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Whirlpool of India. Directors Report, Whirlpool Reports by Directors
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Whirlpool of India.
BSE: 500238|NSE: WHIRLPOOL|ISIN: INE716A01013|SECTOR: Consumer Goods - White Goods
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Download Annual Report PDF Format 2013 | 2012 | 2011 | 2010
Directors Report Year End : Mar '13    Mar 12
The Directors'' are pleased to present their 52nd Annual Report and
 Audited Accounts for the year ended 31st March 2013 Financial Results
 
                                                        (Rs. in lacs)
 
 Particulars                                   For the year ended
 
                                         March 31, 2013  March 31, 2012
 
 Sales/ Income from operations 
 (including excise duty)                     3,03,650        2,85,047
 
 Other Income                                   2,366           1,230
 
 Profit/ (Loss) before Interest, 
 Depreciation, Extraordinary items & Tax       24,249          23,539
 
 Interest                                        (300)           (438)
 
 Depreciation                                  (6,032)         (4,970)
 
 Profit/ (Loss) before tax                     17,917          18,131
 
 Provision for Tax (including deferred 
 tax and wealth tax)                           (5,142)         (5,758)
 
 Net Profit/ (Loss) for the year               12,775          12,373
 
 Credit/ (Debit) Balance B/F from 
 previous year                                 18,396          11,575
 
 Profit available for appropriation            31,171          23,948
 
 Interim Dividend on Preference Shares              -            (142)
 
 Tax on Dividend                                    -             (26)
 
 Transfer to Capital Redemption Reserve             -          (5,385)
 
 Surplus/ (Deficit) carried to Balance Sheet   31,171          18,396
 
 Performance of the Company
 
 During the year ended March 31, 2013 the sales (including excise duty)
 of the Company, was Rs.3,03,650 Lacs as compared to last year''s sales
 of Rs.2,85,047 Lacs up by 6.5%. Profit before tax was Rs.17,917 Lacs as
 compared to corresponding profit of Rs.18,131 Lacs in the previous
 year.
 
 Dividend
 
 No Dividend on equity shares has been recommended by the Board for the
 year ended 31st March 2013 considering the future capital investment
 plans of the Company.
 
 Management Discussion and Analysis Report (MD&A)
 
 As required under the listing agreement, MD&A is enclosed as Annexure A
 and is a part of this Report.
 
 SALES & MARKETING
 
 Financial Year 2012-2013 witnessed a severe contraction of demand for
 Consumer Durables in general and Home Appliances in particular,
 continuing a trend that started in the previous financial year. Three
 factors contributed to demand slowing down. First, food inflation
 continued to be high through all of 2012-13. Second, in spite of
 slowing demand commodity and fuel inflation did not abate resulting in
 frequent increases in the price of products. Finally, depreciation of
 the rupee was a key factor that led to further price increases. In the
 final analysis, the twin impact of shrinking disposable income and high
 cost of goods led to deferment of purchase of items like appliances and
 other durables, which essentially are discretionary in nature. This was
 reflected in the Index of Industrial Production, the country''s primary
 barometer for factory output, where production in the Consumer Durable
 sector has consistently been in negative territory.
 
 In addition to the adverse macro economic factors, the brief summer
 witnessed in 2012 did not help. Summer accounts for approximately 40 %
 of annual sales. However, late onset of summer in most parts of the
 country led to lower offtake of summer products like Refrigerators and
 Air Conditioners with most retailers reporting no growth in the year''s
 most salient season.
 
 Despite these headwinds, your company was able to outperform the
 industry on the back of successful product launches. The company had
 launched a slew of new products across 6 categories - Refrigerators,
 Washing Machines, Air Conditioners, Microwave, Water Purifiers and
 Built-in kitchen appliances in 2012. A key feature of the April 2012
 product launch was the emphasis on premium and super premium segments,
 an area that your company sees as an opportunity and on which it will
 allocate resources in the quarters to follow. Some of the products
 launched are described below.
 
