BSE:517354 | NSE:HAVELLSEQ | 58888:hai | IND:Electronics/Electricals | ISIN code:INE176B01034 | SECT:Consumer Durables
The Directors have pleasure in presenting their 32nd Annual Report on the business and operations of the Company and the accounts for the Financial Year ended March 31st, 2015.
1. FINANCIAL SUMMARY
The Board''s Report is prepared based on the stand alone financial statements of the Company. The Company''s financial performance for the year under review alongwith previous year''s figures are given hereunder:
(Rs. in Crores)
Particulars Consolidated Standalone
2014-15 2013-14 2014-15 2013-14
Net Sales 8,569.43 8,185.80 5,238.69 4,719.69
Other Income 50.46 41.25 52.21 44.06
Operating Profit before Finance Costs, Depreciation, 711.59 783.74 751.33 685.66 Tax and Extraordinary items
Less: Depreciation and amortisation expenses 138.66 115.54 87.51 63.63
Finance Costs 63.96 74.11 17.57 26.93
Profit before Tax and Exceptional Expenses 568.97 594.09 646.25 595.10
Less: Exceptional Items
Less: Tax 183.55 147.76 181.31 116.41
Net Profit for the year 385.42 446.33 464.94 478.69
Add: Balance brought forward from previous year 960.69 1,073.35 1,429.04 1,217.43
Less: Adjustment related to transitional provision as 3.42 - - - per Schedule II to the Companies Act, 2013
Add: Share of Profit transfer to minority 0.00 0.00 - -
Profit available for appropriation 1,342.69 1,519.68 1,890.56 1,696.12
Appropriation of Profits
Transfer to General Reserve 46.50 339.91 46.50 48.00
Interim Dividend - 62.41 - 62.41
Proposed Dividend 187.35 124.82 187.35 124.82
Dividend for previous year - 0.03 - 0.03
Corporate Dividend Tax 38.14 31.82 38.14 31.82
Balance carried over to Balance Sheet 1,070.70 960.69 1,618.57 1,429.04
1,342.69 1,519.68 1,890.56 1,696.12
Havells, on a standalone basis achieved 11% growth in its net sales to Rs. 5,239 crores in 2014.15 as against Rs. 4,720 crores in 2013.14. The operating profit before Finance costs, depreciation and tax was Rs. 751 crores in financial year 2014.15, 9% higher than Rs. 686 crores in financial year 2013.14. Profit after tax was Rs. 465 crores in year 2014.15 as compared to Rs. 479 crores of preceding year.
On a consolidated basis, Havells had 5% growth in net sales to Rs. 8,569 crores in financial year 2014.15 as against Rs. 8,186 crores in 2013.14. The consolidated operating profit before Finance costs, depreciation and tax was Rs. 712 crores in 2014.15 as compared to Rs. 784 crores in the preceding year. Consolidated Profit after tax was Rs. 385 crores in year 2014.15 as compared to Rs. 446 crores of preceding year.
2. BRIEF DESCRIPTION OF THE COMPANY''S WORKING DURING THE YEAR/ STATE OF COMPANY''S AFFAIRS
Your Company had a sales growth of 5% on a consolidated basis in the year 2014.15. The muted growth was a result of challenging macro environment and slowdown in consumer demand. Segments like cables grew by about 13% and switchgears segment by 5%. Lighting & fixtures grew by mere 3% on account of lowered demand for CFL. At the same time consumer durables segment showed an impressive growth of 20%, though on a smaller base.
The Company is fast adopting newer technologies ensuring sustainable growth in the future. For example, your company already has been working on fast growing LED space. We are already equipped with the state of the art factory at Neemrana to capitalise on the growth of this segment. Our recent acquisition of Promptec, a Bengaluru based company in the Solar LED Street light space is another step to strengthen our position in the growing LED market. Even the government impetus will further help the sector and companies like ours. Havells is fully geared to take advantage of this opportunity.
Innovation has been at the forefront of your company''s growth strategy. This year we launched few innovative products like Lumeno- India''s brightest LED. During the year your company added the first Made in India MCB, Euro -2 series to the portfolio. In the fans category, the Company pursuant to its image of being pioneers of energy efficient fans in the country, introduced India''s most energy efficient fan- ES40 that consumes only 40watt electricity as compared to a normal ceiling fan that consumes anywhere between 70-80 watts. We have already filed a patent for its unique design and aesthetics. Increasing our focus on brand Standard, the Company re-launched the brand with new identity and fresh look. We expect brand Standard to attain newer heights in times to come. These measures are expected to fuel Company''s growth in the coming year. Your company also launched India''s most automated water heater plant at Neemrana, Rajasthan. The plant is fully operational and will be able to cater to the requirements of the coming season.
Havells continued to invest in brand building and spent Rs. 154.99 crores during 2014-15. During the year, we changed the media strategy to be able to cover more genres of media including general entertainment channels, new channels and print media. The Company continued to invest on Cricket and IPL and like before launched new campaigns during IPL this year.
SUBSIDIARY COMPANIES, JOINT VENTURE AND CONSOLIDATED FINANCIAL STATEMENTS
The Sylvania-European operations have remained stable during the year despite difficult market conditions. Even with volatile forex conditions the focus for the company has been on profitability, cash generation and debt reduction in the business. The business in the year has shown significant improvement in the financial profile and the company expects this business to remain stable and further strengthens the quality of the balance sheet.
Sylvania is working towards alignment of its product portfolio to the growing consumer demand for LED that is witnessing higher sales in Europe. The technological shift from CFL to LED has been quite smooth as the company already had the fixtures range in Europe. This ensures that we are well placed to address the market shift towards LED.
