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Tata Global Beverage

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Directors Report Year End : Mar '17    Mar 16

To the Members of Tata Global Beverages Limited

The Directors are pleased to submit their fifty fourth report together with the audited financial statements of the Company for the year ended March 31, 2017.

Your Company has adopted Indian Accounting Standards (Ind AS) from April 1, 2016 as notified under Section 133 of the Companies Act, 2013 read along with the Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) Rules, 2016. Accordingly the previous year''s financials have been re-casted to confirm with the requirements of Ind AS.

Financial Results Rs. in Crores

Particulars

Consolidated

Standalone 1

2016-17

2015-16

2016-17

2015-16

Revenue from Operations

6,780

6,637

3,064

2,987

Profit from Operations before Other Income, Finance Costs, Depreciation and

791

654

363

359

Exceptional Items

Less : Depreciation

(126)

(116)

(24)

(23)

Profit from Operations before Other Income, Finance Costs and Exceptional Items

665

538

339

336

Add: Other Income (Standalone results include intra-group dividends which are

83

82

96

112

eliminated on consolidation)

Less : Finance Costs

(91)

(117)

(49)

(68)

Profit before exceptional items and taxes

657

503

386

380

Exceptional items (net)

5

(333)

-

(63)

Profit before tax

662

170

386

317

Provision for tax

(198)

(200)

(110)

(90)

Profit after tax

464

(30)

276

227

Share of net profit/(loss) in Associates and Joint Ventures

(9)

(7)

-

-

Profit for the year

455

(37)

276

227

Attributable to:

Owners of the parent

390

(5)

276

227

Non-Controlling Interest

65

(32)

-

-

Retained Earnings - Opening Balance

4,102

4,059

1,406

1,079

Add: Profit for the year

390

(5)

276

227

Add: Transfer from Debenture Redemption Reserves

81

-

81

-

Add: Realized gains on Equity Shares carried at fair value through OCI

-

328

-

328

Add: Adjustments with Other Equity

3

(47)

(18)

(8)

Amount appropriated during the year:

Dividend including dividend tax paid during 2016-17

(167)

(166)

(168)

(164)

Transfer to General Reserves

(13)

(67)

-

(56)

Retained Earnings - Closing Balance

4,396

4,102

1,577

1,406

State of Company''s Affairs Consolidated Performance

The consolidated revenue at prior year exchange rate grew by 3% aided by improvements in both branded and non branded businesses. Improved performances were recorded in the branded business mainly in EMEA and India with a strong performance by the non branded business. Profit before exceptional items and taxes reflected an improvement of 31% mainly due to higher sales, lower commodity costs, good cost management and lower interest costs. Profit for the year at Rs. 455 crores is significantly higher than the prior year mainly due to better operational performance and lower exceptional items. In the current year, exceptional items mainly include fair value gain determined as per Ind AS 103 -business combination arising out of conversion of an overseas joint venture to a subsidiary pursuant to amendments in the operating agreement, which have been largely offset by expenditure incurred on business reorganization and impairment. The exceptional items in the previous year largely reflected non cash impairment losses relating to certain businesses in Europe and US. In the year under review, the Group decided to divest its stake in a joint venture in China and to restructure certain operations relating to its business in Eastern Europe.

In the prior year, under Indian GAAP exceptional items included profit on sale of certain non core investments amounting to Rs. 328 crores, which is reported directly under Retained Earnings under Ind AS, which explains the loss for the previous year in the consolidated financial results.

Standalone Performance

The standalone revenue from operations for the year ended March 31, 2017 at Rs. 3,064 crores was higher than the prior year. Sales of most major national brands as well as across regional brands grew despite the effect of demonetization, which impacted sales during the months of November and December 2016. Reported sales growth was lower due to price decreases taken in major brands as commodity cost benefits were passed on to customers. Profit before tax at Rs. 386 crores reflected a good increase of 22% over prior year mainly due to lower interest costs and lower impact of exceptional expenditure. Exceptional expenditure in the prior year mainly reflected provisions relating to the China extraction business. Profit after tax also reflects a robust increase of 22% compared to prior year.

