To the Members of Tata Global Beverages Limited
Your Directors are pleased to submit their fifty fourth report together with theaudited financial statements of the Company for the year ended March 31 2017.
Your Company has adopted Indian Accounting Standards (Ind AS) from April 1 2016 asnotified under Section 133 of the Companies Act 2013 read along with the Companies(Indian Accounting Standards) Rules 2015 as amended by the Companies (Indian AccountingStandards) Rules 2016. Accordingly the previous year's financials have been re-casted toconfirm with the requirements of Ind AS.
Rs. in Crores
|Particulars ||Consolidated ||Standalone |
| ||2016-17 ||2015-16 ||2016-17 ||2015-16 |
|Revenue from Operations ||6780 ||6637 ||3064 ||2987 |
|Profit from Operations before Other Income Finance Costs Depreciation and ||791 ||654 ||363 ||359 |
|Exceptional Items || || || || |
|Less : Depreciation ||(126) ||(116) ||(24) ||(23) |
|Profit from Operations before Other Income Finance Costs and Exceptional Items ||665 ||538 ||339 ||336 |
|Add: Other Income (Standalone results include intra-group dividends which are eliminated on consolidation) ||83 ||82 ||96 ||112 |
|Less : Finance Costs ||(91) ||(117) ||(49) ||(68) |
|Profit before exceptional items and taxes ||657 ||503 ||386 ||380 |
|Exceptional items (net) ||5 ||(333) ||- ||(63) |
|Profit before tax ||662 ||170 ||386 ||317 |
|Provision for tax ||(198) ||(200) ||(110) ||(90) |
|Profit after tax ||464 ||(30) ||276 ||227 |
|Share of net profit/(loss) in Associates and Joint Ventures ||(9) ||(7) ||- ||- |
|Profit for the year ||455 ||(37) ||276 ||227 |
|Attributable to: || || || || |
|Owners of the parent ||390 ||(5) ||276 ||227 |
|Non-Controlling Interest ||65 ||(32) ||- ||- |
|Retained Earnings - Opening Balance ||4102 ||4059 ||1406 ||1079 |
|Add: Profit for the year ||390 ||(5) ||276 ||227 |
|Add: Transfer from Debenture Redemption Reserves ||81 ||- ||81 ||- |
|Add: Realised gains on Equity Shares carried at fair value through OCI ||- ||328 ||- ||328 |
|Add: Adjustments with Other Equity ||3 ||(47) ||(18) ||(8) |
|Amount appropriated during the year: || || || || |
|Dividend including dividend tax paid during 2016-17 ||(167) ||(166) ||(168) ||(164) |
|Transfer to General Reserves ||(13) ||(67) ||- ||(56) |
|Retained Earnings - Closing Balance ||4396 ||4102 ||1577 ||1406 |
State of Company's Affairs Consolidated Performance
The consolidated revenue at prior year exchange rate grew by 3% aided by improvementsin both branded and non branded businesses. Improved performances were recorded in thebranded business mainly in EMEA and India with a strong performance by the non brandedbusiness. Profit before exceptional items and taxes reflected an improvement of 31% mainlydue to higher sales lower commodity costs good cost management and lower interest costs.Profit for the year at Rs. 455 crores is significantly higher than the prior year mainlydue to better operational performance and lower exceptional items. In the current yearexceptional items mainly include fair value gain determined as per Ind AS 103 business combination arising out of conversion of an overseas joint venture to asubsidiary pursuant to amendments in the operating agreement which have been largelyoffset by expenditure incurred on business reorganisation and impairment. The exceptionalitems in the previous year largely reflected non cash impairment losses relating tocertain businesses in Europe and US. In the year under review the Group decided to divestits stake in a joint venture in China and to restructure certain operations relating toits business in Eastern Europe.
In the prior year under Indian GAAP exceptional items included profit on sale ofcertain non core investments amounting to Rs. 328 crores which is reporteddirectly under Retained Earnings under Ind AS which explains the loss for the previousyear in the consolidated financial results.
