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Crompton Greaves
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Download Annual Report PDF Format 2013 | 2012 | 2011 | 2010
Directors Report Year End : Mar '13    Mar 12
To The Members,
 
 The Directors are pleased to present their seventy Sixth Annual Report
 on the business and operations of the Company and the accounts for the
 financial year ended 31 March 2013.
 
 THE YEAR IN RETROSPECT
 
 The consolidated net revenue of the Company during 2012-2013 grew by
 7.5% at Rs. 12,094 crore, as compared with Rs.11,249 crore last year.
 The Company has achieved a stand-alone net turnover of Rs.7135 crore,
 during the year under review, as compared with Rs.6485 crore during the
 previous year, a rise of 10%.
 
 Consolidated profit before tax (after exceptional item) decreased to
 Rs.64 crore, as compared with Rs.550 crore in the previous year, a
 decrease of 88.4% over last year.  Stand-alone profit before tax
 decreased from Rs.677 crore to Rs.596 crore, a decrease of 11.9%.
 
 Consolidated loss aftertax (after exceptional item) was Rs.36 crore as
 compared with consolidated profit after tax of Rs.374 crore in the
 previous year, a decrease of 109.7%. The Company recorded a stand-alone
 profit after tax of Rs.446 crore, a decrease of 11.7%.
 
 The Sales and Profit Before Interest and Tax (PBIT) of the respective
 Business Groups, compared with last year is given in Table 1 A detailed
 review of the operations and performance of the Company and each ''
 Business Group as well as the Company''s International operations is
 contained in the Management Discussion and Analysis Report, which is
 given as a separate chapter in the Annual Report.
 
 ACQUISITION
 
 On 27 July 2012, the Company acquired ZIV Group based in Spain, engaged
 in the design, engineering, manufacturing and support of Intelligent
 Electrical Devices (lEDs) and power automation systems for Utilities
 and Industries, for an Enterprise Value of 147 million.
 
 ZIVs offerings span from Substation and Distribution Automation, to
 Advanced Metering Infrastructure (AMI). ZIV has installed more than 1.4
 million lEDs for Utilities and Industries across the world. This
 acquisition expands the CG portfolio for power system automation and
 protection and creates a strong platform for CG in the smart grid
 arena.
 
 On 11 January 2013, the Company acquired the Compact Fluorescent Lamps
 (CFL) business of Karma Industries at Baddi, Himachal Pradesh, for an
 approximate value of Rs. 145 million. The acquisition will double the
 Companys capacity in the fast-growing CFL lighting segment and
 reinforce its presence in the rapidly growing Indian consumer market.
 
 AMALGAMATION
 
 CG-ZIV Power Automation Solutions Ltd (CG-ZIV) is a Joint Venture
 Company between the Company and ZIV Spain. Post acquisition of ZIV
 Group, for simplification of the shareholding structure and operational
 synergies, the Board of Directors at their Meeting held on 13 April
 2013, approved the amalgamation of CG-ZIV with the Company, A Scheme of
 Amalgamation will shortly be filed with the High Court of Judicature at
 Bombay.
 
 JOINT VENTURE
 
 On 2 May 2013, the Company entered into a Joint Venture Agreement with
 PT Prima Layanan Nasional Enjinring (PLNE) of Indonesia, for the
 manufacture of high voltage (HV) and extra high voltage (EHV)
 switchgear ranging from 70kV to 500kV in Indonesia. The Joint Venture
 will be owned 51 % by CG and 49% by PLNE.
 
 RATIONALIZATION
 
 The Company has been progressively evaluating opportunities for
 improving operational viability of the various businesses of CG. The
 transformer market in Western Europe is facing both over capacity and
 price pressure. Therefore, in order to have globally competitive and
 sustainable business operations in Europe, it was decided that CG''s
 Belgium operations be optimised for cost advantages, through
 administrative cost reduction measures and a right-sizing of its
 workforce at its Mechelen, Belgium site.
 
