As on: Sep 23, 2023 10:04 AM
To the Members of Titan Company Limited
The Directors are pleased to present the Thirty-Ninth Annual Report together with the Audited Financial Statements for the year ended 31st March 2023:
1. FINANCIAL RESULTS
(Rs in crore)
a) Standalone Numbers:
During the year under review, the Company's total revenue grew by 41% to Rs 38,270 crore compared to Rs 27,210 crore in the previous year.
Profit before tax and exceptional items grew by 50% to Rs 4,465 crore and the net profit grew by 53% to Rs 3,333 crore.
The Watches & Wearables Division of the Company recorded a revenue of Rs 3,296 crore, a growth of 43%. The revenue from Jewellery Division grew by 37% touching Rs 31,897 crore (excluding sale of bullion of Rs 2,208 crore). The revenue from EyeCare Division grew by 33% to Rs 689 crore.
New Businesses, viz., Indian Dress Wear Division and Fragrances & Fashion Accessories Division recorded a consolidated revenue of Rs 295 crore, a growth of 92% over the previous year. While the Indian Dress Wear Division grew by 168%, the Fragrances & Fashion Accessories Division also recorded a growth of 56%.
The Management Discussion and Analysis report, which is attached, dwells into the performance of each of the business divisions and the outlook for the current year.
b) Consolidated Numbers
At the consolidated level, the revenue stood at Rs 40,575 crore as against Rs 28,799 crore in the previous year. The details of the performance of the Company's subsidiaries are covered below in point 15 of this Report.
2. DIVIDEND
Considering the excellent performance of the Company during the last financial year, the Board of Directors are pleased to recommend a dividend on equity shares at the rate of 1000% (i.e., Rs 10 per equity share of Rs 1 each), for the financial year ended 31st March 2023 subject to approval by the Shareholders, at the ensuing Annual General Meeting (AGM) and payment is subject to deduction of tax at source as may be applicable. This payment represents a dividend payout ratio of 26.6%. The total dividend on equity shares for the financial year 2022-23, if approved by the Shareholders would aggregate to approximately Rs 888 crore. The dividend, subject to the approval of Shareholders at the ensuing AGM would be paid to the Members whose names appear in the Register of Members as on the Book Closure date. The Dividend
Distribution Policy, is annexed as Annexure-III to this Report.
3. TRANSFER TO GENERAL RESERVE
As permitted under the provisions of the Companies Act, 2013 (the Act), the Board does not propose to transfer any amount to general reserve and has decided to retain the entire amount of profit for the financial year 2022-23 in the profit and loss account.
4. FINANCE
The year saw strong performance by all the businesses driven by the aggressive expansion plans across all business segments.
ICRA maintained the Company's long term rating of AAA with stable outlook. The Company continues to optimise its efficiency in inventory management and cash flow by selling excessive bullion as and when necessary.
5. PUBLIC DEPOSITS
The Jewellery Division of the Company was successfully operating customer acquisition schemes for jewellery purchases for many years. When the Companies Act, 2013 became substantially effective on 1st April 2014, the Company had around seven lakh subscribers contributing to these schemes. However, these schemes were exempt under the Companies Act, 1956 relating to acceptance of Public Deposits, as such schemes were not covered in the definition of Deposits. Under the Act and the Rules made thereunder (Deposit Regulations) the scope of the term "Deposit" was enlarged and therefore a view was taken that the jewellery purchase schemes offered by the Company to its customers would be treated as Public Deposits. Thereupon, the Company discontinued fresh enrolment of subscribers and initiated steps to close the erstwhile customer schemes, which were wound down in August 2014.
Under the Deposit Regulations as amended from time to time, a company is permitted to accept Deposits subject to applicable provisions, to the extent of 10% of the aggregate of the paid-up share capital, securities premium account and free reserves from its members and 25% of the aggregate of the paid-up share capital, securities premium account and free reserves from the public after prior approval by way of special resolutions passed by the members in this regard. Requisite approval was obtained from the Members of the Company and a new programme for customers to purchase jewellery (under the Jewellery Purchase Plan) was launched in November 2014 in compliance with the Deposit Regulations.
