Tata Coffee Ltd Directors Report.

To the Members,

Your Directors are pleased to present the 77th Annual Report of Tata Coffee Limited ("the Company") along with the Audited Financial Statements for the Financial Year ended March 31,2020.

Financial Results:

The financial performance of the Company for the year ended March 31, 2020, on a Standalone and Consolidated basis, is summarised below:

(Rs. crore)

Standalone

Consolidated

Particulars 2019-20 2018-19 2019-20 2018-19
Revenue from Operations 719 703 1966 1804
Other income 56 54 21 18
Total Income 775 757 1987 1822
Expenses
Operating expenditure 671 652 1710 1606
Depreciation and amortization expenses 25 23 81 57
Total Expenses 696 675 1791 1663
Profit before Exceptional Items and Taxes 79 82 196 159
Add: Exceptional Items and Taxes 6 16 4 11
Profit before tax (PBT) 85 98 200 170
Tax expense 12 26 59 63
Profit for the year 73 72 141 107
Attributable to:
Shareholders of the Company 73 72 82 69
Non-Controlling Interests - - 59 38
Surplus brought forward from Previous Year 522 479 646 606
Amount available for appropriation 595 551 728 675
General Reserve I - - - -
General Reserve II (7) (8) (7) (8)
Reversal of Dividend Distribution Tax/Deferred Tax - 13 - 13
Dividend paid relating to Previous Year (28) (28) (28) (28)
Tax on Dividend (6) (6) (6) (6)
Transfer to Retained Earnings 8 - 8 -
Transfer to Retained Earnings - transitional impact of Ind AS 116 - - (17) -
Balance carried forward 562 522 678 646

1. Total Income Standalone

Your Companys Total Income during the year under review was Rs.775 crore as compared to Rs.757 crore in the Previous Year.

Consolidated

Consolidated Total Income during the year under review was Rs.1987 crore as compared to Rs.1822 crore in the Previous Year, registering an increase of 9% over the previous year.

2. Profits

Standalone

Profit before Tax for the year 2019-20 was Rs.85 crore as against Rs.98 crore in the previous year. Profit after Tax for the year 2019-20 stood at Rs.73 crore as against Rs.72 crore in the previous year.

Consolidated

On a consolidated basis, Profit before Tax for the year 2019-20 was Rs.200 crore as against Rs.170 crore in the previous year. Profit after Tax (net of minority interest) for the year 2019-20 stood at Rs.82 crore as against Rs.69 crore in the previous year.

3. Dividend

The Board of Directors have recommended a Dividend of Rs.1.50 per share (previous year Rs.1.50 per share) on face value of Rs.1 each for the Financial Year ended March 31, 2020. The total Dividend outgo amounts to Rs.28.02 crore (previous year Rs.28.02 Crore, excluding Dividend Distribution Tax).

Pursuant to Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("the 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 www.tatacoffee.com.

4. Share Capital

The paid-up Equity Share Capital of the Company as on March 31, 2020 was Rs.18.68 crore comprising of 18,67,70,370 equity shares of Rs.1 each. During the year under review, your Company has neither issued any shares with differential voting rights nor has granted any stock options or sweat equity. The Company has paid Listing Fees for the Financial Year 2020-21, to each of the Stock Exchanges, where its equity shares are listed.

5. Material changes and commitment - if any, affecting financial position of the Company from the end of the Financial Year till the date of this Report:

There has been no material change and commitment, affecting the financial performance of the Company which occurred between the end of the Financial Year of the Company to which the financial statements relate and the date of this Report, except for the impact arising out of COVID-19, which is detailed elsewhere in this Report.

6. COVID-19 and its impact

The Directors have been closely reviewing with the Management, the impact of COVID-19 on the Company. Your Company had to temporarily suspend operations at its plants and locations as per the directives of the Government and keeping in mind the paramount need of safety of the employees. The operations, though in a scaled down manner, have since commenced after obtaining permissions from the authorities concerned and all safety measures including social distancing are being followed. The dispatches to customers have also recommenced. The Companys products viz., Coffee, Tea and Pepper are meant for daily consumption in households and Rs.out-of-home The Management is in constant touch with its customers on the evolving situation and are making all efforts to service their requirements with minimal delays. The Companys Wholly-owned Subsidiary viz., Tata Coffee Vietnam Company Limited, at Vietnam, is operating smoothly without any disruptions, as on date. The situation created by Covid-19 continues to hold some uncertainties for the future; however, the Board and the Management will do its best to address the same, as the situation evolves, in the interests of all stakeholders of the Company.