 This rationalisation program was concluded on 14 December 2012 with the
 separation of approximately 200 employees. Job Search and other
 employee help programs were implemented to assist separated employees
 to find new jobs. Post the project, a Fresh Start program comprising
 communication and engagement initiatives was launched to reinforce
 Company''s strategy, vision and expectations, monthly updates on the
 business situation and weekly department meetings. Senior Management is
 actively involved through a Fresh Start Steering Committee which
 oversees the overall communication and employee involvement processes
 to sustain employee productivity commitment and morale after the
 rationalization.
 
 DIVIDEND
 
 The Company declared two interim dividends during the year:
 
 - Rs.0.40 per equity share (20%) aggregating to a total dividend payout
 of Fis.30 crore (including dividend tax) declared on 20 July 2012; the
 Book Closure for this purpose was 28 July 2012 to 3 August 2012 and the
 Interim Dividend was paid on 8 August 2012.
 
 - Rs.0.40 per equity share (20%) aggregating to a total dividend payout
 of Rs.30 crore (including dividend tax) declared on 2 November 2012;
 the Record Date for this purpose was 8 November 2012 and the Interim
 Dividend was paid on 20 November 2012.
 
 The above mentioned dividend payout as a percentage of the share
 capital works out to 40%.
 
 The Board of Directors have recommended a Final Dividend of 20%,
 declared on 24 May 2013; the Book Closure for this purpose is Monday,
 29 July 2013 to Tuesday, 6 August 2013, both days inclusive.
 
 RESERVES
 
 The Reserves, on stand-alone basis, at the beginning of the year were
 Rs.2,573 crore.  The Reserves at the end of the year are Rs.2,929
 crore.
 
 DIRECTORATE
 
 Mr B Hariharan was appointed as an Additional Director on the Company''s
 Board of Directors with effect from 1 November
 
 2012. Dr (Mrs) C Lewiner was appointed as an Additional Director on the
 Company''s Board of Directors with effect from 28 January 2013. Mr S
 Apte was appointed as an Additional Director on the Company''s Board of
 Directors with effect from 18 April 2013.  Mr Hariharan, Dr Lewiner and
 Mr Apte hold office upto the date of the forthcoming annual general
 meeting, and considering that the Company will benefit from their
 continuance as a Director, their appointments are being recommended.
 
 MrS Bayman, Independent Director stepped down from his directorship of
 the Company, with effect from 1 April 2013. The 3oard places on record
 its gratitude and appreciation for Mr Bayman''s guidance to the Company
 during his tenure as Director.
 
 CG Non-India
 
 CG Stand-aione Consolidated *@ : CG Consolidated
 
 Particulars       2013    2012     2013     2012     2013      2012
 
 A Gross Sales    7,571   6,850    5,097    4,794   12,533    11,615
 
 B Less: Excise
 Duty              43(3     365                        439       366
 
 C Net Sales      7,135   6,485    5,097    4,794   12,094    11,249
 
 0 Less: 
 Operating 
 Expenses         6,540   5,764    5,324    4,726   11,711    10,445 
 
 E Operating 
 Profit             595     721     (227)      68      383       804 
 
 F Add: 
 Dividend 
 and Other
 Income              53     50        39       16       76        52 
 
 G Profit 
 before Interest,
 Depreciation,
 Amortisation 
 and Taxes          648    771      (188)      84      459       856 
 
 H Less: 
 Finance costs      (20)     3        90       42       71        46
 
 1 Profit before 
 Depreciation, 
 Amortisation 
 and Taxes          668    768      (278)      42      388       810 
 
 J Less: 
 Depreciation,
 Amortisation        72     91       125      169      203       260 
 
 K Profit before
 exceptional 
 items and taxes    596    677      (403)    (127)     185       550 
 
 L Less: 
 Exceptional 
 Items                               121               121
 
 M Profit Before 
 Tax                596    677      (524)    (127)      64       550
 
 SI Less: 
 Provision 
 for Current 
 Year Tax           143    193        40       23      185       217
 
 0 Less: Provision 
 for Deferred Tax     7    (21)      (90)     (14)     (84)      (35)
 
 P Profit After 
 Tax ,,             446    505      (474)    (136)     (37)      368
 
