TATA COFFEE LIMITED

INTRODUCTION
(Company was incorporated as a public limited company under the Indian Companies Act, 1913 as Consolidated Coffee Estates (1943) Limited on 19th November 1943. The name of the Company was changed to Consolidated Coffee Limited w.e.f. 12th June 1967 and was further changed to Tata Coffee Limited w.e.f. 11th August, 2000 and a fresh Certificate of Incorporation was obtained from the Regist of Companies, Karnataka, Bangalore)

COMPANY OVERVIEW
The Company is a Public Limited Company and is a subsidiary of Tata Tea Limited. The Companys activities range from growing of coffee and tea to the manufacture and marketing of value added coffee products including roasted and ground coffee and instant coffee besides timber value added operations. The coffee operations of the Company are concentrated in the southern part of Karnataka i.e., Coorg, Hassan and Chikmagalur Districts. The Company owns 18 coffee estates and 7 tea estates having an aggregate acreage of 31613 Acres. These include the recent acquisition of the Tata Tea Limited Estates in Anamalais. Apart from coffee, pepper and cardamom is also grown onits estates as inter-crops. The Company is one of the largest exporters of coffee beans. The Company has a curing works, pepper processing unit and a roasting & grinding plant at Kushalnagar. The Company also deals in plantation requirements such as fertilizers, chemicals and estate equipment. The Company has timber reserves, which are used as a shade for coffee plantations. As part of its plans to optimize the utilization of its captive timber resources, the Company has embarked into Timber Value-Addition, the focus being on moving up the value chain. Tata Coffee is also one of the largest exporters of instant coffee from India. The Company has two instant coffee manufacturing facilities one in Toopran, Andhra Pradesh and the other at Theni, Tamil Nadu both of which are 100% EOUs. The Company grows coffee in its own estates , processes the beans, exports green coffee and retails coffee under its own brands in the domestic market. Its activities range from the growing and curing of coffee to the manufacture and marketing of value-added coffee products. The Company is present in all segments of the product matrix. It has brands like Mr. Bean in the premium filter coffee market, Tata Caf and Tata Kaapi in the Institutional segment and Mysore Gold and International Tata Caf in the Instant coffee export segment. The Companys out of home initiatives include the Jiffy vending machines.

BOARD OF DIRECTORS

y y y y y y y y y y

R.K. Krishna Kumar (Chairman) R. Govindarajan P.T. Siganporia U.M. Rao Prof. A. Monappa Ms. Sangeeta Talwar Venu Srinivasan S. Santhanakrishnan T. V. Alexander Hameed Huq (Managing Director)

ANALYSIS OF ACOUNTING POLICIES Basic of accounting

The financial statement are prepared at going concern under the historical cost convention on an accrual basis and comply on in all the material respects with the General Accepted Accounting Principles in India and the relevant provision of the Companies Act, 1956, except those items covered under ACCOUNTING STANDARD - 30 on Financial instrument: Recognition and Measurement which are measured at fair value.

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

Depreciation and Amortization

Depreciation on Fixed Assets is provided at the rates stated in Schedule XIV of the Companies Act, 1956, on written down value method except that Fixed Assets at Instant Coffee Division, Anamallais, Corporate Office and certain Fixed Assets at the Curing Works under the straight-line method. Leasehold improvements are being depreciated over the lease period. In respect of certain assets, depreciation has been provided at the rates arrived at based on its estimated useful life or as per the Rates prescribed in Schedule XIV whichever is higher. (Refer Schedule 4) Increase in value of Fixed Assets upto 31.03.2007 due to Foreign exchange fluctuations is depreciated over the balance residual life of the Asset.

Valuation of Inventories
Valuation of Stock is dealt as under: - Raw Materials and Stores & Spares At weighted average cost - Coffee, Instant Coffee, Tea, Pepper, Plywood and Trading Stock. At lower of cost and net realizable value. - Work-in-Progress At lower of cost and net realizable value. - Cardamom and Other Produces At since realized/estimated realizable value.

BALANCE SHEET OF TATA COFFEE LIMITED AS AT 31ST MARCH 2010

2010 (Rs. In lakh) SOURCES OF FUNDS Shareholders fund

Share Capital Reserve & Surplus

2009 (Rs. In lakh) 1867.70 28405.60 14666.51 3000.00 952.39 48892.20

1867.70 34120.26 9864.22 5000.00 1460.62 52312.80

LOAN FUND
Secured loans Unsecured loans

Deferred Tax Liability(NET)

TOTAL APPLICATION OF FUND
Fixed Assets Gross Block Less: Depreciation Net Block Capital Working In Prgs.(includes advances)

Investments Current Assets, Loans & Advances

Inventories Sundry Debtors Cash and Bank Balance Others Current Assets Loans & Advances

32815.71 10267.12 22548.59 770.32 23318.91 14,677.62 11,674.88 2,502.20 2,024.21 125.06 6,980.24 23,306.59

32570.61 9306.99 23,263.62 1110.51 24,374.13 14,677.62 12,545.97 2,663.63 945.82 91.87 7,030.80 23,278.09

TOTAL CURRENT LIABILITIES AND PROVISIONS

Current Liabilities Provisions

(A)

TOTAL NET CURRENT ASSETS TOTAL

(B) (A-B)

