To the Members
Your Directors are pleased to present the 77th Annual Report of Tata CoffeeLimited ("the Company") along with the Audited Financial Statements for theFinancial Year ended March 312020.
The financial performance of the Company for the year ended March 31 2020 on aStandalone and Consolidated basis is summarised below:
| || || || ||(Rs. crore) |
| || |
|Particulars ||2019-20 ||2018-19 ||2019-20 ||2018-19 |
|Revenue from Operations ||719 ||703 ||1966 ||1804 |
|Other income ||56 ||54 ||21 ||18 |
|Total Income ||775 ||757 ||1987 ||1822 |
|Expenses || || || || |
|Operating expenditure ||671 ||652 ||1710 ||1606 |
|Depreciation and amortization expenses ||25 ||23 ||81 ||57 |
|Total Expenses ||696 ||675 ||1791 ||1663 |
|Profit before Exceptional Items and Taxes ||79 ||82 ||196 ||159 |
|Add: Exceptional Items and Taxes ||6 ||16 ||4 ||11 |
|Profit before tax (PBT) ||85 ||98 ||200 ||170 |
|Tax expense ||12 ||26 ||59 ||63 |
|Profit for the year ||73 ||72 ||141 ||107 |
|Attributable to: || || || || |
|Shareholders of the Company ||73 ||72 ||82 ||69 |
|Non-Controlling Interests ||- ||- ||59 ||38 |
|Surplus brought forward from Previous Year ||522 ||479 ||646 ||606 |
|Amount available for appropriation ||595 ||551 ||728 ||675 |
|General Reserve I ||- ||- ||- ||- |
|General Reserve II ||(7) ||(8) ||(7) ||(8) |
|Reversal of Dividend Distribution Tax/Deferred Tax ||- ||13 ||- ||13 |
|Dividend paid relating to Previous Year ||(28) ||(28) ||(28) ||(28) |
|Tax on Dividend ||(6) ||(6) ||(6) ||(6) |
|Transfer to Retained Earnings ||8 ||- ||8 ||- |
|Transfer to Retained Earnings - transitional impact of Ind AS 116 ||- ||- ||(17) ||- |
|Balance carried forward ||562 ||522 ||678 ||646 |
1. Total Income Standalone
Your Company's Total Income during the year under review was Rs.775 crore as comparedto Rs.757 crore in the Previous Year.
Consolidated Total Income during the year under review was Rs.1987 crore as compared toRs.1822 crore in the Previous Year registering an increase of 9% over the previous year.
Profit before Tax for the year 2019-20 was Rs.85 crore as against Rs.98 crore in theprevious year. Profit after Tax for the year 2019-20 stood at Rs.73 crore as against Rs.72crore in the previous year.
On a consolidated basis Profit before Tax for the year 2019-20 was Rs.200 crore asagainst Rs.170 crore in the previous year. Profit after Tax (net of minority interest) forthe year 2019-20 stood at Rs.82 crore as against Rs.69 crore in the previous year.
The Board of Directors have recommended a Dividend of Rs.1.50 per share (previous yearRs.1.50 per share) on face value of Rs.1 each for the Financial Year ended March 31 2020.The total Dividend outgo amounts to Rs.28.02 crore (previous year Rs.28.02 Croreexcluding Dividend Distribution Tax).
Pursuant to Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ("the Listing Regulations") the Dividend Distribution Policyduly approved by the Board has been put up on the website of the Company and can beaccessed at www.tatacoffee.com.
4. Share Capital
The paid-up Equity Share Capital of the Company as on March 31 2020 was Rs.18.68 crorecomprising of 186770370 equity shares of Rs.1 each. During the year under review yourCompany has neither issued any shares with differential voting rights nor has granted anystock options or sweat equity. The Company has paid Listing Fees for the Financial Year2020-21 to each of the Stock Exchanges where its equity shares are listed.
5. Material changes and commitment - if any affecting financial position of theCompany 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 except for the impactarising out of COVID-19 which is detailed elsewhere in this Report.
