Introduction

Largest integrated coffee plantation company in the world.

Business activities ranging from growing and curing of coffee and tea to the manufacture and marketing of value-added coffee products.

It grows coffee on its own estates, processes the beans, exports green coffee, manufactures and exports Instant Coffee and retails coffee with its own branding in the domestic market.

It owns 19 coffee estates.

Tata Coffee's uniqueness lies in its ability to produce large quantities of estate specific, strain specific, speciality and premium coffee, while maintaining strict consistency in quality.

Apart from coffee and tea, pepper and cardamom are also grown as inter crops on its estates

Board of Directors

Mr. Harish Bhat (Chairman)

Prof A.Monappa

Mr. S.Santhanakrishnan

Ms. Sunalini Menon

Mr. V.Leeladhar

Mr. Hameed Huq (Managing Director)

Mr. K. Venkataramanan ( Executive Director- Finance and CFO)

Mr. T.Radhakrishnan (Executive Director Operations)

About the members

Harish Bhatt (Chairman) Led Tata Global Beverages as the Managing Director and CEO. Graduated from IIM Ahmedabad. Won Gold medal for scholastic excellence in IIM Ahmedabad. He is a prolific writer and his first book Tata Log was published by Penguin in 2012.

S.Santhanakrishnan(Director) He is a partner in PKF Sridhar & Santhanam, Chartered Accountants. He is member of the Central Council of the Institute of Chartered Accountants of India ( ICAI). Actively involved in numerous industry oriented initiatives of the Reserve Bank of India and Ministry of Corporate Affairs.

Venu Srinivasan(Director) He is an Indian industrialist, the chairman and MD of Sundaram Clayton Ltd. And TVS Motors Company. Served as the President of Confederation of Indian Industry for 2009-10. Currently he is the Honorary Consul General of Republic of Korea and Member of the Prime Ministers Council on Trade & Industry.

D R Kaarthikeyan(Director) He is on Board of several companies and a member of several leading International and Domestic Forum . He has participated in important national and international events. He was conferred the Padma Shri by the Government of India in 2010.

Senior Management

Mr. Hameed Huq (Managing Director) He has been the Managing Director of Tata Coffee since 3rd January, 2010.

He joined Tata Coffee in the year 1999 as Vice President (Plantations) and was promoted as Executive Director (Plantations) with effect from 3rd January, 2005. Prior to joining Tata Coffee, Mr. Huq was in Tata Tea since 1972 and held various senior positions in the Company. He also had a short stint in Plantations in Sri Lanka from 1994 to 1997.

Mr. K. Venkataramanan (Executive Director- Finance & CFO) He has been appointed as Executive Director- Finance and CFO of Tata Coffee with effect from 25th October, 2014.

He was formerly the CFO of Tata Global Beverages Limited-the Holding Company, in charge of South Asia.

He is a qualified Chartered Accountant and Cost Accountant with over 27 years experience in diverse areas covering financial & management accounting, commercial finance, taxation, treasury, and corporate restructuring.

Mr. T Radhakrishnan (Executive Director - Operations) Graduated in Chemical Engineering from SV University during the year 1982 and joined Tata Chemicals.

Gained an Operational experience of 26 years in Heavy Chemicals, Fertilizers, Salt, Bicarbonate, Utilities prior to joining Tata Coffee limited in January 2010.

A qualified assessor/auditor for Safety management systems, Quality Systems, and Business excellence models.

Mr. N.S. Suryanarayanan (Company Secretary) He worked as Secretary with WS Industries Ltd., Empee Distilleries Ltd. and Auro Mira Energy Company Private Ltd., before

joining Tata Coffee in the year 2012.

