Tata Consumer Products Ltd Directors Report.
To the Members of
Tata Global Beverages Limited
Your Directors are pleased to submit their Fifty-Sixth report together with the audited financial statements of the Company for the year ended March 31, 2019.
|(Rs. in Crores)|
|Revenue from Operations||7252||6815||3430||3217|
|Profit before exceptional items and taxes||768||774||576||608|
|Exceptional items (net)||(33)||(21)||-||115|
|Profit before tax||735||753||576||723|
|Provision for tax||(261)||(186)||165||189|
|Profit after tax||474||567||411||534|
|Share of net profit/(loss) in Associates and Joint Ventures||(17)||(10)||-||-|
|Profit for the year||457||557||411||534|
|Attributable to Owners of the parent||408||496||411||534|
|Retained Earnings - Opening Balance||5375||4396||2552||1577|
|Add: Profit for the year||408||496||411||534|
|Add: Adjustments with Other Equity including Other Comprehensive Income||67||687||3||638|
|Amount appropriated during the year:|
|Dividend including dividend tax paid||(179)||(173)||(182)||(169)|
|Transfer to General Reserves||(4)||(31)||-||(28)|
|Retained Earnings - Closing Balance||5667||5375||2784||2552|
State of Companys Affairs
The Consolidated Revenue from operations at Rs. 7,252 Crores grew by 6% during FY 2018-19 (3% on constant currency basis). Excluding the impact of business exit, Revenue from operations grew by 8% (5% on constant currency basis). The increase in revenue is led by the growth in Indian tea brands, business model change for single serve K Cup coffee sales in the US and growth in Coffee Extractions business in Tata Coffee. Profit before exceptional items and tax at Rs. 768 Crores is marginally lower than the previous year mainly due to higher tea commodity costs in India and higher brand support costs partly offset by lower tea and coffee commodity costs in the International market. Profit for the year at Rs. 457 Crores is impacted mainly due to higher level of exceptional expenditure, higher tax expense in the current year and lower share of profits from Associates and Joint Ventures. In the previous year, the Company had the benefit of one-time tax credits arising on account of reduction in US rates due to changes in tax legislation.
The Standalone Revenue from operations at Rs. 3,430 Crores grew by 7 % during the year under review. Revenue growth was higher than FY 2017-18 with volume growth across all major brands. Profit before exceptional items and tax at Rs. 576 Crores is lower than previous year mainly on account of higher tea commodity costs and discretionary/one off items. Profit after tax at Rs. 411 Crores is lower than previous year mainly on account of exceptional profits on divestment of our stake in an associate in the previous year.
Your Directors are pleased to recommend for the approval of the shareholders a dividend of Rs. 2.50 per share on the equity share capital of the Company for the year ended March 31, 2019. The total outgo on account of dividend inclusive of taxes, for FY 2018-19 is Rs. 190.21 Crores which represents a pay-out of 46% of the Companys 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: http://www. tataglobalbeverages.com/docs/default-source/default-document-library/tgbl-dividend-policy.pdf?sfvrsn=0.
Transfer to Reserves
The Board of Directors has decided to retain the entire amount of profits for FY 2018-19 in the profit and loss account.
The paid up Equity Share Capital as at March 31, 2019 was Rs. 63.11 Crores comprising of 63,11,29,729 equity shares of Re. 1 each. During FY 2018-19, your Company has neither issued any shares with differential voting rights nor has granted any stock options or sweat equity. As on March 31, 2019, none of the Directors or the Key Managerial Personnel of the Company holds instruments convertible into equity shares of the Company.
This is the second year of implementation of Integrated Reporting by the Company in line with the Integrated Reporting framework developed by the International Integrated Reporting Council. This is being implemented in a phased manner.
