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Index

1. BLUE STAR LIMITED


2. WHIRLPOOL OF INDIA LIMITED
3. BAJAJ ELECTRICALS LIMITED
4. TTK PRESTIGE LIMITED
5. SYMPHONY LIMITED
6. IFB INDUSTRIES LIMITED
7. HITACHI HOME AND LIFE SOLUTIONS (INDIA) LIMITED
8. MIRC ELECTRONICS LIMITED
9. PANASONIC HOME APPLIANCES INDIA COMPANY LIMITED
BLUE STAR LIMITED Back

ANNUAL REPORT 2009-2010

MANAGEMENT DISCUSSION AND ANALYSIS

INTRODUCTION:

Blue Star is India's leading central airconditioning and


commercial
refrigeration company, fulfilling the cooling requirements of a
large
number of corporate and commercial customers. It also offers expertise
in
allied contracting activities such as electrical, plumbing and
fire
fighting services. Blue Star's other businesses include marketing
and
maintenance of imported professional electronic and industrial systems
and
execution of industrial projects.

Blue Star's business model of providing end-to-end solutions as


a
manufacturer, contractor and after-sales service provider coupled
with
differentiated products and expert solutions have contributed to
sustained
growth and leadership.

BUSINESS SEGMENTS:

Blue Star primarily focuses on the corporate and commercial markets.


These
include institutional, industrial and government organizations as well
as
commercial establishments such as malls, multiplexes, hotels,
hospitals,
showrooms, restaurants and boutiques. In accordance with the nature
of
products and markets, business drivers, and competitive positioning,
the
lines of business of Blue Star can be segmented as follows:

ELECTRO MECHANICAL PROJECTS AND PACKAGED AIRCONDITIONING SYSTEMS:

This business segment covers the design, manufacturing,


installation,
commissioning and maintenance of central airconditioning
plants,
packaged/ducted systems and VRF systems, as well as contracting
services in
electrification, plumbing and fire fighting. After-sales services such
as
revamp, retrofit and upgrades as well as energy management and
green
building services are also included in this segment.

COOLING PRODUCTS:

Blue Star offers a wide variety of contemporary and differentiated


room
airconditioners. It also manufactures and markets a comprehensive range
of
commercial refrigeration products and cold chain equipment.

PROFESSIONAL ELECTRONICS AND INDUSTRIAL SYSTEMS:

For over five decades, Blue Star has been the exclusive distributor
in
India for many internationally renowned manufacturers of
professional
electronic equipment and services, as well as industrial products
and
systems. The Company is also in the business of specialized
industrial
projects for the steel industry.

FINANCIAL HIGHLIGHTS:

In spite of a subdued economic environment, Blue Star performed


reasonably
well, mainly due to effective cost control and favourable input
costs.
Total Income was Rs.2556.11 crores for the year ended March 31,
2010,
compared to Rs. 2524.38 crores in FY09. Profit Before Tax
(excluding
exceptional items) grew 10% to Rs. 262.66 crores. Net Profit at Rs.
211.49
crores registered an increase of 17% over last year. Earnings per share
for
FY10 (Face value of Rs. 2.00) stood at Rs. 23.52 vis-a-vis Rs.20.05 in
the
previous year. Return on Capital Employed (ROCE) declined to 55.3%
from
60.3%, while Return on Shareholders' Funds was 43.0% compared to
last
year's figure of 49.1%.

INDUSTRY STRUCTURE AND DEVELOPMENTS:

AIRCONDITIONING:

In 2009-10, the estimated total market size for airconditioning in


India
was around Rs. 10750 crores. Of this, the market for
central
airconditioning, including central plants, packaged/ ducted systems and
VRF
systems was about Rs. 5250 crores, while the market for
room
airconditioners comprised the balance Rs. 5500 crores.

During the year, the economic slowdown continued to affect certain


segments
such as retail and builders. Project expansion plans in the IT/ITES
segment
were also delayed mainly due to the impact of the US recession on
this
segment. However, the airconditioning marketwitnessed significant
growth in
segments such as healthcare, hospitality, data centres and education.
In
addition, infrastructure segments such as airports, power plants, steel
and
metro rail were unaffected by the economic downturn and project plans
were
largely on track.

COMMERCIAL REFRIGERATION:

The commercial refrigeration segment includes a wide range of products


such
as cold storages, water coolers, bottled water dispensers, deep
freezers,
milk coolers, bottle coolers and ice cubers.

The Indian food and grocery vertical is one of the fastest


growing
segments. This largely comprises fruits and vegetables, dairy and
milk
products and aqua and marine products. The distribution and storage
of
perishable commodities require the application of various temperatures
and
humidity levels from the farm to the final consumption point.

India is the largest producer of fruits and second largest producer


of
vegetables in the world. The wastages due to inadequacy in the cold
chain
has been felt by the policy makers as well as the private sector, in
the
context of food security concerns experienced across the globe. In
the
present scenario, the cold chain infrastructure is characterised by
long
and fragmented supply lines leading to high wastage. The major
constraints
on the development of the cold chain industry are high capital cost
and
electricity bills coupled with low rental revenues and
inadequate
availability of concessional finance.
The Ministry of Agriculture in co-ordination with CII has
constituted a
Task Force, comprising experts from all stakeholders and a realistic
target
for developing a cold chain has been mapped out. The Task Force
has
proposed the creation of a 'National Green Grid' to develop a seamless
cold
chain network to balance demand and supply issues with remunerative
price
to farmers and to deliver quality produce in the hands of consumers.

In addition, the Government of India has announced several incentives


like
capital subsidy, project import status for private investments and
schemes
like Rashtriya Krishi Vikas Yojana for various state initiatives. It
is
expected that in the coming years, a significant amount of private
and
public investments will flow into this segment.

SEGMENT-WISE ANALYSIS:

The revenue and results break-up in terms of business segments were


as
follows:

ELECTRO MECHANICAL PROJECTS AND PACKAGED AIRCONDITIONING SYSTEMS:

The electro mechanical projects and packaged airconditioning


business
continued to be the largest segment accounting for 71 % of the
Company's
Total Revenue. While the demand from the ITATES, retail and builder
segment
was muted, the Company received several orders from the
healthcare,
hospitality, education and infrastructure segment including airports,
power
plants and metro rail.

In the central plant equipment segment, the Company offers a range of


screw
and scroll chillers in both air cooled and water cooled versions as
well as
air distribution products such as air handling units and fan coil
units.
The year under review saw significant demand for the Company's
eco-
friendly, next-generation and ASHRAE / ECBC-compliant range of
screw
chillers incorporating R134a refrigerant. Encouraged with the response,
the
Company plans to set up a Euroventcertified test lab, a first-of-its-
kind
in India, to test these chillers locally.
During the review period, the Company won a prestigious Rs. 172
crores
integrated MEP order for the proposed Delhi Airport Metro Express
Line.
This line is envisaged to be a 23 km long underground/ at grade/
elevated
high speed rail corridor which will connect New Delhi International
Airport
to various metro stations. The rail corridor is being developed with
state-
of-the-art technology and will be comparable to the world's best
airport
link expresses such as the ones in Heathrow and Hong Kong. Blue
Star's
scope covers design, supply, fabrication, erection, testing, inspection
and
commissioning of HVAC, Electrical, Fire Fighting, Plumbing,
Station
Management System, Access System and Track Side Auxiliary System for
the
entire project. The project is expected to be completed before the
2010
Commonwealth Games.

The Company strengthened its foothold in the healthcare segment during


the
year with several prestigious orders including orders from
Bangalore
Medical College; ESIC hospitals at Jaipur, Bengaluru, Manesar and
Mumbai;
Narayana Hrudayalaya, Hyderabad and Jaipur; Apollo Hospitals,
Karaikudi;
Rockland Hospital, Manesar; Sadar Hospital, Ranchi and numerous
other
hospitals.

The Company also booked some notable orders from power sector majors
such
as NTPC, Vindhyachal, Rihand and Nabinagar; Reliance
Infrastructure,
Raghunathpur; Essar, Mahan and Salaya; and Adani, Tiroda, amongst
others.
From the steel sector, the Company received notable orders from
IISCO,
Bokaro and Rourkela, and Jindal, Angul.

The Company continued to aggressively pursue business from the


Government
of India and won prestigious orders from CPWD and several
other
Government/PPP agencies. It also executed a project for the
recently
inaugurated state-of-the-art Tamil Nadu State Legislative Assembly
Complex.
The Company was responsible for providing turnkey airconditioning
and
electrical services for Circle 1 & 2, which houses the Chief
Minister's
office.

Other prestigious business booked by the Company during the year


include
orders from Wipro Data Centre, Greater Noida; Hewlett Packard, Mumbai;
CA
India Technologies, Hyderabad; Synthesis Business Park, Kolkata;
Infosys,
Mysore and Pune; National Centre for Biological Sciences,
Hyderabad;
Indiabulls Real Estate Company, Mumbai; Sheth Developers, Mumbai;
Vrindavan
Techvillage Ph-II, Bengaluru; Boomerang IT Campus, Mumbai; C-DAC
Innovation
Park, Pune; Sirifort Training Centre, Delhi; Jaypee Greens Hotels &
Resort,
Greater Noida; Shangri-La Hotel, Mumbai; IBM-Airtel Data
Centre,
Bhubaneswar; Kohinoor City, Mumbai; DLF Magnolias, Gurgaon; RBS
Corporate
Office, New Delhi; Inorbit Mall, Bengaluru; HBN Commercial
Centre,
Bathinda; Mariott, Bengaluru and many more.

Blue Star's ducted systems range comprises packaged airconditioners as


well
as ducted split airconditioners. The Company also offers VRF
systems;
precision control packaged airconditioners for applications where
accurate
control of temperature is critical; as well as telepacs for
telecom
applications. Thus, Blue Star provides the widest range, and meets
every
conceivable customer requirement.

In the ducted systems segment, traditional segments such as


manufacturing,
educational institutions, offices and Government took the lead in
an
otherwise subdued market. There was a sharp decline in the IT/ITES
and
retail segments due to deferment of fresh investment plans. While
business
from big metros declined, share of business from Tier II / III
towns
increased steadily, thereby contributing to a larger share of the
overall
pie.

Blue Star's precision control packaged airconditioners continued to


perform
well with fast growing demand from data centres, banking and
telecom
segments. The Company also sustained its leadership position in the
telecom
segment with its customised array of telepac airconditioners,
especially
designed for the telecom industry. During the year, the Company
introduced
a new range of emergency free cooling telepacs and battery coolers
which
were designed as operating cost saving solutions through joint
innovation
programmes with customers. The Company also performed well in the
high
technology VRF airconditioning systems business, during the year.

The newly formed electrical projects business performed impressively


by
cross-selling its services to existing HVAC customers as well as
acquiring
stand-alone orders. Some of the prestigious orders won during the
year
include TCS, Secunderabad; Shangri-La Hotel, Mumbai; Inorbit
Mall,
Bengaluru; Nokia Siemens, Bengaluru; Paradise Mall, Delhi; Wipro
Data
Centre, Delhi; Brigade Sheraton, Bengaluru; Park Hyatt, Chennai;
Gulmarg
Hotel, Srinagar and Main Mall, Pune. The Company also entered the
Extra
High Voltage (EHV) 132 kV business domain for the first time with
two
prestigious orders of substations and transmission lines at
Discencherla
and Chintal, Andhra Pradesh from Aptransco. These substations are
expected
to be operational by October 2010 and will supply power to the
rural
Nalgonda and the urban Ranga Reddy Districts of Andhra Pradesh.

Blue Star has also been offering plumbing and fire fighting services
in
order to offer a single window, turnkey Mechanical, Electrical &
Plumbing
(MEP) solution to customers. The Company won several orders for
plumbing
and fire fighting services during the year, most of which were bundled
with
airconditioning and electrical contracting orders.

COOLING PRODUCTS:

This business segment includes room airconditioners apart from


commercial
refrigeration products and systems.

During the year,the Company launched a new range of energy labeled


(star-
rated) room airconditioners. These airconditioners are available in a
wide
range of 2, 3 & 5 star ratings and in multiple capacities. The Bureau
of
Energy Efficiency (Ministry of Power, Govt. of India) has made
energy
labeling mandatory with effect from January 7, 2010.

With the legislation finally getting implemented, Blue Star has spruced
up
its product portfolio and has launched a comprehensive range of star-
rated
window and wall mounted split airconditioners to meet a wide range
of
requirements. The energy savings is expected to be a minimum 12% for 2-
star
and goes up to 25% in the case of 5-star. The Company has also improved
the
range of commercial split airconditioners by introducing flat paneled
mega
split airconditioners apart from energy efficient scroll compressor-
fitted
cassette and vertical split airconditioners.

Owing to the onset of early summer in the West and South, there
was
enhanced demand for room airconditioners from the residential
segment.
Focus on educational institutes yielded good business from
schools,
professional colleges, universities and coaching centres. The
National
Accounts Cell won several orders from key customers, especially banks,
ATM
infrastructure providers, financial service providers and telecom
players.

In the commercial refrigeration products segment, sales of chest


freezers
grew well with enhanced demand from ice cream manufacturers and
unorganised
grocery stores. The Company tied up with key accounts in ice cream
and
dairy segments such as Amul, Havmor, Shital, Dinshaws, Vadilal,
Ramani,
Lazza, Dairy Classic, Hatsun Agro, Vijaya Dairy and Milma Dairy,
amongst
others, supplying significant quantities of freezers to them. Bottled
water
dispenser sales recorded high growth driven by demand from small
offices,
shops and residential customers. Storage water coolers registered
modest
growth driven by the manufacturing sector, educational institutes,
offices
and Government establishments.
In the cold chain segment, Blue Star offers a wide range of
equipment
across the chain from the farm to the fork. During the year,
Rajasthan
State Agriculture Marketing Board placed an Rs. 8 crores order on Blue
Star
for storage of fruits and vegetables at three locations. The scope
involves
civil, structural, electrical and refrigeration. In addition, Gujarat
Agro
placed an order valued at Rs. 9 crores for potato storage. The Company
also
booked a prestigious order valued at Rs. 8.5 crores from the Ministry
of
Health and Family Welfare for vaccine storage across the country.
This
project is funded by World Bank.

The Cold Chain Task Force, constituted by CII and Department of


Agriculture
and Co-operation, where Blue Star is also an active participant, is
working
on creating an economically sustainable cold chain model through
Government
subsidy in the areas of integrated packhouses, ripening chambers, bulk
cold
storages, controlled atmosphere chambers and transport refrigeration.
The
cold chain is expected to handle 15% of fruits and vegetables in a
time
span of 3-4 years and 40% in the time span of 5-6 years. This would
mean an
investment of Rs. 22000 crores to handle 15% of the fruits and
vegetables
production and Rs. 55000 crores to handle 40% of the fruits and
vegetables
production in India at the current leveI. These investments would throw
up
an enormous opportunity for Blue Star to aggressively pursue various
cold
chain components like farm-end packhouses, multi commodity cold
storages,
centres for perishable cargo and distribution centres for
logistics,
amongst others.

PROFESSIONAL ELECTRONICS AND INDUSTRIAL SYSTEMS:

Over the years, the Company has changed its business model from being
only
a distributor of leading global manufacturers to that of a
system
integrator and value added reseller, thereby moving up the value chain.
The
Company has the expertise to build a complete system around the
products
offered, thereby offering a comprehensive single window, turnkey
solution.

In 2009-10, the Segment continued to contribute significantly to


the
overall performance of the Company. It is comprised of several
strategic
business units namely Industrial Projects, Industrial Products and
Systems,
Material Testing Equipment and Systems (Destructive / Non
Destructive),
Data Communication Products & Services, Test and Measuring
Instruments,
Analytical Instruments and Medical Diagnostic Equipment.

During the year, the Industrial Projects business performed


exceedingly
well. The Company won a Rs. 45 crores order from SAIL-IISCO Steel
Plant,
Burnpur for compressed air station. The plant is undergoing an
expansion of
2.5 MTPA with a new blast furnace. The centralised compressed air
station
will provide required dry compressed air for various industrial
services as
well as instruments. Blue Star's scope includes all civil, structural
work
and technological structures; compressor building; handling and
hoisting
equipment including electricals; illumination; C&I; water
system;
compressed air pipelines; fire protection and detection systems; roads
and
drainage. The Company also won prestigious orders from other steel
majors
such as Vizag Steel Plant, Rourkela Steel Plant, Tata Blue Scope
and
Tinplate, during the review period.

The destructive and non-destructive testing machines business


had a
relatively slow year. However, during the last quarter, there was
enhanced
demand, especially from automobiles, pipes and allied industries.

MANUFACTURING FACILITIES:

Blue Star has five modern, state-of-the-art manufacturing facilities


at
Thane, Bharuch, Dadra, Himachal and recently, Wada.

