Board Committee Charter

Audit Committee Charter

Tata Motors Limited

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 AUDIT COMMITTEE CHARTER OF TATA MOTORS LIMITED

1. Principles and Objectives

1.1 The role of the Audit Committee (“Committee”) flows from the Board of Directors’
(“Board”) overview function on corporate governance, which holds the management
accountable to the Board and the Board in turn, accountable to the shareholders.

1.2 The primary role of the Committee of Tata Motors Limited ("the Company") is that of
assisting the Board in:
a. Review and exercising oversight on the accounts, finance and audit functions of
the Company as well as transactions having a significant/material financial
implication for the Company:-
b. Review (in conjunction with management) of the financial statements, both stand-
alone financial statements and consolidated financial statements including the
quality and integrity of such statements and the auditor’s report thereon together
with any significant financial reporting judgments contained in them as well as the
adherence of these financial statements to Accounting Standards.
c. Oversight of financial reporting controls and processes for the Company and its
subsidiaries.
d. Oversight of timely and accurate disclosures and communications with
stakeholders.
e. Review of the adequacy and reliability of the internal control systems and risk
management system.
f. Recommendation for appointment, remuneration and terms of appointment of
statutory and internal auditors of the Company and valuers.
g. Review of policy and compliance therewith in matters related to auditors, their
independence, scope of work, performance and effectiveness of the audit
process.
h. Review of the efficacy of the whistle blowing mechanism for stakeholders,
employees & Directors and the functioning of the same.
i. Approval or any subsequent modification of transactions of the Company with
related parties.
j. Scrutiny of inter-corporate loans and investments.
k. Valuation of undertakings or assets of the Company, wherever it is necessary.
l. Review of reasons for defaults in the payments to the depositors, debenture
holders, shareholders and creditors.
m. Oversight of compliance with legal and regulatory requirements including the Tata
Code of Conduct (“TCoC”) for the Company and its subsidiaries.
n. Performing such other duties and responsibilities as may be mandated under the
Companies Act, 2013 and other applicable regulations and the directions of the
Board.

1.3 The Committee will report periodically to the Board on its activities.

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2. Composition

2.1 The Committee shall be appointed by the Board and shall comprise at least three
Directors as members, all of whom shall be Independent Directors.

2.2 The members of the Committee shall elect a Chairman from amongst themselves.
The Chairman of the Board, as far as possible, shall not be a member of the
Committee.

2.3 All members of Audit Committee shall be ‘financially literate’ (which at minimum
means possessing a working familiarity with the basic finance and accounting
practices) and at least one member shall, in the judgement of the Board, be an audit
committee ‘financial expert’ having accounting or related financial management
expertise.

2.4 The Company Secretary shall act as the Secretary to the Committee.

3. Meetings and Quorum

3.1 The Committee shall meet at least 4 times in a year, and not more than 120 days shall
elapse between two successive meetings.

3.2 The Committee may, at its discretion, invite other directors/such executives including
the finance director and/or head of the finance and accounts function, head of internal
audit and a representative of the statutory auditor to be present at the meetings of the
Committee.

3.3 The quorum necessary for transacting business at a meeting of the Committee shall
be two members or one-third of the total number of members of the Committee;
whichever is greater, but there should be a minimum of two Independent Directors
present.

3.4 A duly convened meeting of the Committee at which the requisite quorum is present
shall be competent to exercise all or any of the authorities, powers and discretions
vested in or exercisable by the Committee.

3.5 The Chairperson of the Committee shall be present at Annual General Meeting to
answer shareholder queries.

3.6 The Committee shall have a direct and independent line of reporting by the Head of
Internal Audit function of the Company.

3.7 While invitees to the Committee shall have a right to be heard at the meetings, they
shall not have a right to vote. The right to vote shall vest only with the members of the
Committee.

3.8 The Committee may meet with the representatives of the Company’s subsidiaries
(especially those whose shares are not listed) and shall review their financial
statements (in particular the investments made by them). The Committee may
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 additionally review the system of internal control and financial reporting present in
these subsidiaries for their integrity and adequacy.

3.9 The Committee shall meet periodically with management, the internal auditor and the
external auditor, in separate executive sessions, as deemed fit by it.

