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Directors Report of Tata Coffee Ltd.

Mar 31, 2016

The Directors are pleased to submit the 73rd Report together with the Audited Statement of Accounts for the year ended 31st March, 2016.

FINANCIAL RESULTS:

The Company''s financial performance, for the year ended 31st March, 2016 is summarized below:

(Rs,in Crores)

Standalone Consolidated

2015-16 2014-15 2015-16 2014-15

REVENUE FROM OPERATIONS 718.18 685.31 1764.45 1692.95 Profit from Operations 101.64 104.20 252.12 289.72

Other Income 35.93 40.14 10.97 8.92

Profit before Finance Costs 137.57 144.34 263.09 298.64

Finance Costs 6.00 9.20 35.32 39.45

Profit Before Exceptional Income &Taxes 131.57 135.14 227.77 259.19

Exceptional Income (Net) 10.40 652 10.40 6.52

Profit Before Tax 141.97 141.66 238.17 265.71

Provision for Tax 39.47 40.10 80.17 95.45

Profit After Tax 102.50 101.56 158.00 170.26

Minority Interest - - 40.16 49.87

Profit After Tax net of Minority Interest 102.50 101.56 117.84 120.39

Surplus brought forward from Previous Year 283.15 233.28 328.60 260.03

Transfer on Merger of Alliance Coffee Limited - 0.13 -

Amount available for appropriation 385.65 334.97 446.44 380.42

General Reserve No. I (11.00) (11.00) (11.00) (11.00)

General Reserve No. II (8.10) (13.82) (8.10) (13.82)

Reversal of Dividend Distribution Tax 4.12 238 4.12 2.38

Transitional Impact of Depreciation - (0.16) - (0.16)

Dividends

Final (Proposed) (24.28) (24.28) (24.28) (24.28)

Tax on Dividend (4.94) (4.94) (4.94) (4.94)

(29.22) (29.22) (29.22) (29.22)

Balance carried forward 341.45 283.15 402.24 328.60

1. Turnover: Standalone:

Your Company''s turnover during the year under review was Rs, 718.18 Crores as compared to Rs, 685.31 Crores in the previous year, registering an increase of 5% over the previous year.

Consolidated:

The Consolidated turnover was Rs, 1,764.45 Crores as compared toRs, 1,692.95 Crores in the previous year, registering an increase of 4% over the previous year.

2. Profits: Standalone:

Profit from Operations before ''Other income and interest'' for the year ended 31st March, 2016, stood at Rs, 101.64 Crores as against Rs, 104.20 Crores in the previous year. Profit before Tax for the year 2015-16 is Rs, 141.97 Crores as against Rs, 141.66 Crores in the previous year. Profit after Tax in 2015-16 stood at Rs,102.50 Crores as againstRs, 101.56 Crores in the previous year.

Consolidated:

On a Consolidated basis, the Profit from Operations before ''Other income and interest'' for the year ended 31st March, 2016, stood atRs, 252.12 Crores as againstRs, 289.72 Crores in the previous year. Profit before Tax for the year 2015-16 isRs, 238.17 Crores as against Rs, 265.71 Crores in the previous year. Profit after Tax (net of minority interest) in 2015-16 stood at Rs,117.84 Crores as against Rs, 120.39 Crores in the previous year.

3. Dividend & Reserves:

Your Directors have recommended a Dividend of Rs, 1.30/- per share (face value of Rs, 1 per share) aggregating to Rs, 24.28 Crores for the year 2015-16. The Dividend Tax amounts to Rs, 4.94 Crores. It is proposed to carry forward a sum of Rs, 11 Crores towards General Reserve No. I.

4. Share Capital:

The Paid-up Eguity Share Capital as on 31st March, 2016 was Rs, 18.68 Crores comprising of 18,67,70,370 Shares ofRs, 1 each. The Company has not issued shares with differential voting rights, employee stock options and sweat eguity shares. The Company has paid Listing Fees for the Financial Year 2016-17 to each of the Stock Exchanges.

5. Global Coffee Scenario:

The World produced 144 million bags of coffee in 2015 (up 1.6% from 142 million bags in 2014).Arabicas were 85 million bags (near stagnant over previous year) while Robustas increased by 4% to 60 million bags as per International Coffee Organization.

The weakening of emerging market currencies, the Brazilian Real (BRL) in particular against the US Dollar had an adverse impact on global coffee prices. This was in spite of a lower Brazilian crop at 43.2 million bags in 2015 against 45 million bags in 2014. The New York ICE Arabica terminals dropped from about 140 cents/lb in April 2015 to about 125 cents/lb in March 2016. This reflected the sharp decline in BRL starting from BRL/USD 3.08 in the beginning of the year, declining to BRL/USD 4.1 and finally settling at BRL/USD 3.65. The London LIFFE Robusta terminals also mirrored the fall in NYC terminals, with the terminals plunging from USD 1750-1800/MT in April 2015 to USD 1250-1350/MT in March 2016. A 3.8% increase in Vietnam Robusta crop (27.5 million bags in 2015) over the previous year also contributed to adversely affecting the demand-supply and prices balance.

The overall decline in terminal prices and higher Robusta production resulted in an easier access to coffees from Latin America and South East Asia. This resulted in most Roasters having long term coverage and hampered actual demand. Hence, the differentials for Indian coffees also cooled off from historical highs in the early part of the year.

6. Company''s Performance: A. Plantations: Coffee:

The Company harvested 6,222 MT of Robusta crop (being an Off year) as against 7,002 MT in the previous year. In the case of Arabica, 1,899 MT (being an On year) has been harvested as against 1,594 MT in the previous year. The Arabica crop continues to be challenged by White Stem Borer incidence Industry wide. The Company has with strict monitoring and superior agricultural practices brought down the incidence within its Estates to acceptable levels. Climate change and long spells of drought have posed major challenges and the Company has proactively geared up to meet this by enhancing its water holding capacity by digging new tanks as well as desalting its old tanks.

Tea:

The Company produced 6.180 Million Kgs of Made Tea for the Financial Year 2015-16 as against 6.170 Million Kgs in the previous year. Though the production was satisfactory, due to weak demand world over, Tea prices realized by the Company were lower in the first half of the year. By re-engineering its operations and improvement in the quality of Tea, price realizations has been better in the latter half of the year. The Company has taken various steps to improve the performance of Tea Operations.

Pepper:

The Company had a lower Pepper production of 599 MT (being an Off year) for the Financial Year 2015-16 as compared toa crop of 1150 MT(being an On year) harvested during 2014-15. Due to improved agricultural practices, the quality and grade percentages have vastly improved. The Company has initiated various steps to further enhance the production base of Pepper in the coming years.

Curing Works:

The Company''s Curing Works at Kushalnagar (KNW) cured a total of 11,162 MT Coffee during the current year as against 10,266 MT in the previous year. In addition, 310MTof Monsooned Coffee was processed. The unit is certified under ISO 22000:2005 and SA 8000:2008.

The entire Pepper of the Company is graded and processed at KNW, which graded & processed 764 MT during the Financial Year.

Green Coffee Exports:

During the Financial Year 2015-16, your Company exported 6,332 MT of coffee as against 5,382 MT in the previous year. Your Company continues to focus on growth, through Premium Differentiated Coffees with volumes at 2,940 MT at very healthy premiums.

Plantation Trails:

Plantation Trails, our hospitality business has continued to perform exceedingly well recording best ever revenues and profits. This is primarily due to continued focus on Operational Excellence, Premium Positioning and Digital Marketing coupled with changes in Revenue Management and Cost Optimization.

B. Instant Coffee Operations:

The Instant Coffee Operations recorded significant increase in its turnover and profitability during the Financial Year 2015-16. The Manufacturing units ran to full capacity during the year.

The Company posted strong performances in its key markets; doubling its volumes over last year in Africa and maintaining dominance in Russia. Strong Customer interface backed by robust new product development enabled these.

The Theni Unit received the prestigious BRC & IFS certifications which enabled the Company to service discerning manufacturers and retailers, especially in Europe. The Theni factory also received Integrated Management System (IMS) Certification which integrates all of an organization''s systems and processes in to one complete framework (ISO 14001 ISO 9001 ISO 18001), Halal & Kosher Certifications and our Toopran Unit has been Certified for SA-8000.

As part of sustaining operational excellence, the Theni unit has commissioned a Solar Power Unit, 500 kWh, increasing its Renewable Energy to 65% of its total energy.

Tata Coffee Grand:

Your Directors are pleased to inform that the Company collaborated with its Holding Company Tata Global Beverages Ltd (TGBL) and commenced manufacturing "Tata Coffee - Grand", an Instant Coffee Brand that was launched in the domestic market by TGBL in November 2015. The product is a unique blend of Freeze Dried Coffee and Agglomerated Coffee with Chicory, which has been specifically created to cater to the domestic markets. The feedback received for the offering has been very encouraging.

C. Starbucks Roastery:

The Unit has almost doubled the production and processed 102 MTduring 2015-16 as against 59 MT of the previous year. The Unit continues to cater exclusively to the requirements of TATA Starbucks outlets in India from its State-of-Art Coffee Roasting facility at Kushalnagar Works. The Coffee beans used for this purpose are being supplied exclusively from the Company''s Estates. The Unit is certified under ISO 9001:2008 (Quality Management System), ISO 22000:2005 (Food Safety Management System), FSSC 22000 (Food Safety & Standards Act, 2006), ISO 14001:2004 (Environment Management System) and KOSHER.

7. Business Growth:

Your Company has a dedicated team of Management and Operating personnel who have been instrumental in the growth of the business over the years. Your Directors believe that the Company has the potential to further scale up its business volumes and profitability and are in the process of identifying new avenues of growth and effective utilization of its existing resources.

8. Quality Awards:

(i) Sustainability Awards:

Your Company has consistently been committed to environment protection and co-exists with nature at the coffee plantations. During the year under review, the Company established itself among the biggest names in the global coffee market by winning a total of 28 awards at the India International Coffee festival 2016. The stream of accolades won by the Company at the prestigious event included the Export Award, Roaster Award, Curer Award, and the flavour of India fine Cup Award.

The Cannoncadoo, Ubban, Mylemoney, Cottabetta, Margolly, Goorghully, Yemigoondi & Valparai Estates of the Company have bagged Regional and Specialty awards for their Arabica and Robusta Coffee.

Your Company continues to actively participate in Domestic and International forums to propagate and popularize the Company''s coffee.

(ii) Instant Coffee Operations:

Theni:-

TheTheni Unit won the CII-ITC Sustainability Awards 2015 on Environment Management, as well as a Commendation for Significant Achievement.

Toopran:-

The Toopran Unit received the Excellence Award for Export Performance from the federation of Commerce & Industry, Telangana. The Unit also won the Golden Peacock Award for Environment Management. The Unit has also received second prize in National Energy Conservation Awards in the food sector.