7. Global Coffee Scenario

For the Financial Year 2019-20, world coffee production was estimated at 168.86 million bags, a decrease of 0.8% as compared to the previous Financial Year 2018-19. Arabica production was estimated 3.9% lower at 96.37 million bags while Robusta output was estimated 3.7% higher at 72.5 million bags.

World coffee consumption was estimated at 169.34 million bags, 0.7% higher than in 2018-19, following a year of exceptional consumption growth in Europe and North America.

In coffee year 2019-20, a deficit of 0.48 million bags is currently estimated; however, COVID-19 presents considerable downside risk to global coffee consumption.

As of March 31, 2020, New York (ICE) May terminal for Arabica settled at 119.55 c/lb, while it was at 94.50 c/ lb as of March 31,2019.

As of March 31,2020, London Robusta May futures settled at USD 1186/MT, while it was at USD 1456/MT as of March 31,2019.

The emergence of COVID-19 pandemic in the first calendar quarter of 2020 poses amongst other things, a threat to global coffee demand - which was growing consistently at a rate of about 2.0% to 2.5% annually for the past several years. In particular, the Rs.out-of-home coffee consumption would be impacted for some time as governments across the globe implement social distancing and lockdowns as tools to contain the pandemic. This contraction of demand growth holds challenges for the agricultural supply side around the world, where farmers have been struggling to cope up with prices trading below cost of production in several origins already.

8. Companys Performance

A. Plantations

Coffee

During the Financial Year 2019-20, the Company has harvested a Robusta crop of 4,405 MT as against 6,030 MT in the previous year. In the case of Arabica, a production of 1,425 MT has been achieved as against 1,557 MT in the previous year. The Coffee harvesting operations of the Company for the season 2019-20 has been predominantly completed as per schedule and gleaning operations are currently in progress. With the timely completion of the crop harvest, postharvest operations such as handling, white stem borer control, pepper watering, blossom/backing irrigation for Robusta crop, etc., are in progress.

During the Pre-monsoon i.e., period up to May/June 2019, the Coorg region experienced a drought like situation, and thereafter there was excess rainfall during August - October 2019, recording almost 50% of the annual rainfall. This has resulted in excess moisture retention and Rs.wet foot condition leading to improper carbohydrate metabolism.

Bean development and hardening were hindered with the continuous downpour during bean filling stages, a physiological phenomenon leading to increased abnormalities in the bean, i.e., more percentage of pea berries in the harvested crop thereby resulting in drop in the estimated Coffee crop.

The Company carried out an assessment with assistance from the technical expert from the Research Institute, Coffee Board, who concluded that this was an abnormal physiological phenomenon that had impacted the entire Coffee Industry.

Tea

During the Financial Year 2019-20, the Company produced 4.874 Million kgs of Tea as against 4.879 million kgs in the previous year. The turnover during the year was Rs.59 crore as against Rs.66 crore in the last year. The drop in crop is attributable to delayed premonsoon showers in the month of March and April 2019. Further, the impact of pest infestation during Q2 and Q3 to the tune of 74 % had severely impacted the crop. During the year, the South Indian sale averages dropped by 5.4%, as the demand was low for plain CTC teas and the influx of North Indian teas, due to production being higher in North India.

Pepper

During the year, the Company achieved Pepper production of 123 MT from the previous season 2018-19 and 652 MT for the Season Crop 2019-20 as of March 31, 2020, thereby taking the overall Production to 775 MT for the year as against 597 MT harvested during the previous Financial Year 2018-19. Emergence of catkins/flowering during May/June is very critical for 100% crop setting. Pre-monsoon rainfall was delayed till June 2019 in the North Coorg and Hassan Division Estates, when compared to South Coorg Estates, which extended the emergence of catkins. Late catkin initiation in the month of August/September resulted in sparse setting of Crop and the corns not developing fully, resulting in increased light berries which was observed only on harvest. This has resulted in drop in the anticipated crop which is a physiological phenomenon arising out of the unfavorable weather conditions.

The Company has initiated various steps to further enhance the production base of Pepper in the coming years. Pepper watering during summer months is a continuous process to protect Pepper vines from moisture stress.

