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Notes to Accounts of Tata Coffee Ltd.

Mar 31, 2016

1. CHANGE IN ACCOUNTING POLICY

The Company had been providing depreciation up to 31st March, 2015 on the Written Down Value Method for all its assets in Coffee Estates and Tea Estates in Coorgand Hassan and part of Curing Works and on straight line method for all other assets.

The Company, in order to bring uniformity in depreciation policy, has aligned its policy of providing depreciation on fixed assets on Straight Line basis for all assets with effect from 1st April, 2015. This has resulted in Depreciation charge for the year lower by Rs, 261.00 Lakhs, the Profit before Tax for the year and the Written Down Value as at the end of the year being higher by Rs,1958.15 Lakhs.

2. DISCLOSURE REGARDING DERIVATIVE INSTRUMENTS:

A. The Company uses foreign currency hedges to manage its risks associated with foreign currency fluctuations relating to certain firm commitments and highly probable forecasted transactions. The company does not use derivative instruments for speculative purposes.

3. DISCLOSURE AS PER ACCOUNTING STANDARD

4. - EMPLOYEE BENEFITS:

Post Retirement Employee Benefits:

a) Defined Contribution Plans:

The Company operates defined contribution schemes like provident fund and defined contribution superannuation schemes. For these schemes contributions are made by the company, based on current salaries, to the recognized funds maintained by the company and for certain categories contributions are made to State Plans. In case of provident fund schemes, contributions are also made by employees. An amount of Rs, 1204.17 Lakhs (previous year: Rs,1105.29 Lakhs) has been charged to the Profit and Loss Statement towards defined contribution schemes.

b) Defined Benefit Plans: i) Gratuity:

The Company has covered its gratuity liability by a Group Gratuity Policy named Employee Group Gratuity Assurance Scheme'' issued by LIC of India. The benefits are determined using the projected unit credit method with actuarial valuation being carried out at each Balance Sheet date.

ii) Post retirement Benefits:

The Company''s Retired / Continuing Whole time Directors are eligible for certain post retirement defined benefits on meeting the eligibility criteria and subject to the approval of the Board and is non-funded.

iii) Medical:

The Company''s retired staff/sub-staff. Junior Officers and Management staffs are covered by a Post-Retrial medical benefit which is being valued based on actuarial valuation and the plan is non-funded.

5. Advertisement and Sales promotion Expenses for the financial year includeRs, 477 Lakhs towards share of cost for Brand Development, Sales Promotion and Marketing expenses of Tata Coffee Grand ''which is an Instant Coffee product, jointly developed by the Company with its Holding Company, Tata Global Beverages Limited under a provisional agreement. The Company is in the process of finalizing the definitive agreements pertaining to Tata Coffee Grand''.

Names of related parties and description of relationship

1. Holding Company Tata Global Beverages Limited

2. Subsidiaries Consolidated Coffee Inc.

Eight O'' Clock Holdings Inc. Eight O'' Clock Coffee Company

3 Key Management Personnel Mr. Sanjiv Sarin, Managing Director & CEO (from 25.04.2015)

Mr. Chacko Purackal Thomas, Executive Director and Deputy CEO (from 04.08.2015)

Mr. KVenkataramanan, Executive Director (Finance) &CFO

Mr. T Radhakrishnan, Executive Director

Mr. N. S. Suryanarayanan, Company Secretary

4 Fellow Subsidiaries/JVs OOOSuntyLLC

Tata Global Beverages GB Ltd

Tata Starbucks Private Limited

Tata Global Beverages Australia Pty. Ltd.

Earth Rules Pty.Ltd.

Comparative figures relating to the previous year have been reclassified wherever necessary to conform to the classification adopted this year.


Mar 31, 2015

NOTE NO. 1.01:

1. General Information

Tata Coffee Limited ("the Holding Company") and its subsidiaries (together "the Group") are engaged in the production, trading and distribution of Coffee, Tea and Allied products. The Company owns Coffee and Tea Plantations and Instant Coffee manufacturing facilities in India. The Company exports Coffee to many countries including CIS countries, Europe and Africa. The Group has presence in USA through its overseas subsidiary Consolidated Coffee Inc.