(iii) Tea:

Your Company bagged two awards at the 12th Golden Leaf India Awards - 2016 which has been instituted by the Tea Board and United Planters'' Association of Southern India (UPASI), Coonoor, for its high-quality tea produced at its Pachaimallai factory.

The Company''s Estates and Manufacturing facilities are certified both Nationally and Internationally by Trustea, Rain forest Alliance, and Ethical Tea Partnership. These Certifications reaffirm the Company''s commitment to produce high-quality products in a sustainable and responsible manner, while protecting the environment.

9. Capital Expenditure:

During the financial Year 2015-16, Rs, 2,609.73 Lakhs was incurred primarily on account of welfare, modernisation, up- gradation and other programmes undertaken in the various units of the Company.

10. Subsidiary Companies:

I. Eight O'' Clock Coffee Company (EOC):

EOC''s Total Income during the financial Year 2015-16 at Rs,1046.27 Crores, under Indian GAAP, was higher than the previous year''s total Income ofRs, 1007.64 Crores. The EOC volumes sold were marginally higher than the previous year amidst intense competitive spending. The EOC brand continues to grow. EOC''s total income also includes royalty income from the single serve K-cups sold under a licensing agreement with Keurig. K-cup volumes were lower than previous year due to intense competitive pressures. The Green cost was overall marginally lower than previous year, though the benefits of lower Green cost were seen better pronounced in second half of financial Year 2015-16. The Profit for the year was lower compared to previous year on account of lower K-cup revenues and higher costs.

II. Consolidated Coffee Inc. (CCI):

CCI is the Holding Company of EOC. The Consolidated net profit after taxes was Rs, 80.46 Crores as compared to Rs, 99.91 Crores in the previous year.

Performance of Subsidiaries:

Pursuant to the provision of Section 129(3) of Companies Act, 2013, a statement containing salient features of financial Statements of subsidiaries in form AOC-1 is annexed as per Annexure A.

The Company does not have any Associate or Joint Venture Companies. The Company has adopted a policy for determining the criteria of material subsidiaries which can be viewed at the Company''s website at www.tatacoffee.com.

11. 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, Statutory, Cost and Secretarial Auditors including 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 Company''s Internal financial Controls were adequate and effective during the financial Year 2015-16.

Accordingly, pursuant to Section 134(3)(c) and 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:

(i) in the preparation of the accounts for the Financial Year ended 31st March, 2016, the applicable accounting standards have been followed and that 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 as at the end of the Financial Year and of the profits of the Company for that period;

(iii) they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adeguate 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) they have prepared the Accounts for the Financial Year ended 31st March, 2016 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 adeguate and are operating effectively;

(vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adeguate and are operating effectively.

12. Directors & Key Managerial Personnel:

Mr. Chacko Purackal Thomas was appointed as an Additional Director of the Company. He was also appointed as Executive Director & Deputy CEO of the Company for a period of three years w.e.f 4th August, 2015. In terms of Article 101 of the Articles of Association of the Company read with Section 161 of the Companies Act, 2013, he holds office up to the date of the ensuing Annual General Meeting. The Company has received a notice from shareholder in terms of Section 160 of the Act signifying its intention to propose the appointment of Mr. Chacko as a Director.

Mr. T Radhakrishnan has been re-appointed as Executive Director - ICD Operations of the Company by the Board at its meeting held on 16th May, 2016, for a further term of 3 years w.e.f. 26th July, 2016.

As per the provisions of the Companies Act, 2013, Mr. T Radhakrishnan and Mr. K Venkataramanan retire by rotation at the ensuing Annual General Meeting and being eligible, has offered themselves for re-appointment. The Board recommends their re-appointment.

The necessary resolutions for their appointment are also being placed before the members for their consideration at the forthcoming Annual General Meeting.

In compliance with provisions of Section 203 of the Companies Act, 2013, The Managing Director and CEO, Executive Directors and the Company Secretary have been nominated as Key Managerial Personnel.

All the Independent Directors have given declarations stating that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and SEBI Listing Regulations. In the opinion of the Board, they fulfil the conditions of independence as specified in the Act and Rules made there under and are independent of the Management.

13. Board and Committee Meetings:

An Annual calendar of Board and Committee Meetings planned during the year was circulated in advance to the Directors.

The Board has constituted an Audit Committee with Mr. S. Santhanakrishnan, Ms. Sunalini Menon, Mr. V. Leeladhar and Mr.Siraj AzmatChaudhryas Members.There have been no instances during the year when recommendations of the Audit Committee were not accepted by the Board.

The details of the composition of the Board and its Committees and of the Meetings held and attendance of the Directors at such Meetings are provided in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Act and Listing Regulations.

14. 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, Director term, retirement age and Committees of the Board. It also covers aspects relating to Nomination, Appointment, Induction and Development of Directors, Director Remuneration, Subsidiary oversight, Code of Conduct, Board Effectiveness Review and Mandates of Board Committees.

15. Policy on Director''s 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 strateqy of the Company. The NRC reviews and evaluates the resumes of potential candidates for appointment of Directors and meets them prior to makinq 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 Companies Act, 2013 and SEBI 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 the Board/Committee Meetings.

It is affirmed that the remuneration paid to Directors, Key Managerial Personnel and all other employees is in accordance with the Remuneration Policy of the Company.

The Company''s Policy on Directors'' Appointment and Remuneration and other matters provided in Section 178(3) of the Act and Regulation 19 of SEBI Listen Regulations have been disclosed in the Corporate Governance Report, which forms part of this Report.

(b) Familiarisation/Orientation program for Independent Directors:

The Independent Directors attend a Familiarisation/ Orientation program on being inducted into the Board. The details of Familiarisation program are provided in the Corporate Governance Report and are also available on our website. The Company issues a formal letter of appointment, outlining his/her role, function, duties and responsibilities, the format of which is available in our website https://www.tatacoffee.com.

16. Annual Evaluation of Board Performance and Performance of its Committees and of Directors:

Pursuant to the applicable provisions of the Companies Act, 2013 and SEBI 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 Board''s functioning was evaluated on various aspects, including inter alia degree of fulfilment of key responsibilities, Board structure and composition, 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 a separate meeting of Independent Directors. The same was also discussed in the Board Meeting. Performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated.

17. 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 Company''s 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.

18. Auditors:

(1) Statutory Auditors:

M/s SNB Associates, Chartered Accountants (Firm Registration No. 015682N), were appointed as Statutory Auditors of the Company at the previous Annual General Meeting (AGM) of the Company held on 3rd August, 2015 to hold office till the conclusion of the ensuing AGM. A declaration from them has been received to the effect that they are eligible to act as Auditors of the Company under Section 141 of the Companies Act, 2013.

M/s Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W) are proposed to be appointed as Statutory Auditors of the Company. They have signified their assent and confirmed their eligibility to be appointed as Auditors in terms of the provisions of Section 141 of the Companies Act, 2013 and Rule 4 of the Companies (Audit and Auditors) Rules, 2014.

The Boa rd on the recon emendations of the Audit Com mite have resolved to place the proposal of Appointment/ Re-appointment of Statutory Auditors as follows:

a) M/s SNB Associates, Chartered Accountants, as the Joint Statutory Auditors for a term of one year from the conclusion of ensuing AGM until the conclusion of the next AGM of the Company subject to the approval of the shareholders.

b) M/s Deloitte Haskins & Sells LLP, Chartered Accountants, as Statutory Auditors for a term of five consecutive years i.e. from the conclusion of ensuing AGM until the conclusion of AGM of the Company to be held in the year 2021 subject to the ratification of their appointment by the shareholders at each AGM held after this AGM.

(2) Cost Auditors:

Pursuant to Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014, as amended from time to time, your Company has appointed M/s Rao, Murthy & Associates, Cost Accountants to carry out Audit of Cost Records for the Financial Year 2016-1/. Pursuant to the provisions of Section 148 of the Companies Act, 2013, read with The Companies (Audit and Auditors) Rules, 2014, Members are requested to consider the ratification of the remuneration payable to M/s Rao, Murthy & Associates.

(3) Secretarial Auditor:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the rules made there under, the Company had appointed Mr. Sudhir V. Hulyalkar, Company Secretary in Practice (CP No. 613/) to undertake the Secretarial Audit of the Company for the year ended 31st March, 2016. The Secretarial Audit Report issued in this regard is annexed as Annexure B.

The Auditors'' Report and the Secretarial Audit Report for the Financial Year ended 31st March, 2016 do not contain any qualification, reservation, adverse remark or disclaimer.

19. 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 Company''s 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 continuing basis.

The Company has adopted a Risk Management Policy in accordance with the provisions of the Companies Act, 2013 and Regulation 21 of SEBI Listing Regulations.

20. Particulars of Loans, Guarantees and Investments:

The details of Loans and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the Notes to the Financial Statements forming part of Annual Report. The Company has not provided any guarantees during the Financial Year.

21. Fixed Deposit:

The Company has not accepted any Public Deposits during the Financial Year under review.

22. Related Party Transactions:

All Related Party Transactions that were entered into during the Financial Year were on an arm''s length basis, in the ordinary course of business and in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI 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 SEBI Listing Regulations.

All Related Party Transactions are placed before the Audit Committee for prior approval and a statement of all Related Party Transactions is placed before the Audit Committee for its review on a quarterly basis, specifying the nature, value terms and conditions of the transactions. Prior omnibus approval of the Audit Committee is obtained for the transactions which are repetitive in nature.

None of the transactions with related parties falls under the scope of section 188(1) of the Companies Act, 2013. Information on transactions with related parties pursuant to section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure in Form AOC-2and forms part of this report.

The Company has adopted a Related Party Transactions Policy which is approved by the Board and the same may be viewed on the Company''s website at the web link: http://www.tatacoffee.com/investors/related_party.pdf

23. Corporate Governance & Management Discussion & Analysis:

The Company is in compliance with all the provisions of Corporate Governance as stipulated in the Regulations under Chapter IV of SEBI Listing Regulations. The Compliance Report on Corporate Governance is annexed and forms part of this Report. The Certificate from the Auditors of the Company confirming compliance with the provisions of Corporate Governance forms part of the Corporate Governance Report.

(i) Tata Coffee Code of Conduct for the Prevention of Insider Trading:

The Board of Directors has adopted the Insider Trading Policy in accordance with the requirements of SEBI Listing Regulations. The policy lays down guidelines and procedures to be followed, disclosures to be made while dealing with shares of the Company and the consequences of violation. The objective of the policy is to regulate, monitor and report Trading in Securities of the Company by Employees in order to maintain highest ethical standards.

