7 DECEMBER 2016

INGOVERN VIEWS AND RECOMMENDATIONS

Tata Group EGM Proposals for Removal of Mr. as Director

Six of the seven Tata listed group companies where Mr. Cyrus Mistry serves as a Director, have called for EGMs between 13th December and 26th December 2016 for removal of Mr. Mistry as a Director, after having received requisition from the promoter shareholder Limited. Tata Global Beverages, having already replaced Mr. Mistry as Chairman, is yet to announce the date and notice of its EGM.

Following are details of EGMs and the proposals as requisitioned by Tata Sons Ltd.

1) Tata Consultancy Services Ltd – 13th December 2016  Removal of CP Mistry as a Director

2) The Indian Hotels Company Ltd – 20th December 2016  Removal of CP Mistry as a Director

3) Ltd – 21st December 2016  Removal of CP Mistry as a Director  Removal of Nusli Wadia as a Director

4) Ltd – 22nd December 2016  Removal of CP Mistry as a Director  Removal of Nusli Wadia as a Director

5) Ltd – 23rd December 2016  Removal of CP Mistry as a Director  Removal of Nusli Wadia as a Director  Appointment of Bhaskar Bhat as a Director  Appointment of S. Padmanabhan as a Director

6) Ltd – 26th December 2016  Removal of CP Mistry as a Director

TATA GROUP EGM PROPOSALS 1 | P AGE INGOVERN VIEWS AND RECOMMENDATIONS

Case of Individual Companies

TATA CONSULTANCY SERVICES LIMITED (TCS)

Shareholder Meeting Details Meeting date & time: 13 December 2016, 3:30 PM IST Yashwantrao Chavan Pratishthan Auditorium, Y. B. Chavan Centre, Meeting venue: General JB Marg, next to Sachivalaya Gymkhana, 400021

List of Resolutions Res Resolution Title Management InGovern

1. Removal of Mr. CP Mistry as a Director For Against This is an ordinary resolution requiring more than 50% of the voting shareholders to vote FOR its approval

Actions undertaken by the Board/ Promoter/ Company  AoA of TCS gives right to Tata Sons to appoint/ replace Chairman of TCS  On 9th November 2016, Tata Sons . replaced Mr. Cyrus Mistry as Chairman of TCS . appointed Mr. as the new Chairman of TCS . requisitioned TCS to hold an EGM for removal of Mr. Mistry as Director  On 17th November 2016, the Board of TCS decided to convene an EGM on 13th December 2016

Composition of the Board Name Category Tenure (Years) Ishaat Hussain, Chairman NENID 6 Cyrus Mistry NENID 4 N Chandrasekaran MD 9 Aarthi Subramanian ED 1 Aman Mehta ID 12 Venkataraman Thyagarajan ID 11 Clayton M Christensen ID 10 Ron Sommer ID 10 Vijay Kelkar ID 6 OP Bhatt ID 4 ED: Executive Director; ID: Independent Director; MD: Managing Director; NENID: Non-executive Non-independent Director Highlighted are Independent Directors who have exceeded a tenure of 10 years whom we consider not truly independent

TATA GROUP EGM PROPOSALS 2 | P AGE INGOVERN VIEWS AND RECOMMENDATIONS

The Articles of Association of TCS gives the authority to Tata Sons to appoint and replace the Chairman of Board of TCS. On basis of this, on 9th November 2016, Tata Sons replaced Mr. Mistry with Mr. Ishaat Hussain as Chairman of TCS.

Tata Sons holds 73.26% of equity capital of TCS and other promoter entities hold 0.07%, resulting in total 73.33% equity stake. Since the proposal of removal of Mr. Mistry from the Board is an ordinary resolution, it is certain that the proposal will pass with requisite majority.

In case of TCS where the Board has not expressed any opinions contrary to that of Tata Sons and has replaced Mr. Mistry as its Chairman and it is a certainty that the proposal for his removal will be passed given the promoter’s 73.33% voting power, it is prudent for Mr. Mistry, to protect further damage to his reputation, to resign from the Board before the EGM.

InGovern Recommendation

The proposal for Mr. Mistry’s removal as a Director is because of his replacement as Chairman in Tata Sons Limited. As per Tata Sons, one of the primary reasons of his replacement was non-performance of Tata companies excluding TCS and JLR. Hence, since the promoter itself accepts that the performance of TCS has been good, we do not see any logic as to why a shareholder should vote FOR removal of a Director who was the Chairman, for performance issues.

