tata tea sustainability report 2007-08

8/6/2019 Tata Tea Sustainability Report 2007-08

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Tata Tea Sustainability Report 2007-08


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Abbreviations used in the report

1 Bishop Lefroy Road Kolkata 700 020


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Sustainability Report 2007-08

CONTENTS

CHAPTER PAGE

1 Sustainability at TATA TEA iv

2 MDs Message 5

3 One Strategy 9

4 Profle 15

5 Governance 19

6 Wealth Creation 22

7 Environmental Performance 25

8 Business and beyond 29

a Engaging with stakeholders 30

b Our customers 34

c Our people 35

d Work environment 39

e Our communities 41

f Case study-Creche: Challenging the challenge 43

g Supporting and strengthening communities 44

i


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ii


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APPL AMALGAMATED PLANTATIONS PRIVATE LIMITEDBPC BANGALORE PACKETING CENTERBRC-OP BRITISH RETAIL CONSORTIUM INSTITUTE OF PACKAGING

BSC BALANCE SCORE CARDCD & SW COMMUNITY DEVELOPMENT AND SOCIAL WORKCMO CHIEF MEDICAL OFFICERCOP COMMUNICATION ON PROGRESSCSR CORPORATE SOCIAL RESPONSIBILITYEU EUROPEAN UNIONFMCG FAST MOVING CONSUMER GOODSGJ GIGA JOULEGRI GLOBAL REPORTING INITIATIVEHACCP HAZARD ANALYSIS AND CRITICAL CONTROL POINTIMO INSTITUTE OF MARKETECOLOGY

ISO INTERNATIONAL STANDARD ORGANIZATIONITO INSTANT TEA OPERATIONSKDHPL KANAN DEVAN HILL PLANTATION COMPANY PRIVATE LIMITEDCO CORPORATE OFFICEKRA KEY RESULT AREAL&L LISTENING AND LEARNINGMEMW MOUNT EVEREST MINERAL WATERMRL MINIMUM RESIDUE LEVELNGO NON GOVERNMENTAL ORGANIZATIONNIPO NORTH INDIA PLANTATIONSNPD NEW PRODUCT DESIGN

NPOP NATIONAL PROGRAMME FOR ORGANIC PRODUCTIONOPD OUT PATIENT DEPARTMENTPCB POLLUTION CONTROL BOARDPDCA PLAN-DO-CHECK-ACTPFA PREVENTION OF FOOD ADULTERATIONPMS PERFORMANCE MANAGEMENT SYSTEMPPC PULLIVASAL PACKETING CENTERQMS QUALITY MANAGEMENT SYSTEMRD RURAL DISTRIBUTORSSA SOCIAL ACCOUNTABILITYSEBI SECURITIES EXCHANGE BOARD OF INDIA

SPP STRATEGIC PLANNING PROCESSTBEM TATA BUSINESS EXCELLENCE MODELTCoC TATA CODE OF CONDUCTTTD TATA TETLEY DIVISIONTTGB TATA TEA (GB) LIMITEDTTL TATA TEA LIMITEDUNGC UNITED NATIONS GLOBAL COMPACT

Abbreviations used in the report

ii


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ata ea is committed to carry orward the ata groups philosophy within its sphere o inuence. Tis includes voluntary disclosure o non fnancialperormance as per guidelines o Global Reporting Initiative (GRI), active participation in United

Nations Global Compact and channeling activities to acilitate achievement o United Nations

Millennium Development Goals.

Sustainability report 2007-08o capture the sustainability challenges posed by a ast evolving business

environment ata ea has been employing GRI guidelines or its sustainability

report. Tis is the ourth report since 2003 and the second consecutive

report to be based on 2006 Guidelines(G3) developed by GRI.

ata ea is a signatory to United Nations Global Compact (UNGC).

Continuing the companys commitment towards making

its business an agent o positive change and

development, this report also communicates on the 10 UNGC principles related to human rights, labour, environment and

anti-corruption; and serves as Communication on Progress (COP)

o UNGC. Te sections showcasing the activities related to the

principles are highlighted by UNGCs logo along with the principles addressed.

Sustainability at AA EA

A BRAND NEW AWAKENING

Te new campaign leverages the unique position that tea

enjoys in our culture and attempts to migrate tea from

being purely a physical and emotional revitaliser to becoming a

catalyst for social awakening.


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Scope of the reportTis report covers operations o ata ea Limited rom 1 April 2007 to

31 March 2008. Te ocus is on the Indian branded tea operations and 100% export

oriented units o ata etley division in Kochi and Instant ea Operations (IO) in

Munnar. Te strategy or sustainable exit rom the plantations was completed with the

ormation o Amalgamated Plantations Pvt. Ltd. (APPL) in January 2007 and transer o the

business and undertakings o NIPO pursuant to an order o the High Court at Kolkata passed in

April 2008.

Te ata ea Sustainability Report 2007-08, prepared using G3 guidelines can be downloaded rom ourwebsitewww.tatatea.com

For more inormation about this report, please contact:D.K. Sen

Vice-President & [email protected]

Tata Tea Sustainability Report 2007-08

In India tea is much more than just a beverage; it is indeed a way of life.

It is so deeply embedded in our psyche, in our roots, that life cannot

be imagined without a cup of steaming hot tea. Te new campaign hasmotivated people to internalize the tea experience and externalize their

social awakening. Tis campaign has successfully established thought

leadership for the brand to go along with its market leadership.

10


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4

P.T. Siganporia, Managing Director


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5Sustainability Report 2007-08

Innovation, saety and climate changeconcerns are now entering the realm obasic requirements or ulllment o new-ageliestyle beverage delivery norms amongstconsumers across geographies and segments.