The Sylvania-Latin America business, which contributes around 35% to Sylvania''s total revenue, continues to focus on profitability and growth. Though the year under review witnessed currency volatility, we see economic sentiment picking up in the coming year.
As part of our commitment to the United Nations'' global initiative aimed at promoting sustainable development in the lighting business, we became a Gold Sponsor for the International Year of Light in 2015.
Our products continued to claim international awards for their quality, innovation and design. Our immensely popular architectural lighting brand Concord won the Lighting Design Awards (LDAs) for the fourth consecutive year.
Sylvania on standalone registered net revenue of Euro 443.1 mn in financial year ended 2014-15 as compared to Euro 440.1 mn in financial year ended 2013-14. EBIDTA (Earnings Before Interest Depreciation Tax and Amortisation) was Euro 6.3 mn in financial year ended 2014-15 as compared to Euro 16.5 mn in financial year ended 2013-14.
As on 31st March, 2015, your Company has 55 (Fifty Five) subsidiary companies, 2 being direct subsidiaries and the rest 53 step-down subsidiaries, all of which are registered outside India. The 2 Direct subsidiaries are -
1. Havells Holdings Limited based at Isle of Man. This entity is an SPV formed for the purpose of holding investments and mobilizing funds for the 53 step-down Sylvania subsidiaries of the Company.
2. Havells Exim Limited based at Hong Kong. This entity serves as a Central Procurement Company (CPC) to procure various electrical products for Havells and Sylvania trading operations.
The Board of Directors of the Company has, by Resolution passed in its meeting held on 11th May, 2015, given consent for not attaching the Balance Sheets of the subsidiaries concerned.
The consolidated financial statements of the Company including all subsidiaries duly audited by the statutory auditors are presented in the Annual Report. The consolidated financial statements have been prepared in strict compliance with applicable Accounting Standards and, where applicable, Listing Agreement as prescribed by the Securities and Exchange Board of India.
A report on performance and financial position of each of the subsidiaries, associates and joint venture companies included in the consolidated financial statement is presented in a separate section in this Annual Report. Please refer (AOC-1) annexed to the financial statements in the Annual Report.
The annual accounts of the subsidiary companies and the related detailed information shall be made available to Shareholders of the Company and its subsidiary companies upon request and it shall also be made available on the website of the Company i.e. www.havells.com. The annual accounts of the subsidiary companies shall also be kept for inspection by any shareholder in the head office of the Company and the respective offices of its subsidiary companies.
Your Company has a 50:50 joint venture in People''s Republic of China with Shanghai Yaming Lighting Co., Ltd. under the name of Jiangsu Havells Sylvania Lighting Co., Ltd. This joint venture company is created with an objective to use advanced technology, know-how and scientific management techniques for production of lighting lamps and fixtures and to sell it to Havells group companies.
Both the partners have made full investment in JV (USD 5.3 mn by each partner) as required by JV contract for its registered capital.
In Financial Year 2014-15, JV achieved sales of US$ 19.9 mn against US$ 17.4 mn in 2013-14, thereby showing a growth of 14%. Growth in sales and margin improvement has resulted in net profit of 4% as against loss of 1.4% in 2013-14.
As the global lighting industry is inclining towards LED lighting products, during the period of 2014, JV has invested in infrastructure for LED products and is setting up a team of experts to focus on increasing the share of LED in the total sales.
3. NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR
During the financial year ended 31st March, 2015, no entity became or ceased to be the subsidiary, joint venture or associate of the Company.
Your Company proposes to carry Rs. 46.50 crores to the general reserve and retain Rs. 1,618.57 crores in the profit and loss account.
Your Directors are pleased to recommend a Dividend of Rs. 3/- per equity share for the year 2014-15. The proposed dividend, subject to approval of Shareholders in the ensuing Annual General Meeting of the Company, would result in appropriation of Rs. 225.49 crores (including Corporate Dividend Tax of Rs. 38.14 crores) out of the profits thus giving 48.50% payout from the net profit of the Company. The dividend would be payable to all Shareholders whose names appear in the Register of Members as on the Book Closure Date.
The Register of Members and Share Transfer books shall remain closed from 1st July, 2015, Wednesday to 7th July, 2015 Tuesday (both days inclusive).
6. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT
No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this financial statements relate and the date of this Report.
However, in terms of the "Part B - Havells Employees Stock Purchase Plan 2014" of the Havells Employees Long Term Incentive Plan 2014, which is administered by Havells Employees Welfare Trust, 1,01,857 Equity Shares of Rs. 1/- each, were granted on 23rd April, 2015 to the eligible employees, which, if exercised, shall result in an equivalent no. of Equity Shares of Rs. 1/- to be allotted to Eligible Employees of the Company under the Plan.
Further, the Board of Directors in its Meeting held on 20th April, 2015, approved an investment upto Rs. 32 crores in one or more tranches for purchase and subscription of Equity Shares to acquire majority stake of 51% in Promptec Renewable Energy Solutions Pvt. Ltd. (Promptec). Promptec is a Bengaluru based company engaged in marketing and manufacturing of LED products including street lighting, office lighting and solar lighting. Subsequently, the Company has signed an agreement with Promptec to this effect.
7. CHANGE IN THE NATURE OF BUSINESS, IF ANY
There was no change in the nature of business of the Company during the financial year ended 31st March, 2015.
8. DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL INCLUDING THOSE WHO WERE APPOINTED OR HAVE RESIGNED DURING THE YEAR
As at 31st March, 2015, your Board comprised of the following 12 Directors:
1. Shri Anil Rai Gupta, Chairman and Managing Director Consequent to the demise of Shri Qimat Rai Gupta, founder Chairman and Patriarch, on 7th November, 2014, the Board of Directors, upon the recommendations of the Nomination and Remuneration Committee, designated Shri Anil Rai Gupta, the then Joint Managing Director, as the Chairman and Managing Director of the Company with effect from 13th November, 2014.
Shri Anil Rai Gupta, was last re-appointed by the Shareholders of the Company in the Annual General Meeting held on 5th July, 2013 for a period of 5 (Five) years with effect from 1st April, 2014.
Consequent upon his designation as the Chairman and Managing Director of the Company, the Board of Directors, upon the recommendations of the Nomination and Remuneration Committee, in its meeting held on 22nd December, 2014 varied the terms of remuneration being paid to Shri Anil Rai Gupta, with effect from 1st January, 2015. His remuneration requires the approval of the members at the ensuing AGM.
Further, pursuant to the provisions of Section 152 of the Companies Act, 2013, Shri Anil Rai Gupta, is due to retire by rotation at the ensuing Annual General Meeting, and being eligible, offers himself for re-appointment.
2. Shri Surjit Gupta, Non-Executive Director
Shri Surjit Gupta is one of the First Directors of the Company and belongs to the Promoter Group. He works as technical head of Havells. Under his guidance Havells has become a leading group in the Electrical Industry with an excellent reputation for quality engineering products. He was instrumental in the initial exposures of Havells to international manufacturers and technology. Havells under his leadership has entered into alliances with several foreign manufacturers.
3. Shri Ameet Kumar Gupta, Whole-time Director The Board, upon the recommendations of the Nomination and Remuneration Committee, at its Meeting held on 22nd December, 2014, appointed Shri Ameet Kumar Gupta, as an Additional Director with effect from 22nd December, 2014 and a Whole-time Director with effect from 1st January, 2015. His appointment and remuneration requires the approval of members at the ensuing AGM.
The Company has received a Notice in writing under the provisions of section 160 of the Companies Act, 2013, along with a deposit of Rs. 1,00,000/- proposing the candidature of Shri Ameet Kumar Gupta for the office of Director. The Company has received consent in writing to act as Director in Form DIR-2 and intimation in Form DIR-8 to the effect that he is not disqualified u/s 164(2) to act as Director.
Shri Ameet Kumar Gupta is a Bachelor of Engineering (Electronics & Communication) from Delhi University and an MBA (Marketing and Finance) from Wake Forest University, North Calorina, USA.
He has been working with the QRG group for about 2 decades and actively involved in new business development activities along with Shri Anil Rai Gupta. In addition, he has been accredited with new product introduction and development and also for setting up new plants and manufacturing facilities for the QRG group. His functions include spearheading new projects being under taken by the organisation.
4. Shri Rajesh Gupta, Whole-time Director (Finance) and Group CFO
Shri Rajesh Gupta, Whole-time Director (Finance) and Group CFO of the Company, is a Chartered Accountant having rich experience in finance and allied fields. He is serving the Company for more than 35 years. He is the Director (Finance) and Group CFO.
Shri Rajesh Gupta, Whole-time Director (Finance) and Group CFO of the Company, was last re-appointed by the shareholders in the AGM held on 29th September, 2010 for a term of 5 (Five) years w.e.f. 1st April, 2010, with further variations as to remuneration being approved in the AGM held on 5th July, 2013. As per the existing terms of his appointment, his tenure expires on 31st March, 2015.
Accordingly, based on the recommendations of the Nomination and Remuneration Committee, the Board, in its Meeting held on 28th January, 2015, has re-appointed Shri Rajesh Gupta as the Whole-time Director (Finance) and Group CFO for a period of 5 (Five) years w.e.f. 1st April, 2015 to 31st March, 2020. He is appointed as the Chief Financial Officer in terms of the Companies Act, 2013. His re-appointment and remuneration requires the approval of members at the ensuing AGM.
Further, pursuant to the provisions of Section 152 of the Companies Act, 2013, Shri Rajesh Gupta, is due to retire by rotation at the ensuing Annual General Meeting, and being eligible, offers himself for re-appointment.
5. Shri S. B. Mathur, Independent Director
Shri S. B. Mathur, is an independent director on the Board since year 2006. A qualified Chartered Accountant, retired from Life Insurance Corporation of India (LIC) in October 2004 as its Chairman. He held various positions such as Senior Divisional Manager of Gwalior Division, Chief of Corporate Planning, General Manager of LIC (International) E.C., Zonal Manager in Charge of Western Zone and Executive Director. He has a successful track record of introducing new products in the insurance sector in a competitive environment. He is an Advisor, National Investment Fund and member, Insurance Regulatory and Development Authority.
6. Shri A. P. Gandhi, Independent Director B.E. (Mechanical), Shri A. P Gandhi has vast and extensive knowledge in the field of automobile manufacturing, sales and finance. He has rich years of experience in engineering. He has held top leadership position in prestigious organisations for nearly two decades in over forty nine years of working in professional sector. He has recently joined the Board of Hyundai Motor India Limited.
7. Shri V. K. Chopra, Independent Director Chartered Accountant & Certified Associate of Indian Institute of Bankers, Shri V. K. Chopra professionally a Chartered Accountant has vast experience in finance & banking matters. In his professional career, he has held top leadership positions in various prestigious banking organisations viz. Central Bank of India, Punjab & Sindh Bank, Corporation Bank & SIDBI. He was also a wholetime member of SEBI. Presently, he holds directorships in various prestigious organisations.
