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Directors Report of Tata Global Beverages Ltd.

Mar 31, 2016

The Directors are pleased to submit their fifty third report together with the audited financial statements of the Company for the year ended 31st March 2016.

Financial Results Rs. in Crores

Consolidated Standalone

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

Revenue from Operations 8,111 7,993 3,084 2,885

Profit from Operations before Other Income, Finance Costs, 675 775 342 317 Depreciation and Exceptional Items

Less: Depreciation (143) (133) (23) (20)

Profit from Operations before Other Income, Finance Costs and 532 642 319 297 Exceptional Items

Add: Other Income (Standalone results include intra-group dividends 71 70 107 155 eliminated on consolidation)

Less: Finance Costs (69) (82) (30) (34)

Profit before exceptional items and taxes 534 630 396 418

Exceptional items (net) 11 (130) 265 (69)

Profit before tax 545 500 661 349

Provision for tax (210) (216) (97) (60)

Profit after tax 335 284 564 289

Share of Net loss in Associates (1) (11) - -

Minority Interest (8) (25) - -

Profit for the year 326 248 564 289

Add: Surplus brought forward from previous year 3,331 3,276 920 820

Add: Adjustment on Amalgamation - 20 - 2

Amount available for appropriation 3,657 3,544 1,484 1,111

Proposed dividend (142) (142) (142) (142)

Dividend distribution tax (23) (21) (23) (19)

Transfer to general reserve (68) (49) (56) (29)

Adjustment on evaluation of useful life of Fixed Asset - (1) - (1)

(33) (213) (221) (191)

Retained in profit and loss statement 3,424 3,331 1,263 920

State of Company''s Affairs Consolidated Performance

Consolidated Income from operations for 2015-16 was Rs. 8,111 Crores, against Rs. 7,993 Crores in the previous year, reflecting a 2% growth aided by improved performance both in the branded and unbranded businesses. At prior year exchange rates, the increase would be 3%. Within the branded business, India tea business performed well with good value and volume growth and our incubatory businesses, such as MAP in Australia, Tata Starbucks and NourishCo also increased their revenues. Within the non branded portfolio, improvements were mainly recorded in Coffee plantation and Coffee extraction businesses.

Profit from operations declined against the prior year mainly in the branded business due to underperformances in some developed markets. This decline is largely attributable to commodity price increases in coffee and tea in the international markets, higher spends behind brands and new launches, category decline in some developed markets and increased competitor and retailer activities. The Indian branded and non-branded businesses performed well offsetting the lower performance in developed markets. Profit after tax was however significantly higher than prior year mainly due to the impact of exceptional items. During the year, your Company sold some non-core investments realising a profit of Rs. 328Crores.The Company also recoqnised non cash impairment losses amounting to Rs. 270 Crores mainly relating to its businesses in Eastern Europe and US. While the Company is actively pursuing various growth opportunities, the accounting impairment has been recoqnised due to underperformances as compared to plans mainly arising out of factors like macro- economic instability in Russia and category decline in every day black tea in certain markets and higher competitive intensity in some markets.

We continued our focus on green and specialty teas across markets during the year under review. There was renewed focus of increasing the distribution for our super premium segment whilstfocus on newinnovative products continued. The"Super Green tea" which is the first fortified green tea with proven health benefits which was launched in UK saw significant growth and was ahead of category growth on a full year basis. There was also significant growth in the green tea segment in India, France and US. Fruit and herbal teas were launched in UK and US where customer response has been very positive. Teapigs, our super premium tea brand, saw significant growth in UK, US and Canada and other international markets with improved distribution. In India, our new coffee brand, Tata Coffee Grand had a high impact launch which created the desired buzz and visibility. In addition, Tata Tea Gold with a region specific blend was launched in the state of Maharashtra which received favourable customer response. Various new products like the Signature Collection and London Blend have been launched in select developed markets. The year also reflected good execution of the launch plans in Middle-East which resulted in market share increases. The performance of the businesses under our strategic partnership with Starbucks and PepsiCo also saw good growth. In Tata Starbucks, growth has been achieved as a result of good in-store performance and expansion in the number of stores. NourishCo reflected good growth based on significant increase in the sales of Tata Gluco Plus and a moderate growth in Himalayan sales.

Your Company''s consolidated performance has to be viewed in the context of difficult macro economic conditions and the emerging category trends in some of the developed markets that the Company operates in and that investments are being made for future growth.

Your Company''s focus in 2016-17 would be to invest in innovations and capability building in line with the Group''s medium term strategy plan and balancing the same with pressures on EBIT margins by prioritising our strategic objectives. The key focus themes across all regions will be to drive innovation and build momentum on the recent launches. Our focus will also be on improving distribution and driving cost efficiencies. We will meet these objectives through strengthening and leveraging people capabilities and robust execution of plans with continued commitment to our sustainability initiatives.

Standalone Performance

Your Company''s Income from operations for the year ended 31st March 2016 was Rs. 3,084 Crores, registering an improvement against the prior year, driven by increase in volumes and average realisation reflecting the increase in both national and regional brands. Profit from operations at Rs. 319 Crores was higher than the previous year mainly driven by increased sales and lower commodity and input cost trends despite higher spends behind brands and new launches. Profit before and after tax was significantly higher aided by exceptional income, derived through sale of non-core investments partially offset by provisions relating mainly to the China extraction business arising out of delays in startup and stabilisation of technology for an enhanced product range.

Your Company recorded 7% income growth over the prior year with increases in the flagship Tata Tea Brands and also in the Regional brands. Your Company is pleased to report that it continues to maintain both volume and value leadership in the overall branded tea category and leadership in the green tea category, in a challenging and competitive environment. During the year, your Company renewed its focus on green tea and launched innovative products. The Company launched Tata Tea Gold with a region specific blend to strengthen its foothold in Maharashtra for which consumer response has been positive. In addition, to expand the product category, your Company launched Tata Coffee Grand with a unigue blend that is gaining consumer acceptance.

Share Capital

The Amalgamation of Mount Everest Mineral Water Limited (MEMW) with the Company was completed during the year under review. Pursuant to and in consideration of the Scheme of Amalgamation of MEMW with your Company, which was effective 18th May 2015, your Company issued and allotted 1.27 Crore eguity shares of Re. 1 to the eligible shareholders of MEMW, post which, the paid up capital of the Company increased to Rs. 63.11 Crores.

Dividend

Your Directors are pleased to recommend for the approval of the shareholders, a dividend of Rs. 2.25 per share on the equity share capital of the Company with respect to the financial year 2015-16. The total outgo on account of dividend, inclusive of taxes, for 2015-16 is Rs. 165 Crores which represents a pay-out of 29% of the Company''s stand alone profits.

Transfer to Reserves

An amount of Rs. 56 Crores is proposed to be transferred to General Reserves out of the amount available for appropriation and an amount of Rs. 1,263 Crores is proposed to be retained in the profit and loss statement.

Review of Subsidiaries, Associates and Joint Venture Companies

Pursuant to Section 129(3) of the Companies Act, 2013, the consolidated financial statements of the Company and its subsidiaries, joint ventures and associates, prepared in accordance with the relevant Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014, form part of this Annual Report. Pursuant to the provisions of the said section, a statement containing the salient features of the financial statements of the Company''s subsidiaries, associates and joint ventures in Form AOC-1 is given in this Annual Report. Further, pursuant to the provisions of Section 136 of the Companies Act, 2013, the financial statements of the Company, consolidated financial statements along with relevant documents and separate accounts in respect of subsidiaries are available on the website of the Company.

There have been no material changes in the nature of the business of the subsidiaries (including associates and joint ventures) during the financial year 2015-16. Acquisitions/ divestments, as applicable, have been adequately disclosed in the financial statements.

Your Company has adopted a policy for determining material subsidiaries in terms of Regulation 16(1)(c) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations).The Policy as approved may be accessed on the Company''s website at the link: http://www.tataglobalbeverages.com/docs/default-source/ lnvestor-Governance-Policy-/policy-on-subsidiary.pdf?sfvrsn=0

Performance highlights of key operating subsidiaries / associates /joint ventures Indian Operations Tata Coffee Limited

Tata Coffee recorded a turnover of Rs. 718 Crores reflecting a growth of 5% over the prior year. The improvement is mainly attributable to higher instant coffee sales. The turnover of the plantation business also showed improvement driven by higher sales of Robusta and Pepper offset by lower Arabica volumes due to off year trends. The Instant Coffee business reported a strong growth in Africa and a favourable portfolio mix of volumes contributed to the Instant Coffee''s turnover and profitability. The overall profitability of the plantation business was flat impacted by seasonal nature of the business, soft tea prices and higher costs. The depreciation policy for Tata Coffee was changed to align to a single basis of depreciation for similar type of assets as opposed to different basis of depreciation being followed earlier. A write-back was taken to exceptional items to reflect the impact of the change. Post the impact of exceptional items, Profits before and after tax are at prior year levels.

The Directors of Tata Coffee Limited have recommended a dividend of Rs.1.30 per equity share of Re. 1 each for the year 2015-16 which is the same as last year.

The instant coffee operations continues to focus on operational discipline, cost reduction and sustainability in operations. With a specific focus on cost reduction, various alternatives have been used to reduce the power and fuel costs in the instant coffee factories. In addition, the Then Unit won the CII Sustainability award and Toopran unit won the National level Energy conservation award.

Tata Coffee also won two awards at the 12th Golden Leaf India Awards 2016 in recognition of the high quality teas produced at their factory located in the Anamalai hills in South India. Additionally, Plantation Trails, Tata Coffee''s hospitality brand, was awarded the''Certificate of Excellence''from Trip Advisor, the world''s largest travel website, for the third consecutive year. The award is based purely on customer feedback and ratings.

NourishCo Beverages Limited

NourishCo Beverages Limited, a joint venture with PepsiCo, is driving our water agenda in India. It distributes the Himalayan brand whilst it manufactures and sells the Tata Water Plus and Tata Gluco Plus brands. The Company registered a turnover of Rs. 125 Crores for 2015-16, reflecting a growth of 44%.Tata Gluco Plus has been performing extremely well and high double digit growth in volume and value terms were recorded during the year 2015-16.

The new proposition of''Gas minus Energy Plus"and the visual changes on the packaging to communicate"Energy"forthe brand were received very well by the consumers and have accelerated the brand''s growth rate. We strengthened our distribution with presence in Maharashtra, Karnataka, Gujarat and Kerala. In addition, Himalayan sales declared a double digit growth in volume and value by focusing on channel mix and selective price increases. During the year, a television commercial was run with the objective of establishing Himalayan''s source credentials.