The details relating to Deposits, covered under Chapter V of the Act are as under:
(a) accepted during the year: Rs 3,890 crore
(b) remained unpaid or unclaimed as at the end of the year: Rs 2,290 crore
(c) whether there has been any default in repayment of Deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved:
(i) at the beginning of the year: Nil
(ii) maximum during the year: Nil
(iii) at the end of the year: Nil
There are no Deposits that have been accepted by the Company that are not in compliance with the requirements of Chapter V of the Act.
6. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF REPORT
There have been no material changes and commitments for the likely impact affecting financial position between the end of the financial year and the date of the Report.
7. SIGNIFICANT AND MATERIAL ORDERS
There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.
8. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Details of loans, guarantees and investments covered under the provisions of Section 186 of the Act are given in the notes to the financial statements.
9. INTEGRATED REPORT
The Company has, over the last five years, taken steps to move towards Integrated Reporting <IR> in line with its commitment to voluntarily disclose more information to stakeholders on all aspects of the Company's business. Accordingly, the Company had introduced key content elements of Integrated Reporting aligned to the International Integrated Reporting Council Framework (IIRC) in the Annual Report of the previous years and has disclosed more qualitative data in the Annual Report of this year. Similar to earlier years, the relevant information has been provided in this year's Annual Report as well.
10. ADEQUACY OF INTERNAL CONTROLS AND COMPLIANCE WITH LAWS
During the year, the Company has reviewed its Internal Financial Control systems and has continually contributed to the establishment of a more robust and effective internal financial control framework, prescribed under the ambit of Section 134(5) of the Act. The preparation and presentation of the financial statements is pursuant to the control criteria defined considering the essential components of Internal Control - as stated in the "Guidance Note on Audit of Internal Financial Controls Over Financial Reporting" issued by the Institute of Chartered Accountants of India. The control criteria ensures the orderly and efficient conduct of the Company's business, including adherence to its policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and the timely preparation of reliable financial information.
Based on the assessment carried out by the Management and the evaluation of the results of the assessment, the Board of Directors are of the opinion that the Company has an adequate Internal Financial Controls system that is operating effectively as of 31st March 2023.
There were no instances of fraud which necessitated reporting of material misstatements to the Company's operations.
There has been no communication from regulatory agencies concerning non-compliance with or deficiencies in financial reporting practices.
11. BOARD MEETINGS
During the year under review, seven Board meetings were held, details of which are provided in the Corporate Governance Report.
12. AUDIT COMMITTEE AND OTHER BOARD COMMITTEES
The details pertaining to the composition of the Audit Committee and its role are included in the Corporate Governance Report, which is a part of this Annual Report.
13. RISK MANAGEMENT
Pursuant to the requirements of Regulation 21 and Part D of Schedule II of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR), the Company has constituted a Risk Management Committee (RMC), consisting of Board members and senior executives of the Company.
The Company has in place a Risk Management framework to identify, and evaluate business risks and challenges across the Company, both at the corporate level and also separately for each business division. The Company has a robust process for managing the key risks overseen by the RMC. As part of this process, the Company has identified the risks with the highest impact and then assigned a likely probability of occurrence. Mitigation plans for each risk have also been put in place and are reviewed by the Management every six months before presenting to the RMC. The RMC has set out a review process to report to the Board on the progress of the initiatives for the major risks of each of the businesses.
The Company had implemented a well-designed enterprise level Business Continuity Plan including Disaster Recovery scenario for the various businesses and functions of the Company to minimise disruptions and potential impact on its employees, customers and businesses during any unforeseen adverse events or circumstances.