Thane, which is the oldest manufacturing facility in Blue Star,


primarily
manufactures a range of screw and scroll chillers. It also
manufactures
special chillers for the process industry. During the year, the
main
emphasis was on quality and consistency through robust
manufacturing
processes. Process improvements coupled with TPM initiatives helped
in
reducing the throughput time thereby resulting in lower lead times. It
also
helped in ramping up of production capacity by about 25% in both screw
as
well as scroll chillers. The screw chiller testing facility is
being
modernized with the help of DMT Germany which will help in getting
the
chillers certified from ARI/Eurovent. While the lab upgradation has
been
completed, the certification will be carried out during the first
quarter
of FY11.

The Dadra plant is regarded as one of the best manufacturing facilities


in
the country for high quality airconditioning products for domestic as
well
as export markets. The product range includes packaged/ducted
split
airconditioners, VRF systems, precision control packaged
airconditioners
and telepacs for the telecom sector. Despite slackened demand, the
plant
was able to maintain profitability by stringent control on
operating
expenses coupled with prudent inventory management and
enhanced
productivity. There was focus on energy management, enhancing
safety
practices, value engineering and TPM, during the review period. Six
sigma
and quality circle initiatives are actively practiced at the plant.

Over the last few years, the Bharuch plant has been focusing on
the
refrigeration products and cold chain business and has invested
in
developing modern manufacturing facilities for polyurethane sandwich
panels
which has resulted in significant growth in capacity of panel
production.
During the review period, layout changes were carried out in the
deep
freezer assembly, resulting in enhanced deep freezer volumes.
The
implementation of TPM for manufacturing excellence resulted in
higher
productivity. The safety initiatives during the year enabled the plant
in
receiving the safety award for 'Exhibiting excellent safety measures
in
factory premises' by Gujarat Gas Ltd, for the second consecutive year.
The Himachal plant manufactures window and split airconditioners.
During
the year, a new range of upgraded products was introduced to meet the
now
mandatory energy labeling programme initiated by BEE (Bureau of
Energy
Efficiency). The manufacturing processes, reliability lab and online
run-
test setup was upgraded in line with the stringent BEE regulations. All
the
star-rated models have been tested at an independent Intertek Lab. The
new
initiatives including ISO, six sigma and TPM are being
pursued
enthusiastically at the plant, resulting in higher operational
efficiency.

This was the second full year of operation of Blue Star's latest
state-of-
the-art manufacturing facility at Wada. The plant manufactures the
entire
range of air handling units and specialized airconditioners for the
telecom
industry. The plant is equipped with modern manufacturing facilities
with
complete vertical integration. An Export Oriented Unit (EOU) is also
housed
within the main plant. The EOU is capable of manufacturing air
handling
units, storage water coolers and packaged airconditioning equipment.
During
the year, there was proactive participation at all levels for
various
initiatives such as TPM, SGA and Kaizen. The plant has also been
certified
for deployment of quality management systems (ISO 9001: Version 2008)
by
Underwriters Labs, USA. Vendor assessment audits for the factory
conducted
by multinationals such as Danfoss and Nokia Siemens resulted in
immediate
approvals.

RESEARCH & DEVELOPMENT:

Blue Star invested Rs. 9.7 crores on research and development during
the
year. The Company has invested in modern product development facilities
as
well as sophisticated test laboratories.

The year under review saw the development and launch of several
new
products as well as entire product lines. These included a new range
of
star-rated room airconditioners under the mandatory BEE energy
labeling
programme. The existing air handling units range was also redesigned
and a
new range was developed incorporating heat pipes and heat recovery
wheels.
A few models of ducted/packaged airconditioners with a 15% improvement
in
energy efficiency for green building applications were also
developed.
Further, a new range of VRF systems was also introduced in capacities
from
6 HP to 12 HP Specific models were developed for the exports
market
including roof top and top discharge split units and heat recovery
units
for fresh air applications.

The team has also initiated work on some technology projects


including
phasing out of non eco-friendly refrigerants and replacing them with
ozone
friendlyones; identifying an alternative to copper in heat exchangers;
and

integrating components such as drives and DC motors in products to


improve
energy efficiency.

EXPORTS:

On the product export front, the Company offers products such as


chillers,
air handling units, fan coil units and roof top units apart
from
traditional cooling products like water coolers, ducted systems and
room
airconditioners. These products, which compete with global brands,
enjoy a
good reputation in the Middle East market.

The product export business saw a drop in revenues during the year due
to
the slack demand. The global economic slowdown adversely affected Dubai
and
several other Middle East nations, with the real estate business
severely
impacted. However, towards the end of the year, there was a slow
recovery
in some segments. The export business registered an overall increase
in
profitability due to a shift in product mix towards engineered and
niche
products which enjoy higher margins. During the year, the Company
signed
two MOUs - with Triangle Co., Syria and Alenaire Airconditioning
Phil.
Inc., Philippines as business partners. This appointment is expected
to
strengthen Blue Star's presence in West Asian and South East Asian
regions.

As far as international projects are concerned, the Company has


joint
ventures in Qatar as well as in Malaysia. During the year, the
Company
continued to be selective in pursuing only projects with
reasonable
margins.

AIRCONOITIOIG AID REFRIGERATION SERVICE:

Blue Star continues to retain its eminent position in the market place
as a
superior value added service provider. The total tonnage maintained
under
various categories of after-sales solutions make the Company the
largest
after-sales service provider in the country. While the customary
warranty
and annual maintenance services continues to be the mainstay, the
Company's
focus into the service parts and accessories arena has resulted
in
increased responsiveness and easy availability of genuine parts.
In
addition, a variety of value added services in the areas of energy, air
and
water management as well as Green Building certification and
consultancy
have been widely accepted. The Company has begun to provide Total
Facility
Management solutions and has built the required infrastructure to meet
the
requirements of large sized industries, IT/ITES campuses and
commercial /
public utilities.

As a result of Blue Star's Energy Audit recommendations - carried out


by a
strong 30-member team of BEE accredited Energy Auditors and Managers,
many
customers are opting for revamp or retrofit solutions and upgrading to
more
energy efficient systems. Green Building consultancy services are
offered
for both new construction and existing buildings. The team comprises 3
US
Green Building Council (USGBC) certified Leadership in Energy
and
Environmental Design (LEED) Accredited Professionals. In addition, its
NEBB
certified personnel make Blue Star the only company in India to offer
TAB
(testing, adjusting and balancing of air and hydronic systems) services
to
HVAC customers.

The Company continued to focus on enhancing the quality of


service
delivery, during the year. Towards this end, several
developmental
programmes were implemented including certification and training of
dealers
and business associates; monitoring of service delivery quality
through a
Service Quality Assurance Group; and the handling of high-end
technical
problems through a Service Specialists' Group. The Commissioning
Services
Group which was constituted to handle commissioning services in line
with
international practices resulted in higher customer satisfaction and
lower
warranty expenses.

SUPPLY CHAIN MANAGEMENT:

With a significant amount being spent on outside goods, the Company has
an
agile and adaptable supply chain incorporating modern procurement
practices

such as long term contracts, e-procurement, time-based competition,


hedging
and managing risk. During the year, the Company reduced the
primary
transportation spend by better indent management and volume
consolidation.
With GST expected to come in effect from April 2011, the Company is
already
working out a new network design based on the hub and spoke model
for
distribution, which will help it quickly migrate to the GST environment.

CHANNEL DEVELOPMENT:

The Company has a Channel Management Centre, which is the overall


custodian
of Blue Star channel partners and a single point contact for all
channel
development and channel conflict resolution initiatives. Blue Star has
215
systems dealers who exclusively deal in the Company's systems
businesses
comprising packaged airconditioning and cold rooms and 720 dealers to
sell
room airconditioners and refrigeration products.

On the channel development front, the Company implemented


several
developmental and motivational programmes for its channel
partners,
including trips abroad for high performing dealers. An important
initiative
was in the area of site safety. A comprehensive 'Safety Policy and
Manual
for Business Partners' was created and distributed to all channel
partners
apart from imparting several training programmes on safety. The Company
put
up 4 more Product Display Areas (PDAs) in association with its
leading
dealers during the year, taking the total number of PDAs in the country
to
44. The PDAs aim to provide customers with a pleasant,
standardised
shopping experience, apart from the comprehensive product information
that
Blue Star dealers are known for.

FINANCIAL PERFORMANCE:

The analysis of the financial year performance for the year ended March
31,
2010 in comparison to the previous year is as under:

1. INCOME:

Total Income (net of excise duty) and before profit from sale
of
investments (exceptional item) for the year at Rs. 2556.11 crores
increased
marginally by 1.3% over Rs. 2524.38 crores in the previous year.

2. COST OF SALES, WORK BIDS ADD SERVICES:

The cost of sales, work bills and services during the year was Rs.
1882.08
crores and was 74.5% of the revenue from sales, work bills and
commission
as compared to 74.9% in the previous year. Despite an increase in the
cost
of materials due to higher commodity prices for part of the year, the
cost
of sales for the year was contained due to significant savings as a
result
of value engineering, aided by the appreciation of the rupee in the
latter
part of the year.

3. EMPLOYEE REMUNERATION AD BENEFITS:

Employee cost increased by 1% from Rs. 182.25 crores to Rs.


184.87
crores. The employee cost was 7.2% of the Total Income at the same
level as
previous year.
4. OPERATING AND GENERAL EXPENSE:

Operating and General expenses amounted to Rs. 183.32 crores,


reflecting a
reduction of 2% over the previous year. As a percentage of Total
Income,
the Operating and General expenses for the year were at 7.1% compared
to
7.4% in the previous year.

S. FINANCIAL EXPENSES:

Financial cost at Rs. 8.45 crores for the year was significantly lower
than
Rs. 17.25 crores incurred in the previous year, primarily due to
better
cash management and reduction in bank interest rates during the
year.
Interest cost for the year was 0.33% of the Total Income as compared
to
0.68% in the previous year.

6. DEPRECIATION:

Depreciation charge for the year was significantly higher at Rs.


34.73
crores compared to Rs. 25.88 crores in the previous year, mainly due
to
capitalisation of SAP ERP and additional facilities at the
manufacturing
plant at Wada.

7. TAXATION:

Provision for taxation for the year was Rs. 65.13 crores which is 23.5%
of
the Profit before tax, as compared to 24.3% in the previous year.
The
decrease was mainly due to higher tax depreciation on account
of
significantly higher additions of fixed assets during the year and
the
increase in the quantum of profits of the Himachal factory which
are
eligible for tax holiday.

8. EXCEPTIONAL ITEM:

During the year, the Company realized a profit of Rs. 13.96 crores on
the
sale of its shareholding in Rolastar Pvt Ltd and Ravistar India Pvt Ltd.

9. NET PROFIT:

Net profit after tax for the year was Rs. 211.49 crores as compared to
Rs.
180.29 crores in the previous year, representing an increase of 17%.
Profit
before Tax and Exceptional items for the year at Rs. 262.66
crores,
recorded a growth of 10.2% over the Profit before Tax of Rs. 238.33
crores
in the previous year. Including the Exceptional item, the Profit before
Tax
for the year was Rs. 276.62 crores as compared to Rs. 238.22 crores in
the
previous year.

10. CAPITAL EXPENDITURE:

During the year, the Company incurred capital expenditure of Rs.


47.47
crores as compared to Rs. 80.06 crores in the previous year. This
includes
capital expenditure incurred for the SAP ERP package implemented in
the
financial year and. additional investments in the manufacturing
facility at
Wada.

11. ADJUSTMENTS AGAINST GENERAL RESERVE IN ACCORDANCE WITH THE SCHEME


OF
ARRANGEMENT PERTAINING TO THE ACQUISITION CAF THE ELECTRICAL
CONTRACTING
BUSINESS OF NASEER ELECTRICAL PRIVATE LIMITED:

The Company had in January 2008 acquired the electrical


contracting
business of Naseer Electricals Private Limited (NEPL) under a
Business
Purchase Agreement on a slump sale basis for Rs. 48.10 crores,
including a
sum of Rs. 5 crores held in Escrow account till the conditions
stipulated
in the said Agreement were fulfilled. In accordance with a Scheme
of
Arrangement approved by the shareholders and sanctioned by the Hon'ble
High
Court at Bombay in April 2008, the goodwill arising on the acquisition
had
been adjusted against the General Reserve of the Company. Consequent
upon
final settlement with NEPL, a sum of Rs. 2.22 crores was received back
by
the Company from the amount held in the Escrow account and the same
has
been credited to the General Reserve of the Company.

Further, in accordance with the said Scheme of Arrangement, fees and


bonus
of Rs.5.26 crores paid during the year to the consultants in terms of
the
said Agreement has been adjusted against the General Reserve of
the
Company.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company remains committed to ensure the prevalence of an


effective
internal control environment that provides reliable financial
and
operational information, ensures compliance of corporate policies
and
applicable statutory regulations and safeguards company assets.

The in-house Internal Audit Department is ISO 9001:2000 certified


and
carries out internal audits covering all significant areas of the
Company's
operations in accordance with the annual Internal Audit plan approved
by
the Audit Committee. The Internal Audit Department is supported
and
supplemented by external firms which carry out internal audits at
the
regions and factories. The Audit Committee of the Board periodically
meets
the Internal Auditors and reviews the internal audit
recommendations,
auditee responses and monitors the remedial action taken.

With the successful implementation of SAP, the Company has in


place a
highly integrated ERP system which has resulted in more effective
and
efficient reporting and further strengthening of internal controls.

RISKS AND CONCERNS:

The Company has in place an effective Risk Management framework under


which
all internal and external risks across the various businesses and
functions
are periodically identified, assessed and acted upon by designated
risk
owners to minimise and mitigate their impact. These risks and the
risk
management process are also periodically reviewed by the senior
management
and the Board to ensure their effectiveness.

The Company continues to satisfactorily address the various financial


risks
relating to exchange rates, interest rates and credit risks as well
as
operating risks arising out of high input costs, changes in
technology,
changes in the global scenario, customer preferences, increasing size
and
complexity of contracts and competitive pressures.

The strong fundamentals of the Company and its sound financial base
have
placed it in a strong position to face the vagaries of the market.
The
uncertain global economic scenario could affect the Indian economy.
This
could impact the growth of the Company to some extent. The Company
will
continue to remain vigilant and will proactively take steps to mitigate
the
adverse impact, if any, arising out of these concerns.

HUMAN RESOURCES:

During the review period, the Company reduced its total head
count
marginally from 2620 as on March 31, 2009 to 2603 on March 31, 2010.
The
focus of the function was to control costs and yet maintain a high
degree
of productivity. The Company released modest increases in salaries
which
helped maintain productivity and employee morale during the year.
The
Company saw harmonious industrial relations and the Company signed a
short
term settlement with the Union during the course of the year.

A Central Technical Training Organisation (CTTO) was formed a few


years
back to handle all the technical trainings for the Company's
AC&R
businesses. In all, the CTTO delivered about 8400 man days of training
for
employees as well as channel partners during the year.

ENVIRONMENT, HEALTH & SAFETY

During the year, the Environment, Health and Safety (EHS) function
further
enhanced safety awareness among the employees and business partners.
Over
4000 employees and technicians/workers of business partners were
covered
under safety training. Safety systems and processes were developed
for
project sites / factories and the same were implemented, creating a
safe
work place for all stakeholders. Safety audits were conducted
engaging
external agencies like Central Labour Institute, Mumbai as well as
internal
safety professionals to measure safety compliance. Based on the
findings,
necessary corrective and preventive measures were undertaken on a
priority
basis. There was a 42% drop in the reported accidents in the
organization
during the year compared to the previous year. The EHS function was
further
strengthened by employing more safety professionals.

INFORMATION TECHNOLOGY:

The year witnessed the culmination of the largest ever IT


project
implementation in the Company with the big-bang 'Go-Live' solution of
SAP
ECC 6.0. Through the year, the solution achieved stability and is
now
seamlessly operating across all business divisions and all locations.
The
MIS reporting has also gained steam and almost all reports are
now
generated from the SAP platform. A dedicated team of over 70
professionals
from the Company and its partners are involved in supporting the
SAP
solution. The solution has helped the Company achieve uniformity in
its
business processes across its divisions; automating and
streamlining
operational processes; increasing productivity in operations with a
role-
based solution and centralized information; extending collaboration to
all
value chain partners; and improving operational performance with
strategic
business insight.

BRAND EQUITY:

The Company has made substantial investments in building brand equity


over
the last few years. During the year under review, as a measure of
economy,
there was a moderate reduction in advertising. During the latter part
of
the year, the Company launched a new TV commercial on room
airconditioners
with the value proposition of 'Get office-like cooling at home' which
has
met with a good response.

Apart from the mass media, the Company also made affordable investments
in
field marketing. These include participation in trade
exhibitions,
sponsorships of events by CII and others, IDEAC (Interior
Designers,
Architects and Consultants) relationship management, customer events
and
public relations through the Press. These field activities are critical
and
have gone along way in complementing mass media campaigns and
strengthening
brand equity.