Board Committees Audit Committee

Mr.S.Santhanakrishnan Chairman

Mr. D.R.Kaarthikeyan

Prof. A.Monappa

Stakeholders Relationship Committee

Mr.S.Santhanakrishnan Chairman

Mr. Harish Bhat

Mr.Hameed Huq

Nomination & Remuneration Committee

Mr.S.Santhanakrishnan Chairman

Mr. Harish Bhat

Prof.A.Monappa

Mr. Venu Srinivasan

Corporate Social Responsibility Committee

Mr.S.Santhanakrishnan Chairman

Mr. D.R.Kaarthikeyan

Mr. Hameed Huq

Name of Director Messrs.

Category

Attendance At No of other

Directorships

Committee Positions

No. of Shares

held Board Meeting

Last AGM Member Chairman

R.K.Krishna Kumar(Retired as Director from

18.07.2013)

Chairman Non-Executive

Director 2 - 3 - - -

Harish Bhat(s appointed as Chairman with effect from

26.07.2013)

Chairman Non-Executive

Director 10 Yes 5 - - -

A.Monappa

Non-Executive Director

Independent Director

9 Yes - - - -

U.Mahesh Rao( retired as Director from 02.07.2013 )

Non-Executive Director

Independent Director

4 Yes 2 4 1 -

Venu Srinivasan

Non-Executive Director

Independent Director

1 No 13 3 1 -

Name of Director Messrs.

Category

Attendance At No of other

Directorships

Committee Positions

No. of

Shares held Board Meeting

Last AGM Member Chairman

S. Santhanakrishnan

Non-Executive Director

Independent Director

10 Yes 5 2 3 -

Hameed Huq Managing Director

12 Yes 1 1 - 199

M.Deepak Kumar Executive Director

12 Yes 1 - - -

Mr. D.R.Karrthikeyan( appointed as a Direcctor with

effect from 02.07.2013)

Non-Executive Director

Independent Director

8 - 10 4 - -

T.Radhakrishnan(appointed as a director with effect from

26.07.2013)

Executive Director

6 - 1 - - -

Audit Committee

Name Position No of meetings attended

Mr. S.Santhankrishnan Independent, Non-Executive Director

10

Mr. D.R.Kaarthikeyan(Appointed on Board on 02.07.2013

Independent, Non-Exceutive Director

7

Prof.A.Monappa Independent, Non-Exceutive Director

7

Mr. U.Mahesh Rao(Retired as Director from 02.07.2013)

Independent, Non-Executive Director

3

Details of the remuneration paid during the year 2013-14

Non Executive Directors

* Mr.R.K.Krishna Kumar retired as Director from 18.07.2013

** Mr.U Mahesh Rao retired as Director from 02.07.2013

Name Commission(Rs.) (Relatng to

2012-13) Sitting Fee(Rs.)

Mr. R. K.Krishna Kumar* 25,82,000 50,000

Mr. U. Mahesh Rao** 35,20,000 1,60,000

Prof. A. Monappa 27,11,000 3,70,000

Mr. Venu Srinivasan 1,46,000 20,000

Mr. S. Santhanakrishnan 40,41,000 4,70,000

Mr. D. R. Kaarthikeyan - 3,00,000

Managing Director & Executive Director

Name Salary(in lakhs) Perquisites &

Allowance(in lakhs) Contribution to Retiral funds(in lakhs)

Commission(in lakhs)

Mr. Hameed Huq 51 66.60 13.77 62

Mr. M.Deepak Kumar 38.40 49.99 10.37 35

Mr. T.Radhakrishnan 13.11 17.11 3.54 20

Shareholders

Sr. No. Category of Shareholders Total Holdings Percentage

1 FII/Foreign Companies 7,59,631 4.07

2 Non Resident Individuals 2,37,339 1.27

3 Financial Institutions & Banks 4,56,256 2.44

4 Mutual Funds

4,69,529 2.51

5 Tata Global Beverages Limited 1,07,35,98 57.48

6 Other Bodies Corporate 16,07,145 8.61

7 Resident Individuals 44,11,155 23.62

TOTAL

1,86,77,037 100.00

Human Resources

Tata Coffee builds workforce capabilities through Competency Development for the management team and Skill Development to improve the skill levels of the workers and supervisors at our various estates, continued through the year.