Kushalnagar - Coffee Curing Works & Pepper Processing Unit

The Companys processing centre at Kushalnagar is an important cog in the wheels of Tata Coffee. Kushalnagar Works is a processing hub for the Companys entire produce of Coffee and Pepper. It also houses two roasting units for Tata Coffee Grand and Tata Starbucks. The Unit is certified for ISO 9001:2015, UTZ, SA-8000:2014, Rain Forest Alliance, Organic Coffee processing, and Cafe Practices. During the Financial Year 2019-20, 11,042 MT of coffee was processed.

During the year, the Pepper Processing Unit has graded & processed 601 MT of Pepper as compared to 736 MT in the previous year. The Unit is certified for organic processing and certified under FSSC. 22000 4.1 and SA 8000:2014 [Quality Management Systems].

Green Coffee Exports

During the Financial Year 2019-20, your Company exported 6,701 MT of coffee as against 5,769 MT in the previous year. Your Company continues to focus on growth, through Premium Differentiated Coffees and today differentiated coffee is 47% of the Companys portfolio. The Companys efforts at forging relationships with some of the most well-known roasters globally and finding niche markets for its coffee continue to be strategic priorities for us.

Ama Plantation Trails

Ama Plantation Trails has recorded an Income of Rs.4.1 crore for the Financial Year under review with an EBIT of Rs.1.1 crore. While the Income was lower than Budget, but it was higher than the previous year. EBIT has been impacted due to lower tourist flows and cancellations due to floods in Q2FY20 as well as at the end of the year due to COVID-19. As on date, the operations of Ama Plantation Trails are closed.

B. Instant Coffee Operations

The Financial Year 2019-20 saw the Instant Coffee Division achieving improved sales weathering global headwinds, enhanced competition and the impact of the COVID-19 pandemic towards the end of the year. The new state-of-the-art 5,000 MT per annum Freeze Dried Coffee Plant in Vietnam, managed by the Wholly Owned Subsidiary of the Company, is fully operational producing high-quality Instant Coffee.

The manufacturing units at Theni and Toopran continued to set new benchmarks in Energy management, natural resource management, Gender diversity, Employee engagement, Safety and Sustainability, and have won many awards and certifications during the year pertaining to safety, employee welfare, Rs.Six Sigma in operations etc.

The Company derives its competitive edge from the ability to provide customised solutions and new products. Many of the Companys customers have significantly maintained and improved their market standings across the Globe. This year too, the Company witnessed continued diversification of sales across geographies and broad - basing of its customer profile.

Tata Coffee Grand

The Company manufactures Rs.Tata Coffee Grand, a Filter coffee variant for sales in the domestic market, which is being distributed and marketed by your Companys Holding Company, Tata Consumer Products Limited. The Brand has received positive response in the market. It is a blend of Roasted & Ground Coffee laced with Chicory. During the year, the Company launched a limited edition, 1868 blend comprising the best of washed Arabicas Tata Coffee had to offer, as part of the overall Tata Coffee portfolio.

C. Starbucks Roastery

The Unit has processed 209 MT during the current year. The Unit produces single origin coffees of India, Kenya and Sumatra. The Unit caters exclusively to the requirements of Tata Starbucks outlets in India from its state-of-the-art Coffee Roasting Facility at Kushalnagar Works. An additional roasting line was augmented during the year to cater to the enhanced requirements of Tata Starbucks. The Unit is certified under FSSC 22000 Version 4.1, ISO 9001:2008 (Quality Management System) FSSAI (Food Safety and Standards Authority of India), SA-8000:2014, and Ethical Sourcing.

9. Awards

During the year under review, the Company has received the following awards:

(i) Coffee Plantations

"Best Producer from India" award for season 2018/19 at Ernesto Illy International Coffee Awards. Tata Coffees Sunticoppa estate emerged as a Winner for the sustainable quality. The Ernesto Illy International Coffee Award celebrates excellence in growing coffee beans of the highest quality through sustainable means to offer the best coffee to the world.

(ii) Instant Coffee Operations

1. ICD Unit at Theni, Tamil Nadu has received the following awards

a) EHS Assessment Award by CII-SR - a 4 Star rating from Confederation of Indian Industry

b) Gold Award in Rs.Six Sigma competition conducted by Quality Circle Forum of India - Madurai chapter

2. ICD Unit at Toopran, Telangana, has achieved the First Position in HR awards declared by FTCCI [Federation of Telangana Chamber of Commerce]

10. Certifications:

Instant Coffee Units, Theni & Toopran

a. Theni ICD Unit was certified by British Retail Consortium V8 and the same was re-certified for Integrated Management System (IMS) during 2019-20.

b. Toopran ICD Unit was certified for FSSC 22000 Ver 4.1, and further it was upgraded to FSSC 22000 Ver 5.1.