The standalone revenue from operations for the year ended March 31 2017 at Rs.3064 crores was higher than the prior year. Sales of most major national brands as wellas across regional brands grew despite the effect of demonetisation which impacted salesduring the months of November and December 2016. Reported sales growth was lower due toprice decreases taken in major brands as commodity cost benefits were passed on tocustomers. Profit before tax at Rs. 386 crores reflected a good increase of 22% over prioryear mainly due to lower interest costs and lower impact of exceptional expenditure.Exceptional expenditure in the prior year mainly reflected provisions relating to theChina extraction business. Profit after tax also reflects a robust increase of 22%compared to prior year.
In the prior year under Indian GAAP exceptional items included profit on sale ofcertain non core investments amounting to Rs. 328 crores which is reporteddirectly under Retained Earnings under Ind AS.
The Company has decided to divest its stake in its joint venture in China ZhejiangTata Tea Extraction Company Limited and we are in the process of getting necessaryapprovals in China.
Your Directors are pleased to recommend for the approval of the shareholders a higherdividend of Rs.fi2.35 per share on the equity share capital of the Company for the yearended March 31 2017. The total outgo on account of dividend inclusive of taxes for2016-17 is Rs. 179 crores which represents a pay-out of 65% of the Company's standaloneprofits.
Pursuant to Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 (Listing Regulations) the dividend distribution policy duly approved bythe Board has been put up on the website of the Company and can be accessed at the link:www.tataglobalbeverages.com/investors/governance/ policies.
Transfer to Reserves
The Board of Directors approved to transfer 10% of the profit of 2016-17 to the GeneralReserves amounting to Rs. 27.60 crores in 2017-18.
The paid up Equity Share Capital as at March 31 2017 was Rs. 63.11 crorescomprising of 631129729 equity shares of Re. 1 each. During the year underreview your Company has not issued any shares with differential voting rights nor hasgranted any stock options or sweat equity. As on March 31 2017 none of the Directors ofthe Company hold instruments convertible into equity shares of the Company.
Review of Subsidiaries Associates and Joint Venture Companies
Pursuant to Section 129(3) of the Companies Act 2013 the consolidated financialstatements of the Company and its subsidiaries associates and joint ventures prepared inaccordance with the relevant Accounting Standard specified under Section 133 of theCompanies Act 2013 read with Rule 7 of the Companies (Accounts) Rules 2014 form part ofthis Annual Report. Pursuant to the provisions of said section a statement containing thesalient features of the financial statements of the Company's subsidiaries associates andjoint ventures in Form AOC-1 is given in this Annual Report. Further pursuant to theprovisions of Section 136 of the Companies Act 2013 the standalone and consolidatedfinancial statements of the Company along with relevant documents and separate accountsin respect of subsidiaries are available on the website of the Companywww.tataglobalbeverages.com.
The details of material changes in the nature of the business of some of thesubsidiaries (including associates and joint ventures) during 2016-17 are given in theManagement Discussion and Analysis (MD&A) attached. The impact of such changes asapplicable has been adequately disclosed in the financial statements.
Your Company has adopted a policy for determining material subsidiaries in terms ofRegulation 16(1)(c) of the Listing Regulations. The policy as approved may be accessed onthe Company's website at the link: www.tataglobalbeverages.com/investors/governance/policies.
Performance highlights of key operating subsidiaries associates and joint venturesSubsidiaries
Tata Global Beverages Group Ltd UK substantially reflects the financial performance ofthe Tetley business and other international brands. Revenue was higher than prior year by6% at prior year exchange rates. The growth is reflective of the improved sales in mostmajor markets in which it operates and due to the accounting of an entity as a subsidiaryin view of changes in the operating agreement. The operating profit also reflectsimprovement driven by improved sales effective cost management and favourable commoditycosts. Profit before tax was significantly better than the prior year because ofexceptional income in the current year. In the current year exceptional items mainlyrelate to fair value gain determined as per Ind AS 103 business combination arisingout of conversion of an overseas joint venture to a subsidiary. The company has inprinciple approved restructure of certain operations relating to its business in EasternEurope.