2.1 AMALGAMATION OF COMPANIES:-

I. During the year under review, the Honourable 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.

II. ACL was engaged in the Marketing of Instant Coffee.

III. As a consequence of the amalgamation;

a. The Assets and Liabilities of erstwhile ACL with effect from 1st April 2013, have been incorporated in the Books of Accounts of the Company as per "Pooling of Interest Method" as prescribed by AS 14 specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013.

b. The shares held by the Company in ACL stands cancelled. The difference between the Net Asset value of ACL (Rs.93.31 Lakhs and Cost of Investment of the Company in ACL of Rs. 45.51 Lakhs) is adjusted against the Reserves and Surplus in Statement of Profit and Loss of the Company as provided in the Scheme.

c. As the effective date of Amalgamation is after the year ended 31.03.2014, the Profit After Tax of ACL for the Financial Year ended 2013-14 amounting to Rs. 5.37 Lakhs is adjusted against the Reserves and Surplus in Statement of Profit and Loss of the Company.

d. The Financial Results of the Company for the year ended 31.03.2015 are inclusive of the figures of erstwhile ACL.

2.2 CHANGE IN ACCOUNTING POLICY

The Company, in the current year has accounted for the value of the wind fallen/extracted timber based on Management estimate. This has resulted in the Profit Before Tax for the Year being higher by Rs.8.30 crores.

2.3 DISCLOSURE REGARDING DERIVATIVE INSTRUMENTS:

i. The Company uses foreign currency hedges to manage its risks associated with foreign currency fluctuations relating to certain firm commitments and highly probable forecasted transactions. The Company does not use derivative instruments for speculative purposes.

ii. The following are outstanding Currency Option contracts and other Hedging instruments, which have been designated as Cash flow Hedges as per the provisions of Hedge Accounting in Accounting Standard -30.

The Foreign Currency exposures that are not hedged by a derivatives instrument or otherwise, aggregates to uSD 6.065 million towards payable (Previous year USD 8.125 million) and uSD 0.08 million (Previous year USD 6.10 million) towards receivables as at the Balance Sheet date.

2.4 DISCLOSURE AS PER AS 15 - RETIREMENT BENEFITS:

Post Retirement Employee benefits:

a) defined Contribution plans:

The Company operates defined contribution schemes like provident fund and defined contribution superannuation schemes. For these schemes contributions are made by the Company, based on current salaries, to the recognised funds maintained by the Company and for certain categories contributions are made to State Plans. In case of provident fund schemes, contributions are also made by employees. An amount of Rs.1,105.29 Lakhs (Previous Year : Rs.923.61 Lakhs) has been charged to the Profit and Loss Statement towards defined contribution schemes.

b) defined benefit plans:

i) Gratuity:

The Company has covered its gratuity liability by a Group Gratuity Policy named ''Employee Group Gratuity Assurance Scheme'' issued by LIC of India. The benefits are determined using the projected unit credit method with actuarial valuation being carried out at each Balance Sheet date.

ii) Post retirement Benefits:

The Company''s Retired/Continuing Whole time Directors are eligible for certain post retirement defined benefits on meeting the eligibility criteria and subject to the approval of the Board and is non-funded.

iii) Medical:

The Company''s retired staff/sub-staff, Junior Officers and Management staffs are covered by a Post-Retiral medical benefit which is being valued based on actuarial valuation and the plan is non-funded.

With effect from 27th January, 2015 , the face value of the Company''s shares has been subdivided from Rs. 10 per share to Rs. 1 per share. Earnings per share for previous year have been computed based on the revised number of shares.

Names of related parties and description of relationship

1. Holding Company :

Tata Global Beverages Limited

2. Subsidiaries/JVs :

Consolidated Coffee Inc.

Eight O'' Clock Holdings Inc.

Eight O'' Clock Coffee Company

3. Key Management Personnel :

Mr. Hameed Huq, Managing Director (till 31.03.2015)

Mr. M. Deepak Kumar, Executive Director (till 24.10.2014)

Mr. K. Venkataramanan, Executive Director (from 25.10.2014)

Mr. T. Radhakrishnan, Executive Director

Mr. N. S. Suryanarayanan, Company Secretary

4. Fellow Subsidiary :

Sunty LLC

TGBL GB Ltd.

Tata Starbucks Private Limited

Tata Global Beverages Australlia Pty Ltd.

Comparative figures relating to the previous year have been reclassified wherever necessary to conform to the classification adopted this year.


Mar 31, 2014

1. The Company has fled for merger of its wholly owned subsidiary Alliance Coffee Ltd with the Honourable High Court of Karnataka. Pending approval of the Scheme of merger, the corresponding scheme of entries have not been given effect in the current year standalone financial statements.

2. Disclosure Regarding Derivative Instruments:

i. The Company uses foreign currency hedges to manage its risks associated with foreign currency fluctuations relating to certain firm commitments and highly probable forecasted transactions. The Company does not use derivative instruments for speculative purposes.

ii. The following are outstanding Currency Option contracts and other Hedging instruments, which have been designated as Cash fow Hedges as per the provisions of Hedge Accounting in Accounting Standard -30.

