The Directors are pleased to submit their fifty first report together
with the audited statement of accounts for the year ended 31st March
1. HIGHLIGHTS - CONSOLIDATED PERFORMANCE
Your Company reported growth in revenues, and a significant increase in
consolidated net Profit for the year ended 31st March 2014. Income from
operations at Rs. 7,738 crores increased by 5% year-on-year, reflecting
good performance in some key markets coupled with favourable foreign
exchange translation impact. Operating Profits at Rs 623 crores however
declined from previous year attributable to higher spending on brands,
increased costs to support scaling up in new ventures and market and
competitive pressures in some regions. Group consolidated net Profit at
Rs 481 crores registered 29 % increase over the previous year, the
increase also reflecting the impact of higher exceptional income and
improved performance in some associate companies.
Your Company re-launched some of its key tea and coffee brands with new
product variants and packaging supported by powerful marketing programs
during the year, which have entailed significant marketing spend.
In a few global markets, we also faced and responded appropriately to
some challenging market conditions, particularly on account of
commodity price trends in Coffee and significant competitor activity.
In our newest category, water, we continue to witness very good growth
of our offerings such as Himalayan, Tata Water Plus and Tata Gluco Plus
through NourishCo, our JV with PepsiCo.
Tata Starbucks Limited, the joint venture company with Starbucks made
very good progress and has opened 43 stores as at 31st March 2014. Tata
Starbucks as of date has presence in 6 cities – Mumbai, Delhi, Gurgaon,
Bangalore, Pune and Chennai. The stores have been performing well and
continue to see excellent consumer response.
2. STAND ALONE FINANCIAL HIGHLIGHTS
The Directors now present below the stand alone financial highlights for
Rs. in Crores
Total revenue 2868 2439
Profit before finance cost, depreciation, 468 351
exceptional items and taxes
Finance cost (39) (32)
Depreciation (16) (16)
Profit before exceptional items and taxes 413 303
Exceptional items (net) 172 18
Profit before tax 585 321
Provision for tax (138) (62)
Profit after tax 447 259
Add: surplus brought forward from
previous year 565 486
Add: Transfer from debenture redemption
reserve 81 -
Amount available for appropriation 1093 745
Proposed dividend (139) (133)
Dividend distribution tax (8) (21)
Transfer to debenture redemption reserve (81) -
Transfer to general reserve (45) (26)
Retained in Profit and loss account 820 565
The Directors are pleased to recommend for the approval of the
shareholders a higher dividend of Rs. 2.25 per share on the paid-up
equity share capital of the Company with respect to the financial year
2013-14. The total outgo on account of dividend, inclusive of taxes,
for 2013-14 is Rs. 147 crores which represents a pay-out of 33% of the
Company''s stand alone Profits.
4. REVIEW OF SUBSIDIARY AND ASSOCIATE COMPANIES
(i) a. As required under the listing agreement with the stock
exchanges the audited consolidated financial statements of the Company
incorporating all its subsidiary and associate companies prepared in
accordance with applicable Accounting Standards are attached.
b. The Ministry of Corporate Affairs has by its notification dated 8th
February 2011 granted a general exemption to companies, as per which,
the provisions of Section 212 of the Companies Act 1956 shall not apply
in relation to subsidiaries, subject to the fulfilment of certain
conditions. Accordingly the consolidated financial statements of the
holding company and all subsidiaries duly audited by its statutory
auditors have been presented and the individual accounts of each of the
subsidiary companies have not been attached.
c. Any shareholder may either ask for a copy or inspect at the
registered office, a copy of the audited accounts of the subsidiary
companies (where required to be prepared).
