To the Members
Your Directors are pleased to present the 76th Annual Report together with the AuditedStatement of Accounts for the year ended 31st March 2019.
The Company's financial performance for the year ended 31st March 2019 is summarizedbelow:
Rs in Crores
| || |
| ||2018-19 ||2017-18 ||2018-19 ||2017-18 |
|Revenue from Operations ||703 ||706 ||1804 ||1567 |
|Other Income ||54 ||56 ||18 ||22 |
|Total Income ||757 ||762 ||1822 ||1589 |
|Profit Before Exceptional Items and Taxes ||82 ||81 ||159 ||197 |
|Add: Exceptional Income/(Expenses) ||16 ||- ||11 ||(11) |
|Profit Before Tax ||98 ||81 ||170 ||186 |
|Provision for Tax ||26 ||18 ||63 ||(1) |
|Profit After Tax ||72 ||63 ||107 ||187 |
|Less: Non-controllinq Interests ||- ||- ||(38) ||(80) |
|Profit After Tax attributable to Shareholders of the Company ||72 ||63 ||69 ||107 |
|Surplus brought forward from Previous Year ||479 ||461 ||606 ||539 |
|Amount available for appropriation ||551 ||524 ||675 ||646 |
|General Reserve No. I ||- ||- ||- ||- |
|General Reserve No. II ||(8) ||(7) ||(8) ||(7) |
|Reversal of Dividend Distribution Tax/Deferred Tax ||13 ||2 ||12 ||7 |
|Dividend paid relating to Previous Year ||(28) ||(33) ||(28) ||(33) |
|Tax on Dividend ||(6) ||(7) ||(6) ||(7) |
|Balance carried forward ||522 ||479 ||645 ||606 |
1. Revenue from Operations:
Your Company's total income during the year under review was '757 Crores as compared to'762 Crores in the previous year.
The Consolidated total income during the year under review was '1822 Crores as comparedto '1589 Crores in the previous year registering an increase of 14.66% over the previousyear.
The Profit before Tax for the year 2018-19 was higher at '98 Crores as against '81Crores in the previous year. Profit after Tax in 2018-19 stood at '72 Crores as against'63 Crores in the previous year.
On a consolidated basis Profit before Tax for the year 2018-19 was '170 Crores asagainst '186 Crores in the previous year. Profit after Tax (net of minority interest) in2018-19 stood at '69 Crores as against '107 Crores in the previous year.
Your Directors have recommended a Dividend of '1.50 per share (face value of Re.1 pershare) for the year ended 31st March 2019. The total Dividend amount aggregates to '28.02Crores plus applicable Dividend Distribution Tax thereon.
4. Share Capital:
The Paid-up Equity Share Capital of the Company as on 31st March 2019 was '18.68 Crorescomprising of 186770370 Shares of Re.1/- each. The Company has not issued shares withdifferential voting rights employee stock options and sweat equity shares. The Companyhas paid
Listing Fees for the financial year 2019-20 to each of the Stock Exchanges where itsequity 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.
6. Global Coffee Scenario:
Coffee market in the year 2017-18 ended in surplus. World coffee production in coffeeyear 2017-18 is estimated to be 5.7% higher at 164.81 million bags as output of Arabicaincreased by 2.2% to 101.82 million bags and Robusta grew 11.7% to 62.99 million bags.Due to this surplus International coffee prices experienced a downward trend in the lasttwo years. This decline is linked primarily to market fundamentals though other factorssuch as exchange rate movements and futures markets also played a role.
Coffee year 2018-19 was a second consecutive season of surplus as global outputestimated at 167.47 million bags and exceeded world consumption estimated at 165.18million bags. However given the stronger growth in demand the surplus for 2018-19 isprojected to be 2.29 million bags around 1 million bags less than in 2017-18. This excessin supply continues to put downward pressure on prices that is likely to continue over thenext few months.
The New York (ICE) May terminal representing Arabica settled at 94.50 c/lb on 29thMarch 2019 and was 118.15 c/ lb for the same period month on 29th March 2018.
As on 29th March 2019 London Robusta May futures settled at USD 1456/MT and was USD1725/MT for the same period month on 29th March 2018.
7. Company's Performance:
During the financial year 2018-19 the Company has harvested a Robusta crop of 6030 MTagainst 3736 MT in the previous year. In the case of Arabica a production of 1557 MThas been harvested against 1890 MT in the previous season. The coffee harvesting andprocessing has been done timely and with the receipt of good showers during the initialperiod coupled with adequate irrigation the crop harvested for the year was comparativelygood inspite of the District going through the natural calamity (deluge) during July/August 2018.
