DIRECTORS’ REPORT

TO

THE MEMBERS,

1.The Directors present their Seventy-Ninth Annual Report with the Audited Financial Statements for the year ended 31st March, 2016.

2. OPERATIONS :

The Operating Income of the Company is derived from a mix of dividend and interest income, supplemented by profit on sale of investments. The profit from sale of long term investments for the year ended 31st March, 2016 is Rs. 115.05 crores as compared to Rs. 100.97 crores for the previous year. The standalone profit before tax for the year under reviewis Rs. 234.22 crores as against Rs. 216.02 crores in the previous year, whereas the profit after tax for the year under review stands at Rs. 202.61 crores as against Rs. 186.51 crores as on 31st March 2015. The Consolidated profit after tax for the year amounted to Rs. 197.25 crores as compared to Rs. 182.73 crores in the previous year.

Shareholders may note that the dividend earned by the company during the financial year 2015-16 includes interim dividends received in the last quarter from its investee companies, which have not further proposed any final dividend at the time of declaring their annual results.

The basic and diluted earnings per share (EPS) computed in accordance with the Accounting Standard 20 was Rs. 36.77 per share as at 31st March, 2016 against Rs. 33.85 per share as at 31st March, 2015.

The total number of companies held in the equity / bond portfolio of the Company stands at 110 as on 31st March, 2016, out of which 87 are Quoted and 23 are Unquoted companies.

3. DIVIDEND :

An interim dividend of Rs. 17 per share i.e. 170% (previous year Rs. 17 per share (170%)) was declared on 11th March 2016 to those shareholders whose names stood on Register of Members on the Record Date i.e. 19th March 2016. The Directors have decided not to recommend any final dividend for the year 2015-16.

4. VALUE CREATED :

Shareholders will recall that for the first time in the Annual Report of 31st March, 2015 the Company had shared the “Value Created“ over a 15 year period. The table below analyses the performance of the Company’s portfolio rolling over the period to the 15 year prior to the closing of the current financial year 31st March, 2016. “Value Created” is a measure which evaluates the wealth created net of the capital invested by the shareholders. “Value Created” is the Realisable Value of Investments as on 31st March to which is added Net Current Assets and Fixed assets while any contribution from shareholders is reduced (i.e. equity and share premium).

Shareholders will be pleased to note that the “Value Created” has recorded a compounded annual growth rate (CAGR) of 19.50% vis-à-vis the BSE 200 CAGR of 15.67% for the 15 year period 31st March, 2001 to 31st March, 2016. It is heartening that this performance has been achieved while the management has endeavoured to reduce risk of the portfolio with a prudent allocation to unlisted equity and fixed income securities. The Company has consistently declared dividend which over the last 15 years aggregating Rs. 942.23 crores. Thus, if the value of dividend distributed were to be added to Value Created, the multiplier and returns of the portfolio would stand enhanced to the extent the value was distributed to the shareholders.

5. MANAGEMENT DISCUSSION & ANALYSIS :

The NAV is computed on the basis of the market value of quoted investments, NAVs of unquoted mutual funds, most of the other equity investments in unlisted companies taken on the basis of the last available independent valuations based on the balance sheets available as at 31st March, 2015, and the remaining relatively small balance of unquoted investments taken at respective book values.

The Directors confirm that all the investments classified as non-current investments / trade investments as per Schedule III of the Companies Act, 2013 (“Act”) have been made with the intent to hold for long term appreciation, to enhance the income from dividends and are not held for trade.

The Company continues to remain invested in leaders in sectors, which we believe have potential to remain value accretive over the long term. The Company continues to invest for the long term while availing opportunities to realize gains endeavouring to maintain its policy of consistent dividend distribution.

The Company’s portfolio remains concentrated in areas which could benefit from economic recovery viz., Banks and Financial Services (19%), Industrials and Infrastructure (24%) and consumer facing companies (25%). The Company invests in Tata and Non Tata companies, both listed and unlisted, though investments in Tata companies constitute a larger portion and may be considered of a longer term strategic in nature.

The Company endeavours to evaluate opportunities considering the macro economic conditions both globally & domestically.