Tata Coffee Limited recorded a strong performance aided by a 10% improvement in salesand a 71% improvement in operating profit mainly aided by improved performances by instantcoffee and plantation operations. The Board of Directors of the company has recommended adividend of Rs. 1.75 per share which includes a special dividend of Rs. 0.25 per share tocommemorate the completion of 25 years since acquisition of controlling interest in TataCoffee Limited by your Company. The company is also setting up a state of the artgreenfield freeze dried coffee plant in Vietnam to further its growth agenda in thepremium instant coffee segment and strengthen its global footprint.
Eight O' Clock Coffee had a strong performance driven by improved operating profits dueto lower coffee commodity costs and good control over expenditure.
Tata Tea Extractions Inc.'s revenue and profit from operations grew by 9% and 34%respectively reflecting the improved realisations favourable sales mix and reduction incost.
Amalgamated Plantations Private Limited (APPL) India recorded higher revenues of 9%aided by higher production but the business was adversely impacted by lower realisations.Although better quality teas commanded an improved auction pricing the normal teas wereselling in the auction at prices lower than the levels in the prior year.
Kanan Devan Hills Plantation Company Private Limited (KDHP) India recorded animproved operating performance driven by higher productivity and better price realisation.Turnover increased by 18% and the company made profits for the year under review. EstateManagement Services Private Limited (EMSPL) Sri Lanka reported increase in consolidatedrevenue and significant increase in profit after tax due to good growth in palm oilbusiness supported by improvements in tea business.
NourishCo Beverages Limited India our joint venture with PepsiCo which has brandslike Himalayan Tata Water Plus and Tata Gluco Plus in its sales portfolio reported highervolume driven sales and lower operating losses compared to the previous year.
Tata Starbucks Private Limited India reported an increase in its revenues attributableto improved in-store performance cost and productivity initiatives coupled with thebenefit of additional stores opened during 2016-17. Various in-store initiatives had beenlaunched in the current year which encouraged customer engagement and created newoccasions for the customers to visit the stores. The company also reported a loweroperating loss in the year under review.
Companies which have become or ceased to be Subsidiaries Associates and Joint Ventures
The following are the changes in subsidiaries associates and joint ventures during2016-17:
Tata Waters LLC and Tata Coffee Vietnam Company Limited became subsidiaries ofyour Company;
Empirical Group LLC which was a joint venture has been converted into asubsidiary;
TRIL Constructions Limited ceased to be a subsidiary and became an associate ofyour Company within the meaning of the Companies Act 2013; There were no other changesduring 2016-17.
For further analysis on the Consolidated performance attention is invited to thesection on Management Discussion and Analysis notes to the consolidated financialstatements and Form AOC 1.
Human Resources and Industrial Relations
Results of the employee engagement survey conducted during 2016-17 have shownimprovement over earlier years. Key themes were identified and action plans created at alllevels to improve upon each theme. The HR function had also launched various initiativesto re-energise the organisation and to bring in a high performance culture. Highperformers were recognised across all geographies and customized programs were developedfor capability building across all levels to meet the current and future businesschallenges.
During the year under review industrial relations remained harmonious at all ouroffices and establishments.
Corporate Governance and MD&A
A detailed report on Corporate Governance is separately attached together with a reporton Management Discussion and Analysis (MD&A). The MD&A forms an integral part ofthis report and also covers the consolidated operations reflecting the global nature ofour business.
Vigil Mechanism / Whistle Blower Policy
The Company's vigil mechanism allows the Directors and employees to report theirconcerns about unethical behaviour actual or suspected fraud or violation of the code ofconduct /business ethics. The vigil mechanism provides for adequate safeguardsagainst victimisation of the Director(s) and employee(s) who avail this mechanism. AllDirectors and employees have access to the Chairman of the Audit Committee.