The Competency Development exercise was implemented through Potential Development Centres (PDCs) and Skill Mapping was implemented as a pilot study in four selected estates.

The Company continues its efforts to build further on Reward and Recognition practices introduced in the earlier years and the same has been deployed across the company in order to continue to encourage and foster employee engagement.

Training and development interventions in areas of technical and behavioural needs of the workforce have been addressed through deployment of internal and external faculty.

Focus on welfare and improving the quality of lives of its people educational assistance to the children of employees, crche and child care facilities, transport at subsidized rate to the school going children, supply of provisions at cost through co-operative store branches located at each Unit/Estate, to name a few

CODE OF CONDUCT

Tata Coffee has adopted the Tata Code of Conduct

The Tata group is committed to benefit the economic development of the countries in which it operates.

Prepare and maintain its accounts fairly and accurately and in accordance with GAAP.

Support the development and operation of competitive open markets and shall promote the liberalization of trade and investment in each country and market in which it operates.

Equal opportunities to all its employees and all qualified applicants for employment without regard to their race, caste, religion, color, ancestry, marital status, gender, sexual orientation, age, nationality, ethnic origin or disability.

A Tata company shall comply with government procurement regulations and shall be transparent in all its dealings with government agencies.

Commit and support the constitution and governance systems of the country in which it operates.

Strive to provide a safe , healthy, clean and ergonomic working environment for its people.

CODE OF CONDUCT

Supplying goods and services of world class quality standards, backed by after-sales services consistent with the requirements of its customers.

Committed to enhancing shareholder value and complying with all regulations and laws that govern shareholder rights

Every employee shall be responsible for the implementation of and compliance with the Code in his / her environment.

Employees of a Tata company, in their business conduct, shall comply with all applicable laws and regulations, in letter and spirit, in all the territories in which they operate

The company shall ensure protection to the whistleblower and any attempts to intimidate him / her would be treated as a violation of the Code.

WHISTLE BLOWER POLICY : PROCEDURE

All financial/ accounting disclosures to be addressed to chairman of auditing committee

With respect to disclosures at the level of VPs and above including ethical matters to be

addressed to the chairman of the audit committee

Disclosures concerning other employees to the ethics counselor

The procedures provides contact details of the chairman of the audit committee and the chief

ethic counselor

All disclosures made to the executives to be forwarded to the CAC or the EC

The disclosures to be provided the covering letter to protect the identity of the whistleblower

should be factual and should be non- speculative.

WHISTLE BLOWER POLICY : INVESTIGATION

All disclosures to be thoroughly investigated CAC/ EC may involve any investigators at his

discretion

Identity of the subject must be kept confidential to the best extent possible

Subject must be informed at the outset about the allegations and has right to seek legal

consult

If allegations against the subject found false company will reimburse consult costs

Subject will not interfere in the investigations

A preliminary view by CAC/EC of the disclosure will be done to ascertain the varsity of the

disclosure

ETHICS

A senior executive at the Vice President level is designated as Ethics Counselor.

Policies are reviewed from time to time and changes if any are communicated appropriately across the Company.

At the Board level, the Ethics and Compliance Committee oversees TCS compliance to the Codes of Conduct to be followed by the Directors, Officers and other employees.

Monthly Reports are sent to the Committee on matters relating to the Insider Trading Code and the Code of conduct.

Corporate behavior in public, private and individual space

Tata Coffee commits to good corporate citizenship, not only in the compliance of all relevant laws and regulations but also by actively assisting in the improvement of quality of life of the people in the communities in which it operates.

It also encourages its employees to volunteer and collaborate with community groups.

CSR Committee

The Board has constituted a Corporate Social Responsibility (CSR) Committee, which comprises of Mr.S. Santhanakrishnan (Independent Director), Mr. D. R.Kaarthikeyan (Independent Director) and Mr. Hameed Huq.

