the Company was able to keep the gross debt level stable during the year. The Company''s liquidity remains strong at Rs. 22,000 crores including undrawn lines. The Company also continues to pursue its strategy of exiting non-core assets.

B. EXTERNAL ENVIRONMENT

Global Economic Outlook

Financial Year 2014-15 witnessed volatile markets as economies around the world, found themselves at various points in the economic cycle, with monetary easing being the predominant theme across many geograp -hies. However, growth remained subdued globally, as adverse factors more than offset oil price decline, the quantitative easing in Europe and the growth in South-East Asia.

According to the International Monetary Fund, the global economy is expected to grow at ~3.4% in Financial Year 2015-16. This is due to the fact that slowdown in production in China and Russia is expected to be more than offset by recovery of the developed economies and growth in South-East Asia. However, currency movements and interest rates continue to be risks for growth in many regions.

Developed economies are expected to grow moderately. After posting stronger and broader growth at the end of 2014, the USA is carrying the momentum into 2015 with increased consumer spending and trade activity, falling unemployment rate and improved investor sentiment. Similarly, the Eurozone is improving amidst monetary uncertainty driven by a depreciating Euro and geo-political tensions with Greece, Russia and Ukraine in an environment of relatively loose monetary policy. While, the lower energy prices have helped improving consumer sentiment, the Euro continued to depreciate against the US$ sharply especially after the Swiss national bank removed Swiss Franc''s peg to the Euro. The European Commercial Bank (ECB) has exceeded market expectations with announced expanded quantitative easing programme which has boosted equity and bond markets.

Economic growth in South Asia is expected to be driven by strong consumption and increasing investment in the region. India is expected to be a major contributor to this growth as it is set to double its economic size by 2019 and see significant improvement in intensity of steel use per capita. China witnessed its slowest growth during 2014 in the last 25 years. The lower growth trend in China has adversely impacted commodity markets, including putting pressure on iron ore and steel prices.

Steel prices are now increasingly aligning to global export prices as markets strike a balance between imports and domestic demand. China''s waning demand and resultant rise in exports poses a risk to leveraging improving domestic demand in South Asia and Europe. Further, movement of currencies against US$ would also have a significant impact on the movement of global steel and raw material prices.

Outlook for India

Financial Year 2014-15 saw India emerge as a bright spark even as advanced and emerging economies grappled with uncertainty and slower growth. Economic growth in India peaked in the second quarter of the fiscal at 8.2% (under new series) but remained moderate in the third and fourth quarter at around 7.5%. Cyclical macro parameters like inflation, current account deficit have improved during the year due to domestic as well as external factors. Indian rupee was one of the best performers in the world, registering a 4% decline in value as against the US$ compared to the rest of the world grappling with devaluation of their currencies. However, domestic steel producers witnessed subdued sales as increased imports from China and Russia resulted in sharp cut to steel prices in India over the past six months.

The Indian economy is in the midst of significant structural change and is expected to embark on a sustained economic growth cycle. According to World Bank, India is set to be the world''s fastest growing major economy in the Financial Year 2015-16 at 7.5% and gradually move up to 8% in the next two financial years. However, this economic growth will depend on steady implementation of reforms aimed to improve productivity and competitiveness. Government initiatives like ''Make in India'' will stimulate manufacturing growth while its focus on infrastructure should revive the investment cycle. This should help India grow while being fiscally prudent. States are also expected to play a key part in GDP growth due to their increased finances via greater share of government taxes, coal auctions etc.

Indian steel demand is expected to reflect improving macro-economic environment. Steel end use sectors are expected to perform better compared to previous financial year. Infrastructure projects like dedicated freight corridor etc., are gaining momentum and the steady decline in stalled projects coupled with hike in import duty in both flat and long products should stimulate steel demand. Recent weakness in Indian rupee has also helped competitiveness of domestic steel players. However, steel prices are expected to remain under pressure from Chinese exports and increased domestic competitiveness.

Outlook for Europe

European economy is displaying increasing signs of recovery although it is regional and is still constrained by weak investment activity and high unemployment. Geo-political instability, capital flow volatility and deflation risk continue to exist but the impact of these risks has come down. On account of this, European steel demand is expected to be modest in 2015 following the decline experienced in the second half of the Financial Year 2014-15. Forecast suggest demand to grow in the region of 2% in 2015 considering the positive effects of the weaker Euro. At 150 million tonnes, however, European demand in 2015 would still be around 25% down on the pre-crisis peak and 10% below the pre-crisis norm of around 165 million tonnes.

Market spreads for steel in Europe improved marginally in 2014 on the back of the sharp drop in raw materials prices. However, overcapacity in China and slowdown in domestic demand, led to a 50% increase in Chinese exports to the rest of the world and put pressure on global steel prices. In 2015, steel margins are expected to remain under pressure and steelmakers to focus on operational efficiencies and value addition to customers.

C. OPERATIONS AND PERFORMANCE

Tata Steel Group

The Tata Steel Group recorded total deliveries of 26.3 million tonnes in Financial Year 2014-15 as compared to 26.6 million tonnes during the previous financial year. While deliveries at Indian operations were higher by 3% as compared to the previous year, Tata Steel Europe, NatSteel Holdings (NSH) and Tata Steel Thailand (TSTH) reported lower deliveries. Tata Steel India reported higher deliveries due to better demand in the retail segment and higher levels of production. However, deliveries at Tata Steel Europe were lower, in line with lower production due to operational challenges at its Long Product Division. The closure of key billet suppliers in China coupled with low priced Chinese imports in Singapore, have resulted in lower deliveries at NSH. TSTH reported lower deliveries primarily on account of low demand resulting in continued pressure on spreads.

During the year, the consolidated profit before interest, depreciation, exceptional items and taxes of the Tata Steel Group was Rs. 13,332 crores, lower by 21% over the previous year. Consequently, the consolidated profit before exceptional items and taxes was Rs. 2,541 crores in Financial Year 2014-15 compared to Rs. 6,750 crores in the previous year. During the year, the Company reported an exceptional loss of Rs. 3,929 crores in its consolidated accounts which primarily represents the non-cash write down of goodwill and other assets of Rs. 1,273 crores and Rs. 5,118 crores respectively. This write down in certain non-performing business units within the Tata Steel Group, primarily relating to European operations and investments in coal assets has been partly offset by profit on sale of land at Borivali, India, and profit on sale of Company''s stake in The Dhamra Port Company Limited.

India

The Company''s Indian operations are fully dependent on captive iron ore from Noamundi, Joda and Khondbond and partly on captive coal from West Bokaro and Jharia region. For the first time in the history of the Company, the operation of the captive iron ore mines were restricted. Iron ore mines at all locations remained closed for a period of 30 days. The total impact of this was a reduction in supply of 5.2 million tonnes of iron ore. Further, significant drop in demand for steel in China and devaluation of Russian rouble aggravated the conditions putting substantial pressure on margins due to influx of imports into the country.

The Company was quick in responding to the challenges through a series of risk mitigation measures and also through improvements in operations and implementing the following strategic initiatives to mitigate the impact of mining crisis in India:

- Setting up of cross functional task force for procurement of iron ore from domestic and international sources;

- Initiating appropriate steps on the logistics front to ensure delivery of raw materials from different locations. All the major east coast ports were utilised to receive the imported iron ore;

- Appropriately modifying the sinter and pellet plants to accommodate ore from different sources. Utilising the opportunity to fine tune processes for Blast Furnaces and achieving benchmark fuel rate despite raw material constraints; and

- Working on product mix enrichment and value added products to ensure better realisation and delivery compliance in chosen segments.

The Jamshedpur plant operated at an optimum capacity with the full ramping up of 2.9 mtpa expansion project. This, along with better demand in retail segment, led to a 3% increase in deliveries over the previous year. This was another year of record production and deliveries, as the Company achieved 10.16 million tonnes of hot metal production and 9.07 million tonnes of saleable steel production. Likewise, the Company also reported best ever deliveries of 8.75 million tonnes. The Company was able to report these achievements despite challenging market conditions.

For the Financial Year 2014-15, the profit before interest, depreciation, exceptional items and taxes for the standalone entity was Rs. 10,592 crores which is lower by 22% compared to the previous financial year.

In addition to the exemplary best ever production performance, there were several other best performances recorded by the Company during the Financial Year 2014-15, some of which are as follows:

- Annual sales in the Automotive segment at a record 1.37 million tonnes, as against 1.17 million tonnes in the previous year.

- Annual Tata Tiscon sales at a record 1.23 million tonnes, as against 1.09 million tonnes in the previous year.

- Annual Tata Shaktee sales at a record 0.23 million tonnes, as against 0.21 million tonnes in the previous year.

- Annual Durashine sales at a record 100k tonnes (20% more than the previous best).

- Annual sales in the LPG segment at a record 85k tonnes and a market share of 36% (23% in the previous year).

Total Quality Management

The Company has a strong culture of Total Quality Management (TQM) that is embedded in the organisation''s DNA. The continuous improvement programmes commence at the shop floor and spans across multiple organisational levels, with senior management personnel addressing more complex problems. TQM aligns the long and complex value chain spanning activities from mining to operations to marketing of steel products and services.

The Company motivates innovative thinking through ''aspirational target setting'' In this approach, stretch targets are positioned as desired intentions as a driver for teams to collaborate and come up with innovative ideas to reach as close as possible to the aspirational target. Formal initiatives such as ''Kar Vijay Har Shikhar'' and ''Innovent'' facilitate the generation of innovative ideas through this approach and also support implementation. In addition, the leadership encourages learning from other industries, which has helped the Company to innovate distribution channels in a unique way in the steel industry.

The focus on innovation has helped the Company improve its products, services and solutions to satisfy customer needs. For example, the ''Innovent'' programme has enabled the Company to enter the steel doors segment. Steel doors have been introduced under the brand name ''Pravesh'' and have received a positive response from customers, thereby creating a new market for the Company.

Marketing and Sales

The Company is operating in the domestic steel industry with a growth-oriented strategy and will continue to focus on the same in the coming years. Approximately 98% of the steel value chain products are sold in the domestic market. While the Company has customers and customer groups all across India, the concentration of the overall sales is mostly in the eastern and northern parts of the country. In the raw material value chain, Ferro Alloys and Minerals Division (FAMD) exports ~49% of its chrome and 27% of manganese products to countries including Japan, Korea and China.

Products & Brands

The Company''s branded products in India have a country wide reach to serve more than 3 million consumers annually through a pan India distribution network, focussed on delivering a distinctive consumer experience. Currently we have a network of 65 distributors and over 9,000 dealers retailing our brands. During the year, we launched Steelium Neo - CR steel and Pravesh - wood finished steel doors.

Tata Tiscon and Tata Shaktee are now the most awarded and biggest steel brands in India. In the current year, more than 85% of Tiscon products have been sold in Tier 3 cities and over 90% have been sold by clubbing them together with Tiscon Superlinks and Wiron. During the year, the Company increased Roof Junction solution (2,600 installations) to more centres for fixing Tata Shaktee/Durashine sheets.

Europe

During the year, European production and deliveries were stable, despite being constrained by some demand and operational issues. In the Financial Year 2014-15, liquid steel production in Europe, at 15.16 million tonnes, was slightly (2.5%) lower than Financial Year 2013-14. Deliveries in Financial Year 2014-15 nearly matched the improved volumes of the previous year (1.4% lower).

Whilst this is a relatively stable performance, the Company sees scope for improved sales in future as it continues to work on the precision of its production and delivery performance.

Lower raw material prices led to decline in market prices which resulted in an 8% reduction in European turnover from the previous year - turnover in Financial Year 2014-15 was £8.11 billion.

Despite lower turnover, the business made a significant improvement in its financial performance, with EBIT turning positive at £102 million. The market spread did improve from the previous year and the Company''s enhanced product mix also gave its spread a boost.

EBITDA in Financial Year 2014-15 was £435 million, up by 39% over the previous year. The European operations EBITDA improvement is built on a foundation of lower costs, better supply chain management, supported by increasing sales of higher-value steels which improves its average market spread.

Despite deteriorating market conditions in the second half of Financial Year 2014-15, the year as a whole demonstrated further significant progress on its journey towards sustainable operating and financial performance.

Best Steel For Tomorrow

The programme ''Best Steel For Tomorrow'' in IJmuiden Works in Netherlands was launched by Tata Steel Europe and has been delivering significant improvements. The steel production on the IJmuiden site was 7 million tonnes steel in Financial Year 2014-15. As a result of this program, IJmuiden''s manufacturing stability improved significantly and several plants set new production records. The Direct Sheet Plant realised an annual record of 1.307k tonnes, Hot Strip Mill 2 an annual record of 5.220k tonnes, Pickle Line 22 an annual record of 1.207k tonnes. Cold Mill 22 achieved a new record of 818k tonnes. Production volumes in tinplate mills were higher than last year. Significant improvement in the product mix and precision were achieved too, which increased the earnings. As a consequence of these significant improvements, the IJmuiden Works is considered to be a benchmark site in Europe for sustainable profit generation.

Research & Technology programme at IJmuiden covers process development and product market sector developments, both of which made significant contribution towards robust and stable manufacturing processes and better use of raw materials. Product market sector developments helped development of new steel products with particular emphasis on the automotive, lifting & excavation, construction, energy & power and rail sectors.

South-East Asia

The profitability of the operations in South-East Asia was adversely affected by influx of low priced material from China, poor market conditions and shrinking margins.

During the year, NatSteel Holdings Pte. Ltd. (NSH) recorded a sales volume of 2.46 million tonnes as against the sales volume of 2.68 million tonnes in the previous year. The operations in China experienced lower than planned sales due to the closure of key billet suppliers and poor market conditions.

During the year, NSH posted a turnover of Rs. 9,028 crores, about 26% lower than the previous year. It posted negative EBITDA of Rs. 571 crores as against a profit of Rs. 246 crores in the previous year. Profitability was adversely affected by the significant contraction in scrap-rebar spread by over S$60/tonne from last year.

Similarly, during the year, TSTH recorded total sales of 1128k tonnes, which was lower by 13% as against the previous year. The EBITDA in the Financial Year 2014-15 was at Rs. 71 crores as against Rs. 193 crores in the previous year.

D. KEY DEVELOPMENTS

Mining

During the year, the Company faced significant challenges in its mining operations.

Historically, the Company has been operating its mining activities in Odisha and Jharkhand with all statutory clearances. In Odisha, on the basis of the direction issued by Honourable Odisha High Court, mining operations recommenced in Joda East, Katamati, Bamebari and Joda West Mines from mid December, 2014.

Mining operations in Sukinda Chromite Mine commenced based on the favourable express order issued by the Government of Odisha beginning December, 2014. Likewise, operations resumed in the Noamundi mines based on the express orders issued by the Government of Jharkhand in January 2015. During the year, the Company also commenced mining of chrome ore and production of ferro alloys.

The Mines and Minerals Development and Regulation (MMDR) Amendment Act 2015 was passed by the Indian Parliament and notified in the Gazette on 27 March, 2015. The amended Act addresses regulatory requirements on new allocations, transition provisions, etc.

In accordance with the amended provisions of law, supplementary Lease Deeds have been executed for the Joda East (Iron ore), Khondbond (Iron and Manganese), Joda West (Manganese), Manmora (Manganese), Bamebari (Manganese), Tiringhpahar (Manganese) and Gomardih (Dolomite) mines. All the leases have been extended up to 31 March, 2030 except Gomardih, a non-captive mine, which has been extended till 2020. The lease execution process is underway for Katamati (Iron) mines. A decision on Sukinda (Chrome) and Malda (Manganese) is awaited. The Company is engaged in discussions with the Government of Jharkhand on the extension of the mining lease for the Noamundi Iron Ore Mine.

Greenfield Project in Odisha

The first phase of the Greenfield expansion project at Odisha is at an advanced stage of execution. The construction of the Kalinganagar Project has progressed well and the heating of the coke ovens commenced in the second week of May, 2015 after all the clearances were received. The project will follow a commissioning sequence over the next six months as each facility gets commissioned. Commercial production is expected to commence in the second half of the financial year. The Kalinganagar Steel Plant is a state-of-the-art 3 million tonne plant that will increase the Company''s production capacity, widen its product portfolio and diversify the customer base. It is also aligned to ''Make in India'', an initiative of the Government of India. Thus far, the Company has spent close to Rs. 21,000 crores. The Company is also making significant investment towards social infrastructure and building greater community in the region.

Divestment of Long Products Unit in the UK

During the year, following a detailed review of its product portfolio, Tata Steel Europe signed a Memorandum of Understanding (MoU) with Klesch Group to undertake detailed due diligence and negotiations for the potential sale of the Long Products Europe business and associated distribution activities. About 6,500 people are employed at Long Products Europe and its distribution facilities. The carrying value of the investment has been fully impaired during the year as part of annual impairment analysis.

Developments in the British Steel Pension Scheme

The British Steel Pension Scheme is burdened with long-term challenges such as a high number of pensioners as compared to active employees and low bond yields especially in comparison to the relatively high inflation rates. The Company has been pursuing de-risking options to ensure a sustainable arrangement.

Tata Steel UK Limited, the Company''s subsidiary has been in discussions with the UK trade unions with the aim of creating more sustainable pension arrangements for UK employees by reducing benefits and liabilities. The negotiations with the UK unions concluded without support from the trade unions on proposed modifications to the Scheme. UK Unions carried out a ballot for industrial action.

The UK business has been a challenge for Tata Steel Europe and Tata Steel Group, and has caused significant financial stress in the past. The Group has made significant investments and supported the business over the years. We hope the employees and stakeholders appreciate the support of the Tata Steel Group in sustaining the UK business.

The Company remains open to unconditional talks with the unions to find resolutions to the challenges facing the pension scheme.

Continuous Annealing and Processing Line Joint Venture

During the year, Jamshedpur Continuous Annealing and Processing Company Private Limited (JCAPCPL), a 51:49 joint venture of Tata Steel Limited and Nippon Steel & Sumitomo Metal Corporation, set up India''s first continuous annealing and processing line that will produce 6,00,000 tonnes per annum of high-quality cold rolled sheets exclusively for the automotive industry, including outer panels and high tensile sheets.

Divestment of The Dhamra Port Company Limited (DPCL)

During the year, the Company divested its 50% stake in DPCL for an Enterprise Value of around Rs. 5,500 crores. DPCL was a 50:50 joint venture between L&T Infrastructure Development Projects Limited (L&T IDPL) and the Company. The transaction was successfully completed on 23 June, 2014.

Bond offering

On 25 July, 2014, the Company successfully issued dual tranche Reg S Unsecured Bonds of US$ 1.5 billion in the international markets. The issue comprised of US$ 500 million 4.85% Unsecured Bonds due on 31 January, 2020 and US$ 1 billion 5.95% Unsecured Bonds due on 31 July, 2024 by ABJA Investment Co. Pte. Ltd., a wholly owned subsidiary of the Company incorporated in Singapore. The issue is guaranteed by the Company and the bonds are listed on the Frankfurt Stock Exchange. This was Company''s debut US$ bond issuance and forms part of the Company''s long-term financing strategy to raise capital internationally. The success of bond issue enabled the Company to diversify the investor base, increase maturity profile and optimise the financing and capital structure.

Refinancing

Tata Steel UK Holdings Limited, 100% indirect subsidiary of the Company executed agreements for the refinancing of its debt through term loans and revolving credit facilities of €3.05 billion. The debt was originally incurred in relation to the acquisition of the Corus Group plc in 2007. The new financing structure consists of a 5-year loan of €370 million, a 6 year revolving credit facility for working capital purposes of £700 million and a 7-year loan of €1.8 billion, with more favourable terms and pricing relative to the earlier debt.

Further, Tata Steel Global Holdings Pte Ltd., another 100% indirect subsidiary of the Company, incorporated in Singapore had also executed agreements for loan facilities of US$ 1.5 billion comprising of a 5-year loan of US$ 700 million and a 7-year loan of US$ 800 million. The proceeds of this loan will be used to repay term debts, term out working capital and fund investment needs of the Tata Steel Group outside India.

E. TATA STEEL GROUP INITIATIVES

Health and Safety

Health and safety is the top most priority across the Tata Steel Group and we aspire to set the benchmark on this front within our industry. We have already made some significant achievements in Europe and are working on similar initiatives in India and South-East Asia by launching the ''Committed to Zero'' programme.

All efforts are being made to enhance safety standards and processes in order to minimise safety risks in all our operations. The Company continues to broaden the impact of its programmes, including those from DuPont (the global benchmark), to establish a strong safety culture based on inculcating safe behaviour among its employees, contractors and their employees. The Lost Time Injury Frequency Rate for Financial Year 2014-15 improved to 0.3, an improvement of 40% over the previous year. Extensive work is in progress to ensure risk control in many hazardous processes including underground mining. The Company has made specific improvements in construction activities, road traffic management and contractor management.

In order to build a sustainable work place environment, a common health and safety management system across Tata Steel Group is being implemented. This includes a cross auditing activity to enhance sharing experiences and best practices across regions. During the year, Tata Steel was again recognised by its peers in the World Steel Association, with a Health and Safety recognition award for Tata Steel Europe.

The key themes for the next three years include a safety strategy for the organisation that has been co-created with the senior leadership team and includes six strategic priorities. These are:

- Safety Leadership Development

- Organisational Safety Competency and Capability Improvement

- Contractor Safety Risk Management

- Road and Rail Safety Risk Management

- Process Safety Management, Integrated Emergency Response, Infrastructure Integrity Management

- Occupational Health/Industrial Hygiene

Environment

Tata Steel Group is committed to minimising the environmental impact of its operations through adoption of sustainable practices and continuous improvement in environmental performance. Care for environment under Corporate Citizenship is embedded in the Company''s vision. The Company acknowledges the fact that carrying capacity of nature is finite and that industry has to play an important role in protecting the environment and has to avoid disturbing the ecosystem as a result of its operations.

We continue to focus on operational excellence aimed at resource and energy efficiency, along with recovery, reuse and recycling of waste to minimise the ecological footprint of the organisation. For example, 100% of our manufacturing operations are certified by the independently verified international environmental management standard, ISO 14001.

The Company is also engaging with International Union for Conservation of Nature (IUCN) the largest global NGO network for environment, for base lining biodiversity in our mining locations and developing processes for addressing biodiversity including a Biodiversity Management Policy. Besides, the Company has also started engaging with Natural Capital Coalition for valuation of natural capital usage by companies.

Sustainability

The sustainability initiatives at Tata Steel are driven by the Tata Group core values and ethics. Our sustainability practices rest on the triple bottom-line (economic, social and environment). In 2014 we published our sustainability report using the Global Reporting Initiative (GRI) G3.1 guidelines.

The Company continues to advocate and influence positive and affirmative sustainability actions. Our senior leaders work with industry bodies such as the Confederation of Indian Industry on implementing sustainability practices. Our leaders also participated in the World Economic Forum in Davos in January 2015 and engaged in discussions with global leaders on the year''s theme, "The new global context".