CORPORATE SOCIAL RESPONSIBILITY:

Blue Star's Corporate Social Responsibility (CSR) philosophy is built


on
three pillars namely Environment protection, Energy conservation
and
Community development around our facilities.

The Company is highly committed to the cause of protecting the


environment.
Energy efficiency of its products remains a corner-stone of its
research
and development efforts. Air, water and energy management services as
well
as LEED consultancy for Green Buildings have been part of its business
and
practices. The Company has also been contributing in the technical
domain
through the use of eco-friendly refrigerants in its products.

Energy Conservation goes beyond using efficient products. A huge amount


of
energy is wasted nationally due to sheer ignorance and lack of
awareness.
The Company is helping deserving institutions such as hospitals
and
colleges to save power by conducting free walk-through energy audits.
In
its efforts towards community development around the Company's
facilities,
the Company continues to sponsor the vocational training courses
offered by
an NGO, Kherwadi Social Welfare Association (KSWA), in Wada. This
centre
has been set up to support a vocational training initiative for school
and
college dropouts to make them employable contributing members of
their
families and communities. Regular visits by the Company's employees
have
aided in technical support to KSWA for conducting the courses.

In addition to the above CSR efforts, the Company continued to


sponsor
various philanthropic causes through its charitable Trust, Blue
Star
Foundation, which has been supporting activities in the areas of
education
and healthcare, apart from relief measures in national calamities.

CORPORATE OUTLOOK:

In spite of the weak economic environment that led to a slow start


last
year, Blue Star's profits continued to grow due to effective cost
control
and favourable input costs, with the year ending on an encouraging
note.
The worst of the slowdown seems to be behind us and considering the
healthy
carry forward order book coupled with Blue Star's expertise, leadership
and
credentials, the Company is confident of better business prospects in
the
year ahead.
WHIRLPOOL OF INDIA LIMITED Back
ANNUAL REPORT 2009-2010

MANAGEMENT DISCUSSION AND ANALYSIS

Industry Structure and Developments:

Market growth was modest in the first quarter of the financial year
2009-
2010 but picked up as the year progressed. The General Elections saw
the
ruling alliance return to power, signaling political stability at
the
centre. Strong GDP growth in the face of a contracting global
economy
infused confidence in business; the fiscal stimulus provided relief
from
inflationary pressures; and implementation of the 6th Pay
Commission
stimulated consumer purchase. All these combined to change the
consumer
sentiment from apprehension during the last two quarters of 2008-2009
to
positive as the new financial year progressed. The home appliance
industry
in particular was among the first to witness revival of growth.

Overall, the home appliance industry, comprising Refrigerators,


Washing
Machines, Microwaves and Air Conditioners, grew by 15-20%. Our estimate
of
category growth is 15-20% for Refrigerators and Microwaves and 20-25%
for
Washing Machines and Air Conditioners. Some developments that can be
seen
in the appliance industry are:

* There is distinct preference for high-end products. For example


fully
automatic washing machines and split air conditioners are growing
faster
than the category average.

* There is higher demand for large capacity products driven by


changing
lifestyles, e.g. weekly vs. daily shopping and infrequent heavy-
load
washing vs. daily light-load washing. This is fuelling demand for
large
capacity refrigerators and washing machines respectively.

* Energy consciousness is increasing and is becoming an important


purchase
criterion, especially in Air Conditioners.
* Consumers are paying greater attention to design and aesthetics
while
choosing a brand.

* Health and wellness trends have resulted in demand for health-


related
features in home appliances. For instance, Water Purification products
are
increasingly being seen as a necessity.

* Barriers to owning a washing machine (availability of laundry,


'dhobi',
and domestic help) are coming down. This segment has seen high growth
over
the recent past.

* Emergence of modular kitchens has given birth to a new genre


of
appliances called Built-In appliances where the products
(Ovens,
Dishwashers, Hoods, etc.) integrate with the cabinetry of the kitchen.

* Trade expectations have changed. The emergence of 'modern trade'


has
thrown up the necessity for Trade Marketing and Key Account
Management
practices as well as improving customer management practices.

Outlook And Opportunities

Penetration of home appliances is still very low and the long term
growth
opportunity for this industry is very attractive. Out of every
100
consumers living in urban India, only 33 own a refrigerator and
13 a
washing machine and these numbers are miniscule in rural areas.
Penetration
of air conditioners, microwaves and electrical water purifiers is
even
lower. Hence, the industry can be expected to see sustained growth in
all
categories for many years to come and the government focus
on
infrastructure development - electricity in particular -will
accelerate
demand.

Growth is expected at both ends of the market. Growth of entry


level
products will be stimulated by first time buyers while the
sophisticated
products will be fuelled by the replacement market, new housing and
modular
kitchens. Within the home appliance industry, categories/ segments that
are
expected to grow ahead of the industry average are washing
machines,
microwaves and air conditioners.

Outlook on Threats, Risks and Concerns

Demand is likely to be robust in the next financial year.


However,
competitive activity is also likely to rise and a number of
existing
competitors have announced investments in new plants and expansion into
new
categories and brands. New players are also entering the country, lured
by
the attractiveness of the market. These will impose pressure on
market
share and advertising and promotion budgets will need to be increased
to
maintain brand saliency. Distribution expansion and efficiency will
also be
a key driver to stay ahead of competition. Cost pressures will continue
to
be a concern: on one hand, the increase in demand drives inflation
of
material costs and on the other, regulations on energy and
sustainability
will add cost to our products.

The lack of a well developed supply base of components and


materials
necessitates imports and thus there is consequential risk arising
from
currency fluctuations.

Segment wise Performance, Internal Controls and Financial Performance

The company operates in only one segment of White Goods. Domestic sales
in
value terms grew by 30% and overall sales grew by 28%.

Internal Control Systems and Adequacy

The Company has in place adequate internal control systems and


procedures
commensurate with the size and nature of business. These procedures
are
designed to ensure that:

* all assets and resources are acquired economically, used efficiently


and
are adequately protected;

* significant financial, managerial and operating information is


accurate,
reliable and is provided timely; and

* all internal policies and statutory guidelines are complied with.


The composition and competencies of the audit team and effectiveness
of
internal controls is continuously reviewed by the Audit Committee.

The scope of internal audit extends to all functions and locations of


the
company. The Company has also complied with the revised clause 49 of
the
listing agreement.
BAJAJ ELECTRICALS LIMITED Back
ANNUAL REPORT 2009-2010

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis presented in this Annual


Report
focuses on reviewing the performance of the Company in the past year
and
the current year theme 'Transform 2010', a Company-wide initiative to
move
ahead in various areas of operations. A good beginning has been
achieved
with the successful implementation of ORACLE ERP. Now, the agenda is
to
leverage the capability of the ERP and improve the operating
performance
across the organization. Various initiatives have been discussed in
the
planning meets of each of the Strategic Business Unit, Support
functions
and Corporate functions like Branch Sales Support, Customer Care, CSD,
etc.

Overall Review:

Bajaj Electricals Limited is a 72-year-old diversified Company,


with
interests in Lighting, Luminaires, Appliances, Fans, and
Engineering &
Projects. In the financial year 2009-10, overall profitability of
the
Company has improved mainly due to the better sales performance of all
the
BU's excluding Luminaires BU. An improved product mix, value
engineering
and the ability to pass on a part of the steep increase in input costs
to
customers, favourable forex movement and reduction in interest costs
are
also amongst the major reasons for the better performance of the
Company.

The gross turnover of the Company has increased to Rs.2252.27 crore


as
against Rs.1794.13 crore last year, registering a growth of 25.5%.
The
industry continued to witness intense fluctuations in raw material
costs,
high levels of competition and consequent pressures on margins.

The Company, in order to negate the impact of the intense competition


and
to be on the path of growth, continued its focus on enhancing
revenue
growth through introduction of new products, expansion of the dealer
and
retailer network along with good brand building efforts in addition to
the
various other actions for effective cost control, value
engineering,
competitive sourcing and improving credit discipline. The market
also
witnessed a slowing down in construction activity and lower spends
on
Infrastructure / Industrial Investments.

However, India continues to be on a growth trajectory and the Company


has
positioned itself to reap the benefits of future investments in
demand
conditions and infrastructure expansion.

Business Review:

Engineering & Projects Business Unit (E&P BU):

E&P BU has doubled its turnover in the last 2 years and achieved a
record
turnover of Rs.755 crore with a growth of 39% and a CAGR of 40% in the
year
under review. The order book of the BU as on 1st April, 2010 stood
at
around Rs.750 crore.

The TLT Division has clocked a turnover of Rs.280 crore with 62%
growth,
whereas Special Projects Division has clocked a turnover of Rs.265
crore
with 64% growth.

Despite increasing levels of competition due to the entry of many


new
players in the Highmast and Street Lighting domain, we have been able
to
sell nearly 4,450 Highmasts and over 35,000 poles of different
varieties
during the year.

The Ranjangaon Unit has achieved the highest tonnage of over 35,000
MT
which includes over 25,000 MT of Transmission Line Towers. This Unit
was
commissioned in April, 2001 and since then has made a steady progress
to
achieve near 90% capacity utilization.

The noteworthy achievements for the E&P BU for the year gone by are:
(i) the design, development, supply, installation and commission of
tallest
flag post of 63 m height in Kaithal, Kurukshetra District of
Haryana,
hoisting largest flag of 14 x 22 m which has already entered the LIMCA
Book
of records 2010-11;

(ii) the illumination of the Bandra Worli Sea Link bridge, which has
become
a new land mark of the city of Mumbai;

(iii) the order for the execution of Flood Lighting of Wankhede


Stadium,
Mumbai to host the World Cup Cricket finals 2011.

Our thrust and diversification into the Rural Electrification business


is
also giving good results and currently we have seven projects
under
execution through National Electric Supply Company Limited
(NESCL),
National Hydro Power Corporation (NHPC) and Madhya Pradesh Poorva
Kshetra
Vidyut Vitran Company Limited (MPPKVVCL), Jabalpur. Once completed,
Bajaj
Electricals would be associated with providing electricity connections
of
over 8 lakh BPL households in the country.

Our Transmission Line Division is executing EPC orders for


important
customers like Power Grid Corporation of India Ltd. (PGCIL), Damodar
Valley
Corporation (DVC), Gujarat Electricity Transmission Company
Limited
(GETCO), Andhra Pradesh Transmission Corporation (APTransco),
Tamilnadu
Electricity Board (TNEB), Power Koldam Transmission Company
Limited
(PKTCL), Maharasthra State Electricity Transmission Company Ltd.
(MSETCL),
etc. The E& P BU is working on various system improvement exercises to
take
on the increased competition, bring down the working capital
requirements
and also prepare for higher volume business which is expected from
the
infrastructure boom in the country.

Appliances BU:

Appliances BU offers a wide range of Domestic Appliances including


Water
Heaters, Mixers, Food Processors, Microwave Ovens, Air Coolers, Steam
and
Dry Irons, Electric Kettles, Water Filters, Toasters, Rice Cookers,
Oven-
Toaster-Grillers, Microwave Ovens, Juicer-Mixer-Grinders, Hair
Dryers,
Chimneys, Gas Stoves, Hobs, Room Heaters, Home UPS etc.

The Appliances BU continues to be on the path of aggressive growth and


has
achieved a turnover of Rs.505 crore with a growth of 25% and CAGR of
26% to
remain a dominant No.1 player in Small Appliances Industry, nearly
double
the size of its closest competitor.

This BU has sold nearly 5.2 million pieces in FY 2009-10, which


means
nearly one piece is sold in every 4 seconds (considering 12 hours a
day),
with 24 lacs Irons, 3.2 lacs Water Heaters, thus regaining the
No. 1
position in water heaters.

This BU has also entered the Modern Retail Format and Corporate Sales
in a
big way with a dedicated team focused on this business.

Morphy Richards (MR) has achieved sales of Rs.73 crore inspite of


intense
competition from international premium brands. MR brand has emerged
as a
fastest growing and leading brand in the premium segment of 'Small
Domestic
Appliances' industry with a growth of 33% and CAGR of 26%. It has a
strong
presence in modern retail formats, CSD and in premium trade outlets.

Fans BU:

The Fans BU has an attractive range of ceiling, table, pedestal,


wall
mounted, exhaust and fresh air fans, in various sizes and
colours,
manufactured in plants having ISO 9001 / 9002 quality certifications.

The BU has done exceedingly well by achieving a turnover of around


Rs.379
crore with a growth of 28% and a CAGR of 24% - with a market share
of
around 16%. The BU has many successes to its credit in terms
of
introduction of new models, gains in market and shop shares in
key
counters, improved rural penetration, etc. Today, the most talked about
CRM
initiative in the Fan industry is the highly appreciated Bajaj
Fans
Privilege Club and the Bajaj Fans Star Club programs with nearly
400
dealers qualifying as members to these prestigious Clubs.

Bajaj Fans introduced Star Rated decorative Fans, New Models under the
kids
fan category with Bajaj-Disney Brand, besides introducing many new
models.
The year gone by also saw the introduction of many new models of
Air-
circulators and a wide range of industrial exhaust fans, Cooler-kits,
Pumps
& motors.

Bajaj fans are sold in almost 50,000 outlets across the country - of
which
around 18% are in rural areas and small towns with below 50,000
population.
With an aggressive marketing and promotional strategy the BU is poised
to
take advantage of its unique position in the industry in the coming
years
too.

Chakan Unit of the Company has produced over 3,50,000 fans for the BU
and
has done innovative work on new product development, value
engineering
initiatives, quality improvement efforts, etc. during the year.

Luminaires BU:

The Luminaires BU markets a comprehensive range of luminaires


(light
fittings) covering, commercial, industrial, flood lighting,
street
lighting, post-top lighting luminaires besides special luminaires for
flame
proof and increased safety applications. This BU is certified for ISO
9001
while the various products are manufactured in plants conforming to
ISO
9002 requirements. The luminaires are offered to suit a wide variety
of
light sources ranging from CFL, FTL to HID lamps of various types
and
ratings. The BU has a Lighting Development Centre and LDMS to carry
out
scientific illumination layouts for various applications and a
well-
equipped laboratory approved by the Department of Science & Technology.
At
present, this BU is developing a new generation of energy saving
luminaires
with LEDs.
The Luminaries BU has achieved a turnover of Rs.275 crore with a CAGR
of
9%. The entire Luminaires industry in India went through a de-
growth,
primarily due to the slow down in key sectors like IT, Retail,
Construction
and Manufacturing. Also, the parliamentary elections in the beginning
of
2009-10 and the assembly elections resulted in postponement of major
buying
decision by the governmental undertakings.

The BU has signed an agreement with Ruud Lighting Inc. of USA


for
distributing their LED range of products in SAARC countries and
also
acquired rights to manufacture the Ruud Lighting (BETA LED) range
of
products in India. This will be an important part of our strategy for
LED
products.

The BU has identified 'Green Building Technologies Solutions' as one of


its
major initiatives to promote new products such as LED, Induction
Lamps,
Trilux, IBMS, etc. It has conducted panel discussions in mega cities
like
Delhi, Mumbai & Hyderabad and got an encouraging response to its
Green
Buildings initiatives.

Photolux application design software has been developed by the BU


for
lighting professionals. It empowers them to make illumination
designs
accurately and with a speed. The BU continues to promote the premium
end
Trilux Luminaires. Trilux business was very successful last year with
major
orders from Delhi PWD for street lighting for the Common Wealth
games,
Volkswagen factory, TCS Chennai, etc.

In keeping with Company's commitment to protect the environment, the BU


has
assisted its major vendors in obtaining ISO 14001 certification.

As a part of the strategic diversification in product lines, the BU


has
entered into a new business line i.e. IIBMS (Integrated
Intelligent
Building Management Systems). This covers HVAC Controls, Fire
Alarms,
Access and Security controls, managed by a BMS. The BU has tied up with
two
major partners i.e. Securiton of Switzerland and Delta Controls of
Canada
to offer cutting edge BACNET Technology to its institutional
customers.
This venture will provide a competitive edge to the Company and the
Company
will now be looked upon by customers for end-to-end solutions in
total
energy management, lighting and controls of Buildings and facilities.

Lighting BU:

The Lighting BU markets a wide range of Light Sources and


Domestic
Luminaires. The Light Sources include General Lighting Service (GLS)
lamps,
Fluorescent Tube Lights (FTL), Compact Fluorescent Lamps (CFL),
special
purpose lamps, etc. Keeping in line with the objective of the company
to

lay special emphasis on the Green, Environment - friendly technologies


and
products, the BU is planning a major foray in LED based products. The
entry
into LED portable lights is a step in that direction. A strong
distribution
network exists for marketing these products both in urban and rural
areas.

The manufacturing of GLS and FTL lamps is undertaken at Hind lamps,


an
associate company of BEL, located in U.P. The equity investment in
Starlite
Lighting, a CFL manufacturer has added to the CFL marketing strength.
The
Starlite plant makes world class products on one of its kind Swiss
`Falma'
machines. The roll out of the T3 CFLs is also underway on the
world's
fastest GE chain which has been recently installed.