The CSR Committee shall:

Recommend to the Board, CSR policy which shall indicate the activities to be undertaken by the Company as specified in Schedule VII of the Companies Act, 2013.

Recommend the amount of expenditure to be incurred on the activities as mentioned therein. Monitor the CSR policy of the Company from time to time.

CSR Initiatives

The Coorg Foundation, a Public Charitable Trust(Foundation) provides admirable support to various individuals & institutions in the field of health care, education & culture.

Tata Coffee provides administrative and managerial assistance to the Rural India Health Project Hospital (RIHP), Ammathi which serves the needy sections of the society. The Foundation provided grants to RIHP for treatment of patients belonging to the lower income group.

Swastha which is established by The Coorg Foundation as a fully residential institution for differently abled, continues to extend its support to the needy children in the Coorg and neighbouring areas through its centers in Suntikoppa and Pollibetta by imparting required education and training.

The Coorg Foundation encourages sports through scholarships and assistance towards individuals and teams. To ensure that schools incite the spirit of sportsmanship, grants are made available to develop playgrounds and buy sports equipment.

CSR Initiatives

Developmental Activities for Rehabilitative Education, better known as 'DARE', is an institution fostered by Tata Coffee and provides facilities for the mentally and physically challenged children for the workforce at Tata Coffee.

The Coorg Foundation educates the local community on the importance of the environment and imparts the ways and means to preserve the flora and fauna of the region.

The Coorg foundation is currently implementing a project for greening the hills in Coorg and the 'Talacauvery Tapovana' project for restoring natural forests.

The Hornbill Foundation Tata Coffee LTD. Introduced this foundation at the Anamallai Division on June 5, 2013 with the objective of saving the Great Indian Hornbill which is a near threatened species.

CSR Initiatives

The Company has continued its initiatives for the development and protection of the girl child by conducting regular camps for detection of nutrition deficiency in girl children and promotion of self employment opportunities for women in Theni.

Providing clean drinking water to the residents near the Toopran Unit and operating primary schools at Annamallais.

Sustainability Initiative

Plantation Coffee

Augmented water holding capacity of irrigation tanks to 11046ha. Inch through rainwater harvesting

Bio- gas plants introduced to treat waste water

Instant Coffee Division

Effluent Treatment Plant usage capacity increased from 240 to 640 kilolitres per day

Usage of spent coffee as a source of boiler fuel has led to the plant being a Zero- Discharge Plant

Tea Plantation

Focused on increased usage of bio briquettes

Factories have achieved 79% usage, leading to saving 3,800 trees.

Sustainability Initiative

Carbon Footprint

Through eco friendly plantation business practices, an enormous source of carbon sink is being sustained

Rainwater Harvesting

In Plantations, TCL has developed 272 acre hectares of Reservoir area with a water holding capacity of 588 million gallons.

Energy Conservation

Reduction in fuel usage by 15%.

Theni unit sourced wind power which catered to 60% of its energy in the year 2014-15

Risk Management

The Company has adequate system of internal controls and risk management which are commensurate with its size and nature of operations.

They have been designed to provide reasonable assurance with regard to recording and providing reliable financial information, complying with applicable statutes, safeguarding of assets from unauthorized use or losses, authorization of transactions and adherence to corporate policies.

The internal controls and risk management systems are duly checked for their adequacy by carrying out regular and exhaustive internal audits.

The Company has appointed leading firm of Chartered Accountants to carry out the internal audit of the Companys various divisions.

Risk Management

The audit is carried out through an internal audit plan, which is reviewed each year in consultation with the Audit Committee which reviews of adequacy of internal control checks in the system and covers all significant areas of Companys operations.

The Companys Audit Committee reviews reports submitted by the Internal auditors. Suggestions for improvement are considered by the Audit Committee.