During the year, the Company took several initiatives in various aspects of sustainability. At the strategic level, the Company embarked on a Scenario Planning exercise to envision the future, looking at economic, regulatory and stakeholder scenarios in order to develop our next vision and action plans. The annual business planning process has been strengthened with the inclusion of Social, Environmental and Regulatory aspects in the Objectives and Strategies of the Company. In order to drive the various aspects of sustainability in a more focussed way, the Company put together consolidated governance mechanisms with clear demarcation of roles between the Board, its Committees and the Management.

During the year, the capital projects for environment have progressed significantly. As a result, air pollution levels of the Jamshedpur plant have been significantly reduced as also the specific water consumption and effluent discharge. The Company has initiated steps to replace all office and street lights in the plant and in the mines with LED lights to improve energy efficiency. An environment research team has been formed in R&D for working on projects to reduce the environmental impact of our operations while improving resource efficiency.

We are happy to report that the Company has been duly recognised for its efforts. During the year, the Company won the ''CII ITC Sustainability Awards - Business of the Year'' trophy and the ''IIM Sustainability Award''. The Company was also included in the DJSI Sustainability Index for Emerging Markets.

F. HUMAN RESOURCES MANAGEMENT

In keeping with the tradition of pioneering Human Resource practices across geographies, the Human Resources Management (HRM) function has driven myriad changes in the way Human Resources are managed and developed, striking a balance between business needs and individual aspirations. HRM has now become a business partner and is taking key decisions not just with respect to Human Resource but businesses as a whole. It focusses on improving the way of life, work culture, employee engagement, productivity, effectiveness and efficiency.

During the year, several employee centric policies were launched to cater to the needs of the work force and also to keep the Company up to date with external realities. Policies like adoption leave, extension of maternity leave (12 weeks to 18 weeks), programmes like Stepathlon and Umang (Employee assistance programme) for physical and emotional well-being, and professional counselling services were launched in the interest of the employees'' changing needs.

The Company initiated multiple actions to keep the workforce engaged. Actions are being taken to increase gender diversity, providing greater amenities for contractor workforce, improving employee skills and enhancing employee productivity. In addition, policies are being implemented to support affirmative action through training and enabling employment. The Company has also adopted the SA8000 framework to ensure Human Rights for the workforce.

In the area of industrial relations, wage revision was successfully concluded with a win-win proposition for all stakeholders. To sensitise the workforce with Tata Values and Joint Consultations, ''Nav-Chetna'' and the Tata Story programme were launched and are being conducted across locations.

In the area of Talent Management, focussed campus branding and relationship building initiatives were successfully launched. Among these are Steel-a-thon in B-Schools and Mind over Matter in technical schools.

An outbound leadership programme, Tata Outbound Leadership Convention at Uttarkashi, was launched in partnership with TSAF and National Outdoor Leadership School (NOLS) of USA for the leadership team. A programme on ''Transformational Leadership'' was launched in February 2015 for the leadership team.

The ''Understudy'' policy for timely succession planning and ''Retainership'' policy for Superannuated Expert as well as External Experts were rolled out for building technical expertise and to strengthen the leadership development process.

An academy approach was initiated for capability development, to systematically drive the design and delivery of functional and managerial programmes for respective functions such as Finance, Supply Chain, Procurement, HR etc.

Virtual classroom training using centralised training infrastructure and resources was launched for mines in remote locations such as mines in West Bokaro, Bamnipal, KPO and Jharia.

Particulars of Employees

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this report [Annexure 1].

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits set out in the said Rules forms part of the Report.

However, having regard to the provisions of the first proviso to Section 136(1) of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the Members of the Company. The said information is available for inspection at Registered Office of the Company during working hours. Any member interested in obtaining such information may write to the Company Secretary, at the registered office and the same will be furnished on request. Further the details are also available on the Company''s website: www.tatasteel.com.

G. CORPORATE SOCIAL RESPONSIBILITY

The Company''s vision is to be a global benchmark in value creation and corporate citizenship and the Company''s long-term Corporate Social Responsibility (CSR) objective, is to improve the quality of life of the communities through long-term value creation for all stakeholders. This objective is in alignment with the Tata Group Core Purpose. Towards achieving this, the Company has been a pioneer in various CSR initiatives.

We continue to remain focussed on improving the quality of life and engaging communities through health, education, sports and infrastructure development. During the last three years, the Company has spent over Rs. 550 crores on CSR activities (Rs. 171 crores in Financial Year 2014-15).

The Economic Times awarded Tata Steel with the ''Corporate Citizen of the Year'' Award in 2014. The award acknowledges the work done by the Company''s CSR arms to promote development in areas including healthcare, education, sports and culture. The jury took special note of the Maternal and Newborn Survival Initiative (MANSI) and recognised it as one of the best healthcare practices globally.

Details about the CSR policy and initiatives taken by the Company on CSR during the year are available on our website www.tatasteel.com. The Annual Report on our CSR activities is annexed to this report [Annexure 2].

H. CORPORATE GOVERNANCE

At Tata Steel, we ensure that we evolve and follow the corporate governance guidelines and best practices sincerely to not just boost long-term shareholder value, but to also respect minority rights. We consider it our inherent responsibility to disclose timely and accurate information regarding our financials and performance, as well as the leadership and governance of the Company.

In accordance with the Tata Steel Group Vision, Tata Steel Group aspires to be the global steel industry benchmark for value creation and corporate citizenship. The Tata Steel Group expects to realise its Vision by taking such actions as may be necessary in order to achieve its goals of value creation, safety, environment and people.

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, the Management Discussion and Analysis, the Corporate Governance Report and the Auditors'' Certificate regarding compliance of conditions of Corporate Governance are made part of the Annual Report.

Board Meetings

A calendar of Meetings is prepared and circulated in advance to the Directors. The Board met nine times during the year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and the Listing Agreement.

Selection of New Directors and Board Membership Criteria

The Nomination and Remuneration Committee works with the Board to determine the appropriate characteristics, skills and experience for the Board as a whole and its individual members with the objective of having a Board with diverse backgrounds and experience in business, government, education and public service. Characteristics expected of all Directors include independence, integrity, high personal and professional ethics, sound business judgment, ability to participate constructively in deliberations and willingness to exercise authority in a collective manner. The policy on appointment and removal of Directors and determining Directors'' independence is annexed to this report [Annexure 3].

Familiarisation Programme for Independent Directors

All new Independent Directors (IDs) inducted into the Board are given an orientation. Presentations are made by Executive Directors (EDs) and Senior Management giving an overview of our operations, to familiarise the new IDs with the Company''s business operations. The new IDs are given an orientation on our products, group structure and subsidiaries, Board constitution and procedures, matters reserved for the Board, and our major risks and risk management strategy.

The Policy on the Company''s Familiarisation Programme for IDs can be accessed at http://www.tatasteel.com/investors/pdf/ familiarisation-programme-for-id-tata-steel.pdf

Evaluation

The Board evaluated the effectiveness of its functioning and that of the Committees and of individual directors by seeking their inputs on various aspects of Board/Committee Governance.

The aspects covered in the evaluation included the contribution to and monitoring of corporate governance practices, participation in the long-term strategic planning and the fulfilment of Directors'' obligations and fiduciary responsibilities, including but not limited to, active participation at the Board and Committee meetings.

The Chairman of the Board had one-on-one meetings with the Independent Directors and the Chairman of the Nomination and Remuneration Committee had one-on-one meetings with the Executive and Non-Executive Directors. These meetings were intended to obtain Directors'' inputs on effectiveness of Board/Committee processes.

The Board considered and discussed the inputs received from the Directors.

Further, the Independent Directors at their meeting, reviewed the performance of Board, Chairman of the Board and of Non- Executive Directors.

Compensation Policy for Board and Senior Management

Based on the recommendations of the Nomination and Remuneration Committee, the Board has approved the Remuneration Policy for Directors, KMP and all other employees of the Company. As part of the policy, the Company strives to ensure that:

a) the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company successfully;

b) relationship between remuneration and performance is clear and meets appropriate performance benchmarks; and

c) remuneration to Directors, KMP and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals.

The Remuneration Policy for Directors, KMP and other employees is annexed to this report [Annexure 4].

Independent Directors Declaration

The Company has received the necessary declaration from each ID in accordance with Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence as laid out in sub-section (6) of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

Directors and Key Managerial Personnel Induction

On the recommendations of the Nomination and Remuneration Committee, the Board appointed Mr. Andrew Robb, as an ID of the Company with effect from 12 November, 2014. Mr. Robb was a Member of the Board for seven years and retired by rotation at the AGM held on 14 August, 2014 and did not seek re-appointment. However, in the interest of maintain -ing continuity and providing guidance during challenging times in Tata Steel Europe, the Nomination and Remuneration Committee and the Board of Directors of the Company requested Mr. Robb to accept the Board position once again. Mr. Robb accepted the request. We seek your support in confirming the appointment of Mr. Robb in the ensuing AGM.

Retirement

In accordance with the Tata Group retirement policy for Board of Directors (attainment of 70 years of age for NEDs) Mr. B Muthuraman, Vice Chairman of the Company retired effective 26 September, 2014.

The Board of Directors place on record their deep appreciation for the enormous contributions made by Mr. Muthuraman as the Managing Director of the Company from 2001 to 2009 and thereafter, as Vice Chairman of the Company. The Company and the Board benefitted immensely from Mr. Muthuraman''s vast experience, knowledge and insights of the industry and operations of the Company.

Re-appointments

As per the provisions of the Companies Act, 2013, Dr. Karl- Ulrich Koehler and Mr. D. K. Mehrotra will retire at the ensuing AGM and being eligible, seek re-appointment. The Board recommends their re-appointment.

The Companies Act, 2013, provides for the appointment of IDs. Sub-section (1 0) of Section 1 49 of the Companies Act, 2013 provides that IDs shall hold office for a term of up to five consecutive years on the board of a company and shall be eligible for re-appointment on passing of a special resolution by the shareholders of the Company. Accordingly, all the IDs except for Mr. Andrew Robb, who was appointed as additional Director on 12 November, 2014, were appointed by the shareholders at the general meeting held on 14 August, 2014. Further, sub-section (13) of Section 149, provides that the provisions of retirement by rotation as defined in sub-sections (6) and (7) of Section 152 of the Companies Act, 2013 shall not apply to such IDs.

Hence, none of the IDs retire at the ensuing AGM.

Company Secretary and Compliance Officer

During the year, Mr. A. Anjeneyan, Company Secretary, KMP and Compliance Officer of the Company resigned from the services of the Company. The resignation was effective 10 October, 2014.

Consequent to Mr. A. Anjeneyan''s resignation, the Board appointed Mr. Parvatheesam K as the Company Secretary, KMP and Compliance Officer of the Company. The appointment was effective 12 January, 2015.

Directors'' Responsibility Statement

Based on the framework of internal financial controls established and maintained by the Company, work performed by the internal, statutory, cost and secretarial auditors and external agencies, the reviews performed by Management and the relevant Board Committees, the Board, with the concurrence of the Audit Committee, is of the opinion that the Company''s internal financial controls were adequate and effective as on 31 March, 2015.

Accordingly, pursuant to Section 134(5) of the Companies Act, 2013 the Board of Directors to the best of their knowledge and ability confirm:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) that we 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 and loss of the Company for that period;

c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that the annual accounts have been prepared on a going concern basis;

e) that proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively; and

f) that proper internal financial controls were laid down and that such internal financial controls are adequate and were operating effectively.

Audit Committee

Our Audit Committee was constituted in the year 1986. The Committee has adopted a Charter for its functioning. The primary objective of the Committee is to monitor and provide effective supervision of the Management''s financial reporting process, to ensure accurate and timely disclosures, with the highest levels of transparency, integrity and quality of financial reporting.

The Committee met five times during the year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. As of the date of this report, the Committee is comprised of Mr. Subodh Bhargava (Chairman), Mr. Ishaat Hussain, Mr. Andrew Robb and Mr. O. P. Bhatt.

Internal Control System

The Company has an internal control system, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined in the Internal Audit Charter. To maintain its objectivity and

independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board.

The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

Related Party Transactions

There have been no materially significant related party transactions between the Company and the Directors, the management, the subsidiaries or the relatives except for those disclosed in the financial statements.

Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) along with the justification for entering into such contract or arrangement in Form AOC-2 does not form part of the report.

Vigil Mechanism

The Board, at its meeting held on 17 December, 2014, approved the revised Vigil Mechanism that provides a formal mechanism for all Directors, employees and vendors of the Company to approach the Ethics Counsellor/Chairman of the Audit Committee of the Board and make protective disclosures about the unethical behaviour, actual or suspected fraud or violation of the Tata Code of Conduct (TCoC).

The Vigil Mechanism comprises three policies viz., the Whistle Blower Policy for Directors & Employees, Whistle Blower Policy for Vendors and Whistle Blower Reward & Recognition Policy for Employees.

The Whistle Blower Policy for Directors and Employees is an extension of the TCoC, that requires every Director or employee to promptly report to the Management any actual or possible violation of the Code or any event wherein he or she becomes aware of that which could affect the business or reputation of the Company.

The Whistle Blower Policy for Vendors provides protection to vendors from any victimisation or unfair trade practice by the Company.

The Whistle Blower Reward & Recognition Policy for Employees has been implemented in order to encourage employees to genuinely blow the whistle on any misconduct or unethical activity taking place in the Company. The disclosures reported are addressed in the manner and within the time frames prescribed in the Whistle Blower Policy. Under the Policy, every Director, employee or vendor of the Company has an assured access to the Ethics Counsellor/Chairman of the Audit Committee.

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

The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder.

During the Financial Year 2014-15, the Company has received 24 complaints of sexual harassment, out of which 15 complaints have been disposed off by taking appropriate actions. The remaining 9 complaints are under investigation.

Risk Management

The Company is exposed to inherent uncertainties owing to the sectors in which it operates. A key factor in determining a company''s capacity to create sustainable value is the risks that the company is willing to take (at strategic and operational levels) and its ability to manage them effectively. Many risks exist in a company''s operating environment and they emerge on a regular basis. The Company''s Risk Management processes focusses on ensuring that these risks are identified on a timely basis and addressed.

The Board of Directors has constituted a Risk Management Committee. The Committee has adopted a Charter that outlines the role, responsibilities and power of the Committee and the procedure for organising the meeting of the Committee.

The purpose of the Committee is to assist the Board of Directors in fulfilling its oversight responsibilities with regard to enterprise risk management. The Committee reviews the risk management practices and actions deployed by the Management with respect to identification, impact assessment, monitoring, mitigation and reporting of key risks while trying to achieve its business objectives.

Further, the Committee endeavours to assist the Board in framing, implementing and monitoring the risk management plan for the Company and reviewing and guiding the risk policy. The Committee also guides Management in developing the risk management policy and in implementing an appropriate risk management system/framework for the Company.

To have better focus on governance, the Company constituted a Management Committee viz., the Group Risk Review Committee to identify, assess, review and mitigate risks. The Committee comprises the Managing Director, Group Executive Director (Finance & Corporate), Managing Director & Chief Executive Officer of Tata Steel Europe and other senior management personnel as its members. This Committee has the primary responsibility of implementing the Risk Management Policy of the Company and achieving the stated objective of developing a risk intelligent culture that supports decision making and helps improve Company performance.

Subsidiaries, Joint Ventures and Associates

We have 287 subsidiaries, 23 joint ventures and 24 associate companies as on 31 March, 2015. During the year, the Board of Directors (the Board) reviewed the affairs of material subsidiaries. We have, in accordance with Section 129(3) of the Companies Act, 2013 prepared consolidated financial statements of the Company and all its subsidiaries, which form part of the Annual Report. Further, the report on the performance and financial position of each of the subsidiary, associate and joint venture and salient features of the financial statements in the prescribed Form AOC-1 is annexed to this report [Annexure 5].

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited financial statements of each of the subsidiary will be available on our website www.tatasteel.com. These documents will also be available for inspection during business hours at the registered office of the Company.

The names of companies that have become or ceased to be subsidiaries, joint ventures and associates are disclosed in the annexure to this report [Annexure 6].

Auditors

Statutory Auditors

Deloitte Haskins & Sells LLP (DHS LLP), Chartered Accountants, who are the statutory auditors of the Company, hold office until the conclusion of the ensuing AGM and are eligible for re-appointment. Members of the Company at the AGM held on 14 August, 2014 had approved the appointment of DHS LLP as the Statutory Auditors for a period of three financial years i.e., up to 31 March, 2017. As required by the provisions of the Companies Act, 2013, their appointment should be ratified by members each year at the AGM. Accordingly, requisite resolution forms part of the notice convening the AGM.

Cost Auditors

As per Section 148 of the Companies Act, 2013, the Company is required to have the audit of its cost records conducted by a Cost Accountant in practice. In this connection, the Board of Directors of the Company has on the recommendation of the Audit Committee, approved the appointment of Shome & Banerjee as the cost auditors of the Company for the year ending 31 March, 2016, at a remuneration of Rs. 12 lakhs plus out of pocket expenses.

Shome & Banerjee have vast experience in the field of cost audit and have conducted the audit of the cost records of the Company for the past several years under the provisions of the erstwhile Companies Act, 1956.

The due date for filing the Cost Audit Report of the Company for the Financial Year ended 31 March, 2014 was 30 September, 2014 and the Cost Audit Report was filed in XBRL mode by the Cost Auditor on 27 August, 2014.

Secretarial Auditors

Section 204 of the Companies Act, 2013 inter-alia requires every listed company to annex with its Board''s report, a Secretarial Audit Report given by a Company Secretary in practice, in the prescribed form.

The Board of Directors appointed Parikh & Associates, Practicing Company Secretaries as Secretarial Auditor to conduct Secretarial Audit of the Company for Financial Year 2014-15 and their report is annexed to this Board report [Annexure 7]. In connection, with the auditors observation in the report, it is clarified that the non-filing of Form MGT-14 in respect of one board resolution and delay in transfer of unclaimed rights issue application money to Investor Education Protection Fund are technical lapses that occurred inadvertently.

The Board has also appointed Parikh & Associates, as Secretarial Auditor to conduct Secretarial Audit of the Company for Financial Year 2015-16.

Extract of the Annual Return

The details forming part of the extract of the Annual Return in Form MGT 9 as per provisions of Companies Act, 2013 and rules thereto is annexed to this report [Annexure 8].

Significant and Material Orders Passed by the Regulators or Courts

There have been no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations. However, members'' attention is drawn to the statement on contingent liabilities, commitments in the notes forming part of the Financial Statements.

Particulars of Loans, Guarantees or Investments

Particulars of loans, guarantees given and investments made during the year in accordance with Section 186 of the Companies Act, 2013 is annexed to this report [Annexure 9].

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

Details of the energy conservation, technology absorption and foreign exchange earnings and outgo are annexed to this report [Annexure 10].

Business Responsibility Report

A Business Responsibility Report is included in this Annual Report.

Deposits

During the year, the Company has not accepted any deposits under the Companies Act, 2013.

Acknowledgements

We thank our customers, vendors, dealers, investors, business associates and bankers for their continued support during the year. We place on record our appreciation of the contribution made by employees at all levels. Our resilience to meet challenges was made possible by their hard work, solidarity, co-operation and support.

We thank the Government of India, the State Governments where we have operations and other government agencies for their support and look forward to their continued support in the future.

On behalf of the Board of Directors

CYRUS P. MISTRY Chairman Mumbai 20 May, 2015


Mar 31, 2014

The Directors take pleasure in presenting the 107th annual report on the business and operations of your Company along with the standalone and consolidated summary financial statements for the year ended 31st March, 2014.

Rs. crores

Tata Steel Standalone

2013-14 2012-13

Net revenue from Operations 41,711.03 38,199.43

Total expenditure before Financial cost, depreciation 28,894.13 27,073.19

(net of expenditure transferred to capital)

Operating Profit 12,816.90 11,126.24

Add: Other income 787.64 902.04

Profit before finance cost, depreciation, exceptional items and taxes 13,604.54 12,028.28

Less: Finance costs 1,820.58 1,876.77

Profit before depreciation, exceptional items and taxes 11,783.96 10,151.51

Less: Depreciation 1,928.70 1,640.38

Profit before exceptional items and taxes 9,855.26 8,511.13

Add/(Less): Profit on sale of non-current Investments 12.33

Add/(Less): Provision for diminution in the value of investment/doubtful advances/impairment of non-current assets (141.76) (686.86)

Profit before taxes 9,713.50 7,836.60

Less: Provision for current taxation 3,098.02 1,770.54

Less: Provision for MAT credit (399.84)

Less: Provision for deferred taxation 203.29 1,402.93

Profit/(Loss) after taxes 6,412.19 5,062.97 Add: Share of Profit of Associates

Less: Minority Interest

Profit/(Loss) after tax, minority interest and share of Profit of associates

Distribution on hybrid perpetual securities 266.04 266.21

Tax effect on distribution of hybrid perpetual securities (90.43) (86.37)

6,236.58 4,883.13

Add: Balance brought forward from the previous year 24,616.17 21,145.04

Add: Profit and Loss account balance relating to acquisitions 33.97

Balance 30,886.72 26,028.17

Which the Directors have apportioned as under to: -

(i) Dividend on Preference Shares

(ii) Proposed dividend on Ordinary Shares 971.21 776.97 7 (iii) Tax on Dividends 66.19 128.73

(iv) General Reserve 641.22 506.30

(v) Statutory Reserve

(vi) Special Reserve

(vii) Capital Redemption Reserve

Total 1,678.62 1,412.00

Balance to be carried forward 29,208.10 24,616.17

Tata Steel Group

2013-14 2012-13

Net revenue from Operations 148,613.55 134,711.54

Total expenditure before Financial cost, depreciation 132,202.54 122,390.33

(net of expenditure transferred to capital)

Operating Profit 16,411.01 12,321.21

Add: Other income 516.81 479.15

Profit before finance cost, depreciation, exceptional items and taxes 16,927.82 12,800.36

Less: Finance costs 4,336.83 3,968.11

Profit before depreciation, exceptional items and taxes 12,590.99 8,832.25

Less: Depreciation 5,841.22 5,575.32

Profit before exceptional items and taxes 6,749.77 3,256.93

Add/(Less): Profit on sale of non-current Investments 18.20 966.03

Add/(Less): Provision for diminution in the value of investment/doubtful advances/impairment of non-current assets (45.84) (8,355.91)

Profit before taxes 6,722.13 (4,132.95)

Less: Provision for current taxation 3,482.64 2,325.40

Less: Provision for MAT credit (0.21) (410.12)

Less: Provision for deferred taxation (424.27) 1,314.16

Profit/(Loss) after taxes 3,663.97 (7,362.39)

Less: Minority Interest 0.84 90.31

Profit/(Loss) after tax, minority interest and share of Profit of associates (69.92) (214.46)

Distribution on hybrid perpetual securities 3,594.89 (7,057.62)

Tax effect on distribution of hybrid perpetual securities 266.04 266.21

Add: Balance brought forward from the previous year (90.43) (86.37)

Add: Profit and Loss account balance relating to acquisitions 3,419.28 (7,237.46)

Balance 7,039.38 16,125.42 Balance to be carried forward 8,625.75 7,039.38

DIVIDEND

The Board recommended a dividend of Rs. 10 per Ordinary Share on 97,12,15,405 Ordinary Shares for the year ended 31st March 2014. (Financial Year 2012-13: Rs. 8 per Ordinary Share on 97,12,15,229 Ordinary Shares of Rs. 10 each).