14. RELATED PARTY TRANSACTIONS
I n line with the requirements of the Act and the SEBI LODR, the Company has formulated a Policy on Related Party Transactions. There are no materially significant Related Party Transactions made by the Company with Promoters, Directors or Key Managerial Personnel (KMP) which may have a potential conflict with the interests of the Company at large. All Related Party Transactions are placed before the Audit Committee for approval as per the applicable regulatory requirements, and approval of the Board, if required. Prior omnibus approval of the Audit Committee is obtained for transactions which are of foreseen and repetitive in nature. The transactions entered into pursuant to the omnibus approval so granted are verified by the Internal Auditor and a statement giving details of all Related Party Transactions is placed before the Audit Committee and the Board of Directors for their approval, if applicable, on a quarterly basis. The Policy on Related Party Transactions as approved by the Board is uploaded on the Company's website and can be accessed at https://www.titancompany.in/investors/ corporate-governance/policies. None of the Directors have any pecuniary relationships or transactions except to the extent of sitting fees and commission paid to the Directors, except for the post-retirement benefits being paid to Mr. Bhaskar Bhat, as approved by the Board, consequent upon his retirement as Managing Director on 30th September 2019. None of the transactions with related parties fall under the scope of Section 188(1)
of the Act and Regulation 23(4) of the SEBI LODR. The information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 in Form AOC-2 does not apply to the Company for the financial year 2022-23 and hence the same is not provided. The details of the transactions with related parties during the financial year 2022-23 are provided in the accompanying financial statements.
15. SUBSIDIARIES/ASSOCIATE COMPANIES
As on 31st March 2023, the Company had the following Subsidiaries/Associate Companies:
During the year under review, no Company had become or ceased to be subsidiary, joint venture or associate company.
During the financial year 2022-23, TCL Watches Switzerland AG (formerly Favre Leuba AG) (TCL WSAG) had registered a turnover of CHF 0.12 million i.e., Rs 1 crore against the previous year's figures of CHF 0.23 million, i.e., Rs 2 crore and loss of CHF 0.66 million, i.e., Rs 7 crore (previous year: CHF 1.25 million, i.e., Rs 28 crore). During the financial year 2022-23, the Company has invested CHF 0.3 million (Rs 2 crore) in TCL WSAG as share capital.
As on the date of this report, TCL WSAG is in the process of selling its brand Favre Leuba to a prospective buyer, subject to completion of certain conditions precedent. Post completion of the sale of the brand, the liquidation process would be initiated, subject to receipt of requisite approvals.
During the year under review, as part of restructuring exercise of the Company's subsidiaries, Titan Watch Company Limited, Hong Kong ceased to be a subsidiary of TCL WSAG and became a subsidiary of Titan Holdings.
TEAL is in the business of Manufacturing Services and Automation Solutions. During the financial year 202223, TEAL generated an income of Rs 580 crore against the previous year's figures of Rs 378 crore, an increase of 35% and the profit before tax was at Rs 26 crore against the previous year's figures of Rs 21 crore.
CaratLane is engaged in the business of manufacturing and retailing of jewellery products and has a significant online presence. During the last year, CaratLane recorded a strong performance with double-digit growths in retail sales, with great emphasis on omnichannel selling. CaratLane added 84 stores in the year to take the store count to 222. During the financial year 2022-23, CaratLane registered a turnover of Rs 2,169 crore against the previous year's figures of Rs 1,256 crore and recorded profit before tax of Rs 119 crore against the previous year's figures of Rs 39 crore.
Titan Holdings was formed as a Free Zone Company in Dubai with a view to carry out business activities and invest in the share capital of any other companies/entities either as a joint venture partner or as its wholly-owned subsidiary company for carrying out business activities across UAE, GCC regions and other International markets. Titan Holdings incurred a loss of AED 2 million (Rs 4 crore) against the previous year's loss of AED 0.87 million (Rs 2 crore).