Tata Starbucks Private Limited

Tata Starbucks recorded a turnover of Rs. 235 Crores during 2015-16 registering a growth of 39% over the prior year. Tata Starbucks''store count stands at 82 at the end of the financial year. The business continues to perform well with revenue growth driven by improved store performance and increase in the number of stores. In-store performance has been robust helped by various initiatives such as localisation of supply chain and other similar initiatives contributing to improving profitability.

Amalgamated Plantations Private Limited (APPL)

For the financial year 2015-16, turnover at Rs. 570 Crores was in line with prior year. However, profits were impacted mainly due to wage revisions which were negotiated on a tripartite basis. The business registered record production in February/March 2016 due to good rains during end season. During the year, whilst regular tea prices were soft, premium teas reflected a hardening trend. In addition APPL is also involved with the tea extension planting advisory services initiative which ensures that the small tea growers are trained in Good Tea Cultivation practices to increase yield and improve compliance and quality of green leaf. This will help them get a fair price for sustainable livelihood and become a stable supply base to APPL factories. This initiative has led to identification and linkage of 5,252 small tea growers to APPL Estates for green leaf supply in 2016-17. Further, certain gardens achieved RA certifications and Trust Tea certification, in addition to ISO 22000 and SA 8000.

Kanan Devan Hills Plantation Company Private Limited (KDHP)

For the financial year 2015-16, KDHP recorded a turnover of Rs. 259 Crores. The profitability and operations were impacted by labour unrest in its estates and factories for a week in September and for a fortnight in October, resulting in heavy loss of production. The unrest was across most plantations in Kerala due to demands for wage revision and higher bonus. Additionally, loss of production during this period of unrest and its aftermath, left the tea fields in overgrown condition necessitating substantial costs for ensuing restoration work on the affected fields, which further impacted both production and income. The Company also incurred substantial increase in costs due to a significant increase in labour wages as decided by the Plantation Labour Committee, constituted by the Government of Kerala, and this plantation industry wide wage revision, done once in three years, was due in 2015.

Despite the labour unrest, the productivity for the season was higher than the previous year and total crop production performance was better than that of other companies in Munnar. The average price of tea achieved for the year was also higher than previous year, due to the increased production of high value teas and firming up of tea prices during the second half. In the Great Places to Work Survey (2015) conducted by the Economic Times and Great Place to Work9 Institute, KDHP was ranked 97 in the Top 100 of India''s Best Companies to Work for in 2015. On the quality front, KDHP won two awards at the 2016 Golden Leaf India Awards competition held at Dubai, a testimony to the stringent quality standards adopted by the Company. Additionally, two tea factories were awarded the Appreciation Award under the Small Industry Category of the Kerala State Pollution Control Award, 2016. This is a testimony to the strict safety standards maintained by all KDHP establishments. On the certifications front, KDHP continues to maintain all certifications of international repute, including Rainforest Alliance, Fairtrade, Organic, ISO 22000, ETP, GMP and Trustea. It was a moment of great joy and pride when the Company passed the Rainforest Alliance annual audit, with an astounding score of 98.9%.

International Operations

Eight O Clock Coffee Company (EOC)

EOC''s total income, under IGAAP, during 2015-16 at Rs. 1,046 Crores was higher than the previous year''s income of Rs. 1,008 Crores. The increase in top line is mainly due to favourable currency movement. The business grew its non-promoted volumes over prior year but a significant increase in competitor intensity through additional promotional events and deeper discounting adversely affected the overall sales. Profits were impacted because of lower sales coupled with increase in coffee commodity costs. During the year, Eight O Clock Coffee was the recipient of two Reggie awards for their earlier partnership with Warner Brothers celebrating the 20th anniversary of the hit comedy TV show"Friends".The award recognises the best marketing campaigns activated by brands with a focus on strategy, creativity, originality, integration and results.The campaign resulted in introducing the brand to a younger consumer base which ultimately contributed to brand sales growth.

Tata Global Beverages Group Limited, UK

The consolidated income from Tata Global Beverages Group Limited, UK, under IGAAR which substantially reflects the financial performance of the Tetley business and other international brands, at Rs. 3,313Crores, was lower than prior year mainly due to adverse translation impact. At constant exchange rates, there was a marginal underlying topline growth. The improvement in underlying sales is mainly due to improvements in the Teapigs brand, Russia, Middle East, South Africa, and coffee business in Australia partially offset by lower performance in other key markets. The operating profit was behind prior year mainly due to category de-growth and high competitive intensity in some major markets, higher commodity prices, impact of the macro- economic condition prevailing in countries like Russia and higher spends on new launches and market entries. The underlying performance of the main brands was strong with many successes. Teapigs, our super premium brand has done exceedingly well by growing distribution in UK, US and in other international markets. Green tea has exceeded expectations and our growth is significantly higher than the category growth in UK. Super greens is the star performer in UK and the green tea portfolio, though small, has significantly increased in the last couple of years. In addition to UK, green tea has also done well in US, Canada and France. During the year, fruit and herbal categories were launched in UK and US and the initial response is positive. A new premium variant, the Signature Collection which was launched in Canada is gaining distribution and a new blend -"British Brands"was launched in US. Various advertisement campaigns were deployed in markets to support the Tetley brand and new launches. Whilst in the UK there was a focus on Tetley advertisement using the iconic "teafolk"and implementation of a new pack, Canada concentrated on Signature Collections and new packaging changes. We continue to be market leaders in Canada and have gained volume share in the UK.

The Company is happy to inform you that for the second year running, Tetley has been recoqnised in the 2015 Great Taste Awards, winning coveted gold stars for its Kenyan Gold (Blend Collection), Pure Green, Redbush Vanilla, Super Green Tea, Boost, Lime and Serenity, and Mood Infusions. The Great Taste Awards is one of the world''s largest and most trusted food and drink awards, organised by the Guild of Fine Food. This respected seal of approval is a sign of quality, which consumers can trust whilst buying food and drink from their local retailer.

Non Cash Goodwill impairments were recorded during the year under review mainly relating to its businesses in Eastern Europe and US. While the Company is actively pursuing various growth opportunities, the accounting impairment has been recoqnised due to underperformances as compared to plans mainly arising out of factors like macro-economic instability in Russia and category decline in every day black tea / competitive intensity in other markets.

Tata Tea Extractions Inc.

Tata Tea Extractions Inc., a wholly owned subsidiary in the USA supplies customer specific tea ingredients to Iced Tea Beverage companies. During the year, the income from sales in underlying currency increased by 1%, while the Profit from Operations grew by over 5%, when compared to the previous year. This was mainly on account of improved realisation from customers despite challenging market conditions, favourable blend mix and a marginal reduction in the cost of goods sold.

In addition to the existing products, Tata Tea Extractions has developed a new formulation during the year to cater to the requirements of new customers as well as existing customers. The initial feedback on this formulation from some of the customers have been favourable. In the manufacturing plant in Munnar, we are also working on an enhanced product range for one of our major customers. Developmental activities such as these, coupled with the existing product range is expected to help the company to sustain and grow the extraction business.

Zhejiang Tata Tea Extraction Company Limited- China Joint Venture operations

Delays continue in stabilisation of the China business. While prospective customers have shown interest in our instant tea products, the final conversion to orders will be dependent on meeting the product profile requirements. Going forward, stabilising the production process and establishing a pipeline of external customers and successful scaling of technology will be key to the success of the project. In view of the continued uncertainty of the business, your Company is evaluating various options for restructuring the business.

Estate Management Services Private Limited (EMSPL)

Estate Management Services Private Limited, Sri Lanka (EMSPL) in which your Company owns 31.85% of the shares, is the holding company of Watawala Plantations Limited (WPL). WPL is one of the largest producers of tea and palm oil in Sri Lanka and amongst the most efficiently run in that country. EMSPL also owns Watawala Tea Ceylon Limited (WTCL) which is in the branded business and owns three key brands''Zesta'',''Watawala'' and''Ran Kahata''which together command 33% market share of the branded tea market in Sri Lanka. Sri Lankan tea has good acceptance in several countries including Russia, South East Asia, Australia and Middle East.

EMSPL has continued to perform well during 2015-16. Watawala Plantations PLC registered growth in profitability driven by better performance of tea and rubber segments. Watawala Tea Ceylon also recorded healthy growth in operating performance with both revenue and profitability substantially improving over the previous financial year.

Companies which have become or ceased to be Subsidiaries, Associates and Joint Ventures

During 2015-16, RBC Hold Co LLC ceased to be a subsidiary as it was dissolved during the year. As stated above, Mount Everest Mineral Water Limited, an erstwhile subsidiary, was amalgamated with the Company, effective 18th May, 2015. No other company became or ceased to be a subsidiary, joint venture or associate during 2015-16.

Human Resources and Industrial Relations

During the year under review, a key agenda of the Company was to prioritise HR imperatives to support the Company''s ambitious growth plans. The theme was ''Raising the Bar''and laying down practices on HR policies and principles to support in accelerating business Growth. The Company further continued leveraging the 3 tier leadership program to build the leadership capabilities across regions.

During the year under review, industrial relations remained harmonious at all our offices and establishments.

Corporate Governance and MD &A

A detailed report on Corporate Governance is separately attached together with a report on Management Discussion and Analysis (MDA). The MDA also covers the consolidated operations and reflects the global nature of our business.

Vigil Mechanism /Whistle Blower Policy

The Company has a vigil mechanism for directors and employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the code of conduct/business ethics that provides for adeguate safeguards against victimisation of the director(s) and employee(s) who avail of the mechanism. No director/employee has been denied access to the Chairman of the Audit Committee.

Internal Financial Controls

The Company has adeguate system of Internal Controls which are detailed in the Management Discussion and Analysis Report.

Governance Guidelines

The Company has adopted a governance guidelines on Board effectiveness. The guidelines cover aspects relating to composition and role of the Board, Chairman and Directors, Board diversity, definition of independence, term of directors, retirement age and committees of the Board. The guidelines also cover aspects relating to nomination, appointment and induction and development of directors, directors remuneration, subsidiary oversight, code of conduct, Board effectiveness reviews and mandates of Board committees.

Procedure for Nomination and appointment of directors

The Nomination and Remuneration Committee (NRC) is responsible for developing competency requirements for the Board based on the industry and strategy of the Company. The Board composition analysis reflects in-depth understanding of the Company, including its strategies, environment, operations, financial condition and compliance requirements.