Global and Indian Equity Markets

The year 2015 had been marked by modest GDP growth of 3.1%, decline in growth of world trade, slump in commodity prices and increased financial market volatility. The first quater of 2016 started on a weak note marked by a sharp fall in asset markets. However, the situation has improved slightly since April, 2016. Energy and commodity prices still continue to be low but have now become relatively more stable. The IMF had forecasted the world GDP in 2016 to grow at 3.2%, marginally better than in 2015.

In India the unabated problem of Non-Performing Assets and the pressures of falling prices of industrial commodities like steel have caused considerable stress in the banking system. Further, these stresses have pushed the prospects of revival of private sector capex by at least another 12-24 months.

After two consecutive years of below normal monsoon, a good monsoon would be crucial for India’s agriculture production growth and rural consumption story and the markets will only find itself in a position of strength with evidence of an average to better than average rainfall. India’s growth substantially depends upon export growth which depends on global growth. India’s exports of manufactured goods and services now constitute about 18 percent of GDP, up from about 11 percent a decade ago. Current projections by the IMF indicate that trading partner growth will improve only marginally this year. India’s exports declined by about 16% (y-o-y) in FY 2015-16 to $261 bn due to global demand slowdown and fall in crude oil prices whereas imports in the same period aggregated $380 bn, declining 15.2% (y-o-y), trade deficit was lower at $118 bn in FY 2015-16 compared to $138 bn in FY 2014-15. Lower trade deficit kept the current account deficit at manageable level of 1.4% (of GDP). External headwinds apart, India’s growth was also affected by tepid domestic demand leading to lower capacity utilisation in 2015.

In the backdrop of these uncertainties we would like to share with our shareholders the positives which support the India investment case which have motivated the portfolio of the Company to increase its allocations to economy facing sectors.

The government has introduced certain programs which if successfully implemented may become game changers for India’s future. It would be amiss if we failed to enumerate these programs while considering India’s investment case.

Macro- Economic Resilience

The Economic Survey 2015-16 re-affirms that India stands out as a haven of stability and an outpost of opportunity. It observes that India continues to consolidate the gains achieved in restoring macro-economic stability.

In the budget for 2016-17, the finance minister while making significant increases in allocations to the rural job guarantee scheme, irrigation and rural roads to boost rural demand; national highway and railways sectors to boost infrastructure investment and even after providing for the 7th Pay Commissions recommendations, has contained the projected fiscal deficit at 3.5%, using what economists consider reasonable assumptions of growth in revenue receipts.

In the IMF WEO January 2016 update of the Rational Investor Ratings Index (RIRI) which combines two elements, growth and macro-economic stability, India continues to record improvement and has consistently remained above its peers. The RIRI higher levels indicate better performance.

Higher FDI Inflows - Growing Forex Reserve Balance

Foreign exchange reserves have risen to US$351.5 billion in early February 2016 substantially aided by net FDI inflows which have grown from US$ 21.9 billion in April-December 2014-15 to US$ 27.7 billion in the same period of 2015-16. While the current account deficit has declined and is at comfortable levels, the total external debt has been growing at alarming rates. Non-Government debt, the main cause of the rise in external debt, aggregated US$ 389.5 billion as on 31st December, 2015 having ballooned 100% over the last six years. The Reserves to External Debt Ratio has been improving and has reached a comfortable 73%.

Government Programs which have achieved momentum in execution

I) JAM Trinity

Jan Dhan, Aadhaar and Mobile - popularly known as the JAM trinity - a platform for real-time Direct Benefit Transfers. A billion mobile connections, nearly a billion citizens have been allocated an Aadhaar card, growing smartphone penetration and internet access having already crossed 300 million, a total of 196 million bank accounts opened upto December 2015 together facilitate income transfers, making subsidy distribution both predictable and targeted. The PAHAL scheme of transferring LPG subsidies, witnessed the world’s largest direct benefit transfer program, with about 151 million beneficiaries receiving a total of Rs. 29,000 crores in their bank accounts and is estimated to have reduced leakages by 24 %.

In Andhra Pradesh, salaries under MGNREGA were paid directly to workers, with biometric Smartcards to reduce the scope of siphoning of funds via registering ghost workers. The program was a tremendous success, reducing payment delays by 19%, increasing MGNREGA wages by 24% and reducing leakages by 35%. The return on investing in Smartcards infrastructure was thus seven times the cost of implementation. 90 per cent of beneficiaries preferred the Biometric system.