Titan Global Retail LLC., carries out business activities in UAE and GCC regions pertaining to retail trade in the industry in which the Company operates. During the financial year 2022-23, Titan Global Retail LLC., registered a turnover of AED 157.70 million (Rs 345 crore) against previous year's figures of AED 55.24 million (Rs 112 crore) and incurred a loss of AED 26.59 million (Rs 58 crore) against the previous year's loss of AED 11.53 million (Rs 23 crore).
TCTL is a wholly-owned subsidiary of the Company and is a trading cum clearing member of Multi Commodity Exchange of India Limited and Multi Commodity Exchange Clearing Corporation Limited. TCTL is in the business of trading in all types of direct and derived commodities, commodity futures, currencies, and other securities. During the financial year 2022-23, TCTL registered an income of Rs 7.23 crore against the previous year's figures of Rs 5.21 crore and a profit before tax of Rs 2.76 crore against the previous year's figures of ' 0.95 crore. The Company avails the services of TCTL for its hedging of gold (physical and non-physical) and sale of bullion.
TCL NA is in the business of jewellery retailing in the USA. TCL NA started retail operations during financial year 2022-23 by opening its first Tanishq store in New Jersey and registered a turnover of USD 7.10 million (Rs 57 crore) and a loss of USD 2.51 million (Rs 20 crore).
TEAL USA Inc., a wholly-owned subsidiary of TEAL was incorporated with the objective of business development for its Manufacturing Services and Automation Solutions. The Company has not started any operations as of 31st March 2023.
The Company holds 26.79% stake in Green Infra Wind Power Theni Limited which supplies energy to the Company.
None of these subsidiary companies declared a dividend for the financial year 2022-23.
The annual accounts of these subsidiary/associate companies were consolidated with the accounts of the Company for the financial year 2022-23. The statement containing salient features of the financial statement of subsidiaries/associate companies in Form AOC-1 forms part of the Annual Report. Pursuant to the provisions of Section 136 of the Act, the financial statements along with other relevant documents, in respect of subsidiaries, are available on the website of the Company at https:// www.titancompany.in/investors/investor-relations/ subsidiaries.
16. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed under sub-section (3) (m) of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 are furnished in Annexure-I to the Board's Report.
17. CORPORATE SOCIAL RESPONSIBILITY
In compliance with Section 135 of the Act, the Company has undertaken Corporate Social Responsibility (CSR) activities, projects and programmes as provided in the CSR Policy of the Company and as per the
Annual Action Plan, excluding activities undertaken in pursuance of its normal course of business. In addition to the projects specified as CSR activities under Section 135 of the Act, the Company has also carried out several other sustainability/responsible business initiatives and projects. The Company has spent the entire 2% of the net profits earmarked for CSR projects during the year under review and Impact Assessment has been carried out for all the projects wherever applicable. A report on CSR pursuant to Section 135 of the Act and Rules made thereunder is attached in Annexure-II.
18. ANNUAL RETURN
The Annual Return as required under Section 92 and Section 134 the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is available on the Company's website at https:// www.titancompany.in/sites/default/files/Annual%20 Report%20FY23.pdf.
19. VIGIL MECHANISM
The Company has a whistle blower mechanism wherein the employees can approach the Management of the Company (Audit Committee in case where the concern involves the Senior Management) and make protective disclosures to the Management about unethical behaviour, actual or suspected fraud or violation of the Company's Tata Code of Conduct and Code of Conduct to Regulate, Monitor and Report Trading by Insiders and Code of Fair Disclosure. The Whistle Blower Policy requires every employee to promptly report to the Management any actual or possible violation of these Codes or an event an employee becomes aware of, that could affect the business or reputation of the Company. The disclosures reported are addressed in the manner and within the time frames prescribed in the Policy. A mechanism is in place whereby any employee of the Company has access to the Chairman of the Audit Committee to report any concern. No person has been denied access to the Chairman of the Audit Committee to report any concerns. Further, the said Policy has been disseminated within the organisation and has also been posted on the Company's website at https://www.titancompany.in/sites/default/files/ Whistle%20Blower%20Policy 1.pdf.