The Management keeps the Audit Committee apprised periodically on the implementation status in respect of actionable items.

RISK MANAGEMENT

The risk management process is reviewed periodically in order to keep it aligned with the emerging risks across the globe

KEY RISK

Currency volatility Currency hedging

Cost pressures Focus on improved productivity. Leveraging offshoring

Anti bribery and compliance (ABC) Tata code of conduct binding to all employees Strong anti bribery checks

KPIS

AREA Key Performance Indicators

Product

Consumption

Coffee picked from the ground

Proper coffee drying practices

Integrated agriculture

Environmental

Quantity of water used during post-harvest processing

Coffee Leaf Rust

Shade-grown coffee

Labour Higher salaries than the legal minimum

Ethical

Participation and involvement along the entire chain

Cost analysis

Management of financial risk associated with price volatility

TATA: The Company has been consistently maintaining a Market Value to Book Value Ratio of more than one which is a very good sign as it means that the company is contributing to the creation of wealth in the society.

CCL: The Company has mostly been maintaining a Market Value to Book Value Ratio of more than one which is a very good sign as it means that the company is contributing to the creation of wealth in the society.

Sangameshwar: The Company has not been listed in the stock exchanges.

Market Value to Book Value Ratio Tata Coffee CCL Sangameshwar

2013-14 2.58 1.92 NA

2012-13 4.47 1.24 0

2011-12 3.09 0.75 0

2010-11 4.29 1.16 0

2009-10 1.87 1.51 0

Fixed Assets Turnover Ratio Tata Coffee CCL Sangameshwar Industry

2013-14 0.91 1.46 NA 1.76

2012-13 1.02 1.58 2.21 0.98

2011-12 1.02 1.4 2.17 1.27

2010-11 0.91 1.13 1.88 1.25

2009-10 0.87 1.53 1.29 0.99

TATA: The fixed asset turnover ratio has been increasing gradually since the increasing investments into fixed assets have been matched by an even larger increase in revenue. There was an exception during FY 13-14 where the ratio has decreased as the increase in investment into fixed asset has been lesser than increase in revenues. However when compared to the industry average the company's ratios are much lesser which is not a good sign as it indicates that the competitors are managing to utilise assets more efficiently.

CCL: The fixed asset turnover ratio has been increasing as decreasing investments into fixed assets has been matched by increase in revenue. This increase indicates utilisation of fixed assets. When compared to the industry average the company's ratios are mostly higher than industry average which indicates that the company is managing to utilise assets more efficiently.

Sangameshwar: Due to sale of Timber in the Year 2011, the net fixed assets have decreased hence the FATR has increased.

TATA: Company's debtors turnover ratio has been high and increasing every year which is a very good sign as it means the company is very efficient in managing their debtors. The company has also been way above the industry average which indicates that the company is more efficient than competitors in managing credit.

CCL: The Debtors' Turnover ratio has been increasing which shows that the company is making efforts to collect debt more efficiently. However in comparison to industry average is quite low which indicates that its competitors are more efficient in collecting debt and company should do the same.

Sangameshwar: The Debt collection is robust as compared to the industry average.

Debtors Turnover Ratio Tata Coffee CCL Sangameshwar Industry

2013-14 14.7 7.44 NA 9.79

2012-13 14.68 8.32 21.14 6.93

2011-12 14.56 8.38 16.59 9.46

2010-11 14.67 5.97 48.29 9.51

2009-10 15.13 5.82 73.89 8.2

Tata Coffee: The D-E ratio has been gradually decreasing over the years because. This is because with increase in debts, the company has been largely increasing reserves and surplus to ensure debt-equity ratio doesn't increase. In comparison to the industry average it has been consistently higher which can be risky for the company as it is relying mostly on debt while other companies are managing to keep higher equity and securing shareholders.