1


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6

Dear Stakeholder,

We achieved recognition or our Business Excellence journey during 2007-08 with a High Deltaimprovement award accorded to the ata ea stand alone operations in action plans, process,address o emanating concerns, results and holistic growth at the JRD qv Awards Nite on 29th July2008 Our teams led the growth agenda o the stand alone entity even as we led the transormationand growth agenda to emerge as a global beverage business Te teams co-created several

breakthrough programs and achieved results with our consumers, internal and channel customers,supplier/ vendor partners, local and central governmentalagencies, environmental and societal stakeholders in a holistic manner We will nowmerge our eorts as one global beverage business as we move ahead A ocus oninnovation, climate change and saety has in enabled us to alter our previous norms osourcing, delivery and construct o product oerings and we are beginning to see the benetsrom such a commitment Tese issues have enabled us alter our previous norms o sourcing,delivery and construct o product oerings and we are beginning to see the benets rom sucha commitment While implementation o these initiatives tends to enhance the short termcost o operation, they are the real costs o conducting a sustainable business and we standcommitted to developing our business accordingly We rmly believe that such eorts are in

keeping with the ata Groups Sustainability Policy, reect our core ata Values and help usbuild brand equity while enriching operations in the long term

In the last report we shared our business strategy o identiying opportunities or strategicinnovation and market expansion and the Environmental, Social and Governance (ESG)considerations linked with the strategy Tis year we are happy to share the milestones o our

journey across these as well as the new ESG issues that are now actored in the way we do ourbusiness Te signicant milestones achieved in the Stand Alone entity include:

Continued volume growth in the Indian branded tea business or the third consecutive year with a

volume growth o nearly 15% in 2007-08 Over the last three years the branded business hasgrown 35% in volume and 47% in value termsNew product development or evolving consumer palate such as High Clarity tea and OrganicInstant tea, ata ea Lie (a regular every day tea enhanced with natural herbal extracts), andetley Green ea rangeApproval rom the High Court or restructuring o the North India Plantations as AmalgamatedPlantations Private Limited (APPL) With the ormation o APPL in 2007-08 and Kanan Devan

Leading the transformation and growth agenda


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Hills Plantation Company Private Limited (KDHP) in 2005, we have exited all but two o theplantations earlier managed by usContinued support o welare activities to KDHP stakeholders through management oGeneral Hospital, High Range School and Srishti

Our eorts to ensure inclusive growth while expanding our brands continue through the

Gaon Chalo initiative which aims at improving the rural distribution o the Company whileproviding growth opportunities to the economically backward strata o the society Gaon Chalohas now turned into a movement, touching the lives o 20,000 rural citizens o India across 10,000

villages Tis unique co-created rural market access channel is currently under study by other ataGroup companies, who will participate to widen the spread o oerings and enhance the ruralstakeholder penetration, both working to enhance the economic viability o all entities

Climate change aligned Business Strategy is now a ata Group commitment and at ata ea weare beginning to understand complexity and address issues going orward Even while that is underconsideration, we commenced activity in specic areas as a build up to an organized eort oreduce the use o ossil uels a bio-gasication plant using spent tea has been commissioned at our

Instant ea manuacture unit at Munnar We initiated mapping o our carbon ootprint across ourmanuacturing acilities and shall evaluate recommendations as they emanate

Our commitment to the ten principles o the United Nations Global Compact (UNGC) remainsas deep and unwavering as beore We are glad to note that the 2006-07 Communication onProgress (COP) was appreciated as a notable COP In keeping with our commitment, we haveemployed the Jaago Re campaign or ata ea or as an attempt at social awakening and arehappy that it touched the chords o millions o Indians From September, we have launched the second

phase o the Jaago Recampaign to awaken the youth to consider issues and exercise their ranchise atelections, even as we provide them apolitical linkage options to enable them to do so

We hope that the inormation presented in the Report and on our website provides a view oour commitment to the triple bottom line and enables you to track the progress o our BusinessExcellence journey We look orward to your eedback on our initiatives and on this Report

P Siganporia


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8

Nestled amongst the sylvan plantations is Shrishti Welfare Centre,

exemplifying the deep entrenchment of ESG issue in the conduct

of our business.


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2

Rereshing options or sustainable business in achanging world.


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10

One Strategy

Changing scenarioTe tea industry is going through a state o ux and there are several changes

occurring across the industry Te change in consumer liestyle and increase in

awareness has led to the change in beverage preerence o domestic customers Te globalization

o the trade and increased opportunities o global sourcing has rendered the tea

industry highly competitive Globalization has also led to strengthening o

regulations and saety standards across ood industry Tere has been

emergence o modern interactive trade ormats and high expectation o rural markets

Strategy or changeTe company recognizes that key success actor in the changing

scenario is keeping abreast with consumer preerences especially youth,

regularly meeting their expectations, increasing the reach o products, oering innovative

products across segments and markets, managing raw tea sourcing, leadership

in thought, ood regulation & policy ormulation and supply chain issues o take the

leadership position the company has revisited its strategy Te inputs or the Strategic

Planning Process (SPP) come rom several sources: various actors shaping the industry,

critical success actors, strategic challenges in realizing the vision, internal and

external assessments and eedback received rom ormal/inormal meetings with dierent

stakeholders

Growing together: Inclusive growth and new marketsRural India accounts or 40% o branded tea

sales Te company initiated project Gaon Chalo

that aims at improving the Rural Distribution

o the Company while providing growth

opportunities to the economically backward

strata o the society Te Project has helped

ata eas belie that in order to uel the

economic development o the country,

organizations must extend their support

to disadvantaged communities Currently

35% o the companys Gaon Chalo Channel

Partners hail rom these communities Te state

o Uttar Pradesh (UP) was selected or Project Gaon Chalo since it accounts or 16% o the

Indian population, o which 80% resides in rural areas

Q2

07

0.00

0.20

0.40

0.60

0.80

1.00

1.20

Q3

07

Q4

07

Fig. 1.0 Quarter wise average sales in lac Kg

Market share in % as per ACN Retail Audit


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Te companys % market share in Uttar Pradesh increased rom 19% in mid 2006 to26% by end o 2007 Te all India % volume share increased rom 185% in March 2007 to21% in March 2008 Te all India % valueshare increased rom1855 in 2006-07 to2040 2007-08 ata ea products are beingrouted through NGOs who appoint RuralDistributors 1 (RD-1) Tese RD-1s help appointsupervisors (RD-2s) who vis-it villages and distributeto rural dealer amilies (RD-3s) Tese amiliessell in the villages to earn a margin equivalent tothe retail margin In a span o one year sincestarted, the company is working

with 12 RD-1s, 60 RD-1 coordinators and 430RD-2s in 10,000 villages reaching out to 20,000RD-3s across UP, total sale 1885 lac Kg o tea till Dec 2007