Secondly, the section on Board Evaluation in the FY16 Annual Report of TCS states: “The board and the nomination and remuneration committee reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the chairman was also evaluated on the key aspects of his role.

In a separate meeting of independent directors, performance of non-independent directors, performance of the board as a whole and performance of the chairman was evaluated, taking into account the views of executive directors and non-executive directors.”

Since there is no negative commentary about Mr. Mistry’s evaluation as a Chairman, it is assumed that he had got a favourable rating from the Board. However, the Board, in the explanatory statement to the proposal, expresses that it agrees that removal of Mr. Mistry would be in the best interests of the company.

We seek a logic as to why the Board has recommended removal of a Director who was given a favourable rating in his evaluation as Chairman a few months back itself. The plausible reason is that he was a nominee of Tata Sons on Board of TCS and since he was replaced as Chairman of Tata Sons, it is natural that he is removed from the Board of TCS.

TATA GROUP EGM PROPOSALS 3 | P AGE INGOVERN VIEWS AND RECOMMENDATIONS

A logical consequence of change in designation at Tata Sons would be replacement as Chairman of TCS, which has been duly effected with Mr. Ishaat Hussain being appointed as the new Chairman. However, we believe his removal from the Board altogether is not the best outcome for the company.

Consider SP Group’s (which is represented by Mr. Mistry) beneficial interest in TCS. SP Group holds ~18.4% in Tata Sons which holds 73.33% in TCS. This gives SP Group a beneficial interest of 13.48% in TCS. If this beneficial interest had been a direct stake in the company, it would have been the largest stake after the promoters and much higher than the largest public shareholder LIC’s 3.21% stake in TCS. For a director representing a beneficial stake of 13.47% which ranks second among all shareholders of the company, and having received a favourable rating in his evaluation, there are no logic for his removal from the Board. On the contrary, his beneficial stake of 13.47% would reflect his ‘skin-in-the-game’ i.e., alignment of his interests with that of the company and hence would be in best interests of the company.

Another reason attributed to his removal is the possibility that his presence on the Board may create an environment of constant conflict and discord on the Board. We do not believe this hypothesis as it has been historically proved that the effectiveness of the Board increases when there are directors with an opposing point of view and who are not supposedly ‘Yes-Men’ of the promoters in the Board.

On basis of these points, we recommend shareholders vote AGAINST Mr. Mistry’s removal from the Board of TCS.

Although this resolution will ultimately get passed with a certainty due to the promoter exercising its 73.33% voting power, an AGAINST vote by minority shareholders will serve as a signal of their opinion to the Board of Directors.

With regards to the articles of association of TCS giving the authority to Tata Sons to appoint and replace Chairman of Board of TCS without the need to seek prior opinion of the Board, we believe such a provision greatly restricts the powers of the Board while giving a shareholder extra rights over that of other shareholders. Not letting the directors – representative of all shareholders – to appoint their leader is also an abuse of rights of the minority shareholders of the company. We recommend shareholders raise concern that such a provision be removed from the articles of association of TCS and the Board is given the right to appoint its own Chairman.

TATA GROUP EGM PROPOSALS 4 | P AGE INGOVERN VIEWS AND RECOMMENDATIONS

THE INDIAN HOTELS COMPANY LIMITED

Meeting Details Meeting date & time: 20 December 2016, 11:00 AM IST Indian Merchant Chamber (IMC) Building, IMC Marg, Churchgate, Meeting venue: Mumbai – 400020

List of Resolutions Res Resolution Title Management* InGovern

1. Removal of Mr. CP Mistry as a Director - Against This is an ordinary resolution requiring more than 50% of the voting shareholders to vote FOR its approval * The Board has not recommended either in favour or against the resolution

Actions undertaken by the Board/ Promoter/ Company  On 4th November 2016, a meeting of Independent Directors was held in which they unanimously expressed their full confidence in Mr. Cyrus Mistry as their Chairman  On 9th November 2016, Tata Sons requisitioned Indian Hotels to hold an EGM for removal of Mr. Mistry as Director  On 21st November 2016, the Board decided to convene an EGM on 20th December 2016

Composition of the Board Name Category Tenure (Years) Cyrus Mistry NENID 4 Shapoor Mistry NENID 13 Keki B Dadiseth ID 16 Deepak Parekh ID 16 Nadir B Godrej ID 8 Ireena Vittal ID 3 Vibha Paul Rishi ID 2 Gautam Banerjee ID 2 Rakesh Sarna MD 2 Mehernosh S Kapadia ED 5 ED: Executive Director; ID: Independent Director; MD: Managing Director; NENID: Non-executive Non-Independent Director Highlighted are Independent Directors who have exceeded a tenure of 10 years whom we consider not truly independent

The Independent Directors, who are in the majority in the Boards, have come out in the public and expressed their full confidence in Mr. Mistry as Chairman of Indian Hotels. Despite this public endorsement by the directors, the promoter – Tata Sons has proposed removal of Mr. Mistry as a Director which will automatically remove him as the Chairman.