11. Capital Expenditure

During the Financial Year 2019-20, Rs.40 crore was incurred towards capital expenditure primarily on account of welfare, modernization, upgradation, replanting and other programmes undertaken in the various units of the Company.

12. Subsidiary Companies and Consolidated Financial Statements

Subsidiary Companies

I. Consolidated Coffee Inc. (CCI) and Eight O Clock Holdings Inc.

CCI is the Holding Company of Eight O Clock Holdings Inc and Eight O Clock Holdings Inc is the Holding Company of Eight O Clock Coffee Company. The Consolidated Net Profit of CCI after taxes was Rs.117 crore as compared to Rs.76 crore for the previous year.

II. Eight O Clock Company (EOC)

The Total Income of EOC during the Financial Year 2019-20 was Rs.1121 crore (USD 159 Million) compared to Rs.1101 crore (USD 158 Million) in the previous Financial Year. The Bag coffee volumes were marginally higher compared to previous year and K-cup volumes were flat. EOC increased its spend in trade marketing in the background of intense competition. EOCs private label business also grew both in volumes, turnover and operating profits. EOC continues to focus on innovations with a healthy pipeline and is also investing in new capabilities on e-commerce.

III. Tata Coffee Vietnam Company Limited

The Companys Wholly Owned Subsidiary, Tata Coffee Vietnam Company Limited (TCVCL), which commissioned Freeze-dried Coffee Plant in Vietnam during May 2019 has successfully stabilised its operations and has continuously improved its capacity utilization quarter on quarter, through the year.

TCVCL has well utilised its pilot plant operations to create customised blends and to streamline its order books. This process helped the Company to demonstrate its customer focused approach and to build long term relationships. As a way forward, steps have been initiated in creating niche & unique blends and premiumization.

Operational excellence at TCVCL Plant is driven through setting high standards on Human & Food Safety and Sustainability. The Plant has been certified for LEED (Leadership in Energy and Environmental Design), BRC (British Retail Consortium), Halal, Kosher, UTZ and RFA certifications to suit and support its customers changing requirements.

Performance of Subsidiaries

Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of Financial Statements of the Companys subsidiaries in Form AOC - 1 is annexed as Annexure - A. There has been no material change in the nature of business of the Subsidiaries.

Further, pursuant to the provisions of Section 136 of the Act, the Financial Statements of the Company, Consolidated Financial Statements along with relevant documents and separate Audited Financial Statements in respect of Subsidiaries, are available on the website of the Company at www.tatacoffee.com.

The Company does not have any Associate or Joint Venture Companies. Further, the Company has adopted a policy for determining the criteria of Material Subsidiaries which can be viewed on the Companys website at www.tatacoffee.com.

13. Directors Responsibility Statement

Based on the framework of Internal Financial Controls and compliance systems established and maintained by the Company, the work performed by the Internal Auditors, Statutory Auditors and Secretarial Auditors, including the Audit of Internal Financial Controls over financial reporting by the Statutory Auditors and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Companys internal financial controls were adequate and effective during Financial Year 2019-20.

Accordingly, pursuant to Sections 134(3)(c) and 134(5) of the Act, the Board of Directors, to the best of its knowledge and ability, confirm that:

i. in the preparation of the annual accounts for the Financial Year ended March 31, 2020, the applicable accounting standards have been followed and there are no material departures;

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 that period;

iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. they have prepared the Annual Accounts for the Financial Year ended March 31, 2020 on a going concern basis;

v. they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively;

vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

14. Directors and Key Managerial Personnel

Pursuant to the provisions of Section 152 of the Act, Mr. R. Harish Bhat (DIN: 00478198) retires by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment. The Board recommends his re-appointment.

Based on the recommendation of the Nomination and Remuneration Committee and approval of the same by the Board at its meeting held on May 5, 2020, the Independent Directors viz., Mr. V. Leeladhar, Ms. Sunalini Menon and Mr. Siraj Azmat Chaudhry being eligible for re-appointment as Independent Directors for the second term of their office, having offered themselves for re-appointment, are proposed to be re-appointed as Independent Directors for a term as detailed hereunder. Resolution(s) in this behalf is set out at Item Nos. 5, 6 and 7 of the Notice of Annual General Meeting, for Members approval.