Sustainable business model or plantations:Te success o our model, KDHPL, or exit rom plantations in South India enabled us torestructure the plantations in North India Tis was echoed in the creation o APPL in

North India Wherein these 2 models work on dierent principles they highlight theviability o sustainable business models while balancing diverse stakeholder requirements

Ensuring air labour standards across value chain We have a responsibility to ensure the growth o our entiresupply chain in both nancial and extra nancial matters Our view is that a closenetwork o positive relationships based on condence with business partners, suppliers andcontractual parties open up new opportunities and provide the company with resourcesand inormation critical to the penetration o new markets Te implementationo SA 8000 to all packeting centers has led us to address the requirement o social

accountability viz child labour, orced

labour, health & saety o workorce,reedom o association & collectivebargaining, discrimination, disciplinary

practices, working hours & compensation in asystematic manner Nearly 100% o our

vendors are now certied to ISO certiedand large section is HACCP/BRC-OPcertied

100

25 25 25

ISO 9001

(2000)

ISO 14000

(2000)

ISO 18000

(2000)

ISO 22000

(2005)

HACCP BRC-IOP

Fig.1.2 Supplier certification ( % )

Fig. 1.1 Volume share % in India as on

March 2008

16.3 16.7

18.5

21

0

5

10

15

20

25

2002 Mar-06 Mar-07 Mar-08

Volume%


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12

All these measures have been taken to promote establishment o systems and transparencyalong our value chain Tis in turn allows us to ensure that we deliver better quality products to ourconsumers

Tought LeadershipL has been providing leadership in areas o product saety and health eg, leading by

being the rst to adopt HACCP in the tea industry, using o only PFA approved chemicals,

proactive leadership in lobbying or amendment to the PFA Act to: a) include enzymes in tea

manuacture, b) use o specic articial avouring agents, c) progressive reduction in the levels oiron llings

Te legal and audit department keeps track o industry developments and requirements that might

have a potential impact on the companys processes and practices so that anticipatory measures may

be taken well in advance or uture legislations, which orms key input towards the SPP


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Creating brand dierentiation through ocus on innovation

Ms. Sangeeta alwar, Executive Director

At ata ea we believe in creating relevant brand dierentiation and building a strong ranchisewith our consumers and customers Tis ocus along with continuous innovation in all aspectso brand marketing and sales has helped to transorm our brands into trust marks and love marks

2007-08 was an extremely eventul year or us We attained market leadership in volume terms or

the rst time in June ata ea was rated as the most trusted beverage by the Brand Equity surveyin 2007

In an attempt to migrate the ata ea brand medium o physical and emotional rejuvenation to a

platorm o intellectual and social awakening we launched theJaago Re campaign in October 2007

Te campaign successully established ata ea as a thought leader in the tea category connecting

with the hearts, minds ands souls o young India emerging social consciousness Tis campaign won

the prestigious INDYs 2008 Award or the best advertisement with a social message

In the previous two years ata ea had launched one o the most innovative rural marketing

programs in UP, working with a network o NGOs to sell tea through villagers thus co-creatingvalue or them On the back o this initiative ata ea launched a girl child education program in

UP ata eaKaliyan Tey say i you teach a girl you teach a amily, i you teach a man, he learns

alone educated women help to nurture and build responsible

societies Educating the girl child we eel will help to transorm

mindsets, accelerate symbols o progress and help to diligently address

issues such as high birth rates, amily nutrition, literacy, HIV/Aids,

violence etc

While we ocus on our external stakeholders we are also striving toimprove the diversity index within our organization, by recruiting

women candidates ata ea is actively working on creating an enabling

environment or its women employees

In sum, this is certainly a dening moment or us and one that will

encourage us to work towards attaining greater heights With this and

more to come we have certainly created the momentum to continue

sustainable growth or delivering value to our internal and external

stakeholders


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14

Consumer preference has made Tata Tea the market leader in volume terms.


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3

ProfleAddressing emerging opportunities to strengthen leadershipposition in the world tea market and global beverage sector.


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16

Global Prole

Te company is addressing emerging opportunities to strengthen the leadership position in

the world tea market and global beverage sector Tere has been increase in the share o high

margin products o increase the global ootprint and reach to key customer segments and

geographies, several acquisitions have been done Focusing on green tea extract

70 percent stake has been acquired in a joint venture with Zhejiang ea Import and Export

Company in China or manuacture and marketing o polyphenols, green tea extracts, cold and hot

water soluble instant tea, liquid tea concentrates and other value added tea beverage products Te

perormance o etley in international branded tea markets is robust with volume o sales about

6% higher than during the previous year Te growth o the etley brand was enabled by customer

and consumer insight relevant innovation, introduction o new products, cash generation and in

pioneering the agenda or growth o the beverage portolio Despite global competition in all key

markets, aggressive marketing eorts have grown etleys market hare wand prots in most

key markets

www.tatatea.com

India Prole

Te Indian operations are involved in production o branded black tea and instant tea or

exports and the company has evolved as FMCG branded B2C construct Te company made entry

into the water segment by taking stake in the Mount Everest Mineral Water Te company currently

holds 3173% o the paid up share capital o MEMW Te main products are branded tea consumer

packs available in all states in India, distributed by a network o channel partners Te business is

divided into three distinct operations:

A Branded ea Operations

Te Branded tea business continued to maintain the volume growth that it had recorded in the

last three years Te national and regional brands o the company recorded a volume growth o

nearly 15% during the year under review In terms o volume market share, according to reports o

independent market survey agencies, the company is now the market leader having

ata ea: ProleSecond largest global branded tea operations in the world


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outperormed its nearest competitor

Growth in volume was achieved

during 2007-08 across all the brands o

the Company and the highest growth was

achieved by ata ea Agni Over the last three

years the branded business the grown 35% in

volume and 47% in value terms

B Instant ea

Instant ea unit at Munnar produced 3959

lakh Ibs during 2007-08 compared with

4141 lakh Ibs in the previous year Powders

are being developed or customers as per their

requirements o an ongoing and need basis

New product development such as HighClarity ea is being pursued During the

year the Unit had achieved the capability to

manuacture Organic Instant ea which

has been duly certied by IMO Control,

Bangalore as per NPOP & EU guidelines

C. ata etley Division:

It is a 100% export oriented unit in Kochi

and packs around 4 Mn Kg in consumer

packs It is a key supply base to all

GB markets outside India, 60%

to Australia and 20% to Poland and

Middle east

ata ea the most trusted beverage*

*Brand Equity survey 2007


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The secondJaago Re campaign for social awakening was launched

recently. Tata Tea is using the compaign to awaken the Indian youth to

exercise their franchise.