Review of Subsidiaries, Associates and Joint Venture Companies
Pursuant to Section 129(3) of the Companies Act, 2013 ("Act"), 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 Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, form part of this Annual Report. Pursuant to the provisions of the said section, a statement containing the salient features of the financial statements of the Companys 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 Act, the standalone financial statements of the Company, consolidated financial statements of the Company, and the relevant consolidated financial statements and separate audited financial statements along with other relevant documents, in respect of subsidiaries, are available on the website of the Company, in the link http://tataglobalbeverages.com/investors/financial-performance/ subsidiaries/subsidiary-financials The details of material changes in the nature of the business of some of the subsidiaries (including associates and joint ventures) during FY 2018 -19 are given in the Management Discussion and Analysis ("MD&A") attached. The impact of such changes, if any, has been adequately disclosed in the financial statements.
The Company has revised the policy for determining material subsidiaries in terms of Regulation 16(1)(c) of the Listing Regulations, as amended from time to time. The policy as approved may be accessed on the Companys website at the link http://www.tataglobalbeverages.com/docs/default-source/default-document-library/policy-on-material-subsidiary. pdf?sfvrsn=0.
Performance highlights of key operating subsidiaries, associates and joint ventures
Tata Global Beverages Group Ltd, UK ("TGBG"), substantially reflects the financial performance of the Tetley business and a few other international brands. The topline, in underlying terms and excluding the impact of business exits, reported a marginal decline during FY 2018-19, which is reflective of decline in everyday black tea category and higher competitive intensity in some markets. The developed markets are faced with everyday black tea category decline, whilst on the other hand, strong growth is witnessed in non-black tea categories.
UK, which is one of the largest market, reflected a steady growth in volume and profitability aided, among other things, by a soft commodity price environment. In Australia, the licensing agreement for single serve coffee pods using the MAP brand were changed to Kruger K Fee in the later part of the year. K Fee is the 2nd largest system in Australia and this change will further fuel our growth aspiration in coffee in that country. Profitability improved largely due to improvement in operating performance particularly in the UK, good control over costs, cost benefits arising out of past restructuring and lower level of exceptional expenditure.
TGBG, restructured the activities of some of its 100% step down subsidiaries. Accordingly, Tata Global Beverages Services Limited, Tata Global Beverages Investments Limited and Tata Global Beverages Holdings Limited transferred its net assets and activities to its holding company, i.e. TGBG/ fellow subsidiary, namely, Tata Global Beverages GB Ltd. The purpose of the restructure was to simplify the legal structure, reduce the number of step down subsidiaries and to reduce the ongoing administration burden. It is expected that in the absence of any future transactions, the restructured entities will cease to trade and plan to be dormant for the foreseeable future. As restructure was intra group and between 100% subsidiaries of TGBG, there is no impact of the restructure transactions on the consolidated financial statements.
Tata Coffee Limited ("TCL") ended FY 2018-19 on a better note compared to FY 2017-18 despite crop loss caused by extreme weather conditions. Operating Profit and Profit after tax was higher than previous year driven from improvement in performance of the Instant Coffee, strong focus on cost management and monetization of non-core assets whilst the plantation operations were impacted by abnormal and extreme weather conditions and lower pepper realisations. The Instant Coffee business has recorded its second highest sales volume with key focus on customer acquisition in new geographies whilst the Freeze-Dried Coffee plant in India, which is a sub-segment of the Instant Coffee business, delivered the highest ever production and dispatches since inception.
TCLs state-of-the-art Freeze Dried Instant Coffee plant in Vietnam, with an annual capacity of 5000MT, has been inaugurated and currently in the process of customer trials in the pilot plant.
Freeze Dried coffee is a growing segment worldwide in the premium Instant Coffee space. This move is expected to further strengthen the Companys growth in the Coffee Extractions segment and further expand our global foot print. Eight OClock Coffee ("EOC") registered a good topline growth. While the business benefited from a softer commodity environment, operating profit was lower mainly due to higher spends behind brands and one-time costs associated with the new business model for single serve coffee pods. Profit after tax was lower than previous year as last year had the benefit of one-time tax credits arising on account of changes in US tax legislation reducing the tax rates.