 1.  Neo I-Chill Frost Free Refrigerators with a unique Deep Freeze
 Technology which cools 50% faster
 
 2.  IceMagic Direct Cool Refrigerators, which makes ice 40% faster
 
 3.  WhiteMagic 1-2-3 Nxt with new and advanced 6th Sense technology,
 that removes 16 types of stains
 
 4.  A suite of Built-in kitchen appliances designed in Europe including
 Coffee maker, Oven, Microwave Oven, Hob, Hood and Dishwasher. This
 product range targets the super premium segment of home appliances with
 their sleek design and latest technology.
 
 5.  Purafresh range of wall mounted RO Water Purifiers with MES
 (Mineral Enhancement System) which adds back essential minerals after
 the purification process is completed.
 
 6.  MagiCook 1-2-3 Microwave Oven with simplified, sequential user
 interface and 64 auto-cook menus, highest in the 20 L segment.
 
 The new product line-up is a consequence of incisive consumer insights
 drawn from extensive market research and testing.  Combined with
 Whirlpool''s intuitive and intelligent ''6th Sense'' technology, the new
 range of products contains a high degree of consumer-relevant
 innovation and comes with Whirlpool''s assurance of high performance,
 design and quality. The new portfolio supported by investment in
 advertising and promotion, enabled your company to expand distribution
 and grow market share.  Alternate channels of distribution were
 explored for Water Purifier. While retaining presence in the appliance
 trade, your company leveraged the service channel to introduce a
 Direct-to-Home business model.
 
 Brand presence was augmented in the digital space, where the reach and
 involvement of premium end consumers is high. This medium will be
 leveraged innovatively to receive a higher share of advertising
 dollars. The first step in this direction has been to revamp the
 brand''s website and enable e-commerce for a limited set of products,
 primarily accessories and consumables.
 
 INTERNATIONAL BUSINESS
 
 During the year under review, the export business of the Company
 achieved a turnover of Rs.185 Cr which represents flat growth over last
 year. Given the exceptionally difficult demand conditions and volatile
 currency situation in international markets, particularly Australia and
 Europe, this achievement is commendable.
 
 Neighbouring markets in SAARC region performed well. Over the last few
 years, this region has grown consistently and today accounts for almost
 half our export turnover. Nepal and Bangladesh, in particular,
 witnessed high growths of 50%  . In Nepal, Whirlpool opened Exclusive
 Brand Outlets which has provided a fillip to the brand''s visibility. In
 Bangladesh the company signed up with new distributors and embarked on
 a project to significantly expand retail coverage.
 
 Sharp focus on market development and partnership with stakeholders
 continues in our strong markets of Australia and Sri Lanka.  Despite
 sharp contraction in demand in both these markets, Whirlpools brand
 strength helped in holding volumes to previous year''s level.
 
 Your company has also started business in Thailand with the launch of
 Neo I-Chill Frost Free Refrigerators which we see as a source of
 immense growth. Plans are afoot to launch the range in Philippines too,
 in the near future. We have seen renewed interest from partners in
 Middle East & Africa, after the Neo I-Chill refrigerators were
 introduced in Dubai. We have reason to believe that the new Frost Free
 range will generate healthy demand in most of our export markets.
 
 Going forward, the Company remains very optimistic about the prospects
 of the Exports business. The I-Chill and IceMagic range, with its
 international aesthetics and world class quality, presents an
 opportunity to expand our business in several markets and deliver high
 growth in the coming year.
 
 CONSUMER SERVICES
 
 In the year under review, your company invested substantial resources
 to ensure that the quality of service delivery can qualify as Best in
 Class. The investment was in two areas: expansion of service network
 and training. The establishment and inauguration of a state-of-the-art
 training centre exclusively for Service personnel called Whirlpool
 Service Academy is a tangible manifestation of the function''s intent
 and commitment to deliver a positive customer experience.
 Uncompromising Customer Care (UCC), a pioneering initiative copied by
 others in the industry, has been expanded and is not only delivering
 good results and helping us differentiate our service offering in the
 market place.
 
 The revenue stream of Consumer Service is growing steadily as a result
 of addition of new value added accessories to our catalogue. More
 importantly, we have a healthy innovation pipeline and are confident
 that the new products we launch will create value for both consumers
 and company.
 