20. SECRETARIAL STANDARDS
The Directors state that the applicable Secretarial Standards i.e., SS-1 and SS-2, issued by the Institute of Company Secretaries of India, relating to Meetings of Board of Directors and General Meetings respectively, have been duly complied with.
21. DISCLOSURES AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The constant endeavour of the Company is to create a secure and safe work environment for everyone in the Company. Several means to prevent, prohibit and redress concerns are adopted by the Company. The Ethics Committee and the Committee on Prevention of Sexual Harassment (POSH) work closely with the Board Ethics Committee and obtain inputs and feedback for improvement from time to time.
Besides the core committee on POSH (having senior level representation from across the Company), 16 locational committees have been formed to ensure both spread and coverage of the implementation of the requirements of the POSH Act, 2013. The core committee has also been strengthened with more senior members being made part of it representing manufacturing locations as well.
The Policy on POSH as adopted by the Company is gender neutral, and acknowledges that today workplace is more than the premises that employees come to work and all stakeholders are ensured a safe working environment. Titan has also included the collaborations by partnering with recruiting agencies and consultants in granting recourse to aggrieved persons by forming joint Internal Complaints Committee to look into such matters. An elaboration of the penalties that could be applicable as per the Disciplinary Procedure and Policies manual and also an internal consequence guideline/ matrix and related processes has also been updated.
The Company shares best governance practices with its business associates to influence and impact more work communities. In an effort to encourage business associates to adopt the Policy for their own enterprises, masterclasses are conducted highlighting the importance of compliance and the consequences of good governance.
Communication cascades using the large scale interaction process has been restarted, storytelling as method is used and awareness is created using theatre plays on this subject. A total of 148 sessions involving 17,619 stakeholders across the Company's ecosystem have been covered. The cascades are conducted at various cities and towns across the diverse ecosystem of the Company (manufacturing, retail, offices, vendors and partners).
As on 31st March 2023, there were 12 complaints filed during the year on Sexual harassment, 6 of which are pending resolution at the end of the year. The remaining cases were investigated and dealt with in line with the POSH Policy of the Company and were disposed off appropriately.
22. DIVERSITY, EQUITY, INCLUSION AND BELONGING
During the year under review, the Company has embarked on an elaborate Diversity, Equity, Inclusion and Belonging programme focusing on both enhancing the Diversity quotient, besides conducting large scale awareness, building capacity and also sensitising employees across levels on the importance of gender sensitivity.
23. DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB-SECTION (12) OF SECTION 143 OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT
The Statutory Auditors of the Company have not reported any fraud as specified under the second proviso of Section 143(12) of the Act (including any statutory modification(s) or re-enactment(s) for the time being in force).
24. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS
As per SEBI LODR, Management Discussion and Analysis, Corporate Governance Report and Practicing Company Secretary's Certificate regarding compliance of conditions of Corporate Governance forms part of this Annual Report.
Pursuant to Regulation 34 of the SEBI LODR, the Management Discussion and Analysis is presented in a separate section forming part of this Annual Report. As required under the provisions of the SEBI LODR, the Audit Committee of the Company has reviewed the Management Discussion and Analysis report of the Company for the year ended 31st March 2023.
25. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
SEBI, in May 2021 introduced new sustainability related reporting requirements to be reported in the specific format which is a notable departure from the existing Business Responsibility Report and a significant step towards giving platform to the companies to report the initiatives taken by them in areas of environment, social and governance. Further, SEBI has mandated top
1,000 listed companies, based on market capitalization, to transition to Business Responsibility and Sustainability Reporting from the financial year 2022-23 onwards. In line with the above, the Business Responsibility and Sustainability Report forms part of this Report and is also available on the Company's website.
26. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Ashwani Puri, Mr. B Santhanam, Mr. Pradyumna Vyas, Dr. Mohanasankar Sivaprakasam, Ms. Sindhu Gangadharan and Mr. Sandeep Singhal were the Independent Directors during the entire financial year 2022-23.
Mr. B Santhanam was appointed as an Independent Director for the first term of five years effective 3 rd August 2018 and accordingly, his office of directorship ceases on 2nd August 2023. The Board based on the recommendations of the Board Nomination and Remuneration Committee (BNRC) and pursuant to the performance evaluation of Mr. B Santhanam as a Member of the Board and considering that the continued association of Mr. B Santhanam would be beneficial to the Company, recommended to re-appoint Mr. B Santhanam as an Independent Director of the Company, not liable to retire by rotation, for a second term effective 3rd August 2023 up to 9th May 2028.
Based on the disclosures received from all Independent Directors, as laid under Section 149(6) of the Act and Regulation 16(1)(b) of the SEBI LODR and also in the opinion of the Board, the Independent Directors fulfill the conditions as specified in the Act and SEBI LODR and are independent of the Management and that they are not debarred from holding the office of director by virtue of any SEBI order or any other such authority. All the Independent Directors have confirmed that they are in compliance with Rules 6(1) and 6(2) of the Companies (Appointment and Qualification of Directors) Rules, 2014, with respect to registration with the data bank of Independent Directors maintained by the Indian Institute of Corporate Affairs.
In accordance with the provisions of the Act and in terms of the Memorandum and Articles of Association of the Company, Mr. Bhaskar Bhat is liable to retire by rotation at the ensuing Annual General Meeting and has offered himself for re-appointment.
During the year under review, Tamilnadu Industrial Development Corporation Limited (TIDCO) had
withdrawn the nomination of Mr. Pankaj Kumar Bansal, IAS and had nominated Ms. Mariam Pallavi Baldev, IAS.
The Board placed on record its appreciation and recognised the valuable contribution rendered by Mr. Pankaj Kumar Bansal, IAS during his tenure as member of the Board.
Members' attention is drawn to Item No. 4 of the Notice for the re-appointment of Mr. Bhaskar Bhat as a NonIndependent, Non-Executive Director of the Company, liable to retire by rotation and Item No.5 of the Notice for the re-appointment of Mr. B Santhanam as an Independent Director of the Company for a second term.
None of the Directors are related to each other within the meaning of the term "Relative" as per Section 2(77) of the Act.
27. DETAILS OF KEY MANAGERIAL PERSONNEL
None of the Key Managerial Personnel were appointed or resigned during the year. Pursuant to the provisions of Section 203 of the Act, Mr. C K Venkataraman - Managing Director, Mr. Ashok Sonthalia - Chief Financial Officer and Mr. Dinesh Shetty - General Counsel and Company Secretary are the Key Managerial Personnel of the Company.
28. DIRECTORS' RESPONSIBILITY STATEMENT
Based on the framework of Internal Financial Controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory and secretarial auditors and external consultants, including audit of internal financial control 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 are adequate and operating effectively.
Accordingly, pursuant to the requirements of Section 134 (5) of the Act, the Directors hereby confirm that:
i. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;
ii. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. they have prepared the annual accounts on a going concern basis;
v. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
29. BOARD EVALUATION
The Company is led by a diverse, experienced and competent Board. The performance evaluation of the Board, Committees of the Board and the individual members of the Board (including the Chairman) for financial year 2022-23, was carried out internally pursuant to the framework laid down by the BNRC. This was based on a structured questionnaire which cover various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Member's strengths and contribution, execution and performance of specific duties, obligations and governance and feedback from each Director.
The Independent Directors at their separate meeting, review the performance of Non-Independent Directors and the Board as a whole and the Chairman of the Company after taking into account the views of Executive Director and Non-Executive Directors, the quality, quantity and timeliness of flow of information between the Management and the Board that is necessary for the Board to effectively and reasonably perform their duties. The Chairman of the BNRC leads the performance evaluation exercise. The outcome of the performance evaluation of Committees and the Board is presented to the Board of Directors of the Company and the key outcomes are discussed and acted upon.
