To the Members
Your Directors are pleased to present the 75th Annual Report together with the AuditedStatement of Accounts for the year ended 31st March 2018.
The Company's financial performance for the year ended 31st March 2018 is summarizedbelow:
(Rs. in Crores)
| ||Standalone ||Consolidated |
| ||2017-18 ||2016-17 ||2017-18 ||2016-17 |
|Revenue from Operations ||706 ||779 ||1567 ||1606 |
|Other Income ||56 ||69 ||22 ||23 |
|Total Income ||762 ||848 ||1589 ||1629 |
|Profit Before Exceptional Items and Taxes ||81 ||184 ||197 ||320 |
|Add: Exceptional Income/(Expenses) ||- ||(2) ||(11) ||(2) |
|Profit Before Tax ||81 ||182 ||186 ||318 |
|Provision for Tax ||18 ||43 ||(1) ||108 |
|Profit After Tax ||63 ||139 ||187 ||210 |
|Less: Non-controlling Interests ||- ||- ||(80) ||(59) |
|Profit After Tax attributable to Shareholders of the Company ||63 ||139 ||107 ||151 |
|Surplus brought forward from Previous Year ||461 ||364 ||539 ||430 |
|Amount available for appropriation ||524 ||503 ||646 ||581 |
|General Reserve No. I ||- ||(14) ||- ||(14) |
|General Reserve No. II ||(7) ||(8) ||(7) ||(8) |
|Reversal of Dividend Distribution Tax/Deferred Tax ||2 ||9 ||7 ||9 |
|Dividend paid relating to Previous Year ||(33) ||(24) ||(33) ||(24) |
|Tax on Dividend ||(7) ||(5) ||(7) ||(5) |
|Balance carried forward ||479 ||461 ||606 ||539 |
1. Revenue from Operations: Standalone:
Your Company's total income during the year under review was Rs. 762 Crores as comparedto Rs. 848 Crores in the previous year registering a decrease of 10% over the previousyear.
The Consolidated total income during the year under review was Rs. 1589 Crores ascompared to Rs. 1629 Crores in the previous year registering a marginal decrease of 2%over the previous year.
2. Profits: Standalone:
The Profit before Tax for the year 2017-18 was Rs. 81 Crores as against Rs. 182 Croresin the previous year. Profit after Tax in 2017-18 stood at Rs. 63 Crores as against Rs.139 Crores in the previous year.
On a Consolidated basis Profit before Tax for the year 2017-18 was Rs. 186 Crores asagainst Rs. 318 Crores in the previous year. Profit after Tax (net of minority interest)in 2017-18 stood at Rs. 107 Crores as against Rs. 151 Crores in the previous year.
3. Dividend & Reserves:
Your Directors have recommended a Dividend of Rs. 1.50/- per share (face value of Rs. 1per share) for the year ended 31stfiMarch 2018. The total Dividend amount aggregates toRs. 28.02 Crores plus applicable Dividend Distribution Tax thereon.
4. Share Capital:
The Paid-up Equity Share Capital of the Company as on 31stfiMarch 2018 was Rs. 18.68Crores comprising of 186770370 Shares of Rs. 1/- each. The Company has not issuedshares with differential voting rights employee stock options and sweat equity shares.The Company has paid Listing Fees for the Financial Year 2018-19 to each of the StockExchanges where its equity shares are listed.
5. Material changes and commitment if any affecting financial positionof the Company from the end of the financial year till the date of this Report:
There has been no material change and commitment affecting the financial performanceof the Company which occurred between the end of the financial year of the Company towhich the financial statements relate and the date of this Report.
6. Global Coffee Scenario:
The Global Coffee markets in 2017-18 continued to be mainly influenced by thealternating Brazilian "on" and "off" crops. Global coffee productionwas 159.66 million bags 1.2% higher than 2016-17 with a 12.1% increase in Robusta outputoffsetting a 4.6% decline in Arabica production.
The decline in Arabica production is driven by lower output of Colombian Milds at 15.21million bags (-4.6%) and Brazilian Naturals estimated at 50.23 million bags (-9.6%).
Robusta production rose from 55.6 million bags in 2016-17 to 62.24 million bags in2017-18 largely due to increases in output from Vietnam and Indonesia. Vietnam'sproduction is estimated at 29.5 million bags in coffee year 2017-18 15.5% higher than thelast year.
Coffee year 2017-18 was surplus for the second consecutive year with productionexceeding consumption. This excess is weighing down on global coffee prices in the currentcoffee year.
