Corporate Governance Board of Directors Fords corporate governance principles, code of ethics and charters for each Board

d committee all publicly available in the corporate governance section of the Ford website set the framework for Fords Board of Directors. Fords Board addresses significant business issues as a full group and through five committees: Audit, Compensation, Finance, Nominating and Governance, and Sustainability. The Sustainability Committee was formed in 2008 from the former Environment and Public Policy Committee, reflecting the evolution of its responsibilities and the Companys challenges and opportunities. The principal functions of the Sustainability Committee are as follows:

Assist management in the formulation and implementation of policies, principles and practices to foster the sustainable growth of the Company on a worldwide basis. Sustainable growth means the ability to meet the needs of current customers while taking into account the needs of future generations. Sustainable growth also encompasses a business model that creates value consistent with the long-term preservation and enhancement of financial, environmental and social capital. Assist management in the formulation and implementation of policies, principles and practices to permit the Company to respond to evolving public sentiment and government regulation in the area of motor vehicle and stationary source emissions, especially in the area of greenhouse gas emissions, fuel economy and carbon dioxide regulation. Assist management in setting strategy, establishing goals and integrating sustainability into daily business activities across the Company. Review on a continuing basis new and innovative technologies that will permit the Company to achieve sustainable growth and Company actions to protect those technologies.

Review on a continuing basis partnerships and relationships, both current and proposed, with customers and others that support the Companys sustainable growth. Review on a continuing basis the Companys communication and marketing strategies relating to sustainable growth. During 2011, eight Directors served on the Sustainability Committee, which is chaired by Dr. Homer Neal, an independent director. Fords Board of Directors met nine times and the Sustainability Committee met four times. The Boards Nominating and Governance Committee considers several qualifications when considering candidates for the Board. Among the most important qualities directors should possess are the highest personal and professional ethical standards, integrity and values. They should be committed to representing the long-term interests of all shareholders. Directors must also have practical wisdom, mature judgment and objectivity. Ford recognizes the value of diversity and we endeavor to have a diverse Board, with experience in business, government, education and technology, and in areas that are relevant to the Companys global activities. Under New York Stock Exchange (NYSE) Listed Company rules, a majority of our directors must be independent directors. The NYSE rules also provide that no director can qualify as independent unless the Board affirmatively determines that the director has no material relationship with the listed company. Fords standards in determining whether or not a director has a material relationship with the Company are contained in the Companys Corporate Governance Principles. Based on Fords standards, 13 of the Companys current 16 Directors are independent. Two of Fords Directors are women, one Director is African-American and one Director is Hispanic. Each Board member participates in an annual assessment of the effectiveness of the Board and the Committees on which he or she serves. We have established a procedure for shareholders to submit accounting and other concerns to independent directors and to send other communications to the Board.

Corporate Governance Report for the year 2010-11 (as required under Clause 49 of the Listing Agreements entered into with the Stock Exchanges) 1. The Companys Corporate Governance Philosophy The Company has set itself the objective of expanding its capacities and becoming globally competitive in its business. As a part of its growth strategy, the Company believes in adopting the best practices that are followed in the area of Corporate Governance across various geographies. The Company emphasises the need for full transparency and accountability in all its transactions, in order to protect the interests of its stakeholders. The Board considers itself as a Trustee of its Shareholders and acknowledges its responsibilities towards them for creation and safeguarding their wealth.In accordance with the Tata Steel Group Vision, Tata Steel Group (the Group) aspires to be the global steel industry benchmark for value creation and corporate citizenship. The Group expects to realise its Vision by taking such actions as may be necessary in order to achieve its goals of value creation, safety, environment and people. CORPORATE GOVERNANCE The Company has a non-executive Chairman and the number of Independent Directors is 50% of the total number of Directors. As on 31st March, 2011, the Company has 12 Directors on its Board, of which 6 Directors are independent. The number of Non-Executive Directors (NEDs) is more than 50% of the total number of Directors. The Company is in compliance with the Clause 49 of the listing Agreement pertaining to compositions of directors.None of the Directors on the

