Tata Coffee Limited

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TATA COFFEE LIMITEDINTRODUCTION

(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. TheCompany¶s 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 besidestimber 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 estateshaving 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 onitsestates 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, chemicalsand 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 valuechain. 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 atTheni, 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 growingand 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 Café and Tata Kaapi in the Institutional segment and Mysore

Gold and International Tata Café in the Instant coffee export segment. The Company¶s out of home initiatives include the µJiffy µvending machines.

BOARD OF DIRECTORS



y R.K. Krishna Kumar (Chairman)

y R. Govindarajan

y P.T. Siganporia

y U.M. Rao

y Prof. A. Monappa

y Ms. Sangeeta Talwar

y Venu Srinivasan

y S. Santhanakrishnan

y T. V. Alexander

y Hameed Huq (Managing Director)

ANALYSIS OF ACOUNTING POLICIES

Basic of accounting

The financial statement are prepared at going concern under the historical cost convention onan 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 µACCOUNTING STANDARD - 30¶ on µFinancial

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, andexchange 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



SOURCES OF FUNDS

Shareholders¶ fundShare Capital

Reserve & Surplus

2010

(Rs. In lakh)

2009

(Rs. In lakh)

1867.70

34120.26

1867.70

28405.60

LOAN FUNDSecured loans

Unsecured loans

Deferred Tax Liability(NET)

9864.22

5000.00

1460.62

14666.51

3000.00

952.39

TOTAL 52312.80 48892.20

APPLICATION OF FUNDFixed Assets

Gross Block

Less: Depreciation 32815.71

10267.12

32570.61

9306.99Net Block

Capital Working In Prgs.(includes advances)

22548.59

770.32

23,263.62

1110.51

Investments

Current Assets, Loans & AdvancesInventories

Sundry Debtors

Cash and Bank Balance

Others Current Assets

Loans & Advances

23318.91 24,374.13

14,677.62 14,677.62

11,674.88

2,502.20

2,024.21

125.06

6,980.24

12,545.97

2,663.63

945.82

91.87

7,030.80

TOTAL (A) 23,306.59 23,278.09

CURRENT LIABILITIES AND

PROVISIONSCurrent Liabilities

Provisions

6,577.94

2,412.38

11,535.60

1,906.0

TOTAL (B) 8,990.32 13,441.60

NET CURRENT ASSETS (A-B) 14316.27 9836.49

TOTAL 52312.80 48892.20

PROFIT AND LOSS ACCOUNT

(FOR THE YEAR ENDED 31ST MARCH 2010)



INCOMESales

Less: Excise

Other Incomes

2010

(Rs.In lakh)

2009

(Rs.In lakh)

32814.45

66.28

31309.31

88.11

4594.26

722.20

2457.42

931.23

TOTAL 37342.43 33678.62

EXPENDITUREDepreciation

Accretion)/ Decretion of Stock

29551.19

1138.72

1652.60

34123.99

1222.29

(4508.26)

TOTAL 32342.51 30838.02

PROFIT BEFORE TAXProfit for tax- Current

Prior year

Deferred

mm Fringe benefit

4999.92

1292.71

508.23

-

2840.60

814.00

82.18

80.00

PROFIT AFTER TAX

ADD: Surplus brought forward from previous year

3198.98

842.15

1864.42

1330.88

PROFIT AVALIABLE FOR

APPROPRIATION

4041.13 3195.30

APPROPRIATIONGeneral reserve 1

General reserve 2

Debenture redemption reserve account

319.90

284.42

383.29

186.44

259.99

595.65

987.61 1042.02Dividends :Final(proposed)

Tax on Dividend1400.78

232.65

1120.62

190.45

1633.43 1311.07



Surplus carried to Balance Sheet 1420.09 842.15Significant Accounting Policies / Notes onAccountsEPS - Basic & Diluted (on Rs.10 per Share).....................

(Refer Note B 15 of Schedule 12)

Rs. 17.13 Rs. 9.98

FINANCIAL RATIOS AND THEIR INTERPRETATION

Different Financial Ratios

TYPES OF RATIO INTERPRETATION

Current ratio =

Current AssetsCurrent Liabilities

· It measures the short term

liquidity of a firm. A firm with ahigher ratio has better liquidity.

· A ratio of 2:1 is considered safe.

Acid test or Quick ratio =

Quick assetsCurrent Liabilities

· It measures the liquidity position

of a firm.· A ratio of 1:1 is considered safe.

Debtor Turnover ratio =sales

Average debtors

· This ratio measures how fastdebts are collected.

·A high ratio indicates shorter time lag between credit sales and

cash collection.

Debt to Total capital ratio =Long term debtTotal 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 totalassets financed By outside funds.

yA low ratio is desirable for



creditors.

yIt shows what portion of the totalassets 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 relationto sales.

yA firm should neither have a

high ratio nor a low ratio.

Return on Assets (ROA) =

Net Profit after Taxes * 100 Net worth

yIt measures the profitability of the total funds per investment of a

firm.

Return on Capital Employed(ROCE) =

(Net Profit after Taxes) * 100

capital employed

yIt measures profitability of thefirm with respect to the totalCapital employed.

yThe higher the ratio, the moreefficient use of capital employed

Earnings per Share (EPS) =

Profit after tax

Number of equity Shares

· It measures the profit available tothe 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

Ratios Particulars

(Rs in crore)

Values Remarks

01. Current Ratio =

Current Assets

Current Liabilities

Current Assets

=23306.56

Current Liabilities

=8990.32

2.59

Times

It is satisfactory

02.

Acid test or Quick ratio =

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.

10.

Profit margin ratio =

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


Profit after tax

=3198.98


=61816.48

0.05

Times

Its good.

13.

Debtors collection period =

Average debtors*360

Sales

Average debtors

= 2582.915

Sales= 32814.45

28.34

It is satisfactory

Tata Coffee Limited

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