II) UDAY-Ujwal discom Assurance Yojana

The Distribution Utilities of the country are reeling under heavy debt burden. As on 30th September, 2015, the outstanding debt of the DISCOMs stood at Rs. 4.3 lakh crore. In order to bring relief to these Utilities from the burden of debt, and to improve their overall performance, Government of India launched the Scheme UDAY on 20th November, 2015. UDAY is an aim to ensure a permanent solution to the debt-ridden distribution utilities to achieve financial stability and to improve their operational efficiencies, for sustained growth.

Encouragingly, Bihar was the sixth State to have accepted UDAY, bringing about a positive change in the Power Sector scenario of the States. Rajasthan, Uttar Pradesh, Chhattisgarh and Jharkhand have signed the MoU under UDAY for operational and financial turnaround of their DISCOMs. With the signing of MoU with Bihar, approximately 33% of the DISCOM debt, i.e. around Rs. 1.40 lakh crore would be restructured.

In summary it may be concluded that the period ahead may not be as exciting as the secular bull market of 2003 to 2008 but it may be quite safe to predict that going forward the Sensex may reward investors with a return higher than the CAGR of the last three years which was a little more than 10%, if the rain Gods smile on us.

6. FIXED DEPOSITS :

The Company has not accepted any public deposits under the provisions of the Act.

7. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS :

The provisions of section 186 of the Act pertaining to investment and lending activities is not applicable to the Company since the company is an NBFC whose principal business is acquisitions of securities. During the year, the Company has not provided any guarantee.

8. CONSOLIDATED FINANCIAL STATEMENTS :

The Consolidated Financial Statements of the Company prepared in accordance with Accounting Standard 21 issued by the Institute of Chartered Accountants of India, form part of the Annual Report.

The annual accounts of the subsidiary company and related detailed information are available on the website of the Company and are kept at the Registered Office of the Company and its subsidiary company and will be available to investors seeking information at any time.

The consolidated financial results reflect the operations of Simto Investment Company Ltd. (Subsidiary), and the following Associate Companies namely Amalgamated Plantations Private Ltd, Tata Asset Management Ltd. and Tata Trustee Company Ltd.

The Company has adopted a Policy for determining material Subsidiaries in terms of Regulation 16 (1) (c) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”). The Policy, as approved by the Board, is uploaded on the Company’s website.

Subsidiary Company

The Company has a subsidiary Simto Investment Company Ltd. (“Simto”) which is registered as a Non-Banking Financial Company with the Reserve Bank of India. In terms of Regulation 16 (1) (c) of the Listing Regulations, Simto is not a material unlisted subsidiary. Simto is engaged in investment activities which allocates capital in the markets to participate in activities other than making investments for the long term which has been the primary activity of the Company for many decades.

Simto has an Issued Capital of Rs. 1.53 crores with a net worth of Rs. 21.95 crores as on 31st March, 2016. The market value of investments held by Simto is valued at Rs. 37.45 crores as on 31st March, 2016.

Associate Companies

1. Amalgamated Plantations Private Ltd.

The Company holds 24.61% of the equity share capital of Amalgamated Plantations Private Ltd (“APPL”) which is engaged in the business of cultivation and manufacturing of tea and other allied agricultural products and packaging services. The turnover of APPL during the year was Rs. 569.86 crores and registered a loss of Rs. 23.42 crores during the financial year 2015-16.

2. Tata Asset Management Ltd.

The Company holds 32.09% of the equity share capital of Tata Asset Management Ltd. whose principal activity is to act as an investment manager to Tata Mutual fund and the company is registered with Securities and Exchange Board of India (“SEBI”) under the SEBI (Mutual Fund) Regulations 1996. The consolidated turnover of the company during the year was Rs. 148.47 crores and profit after tax for the year was Rs. 6.33 crores. The company has a net worth of Rs. 173.28 crores as on 31st March, 2016.

3. Tata Trustee Company Ltd.

The Company holds 50% of the equity share capital of Tata Trustee Company Ltd which is acting as the Trustees to Tata Mutual Fund. During the year, the turnover of the company was Rs. 7.95 crores and profit after tax for the year was Rs. 4.35 crores. The company has a networth of Rs. 9.44 crores as on 31st March, 2016.

A statement containing the salient features of the financial statements of the subsidiary company and associate companies is annexed to the Financial Statements in Form AOC-1 “Annexure A”.