(ii) Tata Coffee Limited, your
Company''s subsidiary, recorded a turnover of Rs. 651 crores in 2013-14,
a growth of 9% over the previous year. Profit after tax at Rs 107 crores
for 2013- 14 is the highest recorded so far in the company. Tata Coffee
is committed to growth through quality and continues to participate in
domestic and International forums to popularize the company''s Coffee. In
the year under review, Tata Coffee won awards as the best exporter of
Coffee to the Far East, Russia and CIS Countries, USA and Canada at the
Indian Coffee Export Awards. The R&G unit at Kushalnagar has bagged the
best Roaster Award in the IICF held in the current calendar year. The
Valparai, Nullore, Mylemoney, Gorgolly, Margolly and Gubgul estates of
the company have been adjudged as the best for their Arabica and
Robusta Coffee. During the year under review, Tata Coffee exported 5,237
MT of Coffee against 4,831 MT in the previous year. Tata Coffee continues
to focus on growth through differentiated and premium Coffee. The
Company''s expanded capacity for instant Coffee came on stream during the
The Directors of Tata Coffee Limited have recommended a higher dividend
of Rs. 13 per share for the year 2013-14.
(iii) The Eight O''clock Coffee (EOC) brand performed well in USA, with
good consumer demand delivering growth in the pod format. However the
total income of Eight O''clock Coffee Inc. USA, a subsidiary of
Consolidated Coffee Inc. (CCI), in turn a subsidiary of Tata Coffee,
recorded a lower total income of Rs. 1,026 crores in 2013-14 against
Rs. 1,099 crores in the previous year, under Indian GAAP, attributable
to shift in consumer preference towards pods, higher competitive
activity and the fact that the company records only the royalty income
on sale of pods. During the year, to revitalize the EOC brand, the
company invested in a brand re-launch, with new packaging graphics, new
blends and a television advertising campaign.
CCI, during the year, divested its stake in a US based functional
beverage company, on account of changed market conditions, its
performance and significant future funding requirements.
(iv) Tata Tea Extractions, Inc. (TTEI) , the Company''s wholly-owned
subsidiary in the USA, which supplies customer specific instant tea
products reported net earnings of $ 3.3 million in 2013-14 against $
2.1 million in the prior year. The operations of TTEI were re-certified
under the Global Food Safety Initiatives for food safety compliance as
per BRC (British Retail Consortium) standards. The USFDA had also
conducted a surprise audit of the facility during the year and approved
it for food safety compliance.
(v) Mount Everest Mineral Water
Limited (MEMW), recorded higher revenue from operations of Rs. 26
crores during 2013-14 against Rs. 22 crores in the previous year,
driven largely by marginally higher volumes, better realisation and
higher service income. In an inflationary environment, MEMW was able to
manage its costs which helped in the company reporting a Profit of Rs
2.4 crores for the year as compared to a Profit of Rs. 0.5 crores in the
previous year. The JV between Starbucks and your Company have opened up
significant volume opportunities for the brand, Himalayan, as an
exciting new alternate channel not only in India but also in other
advanced markets across the globe. This also enabled Himalayan to be
the only brand of water to be served/poured at all Tata Starbucks
outlets in India. The first international foray with Starbucks
Singapore, has ensured that Himalayan Water is now available across
major Starbucks outlets in Singapore. The Company''s partnership with a
leading business house in Singapore has also opened up the presence of
Himalayan across major retail chains in Singapore.
(vi) The consolidated Income from operations and Profits of Tata Global
Beverages Group Limited, UK, under Indian GAAP, which substantially
reffects the financial performance of the Tetley business and other
international brands, for the year 2013-14 at Rs 3,459 crores was fat
as compared to the previous year. Whilst the rupee depreciation had a
favourable impact, trading in Tata Gluco Plus to meet consumer needs.
6. TATA STARBUCKS LIMITED
Tata Starbucks Limited reported strong growth as it continued to
increase the number of outlets. It currently operates in Mumbai, Pune,
Bangalore, Delhi, Gurgaon and Chennai.