The Foreign Currency exposures that are not hedged by a derivatives instrument or otherwise, aggregates to USD 8.125 million towards payable (Previous year USD 10.00 million) and USD 6.10 million (Previous year USD 5.60 million) towards receivables as at the Balance Sheet date.

3. Disclosure as per AS 15 - Retirement Benefits:

Post Retirement employee Benefits:

The Company operates defined contribution schemes like provident fund and defined contribution superannuation schemes. For these schemes contributions are made by the Company, based on current salaries, to the recognized funds maintained by the Company and for certain categories contributions are made to State Plans. In case of provident fund schemes, contributions are also made by employees. An amount of Rs.923.61 Lakhs (Previous year : Rs.759.37 Lakhs) has been charged to the Profit and Loss Statement towards defined contribution schemes.

a) Description of Plan:

i) Gratuity:

The Company has covered its gratuity liability by a Group Gratuity Policy named ''Employee Group Gratuity Assurance Scheme'' issued by LIC of India. Under the plan the eligible employees are entitled to Gratuity under a defined benefit plan.

ii) Post retirement Benefits:

The Company''s Retired/Continuing Whole time Directors are eligible for certain post retirement defined benefits on meeting the eligibility criteria and subject to the approval of the Board.

iii) Post Retirement Medical Benefit:

The Company''s retired staff/sub-staff, Junior Officers and Management staffs are covered by a medical insurance policy. The Medical Insurance scheme is a defined benefit plan and is non-funded. Hence, there are no plan assets attributable to the obligation.

As at As at 31st March, 2014 31st March, 2013

Rs. in lakhs Rs. in Lakhs

4. Contingent liabilities:

Estimated amounts of contracts remaining to be executed on capital 56.95 1,215.84 account and not provided for

Claims under adjudication not acknowledged as debts:

i) Demands raised by Income Tax, Excise & Sales Tax Authorities 1,434 1,588.95

ii) Labour disputes under adjudication 82.37 296.06

iii) Claims by Customers/Suppliers 637.24 1,647.41

iv) For Bank & other Guarantees 918.50 809.87

Names of related parties and description of relationship

1. Holding Company Tata Global Beverages Limited

2. Subsidiaries/ JVs Consolidated Coffee Inc., Eight O Clock Holdings Inc Eight O Clock Coffee Company Alliance Coffee Limited



3 Associates The Rising Beverages Company LLC (wound up during the year) RBC Hold Co. LLC

4 Key Management Personnel Mr.Hameed Huq, Managing Director

Mr M Deepak Kumar, Executive Director Mr T Radhakrishnan, Executive Director

5 Fellow Subsidiary/(s) OOO Sunty LLC TGBL GB Ltd Tata Starbucks Limited

Comparative figures relating to the previous year have been reclassified wherever necessary to conform to the classification adopted this year.


Mar 31, 2012

1.1. Disclosure Regarding Derivative Instruments:

i. The Company uses foreign currency hedges to manage its risks associated with foreign currency fluctuations relating to certain firm commitments and highly probable forecasted transactions. The Company does not use derivative instruments for speculative purposes.

ii. The following are outstanding Currency Option contracts and other Hedging instruments, which have been designated as Cash flow Hedges as per the provisions of Hedge Accounting in Accounting Standard -30.

The Foreign Currency exposures that are not hedged by a derivatives instrument or otherwise, aggregates to USD 4.75 million towards payable (Previous year USD 7.29 million towards receivable and USD 4.83 million and Euro 0.01 million towards payable) as at the Balance Sheet date.

1.2. Disclosure as per AS 15 - Retirement Benefits:

Post Retirement Employee Benefits:

The Company operates defined contribution schemes like provident fund and defined contribution superannuation schemes. For these schemes contributions are made by the company, based on current salaries, to the recognized funds maintained by the Company and for certain categories contributions are made to State Plans. In case of provident fund schemes, contributions are also made by employees. An amount of Rs 746.40 lakhs (Rs 652.30 lakhs) has been charged to the Profit and Loss Statement towards defined contribution schemes.

a) Description of Plan

i) Gratuity :

The Company has covered its gratuity liability by a Group Gratuity Policy named 'Employee Group Gratuity Assurance Scheme' issued by LIC of India. Under the plan the eligible employees are entitled to Gratuity under a defined benefit plan.

ii) Post Retirement Medical Benefit:

The Company's retired staff/sub-staff, Junior Officers and Management staffs are covered by a medical insurance policy. The Medical Insurance scheme is a defined benefit plan and is non-funded. Hence, there are no plan assets attributable to the obligation.