The Company produced a total of 4.879 Million Kgs of Made Tea for the financial year2018-19 as against 5.629 Million kgs in the previous year. The current year's productionis short by 13.32%. Shortfall in quantum of rainfall in Q1 and a very vigorous monsooncoupled with unprecedented rainfall in Q2 as well as extended drought conditions in Q4affected the flush growth and thereby impacting the crop.
The Company has achieved a pepper production of 597 MT for the financial year 2018-19compared to 909 MT harvested in the previous financial year due to adverse weatherconditions that prevailed during July / August 2018. The density and primary gradepercentage of Pepper this year has been good due to timely harvest. The Company hasinitiated actions to increase the production base of pepper in the coming years.
Kushalnagar Works (KNW):
The Company's Curing Works at Kushalnagar (KNW) cured a total of 8441 MT Coffee duringthe current year as against 11940 MT in the previous year due to lower coffee availablefor curing. In addition a record quantity of 897 MT of Monsoon Coffee was processedduring the year against 748 MT in the previous year. The Company's processing center atKushalnagar is an important cog in the wheel. KNW is a Processing Hub of entire Company'sproduce of coffee and pepper. Along with two roasting units for Tata coffee grand and Starbucks it is certified for ISO FSSAI UTZ SA8000 Rain forest alliance Organic coffeeprocessing and cafe practices.
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 736 MT of Pepper during the financial year 2018-19 when compared with 644MT in 2017-18. The unit is also certified under FSSC 22000 4.1 SA 8000:2008 ISO22000:2005 ISO 9001:2015 (Quality Management System).
Green Coffee Exports:
During the financial year 2018-19 your Company exported 5769 MT of Coffee as against7004 MT in the previous year. Your Company continues to focus on growth through PremiumDifferentiated Coffees and today Differentiated Coffee is about 50% of our portfoliowhich are sold at a premium.
Plantation Trails the hospitality business continued to grow and perform exceedinglywell with record profits. One of the major drivers for this exceptional growth story hasbeen the digital side of the business. Social platforms continue to speak well of thebrand and enhanced digital presence in new markets gave good results. For the first timePlantation Trails featured as page 1 property for the top 5 online portals.
Plantation Trails was well covered by several international travel publicationsincluding an article in the worldwide publication of The Mercedes Benz Classic magazinepublished from Germany. Lonely Planet rates Plantation Trails in an exclusive article"Best Boutique Stays for a Coffee Experience in Coorg".
The Company and IHCL have partnered to develop the nine heritage bungalows under thehospitality brand 'Ama Plantation Trails'. This partnership leverages group synergies tomeet the evolving patron need for local immersive experiences.
B. Instant Coffee Operations:
The financial year 2018-19 saw the Instant Coffee Division achieving improved salesweathering global headwinds and enhanced competition. This year Tata Coffee Limitedmarked its global presence and set up a 5000 TPA state-of-the-art Freeze-Dried coffeeplant in Vietnam. The Freeze-Dried Coffee plant in India also delivered the highest everproduction and dispatches since inception. The manufacturing units at Theni and Toopranalso set new benchmarks in Employee Engagement Safety and Sustainability winning manyawards and certifications during the year.
The Company continues to significantly focus on new product development to providecustomized and differentiated offerings to customers enabling them to improve theirmarket standing. Sales and Marketing efforts are being continuously augmented to reachcustomers directly across global markets.
Tata Coffee Grand:
The Company manufactures 'Tata Coffee Grand' a Filter Coffee variant for sales indomestic market which is being distributed and marketed by the Holding Company TataGlobal Beverages Limited. The Brand has received positive response in the market. It is ablend of Roast and Ground coffee with Chicory. The Company launched a limited edition 150years celebratory blend comprising the best of washed Arabica's the Company had to offeras part of overall Tata Coffee Grand portfolio. The R&G unit was revamped to meet theHolding Company's requirement and is upgraded to FSSC 22000 4.1 (Food Safety &Standards Certification) and also the unit is certified for FSSAI and SA8000.
C. Starbucks Roastery:
The Unit has recorded 41% higher production and processed 214.54 MT during the currentyear as against 151.73 MT in the previous year which shows a very positive trend. TheUnit produces single origin coffees of India Kenya Sumatra and Columbia. Cold Brew isnewer Product which uses Kenyan coffees.
The Unit continues to cater exclusively to the requirements of TATA Starbucks outletsin India from its state-of-the-art Coffee Roasting Facility at Kushalnagar Works. The Unitis upgraded to FSSC 22000 4.1 (Food Safety & Standards Certification) and continues tobe certified under ISO 9001:2015 (Quality Management System) FSSAI (Food Safety andStandards Authority of India) SA8000.