Internal Financial Controls
The Company has adequate systems for Internal Financial Controls which includesoperational controls and internal financial controls over financial reporting. These aredetailed in the Management Discussion and Analysis Report.
The Company's governance guidelines on Board effectiveness cover aspectsrelating to composition and role of the Board Chairman and Directors Board diversitydefinition of independence term of Directors retirement age and committees of the Board.The guidelines also cover key aspects relating to nomination appointment induction anddevelopment of Directors Directors remuneration oversight on subsidiary performancescode of conduct Board effectiveness reviews and various mandates of Board committees.
Selection and Procedure for Nomination and Appointment of Directors
The Company has a Nomination and Remuneration Committee (NRC) which is responsible fordeveloping competency requirements for the Board based on the industry and strategy ofthe Company. The Board composition analysis reflects in-depth understanding of theCompany including its strategies environment operations financial condition andcompliance requirements.
The NRC makes recommendations to the Board in regard to appointment of new Directors.The role of the NRC encompasses conducting a gap analysis to refresh the Board on aperiodic basis including each time a Director's appointment or re-appointment isrequired. The NRC is also responsible for reviewing the profiles of potential candidatesvis--vis the required competencies undertake a reference and due diligence and meetingof potential candidates prior to making recommendations of their nomination to the Board.The appointee is also briefed about the specific requirements for the position includingexpert knowledge expected at the time of appointment.
Criteria for determining qualifications positive attributes and independence of aDirector
In terms of the provisions of Section 178(3) of the Companies Act 2013 and Regulation19 of the Listing Regulations the NRC has formulated the criteria for determiningqualifications positive attributes and independence of Directors the key features ofwhich are as follows:
Qualifications The Board nomination process encourages diversity ofthought experience knowledge age and gender. It also ensures that the Board has anappropriate blend of functional and industry expertise.
Positive Attributes - Apart from the duties of Directors as prescribed in theCompanies Act 2013 the Directors are expected to demonstrate high standards of ethicalbehavior communication skills and independent judgment. The Directors are also expectedto abide by the respective Code of Conduct as applicable to them.
Independence - A Director will be considered independent if he / she meets thecriteria laid down in Section 149(6) of the Companies Act 2013 and Regulation 16(1)(b) ofthe Listing Regulations.
Annual Evaluation of the Board its Committees and Individual Directors
As required under the Companies Act 2013 and the Listing Regulations the Board ofDirectors conducts an annual evaluation of its own performance Board committees andindividual Directors. While making such evaluation inputs from all the Directors aretaken on the basis of criteria such as Board composition structure Board processes andtheir effectiveness information given to the Board etc. Various aspects such as committeecomposition structure effectiveness of committee meetings etc. are considered whileevaluating the performance of the Board committees after seeking inputs from the committeemembers.
The performances of the individual Directors are reviewed by the Board on the basis ofcriteria such as contribution at meetings their preparedness on the issues to bediscussed etc. Additionally the performance of the Chairman of the Board is alsoevaluated on key aspects of his role.
Pursuant to the provisions of Section 178(3) of the Companies Act 2013 and Regulation19 of the Listing Regulations the NRC has formulated a policy relating to theremuneration for the Directors key managerial personnel and other employees. Thephilosophy for remuneration is based on the commitment of fostering a culture ofleadership with trust. While formulating this policy the NRC has considered the factorslaid down in Section 178(4) of the Companies Act 2013 which are as under:
That the level and composition of remuneration is reasonable and sufficient toattract retain and motivate Directors of the quality required to run the companysuccessfully;
Relationship of remuneration to performance is clear and meets appropriateperformance benchmarks; and
Remuneration to Directors key managerial personnel and senior managementinvolves a balance between fixed and incentive pay reflecting short and long-termperformance objectives appropriate to the working of the Company and its goals.