The Lighting BU has done well despite intense competition and


rapidly
changing market dynamics. It has achieved a turnover of Rs.261 crore
with a
growth of 26% and a CAGR of 21%. The CFL segment continues to
register a
strong growth due to greater adoption of energy saving lamps by
individuals
and the Government bodies. The CFL sales, as a product segment,
have
touched Rs.150 crore mark in 2009-10. The BU has bagged prestigious
orders
from both Government undertakings and private bodies in 2009-10 in the
CFL
category.
The BU has continued to improve its retail presence by expanding
its
network and reaching to over 3,00,000 outlets. The Super
Distributor
strategy to increase the reach in Tier III & Tier IV towns has paid
good
dividends and the pan-India rollover is in progress.

The BU's dealer-customer relationship management program 'JOSH' is


being
carried forward to ensure a very strong and healthy relationship with
its
top channel partners. The Lighting BU with its improved
distribution
network, wide product range, and efficient sourcing strategies is
poised
for improved growth in the future.

Financial Performance:

Rs.
Crore

2009-10
2008-09

Gross Sales Turnover and Other Income 2252.27


1794.13
PBDIT 246.27
185.54
Cash Profit 214.82
148.57
Net Profit 117.10
89.13
Net Profit excluding exceptional items 130.28
89.34

Financial Review:

The Company delivered superior financial performance with


improvements
across key parameters and has become a company with solid fundamentals.
The
Company raised capital of Rs.160.79 crore through the QIP route in
the
third quarter of the financial year under reporting. The Company went
from
being over leveraged 5 years back, to a low debt to equity ratio of
around
0.31 in the year under reporting.

The gross turnover and other income achieved for the year ended 31st
March,
2010 was Rs.2252.27 crore, a growth of 25.53% over the previous year.
PBDIT (excluding exceptional items) increased by 32.73% from Rs.
185.54
crore to Rs. 246.27 crore.

The net profit after tax at Rs.117.10 crore was 5.20 % as compared to
4.97%
in the previous year.

Interest cost was lower by 14.93% at Rs.31.45 crore on account


repayment of
debts out of QIP proceeds and interest rate reduction.

Profit after tax, including exceptional item, was Rs.117.10 crore


as
against Rs.89.13 crore for the previous year, an increase of 31.38%.
Profit
after tax, excluding impact of exceptional item was Rs. 130.28
crore,
representing an increase of 45.82%.

Earning Per Share (EPS) for the year was Rs.13.01.

The Company expects to retain its focus on Profitable Growth in the


year
2010-11 also.

Transform 2010:

Last year, Team Bajaj had embarked on a journey called `CHALLENGE


2009', a
major step towards achieving a target turnover of Rs.2001 crore in FY
2009-
10 which has been a huge success. The Company achieved a sales turnover
of
Rs.2252.27 crore with a growth of 25.5% over the previous year and a
CAGR
of 26.5%. The Company has chosen the theme 'Transform 2010' as
it's
motivating and guiding factor in the current year, to continue to
remain on
the growth path and to achieve superior business performance driven
by
continuous improvements in products & processes, widening of the
product
range and entering new categories and geographies. Simultaneously,
there
will be a strong focus on cost reduction, improving margins and
reducing
working capital deployment.

Opportunities:

The Indian economy is likely to see an improvement in GDP growth to


around
8% and a return of the feel good factor. It is expected that the
government
will focus more strongly on the reforms agenda and take stronger
economic
action aimed at spurring consumption, building infrastructure
and
stimulating economic growth. Rural India is expected to boom with
favorable
monsoon and appropriate government policy. Infrastructure sector
offers a
huge opportunity in both urban and rural India. The construction sector
and
the housing sector are showing strong signs of revival.

All of these developments provide a significant opportunity to


Bajaj
Electricals in its consumer facing businesses as well as
industrial /
infrastructure facing businesses.

Challenges:

The Global economy, it appears will take around 12 to 18 months to


recover
from its past upheavals. The developments in Europe may be a cause
for
future concern. The commodity prices continue to behave erratically.
The
export oriented industries are still on the recovery path except for
IT
which appears to be back on a growth path. Poor infrastructure and the
pace
of pushing the reforms agenda are impacting the overall economic
growth.
Inflation is raring its head time and again. We expect to meet
these
challenges with better customer relationships, focused demand
generation
efforts and a strong business focus by the Company.

Future Outlook:

We are confident that Indian GDP growth will see an improvement to


about
8%. The Indian economy being a domestic consumption led economy
with a
large infrastructure spends has indeed bounced back faster. The
Company
will continue its focus on 'Transformation' through better cost
management,
improving margins, reducing inefficiency, improving supply chain
and
improving productivity so that it can continue to gain market share
and
improve its operating performance. The Company has a balanced
business
portfolio, which is both consumer centric and infrastructure oriented
and
spread across various seasons. The strong distribution network, a
powerful
brand, wide product portfolio, large service infrastructure,
excellent
vendor base and dedicated employees along with excellent channel
partners
continue to be the major areas of strength for the Company. With
the
successful implementation of the new Oracle ERP package the Company
will
further improve its processes, systems and controls. This gives us
reasons
to be optimistic about the future success of the Company.

Internal Control Systems and their Adequacies:

In any industry, the processes and internal control systems play a


critical
role in the health of a company. The Company's well defined
organizational
structure, documented policy guidelines, defined authority matrix
and
internal controls ensure efficiency of operations, compliance with
internal
policies, applicable laws, regulations and protection of
resources.
Moreover, the Company continuously upgrades these systems in line with
the
best available practices. The internal control system is supplemented
by
extensive internal audits, regular reviews by management and
standard
policies and guidelines to ensure reliability of financial and all
other
records to prepare financial statements and other data. The
Management
Information System provides timely and accurate information for
effective
control. Oracle based ERP has been implemented to further strengthen
the
Company's internal systems. Thorough business planning as well as
expense,
capital and manpower budgeting processes ensure that progress is
monitored
against targets, and control is exercised on all major expenses, so
that
actual spending is in accordance with the budgets.

Material Developments in Human Resources (HR):

Human resources are an integral and important part of any organization.


The
Company recognizes the importance of human capital and values it
highly.
The Company has put in place sound policies for the growth and progress
of
its employees. Individual Performance Appraisal Systems have
been
implemented to encourage merit and enhance innovative thinking. Roles
and
Responsibilities are clearly defined at all levels. The Company, with
an
aim to become a preferred employer has a well drawn recruitment policy
and
a performance-based compensation policy including an 'Employee Stock
Option
Plan', which enables the employees to develop a sense of ownership with
the
organization. The Company recognizes the importance of providing
training
and development opportunities to its people to enhance their skills
and
experience, which in turn enables the Company to achieve its
business
objectives. Training programmes are aimed at developing industry
specific
knowledge, management development and competency enhancement as well
as
general corporate and soft skills.

Social Responsibility:

The Bajaj Group and Bajaj Electricals continue to play a meaningful


role in
a large number of areas relating to education, rural
development,
environment protection and social upliftment. Many of the
initiatives
mentioned in previous annual reports such as IMC Ladies Wing -
Jankidevi
Bajaj Puraskar, BMA Management Woman Achiever of the Year Award
and
Paryavaran Mitra - Friends of Environment continue to receive the
support
of the Company. The employees of the Company play an important role
in
their personal capacity for various laudable causes.

Cautionary Statement:

Statements in the Management Discussion and Analysis, describing


the
Company's objectives, projections, estimates and expectations
may
constitute `forward-looking statements' within the meaning of
applicable
laws and regulations. Actual results might differ materially from
those
either expressed or implied, depending upon economic conditions,
Government
policies, regulations, tax laws and other incidental factors.
For and on behalf of the Board of
Directors

Shekhar
Bajaj
Place : Mumbai, Chairman & Managing
Director

Date : May 26, 2010


TTK PRESTIGE LIMITED Back
ANNUAL REPORT 2009-2010

MANAGEMENT DISCUSSION AND ANALYSIS

A. ECONOMY /INDUSTRY SCENARIO

Financial year 2009-10 started with a lot of apprehensions as the


global as
well as Indian economy was suffering from the impact of
immediate
recessionary past. The situation improved during second half of
2009-10.
The Indian economy grew by 7.1% as compared to 6.7% in the previous
year.
Some of the key domestic markets were affected due to deficit rainfall
as
well as local social and political disturbances. Exports from India
were
significantly affected due to continuing recessionary trends in
Western
countries. Against this backdrop your Company was able to achieve a
growth
of 26% in the domestic market, which more than compensated for the drop
in
export sales.

Your Company operates in the kitchen appliances segment with a wide


range
of product categories consisting of Pressure Cookers, Non-stick
Cookware,
Gas Stoves and Domestic Kitchen Electrical Appliances. Pressure Cooker
is
the key product category of your Company. The market for Pressure
Cookers
is shared amongst organized national branded players, regional players
and
unorganized players. Till the last couple of years, the share of
the
unorganized players was very large. The market is gradually shifting
to
branded players and the current market share of the organized brands
is
slightly more than 50% of the total market. In the other product
categories
also the market structure is similar but the share and role of
regional
brands and unorganized players are very significant.

B. OPPORTUNITIES, THREATS AND COMPANY'S RESPONSE

Your Company's growth is steadily built on its core strengths of


brand,
manufacturing, design, distribution, sourcing and service capabilities.
The strategy to focus on the `Total Kitchen Solution' has been creating
new
opportunities for your Company to expand its product base. This in turn
is
creating opportunities for expanding the market base. Your Company's
focus
on offering new improved products both in the traditional product
category
as well as new product category is opening up opportunities in North
and
East markets where your Company is yet to become dominant.

Products like Induction Cook Tops, Induction compatible range of


pressure
cookers and cookware, Apple range of Inner-lid pressure cookers,
Microwave
Pressure Cookers etc are a few examples of products which are designed
to
enable your Company to penetrate into all geographies and income
segments.

The Government scheme for rural employment guarantee is creating


purchasing
power in semi- urban and rural markets which in itself is
providing
opportunities for growth.

Taking advantage of all the above opportunities requires a


focused
attention on various distributional channels consisting of direct
dealers,
authorized redistributors, large format stores, institutions and
exclusive
retail network. Your Company is continuously increasing its
distribution
width and enjoys a good franchise with the entire distribution network.

Your Company's retail formats `Prestige Smart Kitchen', `Prestige


Kitchen
Boutique' and `Prestige Life Style Store' are well supporting
your
Company's vision of dominating the kitchen.

The threat in the domestic market continues from the unorganized


players
and regional brands who compete with unviable low pricing strategies.
Your
Company has been adopting the strategy of continuously offering
innovative,
newer and improved products as well as marketing strategies to stay
above
competition whether organized or unorganized. With the result your
Company
is growing at a faster rate than the general industry average.
As regards export opportunities it appears that the export markets
are
gradually coming out of recession and somegrowth can be expected
from
exports in the future. Further the Company's launch of Microwave
Pressure
Cookers is likely to offer export opportunities. Your Company's
export
strategy will continue to be tactical balancing the needs of
domestic
market, comparative margins and optimum capacity utilization.

C. ANALYSIS OF PERFORMANCE :

1. Kitchen Appliances :

The products include Pressure Cookers, Non-stick Cookware,


Kitchen
Electrical Appliances and Gas Stoves. The turnover of these
product
categories is given in the following table:

(In Rupees
Lakhs)
2009-10 2008-09
Domestic Export Total Domestic Export
Total

Pressure Cookers 22515 1551 24066 20061 1973


22034
Non-stick
Cookware 8714 11 8725 6311 45
6356
Kitchen Electric
Appliances 10372 - 10372 7096 -
7096
Gas Stoves 6106 - 6106 3999 -
3999
Others 2362 49 2411 2133 3
2136
Total 50069 1611 51680 39600 2021
41621

a. Domestic Sales registered a growth of 26.4% while exports declined


by
20% due to economic crisis in Middle East and Sri Lanka.

b. The traditional product categories, namely, Pressure cookers


and
Cookware registered a growth of over 12% and 37% respectively in
domestic
market.

c. The growth in non-traditional product lines like gas stoves and


kitchen
electrical appliances has been very impressive at 46% and 53%
respectively.
d. The growth is driven predominantly by volume expansion and
introduction
of new models and products. With respect to certain product categories
the
growth can also be attributed to sales mix consisting more of value
added
items and improved market penetration.

e. Operating EBIDTA/ Gross Sales ratio improved significantly from


9.16% to
14.74%. Material consumption as percentage of gross sales dropped
by 2
percentage points and the other overheads by 3.6%.The composite margin
of
your Company is the average of the margins of the Pressure Cookers
and
Cookware category on the one hand and Stoves & Kitchen
Electrical
appliances category on the other. Thus various operating ratios are
unique
to your Company and are not strictly comparable to other players
whose
composition of business is not similar to your Company.

f. Your Company continues to maintain strict control over working


capital
management and in fact further improved the inventory and
receivables
turnover ratios. This has enabled your Company to generate significant
free
cash flows as detailed elsewhere in this report.

g. Many new products and models were introduced during the year to make
the
range contemporary and competitive. Towards the end of the financial
year
your Company launched a new range of Induction Cook Tops, a whole new
range
of Pressure Cookers and Cookware with induction compatible base,
Microwave
Pressure Cookers and Apple Range of `inner lid' pressure cookers.

h. The Prestige Smart Kitchen retail net work was consolidated


and
improvised as per plans. While new outlets were opened, some trimming
was
also done by discontinuing a few non-viable outlets. The number of
outlets
as at 31.3.2010 was 228. The network now covers 19 States and 136 towns.

i. The number of outlets of Prestige Kitchen Boutique' and `Prestige


Life
Style' continues at 9 and 2 respectively. The performance of these
outlets
are satisfactory and this network will be expanded step by step as
the
nature of these outlets is one of delivery of service rather than sale
of
appliances in packed form.

2. Properties & Investment :

As mentioned in the last report your Company granted possession to


the
Developer for the purpose of development towards the end of the
financial
year 2007-08. Pending receipt of the necessary sanctions large portions
of
old structures have been demolished leaving a part of the structure
for
administrative and business requirements.

The original plan was to develop a Mall which would give recurring
income
stream of rentals. Due to change in market conditions the developer
has
suggested a mixed development of residential and office space.
The
developer has informed us that they are in the advanced stage of
getting
sanctions for the revised plans and that the construction can
commence
during the first half of the financial year 2010-11. Based on the
revised
plans for development the company expects to have both lump sum as well
as
recurring rent as and when the project is complete. The developer
has
estimated that the project can be completed within a period of 30
months
from the date of commencement of construction.

D. OUTLOOK

Both global and Indian economies are on the path of recovery.


However,
persistent high level of inflation in the long run can impact
the
disposable income and hence the purchasing power. However, the
overall
market sentiment is positive and your Company expects to maintain
its
growth rates aided by the new range of products, barring
unforeseen
circumstances.

E. RISKS AND CONCERNS

The overall inflationary trend in general and the food inflation


in
particular are causes of concern. The significant and steady increase
of
key metal prices is a matter of concern which may have some impact
on
margins of your Company if it is not in a position to pass on the
increase
in input costs to the customers. However, with improved efficiencies
and
economies of scale your Company is hopeful of maintaining a healthy
margin
and return on capital employed. Your Company will not compromise on
the
objective of improving market share and dominance for the sake of
short-
term profits.

F. RISK MANAGEMENT

Your Company has a risk identification and management frame


work
appropriate to the size of your Company and the environment under which
it
operates.

The risks are identified in relation to the following areas:

a. Business risks - arising out of general economy, government


policy,
industry to which the Company belongs , markets in which the
company
operates and life-cycle of company's products.

b. Strategic Risks - arising out of policies relating to


company's
marketing, manufacturing, expansion of market/capacity, technology ,
new
products and human resource and industrial relations.

c. Safety of Properties including intellectual properties and People.

d. Operational and Transactional Risks including foreign currency risks.

e. Statutory Compliances and legal and contractual obligations.

f. Financial Reporting.

g. Frauds and Misappropriation.

h. Information technology systems including disaster recovery.

Reasonable internal control, internal audit and safety audit systems


are in
place to mitigate or minimize risks in the areas `c' to `h'. The other
two
areas relating to Business and Strategy are assessed and addressed
through
periodical business review meetings.
Your Company is working towards putting in place an improved
dynamic
process for identification of key risks and evaluation of risks as
low,
medium and high in the critical areas so as to devise risk mitigation
plans
without losing much time.

G. FINANCES

Your Company has generated Post tax operational free cash flows of
more
than Rs.60 Crores during 2009-10, out of which Rs.18 crores have
been
applied to discharge borrowings from Banks. After spending
significant
amounts on capital expenditure your Company carries a free cash balance
of
Rs.30 crores besides normal operating cash float of Rs. 11 Crores.
Your
Company continues to maintain unutilized funded credit lines of
Rs.30
crores. Thus your Company has adequate cash resources to aggressively
look
for further long-term investments in the kitchen appliances segment.