The NRC makes recommendations to the Board in regard to appointment of new directors. The NRC also conducts a gap analysis to refresh the Board on a periodic basis, including each time a directors appointment or re-appointment is required. The NRC is also responsible for reviewing the profiles of potential candidates vis-a-vis the required competencies, undertake a reference and due diligence and meeting of potential candidates prior to making recommendations of their nomination to the Board. 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 NRC has formulated the criteria for determining qualifications, positive attributes and independence of directors in terms of the provisions of Section 178(3) of the Companies Act, 2013 and Regulation 19 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), the key features of which are:

Qualifications -The Board nomination process encourages diversity of thought, experience, knowledge, age and gender. It also ensures that the Board has an appropriate blend of functional and industry expertise.

Positive Attributes- Apart from the duties of directors as prescribed in the Companies Act, 2013, the directors are expected to demonstrate high standards of ethical behaviour, communication skills and independent judgment. The directors are also expected to abide by the respective Code of Conduct as applicable to them.

Independence - A director will be considered independent if he / she meet the criteria laid down in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) the Listing Regulations.

Annual Evaluation of the Board, its Committees and Individual Directors

The Board of directors had carried out an annual evaluation of its own performance, board committees and individual directors as required under the Companies Act, 2013 and the Listing Regulations. The performance of the board was evaluated by the board after seeking inputs from all the directors on the basis of criteria such as board composition, structure, board processes and their effectiveness, information given to the board etc. The performance of the board committees was evaluated by the board after seeking inputs from the committee members on the basis of criteria such as committee composition, structure, effectiveness of committee meetings etc.

The Board and the NRC reviewed the performance of the individual directors on the basis of criteria such as contribution at meetings, their preparedness on the issues to be discussed etc. Additionally the Chairman was also evaluated on key aspects of his role.

Remuneration Policy

The NRC has formulated a policy relating to the remuneration for the directors, key managerial personnel and other employees. The philosophy for remuneration is based on the commitment of fostering a culture of leadership with trust. The remuneration policy has been prepared pursuant to the provisions of Section 178(3) of the Companies Act, 2013, and Regulation 19 of the Listing Regulations. While formulating this policy, the NRC has considered the factors laid down in Section 178(4) of the Companies Act, 2013, which are as under:

That the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully;

Relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

Remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals.

The key principles governing the remuneration policy are as follows:

Market competitiveness

Role played by the individual

Reflective of size of the company, complexity of the sector/ industry/ company''s operations and the company''s capacity to pay

Consistent with recoqnised best practices and Aligned to any regulatory requirements

In accordance with the policy, the Managing / Executive directors / KMPs / employees are paid basic/ fixed salary, benefits, perquisites and allowances and annual incentive remuneration/ performance linked bonus subject to achievement of certain performance criteria and such other parameters as may be considered appropriate from time to time by the Board. The performance linked bonus would be driven by the outcome of the performance appraisal process and the performance of the Company.

Remuneration for independent directors and non independent non executive directors

The non-executive Directors, including Independent Directors, are paid Sitting fees for attending the meetings of the Board and Committees of the Board. The overall remuneration (sitting fees and commission) should be reasonable and sufficient to attract, retain and motivate directors aligned to the requirements of the Company including considering the challenges faced by the Company and its future growth imperatives. The remuneration should also be reflective of the size of the Company, complexity of the business and the Company''s capacity to pay the remuneration.

The Company pays a sitting fee of Rs. 30,000 per meeting per director for attending meetings of the Board, Audit, Nomination and Remuneration and Executive Committees (Rs. 20,000 in case of Mr. Cyrus Mistry, Chairman and Mr. Harish Bhat, Director). For meetings of all other Committees of the Board, a sitting fee of Rs. 20,000 per meeting per director is paid (Rs. 15,000 in case of Mr. Cyrus Mistry, Chairman and Mr. Harish Bhat, Director). Within the ceiling of 1% of net profits of the Company computed under the applicable provisions of the Companies Act, 2013, the Non-Executive Directors including Independent Directors are also paid a commission, the amount whereof is recommended by the NRCand determined by the Board. The basis of determining the specific amount of commission payable to a Non-Executive Director is related to his attendance at meetings, role and responsibility as Chairman/Member of the Board/Committees and overall contribution as well as time spent on operational matters other than at the meetings. The shareholders of the Company had approved payment of commission to the non-executive directors at the Annual General Meeting held on 26th August 2014, which is valid up to the financial year ending 31st March 2019. No Stock option has been granted to the Non-Executive Directors.

Familiarisation programme for independent directors

The details for familiarisation of the independent directors are given in the website and the same can be accessed at the link http://www.tataglobalbeverages.com/company/leadership/ boa rd-of-di rectors

As required under Regulation 46(2)(i) of the Listing Regulations, the details of familiarisation programmes conducted during the year 2015-16, is also put on the Company''s website.

Number of meetings of the Board

Nine meetings of the Board of Directors were held during the year 2015-16. For further details, please refer to the Corporate Governance Report, which forms part of this Annual Report.

Audit Committee

The details pertaining to composition of audit committee are included in the Corporate Governance Report which forms part of this Annual Report.

Significant and material orders passed by the Regulators or Courts

There are no significant and material orders passed by the Regulators/Courts that would impact the going concern status of the Company and its future operations.

Corporate Social Responsibility and Sustainability initiatives

The Natural Beverages Policy of Tata Global Beverages is the apex policy that incorporates all relevant elements of Sustainability, Corporate Social Responsibility, Affirmative Action, Community Initiatives and volunteering. It is aligned with the Tata Group Sustainability Policy, and is applicable to all units of Tata Global

Beverages, including associate companies and joint ventures. Through this policy, Tata Global Beverages aspires for global sustainability leadership in the natural beverages sector. The policy states that/Tata Global Beverages is committed to be the most admired natural beverage company in the world by making a big and lasting difference through Sustainability and Corporate Social Responsibility. We shall achieve this by being the consumer''s first choice in sustainable beverage production and consumption/The policy is built around the five pillars of sustainability - community development, sustainable sourcing, climate change, water management and waste management.

In compliance with Section 135 of Companies Act, 2013, Tata Global Beverages has undertaken CSR activities, projects and programs, excluding activities undertaken in pursuance of its normal course of business. The report on CSR activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is given in Annexure 1 forming part of this report. The CSR Policy may be accessed on the Company''s website at the link http://www.tataglobalbeverages.com/docs/default-source/ default-document-libra ry/corporate-social-responsibility-policy/2 14b6881a2368caa65dff02001c5bel.pdf?sfvrsn=0

During the year under review, the Company has spent Rs. 5.53 Crores (around 2.46% of the average net profits of last three financial years) on CSR activities on projects qualifying as per Section 135 of the Companies Act, 2013 duly approved by the CSR Committee.

In addition to the projects specified as CSR activities under Section 135 of Companies Act 2013, the Company has also carried out several other sustainability/ responsible business initiatives and projects on a global scale. In 2015, for the fourth year in a row, Tata Global Beverages (TGB) was recoqnised on the Climate Disclosure Leadership Index (CDLI), and ranked second in India by CDR

Particulars of employees

The Information required under Section 19/ read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure 2 which forms part of this report.

Pursuant to Section 19/ (14) of the Companies Act, 2013 the details of remuneration received by the Managing and Executive directors from the Company''s subsidiary company during 2015-16 are also given in Annexure 2 attached to this report.

Particulars of Loans, Guarantees or Investments by the Company

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are provided in Annexure 3 attached to this report.

Risk Management

The Risk Management Committee of the Board is entrusted with the responsibility to assist the Board in overseeing and approving the Company''s risk management framework. The Company has a comprehensive Risk policy and a Risk Register detailing the risks that the Company faces under various categories like strategic, financial, commercial, operational, IT, legal, regulatory, people, reputational and other risks and these have been identified and suitable mitigation measures have also been formulated. The Risk Management Committee reviews the key risks, the Risk register and the mitigation measures periodically. The Audit Committee has additional oversight in the area of financial risks and control.

Disclosures as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

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 for prevention and redressal of complaints of sexual harassment at workplace.

Deposits from public

The Company has not accepted any deposits from the public during the year under review. No amounts on account of principal or interest on deposits from public was outstanding as on 31st March 2016.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Dr. Asim Kumar Chattopadhyay, Company Secretary in Practice, to carry out the Secretarial Audit of the Company. The Report of the Secretarial Audit for 2015-16 is attached herewith as Annexure 4. There are no qualifications in the said report.

Annual Return

As provided under Section 92(3) of the Companies Act, 2013, the extract of annual return in Form MGT-9 is given in Annexure 5 which forms part of this report.

Directors'' Responsibility Statement

Pursuant to Section 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) 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 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 2016 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.

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 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.

Related Party Transactions

All Related party transactions that were entered into during the financial year were on an arms length basis and in the ordinary course of business. There are no material significant related party transactions made by the Company during the year that would have required shareholder approval under Regulation 23(4) of the Listing Regulations and the erstwhile Clause 49 of the Listing Agreement. All related party transactions are reported to the Audit Committee. Prior approval of the Audit Committee is obtained for the transactions which are planned and/ or repetitive in nature and omnibus approvals are taken within the criteria/ limits laid down for unforeseen transactions. The disclosure under Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is not applicable. The Policy on Related Party transactions as approved by the Board has been uploaded on the Company''s Website and may be accessed at the link http://www.tataglobalbeverages.com/our-investors/ governance.

The details of the transactions with related parties during 2015-16 are provided in the accompanying financial statements.

None of the Directors had any pecuniary relationship or transactions with the Company during the year under review.

Directors and key managerial personnel

At the Annual General Meeting of the Company held on 26th August 2014, the members had approved the appointments of Mr. Analjit Singh, Mrs. Mallika Srinivasan, Mr.V Leeladhar, Mrs. Ranjana Kumar, Mr. Darius Pandoleand Mrs. IreenaVittal as Independent Directors for a term of five years from 26th August 2014. All the independent directors have given declarations that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of Listing Regulations. In the opinion of the Board, they fulfill the conditions of independence as specified in the Act and the Rules made thereunder and they are independent of the management.

Mr. Cyrus P Mistry retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-election. Brief particulars and expertise of Mr. Mistry together with his other directorships and committee memberships have been given in the annexure to the Notice of the Annual General Meeting in accordance with the requirements of Listing Regulations.

No director or key managerial personnel was appointed or has retired or resigned during the year under review.

Auditors and Auditors'' Report

The Members at the Annual General Meeting held on 26th August 2014, had appointed M/s. Lovelock and Lewes, as the Statutory Auditors for three years subject to ratification by the members each year. The members are requested to ratify the appointment of M/s. Lovelock and Lewes as Statutory Auditors from the conclusion of the fifty third Annual General Meeting till the conclusion of the fifty fourth Annual General Meeting. The Auditors'' report on the financial statements for the year 2015-16 does not contain any qualifications, reservations or adverse remarks.