3.10 The Committee shall meet the Credit Rating Agencies (CRAs) registered with SEBI,
at least once in a year, to discuss issues including related party transactions, internal
financial control and other material disclosures made by the management, which have
a bearing on rating of the listed NCDs.

4. Authority and Power

4.1 The Committee shall, subject to the approval of the Board, have the power to:
• Investigate any activity within the scope of this Charter or referred to it by the
Board for this purpose
• Requisition the presence of and seek information from any employee.
• Obtain professional advice from external sources.
• Secure attendance of outsiders with relevant expertise, if it considers necessary.
• Have full access to information contained in the records of the Company.
• To determine the provision of appropriate funding by the Company for
compensation to the external auditors, other advisors/experts that the Committee
chooses to engage and other ordinary administrative expenses of the Committee.

5. Functions

The functions of the Committee shall include the following:

5.1 Financial Statements

a. Oversight of the Company’s financial reporting process and disclosure of its

financial information, to ensure that the financial statements are correct, sufficient
& credible.

b. Discuss and review with the management and auditors the annual / half yearly /
quarterly financial statements and auditor’s report thereon before submission to
the Board, with particular reference to:
∼ Matters required to be included in the Directors’ Responsibility Statement in
the Board’s report in terms of clause (c) of sub-section (3) of Section 134 of
the Companies Act, 2013.
∼ Disclosure under Management Discussion and Analysis of financial condition
and results of operations.
∼ Review of accounting policies, practices & standards and reasons for change,
if any.
∼ Major accounting entries involving estimates based on exercise of judgment
by management.
∼ Qualifications/ modified opinion in the draft audit report.

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 ∼ Significant adjustments made in the financial statements arising out of audit
findings.
∼ Compliance with listing and other legal requirements relating to financial
statements.
∼ Disclosure of related party transactions.
∼ The effect of regulatory and accounting initiatives as well as off-balance-
sheet structures, on the financial statements.
∼ Company’s earnings press releases, as well as financial information and
earnings guidance, if any, provided to analysts and rating agencies.

c. Scrutinize inter-corporate loans and investments.

d. Review the statement of uses/applications of funds by major category and the

statement of funds utilized for purposes other than as mentioned in the offer
document / prospectus / notice and the report submitted by the monitoring agency
monitoring the utilization of proceeds of a public or rights or private placement
issue, deviations, if any from disclosures made in the offer documents under
Regulations 32 (1) and 32 (7) of the Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations, 2015 and make
appropriate recommendations to the Board to take up steps in this matter. These
reviews are to be conducted till the money raised through the issue has been fully
spent.

e. Provide approval for appointment of the CFO (i.e. whole-time Finance Director or
any other person leading the Finance function or discharging responsibilities
related to that function) after assessing the qualifications, experience and
background, etc. of the candidate.

f. Review financial information required to be provided to any government body or

public constituencies including media and the analyst community.

g. Disclosures from the Chief Executive Officer and Chief Financial Officer made in
connection with the certifications as regards the Company’s quarterly and annual
reports filed with the SEC under Section 302 of the Sarbanes-Oxley Act of 2002
of:-
∼ all significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to
adversely affect the Company’s ability to record, process, summarize and
report financial data; and
∼ any fraud, whether or not material, that involves management or other
employees who have significant role in the Company’s internal controls.

h. Review utilization of loans and/ or advances from/investment by the holding

company in the subsidiary exceeding rupees 100 crore or 10% of the asset size of
the subsidiary, whichever is lower including existing loans / advances / investments
existing as on the date of coming into force of this provision.

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 i. consider and comment on rationale, cost-benefits and impact of schemes involving
merger, demerger, amalgamation etc., on the Company and its shareholders.

j. Review the system for storage, retrieval, display or printout of books of accounts
maintained in electronic mode during the required period under law.

5.2 External / Independent / Statutory Auditors

a. Provide recommendations to the Board for the appointment, re-appointment,

remuneration and terms of appointment of the auditors of the Company. This would
involve recommending the name of an individual or a firm as an external statutory
auditor for consideration by the Board and further recommendation to the
shareholders. While making recommendations, the Committee shall consider:
∼ whether the qualifications and experience of the auditors are commensurate with
the size and requirements of the Company.
∼ any order or pending proceeding relating to matters of professional conduct against
the proposed auditor before the Institute of Chartered Accountants of India or any
competent authority or any Court.