Name of the Director

Term of re-appointment

From To
Mr. V. Leeladhar (DIN: 02630276) August 3, 2020 December 6, 2021
Ms. Sunalini Menon (DIN: 06983334) August 3, 2020 October 31, 2023
Mr. Siraj Azmat Chaudhry (DIN: 00161853) August 3, 2020 August 2, 2025

At the aforesaid meeting, the Board of Directors appointed Mr. Sunil A. DSouza as an Additional Director (Nonexecutive Non-Independent) of the Company with effect from May 5, 2020. Pursuant to the provisions of Section 161 of the Act, Mr. DSouza holds office till the date of the ensuing Annual General Meeting and is eligible for appointment as Director of the Company. A Resolution in this behalf is set out at Item No. 8 of the Notice of Annual General Meeting, for Members approval.

Further, the Board of Directors at the meeting held on May 5, 2020, subject to the approval of the shareholders in the ensuing Annual General Meeting, re-appointed Mr. K. Venkataramanan, as Executive Director - Finance & CFO of the Company, not liable to retire by rotation, for a further period of two (2) years with effect from October 25, 2020, on terms of remuneration as recommended by the Nomination and Remuneration Committee. A Resolution in this behalf is set out at Item No. 9 of the Notice of Annual General Meeting, for Members approval.

During the year under review, Mr. S. Santhanakrishnan retired as Independent Director effective July 20, 2019, after completing his term of appointment. Mr. L. Krishnakumar resigned as Director of the Company, effective May 5, 2020. The Board places on record its appreciation for the invaluable contributions and guidance provided by Mr. Santhanakrishnan and Mr. Krishnakumar, during their stint with the Company as Directors.

All the Independent Directors of the Company have given their declarations to the Company under Section 149(7) of the Act that they meet the criteria of independence as provided under Section 149(6) of the Act read with Regulation 16(1)(b) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 ("the Listing Regulations"). There has been no change in the circumstances affecting their status as Independent Directors of the Company.

In the opinion of the Board, they fulfil the conditions of independence as specified in the Act and the Listing Regulations and are independent of the management.

The Company does not have any pecuniary relationship or transactions with any of its Directors, other than payment of remuneration/Incentive to the Executive Directors and payment of sitting fees, commission to Non-executive Directors and reimbursement of expenses incurred by them for the purpose of attending meetings of the Board/Committee of the Company.

In terms of Section 203 of the Act, the following are the Key Managerial Personnel of the Company:

- Mr. Chacko Purackal Thomas, Managing Director & CEO

- Mr. K. Venkataramanan, Executive Director - Finance & CFO

- Mr. N. Anantha Murthy, Head - Legal & Company Secretary

15. Board and Committee Meetings

An Annual Calendar of Board and Committee Meetings scheduled during the year were circulated in advance to the Directors.

The Board has constituted an Audit Committee comprising of Mr. V. Leeladhar as Chairman and Ms. Sunalini Menon, Mr. Siraj Azmat Chaudhry and Dr. P. G. Chengappa as its Members. There have been no instances during the year where recommendations of the Audit Committee were not accepted by the Board. The details of the composition of the Board and its Committees and the number of meetings held and attendance of Directors at such meetings are provided in the Corporate Governance Report, which forms part of the Annual Report.

The Directors have devised proper systems and processes for complying with the requirements of applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems were adequate and operating effectively.

16. Governance Guidelines

The Company has adopted Governance Guidelines on Board Effectiveness. The Governance Guidelines encompasses 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. It also covers aspects relating to Nomination, Appointment, Induction and Development of Directors, Directors Remuneration, Subsidiary oversight, Code of Conduct, Board Effectiveness Review and Mandates of Board Committees.

17. Policy on Directors Appointment and Remuneration and other details

(a) Procedure for Nomination and Appointment of Directors

The Nomination and Remuneration Committee (NRC) has been mandated to oversee and develop competency requirements for the Board based on the industry requirements and business strategy of the Company. The NRC reviews and evaluates the resumes of potential candidates for appointment of Directors and meets them prior to making recommendations of their nomination to the Board. Specific requirements for the position, including expert knowledge expected, are communicated to the appointee.