TATA GROUP EGM PROPOSALS 5 | P AGE INGOVERN VIEWS AND RECOMMENDATIONS

InGovern Recommendations

Independent Directors should represent the interests of all, including minority shareholders, and think about the needs of creating a sustainable company. The Companies Act’s code for independent directors requires them to “safeguard the interests of all stakeholders” and to “balance the conflicting interest of the stakeholders.” The Independent Directors of Indian Hotels had expressed their full confidence on Mr. Mistry as their Chairman. The action of Tata Sons for persisting with the removal of Mr. Mistry as a Director shows the promoter’s disregard for the opinions of the Independent Directors.

Also, singling out Mr. Mistry for performance issues in these companies doesn’t seem fair. A Chairman is the leader of the Board which supervises the management and sets the strategy of the company. However, in a non-executive capacity, the Chairman doesn’t have control on the day-to-day management of the company and cannot be held solely responsible for poor performance of the company. Mr. Rakesh Sarna is the Managing Director and Mr. Mehernosh S Kapadia is the Executive Director of Indian Hotels. Collectively, the Key Management Personnel and the whole Board of Directors should be held responsible for the poor performance of the company.

Also, since there is no negative commentary about Mr. Mistry’s evaluation as a Chairman in these companies, it is assumed that he had got a favourable rating from the respective Boards. Hence, there is no reason for his removal from the Board after receiving favourable evaluation from the Boards.

Also, SP Group’s beneficial interest in Indian Hotels is around 5.15%. With no governance issues regarding Mr. Mistry and considering his significant beneficial interests in these companies, it is prudent to allow Mr. Mistry to continue in these Boards.

Indian Hotels is an associate company of Tata Sons as it owns less than 50% in Indian Hotels. Tata Sons directly owns 28.01% and along with other Tata group companies (which include listed companies as well), own 38.65% in Indian Hotels.

Most importantly, although Tata Sons has proposed removal of Mr. Mistry as Director, it has not articulated to the public shareholders any specific plans and the way forward for the company. Unless they explain how their plan is different from what the Board under Mr. Mistry envisaged for the company, public shareholders will not be able to take an informed decision.

On basis of these points, we recommend shareholders vote AGAINST Mr. Mistry’s removal from the Board of Indian Hotels. There is no compelling logic for his removal as Director and given the support of other Directors on the Board, his continuance would be in best interests of the company.

TATA GROUP EGM PROPOSALS 6 | P AGE INGOVERN VIEWS AND RECOMMENDATIONS

TATA STEEL LIMITED

Shareholder Meeting Details Meeting date & time: 21 December 2016, 3:00 PM IST Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg, Mumbai – Meeting venue: 400020

List of Resolutions Res Resolution Title Management* InGovern

1. Removal of Mr. CP Mistry as a Director - Against

2. Removal of Mr. Nusli Wadia as a Director - Against These are ordinary resolutions requiring more than 50% of the voting shareholders to vote FOR approval * The Board has not recommended either in favour or against the resolution

Actions undertaken by the Board/ Promoter/ Company  On 10th November 2016, Tata Sons requisitioned Tata Steel to hold an EGM for removal of Mr. Mistry and Mr. Wadia as Directors  On 25th November 2016, the Board decided to convene an EGM on 21st December 2016  Also on 25th November 2016, the Board replaced Mr. Cyrus Mistry as its Chairman through circular resolutions  The Board then appointed Mr. OP Bhatt as its Chairman till the EGM

Composition of the Board Name Category Tenure (Years) OP Bhatt, Chairman ID 3 Cyrus Mistry NENID 4 Nusli Wadia ID 37 Ishaat Hussain NENID 17 Subodh Bhargava ID 10 Jacobus Schraven ID 9 ID 4 DK Mehrotra NENID 4 Andrew Robb ID 2 Koushik Chatterjee ED 4 TV Narendran MD 2 ED: Executive Director; ID: Independent Director; MD: Managing Director; NENID: Non-executive Non-Independent Director Highlighted are Independent Directors who have exceeded a tenure of 10 years whom we consider not truly independent

TATA GROUP EGM PROPOSALS 7 | P AGE INGOVERN VIEWS AND RECOMMENDATIONS

InGovern Recommendations

The Board of Tata Steel replaced Mr. Mistry as its Chairman by passing circular resolutions on 25 December 2016. In Tata Steel, we share the same concerns as we have for other Tata Group companies.