(ii) Listing Agreement:

The Securities and Exchange Board of India (SEBI) issued SEBI Regulations, 2015 with the objective to consolidate and streamline the provisions of the Listing Agreement for different segments of capital markets and to ensure better enforceability effective December 1, 2015. Accordingly, the Listed Companies were required to enter into fresh Listing Agreement with the Stock Exchanges. The Company has entered into Listing Agreements with NSE and BSE.

The Management Discussion and Analysis Report for the year under review is presented in a separate section and forms a part of the Directors'' Report.

24. 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, creche and child care facilities, transport at subsidized rate to school going children and supply of provisions at cost through co-operative stores.

25. Policy on Prevention, Prohibition and Redressal of Sexual Harassment at Work place:

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 there under. The policy aims to provide protection to Employees at the 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 also constituted an Internal Complaints Committee, known as the Prevention of Sexual Harassment (POSH) Committee, to enguire into complaints of sexual harassment and recommend appropriate action.

During the Financial Year 2015-16, the Company received 2 complaints on sexual harassment, which has been disposed off and appropriate actions were taken. No complaints are pending.

26. Whistle Blower/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 Company''s Code of Conductor Ethics Policy. The Policy provides for adequate safeguards against victimization of Employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee. The Whistle Blower Policy has been posted on the website of the Company www.tatacoffee.com

27. Corporate Social Responsibility:

The Corporate Social Responsibility (CSR) policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure D of this report in the format prescribed as per the Companies (Corporate Social Responsibility Policy) Rules, 2014.

The Company has a Corporate Social Responsibility Policy and the same has been posted in the website of the Company (www.tatacoffee.com).

28. Annual Return:

Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure E.

29. Particulars of Employees and Remuneration:

In terms of the first proviso to Section 136 of the Companies Act, 2013, 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.

Statement containing information as required under Section 197(12) of the Companies Act, 2013, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) rules, 2014, is annexed as Annexure F.

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

The Statement pursuant to Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is annexed as Annexure G.

31. 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 Company''s Operations in future.

Green Initiatives:

In commitment to keep in line with the Green Initiative and going beyond it to create new green initiatives, electronic copies of the notice of the AGM are sent to all members whose email addresses are registered with the Company/Depository Participant(s). For members who have not registered their e-mail addresses, physical copies are sent through the permitted mode.

Acknowledgement:

The Directors thank the Company''s employees, customers, vendors, investors for their continuous support.

The Directors also thank the Government of India, Government of various States in India and concerned government departments/agencies for their co-operation.

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

On behalf of the Board

Place: Bengaluru R. HARISH BHAT

Dated: 16th May, 2016 Chairman


Mar 31, 2015

Dear Members,

The Directors are pleased to submit their 72nd Report together with the Audited statement of accounts for the year ended 31st March, 2015.

FINANCIAL RESULTS:

The Company''s financial performance, for the year ended 31st March, 2015 is summarized below: Rs in Crores Standalone 2014-15 2013-14

Revenue from Operations 683.78 650.92

Profit from Operations 104.20 117.96

Add: Other Income 40.14 35.18

Profit before Interest 144.34 153.14

Less: Interest 9.20 4.91

Profit Before Exceptional Items and Taxes 135.14 148.23

Add: Exceptional Income/(Expenses) 6.52 -

Profit Before Tax 141.66 148.23

Provision for Tax 40.10 41.66

Profit After Tax 101.56 106.57

Less: Minority Interest - -

Profit After Tax net of Minority Interest 101.56 106.57

Surplus brought forward from Previous Year 233.28 167.87

Transfer on Merger of Alliance Coffee Limited 0.13 -

Amount available for appropriation 334.97 274.44

General Reserve No.I (11.00) (11.00)

General Reserve No.II (13.82) (1.75)

Reversal of Dividend Distribution Tax 2.38 -

Transitional Impact of Depreciation (0.16) -

Dividends

Final (Proposed) (24.28) (24.28)

Tax on Dividend (4.94) (4.13)

Balance carried forward 283.15 233.28

Consolidated 2014-15 2013-14

Revenue from Operations 1691.42 1677.17

Profit from Operations 289.72 263.63

Add: Other Income 8.92 12.04

Profit before Interest 298.64 275.67

Less: Interest 39.45 36.93

Profit Before Exceptional Items and Taxes 259.19 238.74

Add: Exceptional Income/(Expenses) 6.52 (102.29)

Profit Before Tax 265.71 136.45

Provision for Tax 95.45 32.86

Profit After Tax 170.26 103.59

Less: Minority Interest 49.87 22.11

Profit After Tax net of Minority Interest 120.39 81.48

Surplus brought forward from Previous Year 260.03 219.71

Transfer on Merger of Alliance Coffee Limited - -

Amount available for appropriation 380.42 301.19

General Reserve No.I (11.00) (11.00)

General Reserve No.II (13.82) (1.75)

Reversal of Dividend Distribution Tax 2.38 -

Transitional Impact of Depreciation (0.16) -

Dividends

Final (Proposed) (24.28) (24.28)

Tax on Dividend (4.94) (4.13)

Balance carried forward 328.60 260.03



TURNOVER:

Standalone:

Your Company''s turnover during the year under review was Rs.683.78 Crores as compared to Rs. 650.92 Crores in the previous year, registering an increase of 5 % over the previous year.

Consolidated:

The Consolidated turnover was Rs.1,691.42 Crores as compared to Rs. 1,677.17 Crores in the previous year,.

PROFITS:

Standalone:

Profit from Operations before ''Other income and interest'' for the year ended 31st March, 2015, stood at Rs. 104.20 Crores as against Rs. 117.96 Crores in the previous year. Profit before Tax for the year 2014-15 is Rs. 141.66 Crores vis-a-vis Rs. 148.23 Crores in the previous year. Profit after Tax in 2014-15 stood at Rs.101.56 Crores as against Rs. 106.57 Crores in the previous year.

Consolidated:

On a consolidated basis, the Profit from Operations before ''Other income and interest'' for the year ended 31st March, 2015, stood at Rs. 289.72 Crores as against Rs. 263.63 Crores in the previous year. Profit before Tax for the year 2014-15 is Rs. 265.71 Crores vis-a-vis Rs. 136.45 Crores in the previous year. Profit after Tax (net of minority interest) in 2014-15 stood at Rs.120.39 Crores as against Rs. 81.48 Crores in the previous year.

DIVIDEND & RESERVES:

Your Directors have recommended a Dividend of Rs. 1.30/- per share (face value of Rs. 1 per share) aggregating to Rs. 24.28 Crores for the year 2014-15. The Dividend Tax amounts to Rs. 4.94 Crores. It is proposed to carry forward a sum of Rs. 11 Crores towards reserves.

SHARE CAPITAL:

The paid up Equity Share Capital as on 31st March, 2015 was Rs. 18.67 crores comprising of 18,67,70,370 Shares of Rs. 1 each. During the year, the Equity Shares of the Company was sub-divided from the face value of Rs. 10/- to Rs. 1/- per share after obtaining the consent from the members of the Company by way of E-voting/Postal Ballot.

The Company has not issued shares with differential voting rights, employee stock options and sweat equity shares. The Company has paid Listing Fees for the Financial Year 2015-16 to each of the Stock Exchanges.

GLOBAL COFFEE SCENARIO:

The global production for the year 2014 is estimated at 142 million bags and the consumption at 149 million bags. As per International Coffee Organisation (ICO) estimates, the total consumption grew at the rate of 1.5% in the year 2014.

The year under review witnessed uncertain weather conditions globally impacting the Arabica coffee crops. Brazil, the world''s largest coffee producer, faced a drought which impacted their coffee harvests. Similar weather concerns in other parts of the world resulted in a sharp increase in Arabica Coffee prices through the year 2014. The price of Arabica which remained in the range of 102 to 150 cents/lb in the New York terminal during the period January to December 2013, witnessed a steep jump to 212 cents/lb in April 2014 and 222 cents/lb in October 2014. With supply concerns easing Arabica retraced to 133 cents/lb levels in March 2015.

Regarding Robusta, Vietnam the world''s largest Robusta coffee producer recorded a bumper Robusta crop which got commercialised in late 2014. The price of Robusta, which remained flat in the range of US$ 1500-1800/MT in the London Terminal till Jan 2014, started hardening from February 2014 and touched US$ 2200/MT in March 2014. On the back of a decent Vietnam crop, the Robusta price traded, witnessed a correction and settled at US$ 1729/MT by end March 2015.

OPERATIONS:

A. Plantations:

Coffee:

The Company has harvested a higher Robusta crop of 7,002 MT as against 4,781 MT in the previous year. This has been the highest Robusta production in the last 5 years. While in the case of Arabica, being a biennial off year, production has been lower at 1,594 MT as against 2,076 MT in the previous year. The Coffee harvesting operation has been completed as per schedule.

Tea:

The Company produced 6.170 Million Kgs of Made tea for the Financial Year 2014-15 as against 6.545 Million kgs in the previous year. The long drought followed by heavy rain and some pest attack had its impact on the tea production. During 2014-15, the Tea market witnessed an easier trend compared to 2013-14 mainly due to increased crop in Africa. This directly impacted South India Tea prices due to lower exports. South India auction prices dropped by around Rs. 15.00 per kg.

Pepper:

The Company has achieved a higher pepper production of 1150 MT for the Financial Year 2014-15 as against 368 MT in the previous year. The Company has initiated various steps to further enhance the production base of pepper in the coming years.

Curing Works:

The Company''s Curing Works at Kushalnagar, cured a total of 10,266 MT Coffee during the current year as against 11,988 MT in the previous year, due to lower crop arrivals. In addition, 327 MT of Monsoon Coffee was processed as against 306 MT in the previous year.

green Coffee Exports:

During the year 2014-15, your Company exported 5,382 MT of coffee as against 5,238 MT in the previous year. Your Company continues to focus on growth, through Differentiated/Specialty coffees with volumes at 2,120 MT at very healthy premiums.

Plantation Trails:

Plantation Trails, our hospitality business has performed exceedingly well in the year under review by recording its best performance since inception. Rework on the business model to optimize costs, enhanced customer centricity, and increased operational efficiencies have resulted in a significant business turnaround. Occupancies grew despite the increased competitive intensity in the marketplace. Plantation Trails has also been the recipient of several awards during the year including the prestigious recognition by Trip Advisor for the "Certificate of Excellence- 2014 Winner".

B. Instant Coffee Division:

The year 2014-15 saw the Instant Coffee Division post record annual sales and production. The total sales volumes clocked were 7,677 MTs - a jump of 16% over the last Financial Year. The production for the year stood at 7,975 MTs - an increase of 15% over last fiscal. In the first full year of increased capacity available, the division did remarkably well in utilizing it to the tune of 92%. The new Freeze Dried Coffee (FDC) unit ran to full capacity during the year.