In the prior year, under Indian GAAP exceptional items included profit on sale of certain non core investments amounting to Rs. 328 crores, which is reported directly under Retained Earnings under Ind AS.

The Company has decided to divest its stake in its joint venture in China, Zhejiang Tata Tea Extraction Company Limited and we are in the process of getting necessary approvals in China.

Dividend

Your Directors are pleased to recommend for the approval of the shareholders a higher dividend of Rs. 2.35 per share on the equity share capital of the Company for the year ended March 31, 2017. The total outgo on account of dividend inclusive of taxes, for 2016-17 is Rs. 179 crores which represents a pay-out of 65% of the Company''s standalone profits.

Pursuant to Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), the dividend distribution policy duly approved by the Board has been put up on the website of the Company and can be accessed at the link: www.tataglobalbeverages.com/investors/governance/ policies.

Transfer to Reserves

The Board of Directors approved to transfer 10% of the profit of 2016-17 to the General Reserves, amounting to Rs. 27.60 crores in 2017-18.

Share Capital

The paid up Equity Share Capital as at March 31, 2017 was Rs. 63.11 crores comprising of 63,11,29,729 equity shares of Re. 1 each. During the year under review, your Company has not issued any shares with differential voting rights nor has granted any stock options or sweat equity. As on March 31, 2017, none of the Directors of the Company hold instruments convertible into equity shares of the Company.

Review of Subsidiaries, Associates and Joint Venture Companies

Pursuant to Section 129(3) of the Companies Act, 2013, the consolidated financial statements of the Company and its subsidiaries, associates and joint ventures, prepared in accordance with the relevant Accounting Standard specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, form part of this Annual Report. Pursuant to the provisions of said section, a statement containing the salient features of the financial statements of the Company''s subsidiaries, associates and joint ventures in Form AOC-1 is given in this Annual Report. Further, pursuant to the provisions of Section 136 of the Companies Act, 2013, the standalone and consolidated financial statements of the Company, along with relevant documents and separate accounts in respect of subsidiaries are available on the website of the Company www.tataglobalbeverages.com.

The details of material changes in the nature of the business of some of the subsidiaries (including associates and joint ventures) during 2016-17 are given in the Management Discussion and Analysis (MD&A) attached. The impact of such changes as applicable has been adequately disclosed in the financial statements.

Your Company has adopted a policy for determining material subsidiaries in terms of Regulation 16(1 )(c) of the Listing Regulations. The policy as approved may be accessed on the Company''s website at the link: www.tataglobalbeverages.com/ investors/governance/policies.

Performance highlights of key operating subsidiaries, associates and joint ventures

Subsidiaries

Tata Global Beverages Group Ltd, UK substantially reflects the financial performance of the Tetley business and other international brands. Revenue was higher than prior year by 6% at prior year exchange rates. The growth is reflective of the improved sales in most major markets in which it operates and due to the accounting of an entity as a subsidiary in view of changes in the operating agreement. The operating profit also reflects improvement driven by improved sales, effective cost management and favorable commodity costs. Profit before tax was significantly better than the prior year because of exceptional income in the current year. In the current year, exceptional items mainly relate to fair value gain determined as per Ind AS 103 - business combination arising out of conversion of an overseas joint venture to a subsidiary. The company has in principle approved restructure of certain operations relating to its business in Eastern Europe.

Tata Coffee Limited recorded a strong performance aided by a 10% improvement in sales and a 71% improvement in operating profit mainly aided by improved performances by instant coffee and plantation operations. The Board of Directors of the company has recommended a dividend of Rs. 1.75 per share which includes a special dividend of Rs. 0.25 per share to commemorate the completion of 25 years since acquisition of controlling interest in Tata Coffee Limited by your Company. The company is also setting up a state of the art Greenfield freeze dried coffee plant in Vietnam to further its growth agenda in the premium instant coffee segment and strengthen its global footprint.

Eight O'' Clock Coffee had a strong performance driven by improved operating profits due to lower coffee commodity costs and good control over expenditure.

Tata Tea Extractions Inc.''s revenue and profit from operations grew by 9% and 34% respectively reflecting the improved realizations, favorable sales mix and reduction in cost.