The Board Evaluation section of FY2016 Integrated Report of Tata Steel states: “The evaluation process endorsed the Board Members’ confidence in the ethical standards of the Company, the cohesiveness that exists amongst the Board Members, the two-way candid communication between the Board and the Management and the openness of the Management in sharing strategic information to enable Board Members to discharge their responsibilities.”

Considering such a positive evaluation of the Board under the leadership of its Chairman, the logic of removal of Mr. Mistry as Director doesn’t carry weight. If indeed the performance of the company where to matter, the Key Management Personnel and the whole Board of Directors should be held responsible for the poor performance of the company. Mr. TV Narendran is the Managing Director and Mr. Koushik Chatterjee is the Executive Director of Tata Steel.

SP Group’s beneficial interest in Tata Steel is around 5.47%. With no governance issues regarding Mr. Mistry and considering his significant beneficial interests, it is prudent to allow Mr. Mistry to continue in the Board of Tata Steel.

Tata Sons directly owns 29.75% and along with other Tata group companies (which include listed companies as well), own 31.35% in Tata Steel.

Most importantly, although Tata Sons has proposed removal of Mr. Mistry as Director, Tata Sons has not articulated to the public shareholders any specific plans and the way forward for the company. Unless there is a plan different from what the Board under Mr. Mistry envisaged for the company, public shareholders will not be able to take an informed decision.

On basis of these points, we recommend shareholders vote AGAINST Mr. Mistry’s removal from the Board of Tata Steel. There is no logic for his removal as Director and his continuance would be in best interests of the company.

Regarding Mr. Wadia’s removal as a Director, InGovern, in an earlier vote recommendation report on the company meetings, had recommended shareholders vote AGAINST his re- appointment to the Board. However, the reason for recommending against was his tenure as Mr. Wadia has been on Board of Tata Steel since 1979 (i.e., more than 37 years). His tenure is far greater than the maximum tenure of 10 years for Independent Directors as per Companies Act, 2013.

However, Tata Sons proposes his removal not because of his long tenure but because he has expressed an opinion that is contrary to theirs. By stating that he is acting in concert with Mr.

TATA GROUP EGM PROPOSALS 8 | P AGE INGOVERN VIEWS AND RECOMMENDATIONS

Mistry, Tata Sons has questioned the position of the Independence Directors. Promoters removing Independent Directors who do not agree with their views also sets a bad precedent for Indian corporate governance and such efforts should be thwarted by voting against the promoter proposals.

In case Tata Sons believes that Mr. Wadia’s independence has been affected, it should also propose removal of other Independent Directors of all its listed group companies with longer tenures. A list of these directors on Boards of the seven companies is given below.

Independent Directors with tenures longer than 10 years

Tata Consultancy Services Limited

Name Tenure (Years)

Aman Mehta 12+

Venkataraman Thyagarajan 11+

Clayton M Christensen 10+

Ron Sommer 10+

The Indian Hotels Company Limited

Name Tenure (Years)

Deepak S Parekh 16+

Keki B Dadiseth 16+

Tata Steel Limited

Name Tenure (Years)

Nusli Wadia 37+

Subodh Bhargava 10+

Tata Motors Limited

Name Tenure (Years)

Nusli Wadia 18+

Tata Chemicals Limited

Name Tenure (Years)

Nusli Wadia 35+

Nasser Munjee 10+

TATA GROUP EGM PROPOSALS 9 | P AGE INGOVERN VIEWS AND RECOMMENDATIONS

Tata Power Limited

Name Tenure (Years)

Homiar Vachha 15+

Nawshir Mirza 10+

We recommend shareholders vote AGAINST Mr. Wadia’s removal from the board because, the principle against his removal does not set a good precedent for the company or for Indian corporate governance. However, shareholders should raise concern on the tenure of Mr. Wadia.