8. Business Growth:
Your Company has a dedicated team of Management and Operating Personnel who have beeninstrumental in the growth of the business over the years. Your Directors believe that theCompany has the potential to further scale up its business volumes and profitability andare in the process of identifying new avenues of growth and effective utilization of itsexisting resources.
During the year under review the Company has received the following awards.
1. "Best Green Business Award" from Economic Times Now for the sustainableand green practices at Coffee Tea and Pepper Plantations. This is an acknowledgement ofthe Company's efforts and best practices for judicious use of the natural resources andthe Company's initiatives for water conservation conservation of natural resources andthe focus on the staying carbon negative.
2. First Prize for Excellence in Workplace Safety at the National Safety PracticesCompetition 2018 organised by Confederation of Indian Industry a second year in row inthe Plantation / Infrastructure category. This was awarded for the Company's initiativestowards devising customised protection equipment for pepper picking that has ensured anincident-free harvest season.
Instant Coffee Operations (ICD):
1. ICD Unit at Theni Tamil Nadu has received the following awards:
a) SR EHS Excellence Awards 2018 - a 4 STAR Rating from Confederation of IndianIndustry
b) Health & Safety Award-2016 from National Safety Council (Tamil Nadu Chapter)
c) Gold Award in the 'Chapter Convention on Quality concepts' conducted by 'QualityCircle Forum of India'- Madurai chapter for 'Granular strength enhancement of AgglomeratedCoffee'
d) Third prize in 5th KAIZEN Mela hosted by Quality Forum of India - Madurai duringJune 2018.
2. ICD Unit at Toopran Telangana has received the following awards:
a) "HR Best Practices Award" from President FTAPCCI at Federation HouseFTAPCCI Hyderabad.
b) National Award for Excellence in Water Management 2018 as "Noteworthy waterefficient unit" from the Ministry of Water Resources Government of India duringOctober 2018.
c) "Best Food/Agri Business Excellence Award - 2019" from HMTV duringFebruary 2019 for exemplary service and sustainable practices.
i) Instant Coffee Unit Toopran
Toopran ICD 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 & BIS certification.
ii) Instant Coffee Unit Theni
Theni ICD Unit was certified for Integrated Management System (IMS) comprising of ISO9001 ISO 14001 BS OHSAS 18001 along with certifications on ISO 22000 HALAL KOSHERBRC IFS FSSAI SA 8000 UTZ & SAN-RFA.
The Theni Unit Laboratory was certified with NABL (National Accreditation Board forTesting and Calibration Laboratories).
10. Capital Expenditure:
During the financial year 2018-19 '45.89 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:
I. Eight O' Clock Coffee Company (EOC):
The Total Income of EOC during the financial year 2018-19 was '1101 Crores (USD 158Million) compared to ' 862 crores (USD 134 Million) in the previous financial year. TheBag coffee volumes were marginally lower compared to previous year. EOC increased itsspends on consumer promotions and also on marketing activities in the background ofintense competition. EOC's K-Cup pods business continued to gain distribution resulting inimproved topline performance which augurs well for the future. EOC's private labelbusiness also grew both in volumes turnover and operating profits. The Company continuesto focus on innovations with a healthy pipeline and is also investing in new capabilitieson e-commerce.
II. Consolidated Coffee Inc. (CCI):
CCI is the Holding Company of EOC. The Consolidated Net Profit after Taxes was '76Crores as compared to '161 Crores for the previous year.
III. Tata Coffee Vietnam Company Limited
The Company's Wholly Owned Subsidiary - Tata Coffee Vietnam Company Limited (TCVCL)unveiled their state-of-the art Freeze-Dried Coffee production plant on 6th March 2019 atthe Binh Duong province of
Vietnam. This is the first one to be set up at an off-shore location and denotes a verysignificant first for Tata Coffee. The plant with an annual capacity of 5000 MTPA has beenset up within 19 months from its GroundBreaking Ceremony. The Factory has had an exemplarysafety record completing almost a million-man hours construction and commissioning workwith zero harm. The site is certified for LEED (Leadership in Energy and EnvironmentalDesign) and is expecting BRC (British Retail Consortium) shortly. TCVCL is uniquelypositioned to work closely with customers to develop exclusive blends at its pilot plant.The plant will go on stream during the financial year 2019-20.
Performance of Subsidiaries:
Pursuant to the provisions of Section 129(3) of the Companies Act 2013 ('the Act') astatement containing salient features of Financial Statements of subsidiaries in FormAOC-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. 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 Management andthe relevant Board Committees including the Audit Committee the Board is of the opinionthat the Company's Internal Financial Controls were adequate and effective during thefinancial year 2018-19.
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 2019the 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 2019 on 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 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.
13. 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.