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4GovernanceFocus on long term shareholde

value without compromising o

integrity, social obligations an

regulatory compliance.


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Corporate GovernanceTe corporate governance policies ollowed by ata ea are aimed at ensuring transparency in

all dealings and in the unctioning o Board and management Tese policies seek to ocus on

enhancement o long term shareholder value without compromising on integrity, social

obligations and regulatory compliances Te company operates within accepted standards o

propriety, air and justice and aims at creating a culture o openness in relationships between

itsel and its stakeholders

EthicsTe ata Code o Conduct (CoC) is a comprehensive written code which is applicable to all

employees including the Managing and Executive Directors Te code, which has

been updated in 2008, lays special emphasis on the impact o the groups activities on climate

change Both the ata Code o Conduct and the Code o Conduct or non executive directors are

available on the website o the company

www.tatatea.com/code_conduct.htm

www.tatatea.com/group_corporate.htm

ata ea BoardTe Board as the representative o the shareholders, provides direction and oversight tothe management or maximizing shareholder value As on March 31, 2008 the Board

comprised o 11 directors Currently, there are 7 committees o the Board including

Audit, Investors Grievance, Remuneration, Executive, Ethics & Compliance,

Nomination and Corporate Sustainability Reporting Te Corporate Sustainability Reporting

Committee tasks the Management Committee to identiy shareholders

concerns Te committee also maps risks and opportunities emerging

rom the global sustainability agenda, devises strategies to address them and

thereaer monitors, documents, and communicates the sustainability

perormance as appropriate Tis year the CSR committee has also providedguidance to the management committee on additional ESG issues such as water

and waste management systems and reducing packaging ootprint

www.tatatea.com/invest_relation.htm

Ensuring transparency rom the tea bush to tea cup

1 2 3 10


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ata ea Management FrameworkTe company has adopted the ata Business Excellence Model (BEM) as a means

o driving excellence through the organization as also the Balanced Score Card (BSC)

methodology or tracking progress on longer term strategic goals Tis enables the organization

to ocus on issues beyond nancial perormance, vis--vis its employees, customers and the

society at large Te senior leadership o L and GB consists o the Joint

Management Board Tis body sets long-term direction, in the global context or

the ata ea Group as a whole Te leadership system, which consists o variousFunctional heads and eam leaders across locations, operations and projects utilizes a

structured Plan-Do-Check-Act (PDCA) cycle and ensures a ocus on balancing value or all

stakeholders Te key requirements o stakeholders are the cornerstone and yardstick o our

short-term and long-term strategies Tis is the road map used to create and execute action

plans, ensure act-based business decisions, prioritize and allocate resources and drive continuous

improvement

Additionally, every unit head is engaged in appropriate monitoring and reporting o

compliance issues under Clause 49 o SEBI Regulations Te process considers both

identication o comprehensive risks including, high risk areas and sel-certication by

each entity indicating compliance level rom each entity Tese compliances

are periodically reviewed by Internal / External Auditors to look at the

rigour o compliance and to suggest areas or improvements in critical

processes


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22

5

We have constantly innovated on the construct o our product oering.Chai Unchai- Te newly introduced chaibar-is one such example.


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Te total income o the company or nancial year 2007-08 was INR 1263 billion,ie 102 % increase over last years income Te prot aer tax also increasedto INR 312 billion rom INR 306 billion Te details o Economic ValueGenerated, Economic Value Distributed, Economic Value Retained are given in the tablesbelow:

Economic value generated(able1.1): Economic value retained:

Economic value distributed (able1.2):

Wealth Creation

Total

Location / Business unit

Brands /Exports

Plantations*

Corporate

07 - 08

Economic Value Distributed(B)

TOTAL (B)

Operating Costs

(See comment)

Employee wages and

benefits

(See comment)

Community investmentsPayments to providers of

capital

Payments to government by

country

(See comment)

91364.650 4406.651 - 1226.552 3638.691 100,636.544

1460.411 1106.623 837.000 - 29.582 3,433.616

1,600.570 1670.046 142.032 25052.748 7627.307 36,092.703

94425.631 7183.320 979.032 26279.300 11295.580 140162.863

Total


Brands /Exports

Plantations*

Corporate

TOTAL (C)

Economic Value Retained(C=

A-B)

(See comment)

5963.220


Brands /Exports

Plantations*

Corporate

TOTAL (C)

Economic Value Retained(C=

A-B)

13,699.527

(1,210.195)

(6,526.112)

5963.220


Direct Economic Value Generated(A)

Revenue from net salesRevenue from sale of

assets

Revenue from financial

investments

Brands /Exports 114336.071 - -

Plantations* 2223.421 - -

Corporate 149.442 16498.571 12918.578

Total 116,708.934 16,498.571 12,918.578

* Includes Interdivisional Sales

Payment to capital providers include Dividend and Tax thereon is included in Payments to Go vernment

Tax relief/credits Subsidies

Investment Grants, R&D

Grants and other revelant

types of grant

Awards

52.63Brands /Exports

Plantations*

Corporate

136.25


07-08


07 - 08

Location / Business unit Royalty Holidays

Finacial assistance from

Export Credit Agencies

(ECAs)

Financial Investments

Other financial benefits

received or receivable

from any government

from any operation

704.6339.75

704.6339.75

07 - 08

Brands /Exports

Plantations*

Corporate


07-08

latoT

latoT

Finacial assistance

received rom government

(able1.4)

(able1.3)


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24

Shola are tropical montane orest ound above 1500 meters on the southern portion othe Western Ghats. Tey have high ecological signicance in protecting the head watero the rivers. Tey have the capability o holding the water received by precipitation like

a sponge thus preventing rapid runo. ata ea has been involved in the conservationand regeneration o this ecosystem.