On the recommendation of the NRC, the Board has adopted and framed a Remuneration Policy for the Directors, Key Managerial Personnel and other employees pursuant to the provisions of the Act and the Listing Regulations. The remuneration determined for Executive/Independent Directors is subject to the recommendation of the Nomination and Remuneration Committee and approval of the Board of Directors. The Non-Executive Directors are compensated by way of profit-sharing commission and the criteria being their attendance and contribution at the Board/Committee Meetings. The Executive Directors are not paid sitting fees; the Non-Executive Directors are entitled to sitting fees for attending the Board/Committee Meetings.

It is affirmed that the remuneration paid to Directors, Key Managerial Personnel and all other employees are in accordance with the Remuneration Policy of the Company. The Companys Policy on Directors Appointment and Remuneration and other matters provided in Section 178(3) of the Act and Regulation 19 of the Listing Regulations have been disclosed in the Corporate Governance Report, which forms part of the Annual Report.

(b) Familiarization/Orientation program for Independent Directors

The Independent Directors attend a Familiarization/Orientation Program on being inducted into the Board. Further, various other programmes are conducted for the benefit of Independent Directors to provide periodical updates on regulatory front, industry developments and any other significant matters of importance. The details of Familiarization Program are provided in the Corporate Governance Report and are also available on the Companys website. The Company issues a formal letter of appointment to the Independent Directors, outlining their role, function, duties and responsibilities, the format of which is available on the Companys website at www.tatacoffee.com.

18. Annual Evaluation of Board Performance and Performance of its Committees and of Directors

Pursuant to the applicable provisions of the Act and the Listing Regulations, the Board has carried out an Annual Evaluation of its own performance, performance of the Directors and the working of its Committees on the evaluation criteria defined by Nomination and Remuneration Committee (NRC) for performance evaluation process of the Board, its Committees and Directors.

The Boards functioning was evaluated on various aspects, including inter-alia the structure of the Board, meeting of the Board, functions of the Board, degree of fulfilment of key responsibilities, establishment and delineation of responsibilities to various Committees, effectiveness of Board processes, information and functioning.

The Committees of the Board were assessed on the degree of fulfilment of key responsibilities, adequacy of Committee composition and effectiveness of Meetings. The Directors were evaluated on aspects such as attendance, contribution at Board/Committee Meetings and guidance/support to the Management outside Board/Committee Meetings.

The performance assessment of Non-Independent Directors, Board as a whole and the Chairman were evaluated in separate meetings of Independent Directors. The same was also discussed in the meetings of NRC and the Board. Performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated.

19. Internal Control Systems & their adequacy

The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

20. Reporting of Frauds

There were no instances of frauds during the year under review, which required the Statutory Auditors to report to the Audit Committee and/or the Board under Section 143(12) of the Act and the rules made thereunder.

21. Transfer to Investor Education and Protection Fund

a) Transfer of Unclaimed Dividend/Debenture Redemption/Debenture Interest to IEPF

As required under Section 124 of the Act, the Unclaimed Dividend amount aggregating to Rs.35,94,445 and Unclaimed Interest on Debentures including Debenture Redemption amount aggregating to Rs.3,39,643 lying with the Company for a period of seven years were transferred during the year 2019-20, to the Investor Education and Protection Fund (IEPF) established by the Central Government.

b) Transfer of shares to IEPF

As required under Section 124 of the Act, 209,226 equity shares, in respect of which dividend has not been claimed by the members for seven consecutive years or more, have been transferred by the Company to the IEPF Authority during the Financial Year 2019-20. Details of shares transferred have been uploaded on the website of IEPF as well as the Company.

22. Related Party Transactions

All Related Party Transactions, that were entered during the Financial Year under review, were on an arms length basis, in the ordinary course of business and are in compliance with the applicable provisions of the Act and the Listing Regulations. There were no materially significant Related Party Transactions made by the Company during the year that required shareholders approval under Regulation 23 of the Listing Regulations.

All Related Party Transactions are placed before the Audit Committee for prior approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are repetitive in nature or when the need for these cannot be foreseen in advance.

None of the transactions entered with Related Parties fall under the scope of Section 188(1) of the Act. Details of transactions with Related Parties as required under Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure - B in Form AOC - 2 and forms part of this Report.

The Company has adopted a Policy for dealing with Related Party Transactions. The Policy as approved by the Board may be viewed on the Companys website at the web link: https://tatacoffee.com/sites/default/files/collaterals/ investors/Related Party Transaction Policy.pdf.