Tata Tea Extractions Inc., the Companys subsidiary in the US had a good performance during the year with topline growth and higher profitability as compared to previous year.
Amalgamated Plantations Private Limited ("APPL"), India, reported a revenue growth of 3% due to higher realisations. However, APPL had incurred operating losses on account of wage revision, challenging plantation environment and onetime credits in the previous year.
Kanan Devan Hills Plantations Company Private Limited ("KDHP") reported a topline growth of 4% over the previous year. Despite the inclement weather conditions which prevailed during part of the year under review in Kerala, the yield achieved was the third highest since formation of KDHP. The operating profit was however impacted by floods which partially got offset by improved realisation and good cost management.
Tata Starbucks Private Limited, our joint venture with Starbucks, reflected a double digit topline growth ~30% due to growth in existing store sales coupled with expansion of stores. Tata Starbucks kept up the momentum on expanding the store base and added 30 new stores to reach 146 stores by the end of FY 2018-19. In FY 2018-19, it also marked the entry into a new city market Chandigarh. The new stores were added across formats including (i) smaller footprint stores as we increased penetration in existing cities (e.g. Mumbai, Bangalore), (ii) new formats: Highway (Mumbai- Pune and Bangalore -Tirupati) and Shop in Shop (Westside, Bangalore) and (iii) high profile coffee forward stores (e.g. store in Vittal Mallya road in Bangalore).
NourishCo Beverages Limited, our Joint venture with PepsiCo in India, delivered growth on account of improved performances by Tata Gluco Plus ("TGP") and Tata Water Plus. TGP remains a star performer product with milestone sale achieved during the year. This year also marked our entry into Odisha market where we were able to replicate the successful business model established in Andhra Pradesh, Telengana and Tamil Nadu. The product is in the process of being rolled-out in West Bengal, Bihar, Jharkhand and Delhi.
Companies which have become or ceased to be Subsidiaries, Associates and Joint Ventures
During the FY 2018-19, there was no change in subsidiaries, associates and joint ventures. 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.
During the year under review, industrial relations remained harmonious at all our offices and establishments.
Corporate Governance and MD&A
The Company has complied with the Corporate Governance requirements under the Act and Listing Regulations. A separate section on Corporate Governance along with a certificate from the practicing Company Secretary confirming compliance is annexed and forms part of this report. A detailed report on Management Discussion and Analysis 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 Companys vigil mechanism allows the Directors and employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the code of conduct /business ethics. The vigil mechanism provides for adequate safeguards against victimisation of the Director(s) and employee(s) who avail this mechanism. All Directors and employees have access to the Chairman of the Audit Committee.
The Company has revised the Whistle-Blower policy to insert "reporting of incidents of leak or suspected leak of Unpublished Price Sensitive Information (UPSI)" in terms of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, as amended from time to time and the revised policy was approved by the Audit Committee and the Board at its meetings held on March 19 and 27, 2019, respectively. The policy as approved may be accessed on the Companys website at the link: http:// www.tataglobalbeverages.com/docs/default-source/default-document-library/tgbl_-whistle-blower-policy.pdf?sfvrsn=0. During the year under review, the Company, based on whistleblower complaint, has noticed certain instances of lapses in relation to sales promotion claims. The Company has promptly started investigating the matter and has also taken appropriate action against the involved employees, however these investigations have not been fully concluded as at the year end. There is no material impact of the above lapses on the financial statements.
Internal Financial Controls
The Board has adopted policies and procedures for governance of orderly and efficient conduct of its business, including adherence to the Companys policies, safeguarding its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures. The Companys internal control systems commensurate with the nature of its business, the size and complexity of its operations.
The Company has a strong and independent in-house Internal Audit ("IA") department that functionally reports to the Chairman of the Audit Committee, thereby maintaining its objectivity.
Remediation of deficiencies by the IA department has resulted in a robust framework for internal controls. These are detailed in the Management Discussion and Analysis Report.