TATA GROUP EGM PROPOSALS 10 | P AGE INGOVERN VIEWS AND RECOMMENDATIONS

TATA MOTORS LIMITED

Shareholder Meeting Details Meeting date & time: 22 December 2016, 3:00 PM IST Yashwantrao Chavan Pratishthan Auditorium, Y. B. Chavan Centre, Meeting venue: General JB Marg, next to Sachivalaya Gymkhana, Mumbai 400021

List of Resolutions Res Resolution Title Management InGovern

1. Removal of Mr. CP Mistry as a Director … Against

2. Removal of Mr. Nusli Wadia as a Director … Against These are ordinary resolutions requiring more than 50% of the voting shareholders to vote FOR approval * The Board has not recommended either in favour or against the resolution

Actions undertaken by the Board/ Promoter/ Company  On 10th November 2016, Tata Sons requisitioned Tata Motors to hold an EGM for removal of Mr. Mistry and Mr. Wadia as Directors  On 14th November 2016, a meeting of Independent Directors was held in which they stated all decisions taken by the Board with regards to strategy, operations and business have been unanimous and executed by Chairman and Management accordingly  On 23rd November 2016, the Board decided to convene an EGM on 22nd December 2016

Composition of the Board Name Category Tenure (Years) Cyrus Mistry NENID 4 Nusli Wadia ID 18 Raghunath Mashelkar ID 9 Nasser Munjee ID 8 Subodh Bhargava ID 8 Vinesh Jairath ID 7 NENID 6 Falguni S Nayar ID 3 MD 1 Ravindra Pisharody ED 4 Satish Borwankar ED 4 ED: Executive Director; ID: Independent Director; MD: Managing Director; NENID: Non-executive Non-Independent Director Highlighted are Independent Directors who have exceeded a tenure of 10 years whom we consider not truly independent

TATA GROUP EGM PROPOSALS 11 | P AGE INGOVERN VIEWS AND RECOMMENDATIONS

InGovern Recommendations

Independent Directors represent the interest of all shareholders. The Independent Directors of Tata Motors, through their meeting on 14 November 2016, emphasised on the collective responsibility of the Board by stating all decisions taken by the Board with regards to strategy, operations and business have been unanimous and executed by Chairman and Management accordingly.

We believe if accountability is indeed put on the Board for non-performance, it should be all the Directors of the Board as a collective. Mr. Gunter Butschek is the MD and CEO while Mr. Ravindra Pisharody and Mr. Satish Borwankar are Executive Directors of Tata Motors. Mr. Butschek was, however, a recent appointment having been appointed as MD and CEO in February this year.

Also, since there is no negative commentary about Mr. Mistry’s evaluation as Chairman, it is assumed that he had got a favourable rating from the Board of Tata Motors. Hence, there is no reason as to his removal from the Board after receiving favourable evaluation from the Board.

SP Group’s beneficial interest in Tata Motors is around 4.88%. With no governance issues regarding Mr. Mistry and considering his significant beneficial interests, it is prudent to allow Mr. Mistry to continue in the Board.

Tata Motors is an associate company of Tata Sons as its stake is less than 50% in Tata Motors. Tata Sons directly owns 26.51% and along with other Tata group companies (which include listed companies as well), own 32.43% in Tata Motors.

Most importantly, although Tata Sons has proposed removal of Mr. Mistry as Director, they have not articulated to the public shareholders their specific plans, the way forward for the company. Unless they explain how their plan is different from what Mr. Mistry envisaged for the company, public shareholders will not be able to take an informed decision.

On basis of these points, we recommend shareholders vote AGAINST Mr. Mistry’s removal from the Board of Tata Motors. There is no compelling logic for his removal as Director and his continuance would be in best interests of the company.

Regarding Mr. Wadia’s removal as a Director of Tata Motors, InGovern, in its earlier vote recommendation reports for the company, had recommended shareholders vote AGAINST his re-appointment to the Board. However, our reason for recommending against was his tenure on the Board as an Indepdent Director. Mr. Wadia has been on Board of Tata Motors since 1998, i.e., more than 18 years which is greater than the maximum tenure of 10 years for Independent Directors as per Companies Act, 2013.