Cost Auditors

Your Board has appointed M/s. Shome and Banerjee, 5A Nurulla Doctor Lane, 2nd Floor, Kolkata - 700 017 as cost auditors of the Company for conducting cost audit for the financial year 2016-17. The members are requested to ratify the remuneration payable to the Cost Auditors for 2016-17.

Disclosure requirements

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Companies Act, 2013, read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is given in Annexure 6 attached to this report.

Concluding Remarks

The Directors wish to convey their appreciation to all of the Company''s employees for their sincere and dedicated services as well as their collective contribution to the Company''s performance.

On behalf of the Board of Directors

Mumbai, Cyrus P Mistry

24th May 2016 Chairman


Mar 31, 2014

The Directors are pleased to submit their fifty first report together with the audited statement of accounts for the year ended 31st March 2014.

1. HIGHLIGHTS - CONSOLIDATED PERFORMANCE

Your Company reported growth in revenues, and a significant increase in consolidated net Profit for the year ended 31st March 2014. Income from operations at Rs. 7,738 crores increased by 5% year-on-year, reflecting good performance in some key markets coupled with favourable foreign exchange translation impact. Operating Profits at Rs 623 crores however declined from previous year attributable to higher spending on brands, increased costs to support scaling up in new ventures and market and competitive pressures in some regions. Group consolidated net Profit at Rs 481 crores registered 29 % increase over the previous year, the increase also reflecting the impact of higher exceptional income and improved performance in some associate companies.

Your Company re-launched some of its key tea and coffee brands with new product variants and packaging supported by powerful marketing programs during the year, which have entailed significant marketing spend.

In a few global markets, we also faced and responded appropriately to some challenging market conditions, particularly on account of commodity price trends in Coffee and significant competitor activity.

In our newest category, water, we continue to witness very good growth of our offerings such as Himalayan, Tata Water Plus and Tata Gluco Plus through NourishCo, our JV with PepsiCo.

Tata Starbucks Limited, the joint venture company with Starbucks made very good progress and has opened 43 stores as at 31st March 2014. Tata Starbucks as of date has presence in 6 cities – Mumbai, Delhi, Gurgaon, Bangalore, Pune and Chennai. The stores have been performing well and continue to see excellent consumer response.

2. STAND ALONE FINANCIAL HIGHLIGHTS

The Directors now present below the stand alone financial highlights for 2013-14:

Rs. in Crores

2013-14 2012-13

Total revenue 2868 2439

Profit before finance cost, depreciation, 468 351 exceptional items and taxes Deduct:

Finance cost (39) (32)

Depreciation (16) (16)

Profit before exceptional items and taxes 413 303

Exceptional items (net) 172 18

Profit before tax 585 321

Provision for tax (138) (62)

Profit after tax 447 259

Add: surplus brought forward from previous year 565 486

Add: Transfer from debenture redemption reserve 81 -

Amount available for appropriation 1093 745

Proposed dividend (139) (133)

Dividend distribution tax (8) (21)

Transfer to debenture redemption reserve (81) -

Transfer to general reserve (45) (26)

(273) (180)

Retained in Profit and loss account 820 565

3. DIVIDEND

The Directors are pleased to recommend for the approval of the shareholders a higher dividend of Rs. 2.25 per share on the paid-up equity share capital of the Company with respect to the financial year 2013-14. The total outgo on account of dividend, inclusive of taxes, for 2013-14 is Rs. 147 crores which represents a pay-out of 33% of the Company''s stand alone Profits.

4. REVIEW OF SUBSIDIARY AND ASSOCIATE COMPANIES

(i) a. As required under the listing agreement with the stock exchanges the audited consolidated financial statements of the Company incorporating all its subsidiary and associate companies prepared in accordance with applicable Accounting Standards are attached.

b. The Ministry of Corporate Affairs has by its notification dated 8th February 2011 granted a general exemption to companies, as per which, the provisions of Section 212 of the Companies Act 1956 shall not apply in relation to subsidiaries, subject to the fulfilment of certain conditions. Accordingly the consolidated financial statements of the holding company and all subsidiaries duly audited by its statutory auditors have been presented and the individual accounts of each of the subsidiary companies have not been attached.

c. Any shareholder may either ask for a copy or inspect at the registered office, a copy of the audited accounts of the subsidiary companies (where required to be prepared).

(ii) Tata Coffee Limited, your

Company''s subsidiary, recorded a turnover of Rs. 651 crores in 2013-14, a growth of 9% over the previous year. Profit after tax at Rs 107 crores for 2013- 14 is the highest recorded so far in the company. Tata Coffee is committed to growth through quality and continues to participate in domestic and International forums to popularize the company''s Coffee. In the year under review, Tata Coffee won awards as the best exporter of Coffee to the Far East, Russia and CIS Countries, USA and Canada at the Indian Coffee Export Awards. The R&G unit at Kushalnagar has bagged the best Roaster Award in the IICF held in the current calendar year. The Valparai, Nullore, Mylemoney, Gorgolly, Margolly and Gubgul estates of the company have been adjudged as the best for their Arabica and Robusta Coffee. During the year under review, Tata Coffee exported 5,237 MT of Coffee against 4,831 MT in the previous year. Tata Coffee continues to focus on growth through differentiated and premium Coffee. The Company''s expanded capacity for instant Coffee came on stream during the financial year.

The Directors of Tata Coffee Limited have recommended a higher dividend of Rs. 13 per share for the year 2013-14.

(iii) The Eight O''clock Coffee (EOC) brand performed well in USA, with good consumer demand delivering growth in the pod format. However the total income of Eight O''clock Coffee Inc. USA, a subsidiary of Consolidated Coffee Inc. (CCI), in turn a subsidiary of Tata Coffee, recorded a lower total income of Rs. 1,026 crores in 2013-14 against Rs. 1,099 crores in the previous year, under Indian GAAP, attributable to shift in consumer preference towards pods, higher competitive activity and the fact that the company records only the royalty income on sale of pods. During the year, to revitalize the EOC brand, the company invested in a brand re-launch, with new packaging graphics, new blends and a television advertising campaign.

CCI, during the year, divested its stake in a US based functional beverage company, on account of changed market conditions, its performance and significant future funding requirements.

(iv) Tata Tea Extractions, Inc. (TTEI) , the Company''s wholly-owned subsidiary in the USA, which supplies customer specific instant tea products reported net earnings of $ 3.3 million in 2013-14 against $ 2.1 million in the prior year. The operations of TTEI were re-certified under the Global Food Safety Initiatives for food safety compliance as per BRC (British Retail Consortium) standards. The USFDA had also conducted a surprise audit of the facility during the year and approved it for food safety compliance.

(v) Mount Everest Mineral Water

Limited (MEMW), recorded higher revenue from operations of Rs. 26 crores during 2013-14 against Rs. 22 crores in the previous year, driven largely by marginally higher volumes, better realisation and higher service income. In an inflationary environment, MEMW was able to manage its costs which helped in the company reporting a Profit of Rs 2.4 crores for the year as compared to a Profit of Rs. 0.5 crores in the previous year. The JV between Starbucks and your Company have opened up significant volume opportunities for the brand, Himalayan, as an exciting new alternate channel not only in India but also in other advanced markets across the globe. This also enabled Himalayan to be the only brand of water to be served/poured at all Tata Starbucks outlets in India. The first international foray with Starbucks Singapore, has ensured that Himalayan Water is now available across major Starbucks outlets in Singapore. The Company''s partnership with a leading business house in Singapore has also opened up the presence of Himalayan across major retail chains in Singapore.

(vi) The consolidated Income from operations and Profits of Tata Global Beverages Group Limited, UK, under Indian GAAP, which substantially reffects the financial performance of the Tetley business and other international brands, for the year 2013-14 at Rs 3,459 crores was fat as compared to the previous year. Whilst the rupee depreciation had a favourable impact, trading in Tata Gluco Plus to meet consumer needs.

6. TATA STARBUCKS LIMITED

Tata Starbucks Limited reported strong growth as it continued to increase the number of outlets. It currently operates in Mumbai, Pune, Bangalore, Delhi, Gurgaon and Chennai.

7. AMALGAMATION OF MOUNT EVEREST MINERAL WATER LIMITED (MEMW) WITH THE COMPANY

Your Directors at their meeting held on November 12, 2013 approved the amalgamation of MEMW with the Company under a Scheme of Amalgamation under Sections 391 to 394 and other applicable provisions of the Companies Act, 1956. The Scheme is subject to and would become effective on receipt of all requisite approvals. As per the directions of the Hon''ble High Court at Calcutta, a meeting of the shareholders of the Company was held on 4th June 2014, wherein the shareholders have approved with requisite majority, the Scheme of Amalgamation of MEMW with the Company with effect from the Appointed date, viz, 1st April 2013. Additionally, as required under Clause 5.16 of the Securities and Exchange Board of India Circular CIR/ CFD/DIL/5/2013 dated 4th February 2013 and Circular CIR/CFD/DIL/8/2013 dated 21st May 2013, approval to the said Scheme of Amalgamation was also accorded by the majority of the public shareholders by way of postal ballot/e-voting. The Company has since filed the consequential petition for sanction of the Scheme by the Hon''ble High Court at Calcutta. The same is pending.

8. ACQUISITION OF EARTH RULES PTY LIMITED, AUSTRALIA

Your Directors are pleased to report that, subsequent to the end of the financial year, an overseas subsidiary of your Company, completed the acquisition of Earth Rules Pty Limited, Australia. Earth Rules, which operates under the brand name ''MAP'' is engaged in Coffee business, with presence in the R&G Coffee and Coffee in Pods (single service portions) segments in Australia. The investment is in line with the Company''s strategic vision of growing its presence in Australia, and it also helps Tata Global Beverages to expand its portfolio in Australia to include high growth single serve Coffee business.

9. REVIEW OF ACTIVITIES A. The Tea Industry

India''s tea output stood at 1,200 million kgs in 2013 up 73.72 million kgs or 7% over previous year. Over 96% of the additional crop was produced in North India. Export volumes for 2013 stood at 211.86 million kgs, marginally up on 2012 by 3.63 million kgs. Despite the additional crop and therefore domestic retention, prices in 2013 were higher than the previous year. The orthodox variety in the North saw higher levels within the mix mostly due to an increasingly easier trade and demand from Iran. In the South, unexpected weather and uneven overall crop caused temporary crop deficits and significant volatility in prices. Adverse weather during the first flush in North India has resulted in a dearer market. We expect this strength to continue up until the peak quality second flush period post which higher crops and spot supply will allow overall prices to ease.