7. AMALGAMATION OF MOUNT EVEREST MINERAL WATER LIMITED (MEMW) WITH THE
Your Directors at their meeting held on November 12, 2013 approved the
amalgamation of MEMW with the Company under a Scheme of Amalgamation
under Sections 391 to 394 and other applicable provisions of the
Companies Act, 1956. The Scheme is subject to and would become effective
on receipt of all requisite approvals. As per the directions of the
Hon''ble High Court at Calcutta, a meeting of the shareholders of the
Company was held on 4th June 2014, wherein the shareholders have
approved with requisite majority, the Scheme of Amalgamation of MEMW
with the Company with effect from the Appointed date, viz, 1st April
2013. Additionally, as required under Clause 5.16 of the Securities and
Exchange Board of India Circular CIR/ CFD/DIL/5/2013 dated 4th February
2013 and Circular CIR/CFD/DIL/8/2013 dated 21st May 2013, approval to
the said Scheme of Amalgamation was also accorded by the majority of
the public shareholders by way of postal ballot/e-voting. The Company
has since filed the consequential petition for sanction of the Scheme by
the Hon''ble High Court at Calcutta. The same is pending.
8. ACQUISITION OF EARTH RULES PTY LIMITED, AUSTRALIA
Your Directors are pleased to report that, subsequent to the end of the
financial year, an overseas subsidiary of your Company, completed the
acquisition of Earth Rules Pty Limited, Australia. Earth Rules, which
operates under the brand name ''MAP'' is engaged in Coffee business, with
presence in the R&G Coffee and Coffee in Pods (single service portions)
segments in Australia. The investment is in line with the Company''s
strategic vision of growing its presence in Australia, and it also
helps Tata Global Beverages to expand its portfolio in Australia to
include high growth single serve Coffee business.
9. REVIEW OF ACTIVITIES A. The Tea Industry
India''s tea output stood at 1,200 million kgs in 2013 up 73.72 million
kgs or 7% over previous year. Over 96% of the additional crop was
produced in North India. Export volumes for 2013 stood at 211.86
million kgs, marginally up on 2012 by 3.63 million kgs. Despite the
additional crop and therefore domestic retention, prices in 2013 were
higher than the previous year. The orthodox variety in the North saw
higher levels within the mix mostly due to an increasingly easier trade
and demand from Iran. In the South, unexpected weather and uneven
overall crop caused temporary crop deficits and significant volatility in
prices. Adverse weather during the first flush in North India has
resulted in a dearer market. We expect this strength to continue up
until the peak quality second flush period post which higher crops and
spot supply will allow overall prices to ease.
B. Domestic Branded Tea Operations
Your Company''s marketing and promotional strategy and launching of new
products resulted in volume and market share growth over the previous
year. Your Company took several initiatives which helped growth across
brands and enables going into the next year with a strong momentum. All
the national brands performed very well and Tata Tea Premium, Agni and
Tetley Green Tea saw good growth. The regional brands also performed
very well with a modest growth over last year, mainly due to restage of
Chakra Gold and Kanan Devan brands and price increases across products
even as competition held on to its prices. Tata Global Beverages
continued in maintaining its volume and value leadership position in
The Tata Tea Jaago Re campaign has, over the years, become synonymous
with ''Awakening'' by addressing serious issues like voting, corruption
and positivity. During 2013-14, the focus has been on gender bias
against women through the launch of our ''Bade Badlaav Ki Liye Choti
Shuruaat'' campaign. A TV ad film was launched on Women''s Day this year
featuring Bollywood star Shahrukh Khan. The advertisement appeals to
each one to do their Choti Shuruaat” - small yet powerful acts
inspired by simply changing one''s mindset. Further to take the thought
forward, a new campaign, ''Power of 49'' was launched aiming to encourage
women to exercise their right to vote at the next general elections.
