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ANNUAL REPORT 2015-16 Contents INSTANT DELIGHT. CONSISTENT BREW. GLOBALLY. ANNUAL REPORT 2015-16 Contents Corporate Overview 2 Message from the MD & CEO 16 Tata Coffee Product Portfolio 4 The World of Instant Coffee 18 Financial Performance 8 Growth of Instant Coffee 20 Profiles of the Board of 10 Tata Coffee in the Instant Directors Coffee Segment 22 Tata Coffee’s Certifications 13 Sustainability at Tata Coffee 23 Community Initiatives 14 Global Footprint Statutory Reports 25 Key Highlights 69 Compliance Report on 26 Notice Corporate Governance 35 Directors’ Report 85 Management Discussion & Analysis Financial Statements Standalone Consolidated 89 Independent Auditor’s 118 Independent Auditor’s Report Report 94 Balance Sheet 122 Consolidated Balance Sheet 95 Statement of Profit and Loss 123 Consolidated Statement of 96 Cash Flow Statement Profit and Loss 97 Notes on Accounts 124 Consolidated Cash Flow Statement 126 Notes on Accounts 2 Coffee is increasingly being consumed the world over for its refreshing energy and its captivatingly enticing aroma. What used to be the sole preserve of a few select consumers is now becoming a global phenomenon. Instant Coffee has played a significant role in the democratisation of coffee as a beverage. Our Mission More and more consumers in emerging Create distinctive long-term markets are embracing coffee which is value for all stakeholders driving its growth. with Coffee and Allied Plantation products embracing A steaming cup of Instant Coffee is sustainable practices. convenient and delicious. In today’s day and age, consumers are looking for easy- to-prepare, great-to-taste options. Instant Coffee fits the bill perfectly on both counts. Making a cup of coffee is easy and quick, and there is consistency of taste, cup-after- cup. For Tata Coffee, the Instant Coffee business constitutes over half of our total business on a standalone basis, besides providing stability and consistency to growth and performance. It allows us to address customer requirements better, given the possibility of customisation. Message from the MD & CEO THE GLOBAL MARKET FOR INSTANT COFFEE HAS MORE THAN TRIPLED IN SIZE SINCE THE YEAR 2000 AND IS SLATED TO CONTINUE ITS GROWTH. AND GROWTH IS ANTICIPATED IN LARGE SPOONFULS IN THE EASTERN HEMISPHERE, WHERE THE COFFEE HABIT IS GROWING. Dear Shareholders, Your Company is proud to be one of the finest gradually helped bridge this gap. In fact new manufacturers and marketers of Instant Coffee formats with flavours and mixes are enhancing Instant Delight. Consistent across the world. the consumer’s romance with Coffee, and Brew. Globally – this defines making Instant Coffee increasingly desirable. our Instant Coffee business The Global market for Instant Coffee has more In many countries and customer segments, a than tripled in size since the year 2000 and is hot, steaming cup of delicious Instant Coffee is at Tata Coffee. The words slated to continue its growth. And growth is now the beverage of choice. ‘Instant delight’ conjure up anticipated in large spoonfuls in the Eastern hemisphere, where the coffee habit We at Tata Coffee are well placed to partake in the vision of happiness, is growing. this growth in the Instant Coffee segment. Our right here right now, when Instant Coffee range spans the category, from the consumer wants it. The consumer has faced a “coffee choice Spray Dried, to Agglomerated to Freeze Dried. dilemma” for many years now – Instant Coffee Even in these segments, our drive to innovate That is what our Instant offers great convenience but the taste profile has helped us create chicory and malt based Coffee delivered in the last is different from Roast and Ground freshly mixes. Hence, we have coffee offerings to brewed coffee, which is more involved in serve a wide range of consumer palates. financial year – 2.5 bn cups its making and often commands a taste of it, globally! premium. Over the years, technology has 2 Corporate Overview Statutory Reports Financial Statements Instant Coffee has an interesting history. It This is yet another factor that our consumers started as a convenience to satisfy the coffee bear in mind, when they buy and use our needs of soldiers involved in the World Wars. Instant Coffee. It has come a long way from those historic beginnings, and is now available to consumers Our plantations are Rainforest and UTZ SUSTAINABILITY RUNS IN OUR DNA in millions of cafes and stores the world over. certified. We invest in rain water harvesting AND WE EXTEND EVERY POSSIBLE extensively which meets over 50% of our MEANS TO PRODUCE OUR Our coffees are prepared from carefully coffee plantation irrigation requirements. INSTANT COFFEES RESPONSIBLY. selected beans, chosen for their unique FOR EXAMPLE, OVER 65% OF THE attributes of flavour, mouthfeel and aroma All this emanates from our Company’s mission, ENERGY CONSUMED BY OUR THENI that contribute to creating unique and which is to ‘Create distinctive long-term FACTORY IS GENERATED THROUGH customer specific blends. Our ingredients value for all our stakeholders through coffee RENEWABLE SOURCES. come together with over 6,000 man hours, and allied plantation products embracing and close involvement across the organisation, sustainable practices.’ contributing to a single winning blend. Our advanced technology, processes and deep While our heads are focused on creating category understanding ensure the consumer stakeholder value, our hearts are aligned has a consistent experience cup after cup. towards adding value to the environment and the community, which is the foundation on Last year we successfully partnered with our which our Company is built. holding Company, Tata Global Beverages, to develop a unique Instant Coffee product “Tata The Tata Coffee team contributed over 800 Coffee Grand” for the Indian market. It has volunteering hours to the community last been very well received by Indian consumers, year. This does not include our contribution to and is an excellent illustration of the product the community during the unfortunate flood innovation that we lead in this space. catastrophe that struck Chennai last year. We continue our efforts to support the differently Sustainability runs in our DNA and we extend abled through the unique Swastha School in every possible means to produce our Instant Coorg. Coffees responsibly. For example, 65% of the energy consumed by our Theni factory We are proud of what we do at Tata Coffee. is generated through renewable sources. In I am sure each one of you is. May I take this addition, we use Electrostatic Precipitators in opportunity to offer a special word of thanks our boiler unit that help remove fine particles to all members of the team in Tata Coffee from the exhaust and thus protect the and all our stakeholders, who support me environment. in making this voyage come alive. We look forward to continuing to create distinctive We received the ”Commendation for value for you, every single day and in every Significant Achievement” at the CII-ITC single cup of coffee. Sustainability Awards 2015 for our Theni site and were awarded second position in the Sanjiv Sarin Food Processing Sector at the National Managing Director & CEO Energy Conservation Awards 2015 for our Toopran site. ANNUAL REPORT 2015-16 3 The World of Instant Coffee Consumers gravitate to Instant Coffee for its convenience, diversity of form, flavours and easy access. It is especially a beverage of choice for new coffee drinkers. Little wonder then that Instant Coffee is one of the fastest growing beverage categories in the world today, especially in emerging economies. Instant Coffee understands the need for a quick cuppa and helps marry convenience with organoleptics to please the senses. Commonly known as soluble coffee, Instant Coffee harnesses the flavour of the bean into a simple drink. Stir and whirl, a delicious cup of coffee is ready. Corporate Overview Statutory Reports Financial Statements Instant Coffee has a very interesting history. It dates back to nearly 250 years; both Instant Coffee and its early origins have travelled the world since then and have garnered much popularity. 1771 1853 1890 1901 Britain - Earliest version of USA - First American product New Zealand - David Strang Japan - First successful technique Instant Coffee was invented. was in cake form. It was of Invercargill invented and for stable powdered product developed and tested during patented Instant Coffee. invented by Sartori Kato, who the Civil War. used a process developed for making instant tea. 1910 1914 -1918 1938 1964 USA- George Constant Louis In World War I, caffeine Nestle co-dried coffee extract Biggest innovation in Instant Washington acquired a patent consumption on the with soluble carbohydrate to Coffee technology - Freeze to mass produce Instant battlefield was boosted by improve the taste. Dried coffee – enabling Coffee. George Washington Coffee, infusion of fresh coffee aroma nicknamed ‘cup of George’. into the product. Source: ineedcoffee.com Instant Coffee is made from Freeze Dried How do coffee beans that have A crystallised form which been roasted and ground. offers taste and aroma you like The ground beans are then closely resembling Roast and extracted under pressure to Ground coffee. This is the your Instant recover the coffee flavour most premium form of Instant and aroma. The coffee extract Coffee. Coffee? is then dried in one of three distinct ways, each of which Agglomerated provides a unique experience A granular form which to the consumer. The three dissolves easily. basic types of Instant Coffee are - Spray Dried The fine powder variety. This is also available in variants like 3-in-1 mixes, and blends with additional flavourings. ANNUAL REPORT 2015-16 5 A typical Instant Coffee Value Chain Farm level - coffee Beans are exported Bought by Instant beans are produced to destinations the Coffee manufacturers world over THE INSTANT COFFEE SEGMENT HAS THE MOST CONSOLIDATED AND COMPETITIVE LANDSCAPE OF ALL HOT DRINKS, DUE TO THE BRAND EXPERIENCE THAT CONSUMERS HAVE COME TO EXPECT.
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