The New York (ICE) terminal representing Arabica settled at 118.15 c/lb on 29th March2018 and was 139.30 c/lb on 31st March 2017.
As on 29th March 2018 London Robusta May futures settled at USD 1725/MT and were USD2149/MT on 31st March 2017.
7. Company's Performance:
During the financial year 2017-18 the Company has harvested a Robusta crop of 3736 MTas against 6000 MT in the previous year. In the case of Arabica a production of 1890 MThas been harvested in being an on year as against 1628 MT in the previous season. Thecoffee harvesting operation and post-harvest operations has been completed as perschedule.
Prolonged drought coupled with high temperature and reduced number of wet days resultedin depletion of soil moisture during crucial "bud differentiation period"September to October 2016. In addition to this unprecedented early blossom shower on 27thJanuary 2017 on standing crop narrowed the gap between crop harvest and blossom forhealthy owering and fruit set.
Early rain induced immature ower bud opening which adversely affected crop setting andproduction.
The Company produced a total of 5.629 Million Kgs of Made tea for the financial year2017-18 as against 5.666 Million kgs in the previous year. The current year's productionis less by 0.39%. Shortfall in quantum of rainfall recorded during the season and veryerratic rain in Q3 affected the flush growth and thereby impacted crop.
The Company has achieved a pepper production of 909 MT for the financial year 2017-18compared to 544 MT harvested during 2016-17. The density and primary grade percentage ofpepper this year has been good. The Company has initiated actions to increase theproduction base of pepper in the coming years.
The Company's Curing Works at Kushalnagar (KNW) cured a total of 11940 MT Coffeeduring the current year as against 11528 MT in the previous year. In addition a recordquantity of 748 MT of Monsoon Coffee was processed against 520 MT in 2016-17.
Pepper Processing Unit:
The Pepper Grading Center is certified for Export Inspection Agency (EIA) whichentails the Company to export Pepper meeting all the Global Standards. The unit has graded& processed 644 MT of Pepper during the financial year 2017-18 when compared with 537MT in 2016-17. The unit is also certified under ISO 22000:2005 and SA 8000:2008.
Green Coffee Exports:
During the financial year 2017-18 your Company exported 6100 MT of green coffee asagainst 6420 MT in the previous year. Your Company continues to focus on growth throughPremium Differentiated Coffees and today differentiated coffee is 42% of our portfolio(sold at healthy premiums).
In line with the strategy to premiumize differentiate and disintermediate the Companycontinues to develop its Specialty Coffees portfolio. The Monsooning Facility hasundergone an expansion to bring about more focus on process and innovation. The Companyoffers Monsooned Malabar and Monsooned Robusta Coffees. Microlots' forming abouttop 1% of the Company's Arabica production have been widely appreciated. These are offeredin special wet and dry milling processes. The
Company's Specialty Coffees portfolio capitalizes on its quality sustainabilitystorytelling and heritage. Apart from creating value on their own these coffees are alsohelping the Company target and develop new niche Roasters across the world.
Plantation Trails our hospitality business continues to grow and perform exceedinglywell recording the highest ever revenues and profits since inception. Primary businessfocus has been on delivering a premium coffee experience for its guests. Global vacationtrends continue to indicate Coorg as one of the top holiday destinations for India.
Plantation Trails was the recipient of several industry awards during the yearincluding prestigious recognitions by Booking.com and Trip Advisor. Operationally a newlyupgraded food experience resulted in a complete turnaround of the food & beveragesbusiness. Cottabetta and Thaneerhulla bungalows had very positive guest feedback andcontinue to be best sellers. Chickmagalur as a destination has again outperformedexpectations.
For a first Plantation Trails hired students from Swastha to help with its operations.This initiative was well received and appreciated by the guests.
B. Instant Coffee Operations:
The financial year 2017-18 saw the Instant Coffee Division achieving noteworthy salesand production with the given external conditions. The total sales volumes for thefinancial year 2017-18 was 7531 MT compared to 8812 MT in the previous financial yearregistering a drop of 15% over the previous year. The production for the year was 8150 MTcompared to 8474 MT in the last fiscal. The plant capacity utilization was lower comparedto previous year due to lower sales. The state-of-the-art Freeze Dried Coffee (FDC)facility underwent for a debottlenecking project successfully safely and achieved anincreased capacity up to 300 tonnes per annum. We could attract seven new customers anddeveloped products with customized quality for them post debottlenecking project.