The increase in Instant Coffee sales volumes was posted despite strong headwinds in the market. The financial crisis in Russia - the largest market of soluble coffee globally - and the rapid weakening of global currencies posed strong challenges to our export oriented business. In addition, the overhang of excess capacities in Instant Coffee globally, continued to pressurize the trade margins. The geopolitical risks in some of our key markets like Ukraine and Middle East also weighed on the portfolio performance.

Market expansion remains at the core of our strategy in the Instant Coffee Business. Our portfolio has been traditionally a Russia & CIS dominated one. This year just over half of our sales came from Russia and CIS vis-a-vis an 80% share a few years ago. As a conscious move towards de-risking our model, we added 32 new customers who contributed around 20% of our total volumes. Some of the countries where we placed our soluble coffees for the first time were China, Angola, Pakistan and Mongolia.

In addition to our customer acquisitions, we also steadily continued our progress on product and packaging innovation. Our new variants of coffee mixes and customized packaging solutions enhanced our standing as an institutional marketeer.

We also marched ahead steadily on our commitment to quality excellence. Our Theni Unit received the prestigious BRC & IFS certifications allowing us to service top most manufacturers and retailers, especially in Europe. Additionally, Theni factory also received ISO 14001, Halal & Kosher certifications while our Toopran Unit has been certified for ISO 14001 and 18000.

C. Starbucks:

Your Company continues to cater exclusively to the requirements of Tata Starbucks outlets in India from its state of art coffee roasting facility at Kushalnagar. The coffee beans used for this purpose are being supplied exclusively from the Company''s estates. Efforts are on to fully utilize the installed capacity of this roasting facility. In the past year we have added to our certification portfolio and are now FSSC 22000

certified (Food Safety System Certification). This forms a part of our integrated management system which now includes ISO 9001:2008 (Quality Management System), ISO 22000:2005 (Food Safety Management System) and ISO 14001:2004 (Environment Management System)

Quality Awards:

Sustainability Awards:

Tata Coffee has consistently been committed to environment protection and co-exists with nature at the coffee plantations. During the year under review, the Company won the prestigious Golden Peacock Award for excellence in Environment Management

Sustained quality has been the main focus of the Company over the years. The R & G Unit at Kushalnagar has won the award for the most innovative design and the best Roaster Award in the India International Coffee Festival (IICF) held in 2014. The Balmany, Valparai, Sunticoppa, Mylemoney, Margolly, Ubban and Yemigoondi Estates of the Company have bagged Regional and Specialty awards for their Arabica and Robusta Coffee.

Our Theni and Toopran units have won the CII Environment Systems award for the year.

Your company continues to actively participate in domestic and International forums to propagate and popularize the company''s coffee.

CAPITAL EXPENDITURE:

During 2014-15, Rs. 2,266.46 Lakhs was incurred primarily on account of welfare, modernisation, up-gradation and other programmes undertaken in the various units of the Company.

SUBSIDIARY COMPANIES:

I. Eight O'' Clock Coffee Company (EOC):

EOC''s total income during 2014-15 at Rs. 1,007.64 Crores, under Indian GAAP, was marginally lower than the previous year''s total income of Rs. 1,026.25 Crores. The reduction in top-line is due to lower bagged volumes in the first half of the year. However, in the second half, EOC volumes increased driven by its popular consumer programs and effective promotional listings.

EOC''s total Income also includes royalty income from the single serve K- cups sold under a licensing agreement with Keurig. K-cup volumes increased significantly year on year due to growth in the single serve business and addition of four new EOC SKU''s. Overall profitability of EOC improved over the previous year.

II. Consolidated Coffee Inc.:

Consolidated Coffee Inc (CCI) is the holding company of EOC. The net profit ( including the profits of EOC), after taxes is

at Rs. 99.91 Crores as compared to a loss of Rs. 3.90 Crores in the previous year.

III. Alliance Coffee Limited:

During the year under review, the Honorable High Court of Karnataka approved the Scheme of amalgamation of Alliance Coffee Ltd (ACL) - the Company''s wholly owned subsidiary with the Company with effect from 1st April, 2013; consequently the Assets and Liabilities of ACL stand vested with the Company from the effective date and ACL stands dissolved without undergoing the process of winding up and consequently ceased to be a Subsidiary of the Company.

PERFORMANCE OF SUBSIDIARIES:

A Statement containing the salient features of the financial position of the subsidiary company in Form AOC. 1 is annexed as per Annexure A.

The Company does not have any associate orjoint venture companies. The policy for determining the criteria of material subsidiaries can be viewed at the company''s website at www.tatacoffee.com.

PARTICULARS OF LOANS,GUARANTEES AND INVESTMENTS:

The details of loans and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements forming part of Annual Report. The Company has not provided any guarantees during the Financial Year.

FIXED DEPOSIT:

The Company has not accepted any public deposits during the year under review.

RELATED PARTY TRANSACTIONS:

All Related Party Transactions that were entered into during the Financial Year were on an arm''s length basis, in the ordinary course of business and were in compliance with the applicable provisions of the Companies Act, 2013 and the Listing Agreement. There were no materially significant Related Party Transactions made by the Company during the year that required Shareholders'' approval under clause 49 of the Listing Agreement.

All Related Party Transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are repetitive in nature. A statement of all Related Party Transactions is placed before the Audit Committee for its review on a quarterly basis, specifying the nature, value terms and conditions of the transactions.

The Company has adopted a Related Party Transactions Policy. The Policy, as approved by the Board, is uploaded on the Company''s website at the web link: http://www.tatacoffee.com/investors/ related_party.pdf

The details of the transactions with Related Parties are provided in the accompanying financial statements.

RISK Management:

The Company has adopted a Risk Management Policy in accordance with the provisions of the Act and Clause 49 of the Listing Agreement. It establishes various levels of accountability and overview within the Company.

The Company has a Risk Management Committee which has been entrusted with the responsibility to assist the Board in (a) Approving the Company''s Risk Management framework (b) Overseeing that all the risks that the organization faces such as strategic, financial, liquidity, security, regulatory, legal, reputational and other risks 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 highlights risks associated with chosen strategies.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company''s internal audit systems are geared towards ensuring adequate internal controls commensurate with the size and needs of the business, with the objective of efficient conduct of operations through adherence to the Company''s policies, identifying areas of improvement, evaluating the reliability of Financial Statements, ensuring compliances with applicable laws and regulations and safeguarding of assets from unauthorized use.

Details of the internal controls system are given in the Management Discussion and Analysis Report, which forms part of the Directors'' Report.

CORPORATE GOVERNANCE:

The Company is in compliance with all the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement entered into with the Stock Exchanges. The Compliance Report on Corporate Governance forms an integral part of this Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance is attached to the report on Corporate Governance.

The Management Discussion and Analysis Report for the year under review as stipulated under clause 49 of the Listing Agreement with the Stock Exchanges, is presented in a separate section and forms a part of the Directors'' Report.

DIRECTORS:

Ms. Sunalini Menon, Mr. K. Venkataramanan, Mr. V. Leeladhar, Mr. Sanjiv Sarin and Mr. Siraj Azmat Chaudhry were appointed as Additional Directors of the Company and in terms of Article 101 of the Articles of Association of the Company read with Section 161 of the Companies Act, 2013, they hold office upto the date of the ensuing Annual General Meeting. It is

proposed to appoint Ms. Sunalini Menon, Mr. V. Leeladhar and Mr. Siraj Azmat Chaudhry as Independent Directors at the forthcoming Annual General Meeting in compliance with Section 149(6) of the Companies Act, 2013 and revised Clause 49 of the Listing Agreement. The Company has received a notice from shareholder in terms of Section 160 of the Act signifying its intention to propose the appointment of Ms. Sunalini Menon, Mr. K. Venkataramanan, Mr. V. Leeladhar, Mr. Sanjiv Sarin and Mr. Siraj Azmat Chaudhry as Directors in the forthcoming Annual General Meeting.

Mr. K. Venkataramanan was appointed as Executive Director- Finance and Chief Financial Officer for a period of 3 years with effect from 25th October 2014. His term of appointment was approved by the members on 13th January 2015 through E-voting/Postal Ballot.

Mr. Sanjiv Sarin was appointed as Managing Director and Chief Executive Officer for a period of 3 years with effect from 25th April 2015. The necessary resolution for his appointment is being placed before the members for their consideration at the forthcoming Annual General Meeting.

Mr. Venu Srinivasan resigned as a Director from the Board with effect from 1st September, 2014. Mr. D.R. Kaarthikeyan demitted his office as a Director in accordance with the Group Guidelines with effect from 1st October, 2014.

Mr. M. Deepak Kumar retired as Executive Director- Finance with effect from 24th October, 2014; Mr. Hameed Huq, retired as Managing Director with effect from 31st March, 2015.

The Board wishes to place on record its appreciation for the invaluable services rendered by Mr. Venu Srinivasan, Mr. D.R. Kaarthikeyan, Mr. M Deepak Kumar and Mr. Hameed Huq during their tenure as Directors of the Company.

All the Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Act and Clause 49 of the Listing Agreement entered into with the Stock Exchanges. In the opinion of the Board, they fulfill the conditions of independence as specified in the Act and Rules made there under and are independent of the management.

Governance Guidelines:

The Company has adopted Governance Guidelines on Board Effectiveness. The Governance Guidelines cover aspects related to composition and role of the Board, Chairman and Directors, Board diversity, definition of independence, Director term, retirement age and Committees of the Board. It also covers aspects relating to nomination, appointment, induction and development of Directors, Director remuneration, Subsidiary oversight, Code of Conduct, Board Effectiveness Review and Mandates of Board Committees.

Procedure for Nomination and Appointment of Directors:

The Nomination and Remuneration Committee is responsible for developing competency requirements for the Board based on the industry and strategy of the Company. The Nomination and Remuneration Committee reviews and evaluates the resumes of potential candidates vis-a-vis the required competencies. The Nomination and Remuneration Committee also meets with potential candidates, prior to making recommendations of their nomination to the Board. At the time of appointment, specific requirements for the position, including expert knowledge expected, is communicated to the appointee.

Criteria for Determining Qualifications, Positive Attributes and Independence of a Director:

The Nomination and Remuneration Committee has formulated the criteria for determining qualifications, positive attributes and independence of Directors in terms of Section 178(3) of the Act and Clause 49 of the Listing Agreement.

Independence:

In accordance with the above criteria, a Director will be considered as an ''Independent Director'' if he/she meets with the criteria for ''Independent Director'' as laid down in the Act and clause 49 of the Listing Agreement.