Tata Business Excellence Model ("TBEM")
In pursuit of holistic improvement, the Company periodically participates in the TBEM Assessment process. The TBEM assessment for the Company took place between July and September 2018. The process, which covered several locations of the Company across the world, was led by a group of seasoned assessors from various Tata companies who provided an external perspective on the strengths and OFI (opportunities for improvement). There has been a steady improvement in the Companys score in this round of assessment. The assessment team has identified several best practices from the Company. A presentation was made to the Board on October 30, 2018. Going forward, the Company will be actioning the feedback leading to improvement in processes and related results. External Best Practices from other Tata companies are looked at for adoption. A series of initiatives that include workshops, working groups, cross functional teams and workstreams in identified areas are being planned. This will be a crucial step to further embed TBEM in the TGB ecosystem in the years to come.
The Companys governance guidelines on Board effectiveness cover aspects relating to composition and role of the Board, Chairman and Directors, Board diversity, 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. As per the Governance Guidelines adopted by the Board, the retirement age for Managing/Executive Directors is 65 years, Non-Executive (Non-Independent) Directors is 70 years and Non-Executive, Independent Directors is 75 years.
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 an 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 and Key Managerial Personnel ("KMP") and senior management. The role of the NRC encompasses conducting a gap analysis to refresh the Board on a periodic basis, including each time a Directors appointment or re-appointment is required. The NRC is also responsible for reviewing the profiles of potential candidates vis--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 Act, 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:
QualificationsThe 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 Act 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 Act, the Rules framed thereunder and Regulation 16(1)(b) of the Listing Regulations.
Annual Evaluation of the Board, its Committees and Individual Directors
The Board of Directors has carried out an annual evaluation of its own performance, Board Committees, and individual directors pursuant to the provisions of the Act and the Listing Regulations.
The Board evaluated its performance after seeking inputs from all the directors on the basis of criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc. The performance of the Committees was evaluated by the Board after seeking inputs from the committee members on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc. The above criteria are as provided by the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India.
The Chairman of the Board had one-on-one meetings with the Independent Directors and the Chairman of NRC had one-on-one meetings with the Executive and Non-Executive, Non-Independent Directors. These meetings were intended to obtain Directors inputs on effectiveness of the Board/ Committee processes.
Annual Report 2018-19
The Board and the NRC reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.
In a separate meeting of independent directors, performance of non-independent directors and the board as a whole was evaluated. The Independent Directors in the said meeting also evaluated the quality, quantity and timeliness of flow of information between the company management and the Board that is necessary for the Board to effectively and reasonably perform their duties. Additionally, the Chairman of the Board was also evaluated on key aspects of his role, taking into account the views of executive directors and non-executive directors in the aforesaid meeting.
The above evaluations were then discussed in the board meeting that followed the meeting of the independent directors and NRC, at which the performance of the board, its committees, and individual directors was also discussed. Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated.
Pursuant to the provisions of Section 178(3) of the Act, and Regulation 19 of the Listing Regulations, the NRC has formulated a policy relating to the remuneration for the Directors, Key Managerial Personnel (KMP), Senior Management 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 Act 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, KMP 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:
Role played by the individual;
Reflective of size of the company, complexity of the sector/ industry/Companys operations and the Companys capacity to pay;
Consistent with recognised best practices; and
Aligned to any regulatory requirements.
In accordance with the policy, the Managing Director,
Executive Director, KMPs, Senior Management 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-Executive-Non-Independent Directors
The Non-Executive Directors, including Independent Directors, are paid sitting fees for attending the meetings of the Board and committees of the Board. As per the Policy, 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 Companys 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 (Rs.20,000 in case of Mr. N. Chandrasekaran, Chairman and Mr. Harish Bhat, Director, being employees of other Tata companies). For meetings of all other committees of the Board, a sitting fee of Rs. 15,000 per meeting per Director is paid (Rs.10,000 in case of Mr. N. Chandrasekaran, Chairman and Mr. Harish Bhat, Non-Executive Director, being employees of other Tata companies).