To make these recommendations, the Committee may also call for any information
from the proposed auditors as it may deem fit.

b. Review and monitor the auditor’s independence and performance and effectiveness
of the audit process.

c. Hold timely discussions with external/ statutory auditors regarding:

o The nature, scope and staffing of Audit as well as post-Audit discussion / review
for dealing with any area of concern prior to commencement of audit.
o All critical accounting policies and practices.
o Significant financial reporting issues and judgments made in connection with
preparation of the Company’s financial statements.
o Other material written communications between the external auditors and the
management, including, but not limited to, the management letter and schedule of
unadjusted differences.

d. Provide for Pre-approval of all audit and non-audit services to be rendered by the
external auditors of the Company
o To adopt a policy for review and pre-approval of all audit and non-audit services to
be provided by the external auditors, so as to ensure their independence and to
monitor adherence to the said Policy.
o The authority to grant pre approvals may be delegated to one or more designated
members of the Audit Committee whose decisions will be presented to the full Audit
Committee at its forthcoming meeting.

e. Provide approval of payment to statutory auditors for any other services rendered by
the statutory auditors.

f. Review, with the management, the auditor’s report on the annual financial statements
covering the
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 o Assessment of the accounting principles used and the significant estimates made
by management,
o Compliance with accounting and auditing standards,
o Evaluation of the overall financial statement presentation,
o Observations or comments of the auditors on financial transactions or matters
which have any adverse effect on the functioning of the Company,
o Matters arising out of disqualification of any Director as per legal and regulatory
provisions,
o Any qualification, reservation or adverse remark in the auditor’s report relating to
the maintenance of accounts and other connected matters,
o Adequacy and operating effectiveness of internal financial control systems,
o Other matters which are required to be included in the audit report as per regulatory
and legal provisions.

g. Review, with the external auditors, certain information relating to the auditor's
judgments about the quality, of the Company's accounting principles as applied to its
financial reporting. This review would typically include discussion on :
o such matters as the consistency of application of Company’s accounting policies,
clarity & completeness of the Company’s financial statements and any related
disclosures.
o such items that have a significant impact on the representational faithfulness,
verifiability & neutrality of the accounting information included in the financial
statements.

h. Review and suitably reply to the report(s) forwarded by the auditors on the matters
where the auditors have sufficient reasons to believe that an offence involving fraud
is being or has been committed against the Company by officers or employees of the
Company.

i. Review with the external auditor, any audit problems or difficulties and the
management’s response thereto.

j. Resolve any disagreements of the external auditor with the management regarding
financial reporting.

k. Preferably review on an annual basis (in conjunction with management of the

Company) a report by the external auditors, describing:
o The internal quality control procedures followed by the external auditor.
o Any material issues raised by the most recent internal quality control review or peer
review of the external audit firm, or by any inquiry or investigation conducted by
any governmental / professional authorities, within the preceding 5 years, with
respect to one or more independent audits carried on by the firm and the steps
taken to deal with such issues.
o Nature of any relationship existing between the Company and the external auditor
and assessment of independence.

l. Establish clear hiring policies for employees or former employees of external

auditors and monitor the implementation of such policies.

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5.3 Internal Audit

a. Review the adequacy of the internal audit function, if any, including the structure
of the internal audit department (including appointment of outsourced Internal
Audit Firms), staffing and seniority of the official heading the department, the
reporting structure coverage and budget, scope, coverage and frequency of
internal audit.

b. Review the performance of the internal audit department, including the objectivity
and authority of its reporting obligation and results of internal audit.

c. Discuss with internal auditors (including outsourced internal audit firms) any
significant findings and follow-up thereon.

d. Review findings of the internal investigations by internal auditors into matters

where there is suspected fraud / irregularity / failure of internal control systems of
a material nature and reporting the matter to the Board.

e. Review the appointment, removal, performance and terms of remuneration of the

Chief Internal Auditor (this also includes review of appointment, removal,
performance and terms of remuneration of any outsourced internal audit firms).

f. Review the regular internal reports to management prepared by the internal audit
department and the outsourced internal audit firms, as well as Management’s
response on the same.

g. Review internal audit reports relating to internal control weaknesses.

h. Pre-approve any non-audit related work allotment, which may conflict with the
role & independence of the Chief Internal Auditor and other internal audit team
members and the outsourced internal audit firms.