CCL: The D-E ratio has been very erratic for the company but it has been consistently more than one. This is not a good sign as the company is relying on debt instead of internal funds. However in the FY 13-14 the company manages to get a ratio of less than one. In comparison to the industry average the company's ratios are much higher. This is not a good sign as the industry averages indicate that competitors are having more equity than debt. In FY 13-14 the debt equity ratio is 0.94 which is much higher than the industry average inspite of splitting shares and issuing bonus shares in Aug '13.

Sangameshwar: The debt equity ratio for Sangameshwar coffee estates is quite good as compared to industry boosting creditors confidence.

Debt-Equity Ratio Tata Coffee CCL Sangameshwar Industry

2013-14 1.22 0.94 NA 0.32

2012-13 1.06 1.1 0.29 0.52

2011-12 1.15 1.07 0.24 0.63

2010-11 1.39 1.09 0.2 0.79

2009-10 1.75 1.24 0.38 0.96

Tata Coffee: The Net Profit Margin Ratio has been steadily increasing over the years as their net profit has been increasing every year. However in FY 11-12 the ratio decreases by almost 25%. The only reason behind this is that the proportion of expenses for that year was way higher than other years because of which the ratio got affected. In comparison to the average industry standards, Tata Coffee has been constantly lower which indicates that their competitors have been performing better.

CCL: The Company has managed to consistently increase its net profits because of which the net profit margin ratio has been increasing over the years. However in comparison to the industry, the company is much lower which indicates that its competitors are managing to make more profits.

Sangameshwar: The increase in profits in the year 2010-11 is due to sale of timber in the estates. The company changed its accounting policy wr.t. Inventory from estimated net realisable value to lower of cost net realisable value resulting in in lower profit margin.

Net Profit Margin Ratio (APATM) Tata Coffee CCL Sangameshwar Industry

2013-14 10.5 8.93 NA 14.19

2012-13 9.31 7.24 33.31 12.83

2011-12 6.16 7.18 14.04 6.2

2010-11 8.42 7.24 38.07 6.07

2009-10 5.73 6.45 29.02 6.19

PESTEL Analysis

Political

Indias political situation is considered to be stable. It has reduced its political interface in the enterprises management which has led to an increase in efficiency and productivity of businesses

The government of India imposes various industry specific regulations such as the Coffee Act, 1942 with the aim of promoting the sale and consumption of coffee in India and aboard.

Economic

Economic factors such as interest rates, taxation changes, economic growth, inflation, exchange rates etc. affect the coffee industry in terms of its production, import export, consumption.

Interest rate influences the cost of capital which plays an important role in the expansion and growth of the industry.

Exchange rates have a great impact on the coffee industry. It affects the cost of import and export of coffee. Since India is the 6th largest exporter of coffee, the coffee exports increase over the years however due to exchange rate, its can affect its value in terms of cost.

Increase in inflation causes the demand of coffee to decrease and thereby decrease the coffee consumption.

It is essential for the farmers to be aware of the economic situation in the times of the economic and financial crisis.

Social

India is having a huge population out of which a majority of the population consist of the youth. The lifestyle of India has changes over the years. These changing patterns have a great impact on the coffee industry.

These days majority of the population prefer coffee which has resulted in an increase in coffee consumption.

PESTEL Analysis

Technological

Technology plays an important role in the development of coffee industry. With the emergence of innovative technology the coffee production and improvement has increased tremendously.

Developments in agriculture have made it possible to grown various varieties of coffee beans in India. Also it has helped the farmers to harvest the coffee beans faster.

Environmental

Various environmental rules and regulations have been implemented in India in order to safeguard the environment. The coffee industry of India has to abide by these rules and regulation which processing coffee.

Environmental disasters such a heavy rainfall or draught have a great impact on coffee production.

Also global warming and other environmental issues affect the coffee production which in turn affects the economy as a whole.

Legal

The health authorities of India have introduced various policies about caffeine production and consumption.

India has also implemented various international trade regulations in order to strength the imports and exports of coffee.

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