Within the ceiling of 1% of net profits of the Company, computed under the applicable provisions of the Act the Non-Executive Directors including Independent Directors are also paid a commission, the amount whereof is recommended by the NRC and approved 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 last Annual General Meeting held on
July 5, 2018 for each financial year to be distributed among the Directors in such manner as the Board of Directors may, from time to time, determine within the overall maximum limit of 1% (one percent) per annum or such other percentage as may be specified by the Act, from time to time. No Stock option has been granted to the Non-Executive Directors. As a policy, Mr. N. Chandrasekaran, Chairman, has abstained from receiving commission from the Company.
Further, in line with the internal guidelines of the Company, no payment is made towards commission to the Non-Executive Directors of the Company, who are in full time employment with any other Tata Company. Accordingly, no commission is paid to Mr. N. Chandrasekaran, Chairman and Mr. Harish Bhat, Non-Executive (Non-Independent) Director.
Board of Directors and meetings
The members of the Companys Board of Directors are eminent persons of proven competence and integrity. Besides experience, strong financial acumen, strategic astuteness and leadership qualities, they have a significant degree of commitment towards the Company and devote adequate time to the meetings and preparation.
The Board meets at regular intervals to discuss and decide on Company/business policy and strategy apart from other Board business. The Board exhibits strong operational oversight with regular presentations in every quarterly meetings. The Board/committee meetings are pre-scheduled and a tentative annual calendar of the Board and Committee meetings is circulated to the Directors well in advance to help them plan their schedule and ensure meaningful participation in the meetings. Only in case of special and urgent business, if the need arises, the Boards/Committees approval is taken by passing resolutions through circulation or by calling Board/Board Committee meetings at short notice, as permitted by law. The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board meetings and Annual General Meetings.
The agenda for the Board and Committee meetings includes detailed notes on the items to be discussed to enable the Directors to take an informed decision. The Board of Directors had held seven meetings during FY 2018-19. For further details, please refer to the Corporate Governance Report, which forms part of this Annual Report. The intervening gap between the meetings was within the period prescribed under the Act and the Listing Regulations.
Directors and Key Managerial Personnel (KMP)
The members in the last Annual General Meeting held on July 5, 2018 have appointed Mr. S Santhanakrishnan as an Independent Director for a period of 5 years i.e. from May 11, 2018 to May 10, 2023 and have re-appointed Mr. L. KrishnaKumar as an Executive Director for a period of five years i.e. from April 1, 2018 to March 31, 2023. Mr. Siraj Azmat Chaudhry was appointed as Independent Director at the Annual General Meeting of the Company held on August 18, 2017 for a period of 5 years i.e. from July 3, 2017 to July 2, 2022. Mrs. Ireena Vittal (Independent Director) resigned from the Board with effect from June 30, 2018, due to personal reasons. The Board placed on record its appreciation for the valuable services rendered by Mrs. Ireena Vittal during her tenure as Director of the Company.
The Independent Directors on the Board of the Company namely Mr. V. Leeladhar, Mrs. Ranjana Kumar, and Mrs. Mallika Srinivasan were appointed at the Annual General Meeting of the Company held on August 26, 2014 for a period of 5 years and thus they are holding their respective offices till August 25, 2019. The Board placed on record its appreciation for the valuable services rendered by Mr. V. Leeladhar, Mrs. Ranjana Kumar, and Mrs. Mallika Srinivasan during their respective tenure as Director of the Company.
Mr. N. Chandrasekaran retires by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for re-appointment. Mr. Ajoy Misra was appointed as Managing Director for a period of five years in 2014 which ended on March 31, 2019 and is eligible for reappointment. Mr. Misra, however, had approached the Nomination and Remuneration Committee for an early retirement from his role and bearing in mind the above request as well as the time required for smooth succession planning, the Board at their meeting held on March 27, 2019, based on the recommendation of the Nomination and Remuneration Committee approved the re-appointment of Mr. Ajoy Misra for a further period of one year i.e. from April 1, 2019 to March 31, 2020, subject to the approval of the shareholders. The approval of the shareholders relating to Mr. Ajoy Misras re-appointment and remuneration is being sought at the forthcoming Annual General Meeting.