5.4 Cost Audit

a. Recommend to the Board, the appointment, re-appointment, removal of the cost

auditors, fixation of audit fee (which shall be subsequently ratified by
shareholders) (Rule 14 of CA (Audit and Auditors) Rules, 2014), nature and scope
of cost audit and also approve rendering of any other services by the cost auditors
and fees pertaining thereto. It shall ensure that the Cost Auditors are
independent, have arm’s length relationship and are also not otherwise
disqualified at the time of their appointment or during their tenure. In order that
‘arm’s length relationship’ is in fact ensured, the Cost Auditors, appointed under
sub-section (3) of Section 148 of the Companies Act, 2013, shall not provide any
other services to the Company relating to (i) design and implementation of cost
accounting system; or (ii) the maintenance of cost accounting records, or (iii) act
as internal auditor, whether acting individually, or through the same firm or
through other group firms where he or any partner has any common interest.

b. Review and recommend the cost audit report to the Board.

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5.5 Internal Control

a. Review, with the management, external and internal auditors and the outsourced
internal audit firms, the quality, adequacy & effectiveness of the Company’s
internal control system and any significant deficiencies or material weakness in
the internal controls.

b. Review management letters / letters of internal control weaknesses issued by

statutory auditors.

c. Evaluation of Internal financial controls.

d. Review management’s report on internal control and statutory auditor’s

attestation on management’s assertion.

5.6 Risk Management

a. Evaluate on a regular basis the adequacy and efficacy of the risk management
systems.

b. Discuss with the management and provide oversight in regard to the Company’s
enterprise-wide risk assessment and management, including appropriate
guidelines to govern the process. Specifically it is preferable that:
∼ On a regular basis there should be a review of the enterprise risks (strategic,
financial, operational & environmental) and mitigation strategies deployed to
manage and bring these risks to an acceptable level.
∼ There should be a review and endorsement of the treasury policy that defines
the Company’s major financial risk exposures and appetite for financial risks
and outlines the appropriate mitigation strategies to minimize risks arising out
of foreign currency transactions, interest fluctuations, borrowings, etc.
∼ There should be a review of the risk disclosure statements in all public
documents or disclosures.

5.7 Whistleblowing / Vigil mechanism

a. The Committee shall maintain an oversight of the adequacy of the whistle

blowing/ vigil mechanisms. It shall review the Company’s arrangements for its
employees, stakeholders and Directors to raise concerns, in confidence, about
suspected wrongdoing in the Company on matters including those related to
ethics, compliance, financial reporting, accounting and auditing.

b. The Committee shall ensure that these arrangements allow independent

investigation of such matters and appropriate follow up action.

c. The whistle blower mechanism shall provide for adequate safeguards against
victimization of persons who use such mechanism and make provision for direct

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 access to the chairperson of the Audit Committee on appropriate or exceptional
cases.

5.8 Compliance with Regulatory Requirements and Policies

a. Review the reasons for substantial defaults in the payments to the depositors,
debenture holders, shareholders (in case of non-payment of declared dividends)
and creditors.

b. Review the valuation of undertakings or assets of the Company, wherever it is

necessary.

c. Oversee compliance with legal and regulatory requirements and also the Tata
Code of Conduct (“TCoC”) for the Company and its subsidiaries.

d. The Committee shall be provided reports by the management on any legal and
compliance matters as may be statutorily required, any material reports or
inquiries from regulatory or governmental agencies on the financial statements of
the Company, and such matters shall be reviewed with any internal or external
counsel as deemed appropriate by the Committee.

e. Review the effectiveness of the system for monitoring compliance with laws and
regulations and the results of management's investigation and follow-up
(including disciplinary action) of any instances of non-compliance.

f. Review the findings of any examinations by regulatory agencies and any auditor
observations.

g. Review at periodic intervals all pending litigations initiated by or against the

Company.