B. Domestic Branded Tea Operations

Your Company''s marketing and promotional strategy and launching of new products resulted in volume and market share growth over the previous year. Your Company took several initiatives which helped growth across brands and enables going into the next year with a strong momentum. All the national brands performed very well and Tata Tea Premium, Agni and Tetley Green Tea saw good growth. The regional brands also performed very well with a modest growth over last year, mainly due to restage of Chakra Gold and Kanan Devan brands and price increases across products even as competition held on to its prices. Tata Global Beverages continued in maintaining its volume and value leadership position in India.

The Tata Tea Jaago Re campaign has, over the years, become synonymous with ''Awakening'' by addressing serious issues like voting, corruption and positivity. During 2013-14, the focus has been on gender bias against women through the launch of our ''Bade Badlaav Ki Liye Choti Shuruaat'' campaign. A TV ad film was launched on Women''s Day this year featuring Bollywood star Shahrukh Khan. The advertisement appeals to each one to do their "Choti Shuruaat” - small yet powerful acts inspired by simply changing one''s mindset. Further to take the thought forward, a new campaign, ''Power of 49'' was launched aiming to encourage women to exercise their right to vote at the next general elections.

The ''Power of 49'' campaign, aims to make it one of India''s largest women-centric awareness campaigns in recent times with intent to reach out to 100 million women. Power of 49, a Jaago Re initiative for women, was launched in August 2013 with an objective to awaken women, who form 49% of India''s voter base, inspiring them to cast an informed and independent vote and exercise the power they have to make or break a government in the forthcoming election. The campaign was conceptualised from the insight that women constitute 49% of the voter base in India but often do not get their due as they are not seen as a determining factor in elections.

Your Company has large presence in rural India through Gaon Chalo, its innovative rural distribution model. This model was initiated in 2005-06 in Uttar Pradesh and is today spread across 18 states through a strong network of NGOs. Gaon Chalo is a non- traditional business model that is Profitable and growing at a very fast pace. The model generates rural opportunities for youth and provides a platform to further the Company''s CSR and Affirmative Action initiatives.

C. International Branded Operations

In the international branded operations, whilst there has been growth in some markets, the trading environment generally remained challenging largely driven by intense retailer activity, competitor pressures and market decline in some categories driven by consumer preferences. We have been proactive in addressing these challenges through innovation, restructuring of businesses and brand re-launches.

The group performed well in markets like Canada, France, Australia, Africa and Middle East. To address changing consumer preferences, the group focussed on growth segments like speciality tea and single serve pod formats.

While black tea in the UK is declining, other categories like premium tea and speciality teas are seeing good growth. The group continues to focus on improving its brand strength and take share in the growing segments. Tetley Black tea bags and Tetley Green tea continue to be number two in their respective categories in UK, whereas Tetley Redbush is a category leader.

The Canadian business had a good year with strong sales and Profitability. Australia had a good year recording sales growth over the prior year. Both these markets saw new product variants being launched during the year under consideration.

In the US, Coffee sales volumes in traditional formats were lower than the prior year mainly driven by growth in consumer preference for Coffee in pods (single serve formats) and also due to competitive intensity in that market. We are present in the single serve format category through EOC K-cups, which recorded strong sales. Both Eight O clock and Grand brands were re-launched during the year with new packaging.

The company continues to focus on category expansion and on improving brand recognition and loyalty for its portfolio of brands

D. Tea Extractions

The Instant Tea Division''s Sales turnover and Profitability improved compared to previous year, mainly on account of favourable foreign exchange and increased production volume. Exports of Instant tea were made largely to US, Europe and Far Eastern Countries.

The Instant Tea Operations achieved the following noteworthy milestones, which will greatly enhance their reach and sustenance of the business in the ever challenging global market:

£ FSSC 22000 Certification under the Global Food Safety Initiatives, a globally recognised food safety standard

- Recipient of a globally recognised Ethical Tea Partnership (ETP) standard certification

- Recipient of the prestigious Kerala State Pollution Control Board Award for environment protection & sustainability Zhejiang Tata Tea Extraction Company Limited, China which is a subsidiary of your company, is a Joint Venture with Zhejiang Tea Group Company Limited, China. The JV was set up for the manufacture and marketing of Instant tea, tea polyphenol and tea concentrates. The company commenced its production of green instant tea products after initial delays and has now commenced exports to USA. The company is conducting further trials to produce tea polyphenols under a new technology and improve efciency factors. It is also addressing marketing challenges to enter new geographies.

E. Exports

The FOB value of exports during 2013-14 was Rs. 172 crores, against Rs. 152 crores in the previous year. The tea bag unit at Kochi performed well and exported its products to several markets during the year. The division launched new format of tea bags for the Australian market. The Instant Tea unit performed well and is strengthening its marketing effort by undertaking new customer contacts, identifying sales channel partners and participation in international fairs with a view to meet new customers and understand industry trends.

F. Plantation Operations

The crop production in 2013-14 at our Pullivasal and Periakanal estates at 20.73 lakh kgs was in line with the previous year crop. The productivity achieved by the two estates to end March 2014 was 51.23 Kgs against 47.44 kg achieved for the same period in the previous season.

G. Community Development, Employees'' Welfare and Environment Conservation

Transforming communities through proactive interventions has been an integral part of Tata Group long before Corporate Social Responsibility became a buzz phrase. Across Tata Global Beverages, we have nurtured and encouraged our businesses to proactively engage with the community and champion causes which are real and relevant. Tata Global Beverages undertakes an extremely strategic and well-thought-out exercise to understand the issues faced and the requirements of disadvantaged communities near our operations and take on projects to improve their socio-economic status. The community initiatives are being pursued through the General Hospital, Srishti complex and the High Range School, all based at Munnar in Kerala.

The General Hospital continued to provide quality healthcare which includes free treatment to the Muthavan tribal community. Srishti focuses on enhancing the hidden talents of differently abled children most of whom are the families of local tea pickers of Munnar. The High Range School continues to actively pursue enhancement of academics in the communities around our geographies of operation. Our continuous efforts have borne fruit, and the education style at our High Range School is now recognised as a benchmark in holistic education, at the Group level.

Your Company is committed to its Affirmative Action (AA) initiatives which seek to directly conduct or support initiatives to ensure an equal footing for socially and economically disadvantaged sections in the country at large, and specifically the Scheduled Caste and Scheduled Tribe communities. Towards this, your Company''s efforts on 4E''s (Employment, Employability, Entrepreneurship and Education) are directed at addressing the national cause of ensuring equal opportunities to the historically disadvantaged. Tata Global Beverages ensures prime focus on enhancing health and education across the nation especially across our geographies. AA initiatives in India are driven primarily from Munnar and Bangalore.

In pursuance of its Sustainability initiatives, your Group has identified five strong pillars of sustainability for the future - climate change, water management, sustainable packaging, ethical supply chain and community work. Following a review of the TGB sustainability agenda, the strategic objective for sustainability has been revised and updated as follows: integrating sustainability into our business, innovation processes, products and brands. The focus will be on establishing Global Key Performance Indicators (KPIs) and their deployment across the organisation building it into the DNA of your Company.

Your subsidiary, Tata Coffee, has always been committed to serving the communities where it operates. In this spirit, the company is actively engaging with the local community in Jayamangalam village located near the Theni plant. Initiatives like ''Self-Help Group'' and ''Girl Child Nutrition'' projects are aimed at enabling a better quality of life for women and girl children.

10. HUMAN RESOURCES AND INDUSTRIAL RELATIONS

During the year under review, industrial relations remained generally peaceful at all our offices and establishments.

The HR priorities for the year 2014-15 were finalised as a part of the global HR budgeting process. The priorities included the institution of a global reward & recognition framework and focus on individual, regional, functional and global recognition systems. Your Company has improved its performance management process with focused training workshops for ''people managers''. A revised 360 degree feedback process is planned for the leadership level this year for improving leadership effectiveness.

11. CORPORATE GOVERNANCE AND MDA

A detailed report on Corporate Governance is separately attached together with a report on Management Discussion and Analysis (MDA). The MDA also covers the consolidated operations and reflects the global nature of our business.

12. BUSINESS RESPONSIBILITY REPORT

Vide its Circular dated August 13, 2012, Securities and Exchange Board of India (SEBI) mandated the inclusion of Business Responsibility Report (BRR) as a part of the Annual Report for top 100 listed entities based on their market capitalisation on BSE Limited and National Stock Exchange of India Limited, as on March 31, 2012. Pursuant to the above, the Stock Exchanges amended the listing agreement by inclusion of Clause 55 providing a suggested framework of a BRR, describing initiatives taken by the company from an environmental, social and governance perspective. The Company''s BRR is hosted on its website www. tataglobalbeverages.com. Any shareholder interested in obtaining a physical copy of the same may write to the Company Secretary at the Registered Office of the Company.

13. TATA BUSINESS EXCELLENCE MODEL (TBEM)

Progress has been made in implementing suggestions made by the Assessment team in the last assessment. The application for external assessment for 2014 has been submitted in June 2014.

14. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 217 (2AA) of the Companies Act, 1956 (''the Act'') and based on the representations received from the operating management, the Directors hereby confirm that:

i) In the preparation of the Annual Accounts for 2013-14, the applicable Accounting Standards have been followed and there are no material departures.

ii) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of Affairs of the Company at the end of the financial year and of the Profit of the Company for the financial year.

iii) 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. They confirm that there are adequate systems and controls for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) They have prepared the Annual Accounts on a going concern basis.

15. DIRECTORS

During the year 2013-14, Mr. R K Krishna Kumar, Mr. U M Rao and Mr. F K Kavarana stepped down as Directors from the Board of your Company upon reaching the retirement age in keeping with the Tata Group Guidelines on retirement of directors. The Board places on record its deep appreciation to Mr. R K Krishna Kumar, Mr. U M Rao and Mr. F. K. Kavarana for the excellent contributions made by them as Directors.

Mr. J S Bilimoria ceased to be a director consequent to his sad and untimely demise on 3rd May 2013.

As reported last year, Mr. L Krishnakumar was appointed as an additional director and as Executive Director by your Board with effect from 1st April 2013.

Mr. S Santhanakrishnan and Mrs. Ireena Vittal joined the Board as additional directors with effect from 28th May 2013 and 22nd October 2013 respectively.

Mr. Cyrus P Mistry retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-election.

As per Section 149(4) of the Companies Act, 2013, the independent directors of the Company are being appointed to hold office as independent directors for a period of five years with effect from 26th August 2014. Brief particulars and expertise of these directors and their other directorships and committee memberships have been given in the annexure to the Notice of the Annual General Meeting in accordance with the requirements of listing agreement with Stock Exchanges.

16. AUDITORS

The Members are requested to appoint the Auditors and fix their remuneration. Messrs. Lovelock and Lewes, the retiring Auditors have furnished certificate of their eligibility for re-appointment as required under the Companies Act, 2013.