The sales volume was lower during 2017-18 compared to previous year due to loss ofsales from one of our key customer. The Company significantly increased its value addedfocus in terms of product and packaging. New product variants developed for selectedmarkets helped the Company to provide right value to the buyers and also differentiateditself from the competition. The Company also strengthened its sales and marketing team toensure widespread reach and deeper customer connect.
New product development wing extended its focus on coffee mixes and specialized instantcoffees during 2017-18 & developed 10 blends which gave sales of around 1350MT.
Tata Coffee Grand:
The Company manufactures Tata Coffee Grand' an Instant Coffee for sale indomestic market which is being distributed and marketed by the Holding company TataGlobal Beverages Ltd. The Brand has received positive response in the market. The twoproduct variants HTS (Hot Tea Shops) with blend of Spray Dried Coffee with Chicory andR&G with blend of Roasted and Ground coffee with Chicory packed for the domesticmarket as part of overall Tata Coffee Grand portfolio got good response from marketresulting increased trend in sales.
C. Starbucks Roastery:
The Unit has recorded 26% higher production and processed 150 MT during the currentyear as against 119 MT in the previous year which shows an increasing trend. The Unitsuccessfully added additional retail SKU known as cold brew as required by Starbucks withKenyan origin roasted coffees. The Unit continues to cater exclusively to the requirementsof TATA Starbucks outlets in India from its state-of-the-art Coffee Roasting Facility atKushalnagar Works. The Unit continues to be certified under ISO 9001:2008 (QualityManagement System) FSSC22000 (Food Safety & Standards Certification) ISO 14001:2004(Environment Management System) and FSSAI (Food Safety and Standards Authority of India).
8. Business Excellence:
The Company participated in a full assessment in the TBEM EA 2017. The Assessment Teamconsisting of members from diverse Tata companies perused the Application and visited allthe operational sites in the Coffee and Tea plantations and the ICD units. There wereextensive deliberations with the functional heads and the senior leadership at theCorporate Office. Inputs were also sought from the Chairman to provide direction to theAssessment Team. The Assessment Team has since presented its feedback highlighting theStrengths and Opportunities for Improvement (OFI) to the Leadership Team of the Companyand also to the Board during December 2017. The Company obtained a score of 519 out of1000 on the Model's scoring scale. This is an increase of 32 points from its previousscore. fiThe Company is in the process of formulating Action Plans to retain its strengthsand address the OFIs. The Company has also contributed to the Business Excellence journeywith 4 persons having participated in assessments of other Tata Group Companies. Trainingof personnel across functions is also being done to spread awareness and build a group ofTBEM assessors for deployment within the organization.
9. Quality Awards:
(i) Sustainability Awards:
Two Arabica microlots of Yemmigoondi Estate was recognized as Starbuck Reserveduring 2017-18.
In the second edition of the Ernesto Illy International Coffee Award in New Yorkfor the Year 2017 Nullore and Coovercolly Estates have received the award for theirexcellence in quality.
In 2nd National Safety Practices Competition held in Chennai on 26th April 2018by Confederation of Indian Industry the Company was awarded for Excellence in WorkplaceSafety (Working at height Pepper).
(ii) Instant Coffee Operations (ICD):
a) ICD-Theni stepped in to a milestone of achieving EHS 4 star award during 2017-18& ICD Toopran unit sustained EHS 4 Star award which has proven the continualimprovement in the areas of Environmental Occupational Health and Safety ManagementSystems.
b) ICD-Toopran also achieved the prestigious FTAPCCI (Federation of Telangana andAndhra Pradesh Chambers of Commerce and Industry) Award for excellence in IndustrialProductivity.
c) ICD Toopran received Legasis excellent performer award 2017 on statutorycompliance.
d) ICD Theni received four awards from MPEZ for high productivity & highest Netforeign exchange earnings
e) ICD-Theni received SEEM (Society of Energy Engineers and Managers) National EnergyManagement Award this year.
i) Instant Coffee Unit Toopran
Toopran Unit was certified for Integrated Management System (IMS) comprising of ISO9001 ISO 14001 OHSAS 18001 along with certifications on FSSC 22000 HALAL KOSHERFSSAI SA 8000 UTZ SAN-RFA & GMP.
ii) Instant Coffee Unit Theni
Theni Unit was certified for Integrated Management System (IMS) comprising of ISO 9001ISO 14001 BS OHSAS 18001 along with certifications on ISO 22000 HALAL KOSHER BRC IFSFSSAI SA 8000 UTZ SAN-RFA & GMP.
The Theni Unit Laboratory was certified with NABL (National Accreditation Board forTesting and Calibration Laboratories).