Associates

Amalgamated Plantations Private Limited (APPL), India, recorded higher revenues of 9% aided by higher production but the business was adversely impacted by lower realizations. Although better quality teas commanded an improved auction pricing, the normal teas were selling in the auction at prices lower than the levels in the prior year.

Kanan Devan Hills Plantation Company Private Limited (KDHP), India, recorded an improved operating performance driven by higher productivity and better price realization. Turnover increased by 18% and the company made profits for the year under review.

Estate Management Services Private Limited (EMSPL), Sri Lanka, reported increase in consolidated revenue and significant increase in profit after tax due to good growth in palm oil business supported by improvements in tea business.

Joint Ventures

NourishCo Beverages Limited, India, our joint venture with PepsiCo, which has brands like Himalayan, Tata Water Plus and Tata Gluco Plus in its sales portfolio reported higher volume driven sales and lower operating losses compared to the previous year.

Tata Starbucks Private Limited, India reported an increase in its revenues attributable to improved in-store performance, cost and productivity initiatives coupled with the benefit of additional stores opened during 2016-17. Various in-store initiatives had been launched in the current year which encouraged customer engagement and created new occasions for the customers to visit the stores. The company also reported a lower operating loss in the year under review.

Companies which have become or ceased to be Subsidiaries, Associates and Joint Ventures

The following are the changes in subsidiaries, associates and joint ventures during 2016-17:

- Tata Waters LLC and Tata Coffee Vietnam Company Limited became subsidiaries of your Company;

- Empirical Group LLC which was a joint venture has been converted into a subsidiary;

- TRIL Constructions Limited ceased to be a subsidiary and became an associate of your Company within the meaning of the Companies Act, 2013;

There were no other changes during 2016-17.

For further analysis on the Consolidated performance, attention is invited to the section on Management Discussion and Analysis, notes to the consolidated financial statements and Form AOC 1.

Human Resources and Industrial Relations

Results of the employee engagement survey conducted during 2016-17 have shown improvement over earlier years. Key themes were identified and action plans created at all levels to improve upon each theme. The HR function had also launched various initiatives to re-energise the organization and to bring in a high performance culture. High performers were recognized across all geographies and customized programs were developed for capability building across all levels to meet the current and future business challenges.

During the year under review, industrial relations remained harmonious at all our offices and establishments.

Corporate Governance and MD&A

A detailed report on Corporate Governance is separately attached together with a report on Management Discussion and Analysis (MD&A). The MD&A forms an integral part of this report and also covers the consolidated operations reflecting the global nature of our business.

Vigil Mechanism / Whistle Blower Policy

The Company''s vigil mechanism allows the Directors and employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the code of conduct /business ethics. The vigil mechanism provides for adequate safeguards against victimization of the Director(s) and employee(s) who avail this mechanism. All Directors and employees have access to the Chairman of the Audit Committee.

Internal Financial Controls

The Company has adequate systems for Internal Financial Controls which includes operational controls and internal financial controls over financial reporting. These are detailed in the Management Discussion and Analysis Report.

Governance Guidelines

The Company''s governance guidelines on Board effectiveness cover aspects relating to composition and role of the Board, Chairman and Directors, Board diversity, definition of independence, term of Directors, retirement age and committees of the Board. The guidelines also cover key aspects relating to nomination, appointment, induction and development of Directors, Directors remuneration, oversight on subsidiary performances, code of conduct, Board effectiveness reviews and various mandates of Board committees.

Selection and Procedure for Nomination and Appointment of Directors

The Company has a Nomination and Remuneration Committee (NRC) which is responsible for developing competency requirements for the Board, based on the industry and strategy of the Company. The Board composition analysis reflects in-depth understanding of the Company, including its strategies, environment, operations, financial condition and compliance requirements.

The NRC makes recommendations to the Board in regard to appointment of new Directors. The role of the NRC encompasses conducting a gap analysis to refresh the Board on a periodic basis, including each time a Director''s appointment or re-appointment is required. The NRC is also responsible for reviewing the profiles of potential candidates vis-a-vis the required competencies, undertake a reference and due diligence and meeting of potential candidates prior to making recommendations of their nomination to the Board. The appointee is also briefed about the specific requirements for the position including expert knowledge expected at the time of appointment.