9. BOARD AND COMMITTEE MEETINGS :

During the year six Board Meetings and four Audit Committee Meetings were held. The details of the composition of the Board and its Committees and of the Meetings held and attendance of the Directors at such Meetings, are provided in the Corporate Governance Report. The Board has constituted an Audit Committee under the Chairmanship of Mr. H. N. Sinor, with the other members of the Committee being Mr. A.B.K. Dubash, Mr. P P. Shah and Mr. F. N. Subedar.

There have not been any instances during the year when recommendations of the Audit Committee were not accepted by the Board.

10. DIRECTORS’ RESPONSIBILITY STATEMENT :

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors including audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by 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 the financial year 2015-16.

Accordingly, pursuant to Section 134(3)(c) and 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that: –

i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

ii) they have selected such accounting policies and 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;

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;

vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

11. RISK MANAGEMENT :

The Company has adopted a Risk Management Policy in accordance with the provisions of the Act and Regulation 17 (9) of the Listing Regulations. It establishes various levels of risks with its varying levels of probability, the likely impact on the business and its mitigation measures.

The Internal Auditor evaluates the execution of Risk Management Practices in the Company, in the areas of risk identification, assessment, monitoring, mitigation and reporting. Asset Liability and Risk Management Committee oversees the Risk Management and reports to the Audit Committee as well as the Board of Directors about risk assessment and management procedures and status from time to time.

12. INTERNAL CONTROL SYSTEMS :

The Company maintains appropriate systems of internal controls, including monitoring procedures, to ensure that all assets and investments are safeguarded against loss from unauthorised use or disposition. Company policies, guidelines and procedures provide for adequate checks and balances and are meant to ensure that all transactions are authorised, recorded and reported correctly.

The Internal Auditors review the efficiency and effectiveness of these systems and procedures. Added objectives include evaluating the reliability of financial and operational information and ensuring compliances with applicable laws and regulations. The Internal Auditors submit their Report periodically which is placed before and reviewed by the Audit Committee.

13. VIGIL MECHANISM / WHISTLE BLOWER POLICY :

The Company has adopted a Whistle Blower Policy to provide a formal mechanism to the Directors and employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Company’s Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimisation of employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee.

14. RELATED PARTY TRANSACTIONS :

All Related Party Transactions that were entered into during the financial year were on an arm’s length basis, in the ordinary course of business and were in compliance with the applicable provisions of the Act and the Listing Regulations.

There were no materially significant Related Party Transactions made by the Company with Promoters, Directors, Key Managerial Personnel which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are repetitive in nature. A statement of all Related Party Transactions is placed before the Audit Committee for its review on a quaterly basis, specifying the nature, value and terms and conditions of the transactions, if any.

The Company has adopted a Related Party Transactions Policy. The Policy, as approved by the Board, is uploaded on the Company’s website at the web link: http://www.tatainvestment.com/images/RelatedParty_Policy.pdf. There are no transactions to be reported in form AOC-2.

The details of the transactions with Related Parties are provided in the accompanying financial statements.

15. CORPORATE SOCIAL RESPONSIBILITY (CSR) :

In terms of section 135 and Schedule VII of the Act, the Board of Directors has constituted a CSR Committee under the Chairmanship of Mr. F N. Subedar. Mr. A. Chandra and Mr. A. N. Dalal are the other members of the Committee. The CSR Committee of the Board has framed a CSR Policy and uploaded it on the website of the Company http://www. tatainvestment.com/images/CSR_Policy.pdf The Company’s CSR initiatives are primarily routed through Tavescor Charitable Trust which was set up by the Company in 1997. The main objects of the Trust are Relief to the poor including relief from distress caused by natural calamities; Advancement of education and learning i.e. promoting education, enhancing vocational skills etc. among children and differently abled persons; Grant of medical aid including promotion of preventive health care; Aid to any charitable institution; Promoting measures for protection and preservation of animals and birds; Advancement of public utilities – including maintaining the quality of soil, air and water.

The Annual Report on CSR activities is annexed herewith as “Annexure B”.

16. POLICY ON PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORK PLACE :

The Company has adopted a policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013 and the Rules thereunder. The Policy aims to provide protection to employees at the work place and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. The Company has also constituted an Internal Complaints Committee, known as the Prevention of Sexual Harassment (“POSH”) Committee, to inquire into complaints of sexual harassment and recommend appropriate action.