6. COVID-19 and its impact
The Directors have been closely reviewing with the Management the impact of COVID-19on the Company. Your Company had to temporarily suspend operations at its plants andlocations as per the directives of the Government and keeping in mind the paramount needof safety of the employees. The operations though in a scaled down manner have sincecommenced after obtaining permissions from the authorities concerned and all safetymeasures including social distancing are being followed. The dispatches to customers' havealso recommenced. The Company's products viz. Coffee Tea and Pepper are meant for dailyconsumption in households and Rs.out-of-home' The Management is in constant touch with itscustomers on the evolving situation and are making all efforts to service theirrequirements with minimal delays. The Company's Wholly-owned Subsidiary viz. Tata CoffeeVietnam Company Limited at Vietnam is operating smoothly without any disruptions as ondate. The situation created by Covid-19 continues to hold some uncertainties for thefuture; however the Board and the Management will do it's best to address the same asthe situation evolves in the interests of all stakeholders of the Company.
7. Global Coffee Scenario
For the Financial Year 2019-20 world coffee production was estimated at 168.86 millionbags a decrease of 0.8% as compared to the previous Financial Year 2018-19. Arabicaproduction was estimated 3.9% lower at 96.37 million bags while Robusta output wasestimated 3.7% higher at 72.5 million bags.
World coffee consumption was estimated at 169.34 million bags 0.7% higher than in2018-19 following a year of exceptional consumption growth in Europe and North America.
In coffee year 2019-20 a deficit of 0.48 million bags is currently estimated; howeverCOVID-19 presents considerable downside risk to global coffee consumption.
As of March 31 2020 New York (ICE) May terminal for Arabica settled at 119.55 c/lbwhile it was at 94.50 c/ lb as of March 312019.
As of March 312020 London Robusta May futures settled at USD 1186/MT while it was atUSD 1456/MT as of March 312019.
The emergence of COVID-19 pandemic in the first calendar quarter of 2020 poses amongstother things a threat to global coffee demand - which was growing consistently at a rateof about 2.0% to 2.5% annually for the past several years. In particular theRs.out-of-home' coffee consumption would be impacted for some time as governments acrossthe globe implement social distancing and lockdowns as tools to contain the pandemic. Thiscontraction of demand growth holds challenges for the agricultural supply side around theworld where farmers have been struggling to cope up with prices trading below cost ofproduction in several origins already.
8. Company's Performance
During the Financial Year 2019-20 the Company has harvested a Robusta crop of 4405 MTas against 6030 MT in the previous year. In the case of Arabica a production of 1425 MThas been achieved as against 1557 MT in the previous year. The Coffee harvestingoperations of the Company for the season 2019-20 has been predominantly completed as perschedule and gleaning operations are currently in progress. With the timely completion ofthe crop harvest postharvest operations such as handling white stem borer controlpepper watering blossom/backing irrigation for Robusta crop etc. are in progress.
During the Pre-monsoon i.e. period up to May/June 2019 the Coorg region experienced adrought like situation and thereafter there was excess rainfall during August - October2019 recording almost 50% of the annual rainfall. This has resulted in excess moistureretention and Rs.wet foot' condition leading to improper carbohydrate metabolism.
Bean development and hardening were hindered with the continuous downpour during beanfilling stages a physiological phenomenon leading to increased abnormalities in the beani.e. more percentage of pea berries in the harvested crop thereby resulting in drop inthe estimated Coffee crop.
The Company carried out an assessment with assistance from the technical expert fromthe Research Institute Coffee Board who concluded that this was an abnormalphysiological phenomenon that had impacted the entire Coffee Industry.
During the Financial Year 2019-20 the Company produced 4.874 Million kgs of Tea asagainst 4.879 million kgs in the previous year. The turnover during the year was Rs.59crore as against Rs.66 crore in the last year. The drop in crop is attributable to delayedpremonsoon showers in the month of March and April 2019. Further the impact of pestinfestation during Q2 and Q3 to the tune of 74 % had severely impacted the crop. Duringthe year the South Indian sale averages dropped by 5.4% as the demand was low for plainCTC teas and the influx of North Indian teas due to production being higher in NorthIndia.