Board is a Member on more than 10 Committees and Chairman of more than 5 Committees (as specified in Clause 49), across all the companies in which he is a Director. The necessary disclosures regarding Committee positions have been made by the Directors. The names and categories of the Directors on the Board, their attendance at Board Meetings during the year and at the last Annual General Meeting, as also the number of Directorships and Committee Memberships held by them in other companies are given below : Five Board Meetings were held during the year 2010-11 and the gap between two meetings did not exceed four months. The dates on which the Board Meetings were held were as follows : 9th April, 2010, 26th May, 2010, 12th August, 2010, 12th November, 2010 and 15th February, 2011. Dates for the Board Meetings in the ensuing year are decided well in advance and communicated to the Directors. Board Meetings are held at the Registered Office of the Company. The Agenda along with the explanatory notes are sent in advance to the Directors. Additional meetings of the Board are held when deemed necessary by the Board.The information as required under Annexure IA to Clause 49 is being made available to the Board.The Board periodically reviews compliance reports of all laws applicable to the Company. Steps are taken by the Company to rectify instances of non-compliance, if any.During 2010-11, the Company did not have any material pecuniary relationship or transactions with Non-Executive Directors, other than Dr. J. J. Irani and Mr. B. Muthuraman to whom the Company paid retiring benefits aggregating to ` 43.77 lakhs and` 60.30 lakhs, respectively. The Company has adopted the Tata Code of Conduct for Executive Directors, Senior Management Personnel and other Executives of the Company. The Company has received confirmations from the Managing Director as well as Senior Management Personnel regarding compliance of the Code during the year under review. It has also adopted the Tata Code of Conduct for Non-Executive

Directors of the Company. The Company has received confirmations from the Non-Executive Directors regarding compliance of the Code for the year under review. Both the Codes are posted on the website of the Company.Hundred and fourth annual report 2010-11

Audit Committee The Company had constituted an Audit Committee in the year 1986. The scope of the activities of the Audit Committee is as set out in Clause 49 of the Listing Agreements with the Stock Exchanges read with Section 292A of the Companies Act, 1956. The terms of reference of the Audit Committee are broadly as follows : a. To review compliance with internal control systems; b. To review the findings of the Internal Auditor relating to various functions of the Company; c. To hold periodic discussions with the Statutory Auditors and Internal Auditors of the Company concerning the accounts of the Company, internal control systems, scope of audit and observations of the Auditors/Internal Auditors; d. To review the quarterly, half-yearly and annual financial results of the Company before submission to the Board; e. To make recommendations to the Board on any matter relating to the financial management of the Company, including Statutory & Internal Audit Reports; f. Recommending the appointment of statutory auditors and branch auditors and fixation of their remuneration. Mr. Subodh Bhargava, Chairman of the Audit Committee was present at the Annual General Meeting held on 13th August, 2010.

Remuneration Committee The Company had constituted a Remuneration Committee in the year 1993. The broad terms of reference of the Remuneration Committee are as follows : a. Review the performance of the Managing Director and the Whole-time Directors, after considering the Companys performance. b. Recommend to the Board remuneration including salary, perquisites and commission to be paid to the Companys Managing Director and Whole-time Directors. c. Finalise the perquisites package of the Managing Director and Whole-time Directors within the overall ceiling fixed by the Board. d. Recommend to the Board, retirement benefits to be paid to the Managing Director and Whole-time Directors under the Retirement Benefit Guidelines adopted by the Board. The Remuneration Committee also functions as the Compensation Committee as per SEBI guidelines on the Employees Stock Option Scheme. The Company, however, has not yet introduced the Employees Stock Option Scheme. The composition of the Remuneration Committee and the details of meetings attended by the Directors are given below : The Chairman of the Remuneration Committee, Mr. Suresh Krishna was present at the Annual General Meeting held on 13th August, 2010The Company has complied with the non-mandatory requirement of Clause 49 regarding the Remuneration Committee. Remuneration Policy The Company while deciding the remuneration package of the senior management members takes into consideration the following items :