H. INVESTMENTS

There was no change in investments during the year.

I. INTERNAL CONTROL SYSTEMS

Your Company is continuously improving the internal control systems in


all
the areas of operation. Your Company uses both internal and
external
agencies for internal audit on a continuous basis. Based on audit
feedback
the systems are updated. Your Company is effectively using SAP
processes
and this has lead to further improvements in the internal control
systems.

J. DEVELOPMENTS IN HUMAN RESOURCES

The direct employment strength stood at 913 as compared to 877 in


the
previous year. Your Company has a structured policy in training
and
development.
SYMPHONY LIMITED Back
(FORMERLY KNOWN AS SYMPHONY COMFORT SYSTEMS LIMITED)

ANNUAL REPORT 2009-2010

MANAGEMENT DISCUSSION AND ANALYSIS

1] Industry structure and development:

The air cooler industry in India is mainly controlled by the


unorganised
sector. Your Company is a pioneer in the manufacturing of air coolers
in
organised sector. Earlier, air coolers were available in metal/
wooden
body, which had its own problems like rusting, noise etc. Your Company
has
made a dent in the market by bringing ABS plastic body air coolers in
the
market. At present, the Company is the world's largest manufacturer
of
portable air coolers. The Company has developed various models of
air
coolers over a period of time to suit the requirements of customers.
Your
Company is focusing on the constant improvement in the products
to
facilitate the end user.

2] Opportunities and threats

Opportunities:

The market dynamics transforms into the following sets of opportunities

* Having well established brand 'Symphony' in air coolers


market,
distribution network in domestic and export markets, the Company is
poised
to exponential growth.

* The air cooler is an environment friendly, energy efficient


product
requiring low capital and revenue expenditure. There is tremendous
local
and export potential.

* Due to globalisation, increased opportunity to tap export market

* Huge potential in domestic market considering population of the


country
and increased awareness about quality among customers

* Various applications of air coolers

Threats:
* Heavy competition from local and unorganised sector

* Fluctuation in oil prices and consequent fluctuation in raw


material
prices

* Demand for air coolers is subject to vagaries of summer

3] Outlook:

The Company is conscious of the need for continuous product innovation


and
strengthening marketing and distribution net work. The Company carries
out
continuous value engineering in products with an aim to improve
product
performance, quality and reduce costs.

The Company is exploring the possibility of expanding the base for


air
coolers' sales in domestic as well as international market. The
various
models have got 'CE' mark which is a pre-requisite for exports to
European
countries. The Company has also got 'ETL' listing which is essential
for
the US market.

4] Internal control systems and adequacy:

Your Company has adequate internal control procedures commensurate with


the
size and nature of business. The Company has deployed a strong system
of
internal controls to allow optimal use and protection of assets,
facilitate
accurate and timely compilation of financial statements and
management
reports and ensure compliance with statutory laws, regulations
and
management policies. The Company has also devised an extensive
monitoring
and review mechanism, whereby the management regularly reviews
actual
performance with reference to business plans-both financial
and
operational.

The functional heads are responsible for performing regular


internal
assurance reviews to ensure adequacy of the internal controls systems
and
adherence to management policies and statutory requirements. The
functional
heads deploy an annual internal assurance plan based on assessment of
major
risks in each of the businesses. Risk assessment helps in identifying
and
focusing on all high-risk areas. The reviews cover all the
business
critical functions, such as revenue assurance, collection, credit and
risk,
MIS and information technology and network security, procurement
and
financial reporting.

The Board Audit Committee periodically reviews the audit plans,


audit
observations of both internal and external audits, risk assessment
and
adequacy of internal controls.

5] Human resources:

The Company recognises that its personnel are one of the most
important
pillars of the organisation. A major exercise in training and
development
of employees has been undertaken at all levels. The Company gives a lot
of
importance to the human resources activities. These activities have
helped
to retain and motivate employees of the company even during
difficult
period. With their support we can look forward to a bright future for
the
Company.

6] Cautionary statement:

Estimates and expectations stated in this management discussion


and
analysis may be forward looking statement within the meaning of
applicable
securities, laws, and regulation. Actual result could defer materially
from
those expressed or implied. Important factors that could make a
difference
to your Company's operations includes favourable summer season with
high
temperature, price condition in the domestic and international
markets,
changes in the government regulations, tax laws, other statutes and
other
incidental factors.

An evaporative air coolers is a low cost, low energy and an


environment
friendly alternative to an air conditioner. Unlike conventional
air
conditioners, evaporative coolers require fresh air and work best with
open
windows and doors. Evaporative air coolers are extremely simple to
use,
cooling the air through an evaporation process, which reduces
room
temperature, whilst delivering a constant flow of fresh, healthy
natural
air. They also filter dust and dirt without drying the air.

Evaporative air cooling is natural cooling by means of water


evaporation.
When water evaporates, its molecules mix with air. The energy required
for
evaporation is drawn from air molecules, reducing the actual
air
temperature. Hence, breeze from the air coolers helps reduce
ambient
temperature. Besides, they consume significantly less electricity and
do
not release dangerous emissions.

They are best suited for residences, showrooms, shops, places of


work
especially where doors are opened and closed frequently - a major
advantage
over conventional air-conditioners. More importantly, they are
perfect
humidifiers for the dry months, making them ideal for year-
round
application.

Air coolers V/s air conditioner:

Air coolers use 100% fresh Air conditioners re-circulate the same
dry
and natural air for cooling. air for cooling.

For cooling a room of 750 For cooling a similar sized area, an AC


sq. ft size, a Symphony air consumes approximately 5.5 units of
energy
cooler consumes only 0.18 per hour.
units of energy per hour.

Air coolers use water as a Air conditioners uses and generates


harmful
refrigerant which is gases such as CFCs, HFCs, HCFCs and other
recycled into the air. ozone-depleting gases.
It does not use or even
generate harmful gases.

Air coolers can be used Air conditioners are effective for closed
anywhere in open spaces areas only.
and in a closed
environment.

Air coolers are largely Air conditioners require additional


plug-and-play equipment investment in infrastructure
requiring no additional (additional power arrangement - meter
infrastructure. capacity upgradation, high capacity
electricity lines and switches, among
others) for installation.

Light and portable: can be Air conditioners are fixed in a


particular
used in multiple points. place, which restrict their application
and
They can replace, complement benefits,
and operate in addition to
air conditioners.

Air coolers are less Air conditioners are effective in humid


effective in humid climate.
climate.

Global warming:

The greenhouse effect has resulted in global warming, rising


planet
temperatures and erratic climatic patterns reflected in
increased
hurricanes and drought, longer spells of dry heat and intense rain,
colder
weather in Northern Europe as well as water scarcity in South Asia
owing to
the retreating Himalayan glaciers. The first four months of 2010 were
the
hottest on record while March, 2010 was recorded as the warmest month
in
the last 60 years in North India (Source.-National Oceanic and
Atmospheric
Administration). The average global temperature of 13.3 degree
Celsius
(January-April) was 0.69 degrees above the average recorded since 1880.

Income increase:

India's per capita income grew 10.5% from Rs. 40,141 in 2008-09 to
Rs.
44,345 in 2009-10 (Source: Economic Times). In terms of GDP, many
Indian
cities are expected to become larger than some countries. For instance,
the
GDP of Mumbai Metropolitan region is projected at US$265 billion by
2030,
larger than the GDP of countries like Malaysia, Portugal and Columbia.

Middle-class:

India's middle-class is expected to account for 85% of urban households


and
70% of consumption by 2015; the upper-class will account for 7%
of
households and 28% of consumption. World Bank estimates that the
country's
middle-class is likely to grow from 430 million in 2000 to 1.2 billion
in
2030, defining the middle-class as earners making US$10-20 a day.
The
National Council for Applied Economic Research in August 2010 claimed
that
in 2001-02, India had 13.8 million households with incomes in excess
of
US$4,000 per year and in 2009-10, the number - at constant prices -
had
risen to 46.7 million, representing a population of about 200
million
individuals. The number of middle-class households (households
with
US$4,500-22,000 annual income) in India rose from 10.7 million in
2001-02
to 28.4 million in 2009-10. Around 170 people join the country's
middle-
class every minute.

Urbanisation:

India's urban population grew from 290 million, as reported in the


2001
census, to 340 million in 2008 and a projected 590 million by 2030.
Urban
India accounts for 30% of its population and 52% of GDP. According
to
McKinsey, urban India will account for two-thirds of
incremental
consumption, driven by population and urbanisation growth. By 2030,
India
will have 68 cities with a population of more than one million, 13
cities
with more than 4 million people and six mega cities with a population
of
ten million or more.

Rural growth:

Aggregate rural consumption expenditure in India is around 30% more


than
aggregate urban consumption expenditure. NREGA spend in rural India is
set
to jump from US$1.9 billion in 200607 to around US$8 billion in 2009-10
and
almost treble from there by 2012-13. India's per capita rural incomes
are
expected to increase from Rs. 7,335 in 1981 toRs. 15,396 in 2011
(Source:
India Today).

Working population:

India has a young and rapidly growing population. India will have
the
largest growing workforce for the next 20 years as 270 million Indians
join
the net working age population till 2030. Moreover, cities will account
for
70% of all the new jobs created (Source: Mckinsey). The
domestic
consumption expenditure too is set to triple by 2020 from Rs. 30 lacs
crore
in 2009 to Rs. 113 lacs crore in 2020. Across 2010-20, India will add
120
million people in the working age-group seeking employment, making
India's
global working population 28%. China, on the other hand, is expected to
add
only 19 million people in the same period, contributing 5% to the
global
working population.

Nuclear families:

According to estimates, around 1.5-2% of joint families go nuclear


every
year. The rise in the number of nuclear families will result in a
higher
retail spending. It is also estimated that nuclearisation will account
for
a 3-4% increase in aggregate spending over 2007-12.

Growth drivers for industrial segment

Power deficit:

India is the world's sixth-largest energy consumer with an


installed
capacity of 159,398.49 MW (as on March 31, 2010). The country accounted
for
about 3.5% of the world's total annual energy consumption but a low
per
capita consumption of about a fourth of the 2,873 kwh world consumption
in
2009-10.

According to the CEA, peak-hour deficit increased from 11.9% in 2008-09


to
13.3% in 2009-10. Experts believe that pent-up demand may be higher
than
the projected 11%, worsening the situation.

With the rising mercury column, demand-availability gap in power


supply
also started widening in most parts of the country. Peak deficit and
energy
shortage - the key parameters that indicate how well the
generation
stations are able to cope with the stresses of high demand -
recorded a
significant upsurge during April 2010. The deficit increased from 13.3%
in
March 2010 to 15.1% during the fourth month of the calendar
year.
Similarly, energy shortage increased to 14.6% for the same period,
from
11.7% registered a month earlier. However, total energy deficit
declined
from 11.1% in 2008-09 to 10.1% in 2009-10.

Retail growth:

The Indian retail market is one of the world's largest, estimated at


US$450
billion ( Rs. 20,25,000 crore) and expected to more than double to
about
US$900 billion ( Rs. 40,50,000 crore) by 2015. Organised retail is
expected
to grow from the present 5% to 10.4% of the retail market by 2012
(Source:
KPMG). Around 100 new malls and 30 million square feet of rental space
are
expected to be commissioned between 2009 and the end of this year. Much
of
this new space will be occupied by leading organised retail
companies
(Source: South Asia Monitor, January 6, 2010).

Hospitality sector:

As India emerges as a preferred tourist destination, the number of


branded
hotel rooms is expected to double in three years. The demand for travel
and
tourism in India is expected to grow 8.2% between 2010 and 2019,
making
India the third fastest growing in this segment. Capital investment
in
India's travel and tourism sector is expected to grow 8.8% between 2010
and
2019 (Source: IBEF). Also, revenues from the Indian travel and
tourism
industry are expected to increase from US$100 billion in 2008 to
US$276
billion in 2018.

Commercial space:

The IT and ITeS sectors require 150 million sq. ft of office space
across
urban India by end 2010. The organised retail industry is likely to
require
an additional 220 million sq. ft by end 2010. The commercial
market
(including IT/ITeS, BPO, banking and financial services, pharmaceutical
and
telecom) in India is expected to grow at 20-22% over the next five
years
(Source: Cushman & Wakefield report) in cities like Delhi,
Bangalore,
Mumbai, Chennai and Hyderabad, among others.

Management discussion and analysis

Business Drivers:

1. Design and products:-

Symphony's design and feature development starts with feedback


assimilation
and analysis. The Company focuses on minimising variables that could
lead
to additional procurement.

Product development:

The Company's mind-to-market cycle of an average nine months in


2008-09
declined through the following initiatives:

* Replaced conventional equipment with laser technology to create


the
design prototype

* Identified diversified sources for moulds and reduced sourcing time

During the year, the Company developed more than 200 moulds leading
to
faster product development.

Product launches:

In 2009-10, the Company launched four new models - three models of the
Diet
Cooler and one in the Ice Cube category.

The Company launched a new category of air coolers, the world's first
air
coolers with a fan in the personal category, suitable for smaller
places
like shops on account of lower noise and multiple applications (fan
and
cooler).

The Company introduced the slim and lean Diet Cooler, designed to
occupy
less space than conventional air-coolers and consume significantly
lower
electricity.

The Company introduced new features in existing products, including


remote
controlled coolers for export.
Going ahead, the Company plans to launch six products in 2010-11
against
four in 2009-10, expected to accelerate business growth.

2. Operations:

The Company controls quality and product manufacturing standards at


the
component and finished product factories. The proximity of the units
to
ports helped the Company reduce logistic costs related to exports.

The Company has a team of executives to control product and raw


material
quality. The Company designed the assembly line and selected vendors.
An
ongoing check at each production stage helped maintain material
efficiency.
Quality was established through specific tests.

Highlights, 2009-10:

* The Company invested in testing panels that 'locked' data, reducing


the
need for additional people resources.

* The Company's air cooler production increased from 242 thousand units
in
2008-09 to 420 thousand units a year in 2009-10.

* The Company altered some components, reduced the number of


components
needed and standardised a few to ensure use across all models.

* The Company shifted from manual assembly to a conveyorised line for


its
assembly line (two more under way). The Company added new capacity
lines to
its manufacturing facilities.

* The Company outsourced pumps, a key cooler component, from


large
international suppliers.

* The Company appointed personnel to appraise product quality.


Internal
rejections declined from 5% to less than 1% across three years.

* The Company demonstrated that its air cooler could operate without
water
in adverse situations, owing to innovations related to the thermal
overload
protector.

* The Company eliminated the odour of gum from the cooling pad
following
the cooler being switched on.

* The Company moved towards an automated packaging system,


reducing
production tenure.

Outlook:

The Company is moving towards a zero-defect status for components


following
improvements in automation, planning and quality. Going ahead, the
Company
intends to reduce components by 15-18% during the year.

3. Marketing:

An efficient marketing and distribution network is critical for a


company
whose principal product enjoys pan-Indian and pan-global demand.
The
Company enjoys a diversified Indian presence through 37 branches, each
with
territory sales executives and branch heads for dedicated
territories.
Symphony's products have been exported to 54 countries.

Symphony has a significant presence in Large Format Stores (LFS)


through
renowned chains namely Croma, Reliance Mart and Vijay Sales, among
others.
Going forward, this LFS channel will play a vital role in
Symphony's
growth.

Based on a region's potential, prospective distributors are appointed.


The
Company's personnel are in constant touch with its distributor and
dealer
network. Documented policies define guidelines; the web-based ERP
system
provides real-time communication with distributors and dealers on
product
launches, their accounts with the Company and other policies, schemes
and
promotional offers announced by the Company.

Customers are provided with after-sales service through service


providers -
third-party multi-brand franchisees - across

the country. The marketing team plays an essential role in


strategic
decision making by providing essential inputs such as customer feedback
on
product and service, evolving trends and regional demand dynamics,
among
others, which facilitate informed decision-making.
Highlights, 2009-10:

* The Company classified its product range across three segments -


Mobile
range, Power saver range and Diet range - resulting in customised
marketing
and distribution.

* The Company introduced the cash-and-carry concept to


circumvent
overstocking and accelerate revenue inflow.

* The Company embarked on consumer segmentation; it introduced


customised
products keeping specific consumers in mind.

* The Company introduced a small fanlike cooler targeted at small


traders
with storage space constraints

* The Company launched Diet Coolers in three models, occupying half


the
space of conventional coolers

* The Company strengthened sales promotions and launched an


advertisement
campaign called 'First-Summer' from September 2010 to October
2010,
encouraging the use of coolers as round-the-year products.

* The Company instituted 26 stock points across India, even as


product
manufacture was concentrated in west India.

