The Directors have pleasure in presenting their 15th Annual Report on
the operations of the Company and the Audited Statement of Accounts for
the year ended December 31st 2004.
(Rs. in Lacs)
For the For the
year ended year ended
Dec. 31, 2004 Dec. 31, 2003
Gross Sales and Service Income 35,419.81 32,232.50
Less : Excise Duty on sales 3,695.88 3,967.76
Net Sales and Service Income 31,723.93 28,264.74
Other Income 1,810.20 975.00
Profit/(Loss) before Interest and
Depreciation/amortization (7,375.26) (9,072.52)
Less: Interest 1,760.74 1,731.62
Profit/(Loss) after Interest but
before Depreciation/amortization (9,136.00) (10,804.14)
Less: Depreciation/amortization 2,309.46 2,693.93
Profit/(Loss) for the year before
Exceptional Items and Tax (11,445.46) (13,498.07)
Less: Exceptional Items (Net) 329.85 9,133.20
Profit/(Loss) for the year after
Exceptional Items but before Tax (11,775.31) (22,631.27)
Tax Expense - -
Net Profit/(Loss) after Tax (11,775.31) (22,631.27)
The gross turnover of the Company increased during the year to
Rs. 35,420 Lacs from Rs. 32,232 Lacs in the previous year. In terms of
volume the Company registered a 12% decrease in sales of refrigerators
and 18% increase in sales of washing machines compared to 2003. The new
product categories of Airconditoners and Microwave Ovens launched
during the year also contributed to 12% of the total sales volume.
Overall sales volume remained more or less at 2003 levels and despite
the constant price erosion in the market during the year, the net sales
value showed an increase of 12% reflected in the Gross margins/(Loss)
of (Rs. 7,375 Lacs) against (Rs. 9,073 Lacs) in 2003. This was mainly
due to an improved product/customer mix as well as various
restructuring and cost control initiatives taken by the Company during
the year. With reduced depreciation charge in 2004, the net loss before
exceptional items improved by 15% over 2003 at Rs. 11,445 Lacs.
With financial support from AB Electrolux during the year by way of
voluntary, discretionary revenue grants of Rs. 20 Crores provided to
the Company used in meeting restructuring and related costs coupled
with lower restructuring costs compared to 2003, the net profit/(loss)
for the year after exceptional items improved significantly by 48% to
Rs. 11,775 Lacs as against Rs. 22,631 Lacs in the previous year.
RIGHTS ISSUE OF EQUITY SHARES
During the year the Company, with the object of augmenting its net
worth, came out with the Rights Issue of 199,774,709 equity shares of
Rs.10/- each, for cash at par, to the existing shareholders of the
Company in the ratio of 8 equity shares for every 7 equity shares held
by them. The Rights Issue was opened for subscription on March 26, 2004
and closed on April 26, 2004. The Rights Issue was subscribed to 1.009
times, wherein 98.49% of the total issue was subscribed by AB
Electrolux, Sweden, the foreign promoter, where after, the shareholding
of AB Electrolux was increased from 75.96% to 87.97% in the expanded
capital base of the Company.
DELISTING OF SHARES AND FINAL EXIT OFFER BY AB ELECTROLUX, SWEDEN
Pursuant to the option made available under the SEBI letter dated
December 24, 2002, AB Electrolux made an Open Offer in accordance with
Clause 17 of the Securities and Exchange Board of India (Delisting of
Securities) Guidelines, 2003, to acquire the equity shares of the
Company `not already held' by AB Electrolux at the Rights Issue price
i.e. Rs.10/- per share, by way of an Offer Letter dated July 9th
2004. The Open Offer opened on July 19th 2004 and closed on August 9th
2004 (extended from earlier closing date i.e. August 2nd 2004).
Subsequent to the closure of the Open Offer, the shareholding of AB
Electrolux in the Company increased to 90.21%.