The dividend on Ordinary Shares is subject to the approval of the shareholders at the Annual General Meeting. The total dividend payout works out to 16% (Financial Year 2012-13: 18%) of the net Profit for the standalone results.

GLOBAL ECONOMIC CONDITIONS

The world Gross Domestic Product (GDP), as reported by the International Monetary Fund (IMF), witnessed a growth of 3% in 2013 as compared to a growth of 3.2% in 2012. Both advanced economies and emerging and developing economies witnessed the slowdown in growth at 1.3% and 4.7% respectively.

in certain developed regions including Europe but the growth remains anemic. Similarly, the GDP growth in India at 4.7% in Financial Year 2013-14, marks a second straight year of sub-5% growth – the worst slowdown in more than a quarter of a century. This is largely attributed to sluggish growth in investments and tight monetary policy by the Reserve Bank of India leading to demand contraction.

Global Steel Outlook

Tata Steel is the world''s second most geographically diversified steel company with significant exposure in India and Europe.

As per the World Steel Association, the global apparent steel use is likely to grow by 3.1% in 2014 to 1,527 million tonnes and by 3.3% to 1,576 million tonnes in 2015 as opposed 3.6% growth in 2013. In India, steel demand is expected to grow by 3.3% to 76.2 million tonnes in 2014 and by 4.5% to 79.6 million tonnes in 2015, following a marginal 1.8% growth in 2013.

Similarly, the apparent steel use for EU (28) is expected to grow by 3.1% in 2014 to 143.3 million tonnes and 3% to 147.6 million tonnes in 2015 as compared to a de-growth of -0.2% in 2013. This will help to recoup the demand in construction and automotive segments, which have almost bottomed out.

Growth of the Chinese economy, which in recent years has been one of the main demand drivers in the global mining and steel industries, has continued to slow down in the last 12-18 months, along with other emerging economies. A slow economic recovery in North America, continued stagnation in Europe and a continued slowdown in emerging economies including India and China would impact the global manufacturing and metals industry like Steel.

A recent release (April 2014) of quantitative risk assessment in the World Economic and Financial Survey by the International Monetary Fund (IMF) suggests that recession risks have decreased slightly for the major economies and have remained broadly unchanged for other economies. However, the risk of Eurozone crisis and a hard landing for China cannot be ruled out.

TATA STEEL GROUP PERFORMANCE

The momentum provided by the ramp up of all the production units under the 2.9 mtpa expansion plan at Jamshedpur, stabilisation of rebuild Blast Furnace#4 at Port Talbot, UK, significant growth in sales volume of operating entities of Nat Steel Holdings (Singapore) at Vietnam and China and an increase in deliveries in Tata Steel Thailand, contributed to record gross deliveries of 26.6 million tonnes by the Tata Steel Group during the Financial Year 2013-14. This was higher by 10% compared to the previous year deliveries of 24.1 million tonnes.

The consolidated profit before interest, depreciation, exceptional items and taxes (EBITDA) of the Group was Rs. 16,928 crores in the Financial Year 2013-14, higher by 32% over the previous year. Consequently, the consolidated profit before exceptional items and taxes (PBT) was Rs. 6,750 crores in the Financial Year 2013-14 compared to Rs. 3,257 crores in the previous year.

Indian operations:

During the Financial Year 2013-14 the Company fully ramped up to its installed capacity of 9.7 million tonnes at Jamshedpur and continued with the full-fledged construction and installation of facilities for 3 million tonnes crude steel Greenfield capacity expansion at Odisha. There has been an overall increase of ~ 12% to 14% in the production and sales volumes of the Indian operations over last year. The Company had a record production of 9.89 million tonnes of Hot Metal and 8.93 million tons of Saleable Steel during the year. Similarly, the Company reported the best ever deliveries of 8.52 million tonnes during the financial year. This has led to significant efficiency gains and a richer product mix. The Company has also invested in widening its customer base in India. The increase in sales has been achieved without sacrificing the product premium. The profit before interest, depreciation, exceptional items and taxes (EBITDA) for standalone Tata Steel was Rs. 13,605 crores for the Financial Year 2013-14, higher by 13% compared to the previous Financial Year.

There were several best performances recorded by many units of the Company during the Financial Year 2013-14 some of which are as follows:

Production

Best ever total agglomerate production of 12.14 million tonnes (Previous best - 10.22 million tonnes in the Financial Year 2012-13).

Steel Melting Shop LD#3 achieved its best ever production of 2.23 million tonnes (Previous best - 1.02 million tonnes in the Financial Year 2012-13).

Cold Rolling Mill achieved its highest ever production of 1.64 million tonnes (Previous best - 1.56 million tonnes in Financial Year 2009-10).

TSCR achieved its highest ever production of 2.18 million tonnes (Previous best - 0.99 million tonnes in the Financial Year 2012-13).

Sales

Best ever annual sales to the Automotive segment at 1.17 million tonnes (Previous best - 1.05 million tonnes in Financial Year 2012-13).

Best ever annual sales in Industrial Products segment at 1.7 million tonnes (63% more than the previous best in Financial Year 2012-13 at 1.07 million tonnes).

Best ever annual sales in LPG segment at 110 kt and a market share of 23%.

Kar Vijay Har Shikhar (KVHS), an initiative launched during Financial Year 2010-11, focussed on the Company''s aspiration to improve its EBITDA. It is a multi-unit, multi-location, cross functional improvement programme spanning the entire value chain from mining to marketing and sales of finished steel. The Company achieved an improvement in savings of Rs. 1,614 crores in the Financial Year 2013-14, which included a KVHS contribution ofRs. 1,170 crores.

Customer centricity has been the key focus area for Tata Steel and to align the actions even more closely, the Company has taken a step change in reorganising its Marketing & Sales organisation in line with the market segments i.e. Auto & Special Products, Branded and Retail, Industrial Products and downstream units.

European operations:

Tata Steel Europe (TSE) completed two major upgrades of the key production facilities (the rebuild of Blast Furnace 4 at Port Talbot during an eight month period ending February 2013 and the repair of the hearth in Blast Furnace 7 at I muiden in the March 2013) at the end of Financial Year 2012-13, which has strengthened its operating platform. This resulted in higher liquid steel production volumes of 2.2 million tonnes during the year under review.

Tata Steel Europe''s (TSE) turnover for the Financial Year 2013-14 was 3% lower than the previous year. This is due to the decrease in the average revenue per tonne caused primarily by the deterioration in the market conditions in the first half of Financial Year 2013-14, even though it was partly offset by a 6% increase in steel deliveries, attributable largely to a full year of operations by the two blast furnaces at Port Talbot.

Record performances in TSE''s operations during the Financial Year 2013-14 included the following:

At I Jmuiden, the best ever total Hot Strip Mill output of 5.21 million tonnes (previous best of 5.05 million tonnes in Financial Year 2011-12); the best ever total Direct Sheet Plant output of 1.26 million tonnes (previous best was 1.19 million tonnes in Financial Year 2006-07); and the best ever total hot dipped galvanising line output at DVL3 of 552 thousand tonnes (previous best was 465 thousand tonnes in Financial Year 2012-13).

At Port Talbot, the best ever total hot metal make at Blast Furnace 4 (2.05 million tonnes - previous best of 1.91 million tonnes in Financial Year 2002); the best ever total hot metal make for the site (4.16 million tonnes - previous best of 3.86 million tonnes in Financial Year 2007); the best ever total liquid steel make (4.55 million tonnes - previous best of 4.41 million tonnes in Financial Year 2007); and the best ever total slab make (4.45 million tonnes - previous best of 4.29 million tonnes in Financial Year 2006-07).

Tata Steel Europe has launched a multi- year transformation journey under the banner OGSM ("Objectives, Goals, Strategies & Measures") in the Financial Year 2010-11. The above programme is expected to structurally change the organisational health covering productivity improvement through operating performance, supply chain management, product differentiation and customer management, cost management including right sizing manpower and optimising the asset network. The systematic deployment of the OGSM tool has yielded significant EBITDA benefits since the time of the launch. The continued focus on operating costs achieved savings of around £ 200 million, which contributed towards improved year on year EBITDA performance at Rs. 3, 008 crores during the Financial Year 2013-14. This almost quadrupled as compared to previous year.

TSE continued to implement its strategy of market differentiation and launched 30 new products as planned during the year. The volume of new products sold increased by about 75% and sales of differentiated products also grew by 16% in comparison to the previous year.

Moreover, to generate a more sustainable performance, TSE continues to focus on customers and innovation driven strategy. As a result, the Company achieved following customer successes during the year:

Network Rail, the owner and operator of rail infrastructure in the UK, has chosen to source more than 95% of its rail from Tata Steel Europe until 2019.

Schneider Electric selected TSE for its Preferred Supplier 2013 award.

Royal Mint recognised TSE as the Most Innovative Supplier for the third year running.

GOLD in the Caterpillar Supplier Quality Excellence Process for its global supply of track shoe profiles was awarded to TSE.

Toyota awarded a Certificate of Recognition to TSE''s important contribution in the area of quality.

South-East Asian operations:

The South East Asian operations continued to improve its performance especially in Thailand despite various challenges in the market environment.

NatSteel Holdings Pte. Ltd. (NSH) enhanced its capabilities across all geographies and invested capital in technology building, strengthening information technology and capability building during the Financial Year 2013-14 despite uncertainties posed by a volatile, uncertain and highly competitive business environment especially due to Chinese exports to the ASEAN region. Its Singapore operations completed major plant modernisation projects, including the New Scrap Shear, New Shaft Furnace and various downstream automation projects.

NSH has posted a turnover of Rs. 12,128 crores during the Financial Year 2013-14, an increase of about 30% over the previous year. However, the profit before interest, depreciation, exceptional items and taxes (EBITDA) was at Rs. 246 crores that was lower by 31% compared to the previous year. Profitability was adversely affected as the operating costs were higher during the stabilisation period post the completion of the plant revamp in Singapore and influx of low-priced materials from China putting pressure on the margins.

The Chinese imports into ASEAN region jumped more than 50% in 2013, which created significant pressure in those domestic markets. In addition, political turmoil in Thailand continues to affect the underlying performance of Tata Steel Thailand (TSTH). Despite this, TSTH recorded a 10% increase in finished goods deliveries at 1.30 million tonnes in Financial Year 2013-14 over the previous Financial Year. This is primarily led by ongoing projects in the construction sector, continued exports to neighbouring countries and a stronger presence in the upcountry market translating into higher rebar sales. On the downside, the wire rods product line was adversely affected by the cheaper imports from China. The profit before interest, depreciation, exceptional items and taxes (EBITDA) at Rs. 193 crores, which is about 50% higher compared to the previous year.

Review of Impairment Risks

Under the Indian Accounting Standards, a company is required to undertake an impairment review of its assets and investments at each reporting date based on certain triggers relating to the business or the operating environment. Changes in assumptions underlying the carrying value of certain assets, including as a result of adverse market conditions could result in impairments of such assets and the Company is obliged to recognise the same. The Company has recognised an impairment charge of Rs. 141.76 crores in standalone books and Rs. 45.84 crores in consolidated books primarily on account of continuous losses and substantial erosion of net worth in Tayo Rolls Limited (a subsidiary of Tata Steel Limited) and de-allocation of the Coal mine in view of pending milestones in Strategic Energy Technology System Private Limited (a joint venture between Tata Group and South Africa''s Sasol Synfuel to convert coal to liquid fuel from a coal block in Odisha).

While an impairment loss is recognised as an expense in the income statement, it is a non-cash charge and does not affect any of the financial covenants and the funding position of Tata Steel Group.

Review of Regulatory Risks

The Central Government constituted a one member Commission comprising Hon''ble Justice M B Shah, former Judge of Supreme Court of India, to look into the nature and extent of illegal mining of iron and manganese ores and recommend suitable measures for regulation. Pursuant to the study carried out by the Commission in the states of Goa, followed by Odisha, reports have been submitted to the Central Government. In the report there are observations regarding mining activity in the State of Odisha covering (i) various aspects of non-compliance to the statute viz: absence or delay in taking approvals under environment statutes, forest statutes, mining plans, etc. (ii) extraction of ore beyond the limits permitted by such approvals, (iii) non-disposal of mining lease renewal applications for several years by the State and mining continuing under deeming provisions.

The Company is of the opinion that its mining operations are within the norms of the required regulations including Environment Clearance, Forest Clearances and Consent to Operate. The Company has since inception demonstrated the principle of mineral conservation and mineral development by undertaking scientific and sustainable mining practices including caring for the environment and the communities around the mining operations.

MAJOR DEVELOPMENTS DURING THE FINANCIAL yEAR 2013-14

A. Amalgamation

a. Kalimati Investment Company Limited

Pursuant to the sanction of the Hon''ble High Court of Bombay to the Scheme of Amalgamation, the assets and liabilities of the erstwhile Kalimati Investment Company Limited, a wholly-owned subsidiary of the Company (whose principal business was to carry on the business of investment and finance, and was registered as a non-banking financial company with the Reserve Bank of India) has been amalgamated with the Company with effect from January 1, 2013 in accordance with the scheme so sanctioned by the Court. The effect of the merger has been given in the accounts.

b. Tata Metaliks Limited

Tata Metaliks Limited (TML), a subsidiary of the Company is one of the largest producers of Foundry Grade Pig Iron in India. On 10th April, 2013, Tata Steel Limited announced the merger of TML and its subsidiary TMKPL with your Company under a Scheme of Amalgamation to be sanctioned through a court approval process. Tata Steel will issue 4 (four) equity shares of Rs. 10 each for every 29 (twenty nine) equity shares of Rs. 10 each held by the public shareholders of TML upon approval of the Scheme by the Courts.

Tata Steel holds 50.09% of the equity share capital of TML. The Shareholders'' approval for the Scheme is being sought at the Court Convened Meeting of the shareholders to be held on 16th May, 2014.

B. Capital Projects

a. 2.9 milion tonnes expansion project in Jamshedpur

Major facilities such as Pellet Plant, Coke Oven Battery 10, "I" Blast Furnance, LD3 and TSCR under the 2.9 mtpa expansion project in Jamshedpur were commissioned in the Financial Year 2012-13. These facilities have been stabilised during the year which has enabled the Company to ramp up its production to 9.16 million tonnes of crude steel.

b. Greenfield Project in Odisha

Kalinganagar Project in Odisha is the Company''s second integrated Greenfield steel plant with 6 million tonnes crude steel capacity, after Jamshedpur. It is being executed in two phases of 3 million tonne each, with the entire capacity principally devoted to flat products. The Company''s Phase 1 of the 3 million tonne per annum of green field project at Kalinganagar Complex in Odisha has progressed significantly during the Financial Year. The stage wise commissioning of various units, namely power generation units, coke ovens, sinter plant, blast furnace, steel melting shop and hot strip mill of the first phase is expected to be initiated towards the end of Financial Year 2014-15. Subsequent to the commissioning and ramp up of the first phase of operations in Kalinganagar, the Company will also progress towards the implementation of second phase of the project in future.

c. Direct Shipping Ore Project in Canada

The Company through its Joint Venture Company (Tata Steel Minerals Canada Limited) is developing a Direct Shipping Ore (DSO) Project in the provinces of Quebec and Newfoundland & Labrador. The Company indirectly holds 80% in Tata Steel Minerals Canada (TSMC). New Millennium Corporation (NML), a Toronto listed company, holds 20% stake in the joint venture company. In addition, the Company holds 26.33% stake in NML.

The project primarily comprises of mining, crushing, washing, screening and drying the run- of-mine ore with a state-of-the-art facility near Schefferville, Québec to produce 4.2 million tonnes per annum of sinter fines and pellet feed. The processing facilities will be housed under a large steel supported fabric structure to enable year round operations. The construction of the processing plant is on-going and is expected to be commissioned by end of Financial Year 2014-15. Besides a dry crushing and screening facilities have also been installed which will produce about 1.8 million tonnes per annum of iron ore product. The above facilities will enable TSMC to produce and despatch around 6 million tonnes per annum of iron ore in a phased manner.

TSMC had already commenced mining activity in September 2012 and the mine has produced around 1 million tonnes till Financial Year 2013-14 through dry crushing and screening. TSMC shipped about 0.25 million tonnes in Financial Year 2013-14 and the shipment for Financial Year 2014-15 is expected to commence shortly.

Key developments during the year were as follows:

i. The Company increased its resource base from 64 million tonnes to 93 million tonnes through exploration activities in DSO properties. An additional potential of 8 million tonnes has been identified.

ii. TSMC entered into an un-incorporated joint venture with Labrador Iron Ore Mines (LIM) to acquire a 51% stake in the House deposit based on the outcome of the feasibility study. This is expected to add an additional 24 million tonnes of reserves to the resources of the Company. The feasibility study is in progress. Considerable savings in operating costs are expected to be achieved due to access to the Howe deposit. With House deposits, the combined resource base stands at 125 million tonnes.

iii. The construction of the Deep Sea Port at Sept-IIes, Canada through which TSMC intends to export its products is likely to be completed by end of 2014. The access to the Deep Sea port is not available at present but the Federal and Provincial Governments are supporting the Port Authority''s efforts to obtain the required access to the Deep Sea Port. It is expected that this issue will get resolved shortly. In the meanwhile, TSMC has entered into agreement with the Iron Ore Company of Canada to export its product for year 2014.

SAFETY AND HEALTH

The health and safety of the employees across its operations remains the highest priority for the Group. All endeavours are being taken to enhance safety standards and processes towards minimising safety risks in all operations in the company. The Company continues to broaden the impact of its programmes, including those from DuPont the world benchmark, to establish a strong safety culture based on inculcating safe behaviour among its employees, contractors and their employees. The Lost Time Injury Frequency Rate for Financial Year 2013-14 dipped to 0.56, an improvement of 7% over last year. Extensive work has been on-going over more than a decade to ensure risk control in many high hazard processes including underground mining has resulted in performance improvements. However, the journey will continue to ensure risks of fatalities are minimised in future. The Company''s specific improvement areas are in construction activities, road traffic management and contractor management.

In order to build a sustainable work place environment, a common health and safety management system across Tata Steel Group is being implemented. This includes cross- auditing activity to enhance sharing experiences and best practices across regions. During the year, Tata Steel was again recognised by its peers in World Steel Association with a health and safety recognition award for Tata Steel Europe.

ENVIRONMENT

Member companies of World Steel Association, including Tata Steel, are committed to a vision in which steel is recognised as

a key element of a sustainable future. Environment protection forms a focus area with member companies expected to optimise the eco-efficiency of their products through the product lifecycle, including increased resource and energy efficiency in the production of steel and during the use of steel products. It also enjoins members to promote the recovery, reuse and recycling of steel.

In line with the above commitment, Tata Steel continues to focus on operational excellence aimed at resource efficiency, energy efficiency, along with recovery, reuse and recycling of waste to minimise the ecological footprint of the Company. Tata Steel''s 2.9 mtpa expansion project in India and the upgrade of the blast furnaces by the European operations were aimed at aligning its environmental performance with best in class. The previously installed "I" Blast Furnace and the "H" Blast Furnace as part of 1.8 mtpa and 2.9 mtpa expansion projects in Jamshedpur are among the most resource efficient in India. CO2 emissions from the Jamshedpur Steel Works showed a significant change decreasing to 2.42 tCO2/tcs in Financial Year 2013-14 from 2.52 tCO2/tcs in Financial Year 2012-13.

Similarly, the Company is currently participating in a voluntary agreement with the Dutch government on 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 improvement in energy efficiency at the rate of 2% per annum, covering both energy used within the manufacturing process and energy saved across the product life cycle. The total energy efficiency improvement in 2013 was 4.9%. CO2 emissions in TSE during the Financial Year 2013-14 were 1.88 tCO2/tcs, against 1.95 tCO2/tcs in Financial Year 2012-13.

Moreover, in the United Kingdom, TSE''s engagement in a Climate Change Agreement (''CCA'') continued to benefit the Company from reduced rates in relation to the Climate Change Levy (''CCL''). The UK Government also introduced an exemption from CCL for certain metallurgical & mineralogical processes from April 2014.

Specific environment protection measures and resultant Benefits are provided in Annexure ''A'' to the Directors'' Report.

CORPORATE SOCIAL RESPONSIBILITY

Tata Steel''s vision and strategies focus on having right balance between Value Creation and Corporate Citizenship. The new Companies Act 2013 mandates that every company, who meet certain eligibility criteria needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility activities. However, Corporate Social Responsibility is an integral part of Tata Steel management process since inception.

Tata Steel''s sustainable development and inclusive growth strategy is sustained through CSR programmes. The Company strives to enhance the livelihood of the local communities and contribute to their future economic and social well-being through a proactive community partnership programme based on three key pillars:

Education – Improve and inspire future technical skills

Environment – Acting responsibly and maintaining high standards

Health & Well-being – Improving the quality of life in communities around our sites

The key focus areas are promoting quality education, creating livelihoods, enabling skill development, providing state-of- the-art medical facilities and building sports, and training facilities. Tata Steel is committed towards providing health care services to the communities in and around the area of operations. During Financial Year 2013-14, 1.5 million people in India and nearly 80,000 people in Europe and UK benefitted from the community programmes of Tata Steel group.

Some of the key projects undertaken during the years are as follows:

In India:

a. Project MANSI, aimed at improving maternal and new born survival rates, is being implemented in 167 villages of Seraikela district. The positive impact achieved includes a drop in the infant mortality rate by 26.5% and neonatal mortality rate by 32.7%. This project was recognised by the Government of Jharkhand, which has asked the Company to help upscale to the state level.

b. Jyoti Fellowship awarded to nearly 3,000 meritorious students from the Scheduled Caste and Scheduled Tribes communities in the states of Jharkhand, Chhattisgarh and Odisha.

c. Nearly 49,000 students in 383 Government schools in Jamshedpur were served the mid-day meal from a Central Kitchen established by Tata Steel.

d. Project RISHTA on adolescent health was scaled up from Seraikela Kharsawan to other operational areas of the Company in Jharkhand and Odisha. It is now being implemented in 700 villages across seven districts in the two states.

e. The Company trained 93 tribal girls as nurses from the naxalite affected Saranda region of Jharkhand. Another 1,800 youth were trained through a range of skill development programmes across the Company''s locations in Financial Year 2013-14.

f. Nearly 10,000 youth learned tribal scripts for Ho, Santhali and Oraon languages.

g. Under the solar street light project, nearly 2,300 solar street lights were installed in villages of Jharkhand and Odisha in Financial Year 2013-14.