During the year the Company achieved Pepper production of 123 MT from the previousseason 2018-19 and 652 MT for the Season Crop 2019-20 as of March 31 2020 thereby takingthe overall Production to 775 MT for the year as against 597 MT harvested during theprevious Financial Year 2018-19. Emergence of catkins/flowering during May/June is verycritical for 100% crop setting. Pre-monsoon rainfall was delayed till June 2019 in theNorth Coorg and Hassan Division Estates when compared to South Coorg Estates whichextended the emergence of catkins. Late catkin initiation in the month of August/Septemberresulted in sparse setting of Crop and the corns not developing fully resulting inincreased light berries which was observed only on harvest. This has resulted in drop inthe anticipated crop which is a physiological phenomenon arising out of the unfavorableweather conditions.
The Company has initiated various steps to further enhance the production base ofPepper in the coming years. Pepper watering during summer months is a continuous processto protect Pepper vines from moisture stress.
Kushalnagar - Coffee Curing Works & Pepper Processing Unit
The Company's processing centre at Kushalnagar is an important cog in the wheels ofTata Coffee. Kushalnagar Works is a processing hub for the Company's entire produce ofCoffee and Pepper. It also houses two roasting units for Tata Coffee Grand and TataStarbucks. The Unit is certified for ISO 9001:2015 UTZ SA-8000:2014 Rain ForestAlliance Organic Coffee processing and Cafe Practices. During the Financial Year2019-20 11042 MT of coffee was processed.
During the year the Pepper Processing Unit has graded & processed 601 MT of Pepperas compared to 736 MT in the previous year. The Unit is certified for organic processingand certified under FSSC. 22000 4.1 and SA 8000:2014 [Quality Management Systems].
Green Coffee Exports
During the Financial Year 2019-20 your Company exported 6701 MT of coffee as against5769 MT in the previous year. Your Company continues to focus on growth through PremiumDifferentiated Coffees and today differentiated coffee is 47% of the Company's portfolio.The Company's efforts at forging relationships with some of the most well-known roastersglobally and finding niche markets for its coffee continue to be strategic priorities forus.
Ama Plantation Trails
Ama Plantation Trails has recorded an Income of Rs.4.1 crore for the Financial Yearunder review with an EBIT of Rs.1.1 crore. While the Income was lower than Budget but itwas higher than the previous year. EBIT has been impacted due to lower tourist flows andcancellations due to floods in Q2FY20 as well as at the end of the year due to COVID-19.As on date the operations of Ama Plantation Trails are closed.
B. Instant Coffee Operations
The Financial Year 2019-20 saw the Instant Coffee Division achieving improved salesweathering global headwinds enhanced competition and the impact of the COVID-19 pandemictowards the end of the year. The new state-of-the-art 5000 MT per annum Freeze DriedCoffee Plant in Vietnam managed by the Wholly Owned Subsidiary of the Company is fullyoperational producing high-quality Instant Coffee.
The manufacturing units at Theni and Toopran continued to set new benchmarks in Energymanagement natural resource management Gender diversity Employee engagement Safety andSustainability and have won many awards and certifications during the year pertaining tosafety employee welfare Rs.Six Sigma' in operations etc.
The Company derives its competitive edge from the ability to provide customisedsolutions and new products. Many of the Company's customers have significantly maintainedand improved their market standings across the Globe. This year too the Company witnessedcontinued diversification of sales across geographies and broad - basing of its customerprofile.
Tata Coffee Grand
The Company manufactures Rs.Tata Coffee Grand' a Filter coffee variant for sales inthe domestic market which is being distributed and marketed by your Company's HoldingCompany Tata Consumer Products Limited. The Brand has received positive response in themarket. It is a blend of Roasted & Ground Coffee laced with Chicory. During the yearthe Company launched a limited edition 1868 blend comprising the best of washed ArabicasTata Coffee had to offer as part of the overall Tata Coffee portfolio.
C. Starbucks Roastery
The Unit has processed 209 MT during the current year. The Unit produces single origincoffees of India Kenya and Sumatra. The Unit caters exclusively to the requirements ofTata Starbucks outlets in India from its state-of-the-art Coffee Roasting Facility atKushalnagar Works. An additional roasting line was augmented during the year to cater tothe enhanced requirements of Tata Starbucks. The Unit is certified under FSSC 22000Version 4.1 ISO 9001:2008 (Quality Management System) FSSAI (Food Safety and StandardsAuthority of India) SA-8000:2014 and Ethical Sourcing.