Criteria for determining qualifications, positive attributes and independence of a Director

In terms of the provisions of Section 178(3) of the Companies Act,

2013 and Regulation 19 of the Listing Regulations, the NRC has formulated the criteria for determining qualifications, positive attributes and independence of Directors, the key features of which are as follows:

- Qualifications - The Board nomination process encourages diversity of thought, experience, knowledge, age and gender. It also ensures that the Board has an appropriate blend of functional and industry expertise.

- Positive Attributes - Apart from the duties of Directors as prescribed in the Companies Act, 2013, the Directors are expected to demonstrate high standards of ethical behavior, communication skills and independent judgment. The Directors are also expected to abide by the respective Code of Conduct as applicable to them.

- Independence - A Director will be considered independent if he / she meets the criteria laid down in Section 149(6) of the Companies Act, 2013 and Regulation 16(1 )(b) of the Listing Regulations.

Annual Evaluation of the Board, its Committees and Individual Directors

As required under the Companies Act, 2013 and the Listing Regulations, the Board of Directors conducts an annual evaluation of its own performance, Board committees and individual Directors. While making such evaluation, inputs from all the Directors are taken on the basis of criteria such as Board composition, structure, Board processes and their effectiveness, information given to the Board etc. Various aspects such as committee composition, structure, effectiveness of committee meetings etc. are considered while evaluating the performance of the Board committees after seeking inputs from the committee members.

The performances of the individual Directors are reviewed by the Board on the basis of criteria such as contribution at meetings, their preparedness on the issues to be discussed etc. Additionally, the performance of the Chairman of the Board is also evaluated on key aspects of his role.

Remuneration Policy

Pursuant to the provisions of Section 178(3) of the Companies Act, 2013, and Regulation 19 of the Listing Regulations, the NRC has formulated a policy relating to the remuneration for the Directors, key managerial personnel and other employees. The philosophy for remuneration is based on the commitment of fostering a culture of leadership with trust. While formulating this policy, the NRC has considered the factors laid down in Section 178(4) of the Companies Act, 2013, which are as under:

- That the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the company successfully;

- Relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

- Remuneration to Directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals.

The key principles governing the Remuneration Policy are as follows:

- Market competitiveness;

- Role played by the individual;

- Reflective of size of the company, complexity of the sector/ industry / Company''s operations and the Company''s capacity to pay;

- Consistent with recognized best practices; and

- Aligned to any regulatory requirements.

In accordance with the policy, the Managing Director, Executive Director, KMPs and employees are paid basic salary, fixed salary, benefits, perquisites, allowances and annual incentive remuneration / performance linked bonus subject to achievement of certain performance criteria and such other parameters as may be considered appropriate from time to time by the Board. The performance linked bonus would be driven by the outcome of the performance appraisal process and the performance of the Company.

Remuneration for Independent Directors and Non-Independent Non-Executive Directors

The Non-Executive Directors, including Independent Directors, are paid sitting fees for attending the meetings of the Board and committees of the Board. The overall remuneration (sitting fees and commission) should be reasonable and sufficient to attract, retain and motivate Directors aligned to the requirements of the Company including considering the challenges faced by the Company and its future growth imperatives. The remuneration should also be reflective of the size of the Company, complexity of the business and the Company''s capacity to pay the remuneration.

The Company pays a sitting fee of Rs. 30,000 per meeting per Director for attending meetings of the Board, Audit, Nomination and Remuneration and Executive Committees. For meetings of all other committees of the Board, a sitting fee of Rs. 20,000 per meeting per Director is paid. Within the ceiling of 1% of net profits of the Company, computed under the applicable provisions of the Companies Act, 2013, the

Non-Executive Directors including Independent Directors are also paid a commission, the amount whereof is recommended by the NRC and determined by the Board. The basis of determining the specific amount of commission payable to a Non-Executive Director is related to his attendance at meetings, role and responsibility as Chairman or member of the Board / Committees and overall contribution as well as time spent on operational matters other than at the meetings. The shareholders of the Company had approved payment of commission to the Non-Executive Directors at the Annual General Meeting held on August 26, 2014, which is valid up to the financial year ended March 31, 2019. No Stock option has been granted to the Non-Executive Directors.