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Climate change aligned business strategyis a ata group commitment.

6


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26

Energy consumption

Several initiatives o energy and resource conservation have been taken across the units Te ataetley division at Kochi has implemented use o light sheets on the roo to eliminate use o electriclighting in the actory during day hours Wind driven roo exhausts have been installed to reduce thetemperature in the actory Te efciency o the machines used have been improved considerably rom65% in 2003 to 80% in 2008 Te Instant ea Division has also installed urbo roo ventilators toincrease the natural lighting in the actory premises Te unit has improved the power actor by onlinepower actor improver to 099 rom 088, which is resulting in reduction o electricity and savings oINR 35,000-40,000 per month Similarly the Pullivasal Packeting Center has replaced all the sodiumvapour lamps with tube lights

Case study: Bio-gasier at Instant ea Division

Te Instant tea division has developed a biogasier which utilizes the tea waste to replace the urnaceoil Te solid tea waste generated in the process contains 60-65% water, which is dried and used asbiouel Tis biouel is converted into producer gas and used by gasier, Te producer gas has thecapacity to replace the urnace oil or uelwood to produce steam Te gasier produces 10 tons osteam/hr and 200 205 tons o steam per day Tough at testing stage the gasier has capacity toreduce by hal the standard requirement o nearly 1800 kilo litre o urnace oil Tis initiative hasalso resulted in optimal utilization o waste generated Earlier the waste generated was transported to

plantations or composting Earlier 35% o the waste generated was dried and used in re wood boilerNow 100% tea waste goes to bio gasier

Environmental perormanceGoing green

Bio-Gasier Plant at Instant Tea Operations, Munnar


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Energy Efciency and GHG emissions

Te GHG emissions related to total direct and indirect energy consumption related to diesel andelectricity consumption is 11950088 tons Co2 eSimilarly the direct energy consumption or the year2007-08 was 289328 J and the indirect energyconsumption was 24461 J (able 20):

Water Consumption

Te total water withdrawan romdierent sources, mainly the municipality

supply and the ground water was 12789246m3Instant tea operations at Munnar was the highest consumer owater with 12551852 m3 It was also the only plant that recycled

water Te total amount o recycled water was 330648m3

A total o 25467910 ons o raw tea was used by dierent unitsand 7113 ons was produced as spent tea waste

Environmental expenditure

Te total expenditure incurred on the environmental initiatives was INR 403 million

Contribution of different energy sources in GHG emission

5%

49%

45%

1%

Diesel Electricity Furnace oil LPG

Energy Consumption

2007-08 2006-07 2005-06

Direct Energy

(TJ)289 300 356

Indirect Energy

(TJ)24 103 113

81%

2%

17%

Used Recycled Discharge

Fig. 2.0

Fig. 2.1 Water Use

7 8 9


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ata ea was awarded the prestigious Businessworld FICCI-SEDFCorporate Social Responsibility Award - 2007 -Corporate Citizen - II


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Business

andbeyond...

7


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Work EnvironmentEngaging with our stakeholdersEngaging with our stakeholders

Te company has identied various stakeholders and has dened processes or engaging withthem proactively, addressing their concerns Good citizenship is practiced at all levels o theorganization, with the lead being taken by the senior leaders

Twoway

communication

Stakeholder

Forum

Frequency

Participants

Feedback

received on

Issues addressed

Employees

Employee satisfaction survey

Regular

Fair treatment and adequate

remuneration

Career growth, jobsatisfaction

End consumer

Members of seniorleadership

Market visits/Open channels

CCMS and unstructured face

face interactions

As per plan/ as and when req

Requirement, needs and

expectations

Products- own and competitcurrent and future

Members of senior leadershiBrand and Sales manager,

Market Research Team


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o synchronize our eorts and better understand the stakeholders expectations, a well dened processhas been put in place, wherein inputs are gathered rom various stakeholders through structured twoway mechanism

Stockists meet

Quarterly

Pricing, discount, schemes,

new opportunities, co. directions,

stockist expectations, reward/recognition

Key processes, customer feedback,competitor activity, on time supply,

product quality

MD & commercial heads,Brand and sales managers

Channel partners

Launches and re-launches

As planned

Product details, co. expectation,

volumes, pricing

Strategic inputs, market reaction,competitor activity

Brand and sales managers,commercial/QM representatives

Ad, Media, other

Market Research Agency

Meetings, briefs, presentations

Regular

Advertising theme, brand positioning

Innovative tools, consumer insight,competitor activity

Commercial head, brand managers,MR manager


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32

Twoway

communication

Stakeholder

Forum

Frequency

Participants

Feedback

received on

Issues addressed

Contract packers

Own representation in

packing units

Ongoing

Setting up facilities, standards

expected, processes to be followed

Bottlenecks faced,

improved processes

TTL representatives,

SCM & Production heads

Suppliers

Vendor meetings

Formally twice a year/ ongoin

Strategic sourcing, product

quality and specifications,

NPD rate fixation

Innovation, Competitor activit

Supply chain managers,

brand managers


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Brokers

Auctions, Face to face

meetings

Weekly/ Regular

Production, quality and price

Quality, Industry and

market trends, Changingbuyer preferences, Price

analysis, Competitor activity

MD/Head TBB/Other

key personnel

Community & Govt

Meeting with Govt Bodies

Ongoing

Welfare programs, health &

hygiene, agricultural practices

relief & rehabilitation efforts,

infrastructure issues, security

Regulatory issues, PLA issues

subsidies, societal welfare,environmental issues.