30. INDEPENDENT DIRECTORS MEETING
A separate meeting of the Independent Directors (Annual ID Meeting) was convened, which reviewed the performance of the Board (as a whole), the
Non-Independent Directors and the Chairman. The Independent Directors inter-alia discuss the issues arising out of Committee meetings and Board discussions including the quality, quantity and timely flow of information between the Management and the Board that is necessary for the Board to effectively and reasonably perform their duties. Post the Annual ID Meeting, the collective feedback of each of the Independent Directors was discussed by the Chairman of the BNRC with the Board covering the performance of the Board as a whole, the performance of the Non-Independent Directors and the performance of the Chairman of the Board.
31. REMUNERATION POLICY
The Board has, on the recommendation of the BNRC, framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy forms part of the Corporate Governance Report.
The remuneration to the Non-Executive Directors and Senior Management Employees consists of various components as explained here.
Non-Executive Directors
The Non-Executive Directors shall be entitled to receive remuneration by way of sitting fees, reimbursement of expenses, for participation in the Board/Committee meetings and Commission.
Senior Management Employees
The remuneration is divided into two components viz; fixed component of salaries, perquisites and retirement benefits and variable component of performance based incentive.
32. EMPLOYEE STOCK OPTION PLAN - PERFORMANCE BASED STOCK UNITS
With an objective to achieve sustained growth and to create shareholder value by aligning the interests of the employees with long term interest of the Company, during the financial year 2022-23, the Company had sought approval of the Members through Postal Ballot Notice dated 10th February 2023 for the adoption and implementation of the Titan Company Limited Performance Based Stock Unit Scheme (Scheme 2023) to the eligible employees of the Company and its subsidiaries. The Members, vide special resolution passed through Postal Ballot on 21st March 2023, approved the adoption and implementation of the Scheme 2023 and BNRC is the administrator of the Scheme 2023. During the year under review, the Company has not granted any Performance Based Stock Units to the eligible employees in terms of Scheme 2023.
The details of the Scheme 2023, including terms of reference, and the requirement specified under Regulation 14 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, are available on the Company's website at https://www.titancompany. in/sites/default/files/ESOP%20disclosure 0.pdf.
33. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND OTHER DETAILS
In accordance with the Joint Venture Agreement between the Promoters, three Directors each may be nominated by Tata Sons Private Limited and Tamilnadu Industrial Development Corporation Limited. The broad guidelines for selection of Independent Directors are as set out below:
The BNRC oversees the Company's nomination process for Independent Directors and in that connection identifies, screens and reviews individuals qualified to serve as an Independent Director on the Board. The BNRC further has in place a process for selection and the attributes that would be desirable in a candidate and as and when a candidate is shortlisted, the BNRC will make a formal recommendation to the Board.
34. OTHER DISCLOSURES
The information required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:
i) The ratio of the remuneration of each Director to the median remuneration of the employees of the Company and the percentage increase in remuneration of each Director, Managing Director, Chief Financial Officer and Company Secretary in the financial year:
Notes:
1 The % change in remuneration is not comparable as the said Directors/KMP held the position for a part of the year either in financial year 2021-22 or in financial year 2022-23.
The Directors' remuneration includes the Commission for the year under reporting and payable in financial year 2023-24 post the ensuing Annual General Meeting.
ii) The percentage increase in the median remuneration of employees in the financial year: 10%
iii) The number of permanent employees on the rolls of Company: 7,857
iv) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
The average percentage increase for the financial year 2022-23 was 10% across all levels. Increase in the managerial remuneration is based on market trends and performance criteria as determined by the Board of Directors and on the basis of the recommendation of the BNRC.
v) Affirmation that the remuneration is as per the Remuneration Policy of the Company:
The Company's Remuneration Policy is based on the principle of internal equity, competence and experience of the employee and industry standards. Through its compensation programme, the Company endeavours to attract, retain, develop
and motivate high performance and engaged workforce. The Company follows a compensation mix of fixed pay, benefits and performance based variable pay. Individual performance pay is determined by business performance and the performance of the individuals is measured through the annual appraisal process. The Company affirms that remuneration is as per the Remuneration Policy of the Company.