Qualifications:

A transparent Board nomination process is in place that encourages diversity of thought, experience, knowledge, perspective, age and gender. It is also ensured that the Board has an appropriate blend of functional and industry expertise. While recommending the appointment of a Director, the Nomination and Remuneration Committee considers the manner in which the function and domain expertise of the individual will contribute to the overall skill-domain mix of the Board.

Positive Attributes:

In addition to the duties as prescribed under the Act, the Directors of the Board of the Company are also expected to demonstrate high standards of ethical behavior, strong interpersonal and communication skills and soundness of judgment. Independent Directors are also expected to abide by the Code of Independent Directors as outlined in Schedule IV to the Act.

Annual Evaluation of Board Performance and Performance of its Committees and of Directors:

Pursuant to the provisions of the Act and clause 49 of the Listing Agreement, the Board has carried out an annual evaluation of its own performance, performance of the Directors as well as the evaluation of the working of its Committees.

The Nomination and Remuneration Committee has defined the evaluation criteria and the performance evaluation process for the Board, its Committees and Directors.

The Board''s functioning is evaluated on various aspects, including inter alia degree of fulfillment of key responsibilities, Board structure and composition, establishment and delineation of responsibilities to various Committees, effectiveness of Board processes, information and functioning.

Directors were evaluated on aspects such as attendance, contribution at Board/Committee meetings and guidance/support to the management outside Board/Committee meetings.

The Committees of the Board were assessed on the degree of fulfillment of key responsibilities, adequacy of Committee composition and effectiveness of meetings.

The performance evaluation of the Independent Directors was carried out by the Board. The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors who also reviewed the performance of the Board, its Committees and the Directors.

The Chairman of the Board provided feedback to the Directors on the significant highlights with respect to the evaluation process of the Board.

REMUNERATION POLICY:

The Company has adopted a Remuneration Policy for the Directors, Key Managerial Personnel and other employees, pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement

The Board has on the recommendation of the Nomination and Remuneration Committee framed a policy for Remuneration for Directors, Key Managerial Personnel and other employees which lay down criteria for selection and appointment of Board Members. 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.

It is affirmed that the remuneration paid to Directors, Key Managerial Personnel and all other employees is as per the Remuneration Policy of the Company.

As a policy, the Executive Directors are not paid sitting fees; the Non-Executive Directors are entitled to sitting fees for the Board/ Committee Meetings.

BOARD AND COMMITTEE MEETINGS:

A calendar of Board and Committee Meetings to be held during the year was circulated in advance to the Directors. Ten Board Meetings were convened and held during the year.

The Board has constituted an Audit Committee with Mr. S. Santhanakrishnan as Chairman, Prof. Arun Monappa, Ms. Sunalini Menon and Mr. V Leeladhar as Members.

The details of the composition of the Board and its Committees and of the Meetings held and attendance of the Directors at such Meetings are provided in the Corporate Governance Report.

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, and Secretarial Auditors and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company''s Internal Financial Controls were adequate and effective during the Financial Year 2014-15.

Accordingly, pursuant to Section 134(3)(c) and 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:

(i) In the preparation of the accounts for the Financial Year ended 31st March, 2015, 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 were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as 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 31st March, 2015 on a ''going concern'' basis;

(v) The Directors have laid down Internal Financial Controls for the Company which are adequate and are operating effectively;

(vi) 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.

EMPLOYEES WELFARE:

The Company''s focus on welfare and improving the quality of lives of its people continues as always. In order to improve the quality of living for our employees, we have been providing educational assistance to their children, creche and child care facilities, transport at subsidized rate to school going children, supply of provisions at cost through co-operative store branches located at each Unit/Estate.

CORPORATE SOCIAL RESPONSIBILITY - SERVICE TO THE COMMUNITY:

Corporate Social Responsibility Initiatives:

Your Company is committed to ensuring that its growth is sustainable and significantly enhances the quality of life of the communities in which it operates. The Company has constituted a Corporate Social Responsibility Committee in compliance with Section 135 of the Companies Act, 2013 comprising of two Independent Directors and the Managing Director of the Company.

The focus areas that have been chosen for serving the community are Education, Health, Hygiene and Nutrition, Gender Equality, Environmental Sustainability, Affirmative Action and Promotion of Rural Sports.

The educational programmes include Swastha, DARE, and Merit Scholarships for students of Coorg and Anamallais, promoting education and support for children with visual disabilities and skill development for the underprivileged through sponsoring programmes.

The Coorg Foundation - a Public Charitable Trust (Foundation) established by your Company continues to provide admirable support to various individuals and institutions in the field of education, health care and culture during the year. "Swastha" which was established by The Coorg Foundation in 1994 as a fully residential institution for differently abled, continues to extend its support to the needy children in Coorg and neighbouring areas through its centres in Suntikoppa and Pollibetta by imparting required education and training. They are trained in making stationery items, offset and screen printing, greeting cards and table mats. These products are procured by the public and Institutions in the Kodagu District. The sale proceeds of the same are utilized for meeting the day to day expenses of Swastha.

In pursuance of the objectives of the SWASTHA, the DARE (Developmental Activities for Rehabilitative Education) was set up in 1996 in the Anamallais to train differently abled children to be self reliant.

Rural India Health Project Hospital (RIHP), Ammathi, which is supported by the Company, continues to serve the needy sections of the society. The Coorg Foundation provides grant to RIHP for treatment of patients belonging to the lower income group.

In addition, the Company has continued its initiatives for the development and protection of the girl child by conducting regular camps for detection of nutrition deficiency in girl children and promotion of self employment opportunities for women in Theni; providing clean drinking water to the residents near the Toopran Unit and operating primary school at Anamallais.

The Company has a Corporate Social Responsibility Policy and the same has been hosted in the website of the Company (www.tatacoffee.com);

The above projects are in accordance with Schedule VII of the Act. The Annual Report on CSR activities is annexed as Annexure B.

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 there under. The policy aims to provide protection to employees at the 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 also constituted an Internal Complaints Committee, known as the Prevention of Sexual Harassment (POSH) Committee, to inquire into complaints of sexual harassment and recommend appropriate action.

During the Financial Year 2014-15, the Company received one complaint on sexual harassment, which has been disposed off and appropriate action taken. No complaints were pending.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY:

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

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 Company''s Operations in future.

KEY MANAGERIAL PERSONNEL:

In compliance with provisions of Section 203 of the Companies Act, 2013, during the Financial Year 2014-15, The Managing Director and CEO, Executive Director Finance and CFO, Executive Director- ICD Operations and the Company Secretary have been nominated as Key Managerial Personnel.

AUDITORS:

(1) STATUTORY AUDITORS:

M/s. SNB Associates, Statutory Auditors of the Company hold office till the conclusion of the ensuing Annual General Meeting. They have confirmed their eligibility to the effect that their appointment, if made, would be within the prescribed limit under the Act, and they are eligible for appointment.

(2) COST AUDITORS:

Pursuant to Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, your Company has appointed M/s Rao, Murthy & Associates, Cost Accountants to carry out Audit of Cost Records for the Financial Year 2015-16. As required under the Companies Act, 2013, a resolution seeking members approval for the remuneration payable to the Cost Auditor forms part of the notice convening the Annual General Meeting.

(3) SECRETARIAL AUDITOR:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the rules made there under, the Company had appointed Mr. Sudhir V. Hulyalkar, Company Secretary in Practice (CP No. 6137) to undertake the Secretarial Audit of the Company for the year ended 31st March, 2015. The Secretarial Audit Report is annexed as Annexure C.

The Auditors'' Report and the Secretarial Audit Report for the Financial Year ended 31st March, 2015 do not contain any qualification, reservation, adverse remark or disclaimer.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND Foreign Exchange Earnings AND OUTGO:

The statement pursuant to Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is annexed as Annexure D.

PARTICULARS OF EMPLOYEES AND REMUNERATION:

Statement containing information as required under Section 197(12) of the Companies Act, 2013, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) rules, 2014, is annexed as Annexure E.

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.

ANNUAL RETURN:

Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure F.

Place: Bengaluru Dated: 15th May, 2015

On behalf of the Board R. HARISH BHAT Chairman


Mar 31, 2012

The Directors are pleased to submit their Report together with the Audited Statement of Accounts for the year ended 31st March, 2012.

2011/12 2010/11 Rs.in Lakhs Rs.in Lakhs

Profit from Operations before Other Income & Interest 9503.76 4182.41

Add: Other Income 805.43 2640.39

Operating profit before Interest 10309.19 6822.80

Less: Interest 732.02 1026.22

9577.17 5796.58

Add: Exceptional Income 838.57 1065.60

Profit Before Tax 10415.74 6862.18

Provision for Tax: Current Year 2811.80 1477.00

Deferred Tax (281.34) (123.28)

2530.46 1353.72

Profit After Tax 7885.28 5508.46

Add: Surplus brought forward from Previous Year 4585.04 1420.09

Amount available for appropriation 12470.32 6928.55

General Reserve No. I 792.03 550.84

General Reserve No. II 365.45 311.17

Debenture Redemption Reserve A/c (1060.99) 96.49 (692.80) 169.21

Dividends

Interim Dividend - 933.85

Final (Proposed) 2054.47 933.85

Tax on Dividend 333.29 2387.76 306.60 2174.30

Balance carried forward 9986.07 4585.04

TURNOVER

Your Company's turnover during the year under review was Rs 508.52 crores as compared to Rs 400.73 crores in the previous year, registering an increase of 27% over last year.

PROFITS

Profit from Operations before 'Other income and interest' for the year ended 31st March, 2012, stood at Rs 95.04 crores as against Rs 41.82 crores in the previous year, reflecting an increase of 127%. Profit before Tax at Rs 104.16 crores vis-a-vis Rs 68.62 crores in the previous year reflects an increase of 52%. Profit after Tax in 2011-12 stood at Rs 78.85 crores as against Rs 55.08 crores in the previous year.

DIVIDEND

Your Directors have recommended a dividend of Rs 11/- per share aggregating to Rs 2054.47 lakhs for the year 2011-12. The Dividend Tax amounts to Rs 333.29 lakhs.

COFFEE SCENARIO:

The Arabica futures market started the year at a good level viz. above 250 cents and continued its upward journey until it crossed the psychological 300 cents level in the first week of May - an increase of 50 cents in a month. Thereafter, it dropped steadily to below the 240 cent level in the beginning of August. It again touched 290 cents by early September but could not sustain the level and quickly dropped back to the low by end September and thereafter continued losing value steadily until it touched new lows for the year - below 180 cents in March. With prices softening, the tightness in the physical market eased to a significant extent.