MD, Director Special Projects

Head CD&SW, welfare &

medical staff, estate manager

Shareholders

Analyst meet

Half yearly

Financial performance/

future plans

Performance expectations, stakeholder concerns

MD/CFO/ED/

Company Secretary/

Director

AGM

Annual

Company performance,

future plans, stakeholder

concerns

Board Members of TTL


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34

Our customersContinuous improvement in the Listening and Learning methods help us inknowing the pulse o market and orge long lasting relations with our customers

India is the largest consumer o black tea in the world, which is consumed in more than 90% o

households in India Due to habit driven nature o the category, the only way to trigger brand

switch is to dierentiate and innovate the product Te companys products reach end consumers

passing through internal customers who are involved at dierent levels o value/supply chain Each

o these internal customers provides valuable insights on customer reactions and expectations

Identiying their signicance the company has developed dierent sets o Listening & Learning

methods to capture them Tese L&L methods are evaluated and improved annually at the annual

marketing and sales conerence Notable improvements or the reporting period are:

Benchmarkingagainstlocalandregionalbrandsintroduced

Specialprojectstounderstandtheregionalplayerbusinessmodeltohelparriveatstrategyfor

our brands

Householdpaneltounderstandthemovementofvolumeandshisbysegments

Comprehensiveusage&attitudeandconsumerinsightstudy

Separatereportingandmonitoringofkeyaccounts,specialschemes

Strict benchmarking (achieved for zonal and town level) for media advertisements and

pre-testing o all new theme ads

Bimonthlyscanofallmediaandsubscriptiontotargetgroupscan

Frequencyofretailerandstockistsurveysincreasedfromannualtobiannual

Although, neither the companys operations nor the products are harmul, adequate checks and

measures are in place to ensure that all possible risks are addressed in every process, through Risk

Mapping Process and Review o Risk Register annually by the Audit committee During the

evaluation o new projects, the New Product Design (NPD) process in the orm

o the Stage & Gate model ensures that a detailed analysis is carried out o the

impact o products and adherence to all regulatory norms, prior to their introduction

We have established a Commercial Complaint Management System to listen to dierent types o

consumer complaints ata ea has been engaged in dialogue with industry research bodies, egMRL/pesticide levels in tea, ood grade certication or packing materials, waste disposal, medical

health check up or workers, water quality and energy consumption in production acilities etc All

these go towards ensuring that public concerns with current and uture products and operations are

anticipated and addressed


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Te company has recently experienced accelerated transition, moving rom being hierarchical and

plantation dominated large employee business to very lean and ocused market oriented FMCG

branded B2C construct oday company has 2833 employees Te production operations in the

domestic branded tea value stream are being progressively outsourced

Te company engages its workorce through a robust measurement ramework that aligns the

strategic objectives to perormance metrics and tracks individual and team perormance

Initiatives like ata Business Excellence Model, Balance Score Card (BSC), WL, competency

proling and mapping succession planning etc are in place as part o Perormance ManagementSystem (PMS) Tese systems are supported by segmented approaches o compensation, reward &

recognition, career progression and variable pay

Te PMS or executives enables provision o eedback to employees and make improvements in

the compensation/reward/recognition/bonuses linked to perormance Te corporate objective o

delivering superior value to customers is cascaded through the medium o Corporate BSC, driven

through the unctional BSCs and then linked to key result areas (KRAs) o executives Te KRAs

include goals and targets which are aligned to customer and business needs o the organization

For leadership roles this is complemented by perormance standards and behavioural assessments

on ata leadership practices For the ofcers, sta and workers, specic targets are set to ensureachievement o high perormance As part o extended PMS, other approaches o recognition by

peers/seniors/awards night, career development through training and mentoring, job rotations,

oreign assignments/visits and gis during special occasions urther reinorce high perormance

Employee satisaction survey is taken regularly to assess the eectiveness o PMS

A unique eature o company is employee developmental process that identies individuals who

show extraordinary traits o leadership, termed as Key Resources Tese resources have signicant

responsibility or delivering the business agenda o ata ea and are exclusive to top talent identi-

cation process which trains or uture leadership

Our PeopleEfcient management o human resources and application o systems amidsttransition and adoption to new work culture has been the major ocus


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36

3 details of Affirmative Action Plan.

SPP based individual

goals & KRA detailed

in PMS & review

Identify successor

during succession

planning

New recruit 360 degree

Feedback

IDP for Top talent &

Ke resources

Competency gap

anal sis

Consolidation of

trainin needs

Training calendar

re aration

Training

nomination

Training feedback

effectiveness

analysis

Further needs

Te company also has a very dynamic system or identication o development needs o the sta,

summarized as ollows (Fig 30):

Tere is structured training module or dierent segments o employees (able 30):

Employee Group Training initiativeEmployee development and career

progression

Senior Management, Top Talent & Key

resources

Managerial grid, leadership development,

behavioural training

Career progression for senior leadership positions,

identification as a group Resource through Group IDP

prog, enhancing the leadership & strategic capabilities

Middle Management and need based

TBEM, EWPM, supply chain, project management,

finance, total quality, brand management, innovation,

benchmarking, team building

Develop competencies for tracking up higher positions

and better work delivery in line with action plan

requirements

Junior Management, SDOs, Officers,

StaffSelling, packaging skills, computer

Picking up specific skills that help in career progression,

job rotations etc

All (need based)Tea testing skills, Sap, PMS, TBEM, EWPM, TCOC,

team building, safety & health

Developing functional skills, align behavioural traits,

health & safety awareness

15%

60%

25%

50

(For Bangalore packeting center, Instant Tea and Tata Tetley Division, Pullivasal Packeting Center )

Fig. 3.1 Agewise breakup of employees


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Fig. 3.2 The total man hours of training

1431

524

842

1200

0

200

400600

800

1000

1200

1400

1600

Ma

nhours

ITO BPC TTD PPC CO

Unit

Location

211

171

197

181

290 9

5

55

12

3

671

528

2

18

56

55

37

42

126

36 9

9

25

4

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

CO PPC

ITD

TTD

BPC GH HR

S

Shrishti

Proje

ctoffic

e

Pulliv

asal

estate

Periaka

nale

state

Contract workers

TraineeConfirmed

Fig. 3.3 Workforce Categorisation


42/53

38

671

528

344

307

239208

10493

64

7

268

Fig. 3.4 Workforce strength at different locations

Te HR policies outline separate approaches, based on employee segment, location, work level,

and nature o job 475workers are members o various unions across D, IO, BPC and PPC