23. Corporate Governance and Management Discussion & Analysis Report

Your Company is in compliance with all the applicable provisions of Corporate Governance as stipulated under Chapter IV of the Listing Regulations. A detailed report on Corporate Governance as required under the Listing Regulations is provided in a separate section and forms part of the Annual Report. Certificate from a Practicing Company Secretary regarding compliance with the conditions stipulated in the Listing Regulations forms part of the Corporate Governance Report.

The Management Discussion & Analysis Report as required under the Listing Regulations is presented in a separate section and forms part of the Annual Report.

24. Auditors

(i) Statutory Auditors

The Members at the 73rd Annual General Meeting of the Company held on July 26, 2016, had appointed M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/W- 100018) as the Statutory Auditor of the Company to hold office for a term of five years i.e., from the conclusion of the said Annual General Meeting until the conclusion of 78th Annual General Meeting of the Company to be held in 2021, subject to ratification of their appointment by the shareholders, every year. The Ministry of Corporate Affairs vide its Notification dated May 7, 2018, had dispensed with the requirement of ratification of Auditors appointment by the shareholders, every year. Hence, the resolution relating to ratification of Auditors appointment is not included in the Notice of the ensuing Annual General Meeting.

(ii) Cost Auditors

In terms of the provisions of Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014, as amended from time to time, the Board of Directors, based on the recommendation of the Audit Committee, has appointed M/s. Rao, Murthy & Associates, Cost Accountants, as Cost Auditor of the Company for conducting the Cost Audit for the Financial Year 2020-21, on a remuneration as mentioned in the Notice of 77th Annual General Meeting.

A Certificate from M/s. Rao, Murthy & Associates, Cost Accountants, has been received to the effect that their appointment as Cost Auditor of the Company, if made, would be in accordance with the limits specified under Section 141 of the Act and Rules framed thereunder.

A resolution seeking Members ratification for the remuneration payable to the Cost Auditor forms part of the Notice of 77th Annual General Meeting and the same is recommended for your consideration and ratification.

(iii) Secretarial Auditors

Pursuant to the provisions of Section 204 of the Act and the rules made there under, the Company had appointed M/s. BMP & Co. LLP, Company Secretaries, to undertake the Secretarial Audit of the Company for the year ended March 31, 2020. The Secretarial Audit Report issued in this regard is annexed as Annexure - C.

The Auditors Report and the Secretarial Audit Report for the Financial Year ended March 31, 2020, do not contain any qualifications or reservations or adverse remarks.

25. Risk Management

The Company has constituted a Risk Management Committee which has been entrusted with the responsibility to assist the Board in (a) approving the Companys Risk Management Framework and (b) Overseeing all the risks that the organization faces such as strategic, financial, liquidity, security, regulatory, legal, reputational and other risks that have been identified and assessed to ensure that there is a sound Risk Management Policy in place to address such concerns/risks. The Risk Management process covers risk identification, assessment, analysis and mitigation. Incorporating sustainability in the process also helps to align potential exposures with the risk appetite and highlight risks associated with chosen strategies.

The Audit Committee has additional oversight in the area of financial risks and controls. Major risks identified by the business and functions are systematically addressed through mitigating actions on a continuing basis.

The Company has adopted a Risk Management Policy in accordance with the provisions of the Act and Regulation 21 of the Listing Regulations.

26. Particulars of Loans, Guarantees and Investments

The details of Loans and Investments and guarantees covered under the provisions of Section 186 of the Act are given in the Notes to the Financial Statements forming part of Annual Report.

27. Fixed Deposits

During the year under review, your Company has neither accepted nor renewed any deposits from the public within the meaning of Section 73 of the Act and the Companies (Acceptance of Deposits) Rules, 2014.

28. Employees Welfare

The Company continues to focus on welfare and improving the quality of lives of its employees by providing educational assistance to their children, employee wellness sessions, periodic occupational health checks, merit scholarships to employee children, spiritual peace by yoga classes, creche and child care facilities, transport at subsidised rate to school going children, supply of provisions at cost and other home appliances on instalment basis through co-operative stores and providing housing loan interest subsidy & interest free loans for the employee family wellness.