6,577.94 2,412.38 8,990.32 14316.27 52312.80

11,535.60 1,906.0 13,441.60 9836.49 48892.20

PROFIT AND LOSS ACCOUNT (FOR THE YEAR ENDED 31ST MARCH 2010)

2010 (Rs.In lakh) INCOME

Sales Less: Excise

2009 (Rs.In lakh) 31309.31 88.11 2457.42 931.23 33678.62 34123.99 1222.29 (4508.26)

32814.45 66.28 4594.26 722.20 37342.43 29551.19 1138.72 1652.60

Other Incomes

TOTAL EXPENDITURE
Depreciation Accretion)/ Decretion of Stock

TOTAL PROFIT BEFORE TAX

Profit for tax- Current Prior year Deferred mm Fringe benefit

32342.51 4999.92 1292.71 508.23 3198.98 842.15 4041.13

30838.02 2840.60 814.00 82.18 80.00 1864.42 1330.88 3195.30

PROFIT AFTER TAX

ADD: Surplus brought forward from previous year

PROFIT AVALIABLE FOR APPROPRIATION APPROPRIATION

General reserve 1 General reserve 2 Debenture redemption reserve account

319.90 284.42 383.29 987.61

186.44 259.99 595.65 1042.02 1120.62 190.45 1311.07

Dividends :
Final(proposed) Tax on Dividend

1400.78 232.65 1633.43

Surplus carried to Balance Sheet Significant Accounting Policies / Notes on Accounts EPS - Basic & Diluted (on Rs.10 per Share)..................... (Refer Note B 15 of Schedule 12)

1420.09 Rs. 17.13

842.15 Rs. 9.98

FINANCIAL RATIOS AND THEIR INTERPRETATION

Different Financial Ratios TYPES OF RATIO Current ratio = Current Assets Current Liabilities Acid test or Quick ratio = Quick assets Current Liabilities Debtor Turnover ratio = sales Average debtors INTERPRETATION It measures the short term liquidity of a firm. A firm with a higher ratio has better liquidity. A ratio of 2:1 is considered safe. It measures the liquidity position of a firm. A ratio of 1:1 is considered safe. This ratio measures how fast debts are collected. A high ratio indicates shorter time lag between credit sales and cash collection.

Debt to Total capital ratio = Long term debt Total equity

yIt indicates what proportion of the permanent capital of a firm consists of long-term Debt. yA ratio 1:2 is considered Safe. yIt measures the share of the total assets financed By outside funds. yA low ratio is desirable for

creditors. yIt shows what portion of the total assets is financed by the owners capital yA firm should neither have a high ratio nor aLow ratio. Gross Profit margin = Gross profit* 100 Sales yIt measures the profit in relation to sales. yA firm should neither have a high ratio nor a low ratio. yIt measures the profitability of the total funds per investment of a firm.

Return on Assets (ROA) = Net Profit after Taxes * 100 Net worth

Return on Capital Employed (ROCE) = (Net Profit after Taxes) * 100 capital employed

yIt measures profitability of the firm with respect to the total Capital employed. yThe higher the ratio, the more efficient use of capital employed

Earnings per Share (EPS) = Profit after tax Number of equity Shares

It measures the profit available to the equity holders on a per share basis

Fixed Assets turnover = Cost of Goods Sold Fixed Assets

Higher the ratio, more efficient is the firm in utilizing Its assets.

Analysis of Financial Ratios for 2010

Sl. No 01.

Ratios

Particulars (Rs in crore)

Values

Remarks

Current Ratio = Current Assets Current Liabilities

Current Assets =23306.56 Current Liabilities =8990.32 2.59 Times

It is satisfactory

Acid test or Quick ratio = 02. Quick Assets Current Liabilities

Quick Assets = 11631.68 Current Liabilities =8990.32 1.29 times

It is satisfactory

03.

Assets turnover ratio = sales average total assets

Sales = 32814.45 Average total assets = 61816.48 0.53 Times

It is not good.

04.

Debt to equity ratio Long term debt Share equity

Long term debt =14864.22 share equity =35987.96

0.41 Times

Its good.

05

Net Profit margin = Net Profit * 100 Sales

Net Profit = 1420.09 Sales =32814.45

37.23 %

It is satisfactory.

6.

Return on Investments = Net Profit before Tax * 100 Net Worth

Profit Before Tax = 6800.86 Net Worth = 35987.96

18.90%

It is not satisfactory

7.

Debtors turnover ratio Sales Average debtors

Sales =32814.45 avg. debtors =2582.915 12.70 Times

It is not good.

8.

Earning per share = Profit after tax No. of equity share

Profit after tax = 3198.98 no. of equity share = 186.77 17.13

It is good.

9.

Fixed Assets turnover = Sales Fixed assets

Fixed Assets = 22548.59 Sales = 56,885.10 2.52 Times

It is safe.

Profit margin ratio = 10. Profit after tax*100 Sales

Profit after tax =3198.98 Sales =32814.45 9.75%

It is not satisfactory

11.

Inventory turnover ratio = sales average inventory

Sales = 32814.45 Average inventory = 12110.425 2.71 Times

It is not good.

12.

Return on assets ratio Profit after tax Average total assets

Profit after tax =3198.98 Average total assets =61816.48

0.05 Times

Its good.

Debtors collection period = 13. Average debtors*360 Sales

Average debtors = 2582.915 Sales= 32814.45 28.34

It is satisfactory