The ''Power of 49'' campaign, aims to make it one of India''s largest
women-centric awareness campaigns in recent times with intent to reach
out to 100 million women. Power of 49, a Jaago Re initiative for women,
was launched in August 2013 with an objective to awaken women, who form
49% of India''s voter base, inspiring them to cast an informed and
independent vote and exercise the power they have to make or break a
government in the forthcoming election. The campaign was conceptualised
from the insight that women constitute 49% of the voter base in India
but often do not get their due as they are not seen as a determining
factor in elections.
Your Company has large presence in rural India through Gaon Chalo, its
innovative rural distribution model. This model was initiated in
2005-06 in Uttar Pradesh and is today spread across 18 states through a
strong network of NGOs. Gaon Chalo is a non- traditional business model
that is Profitable and growing at a very fast pace. The model generates
rural opportunities for youth and provides a platform to further the
Company''s CSR and Affirmative Action initiatives.
C. International Branded Operations
In the international branded operations, whilst there has been growth
in some markets, the trading environment generally remained challenging
largely driven by intense retailer activity, competitor pressures and
market decline in some categories driven by consumer preferences. We
have been proactive in addressing these challenges through innovation,
restructuring of businesses and brand re-launches.
The group performed well in markets like Canada, France, Australia,
Africa and Middle East. To address changing consumer preferences, the
group focussed on growth segments like speciality tea and single serve
While black tea in the UK is declining, other categories like premium
tea and speciality teas are seeing good growth. The group continues to
focus on improving its brand strength and take share in the growing
segments. Tetley Black tea bags and Tetley Green tea continue to be
number two in their respective categories in UK, whereas Tetley Redbush
is a category leader.
The Canadian business had a good year with strong sales and
Profitability. Australia had a good year recording sales growth over the
prior year. Both these markets saw new product variants being launched
during the year under consideration.
In the US, Coffee sales volumes in traditional formats were lower than
the prior year mainly driven by growth in consumer preference for Coffee
in pods (single serve formats) and also due to competitive intensity in
that market. We are present in the single serve format category through
EOC K-cups, which recorded strong sales. Both Eight O clock and Grand
brands were re-launched during the year with new packaging.
The company continues to focus on category expansion and on improving
brand recognition and loyalty for its portfolio of brands
D. Tea Extractions
The Instant Tea Division''s Sales turnover and Profitability improved
compared to previous year, mainly on account of favourable foreign
exchange and increased production volume. Exports of Instant tea were
made largely to US, Europe and Far Eastern Countries.
The Instant Tea Operations achieved the following noteworthy
milestones, which will greatly enhance their reach and sustenance of
the business in the ever challenging global market:
Ł FSSC 22000 Certification under the Global Food Safety Initiatives, a
globally recognised food safety standard
- Recipient of a globally recognised Ethical Tea Partnership (ETP)
- Recipient of the prestigious Kerala State Pollution Control Board
Award for environment protection & sustainability Zhejiang Tata Tea
Extraction Company Limited, China which is a subsidiary of your
company, is a Joint Venture with Zhejiang Tea Group Company Limited,
China. The JV was set up for the manufacture and marketing of Instant
tea, tea polyphenol and tea concentrates. The company commenced its
production of green instant tea products after initial delays and has
now commenced exports to USA. The company is conducting further trials
to produce tea polyphenols under a new technology and improve efciency
factors. It is also addressing marketing challenges to enter new
The FOB value of exports during 2013-14 was Rs. 172 crores, against Rs.
152 crores in the previous year. The tea bag unit at Kochi performed
well and exported its products to several markets during the year. The
division launched new format of tea bags for the Australian market.
The Instant Tea unit performed well and is strengthening its marketing
effort by undertaking new customer contacts, identifying sales channel
partners and participation in international fairs with a view to meet
new customers and understand industry trends.