8. Shri S. K. Tuteja, Independent Director
Shri S. K. Tuteja, a member of the 1968 batch of the Indian Administrative Services (IAS), Punjab cadre, retired as Secretary to the Government of India in the Department of Food & Public Distribution after 37 years of Civil Service. IAS, FCS, M. Com (DU), he has served on different posts in Government of India, Government of Punjab and in Public Sector. He was awarded the "Dayanand Munjal Award" for "Manager of the Year". He has acted as a consultant to various international programmes carried out in the field of new technologies and innovations. He participated as a Member of the India Delegation in the 4th Ministerial Conference of WTO held in Doha, Qatar and was a member of the Executive Committee of the International Sugar Organisation, London and the International Grain Council, London.
9. Dr. Adarsh Kishore, Independent Director
Dr. Adarsh Kishore, a member of the 1969 batch of Indian Administrative Services (IAS), Rajasthan, Cadre, Phd in Political Economy is Former Finance Secretary, GOI and Former Executive Director, International Monetary Fund (IMF) representing Bangladesh, Bhutan, India and Sri Lanka. He is an Advisor, Chartered Finance Management Limited.
10. Smt. Pratima Ram, Independent Director
The Board, upon the recommendations of the Nomination and Remuneration Committee, at its Meeting held on 28th July, 2014, appointed Smt. Pratima Ram as an Additional Director and Independent Director. She holds office upto the date of this AGM.
The Company has received a Notice in writing under the provisions of section 160 of the Companies Act, 2013, along with a deposit of Rs. 1,00,000/- proposing the candidature of Smt. Pratima Ram for the office of Director. The Company has received consent in writing to act as Director in Form DIR-2 and intimation in Form DIR-8 to the effect that she is not disqualified u/s 164(2) to act as Director. The Company has also received declaration from her that she meets the criteria of independence as prescribed u/s 149(6) of the Companies Act, 2013.
In the opinion of the Board, she fulfills the condition for appointment as Independent Director on the Board.
She is eligible to be appointed as a Director of the Company and her appointment requires the approval of members at the ensuing AGM.
Smt. Pratima Ram is an experienced banker with three decades of service in Corporate, International and Investment Banking. She has worked in India, USA and South Africa.
Smt. Pratima Ram held the position of Chief General Manager and Country Head of United States operations of State Bank of India and prior to this she was the CEO of the South African operations of the Bank. At SBI Capital Markets, she led the Corporate Advisory, M&A, and project Appraisal businesses. While at SBI, she also headed the Diamond Financing business of the Bank.
On leaving the public sector, she joined private sector in the infrastructure space as Group President Finance at Punj Lloyd Group having diversified operations in more than 15 countries. She is currently the Advisor to India Infoline Finance Ltd., a Non-Banking Finance Company focused on lending to small businesses, Real Estate and Health care sectors.
She has held Board position in SBI California Lloyd, USA and India Infoline Finance Ltd., Mumbai. Smt. Pratima Ram graduated from university of Virginia, USA and Bangalore University.
11. Shri T. V. Mohandas Pai, Non-Independent Director The Board, upon the recommendations of the Nomination and Remuneration Committee, at its Meeting held on 22nd December, 2014, appointed Shri T. V. Mohandas Pai as an Additional Director as Non-Independent and Non-Executive. He holds office upto the date of this AGM.
The Company has received a Notice in writing under the provisions of section 160 of the Companies Act, 2013, along with a deposit of Rs. 1,00,000/- proposing the candidature of Shri T. V. Mohandas Pai for the office of Director. The Company has received consent in writing to act as Director in Form DIR-2 and intimation in Form DIR-8 to the effect that he is not disqualified u/s 164(2) to act as Director.
He is eligible to be appointed as a Director of the Company and his appointment requires the approval of members at the ensuing AGM.
Shri T. V. Mohandas Pai is a key player in the development of the IT services industry in India and instituted several industry-firsts in the Country. Prior to this, he was a Member of the Board at Infosys Ltd., where he also served as CFO and the lead for Human Resources and Education & Research. He was the first to institute the broad based employee stock option plan, led the first Indian company to list in the US etc.
He co-founded Aarin Capital Partners in early 2012 to fund opportunities in Health Care, Life Sciences, Education and Technology-led businesses. He also co-founded Exfinity Investment Managers in mid-2014 to launch Exfinity Technology Fund I and focused on providing capital and operational support to technology companies with an India base or focus.
He is also the Chairman of SEBI Primary Markets Advisory Committee (PMAC). He was a Trustee of the International Financial Reporting Standards (IFRS) Foundation and a Member of the Dr. Anil Kakodkar Committee on Autonomy for the IITs and the Karnataka Knowledge Commission. He is currently a Member on the Boards of IIT, Hyderabad. Chairperson, FICCI Higher Education Committee
He was a Member of various important national committees like the Kelkar Committee, constituted by the Ministry of Finance, GoI; the Non-Resident Taxation Committee as well as the Chair of the Karnataka ICT Group 2020.
He is also a keen philanthropist who helped set up the Akshaya Patra Foundation in Bangalore which today delivers a hot mid-day meal to over 1.4 million school children in 11,000 government schools across 9 states in India along with other likeminded persons. In April 2015, the President of India awarded him the Padma Shri in recognition of his efforts for the betterment of the nation in areas of Trade and Industry.