10. Capital Expenditure:
During the financial year 2017-18 Rs. 66.37 Crores was incurred towards capitalexpenditure primarily on account of welfare modernization upgradation replanting andother programmes undertaken in the various units of the Company.
11. Subsidiary Companies and Consolidated Financial Statements: Subsidiary Companies:
I. Eight O' Clock Coffee Company (EOC):
The Total Income of EOC during the financial year 2017-18 was at Rs. 860 Crorescompared to Rs. 827 Crores for the previous year. EOC in USA had a stable performance inits base business in 2017-18 with Bag coffee volume sales improving from the previous yearled by effective promotion distribution gains and new items. The Company's Profits grewover the previous year aided largely by good control over costs. The Company continued itsfocus on new product launches. EOC Coffee a premium coffee brand with over a 150 yearlegacy introduced a game changer to the coffee category that delivers an enhancedcoffee-drinking experience to consumers. The Company launched a new coffee infusions linein the US which offers thoughtfully crafted coffees blended with added ingredients tohelp enhance your day. Through this launch EOC is delivering an enhanced coffee drinkingexperience to consumers. The launch is being supported through a multi-faceted marketingcampaign and the consumer response has been positive. EOC and Keurig Green Mountain Inc.(Keurig) have announced a multi-year expansion of their successful partnership for themanufacturing sales licensing and distribution of the EOC Coffee brand in K-Cup pods foruse in Keurig brewers.
II. Consolidated Coffee Inc. (CCI):
CCI is the Holding Company of EOC. The Consolidated Net Profit after taxes was Rs. 161Crores as compared to Rs. 117 Crores for the previous year.
Performance of Subsidiaries:
Pursuant to the provisions of Section 129(3) of the Companies Act 2013 (theAct') a statement containing salient features of Financial Statements of subsidiaries inForm AOC-1 is annexed as Annexure - A.
The Company does not have any Associate or Joint Venture Companies. The Company hasadopted a policy for determining the criteria of material subsidiaries which can be viewedon the Company's website at www.tatacoffee.com.
12. Freeze Dried Instant Coffee Facility in Vietnam:
The Board of Directors of the Company at their meeting held on 19th December 2016 hadapproved setting up of a state-of-the-art greenfield Freeze Dried Instant Coffee facilityin Vietnam of 5000 MT capacity per annum through a Subsidiary Company with an estimatedProject Cost of Rs. 350 Crores. Pursuant thereto the Company has infused an amount of Rs.38.77 Crores in the equity capital of "Tata Coffee Vietnam Company Limited"which is a Wholly-owned Subsidiary of the Company.
The plant is being setup at the Vietnam-Singapore Industrial Park in Southern BinhDuong province Vietnam. This trailblazing move marks a very important phase in theCompany's Instant Coffee business. The Directors are happy to report that the Project ismaking satisfactory progress and that the Instant Coffee plant is expected to beoperational early 2019.
13. Directors' Responsibility Statement:
Based on the framework of Internal Financial Controls and compliance systemsestablished and maintained by the Company the work performed by the Internal StatutoryCost and Secretarial Auditors including Audit of Internal Financial Controls overfinancial reporting by the Statutory Auditors and the reviews performed by the Managementand the relevant Board Committees including the Audit Committee the Board is of theopinion that the Company's Internal Financial Controls were adequate and effective duringthe financial year 2017-18.
Accordingly pursuant to Section 134(3)(c) and 134(5) of the Act the Board ofDirectors to the best of their knowledge and ability confirm that:
(i) in the preparation of the accounts for the financial year ended 31st March 2018the applicable accounting standards have been followed and that there are no materialdepartures;
(ii) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as at the end of the financial year and of theprofits of the Company for that period;
(iii) they have taken proper and sufficient care to the best of their knowledge andability for the maintenance of adequate accounting records in accordance with theprovisions of the Act for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;
(iv) they have prepared the Accounts for the financial year ended 31st March 2018 on agoing concern' basis;
(v) they have laid down Internal Financial Controls to be followed by the Company andsuch Internal Financial Controls are adequate and are operating effectively;
(vi) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and such systems were adequate and are operating effectively.
14. Disclosure on compliance with Secretarial Standards
Your Directors confirm that the Secretarial Standards issued by the Institute ofCompany Secretaries of India have been complied with.