In Europe:

a. Tata Steel created the Industrial Cadets Program that raises awareness on local career opportunities in the industrial and manufacturing sectors, helps students and employees develop life skills and create a talent pipeline. The programme involves industry-based activities where 11-19 year olds can develop personal skills and enhance careers awareness whilst gaining accreditation. The inspiration for Industrial Cadets came from HRH The Prince of Wales. The Department for Communities and Local Government support the initiative. Tata Steel pioneered the programme by working with the very first Industrial Cadets.

b. Employees of Tata Steel are increasingly acting as STEM ambassadors to attract more youngsters to the disciplines of Science, Technology, Engineering and Mathematics.

c. Girls'' Day is part of a national programme across the Netherlands which focusses on introducing technical studies to girls between the ages of 8-14. In 2013, 140 girls attended Girls'' Day in IJmuiden.

d. Marquette run organised in the local area of the IJmuiden site, the run focusses on the health and well-being of kids (2,000 participants, of which 1,000 are youngsters).

e. The first time neighbour days were held to introduce people from the community around the Company''s European sites to various on-site activities. More than 2,500 people were introduced to the production processes on site.

f. In 2006, Tata Steel became the corporate partner of the British Triathlon Federation. In 2013, almost 10,000 children participated in 12 events and in November TSE celebrated the 100th Tata – Kids of Steel with a mini-triathlon at the Houses of Parliament in London, United Kingdom.

Details of various initiatives undertaken during Financial Year 2013-14 under Corporate Social Responsibility by the Company are covered in this Annual Report.

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, the 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

a. In accordance with the provisions of the Companies Act, 2013 and the Company''s Articles of Association, Mr. Cyrus P. Mistry and Mr. Ishaat Hussain retire by rotation and are eligible for re-appointment.

b. Mr. Koushik Chatterjee, Executive Director & Group Chief Financial Officer of the Company was appointed as Group Executive Director (Finance and Corporate) of the Company with effect from 19th September, 2013.

c. Mr. T. V. Narendran, was appointed as an Additional Director designated as the Managing Director – Designate, India & South East Asia with effect from 19th September, 2013. Mr. T. V. Narendran will hold office till the date of the forthcoming Annual General Meeting (AGM) and notice has been received from a Member proposing the candidature of Mr. T. V. Narendran for being appointed as a Director of the Company.

d. Mr. H. M. Nerurkar stepped down as the Managing Director of the Company on 31st October, 2013 on reaching the age of superannuation. The Directors would like to place on record their sincere appreciation for his ability, unstinting commitment and outstanding contribution to the Company during his tenure on the Board since 2009.

e. Mr. T. V. Narendran has succeeded Mr. H. M. Nerurkar as Managing Director, India and South East Asia with effect from 1st November, 2013.

f. Pursuant to Section 149 and other applicable provisions of the Companies Act, 2013, your Directors are seeking appointment of Mr. Nusli N. Wadia, Mr. Subodh Bhargava, Mr. Jacobus Schraven, Mrs. Mallika Srinivasan and Mr. O. P. Bhatt as Independent Directors for the terms given in the Notice of the 107th Annual General Meeting. Details of the proposal for the appointment of above Independent Directors are mentioned in the Explanatory Statement under Section 102 of the Companies Act, 2013 of the Notice of the 107th Annual General Meeting.

g. Mr. Andrew Robb, who holds office up to the date of the forthcoming AGM has informed that he would not be seeking re-election to the Board. The Directors would like to place on record their sincere appreciation for his commitment and contribution made by him during his tenure on the Board since 2007.

AUDITORS

M/s Deloitte Haskins & Sells LLP (DHS LLP), Chartered Accountants, who are the statutory auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. Pursuant to provisions of Section 139 of the Companies Act, 2013 and rules framed there under, it is proposed to appoint DHS LLP as statutory auditors of the Company from the conclusion of the ensuing AGM till the conclusion of the 110th AGM to be held in the year 2017, subject to annual Ratification by members at Annual General Meeting.

During the year, the Company had received intimation from DHS LLP stating that Deloitte Haskins & Sells had been converted into a limited liability partnership (LLP). Accordingly, the audit of the Company for Financial Year 2013-14 was conducted by DHS LLP.

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.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Details of the energy conservation and research and development activities undertaken by Tata Steel Limited along with the information in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are provided as an Annexure to the Directors'' Report.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, a Management Discussion and Analysis, Corporate Governance Report and the Managing Director''s and Auditors'' Certificate regarding compliance of conditions of Corporate Governance are made part of the Annual Report.

BUSINESS RESPONSIBILITY REPORT

A Business Responsibility Report is included in this Annual Report.

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 for the Financial Year 2013-14, 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.

ACKNOWLEDGEMENTS

The Directors wish to convey their appreciation to all Company''s employees for their enormous personal efforts

as well as their collective contribution to the Company''s performance. The Directors would also like to thank the employee unions, shareholders, customers, dealers, suppliers, bankers, Government and all the other business associates for the continuous support given by them to the Company and their confidence in its management.

On behalf of the Board of Directors CYRUS P. MISTRY

Chairman

Mumbai, 14th May, 2014


Mar 31, 2013

To the Members,

The Board of Directors hereby presents the 106th annual report on the business and operations of your Company along with the standalone and consolidated summary financial statements for the year ended 31st March, 2013.

Rs. Crores

Tata Steel Standalone Tata Steel Group

2012-13 2011-12 2012-13 2011-12

Income from Operations 38,199.43 33,933.46 134,711.54 132,899.70

Total expenditure before finance cost, depreciation 27,073.19 22,396.69 122,390.33 120,482.91 (net of expenditure transferred to capital)

Operating Profit 11,126.24 11,536.77 12,321.21 12,416.79

Add: Other income 902.04 886.43 479.15 1,573.03

Profit before finance cost, depreciation, exceptional items and taxes 12,028.28 12,423.20 12,800.36 13,989.82

Less: Finance costs 1,876.77 1,925.42 3,968.11 4,250.11

Profit before depreciation, exceptional items and taxes 10,151.51 10,497.78 8,832.25 9,739.71

Less: Depreciation 1,640.38 1,151.44 5,575.32 4,516.65

Profit before exceptional items and taxes 8,511.13 9,346.34 3,256.93 5,223.06

Add/(Less): Profit on sale of non-current Investments 12.33 511.01 966.03 3,361.92

Add/(Less): Provision for diminution in the value of investment /doubtful advances (686.86) - - -

Add/(Less): Provision for impairment of non-current assets - - (8,355.91) -

Profit/(Loss) before taxes 7,836.60 9,857.35 (4,132.95) 8,584.98

Less: Provision for current taxation 1,770.54 3,115.11 2,325.40 3,517.65

Less: MAT credit (399.84) - (410.12) (5.41)

Less: Provision for deferred taxation 1,402.93 45.82 1,314.16 124.22

Profit/(Loss) after taxes 5,062.97 6,696.42 (7,362.39) 4,948.52

Add: Share of profit of Associates - - 90.31 268.11

Less: Minority Interest - - (214.46) (173.14)

Profit/(Loss) after minority interest and share of profit of associates - - (7,057.62) 5,389.77

Distribution on hybrid perpetual securities 266.21 256.54 266.21 256.54

Tax effect on distribution of hybrid perpetual securities (86.37) (83.24) (86.37) (83.24)

4,883.13 6,523.12 (7,237.46) 5,216.47

Add: Balance brought forward from the previous year 21,145.04 16,639.46 16,125.42 12,959.16

Add: Profit and Loss account balance relating to acquisitions - (0.87) - -

Balance 26,028.17 23,161.71 8,887.96 18,175.63

Which the Directors have apportioned as under to: -

(i) Dividend on Preference Shares - - 0.21 0.21

(ii) Proposed dividend on Ordinary Shares 776.97 1,165.46 776.97 1,165.46

(iii) Tax on Dividends 128.73 181.57 226.41 185.71

(iv) General Reserve 506.30 669.64 665.56 680.51

(v) Statutory Reserve - - 8.29 -

(vi) Special Reserve - - 161.28 11.77

(vii) Capital Redemption Reserve - - 9.86 6.55

Total 1,412.00 2,016.67 1,848.58 2,050.21

Balance to be carried forward 24,616.17 21,145.04 7,039.38 16,125.42

DIVIDEND:

The Board recommended dividend of Rs. 8 per Ordinary Share on 97,12,15,229 Ordinary Shares (Financial Year 2011-12: Rs. 12 per Ordinary Share on 97,12,14,450 Ordinary Shares of Rs. 10 each) for the year ended 31st March, 2013.

The dividend on Ordinary Share is subject to the approval of the shareholders at the Annual General Meeting. The total dividend payout works out to 18% (Financial Year 2011-12: 20%) of the net profit for the standalone results.

GLOBAL ECONOMIC CONDITIONS

The world Gross Domestic Product (GDP), as reported by the International Monetary Fund, witnessed a moderate growth of 3.2% in 2012 as compared to a growth of 4.0% in 2011. While the growth in the advanced economies was 1.2% in 2012 in contrast to 1.6% in 2011, growth in the emerging and developing economies fell to 5.1% in 2012 compared to 6.4% in 2011. There was a noticeable slowdown in the emerging market and developing economies during 2012, a reflection of the sharp deceleration in demand from key advanced economies. Global prospects have improved but the road to recovery in the advanced economies is still uncertain and volatile.

The US GDP increased by 2.2% in 2012 reflecting significant legacy effects from the financial crisis, continued fiscal consolidation, a weak external environment and disruptions in the northeast following Superstorm Sandy. The recovery is beginning to show some bright spots as credit growth has picked up and bank lending conditions have been easing slowly from tight levels. However, the impact of recent recovery is yet to show material impact on the economy. In comparison to the US, the euro zone economy contracted by 0.6% in 2012 over 2011. Amongst the euro zone countries, Germany posted a marginal growth of 0.9% while Italy and Spain posted a decrease of 2.4% and 1.4% respectively. Decisive policy actions at the European level-including Outright Monetary Transactions, the completion of the European Stability Mechanism, the Greek debt relief programme and the agreement on the Single Supervisory Mechanism-have increased confidence in the viability of the Economic and Monetary Union. However, lower sovereign spreads and improved bank liquidity are yet to translate into either improved private sector borrowing conditions or stronger economic activity. Emerging economies of eastern Europe experienced a sharp growth slowdown in 2012 reflecting spillover effect from the euro area crisis and domestic policy tightening in the larger economies. For 2012 as a whole, EU apparent steel consumption is estimated to have decreased by -9.7% to 140 million tonnes, with lower demand due to poor economic situation in the euro zone and reduced global trade. Output in the main EU27 steel using sectors declined in 2012 (Construction -5%, Automotive -4%, Mechanical Engineering -1%).

The GDP of Association of South East Asian Nation (ASEAN) (Indonesia, Malaysia, the Philippines, Thailand and Vietnam) grew at 6.1% reflecting resilient domestic demand. Thailand economy grew at 6.4% while that of Indonesia grew by 6.2% in 2012. It is estimated that the public spending by the Government especially in infrastructure and public reconstruction will sustain the growth in Thailand in the future. It is expected that continued remittance flows and low interest rates should continue to support the private consumption and investments in the region.

Steel consumption in the ASEAN region (Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Burma, Cambodia, Laos and Vietnam) have surged by 7.6% year on year to 56.4 million tonnes in 2012. Thailand registered the highest growth rate of 13.9% year on year followed by Vietnam at 9.9%, and Indonesia at 8.8%. Malaysia and Philippines both registered marginal increases in steel demand of 1.7% and 2.2%, respectively, while steel demand in Singapore declined marginally during the year.

The domestic economy in India witnessed a significant slowdown during the year with certain sectors like automotive, capital goods showing a marked slowdown in demand. The moderation in the industrial growth particularly in the manufacturing sector is largely attributed to sluggish growth in investments and tighter monetary policy. Growth in services was 6.6% as compared to a growth of 8.2% in 2011-12. Amongst the key macro-economic indicators, the current account deficit is currently at a very high level which would put significant pressure on the economy especially on the currency.

In India the flat steel consumption grew by 4.3% in the fiscal, while long steel consumption grew by 4.7%. Amongst the main steel consuming sectors,the construction sector grew at around 5.9% and the consumer durables sector grew by 4.5% while the capital goods is expected to have declined significantly by around 10.1% and the automotive sector grew by 1.2%.

TATA STEEL GROUP PERFORMANCE:

In the backdrop of a weak global economy and a challenging market situation, the gross deliveries of the Tata Steel Group at 24.1 million tonnes in 2012-13 were almost at the similar levels as the previous year of 24.2 million tonnes. The turnover of the Tata Steel India operations increased by 13% primarily due to enhanced volume from the newly commissioned facilities of the 2.9 million tonnes per annum capacity expansion in Jamshedpur and enhanced product mix in the Long Products segment. However, there was a decrease in the turnover in Tata Steel Europe by 15% (in its reporting currency) primarily due to weaker market conditions and lower operating volume in Europe.

The consolidated profit before finance costs, depreciation, exceptional items and taxes of the Group was Rs. 12,800 crores in the Financial Year 2012-13 lower by 9% over the previous year primarily due to lower operating performance in Europe, relatively weaker steel prices across all geographies. Consequently, the consolidated Profit before exceptional items and taxes were Rs. 3,257 crores in the Financial Year 2012-13 compared to Rs. 5,223 crores in the previous year.

Indian operations:

The Financial Year 2012-13 marked a major milestone in operating history of Tata Steel as the capacity expansion at Jamshedpur was completed with most of the facilities of 2.9 mtpa brownfield expansion being commissioned for production. The expansion project includes the commissioning of the 6 mtpa Pellet Plant, a 3.05 mtpa Blast Furnace (I Furnace), a new LD Shop (LD#3) and the 2.54 mtpa Thin Slab Caster and Rolling (TSCR), and two new Lime Kilns (Nos. 8 & 9) (600 tpd each). The other capital projects commissioned during the Financial Year 2012-13 were the augmentation of Noamundi and Joda Iron Ore Mines and setting up of one 0.7 mtpa Coke Ovens Battery (No.10) along with the By-Product Plant.

In order to prepare for marketing the additional volume of production from the new expansion, the Company has been working on significant initiatives on the marketing front which included (a) the launch of the Astrum brand (HR coils) to serve the large SME market, (b) acquisition and expansion of large commercial accounts in tubing, cold rolling, packaging and LPG segments, (c) developing international markets for the products and (d) initiating new product development process for securing customer approvals in the automotive segment.

The Company completed the Financial Year 2012-13 with an overall increase of approximately 14% in production and sales volumes. The production of Hot Metal (8.86 million tonnes), Crude Steel (8.13 million tonnes) and Saleable Steel (7.94 million tonnes) reached their respective highest levels till date. Correspondingly, the deliveries recorded new highs at 7.48 million tonnes for the year.

There were also several best performances recorded by many of the other operating units of the Company during the Financial Year 2012-13 some of which are as follows:

a. The Ferro Alloys and Mineral Division (FAMD) achieved the highest ever Ferrochrome production (218k tonnes) and sales (223k tonnes). FAMD launched "Tata Silcomag" India''s first branded Ferro Alloy for the SME segment.

b. Global Wires achieved its highest ever total wires production of 315,000 tonnes.

c. The Tubes Division production at 391,000 tonnes and sales at 387,000 tonnes in the Financial Year 2012-13 was the highest ever. The Division developed new products like Red Oxide Pipes, Thin Organic Coated galvanised tubes and GP tubes for retail segment. Tata Pipes also won the Zee Business ''Good Home Award'' 2012 in pipes category.

d. The Bearings Division commissioned a new line of Bearings - ''HUB Bearings'', specifically used in passenger vehicles. The Division also inaugurated a state of art ''testing and validation centre'' based on latest technology to meet the increasing expectations of the automotive customers. The Bearings Division production was 33.73 million numbers and sales was 32.03 million numbers in the Financial Year 2012-13. The Bearings Division won the ''Economic Times - Frost and Sullivan - IMEA'' Gold Award excellence in manufacturing & supply chain, and the Bajaj Gold Consistency Award for QCD, second year in a row in the Financial Year 2012-13.

e. The Agrico Division has launched two new products ''Seed Drill'' and ''Cultivator'' under the Grasshopper sub brand, and has achieved its best ever sales of Rs. 162 crores (a growth of ~5%) in the Financial Year 2012-13.

The Company achieved a savings of approximately Rs. 1,625 crores by improving operational excellence through focused initiatives in the Financial Year 2012-13. The special improvement initiative ''KVHS'' (Kar Vijay Har Shikhar - Conquer Every Peak) launched during the Financial Year 2011-12, contributed approximately Rs. 1,057 crores in the Financial Year 2012-13. This initiative is focused on Tata Steel''s aspiration to improve its earnings through generation of new ideas and deploying the same through a structured framework. It is a multi-unit, multi-location and a cross functional improvement programme that aims to excel across the entire value chain - from the raw materials mining to the operating units across all divisions.

Inspite of very challenging market conditions and weak steel prices in India, the Company sold an additional 850,000 tonnes during the Financial Year 2012-13. During the fourth quarter of the financial year, the Company sold around 2.2 million tonnes of steel that is the highest quarterly volume in the history of the Company. This was possible due to the successful ramp up of the new facilities in Jamshedpur and the marketing initiatives taken by the Company to gear up to sell the additional volume of the expanded capacity. The profit before finance costs, depreciation, exceptional items and taxes for the stand alone Tata Steel was Rs. 12,028 crores for the Financial Year 2012-13 which was marginally lower by about 3% compared to the previous financial year.

European operations:

Tata Steel Europe''s (TSE) turnover for the Financial Year 2012-13 was 15% lower than the previous year. This was due to lower deliveries by about 7% compared to the previous year and a 8% lower average revenue per tonne caused by the deterioration in the market conditions and volatile currency exchange rates in the Financial Year 2012-13. The deliveries in Financial Year 2012-13 were impacted by the lower volume of production due to the rebuilding of Blast Furnace 4 (Port Talbot, United Kingdom), and hearth issues at Blast Furnace 7 in IJmuiden (Netherlands). The blast furnace #4 rebuild, was completed and the furnace was relighted in February 2013. The company continued to press forward with its structured improvement programme OGSM (Objectives Goals Strategies and Measurement) and posted significant gains from the success of this programme. The above improvement programme along with the other short-term management interventions could offset some of the adverse impact of the external market deterioration.

In order to enhance customer service levels, TSE is implementing a major ''supply chain transformation'' project aimed at allocating customer demand in the most efficient and timely manner (thereby reducing inventory levels, reducing costs to serve, and improving delivery and availability standards), whilst at the same time improving customer service levels. The company has also been accelerating its new product development programme as 17 new products were introduced in the market.

South-East Asian operations:

NatSteel achieved its best ever performances in Singapore and China driven by capacity expansion in China. NatSteel''s Singapore downstream domestic sales achieved a new high of 500,000 tonnes, a 19% increase over the Financial Year 2011-12.This makes it one of the largest reinforcement solutions business in the world with an enhanced product mix of 66% value added products. Other operating entities like NatSteel Vina in Vietnam and China also showed improved performance compared to the previous year. NatSteel''s operations in Australia have also undergone a major transformation, with the restructuring of its Queensland operations in Australia.

Tata Steel Thailand (TSTH) production in the Financial Year 2012-13 at 1.167 million tonnes was at par with the previous financial year though it recorded an increase in the finished goods sales by 3% during the year. The enhanced growth in construction sector in Thailand helped in the increase of rebars sales though the wire rods product line was adversely affected by the cheaper imports from China. TSTH further strengthened its leadership position in rebars by increasing its market share from 25% to 29% and also established a stronger foothold of its brand Tata Tiscon in the regional markets of Thailand. The year also saw the launch of Seismic rebars, an earthquake resistant rebar for the first time in Thailand.

Review of Impairment risks:

Under the Indian Accounting Standards a company is required to undertake an impairment review of its assets and investments based on certain triggers relating to the business or the operating environment.

Based on the above review, the Company has made a provision in the stand alone financial statements of Rs. 687 crores towards impairment in respect of equity investment in and loans granted to Tata Steel KZN Pty. Limited, South Africa. Further, the Company has recognised a non-cash write down of goodwill and other assets of Rs. 8,356 crores in the consolidated financial statements. The above impairment provision relates partly towards the write down of the assets in some parts of the business in Tata Steel Europe and also part write down of goodwill created on the acquisition of Corus Group plc (now Tata Steel Europe) in 2007. The balance provision relates to the investments made by the Company in Tata Steel KZN Pty. Limited, South Africa, Kalimati Coal Company Limited, Australia, Tata Steel Thailand and Tata Metaliks Limited (Redi Plant). The recoverable value of these companies have been adversely affected by various reasons including severe contraction in demand,especially in construction sector,declining output prices and very high raw material prices that has impacted competitive strength of the above businesses. The above provisions are non- cash charges and do not affect any of the financial covenants and the funding position of Tata Steel Group.

EXPANSION PROJECTS:

Brownfield Projects:

Jamshedpur expansion project (2.9 million tonnes)

Tata Steel India has completed implementation of the 2.9 mtpa expansion project at Jamshedpur Works to increase its crude steel capacity from 6.8 mtpa to 9.7 mtpa. The expansion project also entailed augmentation of Noamundi and Joda Iron Ore Mines and related facilities along with a By-Product Plant. Besides the main production units, the expansion project also included setting up the required support systems such as power, water, utilities, raw material handling and plant logistics. All the production facilities have been commissioned in phases. The facilities are currently in various stages of ramp up. Continuous Annealing and Processing Line Jamshedpur Continuous Annealing & Processing Company Private Limited (JCAPCPL), a joint venture company between Nippon Steel & Sumitomo Metal Corporation (NSSMC) and Tata Steel was formed in early 2012 for producing high end cold rolled coils and sheets for the Indian automotive market. It is currently undertaking the construction of a 0.6 mtpa Continuous Annealing & Processing Line (CAPL). The construction of the CAPL and all other related facilities is progressing as per schedule.

Greenfield Project

The greenfield project execution in Odisha to produce flat steel products with an ultimate capacity of 6 mtpa in two phases has made significant progress on all fronts during the year. Major orders for all zones of the phase 1 of the project have been placed and construction work is in full swing.

The new facility coming up at Kalinganagar will augment Tata Steel''s product range to meet the changing customer needs in segments that the Company serves currently. These include Automotive, Packaging, Tubing, Construction, Appliances and Railways.

The Kalinganagar facility will also enable Tata Steel to enter and have a significant presence in segments such as Oil & Gas, Lifting & Excavation, Infrastructure, Defence, Shipbuilding, Energy, Power, etc. This will help Tata Steel to improve its market share in the domestic market in the future. The first phase is expected to be completed by 2015.

RAW MATERIAL PROJECTS:

Tata Steel continued to implement its long-term strategy to secure ownership of assets that will increase its raw materials security and share of value-added products. During the Financial Year 2012-13 the Company''s primary focus remained on expediting implementation of its existing ventures and stabilising the operation of operating ventures.

Benga Coal Project, Mozambique:

In November 2007, the Company entered into Definitive Agreement with Riversdale Mining Company, an Australian listed company for purchasing 35% stake in its Mozambique Coal Project. In April 2011, British Australian Mining Company, Rio Tinto took over Riversdale Mining Company.

The Company holds 35% in RioTinto Benga (Mauritius) Ltd. (RTBML) with the balance 65% held by Rio Tinto. In Financial Year 2012-13 RTBML produced 1.41 Million tonnes of Coal (0.67 million tonne of coking coal and 0.74 million tonne of thermal coal).