During the year under review the Company has received the following awards:
(i) Coffee Plantations
"Best Producer from India" award for season 2018/19 at Ernesto IllyInternational Coffee Awards. Tata Coffee's Sunticoppa estate emerged as a Winner for thesustainable quality. The Ernesto Illy International Coffee Award celebrates excellence ingrowing coffee beans of the highest quality through sustainable means to offer the bestcoffee to the world.
(ii) Instant Coffee Operations
1. ICD Unit at Theni Tamil Nadu has received the following awards
a) EHS Assessment Award by CII-SR - a 4 Star rating from Confederation of IndianIndustry
b) Gold Award in Rs.Six Sigma' competition conducted by Quality Circle Forum of India -Madurai chapter
2. ICD Unit at Toopran Telangana has achieved the First Position in HR awardsdeclared by FTCCI [Federation of Telangana Chamber of Commerce]
Instant Coffee Units Theni & Toopran
a. Theni ICD Unit was certified by British Retail Consortium V8 and the same wasre-certified for Integrated Management System (IMS) during 2019-20.
b. Toopran ICD Unit was certified for FSSC 22000 Ver 4.1 and further it was upgradedto FSSC 22000 Ver 5.1.
11. Capital Expenditure
During the Financial Year 2019-20 Rs.40 crore was incurred towards capital expenditureprimarily on account of welfare modernization upgradation replanting and otherprogrammes undertaken in the various units of the Company.
12. Subsidiary Companies and Consolidated Financial Statements
I. Consolidated Coffee Inc. (CCI) and Eight O' Clock Holdings Inc.
CCI is the Holding Company of Eight O' Clock Holdings Inc and Eight O' Clock HoldingsInc is the Holding Company of Eight O' Clock Coffee Company. The Consolidated Net Profitof CCI after taxes was Rs.117 crore as compared to Rs.76 crore for the previous year.
II. Eight O' Clock Company (EOC)
The Total Income of EOC during the Financial Year 2019-20 was Rs.1121 crore (USD 159Million) compared to Rs.1101 crore (USD 158 Million) in the previous Financial Year. TheBag coffee volumes were marginally higher compared to previous year and K-cup volumes wereflat. EOC increased its spend in trade marketing in the background of intense competition.EOC's private label business also grew both in volumes turnover and operating profits.EOC continues to focus on innovations with a healthy pipeline and is also investing in newcapabilities on e-commerce.
III. Tata Coffee Vietnam Company Limited
The Company's Wholly Owned Subsidiary Tata Coffee Vietnam Company Limited (TCVCL)which commissioned Freeze-dried Coffee Plant in Vietnam during May 2019 has successfullystabilised its operations and has continuously improved its capacity utilization quarteron quarter through the year.
TCVCL has well utilised its pilot plant operations to create customised blends and tostreamline its order books. This process helped the Company to demonstrate its customerfocused approach and to build long term relationships. As a way forward steps have beeninitiated in creating niche & unique blends and premiumization.
Operational excellence at TCVCL Plant is driven through setting high standards on Human& Food Safety and Sustainability. The Plant has been certified for LEED (Leadership inEnergy and Environmental Design) BRC (British Retail Consortium) Halal Kosher UTZ andRFA certifications to suit and support its customers changing requirements.
Performance of Subsidiaries
Pursuant to the provisions of Section 129(3) of the Act a statement containing thesalient features of Financial Statements of the Company's subsidiaries in Form AOC - 1 isannexed as Annexure - A. There has been no material change in the nature ofbusiness of the Subsidiaries.
Further pursuant to the provisions of Section 136 of the Act the Financial Statementsof the Company Consolidated Financial Statements along with relevant documents andseparate Audited Financial Statements in respect of Subsidiaries are available on thewebsite of the Company at www.tatacoffee.com.
The Company does not have any Associate or Joint Venture Companies. Further theCompany has adopted a policy for determining the criteria of Material Subsidiaries whichcan be viewed on the Company's website at www.tatacoffee.com.
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 AuditorsStatutory Auditors and Secretarial Auditors including the Audit of Internal FinancialControls over financial reporting by the Statutory Auditors and the reviews performed byManagement and the relevant Board Committees including the Audit Committee the Board isof the opinion that the Company's internal financial controls were adequate and effectiveduring Financial Year 2019-20.