15. Directors & Key Managerial Personnel:
Based on the recommendation of the Nomination & Remuneration Committee the Boardof Directors at its meeting held on 18th May 2017 appointed Dr. P. G. Chengappa as anAdditional Director (Non-executive Independent) of the Company with effect from that date.Further at the same meeting the Board of Directors re-appointed Mr. K. Venkataramanan asExecutive Director Finance and Chief Financial Officer for a further term of 3years with effect from 25th October 2017 on terms of remuneration as recommended by theNomination & Remuneration Committee. These appointments have further been approved bythe Shareholders at the Annual General Meeting of the Company held on 17th July 2017.
In view of the planned relocation of Mr. T Radhakrishnan to Vietnam during FY 2018-19to head the Instant Coffee Plant of the Company's Subsidiary Tata Coffee VietnamCompany Limited at Vietnam Mr. T Radhakrishnan resigned as Executive Director ICDOperations of the Company with effect from 7th November 2017. Your Directors place onrecord their appreciation of the valuable services rendered by him during his tenure asExecutive Director of the Company.
Based on the recommendation of the Nomination & Remuneration Committee the Boardof Directors at its meeting held on 7th November 2017 appointed Mr. L Krishnakumar as anAdditional Director (Non-executive Non-Independent) of the Company with effect from thatdate. Pursuant to the provisions of Section 161 of the Act Mr. Krishnakumar holds offcetill the date of the ensuing Annual General Meeting and is eligible for appointment. Aresolution in this behalf is set out at Item No.4 of the Notice of Annual General Meetingfor members' approval.
The Board of Directors at its meeting held on 23rd March 2018 subject to the approvalof the shareholders in the general meeting re-appointed Mr. Sanjiv Sarin as the ManagingDirector & CEO of the Company for a further period i.e. from 25th April 2018 to 31stMarch 2019 on terms of remuneration as recommended by the Nomination & RemunerationCommittee. A resolution in this behalf is set out at Item No.5 of the Notice of AnnualGeneral Meeting for members' approval.
The Board of Directors at its meeting held on 7th May 2018 subject to the approval ofthe shareholders in the general meeting re-appointed Mr. Chacko Purackal Thomas as theExecutive Director & Dy. CEO of the Company for a further period of 3 years i.e. from4th August 2018 to 3rd August 2021 on terms of remuneration as recommended by theNomination & Remuneration Committee. A resolution in this behalf is set out at ItemNo.6 of the Notice of Annual General Meeting for members' approval.
Pursuant to the provisions of Section 152 of the Act Mr. R. Harish Bhat Directorwill retire by rotation at the ensuing Annual General Meeting and being eligible hasoffered himself for re-appointment. The Board recommends his re-appointment.
In terms of Section 203 of the Act the following are the Key Managerial Personnel ofthe Company:
- Mr. Sanjiv Sarin Managing Director & CEO
- Mr. K. Venkataramanan Executive Director Finance & CFO
- Mr. N. Anantha Murthy Head Legal & Company Secretary All the IndependentDirectors of the Company have given their declarations stating that they meet the criteriaof independence as laid down under Section 149(6) of the Act and Regulation 16(1)(b) ofSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 (the Listing Regulations'). In the opinion of the Board theyfulfil the conditions of independence as specified in the Act and the Listing Regulationsand are independent of the management.
16. Board and Committee Meetings:
The Annual Calendar of Board and Committee Meetings planned during the year werecirculated in advance to the Directors.
The Board has constituted an Audit Committee comprising of Mr. S. Santhanakrishnan asChairman Mr. V Leeladhar and Ms. Sunalini Menon as its Members. There have been noinstances during the year where recommendations of the Audit Committee were not acceptedby the Board.
The details of the composition of the Board and its Committees and the number ofmeetings held and attendance of Directors at such meetings are provided in the CorporateGovernance Report which forms part of the Annual Report.
17. Governance Guidelines:
The Company has adopted Governance Guidelines on Board effectiveness. The GovernanceGuidelines encompasses aspects relating to composition and role of the Board Chairman andDirectors Board Diversity Definition of Independence Term of Directors Retirement Ageand Committees of the Board. It also covers aspects relating to Nomination AppointmentInduction and Development of Directors Directors' Remuneration Subsidiary oversightCode of Conduct Board effectiveness Review and Mandates of Board Committees.
18. Policy on Director's Appointment and Remuneration and other details:
(a) Procedure for Nomination and Appointment of Directors:
The Nomination and Remuneration Committee (NRC) has been mandated to oversee anddevelop competency requirements for the Board based on the industry requirements andbusiness strategy of the Company. The NRC reviews and evaluates the resumes of potentialcandidates for appointment of Directors and meets them prior to making recommendations oftheir nomination to the Board. Specific requirements for the position including expertknowledge expected are communicated to the appointee.