For the mentioned units the turnover or the reporting period was 32 employees and 325

manhours o lost time injuries were reported We have also instituted afrmative action

plan as per the group guidelines, which was approved by the CSR commit-

tee o the Board Data was collected rom within the company on a voluntary

basis and a detailed action plan on employability and education was ormulatedwithin and outside the company ata ea is working closely with Industry bodies

on this initiative As part o the initiative 11 colleges in Kerala were selected or

training o the candidates rom disadvantaged communities on I skills and

Communicative English Tis was requested by the college principals and initial

response has been very good

3 4 5 6

CO PPC TTD

BPC General Hospital

High Range School

Shrishti Project office

Pullivasal estatePeriakanal estate


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At ata ea, we strive to provide and maintain workplace, machinery and equipment and use work

methods that are sae and minimize the risk to health

We provide sae, healthy and ergonomically designed work stations to our employees, which go

well beyond statutory requirement Proper lighting, air conditioning, comortable urniture and

regular house keeping ensures a pleasant workplace in the ofces Fire ghting equipments are

suitably placed and security guards are posted at all work locations to ensure saety o Ls

property and employees Even as the work place is relocated in line with the new business model,

movement is acilitated through special policy deployment that addresses work and amily

requirements eg, extended stay in service apartments, relocation allowance, nancial assistance or

school admission, rental advance and brokerage, daily local conveyance and additional investments

in work stations

We also own ull edged medical acilities surpassing legal requirements As part o our services

to our employees we provide annual medical check ups/ vaccination or contagious diseases, and

ree medical service to employees and amily, dependent parental medical insurance cover, cashless

hospitalization, through arrangements with hospitals

As statute all our employees are covered under various insurance schemes

Various units o the company have instituted dierent saety measures across the actories

Some prominent initiatives taken by ata etley division at Kochi include issuance o Sae

Work Permit prior to execution o all jobs deemed to have a risk element Te packing material

storage warehouse is susceptible to re accidents; smoke sensors and ull edged re ghting

system have been installed in the Systems Dept to counter the re threat All the electrical

switchgears have been upgraded and acoustic enclosures have been built or all equipments

that have a noise generating potential viz - Generator, compressors etc Te unit has also

maintained complete data base o blood types or all actory / ofce personnel so that donors can be

identied without delay Te actory is ISO 9001 certied or QMS and ISO 22000 certied or

Food Saety Management Systems ISO 22000 combines HACCP, Prerequisite Programmes and

Operational Prerequisite Programme into single Food Saety Management Strategy An incinerator

approved by PCB is installed or disposal o paper based process waste

Work EnvironmentSae and healthy work environment at work


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40

Innovation at work place:

Te company rmly believes that innovation happens best with the people who are involved in

the process Te workers are encouraged to come up with suggestions and innovations that help in

process improvement Tis open door policy has led to inclusion o several improvements in the

production process and signicant cost savings o approximately INR . 5 Million Tese suggestions

include changing the placement o coding window on the carton, rearrangement o checkweigher

and coding machine resulting in optimization o the manpower in the process Also there have

been suggestions that include use o stamp pad instead o stenciling and use o washable cloth maskinstead o surgical masks Te engineering team has designed and built several equipments in the

actory which are a rst, and unique to companys operations A key example is the SNAP Carton

maker, which has enabled the Australian market to sell a new generation carton, using low cost

capital equipment developed entirely at Kochi Tis has enabled the market to have a projected

growth o 2- 3%, as against a 2 % drop had the innovation not been introduced Te actory has also

developed an indigenous teabag enveloping mechanism, at a cost 1/30th o the cost prevailing in

UK (INR 3 million vs 90 million)

Also to improve the traceability o product complaints received rom the market, we have installed

a tag coder which operates in tandem with the Constanta tea-bagging machine at a speed o 150 perminute, which is again a rst-time


45/53


L is committed to the cause o contributing to supporting and strengthening its key

communities Although contributions are made to charitable institutions across the country,

there is well dened process or identiying key communities and implementing social welare

plans, which enables maximum benecial impact to the identied communities We are pioneer

within the industry in CSR and have won several awards in this sphere and have a well structured

process or identiying key communities and implementing social welare plan Our key

communities are concentrated in and around erstwhile estates

Fig 40 Process or identiying key communities and implementing social welare plans

We continue to partner with KDHP and APPL to make the plantation commercially viable and

ensuring continuity and sel sustainability o the society and environment through the community

institutions An annual welare audit is conducted in the identied area to review and strengthen

the process and improve on the impact o the welare activities on the communities with set o

measurements and targets We continue to retain the complete responsibility or the

General Hospital, Shrishti welare center & High Range school at Munnar

Our communitiesCommitted to holistic social development

InputsLeadership

Communication

Communicate across

organization-

Learning & sharing

(welfare committee

meetings)

Take corrective action

Revise / intensify plans

Fix responsibilities and targets

Utilize external / internal resources

Implement action plansAugmentwithvolunteerworkbyseniorleaders

and employees

Develop action plans based for

Health Care

Reproductive health

Child care

Education

Empowerment of women

Community participationRegional / national calamities

Decide on key communities and areas for focus-

Senior leaders use criteria such asVision/values/culture/mindset

Close to area where we operate

Cause espoused and our relative strengthsImpact on society

Beneftstomaximumpeoples

Monitor and review action


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42

Shrishti Welare Centre (Shrishti) a unit

set up or the dierently abled children o

tea community runs a DARE School or

special children, Strawberry Preserve Unit,

Athulya- Hand Made Paper Unit and

Aranya- a dying unit specializing in shibori

dying, a Japanese tye and dye art orm Te

DARE school identies children with special

needs rom the surrounding communities

and trains them depending on their

requirement Te training i based on the

basis o hearing capacity Children who are

hearing impaired are given training which helps them work in the strawberry preservation unit o the

center Te children with special needs are given training on speech and other orms o education Te

aim is to mainstream the children in the ormal schools Te children who do not join ormal schools

are given training on other orms o art like painting, gardening etc Te hearing impaired candidates

get employed with the Athulya and Aranya centers and earn respectul living or them selves Athulya

uses the waste generated rom the actories and other wastes or manuacturing papers Aranyaspecializes in unique Japanese tie and dye orm o printing called shibori