F. Plantation Operations
The crop production in 2013-14 at our Pullivasal and Periakanal estates
at 20.73 lakh kgs was in line with the previous year crop. The
productivity achieved by the two estates to end March 2014 was 51.23
Kgs against 47.44 kg achieved for the same period in the previous
G. Community Development, Employees'' Welfare and Environment
Transforming communities through proactive interventions has been an
integral part of Tata Group long before Corporate Social Responsibility
became a buzz phrase. Across Tata Global Beverages, we have nurtured
and encouraged our businesses to proactively engage with the community
and champion causes which are real and relevant. Tata Global Beverages
undertakes an extremely strategic and well-thought-out exercise to
understand the issues faced and the requirements of disadvantaged
communities near our operations and take on projects to improve their
socio-economic status. The community initiatives are being pursued
through the General Hospital, Srishti complex and the High Range
School, all based at Munnar in Kerala.
The General Hospital continued to provide quality healthcare which
includes free treatment to the Muthavan tribal community. Srishti
focuses on enhancing the hidden talents of differently abled children
most of whom are the families of local tea pickers of Munnar. The High
Range School continues to actively pursue enhancement of academics in
the communities around our geographies of operation. Our continuous
efforts have borne fruit, and the education style at our High Range
School is now recognised as a benchmark in holistic education, at the
Your Company is committed to its Affirmative Action (AA) initiatives
which seek to directly conduct or support initiatives to ensure an
equal footing for socially and economically disadvantaged sections in
the country at large, and specifically the Scheduled Caste and Scheduled
Tribe communities. Towards this, your Company''s efforts on 4E''s
(Employment, Employability, Entrepreneurship and Education) are
directed at addressing the national cause of ensuring equal
opportunities to the historically disadvantaged. Tata Global Beverages
ensures prime focus on enhancing health and education across the nation
especially across our geographies. AA initiatives in India are driven
primarily from Munnar and Bangalore.
In pursuance of its Sustainability initiatives, your Group has
identified five strong pillars of sustainability for the future - climate
change, water management, sustainable packaging, ethical supply chain
and community work. Following a review of the TGB sustainability
agenda, the strategic objective for sustainability has been revised and
updated as follows: integrating sustainability into our business,
innovation processes, products and brands. The focus will be on
establishing Global Key Performance Indicators (KPIs) and their
deployment across the organisation building it into the DNA of your
Your subsidiary, Tata Coffee, has always been committed to serving the
communities where it operates. In this spirit, the company is actively
engaging with the local community in Jayamangalam village located near
the Theni plant. Initiatives like ''Self-Help Group'' and ''Girl Child
Nutrition'' projects are aimed at enabling a better quality of life for
women and girl children.
10. HUMAN RESOURCES AND INDUSTRIAL RELATIONS
During the year under review, industrial relations remained generally
peaceful at all our offices and establishments.
The HR priorities for the year 2014-15 were finalised as a part of the
global HR budgeting process. The priorities included the institution of
a global reward & recognition framework and focus on individual,
regional, functional and global recognition systems. Your Company has
improved its performance management process with focused training
workshops for ''people managers''. A revised 360 degree feedback process
is planned for the leadership level this year for improving leadership
11. CORPORATE GOVERNANCE AND MDA
A detailed report on Corporate Governance is separately attached
together with a report on Management Discussion and Analysis (MDA). The
MDA also covers the consolidated operations and reflects the global
nature of our business.
12. BUSINESS RESPONSIBILITY REPORT
Vide its Circular dated August 13, 2012, Securities and Exchange Board
of India (SEBI) mandated the inclusion of Business Responsibility
Report (BRR) as a part of the Annual Report for top 100 listed entities
based on their market capitalisation on BSE Limited and National Stock
Exchange of India Limited, as on March 31, 2012. Pursuant to the above,
the Stock Exchanges amended the listing agreement by inclusion of
Clause 55 providing a suggested framework of a BRR, describing
initiatives taken by the company from an environmental, social and
governance perspective. The Company''s BRR is hosted on its website www.
tataglobalbeverages.com. Any shareholder interested in obtaining a
physical copy of the same may write to the Company Secretary at the
Registered Office of the Company.