 Q Minority 
 Interest                              1        0        1         1
 
 A Share of Profit 
 of Associate
 Companies (net)                      (2)       0        0         5
 
 S Profit 
 available for
 distribution       446    505      (475)    (136)     (36)      374
 
 * Consolidated Accounts of CG International BV (CGIBV), the holding
 company for CG''s international operations.  Includes results of CG
 Stand-alone and Indian subsidiaries, Crompton Greaves Holdings
 Mauritius Limited, CG International Holdings Singapore PTE Ltd and
 CGIBV consolidated @ Figures have been regrouped for the purposes of
 consolidation.
 
 CG Non-India 
 
 CG Stand-alone Consolidated *@ j CG Consolidated
 
 Particulars     2013     2012    2013      2012      2013     2012
 
 A Gross Sales   1,080   1,035    727        724     1,788    1,755
 
 B Less: Excise 
 Duty               62      55                          63       55
 
 C Net Sales     1,018     980    727        724     1,725    1,700
 
 D Less: 
 Operating 
 Expenses          933     871    759        714     1,670    1,578
 
 E Operating 
 Profit             85     109    (32)        10        55      122
 
 F Add: Dividend 
 and Other 
 Income              7       8      6          2        10        8
 
 G Profit before 
 Interest,
 Depreciation, 
 Amortisation 
 and Taxes          92     117    (26)        12        65      130
 
 H Less: 
 Finance costs      (3)      1     13          6        10        7
 
 j Profit before 
 Depreciation, 
 Amortisation 
 and Taxes          95     116    (39)          6        5        5
 123
 
 J Less: 
 Depreciation, 
 Amortisation       10      14     18          26      ,29       39
 
 K Profit before
 exceptional 
 items and taxes    85     102    (57)        (20)      26       84
 
 L Less: 
 Exceptional 
 Items                             17                  17  
 
 M Profit 
 Before Tax         85     102    (74)        (20)      9        84
 
 J Less: 
 Provision 
 for Current 
 Year Tax           20      29      6           3      26        33
 
 0 Less: 
 Provision
 for Deferred Tax    1      (3)   (13)         (2)    (12)       (5)
 
 P Profit After
 Tax                64      76)    (67)        (21)     (5)       56
 
 Q Minority 
 Interest                           0           0       0         0
 
 B Share of 
 Profit of 
 Associate 
 Companies (net)                    0           0       0         1
 
 S Profit 
 available for
 distribution      64       76    (67)        (21)     (5)       57
 
 * Consolidated Accounts of CG International BV (CGIBV), the holding
 company for CG''s international operations. ** Includes results of CG
 Stand-alone and Indian Subsidiaries, Crompton Greaves Holdings
 Mauritius Limited, CG International Holdings Singapore PTE Ltd and
 CGIBV consolidated @ Figures have been regrouped for the purposes of
 consolidation. Note: Average exchange rate considered for 1 EURO in
 2012-13 is Rs.70.1028 and in 2011-12 is Rs.66.1764
 
 Mr SP Talwar, Independent Director stepped down from his directorship
 of the Company, with effect from 24 May 2013. The Board places on
 record its gratitude and appreciation for Mr SP Talwar''s guidance to
 the Company during his tenure as Director.
 
 DrOGoswami, MsM Pudumjeeand MrS Prabhu are the Directors who retire by
 rotation at the forthcoming Annual General Meeting; and being eligible,
 offer themselves for re- appointment to the Board.
 
 The details of the Directors being recommended for appointment and
 re-appointment are contained in the accompanying Notice of the
 forthcoming Annual General Meeting.
 
 PROMOTER GROUP
 
 The Company is a part of the USD 4 Billion Avantha Group, one of
 India''s leading business conglomerates, led by Chairman Mr Gautam
 Thapar. With a global footprint, the Avantha Group operates in 90
 countries with more than 25,000 employees worldwide.
 
 As required by the Listing Agreement with Stock Exchanges, CG
 periodically discloses its promoter group and persons acting in concert
 in the shareholding pattern and other filings with the Stock Exchanges.
 