(a) employment scenario (b) remuneration package of the industry and (c) remuneration package of the managerial talent of other industries. The annual variable pay of senior managers is linked to the performance of the Company in general and their individual performance for the relevant year measured against specific Key Result Areas, which are aligned to the Companys objectives. The Non-Executive Directors (NEDs) are paid remuneration by way of Commission and Sitting Fees. In terms of the shareholders approval obtained at the AGM held on 5th July, 2006, the Commission is paid at a rate not exceeding 1% per annum of the profits of the Company (computed in accordance with Section 309(5) of the Companies Act, 1956). The distribution of Commission amongst the NEDs is placed before the Board. The Commission is distributed on the basis of their attendance and contribution at the Board and certain Committee Meetings as well as time spent on operational matters other than at the meetings.The Company pays sitting fees of ` 20,000 per meeting to the NEDs for attending the meetings of the Board, Executive Committee of the Board, Remuneration Committee, Audit Committee, Safety, Health and Environment Committee and Committees constituted by the Board from time to time. For other meetings, viz. Investors' Grievance Committee and Ethics and Compliance Committee, the Company pays to the NEDs sitting fees of ` 5,000 per meeting.Hundred and fourth annual report 2010-11 The Company pays remuneration by way of salary, perquisites and allowances (fixed component) and commission (variable component) to Managing and Whole-time Directors. Salary is paid within the range approved by the Shareholders. Annual increments effective 1st April each year, as recommended by the Remuneration Committee, are approved by the Board. The ceiling on perquisites and allowances as a percentage of salary, is fixed by the Board. Within the prescribed ceiling, the perquisites package is approved by the Remuneration Committee. Commission is calculated with reference to net profits of the

Company in a particular financial year and is determined by the Board of Directors at the end of the financial year based on the recommendations of the Remuneration Committee, subject to overall ceilings stipulated in Sections 198 and 309 of the Companies Act, 1956. Specific amount payable to such directors is based on the performance criteria laid down by the Board which broadly takes into account the profits earned by the Company for the year.Details of remuneration for 2010-11 Shareholders Committee An Investors Grievance Committee was constituted on 23rd March, 2000 to specifically look into the redressal of Investors complaints like transfer of shares, non-receipt of balance sheet and non-receipt of declared dividend, etc.One meeting of the Investors Grievance Committee was held on 12th November, 2010.The composition of the Investors Grievance Committee is given below Committees In addition to the above Committees, the Board has constituted 5 more Committees, viz. Executive Committee of the Board, the Nomination Committee, Committee of Directors, the Ethics and Compliance Committee and Safety, Health and Environment Committee.The terms of reference of the Executive Committee of the Board (ECOB) are to approve capital expenditure schemes and donations within the stipulated limits and to recommend to the Board, capital budgets and other major capital schemes, to consider new businesses, acquisitions, divestments, changes in organisational structure and also to periodically review the Companys business plans and future strategies. Disclosures i) The Board has received disclosures from key managerial personnel relating to material, financial and commercial transactions where they and/or their relatives have personal interest. There are no materially significant related party