On the recommendation of the NRC the Board has adopted and framed a RemunerationPolicy for the Directors Key Managerial Personnel and other employees pursuant to theprovisions of the Act and the Listing Regulations. The remuneration determined forExecutive/ Independent Directors is subject to the recommendation of the Nomination andRemuneration Committee and approval of the Board of Directors. The Non-Executive Directorsare compensated by way of profit sharing commission and the criteria being theirattendance and contribution at the Board/Committee Meetings. The Executive Directors arenot paid sitting fees; the Non-Executive Directors are entitled to sitting fees forattending the Board/Committee Meetings.
It is affirmed that the remuneration paid to Directors Key Managerial Personnel andall other employees is in accordance with the Remuneration Policy of the Company. TheCompany's Policy on Directors' Appointment and Remuneration and other matters provided inSection 178(3) of the Act and Regulation 19 of the Listing Regulations have been disclosedin the Corporate Governance Report which forms part of the Annual Report.
(b) Familiarization/Orientation program for Independent Directors:
The Independent Directors attend a Familiarization / Orientation Program on beinginducted into the Board. The details of Familiarization Program are provided in theCorporate Governance Report and are also available on the Company's website. The Companyissues a formal letter of appointment to the Independent Directors outlining their rolefunction duties and responsibilities the format of which is available on the Company'swebsite at https://www.tatacoffee.com.
19. Dividend Distribution Policy:
As required under Regulation 43A of the Listing Regulations the Company has formulateda Policy on Dividend Distribution.
This Policy can be viewed on the Company's website at https:// www.tatacoffee.com.
20. Annual Evaluation of Board Performance and Performance of its Committees and ofDirectors:
Pursuant to the applicable provisions of the Act and the Listing Regulations the Boardhas carried out an Annual Evaluation of its own performance performance of the Directorsand the working of its Committees on the evaluation criteria defined by the Nomination andRemuneration Committee (NRC) for performance evaluation process of the Board itsCommittees and Directors.
The Board's functioning was evaluated on various aspects including inter-alia thestructure of the Board meetings of the Board functions of the Board degree offulfilment of key responsibilities establishment and delineation of responsibilities tovarious Committees effectiveness of Board processes information and functioning.
The Committees of the Board were assessed on the degree of fulfilment of keyresponsibilities adequacy of Committee composition and effectiveness of Meetings. TheDirectors were evaluated on aspects such as attendance contribution at Board/CommitteeMeetings and guidance/support to the Management outside Board/Committee Meetings.
The performance assessment of Non-Independent Directors Board as a whole and theChairman were evaluated in a separate meeting of Independent Directors. The same was alsodiscussed in the meetings of NRC and the Board. Performance evaluation of IndependentDirectors was done by the entire Board excluding the Independent Director beingevaluated.
21. Internal Control Systems & their adequacy:
The Board has adopted policies and procedures for ensuring the orderly and efficientconduct of its business including adherence to the Company's policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialdisclosures.
22. Reporting of Frauds:
There was no instance of fraud during the year under review which required theStatutory Auditors to report to the Audit Committee and / or Board under Section 143(12)of the Act and the rules made thereunder.
23. Transfer to Investor Education and Protection Fund:
a) Transfer of unclaimed dividend / debenture redemption / debenture interest to IEPF:
As required under Section 124 of the Act the unclaimed dividend amount aggregating toRs. 1363703/- pertaining to the financial year ended on 31st March 2010 Rs. 947690/-in respect of interim dividend declared for the financial year ended on 31st March 2011and Unclaimed Interest on Debentures including Debenture redemption amount aggregating toRs. 270203/- lying with the Company for a period of seven years were transferred duringthe year 2017-18 to the Investor Education and Protection Fund established by the CentralGovernment.
b) Transfer of shares to IEPF:
As required under Section 124 of the Act 1242821 equity shares in respect of whichdividend has not been claimed by the members for seven consecutive years or more havebeen transferred by the Company to the Investor Education and Protection Fund Authority(IEPF) during the financial year 2017-18. Details of shares transferred have been uploadedon the website of IEPF as well as the Company.