Apart from the welfare initiatives implemented during last year, the following were the focus areas in the welfare initiatives during Financial Year 2019-20:

• Improvement in housing infrastructure for Plantation workers by constructing new labour line, new attached toilets and bathrooms, wastewater soak pits etc.,

• Installation of Green Oxyguard waste incinerator near the labour lines to maintain waste management

• Pre-employment medical check-up for all the seasonal casual workers

• Creating awareness for all seasonal casual workers through an animated movie in the local language. The movie was made to highlight the statutory/nonstatutory benefits available to workmen from TCL, various welfare amenities, safety measures etc.,

• Disposal of plastic waste accumulated in the estates through a licensed vendor for recycling of waste

• Awareness programme on COVID-19 by the Medical/Welfare/Safety Departments in all Estates

• Provision of sanitisers and masks to all employees as a safeguard as well to prevent spread of COVID-19

29. Policy on Prevention, Prohibition and Redressal of Sexual Harassment at Workplace

The Company has zero tolerance for sexual harassment at workplace and has adopted 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 made thereunder. The Policy aims to provide protection to employees at workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. The Company has revisited the Internal Complaints Committee members and emphasised on the roles and responsibilities expected from the members. Training programmes were conducted around locations to strengthen the awareness among the Committee members.

The Company continuously invests in enhancing the awareness on the Policy across its workforce. During multiple engagements/assessments, it was noticed that the retention of POSH/TCOC related awareness is low among blue collar workforce, which is complemented with the high inflow of migratory and casual workforce during the harvesting season.

The Company also conducts a periodic (bi-annual) awareness plan across the organization on Ethics, TCOC, POSH & Whistle Blower policy involving workmen as facilitators. Facilitation documents in the form of brochures and pocket cards in multiple languages for each workman were created and distributed at each of the locations.

As process owners, the Unit Managers made batches of 20 each (10 male and 10 female) and covered the first batch with the One Page Information. In turn, the individuals of first batch oriented/communicated to the next batch of 20 from same gender in their native language. The process from one batch to the other continues till all workmen are covered in the Unit. To ensure the effectiveness of the delivery, process owner/Unit Manager used a case study based mock test for reinforcing the learnings for all batches.

During the Financial Year 2019-20, the Company received six complaints on sexual harassment, which have been disposed of and appropriate actions taken.

30. Whistle Blower Policy/Vigil Mechanism

The Company has adopted a Whistle Blower Policy to provide a formal mechanism to the Directors and employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Companys Code of Conduct or Ethics Policy. The Policy provides for adequate safeguards against victimization of employees, who avail of the mechanism and provides to employees direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company have been denied access to the Audit Committee. The Whistle Blower Policy has been posted on the website of the Company at www.tatacoffee.com.

31. Corporate Social Responsibility (CSR)

The Company has a Policy on Corporate Social Responsibility and the same has been posted on the website of the Company at www.tatacoffee.com. The Annual Report on CSR activities in terms of the requirements of Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed as Annexure - D, which forms part of this Report.

32. Business Responsibility Report

As required under Regulation 34 of the Listing Regulations, the Business Responsibility Report is provided in a separate section and forms part of the Annual Report.

33. Extract of Annual Return

Pursuant to Section 92(3) of the Act and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the extract of the Annual Return in the prescribed form i.e., Form MGT-9 is annexed as Annexure - E, which forms part of this Report.

34. Particulars of Employees and Remuneration

In terms of the first proviso to Section 136 of the Act, the Reports and Accounts are being sent to the shareholders excluding the information required under Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Any Shareholder interested in obtaining the same may write to the Company Secretary at the Registered Office of the Company. The said information is available for inspection by the Members at the Registered Office of the Company on any working day of the Company upto the date of the 77th Annual General Meeting.

The statement containing information as required under the provisions of Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure - F and forms part of this Report.

35. Particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules 2014 is annexed as Annexure - G and forms part of this Report.

36. Significant and Material Orders passed by the Regulators or Courts

There are no significant or material orders which were passed by the Regulators or Courts or Tribunals which impact the going concern status and the Companys Operations in future.

37. Green Initiatives

In commitment to keep in line with the Green Initiatives and going beyond it, to create further new green initiatives, electronic copy of the Notice of 77th Annual General Meeting of the Company including the Annual Report for FY 2019-20 are being sent to all Members whose e-mail addresses are registered with the Company/Depository Participant(s).

38. Appreciation

Your Directors take this opportunity to thank the Parent Company - Tata Consumer Products Limited, the employees, customers, vendors, investors of the Company and the communities in which the Company operates, for their unstinted co-operation and valuable support extended during the year.

Your Directors also thank the Government of India, Government of various States in India and Government Departments/Agencies concerned for their co-operation.

Your Directors appreciate and value the contributions made by each and every member of the Tata Coffee family.

For and on behalf of the Board
Place: Bengaluru R. HARISH BHAT
Date: May 5, 2020 Chairman