17. COST AUDITORS

The Central Government has approved the appointment of M/s. Shome and Banerjee, 5A Nurulla Doctor Lane, 2nd Floor, Kolkata - 700 017 as cost auditors for the Company for conducting cost audit for the financial year 2013-14. The due date for fling the Cost Audit Report for the financial year ended 31st March 2013 was 30th September 2013 and the Cost Audit Report was filed by the Cost Auditors on 10th September 2013.

18. PARTICULARS OF EMPLOYEES

Information as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, forms part of this report. However as per the provisions of Section 219(1) (b) (iv) of the Companies Act,1956, the report and accounts are being sent excluding the statement containing the particulars to be provided under Section 217(2A) of the Companies Act 1956. Any member interested in obtaining such particulars may write to the Company Secretary for a copy thereof

19. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

A statement giving details of conservation of energy, technology absorption, foreign exchange earnings and outgo in accordance with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed to this report.

20. CONCLUDING REMARKS

The Directors are sure that the shareholders would like to join them in conveying their appreciation to all employees of the Company for their sincere and dedicated services during 2013-14.

On behalf of the Board of Directors

Mumbai, (CYRUS P MISTRY)

16th July, 2014 Chairman


Mar 31, 2013

The Directors are pleased to submit their fiftieth report together with the audited statement of accounts for the year ended 31st March 2013.

1. Highlights - Consolidated Performance

Your Company''s consolidated total operating income for the year ended 31st March 2013, at Rs. 7,351 crores, was 11% higher than the previous year reflecting strong performance in the branded tea and coffee businesses in major markets and excellent performance of the plantation and extraction businesses. Favourable translation impact also contributed to the growth in operating income. In the branded tea business we continue to be market leaders in India and Canada and among the leading brands in other major markets.

Group Profit from operations for the year at Rs. 663 crores is 26% higher than the previous year reflecting strong operating performance in most key markets. Contributing to this performance were improved profitability of branded coffee business, strong performance of the tea business in markets like I ndia and Australia, and favourable impact of cost interventions. The increase in Group Consolidated Net Profit for the year at Rs. 373 crores is 5% higher as compared to the prior year reflecting the improvement in performance offset by the impact of exceptional items.

We are delighted to report that our strategic partnerships with PepsiCo and Starbucks have recorded rapid strides during the year.

NourishCo Beverages, the equal-stake joint venture between Tata Global Beverages Limited and PepsiCo handles a portfolio of three products, the premium water brand Himalayan, Tata Water Plus and Ta ta Gluco Plus. The company is set to launch more innovations in enhanced and functional beverages.

Ta ta Starbucks Limited, the equal-stake joint venture between Starbucks Coffee Company and Tata Global Beverages Limited has rapidly scaled up and opened 12 Starbucks stores during 2012-13 in Mumbai and New Delhi.

Your Company will pursue a strategy of building on its strengths - unique competencies, differentiated offerings, appealing brands and significant scale in the three natural beverage categories of tea, coffee and water to emerge as one of the largest, most admired and successful natural beverage companies in the world.

2. Stand alone Financial Highlights

The Directors now present below the stand alone financial highlights for 2012/13:

Rs. in Crores

2012-13 2011-12

Total Revenue 2,439 2,129

Profit before finance cost, depreciation, exceptional items 351 326 and taxes Deduct:

Finance cost (32) (27)

Depreciation (16) (48) (12) (39)

Profit before exceptional items and taxes 303 287

Exceptional items (net) 18 83

Profit before tax 321 370

Provision for tax (62) (67)

Profit after tax 259 303

Add: surplus brought forward from previous year 486 367

Amount available for appropriation 745 670

Proposed dividend (133) (133)

Dividend distribution tax (21) (21)

Transfer to general reserve (26) (30)

(180) (184)

565 486

3. Dividend

The Directors are pleased to recommend for the approval of the shareholders a dividend of Rs. 2.15 per share on the paid-up equity share capital of the Company with respect to the financial year 2012-13 which is the same dividend that was declared last year. The total outgo on account of dividend, inclusive of taxes, for 2012-13 is Rs. 154 crores which represents a pay-out of 59% of the Company''s stand alone profits against the payout of 51% in the previous year.

4. Review of Subsidiary and Associate Companies

(i) a. As required under the listing agreement with the stock exchanges the audited consolidated financial statements of the Company incorporating all its subsidiary and associate companies prepared in accordance with applicable Accounting Standards are attached.

b. The Ministry of Corporate Affairs has by its notification dated 8th February 2011 granted a general exemption to companies, as per which, the provisions of Section 21 2 shall not apply in relation to subsidiaries, subject to the fulfillment of certain conditions. Accordingly the consolidated financial statements of the holding company and all subsidiaries duly audited by its statutory auditors have been presented and the individual accounts of each of the subsidiary companies have not been attached.

c. Any shareholder may either ask for a copy or inspect at the registered office a copy of the audited accounts of the subsidiary companies (where required to be prepared).

(ii) Tata Coffee Limited, your Company''s subsidiary, recorded excellent performance in 2012-13 registering growth in both top line and bottom line. Tata Coffee''s income from operations for the year 2012-13 at Rs. 598 crores was 18% higher than the previous year. Profit before exceptional items and taxes for the year ended 31 st March, 2013 was Rs. 141 crores against Rs. 96 crores in the previous year, representing an increase of 47% driven by excellent performance of the plantation activities and the Instant coffee operations. Profit before Ta x at Rs. 131 crores grew 26% over the previous year. The Profit earned by Ta ta Coffee in 2012-13 has been the highest in the history of the Company. The Directors ofTa ta Coffee Limited have recommended a final dividend of Rs. 7.50 per share which was in addition to an interim dividend of Rs. 5 per share thus resulting in a total dividend of Rs. 12.50 per share for the year 2012-13 against Rs. 11 per share in the previous year.

The instant coffee operations of Tata Coffee demonstrated sustenance of process centric approach with effective operational discipline. The prime focus was on consistent quality, customer centric initiatives a nd work force development. The division achieved record capacity utilisation across all product variants. The Instant coffee units of Tata Coffee are certified by FSSAI (Food safety standards authority of India), ISO 9001 and 22000:2005, Kosher (Toopran), Halal and SA - 8000 (Theni). The Theni unit won the certificate of appreciation from Ministry of Commerce and Industry, Govt. of India for highest growth in exports amongst the manufacturing units (TN and Pondicherry) for the year 2011-12.

In a key partnership milestone between Starbucks Coffee Company and Ta ta Coffee Limited, a roasting and packaging plant was inaugurated in Kushalnagar in Coorg, Karnataka in February 2013. This world-class facility enables roasting and packaging of green coffee beans for Starbucks stores in India.

(iii) Eight O''clock Coffee Company, USA, (EOC) a subsidiary ofTa ta Coffee, had a very good year recording significant increase in operating profits aided by lower coffee prices, prudent cost management and improved efficiencies. The business launched Eight''O Clock K-cups under a trademark licensing agreement with Keurig, which has been well received by consumers and are achieving distribution gains. Consequently Ta ta Coffee also reported a significant improvement in its consolidated performance.

(iv) Our B2B operations in USA, Tata Tea Extractions Inc, the Company''s wholly-owned subsidiary, which supplies customer specific products in the beverage industry reported higher operating earnings of Rs. 10 crores in 2012-13 compared with Rs. 6 crores in the previous year. Net earnings after tax increased to Rs. 12 crores in 2012-13 against Rs. 9 crores in the previous year. The increase in earnings was driven by favorable product mix, better price realisation and lower input cost.

(v) Mount Everest Mineral Water Ltd. (MEMW), the Company''s subsidiary, recorded higher revenue from operations in 2012-13 at Rs 22 crores against Rs. 19 crores in the prior year driven by higher volumes in the premium Himalayan brand and better realisations. In a highly inflationary environment, MEMW embarked on several initiatives aiming at cost optimisation resulting in reporting a profit of Rs. 0.54 crores against a loss of Rs 1.64 crores in 2011-12. As earlier reported, your Company acquired an additional 4.98% equity in MEMW during the year under review thus taking its holding in MEMW to 50.07%. MEMW is also focusing on export opportunities including enhanced distribution through its joint venture partners.

(vi) The consolidated Operating Income ofTa ta Global Beverages Group Limited, UK which substantially reflects the financial performance of the Tetley business and other international brands for the year 2012-13 was Rs. 3,440 crores, an increase of 7% over the prior year. Profit before exceptional items and taxes at Rs. 246 crores registered a 7% increase over 2011-12. Profit before and after tax at Rs. 263 crores and Rs. 225 crores respectively were also higher than the previous year. The increase in profitability is attributable to cost savings initiatives and improved performance in some markets and currency translation.

(vii) Estate Management Services Pvt. Limited, Sri Lanka (EMSPL), in which your Company owns 49% of the shares, is the holding company of Watawala Plantations Ltd. (WPL). EMSPL is one of the largest producers of tea and palm oil in Sri Lanka and amongst the most efficiently run in that country. Its marketing company, Watawala Tea Ceylon Ltd. (WTC) owns three key brands - "Zesta", " Watawala Kahata", and "Ran Tea" which together command over 30% market share of the branded tea market in Sri Lanka. Sri Lankan tea has good acceptance in several countries including Russia, South East Asia, Australia and the Middle East. The EMSPL group achieved record turnover and earnings during 2012-13 aided by one of the highest ever performance of WPL as well as consistent growth of WTC.

(viii) The turnover of Amalgamated Plantations Private Limited (APPL), in which the company owns a 49.66% stake, was Rs. 512 crores which was higher than in the previous year attributed to increased sales volume and better realisations. Profit after tax at Rs. 24 crores was significantly higher than prior year''s profit of Rs. 11 crores largely due to better realisations.

APPL''s growing focus on being ''environmentally aware'' resulted in converting its Hathikuli tea estate into an organic estate. This was appreciated by Sanctuary Asia Magazine at an award function held on 30th November 2012, at the National Centre for Performing Arts (NCPA), Mumbai. APPL was awarded the ''Wind under the Wings''in recognition of its inspiring contribution towards environment. APPL''s Hathikuli Tea Estate is now the largest Certified Organic integrated Farm in Asia manufacturing three varieties of tea and black pepper. In the process, the health of the tea bushes enhanced significantly; pepper yields are rising and soil biodiversity is greater than before. The benefits also include improved health of the workforce.

(ix) Kanan Devan Hills Plantations Private Limited (KDHP) in which your Company increased its stake to 28.92% during the year, had a reasonably good 2012-13 on the crop front with production of 20.23 million kgs against the previous year crop of 19.14 million kgs. Production could have been higher but for the dry weather that prevailed during the last quarter of the financial year under review. The price of tea during the year remained firm and towards the end of the financial year, owing to all-round drop in production peaked to levels never seen in the past. Prices have however since begun to soften.