The Robusta futures market which started the year on a high note at $2300 steadily dropped to $1700 by early November as there was a gradual build up in global Robusta inventory. However, increased demand for Robusta from roasters trying to control blend costs by replacing Arabicas which were comparatively more expensive, led to hardening of both futures and differentials in the last quarter of the year. By February, the market had crossed $2000 and differentials too had firmed up leading to higher physical prices vis-a-vis in the beginning of the year. The much touted bumper Vietnamese crop which was estimated at 20 mln bags was lowered to 18 mln thereby lending support to Robusta prices. India, too harvested a lower Robusta crop.

The softening in Arabica and hardening in Robusta prices has resulted in the arbitrage between the two markets shrinking, making usage of Arabicas attractive once again.

Global consumption continued to grow at a steady 1.5-2%, inspite of green coffee price increases passed on to the consumer. Only the channel shifted from out-of- home to in-home. Consumption is expected to continue to grow, especially in markets such as Brazil, Russia and China.

TEA SCENARIO

Black Tea production in major producing countries during January/December 2011 was 988.2 Mn. kgs as against 966.4 Mn. Kgs in 2010, showing an increase of 21.8 Mn. kgs. Crops in Kenya & Sri Lanka showed an increase at 21.1 Mn. kgs and 3.1 Mn. kgs respectively. On the other hand Malawi / Bangladesh were lower by 4.5 Mn. kgs whereas India was higher by 21.8 Mn. kgs.

Indian exports in 2011 were estimated at 186.6 Mn. kgs as against 193.3 Mn. kgs in the previous year - lower by approx. 6.7 Mn. kgs. Consumption continues to rise at approximately 3 to 3.5% per annum. Unlike 2011, the first quarter of 2012 is likely to see a significant drop in South Indian production.

At present, the supply situation globally and in India is low but likely to improve in May / June. Hence the markets have been bullish during the first quarter and this trend is likely to continue in the initial stages of the second quarter. Once crops increase, quality CTC's shall continue to sell at attractive premiums following improved demand from the internal markets. However, medium and plainer CTC's are expected to sell in line with quality.

Availability of Orthodox teas is likely to remain low in India. Hence these varieties should witness a much healthier trend compared to the previous year.

OPERATIONS: Plantations:

The Arabica production for the financial year 2011/12 stood at 2130 MT as against 1670 MT ( 28%) in the previous year. The Arabica crop has been better this year across all tracts and the Coffee Board has estimated a 11% increase compared to previous year.

As regards Robusta, the Company has achieved a production of 5667 MT as against 6620 MT (-13%) in the previous year. The Robusta crop has been poor across all producing districts and industry experts have predicted a drop of about 20-30% crop as compared to the previous year. The reasons for this lower crop, as analysed by the Coffee Board Research Station, is the unfavourable weather during crucial period which has resulted in higher mucilage and fruit skin, finally bringing down the outturn to lower than normal.

The Plantations have undergone an unusual weather pattern during the year under review. There was a long drought with no trace of rain for a continuous period of around 142 days between November 2011 and end March 2012. The weather during the latter part of the 1st quarter of the current calendar year was very dry and hot, with the maximum day temperature touching 34°C. However, the Company has provided blossom irrigation to all mature Robusta, supplementing the rain. Further, some percentage of Arabica has also been covered with Blossom irrigation with the available water. However, certain estates have received natural showers during late March which extended till April and covered most of the estates. With these proactive measures, normal crop is expected during 2012/13.

The Company has achieved a total Tea production of 6.775 Million Kgs at Anamallais and in the two estates in Karnataka as against 7.334 Million Kgs during the previous year.

The total Pepper crop for the Company stood at 865 MT as against 535 MT ( 62%) harvested during the previous year. Due to long drought as reported above, Pepper vines have also been brought under irrigation along with Coffee.

Curing Works:

The Company's Curing Works at Kushalnagar cured a total of 12010 MT Coffee during the year under review as against 12959 MT in the previous year. In addition, 304 MT of Monsooned Coffee, a value added product was processed as against 356 MT in the previous year.

The volume handled by the unit during the year was marginally lower due to the overall drop in crop production during the season 2010-11. The unit continued its good performance during the year, due to the sustained cost reduction initiatives in the factory and better husk sale realization.

The ISO 22000 certified Pepper Unit in the Kushalnagar Curing Works premises handled the grading and steaming operations of the Company's entire pepper produce.

Timber Value Addition:

The Company's high end products such as Fire Retardant Composite panels, Sound Absorption plywood and Shuttering plywood have not performed up to expectations during 2011/12. The Division has sustained by selling Marine, Commercial plywood and Block board products. In view of the above, the existing business model is being revisited.

Exports:

During the year 2011-12, your Company exported 5735 MT of coffee as against 4819 MT in the previous year.

Your company's focus to grow the market for differentiated coffee continued to show results with volumes growing to 2123 MT as against 1847 MT in the previous year.

Quality Awards:

Your Company's thrust towards producing Best Coffees to meet the varying needs of the customers both at national and international level has been continuing. Your Company won 12 awards at the Fine Cup Award Cupping competition - 2011 held in Maastricht, Netherlands as against 10 won during the previous year, which stands as a testimony to the Company's commitment to produce Quality coffee. Efforts are continuing in this direction with added thrust and samples have been sent from the Company's different estates for the competition to be held in 2012.

Instant Coffee Division

During the year under review, the instant coffee operations demonstrated sustenance of process centric approach with effective operational discipline. In addition to Safety, the prime focus was on quality, customer centric initiatives and work force development. The consistent quality of products and prompt services was appreciated by the key customers. The Division achieved record production of 6356 MT as compared to 4974 MT in the previous year - an increase of 28%. Total exports in volume terms increased to 6331 MT as against 5659 MT in the previous year - an increase of 12%. High capacity utilization was attained at all the units and across all product variants.

A plan with process improvements and focus on quality was put in place for the Freeze Dried Coffee operations, which has resulted in increase in production by 14%. The Toopran unit performed extremely well, with production almost doubling over previous year and capacity utilization of more than 100% being achieved. Improvement in yield at the Toopran unit contributed significantly to the profitability of the Division.

A 2000 TPA premium extraction unit for the Freeze Dried Facility is being set up at Theni with GEA Niro's Extraction Plant and Roaster from LILLA. The new project is expected to be commissioned and go on stream in the next financial year.

Focus on Non-Russian markets has enabled the Company to make inroads into West Africa, Korea and Japan. Key customer relationship building approaches are under progress. This will give your Company a balanced market approach covering most of the key geographies. The Company has also entered into an agreement with RSP Tradecom Pvt. Limited for availing services with regard to marketing the Company's soluble coffee in territories of Russia, Baltic, CIS and Poland and such other countries as the parties may mutually agree.

The focus continues to be on safety, cost, quality and sustainability. Twenty percent of the Division's total power requirement comes from renewable energy sources. The Freeze Dried unit operates its equipment with wind power, thereby contributing to Company's green initiative.

The Instant coffee unit at Toopran received the "ISO 22000:2005" accreditation during the year from M/s. DNV certification. Both Theni and Toopran units are now certified for ISO 9001: 2008 and ISO 22000: 2005.

TRADING OPERATIONS Coffee Value-Added Products

Your Company continues to maintain its current position in the Roast & Ground coffee segment. The current market share is around 2.5% in the south Indian conventional coffee market. Your Company also continues to be present in the instant coffee segment through supplies to private labels of key retail chains in India, vending premixes and in the Hot Tea Shop segment .

Vending business has also maintained its current position while consolidating on supply chain strengths. The Vending Premix manufacturing unit has been recognized by CII for 'Excellence in Food Safety" in its category.

Plantation Trails

Your Company's Hospitality business - Plantation Trails has performed well in the year under review vis-a-vis the previous year both in terms of revenue as well as profitability. The focus during the year was to restructure the operations and provide guests with a world-class plantation experience. Several new initiatives from a customer centric perspective were introduced. The restructuring and the new measures have resulted in increase in the overall Customer Satisfaction. Restoration and up-gradation of the Company's heritage bungalows has commenced and efforts towards repositioning the product in the premium market initiated.

STARBUCKS

Following the Memorandum of Understanding with Starbucks Coffee International, Inc., USA (Starbucks), your Company has entered into separate Agreements with Starbucks Coffee International, Inc., USA (Starbucks) and Tata Starbucks Limited, a 50:50 Joint Venture between Tata Global Beverages Limited and Starbucks, for roasting coffee produced in the Company's estates using Starbucks know-how and technology and packaging, sale and distribution thereof to Starbucks Cafes to be set up by Tata Starbucks Limited in India/ Starbucks business operations overseas.

CAPITAL EXPENDITURE

During 2011-12, Rs 2136.58 lakhs was incurred primarily on account of welfare, modernization, up-gradation and other programmes undertaken in the various units of the Company.

SUBSIDIARY COMPANIES

Eight O' Clock Coffee Company

Eight O'clock Coffee (EOC) turnover during the year stood at Rs 1040.50 Crores registering an increase of 13.8% over the Previous Year's turnover of Rs 914.50 Crores. The price increases incorporated in the preceding year had a full year impact this year. Such increase did not cover the full cost of commodity price impact and additional trade spends was incurred to stave erosion of volumes. EOC maintained market share even as volumes eroded as consumers and customers reacted to enhanced pricing. The development of the Single serve option across retail and accelerated consumer adoption of this format reduced shelf space availability for traditional bag and can formats. The higher commodity costs and promotion expenses to protect market share resulted in an overall decline in earnings and margins. Profit before Tax was negative at Rs 4.2 Crores as against the profit of Rs 118.8 Crores in the Previous Year. Profit after Tax stood at Rs 4.71 Crores versus Rs 72.59 Crores in the Previous Year.

Alliance Coffee Limited

As reported last year, the Marketer Agreement between the Company and Alliance Coffee Ltd. (Alliance) was terminated and the entire shareholdings of Beeyu Overseas Ltd. and its Associates in Alliance was purchased by the Company, following which Alliance has become a wholly owned subsidiary of Tata Coffee. Going forward the proposal is to have the Registered Office of Alliance shifted from Kolkata to Bangalore, for which necessary application has been submitted to the Company Law Board, Eastern Region Bench, Kolkata and thereafter merge Alliance with Tata Coffee.

The Ministry of Corporate Affairs has exempted Holding companies from attaching the accounts of its subsidiaries to its balance sheet. In terms of the said Circular and as required under the Listing Agreement with the Stock Exchanges, the consolidated financial statements of the Company together with its subsidiaries are attached. Any shareholder may ask for a copy or inspect at the Registered/Head Office a copy of the Annual Accounts of Alliance Coffee Limited and the consolidated financial statements of Consolidated Coffee Inc., USA which includes the Eight O' Clock Coffee Company financials.

CORPORATE GOVERNANCE

The Company has been in compliance with all the conditions of corporate governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges. The detailed Report on Corporate Governance in terms of Clause 49 of the Listing Agreement and a certificate of the Auditors thereon is attached to the Annual Report.