The Shares of Electrolux Kelvinator Limited were listed on six stock
exchanges in India at Delhi, Mumbai, Jaipur, Bangalore, Ahmedabad and
Kolkata. Subsequent to the closure of the First Open Offer, since the
equity shareholding of AB Electrolux in the Company had increased to
90.21%, on the application made by the Company in this regard, the
Shares of the Company have been delisted from the records of all the
AB Electrolux has now provided a Final Exit opportunity for a period of
twelve months (beginning February 11, 2005 to February 10, 2006) to all
those shareholders who could not participate in the First Offer after
the Delisting of the shares of the Company from all the Stock
Exchanges. A Public Announcement was also made by AB Electrolux in this
regard on February 4th 2005 in the leading Newspapers (The Economic
Times and The Hindustan Times and their affiliates) for the benefit of
shareholders, advising them to avail the Final Exit opportunity. The
`Offer Letter' along with the `Form of Acceptance' and other related
documents including a postage prepaid self addressed envelope, have
been sent to all residual shareholders by Registered Post, detailing
the procedure to be followed. The payment to shareholders accepting
the Offer will be made on a monthly basis, subject to necessary
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report as required under the Listing
Agreements with Stock Exchanges is enclosed as Annexure A.
FINANCE AND CAPITAL STRUCTURE
Although the proceeds of the Rights Issue aggregating to approx. Rs.
200 Crores have recouped the net worth to that extent, the .inordinate
delay in the Rights Issue has, however, led the Company to a situation
where its accumulated losses as at December 31, 2003 have exceeded the
net worth and accordingly, during the year the necessary
filings/reportings were made with the relevant regulatory authorities
in accordance with law.
In order to enable the Company to make its net worth positive, the
Company during the year under review, issued Rs. 100 Crores 6%
Cumulative Redeemable Non-Convertible Preference Shares to AB
Electrolux, Sweden. In addition to the subscription of Rs. 100 Crores
preference capital, AB Electrolux, also made a voluntary discretionary
revenue grant of Rs. 20 Crores to the Company. As a result as at
December 31, 2004, the net worth of the Company has turned positive.
TRANSFER TO RESERVES
During the year no amount has been transferred to reserves.
In view of the unavailability of distributable profits, your Directors
express their inability to declare any dividend for the year.
The Company has not accepted any Fixed Deposits from the Public or
Shareholders or Employees during the year.
The Board of Directors of your Company has been reconstituted with the
cessation of nomination of Mr. Fredrik Rystedt and appointment of Mr.
Peter Birch and Mr. Paul N Gelardi as Directors on the Board of
Directors. Mr. Dinkar Goswami and Mr. G S Davar resigned from the Board
of Directors. The Board of Directors express their gratitude and
appreciation for the valuable contribution extended by the outgoing
The Audit Committee of your Company convened three meetings during the
year. The Audit Committee has also been reconstituted. Presently, the
constitution of the Audit Committee comprises of -
1. Mr. Johan Gunnar Michael Fant (Alternate - Mr. G S Davar)
2. Mr. Rajeev Karwal
3. Mr. Paul N Gelardi
The Company Secretary is the Secretary of the Audit Committee.
DIRECTORS' RESPONSIBILITY STATEMENT
As required under Section 217(2AA) of the Companies Act, 1956, the
Directors hereby confirm:
(i) that in the preparation of the Annual Accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
(ii) that the Directors have 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 or loss of the company for that year;
(iii) that the Directors have 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;
(iv) that the Directors have prepared the Annual Accounts on a going
The financial statements for the year ended 318t December, 2004 are in
full conformity with the requirements of the Generally Accepted
Accounting Principles (GAAP) and the Accounting Standards issued by the
Institute of Chartered Accountants of India till date and have been
prepared on a going concern basis.
The Directors of Electrolux Kelvinator Limited accept responsibility
for the integrity and objectivity of these financial statements as
reflected through the consistent application of the Accounting Policies
as well as for the estimates made and the judgments exercised relating
to matters not concluded by year-end. The Directors believe that the
financial statements reflect fairly the form and substance of the
transactions concluded and reasonably present:
- the Company's financial condition,
- a true and fair view of the results of the operations for the year
- the state of affairs of the business as at 31st December, 2004. The
financial statements have been audited by Price Waterhouse, Chartered
Accountants. The Audit Committee of the Company has reviewed these
AUDITORS AND AUDITORS'REPORT
M/s Price Waterhouse, Chartered Accountants, the Auditors retire at the
conclusion of the forthcoming Annual General Meeting and being eligible
offer themselves for re-appointment. A Certificate in terms of Section
224(1B) of the Companies Act, 1956 has beep received from them.