During the year under review, Mr. V. Madan ceased to be Company Secretary w.e.f. August 6, 2018 consequent upon his retirement from the Company and Mr. Neelabja Chakrabarty was appointed as Company Secretary w.e.f. August 7, 2018. Pursuant to the provisions of Section 203 of the Act, the KMPs of the Company as on March 31, 2019 are; Mr. Ajoy Misra, Managing Director & CEO, Mr. L. KrishnaKumar, Executive Director, Mr. John Jacob, Chief Financial officer and Mr. Neelabja Chakrabarty, Company Secretary.
Apart from the above, no other Director or KMP were appointed or had retired or resigned during FY 2018-19.
Brief particulars and expertise of directors seeking 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 and Secretarial Standards.
Independent Directors Declaration
Our definition of Independence of Directors is derived from Regulation 16(1)(b) of the Listing Regulations and Section 149(6) of the Act and rules framed thereunder. The Independent Directors have also submitted a declaration that they meet the criteria of independence and that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence, pursuant to Regulation 25 of the Listing Regulations.
Based on the confirmation/disclosures received from the Directors, the following Non-Executive Directors are Independent as on March 31, 2019:
1) Mr. V. Leeladhar
2) Mrs. Ranjana Kumar
3) Mrs. Mallika Srinivasan
4) Mr. S. Santhanakrishnan
5) Mr. Siraj Azmat Chaudhry
Committees of the Board
The Company has nine Board Committees as on March 31, 2019:
1) Audit Committee
2) Nomination and Remuneration Committee
3) Stakeholders Relationship Committee
4) Risk Management Committee
5) Corporate Social Responsibility Committee
6) Executive Committee
7) Ethics and Compliance Committee
8) M&A and Divestiture Committee
9) Committee for Special Projects
Details of all the committees along with their main terms, composition and meetings held during the year under review are provided in the Report on Corporate Governance, a part of this Annual Report.
Familiarisation programme for Independent Directors
As trustees of shareholders, independent directors play a pivotal role in upholding corporate governance norms and ensuring fairness in decision making. Being experts in various fields, they also bring independent judgement on matters of strategy, risk management, controls and business performance.
At the time of appointing a new Independent Director, a formal letter of appointment is given to the Director, inter alia, explaining the role, duties and responsibilities of the Director. The Director is also explained in detail the compliances required from him/her under the Act, SEBI Regulations and other relevant regulations.
By way of an introduction to the Company, presentations are also made to the newly appointed Independent Director on relevant information like overview of the Companys businesses, market and business environment, growth and performance, organisational set up of the Company, governance and internal control processes.
Ongoing familiarisation program aims to provide insights into the Company and the business environment to enable all the Independent Directors to be updated of newer challenges, risks and opportunities relevant in the Companys context and to lend perspective to the strategic direction of the Company. The details for familiarisation program for 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 familiarisation programmes conducted during FY 2018-19 is also put on the Companys website and the same can be accessed at the link : http://www.tataglobalbeverages. com/docs/default-source/default-document-library/familiarisation-programme-for-independent-directors. pdf?sfvrsn=0.
The Company recognizes and embraces the importance of a diverse board in its success. The Company believes that a truly diverse board will leverage differences in thought, perspective, knowledge, skill, regional and industry experience, cultural and geographical background, age, ethnicity, race and gender, which will help the Company to retain its competitive advantage. The Board has adopted the Board Diversity Policy which sets out the approach to diversity of the Board of Directors.
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 the Act, the Company has undertaken CSR activities, projects and programs as provided in the CSR policy of the Company and as identified under Schedule VII to the Act and excluding activities undertaken in pursuance of its normal course of business.