transactions which have potential conflict with the interest of the Company at large. ii) The Company has complied with the requirements of the Stock Exchanges, SEBI and other statutory authorities on all matters relating to capital markets during the last three years. No penalties or strictures have been imposed on the Company by the Stock Exchanges, SEBI or other statutory authorities relating to the above. iii) The Company has adopted a Whistle Blower Policy and has established the necessary mechanism in line with Clause 7 of the Annexure 1D to Clause 49 of the Listing Agreement with the Stock Exchanges, for employees to report concerns about unethical behaviour. No personnel has been denied access to the Ethics Counsellor/Chairman of the Audit Committee. iv) The Company has fulfilled the following non-mandatory requirements as prescribed in Annexure 1D to Clause 49 of the Listing Agreement with the Stock Exchanges : a) The Company has set up a Remuneration Committee. Please see para 4 for details. b) The Company has moved towards a regime of unqualified financial statements. Reconciliation of Share CapitalA qualified practicing Company Secretary carried out a Share Capital audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. The audit confirms that the total issued/paid up capital is in agreement with the total number of shares in physical form and the total number of dematerialised shares held with NSDL and CDSL.

Corporate governance: basic stance Based on its fundamental corporate philosophy, Honda is working to enhance corporate governance as one of its most important management issues. Our aim is to have our customers and society, as well as our shareholders and investors, place even greater trust in us and to ensure that Honda is a company that society wants to exist. Management structure Board of Directors The Board of Directors consists of 20 directors, including two outside directors, and determines important matters that are related to business execution or that are designated by law, and supervises business execution. In June 2005, Honda introduced an operating ofcer system aiming at strengthening its business execution and improving exibility in decision-making at the Board of Directors. Honda has also increased the number of outside directors to strengthen the supervisory functions of the Board of Directors.The Board of Directors met nine times in scal 2006. Board of Corporate Auditors The Board of Corporate Auditors consists of six corporate auditors, including three outside corporate auditors. In accordance with Honda auditing standards, auditing policies, apportionment of responsibilities and other such matters as determined by the Board of Corporate Auditors, each corporate auditor audits the directors execution of duties. Corporate auditors accomplish these audits through various means, including attending meetings of the Board of Directors and inspecting the state of the companys assets and liabilities. In addition, a Corporate Auditors Ofce has been established to provide direct support to the Board of Corporate Auditors. In scal 2006, the Board of Corporate Auditors met 14 times. The Board of Corporate Auditors has certied Shinichi Sakamoto, a Honda corporate auditor, as an audit committee nancial expert, as dened in

the rules of the Securities and Exchange Commission pursuant to Section 407 of the US Sarbanes-Oxley Act of 2002.In scal 2006, meetings between Hondas corporate auditors and its independent auditor were held on ve occasions. At those meetings, the independent auditor provided the corporate auditors with explanations and reports on accounting audit plans and results, and opinions were exchanged. The corporate auditors coordinate closely with the Audit Ofce, which is responsible for internal audits, with respect to audit policies and schedules. In scal 2006, corporate auditors and the Audit Ofce, either independently or in collaboration, conducted business audits of a total of 128 companies among Hondas Japan and overseas subsidiaries and afliates

Directors remuneration The total amount of remuneration and bonuses of directors and corporate auditors is determined according to criteria that reect their performance. Remuneration for directors and corporate auditors is paid based on criteria approved by the Board of Directors, and it is paid within the extent of the maximum amount resolved by the Ordinary General Meeting of Shareholders. Bonuses for directors and corporate auditors are paid based on decisions of the Ordinary General Meeting of Shareholders, taking into consideration the companys prots during the scal year, past bonuses paid and various other factors Decisions regarding director candidates Candidates for director are nominated and appointed by the Board of Directors. Candidates for corporate auditor are nominated and appointed by resolution of the Board of Directors, subject to agreement of the Board of Corporate Auditors. Accounting audits In order to ensure proper auditing of the companys accounts ,the Board of Corporate Auditors and the Board of Directors receive auditing reports based on the Commercial Codes Audit Special Exceptions Law (Company Law since scal

2007), the Securities and Exchange Law and the US Securities Exchange Act. In addition, they supervise the election of independent auditors, their remuneration and their non-audit services. In scal 2005, the company elected Ernst & Young Shin Nihon as its independent auditor under the Commercial Codes Audit Special Exceptions Law and the Securities and Exchange Law, and elected AZSA & Co. as its independent auditor under the US Securities Exchange Act. In scal 2006, the company elected AZSA & Co. as its independent auditor under Japanese laws, thus having the same independent auditor under both US and Japanese law, in order to ensure an efcient Group-wide auditing system.