1.3 Rights issue of Partly Convertible Debentures

The Company had raised Rs 24,833.32 lakhs by way of Rights issue of Partly Convertible Debentures in 2006-07. Against this, the Company had utilized Rs 23,587.98 lakhs as per the Objects of the Issue. The balance amount of Rs 1,245.34 lakhs meant for projects have been used for reducing the Company's working capital borrowings and will made be available when needed for the projects.

As at As at 31st March, 2012 31st March, 2011

Rs.in Lakhs Rs. in Lakhs

1.4 Contingent Liabilities:

Estimated amounts of contracts remaining to be executed on capital 2,615.42 113.66 account and not provided for

Claims under adjudication not acknowledged as debts:

i) Demands raised by Income Tax, Excise & Sales Tax Authorities 1,505.42 999.65

ii) Labour disputes under adjudication 239.42 302.61

iii) Claims by Customers/ Suppliers 1,664.25 408.17

Contingent Liabilities:

i) Bank and other Guarantees 896.57 1,000.81

ii) Bills discounted - 137.36

Exchange difference in respect of forward exchange contracts to be - - charged or capitalised in the subsequent accounting period

1.5 Segmental Reporting

The Company's operations predominantly relate to Coffee and Other Produce comprising of growing of Coffee, Pepper, Tea and other plantation crops and conversion of Coffee into Value added products such as Roast and Ground Coffee and Instant Coffee. The Company is also in the business of Curing operations of Coffee and trading of items required for Coffee plantations. Accordingly the revenue from Coffee and Other produce, Trading and curing (others) comprise the primary basis of segmental information set out in these financial statements. Secondary segmental reporting is performed on the basis of geographical locations of the customers. The accounting principles consistently used for the preparation of Financial statements are also applied to record Income and Expenditure in individual segments. These are set out on the note as significant accounting policies. Fixed assets used in Company's business and liabilities contracted have been identified to the reportable segments. Inter unit transfers have been made at market prices.

# After considering impairment of Plant and Machinery of Rs Nil Lakhs (Previous Year Rs 226.17 Lakhs)

The previous year's figures are regrouped wherever necessary.

Geographical revenues are segregated based on the locations of the customers who are invoiced or in relation to which the revenues is otherwise recognised.

The Company's exports are made to two major geographical areas in the world. In India its home country the Company sells Coffee, Pepper, Tea, Roast, Ground Coffee and Instant Coffee. The Plantation and Manufacturing facilities of the Company are located in India.The Trading and Curing (others) are carried out exclusively in India.


Mar 31, 2011

1. a) Contingent Liabilities:

As at 31st As at 31st March, 2011 March, 2010 Rs. in Lakhs Rs. in Lakhs

i) Bank Guarantees 1,000.81 897.95

ii) Bills discounted 137.36 -

2. Micro enterprises and small enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 have been determined based on the confirmations received in response to intimation in this regard sent by the Company to the suppliers. Interest Accrued but not paid as at 31st March, 2011 is Rs 0.05 Lakhs (Previous Year Rs 0.07 Lakhs)

3. Segmental Reporting:

The Companys operations predominantly relate to Coffee & Other Produce comprising of growing of Coffee, Pepper, Tea and other plantation crops and conversion of Coffee into Value added products such as Roast and Ground Coffee and Instant Coffee. The Company is also in the business of Curing operations of Coffee and trading of items required for Coffee plantations. Accordingly the revenue from Coffee & Other produce, Trading and Curing (others) comprise the primary basis of segmental information set out in these financial statements. Secondary segmental reporting is performed on the basis of geographical locations of the customers.The accounting principles consistently used for the preparation of Financial statements are also applied to record Income and Expenditure in individual segments. These are set out on the note as significant accounting policies. Fixed assets used in Companys business and liabilities contracted have been identified to the reportable segments. Inter unit transfers have been made at market prices.

PRIMARY SEGMENT

Geographical revenues are segregated based on the locations of the customers who are invoiced or in relation to which the revenues is otherwise recognised. The Companys exports are made to two major geographical areas in the world. In India its home country the Company sells Coffee, Pepper, Tea, Roast, Ground Coffee and Instant Coffee. The Plantation and Manufacturing facilities of the Company are located in India. The Trading and Curing (others) are carried out exclusively in India.

Names of related parties and description of relationship

1. Holding Company Tata Global Beverages Limited

2. Subsidiaries/JVs Consolidated Coffee Inc., Eight OClock Coffee Company Alliance Coffee Limited Tata Coffee (Uganda) Ltd.