14. Directors & Key Managerial Personnel:
The Board of Directors at its meeting held on 22nd March 2019 subject to the approvalof the shareholders in the general meeting appointed Mr. Chacko Purackal Thomas asManaging Director & CEO of the Company for a period of 3 years with effect from 1stApril 2019 on terms of remuneration as recommended by the Nomination & RemunerationCommittee. A resolution in this behalf is set out at Item No. 4 of the Notice of AnnualGeneral Meeting for Members' approval.
Pursuant to the provisions of Section 152 of the Act Mr. L. Krishnakumar (DIN:00423616) retires by rotation at the ensuing Annual General Meeting and being eligiblehas offered himself for re-appointment. The Board recommends his re-appointment.
Mr. Sanjiv Sarin retired as the Managing Director & CEO of the Company on 31stMarch 2019. The Board wishes to place on record its appreciation for the invaluableservices rendered by Mr. Sarin during his tenure as Managing Directors & CEO of theCompany.
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
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 and Regulation 16(1)(b) of Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 ('the Listing Regulations'). In the opinion of the Board they fulfil the conditionsof independence as specified in the Act and the Listing Regulations and are independent ofthe management.
15. Board and Committee Meetings:
An 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.
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 Directors' 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.
18. 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 athttps://www.tatacoffee.com.
19. 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 based on the evaluation criteria defined by Nominationand Remuneration 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.
20. 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.
21. 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.
22. 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 to'1106485/- pertaining to the financial year ended on 31st March 2011 and UnclaimedInterest on Debentures including Debenture redemption amount aggregating to '295456/-lying with the Company for a period of seven years were transferred during the financialyear 2018-19 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 96142 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 2018-19. Details of shares transferred have been uploadedon the website of IEPF as well as the Company.
23. Related Party Transactions:
All Related Party Transactions that were entered during the financial year under reviewwere on an arm's length basis and in the ordinary course of business and is in compliancewith the applicable provisions of the Act and the Listing Regulations. There were nomaterially significant Related Party Transactions made by the Company during the year thatrequired 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 with related parties falls 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 areprovided in 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:www. tatacoffee.com.
24. 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.
(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 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 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.
The Company has received a certificate from M/s. Deloitte Haskins & Sells LLPconfirming that they are not disqualified from continuing as Statutory Auditors of theCompany.
(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 2019-20 on a remuneration as mentioned at Item No. 6 in the Noticeof 76th Annual 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 76th 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 Company Secretaries to undertake theSecretarial Audit of the Company for the year ended 31st March 2019. The Secretarial AuditReport issued in this regard is annexed as Annexure - C.
The Auditors' Report and the Secretarial Audit Report for the financial year ended 31stMarch 2019 do not contain any qualification or reservation or adverse remark.
26. 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.
27. 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.
28. 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.
29. 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 wellness sessions periodic occupational healthchecks merit scholarships to employee children spiritual peace by yoga classes crecheand child care facilities transport at subsidized rate to school going children supplyof provisions at cost and other home appliances on installment basis through co-operativestores and providing housing loan interest subsidy & interest free loans for theemployees.
Apart from the welfare initiatives implemented during last year the following were themain focus areas in the welfare initiatives during financial year 2018-19:
improvement in housing infrastructure for Plantation workers by constructing newattached toilets and bathrooms waste water soak pits etc.
Inter division visit of Welfare Officers to share good practices betweendivisions.
Nomination of employees with outstanding track record for the national levelawards. Three of our workmen have been conferred with Prime Minister's Shrama Award.
Pre-employment medical check-up for all seasonal casual workers.
Disposal of plastic waste accumulated in the estates through an NGO called'Hasirudala' who has partnership with licensed vendors for waste segregation andre-cycling of usable plastics.
30. 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 hasrevisited the Internal Complaints Committee members and emphasized on the roles andresponsibilities expected from the members. Posters and Banners were refreshed with thelist of committee members and strengthened the awareness of zero tolerance throughcampaigns and Nukkad Natak.
During the financial year 2018-19 the Company received 3 complaints on sexualharassment which have been disposed of and appropriate actions were taken.
31. 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 have been denied access to the AuditCommittee. The Whistle Blower Policy has been posted on the website of the Company atwww.tatacoffee. com.
32. 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 on CSRactivities in terms of the requirements of Companies (Corporate Social ResponsibilityPolicy) Rules 2014 is annexed as Annexure - D which forms part of this 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 herewith 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 76th 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 this Report.
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 of thisReport.
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 Initiative and going beyond it to createnew green initiatives electronic copy of the Notice of 76th 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 employees customers vendorsinvestors of the Company and the communities in which the Company operates and the HoldingCompany - Tata Global Beverages Limited for their unstinted co-operation and valuablesupport extended to 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: 19th April 2019 ||Chairman |