Drawing on a remarkable legacy to create goodness for the future
In this fast-moving world staying resonant and relevant for 100 yearsis a journey of great pride for any organisation. What makes it even more eventful forTata Coffee is its ability to remain the face of change in the Indian coffee industry. Itis thus an honour to share with you the Annual Report FY 2021-22 that celebrates theevolution of a crop as the world's most preferred beverage. With our stakeholders asthe central cog in the wheel this edition is a tribute to the movers and shakers of TataCoffee and the spirit of sharing goodness. We have always kept pace with the times;changing consolidating and calibrating as situations and circumstances have demanded. Yetif there's one thing that remained unchanged it is the inherent resilience of theenterprise and its people to always emerge stronger on the other side. We are no strangersto extreme external challenges such as those playing out today a globalinflationary environment scarcity in raw material supply exorbitant freight costs andgeo-political tensions. However such challenges have only strengthened our resilience andresolve enabling us to do more.
Encapsulating our strong annual performance
We are investing our collective energy in conceiving strategicinitiatives to combat fluctuating prices across coffee markets and volatilities induced byclimate change which have large-scale bearings on our plantations and its produce. Thisincludes accelerating optimisation measures across the business and unlocking digitalcapabilities to become a more future-ready organisation. Continuous upheavalsnotwithstanding we continued to grow year on year with every achievement accompanyingsignificant learnings for the future. This robust performance in a year marked withchallenges was a result of peak utilisation of production capacities and record saleswell balanced across key regions. Despite all external deterrents Instant Coffee Indiarecorded second highest production volumes historically. ICD Theni clocked what has beenhistorically its highest production (overall and FDC).
We recorded our highest ever Green Bean sales. As anticipated TCVCLalso achieved a record full-year production. The year under review ended with us reachingseveral milestones one of which was recording the second highest ever sales from India.Sales from Vietnam also witnessed record volumes. We made significant efforts inincreasing the share of premium/decaf products and blends and these products aredemonstrating good potential for the future. We also managed to drive down costs throughcontinuous improvement projects and proactive decision-making. Our Instant Coffee divisionhas been one of the year's biggest growth drivers recording its second-bestperformance in terms of sales and profitability and 100% capacity utilisation. We achievedseveral breakthroughs in the US market and robust performance in Japan. With TCVCL weachieved peak capacity utilisation with the plant operating at ~98% capacity recordproduction and sales in Vietnam despite disruptions and uncertainties and higher profitscompared to last year. We also made impressive progress on key strategic pillars bybringing certified blends. Decaf ensured ~10% of the business and performance was evenlyon the positive side across all key geographies.
Focusing on the next
In a future-oriented move our Board in a meeting held on March 292022 approved a Composite Scheme of Arrangement (the Scheme') among TataCoffee (the Company') Tata Consumer Products Limited (TCPL) and TCPLBeverages and Foods Limited (TBFL) and their respective shareholders and creditors whichupon its effectiveness based on necessary approvals of shareholders/creditors/regulatoryauthorities and so on would result in (a) demerger of the Plantations Business of theCompany which will move into TBFL (a wholly-owned subsidiary of TCPL) and (b)amalgamation of the remaining business of the Company with TCPL. The demerger will createa dedicated plantation vertical enabling increased efficiencies and synergies amongvarious plantation businesses wholly or partly owned by TCPL and better resourceallocation. Our shareholders will be allotted shares of TCPL making them stake-owners ofa larger branded consumer products business with multiple growth avenues. Integration ofour and TCPL's Extraction business under a single entity through the amalgamationwill enable focused management attention operational efficiencies revenue and costsynergies including from commonality of customers sales and supply chain opportunitiesthrough enhanced reach and wider variety of offerings. This will help us gain marketshare capital optimisation leveraging of sales and distribution network andsimplification of overlapping infrastructure.
Bringing in optimisation and targeting new efficiencies
Cost optimisation and pullback have always been crucial. Our commercialand logistics as well as procurement and operations teams run the show proactivelyenforcing timely decisions and communicating them effectively to our sales and marketingteams. We managed to pullback more substantial savings across the business throughcontinuous improvement projects like Six Sigma Lean and Kaizen. With precision farmingand block level profitability management we are monitoring and regulating therequirements at the smallest unit in the farm. This practice is being replicated at allour estates. We also made significant developments in the identification of elite plantsand clonal propagation which augurs well for the sustainability of the farms andbiological assets which will be crucial for improved yields in the future.
Steadfast on safety
We have seen significant improvements in our Proactive Safety Indexscores which are measured at our units from a baseline of 16.70% to 74.89% currently.
As part of our business continuity plan and to ensure the safety of ouremployees TCVCL successfully carried out an on-site programme on three differentoccasions during the year. This year we achieved our goal of producing Zero Harm Pepperwhich means there were no unfortunate incidents during pepper harvesting at outplantations.
Relentless focus on our sustainability and social commitments
In Sustainability and ESG space as an outcome of our stakeholderengagement and materiality studies we have identified material issues and monitors metricson periodic basis including GHG emissions Carbon sequestered Water use & recycledWaste Customer complaints and governance. The year saw us consuming the highest eversolar units in the Theni Plant. We doubled our wind power procurement capacity compared tolast year; ~30% of the power requirement is now being met through wind energy. Weinitiated the Carbon Stock and Sequestration Assurance project with a leading organisationto acquire a carbon sequestration certification for our plantations. The Ernesto IllyInternational Coffee Award (the Best of the best coffee in the world) and India'sbest coffee recognised our Jumboor estate. This is a testament to the sustainability ofthe coffee grown at our plantations. Over 95% of our Arabica is sold as premiumdifferentiated coffee and over the years we have built strong relationships with roastersand global
We have always kept pace with the times; changing consolidating andcalibrating as situations and circumstances have demanded. Yet if there's one thingthat remained unchanged it is the inherent resilience of the enterprise and its people toalways emerge stronger on the other side.
clients enabling an average of over 50% of our coffee going directlyto roasters. This reinforces our premiumisation and disintermediation commitment. Weremain committed to uplifting lives and helping raise more resilient communities. Ouremployees are active participants at the Tata Volunteering Week (that happens bi-annually)and they have collectively clocked 63590+ hours during FY 2021-22 touching 330380+lives. We also undertook several social impact projects for the people inhabiting areasaround our plantations and the workforce across our plantations including internships andvocational training for the youth. For the differently abled we organised health campsand helped install water puri_ers and procure equipment. As we tread new avenues to seizenovel opportunities for growth and enhance value we implore our stakeholders to remain assteadfastly by us as has been their tradition. We believe in our ability to remainresilient relevant and resolute through every business cycle and will continue to workto the best of our abilities to ensure growth goodness and goodwill for the next 100years to come.
|Warm Regards |
|Chacko Purackal Thomas |
|Managing Director & CEO |