Iron Ore Projects in Canada:

The Company holds 26.31% in New Millennium Iron Corp., Canada (NML). NML owns Direct Shipping Ore (DSO Project) and Taconite Iron Ore Projects. A joint venture Company Tata Steel Minerals Canada Limited (TSMC) was formed in October 2010 for development of DSO Project. Tata Steel holds 80% equity stake in TSMC and the balance 20% equity stake is held by NML.

TSMC has commenced production in September 2012 and achieved the production of 0.30 million tonnes in the Financial Year 2012-13 against the plan of 0.25 million tonnes.A production of 2 million tonnes is planned for the Financial Year 2013-14.

In recognition of the progress made by the Company, TSMC has been conferred with the ''Miner of the Year Award'' by the Canadian Institute of Mining, Minerals and Petroleum (CIM), New Foundland and Labrador.

In March 2013, the Company through its subsidiary TSMC, entered into a framework arrangement with Labrador Iron Mines (LIM) for acquisition of 51% stake in LIM''s Howse deposit which is near the Company''s DSO Project. This arrangement is expected to enhance resource and production and will also improve operational flexibility relating to DSO Project.

HEALTH AND SAFETY:

Tata Steel has identified excellence in health and safety in all its operations as a key business imperative. The Company has adopted and applied a range of programmes, including those from DuPont the world benchmark in safety, to establish a strong safety culture by inculcating safe behaviour among its employees and contractors. In Tata Steel the Lost Time Injury Frequency Rate for the Financial Year 2012-13 is 0.60 which is an improvement of 12% over last year.

The health initiatives, driven through Wellness@Workplace programme in India has a special focus on the health of women employees. These are designed to provide an injury- free working environment for a healthy and happy workforce. Tata Steel India has taken a special drive on Fatality Risk Control Programme and elimination of commonly accepted unsafe practices. This initiative has enabled correction of more than 10,000 unsafe conditions and 969 unsafe practices.

In Tata Steel India, a series of safety initiatives helped in enhancing of production capacity from 5 mtpa to 10 mtpa in the last eight years while maintaining complete harmony with the community. Further expansion of 6mtpa at Kalinganagar, Odisha is being carried out by promoting safety culture among the employees including contractors as also involving community through a special project ''AAKAR'' to promote the local acceptance. In its endeavour to address the issue of community safety, Tata Steel India is working with external consultants to drive systematic domestic safety management and safety education initiatives for school and college students in Jamshedpur and at the different mines and collieries.

In Tata Steel Europe health and safety improvements are embedded in the business strategic plan (OGSM) and these were delivered well in the Financial Year 2012-13 enabling a 18% reduction in Lost Time Injuries and recordables (4.55 in 2012-13 compared to 5.56 in 2011-12).''Recordables''are defined as all work related incidents resulting in harm to a person or persons, excluding those that require no more than first aid treatment. Highlights during the period was the full project re-build of Blast Furnace 4 at Port Talbot with no lost time injuries. TSE launched two enabling strategies that were Health & Safety Excellence for senior leaders and positive safety conversation training and implementation for all employees to move to a mature safety culture.

Operations in South East Asia at Tata Steel Thailand and NatSteel are strengthening their safety practices particularly in the areas of positive isolation, stock yard management and employees involvement through train the trainers programme. These are carried out through theme based onsite visits, reviews, recommendations and trainings.

In 2012-13 Tata Steel was again recognised by its peers in the World Steel Association with a health and safety recognition award for Tata Steel and NatSteel.

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


Mar 31, 2012

To the Members,

The Board of Directors hereby present the 105th annual report on the business and operations of your company along with the standalone and consolidated summary financial statements for the year ended 31st March, 2012.

Figures in Rs. crores

Tata Steel Standalone Tata Steel Group

2011-12 2010-11 2011-12 2010-11

Net Sales/Income from Operations 33,933.46 29,396.35 1,32,899.70 1,18,753.12

Total expenditure before depreciation 22,396.69 17,914.06 1,20,482.91 1,02,006.45 (net of expenditure transferred to capital)

Operating Profit 11,536.77 11,482.29 12,416.79 16,746.67

Add: Dividend and other income 886.43 528.36 1,573.03 679.98

Profit before finance costs, depreciation, exceptional items and tax 12,423.20 12,010.65 13,989.82 17,426.65

Less: Finance costs 1,925.42 1,735.70 4,250.11 3,955.78

Profit before depreciation, exceptional items and tax 10,497.78 10,274.95 9,739.71 13,470.87

Less: Depreciation 1,151.44 1,146.19 4,516.65 4,414.82

Profit before exceptional items and tax 9,346.34 9,128.76 5,223.06 9,056.05

Add/(Less): Restructuring, Impairment & Disposals - - - 2,310.21

Add/(Less): Profit on sale of Long term Investments 511.01 648.09 3,361.92 735.69

Profit before tax 9,857.35 9,776.85 8,584.98 12,101.95

Less: Provision for current tax 3,115.11 2,857.00 3,512.24 2,910.34

Less: Provision for deferred tax 45.82 54.16 124.22 335.56

Profit after tax 6,696.42 6,865.69 4,948.52 8,856.05

Add: Share of profit of Associates - - 268.11 66.36

Less: Minority Interest - - (173.14) (60.28)

Profit after minority interest and share of profit of associates - - 5,389.77 8,982.69

Distribution on hybrid perpetual securities 256.54 6.79 256.54 6.79

Tax effect on distribution of hybrid perpetual securities (83.24) (2.25) (83.24) (2.25)

6,523.12 6,861.15 5,216.47 8,978.15 Add: Balance brought forward from the previous year 16,639.46 12,772.65 12,959.16 7,010.48

Add: Profit and Loss account balance relating to acquisitions (0.87) - - - Balance 23,161.71 19,633.80 18,175.63 15,988.63 Which the Directors have apportioned as under to:-

(i) Dividend on Preference Shares - - 0.21 -

(ii) Proposed dividend on Ordinary Shares 1,165.46 1,151.06 1,165.46 1,150.25

(iii) Tax on dividends 181.57 156.71 185.71 163.22

(iv) General Reserve 669.64 686.57 680.51 703.42

(v) Debenture Redemption Reserve - 1,000.00 - 1,007.26

(vi) Special Reserve - - 11.77 5.32

(vii) Capital Redemption Reserve - - 6.55 -

Total 2,016.67 2,994.34 2,050.21 3,029.47

Balance to be carried forward 21,145.04 16,639.46 16,125.42 12,959.16

DIVIDEND

The Board recommended dividend of Rs. 12 per Ordinary Share on 97,12,14,450 Ordinary Shares (Financial Year 2010-11: Rs. 12 per Ordinary Share on 95,92,14,450 Ordinary Shares of Rs. 10 each) for the year ended 31st March, 2012.

The dividend on Ordinary Shares is subject to the approval of the shareholders at the Annual General Meeting. The total dividend payout works out to 20% ( Financial Year 2010-11: 19%) of the net Profit for the standalone results and 25% (Financial Year 2010 -11: 15%) of the net Profit of the consolidated results of the Company.

CONVERSION OF WARRANTS

1,20,00,000 Warrants were allotted to Tata Sons Limited (TSL) on Preferential basis on 23rd July, 2010, where each Warrant entitled TSL to subscribe for one Ordinary Share of the Company at a price of Rs. 594/- per share.

On 20th January, 2012, TSL exercised its option to convert 1,20,00,000 Warrants into Ordinary Shares at a price of Rs. 594/- per share. Accordingly, 1,20,00,000 Ordinary Shares of Rs. 10 each were allotted to TSL on 20th January, 2012 at a premium of Rs. 584/- per share aggregating to Rs. 712.80 crores.

After the preferential issue, the paid-up share capital of the Company stands at Rs. 971.21 crores comprising of 97,12,14,450 Ordinary Shares of Rs. 10 each.

GLOBAL ECONOMY

The world GDP, as reported by the International Monetary Fund, witnessed a moderate growth of 4.0% in 2011 as compared to a growth of 5.0% in 2010. The growth in the advanced economies slowed to 1.6% in 2011 in comparison to 3.2% in 2010, while the emerging and developing economies grew at 6.2% in 2011 compared to 7.5% in 2010. The year also saw supply-side disruptions from the earthquake and tsunami in Japan and the foods in Thailand. The future of economic and monetary environment of the European Union has become uncertain, as the sovereign debt crisis in the Eurozone has affected the confidence of the underlying economy.

US: After a weak start, the economic activity in the US gained strength through the year with the quarterly growth rate rising each quarter to finish at 1.7% for the full year. The United States has seen a spate of encouraging economic news, including fall in unemployment rates. Risks in the outlook are more balanced though with downside bias, given the fiscal uncertainty, weakness in the housing market, and potential spillovers from Europe.

Europe: GDP in the Euro zone increased by 1.4% in 2011 over 2010. Germany and France posted growth of 3% and 2% respectively while Italy and Spain posted an increase of only 0.4% and 0.7% respectively. Europe tipped back into recession, resulting from renewed escalation of perceived Euro zone crisis risks in late 2011. The Euro area crisis is the outcome of several underlying forces. These factors include mispriced risk, prolonged liquidity fed macroeconomic policies over many years and weak prudential banking norms. While the overall public and external debt levels of the euro area are lower than those of the United States and Japan, the crisis has exposed saws in the governance of the European Monetary Union. While cross-border bank lending markets became increasingly integrated, the supervision and regulation remained at national level.

India: As reported in the Economic Survey of 2011-12, GDP grew by 6.9% in 2011-12 as compared to the growth of 8.4% in 2010-11. The inflation (WPI) at 9.1% in Financial Year 2011-12 led to consistent interest rate hikes, affecting demand adversely. The agricultural output is expected to grow by 2.5%, lower than expected as compared to a high growth of 7% in 2010-11. It is a matter of concern that the agricultural growth is characterised by fluctuations due to the vagaries of nature. The manufacturing sector grew by 3.9% during the year as compared to 7.6% during 2010-11. The fragile economic recovery in the US and Europe and moderately subdued expectations at home affected the growth of the industrial sector in the current year. Growth in services was around 9.4% as compared to a growth of 9.3% in 2010-11. Amongst the key macroeconomic indicators, fiscal deficit was around 5.9% of GDP in 2011-12 as compared to 4.8% in 2010-11. Export and import grew positively by 23.5% and 29.4% compared to 2010-11 despite difficult conditions in the global economy.

South East Asia: The GDP of Association of South East Asian Nations (ASEAN) (Indonesia, Malaysia, Philippines, Thailand and Vietnam) grew at 4.5%. The Thailand economy grew at 0.1% while that of Singapore by 4.9% and Vietnam by 5.9% in 2011. As the pace of economic activity in the region has slowed and capital flows have diminished, inflation pressure has waned and credit flows have slowed.

TATA STEEL GROUP PERFORMANCE

Gross steel deliveries were at par with previous year in line with the underlying market conditions. Tata Steel India deliveries were higher by 3% while Tata Steel Europe and Tata Steel Thailand deliveries declined by 5% and 12% respectively. Deliveries of NatSteel Holdings were at par with the previous year.

Tata Steel India's turnover increased by 15% due to better market conditions and enhanced product mix. Higher revenues from sale of automotive and branded products and increased sale of long products in the retail segment, contributed to the increased turnover. The turnover of Tata Steel Europe and NatSteel increased by 3% and 4% respectively while there was a reduction in the turnover of Tata Steel Thailand by 2% (in their respective reporting currencies).

Earnings before interest, taxes and depreciation (EBIDTA) of the group was Rs.13,533 crores in Financial Year 2011-12 compared to Rs. 17,116 crores in Financial Year 2010-11.

Indian operations: Tata Steel completed the year 2011-12 with an all-round increase in the production levels. The production of hot metal (7.75 mt), crude steel (7.13 mt) and saleable steel (6.97 mt) are the highest milestones for the Company till date. The production from the larger furnaces was maximised with better productivity and lower coke consumption while increased vessel life in the steel melting area enhanced the liquid steel production levels.

The deliveries during Financial Year 2011-12 were 6.63 million tonnes compared to 6.42 million tonnes in the previous year. There were several best ever performances recorded by many units of the Company during Financial Year 2011-12.

The special improvement initiative, the 'Kar Vijay Har Shikhar' programme launched in India, has resulted in savings of Rs.945 crores in Financial Year 2011-12. The program is an operations transformation exercise implemented through a focused methodology to de-bottleneck processes in order to increase throughput and reduce costs across functions, notably marketing, mining and production. Application of 'Theory of Constraints' in the Marketing function has led us to leverage our retail network to push unique value propositions to customers, replenishing stocks at dealer levels on a predetermined basis, resulting in robust retail sales and better margins.

The Ferro Alloys and Minerals Division (FAMD) registered total sales volume of 1,351k tonnes in Financial Year 2011-12 as against 1,464k tonnes in Financial Year 2010-11. Lower sales of Chrome concentrate and Pyroxenite resulted in lower overall FAMD sales. Sales of Ferro alloys (Chrome and Manganese Alloys) registered an increase of 17% (Financial Year 2011-12: 309 k tonnes; Financial Year 2010-11: 264k tonnes) and dolomite sales registered an increase of 15% (Financial Year 2011-12: 480k tonnes; Financial Year 2010-11: 417 k tonnes). FAMD continues to supplement Profits of the Steel division, in spite of weakness in international demand witnessed in the second half of the financial year.

The Tubes division recorded sales of 377k tonnes in Financial Year 2011-12 compared to 366k tonnes in Financial Year 2010-11, an increase of 3% over the previous year. This was due to improved demand in the irrigation and infrastructure segments and increasing order book of Tata Structure. The year also marked the unveiling of the 'CHARKHA' at Oval Maidan, Mumbai – a symbol of the innovative and futuristic applications of the Tata Structure hollow section.

The Bearings division registered sales of 34.54 million numbers in Financial Year 2011-12 compared to 32.95 million numbers in Financial Year 2010-11, signifying growth of 5%, driven primarily by robust demand from the auto segment.

European operations: Sales volume in Europe remained fat through the year at around 3.5 million tonnes per quarter. The liquid steel production for the year was 14 million tonnes. Higher demand driven by restocking resulted in a sharp increase of 12% in the first quarter of Financial Year 2011-12, before weakening demand and stabilising raw material costs saw average revenue per tonne fall steadily each quarter through the year. The fourth quarter average revenue per tonne was 9% lower than the first quarter.

The Company's European operations were impacted on account of excess steel capacity in the Eurozone and weak underlying demand. Each quarter witnessed steeper decline in steel price compared to raw material prices, resulting in cost/price squeeze. Management continued its efforts to restructure Long Products business at Scunthorpe, aligned business operations to current and projected demand in Speciality business, infused capital to improve asset quality and energy efficiency while simultaneously implemented cost reduction program titled 'Step Up and Save'.

In order to enhance customer service, Tata Steel Europe (TSE) is implementing a 'Supply Chain Transformation' project, aimed at allocating customer demand to the production hubs in the most efficient and cost-effective manner. This is expected to reduce inventory levels, improve delivery compliance and strengthen customer relationships. During the financial year 2011-12, TSE's customer orientation was much appreciated. The Company was selected as the preferred supplier of choice for select automakers and was shortlisted for a prestigious Annual Quality Improvement award.

South East Asian operations: NatSteel marginally increased its sales level in Financial Year 2011-12 (1.81 million tonnes) over Financial Year 2010-11 (1.80 million tonnes) resulting in increase of turnover by 4%. NatSteel Singapore increased its sales volume from 844k tonnes in Financial Year 2010-11 to 893k tonnes in Financial Year 2011-12, a 6% growth in volume on the back of strong construction demand. Singapore operations are focused to add higher proportion of value added products to their existing range of products. In China, the sales volumes reached 540k tonnes in Financial Year 2011-12 compared to 495k tonnes in Financial Year 2010-11. NatSteel is setting up in China a Downstream Reinforcements Solutions operation to add depth to its product portfolio. Operations in Australia suffered on account of poor demand, rapidly accelerating costs and disproportionate supply in the market place.

Tata Steel Thailand (TSTH) recorded crude steel production of 1.18 million tonnes in Financial Year 2011-12 compared to 1.30 million tonnes in Financial Year 2010-11. Sales during the year was lower at 1.14 million tonnes compared to 1.29 million tonnes registered in Financial Year 2010-11. Thailand's economy suffered on account of unprecedented foods which impacted construction activity country wide. Low capacity utilization coupled with elevated imported scrap prices led to reduction in rebar scrap spread, impacting margins of TSTH. In spite of tough market conditions TSTH continued to be a market leader in rebars and high end wire rods. Tata TISCON a prominent brand in India was launched for the first time internationally in Thailand. TSTH diversified its product portfolio by producing

Special Bar Quality product, for applications in the automotive segment and doubled its efforts to reduce costs, optimize product-mix and improve yield of mills.

EXPANSION PROJECTS

Brownfield PROJECTS:

The 2.9 mtpa Brownfield expansion at Jamshedpur would enhance the crude steel making capacity to 9.7 mtpa and the Flat Steel production capacity will increase by 2.54 mtpa. The trial production and testing has started for Pellet plant, I Blast furnace, LD#3, first stream of Thin Slab Caster (TSC) and fines circuit of Noamundi iron ore mines. All balance facilities under this project are scheduled to be completed in Financial Year 2012-13.

The implementation of the 0.6 mtpa Continuous Annealing and Processing Line project at Jamshedpur for the production of automotive cold rolled fat products is progressing as per schedule for commissioning in end 2013. The above project is being undertaken as part of the JV between Nippon Steel Corporation and Tata Steel. The above Joint Venture will serve the growing needs of the Indian automotive customers for high end cold rolled coils and sheets.

These PROJECTS, along with other sustenance and improvement PROJECTS, are being implemented to support the Company's current operations and its growth aspirations.

Greenfield Project:

The greenfield project in Odisha to produce Flat Steel products with 6 mtpa capacity in two phases of 3 mtpa each, has made considerable progress on all fronts during the year. Contracts for major technology packages for Blast Furnace, Sinter Plant, Coke Plant, Steel Melting Shops (SMS) and Hot Strip Mill have been finalised and orders for civil and structural packages have been placed. The construction work at the site is progressing, with major piling and nearly 1.3 lakh cubic metres of concreting work, having been completed. Structural erection for Sinter Plant, Blast Furnace and SMS has commenced. Equipments for major facilities have been received and ordering of imported equipments for Coke Plant and Hot Strip Mill is in progress.

RAW MATERIAL PROJECTS

Tata Steel continued to implement its long-term strategy to secure ownership of assets to enhance raw materials self- sufficiency. During Financial Year 2011-12, the Company continued to focus on expediting implementation of its existing overseas ventures.

Coal PROJECTS:

Benga Coal Project, Mozambique:

In November 2007, Tata Steel entered into definitive agreements with Riversdale Mining Limited (RML), an Australian listed company for purchasing 35% stake in Riversdale's Mozambique Coal project at Benga and Tete tenements located in Moatize basin of Mozambique. The Company had also acquired 27.1% stake in RML.

In April 2011, the British-Australian mining company, Rio Tinto took over Riversdale Mining Limited (RML). The Company divested 27.1% of its stake in Riversdale Mining Limited (RML) for a consideration of Rs. 5,017 crores (US$ 1,104 million) to Rio Tinto and continues to hold 35% equity stake in the Benga project.

In Phase1, the project is expected to produce 5.3 mtpa Run of Mine (ROM) coal (1.5 mtpa coking coal and 0.9 mtpa thermal coal) and in Phase2 production is expected to increase to 10.6 mtpa ROM (3mtpa coking coal and 1.8 mtpa thermal coal). The Benga coal project has commenced production from March 2012 and the first shipment of coal is expected to be dispatched in June 2012.

Coal Mining Project in Australia, Carborough Downs joint Venture:

The existing Carborough Downs Joint Venture in Australia is operating at 1.8 mtpa capacity. The Company has 5% equity stake with 20% off-take rights.

Iron Ore PROJECTS in Canada:

In September 2008, the Company entered into a Heads of Agreement with New Millennium Iron Corporation, Canada (NML), a Canadian listed mining company, to develop iron ore PROJECTS in northern Quebec and Newfoundland and Labrador and gradually acquired 27.16% stake in NML through its wholly-owned subsidiary Tata Steel Global Minerals Holdings Pte. Ltd. NML owns Direct Shipping Ore (DSO) project, having estimated proven and probable reserves of 64.1 million tonnes and Taconite PROJECTS, namely Labmag and Kemag with a combined resource size of 5.65 billion tonnes. Subsequently, a joint venture company, Tata Steel Minerals Canada (TSMC), was formed in October 2010 for development of DSO project. The Company holds 80% equity stake in TSMC and the balance 20% equity stake is held by NML.

TSMC has obtained the required permits for camp, site levelling and construction. The Camp in Schefferville was inaugurated in January 2012. Site levelling is underway and frame supported Dome is under construction to house the beneficiation facility. Orders have been placed for major part of the processing facility and civil work at the site has commenced. Production from the mine is expected to commence by Q3 Financial Year 2012-13.

On 6 March, 2011, the Company signed a binding Heads of Agreement with NML to develop iron ore deposits under Taconite PROJECTS. Feasibility study of the project is currently under progress and is expected to be completed by the end of calendar year 2012.

HEALTH AND SAFETY

The Company's safety and occupational health responsibilities are expressed in its policy and is driven by an absolute commitment to ensure zero harm to employees, contract workforce and society at large and are integral to the way the business is carried out. The group vision has a target of 0.4 Lost Time Injury Firequency Rate (LTIFR) and zero fatality by end CY 2012. In pursuance of this policy, the management is committed to continue with their efforts to strengthen safety excellence journey in the Company. Over the last three years, extensive efforts in order to address premature mortality on account of occupational health and medical illness have been undertaken. An initiative named 'Wellness @ Workplace' was launched in 2010 to control lifestyle-related diseases. Workplace hazards were minimised through the implementation of the Industrial Hygiene Programme and workplace ergonomics issues were addressed through Industrial Ergonomics.

In 2011-12, Tata Steel Europe and NatSteel received the World Steel Association's recognition awards for their improvements in health and safety. Tata Steel group companies have won an award every year for the last four years. Tata Steel India was awarded the best SHE (Safety, Health and Environment) award for the first time by CII, Eastern Region.

'Health and Safety' is reviewed at all Board meetings of the Company with a Safety, Health and Environment Committee established to carry out more detailed reviews. The integrated and systemic Health and Safety Management System, introduced in Tata Steel Europe in 2008 with a governance process for improvement actions and regular safety tours by the Board and executive members, has been developed for Tata Steel Group-wide application in the current year.

During the year, Tata Steel Group operations recorded a LTIFR of 0.68 against 0.78 in 2010-11, a 13% improvement over the last year. However, during the year there were 8 fatalities across the Group. Each of these has been thoroughly investigated, the lessons communicated and corrective actions taken across the group. The Board expresses its sincere regret at these tragic fatalities.