12. Shri Puneet Bhatia, Non-Independent Director
The Board, upon the recommendations of the Nomination and Remuneration Committee, at its Meeting held on 22nd December, 2014, appointed Shri Puneet Bhatia as an Additional Director as Non-Independent and Non-Executive. He holds office upto the date of this AGM.
The Company has received a Notice in writing under the provisions of section 160 of the Companies Act, 2013, along with a deposit of Rs. 1,00,000/- proposing the candidature of Shri Puneet Bhatia for the office of Director. The Company has received consent in writing to act as Director in Form DIR-2 and intimation in Form DIR-8 to the effect that he is not disqualified u/s 164(2) to act as Director.
He is eligible to be appointed as a Director of the Company and his appointment requires the approval of members at the ensuing AGM.
Shri Puneet Bhatia is Managing Director and Country Head - India for TPG Asia. Prior to joining TPG Asia in April 2002, Shri Puneet Bhatia was Chief Executive, Private Equity Group for GE Capital India, where he was responsible for conceptualizing and creating its direct and strategic private equity investment group.
Prior to this, he was with ICICI Ltd. from 1990 to 1995 in the Project and Corporate Finance group and thereafter worked as Senior Analyst with Crosby Securities from 1995 to 1996 covering the automobiles and consumer sectors.
Shri Puneet Bhatia currently serves as Director on the Boards of Shriram Transport Finance and Shriram City Union Finance. He has a B.Com Honors degree from the Sriram College of Commerce, Delhi and an M.B.A. from the Indian Institute of Management, Calcutta.
The details of Directors being recommended for appointment/ re-appointment as required in clause 49 of the Listing Agreement are contained in the accompanying Notice convening the ensuing Annual General Meeting of the Company.
Appropriate Resolution(s) seeking your approval to the appointment/ re-appointment of Directors are also included in the Notice.
9. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
During the financial year 2014-2015, the Board of Directors of the Company, met 10 (Ten) times on 23rd April, 2014, 28th May, 2014, 30th June, 2014, 28th July, 2014, 23rd September, 2014, 22nd October, 2014, 13th November, 2014, 22nd December, 2014, 28th January, 2015 and 18th March, 2015.
Further, a separate Meeting of the Independent Directors of the Company was also held on 18th March, 2015, whereat the prescribed items enumerated under Schedule IV to the Companies Act, 2013 and clause 49 of the Listing Agreement were discussed.
10. DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c) of the Companies Act, 2013, the Directors to the best of their knowledge hereby state and confirm that:
a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;
c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
d) the directors had prepared the annual accounts on a going concern basis; and
e) the internal financial controls to be followed by the company were laid down and such internal financial controls were adequate and were operating effectively.
f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
11. DECLARATION BY INDEPENDENT DIRECTOR(S) AND RE-APPOINTMENT, IF ANY
All the Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules.
12. NOMINATION AND REMUNERATION POLICY OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES
In adherence of section 178(1) of the Companies Act, 2013, the Board of Directors of the Company in its Meeting held on 22nd December, 2014, approved a policy on directors'' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided u/s 178(3), based on the recommendations of the Nomination and Remuneration Committee. The broad parameters covered under the Policy are - Company Philosophy, Guiding Principles, Nomination of Directors, Remuneration of Directors, Nomination and Remuneration of the Key Managerial Personnel (other than Managing/ Whole-time Directors), Key-Executives and Senior Management and the Remuneration of Other Employees.
The Company''s Policy relating to appointment of Directors, payment of Managerial remuneration, Directors'' qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 is furnished in ANNEXURE - 1 and forms part of this Report.
13. FORMAL ANNUAL EVALUATION
As the ultimate responsibility for sound governance and prudential management of a company lies with its Board, it is imperative that the Board remains continually energized, proactive and effective. An important way to achieve this is through an objective stock taking by the Board of its own performance.
The Companies Act, 2013, notified on 1st April, 2014, not only mandates board and director evaluation, but also requires the evaluation to be formal, regular and transparent. Subsequently, through two circulars (dated April 17, 2014 and September 15, 2014), SEBI has also revised the Equity Listing Agreement, to bring the requirements on this subject in line with the Act.
In accordance with the framework approved by the Nomination and Remuneration Committee, the Board of Directors, in its Meeting held on 18th March, 2015, undertook the evaluation of its own performance, its Committees and all the individual Directors.
The review concluded by affirming that the Board as a whole as well as all of its Members, individually and the Committees of the Board continued to display commitment to good governance, ensuring a constant improvement of processes and procedures.
It was further acknowledged that every individual Member and Committee of the Board contribute its best in the overall growth of the organisation.
14 EXTRACT OF THE ANNUAL RETURN
The extract of the Annual Return in Form No. MGT - 9 forms part of the Board''s Report and is annexed herewith as ANNEXURE - 2.
1. STATUTORY AUDITORS
The Statutory Auditors, M/s V. R. Bansal & Associates, Chartered Accountants, (Registration No. 016534N) and M/s S. R. Batliboi & Co. LLP (Registration No. 301003E) hold office till the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment. The certificate from the Auditors have been received to the effect that their re-appointment, if made, would be within the prescribed limit under section 141 of the Companies Act, 2013.
STATUTORY AUDITORS'' REPORT
The observations of Statutory Auditors in their reports on standalone and consolidated financials are self-explanatory and therefore do not call for any further comments.
2. COST AUDITORS
Pursuant to the provisions of Section 141 read with Section 148 of the Companies Act, 2013 and Rules made thereunder, M/s. Sanjay Gupta & Associates, Cost Accountants (Firm Regn. No. 000212) were appointed as the cost auditors of the Company for the year ending 31st March, 2015.