* The Company appointed marketing personnel in Saudi Arabia, who were


well-
versed in the local language and culture. It also entered into
brand-
building for the Middle Eastern markets.

* The Company concentrated on increasing market share of water heaters


in
select cities.

Outlook:

* The Company intends to shift from a census-based dealer presence to a


pin
code-based presence, widening the network.

* The Company plans to employ locals in prospective markets to


strengthen
its presence.

* The Company plans to increase the number of carrying-and-


forwarding
agents (CFA) across India.

* The Company is contemplating to introduce exclusive showrooms


-Symphony
Shoppe - in major cities across India.

Internal control systems and adequacy:

Your Company has adequate internal control procedures commensurate with


the
size and nature of business. The Company possesses a strong
internal
control system facilitating in the optimal use and protection of
assets,
accurate and timely compilation of financial statements and
management
reports and ensure compliance with statutory laws, regulations
and
management policies. The Company devised an extensive monitoring and
review
mechanism, which allows the management review actual performance
with
business plans - financial and operational.

The functional heads deploy an annual internal assurance plan based on


the
assessment of major risks in each of the businesses. The Board's
Audit
Committee periodically reviews the audit plans, audit observation of
both
internal and external audits, risk assessment and adequacy of
internal
controls.

Finance review

Cool Numbers:

The Company recorded an improved performance in 2009-10 largely driven


by
higher volumes and value-engineering through responsible vendor
support.
Consequently, the growth was visible in absolute numbers and key ratios.

Profit and loss account:

Net sales:-

This increased 53% from Rs. 12,422 lacs in 2008-09 to Rs. 18,977 lacs
in
2009-10, consequent to a 61% increase in sales volume from 2,62,067
units
to 4,21,355 units. Domestic sales accounted for Rs. 15,875 lacs, up
from
Rs. 9,833 lacs in 2008-09 - a 61% growth. This was largely owing to
two
factors - a stronger distribution network which enabled the Company
to
cater to a larger market opportunity, and the introduction of
niche
products with attractive customer acceptance. International business
grew
from Rs. 2,589 lacs in 2008-09 to Rs. 3,102 lacs in 2009-10 as
the
Company extended its presence to 54 geographies till 2009- 10.

Other income: Treasury income increased 49% from Rs. 256 lacs in
2008-09
to Rs. 381 lacs in 2009-10, largely owing to investable surplus
from
operation.

Operating expenses:

In keeping with increased volumes, total operating costs increased


from
Rs. 8,780 lacs in 2008-09 to Rs. 13,673 lacs in 2009-10, owing to
the
following:

* Increase in material costs (largely plastics), dovetailed with


the
movement in crude prices

* Increase in VAT which was not passed on to the end consumer

* No increase in sales prices in 2009-10

Material cost:

This was the largest cost component and constituted about 63% of the
total
operating cost. In 2009-10, the increase in material cost was largely
owing
to a growth in volumes (from the domestic market and exports) and
material
costs (owing to the northward movement in crude prices). The
Company
managed the latter largely through value engineering, which optimised
the
use of components in products.

Employee costs:

An increase in scale necessitated an increase in team size - the


Company
added 42 members (net) in 2009-10, adding to its wage bill. Besides,
the
team's annual salary increase also contributed to the 34% increase
in
employee expenses from Rs. 567 lacs in 2008-09 to Rs. 760 lacs in
2009-
10. However, the increase in employee cost yielded significant returns
as
revenue per employee grew 27% from Rs. 61 lacs in 2008-09 to Til lacs
in
2009-10 and EBIDTA grew 40% from Rs. 4,077 lacs to Rs. 5,721 lacs
over
the same period.

Operational cost over the years (Rs. in lacs)


2007-08 2008-09 2009-10

Material cost 3,315 5,289 8,636

Employee expenses 359 567 760

Sales and administration expenses 748 1,023 1,363

Other expenses 1484 1,722 2,879

Depreciation 93 115 131

Interest 8 16 57

Sales expenses: Expenses under this head (advertisement and


sales
promotion, freight and forwarding, sales commission and
warehousing
charges) increased 33% from Rs. 1,023 lacs in 2008-09 to Rs. 1,363
lacs
in 2009-10, in keeping with the Company's focus on strengthening
its
marketing reach globally and distribution effectiveness domestically.
This
was reflected in a sizeable increase in travelling expenses.

Margins:

EBIDTA increased 40% from Rs. 4,077 lacs in 2008-09 to Rs. 5721 lacs
in
2009-10 but increase in material cost dented profitability margins -
EBIDTA
margin declined from 32% in 2008-09 to 30% in 2009-10. Net
profit
(excluding the exceptional item) grew 29% from Rs. 2,857 lacs in
2008-09
to Rs. 3,693 lacs in 2009-10.

Taxation:

The Company's tax provision increased 15% from Rs. 1,598 lacs in
2008-09
to Rs. 1840 lacs in 2009-10 primarily owing to an increase in
taxable
profitability. The Company did not enjoy any tax shield. Its average
tax
rate stood at 33% calculated on profit before tax.
Balance Sheet:

Capital employed:-

Capital employed in the business increased 67% owing to an increase


in
accruals (operational surplus being ploughed back into the
business).
Capital employed grew from Rs. 5,161 lacs as on June 30, 2009,
to
Rs.8,630 lacs as on June 30, 2010. Return on capital employed (ROCE)
stood
at 43% in 2009-10 against 84% in 2008-09.

Sources of funds:

The Company's net worth increased 68% to Rs. 8,620 lacs as on June
30,
2010, from Rs. 5,131 lacs as on June 30, 2009, owing to
increased
reserves. Consequently, book value per share increased from Rs. 73 as
on
June 30, 2009, to Rs. 123 as on June 30, 2010. Return on net worth
stood
at 43% in 2009-10 against 84% in 2008-09.

Equity capital:

Equity share capital comprised 69,95,700 equity shares with a face


value of
Rs. 10 each as on June 30, 2010. It remained unchanged during 2009-10.

External funds:

The Company achieved zero-debt status as on June 30, 2010, its


only
unsecured loan being a Rs. 10 lacs sales tax deferment loan. The
Company
did not avail any working capital limits and managed its daily
operations
through positive working capital cycle.

Application of funds:

Fixed assets: The Company's gross block increased 52% from Rs.1,286
lacs as
on June 30, 2009, to Rs. 1,958 lacs as on June 30, 2010, owing to
the
purchase of freehold land ( Rs. 566 lacs) and the addition of high-
quality
moulds which increased air cooler manufacturing capacity. The Company
added
Rs. 87 lacs to its plant and machinery account in 2009-10. As there is
no
debt on the Company's books, all assets are free from any encumbrances
- a
unique advantage.
Investments:

The Company's investments increased 70% from Rs. 3,138 lacs as on June
30,
2009, to Rs. 5,349 lacs as on June 30, 2010.

Managing Risks:

1. Risks external to the business:

A downturn in the economy or the air cooler sector could impact


business
growth:-

* The Indian economy continued to remain the second-fastest growing in


the
world despite a global meltdown, reflecting its resilience.
Credible
estimates suggest that India's GDP will grow at 9%-plus across the
Eleventh
Plan.

* The consumer durables segment is expected to grow at about


17-18%
annually to reach the Rs. 60,000-crore mark within five years
(Source:
Crisil).

* For 2010-11, the Centre for Monitoring Indian Economy (CMIE) expects
the
sales of air conditioners and refrigerators to grow 24% against 19%
in
2009-10.

* Air coolers, a cost-effective cooling option for all social


classes,
finds more applications than air-conditioners and this is expected
to
generate faster growth.

* Significant rural income growth, increasing land prices and higher


prices
of agricultural produce fixed by the government, among other factors,
are
expected to translate into an unprecedented demand for air coolers.

Seasonality in demand (concentrated in the summer months) could lead


to
unproductive operations during other months:-

* The Company converted this risk into an opportunity through its


'First-
Summer' advertisement campaign - a first in the Indian air cooler
market _
positioning the months from September to October as summer.
* The Company established a foothold in diverse international markets
with
varied seasonal patterns, extending product demand for more months
and
minimising seasonality.

* The Company focused energies on a new business - water


heaters -
complementing its existing product line in terms of seasonality.

Increasing competition from unorganised segment players could


hamper
growth:

* The Company continued to grow its presence in the air cooler


market
through a stronger pan-India presence of more than 450 distributors
and
6,500 dealers.

* The Company's products were accorded respect-enhancing


global
certifications that translated into growing offtake and a higher
premium
than competing products.

* The Company, recognised for its innovation, grew market share and
market
size. The 'Ice Cube' range (the only cooler which works as a fan
and
cooler) is proof.

Sale volumes grew at a 54% CAGR over the three years leading to 2009-10.

2. Risks internal to the business:

Growth could lead to complacence:-

* The Company's management recognised an important reality - that it


is a
small company that has much to achieve.

* The Company's top management recognised the painstaking team effort


to
create an unbeatable value proposition of products and services.

* The Company continued to be respected for innovative productisation.

Inability to imbibe cutting-edge technology could result in reduced


product
acceptance:-

* The Company was the only one in the air cooler field to
periodically
launch new products with unique features.
* The Company periodically imbibed new technologies that reduced the
mind-
to-market cycle, optimised the use of components, reduced costs
and
enhanced the proportion of value-added products.

* The Company partly automated its assembly line leading to


enhanced
productivity, a first among Indian cooler manufacturers.

* The Company invested substantially in technology upgradation


and
development in the five years leading to 2009-10.

Inconsistent product quality could lead to customer attrition:-

* The Company possessed stringent global quality certifications,


namely,
CE, SONCAP, SASO and ASHRAE.

* The Company invested in, end-to-end testing facilities; it


conducted
product tests at renowned third-party test laboratories in Singapore
and
Hong Kong.

* The Company conducted multiple quality tests across all process


stages
and a stringent end product audit.

Inadequate reach could impact the Company's brand positioning as a


reputed
global air cooler brand:-

* The Company's robust distribution network enabled it to capture more


than
45% market share in India.

* The Company's strong presence in the global air cooler market


is
reflected in its presence across over 54 nations.

* The Company's quality certifications provide an edge over competing


local

players.
IFB INDUSTRIES LIMITED Back
ANNUAL REPORT 2009-2010

MANAGEMENT DISCUSSION AND ANALYSIS

A) Industry Structure & Developments:

With market liberalisation, increasing consumerism and the entry of


more
foreign players, Indian markets are exhibiting revolutionary changes.
The
Indian consumer is rapidly evolving and is exposing the consumer to a
host
of new choices by international brands selling their products
at
competitive prices. According to a study by the Mckinsey Global
Institute
(MCI), released in May 2007, India's middle class will swell by more
than
ten times- from 50 million in 2007 to 583 million people by 2025. By
2025,
India will also become the 5th largest consumer market, surpassing
Germany,
moving up from the 12th position it occupied in 2007.

The Indian auto component industry is one of India's sunrise


industries
with tremendous growth prospects. From a low-key supplier
providing
components to domestic market alone, the industry has emerged as one of
the
key auto components centres in Asia and is today seen as a
significant
player in the global automotive supply chain.

B) Opportunities & Threats:

There is scope for growth opportunity of our white goods in the


rural
market. Over and above our presence in Metros, we are now working
on
strengthening our distribution system in group 2&3 towns and focussing
on
marketing programmes for semi-urban markets.

According to the Investment Commission of India, India is among the


most
competitive manufacturers of auto components in the world. India is
also
becoming a global hub for research and development (R&D). Companies
like
Daimler Chrysler, Suzuki, Johnson Controls etc have set up
development
centres in India. Many international autocomponent majors including
Delphi,
Visteon etc. have set up operations in India. Auto manufacturers
including
GM, Ford, Toyota, etc. as well as auto component manufacturers have set
up
International Purchasing Offices (IPOs) in India to source for their
global
operations. In the changed scenario the opportunity for growth of
the
Company has increased manifold.

It is fair to say that India is now firmly on a higher growth


trajectory.
With the accelerated reforms, India is expected to achieve 8 percent
growth
over the next four to five years.

The greatest opportunity of the Company is its brand equity,


product
quality, latest technical know how and last but not the least is the
trust
in Company's products by the valued customers. The Company has built
up
brand image through close liaison with its valued customers during the
past
years . The threats facing the Company however are:

* Threats from the competitors in the area of pricing.

* Significant rise in material cost and exchange fluctuation


that
drastically impacts margins.

* Growth of the Indian economy together with the reduction of import


duties
makes India increasingly a target market for many MNCs and
therefore,
competitive pressure on the domestic market will continue to grow.
In
particular, imports from low labour cost countries will increase and
will
lead to increase price pressure. Over the last couple of years the
MNCs
have eaten up the share of other brand owners and have been
consolidating
their presence in the market. Today consumers are increasingly looking
for
price competitive and feature led products.

C) Segment wise performance:

The Home Appliance Division has improved its turnover and profitability
as
compared to last year. The profitability of the division has grown due
to
growth in volume and value as also reduction in freight cost and
material
cost. Introduction of new models in washing machine and microwave
oven
category at competitive prices has enabled good growth.

Cost reduction has been a major focus area for the plant keeping in
mind
competition. Cost reduction on plastic tubs, new programmer etc
resulted in
good savings. Cost reduction has been a major focus area for the
plant
keeping in mind competition. The company is adopting various cost
control
measures but a lot more need to be done in the areas of cost control.
All
our product categories have performed above industry average. To give
more
focus to Micro wave ovens, dishwasher and dryers independent managers
have
been given the responsibility for these product categories. The company
has
entered the commercial laundry equipment business & has launched the
same
pan India. Sales/ Enquiry of this segment has been very encouraging and
the
company expects good sales from these two categories going forward.
The
Company has also entered kitchen appliances and modular kitchen
business.

The Engineering Division also recorded outstanding growth in sales


and
profitability. Operations team took special drive for work
simplification
and process improvements. Process improvements helped in fatigue
reduction
and productivity improvement

D) Outlook:

The overall economic outlook seems to be favourable for recovery in


the
global economic environment and the Indian economy is also poised to
grow.
According to most indications, industrial growth will be over 15%0 and
the
GDP growth will be over 8%. The automobile sector led by passenger
cars
should grow by over 25% and the two-wheeler industry should grow by
about
30%.

IFB has invested in its Fine Blanking operations in order to meet


the
growing demands of the Indian automobile industry. However, we have
also
de-risked by marketing our fine blanked products to other industries
which
are also high growth. We are focusing on domestic demand and have built
up
capacities to meet the same. We will look at exports at a later date as
the
long working capital cycle is not suitable for us.

We have decided to invest in modernizing our Tool Room to


international
standards and we will add new fine blanking presses as well as
modernize
the old ones. This jump in investments will, we hope, ensure doubling
of
our sales by 31st March, 2012.

With the expected GDP growth, we expect Appliances growth in our


product
categories to be robust and thus we would expect 20%+ sales growth.
Our
focus would be to improve our service function as well as to invest
in
technology to improve visibility across the company - we are
thus
implementing SAP and this will help us to bring down inventory as well
as
to react faster to market needs apart from bringing about
other
improvements. Our focus would also be to improve our distribution
channel
by penetrating deeper into smaller towns.

The other area of focus would be to complete the expansion-


cum-
modernization of our washing machine factory - we expect the same to
be
completed by end October' 2010. This expansion would ensure state-of-
theart
new generation washing machines of higher capacities and the
excess
capacity we would use to market for OEM sales to buyers in Europe,
Africa,
Asian countries, etc.

We would also like to strengthen our direct sales channel as well as


our
customer retention programs in order to sell more IFB products to the
same
customer leading to more business per customer on a recurring basis due
to
recurring service income via AMC's as well as sale of additives, etc.

Thus for the year we expect more working capital requirements and for
that
purpose we may use banking facilities from Standard Chartered Bank
from
time-totime. However, at this point in time, the company continues to
be
completely 'zero' debt.
E) Concerns:

Our concern in the Fine Blanking business is pressure for price


reduction
from customers' end as well as pressure for higher material costs due
to
upward revision of commodity prices from time-to-time.

Our major concern in Appliances is the same apart from HR challenges


which
is, however, a concern for every growing company.

To overcome the same, we have substantially increased our investment


in
training and we hope to increase the same further as well as bring
in
better HR practices in order to reduce attrition. We, however, feel
that at
the Senior Management level, more face-to-face contacts with others
working
in IFB and solving their problems will lead to lowering of the
attrition
rate.

G) Internal Control Systems and their adequacy:

The Company has adequate system of internal controls and checks


and
balances to ensure that its assets are safeguarded and protected
against
loss from unauthorized use. The strength of these systems is
continuously
being monitored by the internal auditors and the findings of these
audits
are reported to the Audit Committee of the Board and also to the Board
of
Directors. The adequacy of the internal control system has also
been
examined by the statutory auditors and the Company has not received
any
adverse comments from them on the adequacy of internal control system.