The key principles governing the Remuneration Policy are as follows:
Role played by the individual;
Reflective of size of the company complexity of the sector/ industry /Company's operations and the Company's capacity to pay;
Consistent with recognised best practices; and
Aligned to any regulatory requirements.
In accordance with the policy the Managing Director Executive Director KMPs andemployees are paid basic salary fixed salary benefits perquisites allowances andannual incentive remuneration / performance linked bonus subject to achievement of certainperformance criteria and such other parameters as may be considered appropriate from timeto time by the Board. The performance linked bonus would be driven by the outcomeof the performance appraisal process and the performance of the Company.
Remuneration for Independent Directors and Non-Independent Non-Executive Directors
The Non-Executive Directors including Independent Directors are paid sitting fees forattending the meetings of the Board and committees of the Board. The overall remuneration(sitting fees and commission) should be reasonable and sufficient to attract retain andmotivate Directors aligned to the requirements of the Company including considering thechallenges faced by the Company and its future growth imperatives. The remuneration shouldalso be reflective of the size of the Company complexity of the business and theCompany's capacity to pay the remuneration. The Company pays a sitting fee of Rs. 30000per meeting per Director for attending meetings of the Board Audit Nomination andRemuneration and Executive Committees. For meetings of all other committees of the Boarda sitting fee of Rs. 20000 per meeting per Director is paid. Within the ceiling of 1% ofnet profits of the Company computed under the applicable provisions of the Companies Act2013 the
Non-Executive Directors including Independent Directors are also paid a commission theamount whereof is recommended by the NRC and determined by the Board. The basis ofdetermining the specific amount of commission payable to a Non-Executive Director isrelated to his attendance at meetings role and responsibility as Chairman or member ofthe Board / Committees and overall contribution as well as time spent on operationalmatters other than at the meetings. The shareholders of the Company had approved paymentof commission to the Non-Executive Directors at the Annual General Meeting held on August26 2014 which is valid up to the financial year ended March 31 2019. No Stock optionhas been granted to the Non-Executive Directors.
Familiarisation programme for Independent Directors
The details for familiarisation of the Independent Directors are put up on the websiteof the Company. As required under Regulation 46(2)(i) of the Listing Regulations thedetails of familiarisation programmes conducted during 2016-17 is also put on theCompany's website and the same can be accessed at the linkwww.tataglobalbeverages.com/company/leadership/Board-of-Directors.
Number of meetings of the Board
The Board of Directors had held nine meetings during 2016-17. For furtherdetails please refer to the Corporate Governance Report which forms part of this AnnualReport.
The details pertaining to composition of Audit Committee are included in the CorporateGovernance Report which forms part of this Annual Report.
Significant and material orders passed by the Regulators or Courts
There are no significant and material orders passed by the Regulators / Courts thatwould impact the going concern status of the Company and its future operations.
Corporate Social Responsibility (CSR) and Sustainability initiatives
In compliance with Section 135 of Companies Act 2013 the Company has undertaken CSRactivities projects and programs excluding activities undertaken in pursuance of itsnormal course of business. The report on CSR activities as required under Companies(Corporate Social Responsibility Policy) Rules 2014 is given in Annexure 1 forming partof this Report. The CSR Policy may be accessed on the Company's website at the link www.tataglobalbeverages.com/investors/governance/policies.
During the year under review the Company spent Rs. 7.79 crores (2.94% of the averagequalifying net profits of last three financial years) on CSR activities on projectsqualifying as per Section 135 of the Companies Act 2013 duly approved by the CSRCommittee. In addition to the projects specified as CSR activities under section135 of Companies Act 2013 the Company has also carried out several other sustainability /responsible business initiatives and projects on a global scale.