The Natural Beverages Policy of Tata Global Beverages is the apex Sustainability Policy that defines the aspiration to be the consumers 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 aims to support development programs for a million people in its supply chain by 2022. It aspires to create sustainability leadership in its beverages production units through focus on zero waste to landfill, use of renewable energy and rain water harvesting. All packaging centers globally have focused on zero waste to landfill target in 2018-19. The Eaglescliffe factory utilises about 39% of its electricity requirement from a 4.6MW solar farm at a nearby location. The Company has also installed solar photovoltaic plants at its Water factory in Dhaula Kuan and Sampla Packeting Centre in India that account for about 25% of the energy used in those factories. Himalayan water for the USA market is CarbonNeutral certified product by Natural Capital Partners. Through Project Jalodari, the Company supports the right to water for everyone i.e. "to sufficient, safe, acceptable, physically accessible and affordable water for personal and domestic uses." Under the Plastic Waste Management Rules, 2016 and amended in 2018, in India, EPR (Extended Producer Responsibility) Plan has been framed by your Company for collection and reprocessing of plastic packaging waste on a brand neutral basis across key markets. In October 2018, the Company joined the UK Plastics Pact - a collaborative initiative between UK businesses and stakeholders across the plastics value, to embed a circular economy for plastics in the UK by 2025. During the year under review, the Company spent Rs. 8.09 Crores (2.11% of the average qualifying net profits of last three financial years) on CSR activities on projects qualifying as per Section 135 of the Act, duly approved by the CSR Committee. In addition to the projects specified as CSR activities under Section 135 of Act, the Company has also carried out several other sustainability/responsible business initiatives and projects on a global scale. Salient features of the CSR Policy and details of activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is provided in Annexure 1 forming part of this Report. The CSR Policy may be accessed on the Companys website at the link: http://tataglobalbeverages.com/docs/default-source/ default-document-library/corporate-social-responsibility-policy 7214b6881a2368caa65dff02001c5be1.pdf?sfvrsn=0.
Particulars of Employees
The information as required under Section 197 of the Act 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 Act, the details of remuneration received by the Managing Director and the Executive Director from the Companys subsidiary company during FY 2018-19 are also given in Annexure 2 attached to this report.
The information required under Rule 5(2) and (3) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in an Annexure forming part of this Report. In terms of the first provision to Section 136 of the Act, the Report and Accounts are being sent to the Members excluding the aforesaid Annexure. Any member interested in obtaining the same may write to the Company Secretary at the Registered Office of the Company. None of the employees listed in the said Annexure are related to any Director of the Company.
Particulars of Loans, Guarantees and Investments by the Company
Details of loans, guarantees and investments covered under the provisions of Section 186 of the Act are provided in Annexure 3 attached to this report.
The Board of Directors of the Company has formed a Risk Management Committee to frame, implement, and monitor the risk management plan for the Company. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Company has an elaborate Risk Charter and Risk policy defining risk management governance model, risk assessment and prioritisation process. The Risk Management Committee reviews and monitors the key risks and their mitigation measures periodically and provides an oversight to the Board on Companys risks outlined in the risk registers. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified are addressed through mitigating actions.
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 framed thereunder for prevention and redressal of complaints of sexual harassment at workplace. Awareness programs were conducted at various locations of the Company.
The Company has complied with provisions relating to the constitution of Internal Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year under review, the Company received one complaint of sexual harassment and the same was resolved. There was no complaint pending as on March 31, 2019.
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, 2019.
Pursuant to the provisions of Section 204 of the Act 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 FY 2018-19 is attached herewith as Annexure 4. There are no qualifications, observations or adverse remark or disclaimer in the said report.
Business Responsibility Report ("BRR")
The Listing Regulations mandate the inclusion of the BRR as part of the Annual Report for top 500 listed companies based on market capitalisation. In compliance with the Listing Regulations, the Company has integrated BRR disclosures into the Annual Report.