Accordingly pursuant to Sections 134(3)(c) and 134(5) of the Act the Board ofDirectors to the best of its knowledge and ability confirm that:
i. in the preparation of the annual accounts for the Financial Year ended March 312020 the applicable accounting standards have been followed and 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 at the end of the Financial Year and of the profitof the Company for that period;
iii. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
iv. they have prepared the Annual Accounts for the Financial Year ended March 31 2020on a going concern basis;
v. they have laid down internal financial controls to be followed by the Company andsuch internal financial controls are adequate and operating effectively;
vi. they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
14. Directors and Key Managerial Personnel
Pursuant to the provisions of Section 152 of the Act Mr. R. Harish Bhat (DIN:00478198) retires by rotation at the ensuing Annual General Meeting and being eligiblehas offered himself for re-appointment. The Board recommends his re-appointment.
Based on the recommendation of the Nomination and Remuneration Committee and approvalof the same by the Board at its meeting held on May 5 2020 the Independent Directorsviz. Mr. V. Leeladhar Ms. Sunalini Menon and Mr. Siraj Azmat Chaudhry being eligible forre-appointment as Independent Directors for the second term of their office havingoffered themselves for re-appointment are proposed to be re-appointed as IndependentDirectors for a term as detailed hereunder. Resolution(s) in this behalf is set out atItem Nos. 5 6 and 7 of the Notice of Annual General Meeting for Members' approval.
|Name of the Director || |
Term of re-appointment
| ||From ||To |
|Mr. V. Leeladhar (DIN: 02630276) ||August 3 2020 ||December 6 2021 |
|Ms. Sunalini Menon (DIN: 06983334) ||August 3 2020 ||October 31 2023 |
|Mr. Siraj Azmat Chaudhry (DIN: 00161853) ||August 3 2020 ||August 2 2025 |
At the aforesaid meeting the Board of Directors appointed Mr. Sunil A. D'Souza as anAdditional Director (Nonexecutive Non-Independent) of the Company with effect from May 52020. Pursuant to the provisions of Section 161 of the Act Mr. D'Souza holds office tillthe date of the ensuing Annual General Meeting and is eligible for appointment as Directorof the Company. A Resolution in this behalf is set out at Item No. 8 of the Notice ofAnnual General Meeting for Members' approval.
Further the Board of Directors at the meeting held on May 5 2020 subject to theapproval of the shareholders in the ensuing Annual General Meeting re-appointed Mr. K.Venkataramanan as Executive Director - Finance & CFO of the Company not liable toretire by rotation for a further period of two (2) years with effect from October 252020 on terms of remuneration as recommended by the Nomination and RemunerationCommittee. A Resolution in this behalf is set out at Item No. 9 of the Notice of AnnualGeneral Meeting for Members' approval.
During the year under review Mr. S. Santhanakrishnan retired as Independent Directoreffective July 20 2019 after completing his term of appointment. Mr. L. Krishnakumarresigned as Director of the Company effective May 5 2020. The Board places on record itsappreciation for the invaluable contributions and guidance provided by Mr.Santhanakrishnan and Mr. Krishnakumar during their stint with the Company as Directors.
All the Independent Directors of the Company have given their declarations to theCompany under Section 149(7) of the Act that they meet the criteria of independence asprovided under Section 149(6) of the Act read with Regulation 16(1)(b) of Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015("the Listing Regulations"). There has been no change in the circumstancesaffecting their status as Independent Directors of the Company.
In the opinion of the Board they fulfil the conditions of independence as specified inthe Act and the Listing Regulations and are independent of the management.
The Company does not have any pecuniary relationship or transactions with any of itsDirectors other than payment of remuneration/Incentive to the Executive Directors andpayment of sitting fees commission to Non-executive Directors and reimbursement ofexpenses incurred by them for the purpose of attending meetings of the Board/Committee ofthe Company.
In terms of Section 203 of the Act the following are the Key Managerial Personnel ofthe Company:
- Mr. Chacko Purackal Thomas Managing Director & CEO
- Mr. K. Venkataramanan Executive Director - Finance & CFO
- Mr. N. Anantha Murthy Head - Legal & Company Secretary
15. Board and Committee Meetings
An Annual Calendar of Board and Committee Meetings scheduled during the year werecirculated in advance to the Directors.