The Company has not received any complaint of sexual harassment during the financial year 2015-2016.

17. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS :

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

18. DIRECTORS :

Pursuant to the provisions of the Act and the Company’s Articles of Association, Mr. K. A. Chaukar, Director, retires by rotation and, being eligible, offers himself for re-appointment.

All Independent Directors have given declarations that they meet the criteria of Independence as laid down under Section 149(6) of the Act and the Listing Regulations.

There has been no change in Directors/Key Managerial Personnel during the financial year.

19. ANNUAL EVALUATION OF BOARD PERFORMANCE AND PERFORMANCE OF ITS COMMITTEES AND OF INDIVIDUAL DIRECTORS :

Pursuant to the provisions of the Act and Listing Regulations, the Board has carried out an annual evaluation of its own performance, performance of the Directors individually as well as the evaluation of the working of its Committees.

The Nomination and Remuneration Committee has defined the evaluation criteria, procedure and time schedule for the Performance Evaluation process for the Board, its Committees and individual Directors, including the Chairman of the Company.

For evaluating the Board as a whole, views were sought from the Directors on various aspects of the Board’s functioning such as degree of fulfilment of key responsibilities, Board Structure and composition, establishment, delineation of responsibilities to various committees, effectiveness of Board processes, information and functioning, Board culture and dynamics, quality of relationship between the Board and the management.

Similarly, views from the Directors were also sought on performance of individual Directors covering various aspects such as attendance and contribution at the Board/Committee Meetings and guidance/support to the management outside Board/Committee Meetings. In addition, the Chairman was also evaluated on key aspects of his role, including setting the strategic agenda of the Board, encouraging active engagement by all Board members and promoting effective relationships and open communication, communicating effectively with all stakeholders and motivating and providing guidance to the Executive Director.

Areas on which the Committees of the Board were assessed included degree of fulfilment of key responsibilities, adequacy of Committee composition, effectiveness of meetings, Committee dynamics and quality of relationship of the Committee with the Board and the Management.

The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors who also reviewed the performance of the Board as a whole. The Nomination & Remuneration Committee also reviewed the performance of the Board, its Committees and of individual Directors.

The Chairman of the Board provided feedback to the Directors, as appropriate. Significant highlights, learning with respect to the evaluation, were discussed at the Board Meeting.

20. REMUNERATION POLICY :

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

21. AUDITORS :

STATUTORY AUDITORS :

M/s. Deloitte Haskins & Sells, Chartered Accountants, who are the statutory auditors of the Company, hold office in accordance with the provisions of the Act upto the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment.

SECRETARIAL AUDITORS :

Pursuant to provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Parikh & Associates, Company Secretaries, to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as “Annexure C” Seventy-ninth annual report 2015-2016

The Auditors’ Report and the Secretarial Audit Report for the financial year ended 31st March, 2016 do not contain any qualification, reservation, adverse remark or disclaimer.

22. EXTRACT OF ANNUAL RETURN :

The details forming part of the extract of the Annual Return in the form MGT-9 is annexed herewith as “Annexure D “.

23. CONSERVATION OF ENERGY, ABSORPTION,FOREIGN EXCHANGE EARNINGS AND OUTGO :

Being an investment company and not involved in any industrial or manufacturing activities, the Company’s activities involve very low energy conservation and has no particulars to report regarding conservation of energy and technology absorption. However, efforts are made to further reduce energy conservation.

During the year, the Company’s expenditure in foreign exchange is Rs. 0.41 lacs as mentioned in Note 8 to the Annual Report and the Company did not have any foreign exchange earnings during the year.

24. PARTICULARS OF EMPLOYEES AND REMUNERATION :

The information required under Section 197 (12) of the Act read with Rules 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as “Annexure E”.

The information required under Section 197 (12) of the Act read with Rules 5 (2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in the Annexure forming part of the Report. In terms of the first proviso to Section 136 of the Act, the Report and Accounts are being sent to the Shareholders excluding the aforesaid Annexure. Any Shareholder interested in obtaining the same may write to the Company Secretary at the Registered Office of the Company. None of the employees listed in the said Annexure is related to any Director of the Company.

A report on Corporate Governance, in accordance with Schedule V of the Listing Regulations is set out separately for the information of the shareholders.

On behalf of the Board of Directors,

NOEL N. TATA

Chairman

Mumbai, 23rd May, 2016