The implementation of process safety management, to reduce the occurrence of high consequence but very low firequency events has continued across the group. This will help the sustainability of the operations by assuring safety to the community and achievement of operational excellence.

ENVIRONMENT

Overall, the Tata Steel Group continues to lay emphasis on minimising the environmental impact of its operations and its products through the adoption of sustainable practices and continuous improvements in environmental performance. Furthermore, the Company aims to contribute positively to the communities around or near its operations, participating actively in community initiatives, encouraging biodiversity and nature conservation.

Tata Steel products are part of the solution to climate change as steel has inherent environmental advantages by being durable, adaptable, reusable and recyclable. As a result, CO2 emissions in steel production are offset by reductions in emissions through the life cycle of steel products, achieved through effective product design and through end of life recycling. One of the key corporate objectives for your company is to reduce CO2 emissions per tonne of crude steel (tcs) produced. The current targets are provisional and are under review pending regulatory developments in both Europe and India.

The Group continues to invest substantially in short to medium term CO2 emissions reduction and energy efficiency programmes. In addition to these improvements, Tata Steel Europe is also working with other steelmakers in Europe on a longer term major research and development project, ULCOS (ultra low CO2 steelmaking), which aims to develop breakthrough technologies to significantly reduce CO2 emissions per tonne of steel produced.

Tata Steel maintains proactive approach towards environment management and has adopted ISO 14001 for mining and manufacturing operations. Tata Steel is examining means to reduce energy consumption and CO2 emissions to retain its position as the Indian benchmark in steelmaking through Blast Furnace-Basic Oxygen Furnace (BF-BOF) route by increasing process efficiency, scrap utilisation, reduction of Alumina in Iron Ore and Ash in Coal through beneficiation.

In Jamshedpur Steel Works CO2 emissions during Financial Year 2011-12 were 2.5 tCO2/tcs, similar to emission levels in Financial Year 2010-11. Specific make-up water consumption in Financial Year 2011-12 at 5.84 m3/tcs was lower by 3.3% than 6.04 m3/tcs recorded in Financial Year 2010-11 due to more than normal rainfall and increased recycling of effluents. The recycling of treated effluent increased to 4.3 MGD1 in Financial Year 2011-12 from 3.4 MGD in Financial Year 2010-11. Solid waste utilisation2 was 75% in Financial Year 2011-12 compared to 78% in Financial Year 2010-11.

In Tata Steel Europe, CO2 emissions during Financial Year 2011-12 were at 1.9 tCO2/tcs. Compliance with environmental permit conditions continued to be at a very high level across TSE during the financial year.

Tata Steel Europe met its environmental obligations in Phase 1 (2005 to 2007) of the EU ETS and expects to do the same in Phase 2 (2008 to 2012). As a result of generally lower production levels since October 2008, TSE now expects to be in surplus carbon credits in Phase 2. Excess rights can either be sold in the market or retained for future compliance purposes. Whilst TSE continues to invest to reduce CO2 emissions, current proposals by the EU Commission for Phase 3 (2013 to 2020) of the scheme could, as they currently stand, have a negative impact on production levels post 2012 for European steelmakers in general. However, these proposals are continuing to evolve and no final decisions have been made at this stage.

TSE currently participates in a voluntary agreement with the Dutch government regarding energy efficiency improvements over the period 2009 to 2012. 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. The total energy efficiency improvement in 2011 was 3.4%.

The UK government announced in the 2011 budget their intention to introduce a 'carbon price floor' with effect from 2013-14. This is an additional UK-only tax on electricity generation related to the carbon intensity of the generation fuel used, which would come into effect if the price of carbon in the EU ETS does not reach certain thresholds. The impact of the tax for consumers, if triggered, will be to raise the wholesale price of electricity in the UK. European steelmakers already face significantly higher emission costs under Phase 3 of the EU ETS and the carbon price floor will impose additional cost Specifically on the UK steel industry. However, in response to concerns being raised in relation to the effects that this and other policy decisions would have on international competitiveness, a compensation package for energy intensive industries has been announced in principle by the UK Government, although the scope and extent of the package are still being determined.

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. Suresh Krishna stepped down as a Director of the Company on 24th December, 2011 on reaching the age of 75 years. The Directors would like to place on record their sincere appreciation of the contributions made by Mr. Suresh Krishna during his tenure on the Board since 1994.

In April 2012, Mr. B. Muthuraman, Vice Chairman of the Company was conferred with the prestigious Padma Bhushan Award by the Honourable President of India, in the trade and industry category.

In accordance with the provisions of the Companies Act, 1956, and the Company's Articles of Association, Mr. B. Muthuraman, Mr. Ishaat Hussain and Mr. Andrew Robb retire by rotation and are eligible for re-appointment.

Mr. Cyrus Pallonji Mistry, Executive Deputy Chairman of Tata Sons Limited and Mrs. Mallika Srinivasan, Chairman & Chief Executive Officer of Tractors and Farm Equipment Limited were appointed as Additional Directors by the Board with effect from 21st May, 2012.

Mr. Cyrus Pallonji Mistry and Mrs. Mallika Srinivasan 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. Mistry and Mrs. Srinivasan for being appointed as Directors of the Company.

ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

Details of energy conservation and research and development activities undertaken by the Company along with the information in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure 'A' to the Directors' Report.

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.

COPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement executed 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

RATAN N. TATA

Chairman

Mumbai, 22nd May, 2012


Mar 31, 2011

The Board of Directors hereby presents the 104th annual report on the business and operations of your Company along with the standalone and consolidated summary financial statements for the year ended 31st March, 2011.

Figures in Rs. crores

Tata Steel Standalone Tata Steel Group

2010-11 2009-10 2010-11 2009-10

Net Sales/Income from Operations 29,396.35 25,021.98 1,18,753.12 1,02,393.12

Total expenditure before depreciation 17,963.49 16,069.89 1,02,757.50 94,350.46 (net of expenditure transferred to capital)

Operating Profit 11,432.86 8,952.09 15,995.62 8,042.66

Add: Dividend and other income 790.67 853.79 980.98 1,185.85

Profit before interest, depreciation, exceptional items and taxes 12,223.53 9,805.88 16,976.60 9,228.51

Less: Net finance charges 1,300.49 1,508.40 2,770.04 3,022.06

Profit before depreciation, exceptional items and taxes10,923.04 8,297.48 14,206.56 6,206.45

Less: Depreciation 1,146.19 1,083.18 4,414.82 4,491.73

Profit before exceptional items and taxes 9,776.85 7,214.30 9,791.74 1,714.72

Add/(Less): Restructuring costs - - 2,310.21 (1,683.72)

Profit before taxes 9,776.85 7,214.30 12,101.95 31.00

Less: Provision for current taxation 2,857.00 1,998.00 2,910.34 2,162.53

Less: Provision for deferred taxation 54.16 169.50 335.56 (10.69)

Profit after taxes 6,865.69 5,046.80 8,856.05 (2,120.84)

Less: Minority Interest - - (60.28) 15.24

Add: Share of Profit of Associates - - 66.36 126.86

Profit after minority interest and share of Profit of associates - - 8,982.69 (2,009.22)

Distribution on hybrid perpetual securities 6.79 - 6.79 -

Tax effect on distribution of hybrid perpetual securities (2.25) - (2.25) -

Profit after taxes and distri -bution on hybrid perpetual securities 6,861.15 5,046.80 8,978.15 (2,009.22)

Add: Balance brought forward from the previous year 12,772.65 9,496.70 7,010.48 10,961.96

Add: Balance brought forward - HMPCL on Amalgamation - 12.28 - -

Balance 19,633.80 14,555.78 15,988.63 8,952.74

Which the Directors have apportioned as under to:

(i) Dividend on Preference Shares - 45.88 - 45.88

(ii) Proposed dividend on Ordinary Shares 1,151.06 709.77 1,150.25 709.23

(iii) Tax on dividends 156.71 122.80 163.22 154.33

(iv) Special Reserve - - 5.32 48.55

(v) General Reserve 686.57 504.68 703.42 552.58

(vi) Debenture Redemption Reserve 1,000.00 400.00 1,007.26 400.00

(vii) Statutory Reserve - - - 31.69

Total 2,994.34 1,783.13 3,029.47 1,942.26

Balance to be carried forward 16,639.46 12,772.65 12,959.16 7,010.48

DIVIDEND

The Board recommended dividend of Rs. 12 per Ordinary Share on 95,92,14,450 Ordinary Shares (2009-10: Rs. 8 per Ordinary Share on 88,72,14,196 Ordinary Shares of Rs. 10/- each) for the year ended 31st March, 2011.

The dividend on Ordinary Shares is subject to the approval of the shareholders at the Annual General Meeting. The total dividend payout works out to 19% (2009-10: 17%) for the standalone company.

INCREASE IN AUTHORISED SHARE CAPITAL

In order to facilitate the issue of Ordinary Shares with differential voting rights as to voting and/or dividend (hereinafter referred to as A Ordinary Shares) in the future, the authorised share capital of the Company was increased from Rs. 8,000 crores to Rs. 8,350 crores by creation of a new class of Capital viz. 35,00,00,000 A Ordinary Shares of Rs. 10 each aggregating to Rs. 350 crores.

PREFERENTIAL ISSUE OF SHARES AND WARRANTS TO TATA SONS LIMITED

Pursuant to the shareholders approval obtained through Postal Ballot, the following securities were allotted to Tata Sons Limited on 23rd July, 2010:

i. 1,50,00,000 Ordinary Shares of Rs. 10/- each at a premium of Rs. 584/- per share aggregating to Rs. 891 crores and

ii. 1,20,00,000 Warrants, where each Warrant would entitle Tata Sons Limited to subscribe to one Ordinary Share of the Company at a price of Rs. 594/- per share. As per the SEBI (ICDR Regulations 2009), an amount equivalent to 25% of the price i.e. Rs. 148.50 per Warrant aggregating to Rs. 178.20 crores was received from Tata Sons Limited. The option to convert the Warrants into Ordinary Shares is exercisable by Tata Sons Limited before 23rd January, 2012.

FOLLOW-ON PUBLIC ISSUE OF ORDINARY SHARES

The Company completed a follow-on public issue of 5,70,00,000 Ordinary Shares of Rs. 10/- each at a price of Rs. 610 per share (including premium of Rs. 600 per share) aggregating to Rs. 3,477 crores. The Ordinary Shares were allotted on 29th January, 2011 in accordance with the terms contained in the Prospectus dated 25th January, 2011.

GLOBAL ECONOMY

The world GDP, as reported by International Monetary Fund, was on an upturn, growing by 5% in 2010 as compared to a negative growth of 0.5% in 2009. While the growth in the advanced economies was 3.0% in 2010, in contrast to -3.4% in 2009, the emerging and developing economies grew by 7.3% in 2010 when compared to the growth of 2.7% in 2009. The growth in the developing and emerging economies slowed down during the end of 2010 as stimulus measures were slowly removed and policies were tightened in response to rising inflation and overheating concerns. A trend of GDP growth (%) for the last five years in the world, split up into advanced economies and emerging and developing economies, is shown below:

The US: The US GDP increased by 2.8% in 2010 as compared to a negative growth of 2.6% in 2009, but the country still faces large fiscal deficit. In late 2009 and early 2010 there was a deceleration in growth in the US economy as the effect of one time stimulus factors faded. However, in the second half of the year, growth picked up with a decline in the rate of unemployment and consumer spending picking up at its fastest pace in the last five years with further major stimulus measures being introduced along with tax cuts and investment incentives. The housing market, non-residential construction and overall credit growth still remained weak with tight bank lending conditions starting to ease for not only large firms but also for small and medium-sized firms.

India: As reported in the Economic Survey of 2010-11, GDP is expected to grow by 8.6% in 2010-11 as compared to the growth of 8.0% in 2009-10. The agricultural output grew by 5.4% as compared to a nominal 0.4% growth in 2009-10 when the country was hit by a dEfficient monsoon. Manufacturing grew by 8.8% during the year being at par with the growth noticed in the last f scal. Overall growth in industry was 8.1% during 2010-11 compared to 8.0% in the last year. Services witnessed a decelerated growth of 9.6% as compared to a growth of 10.1% in 2009-10. Amongst the key macro-economic indicators, f scal def cit was limited to 4.8% of GDP in 2010-11 as compared to 6.3% in 2009-10. Export and import grew positively by 29.5% and 19.0% in contrast to the negative growths experienced in the previous year. Clouds of high inflation and a temporary slowdown in the industrial growth are looming in the country as steps are being taken to mitigate such adversities.

Europe: GDP in the Eurozone increased by 1.9% in 2010-11 over 2009-10 with a high unemployment rate of around 10% and divergent performances by member countries. While Germany posted a growth of 4% driven by strong export demand and lower unemployment, the Spanish economy was adversely affected by fiscal tightening and a weak housing market with a rise in unemployment. Ireland, Portugal and Greece are seeking financial assistance from the EU and IMF after facing sharp increases in their borrowing costs and potential shortfall in funding. The UK GDP grew by 1.9% in 2010-11, continuing to recover but uneven growth, high unemployment and rising inflation has resulted in the UK household disposable income coming under pressure. There was a strong quarterly growth at the beginning of the year followed by a slowdown and winter-inflicted contraction in the December quarter. The fiscal austerity announced by the UK Government will see a 24% cut in public investment and 7% cut in real government consumption in the next five years.

TATA STEEL GROUP PERFORMANCE

Tata Steel Group steel deliveries at 23.5 million tonnes in the financial year under review were at par with the financial year 2009-10 (23.6 million tonnes). The gross steel deliveries (including the inter-group transfers) for the steel-producing entities were higher than the previous years with Tata Steel India, Tata Steel Europe, NatSteel Holdings and Tata Steel Thailand posting growth of 4%, 3%, 1% and 8% respectively. Your companys Indian operations recorded a growth of 4% in steel deliveries from 6.17 million tonnes in the financial year 2009-10 to 6.42 million tonnes in 2010-11.

Along with the increase in gross steel deliveries, the steel- producing entities witnessed increases in the average realisations in line with the steep increase in the raw material prices. The turnover for the Group in 2010-11 at Rs. 118,753 crores, was 16% higher than 2009-10 (Rs. 102,393 crores). While the turnover in Tata Steel India witnessed a growth of 17% from Rs. 25,022 crores in the financial year 2009-10 to Rs. 29,396 crores in the financial year 2010-11, Tata Steel Europes turnover increased by 15% from Rs. 65,843 crores in the financial year 2009-10 to Rs. 75,991 crores in the financial year 2010-11.

The Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA) of the Group increased signif cantly from Rs. 9,340 crores in the f scal year 2009-10 to Rs. 17,103 crores in the financial year 2010-11 primarily driven by the increase in prices partly of set by the steep increase in input costs. Tata Steel India recorded an EBITDA of Rs. 12,224 crores in the financial year 2010-11 growing by 25% as compared to Rs. 9,806 crores in 2009-10.

Restructuring, impairment and disposals in the current year include Rs. 2,503 crores Profit on disposal of Teesside Cast Products at Tata Steel Europe.

Consequently, the Group turned around with a Profit after Tax (after minority interest and share of profits of associates) for 2010-11 at Rs. 8,983 crores as compared to a loss of Rs. 2,009 crores in 2009-10.

Indian Operations: Crude steel production at 6.86 million tonnes in financial year 2010-11 was higher than the previous year (6.56 million tonnes) by 4%, thus exceeding the nameplate production capacity in the second year on enhanced capacity. There was an increase in the vessel life and heat size of the two steel melting shops enhancing their productivity to achieve the higher crude steel production of your company. Saleable steel also increased by 4% from 6.44 million tonnes recorded in financial year 2009-10 to 6.69 million tonnes in the financial year under review with higher hot metal being available from the bigger blast furnaces with higher productivity. The sales volume during the financial year 2010-11 at 6.42 million tonnes was 4% higher as compared to the previous year (6.17 million tonnes) indicating the robust growth in steel demand. Apart from the two steel melting shops, there were many units (including mines and collieries) which surpassed their respective best ever performances.

Ferro Alloys and Minerals divisions saleable production at 1,405k tonnes in the financial year 2010-11 was higher than financial year 2009-10 (1,350k tonnes) by 4%. The sales (including transfers to other divisions of the Company), however, at 1,464k tonnes were lower than the previous year (1,508k tonnes) by 3%. Chrome alloys exports and manganese alloys sales of the division touched new heights during the financial year under review.

Improved demand in auto and infrastructure segments led to the increase in sales and production in the Tubes division. The division recorded production of 371k tonnes in FY 2010-11, higher by 6% over FY 2009-10 (351k tonnes), while the sales improved from 349k tonnes in FY2009-10 to 366k tonnes in 2010-11, an increase of 5%. Boosted by various improvement initiatives under Kar Vijay Har Shikhar programme, the division continued to improve on its performance in various segments like Tata Pipes (plumbing and irrigation), Tata Structural (infrastructure) and Precision Tubes (Automotive, Process and Power sector).

Sales in the Bearings division in the financial year 2010-11 at 32.95 million numbers grew by 4% against the financial year 2009-10 (31.69 million numbers), while the production at 33.14 million numbers in FY 2010-11 increased by 12% over FY 2009-10 (29.61 million numbers). The increases were primarily driven by higher demand in the domestic auto segment.

European operations: Sales volumes of Tata Steel Europe (TSE), excluding seasonal effects, were reasonably flat for the first three quarters of the financial year 2010-11, before showing an improvement in the last quarter to the highest level of quarterly sales since financial year 2008-09. Deliveries in Tata Steel Europe during FY 2010-11 (14.9 million tonnes) increased by 3% over FY 2009-10 (14.4 million tonnes). Selling prices increased steadily through the year with the revenue per tonne increasing by around 17% over the previous year. The revenue per tonne increased relatively sharply in the first quarter of the financial year under review in anticipation of the equally sharp increase in price of raw materials, but became more modest in the second and third quarters before losing its upward momentum in the fourth quarter. Raw material prices, in contrast, peaked during the third quarter.

TSE has adopted the Tata Steel identity for trading purposes with ef ect from September 2010 and a progressive rebranding process is under way. The Company has also adopted a new operating model to replace the previous model of three main operating divisions (Strip Products, Long Products and Distribution & Building Systems). It is now organised into a number of business activities comprising steelmaking hubs (Strip Products Mainland Europe, Strip Products UK and Long Products Europe), speciality businesses (Colours, Building Systems, Packaging, Tubes, Kalzip, Plating, Cogent Power and Speciality Steel), and a distribution and sales network (Distribution UK & Ireland, Distribution Europe and International). TSE has adopted a single sales and marketing function with eight industry-focused marketing sectors, namely automotive, construction, packaging, rail, lifting and excavating, energy and power, industry strip and industry long products. Europe, principally the EU, continues to be the most important market of the Company.

On 24th February, 2011, Tata Steel UK Limited (TSUK), a subsidiary of TSE, signed a def nitive sale agreement to sell certain assets of TCP to Sahaviriya Steel Industries Public Company Limited in a deal valuing the business at £434 million. The assets covered by the sale include the Redcar blast furnace, the Redcar and South Bank coke ovens, TCPs power generation facilities and sinter plant, and the Lackenby steelmaking and casting facilities. The deal also includes TSUK and SSI entering into a joint venture to operate Redcar wharf, TCPs bulk terminal. The sale was completed on 24th March, 2011.

The Fit for the Future programme initiated in response to the financial crisis continued to give results with notable reduction in the average number of employees. The deal with SSI resulted in 850 employees getting transferred to SSI and it is expected that further jobs will be created.

South-East Asian operations: NatSteel recorded an increase in steel sales by 1% in FY 2010-11 (1.80 million tonnes) over FY 2009-10 (1.78 million tonnes). The increases were most noticeable in NatSteel Singapore, the Australian units, Thailand and in trading business, while other business units in China and Vietnam witnessed decline in their respective volumes. NatSteel Singapore increased its sales volume by 106k tonnes from 738k tonnes in FY 2009-10 to 844k tonnes in FY 2010-11. Average revenue per tonne improved across all units (other than Australian units) thereby increasing the turnover of the Company. The Company sold its share in an associate company Southern Steel Berhard (SSB) during the financial year. The EBITDA of the Company, excluding the Profit on sale of share of SSB in the financial year under review, reduced from the previous financial year primarily due to rise in the cost of input materials which more than of set the increase in prices and impact of higher sales volumes.

Sales volume of Tata Steel Thailand during FY 2010-11 at 1.29 million tonnes was higher than FY 2009-10 (1.20 million tonnes) by 8%, while production increased by 6% from 1.21 million tonnes in FY 2009-10 to 1.28 million tonnes in FY 2010-11. During the financial year under review, the Company had to mothball the Mini Blast Furnace in the third quarter due to high costs of operations and low capacity utilisation, before recommencing its operations in the fourth quarter. The company incurred losses during the year primarily due to high costs of operations, low capacity utilisation and losses due to mothballing of the Mini Blast furnace partly compensated by increase in average revenue per tonne and higher sales volume.

EXPANSION PROJECTS

Brownf eld Projects:

Tata Steel India is implementing an expansion project at Jamshedpur Works to increase its crude steel capacity from 6.8 million tonnes per annum to 9.7 million tonnes per annum. The facilities under this project are scheduled to be completed in FY 2011-12. Simultaneously, the Company is implementing a few other major capital schemes at Jamshedpur which include Coke Plant Battery No. 11, Coke Dry Quenching at Coke Ovens Batteries 5, 6 & 7 and a new mill for producing Full Hard Cold Rolled (FHCR) coils. Tata Steel India is also setting up a Continuous Annealing and Processing Line at Jamshedpur with a capacity of 0.6 mtpa under a joint venture company with Nippon Steel Corporation (NSC), Japan. The line will produce automotive cold rolled flat products and address the needs of Indian automotive customers for high- grade cold rolled steel sheets. NSC will transfer its technology for producing high-grade cold rolled steel sheets for automotive application including skin panel and high tensile steel. These projects, along with other sustenance and improvement projects, are being implemented with a view to support your Companys current operations and its growth aspirations.

Greenf eld Projects:

Odisha Project:

Preliminary work on the 6 mtpa greenfield steel plant at Kalinganagar, Odisha is in progress. The boundary wall on 3 sides (8.5 km) along with trench cutting and barbed wire fencing has been completed, warehouse has been made operational and construction of Sinter plant has started. As of March 2011, a total of 910 families have moved from the plant site to the new rehabilitation colony area where plot allocation has been started. The rehabilitation colonies have been provided with good infrastructural facilities which include clean drinking water, street lighting, and a community centre set up by the Company. Key challenges for FY 2011-12 are to develop infrastructure and mobilise resources to accelerate the project work.

Other projects:

Chhattisgarh Project:

The Company has signed an MoU with the Government of Chhattisgarh for setting up of a 5 mtpa Greenfield integrated steel plant in Bastar. Land has been acquired by the

Government and the rights vest with Chhattisgarh State Industrial Development Corporation (CSIDC) for allotment to Tata Steel Limited for 99 years. The letter of intent from CSIDC has been issued. Your Company requested for demarcation free from all encumbrances, as per terms of MoU, before taking possession of the said land.