35. INFORMATION AS PER RULE 5(2) OF THE CHAPTER XIII, OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014
The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Rules forms part of this Report. Further, the Report and the Accounts are being sent to the Members excluding the aforesaid statement. In terms of Section 136 of the Act, the said statement will be open for inspection upon request by the Members. Any Member interested in obtaining such particulars may write to the Company Secretary.
36. AUDITORS
a) Statutory Auditors
Pursuant to the provisions of Section 139 of the Act read with applicable Rules framed thereunder, M/s. B S R & Co., LLP have been appointed
as Auditors for a term of five years from the conclusion of the 38th Annual General Meeting till the conclusion of the 43rd Annual General Meeting.
The Ministry of Corporate Affairs vide Notification dated 7th May 2018 notified several Sections of the Companies (Amendment) Act, 2017. In view of the said notification, the requirement of ratification of appointment of auditors, under Section 139 of the Act at each AGM is no longer required. Hence, the resolution for this item is not being included in the Notice to the AGM.
b) Secretarial Audit and Auditors
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed V. Sreedharan & Associates, Practicing Company Secretaries to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as Annexure-IV.
c) Cost Audit
The Company is not required to maintain cost records as per sub-section (1) of Section 148 of the Act.
37. GENERAL DISCLOSURE
During the year, there were no transactions requiring disclosure or reporting in respect of matters relating to:
a) i ssue of equity shares with differential rights as to dividend, voting or otherwise;
b) i ssue of shares (including sweat equity shares) to employees of the Company under any scheme;
c) raising of funds through preferential allotment or qualified institutions placement;
d) significant or material order passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future;
e) pendency of any proceedings under the Insolvency and Bankruptcy Code, 2016; and
f) i nstance of one-time settlement with any bank or financial institution.
38. AUDITOR'S REPORT AND SECRETARIAL AUDITOR'S REPORT
The Auditors' Report on the financial statements of the Company for the financial year ended 31st March 2023 is unmodified, i.e., it does not contain any qualifications, reservations, adverse remarks or disclaimers. The Auditor's Report is enclosed with the financial statements forming part of the Annual Report.
There are no disqualifications, reservations, adverse remarks, or disclaimers in the Secretarial Auditor's Report.
39. DISCLOSURES OF TRANSACTIONS OF THE LISTED ENTITY WITH ANY PERSON OR ENTITY BELONGING TO THE PROMOTER/PROMOTER GROUP WHICH HOLD(S) 10% OR MORE SHAREHOLDING IN THE LISTED ENTITY, IN THE FORMAT PRESCRIBED IN THE RELEVANT ACCOUNTING STANDARDS FOR ANNUAL RESULTS
Related Party Transactions with Promoter/Promoter Group holding 10% or more shares
Tamilnadu Industrial Development Corporation Limited and Tata Sons Private Limited hold 10% or more shares in the Company. The details of transactions with promoter/ promoter group holding 10% or more shares have been disclosed in the financial statements which is part of the Annual Report.
The details of the transactions with related parties during financial year 2022-23 are provided in the accompanying financial statements. There were no transactions during the year which would require to be reported in Form AOC-2.
Acknowledgements
Your Directors wish to place on record their appreciation for the commitment extended by the employees of the Company and its subsidiaries during the year. Further, the Directors also wish to place on record the support which the Company has received from its promoters, shareholders, bankers, business associates, vendors and customers of the Company.