KDHP recorded a profit after tax of Rs. 12 crores compared to Rs. 3 crores in the previous year. Operational results would have been substantially better but remained subdued due to full year impact of the steep increase in the wage rates that came into effect at the end of the previous financial year, almost doubling of fertiliser costs, and steep increase in power costs. Outlook for KDHP in the current year is cautiously optimistic.

5. NourishCo Beverages Limited - Joint Venture in Liquid Beverage Business 2012-13 is the third year of operations of NourishCo Beverages, the Joint Venture with PepsiCo formed to handle the sales, marketing and distribution of Himalayan natural mineral water and other water products through the PepsiCo distribution network. This significant partnership has enabled a higher visibility and availability of Himalayan across channels and markets.

NourishCo''s full portfolio of products comprising Himalayan, Tata Water Plus (TWP) in Pet / Pouch format and Ta ta Gluco Plus (TGP) have made good progress . Sales volumes of Himalayan have grown during the year attributable to robust distribution and launch of various print media and TV commercials. Himalayan today is widely distributed and available in major niche markets across India. TWP expanded its reach and distribution significantly during the year. The brand is now available in Tamil Nadu and Andhra Pradesh. During the year, TWP was also relaunched by NourishCo in new packaging with an appealing marketing campaign. Tata Gluco Plus, a glucose based drink is now available in three exciting flavours - lemon, orange and mango.

We are happy to report that Tata Water Plus, the country''s first nutrient drinking water, was the Official Hydration Partner for the 18th edition of the Aircel Chennai Open Tennis Tournament held in January 2013. Tata Water Plus fulfilled the hydration requirements of a large number of people during the event.

6. Tata Starbucks Limited

Your Company has always believed in creating memorable beverage experiences for consumers. The joint venture with Starbucks is yet another strong expression of this belief. Through Ta ta Starbucks, your Company offers the legendary Starbucks coffee experience, backed by the trust of the Ta ta name, to Indian consumers. The unique flagship stores are owned and operated by the joint venture and branded as "Starbucks Coffee - A Ta ta Alliance". During the year, Tata Starbucks have opened 12 stores in Mumbai and New Delhi.

Starbucks stores offer an extensive product portfolio that includes Starbucks signature espresso-based beverages, as well as Starbucks VIA Ready Brew and Starbucks Reserve coffees. The store will also offer Ta ta Tazo tea and Himalayan mineral water, and its broad food offering boasts a wide selection ofWestern favorites, as well as locally relevant flavours. In addition, there is a wide range of Starbucks merchandise and free Wi-Fi so customers can enjoy the unparalleled coffeehouse experience that Starbucks is known for globally

Deepening its commitment to community, Tata Starbucks Limited will work to improve the lives of coffee growing communities in the State of Karnataka. The joint venture, will work to support ''Swastha'', a school for children with special needs (in partnership with the Coorg Foundation). Additionally, Tata Starbucks Limited will work on initiatives including the promotion of responsible agronomy practices and training of local farmers, technicians and agronomists to improve their coffee-growing and milling skills.

7. MoU with Kerala Ayurveda Limited

Following the MoU signed with Kerala Ayurveda Limited (KAL) to develop beverage and food products around ayurvedic recipes, the Company and KAL are currently engaged in a collaborative Joint development effort towards researching and development of formulations for application in beverages and water categories, aimed at improving health and wellness.

8. Marketing Alliance with SIGCC

Your Company has forged a marketing alliance with South Indian Green Cardamom Company (SIGCC) for the launch of their first branded product ''Spice Mist.''SIGCC is a company founded, managed and run by the growers of spices themselves. Spice Mist has been launched in two varieties- cardamom and pepper. It is the first nationally branded whole spice in the Indian market. The products have been test marketed in a few cities. Through this alliance, SIGCC can sell Spice Mist through Tata Global Beverages''wide distribution network. This will enable the spice growers to get a better price for their products by selling directly to the consumer instead of through intermediaries. This alliance represents yet another move by your Company to add value to India''s plantation community.

9. Review of Activities

A. The Tea Industry

India''s tea output stood at 1,112 million kgs in 2012 against 1,116 million kgs in 2011. The drop in crop was led by South India. Consumption increased by 1.9% to 890 million kgs in 2012 versus 873 million kgs in 2011 resulting in lower inventories. As a result tea prices strengthened, increasing by Rs. 18 /kg over 2011. The outlook for 2013-14 is for prices to be fully firm to dearer if crop intakes follow seasonal norms.

Tea Exports from India declined by 14 million kgs in 2012 mainly due to the higher price levels with teas from other origins looking more attractive price-wise. Import of tea into India in 2012 was only marginally lower than the previous year.

B. Domestic Branded Tea Operations

Branded operations continued its excellent performance ending the year 2012-13 with a 7% growth over the previous year in volume and 16% by value. The national brands recorded a 7% growth over the previous year. All the national brands performed well, in spite of significant price increases taken on all the brands in view of increased commodity cost, and notwithstanding the fact that some competitor brand held onto constant consumer prices in the first quarter and moved prices up only thereafter.

The Regional brands also performed well, registering good growths over last year led mainly by Chakra Gold and Kanan Devan which recorded impressive growth during the year.

Your Company maintained its volume and value leadership position with a MAT volume and value share of 20.5% and 22.2% respectively, well ahead of its major competitors.

Tata Tea established itself as a thought leader in the tea category in India by positioning tea as a medium for social awakening through the Jaago Re campaign. Jaago Re helped build a differentiated positioning for brand Ta ta Tea - while tea may wake you up, Tata Tea awakens you! The campaign has continuously evolved, from the time it was launched in 2007. However the common thread underlying the success of its various avatars is Jaago Re''s ability to identify social trends long before they become fully evident and call out to the nation to awaken to it. Since inception the Jaago Re campaign has won various laurels and recognitions. Tata Tea achieved volume leadership of the branded tea category towards the end of 2007 and value market leadership in 2011. This makes Jaago Re a campaign which delivers strong business results while doing social good through its overall message.

Tata Tea''s Jaago Re campaign won the ''Cause Marketing Campaign'' a ward at the Forbes India Philanthropy Awards (FIPA) 2012. FIPA announced ten awards for people and organisations who have been change makers, innovators and executors in the field of philanthropy. The award is in recognition of the Jaago Re campaign''s success in integrating ''cause'' with '' brand.''

A new Jaago Re campaign featuring Shah Rukh Khan was launched in record time in the month of March to coincide with International Women''s day and more importantly tap the sentiment of the nation towards women. With a strong call for a ''choti shuruaat'' towards putting women first, we believe this will go a long way in highlighting this important social cause, and also strengthening the equity of the brand.

The Gaon Chalo initiative aimed at promoting distribution in the rural areas has been a special initiative undertaken by your Company and has been very successful over the years. The initiative commenced about 5 years ago and has made rapid progress. The core of the solution to enhance rural penetration was to create synergies among the local communities, in particular tying up with Non Government Organisations (NGO) who are well established in most villages across the country. The Gaon Chalo initiative currently covers many states across the country.

C. International Branded Operations

The UK market witnessed decline in volumes in the backdrop of decline in black tea category, increased competitive intensity and a shift in consumer behavior. However growth in green tea and specialty teas continues to be strong. Tetley recorded growth in green tea volumes as well as Redbush variety driven by a combination of focus on specific market segments, good merchandising efforts and the effect of new marketing campaigns. Your Group increased its investment behind brands to support volumes and this strategy has helped in the growth in green teas and other specialty teas. Difficult trading environment prevailed in Europe due to competitive intensity. Your Group is in the process of restructuring its business model in certain geographies with a view to improving margins.

Profitability of the US operations was significantly higher than the prior year driven by lower coffee cost, effective cost management and royalty income under the licensing arrangement with Keurigs for the coffee - pods. During 2012-13, Eight O Clock Coffee (EOC) launched coffee-pods (K-cups) to fit in existing Keurig brewers for the US market, as part of a licensing deal with Green Mountain Coffee Roasters Inc. EOC K cups have met with good market response.

Canadian tea business was impacted by competitive intensity and restructuring of distribution. Trade activation programmes were implemented to support incremental activities and regain volumes. The region implemented price increases in all major accounts under difficult and competitive market conditions. The Canadian business launched Tetley tea pods (T-Discs) for the Ta ssimo brewing system as part of a licensing deal with Kraft.

Australia had a good year with an improvement in the underlying income and profit from operations over the prior year driven by strong distribution performance and consumer programmes coupled with successful new products launched last year, namely the new Chai Latte and Specialty products . The business continues to invest behind brands to protect black tea volumes and support new product launches in the market in categories like speciality teas and Chai Latte.

In Pakistan, the business introduced Tetley Gold with an improved blend, in two select regions. The consumer response to the product has been very encouraging.

To commemorate 175 years of the iconic Tetley brand, the UK''s first tea table book titled ''You, me and a cup of tea'' was created by Tetley in partnership with CLIC Sargent, UK''s leading children and young people''s cancer charity. The book features a unique collection of 175 memorable teatime stories from celebrities, Tetley Tea fans and tea drinkers from across UK. Young people and their families affected by cancer, who have been supported by CLIC Sargent, have shared their stories in the book as well and all proceeds from the sales of the book will go to the charity.

D. Tea Extractions

The division''s operations were stable and exports of I nstant tea were made largely to US, Europe and Far Eastern countries. Profitability of the division improved during the year driven by improved realisation due to favourable foreign exchange. The Food Safety Management system of the division has been recommended for FSSC 22000 certification by Bureau Veritas, the certification agency. This certificate is globally recognised under the Global Food Safety Initiative (GFSI) and is a key consideration for procurement by many of the customers in USA, Europe, Japan etc.

Zhejiang Ta ta Tea Extraction Company Limited, China which is a subsidiary of your company, is a Joint Venture with Zhejiang Tea Group Company Limited, China. The JV was set up for the manufacture and marketing of Instant tea, tea Polyphenol and tea concentrates. The company commenced its production of green instant tea products after initial delays and has now started trial exports to USA. The trial commercial production of green Tea Polyphenols commenced during the current year, with the first order to be dispatched during the early part of the next fiscal.

E. Exports

The FOB value of exports during 2012-13 was Rs. 152 crores, against Rs. 157 crores in the previous year. The tea bag unit at Kochi performed well and exported its products to new markets of Nigeria, US and Sri Lanka. The Instant Tea unit is working with the commercial team to develop SKUs for new markets. The Export Credit Guarantee Corporation (ECGC) of India has recognised your Company as the 3rd most valued exporter client of the ECGC Kochi branch.