3 Key Management Personnel Mr. Hameed Huq, Managing Director Mr. M. Deepak Kumar, Executive Director (w.e.f. 25.10.2010)

4 Fellow Subsidiary Tata Russia (Grand JV) Tata Global Beverages Overseas Ltd.

The remuneration and commission to key management personnel is disclosed in Note No. B16 and B17 of Schedule No. 13

4. Comparative figures relating to the previous year have been reclassified wherever necessary to conform to the classification adopted this year.


Mar 31, 2010

A) Assets and Liabilities are recorded at cost to the Company.

b) Fixed Assets are stated at cost less depreciation. Interest on qualifying assets (i.e. Assets that take substantial time to be ready for intended use) is capitalized at the applicable borrowing cost on the funds used for acquiring such assets. Roll over charges, and exchange differences, relating to foreign currency borrowings attributable to Fixed Assets are capitalized upto 31.03.2007 and charged to P&L Account afterwards. The Fixed assets are tested for impairment and wherever required, provision is made.

c) Investments of long-term nature are stated at cost. A provision for diminution in value is made to recognize a decline, other than temporary. Current investments are stated at lower of cost and market value.

d) Valuation of Stock is dealt as under: -

1. Disclosure regarding Derivative instruments :

(i) The Company uses foreign currency hedges to manage its risks associated with foreign currency fluctuations relating to certain firm commitments and highly probable forecasted transactions. The Company does not use derivative instruments for speculative purposes.

Against the Mark to Market loss of Rs. 1232.55 (Previous Year 5883.45 lakhs) a sum of Rs. 226.08 lakhs (Previous year 727.89 lakhs) has been recognized in the Profit & Loss account and Rs. 1006.45 lakhs (Previous year 5155.56 lakhs) has been debited to the Hedging Reserve account as per the provisions of Hedge Accounting cf Accounting Standard - 30.

The Foreign Currency exposures that are not hedged by a derivatives instrument or otherwise, aggregates to USD 0.050 million (Previous year Euro 0.506 million) payable as at the Balance Sheet date.

2. Rights issue of Partly Convertible Debentures

The Company had raised Rs.24,833.32 lakhs by way of Rights issue of Partly Convertible Debentures in 2006-07. Against this, the Company had utilized Rs.23,587.98 lakhs as per the Objects of the Issue. The balance amount of Rs.1,245.34 lakhs meant for projects have been used for reducing the Companys working capital borrowings and will made be available when needed for the projects.

3. Disclosure as per AS 15 - Retirement Benefits: Post Retirement Employee Benefits :

a) Description of Plan

i) Gratuity

The Company has covered its gratuity liability by a Group Gratuity Policy named Employee Group Gratuity Assurance Scheme issued by LIC of India. Under the plan the eligible employees are entitled to Gratuity under a defined benefit plan.

ii) Post Retirement Medical Benefit:

The Companys retired staff/sub-staff, Junior Officers and Management staffs are covered by a medical insurance policy. The Medical Insurance scheme is a defined benefit plan and is non-funded. Hence, there are no plan assets attributable to the obligation.

iii) Pension:

The Companys retired Management Staffs pension, except periodicaljncreases, are met through annuity issued by LIC of India. The pension increase component which has become applicable from the current year onwards, is a non-funded scheme and hence there are no plan assets attributable to the obligation.

4. Segmental Reporting:

The Companys operations predominantly relate to Coffee & Other Produce comprising of growing of Coffee, Pepper, Tea and other plantation crops and conversion of Coffee into Value added products such as Roast and Ground Coffee and Instant Coffee. The Company is also in the business of Curing operations of Coffee and trading of items required for Coffee plantations. Accordingly, the revenue from Coffee & Other produce, Trading and curing (others) comprise the primary basis of segmental information set out in these financial statements. Secondary segmental reporting is performed on the basis of geographical locations of the customers. The accounting principles consistently used for the preparation of Financial statements are also consistently applied to record Income and Expenditure in individual segments. These are set out on the note as significant accounting policies. Fixed assets used in Companys business and liabilities contracted have been identified to the reportable segments. Inter unit transfers have been made at market prices and has been consistently followed.

Geographical revenues are segregated based on the locations of the customers who are invoiced or in relation to which the revenues is otherwise recognised. The Companys exports are made to two major geographical areas in the world. In India its home country the Company sells Coffee, Pepper, Tea, Roast, Ground Coffee and Instant Coffee. The Plantation and Manufacturing facilities of the Company are located in India. The Trading and Curing (others) are carried out exclusively in India.

The remuneration and commission to key management personnel is disclosed in Note No. B17 and B18 of Schedule No. 12 22. Comparative figures relating to the previous year have been reclassified wherever necessary to conform to the classification adopted this year.

 
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