13. TATA BUSINESS EXCELLENCE MODEL (TBEM)
Progress has been made in implementing suggestions made by the
Assessment team in the last assessment. The application for external
assessment for 2014 has been submitted in June 2014.
14. DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirement of Section 217 (2AA) of the Companies Act,
1956 (''the Act'') and based on the representations received from the
operating management, the Directors hereby confirm that:
i) In the preparation of the Annual Accounts for 2013-14, the
applicable Accounting Standards have been followed and there are no
ii) They have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of Affairs of
the Company at the end of the financial year and of the Profit of the
Company for the financial year.
iii) They have taken proper and sufficient care to the best of their
knowledge and ability for the maintenance of adequate accounting
records in accordance with the provisions of the Companies Act, 1956.
They confirm that there are adequate systems and controls for
safeguarding the assets of the Company and for preventing and detecting
fraud and other irregularities.
iv) They have prepared the Annual Accounts on a going concern basis.
During the year 2013-14, Mr. R K Krishna Kumar, Mr. U M Rao and Mr. F K
Kavarana stepped down as Directors from the Board of your Company upon
reaching the retirement age in keeping with the Tata Group Guidelines
on retirement of directors. The Board places on record its deep
appreciation to Mr. R K Krishna Kumar, Mr. U M Rao and Mr. F. K.
Kavarana for the excellent contributions made by them as Directors.
Mr. J S Bilimoria ceased to be a director consequent to his sad and
untimely demise on 3rd May 2013.
As reported last year, Mr. L Krishnakumar was appointed as an
additional director and as Executive Director by your Board with effect
from 1st April 2013.
Mr. S Santhanakrishnan and Mrs. Ireena Vittal joined the Board as
additional directors with effect from 28th May 2013 and 22nd October
Mr. Cyrus P Mistry retires by rotation at the forthcoming Annual
General Meeting and being eligible, offers himself for re-election.
As per Section 149(4) of the Companies Act, 2013, the independent
directors of the Company are being appointed to hold office as
independent directors for a period of five years with effect from 26th
August 2014. Brief particulars and expertise of these directors and
their other directorships and committee memberships have been given in
the annexure to the Notice of the Annual General Meeting in accordance
with the requirements of listing agreement with Stock Exchanges.
The Members are requested to appoint the Auditors and fix their
remuneration. Messrs. Lovelock and Lewes, the retiring Auditors have
furnished certificate of their eligibility for re-appointment as
required under the Companies Act, 2013.
17. COST AUDITORS
The Central Government has approved the appointment of M/s. Shome and
Banerjee, 5A Nurulla Doctor Lane, 2nd Floor, Kolkata - 700 017 as cost
auditors for the Company for conducting cost audit for the financial
year 2013-14. The due date for fling the Cost Audit Report for the
financial year ended 31st March 2013 was 30th September 2013 and the
Cost Audit Report was filed by the Cost Auditors on 10th September 2013.
18. PARTICULARS OF EMPLOYEES
Information as required under Section 217(2A) of the Companies Act,
1956 read with the Companies (Particulars of Employees) Rules, 1975, as
amended, forms part of this report. However as per the provisions of
Section 219(1) (b) (iv) of the Companies Act,1956, the report and
accounts are being sent excluding the statement containing the
particulars to be provided under Section 217(2A) of the Companies Act
1956. Any member interested in obtaining such particulars may write to
the Company Secretary for a copy thereof
19. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
A statement giving details of conservation of energy, technology
absorption, foreign exchange earnings and outgo in accordance with
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988 is annexed to this report.
20. CONCLUDING REMARKS
The Directors are sure that the shareholders would like to join them in
conveying their appreciation to all employees of the Company for their
sincere and dedicated services during 2013-14.
On behalf of the Board of Directors
Mumbai, (CYRUS P MISTRY)
16th July, 2014 Chairman