TATA GROUP EGM PROPOSALS 12 | P AGE INGOVERN VIEWS AND RECOMMENDATIONS

However, Tata Sons proposes his removal not because of his long tenure but because he has expressed an opinion in Tata Motors that is contrary to theirs. By stating that he is acting in concert with Mr. Mistry, Tata Sons has challenged the position of the Independence Directors. Promoters removing Independent Directors who do not agree with their views also sets a bad precedent for Indian corporate governance.

In case Tata Sons believes that Mr. Wadia’s independence has been affected, it should also propose removal of all the Independent Directors of these companies with longer tenures.

We recommend shareholders vote AGAINST Mr. Wadia’s removal from the board because, the principle against his removal does not set a good precedent for Indian corporate governance. However, shareholders should raise concern on the tenure of Mr. Wadia.

TATA GROUP EGM PROPOSALS 13 | P AGE INGOVERN VIEWS AND RECOMMENDATIONS

TATA CHEMICALS LIMITED

Meeting Details Meeting date & time: 23 December 2016, 3:00 PM IST Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg, Marine Meeting venue: Lines, Mumbai 400020

List of Resolutions Res Resolution Title Management InGovern

1. Removal of Mr. CP Mistry as a Director - Against

2. Removal of Mr. Nusli Wadia as a Director - Against

3. Appointment of Mr. Bhaskar Bhat as a Director - For

4. Appointment of Mr. S. Padmanabhan as a Director - For These are ordinary resolutions requiring more than 50% of the voting shareholders to vote FOR approval * The Board has not recommended either in favour or against the resolution

Actions undertaken by the Board/ Promoter/ Company  On 10th November 2016, a meeting of Independent Directors was held in which they unanimously affirmed their confidence in Mr. Mistry as their Chairman  On the same date, Mr. Bhaskar Bhat, a Non-Executive Director resigned from the Board due to his disagreement with the statement put out by the Independent Directors  On 10th November 2016, Tata Sons requisitioned Tata Chemicals to hold an EGM for removal of Mr. Mistry and Mr. Wadia as Directors  On 16th November 2016, the company received two more notices from Tata Sons proposing Mr. Bhaskar Bhat and Mr. S Padmanabhan as Directors  On 22nd November 2016, the Board decided to convene an EGM on 23rd December 2016

Composition of the Board Name Category Tenure (Years) Cyrus Mistry NENID 4 Nusli Wadia ID 35 Nasser Munjee ID 10 YSP Thorat ID 6 Vibha Paul Rishi ID 2 R Mukundan MD 8 ED: Executive Director; ID: Independent Director; MD: Managing Director; NENID: Non-executive Non-Independent Director Highlighted are Independent Directors who have exceeded a tenure of 10 years whom we consider not truly independent

InGovern Recommendations

In Tata Chemicals, we share the same concerns as we did with other companies. The Independent Directors of Tata Chemicals, through their meeting on 10 November 2016 reaffirmed their confidence in their Chairman.

TATA GROUP EGM PROPOSALS 14 | P AGE INGOVERN VIEWS AND RECOMMENDATIONS

Tata Sons directly owns 19.35% and along with other Tata group companies (which include listed companies as well), own 30.80% in Tata Chemicals. SP Group’s beneficial interest in Tata Chemicals which is around 3.56%. With no governance issues regarding Mr. Mistry and considering his significant beneficial interests, it is prudent to allow Mr. Mistry to continue in the Board.

Also, Tata Sons has not articulated to the public shareholders their specific plans and the way forward for Tata Chemicals. Unless they explain how their plan is different from what the Board under Mr. Mistry envisaged for the company, public shareholders will not be able to take an informed decision.

In line with our recommendations for other companies, we recommend shareholders vote AGAINST Mr. Mistry’s removal from these Boards. There is no logic for his removal as Director and his continuance would be in best interests of the company.

Regarding Mr. Wadia’s removal as a Director of Tata Chemicals, InGovern, in our earlier vote recommendation reports at the AGM of the company, had recommending shareholders vote against his re-appointment to the Board. Our reason for recommending against was his tenure on the Board as an Independent Director. Mr. Wadia has been on Board of Tata Chemicals since 1981, i.e., more than 35 years which is greater than the maximum tenure of 10 years for Independent Directors as per Companies Act, 2013.

However, Tata Sons proposes his removal not because of his long tenure but because he has expressed an opinion that is contrary to theirs. By stating that he is acting in concert with Mr. Mistry, Tata Sons has shown disregard for the position of the Independence Directors. Promoters removing Independent Directors who do not agree with their views also sets a bad precedent for Indian corporate governance. In case Tata Sons believes that Mr. Wadia’s independence has been affected, it should also propose removal of all the Independent Directors of these companies with longer tenures.