Extract of Annual Return
As provided under Section 92 of the Act and rules framed thereunder, the extract of annual return in Form MGT-9 is given in Annexure 5 which forms part of this report. In compliance with section 134(3)(a) of the Act, MGT 9 is uploaded on Companies website and can be accessed at http://www.tataglobalbeverages.com/investors/investor-information/mgt-9
Directors Responsibility Statement
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 Companys internal financial controls were adequate and operating effectively during the FY 2018-19.
Pursuant to Section 134(5) of the Act, 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, 2019, 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, 2019 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.
Related Party Transactions
All related party transactions that were entered into during the financial year 2018-19, were on an arms length basis and in the ordinary course of business. There are no material related party transactions made by the Company during the year that required shareholders approval under Regulation 23(4) of the Listing Regulations or Section 188 of the Act.
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. Given that the company does not have any thing to report pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 in Form AOC-2 , therefore the same is not provided.
The policy on Related Party Transactions as amended in line with the amendments issued by Securities and Exchange Board of India (SEBI) notified SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 (Amendment Regulations) on May 9, 2018 and as approved by the Board of Directors is available on the Companys website and may be accessed at the link: http://www.tataglobalbeverages.com/docs/default-source/ default-document-library/policy-on-related-party-transactions. pdf?sfvrsn=0.
The details of the transactions with related parties during FY 2018-19 are provided in the accompanying financial statements.
During the year under review, 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.
Transaction with person or entity belonging to the promoter/ promoter group which hold(s) 10% or more shareholding in the Company have been disclosed in the accompanying financial statements.
Statutory Auditors and Auditors Report
At the 54th Annual General Meeting held on August 18, 2017, the shareholders had approved the appointment of M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (ICAI Firm Registration No.117366W/W-100018) as the Statutory Auditors for a period of 5 years commencing from the conclusion of the 54th Annual General Meeting until the conclusion of the 59th Annual General Meeting to be held in the year 2022, subject to ratification by the shareholders every year, if so required under law. Pursuant to the recent amendment to Section 139 of the Act effective May 7, 2018, ratification by Shareholders every year for the appointment of the Statutory Auditors is no longer required and accordingly the Notice of ensuing Annual General Meeting does not include the proposal for seeking Shareholders approval for ratification of Statutory Auditors appointment.
M/s. Deloitte Haskins & Sells LLP has furnished a certificate of their eligibility and consent under Section 139 and 141 of the Act and the Companies (Audit and Auditors) Rules 2014 for their continuance as the Auditors of the Company for the FY 2019-20. In terms of the Listing Regulations, the Auditors have confirmed that they hold a valid certificate issued by the Peer Review Board of the ICAI.
Flavours of Growth
The Statutory Auditors Report for FY 2018-19 on the financial statement of the Company forms part of this Annual Report. The Statutory Auditors report on the financial statements for FY 2018-19 does not contain any qualifications, reservations or adverse remarks or disclaimer.
The Statutory Auditors of the Company have not reported any fraud as specified under the second proviso to Section 143(12) of the Act.
Your Board has appointed Shome and Banerjee, 5A Nurulla Doctor Lane, 2nd Floor, Kolkata - 700 017 as Cost Auditors of the Company for conducting cost audit for the FY 2019-20. A resolution seeking approval of the members for ratifying the remuneration payable to the Cost Auditors for FY 2019-20 is provided in the Notice to the ensuing Annual General Meeting.
The Cost accounts and records as required to be maintained under Section 148 (1) of Act are duly made and maintained by the Company.
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Act, read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is given in Annexure 6 attached to this Report.
The Directors wish to convey their deep appreciation to all the employees, customers, vendors, investors, and consultants/advisors of the Company for their sincere and dedicated services as well as their collective contribution to the Companys performance.
The Directors also thank the Government of India, Governments of various states in India, Governments of various countries and concerned Government departments for their cooperation.
|On behalf of the Board of Directors|
|April 23, 2019||(DIN 00121863)|