The Natural Beverages Policy of the Company is the apex sustainability policy thatdefines the aspiration to be the consumer's first choice in sustainable beverageproduction and consumption. The sustainability pillars of the Company are SustainableSourcing Climate Change Water Management Waste Management and Community Development.The Company encourages its suppliers to use ecological and sustainable agriculturalpractices in tea production and has used 100% sustainably sourced tea for the Tetley brandin EMEA and CAA regions this year. The Company is also co-funding "Trustea" the India sustainable tea program that aims to sustainably transform Indian teaand has certified 370 million kgs of tea by December 2016 reaching over 400 teaestates and 350000 workers. Tata Global Beverages was awarded "Tata Innovista2016" award for Sustainable Plant Protection Formulation (S-PPF) to develop aportfolio of bio-pesticides and package of practices with 5 other Tata companies.
The Company is ranked in the A-list' of Climate Disclosure Leadership Index (CDLIIndia 2016) that measures the carbon footprint of all its beverage production unitsglobally. It has a four pronged climate change strategy focused on sustainable agriculturefor climate change adaptation sustainable forestry for climate change mitigation energyefficiency and renewable energy. The Company recognises that the right to water is aninternational human right and supports the right to water for everyone "tosufficient safe acceptable physically accessible and affordable water for personal anddomestic uses." The Company has initiated Project Jalodari' for rain waterharvesting or recharge in all Indian tea packeting centres. The Company is committed tooptimize consumer packaging make efficient use of resources and reduce environmentalimpact without compromising product quality and safety. The Eaglesclifie factory in UK isa zero waste to landfill unit and the goal is to replicate this in all beverageproduction units in the near future.
The Company respects and adheres to the Tata Group's philosophy of giving backto the community and acknowledges the role played by communities in the growth of itsbusiness. Tata Global Beverages focuses on women empowerment skill developmenteducation and health & nutrition for the development of the communities it operatesin. Tata Global Beverages and Tata Trusts have contributed $1 million to Smile Train aninternational children's charity for providing cleft repair surgery and comprehensivecleft care to 4000 children this year. Tata Global Beverages is co-funding a program byUNICEF (a United Nations Agency) and Ethical Tea Partnership
(ETP) for promoting child rights and child protection in tea gardens of Assam and hasreached 29000 adolescent girls and 28000 community members till the year under review.The Company provides affordable healthcare to 100000 community members every yearthrough High Range Hospital (formerly General Hospital) Munnar (Kerala) and The ReferralHospital and Research Centre (RHRC) Chubwa (Assam). It also collaborates with variousTata companies in activities and programs for volunteering and afirmative actions.
Particulars of employees
The information required under Section 197 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are given in Annexure 2which forms part of this report.
Pursuant to Section 197 (14) of the Companies Act 2013 the details of remunerationreceived by the Managing Director and the Executive Director from the Company's subsidiarycompany during 2016-17 are also given in Annexure 2 attached to this report.
Particulars of loans guarantees and investments by the Company
Details of loans guarantees and investments covered under the provisions of Section186 of the Companies Act 2013 are provided in Annexure 3 attached to this report.
The Risk Management Committee of the Board is entrusted with the responsibility toassist the Board in overseeing and approving the Company's risk management framework. TheCompany has an elaborate Risk Charter and Risk policy defining risk management governancemodel risk assessment and prioritization process. The Risk Management Committee reviewsand monitors the key risks and their mitigation measures periodically and provides anoversight to the Board on Company's risks outlined in the risk registers. The AuditCommittee has additional oversight in the area of financial risks and controls.
Disclosures as per the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013
The Company has adopted zero tolerance for sexual harassment at workplace and hasformulated a policy on prevention prohibition and redressal of sexual harassment atworkplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the rules thereunder for preventionand redressal of complaints of sexual harassment at workplace. Awareness programs wereconducted at various locations of the Company.
Deposits from public
The Company has not accepted any deposits from the public during the year under review.No amount on account of principal or interest on deposits from public was outstanding ason March 31 2017.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Dr. Asim Kumar Chattopadhyay Company Secretary in Practice to carry out theSecretarial Audit of the Company. The Report of the Secretarial Audit for 2016-17 isattached herewith as Annexure 4. There are no qualifications in the said report.