We recommend shareholders vote AGAINST Mr. Wadia’s removal from the board because while his tenure as an Independent Director is greater than 10 years, the principle against his removal does not set a good precedent for Indian corporate governance.

Regarding appointment of Mr. Bhaskar Bhat and Mr. S Padmanabhan as Directors, we do not have any concerns. Mr. Bhat was a Non-executive non-independent Director on the Board and had resigned recently due to his disagreement with Independent Directors for expressing their confidence on Mr. Mistry as Chairman. Mr. S Padmanabhan is a new appointment.

We recommend shareholders vote FOR their appointments.

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THE TATA POWER COMPANY LIMITED

Meeting Details

Meeting date & time: 26 December 2016, 11:00 AM IST Yashwantrao Chavan Prathishthan Auditorium, Y. B. Chavan Center, Meeting venue: Gen. JB Marg, next to Sachivalaya Gymkhana, Mumbai 400021

List of Resolutions

Res Resolution Title Management* InGovern

1. Removal of Mr. CP Mistry as a Director … Against This is an ordinary resolution requiring more than 50% of the voting shareholders to vote FOR its approval

Actions undertaken by the Board/ Promoter/ Company  Tata Sons requisitioned Tata Power to hold an EGM for removal of Mr. Mistry as Director  On 22nd November 2016, the Board decided to convene an EGM on 26th December 2016

Composition of the Board Name Category Tenure (Years) Cyrus Mistry NENID 5 Homiar S Vachha ID 15 Nawshir H Mirza ID 10 Deepak M Satwalekar ID 8 Ashok K Basu ID 7 Pravin H Kutumbe NENID 1 Sandhya S Kudtarkar NENID 0 Anjali Bansal ID 0 Vibha Padalkar ID 0 Sanjay Bhandarkar ID 0 Anil Sardana MD 9 Ashok Sethi ED 2 ED: Executive Director; ID: Independent Director; MD: Managing Director; NENID: Non-executive Non-Independent Director Highlighted are Independent Directors who have exceeded a tenure of 10 years whom we consider not truly independent

It is surprising to see that the Board and specifically the Independent Directors of Tata Power have not made their positions publicly known while those at other six companies have aired their views.

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InGovern Recommendations

In Tata Power, we share the same concerns as we did with other companies.

Along with other points as explained in our vote recommendations in this report, we draw attention to SP Group’s beneficial interest in Tata Power which is around 5.71%. With no governance issues regarding Mr. Mistry and considering his significant beneficial interests, it is prudent to allow Mr. Mistry to continue in the Board.

Also, Tata Sons has not articulated to the public shareholders their specific plans and the way forward for Tata Power. Unless they explain how their plan is different from what the Board under Mr. Mistry envisaged for the company, public shareholders will not be able to take an informed decision.

In line with our recommendations for other companies, we recommend shareholders vote AGAINST Mr. Mistry’s removal from these Boards. There is no logic for his removal as Director and his continuance would be in best interests of the company.

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TATA GLOBAL BEVERAGES LIMITED

Shareholder Meeting Details

Meeting date & time: No announcement of requisition by Tata Sons Meeting venue: -

Actions undertaken by the Board/ Promoter/ Company

 On 15th November 2016, the Board replaced Mr. Cyrus Mistry as its Chairman  The Board then appointed Mr. Harish Bhat as its Chairman  Company has not notified of any requisition received from Tata Sons

Composition of the Board

Name Category Tenure (Years) Harish Bhat, Chairman NENID 4 Cyrus Mistry NENID 4 Darius Pandole ID 4 S Santhanakrishnan NENID 3 V Leeladhar ID 7 Mallika Srinivasan ID 8 Analjit Singh ID 8 Ranjana Kumar ID 6 Ajoy K Mishra MD 5 L Krishnakumar ED 3 Ireena Vittal ID 3 ED: Executive Director; ID: Independent Director; MD: Managing Director ; NENID: Non-executive Non-independent Director

The Board of Tata Global Beverages replaced Mr. Mistry as their Chairman by voting in favour of his replacement in the ratio of 7:3, on 15th November 2016. The Board, then appointed Mr. Harish Bhat as its new Chairman.

At the time of publishing this report, there is no notification of any requisition by Tata Sons for holding an EGM. Hence, we haven’t made any recommendations for Tata Global Beverages.