Familiarization programme for Independent Directors

The details for familiarization of the Independent Directors are put up on the website of the Company. As required under Regulation 46(2)(i) of the Listing Regulations, the details of familiarization programmes conducted during 2016-17 is also put on the Company''s website and the same can be accessed at the link www.tataglobalbeverages.com/company/leadership/Board-of-Directors.

Number of meetings of the Board

The Board of Directors had held nine meetings during 2016-17. For further details, please refer to the Corporate Governance Report, which forms part of this Annual Report.

Audit Committee

The details pertaining to composition of Audit Committee are included in the Corporate Governance Report which forms part of this Annual Report.

Significant and material orders passed by the Regulators or Courts

There are no significant and material orders passed by the Regulators / Courts that would impact the going concern status of the Company and its future operations.

Corporate Social Responsibility (CSR) and Sustainability initiatives

In compliance with Section 135 of Companies Act, 2013, the Company has undertaken CSR activities, projects and programs, excluding activities undertaken in pursuance of its normal course of business. The report on CSR activities as required under Companies (Corporate Social Responsibility Policy) Rules,

2014 is given in Annexure 1 forming part of this Report. The CSR Policy may be accessed on the Company''s website at the link www.tataglobalbeverages.com/investors/governance/policies.

During the year under review, the Company spent Rs. 7.79 crores (2.94% of the average qualifying net profits of last three financial years) on CSR activities on projects qualifying as per Section 135 of the Companies Act, 2013 duly approved by the CSR Committee. In addition to the projects specified as CSR activities under section 135 of Companies Act 2013, the Company has also carried out several other sustainability / responsible business initiatives and projects on a global scale.

The Natural Beverages Policy of the Company is the apex sustainability policy that defines the aspiration to be the consumer''s first choice in sustainable beverage production and consumption. The sustainability pillars of the Company are Sustainable Sourcing, Climate Change, Water Management, Waste Management and Community Development. The Company encourages its suppliers to use ecological and sustainable agricultural practices in tea production and has used 100% sustainably sourced tea for the Tetley brand in EMEA and CAA regions this year. The Company is also co-funding Trustea - the India sustainable tea program that aims to sustainably transform Indian tea, and has certified 370 million kgs of tea by December 2016, reaching over 400 tea estates and 350,000 workers. Tata Global Beverages was awarded Tata Innovista 2016 award for Sustainable Plant Protection Formulation (S-PPF), to develop a portfolio of bio-pesticides and package of practices with 5 other Tata companies.

The Company is ranked in the ''A-list'' of Climate Disclosure Leadership Index (CDLI India 2016) that measures the carbon footprint of all its beverage production units globally. It has a four pronged climate change strategy focused on sustainable agriculture for climate change adaptation, sustainable forestry for climate change mitigation, energy efficiency and renewable energy. The Company recognizes that the right to water is an international human right and supports the right to water for everyone to sufficient, safe, acceptable, physically accessible and affordable water for personal and domestic uses. The Company has initiated ''Project Jalodari'' for rain water harvesting or recharge in all Indian tea packeting centres. The Company is committed to optimize consumer packaging, make efficient use of resources and reduce environmental impact without compromising product quality and safety. The Eaglescliffe factory in UK is a zero waste to landfill unit, and the goal is to replicate this in all beverage production units in the near future.

The Company respects and adheres to the Tata Group''s philosophy of giving back to the community, and acknowledges the role played by communities in the growth of its business. Tata Global Beverages focuses on women empowerment, skill development, education and health & nutrition for the development of the communities it operates in. Tata Global Beverages and Tata Trusts have contributed million to Smile Train, an international children''s charity, for providing cleft repair surgery and comprehensive cleft care to 4000 children this year. Tata Global Beverages is co-funding a program by UNICEF (a United Nations Agency) and Ethical Tea Partnership (ETP) for promoting child rights and child protection in tea gardens of Assam, and has reached 29,000 adolescent girls and 28,000 community members till the year under review. The Company provides affordable healthcare to 100,000 community members every year through High Range Hospital (formerly General Hospital), Munnar (Kerala) and The Referral Hospital and Research Centre (RHRC), Chubwa (Assam). It also collaborates with various Tata companies in activities and programs for volunteering and affirmative action’s.