Further, Chhattisgarh Government has accorded approval for drawing water from the river Sabri and the Ministry of Railways, Government of India has granted an in-principle approval for the railway corridor. Public hearing for the Environment Clearance has been successfully conducted.

Prospecting License for iron ore has been granted in Bailadila-I deposits after obtaining necessary approvals from the Ministry of Environment and Forest and Ministry of Mines, Government of India. Prospecting License for Pyroxenite in the close proximity of iron ore area is in an advanced stage of grant by the State Government. In line with the Companys initiatives in the field of Corporate Social Responsibility, several activities in the field of health, youth and women empowerment, sports and skill development are being carried out for local residents as well as those from displaced families.

Ha Tinh Project at Vietnam:

Tata Steel signed an MoU with Vietnam Steel Corporation (VSC) on 29th May, 2008 to develop a steel complex with an estimated capacity of 4.5 million tonnes per year in Ha Tinh province at Vietnam. Another MoU was signed to set up a cold rolling mill in Ha Tinh province. On successful completion of study and financial closure, Tata Steel will have a stake of minimum 65% and VSC will have a stake of 35% in the steel complex.

Karnataka Project:

Tata Metaliks Limited (TML) and Tata Steel have entered into a MoU with the Government of Karnataka in June 2010 for setting up an integrated steel plant of 3 mtpa in Agadi and Boodagatti villages of Haveri District, Karnataka. State High Level Clearance Committee of the Government of Karnataka has approved 2,500 acres of land at Agadi, Boodagatti, Devagiri and Yellapura villages, and is in process of acquiring land.

RAW MATERIAL PROJECTS

Your Company continues to implement its long-term strategy to secure ownership of assets that will increase its raw materials security and share of value-added products. During the financial year 2010-11, the Companys primary focus was on expediting implementation of its existing ventures.

Coal Projects:

Benga Coal Project, Mozambique: The Tata-Riversdale Joint Venture in Mozambique conducted a formal Ground Breaking Ceremony at the Benga Coal Project in the presence of the President of the Republic of Mozambique, His Excellency Armando Emilio Guebuza on 14th April, 2010. This official ceremony follows a series of milestones already achieved by the Company such as the signing of the Mining Contract, approval of Environmental Licences for the Benga Coal Project and the Benga Power Project, and the approval of Stage 1 of the Benga Coal Project following the completion of the Feasibility Study for production of 10.6 million ROM tonnes in two phases. Other key contracts and agreements include the CHP Plant Supply Contract, a Resettlement Action Plan and the Project Labour Agreement (PLA) which was signed with SINTICIM (the Mozambican National Construction and Mine workers Union).

Stage 1 entails initial production of 5.3 million ROM tonnes per year to produce approximately 1.7 mtpa of high quality hard coking coal and 0.3 mtpa of thermal coal by the second half of 2011. Tata Steel has 35% stake in the joint venture with 40% of -take right to the coking coal produced from these mines. The joint venture owns the Benga and Tete tenements which cover an area of 24,960 hectares. Benga has an inferred resource of approximately 4 billion tonnes. Your Company plans to supply the hard coking coal from this project to its facilities in Europe in the initial phase of the project development and also for the requirements of the Indian operations in the future. Tata Steel currently holds about a 27.1% equity stake in the parent company, Riversdale Mining Limited.

Coal Mining Project in Australia (CDJV): Tata Steel has a strategic interest of 5% in the coal mining project in Australia in partnership with Vale, Nippon Steel, JFE and POSCO with up to 20% of -take rights. The Joint Venture was formed for the development of a greenf eld underground coal project in Bowen Basin, Queensland. The first raw coal production started in August 2006 and the mine is currently producing around 1.5 mtpa. The mine is being operated by Long Wall method and expected to produce around 3.0 million tonnes of Coking and PCI coal during FY 2011-12.

Iron Ore Projects:

Direct Shipping Ore Project in Canada (New Millennium Capital Corporation):

In September 2008, Tata Steel had entered into a Heads of Agreement with New Millennium Capital Corporation, Canada

(NML), a Canadian listed mining company, to develop iron ore projects in northern Quebec and Newfoundland and Labrador and had acquired a 19.9% stake in NML. As per the agreement, Tata Steel had an exclusive option to acquire an 80% equity interest in NMLs Direct Shipping Ore project (DSO Project) and an exclusive right to negotiate and settle a proposed transaction in respect of NMLs LabMag and KéMag (Taconite) Projects. In September 2010, Tata Steel has made a positive investment decision by exercising its option to acquire 80% interest in the NMLs Direct Shipping Ore (DSO) Project.

As part of the Joint Venture agreement, Tata Steel will reimburse NML for 80% of NMLs cost to date on the DSO Project; arrange funding for up to CAD$ 300 million of capital costs for the Project to earn its 80% share of the JV and commit to take 100% of the DSO projects iron ore products of specif ed quality, at world market prices, for the life of the mining operation. The Feasibility Study estimates proven and probable mineral reserves of 64.1 million tonnes and the project is expected to produce 4 million dry tonnes per year of iron ore products commencing in the second half of 2012. The iron ore from this project will be supplied to Tata Steel Groups facilities located in Europe.

On 26th February, 2011, Tata Steel purchased 67,39,956 common shares of NML under its existing pre-emptive right at CAD$ 3.50 per share for gross proceeds to NML of CAD$ 23,589,846. This will maintain Tata Steels interest in NML at approximately 27.2% of the total shares outstanding.

On 6th March, 2011 Tata Steel signed a binding heads of agreement with New Millennium Capital Corporation to develop the LabMag and KéMag iron ore deposits, known collectively as the Taconite Project. The Taconite Project consists of two world- class magnetite iron ore deposits on the emerging Millennium Iron Range, which stretches 210 kilometres from western Labrador through eastern Quebec. The LabMag deposit is located in the Labrador portion of the range and the KéMag deposit is located in the Quebec portion. Together, the two deposits hold over 9 billion tonnes of reserves and resources and are expected to produce more than 20 million tonnes per year of concentrate, with a potential mine life of over 100 years.

Ivory Coast Project: In view of the environmental issues encountered in the case of Mt. Nimba deposit, Tata Steel approached the Government of Ivory Coast to grant a Prospecting License for Mt. Gao for an early start of the project. The Government of Ivory Coast has granted an Exploration

License to Sodemi on 30th July, 2009 and an Addendum to the Joint Venture Agreement was signed on 29th September, 2009 to include Mt. Gao in the Joint Venture Agreement. Upon transferring the Exploration License for Mt. Gao to the JV company, a helicopter-borne geophysical survey covering 811 sq km has been completed. The team on the site has also done a detailed geological mapping over a 100 sq km area at 1:10000 scale. Currently exploration work on the ground has been put on hold due to rising security concern in Ivory Coast.

Limestone Project:

Limestone Project in Oman: The Environmental Impact Assessment has been completed and the mining license is awaited.

OTHER PROJECTS

Dhamra Port Company Limited (DPCL):

The Dhamra Port Company Limited, a 50:50 joint venture between Tata Steel Limited and Larsen & Toubro, is developing a deep-draught port under a concession agreement awarded by the Government of Odisha on Build, Own, Operate, Share and Transfer (BOOST) basis. The project will be located on the eastern coast of India approximately 225 km southwest of Kolkata and 205 km from Bhubaneshwar.

Situated between Haldia and Paradip, Dhamra Port will be one of the deepest ports in India with a draft of 18 metres, capable of accommodating super capesize vessels up to 1,80,000 DWT.

Phase-I of the project is complete and the port has started commercial operations on 6th May, 2011. In Phase-I, two fully mechanised berths; one for handling import cargo and the other for export cargo with back-up facilities have been built, along with a rail corridor for hinterland connectivity. The construction of railway line on a route length 62 km from Bhadrak to Dhamra is completed except commissioning of the automated signaling system. The capacity is estimated to be 27 mtpa in Phase-I. Dhamra Port will be of strategic importance to Tata Steel in terms of its integrated logistics cost of raw materials and will also consolidate Tata Steels supply chain network, contributing to its expansion aspirations.

S&T Mining Limited:

S&T Mining Limited is a joint venture between Tata Steel Limited and Steel Authority of India Limited to develop the raw material security. The company was shortlisted by CIL to participate in the tender for reviving and developing abandoned mines. It has made progress on its proposal to set up a 2 mtpa coal washery in Jharkhand for which it is in an advanced stage of environmental clearance. It is also gearing up for participating in the Coal auction process of Ministry of Coal, Government of India.

HEALTH AND SAFETY

Health and Safety continues to be a key performance indicator and one of the prime drivers of the Corporate Vision of your Company. The Group Vision is to achieve a target of 0.4 LTIFR with zero fatalities by 2012. Tata Steels safety and health responsibilities are driven by the belief within our policy which was launched for Tata Steel group from January 2011: "The safety and health of all the people who work in and with the Tata Steel Group is our number one priority." In pursuance of this belief, we are committed to continual efforts to improve health and safety in Tata Steel as we strive for excellence.

Health and Safety is reviewed at all Board meetings of your Company with a Health, Safety and Environment committee incorporating senior executives and non-executives from the Board also established to carry out more detailed reviews. The integrated and systemic Health and Safety Management System introduced in Tata Steel Europe in 2008 with a governance process for improvement actions and regular safety tours by the Board and executive members is being evaluated for Tata Steel Group-wide application.

During the financial year 2010-11, the Group recorded a LTIFR of 0.78 improving by 18% against 0.95 in FY2009-10. Tragically, during the financial year under review there were 10 fatalities across the Group which included 5 contractor employees. The Board expresses its sincere regret at these fatalities and is committed to learning from each of these incidents to prevent any recurrence and also in its implementation of measures to ensure that any fatality potential is identified and controlled in our operations.

The safeguarding and promotion of the physical, mental and social well-being of employees of the Group has been enhanced from a number of programmes across the Group. In India, the programme Wellness at Workplace targets the major health risks such as heart disease, diabetes and includes proactive reviewing of individual medical condition and identifying improvements. In Europe, health promotion is also done on major risks such as cancer, heart disease with an additional focus on minimising exposure to potential health hazards like noise, vibration and the need to use personal protective equipment.

ENVIRONMENT

Tata Steel Group puts emphasis on minimising the environmental impact of its operations and its products by adopting sustainable practices and continuous improvements in environmental performance. Manufacturing steel unavoidably produces carbon dioxide (CO2). However, Tata Steel products are part of the solution to climate change as steel has inherent environmental advantages of being durable, adaptable, reusable and recyclable. CO2 emissions in steel production are of set by reductions in emissions through the life cycle of steel products, achieved through effective product design and through recycling at end of life. Furthermore, your Company aims to contribute positively to the communities around or near its operations, actively participating in community initiatives, encouraging biodiversity and nature conservation.

One of the key corporate goals which your Company seeks to achieve is to reduce carbon dioxide (CO2) emissions per tonne of crude steel produced. The current targets, which are provisional and are under review pending regulatory developments in both India and Europe, are to reduce emissions on a group-wide basis to less than 1.9 tonnes of CO2 per tonne of crude steel by 2015 and to less than 1.7 tonnes of CO2 per tonne of crude steel by 2020 (using the World Steel Association reporting scope and methodology). CO2 emissions for the Tata Steel Group during FY 2010-11 were 2.15 tonnes per tonne of crude steel for Blast Furnace route steel (2.01 tonnes per tonne of crude steel including Electric Arc Furnace route steel).

CO2 emission (direct + electricity) in the Indian operations during FY 2010-11 at 2.44 tonnes per tonne of crude steel was almost at the same level as the last year (2.41 tonne per tonne of crude steel), while the water pollutant discharge was 65 gallons per tonne of crude steel in FY 2010-11 improving 26% as compared to 88 gallons per tonne of crude steel in 2009-10. Solid waste utilisation also improved from 91.1% in 2009-10 to 94.4% in 2010-11. Environmental clearances for 2.9 million tonne expansion programme for Jamshedpur Steel Works and Chhattisgarh project were obtained along with the consent to establish the Cold Rolling Mill complex at Bara, Jamshedpur.

In the European operations, the CO2 emissions were 2.0 tonnes per tonne of crude steel. More generally, compliance with

environmental permit conditions was at a very high level across the European operations during the financial year and there were no prosecutions or regulatory enforcement actions in relation to environmental matters. Furthermore, TSE met all of its environmental obligations as specified under Phase 1 (2005 till 2007) of the EU Emissions Trading Scheme (EU ETS) and expects to meet its obligations for Phase 2 (2008 till 2012). In the UK, the revised target within the Climate Change Levy (CCL) Agreement to reduce absolute energy consumption by 15.8% compared to 1997 levels was achieved in 2010. This ensures that Tata Steel Europe will continue to benefit from reduced rates in relation to the CCL for 2011 and 2012. The UK government announced in the 2011 budget their intention to introduce a carbon price floor with effect from FY 2013-14. This is an additional tax on electricity generation related to the carbon intensity of the generation fuel used, which would come into effect if the price of carbon in the EU ETS does not reach certain thresholds. TSE also currently participates in a voluntary agreement with the Dutch government to benchmark and maintain its energy efficiency in line with worlds best standards. The primary requirement of the agreement is an energy efficiency improvement of 2% per annum. The total energy efficiency improvement in 2010 was 2.8%.

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

Dr. Karl-Ulrich Koehler has been Chief Executive Officer and Managing Director of Tata Steel Europe Limited since 1st October, 2010. He was appointed Chief Operating Officer of Tata Steel Europe Limited in February 2010. Considering his vast experience of 30 years in the steel industry, the Board thought it prudent to appoint Dr. Koehler as an Additional Non-Executive Non-Independent Director of the Company with effect from12th November, 2010.

Dr. Koehler will hold office till the date of the forthcoming Annual General Meeting and a notice has been received from a Member proposing the candidature of Dr. Koehler for being appointed as a Director of the Company.

Mr. Kirby Adams ceased to be a Director of the Company on 30th September, 2010. The Directors would like to place on record their appreciation of the contributions made by Mr. Kirby Adams during his tenure as Director of the Company.

Dr. J. J. Irani will step down as a Director of the Company on 2nd June, 2011 on reaching the age of 75 years, and hence will not be seeking re-appointment. The Directors would like to place on record their appreciation of the leadership and contributions made by Dr. Irani as the Managing Director of the Company from 1992 to 2001 and thereafter, as a non-executive Director of the Company. Therefore in accordance with the provisions of the Companies Act, 1956, and the Companys Articles of Association, Mr. Ratan N. Tata, Mr. Nusli N. Wadia, Mr. Subodh Bhargava and Mr. Jacobus Schraven retire by rotation and are eligible for re-appointment.

ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

Details of energy conservation and research and development activities undertaken by the Company along with the information in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure A to the Directors Report.

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 upto 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 Directors and Auditors Certificate regarding compliance of conditions of Corporate Governance are made a part of the Annual Report. A note on the Companys 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

RATAN N. TATA

Chairman

Mumbai, 25th May, 2011


Mar 31, 2010

The Board of Directors hereby presents the 103rd annual report on the business and operations of your Company along with the standalone and consolidated summary fi nancial statements for the year ended 31st March, 2010.

Figures in Rupees crores

Tata Steel Standalone Tata Steel Group

2009-10 2008-09 2009-10 2008-09

Net Sales/Income from Operations 25,021.98 24,315.77 102,393.12 147,329.26

Total expenditure before depreciation 16,069.89 15,182.34 94,350.46 129,201.59 (net of expenditure transferred to capital)

Operating Profit 8,952.09 9,133.43 8,042.66 18,127.67

Add: Dividend and other income 853.79 308.27 1,185.85 265.67

Profit before interest, depreciation, exceptional items and taxes 9,805.88 9,441.70 9,228.51 18,393.34

Less: Net f nance charges 1,508.40 1,152.69 3,022.06 3,290.18

Prof t before depreciation, exceptional items and taxes 8,297.48 8,289.01 6,206.45 15,103.16

Less: Depreciation 1,083.18 973.40 4,491.73 4,265.39

profit before exceptional items and taxes 7,214.30 7,315.61 1,714.72 10,837.77

Add/(Less): Exceptional items – – ( 1,683.72)(4,094.53)

profit before taxes 7,214.30 7,315.61 31.00 6,743.24

Less: Provision for current taxation 1,998.00 2,173.00 2,162.53 1,997.12

Less: Provision for deferred taxation 169.50 (75.13) (10.69) (121.93)

Less: Provision for fringe benefit tax -- 16.00 -- 18.81

Profit after taxes 5,046.80 5,201.74 (2,120.84) 4,849.24

Less: Minority Interest -- -- 15.24 (40.94)

Add: Share of profit of Associates -- -- 126.86 60.72

profit after minority interest and share of profit of associates 5,046.80 5,201.74 (2,009.22) 4,950.90

Add: Balance brought forward from the previous year 9,496.70 6,387.46 10,961.96 8,234.03

Add: Balance brought forward - HMPCL on Amalgamation 12.28 -- -- --

Balance 14,555.78 11,589.20 8,952.74 13,184.93 Which the Directors have apportioned as under to:

(i) Proposed dividend on Ordinary Shares 709.77 1,168.95 709.23 1,167.88

(ii) Dividend on Preference Shares 45.88 109.45 45.88 109.45

(iii) Tax on dividends 122.80 214.10 154.33 217.64

(iv) Special Reserve -- -- 48.55 4.24

(v) Debenture Redemption Reserve 400.00 -- 400.00 --

(vi) Statutory Reserve -- -- 31.69 51.53

(vii) General Reserve 504.68 600.00 552.58 672.23

Total 1,783.13 2,092.50 1,942.26 2,222.97

Balance to be carried forward 12,772.65 9,496.70 7,010.48 10,961.96

DIVIDENDS

(i) 2% Cumulative Convertible Preference Shares (CCPS): The Board had declared a proportionate interim dividend of Re. 0.838356 per share on 547,266,011 CCPS of Rs. 100 each for the period 1st April, 2009 to 31st August, 2009 (2008-09: Rs. 2 per share on 547,266,011 CCPS of Rs. 100 each). The Board declared the interim dividend paid as the f nal dividend on the CCPS for the year ended 31st March, 2010.

The above CCPS were compulsorily converted into 91,211,001 Ordinary Shares of Rs. 10 each at a premium of Rs. 590 per share on 1st September, 2009.

(ii) Ordinary Shares: The Board recommended dividend of Rs. 8 per Ordinary Share on 887,214,196 Ordinary Shares (2008-09: Rs. 16 per Ordinary Share on 730,592,471 Ordinary Shares of Rs. 10 each) for the year ended 31st March, 2010.

The dividends on CCPS and Ordinary Shares are subject to the approvals of the shareholders at the Annual General Meeting.

The total dividend payout works out to 17% (2008-09: 29%) for the standalone company.

GLOBAL ECONOMY

2009 was one of the most challenging years for the global economy in recent times with the global recession of 2008 and 2009 representing the largest peacetime downturn in economic activity since the 1930s. The World Bank reported that the positive growth in the emerging and developing economies was more than offset by negative growth in the advanced economies resulting in negative World GDP growth in 2009. The sharp decline in global demand for consumer durables and investment goods that accompanied the economic crisis, led to a significant demand contraction particularly in the United States of America and Europe which continued in most economies till September 2009. Economies with large current account deficits, excessive reliance on foreign capital to finance domestic consumption, and sizeable fiscal deficits witnessed sharper growth declines. Following unprecedented fiscal and monetary policy stimulus measures and direct Government support for some institutions and sectors, a gradual recovery in domestic demand and the turning of the inventory cycle saw most economies emerge from recession by the end of 2009. In contrast to most developed and emerging economies, China and India were able to avoid recession and recorded GDP growth of around 10% and 7.2% respectively in spite of a slowdown from pre-crisis growth rates as export demand collapsed across many sectors.

The US: The GDP in the country had a negative growth of 2.4% in 2009 over 2008 with a sharp decline in the fi rst quarter of 2009 being partly offset by recoveries in the third and fourth quarters characterised by expanding production but continued job losses. Among the key economic indicators of change in GDP, the gross private domestic investment in 2009 dropped by 23.2% over 2008, while the export of goods and services dropped by 9.6% and 12.2% respectively.

The UK and Europe: The Eurozone economy declined by 2.7% in 2009-10 following a contraction of 1.3% in 2008-09 and emerged from recession in the third quarter of calendar year 2009. However, some member countries like Spain, Ireland and Greece continued to remain in recession till the end of calendar year 2009 while the UK emerged from recession in the last quarter of the calendar year. By the end of the downturn, the Eurozone economy as a whole had contracted by 5.1% from the peak and Eurozone industrial production and exports had posted cumulative declines of 14% and 13% respectively. Meanwhile, refl ecting a collapse in confi dence, tight credit and a large fall in demand, private business investment continued to decline until the end of 2009-10 posting a cumulative decline of 17.2%. The UK Government and the Bank of England undertook measures to stimulate the British economy increasing the liquidity and easing access for large companies to credit. However, this was not suffi cient to support medium and small businesses resulting in a drop in industrial production and private business investment.

India: In India, the Economic Survey of 2009-10 revealed that some of the key macroeconomic indicators revived especially during the second half of the year compared to the previous year. Even though the agricultural output declined by 0.2% as a consequence of a poor monsoon season, the industrial and service sectors grew at the rate of 8.2% and 8.7% respectively taking estimated GDP growth to 7.2% during the year. It is worth noting that the manufacturing industry grew at 8.9% during the year.

TATA STEEL GROUP PERFORMANCE

Global effective steelmaking capacity utilisation fell sharply in the second half of 2008 as steelmakers cut production in response to falling demand, reaching a low of around 61% in December 2008 - a fi gure which had improved to 76% by December 2009. Capacity utilisation at Tata Steel Europe improved to 81% in the second half of 2009-10 in comparison to 64% in the fi rst half of the fi nancial year resulting in a 16% rise in production in H2FY 10 over H1FY 10. Group deliveries for the year 2009-10 at 24 million tonnes declined 15% compared to the 28 million tonnes recorded during 2008-09 as recessionary conditions affected most economies though less so in India. Tata Steel India registered growth of 18% in the fi nancial year 2009-10 (6.17 million tonnes) over 2008-09 (5.23 million tonnes).

The Turnover for the Group in 2009-10 at Rs. 102,393 crores, was 30.5% lower than 2008-09 (Rs. 147,329 crores) due to the severe contraction in the end user demand in Europe. The spot price of steel continued to be weak in the fi rst half of 2009-10, with marginal recovery during the second half in line with the gradual pickup in global steel demand. The price recovery has varied by product and region, but in general has been strongest for Strip products in Asia while Long Product prices continued to be under pressure in Europe and Thailand due to lower level of construction activities in those regions. Consequently the Tata Steel Group Turnover for the second half of the year was Rs. 53,706 crores which was 10.3% higher than the fi rst half of 2009-10 at Rs. 48,687 crores. The increase in the turnover during the second half of the year was primarily due to the signifi cant increase in the deliveries (12.70 million tonnes in the second half compared to 11.57 million tonnes in the fi rst half of 2009-10) and increase in the average prices during the second half of the year. For the year under review, Tata Steel Europe’s Turnover at Rs. 67,192 crores was 39% lower than that of last year.

The Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA) of the Group was signifi cantly affected in the fi rst half of the fi nancial year 2009-10 by the sudden termination of the Teesside Offtake Agreement by the Consortium members and the challenging market conditions in the Europe. This resulted in a consolidated EBITDA for the Group of Rs. 606 crores for the six months ended September 2009. However, with the help of several initiatives across the Group and the re-structuring program in

Europe, the Company reported a signifi cant turnaround in the fi nancial performance of the Company in the second half of the year with a consolidated EBITDA of Rs. 8,734 crores which was 1341% higher than the fi rst half of the year. The consolidated EBITDA for the year 2009-10 was Rs. 9,340 crores compared to Rs. 18,495 crores in the corresponding period of the previous year.

Consequently, the Profi t After Tax for the second half of the year 2009-10 was Rs. 2,907 crores compared to a loss of Rs. 4,916 crores in the fi rst half of the year. This resulted in a loss after tax (after minority interest and share of profi t of associates) of Rs. 2,009 crores for the year under review which was signifi cantly lower compared to the profi t of Rs. 4,951 crores registered in FY 2008-09.

Tata Steel – Indian operations: The steel division of the Indian operations registered an increase of 20% in their saleable steel from 5.37 million tonnes in FY 2008-09 to 6.44 million tonnes in FY 2009-10. The production from the larger furnaces were maximised with better productivity and lower coke consumption while increased vessel life in the steel melting area enhanced the production level. The deliveries during the year FY 2009-10 at 6.17 million tonnes were higher by 18% over FY 2008-09 (5.23 million tonnes). There were several best ever performances recorded by many units in the Steel Works of the Company.

The Ferro Alloys and Minerals division registered an increase of 22% in their saleable production during FY 2009-10 (1302k tonnes) over FY 2008-09 (1064k tonnes) while their sales at 1,508k tonnes in the year under review were higher by 36% over FY 2008-09(1,105k tonnes). Chrome Alloys exports and Manganese Alloys sales of the division scaled new peaks during the year under review.

The Tubes division in FY 2009-10 grew by 11% and 10% in production and sales respectively over the previous year, boosted by various improvement initiatives across all its units. The division continues to pioneer the Closed Structural Business, with landmark structures being built using Tata Structura which crossed the three lakh tonnes landmark this year.

Sales in the Bearings division registered a growth of 23% while its production increased by 8% driven primarily by the revival in the domestic auto segment demand.

Tata Steel Europe (TSE): Deliveries in Tata Steel Europe during FY 2009-10 (14.2 million tonnes) declined by 25% over FY 2008-09 (19 million tonnes) due to the market conditions in Europe and the UK. The recessionary conditions that commenced in the second half of the previous year continued to affect the operations for most part of the fi nancial year 2009-10. The two halves of the fi nancial year under review were in sharp contrast to each other.

The Company acted swiftly to respond to this downturn by launching two very signifi cant initiatives i.e. ‘Weathering the Storm’ and ‘Fit for the Future’ program. The ‘Weathering the Storm’ program covering the entire organisation in Europe, included a series of short-term actions to mitigate the impact of reduced steel demand. It involved a reduction in third party services, fl exible production to reduce energy cost, reduction in employment cost relating to overtime and putting major capital expenditure programmes on hold. The ‘Fit for the Future’ initiatives were put in place to address longer term issues such as TSE’s competitiveness and targeted savings of £350m.

The performance of the Company was adversely affected by the sudden termination in April 2009 of the Long-term Off-take Agreement by the Consortium for the slabs produced by Teesside Cast Products business in the UK thus burdening the Company with exposure to the small, niche merchant slab market. The Company did operate the Teesside plant till February 2010 incurring signifi cant losses as the slabs are surplus to the requirements of the Company. Therefore, the Company had to regrettably mothball part of the facilities in February 2010 including the Redcar blast furnace and Lackenby steelmaking. Your Company continues to explore options that could provide employment for the employees affected, including the sale of the mothballed operations.

The Company registered a signifi cant turnaround in its operations in the second half of the year. This was achieved through increased deliveries, better cost structure and improved pricing scenario. Therefore, the EBITDA for the second half of the year was Rs. 2,303 crores which was around 163% more than the negative EBITDA of Rs. 3,654 crores in the fi rst half.

NatSteel Holdings: NatSteel recorded an increase in sales by 3% in FY 2009-10 (2.44 million tonnes) over FY 2008-09 (2.37 million tonnes). The increases were mainly in the subsidiaries in China, Vietnam and Thailand while the Singapore operations and other subsidiaries witnessed a dip in the sales volume over last year due to lower construction activity in the region especially in the fi rst half of the year. The Chinese subsidiary contributed the most (FY 2009-10 0.532 million tonnes) with an increase of 25% in volumes over the prior year. In Vietnam, construction demand led to an increase in steel demand resulting in sales of NatSteel Vina to be at 0.13 million tonnes in FY 2009-10, 65% higher than the previous year. In Thailand the deliveries at 0.152 million tonnes witnessed a growth of 20% over 2008-09. The profi t after tax for NatSteel Holdings was at Rs. 102 crores in FY 2009-10 as compared to Rs. 7 crores in the fi nancial year 2008-09.

Tata Steel Thailand (TSTH): TSTH recorded an increase of 8% in sales during FY 2009-10 (1.20 million tonnes) over FY 2008-09 (1.11 million tonnes) with increases of 6% and 9% in the domestic sales and exports respectively. The Mini Blast Furnace along with its ancillary facilities was commissioned during the year under review. However, poor prices prevailing in the market along with higher input costs led to a loss for the company (Rs. 11 crores) during FY 2009-10 as compared to a profi t of Rs. 11 crores in FY 2008-09.

EXPANSION PROJECTS

Brownf eld Projects:

Tata Steel India is executing its plan to increase its crude steel capacity from 6.8 million tonnes per annum to 9.7 million tonnes per annum at its Jamshedpur Works by 2011-12.

Simultaneously the Company also has a few major ongoing capital projects which includes the capacity augmentation of Hot Strip Mill, Coke Dry Quenching at Coke Ovens Batteries 5, 6 & 7 and setting up a new mill for producing Full Hard Cold Rolled (FHCR) coils at Jamshedpur.

On 6th April, 2010, Tata Steel entered into a Memorandum of Understanding with Nippon Steel Corporation (NSC), Japan for setting up a Continuous Annealing and Processing Line at Jamshedpur, India with 0.6 mtpa capacity. The line will produce automotive cold rolled f at products and address the local needs of Indian automotive customers for high grade cold rolled steel sheets. Tata Steel will hold 51% and NSC will hold 49% stake in the joint venture company. The proposed joint venture aims to capture the growing demand for high-grade automotive cold-rolled f at products in India. NSC will transfer its technology for producing high-grade cold-rolled steel sheets for automotive application including skin panel and high tensile steel.

These projects, along with other sustenance and improvement projects are being implemented with a view to support the Company’s current operations and its growth aspirations.

Greenf eld Projects:

Orissa Project: Preliminary work on the 6 million tonne per annum capacity greenfield steel plant at Kalinganagar, Orissa to be constructed in two phases, is in progress, focusing on land acquisition, rehabilitation and resettlement work. As of March 2010, a total of 806 families have been shifted from the plant site. The rehabilitation colonies for their resettlement have been provided with good infrastructural facilities which include clean drinking water, street lighting, and a community centre set up by the Company. A hospital with all amenities is also being provided by the Company. During the financial year 2009-10, construction of a warehousing shed and a building for a power receiving sub-station had started at one corner of the plant area.

As per the MOU signed with the State Government of Orissa, the Company has fulfi lled its obligation of placing the order for equipment and services.

Chhattisgarh Project: The Company has signed an MOU with the Government of Chhattisgarh for setting up of a 5 mtpa greenfi eld integrated steel plant in Bastar. The process of land acquisition commenced with multi level discussions with stakeholders and thereafter obtaining necessary approval for a rehabilitation and resettlement package from the government. The land has been transferred in favour of the Department of Industries, which will subsequently lease it out to Tata Steel Limited.

The Chhattisgarh Government has accorded approval for drawing water from river Sabri and the Ministry of Railway, Government of India has granted an in principle approval for the railway corridor. Prospecting License for iron ore has been granted in Bailadila-I deposits after approvals have been obtained from the Ministry of Environment and Forest and Ministry of Mines, Government of India.

Public hearing for the Environment clearance has been successfully conducted with the State Government having recommended the Company case to the Ministry of Environment and Forest, New Delhi. In line with the Company’s initiatives in the f eld of Corporate Social Responsibility, several activities in the f eld of health, youth and women empowerment, sports and skill development are being carried out for the local residents as well as those of the displaced families.

RAW MATERIAL PROJECTS

Your Company continued to implement its long-term strategy to secure ownership of assets that will increase its raw materials security and share of value-added products. During the fi nancial year 2009-10 the Company’s primary focus was on expediting implementation of its existing ventures.

Coal Projects:

Benga Coal Project, Mozambique: The Tata-Riversdale Joint Venture (JV) in Mozambique conducted a formal ‘Ground Breaking Ceremony’ at the Benga Coal Project in the presence of the President of the Republic of Mozambique, His Excellency Armando Emilio Guebuza on 14th April, 2010. This offi cial ceremony follows a series of milestones already achieved by the Company such as the signing of the Mining Contract, approval of Environmental Licenses for the Benga Coal Project and the Benga Power Project and the approval of Stage 1 of the Benga Coal Project following the completion of the Feasibility Study for production of 10.6 million ROM tonnes in two phases. Other key contracts and agreements include the CHP Plant Supply Contract, a Resettlement Action Plan, and the Project Labour Agreement (PLA) which was signed with SINTICIM (the Mozambican National Construction and Mineworkers Union).

Stage 1, entails initial production of 5.3 million ROM tonnes per year to produce approximately 1.7 mtpa of high quality hard coking coal and 0.3 mtpa of export thermal coal by Q2 2011. Tata Steel has a 35% stake in the JV with a 40% off-take right to the coking coal produced from these mines. The JV owns the Benga and Tete tenements which cover an area of 24,960 hectares. Benga has an inferred resource of approximately 4 billion tonnes. Your Company plans to supply the hard coking coal from this project to its facilities in Europe in the initial phase of the project development and also for the requirements of the Indian operations in the future.

Tata Steel currently holds about a 21.14% equity stake in the parent company, Riversdale Mining Limited.

Coal Mining Project in Australia (CDJV): Tata Steel has a strategic interest of 5% in the coal mining project in Australia in partnership with Vale, Nippon Steel, JFE and POSCO with up to 20% off-take rights. The Joint Venture was formed for the development of a Greenfi eld underground coal project in Bowen Basin, Queensland. The fi rst raw coal production started in August 2006 and the mine is currently producing around

1 mtpa. The Longwall expansion programme continued during the year. On completion of the second phase, it is expected to produce around 2.5 million tonnes of Coking and PCI coal during the fi scal year 2010-11.

Iron Ore Projects:

Direct Shipping Ore Project in Canada (New Millennium Capital Corp.):

In September 2008, Tata Steel had entered into a Heads of Agreement with New Millenium Capital Corporation, Canada (NML), a Canadian listed mining company, to develop iron ore projects in northern Quebec and Newfoundland & Labrador and had acquired a 19.9% stake in NML. Tata Steel has an exclusive option to acquire an 80% equity interest in NML’s Direct Shipping Ore project (DSO Project), a commitment to take the resulting production if the option is exercised and an exclusive right to negotiate and settle a proposed transaction in respect of NML’s LabMag and KeMag Projects.

In November 2009, Tata Steel signed a Joint Venture Agreement with NML, to advance the development of the DSO Project.

In June 2010, Tata Steel subscribed to a private placement of Canadian $20 million by NML pursuant to which Tata Steel Global Minerals Holding Pte. Ltd. now holds a 27.4% stake in NML. NML has completed a feasibility study for the DSO Project which is being reviewed by Tata Steel. The Feasibility Study estimates proven and probable mineral reserves of 64.1 million tonnes for the DSO Project. Subject to receiving all regulatory approvals, production is expected to commence in 2011. Tata Steel will have 100% off- take rights to the produce of the mine of a specifi ed quality. The iron ore from this project will be supplied to Tata Steel Group’s facilities located in Europe.

Ivory Coast Project: In view of the environmental issues encountered in the case of Mt. Nimba, Tata Steel approached the Government of Ivory Coast to grant a prospecting license for Mt. Gao for an early start of the project. The Government of Ivory Coast has granted an exploration license to Sodemi on 30th July, 2009 and an Addendum to the Joint Venture Agreement was signed on 29th September, 2009 to include Mt. Gao in the Joint Venture Agreement. The exploration license for Mt. Gao has been transferred to the JV Company. A team has been deployed on the ground to carry out the feasibility studies.

Limestone Project:

Limestone Project in Oman: The Environmental Impact Assessment has been completed and the mining license is awaited.

OTHER PROJECTS

Hooghly Met Coke and Power Company Ltd. (HMPCL):

As a part of business restructuring exercise, Tata Steel merged Hooghly Met Coke and Power Company Ltd. (HMPCL) with itself with effect from 1st April, 2009. The scheme became effective on 24th March, 2010 after sanction of the scheme of merger by Honorable High Court of Kolkata. HMPCL was incorporated in 2005 and was a 100% subsidiary of Tata Steel prior to merger. The company was set up to produce low ash metallurgical coke by adopting the heat recovery route and for meeting Tata Steel’s requirements for its Jamshedpur plant. The plant is located in Haldia, West Bengal. Close proximity to the Haldia Dock Complex offers several advantages, including the import of coking coal in a more cost effective manner. The company has a production capacity of 1.6 million tonnes of coke.

Dhamra Port Company Limited (DPCL):

The Dhamra Port Company Limited, a 50:50 joint venture of Tata Steel Limited and Larsen & Toubro, is developing a deep-draught port under a concession agreement awarded by the Government of Orissa on Build, Own, Operate, Share and Transfer (BOOST) basis. Situated between Haldia and Paradip, Dhamra Port will be one of the deepest ports in India with a draft of 18 meters, capable of accommodating super capesize vessels up to 1,80,000 DWT.

Phase-I of the project is almost complete and the port is expected to commence commercial operations by August 2010. In Phase-I, two fully mechanised berths, one for handling imported cargo and the other for export cargo with back-up facilities are being built, along with a rail corridor for hinterland connectivity. The capacity is estimated to be 27 MTPA in Phase-I. Once commissioned, Dhamra Port will be of strategic importance to Tata Steel in terms of its integrated logistic cost of raw materials and will also consolidate Tata Steel’s supply chain network, contributing to its expansion aspirations.

S&T Mining Limited:

As part of the drive to secure raw material sources for domestic operations, Tata Steel formed a 50:50 Joint Venture company, S&T Mining Co. with Steel Authority of India Limited (SAIL) in September, 2008. The company has the specific objective of combining the expertise of its parent companies to identify, acquire and develop coal blocks in India. A number of activities have been initiated towards this objective.

MMTC and Tata Steel form a JV for exploration and development of minerals:

Steel production in India is projected to grow to over 120 Million tonnes by the year 2015. To cater to the raw materials requirement of increasing steel demand and other mineral based industries, your Company has entered into an agreement with MMTC Limited, a Central Government undertaking in October 2009 to establish a joint venture company for acquiring, developing and operating mines and processing of minerals and metals. Tata Steel holds 74% equity in the joint venture with MMTC holding 26%.

Tata Steel and NMDC sign MoU for enhancing iron ore resources:

Consistent with its long-term strategy to expand its steel capacity in India along with access to enhanced resources, your Company has signed a Memorandum of Understanding (MoU) with NMDC for exploring possibilities of entering into joint ventures for the purpose of acquisition, exploration and development of mines, extraction and processing of minerals, setting up integrated steel plants and any other businesses of mutual interest.

HEALTH AND SAFETY

Health and Safety continues to be one of the prime drivers of the Corporate Vision of your Company. The Tata Steel Group lays signifi cant emphasis on sustainable Health & Safety performance as it has a direct impact on performance. The Company is continuing its ‘Safety Excellence Journey’ with a philosophy that ‘Safety is a Line Management function and all injuries can be prevented’. Health and Safety is reviewed at all Board meetings of Tata Steel with a Health, Safety & Environment Committee established to carry out more detailed reviews. In TSE an integrated and systemic Health & Safety Management System was introduced in 2008 with a governance process for improvement actions at executive level and regular safety tours by the Board and executive members. This system is being evaluated for Group- wide application.

Every initiative at Tata Steel is governed not only with a cost effi cient & quality conscious approach but with a special emphasis on safe practices. During the fi nancial year 2009-10 the Indian operations recorded a Lost Time Injury Frequency Rate (LTIFR) of 0.56, a reduction of 31% from 0.80 registered in the fi nancial year 2008-09 while in the UK & European operations the LTIFR reduced by 15% compared to the previous fi nancial year. During the year, Tata Steel Group operations recorded a LTIFR of 0.95 against 1.31 in FY 09, a 27% improvement over the last year. However, during the year there were 5 fatalities across the Group which included 3 contractor employees and every effort is being taken by your Company to avoid such unfortunate incidents. The Board expresses its sincere regret at these tragic fatalities.

The Group Vision has a target of 0.4 LTIFR with Zero fatality by 2012. With reduction in the LTIFR, TSE is focusing towards measuring total recordable incidents from FY 2010-11. Recordable incidents are work related incidents which result in harm to a person or persons, other than those which require no more than fi rst aid treatment.

For sustainability of its operations and reducing process hazards by strengthening safety in processes, the Indian operations have initiated implementation of Process Safety & Risk Management (PSRM) in high hazard operations. The prime objective of Process Safety Management is to achieve “Operating excellence through operational discipline”. PSRM will be implemented in all facilities by the fi nancial year 2011-12.

The recent expansion campaign in Tata Steel India called for a large content of unskilled contract workforce, to be employed at various project sites. The onus was on Tata Steel to get the jobs executed with least possible injuries. The Company partnered with DuPont for improving the performance of construction activity by instilling the DuPont proven model of construction safety to our contract partners. Recognizing the excellent practices in the fi eld of Construction Safety, in pursuit of an injury free & illness free healthy workplace, Worldsteel Association awarded Tata Steel with “Worldsteel Association Safety Excellence Recognition Award 2009”.

Community safety is an important feature of the safety excellence journey of Tata Steel. Safety has been introduced as a curriculum in schools from nursery onwards by providing necessary inputs and motivation to the schools of Jamshedpur. This is done with the help of ‘SAFE’, an NGO run for the improvement of safety in the schools and society.

ENVIRONMENT

Tata Steel Group is committed to minimising the environmental impact of its operations and its products by adopting sustainable practices and continuous improvements in environmental performance. Climate change is one of the most important issues facing the world today. Your Company recognises that the steel industry is a signifi cant contributor to man-made greenhouse gas emissions as the manufacture of steel unavoidably produces carbon dioxide (CO2). The Group aims to contribute positively to the communities around or near its operations and actively participate in community initiatives, encourage biodiversity and nature conservation. The Group’s fi rst Corporate Citizenship Report was published in October 2009 detailing the progress made in FY 09 in terms of health, safety and environmental performance, as well as covering social, community and ethical issues. 100% of TSE’s manufacturing operations are certifi ed to the independently verifi ed international environmental management standard, ISO 14001.

CO2 emissions (direct + electricity) in the Indian operations during the fi nancial year 2009-10 at 2.38 t/tcs reduced by 5.3% as compared to the previous fi nancial year. TSE met with all the environmental obligations as specifi ed under Phase 1 (2005 till 2007) of the EU Emissions Trading Scheme (EU ETS) and expects to meet the same for Phase 2 (2008 till 2012) also. As a part of the integration process with TSE, during FY 2009-10, the Indian operations at the Jamshedpur Steel Works benchmarked its activities with the IJmuiden Plant of Tata Steel Europe and have undertaken several energy effi ciency measures like maximising the utilisation of by-product gases, effi cient operations of blast furnaces, etc. to reduce CO2 emissions during the year. In addition to the Steel Plant at Jamshedpur, a number of other divisions of Tata Steel India undertook the Carbon Foot Print exercise to assess the base levels and formulate a plan for setting targets and actions. TSE currently participates in a voluntary agreement with the Dutch government to benchmark and maintain its energy effi ciency in line with world’s best standards. The primary requirement of the agreement is an energy effi ciency improvement of 2% per annum. In the UK, a revised agreement has been negotiated with the government to reduce total energy consumption by 15.8% compared to 1997 levels, by the end of 2010.

During the reporting period, specifi c water consumption including power and steam generation in the Indian operations reduced by 18.3% to the level of 5.57 m3/tcs mainly driven by recovery of wastewater from the drains of the Steel Works. Solid waste utilisation increased by 1.55% in 2009-10 to the level of 91.1%.

SUBSIDIARIES

The consolidated fi nancial 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 has granted exemption under Section 212(8) of the Companies Act, 1956, from attaching the balance sheet, profi t and loss account and other documents of the subsidiary companies to the balance sheet of the Company. 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 Offi ce in Mumbai and that of the subsidiary companies concerned.

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

DIRECTORS

Mr. B. Muthuraman retired as the Managing Director of the Company on 30th September, 2009, on having reached the age of 65 years. The Directors would like to place on record their appreciation of his leadership and contributions made by Mr. Muthuraman during his tenure as the Managing Director, in the growth of the Company.

The Board appointed Mr. B. Muthuraman as an Additional Non- Executive Director designated as Vice Chairman of the Board of Directors of the Company with ef ect from 1st October, 2009. Mr. Muthuraman will hold of ce till the date of the forthcoming Annual General Meeting and a notice has been received from a Member proposing the candidature of Mr. Muthuraman for being appointed as a Director of the Company.

The Board has also approved the appointment of Mr. H. M. Nerurkar as the Managing Director of the Company, subject to the shareholders’ approval and Mr. Kirby Adams as the Managing Director and Chief Executive Of cer of Tata Steel Europe, with ef ect from 1st October, 2009.

Mr. James Leng ceased to be the Deputy Chairman of the Board of Directors of the Company on ceasing to be a Director with ef ect from 7th July, 2009. Dr. Anthony Hayward has also ceased to be a Director of the Company with ef ect from 18th September, 2009. The Directors would like to place on record their appreciation of the contributions made by Mr. Leng and Dr. Hayward during their tenure as Directors of the Company.

In accordance with the provisions of the Companies Act, 1956, and the Company’s Articles of Association, Mr. S. M. Palia, Mr. Suresh Krishna, Mr. Ishaat Hussain and Mr. Andrew Robb retire by rotation and are eligible for re-appointment.

ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

Details of energy conservation and research and development activities undertaken by the Company along with the information in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure ‘A’ to the Directors’ Report.

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 Offi ce of the Company during business hours on working days upto 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.

COPORATE 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’ Certifi cate regarding compliance of conditions of Corporate Governance are made a part of the Annual Report. A note 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, confi rm 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 fi nancial year and of the profi t of the Company for that period;

3. they have taken proper and suffi cient 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

RATAN N. TATA

Mumbai, 26th May, 2010 Chairman

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