In terms of the Cost Audit Order dated 30th June, 2014 notified by the Ministry of Corporate Affairs which exempted certain industries from the purview of Cost Audit, the Company was not required to get the cost audit done for the financial year 2014-15. However, by virtue of Cost Audit Order notified by the Ministry of Corporate Affairs dated 31st December, 2014, the Company is again covered under the purview of Cost Audit w.e.f. the financial year 2015-16.
The due date for filing the Cost Audit Reports for the Financial Year ended 31st March, 2014 was 28th September, 2014 and the Cost Audit Report was filed by the Cost Auditor M/s Sanjay Gupta & Associates, Cost Accountants, on 20th August, 2014.
3. SECRETARIAL AUDITORS
Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with corresponding Rules framed thereunder, M/s MZ & Associates were appointed as the Secretarial Auditors of the Company to carry out the secretarial audit for the year ending 31st March, 2015.
SECRETARIAL AUDIT REPORT
A Secretarial Audit Report given by the Secretarial Auditors in Form No. MR-3 is annexed with this Report as ANNEXURE - 3.
There are no qualifications, reservations or adverse remarks made by Secretarial Auditors in their Report.
16. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186
During the financial year ended 31st March, 2015, no Loan u/s 186 of the Companies Act, 2013 was made by the Company.
The particulars of investments and guarantees made/ given by the Company, under Section 186 is furnished in ANNEXURE - 4 and forms part of this Report.
17. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
The particulars of every contract and arrangement entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arm''s length transactions under third proviso thereto are disclosed in Form No. AOC -2 in ANNEXURE - 5 and form part of this Report.
18. CONTRIBUTION TO EXCHEQUER
The Company is a regular payer of taxes and other duties to the Government. During the year under review your Company paid Rs. 150.99 crores towards Income Tax as compared to Rs. 116.41 crores paid during the last financial year. The Company also paid Excise Duty of Rs. 319.10 crores, Custom Duty, Sales Tax & Service Tax of Rs. 523.54 crores, totalling Rs. 842.64 crores during financial year 2014-15 as compared to Rs. 819.28 crores paid during last financial year.
19. DETAILS RELATING TO DEPOSITS COVERED UNDER CHAPTER V OF THE ACT
The Shareholders vide their Special Resolution dated 9th June, 2014, passed by way of Postal Ballot, have approved inviting/ accepting/ renewing deposits, in terms of the provisions of Companies Act, 2013 making the Company eligible for the same.
The Company has neither accepted nor renewed any deposits during the year under review. During the year, your Company repaid all the outstanding fixed deposits from public aggregating to Rs. 75.32 crores. As at 31st March, 2015, there was no deposit remaining unpaid or unclaimed as at the end of the year.
20. CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has always been undertaking CSR activities on a significant scale through QRG Foundation, a Trust instituted by the group, upholding the belief that corporates have a special and continuing responsibility towards social development.
The vision of Havells Group''s CSR activities, to make sustainable impact on the human development of under-served communities through initiatives in Education, Health and Livelihoods, has been formally codified with the constitution of a dedicated Corporate Social Responsibility Committee of the Board on 30th October, 2013 by the Board of Directors of the Company prior to the notification of section 135 of the Companies Act, 2013 and Rules framed thereunder. Details regarding the constitution, roles and functions of the Corporate Social Responsibility Committee are given in the Report on Corporate Governance.
Further, the Board of Directors of your Company has also adopted the CSR Policy of the Company as approved by the Corporate Social Responsibility Committee which is also available on the website of the Company at www.havells.com.
The Annual Report on CSR as per Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed herewith as ANNEXURE - 6 to this Report in the prescribed format.
21. AUDIT COMMITTEE
The Audit Committee of the Board of Directors of the Company, comprises 4 (Four) Members, namely Shri V. K. Chopra, Shri S. B. Mathur, Shri A. P. Gandhi and Shri Surjit Gupta, majority of them being Independent Directors except Shri Surjit Gupta, who is a Non-Independent Non-Executive Director. Shri V. K. Chopra, an Independent Director, is the Chairperson of the Audit Committee.
The Board accepted the recommendations of the Audit Committee whenever made by the Committee during the year.
22. RISK MANAGEMENT POLICY
Havells understands controlling risks through a formal programme is necessary for the well-being of the Company. To this end, the Board has formed an Enterprises Risk Management Committee to identify the risks impacting the business and formulate strategies/ policies aimed at risk mitigation as part of risk management. Further, a core Committee comprising senior management, has also been formed to identify and assess key risks and formulate strategies for mitigation of risks identified in consultation with process owners.
During the year, the Board of Directors, in its meeting held on 28th January, 2015, has also adopted a formal Risk Management policy for the Company, whereby, risks are broadly categorized into Strategic, Operational, Compliance, and Financial & Reporting Risks. The Policy outlines the parameters of identification, assessment, monitoring and mitigation of various risks which are key to business objectives.
23. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
The Risk Management and Governance Department of the Company have certified the existence of various risk-based controls in the Company and also tested the key controls towards assurance for compliance for the present fiscal.
Further, the testing of such controls shall also be carried out independently by the Statutory Auditors from the financial year 2015-16 onwards as mandated under the provisions of the Companies Act, 2013.
In the opinion of the Board, the existing internal control framework is adequate and commensurate to the size and nature of the business of the Company.
24. DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES
Prior to the notification of section 177(9) of the Companies Act, 2013, the Company has had in place a composite Policy "Idea & satark", whereby "Idea" seeks to promote a culture of innovative thinking and creativity in all aspects of business - technical, non- technical, commercial, administrative, processes, cost saving etc. that may benefit the Company; and "Satark" (alert/ vigilant) functions as a Whistle Blowing mechanism, empowering any person associated with the organisation to bring to the attention of the management any irregularity that he/ she may notice. The "Idea & Satark"
- is a forum available to the employees and any person associated with the organisation, allowing him/ her to blow the whistle/ highlight any fraud, irregularity, wrongdoing etc.
- ensures confidentiality of the whistle-blower under the Policy subject to the rights of the person against whom the grievance is made.
- provides whistle-blower access to the Chairman of the Audit Committee.
Recognizing the regulatory mandate u/s 177(9) and clause 49 of the Listing Agreement placing greater stress on the establishment of Vigil Mechanism in a listed entity for its directors and employees so they may report their genuine concerns or grievances, steps were taken during the financial year 2014-15, by way of placing refreshed drop-boxes and posters across all establishments - Units, Branches and the Corporate Office to increase awareness about Satark, especially highlighting the fact that the forum provides direct access to Audit Committee Chairman in cases where the complaint is to be made against any senior management employee.
25. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE
There was no significant and material order passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.
26. EMPLOYEE RELATIONS
Havells is an equal opportunities employer. Employees are evaluated solely on the basis of their qualifications and competencies. Havells hiring policy is geared to ensure it hires employees without regard to their race, colour, religion, national origin, citizenship, age, sex, marital status, ancestry or socio-economic background.
Havells provides equal opportunity in all aspects of employment, including recruitment, training conditions of service, career progression, termination or retirement and acts like a beacon to employees at all levels to act fairly and prevent discrimination.
The global workforce which spread across the continents, forms the backbone of the entity. We handle global preferences and mindsets of both internal and external customers. Employee recognition schemes in the form of ESOPs/ ESPS and the Idea policy have been a successful tool in acknowledging their contribution and making them partners in the wealth created by Havells.
Havells greatest asset is its employees. It is committed to attracting, retaining, and developing the highest quality and most dedicated work force possible in today''s market. It strives to promote people on the basis of their qualifications, performance, and abilities, and is determined to provide a work environment free of any form of illegal discrimination both direct and indirect, including sexual harassment. Further, Havells is committed to maintaining a workplace where each employee''s privacy and personal dignity is respected and protected from offensive or threatening behaviour including violence.
In accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 to provide for the effective enforcement of the basic human right of gender equality and guarantee against sexual harassment and abuse, more particularly against sexual harassment at work places, your Company has in place a "Nirbhaya Policy", duly approved by the Board of Directors.
An Internal Complaints Committee has been constituted under the above policy which provides a forum to all female personnel to lodge complaints (if any) therewith for redressal. The Committee submits an annual report to the Audit Committee of the Board of Directors of your Company on the complaints received and action taken by it during the financial year.
During the year, no complaint was lodged with the Internal Complaints Committee formed under Nirbhaya Policy.
In order to fulfill the desired utility of the Committee and make the Nirbhaya Policy meaningful, the Committee meets at specified intervals to take note of useful tools, mobile applications, media excerpts etc. that enhance security of female employees. The same are circulated within the organisation to encourage general awareness.
27. DETAILS PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT, 2013
Details pursuant to section 197(12) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report and are annexed herewith as ANNEXURE - 7.
28. HAVELLS EMPLOYEES LONG TERM INCENTIVE PLAN 2014
The shareholders vide their special resolution dated 9th June, 2014 have approved the Havells Employees Long Term Incentive Plan 2014 (''the Plan'') framed in accordance with the erstwhile SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The Plan administered by Havells Employees Welfare Trust under the supervision of the Nomination and Remuneration Committee, covers Part A - Havells Employees Stock Option Plan 2013 and Part B - Havells Employees Stock Purchase Plan 2014.
Promoters, Independent Directors, Directors directly or indirectly holding 10% or above of the equity share capital of the company, Employees not residing in India or Non-Resident Indians (NRIs) are not eligible for the grant of options/ issue of shares under the Plan.
The Company has received a certificate dated 17th April, 2015 from the Auditors of the Company that the Scheme has been implemented in accordance with the SEBI Guidelines and the Resolution passed by the shareholders dated 9th June, 2014. The Certificate would be placed at the Annual General Meeting for inspection by members. Disclosures under the Havells Long Term Incentive Plan 2014 as at 31st March, 2015, are set out in ANNEXURE - 8 to this Report.
29. CREDIT RATINGS CARE Ratings
Credit Analysis & Research Limited (CARE) is a full service rating company that offers a wide range of rating and grading services across sectors. CARE''s Credit rating is an opinion on the relative ability and willingness of an issuer to make timely payments on specific debt or related obligations over the life of the instrument. CARE rates rupee denominated debt of Indian companies and Indian subsidiaries of multinational companies.
During the year, CARE has reaffirmed the CARE A1 [A One Plus] rating assigned to the short-term facilities of your Company. This rating is applicable to facilities having a tenure upto one year. Instruments with this rating are considered to have very strong degree of safety regarding timely payment of financial obligations.
CARE has also reaffirmed the CARE AA [Double A Plus] rating assigned to the long-term facilities of your Company. This rating is applicable to facilities having a tenure of more than one year. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations.
Further, CARE has revised the Credit Rating assigned by it to the FD (Fixed Deposit) programme of the Company, from CARE AA (FD) (Double A Plus (Fixed Deposits)) to CARE AAA (FD) (Triple A (Fixed Deposits)).