Te High Range School (HRS) run by the company has taken several pioneering steps in the region

in the eld o education It aims to integrate personality and intellectual maturity along with course

curriculum or overall development o students Currently this mix is 40% and 60% It uses audio visual

method o teaching to make learning more interactive and also exposes the children to the technologies

which makes them more condent Te school in collaboration with Amada Group has developed an

operating system called UBUNU which can analyse student perormance, areas o improvement and

strong areas by an online assessment Currently this system is enabled or english and mathematics only

Identiying the need or additional training or preparation o various entrance exams, the school has

entered into understanding with IME institution or enrollment o the students Te school unded

training o 8 students at IME and reimbursed the lodging and boarding expenses o 5 students It

spent INR 42000 and INR 16952 respectively One o the students o the school R Sairam achieved

the 13 rank in Kerala in AIEEE 2008 examinations

Differently abled - Empowered


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Te support and training provided at DARE

school and condence o earning their own

livelihoods at strawberry preservation unit,

Athulya and Aranya go a long way in making

the people and children with special needs

independent Te act that they become earning

members helps them to lead a normal lie Tis

condence gives them inspiration to progress

ahead in the cycle o lie Te adult work-ers in these units nd their lie partners among

themselves and carry on with the married lie

like a normal couple and become proud parents

Maheshwari and Peter are one such couple with

special needs But this did not restrict

their courage to gain employment at the

Aranya center or dream o a amily o their own

Aer Maheshwari gave birth to baby girl last year, the

couple came across another challenge, where to keepthe girl when they are out or work Te well being

and eeding o child was a problem o counter this,

the company invested approximately INR 35 lakhs

to develop a crche in the Shrishti campus which

became unctional in December 2007 Te crche

is tted with all the required amenities like cribs,

nursing section, play area, etc Te crche maintains

constant temperature with help o heaters despite

o uctuations in external temperature It also has

acilities or cooking and cleaning or the children

2 ull time caretakers are employed in the crche

Te mothers o the children come at required time

to nurse the babies and dont have to worry about

the wellbeing o their children while they are away

working Te crche houses 12 children

CASE SUDY

Creche

A happy mother with her child

Joys of childhood

Full of life


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44

Disease trackingprofile tracked daily/

weekly/monthly, alongwith referrals and

treatment and reviewed

monthly by CD & SWdept.

Improved maternalhealth

Reproductivehealth

ChildcareEducation

Behaviour change

communication,Building competencies

of personnel

Targets/goals for each activity

are set for the estate medicalofficers by CD & SW dept along

with action plans, reviewed everyquarter for corrective action plan.

Childhood diseases, increase

in welfare audit scores.

Nutritional surveillance,

universal and extendedimmunisation, supplementary

feeding, Vitamin A prophylaxis,Improving service infrastructure

H

ealth

Care

Surveillance of early

warning system for

communicable disease

Analyzed on a monthlybasis for modification/

improvement and

reviewed by CD & SW

dept.

Child care programs

are improving onbirthrates, malnutrition,

family welfare, mandayslost due to medical

reasons.

EducationEnhancement of competencies

and skills of primary school staff

and mahila mandals, enhancedresources for providing high

school level/adult education.

Actions taken are analyzedby CD & SW dept

Unemployment among

non-worker dependentsreduced

Supporting and Strengthening Communities


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Comm

unity

participation

Early reporting, early diagnosis

and treatment system introducedthrough link workers, mahila

mandal and line chowkidars,paramedics, field staff.

Reduction in sick days,

absenteeism referrals,attendance in meetings,

No. of link workers andself help groups

Organization of communitybuilding groups such as

Mahila Mandals

AIDS

awareness/

Adultliteracy

Voluntary blood testing

procedureReduction in Aids cases

Promotion of aids awareness,

aids literacy and encouragingfamily panning

Natural

calamities Treating economically

poor patients in OPD ofreferral hospital in Munnar

Improved health and

reduction in morbidityprofile

Preparation for disasters,provision for economic relief

Environmental

preservation

Partnering with forest dept.,wildlife dept., and other NGOs

for protection of wildlife and

preservation of environmentthrough various joint initiatives,

continuous replanting of fallowareas with high quality clones/species

Region has been recognizedas one of the HOT SPOTS of

the world. Census data showsincrease in population of all

protected species. No. of tea and

energy plantations.

High range wildlife and

environmental preservationassociation, Joint management

of Ervikulam national park,

Employmentof

womenandphys

ically

challenged

Schemes for income

generation, encouragingbank savings

Regular monitoring for

timely action through theestate hospitals and CMOs

Reduction in diseases, more

healthy workers, reduction inhealth related absenteeism


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46

GRI CONTENT INDEX

Standard Disclosures GRI Indicators Page

Strategy and Analysis 1.1, 1.2 5-7, 9-13

Organizational Profle 2.1-2.10 Cover page, 15-17, Inside front

cover page, 28, 35-38

Report Parameters 3.1-3.13 iv,v

Governance, Commitments and

Engagements

4.1-4.4, 4.6, 4.8-

4.17

11,19-21, 30, 35-37

Economic

EC1 23

EC2 7

EC3 20,23,39

EC4 23

EC6 10,11

EC7 NR

EC8 23,41-45

Environment

EN1 27

EN2 NR

EN3 27

EN4 27

EN8 27

EN11 NR

EN12 NR

EN16 27

EN17 NA

EN19 NA

EN20 NR

EN21 27

EN22 27


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EN23 NA

EN26 26

EN27 NR

EN28 NA

Social

SO1 45

SO2 NR

SO3 NR

SO4 NA

SO5 12

SO8 NA

Human Rights HR1 NR

HR2 NR

HR4 NR

HR5 11,38

HR6 11,38

HR7 11,38

Labour LA1 37

LA2 38

LA4 38

LA5 NR

LA7 38

LA8 13,45

LA10 37

LA13 NR

LA14 NR

Product Responsibility PR1 34,39

PR3 11,12

PR6 NR

PR9 11,23NR-Not reported

NA-Not applicable


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48

UNGC INDEX

UNGC Principle Page

1 20

2 20

3 20,38

4 38

5 38

6 38

7 27

8 27

9 27

10 i,20


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tata tea sustainability report 2007-08

Documents