(i) Statutory Auditors:
The Members at the 73rd Annual General Meeting of the Company held on 26th July 2016had appointed M/s. Deloitte Haskins & Sells LLP Chartered Accountants (FirmRegistration No. 117366W/W-100018) as the Statutory Auditor of the Company to hold offcefor a term of five years i.e. from the conclusion of the said Annual General Meetinguntil the conclusion of 78th Annual General Meeting of the Company to be held in 2021subject to ratification of their appointment by the shareholders every year. The Ministryof Corporate Affairs vide its Notification dated 7th May 2018 has dispensed with therequirement of ratification of Auditor's appointment by the shareholders every year.Hence the resolution relating to ratification of Auditor's appointment is not included inthe Notice of the ensuing Annual General Meeting.
(ii) Cost Auditors:
In terms of the provisions of Section 148 of the Act read with the Companies (CostRecords and Audit) Rules 2014 as amended from time to time the Board of Directorsbased on the recommendation of the Audit Committee has appointed M/s. Rao Murthy &Associates Cost Accountants as Cost Auditor of the Company for conducting the Cost Auditfor the financial year 2018-19 on such remuneration as mentioned in the Notice ofthe ensuing Annual General Meeting.
A resolution seeking Member's ratification for the remuneration payable to the CostAuditor forms part of the Notice of 75th Annual General Meeting and the same isrecommended for your consideration and ratification.
(iii) Secretarial Auditor:
Pursuant to the provisions of Section 204 of the Act and the rules made there underthe Company had appointed M/s. BMP & Co. LLP Practicing Company Secretaries toundertake the Secretarial Audit of the Company for the year ended 31stfiMarch 2018. TheSecretarial Audit Report issued in this regard is annexed as Annexure - B.
The Auditors' Report and the Secretarial Audit Report for the financial year ended 31stMarch 2018 do not contain any qualification or reservation or adverse remark.
25. Risk Management:
The Company has constituted a Risk Management Committee which has been entrusted withthe responsibility to assist the Board in (a) approving the Company's Risk ManagementFramework and (b) overseeing all the risks that the organization faces such as strategicfinancial liquidity security regulatory legal reputational and other risks that havebeen identified and assessed to ensure that there is a sound Risk Management Policy inplace to address such concerns/risks. The Risk Management process covers riskidentification assessment analysis and mitigation. Incorporating sustainability in theprocess also helps to align potential exposures with the risk appetite and highlight risksassociated with chosen strategies.
The Audit Committee has additional oversight in the area of financial risks andcontrols. Major risks identified by the business and functions are systematicallyaddressed through mitigating actions on continuing basis.
The Company has adopted a Risk Management Policy in accordance with the provisions ofthe Act and Regulation 21 of the Listing Regulations.
26. Particulars of Loans Guarantees and Investments:
The details of Loans and Investments and Guarantees covered under the provisions ofSection 186 of the Act are given in the Notes to the Financial Statements forming part ofAnnual Report.
27. Fixed Deposit:
During the year under review your Company has neither accepted nor renewed anydeposits from the public within the meaning of Section 73 of the Act and the Companies(Acceptance of Deposits) Rules 2014.
28. Related Party Transactions:
All Related Party Transactions that were entered into during the financial year underreview were on an arm's length basis and in the ordinary course of business and is incompliance with the applicable provisions of the Act and the Listing Regulations. Therewere no materially significant Related Party Transactions made by the Company during theyear that required shareholders' approval under Regulation 23 of the Listing Regulations.
All Related Party Transactions are placed before the Audit Committee for priorapproval. Prior omnibus approval of the Audit Committee is obtained for the transactionswhich are repetitive in nature or when the need for them cannot be foreseen in advance.
None of the transactions entered into with related parties falls under the scope ofSection 188(1) of the Act. Details of transactions with related parties as required underSection 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules 2014are given in Annexure - C in Form AOC-2 and forms part of this Report.
The Company has adopted a Policy for dealing with Related Party Transactions. ThePolicy as approved by the Board may be viewed on the Company's website at the web link:http:// www.tatacoffee.com/investors/relatedfiparty.pdf.
29. Corporate Governance & Management Discussion & Analysis Report:
Your Company is in compliance with all the applicable provisions of CorporateGovernance as stipulated under Chapter IV of the Listing Regulations. A detailed report onCorporate Governance as required under the Listing Regulations is provided in a separatesection and forms part of the Annual Report. Certificate from the Practicing CompanySecretary regarding compliance with the conditions stipulated in the Listing Regulationsforms part of the Corporate Governance Report.
The Management Discussion and Analysis Report as required under the Listing Regulationsis presented in a separate section and forms part of the Annual Report.
30. Business Responsibility Report:
As required under Regulation 34 of the Listing Regulations the Business ResponsibilityReport is provided in a separate section and forms part of the Annual Report.