EMPLOYEE WELFARE

The Company has been continuing with its welfare activities as in the past. Improvement to labour line and surroundings, educational assistance to the children of employees, providing drinking water at the work spot, providing transport at subsidized rate to the school going children of employees, supply of provisions through Co-operative store branches located at each Unit/Estate are a few of the welfare measures adopted by the Company.

The re-certification of Social Accountability 8000-2008 Certificate by the Certification Auditors is a testimony to the Company's commitment to comply with the international requirements under Social Accountability, which is in addition to the statutory requirements which are already in place. Further, the initiative taken by the company to assess the Human Development Index through an external agency is continuing. This will enable the Company to know its present welfare standards in comparison to international level and help take further initiatives to bring it on par with international standard.

The re-certification of Tata Coffee under Rainforest Alliance is another area which shows the Company's commitment towards protecting and preserving the environment and eco system, thus ensuring a safe work place and also safe living conditions not only for the Company's own employees, but also to the community around.

Safety at work place and also at Home is given top priority by the Company. The Company has taken all possible steps to ensure safe working conditions for its employees. Each employee is made to understand the potential danger involved in each area of operation and the requirement to follow the safety guidelines.

DIRECTORATE

Mr. T.V. Alexander, Director who joined the Board in May, 2009 passed away on 5th February, 2012. Your Directors convey their deep sense of sorrow at the sad and untimely demise of Mr. Alexander and place on record his active contribution to the organization during his tenure as Director.

Mr. Venu Srinivasan and Mr. S. Santhanakrishnan retire by rotation and are eligible for re-appointment.

SERVICE TO THE COMMUNITY

The Coorg Foundation, a Public Charitable Trust established by your Company continued to provide support to various individuals and institutions in the field of Health Care, Education, Sports and Culture during the year under review. Medical

Assistance was extended through Rural India Health Project Hospital, Ammathi to the needy sections of the society. In order to encourage professional education among the young students of Kodagu, the Foundation continues to provide Scholarships. The top ranking students out of those who have studied in the Institutions based in Kodagu are given Merit Awards.

Swastha - The project established by The Coorg Foundation as a fully residential institution, meant for differently abled, continues to support the needy children in the District through its centers in Suntikoppa and Pollibetta by imparting required education and training. The Community Based Rehabilitation programme, initiated during the previous year with the intention of reaching out to a larger number of challenged people in the district, continues to do well. The centre has conducted regular Awareness programmes in the villages in Somwarpet Taluk and organized 2 Health camps at Swastha Premises to identify the needs and to facilitate supportive devices to needy participants.

PARTICULARS OF EMPLOYEES

Information required under Section 217(2A) of the Companies Act, 1956 read with The Companies (Particulars of Employees) Rules, 1975 forms part of this Report. However, as per the provisions of Section 219(1)(b)(iv), the Report and Accounts are being sent to all Shareholders of the Company excluding the Statement of Particulars of Employees. Any Shareholder interested in obtaining such particulars may inspect the same at the Registered Office of the Company or write to the Company for a copy.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Statement pursuant to Section 217(1)(e) of the Companies Act, 1956 read with The Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is attached.

RESPONSIBILITY STATEMENT OF THE BOARD OF DIRECTORS

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representation received from the operating management confirm:

(i) that in the preparation of the accounts for the financial year ended 31st March, 2012, the applicable accounting standards have been followed and that there are no material departures;

(ii) that they have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 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 31st March, 2012 on a 'going concern' basis. AUDITORS

M/s. N.M. Raiji & Co., and M/s. SNB Associates, Auditors of the Company hold office till the conclusion of the ensuing Annual General Meeting. The Auditors have furnished the certificate under Section 224(1) of the Companies Act, 1956 of their eligibility for re-appointment.

On behalf of the Board

R.K. KRISHNA KUMAR

Chairman

Place : Mumbai

Dated : 30th May, 2012


Mar 31, 2010

The Directors are pleased to submit their Report together with the Audited statement of accounts for the year ended 31st March, 2010.

2009/10 2008/09 Rs. in Lakhs Rs. in Lakhs Profit from Operations before Other Income & Interest 1963.11 2135.21 Add: Other Income 3791.79 1742.70 Operating profit before Interest 5754.90 3877.91 Less: Interest 754.98 1037.31 Profit Before Tax 4999.92 2840.60 Provision for Tax: Current Year 1292.71 814.00 Deferred Tax 508.23 82.18 FBT - 80.00 1800.94 976.18 Profit After Tax 3198.98 1864.42 Add: Surplus b/f from PY 842.15 1330.88 Amount available for appropriation 4041.13 3195.30 General Reserve No. 1 319.90 186.44 General Reserve No. II 284.42 259.99 Debenture Redemption Reserve A/c 383.29 987.61595.651042.08 Dividend Final (Proposed) 4100.78 1120.62 Tax on Dividend 232.65 1633.43 190.45 1311.07 Balance carried forward 1420.09 842.15

TURNOVER

Your Companys turnover during the year under review was Rs.373.42 Crores compared to Rs.336.79 Crores in the previous year, registering an increase of 10.88% over last year.

PROFITS

Profit from Operations before other income and interest for the year ended 31st March, 2010 stood at Rs. 19.63 Crores as against Rs 21.35 Crores in the previous year, reflecting a drop of 8%. Other income includes dividends from subsidiaries of Rs. 37.27 Crores (previous year Rs. 15.12 Crores). Profit before tax at Rs.50.00 Crores vis-a-vis Rs 28.41 Crores in the previous year reflected an increase of 76%. Profit after tax in 2009-10 stood at Rs. 31.99 Crores as against Rs 18.64 Crores in the previous year.

DIVIDEND

Your Directors have recommended a dividend of Rs. 7.50 per share. This will absorb a sum of Rs.16.33 Crores including Rs. 2.33 Crores by way of dividend tax.

COFFEE SCENARIO:

The last year was a very important period for coffee. The global futures prices which reflects overall demand and supply situation was range bound between 110-145 c/lb for Arabica and $1280 to $1530 for Robusta as overall demand-supply was balanced. However, specific origins, Colombia in particular had a significant supply shortfall leading to physical prices shooting up dramatically.

The steep fall in the Colombian coffee output from a steady 12 mln bags p.a. to 8-9 mln bags last year impacted many roasters worldwide who had this origin in their blend, and specifically those who had single origin Colombian blends which meant that they were tied to this origin and could not use other origins as replacement. This led to roasters offering huge premiums to protect their Colombian supply as well as attempt replacement, wherever possible with the result that physical prices for

Arabicas from other origins shot up alongside. Indian Arabica prices were further boosted by a low crop last year which led to domestic prices outstripping international prices.

It was also an off year for Brazil which harvested a crop of 42 mln bags which helped support the prices.

Robustas was not untouched by the Arabica situation. When Arabica prices scaled heights, roasters tried to replace Arabicas with cheaper Robustas which led to Robusta prices appreciating too but not to the same extent as Arabica as the roasters found that they had hit the limit where further use of Robustas would impact their blend. Indian Robusta output was down by 20% which impacted the Washed Robusta prices more than the Unwashed Robustas as Washed Robustas from India have very few competitors while Unwashed Robustas have close replacement origins in Uganda and Vietnam. Consequently, Washed Robusta prices appreciated significantly whereas the Unwashed Robusta prices showed only marginal appreciation as Vietnam with a crop of 16 mln bags added to a growing stockpile of Unwashed Robustas worldwide.

The pressure of the recession gradually eased as the year went by and green coffee went largely unscathed. Global consumption continued to maintain its growth path at 2-2.5% p.a. even as consumption shifted from out-of-home to in-home instead of consumers reducing consumption.

TEA SCENARIO

Black Tea production by major producing countries during January/December 2009 totalled approx 1772 m. kgs against 1824 m. kgs in 2008, showing a deficit of 52 m. kgs. The main contributors to this shoftfall were Kenya, with 32 m. kgs and Sri Lanka with 29 m. kgs. Against this, Malawi was up by about 11 m. kgs. India was only marginally down, by 1.8 m. kgs. (totaling 979 m. kgs.).

Indian exports in 2009 are estimated at 191 m. kgs. against 203 m. kgs. the year before, down by almost 12 m. kgs. Consumption in India is reported to be rising by about 3 to 3.5% p.a., which amounts to approx. 25 to 28 m. kgs. in volume. In 2009, the carry forward stock from the previous year was very small or even in deficit, if earlier years production/ exports/ consumption figures are considered. This year however, there is some carry over, due to high production during the last quarter of 2009.

The current year, unlike 2009, has started with a significant increase in South Indian production. During January/February, the estimate is 11 m. kgs. up. In the North, January/February has seen a deficit of 3 m. kgs., so that the all-India surplus stands at around 8 m. kgs. However, Assam has reportedly had good rains recently and the crop is likely to improve from the second half of April.

At a global level also, the supply situation has improved considerably, with Sri Lanka producing approximately 21 m. kgs. more during the first two months while Kenya has added 25 m. kgs. The increase in production so far is therefore already of the order of 54 m. kgs for the first two months of the year.

While the supply situation in India may be more comfortable than the previous year, this is likely to be absorbed by the domestic market where quality products are in great demand. As a result of this, good liquoring teas are still selling at last years levels or higher, while medium/plain teas of both Orthodox and CTC varieties have seen lower prices.

OPERATIONS:

Plantations:

The Company achieved an all time record Robusta coffee production at 7285 Tonnes as against 4225 Tonnes harvested during previous year. The Arabica production was higher at 2171 Tonnes compared to 1551 Tonnes harvested during previous year. The overall Coffee Production for the Company was 9456 Tonnes during the year under review as compared to 5776 Tonnes during previous year.

The prospects for the coming season appear to be normal. Though there has been a delay in blossom showers, the Company has ensured extensive coverage of its Robusta area with blossom irrigation. Available water was used for Arabica irrigation as well.

On the Tea front too, the Company has achieved a record of 7.994 Million Kgs at Anamallais and in the two estates in Karnataka in the year 2009-10 as against 7.606 Million Kgs during previous year.

The Pepper,crop stood at 884 Tonnes as against 1515 Tonnes harvested during previous year. The decline in crop was on account of biennial bearing, having harvested a record crop during 2008/09.

Curing Works:

The Companys Curing Works at Kushalnagar cured a total of 10427 MT during the year as against 11195 MT in the previous year. In addition 331 MT of Monsooned coffee was processed as against 365 MT in the previous year. The quantity received for curing was lower, due to the all time low crop picked during the 2008/09 season.

The unit will be handling a higher crop in the next financial year in view of the increased volumes of the 2009/10 seasons coffee received for curing. The unit registered an improved performance during the year due to the various cost reduction initiatives undertaken through continuous process improvement in the factory and better husk sale realization.