In the annual surveillance conducted by ICRA of the Credit Rating assigned by it to the FD (Fixed Deposit) programme of the Company viz. Havells India Limited, ICRA has upgraded the rating to MAAA (pronounced as M triple A) from MAA (pronounced as M double A) earlier. MAAA is the highest-credit-quality rating assigned by ICRA.
CRISIL has assigned "FAAA / Stable" (pronounced "F triple A rating with stable outlook") to the Fixed Deposit Programme of the Company and "CRISIL A1 " (pronounced "CRISIL A one plus") to the Commercial Paper Programme of the Company.
The Company has acquired a number of international certifications, like BASEC, KEMA, CB, CE and RoHS, for its various products to expand its reach in international arena.
31. CORPORATE GOVERNANCE CERTIFICATE
Good governance is not a part of our vocabulary but in our organisation''s DNA.
Your Company upholds the standards of governance and is compliant with the Corporate Governance provisions as stipulated under clause 49 of the Listing Agreement in both letter and spirit. The Company''s core values of honesty and transparency have since its inception been followed in every line of decision making. Setting the tone at the top, your Directors cumulatively at the Board level, advocate good governance standards at Havells. Havells has been built on a strong foundation of good corporate governance which is now a standard for all operations across your Company.
Parameters of Statutory compliances evidencing the standards expected from a listed entity have been duly observed and a Report on Corporate Governance as well as the Certificate from Statutory Auditors confirming compliance with the requirements of clause 49 of the Listing Agreement forms part of the Annual Report.
Further, the Management Discussion and Analysis Report and CEO / CFO Certificate as prescribed under clause 49 of the listing agreement are also presented in separate sections forming part of the Annual Report.
32. ENVIRONMENT, HEALTH AND SAFETY
Havells is committed to protecting the health and safety of everyone involved in its operations as it is committed to protecting the sustainability of the environment in which it operates. We have worked hard to put in place management systems; controls; objectives and targets; strategies; and training that uphold and honour national and international codes and standards on health, safety and environment. Whether it is policies that inculcate safe behaviour as a personal value in all our stakeholders or that prevent accidents, we have put in place mandatory compliances for all employees and contractors while on business at our sites.
Fostering a preemptive safety culture across all our assets and facilities,we also ensure energy conservation at all plant locations. We have rain water harvesting facilities at all locations including our corporate office to maintain the balance of natural resource like water.
Your Company also provides life insurance cover, personal accident cover and robust medical and health policies to employees, workers, and channel partners against any unfortunate incident.
Havells uses the "Idea policy" to encourage employees to share their ideas and contributions in making your Company an accident free unit. We strongly believe that those on the shop floor who actually execute a task are the best to judge the parameters involved for safety and welfare.
33. RESEARCH AND DEVELOPMENT
Research and Development is part and parcel of ''Knowledge Creation'' which in turn creates prosperity and wealth. It is said that ''an idea'' can change your life; yes, on the same basis R & D brings profits and wealth to your enterprise. R & D has helped Havells in building products indigenously and progressively.
The Havells'' Center for Research and Innovation (CRI), at the Company''s Head Office premises in Noida, U.P has been serving your Company since 2005. The ISO-9001, 2000 certified CRI is recognized by Department of Scientific & Industrial Research and Ministry of Science & Technology, Government of India. Further, we have dedicated R & D departments (CRIs) at all plant locations and all of them are recognized by the Department of Scientific and Industrial Research (DSIR), Ministry of Science and Technology.
The state-of-the-art R & D center, run by a strong team of engineers, cooperates closely with the various departments so as to provide the best and the latest in terms of technology and design. We take a step forward every day; based on our sound understanding of the dynamics of the business and that of our products, all integrated with the continuous endeavours of our research and development team.
34. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the provisions of Section 205C of the Companies Act, 1956, your Company has transferred Rs. 3,08,058/- during the year 2014-15 to the Investor Education and Protection Fund. This amount was lying unclaimed/ unpaid with the Company for a period of seven years after declaration of Dividend for the financial year ended 2006-07.
35. LISTING OF SHARES
The shares of the Company are listed on the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE). NSE has been defined as the Designated Stock Exchange of the Company. The listing fee for the year 2015-16 has already been paid to the credit of both the stock exchanges.
36. APPOINTMENT OF NEW RTA (REGISTRARS & TRANSFER AGENTS) OF THE COMPANY
During the year, the Board of Directors consented to appoint Link Intime India Private Limited, having its registered office at C-13, Pannalalsilk Mills Compound, LBS Marg, Bhandup (West), Mumbai - 400078, as the new RTA (Registrars & Share Transfer Agents) of the Company in place of MCS Limited, Company''s existing RTA.
All operations and services shall be handled by the Link Intime office in Delhi. The complete address for communication with the new RTA is given in the section on Corporate Governance Report.
The process of shifting is currently in progress and till the completion of all required formalities in this regard the existing RTA of the Company i.e. MCS Limited shall continue to provide share registry services to shareholders of the Company.
37. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in ANNEXURE - 9 and forms part of this Report.
The Board places on record its appreciation for the continued co-operation and support extended to the Company by customers, vendors, regulators, banks, financial institutions, rating agencies, stock exchanges and depositories, auditors, legal advisors, consultants, business associates and all the employees with whose help, cooperation and hard work the Company is able to achieve the results.
The Board deeply acknowledges the trust and confidence placed by the consumers of the Company and all its shareholders.
For and on behalf of Board of Directors of Havells India Limited
Anil Rai Gupta
Noida, May 11,2015 Chairman and Managing Director
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