31. Employees Welfare:
The Company continues to focus on welfare and improving the quality of lives of itsemployees by providing educational assistance to their children employee wellnesssessions periodic occupational health checks merit scholarships to employee childrenspiritual peace by yoga classes crche and child care facilities transport atsubsidized rate to school going children supply of provisions at cost throughco-operative stores and providing housing loan interest subsidy & interest free loansfor the employee family wellness.
Apart from the welfare initiatives implemented during last year the following were themain focus areas in the welfare initiatives during FY 2017-18:
improvement in housing infrastructure for Plantation workers)
Introduction of new mobile toilets in plantations for the workers use in thework spots.
Digitalization of TCL employees health records through TDHP
Implementation of uniform colour coded waste segregation measures acrosslocations.
32. Policy on Prevention Prohibition and Redressal of Sexual Harassment at Work place:
The Company has zero tolerance for sexual harassment at workplace and has adopted aPolicy on Prevention Prohibition and Redressal of Sexual Harassment at workplace in linewith the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the rules made thereunder. The Policy aims toprovide protection to employees at workplace and prevent and redress complaints of sexualharassment and for matters connected or incidental thereto with the objective ofproviding a safe working environment where employees feel secure. The Company has alsoconstituted an Internal Complaints Committee known as the Prevention of Sexual Harassment(POSH) Committee to enquire into complaints of sexual harassment and recommendappropriate action.
During the financial year 2017-18 the Company received 4 complaints on sexualharassment which have been disposed of and appropriate actions were taken.
33. Whistle Blower Policy/Vigil Mechanism:
The Company has adopted a Whistle Blower Policy to provide a formal mechanism to theDirectors and employees to report their concerns about unethical behavior actual orsuspected fraud or violation of the Company's Code of Conduct or Ethics Policy. The Policyprovides for adequate safeguards against victimization of employees who avail of themechanism and also provides for direct access to the Chairman of the Audit Committee. Itis affirmed that no personnel of the Company has been denied access to the AuditCommittee. The Whistle Blower Policy has been posted on the website of the Company atwww.tatacoffee.com.
34. Corporate Social Responsibility (CSR):
The Annual Report on CSR activities in terms of the requirements of Companies(Corporate Social Responsibility Policy) Rules 2014 is annexed as Annexure - D whichforms part of this Report.
The Company has a Corporate Social Responsibility Policy and the same has been postedon the website of the Company at www.tatacoffee.com.
35. Extract of Annual Return:
Pursuant to the provisions of Section 92(3) of the Act and Rule 12(1) of the Companies(Management and Administration) Rules 2014 the extract of the Annual Return in theprescribed form i.e. Form MGT-9 is annexed herewith as Annexure E which formspart of this Report.
36. Particulars of Employees and Remuneration:
In terms of the first proviso to Section 136 of the Act the Reports and Accounts arebeing sent to the shareholders excluding the information required under Rule 5(2) and (3)of the Companies (Appointment and Remuneration of Managerial Personnel)
Rules 2014. Any shareholder interested in obtaining the same may write to the CompanySecretary at the Registered Office of the Company. The said information is available forinspection by the Members at the Registered Office of the Company on any working day ofthe Company upto the date of the 75th Annual General Meeting.
The statement containing information as required under the provisions of Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is given in Annexure F and forms part of thisReport.
37. Particulars of Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo:
The information on Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo stipulated under Section 134 (3) (m) of the Act read with Rule 8(3) ofthe Companies (Accounts) Rules 2014 is annexed as Annexure G and forms part ofthis Report.
38. Significant and Material Orders passed by the Regulators or Courts:
There are no significant or material orders which were passed by the Regulators orCourts or Tribunals which impact the going concern status and the Company's Operations infuture.
39. Green Initiatives:
In commitment to keep in line with the Green Initiative and going beyond it to createnew green initiatives electronic copy of the Notice of 75th Annual General Meeting of theCompany are sent to all Members whose email addresses are registered with theCompany/Depository Participant(s). For members who have not registered their e-mailaddresses physical copies are sent through the permitted mode.
Your Directors take this opportunity to thank the Parent Company Tata GlobalBeverages Limited the employees customers vendors investors and the communities inwhich the Company operates for their unstinted co-operation and valuable support extendedto the Company during the year.
Your Directors also thank the Government of India Government of various States inIndia and concerned government departments/agencies for their co-operation.
Your Directors appreciate and value the contributions made by every member of TataCoffee family.
| ||For and on behalf of the Board |
|Place: Bengaluru ||R. HARISH BHAT |
|Date: 7th May 2018 ||Chairman |