The Board has constituted an Audit Committee comprising of Mr. V. Leeladhar as Chairmanand Ms. Sunalini Menon Mr. Siraj Azmat Chaudhry and Dr. P. G. Chengappa as its Members.There have been no instances during the year where recommendations of the Audit Committeewere not accepted by the Board. The details of the composition of the Board and itsCommittees and the number of meetings held and attendance of Directors at such meetingsare provided in the Corporate Governance Report which forms part of the Annual Report.
The Directors have devised proper systems and processes for complying with therequirements of applicable Secretarial Standards issued by the Institute of CompanySecretaries of India and that such systems were adequate and operating effectively.
16. 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.
17. 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 are 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. Further various other programmes are conducted for the benefitof Independent Directors to provide periodical updates on regulatory front industrydevelopments and any other significant matters of importance. The details ofFamiliarization Program are provided in the Corporate Governance Report and are alsoavailable on the Company's website. The Company issues a formal letter of appointment tothe Independent Directors outlining their role function duties and responsibilitiesthe format of which is available on the Company's website at www.tatacoffee.com.
18. 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 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 meeting of the Board functions of the Board degree of fulfilmentof key responsibilities establishment and delineation of responsibilities to variousCommittees 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 separate meetings 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.
19. 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.
20. Reporting of Frauds
There were no instances of frauds during the year under review which required theStatutory Auditors to report to the Audit Committee and/or the Board under Section 143(12)of the Act and the rules made thereunder.
21. 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.3594445 and Unclaimed Interest on Debentures including Debenture Redemption amountaggregating to Rs.339643 lying with the Company for a period of seven years weretransferred during the year 2019-20 to the Investor Education and Protection Fund (IEPF)established by the Central Government.
b) Transfer of shares to IEPF
As required under Section 124 of the Act 209226 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 IEPF Authority during the Financial Year 2019-20.Details of shares transferred have been uploaded on the website of IEPF as well as theCompany.
22. Related Party Transactions
All Related Party Transactions that were entered during the Financial Year underreview were on an arm's length basis in the ordinary course of business and are 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 these cannot be foreseen in advance.
None of the transactions entered with Related Parties fall under the scope of Section188(1) of the Act. Details of transactions with Related Parties as required under Section134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules 2014 are givenin Annexure - B 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:https://tatacoffee.com/sites/default/files/collaterals/ investors/Related PartyTransaction Policy.pdf.
23. Corporate Governance and 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 a Practicing CompanySecretary regarding compliance with the conditions stipulated in the Listing Regulationsforms part of the Corporate Governance Report.
The Management Discussion & Analysis Report as required under the ListingRegulations is presented in a separate section and forms part of the Annual Report.
(i) Statutory Auditors
The Members at the 73rd Annual General Meeting of the Company held on July26 2016 had appointed M/s. Deloitte Haskins & Sells LLP Chartered Accountants (FirmRegistration No. 117366W/W- 100018) as the Statutory Auditor of the Company to hold officefor 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 heldin 2021 subject to ratification of their appointment by the shareholders every year. TheMinistry of Corporate Affairs vide its Notification dated May 7 2018 had dispensed withthe requirement 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 2020-21 on a remuneration as mentioned in the Notice of 77thAnnual General Meeting.
A Certificate from M/s. Rao Murthy & Associates Cost Accountants has beenreceived to the effect that their appointment as Cost Auditor of the Company if madewould be in accordance with the limits specified under Section 141 of the Act and Rulesframed thereunder.
A resolution seeking Member's ratification for the remuneration payable to the CostAuditor forms part of the Notice of 77th Annual General Meeting and the same isrecommended for your consideration and ratification.
(iii) Secretarial Auditors
Pursuant to the provisions of Section 204 of the Act and the rules made there underthe Company had appointed M/s. BMP & Co. LLP Company Secretaries to undertake theSecretarial Audit of the Company for the year ended March 31 2020. The Secretarial AuditReport issued in this regard is annexed as Annexure - C.
The Auditors' Report and the Secretarial Audit Report for the Financial Year endedMarch 31 2020 do not contain any qualifications or reservations or adverse remarks.
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 a 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 Deposits
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. 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 creche and child care facilities transport at subsidisedrate to school going children supply of provisions at cost and other home appliances oninstalment basis through co-operative stores and providing housing loan interest subsidy& interest free loans for the employee family wellness.