The grading and steaming operations of the Companys pepper produce, is also being handled at the Pepper Unit in Kushalnagar Works premises, which is certified for ISO 22000.

Timber Value Addition:

Strengthening our way forward in value addition, the Division added semi densified film face plywood, high quality Block Boards which can be used as doors. In our existing product range we have Marine, Commercial plywood, Block board, Fire Retardant composite panels and Sound absorbing panels. The market performance of our products continues to be satisfactory in spite of a slow down in the construction industry.

Exports:

During the year 2009/10, your Company exported 3633 mt of coffee as against 3316 mt in the previous year. As in earlier years, Italy continues to be the prime destination.

Your Company continued its drive towards differentiated sales and the total sales stood at 643 mt.

Quality Awards:

Your Companys efforts in promoting its coffee at the international levels, especially in the Specialty and Estate Specific coffee segment has been continuing. Winning a total of 16 awards at the International Cupping competition held at Atlanta during 2009 is a testimony of its success in this direction. This year a total of 10 samples have entered the final round of the international cupping competition which is scheduled to be held in Anaheim, California.

Instant Coffee Division:

During the year under review, the Division has made a steady progress in sales volume quarter on quarter overcoming the impact of economic recession. Though the total export volume (3536 MT) was more or less the same as in the previous year (3758 MT), the quarterly sales during the 3rd and 4th quarters were almost double the volumes recorded in the corresponding quarters of the previous year. The period also witnessed the highest sales of Agglomerated coffee and Freeze dried coffee which have higher margins compared to other product variant viz. spray dried coffee powder.

In its endeavour to develop Non-Russian market and to meet diversified customer groups/segments, the Company has undertaken several initiatives towards improving the quality of Freeze dried coffee and developing new products for specific markets. The thrust has also been on cost control through lean initiatives, improved productivity and restructuring of the purchasing process of green coffee and packing materials.

The Instant coffee unit at Theni received the "SA 8000" accreditation during the year from M/s. Bureau Veritas Certification for employee welfare and ensuring safe working atmosphere.

TRADING OPERATIONS

Coffee Value-Added Products

Your Company is maintaining its current position in the Roast and Ground segment and post launching of Instant coffee in the Hot Tea Shop segment, is exploring opportunities for Instant Coffee in the Retail segment. Your Company is also supplying Instant coffee as a private label to a few retail chains. Your Companys Roast and Ground Plant has been rated as the best in the country and awarded the Gold medal at the recently concluded India International Coffee Fesjwal 2009. It is also the only roastery in the country which processes 100% certified coffees in its operations. Better cost and price management has ensured improved performance this year. Your Company continues to be a leading player in the Vending business. The year has seen a very healthy improvement in sales and contribution over the previous year.

PLANTATION TRAILS

Your Companys Hospitality business has performed well and has exceeded its profitability budget. Overall customer satisfaction levels have seen an improvement by 30% over the previous years scores. The main focus in the current year is to ensure that the Division offers the right product and service thereby enhancing customer experience.

GREEN TEA POLYPHENOL

Due to non-availability of statutory approvals from the local and District level authorities and having regard to Anamallais being declared as "Tiger Reserve" by the Government as a result of which getting permission for construction of a factory in the Anamallais area is unlikely, the proposal for setting up the Polyphenol project has been dropped.

CAPITAL EXPENDITURE

During 2009-10, Rs.849.10 Lakhs was incurred, primarily on account of welfare, modernisation, up-gradation and other programmes undertaken in the various units of the Company.

SUBSIDIARY COMPANIES

Eight O Clock Coffee Company

Eight O Clock Coffee Company (EOC) registered an excellent performance in the fiscal year ended 31 st March, 2010. Sales and Turnover stood at 43.998 mm lbs and Rs.959.08 Crores respectively in the year under review as against 37.678 mm lbs and Rs.801.99 Crores for the fiscal year ended 31st March, 2009. The Profit before Tax at Rs.135.60 Crores (Rs.53.17 Crores in the previous year) and Profit after Tax at Rs.76.87 Crores (Rs.32.57 Crores in the previous year) registered an increase of 155% and 136% respectively over the previous year.

The improved performance was inter-alia achieved through higher sales, effective green coffee hedging strategy, implementation of right sizing plan and cost management initiatives. There was a marked improvement in EOC sales in all significant channels viz. grocery, mass and club. Aggressive position management on green coffee procurement resulted in considerable savings. Savings were also generated from direct purchase of Columbian bean and development of new blends.

During the year under review, EOC retired debt worth USD 15.21 mm and refinanced Senior debt which automatically improved flexibility in operations and also resulted in reduction in coupon rate. EOC paid out dividend amounting to USD 15.5 mm in the year 2009-10.

Alliance Coffee Limited

Gross earnings by way of commission income during the year under review was Rs 453.44 Lacs as against Rs. 491.95 Lacs during the previous year, representing a 7.83% decrease. Profit before depreciation and taxation during the year under review was Rs. 330.99 Lacs as against Rs. 383.06 Lacs during the previous year. After providing for depreciation and taxation, the Companys net profit for the year was placed at Rs 215.27 Lacs as against Rs. 247.77 Lacs in the previous year. The performance of the Company was affected in the first and second quarter on account of recessionary situation and global slowdown in the Russian, CIS and other markets; however the position improved in the second half of the year.

The Company has been granted exemption by the Ministry of Corporate Affairs, Government of India, from attaching with its Balance Sheet the copy of the Balance Sheet, Profit & Loss Account, Directors Report, Auditors Report of Alliance Coffee Limited, Eight O Clock Coffee Company, USA and Consolidated Coffee Inc., USA and other documents required to be attached under Section 212 (1) of the Companies Act, 1956. As required under the Listing Agreement with the Stock Exchanges and in terms of the said communication of the Ministry of Corporate Affairs, consolidated financial statements of the Company together with its subsidiaries are attached. Any shareholder may ask for a copy or inspect at the registered office a copy of the Annual Accounts of Alliance Coffee Limited and the consolidated financial statements of Consolidated Coffee Inc., USA which includes the Eight O Clock Coffee Company financials. The annual accounts of Consolidated Coffee Inc., USA (consolidated) and Alliance Coffee Limited would also be posted on the Companys website.

CORPORATE GOVERNANCE

The Company has been in compliance with all the conditions of corporate governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges. The detailed Report on Corporate Governance in terms of Clause 49 of the Listing Agreement and a certificate of the Auditors thereon is attached to the Annual Report.

EMPLOYEES WELFARE

Your Companys thrust towards ensuring its employees health and welfare has been continuing. Recognition and Rewards introduced by the Company at the Estate/Unit level has resulted in increased productivity and higher remuneration to the workers by way of incentives. The re-certification of SA-8000 standard by M/s. Det Norske Veritas stands as a testimony to the Companys commitment to comply with the international requirements which is beyond statutory norms, under Social Accountability. The Company has also been certified under Rainforest Alliance, reflecting commitment towards protecting the environment and the eco system, ultimately leading to a safe working place for the workers. The Company has also undertaken a study of the housing of its entire labour force and the facilities provided therein, together with a Human Development Index (HDI) study, so as to compare the living condition and education levels of our employees with world standard.

DIRECTORATE

Mr. Hameed Huq, on ceasing to be Executive Director (Plantations) was appointed as Additional Director by the Board with effect from 3rd January, 2010 and also elevated to the position of Managing Director of the Company from the said date for a period of 3 years. As Additional Director, Mr. Huq holds office up to the date of the ensuing Annual General Meeting of the Company in terms of Section 260 of the Companies Act, 1956 and is eligible for re-appointment as Director not liable to retire by rotation under the Articles of Association. The Company has received notice from a Member under Section 257 of the Act signifying his intention to propose the appointment of Mr. Huq as Director at the forthcoming Annual General Meeting.

Mr. R.K. Krishna Kumar, Mr. P.T. Signaporia and Ms. Sangeeta Talwar retire by rotation and are eligible for re-appointment.

Ms. Barbara A. Roth resigned from the Board with effect from 8th October, 2009. Mr. M.H. Ashraff who served the Board as Managing Director for a period of 10 years and Mr.A.Sengupta, Executive Director (Instant Coffee Operations) who served the Company for over 10 years demitted their respective offices with effect from 3rd January, 2010. Your Directors wish to place on record their appreciation for the significant and valuable contribution made by Mr.Ashraff and Mr.Sengupta during their long association with the Company.

SERVICE TO THE COMMUNITY

The year 2009-2010 has been another eventful year for The Coorg Foundations Public Charitable Trust established by TATA Coffee which continues to promote welfare activities in the field of Healthcare, Education, Sports, Culture & Environment. The Foundation provided assistance to several individuals in need of critical medical care directly and also through other TATA Trusts. Donations were made to various medical institutions for conducting free eye camps and infrastructure development.

"SWASTHA", one of the major projects of the Foundation, meant for serving the differently abled children in centres at Suntikoppa & Pollibetta, continues to maintain high standards of service and progress in the right direction. Under the able guidance of highly motivated resource persons, the children, besides being taught basic self help skills and reading and writing, are provided with vocational trainings, viz. making of a variety of paper products, candles, greeting cards, tailoring, printing & mushroom cultivation. The children have also won several medals in various sporting events at the state and national level. SWASTHA was awarded "The Best Institution for Disabled" by the Government of Karnataka on World Disabled Day on 3rd December, 2009.

PARTICULARS OF EMPLOYEES

Information required under Section 217(2A) of the Companies Act, 1956 read with The Companies (Particulars of Employees) Rules, 1975 is given in the Annexure forming part of this Report. However, as per the provisions of Section 219(1)(b)(iv), the Report and Accounts are being sent to all Shareholders of the Company excluding the Statement of Particulars of Employees. Any Shareholder interested in obtaining such particulars may inspect the same at the Registered Office of the Company or write to the Company for a copy.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Statement pursuant to Section 217(1 )(e) of the Companies Act, 1956 read with The Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is attached.

RESPONSIBILITY STATEMENT OF THE BOARD OF DIRECTORS

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representation received from the operating management confirm:

(i) that in the preparation of the accounts for the financial year ended 31 st March, 2010, the applicable accounting standards have been followed and that there are no material departures;

(ii) that they have selected such accounting policies and applied them consistently and made judgements and estimates that were 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 they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 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 31 st March, 2010 on a going concern basis.

AUDITORS

M/s. N.M. Raiji & Co., and M/s. SNB Associates, Auditors of the Company hold office till the conclusion of the ensuing Annual General Meeting. The Auditors have furnished the certificate under Section 224(1) of the Companies Act, 1956, of their eligibility for re-appointment.

On behalf of the Board R.K. KRISHNA KUMAR Chairman Place: Mumbai Dated; 13th May, 2010

 
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