Business execution system Organization Honda has six regional operations around the world to execute and develop business based on its fundamental corporate philosophy. These operations adopt long-term perspectives and maintain close ties with local communities .Hondas four business operationsmotorcycles, automobiles, power products and componentsformulate the medium and long-term plans for their business development, and each operation aims to maximize its business performance on a global basis. Each functional operationsuch as Customer Service Operations, Production Operations, Purchasing Operations, Business Management Operations and Business Support Operationssupports the other functional operations, with the aim of increasing Hondas effectiveness and efciencies. Research and development activities are conducted principally at Hondas independent subsidiaries. Honda R&D Co., Ltd., is responsible for research and development on products, while Honda Engineering Co., Ltd., handles research and development in the area of production technology. Honda proactively carries out research and development in advanced technologies with the aim of creating products that are distinctive and internationally competitive.

Business Execution Ofcer System Honda assigns a general manager from the Board of Directors or an operating ofcer to each regional, business and functional division, as well as to each research and development subsidiary. By ensuring swift, optimal decision-making in each region and workplace, Honda is building a highly effective and efcient business execution system. Corporate Governance Corporate Governance Corporate Governance Management Council Honda has established the Management Council, which consists of 10 Representative Directors. Along with discussing in advance the matters to be addressed at meetings of the Board of Directors, the Management Council discusses important management issues within the scope of authority conferred upon it by the Board of Directors. The Management Council met 22 times in scal 2006. Regional Operating Councils To enhance the independence of each regional operation and ensure swift decision-making, regional operating councils have been established at each regional operation to discuss important management issues in the region within the scope of authority conferred upon it by the Management Council. Internal control systems Fundamental approach To earn the trust of customers and society, Hondas divisions,under the guidance of their respective directors-in-charge,have frameworks in place to ensure a systematic approach to compliance and risk management. These include formulation of behavioral guidelines and procedures for self-assessment. Honda also has a system to support the initiatives of each division. Moreover, effective audits are carried out to monitor the execution status of each division.

Compliance system Honda has appointed a Compliance Ofcer, who is a director in charge of compliance-related initiatives. Other key elements of our compliance system include the Business Ethics Committee and the Business Ethics Improvement Proposal Line.

Business Ethics Committee Hondas Business Ethics Committee is chaired by the Compliance Ofcer and consists of directors and corporate ofcers. The Committee deliberates matters related to corporate ethics and compliance. It met four times in scal 2006. Business Ethics Improvement Proposal Ofce Honda places high priority on open communications. It has also set up the Business Ethics Improvement Proposal Ofce to receive suggestions related to corporate ethics issues. By devising appropriate responses to suggestions received, Honda is constantly working to enhance corporate ethics. The system is designed to ensure the protection of those who provide information, who can either use their real name or remain anonymous. The Business Ethics Committee supervises the operation of the Business Ethics Improvement Proposal Line and submits status reports to the Board of Corporate Auditors. Risk management system Each division works to address and mitigate its particular set of risks. In addition, the Honda Crisis Response Rules are designed to address company-wide crises, such as major natural disasters. Honda has appointed a Risk Management Ofcer, who is a director in charge of risk management-related initiatives. It has also established the Company-Wide Response Headquarters to address crisis situations.

Business audits The Audit Ofce is an independent supervisory department under the direct control of the President. This ofce audits the performance of each department and works to improve the internal auditing of afliates. Disclosure Committee The Disclosure Committee, which consists of members of the Board of Directors, deliberates matters related to the accuracy and appropriateness of corporate information to be disclosed in business results announcements and nancial report.