F. Plantation Operations

The crop production in 2012-13 at our Pullivasal and Periakanal Estates was marginally higher in 2012-13 at 20.73 lakh kgs against 20.62 lakh kgs in the previous year. The yield achieved was also higher than the previous year by 1%. Productivity at 50.06 kgs in 2012-13 was however lower at the two estates compared to the previous year due to unfavourable weather conditions. The year 2012-13 started with drought in the region and although the estates received some rainfall later, it was not adequate to help improve crop growth and productivity.

G. Community Development, Employees'' Welfare and Environment Conservation

Your Company continues the legacy of giving back to society through its focus on community development and social welfare initiatives, particularly through its engagement with, the General Hospital, Srishti Welfare Centre and High Range School, in Munnar.

The General Hospital continued to provide quality healthcare which includes free treatment to the Muthavan tribal community. The hospital now also has a visiting Ophthalmologist and Orthopedic Doctor thereby ensuring easy access and higher availability of basic investigatory and interventional facilities in the locality.

The High Range School is functioning smoothly with CCE (Continuous and Comprehensive Evaluation) being actively pursued as a part of routine curriculum. CBSE Class XII and X Results have been consistently good a nd the fi rst two toppers in the Class XII examinations last year are children of general workers of KDHP and your Company. We are also providing scholarship for university education to the workers children along with entrance coaching for Plus Two Science-stream students.

The Srishti Welfare Centre runs various programmes for the education, training and rehabilitation of children and young adults with special needs. The centre now comprises of 5 units - The DARE School, DARE Strawberry Unit, Athulya, Aranya and The Deli. Trainees and Programme coordinators of each unit were given opportunities to increase their knowledge and functional skills by interacting with welfare units outside their region. The unit also participated in exhibitions, national and international, where their products received much appreciation. Through Srishti the Company has helped these people become productive and respected members of the community.

Your Group has a clear focus and strategic approach towards driving Affirmative Action (AA) in India. In pursuance of this initiative, your Company is committed to directly conducting and supporting initiatives for socially and economically disadvantaged sections in the country at large, and specifically the Scheduled Caste and Scheduled Tribe communities in India. The AA initiative revolves around the four Es - Employment, Employability, Entrepreneurship and Education. As part of the initiative, your Company in collaboration with the renowned Bangalore based NGO, Unnati, sponsored 52 students from Scheduled caste and Scheduled Tribe communities who have been trained in technical skills and are now employed in various companies. The NGO provides skill building in the areas of retailing, hospitality, front office, Information Technology, etc.

The model of entrepreneurship follows inclusive growth by partnering with the rural communities, which include AA community. Gaon Chalo initiative has provided financial stability and growth to the economically backward communities and at the same time expanded the reach of our brands.

Munnar in India has long been the hub of your Company''s education initiatives in India. At the High Range School, the workers''children from both KDHP and your Company are given free and subsidised education, irrespective of their community. Apart from the High Range School, the company undertakes special education through Project DARE.

10. Human Resources and Industrial Relations

During the year under review, industrial relations remained generally peaceful at all our offices and establishments.

Our focus on attracting and nurturing talent and developing capabilities has remained sharp during the year, preparing the business for future growth. One of the development initiatives highlighted within the Organisation Resource Review Process (ORR) was influencing and networking. A global two day program was developed and piloted in the EMEA (Europe, Middle East & Africa) region. A further program was also conducted in the US in March this year. In addition we are also developing a senior leadership module for Influencing and networking.

11. Corporate Governance and MD and A

A detailed report on Corporate Governance is separately attached together with a report on Management Discussion and Analysis (MDA). The MDA also covers the consolidated operations and reflects the global nature of our business.

12. Tata Business Excellence Model (TBEM)

Your Group was assessed under the Tata Business Excellence Model on a consolidated basis for the second successive year in 2012-13. The group has achieved a n overall improvement in score in the a ssessment done in 2012-13. The external assessment team shared their findings on the Group''s TBEM assessment with your senior management team in early February 2013, and this was also tabled to the Board of Directors, alongwith an action plan for the future. The feedback from the assessment gives us an opportunity to understand our strengths and areas for improvement. This also serves as a means to learn, manage and improve organisational performance, as we drive towards excellence in all parts of our business.

13. Directors'' Responsibility Statement

Pursuant to the requirement of Section 217 (2AA) of the Companies Act, 1956 (''the Act'') and based on the representations received from the operating management, the Directors hereby confirm that:

i) In the preparation of the Annual Accounts for 2012-13, the applicable Accounting Standards have been followed and there are no material departures.

ii) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the financial year.

iii) 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. They confirm that there are adequate systems and controls for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) They have prepared the Annual Accounts on a going concern basis.

14. Directors

During the year Mr. R N Ta ta stepped down as Director and Chairman of the Board of your Company upon his reaching the retirement age in keeping with the Tata Group Guidelines on retirement of directors. Mr. Tata in his long association of over 21 years, had led the Company with great distinction, providing guidance and direction, in its quest for growth and excellence. Mr. Tata''s deep involvement in the Company''s affairs and his outstanding leadership helped overcome several challenges which the Company went through during this period. In matters connected with various aspects of the Company''s strategy and operations, Mr. Ta ta had provided significant direction and guidance which enabled the company to transform from an Indian tea company into a global beverages Company focused on natural beverages.

Mr. Cyrus Mistry was appointed to the Board of your Company as Director on 22nd June 2012 and later was also appointed as Chairman of the Board on 20th November 2012. Mr. Mistry has assumed the leadership of the Company at a historic moment, and his taking over as Chairman will help bring in a fresh new perspective in guiding the Company towards new horizons of achievement.

As an expression of its sincere admiration and acknowledgement of the visionary leadership provided by Mr. Tata and to also mark the occasion of Mr. Cyrus Mistry taking over as the Chairman of the Board, your Company has instituted two Annual Scholarships at the High Range School, Munnar, one to mark Mr. Tata''s stepping down and the other to mark Mr. Mistry assuming the Chairmanship. These will be called as "The Ratan Ta ta and Cyrus Mistry Scholarship" a nd will be awarded to two top ranking students of the school, who are children of plantation workers, for pursuit of a professional undergraduate college education.

Mr. Arun Gandhi stepped down as Director with effect from 15th March, 2013 upon his reaching the retirement age in keeping with the Tata Group Guidelines on retirement of directors. Mr. Gandhi played an active and key role in several acquisitions undertaken by the Company, and also participated actively in various deliberations of the Board of Directors, including those relating to strategy, financial and operational controls. Your Directors wish to record their sincere appreciation for the advice and guidance provided by Mr. Gandhi during his tenure as a Director.

As reported last year, Mr. P. T Siganporia retired as Director and Managing Director of the company with effect from 30th June 2012 and Mr. Harish Bhat took over as the Managing Director with effect from 1 st July 2012.

Mr. L Krishnakumar was appointed as an additional Director and as Executive Director by your Board with effect from 1st April 2013. Mr. L Krishnakumar has been associated with the Tata Group since 2000 - initially with The Indian Hotels Company Limited as its Vice President - Finance and since 2004, he has been with the Company as the Group Chief Financial Officer. The appointment and remuneration of Mr. L Krishnakumar will come up for approval of the members at the forthcoming Annual General Meeting Mr. L Krishnakumar is a Chartered Accountant and has also obtained professional qualifications in Cost Accountancy and Company Secretarial Services and has over 30 years experience in a variety of industries including consumer goods, hotels, manufacturing and consulting. Mr. L Krishnakumar is also a Director on the Board of several overseas subsidiaries of your Company.

Mr. S Santhanakrishnan was appointed as an additional Director by your Board with effect from 28th May 2013. Mr. S Santhanakrishnan, FCA is the partner of PKF Sridhar & Santhanam, Chartered Accountants and has more than 30 years of experience in Finance, Accounts including IFRS, Strategy & Planning, Global Assurance, Corporate laws and Consulting. He is a member of the Central Council of the Institute of Chartered Accountants of India (ICAI). He is actively involved in numerous industry oriented initiatives of the Reserve Bank of India and the Ministry of Corporate Affairs. The appointment of Mr. S Santhanakrishnan will come up for approval of the members at the forthcoming Annual General Meeting.

Mr. F K Kavarana, Mrs. Ranjana Kumar and Mrs. Mallika Srinivasan retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-election.

Brief particulars and expertise of these Directors and their other directorships and committee memberships have been given in the annexure to the Notice of the Annual General Meeting in accordance with the requirements of listing agreement with Stock Exchanges.

All these directors have filed Form DD-A with the Company as required under the Companies (Disqualification of Directors under Section 274(1)(g) of the Companies Act, 1956) Rules, 2003.

Your Directors are deeply distressed to report the sad and untimely demise of Mr. J S Bilimoria on 3rd May 2013. Mr. Bilimoria joined the Board of your Company in January 2009 and was also the Chairman of the Audit Committee since January 2010. Mr. Bilimoria made significant contributions to the deliberations at both the Board and Audit Committee meetings as well as at other Committees of the Board of which he was a member. We offer our condolences to Mrs. Bilimoria and her other family members on this tragic and untimely loss.

15. Auditors

The Members are requested to appoint the Auditors and fix their remuneration. Messrs. Lovelock and Lewes, the retiring Auditors have furnished certificate of their eligibility for re-appointment as required under the Companies Act, 1956.

16. Cost Auditors

The Central Government has approved the appointment of M/s. Shome and Banerjee, 5A Nurulla Doctor Lane, 2nd Floor, Kolkata - 700017 as cost auditors for the Company for conducting Cost Audit for the financial year 2012-13. The due date for filing the Cost Audit Report for the financial year ended 31st March 2012 was 31st January 2013 and the Cost Audit Report was filed by the Cost Auditors on 27th December 2012. The due date for filing the Cost Audit Report for the financial year ended 31st March 2013 is 30th September 2013.

17. Particulars of Employees

Information as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, forms part of this report. However as per the provisions of Section 219(1) (b) (iv) of the Companies Act,1956, the report and accounts are being sent excluding the statement containing the particulars to be provided under Section 217(2A) of the Companies Act 1956. Any member interested in obtaining such particulars may write to the Company Secretary for a copy thereof

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

A statement giving details of conservation of energy, technology absorption, foreign exchange earnings and outgo in accordance with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed to this report.

19. Concluding Remarks

The Directors are sure that the shareholders would like to join them in conveying their appreciation to all employees of the Company for their sincere and dedicated services during 2012-13, without which such commendable performance would not have been possible in a relatively challenging global environment.

On behalf of the Board of Directors

Mumbai, (CYRUS P MISTRY)

28th May, 2013 Chairman

 
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