Extract of Annual Return
As provided under Section 92(3) of the Companies Act 2013 the extract of annualreturn in Form MGT-9 is given in Annexure 5 which forms part of this report.
Directors' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and ability confirm:
(i) That in the preparation of the accounts for the financial year ended March 312017 the applicable accounting standards have been followed and that there are nomaterial departures;
(ii) That the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profits of the Company for that period;
(iii) That the Directors have taken proper and sufficient care to the best of theirknowledge and ability for the maintenance of adequate accounting records in accordancewith the provisions of the Companies Act 2013 for safeguarding the assets of the Companyand for preventing and detecting fraud and other irregularities;
(iv) That they have prepared the accounts for the financial year ended March 31 2017on a going concern basis';
(v) That the Directors have laid down internal financial controls for the Company whichare adequate and are operating effectively;
(vi) That the Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and such systems are adequate and are operatingeffectively. Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory costand secretarial auditors including audit of internal financial controls over financialreporting by the statutory auditors and the reviews performed by the management and therelevant Board committees including the audit committee the Board is of the opinion thatthe Company's internal financial controls were adequate and operating effectively duringthe financial year 2016-17.
Related Party Transactions
All related party transactions that were entered into during the financial year were onan arm's length basis and in the ordinary course of business. There are no materialsignificant related party transactions made by the Company during the year that would haverequired shareholder approval under Regulation 23(4) of the Listing Regulations. Allrelated party transactions are reported to the audit committee. Prior approval of theaudit committee is obtained on a yearly basis for the transactions which are planned and /or repetitive in nature and omnibus approvals are taken as per the policy laid down forunforeseen transactions. The disclosure under Section 134(3)(h) of the Companies Act 2013read with Rule 8(2) of the Companies (Accounts) Rules 2014 is not applicable. The policyon Related Party Transactions as approved by the Board is available on the Company'swebsite and may be accessed at the link www.tataglobalbeverages.com/investors/governance/policies.
The details of the transactions with related parties during 2016-17 are provided in theaccompanying financial statements.
During the year the non-executive directors of the Company had no pecuniaryrelationship or transactions with the Company other than sitting fees commission andreimbursement of expenses as applicable.
Directors and Key Managerial Personnel (KMP)
The Board had appointed Mr. N. Chandrasekaran as an Additional Director on the Board ofthe Company with effect from 3rd July 2017. Mr. N. Chandrasekaran is Chairmanof the Board of Tata Sons promoter of more than 100 Tata operating companies includingyour Company with aggregate annual revenues of more than US$100 billion. He joined theboard of Tata Sons in October 2016 and was appointed Chairman in January 2017. He alsochairs the boards of several group operating companies including Tata Steel Tata MotorsTata Power Indian Hotels and Tata Consultancy Services (TCS) of which he was chiefexecutive from 2009-17. Under his leadership TCS generated total revenues of US$16.5billion in 2015-16 and consolidated its position as the largest private sector employer inIndia and the country's most valuable company.
Mr. Harish Bhat had stepped down as Chairman of the Board effective 2ndJuly 2017. Your Board appointed Mr. N. Chandrasekaran as the Chairman of the Board of theCompany with effect from 3rd July 2017 in the place of Mr. Harish Bhat. YourBoard places on record its deep appreciation for the excellent contributions made by Mr.Harish Bhat as Chairman of the Board.
The Board had also appointed Mr. Siraj Azmat Chaudhry as an Additional IndependentDirector on the Board of the Company with effect from 3rd July 2017. Mr. SirajChaudhry is Chairman of Cargill India. His tenure at Cargill spans nearly 23 years andincludes handling the leadership role in India as well as a global commodity trading rolein Geneva. Under his leadership since
2007 Cargill India has successfully built both consumer FMCG businesses in India andInstitutional businesses backed by world class manufacturing facilities robust sales& distribution network and an enviable brand portfolio.