 RESEARCH AND DEVELOPMENT
 
 CG''s continues its commitment and increased focus on R&D, since these
 efforts are important drivers for global competitiveness and growth.
 
 Our business units were consolidated globally to reflect One CG, and
 the offerings of CG have been re-aligned along Global Product Lines.
 This has necessitated realignment of R&D initiatives globally. SBU R&D
 units and the Global R&D Centre have been suitably integrated to create
 internal and external synergies and extract better value from the new
 model for R&D.
 
 Energy efficiencies and cost reduction were the main triggers for
 product innovation during the year. Extended range of IE3 motors,
 motors with regenerative drives, low loss, low noise transformers,
 extended range of LED based light sources, low energy consuming fans &
 appliances, lighting management systems for small buildings are salient
 examples in our drive to reach out to the market.
 
 Some of these new products have been highlighted in the Annexure to the
 Report.
 
 CG has been consistently leading technological innovations, fulfilling
 the evergrowing requirements of its customers in India and worldwide.
 CG continues to have a strong presence and has commercialized
 production of its 1200 kV offerings in India - Capacitive Voltage
 Transformer, Surge Arrester and Power Transformer. R&D continues to
 facilitate the indigenous design, development and manufacturing of 800
 kV Power transformers, gas circuit breakers, instrument transformers
 and surge arresters.
 
 CG''s R&D efforts have resulted in 15 R&D units which have received
 recognition from the Department of Scientific & Industrial Research,
 Ministry of Science &Technology, India.  These recognitions further
 support CG in its quest for building a stronger foundation for
 innovativeness in development of technology as an important driver
 towards a stronger global presence, in future.
 
 T Consolidated Accounts of CG International BV (CGIBV), the holding
 company for CG''s international operations. Includes results of CG
 Stand-alone and Indian Subsidiaries, Crompton Greaves Holdings
 Mauritius
 
 Limited, CG International Holdings Singapore PTE Ltd and CGIBV
 consolidated @ Figures have been regrouped for the purposes of
 consolidation. Note: Average exchange rate considered for 1 USD in
 2012-13 is Rs.54.4316andin2011-12isRs.48.1233
 
 Limited (CGPS).
 
 In addition to the above, the Company has
 
 41 foreign subsidiaries as under:
 
 - Crompton Greaves Holdings Mauritius Ltd
 
 - CG International Holdings Singapore PTE Ltd
 
 - CG International B.V.
 
 - PT. CG Power Systems Indonesia
 
 - CG Holdings Belgium N.V.
 
 - CG Power Holdings Ireland Ltd
 
 - CG Power Systems Belgium N.V.
 
 - CG Automation Systems UK Ltd
 
 - CG Power Systems USA Inc
 
 - CG Automation Solutions USA Inc
 
 - CG Power Systems Ireland Ltd
 
 - Viserge Ltd
 
 - CG Sales Networks France SA
 
 - Microsol Ltd
 
 - CG Service Systems Curacao NV
 
 - CG Service Systems France SAS
 
 - CG Holdings Hungary Kft
 
 - CG Holdings Germany GmbH
 
 - CG Electric Systems Hungary Zrt  CG Sales Networks Americas Inc
 
 - CG Power Solutions USA Inc
 
 - CG Power Systems Canada Inc
 
 - CG Power Solutions UK Ltd
 
 - CG Power Solutions Saudi Arabia Ltd
 
 - CG Sales Networks Singapore PTE Ltd
 
 - CG Holdings USA Inc
 
 - CG Power Systems Brazil Ltda
 
 - CG Power County LLC
 
 - CG Drives & Automation Germany GmbH
 
 - Emotron Latin America Inc
 
 - CG Industrial Holdings Sweden AB
 
 - Crompton Greaves Holdings Sweden AB
 
 - CG Drives & Automation Sweden AB
 
 - CG Drives & Automation Netherlands BV
 
 - ZIVI D Smart Energy Networks
 
 - ZIVAplicacionesyTecnologiaSL
 
 - ZIV Communications SA
 
 - ZIV Metering Solutions SL
 
 - ZIV USA Inc
 
 - ZIV Grid Automation SL
 
 - ZIVdoBrasilLtda
 
 Pursuant to a general exemption granted by the Ministry of Corporate
 Affairs under Section 212 of the Companies Act, 1956, the Company is
 not required to annex to this Report, the Annual Reports of the
 abovementioned 4 Indian subsidiaries and 41 foreign subsidiaries, for
 the year ended 31 March 2013. However, if any Member of the Company or
 the respective
 