The qualifications in the Auditors' Report are self-explanatory and
Notes to Accounts appropriately explain and deal with the management
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE
The information required under Section 217(1)(e) of the Companies Act,
1956 read with the Companies (Disclosure of Particulars in the Report
of the Board of Directors) Rules, 1988 is given in Annexure - B,
forming part of this report.
INFORMATION UNDER THE LISTING AGREEMENT WITH THE STOCK EXCHANGE(S)
Pursuant to Clause 38 of the Listing Agreement with the Stock
Exchange(s), it is confirmed that the Annual Listing Fee for the
financial year 2004 has been paid to all the Stock Exchange(s) on which
the shares of the Company were listed.
The Statement under Section 217(2A) of the Companies Act 1956 read with
Companies (Particulars of Employees) Rules, 1975 is given in
Annexure - C, forming part of this report.
The Directors wish to place on record their gratitude to various Union
and State Government authorities, banks, financial institutions,
shareholders and other business associates for their valuable
co-operation and assistance. The Directors also wish to place on
record, their sincere appreciation for the contribution made by the
employees at all levels.
For and on behalf of the Board of Directors
Date : 17th February, 2005 Johan Fant
Place : Gurgaon Chairman
ADDENDUM TO THE DIRECTORS' REPORT
TO THE MEMBERS
Your Directors are pleased to provide herein the material changes,
which have occurred subsequent to the close of the financial year ended
December 31st 2004 and Director's Report dated 17th February, 2005.
CHANGE IN MANAGEMENT AND BOARD OF DIRECTORS
The management of the Company has changed with effect from July 2005.
The present Board of Directors of the Company comprises of the
following Directors : Mr. Venugopal N Dhoot
Mr. Pradeepkumar N Dhopt
Mr. Sanjeev K Shelgikar
Mr. Anirudh V Dhoot
Mr. Saurabh P Dhoot
Mr. Suresh M Hegde
Mr, Atul Galande
Consequent to the change in management, the various sub-committees of
the Board, i.e. Audit Committee, Shareholders'/Investors' Grievance
Committee and Remuneration Committee of the Company have been
reconstituted as under:
Mr. Anirudh V Dhoot and Mr. Saurabh P Dhoot have been appointed as the
members of the Audit Committee under the chairmanship of Mr. Suresh M
Hegde. The Company Secretary is the Secretary of the meeting.
The Shareholders'/Investors' Grievance Committee is headed by Mr.
Suresh M Hedge with Mr. Anirudh V Dhoot and Mr. Saurabh P Dhoot as the
members. The Company Secretary is the Secretary of the meeting.
The Remuneration Committee is headed by Mr. Suresh M Hegde with Mr.
Anirudh V Dhoot and Mr. Saurabh P Dhoot as the members. The Company
Secretary is the Secretary of the meeting.
FINANCE AND CAPITAL STRUCTURE
The Capital Structure of the Company has undergone the following
changes subsequent to the date of Directors'Report.
The Authorised Share Capital of the Company has been altered on 19th
August, 200E by cancellation of 15,00,00,000 Equity Shares of Rs. 10/-
each which have not beer issued/or agreed to be taken by any person and
further creation of 1,50,00,000 Non- Cumulative Redeemable
Non-Convertible Preference Shares of Rs. 100/- each.
The Board of Directors made an allotment of 7,50,00,000 Equity Shares
of Rs. 10/- each to AB Electrolux on 23rd June, 2005 on a preferential
basis, subsequent to obtaining the shareholders' approval on 16th June,
2005 for issue of up to 32,54,22,421 Equity Shares of Rs. 10/- each.
M/s Price Waterhouse, Chartered Accountants, the statutory auditors,
retire at the conclusion of the forthcoming Annual General Meeting. M/s
Price Waterhouse, Chartered Accountants, the retiring auditors have,
vide their letter dated 14th July, 2005, requested for not being
considered for re-appointment as the auditors of the Company.