Particulars of employees

The information required under Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure 2 which forms part of this report.

Pursuant to Section 197 (14) of the Companies Act, 2013 the details of remuneration received by the Managing Director and the Executive Director from the Company''s subsidiary company during 2016-17 are also given in Annexure 2 attached to this report.

Particulars of loans, guarantees and investments by the Company

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 are provided in Annexure 3 attached to this report.

Risk Management

The Risk Management Committee of the Board is entrusted with the responsibility to assist the Board in overseeing and approving the Company''s risk management framework. The Company has an elaborate Risk Charter and Risk policy defining risk management governance model, risk assessment and prioritization process. The Risk Management Committee reviews and monitors the key risks and their mitigation measures periodically and provides an oversight to the Board on Company''s risks outlined in the risk registers. The Audit Committee has additional oversight in the area of financial risks and controls.

Disclosures as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has adopted zero tolerance for sexual harassment at workplace and has formulated a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules there under for prevention and redressal of complaints of sexual harassment at workplace. Awareness programs were conducted at various locations of the Company.

Deposits from public

The Company has not accepted any deposits from the public during the year under review. No amount on account of principal or interest on deposits from public was outstanding as on March 31, 2017.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Dr. Asim Kumar Chattopadhyay, Company Secretary in Practice, to carry out the Secretarial Audit of the Company. The Report of the Secretarial Audit for 2016-17 is attached herewith as Annexure 4. There are no qualifications in the sand report.

Extract of Annual Return

As provided under Section 92(3) of the Companies Act, 2013, the extract of annual return in Form MGT-9 is given in Annexure 5 which forms part of this report.

Directors'' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm:

(i) That in the preparation of the accounts for the financial year ended March 31, 2017, the applicable accounting standards have been followed and that there are no material departures;

(ii) That the Directors 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 profits of the Company for that period;

(iii) That the Directors 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, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) That they have prepared the accounts for the financial year ended March 31, 2017 on a ''going concern basis'';

(v) That the Directors have laid down internal financial controls for the Company which are adequate and are operating effectively;

(vi) That the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and are operating effectively.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, cost and secretarial auditors including audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by the management and the relevant Board committees, including the audit committee, the Board is of the opinion that the Company''s internal financial controls were adequate and operating effectively during the financial year 2016-17.

Related Party Transactions

All related party transactions that were entered into during the financial year were on an arm''s length basis and in the ordinary course of business. There are no material significant related party transactions made by the Company during the year that would have required shareholder approval under Regulation 23(4) of the Listing Regulations. All related party transactions are reported to the audit committee. Prior approval of the audit committee is obtained on a yearly basis for the transactions which are planned and / or repetitive in nature and omnibus approvals are taken as per the policy laid down for unforeseen transactions. The disclosure under Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is not applicable. The policy on Related Party Transactions as approved by the Board is available on the Company''s website and may be accessed at the link www.tataglobalbeverages.com/investors/governance/policies.

The details of the transactions with related parties during 2016-17 are provided in the accompanying financial statements.

During the year, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company other than sitting fees, commission and reimbursement of expenses, as applicable.

Directors and Key Managerial Personnel (KMP)

The Board had appointed Mr. N. Chandrasekaran as an Additional Director on the Board of the Company with effect from 3rd July, 2017. Mr. N. Chandrasekaran is Chairman of the Board of Tata Sons, promoter of more than 100 Tata operating companies, including your Company, with aggregate annual revenues of more than US0 billion. He joined the board of Tata Sons in October 2016 and was appointed Chairman in January 2017. He also chairs the boards of several group operating companies, including Tata Steel, Tata Motors, Tata Power, Indian Hotels and Tata Consultancy Services (TCS) — of which he was chief executive from 2009-17. Under his leadership, TCS generated total revenues of US.5 billion in 2015-16 and consolidated its position as the largest private sector employer in India and the country''s most valuable company.