 subsidiaries so desires, the Company will be happy to make available
 the Annual Accounts of the subsidiaries to them, on request. These will
 also be available for inspection at the Registered Office of the
 Company and of its subsidiaries, during working hours up to the date of
 the Annual General Meeting.
 
 The details of each subsidiary with respect to capital, reserves, total
 assets, total liabilities, details of investment (except in case of
 investment in subsidiaries), turnover, profit before taxation,
 provision for taxation, profit after taxation and proposed dividend as
 prescribed by the Ministry of Corporate Affairs, are detailed in
 Information in respect of subsidary companies in the accounts section
 of this Report.
 
 BRANCH OFFICE
 
 The Company has established a branch office at Poland. The stand-alone
 financial statements of the Company includes the financial statements
 of its Poland branch i.e. Crompton Greaves Ltd SA.
 
 CONSOLIDATION OF ACCOUNTS
 
 As required by Accounting Standards AS- 21 and AS-23 of the Institute
 of Chartered
 
 Accountants of India, the financial statements of the Company reflect
 the consolidation of the Accounts of the Company, its 45 subsidiaries
 mentioned above, and five Associate Companies. The Associate Companies
 are Avantha Power & Infrastructure Limited, CG Lucy Switchgear Limited,
 Pauwels Middle East Trading & Contracting Pvt Co. LLC, K.K.  El Fi
 Japan and Saudi Power Transformers Company Ltd.
 
 CONSERVATION OF ENERGY. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 EARNINGS AND OUTGO
 
 As required by the Companies (Disclosure of Particulars in the Report
 of Board of Directors) Rules, 1988, the relevant data pertaining to
 conservation of energy, technology absorption and foreign exchange
 earnings and outgo are given in the prescribed format as Annexure to
 this Report.
 
 PARTICULARS OF EMPLOYEES
 
 The statement of particulars required pursuant to Section 217(2A) of
 the Companies Act,
 
 1956 read with the Companies (Particulars of Employees) (Amendment)
 Rules, 2011, forms a part of this Report. However, as permitted by the
 Companies Act, 1956, the Report and Accounts are being sent to all
 Members and other entitled persons excluding the above statement. Those
 interested in obtaining a copy of the said statement may write to the
 Company Secretary at the Registered Office and the same will be sent by
 post. The statement is also available for inspection at the Registered
 Office, during working hours up to the date of the Annual General
 Meeting,
 
 DIRECTORS'' RESPONSIBILITY STATEMENT
 
 The Directors would like to assure the Members that the financial
 statements for the year under review conform in their entirety to the
 requirements of the Companies Act, 1956.  The Directors confirm that:
 
 - the Annual Accounts have been prepared in conformity with the
 applicable Accounting Standards;
 
 - the Accounting Policies selected and applied on a consistent basis,
 give a true and fair view of the affairs of the Company and of the
 profit for the financial year;
 
 - sufficient care has been taken that adequate accounting records have
 been maintained for safeguarding the assets of the Company; and for
 prevention and detection of fraud and other irregularities;
 
 - the Annual Accounts have been prepared on a going concern basis.
 
 AUDITORS
 
 The Company''s Statutory Auditors, Sharp &Tannan, hold office up to the
 conclusion of the forthcoming Annual General Meeting; and, being
 eligible, are recommended for re-appointment on terms to be negotiated
 by the Audit Committee of the Board of Directors.  They have furnished
 the requisite certificate to the effect that their re-appointment, if
 effected, will be in accordance with Section 224(1 B) of the Companies
 Act, 1956.
 