The Board of Directors has received a certificate in terms of Section
224 (IB) of the Companies Act, 1956 from M/s Kadam & Co., Chartered
Accountants. The Board of Directors recommends their appointment as
auditors of the Company.
for and on behalf of the Board of Directors
Date : 30th August, 2005 Anirudh V Dhoot Suresh M Hegde
Place : Mumbai Director Director
INFORMATION AS PER SECTION 217(1)(e) READ WITH COMPANIES (DISCLOSURE OF
PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 AND
FORMING PART OF THE DIRECTORS' REPORT FOR THE YEAR ENDED 31st DECEMBER,
Conservation of energy, technology absorptions and foreign exchange
earnings and outgo:
In accordance with the requirements of Section 217(1)(e) of the
Companies Act, 1956 read with Companies (Disclosure of Particulars,in
the Report of the Board of Directors) Rules, 1988, statement showing
particulars with respect to Conservation of Energy, Technology
Absorption and Foreign Exchange Earnings and outgo is as under:
B. TECHNOLOGY ABSORPTION
1. RESEARCH & DEVELOPMENT (R&D)
a) Specified areas in which R&D carried out by the Company:
Design and Development of new 180L DC (Oxy polo series) entry-level
refrigerator with four variants.
Introduction of a new variants refrigerators with silver finish
Design and Development of new inverter compatible 190L DC refrigerator
to ensure uninterrupted operation of refrigerator during power failure.
Development of new Window Air-conditioners with LOT/1.5T capacity.
Re-launch of Front Loading washing machine in 6.0kg capacity in
Premium/Luxury segments with white/silver finish exteriors
Design and development of new variants in semi-automatic washing
machine with 6.5kg and 6.8kg capacity.
Development of new fully featured, customer friendly PCB control for
fully automatic washing machines.
b) Benefits derived as a result of the above R&D:
Up-gradation and improved quality of the products.
New models with improved and innovative features are well accepted by
Product up gradation, improvement & optimization of process for
Indigenization of items leading to import substitution.
c) Future Plan of Action:
Development of new No-frost Models from 350L - 450L, including Premium
and Luxury variants with innovative features.
Upgrading all the present models aesthetics in line-with Electrolux
Global design guidelines.
Focus on new ranges of refrigerators and washing machines with modem
New refrigerators to fulfill upcoming energy efficiency rating
Upgrading Front loading and Top loading washing machines.
Design and development support to Asia-Pacific regional projects.
d) Expenditure on R&D :
Capital - Nil
Recurring - Rs. 29.860.809/-
Total - Rs. 29,860,809/-
2. TECHNOLOGY ABSORPTION, ADAPTATION & INNOVATION:
a) Efforts in brief, made towards technology absorption, adaptation and
Development and introduction of new aesthetic and customer friendly
value added and innovative features in the products.
b) Benefits derived as a result of the above efforts, e.g. product
Improvement, cost reduction, product development, import substitution
Process and quality improvement resulting in product up gradation.
Cost optimization through process improvement design changes and
Reduction in foreign exchange outflow by suitable import substitution.
c) In case of imported technology (imported during last 5 years
reckoned from the beginning of the financial year, following
Importation may be furnished:
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
(a) Activities relating to exports: initiatives taken to increase
exports; development of new export markets for products and services;
and export plans
The company had during the year 2004, started export operations in the
SAARC countries (excluding Sri Lanka) with a Distribution setup in
Nepal and is in the process of setting up distribution in Bangladesh.
Group exports to countries like UAE, Sri Lanka, Sierra Leone & Liberia
also took place during the year. The exports included India
manufactured refrigerators and Washing Machines.
(b) Total foreign exchange earned and used
(i) Foreign Exchange Earnings - Rs. 6,004,244/-
(ii) Foreign Exchange Expenditure
CIF Value of Imports - Rs. 717,819,061/-
(including Capital expenditure of Rs. 6,557,511/-)
Others - Rs. 123,257,858/-