H) Human Resources:

IFB is a knowledge-driven organization and its greatest asset is


the
experience and skill of its employees. Recognizing that the workforce
will
provide critical competitive edge in its growth endeavor, IFB has
laid
major emphasis on acquiring, maintaining and developing its human
asset
base. We offer wide range of career development programs including on
the
job training, job rotation etc. Our belief is that by investing in
these
programs we will have a highly motivated work force. During the year
the
Company also offered shares to eligible employees under Employees
Stock
Purchase Scheme. Due to changes in H.R Policy the attrition rate of
the
executives of the company has been reduced to minimum.

As a result of focused attention the employees at all levels have


actively
participated in the effort to sustain and improve the performance of
the
Company even in the most difficult times. The Company had 986
nos.
employees at the end of March 2010. As in the past, industrial
relations
continued to remain cordial at all locations of the Company.

I) Risk Management:

The Company is exposed to several risks. They can be categorised


as
operational risks and strategic risks.

Some of the major risks in each category are described below. There
are
other risks that could have a material effect on the Company's
performance
and financial position. The Company has taken several mitigating
actions,
applied many strategies and introduced control and reporting systems
to
reduce and mitigate these risks.

OPERATIONAL RISKS

Environmental issue:

The company has no pending material environment related issues. Since


most
of the Company's manufac-Luring process consist of the assembly
of
components, the environmental impact from the company's plants are
remote.

However, environmental requirements are complex and tend to become


more
stringent with time & the Company will constantly innovate to keep up
with
requirements as per law.

Product warranty and recalls:

It has become almost mandatory to incorporate such clause in


International
contracts. However, the Company has so far not accepted any contract
with
such draconian clause but in the event the company accepts contracts
with
such clause, the company is exposed to product liability and
warranty
clause in the event our product fails to perform as expected. A
recall
claim or a product liability claim brought against the Company in
excess of
the Company's coverage may have a material adverse effect on the
Company's
business.

STRATEGIC RISKS

Dependence on supplier:

The company largely depends on vendors in order to meet its


delivery
commitments. Consequently, there is a risk that disruption in supply
chain
could lead to the company not being able to meet its delivery
commitments
and as a consequence to incur extra costs. The Company's strategy is
to
reduce this risk by maintaining two suppliers in all significant
component
areas.

Patent & Proprietary Technology:

The Company's strategy is to protect its innovations with patents and


to
vigorously defend its trademarks and knowhow against infringements
and
unauthorized use. There can be no assurance that any patent now owned
by
the company will have protection against competitor that develop
similar
technology.

CAUTIONARY STATEMENT:

Statement in this Management discussion and Analysis describing


the
Company's objectives, projection, estimates and expectations may
be'
forward looking statement' within the meaning of applicable laws
and
regulations. Actual results might differ substantially or materially
from
those expressed or implied. Important developments that could affect
the
company's operations include market competition, significant change
in
political & economic environment in India, litigation, exchange
rate
fluctuation, change in interest rates etc.

HITACHI HOME AND LIFE SOLUTIONS (INDIA) LIMITED Back


ANNUAL REPORT 2009-2010

MANAGEMENT DISCUSSION AND ANALYSIS

Industry Structure & Developments:

Consumer Appliances Industry:

The Indian consumer durable industry is estimated to be in the range


of
Rs.350,000 Mn. The home appliances industry (products that your
Company
deals in) is estimated to be around Rs.55000 Mn. Room Air
conditioners
contribute to the largest share of this at around Rs. 50,000 Mn.
followed
by Refrigerators at around Rs. 5,000 Mn. (This size of Rs. 5,000 Mn. is
for
the Frost Free Refrigerators above 300 Ltrs. capacity).

Air conditioning Industry:

Our estimate of the industry performance during FY 2009-10 is given


below:

Total Industry Sales (in Mn.)


Category 2009-10 2008-09 Growth

Room Air conditioners (in Units) 2.51 2.01 25%


Ductable Air conditioners (in Tr.) 0.33 0.37 -11%

Air conditioner is now much more than a cooling appliance. Its image
has
transformed to being a stylish and intelligent indoor Air
conditioning
system. The customer's now look for various other features like
aesthetics,
comfort features, designs, colours, latest technologies, higher
energy
efficiency and better service. Split Air conditioners are fuelling
the
growth of the industry with design innovations, elegant looks in a
feature
packed indoor unit.

Room Air conditioners:

The Room Air conditioner category consists of both the Window and Split
Air
conditioners for the use in residential and commercial spaces.
The Room Air conditioning industry experienced a growth rate of close
to
25% in 2009-10 in comparison to about 7% growth in 2008-09.
However
penetration of Room Air conditioners in India is still low at around
3%
only.

The demand of Split Air conditioners is continuously increasing. The


market
share of Split Air conditioners is more than 65%, because Split
Air
conditioners are more elegant in looks, produce much lesser noise and
are
more energy efficient. Your Company has constantly formulated
its
strategies to garner more share in this segment which has helped to
achieve
a growth of over 52% in Split Air Conditioner category. Your company
has
introduced a new range of Split Air conditioners to further strengthen
its
position in this segment.

Your Company offers a wide range of Room Air conditioners. Through


its
extensive research and development, your Company has remained at
the
forefront of the Air conditioning industry. New technological
breakthroughs
allow Hitachi to provide high quality, efficient and reliable
Air
conditioning solutions.

Your company has grown @ 46% over the last year with 1.58 lac units
against
1.08 lac units in last financial year in Room Air conditioners segment.

Your Company has launched a new range of Split Air conditioners


'i-TEC
(Inverter AC, Available in 1.5Tr.) and upgraded 'ACE Followme' (Tr.
0.9,
1.2, 1.5 & 2.0). These new Air conditioners, equipped with Direct
Efficient
Technology are a perfect blend of absolute comfort, silence, durability
and
elegant design. They ensure consistent cooling and are highly
energy
efficient as well. This year we have also launched another Split
Air
conditioner range 'KAZE' for Tier II Cities. We have done media launch
of
'KAZE' in 31 towns and received comprehensive & positive coverage in
all
leading media. Other ranges of Split Air conditioner are Atom Square',
Ace
Cutout', 'Star', Atom XL', and 'Logicool' to cater to the specialized
need
of specific segments. In Window Air conditioner segment 'Quadricool
TM' &
'Quadricool SM' are available in Tr. 1.1, 1.5 & 2.0.

This year, the BEE (Bureau of Energy Efficiency, A Government


enterprise
under the Ministry of Power) has made Energy Star labeling for Room
Air
conditioners mandatory from January 2010. Your Company had
adopted
voluntarily the scheme of Star Labeling last year hence the customers
were
able to choose the Hitachi brand star rated Split Air conditioners.
Your
Company's star rated Air Conditioners have been received very well in
the
market. Last year 79% of Hitachi Split Air conditioners sold were
having 5
star rating.

Ductable Range of Air conditioners:

The spread of the global economic downturn significantly affected


business
environment in India as well. Your Company also faced similar pressure
in
Commercial AC business. Because of restricted investment in
infrastructure,
retail and IT & ITES, the Commercial AC business was affected. Your
Company
has had a de-growth in the last financial year in the Ductable Split
range
and Chillers. However, in the Telecom Air conditioner category your
Company
continued and strengthen its leadership position.

In Commercial Air conditioning business, in the first half of


financial
year market was sluggish due to global slow down impact, while from
second
half of the year market started positive movement. In first half of
year,
your Company de-grew but lower than the market de-growth rate, while
in
second half of the year, your Company registered higher growth than
the
market, which helped us to restrict de-growth lower than the market.
Your
Company gained around 1% in market share in year 2009-10.

Your Company has the Takumi range of Ductable Air conditioners, which
is
the emergence of Hitachi's engineered system to create One-of-a-
kind
solution to Air conditioning industry. Its unique energy
efficient
engineering design and flexibility in application provides
pragmatic
solutions to suit best for cooling requirements. The range of
these
products available is from 3.0 Tr. to 16.5 Tr. which are highly
appreciated
and well received in the market. The customer of this segment comprises
of
Retail Chains, MNCs, IT/ITES sectors, BPOs, Call Centers,
Institutes,
Malls, etc.

Telecom Air conditioners:

This cutting edge Air conditioning system is specially designed


for
unmanned Telecom Shelters/ Telecom BTS sites. Our specialized &
unique
product, Spacemaker comes with higher cooling capacity, unique
safety
features, lower power consumption and lower operating costs. Market
share
of your Company in this segment is above 32%. Looking to the future
growth
of the telecom industry, it is expected that we shall maintain our
share in
this segment.

Refrigerators:

Your Company offers a wide range of stylish & premium


refrigerators
available in 2-Door, 3-Door and Big French (4-Door) models. Range
of
refrigerators not only adds depth and character to the consumer's
kitchen
but also compliments with the strong cutting-edge technology to
make
beautiful solutions for household needs.

The refrigerators are differentiated on account of their


innovative
functionality, style and utility intertwined with the advanced
features.
The Minus Zero Cooling, New Front Jet Freezing, Electronic
Temperature
Control, Nano Titanium Filter Treatment and Digital Control Panel
features
allow the food to stay fresh and healthy for longer periods. The
advanced
Minus Zero Cooling mode preserves the nutritional value and the
moisture in
the food stored and the Digital Control Panel helps in controlling
the
temperature inside the refrigerator without opening the doors,
thereby
saving energy consumption.

Your Company has grown by over 4% against last year. New models have
been
introduced in 2-door & big French category. It is expected that
your
Company will perform better in coming years in this category.

Set up of New Air conditioner Manufacturing Facility

Your company has inaugurated new Air conditioner manufacturing facility


in
August 2009. This facility is one of the largest Air
conditioner
manufacturing facilities in India and also one of the largest
Air
conditioner manufacturing facilities of Hitachi in the world. The
new
facility is adjoining the old plant, was built in a record time of
7!4
months. The plant is state of art and equipped with advanced
machinery.
With this new plant the annual production capacity has increased to
2.30
Lac units in single shift working. The new facility would manufacture
Room
& Commercial Air conditioners including Ductable Air conditioners
and
Telecom Air conditioners. The Chiller manufacturing will start in the
next
financial year.

Set up of Hitachi Customer Satisfaction Centers:

During the year under review, your Company has set up its own
Service
Centers. These centers will be entirely owned & operated by your
Company,
thereby assuring better & personalized service to every customer. In
the

first phase, Company has opened Service Centers, in the major


cities.
Gradually this concept will be expanded to smaller towns across
the
country.

Future Outlook: Opportunities, Threats, Risks and Concerns


Opportunities:

Growth in Smaller Towns:

Smaller towns are showing encouraging growth. These towns are


very
critical, as the next round of growth will come from them. The
relevant
consumer base is large and growing, as are affluence levels, which
will
result in augmentation of purchasing power and branded product
consumption.

Increased Affordability of Products:

Air conditioners are now affordable both in terms of initial investment


and
running cost and are now treated as a necessity rather than a luxury
item.
The reduction of the price gap between the Split Air conditioner and
Window
Air conditioner has fuelled the growth of the Split Air
conditioner
segment. With the emergence of the apartment culture in metros and
non

metros the need of below 1.0 Tr. and between 1 Tr. and 1.5 Tr.
capacities
has emerged. Understanding that need of the market your Company
has
extended 'ACE Followme' range to 0.9, 1.2, 1.5 & 2.0 Tr. and other
models
'KAZE' & 'Ace Cutout' also have the same tonnage class.

Increase in Income Levels:

Increasing affluence levels across the country will lead to increase


in
consumption growth. Growing middle class with increasing disposable
income
supported with robust economic growth are good signs for the
industry.
Retailers are marketing their goods more aggressively by providing
easy
financing options to the consumers by partnering with banks.

Increasing Share of Organised Retail:

The Indian retail market, which is the fifth largest retail


destination
globally, has been ranked as the most attractive emerging market
for
investment in the retail sector. The organised retail sector is all set
to
witness maximum number of large format malls and branded retail stores
in
the next two years. Tier II cities are emerging as the
favoured
destinations for the retail sector with their huge growth
potential.
Shopping malls are becoming increasingly common in Indian cities. This
will
have a positive impact on the consumer durable industry, as
organised
retailing would not only streamline the supply chain, but also
facilitate
increased demand, especially for high-end and branded products.

Threats, Risks and Concerns:

1. During last one year the cost of steel, copper & plastic have
been
rising sharply. Energy labeling initiated by the government is also
adding
to the input cost of product.

2. Banks / NBFCs are tightening their consumer finances. In view


of
problems at the world level in the banking sector, the funding options
have
minimized. Inventory funding is also very tight, which is not a
good
situation for dealers to run their operations.

3. Excise duty has gone upto 10% in the last union budget. Some of
the
states have also increased VAT additionally upto 2.5%.

4. High electricity cost & quality of power supply remain a hindrance


in
the growth of business. Long power cuts and voltage fluctuations may
affect
the pace of industry growth.'

5. The import of low cost products from neighboring countries continues


to
be a threat to the consumer durable industry.

Human Resources:

The total strength of employees (staff and operators) of your company


was
557 as on March 31, 2010.

Hitachi Customer Satisfaction (HCS) was formed as a new Process at HHLI


for
enhancing the service delivery to customers. A pool of Service
Engineers
has been inducted into the System at 19 HCS centers.

In order to streamline the Customer Complaints redressal, the


National
Service Centre (NSC) was strengthened with deployment of 25
Engineers
alongwith regular Customer Service Executives to centrally
handle
customer's issues at Head Office level. It is handling regular
customer
issues as well as Institutional Customers service co-ordination.
Re-
Modeling of Compensation Structure was done with a uniform step
wise
structure of Position Classes during the annual appraisal. Variable
Salary
limits were also enhanced at all levels.

A unique team building programme was organised for all employees in


which
each employee got an opportunity to visit and learn about the new State
of
Art Plant at Kadi and then participate in the Out Bound Training (OBT)
with
a cross-functional groups. This programme educated our employees about
the
growth plans of the Company for 2010-11, the challenges to be taken and
the
team work and passion required to take it forward.

Forty eight Graduate Engineer Trainees (GETs) were recruited. After


the
intensive Plant Training, the GETs were assigned specific On the
Job
Training (OJT) in various departments in Plant and Field under senior
staff
for guiding and mentoring them.

The Central Air-conditioning business team is being


continuously
strengthened with addition of manpower in areas of Project
Design,
Estimation, Execution and Commercial for handling Central AC Projects.

Internal Control and Systems:

Company has adequate system of internal control to ensure that all


the
assets pertaining to Company are safeguarded and protected. Internal
Audit
has also been done through external Auditors at Plants as well as at
all
the branches of the Company as per the detailed scope defined and
approved
by the Audit Committee. The Internal Audit is planned to substantiate
and
review the adequacy of controls and laid down procedures & systems.

Observations of Internal Auditors and the detailed plan of action


is
reviewed and discussed at the meetings of the Audit Committee.
MIRC ELECTRONICS LIMITED Back
ANNUAL REPORT 2009-2010

MANAGEMENT DISCUSSION AND ANALYSIS

The management has pleasure in presenting this report in adherence to


the
Code of Corporate Governance enacted by the Securities and Exchange
Board
of India under Clause 49 of the Listing agreement.

Economic Review:

Having withered the global recession India's economy is poised for


growth
at a faster pace in 2010-11 than earlier expected, supported by a
global
recovery, domestic demand and a double-digit expansion in factory
output.

Such expansion is expected to generate greater inflation than


previously
expected, requiring a steady series of rate rises from the Reserve Bank
of
India. Asia's third-biggest economy is expected to grow at annual
rates
above 8 per cent in coming quarters.

According to a study by the McKinsey Global Institute (MGI), `Bird


of
Gold': The Rise of India's Consumer Market', Indian incomes are likely
to
grow three-fold over the next two decades and India will become the
world's
fifth largest consumer market by 2025.

I. Industry structure and developments

The consumer durables industry consists of durable goods used for


domestic
purposes such as televisions, LCD TVs, air conditioners, DVD
players,
washing machines, refrigerators, microwave ovens etc. The growth in
the
consumer durables sector has been driven primarily by factors such as
boom
in the real estate/housing industry, higher disposable income,
emergence of
the retail industry in a big way coupled with rising affluence levels
of a
large section of the population.

A shift in consumer preferences towards higher-end,


technologically
advanced branded products has been quite discernable. This shift can
be
explained by narrowing differentials between the prices of branded
and
unbranded products added with the high quality of after sales
service
provided by the branded players. The shift has also been triggered by
the
availability of foreign branded products in India owing to lower
import
duties coupled with other liberal measures as introduced by the
government.

A combination of changing lifestyles, higher disposable income,


greater
product awareness and affordable pricing have been instrumental in
changing
the pattern and amount of consumer expenditure leading to strong growth
in
the consumer durables industry.

Consumer durables grew at a robust rate of 31.6 percent in January 2010


as
against a nominal 2.1 percent posted in the same time last year. In
fact,
along with the manufacturing sector for capital goods, the
manufacturing
sector for consumerdurables were prime contributors to the robust
growth in
the Index of Industrial Production (IIP), which grew by 16.7 percent
in
January 2010.