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Defining a Better Governance Structure

Unravelling the Crossholdings at Tata Sons

As shown in the table below, listed Tata Group companies like Tata Motors, Tata Chemicals, Tata Power, Indian Hotels and Tata Investment Corporation are shareholders of their own promoter - Tata Sons Limited.

Shareholding of Tata Sons Shareholder Holding (%) Various Tata Trusts 65.89 18.40 Tata Motors Ltd 3.06 Tata Chemicals Ltd 2.53 Tata Power Ltd 1.65 The Indian Hotel Company Ltd 1.11 Tata Investment Corporation Ltd 0.08 Others 7.28

Tata Motors own 3.06%, Tata Chemicals own 2.53%, Tata Power own 1.65%, Indian Hotels own 1.11% and Tata Investment Corporation own 0.08% of the equity stake of Tata Sons.

This cross-shareholding structure in not only prevalent in the promoter-group company level but also among various listed company level as shown in the tables below:

Tata Global Beverages % Tata Chemicals % Tata Sons 23.5 Tata Sons 19.35 Tata Chemicals 7.10 0.08 Tata Investment Corporation 4.43 0.06 Others 0.69 Tata Global Beverages 4.39 Tata Investment Corporation 5.97 Others 0.95 Total 35.72 Total 30.80

Tata Steel % Tata Power % Tata Sons 29.75 Tata Sons 31.05 Tata Chemicals 0.26 Tata Investment Corporation 0.25 Tata Investment Corporation 0.35 Tata Steel 1.45 Tata Motors 0.46 Others 0.27 Others 0.53 Total 31.35 Total 33.02

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Tata Motors % Indian Hotels % Tata Sons 26.51 Tata Sons 28.01 Tata Chemicals 0.07 Tata Investment Corporation 1.35 Tata Investment Corporation 0.36 Tata Chemicals 0.90 Tata Steel 2.85 Others 8.39 Others 2.64 Total 32.43 Total 38.65

Crossholdings between promoter-company or group company levels are not examples of good corporate governance standards. While crossholdings make the holding structure of the companies complex, they also benefit the promoters in controlling higher voting powers than the actual beneficial interest.

In case of Tata Group, crossholdings between listed companies benefit Tata Sons as it exerts control on 35.72% voting rights of Tata Global Beverages and 30.80% of Tata Chemicals while the beneficial interests are 23.5% and 19.35% respectively.

Also, there is no logic whatsoever on the need for listed Group companies to hold shares of the promoter company Tata Sons Limited. Efforts should be made by the Tata Group to unravel these crossholdings and make ownership structure of the Group much cleaner and simpler.

In addition to the above, there should be greater disclosures and operating guidelines between the Trusts, Tata Sons Limited and Operating Companies.

Defining a non-conflicted Board and Possible Relationship with listed Group Companies

The following Independent Directors of listed Tata companies are on the Board of Trustees of various Tata Trusts: 1. Nasser Munjee – Independent Director on Boards of Tata Motors and Tata Chemicals On the Boards of Trustee of:  Sir Trust  Bai Hirabai J. N. Tata Navsari Charitable Institution

2. Keko B Dadiseth – Independent Director on Board of Indian Hotels Company On the Boards of Trustee of:   Bai Hirabai J. N. Tata Navsari Charitable Institution

3. – Relative of Mallika Srinivasan, Independent Director on Boards of Tata Steel and Tata Global Beverages On the Board of Trustee of:  Sir Trust

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The Independent Directors’ and their relatives’ position on the Board of Tata Trusts create a clear situation of conflict of interests especially in situations like the present one where the Tata Trusts had given their approval for replacement of Mr. Mistry as Chairman of Tata Sons.

Such conflict of interests should be avoided by replacing these Independent Directors with new members or asking them to step down from the Board of Trustees of the Tata Trusts.

The Value of “Tata” as a brand

Shareholders should question whether just the “Tata” name is sufficient as a brand. We believe that such implicit assumptions need to be questioned. There have been successes and failures associated with the brand, so the inherent business model, customer service and product quality are also important.

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This report has relied on data from: Press releases by Tata Sons Limited on www.tata.com Press releases by Mr. Cyrus Mistry and on www.cyrusforgovernance.com Announcements and EGM notices of each of the operating listed companies to the stock exchanges

This report has been updated till end of 7th December 2016. There is a possibility that if any new information is revealed this report will be updated.

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