annual-report-FY2021

68 COMPANY OVERVIEW BOARD’S REPORT MANAGEMENT DISCUSSION AND ANALYSIS CORPORATE GOVERNANCE BUSINESS RESPONSIBILITY REPORT STANDALONE ACCOUNTS CONSOLIDATED ACCOUNTS Termination of Joint Venture discussions with Ford Motor Company The Company and Ford Motor Company Inc., USA (‘Ford’) mutually determined that they will not complete a previously announced Joint Venture between the companies. This followed the passing of the expiration date of the definitive agreements signed between the two companies. This outcome was driven by fundamental changes in global economic and business conditions since the agreement was first announced. Those changes influenced separate decisions by Ford and the Company to reassess their respective capital allocation priorities. Ssangyong Motor Company (“Ssangyong”) During the year, the Board of your Company decided not to make any further equity investment in Ssangyong Motor Company, a subsidiary in South Korea. Pursuant to the decision, Ssangyong management initiated a search for a potential investor to invest equity. During the year under review, the Members of the Company have, by way of a Postal Ballot, approved the proposal of Transfer/Dilution of stake in Ssangyong and/or cessation of control of the Company over Ssangyong. Following a global search, one North America based investor expressed an interest to invest and acquire a majority stake in Ssangyong. However, a term sheet could not be concluded due to regulatory constraints. Following Ssangyong’s inability to pay bank loans which were due in December, 2020, Ssangyong applied to Korean Courts for commencement of rehabilitation procedure. The Court allowed three months to Ssangyong to arrive at a private investment agreement with the said investor. Since that could not be concluded within the stipulated time, the Court initiated rehabilitation process on 15 th April, 2021 and appointed a Court receiver who took over the day-to-day management of Ssangyong. An examiner appointed by the Court will determine whether Ssangyong should be sold as a going concern or liquidated. If the examiner recommends a sale, the receiver will oversee the preparation of a rehabilitation plan which may include a combination of capital reduction, debt waiver, debt-to-equity conversion and other similar actions. The rehabilitation plan is expected to be submitted to the Court by July, 2021. Pursuant to the admission in the Autonomous Restructuring Support (ARS) program and following the guidance under Ind AS 110 – Consolidated Financial Statements, the Company has ceased consolidating Ssangyong as a subsidiary from 28 th December, 2020 and has classified the investment to be measured at fair value as per Ind AS 109 – Financial instruments. Accordingly, the losses from operations, resultant gain on deconsolidation of Ssangyong and impairments/ provisions for the exposures of the Company to Ssangyong have been recognised and presented under ‘Profit/(loss) before tax from discontinued operation’ in the Consolidated Statement of Profit and Loss. However, Ssangyong continues to be a subsidiary of the Company under the Companies Act, 2013. 100% shareholding in Meru through primary infusion and secondary share purchase In December 2019, your Company acquired 36.63% of the equity share capital along with control of Meru Travel Solutions Private Limited (“Meru”), holding company of the Meru Group. In January 2021, your Company increased its stake in Meru to 43.20% by way of a primary investment of Rs. 15 crores in Meru. Further to this and with the intent of increasing the focus on Mobility Sector, in May 2021 your Company acquired the balance stake from the erstwhile shareholders of Meru for Rs. 97 crores. Meru also redeemed its preference shares held by its then shareholder through proceeds of fresh issue on rights basis which was subscribed by your Company for Rs. 3 lacs. Post the above transactions, Meru is now a wholly owned subsidiary of your Company. D. INTERNAL FINANCIAL CONTROLS The Corporate Governance Policies guide the conduct of affairs of your Company and clearly delineate the roles, responsibilities and authorities at each level of its governance structure and key functionaries involved in governance. The Code of Conduct for Senior Management and Employees of your Company (the Code of Conduct) commits Management to nancial and accounting policies, systems and processes. The Corporate Governance Policies and the Code of Conduct stand widely communicated across your Company at all times. Your Company’s Financial Statements are prepared on the basis of the Signi cant Accounting Policies that are carefully selected by Management and approved by the Audit Committee and the Board. These Accounting policies are reviewed and updated from time to time.