Mr. Harish Bhat had stepped down as Chairman of the Board effective 2nd July, 2017. Your Board appointed Mr. N. Chandrasekaran as the Chairman of the Board of the Company with effect from 3rd July, 2017 in the place of Mr. Harish Bhat. Your Board places on record its deep appreciation for the excellent contributions made by Mr. Harish Bhat as Chairman of the Board.

The Board had also appointed Mr. Siraj Azmat Chaudhry as an Additional Independent Director on the Board of the Company with effect from 3rd July, 2017. Mr. Siraj Chaudhry is Chairman of Cargill India. His tenure at Cargill spans nearly 23 years, and includes handling the leadership role in India, as well as a global commodity trading role in Geneva. Under his leadership since 2007, Cargill India has successfully built both consumer FMCG businesses in India, and Institutional businesses, backed by world class manufacturing facilities, robust sales & distribution network, and an enviable brand portfolio.

Pursuant to Section 161(1) of the Companies Act, 2013, Mr. Chandrasekaran and Mr. Chaudhry will hold office upto the date of the forthcoming Annual General Meeting. The Company has received notices under Section 160(1) of the Act proposing the candidatures of Mr. Chandrasekaran and Mr. Chaudhry for appointment as Directors at the forthcoming AGM.

Mr. Harish Bhat and Mr. S Santhanakrishnan, Directors, retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-election.

Brief particulars and expertise of the Directors seeking appointment / reappointment together with 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 the Listing Regulations.

The Independent Directors on the Board of the Company, namely, Mrs. Mallika Srinivasan, Mr. V Leeladhar, Mrs. Ranjana Kumar and Mrs. Ireena Vittal were appointed at the Annual General Meeting of the Company held on August 26, 2014. The said Directors have given declarations that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the Listing Regulations.

Mr. Siraj Azmat Chaudhry who was appointed as an Additional Independent Director with effect from 3rd July, 2017 has also given a declaration that he meets the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)

(b) of the Listing Regulations.

During the year under review, your Board of Directors had resolved to replace Mr. Cyrus P. Mistry as Chairman of the Board at its meeting held on November 15, 2016 and appointed Mr. Harish Bhat as Chairman of the Board effective 15th November, 2016. Mr. Cyrus P Mistry resigned as a Director from the Board of the Company with effect from December 19, 2016.

Mr. Analjit Singh and Mr. Darius Pandole, Independent Directors, resigned from the Board with effect from December 20, 2016.

Apart from the above, no other Director or key managerial personnel were appointed or had retired or resigned during 2016-17.

Auditors and Auditors'' Report

The members at the Annual General Meeting held on August 26, 2014, had appointed Lovelock and Lewes, as the Statutory Auditors for three years subject to ratification by the members each year. Accordingly the term of Lovelock and Lewes ends at the conclusion of the forthcoming Annual General Meeting. Your Board recommends the appointment of Deloitte Haskins & Sells, LLP, Chartered Accountants, as the Statutory Auditors of the Company from the conclusion of the fifty fourth Annual General Meeting until the conclusion of the fifty ninth Annual General Meeting of the Company to be held in the year 2022.

The Statutory Auditors of the Company have not reported any fraud as specified under the second proviso to Section 143(12) of the Companies Act, 2013.

The Auditors'' report on the financial statements for the year 2016-17 does not contain any qualifications, reservations or adverse remarks.

Cost Auditors

Your Board has appointed Shome and Banerjee, of 5A Nurulla Doctor Lane, 2nd Floor, Kolkata - 700 017 as Cost Auditors of the Company for conducting cost audit for the financial year 2017-18. The members are requested to ratify the remuneration payable to the Cost Auditors for 2017-18.

Disclosure Requirements

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Companies Act, 2013, read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is given in Annexure 6 attached to this report.

Pursuant to the Listing Regulations, the Report on Corporate Governance along with the certificate from a Practicing Company Secretary regarding compliance of conditions of Corporate Governance, the Business Responsibility Report and the Dividend Distribution Policy are attached and are part of this Annual Report.

Appreciation

The Directors wish to convey their deep appreciation to all the employees of the Company for their sincere and dedicated services as well as their collective contribution to the Company''s performance.

On behalf of the Board of Directors

N. Chandrasekaran

Mumbai Chairman

06th July, 2017 (DIN 00121863)

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