II. Opportunities and Threats

The key growth drivers for the Indian consumer durables industry:

* Rise in the share of organised retail: Approximately 315 hypermarkets


are
expected to come into existence in Tier-I and Tier-II cities across
India
by the end of 2011, according to a joint study by consultancy firm KPMG
and
industry body ASSOCHAM named `Reinventing India's Retail
Sector'.
Consultancy firm Technopak has said that the organised modern
retail
segment in India will grow by over three times during the next five
years
(from 2010), to reach a figure of US$ 80 billion. Hence there is
great
opportunity for growth in this sector in view of the
positivedevelopments
in organized retail sector.

* Availability of newer variants of a product: Consumers are spoilt


for
choice when it comes to choosing products. Newer variants of a product
help
a company in gettingthe attention of consumers who look for innovation
in
products.

* Rise in disposable income: The demand for consumer electronics has


been
rising with the increase in disposable income coupled with more and
more
consumers falling under the double income families. The growing
Indian
middle class is an attraction for companies who are out to woo them.

* Product pricing: The consumer durables industry is highly


price
sensitive, making price the determining factor in increasing volumes,
at
least for lower range consumers. For middle and upper range consumers,
it
is the brand name, technology and product features that are important.

* Availability of financing schemes: Availability of credit and


the
structure of the loan determine the affordability of the product. Sale
of a
particular product is determined by the cost of credit as much as
the
flexibility of the scheme.

* Innovative advertising and brand promotion: Sales promotion measures


such
as discounts, free gifts and exchange offers help a company
in
distinguishing itself from others.

* Festive season sales: Demand for colour TVs usually pick up during
the
festive seasons. As a result most companies come out with offers
during
this period to cash in on the festive mood. This period will continue
to be
the growth driver for consumer durable companies.

* Emergence of nuclear families.

* Growth of entertainment and Media and the flurry of television


channels
and the rising penetration of cinemas.

* Electrification in rural India and increasing aspirations of people


in
rural India.

The consumer durables market in India has seen a proliferation of


brands
and product categories in recent years. All the major international
brands
from Japan, Korea, US, Europe and China have launched in India with
varying
degrees of success. Most brands are still trying to build a pan-
India
dealer network.

In the times to come the Consumer durables sector is poised for a


quantum
leap due to technological improvements, falling prices due to
competition,
aggressive marketing and declining import tariffs.

The changing dynamics of consumer behaviour indicate that luxury goods


are
now being perceived as necessities with higher disposable incomes
being
spent on lifestyle products.

In response to the aforesaid opportunities the Company expanded its


scope
from a single product to a multi-product portfolio, resulting in
enhanced
possibility to occupy a larger shelf space. It prudently invested
its
resources to drive its innovation and promote its products.

Threats

* With stiff competition, the consumer durables industry faces a


persistent
pressure on margins due to its inability to pass on input cost rises
to
consumers. Hence, thecompany's future profitability may come
under
pressure.

* Rising inputs costs of raw materials viz. copper and steel will put
huge
pressure on the margins. Further with the recent increase in excise
duties
the pressure will be on manufacturers to pass on the burden to
consumers
which may lead to reduced demand.

* Exchange schemes and pricing could have a negative industry impact.

* The entry of cheap Chinese products through organized retail


continues to
be a threat to the domestic players like ONIDA. Amid hyped media
reports on
the invasion of Chinese goods, the consumer is likely to get
confused
thereby resulting in temporary loss of market share and revenues.
However,
brand building continues to be the competitive edge in which the
Chinese
products seem to lag behind. They don't have much experience in
brand
building, especially in the international context. Therefore, their
entry
into India as brands have been very diffident and that hasn't worked in
the
extremely competitive market like India.

* The focus of consumers is shifting to energy efficient appliances


and
providing such appliances at a competitive price will be a challenge.

* Margins are under pressure in view of increase in cost of


marketing,
advertising and after-sales services.

* Cyclicality has triggerred an industry recession.

* The Company faces stiff competition from South Korean companies like
LG
and Samsung. In last few years, they have been increasing their
market
share in India. Going forward, they are expected to give tough
competition
to Indian manufacturers with newer high-end technologies.

III. Product-wise performance

There was 11% growth in sale of Onida Air-conditioners during the


year
under review. The sale of Washing machines registered a growth of 5%
and
the sale of Microwave ovens registered a growth of 8%. The sale of
Mobile
registered a growth of 26% and the sale of other electronics
products
registered a growth of 11%. During the year under review, the
Company
witnessed a moderate de-growth in sales of Colour Televisions and LCDs
of
2%. The performance in Mobiles, Air Conditioners and Washing
Machine
segments marks the advancement of the Company towards becoming a
complete
home solutions provider.

IV. Outlook

In the times to come, Brand strength, product mix, a well-


established
distribution network, after-sales service, and technological
superiority
would be factors which will determine the competitive advantage of
industry
players. Market shares are expected to consolidate; however, the pace
of
consolidation would decline. While major industry players would
continue to
focus on prices in the low-medium range, advertising and promotional
spends
would continue to be an integral part of the players' expenses.

The Company has extended its offerings under the Onida brand
across
products as well as geographical boundaries.The Company expects to
increase
its presence in these products and emerge as a leading solutions
provider
for electronic home improvement goods. The Company has also positioned
an
exclusive brand `IGO' for the rural market to capture the potential
demand
from the rural areas, which is growing aggressively.

On the export front the Company intends to aggressively capitalize


its
export potential and has invested considerably in research and
development
initiatives to create products for diverse geographies. Over the time
the
management expects Onida to emerge as a global brand in the
consumer
durables industry in India as well as internationally.

V. Risks and concerns

At MIRC, we have recognized that managing business risk is an integral


part
of generating substantial and sustainable shareholder value. This
positive
interpretation of risk reflects the new understanding of the
connection
between well-managed risk and improved performance. That is, where
the
management seeks to mobilize the linkage between risk
management,
achievement of corporate goals and reduced volatility of outcomes. A
more
dynamic approach to risk management is critical to deliver
superior
performance and superior returns to shareholders. To this end,
the
management has always been proactive on risk identification and
mitigation.

As part of a comprehensive de-risking strategy, the Company initiated


an
organized system of forecasting and cost budgeting leading to an
optimal
utilization of resources. The Company expects to enhance its
global
presence to rationalize its significant dependence on the Indian
geography.

VI. Internal control systems and their adequacy

The management periodically reviews the internal control systems


and
procedures leading to the orderly and efficient conduct of its
business.
The internal control structure is adequately designed to
ensure
effectiveness of its operations in the utilization of funds,
safeguarding
of assets against unauthorized use or disposition, true and fair
reporting
and compliance with all the applicable regulatory laws and company
rules.

Internal Audit is conducted on a regular basis by external auditors


to
monitor and report on the effectiveness of the internal control in
the
organization.

Significant findings of the Internal Audit are brought to the notice of


the
Audit Committee as well as to the Board of Directors of the Company
and
corrective measures recommended for implementation. Reports of the
Internal
Auditor are also continuously reviewed by the management and
corrective
action initiated to strengthen the controls and enhance the
effectiveness
of the existing systems.

VII. Operational and financial performance

During the year under review the turnover of the Company increased
from
Rs.1517.72 crores to Rs.1568.35 crores. The Profit before tax
increased
from Rs. 10.15 crores to Rs.22.65 crores registering an increase of
123%
and the Profit after tax increased from Rs.8.95 crores to Rs.18.37
crores
registering an increase of 105%.

VIII. Material developments in Human Resources/ Industrial Relations


front,
including number of people employed

At MIRC, human capital is considered to be the most valuable


resource,
since people deliver results. People are nurtured, developed, motivated
and
rewarded to ensure business growth. The H.R. Cell ensures that the
Company
attracts right competency, develop them continuously, and keep
its
employees motivated through implementation of various HR processes.

The objective of the Human resource initiative at Mirc is that all


ONIDIANS
shall collectively perform to realize the goals of the company and
catapult
the organization to the elite league of companies which grace the hall
of
fame of the corporate world.

The Company's H.R. Cell takes a proactive role in responding to


genuine
grievances of employees to foster a warm positive relationship between
the
management and employees, increase job satisfaction and ensure
that
employees can add value to their lives.

The Human resource approach of the Company embodies the following:

* Empowering our employees to innovate in an open, informed and


challenging
work place. Encouraging the richness of ideas, approaches and points
of
view within a work environment conducive to both superior performance
and
personal fulfillment.

* Conducting and facilitating need-based training empowered by


structured
career plans that optimize individual potential.

* A unique variable pay plan linked to company's profitability


for
executives.

* A highly conducive and enabling work atmosphere. A well-designed


safe
campus

* Stress upon lateral thinking across all levels.

The management is continuously working on the development of human


capital
to enhance responsiveness, efficiency and effectiveness in an ever-
changing
business environment. Employee performance is continuously
evaluated
against agreed KRAs as well as feedback on behavioral competencies.
The
company had about 1858 employees on its roll as on 31st March, 2010.
IX. Material financial and commercial transactions involving
Senior
management

The Company has in place a Code of Corporate Governance which


stipulates
that senior management personnel shall make disclosures to the Board
of
Directors regarding any material financial and/or commercial
transactions
in which they are interested which may have a potential conflict with
the
interest of the Company. In terms of the said Code senior
management
personnel have confirmed to the Board that they had no
such
dealings/transactions with the Company during the financial year ended
31st
March, 2010.

X. Cautionary Statement

The Statements made in this report describing the Company's


projections,
expectations and estimations may be forward looking within the meaning
of
applicable securities laws and regulations. These statements are based
on
certain assumptions and expectation of future events. The actual
results
may differ from those expressed or implied in this report due to
the
influence of external and internal factors beyond the control of
the
Company.

The Company assumes no responsibility in respect of forward


looking
statements herein which may undergo changes in future on the basis
of
subsequent developments, information or events.

On behalf of the Board of


Directors

Date : 3rd May, 2010 Gulu L. Mirchandani


Place : Mumbai Chairman and Managing Director
PANASONIC HOME APPLIANCES INDIA COMPANY LIMITED Back
ANNUAL REPORT 2009-2010

MANAGEMENT DISCUSSION AND ANALYSIS

INDUSTRIAL REVIEW:

The global economy continues to recover amidst ongoing policy support


and
improving financial market conditions. India's GDP stood at 7.4 per
cent in
the year 2009-10 as compared to 6.7% in the previous year. The
Government
estimates the economy to grow at a rate of 8.5 per cent in 2010-11
driven
by better farm output and a global recovery. The industrial sector
recovery
is increasingly becoming broad-based and is expected to take firmer
hold
going forward on the back of rising domestic and external demand.
The
improved performance of the industrial sector is also reflected in
the
improved profitability in the corporate sector.

Driven by a young population with access to disposable incomes and


easy
finance options, the Indian consumer market has been growing very fast.
The
Indian consumer durables segment can be segregated into
consumer
electronics viz., TVs, VCD players and audio systems and
consumer
appliances like refrigerators, washing machines, air
conditioners,
microwave ovens, vacuum cleaners etc.,. Most of the segments in this
sector
are characterized by intense competition consequent to the re-entry of
many
Multinational Companies (MNCs) into the Indian consumer market
introduction
of state-of-the-art models, price discounts and exchange schemes.
MNCs
continue to dominate the Indian consumer durable segment.

Your Company continued to sustain its predominant position in the


Electric
Cooker segment. Quality of the product continues to be the strength of
the
Company to secure maximum customer satisfaction. During the year,
your
Company has successfully launched the mechanical Jar Cooker, a new
product
from its manufacturing stable besides revamping some of its
current
offerings to better suit consumer tastes. The ongoing capacity
expansion
program to increase the manufacturing capacity of Electric Cooker to
10
lakhs numbers is progressing as scheduled and is expected to be
completed
during the first half of the current financial year. The
investment
requirements for the ongoing expansion program and for the development
of
new models of electric cooker and mixer grinder are being met
through a
combination of internal accruals and Bank borrowings.

ANALYSIS OF FINANCIAL CONDITION AND RESULTS:

During the year under review your Company has registered an


impressive
growth in its sales where the gross sales increased to Rs.144.66 Crore
from
Rs.109.86 Crore in the previous year registering a growth rate of
31.68%.
Your Company has registered a profit before tax of Rs.299.50 Lakhs
as
against Rs. 258.84 Lakhs, in the previous year. The profit after tax
of
your Company stood at Rs.193.40 Lakhs as against Rs. 141.68 Lakhs in
the
previous year.

OUTLOOK ON OPPORTUNITIES, THREATS, RISKS AND CONCERNS:

The demand for consumer durables has increased with rising income
levels,
double-income families, changing lifestyles, availability of
credit,
increasing consumer awareness and introduction of new models. Apart
from
steady income gains, consumer financing has become a major driver in
the
consumer durables industry. The other factor for surging demand
for
consumer goods is the phenomenal growth of media in India. The flurry
of
television channels and the rising penetration of cinemas will continue
to
spread awareness of products in the remotest of markets.

The consumers will increase their spending owing to improving


economic
conditions. A large number of hypermarkets are expected to come
into
existence in tier-I and tier-II cities across India within two years
to
capitalize the boom in organized retail sector. Approximately
315
hypermarkets are expected to come into existence in Tier-I and
Tier-II
cities across India by the end of 2011, according to a joint study
by
consultancy firm KPMG and industry body ASSOCHAM named `Reinventing
India's
Retail Sector'. Consultancy firm Technopak has opined that the
organised
modern retail segment in India will grow by over three times during
the
next five years (from 2010), to reach a figure of US$ 80 billion.

Your Company with the support of technical collaborator has


developed
Electric Cookers meeting the IEC standards to cater to the export
market.
With the manufacture of Electric Cooker and Mixer Grinder meeting
the
international IEC standard, your Company expects to increase the
exports
sales substantially in the coming years. Your Company has
successfully
launched the mechanical jar cooker during the year. With the launch
of
mechanical jar cooker, your Company has added one more product to
its
manufacturing portfolio. Throughout the year, the Company had
continuous
price-down negotiations with suppliers and resorted to localisation
of
imported material parts in order to achieve cost reduction targets.
In
addition, the Company implemented some in-house production of
components to
achieve greater cost efficiency and to improve quality of products.

Overall the sector promises significant growth opportunities.


Strong
distribution network, own manufacturing facility, market positioning
and
branding coupled with product technology that benefit the customer
through
low power consumption, low service requirement and low cost of
operation
are the factors which strengthen your Company.

Entry of new players both MNCs and domestic companies in the


industry,
unbranded products and cheaper imports are the main causes of concern
at
this stage. The increase in prices of key raw materials and
persistent
power shortage are also a matter of concern which may negatively impact
the
margins of your Company as it would not be able to pass on the increase
in
input costs to the customers.

RISK MANAGEMENT:

Risk refers to events which hinder the achievement of business


objectives
the occurrence of which is uncertain, and Risk Management refers
to a
series of measures to recognize, confirm, evaluate and prioritize
risks
and, by establishing measures to respond to such risks in advance,
to
prevent the occurrence of or reduce such risks, or to minimize the
damage
caused when such risks occur. Your Company follows the risk
management
policy globally adopted by all Panasonic companies where it is
committed to
ensuring the achievement of its business plans by adequately promoting
risk
management and appropriately responding to risks that could impede
the
accomplishment of its business goals, with the aim of achieving
the
sustainable and steady growth of business.

INTERNAL CONTROL SYSTEMS AND ADEQUACY:

Your Company has a proper and adequate system of internal controls


to
ensure that its assets are safeguarded and protected against loss and
from
unauthorized use and to ensure that transactions are authorized,
recorded,
and reported correctly. The internal control systems are supplemented
by
internal audits by an external auditor and periodic reviews by
management.
The adequacy of the internal control systems are regularly tested by
the
Statutory as well as Internal Auditors. The systems and procedures
are
constantly upgraded to suit the requirements.

HUMAN RESOURCES:

Human Resource Management, work place safety and employee welfare


have
always been given utmost importance in your Company. The Company
will
continue to strengthen employer-employee relationship by
providing a
conducive working environment and offering a competitive
compensation
package. Imparting adequate HR training programmes and
specialized
trainings to the employees of the Company is an on going exercise.
The
industrial relations in your Company continued to be cordial. The
attrition
rate for the year stood at 4%. The Company has 252 number of employees
as
on 31st March 2010.

CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis Report describing


the
Company's objectives, expectations or predictions may be forward
looking
within the meaning of applicable Securities laws and regulations.
Actual
results may differ materially from those expressed in the
statement.
Important factors that could affect and influence Company's
operations
include global and domestic supply and demand conditions affecting
selling
prices of finished goods, input availability and prices, changes
in
government regulations, tax laws, economic developments within the
country

and other factors such as litigation and industrial relations.

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