5.9 Related Party Transactions

a. Provide prior approval for proposed transactions or any subsequent material

modification of transactions of the Company with Related Parties.

b. Define “material modifications” of the transactions and disclose it as part of the

policy on materiality of related party transactions and on dealing with Related
Party Transactions.

5.10 Subsidiary Company Oversight

a. Review the financial statements, in particular, the investments made by the

unlisted subsidiary companies.

b. The Chief Internal Auditor of the Company shall also be responsible for the
Internal Audit and Risk Management of all subsidiary companies and, therefore,
he shall report thereon to the Committee. (This will be carried out through periodic
assessments either directly or through an outsourced / co-sourced arrangement).
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 c. The following functions shall be reviewed by the Committee of a material
subsidiary Company along with the holding Company’s Audit Committee:
o Statutory Audit:
∼ Appointment of the auditors
∼ Fixing of remuneration of the auditors
∼ Pre-approval of services to be requisitioned
∼ Compliance regarding ‘prohibited service’, as defined in the policy
∼ Financial Statements
∼ Investments and significant transactions
∼ Review / oversight of the work done by the auditors.
o Internal Audit:
∼ Review the adequacy of structure and function of the Internal Audit, status
of audit plan and its execution.
∼ Review key Internal Audit observations along with management response
thereto.
o Review the status on compliance with the Tata Code of Conduct.
o Review the adequacy of risk management and the control environment.

5.11 Other Functions

a. Perform other activities related to this Charter as requested by the Board of

Directors.

b. The Committee shall review compliance with the provisions of these regulations
at least once in a financial year and shall verify that the systems for internal
control are adequate and are operating effectively.

6. Reporting

6.1 The annual report of the Company shall disclose the composition of the Committee,
brief description of the scope of the Committee Charter, names of members,
Chairperson, meetings, attendance, etc.

6.2 The Committee will report and update the Board periodically, on various matters that
it has considered including
∼ The quality or integrity of the Company’s financial statements;
∼ The Company’s compliance with legal or regulatory requirements;
∼ The performance of the External Auditor as well as the Internal Audit Function;
and
∼ The findings of any internal investigations by the Internal Auditors into matters
where there is suspected fraud, irregularity or failure of Internal control systems
of a material nature.

6.3 The Audit Committee will record its recommendations to the Board which will be
incorporated in the information placed before the Board. The recommendations of the
Committee on any matter would need to be considered by the Board. Where the

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 Board has not accepted any recommendation of the Audit Committee, the same shall
be disclosed in the Board’s report along with the reasons therefor.

7. Compensation

7.1 Members of the Committee may receive such sitting fees and/ or commission, if any,
for their services as Committee members, as may be determined by the Board in its
sole discretion.

8. Evaluation

8.1 The Committee shall undergo an annual self-evaluation of its performance and report
the result to the Board of Directors. It shall recommend any changes it considers
necessary for the approval of the Board. The Committee may facilitate/conduct such
evaluation & reviews in such manner as it deems appropriate. It shall confirm annually
to the Board that the responsibilities outlined above have been carried out.

8.2 Indicative areas for evaluation as part of this exercise include:

∼ Effectiveness of the committee
∼ Structure of the committee and meetings
∼ Independence of the committee from the Board
∼ Contribution to decisions of the Board

9. Subsidiary Companies

9.1 Listed subsidiary companies of the Company shall also form Audit Committees, as
applicable. In such cases, where there is a requirement to form separate charters for
subsidiary companies, such Committees (as required by law or for business reasons)
may consider and adopt the policies, procedures and processes laid down by the
Audit Committees of the holding company. Further, critical issues may be referred by
the Audit Committee of the subsidiary to the Audit Committee of the holding Company.

9.2 The minutes of the Audit Committee of the material subsidiary companies may be
provided to the members of the Audit Committee of the holding company for
information and also to enable them to provide any advice that is appropriate.

10. Review of Charter

10.1 The adequacy of this Charter shall be reviewed and reassessed by the Committee,
at least annually and appropriate recommendations shall be made to the Board to
update the Charter based on the changes that may be brought about due to any
regulatory amendments or otherwise.

Date of approval by Audit Committee: July 26 and 27, 2022

Amended by the Board of Directors on: July 27, 2022
Effective Date: July 27, 2022

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