 The Company had appointed Ashwin Solanki & Associates, Cost
 Accountants, to audit the cost accounts related to the Company''s
 products for 2011 -2012. The due date for filing the above cost audit
 reports was 28 February 2013; the actual date of filing was 27 December
 2012. The Company has re-appointed Ashwin Solanki & Associates as Cost
 Auditors, for the financial year 2012-2013.
 
 FIXED DEPOSITS
 
 The Company has discontinued acceptance of fresh deposits and also
 renewal of existing deposits. One person has not claimed repayment of
 his matured deposit amounting to Rs. 10,000 as at 31 March 2013. At the
 date of this Report, an amount of Rs.4,27,000 has been claimed and
 repaid, or transferred to the Investor Education Protection Fund, on
 completion of seven years.
 
 Link Intime India Pvt. Ltd (formerly Intime Spectrum Registry Limited)
 continues to be the Company''s Registrars for all matters related to the
 Company''s Fixed Deposit Scheme.  The contact details of Link Intime
 India Pvt.  Ltd are mentioned in the Report on Corporate Governance.
 
 SHARE REGISTRARS TRANSFER AGENT
 
 The Company''s Registrar & Transfer Agents for shares is Datamatics
 Financial Services Ltd (DFSL). DFSL is a SEBI-registered Registrar &
 Transfer Agent. The contact details of DFSL are mentioned in the Report
 on Corporate Governance.
 
 Investors are requested to address their queries, if any to DFSL;
 however, in case of difficulties, as always, they are welcome to
 contact the Company''s Investor Services Department, the contact
 particulars of which are contained in the Report on Corporate
 Governance.
 
 ENVIRONMENT. HEALTH 8 SAFETY
 
 CG''s global initiative to review and monitor the energy, paper & water
 consumption as well as health & safety parameters at its various
 divisions/entities in India and abroad through an Environment, Health &
 Safety (EHS) scorecard is progressing well. Targets assigned to each
 division/entity to reduce the resource consumption for next year is
 regularly monitored through an EHS scorecard and reviewed at monthly
 business review meetings.  The improved awareness for EHS and also the
 Key Performance Indicators identified by each division/entity for
 improvements has helped CG to reduce the number of accidents
 significantly.  Water consumption has reduced by 15% and paper
 consumption has reduced by 17%.
 
 To strengthen this initiative further, a new Key Performance Indicator
 of material waste reduction has been added for 2013-2014.  All units
 have budgeted targets for reduction in material waste. This initiative
 of optimum utilization of materials will be an important contribution
 from CG, for environment protection activities.
 
 During the year, CG has formed a core group for exchange of knowledge
 and to standardize the systems and procedures across all CG locations
 worldwide. This core group also assesses the various Units on safety
 and environment protection improvement activities.  Audits were
 conducted by this core group twice during the year.
 
 CG has implemented several company-wide processes at its Units,
 including improved awareness and communication programmes, safety
 audits, periodic health check-ups for its employees as well as accident
 prevention and investigation programs, to further improve its EHS track
 record. Safety Week was observed across all Units from 4 March 2013 to
 10 March 2013 to create continuing awareness on safety.
 
 28 manufacturing plants of CG worldwide have achieved certifications
 for ISO 140Q-1 - Environmental Management Systems and OHSAS 18001 -
 Occupational Health & Safety Assessment series. CG is pursuing similar
 Certification for its other remaining locations.  Certifying
 authorities periodically conducts surveillance audits of both ISO 14001
 and OHSAS 18001, to ensure continued conformity with these Standards.
 
 ACKNOWLEDGEMENTS
 
 The Directors wish to convey their gratitude and appreciation to all of
 the Company''s employees at all its locations worldwide for their
 tremendous personal efforts as well as their collective dedication and
 contribution to the Company''s performance.
 
 The Directors would also like to thank the employee unions,
 shareholders, customers, dealers, suppliers, bankers, government and
 all other business associates for their continued support extended to
 the Company and the Management.
 
                          On behalf of the Board of Directors
 
                          G Thapar
 
                          Chairman
 
 Mumbai, 24 May 2013
Source : Dion Global Solutions Limited
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