Pursuant to Section 161(1) of the Companies Act 2013 Mr. Chandrasekaran andMr. Chaudhry will hold office upto the date of the forthcoming Annual General Meeting. TheCompany has received notices under Section 160(1) of the Act proposing the candidatures ofMr. Chandrasekaran and Mr. Chaudhry for appointment as Directors at the forthcoming AGM.
Mr. Harish Bhat and Mr. S Santhanakrishnan Directors retire by rotation at theforthcoming Annual General Meeting and being eligible offer themselves for re-election.
Brief particulars and expertise of the Directors seeking appointment / reappointmenttogether with their other directorships and committee memberships have been given in theannexure to the notice of the Annual General Meeting in accordance with the requirementsof the Listing Regulations.
The Independent Directors on the Board of the Company namely Mrs. Mallika SrinivasanMr. V Leeladhar Mrs. Ranjana Kumar and Mrs. Ireena Vittal were appointed at the AnnualGeneral Meeting of the Company held on August 26 2014. The said Directors have givendeclarations that they meet the criteria of independence as provided in Section 149(6) ofthe Companies Act 2013 and Regulation 16(1)(b) of the Listing Regulations.
Mr. Siraj Azmat Chaudhry who was appointed as an Additional Independent Director witheffect from 3rd July 2017 has also given a declaration that he meets thecriteria of independence as provided in Section 149(6) of the Companies Act 2013 andRegulation 16(1) (b) of the Listing Regulations.
During the year under review your Board of Directors had resolved to replace Mr. CyrusP. Mistry as Chairman of the Board at its meeting held on November 15 2016 and appointedMr. Harish Bhat as Chairman of the Board effective 15th November 2016.Mr. Cyrus P Mistry resigned as a Director from the Board of the Company with effectfrom December 19 2016.
Mr. Analjit Singh and Mr. Darius Pandole Independent Directors resigned from theBoard with effect from December 20 2016.
Apart from the above no other Director or key managerial personnel were appointed orhad retired or resigned during 2016-17.
Auditors and Auditors' Report
The members at the Annual General Meeting held on August 26 2014 had appointedLovelock and Lewes as the Statutory Auditors for three years subject to ratification bythe members each year. Accordingly the term of Lovelock and Lewes ends at the conclusionof the forthcoming Annual General Meeting. Your Board recommends the appointment of DeloitteHaskins & Sells LLP Chartered Accountants as the Statutory Auditors of the Companyfrom the conclusion of the fifty fourth Annual General Meeting until the conclusion of thefifty ninth Annual General Meeting of the Company to be held in the year 2022.
The Statutory Auditors of the Company have not reported any fraud as specifiedunder the second proviso to Section 143(12) of the Companies Act 2013.
The Auditors' report on the financial statements for the year 2016-17 does notcontain any qualifications reservations or adverse remarks.
Your Board has appointed Shome and Banerjee of 5A Nurulla Doctor Lane 2ndFloor Kolkata - 700 017 as Cost Auditors of the Company for conducting cost audit for thefinancial year 2017-18. The members are requested to ratify the remuneration payable tothe Cost Auditors for 2017-18.
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo pursuant to Section 134(3)(m) of the Companies Act 2013 read withRule 8(3) of the Companies (Accounts) Rules 2014 is given in Annexure 6 attached to thisreport.
Pursuant to the Listing Regulations the Report on Corporate Governance along with thecertificate from a Practicing Company Secretary regarding compliance of conditions ofCorporate Governance the Business Responsibility Report and the Dividend DistributionPolicy are attached and are part of this Annual Report.
The Directors wish to convey their deep appreciation to all the employees of theCompany for their sincere and dedicated services as well as their collective contributionto the Company's performance.
| ||On behalf of the Board of Directors |
| ||N. Chandrasekaran |
|Mumbai ||Chairman |
|06th July 2017 ||(DIN 00121863) |