Apart from the welfare initiatives implemented during last year the following were thefocus areas in the welfare initiatives during Financial Year 2019-20:
Improvement in housing infrastructure for Plantation workers by constructing newlabour line new attached toilets and bathrooms wastewater soak pits etc.
Installation of Green Oxyguard waste incinerator near the labour lines tomaintain waste management
Pre-employment medical check-up for all the seasonal casual workers
Creating awareness for all seasonal casual workers through an animated movie inthe local language. The movie was made to highlight the statutory/nonstatutory benefitsavailable to workmen from TCL various welfare amenities safety measures etc.
Disposal of plastic waste accumulated in the estates through a licensed vendorfor recycling of waste
Awareness programme on COVID-19 by the Medical/Welfare/Safety Departments in allEstates
Provision of sanitisers and masks to all employees as a safeguard as well toprevent spread of COVID-19
29. Policy on Prevention Prohibition and Redressal of Sexual Harassment at Workplace
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 hasrevisited the Internal Complaints Committee members and emphasised on the roles andresponsibilities expected from the members. Training programmes were conducted aroundlocations to strengthen the awareness among the Committee members.
The Company continuously invests in enhancing the awareness on the Policy across itsworkforce. During multiple engagements/assessments it was noticed that the retention ofPOSH/TCOC related awareness is low among blue collar workforce which is complemented withthe high inflow of migratory and casual workforce during the harvesting season.
The Company also conducts a periodic (bi-annual) awareness plan across the organizationon Ethics TCOC POSH & Whistle Blower policy involving workmen as facilitators.Facilitation documents in the form of brochures and pocket cards in multiple languages foreach workman were created and distributed at each of the locations.
As process owners the Unit Managers made batches of 20 each (10 male and 10 female)and covered the first batch with the One Page Information. In turn the individuals offirst batch oriented/communicated to the next batch of 20 from same gender in their nativelanguage. The process from one batch to the other continues till all workmen are coveredin the Unit. To ensure the effectiveness of the delivery process owner/Unit Manager useda case study based mock test for reinforcing the learnings for all batches.
During the Financial Year 2019-20 the Company received six complaints on sexualharassment which have been disposed of and appropriate actions taken.
30. 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 behaviour 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 provides to employees' direct access to the Chairman of the Audit Committee.It is affirmed that no personnel of the Company have been denied access to the AuditCommittee. The Whistle Blower Policy has been posted on the website of the Company at www.tatacoffee.com.
31. Corporate Social Responsibility (CSR)
The Company has a Policy on Corporate Social Responsibility and the same has beenposted on the website of the Company at www.tatacoffee.com. The Annual Report onCSR activities in terms of the requirements of Companies (Corporate Social ResponsibilityPolicy) Rules 2014 is annexed as Annexure - D which forms part of this Report.
32. 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.
33. Extract of Annual Return
Pursuant to Section 92(3) of the Act and Rule 12(1) of the Companies (Management andAdministration) Rules 2014 the extract of the Annual Return in the prescribed form i.e.Form MGT-9 is annexed as Annexure - E which forms part of this Report.
34. 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. AnyShareholder interested in obtaining the same may write to the Company Secretary at theRegistered Office of the Company. The said information is available for inspection by theMembers at the Registered Office of the Company on any working day of the Company upto thedate of the 77th 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.
35. 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.
36. 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.
37. Green Initiatives
In commitment to keep in line with the Green Initiatives and going beyond it to createfurther new green initiatives electronic copy of the Notice of 77th AnnualGeneral Meeting of the Company including the Annual Report for FY 2019-20 are being sentto all Members whose e-mail addresses are registered with the Company/DepositoryParticipant(s).
Your Directors take this opportunity to thank the Parent Company - Tata ConsumerProducts Limited the employees customers vendors investors of the Company and thecommunities in which the Company operates for their unstinted co-operation and valuablesupport extended during the year.
Your Directors also thank the Government of India Government of various States inIndia and Government Departments/Agencies concerned for their co-operation.
Your Directors appreciate and value the contributions made by each and every member ofthe Tata Coffee family.
| ||For and on behalf of the Board |
|Place: Bengaluru ||R. HARISH BHAT |
|Date: May 5 2020 ||Chairman |