 As mentioned earlier, the service network is leveraged to establish a
 Direct to Home business model for Water Purifiers. The need for water
 testing, product detailing, product demonstration and filter
 replenishment makes this an ideal channel to grow your company''s water
 business. Indeed, the intention of the service function is to use its
 vast network to knock on doors beyond existing Whirlpool homes, using
 water products as a bridge to forge new relationships and adding value
 by offering consumers the right solution for their water problems.
 
 HUMAN RESOURCES
 
 The year 2012-13 saw the Human Resource function partner strongly with
 the business to manage the hostile business environment.  The foremost
 priority of the HR team was to sustain the Spirit of Winning, key
 drivers of which were talent retention, capability development, culture
 and communication.
 
 HR rallied and aligned the organisation around the company''s long term
 strategy and short term imperatives. The goal setting process was
 deployed through your company''s online system and reinforced through
 cross functional meets to build common understanding and drive
 excellence.
 
 Career architecture frameworks were specifically designed and deployed
 in the organisation to bring visibility and clarity to individuals
 careers. Growth opportunities were created and the year saw 80% more
 role changes than the previous year.  Improving Managerial
 Effectiveness, a key management competency, continued to receive
 extraordinary focus. Specific feedback on one''s managerial ability was
 gathered through a managerial skill survey, followed by a skill
 building workshop where 150 managers were trained to become better and
 more effective supervisors. These initiatives helped your company get a
 healthy score on Managerial Skills and helped increase Employee
 Engagement scores as well.
 
 Employee Engagement initiatives acquired a greater sense of purpose
 too. Focus group discussions were conducted across the country and
 employee centric action plans were initiated. The quarterly ''Everyone
 Connect'' teleconference which connects every employee across the
 country to the Leadership remains a key platform for periodic two-way
 communication. The interactive intranet site ''W-Connect'' continues to
 be a popular forum for employees to express themselves.
 
 Our commitment towards grooming young leaders found expression in the
 Emerging Leader Development Program meant for first-time people
 managers. The Critical Thinking and Communication Skills Workshop and
 Project Management Course were continued to enhance execution
 capability. Specific focus was applied on improving Art of People
 Assessment - Interviewing Capability.
 
 Indeed, the initiatives outlined above resulted in an increase in
 Employee Engagement Score to 83%, placing Whirlpool of India Limited,
 amongst the highest in the Whirlpool world.
 
 FINANCE AND ACCOUNTS
 
 The 2012-13 fiscal was a tough year for the consumer durables industry.
 Macro Economic indicator continue to be negative. GDP growth down from
 6.5 points to 5.0 points, has resulted in slow down in Industry and low
 demand. In addition, sharp devaluation of the rupee and unabated
 commodity inflation spiked up input costs that necessitated frequent
 pricing actions, further softening demand. As a result, the consumer
 durables industry continue to be declining trend for 2nd consecutive
 year.
 
 Against this background, your Company''s net income were up by 4.7%
 versus the previous year and profit before tax was marginally down by
 1.2% due to higher operation cost led by Inflation. Under the extremely
 challenging business environment described earlier, this is a very
 creditable performance with overall profitability and fiscal management
 still being the best in the industry.
 
 In view of demand being low, your Company continues to focus on Cost
 and Cash. Several actions were taken to improve volume and category
 mix. All new product launches were made to improve market share and
 volume. Relentless pressure was applied on controlling discretionary
 expenditure and working capital management. Cash generation from
 operations remained strong even in this volatile environment, enabling
 your Company to finance planned investments internally without recourse
 to external debts.  Indeed, your Company has invested over Rs.80 Crore
 in platform upgrades to produce more energy efficient and superior
 performing appliances.
 
 DIRECTORS
 
 Your Directors intrinsically believe in the philosophy of Corporate
 Governance and are committed to it for the effective functioning of the
 Board.
 
 In accordance with the provisions of the Companies Act, 1956 and the
 Article 115 of the Articles of Association of the Company, Mr. Simon J
 Scarff and Mr. Sanjiv Verma retire by rotation and being eligible offer
 themselves for reappointment.
 
 Mr. Simon J Scarff, is an Independent Non Executive Director of the
 company. He worked for over 23 years with Smithkline in various
 capacities and had last served as Non Executive Director & Chairman of
 GlaxoSmithKline Consumer Healthcare Limited up to 30th April 2013. In
 1999 he was awarded the prestigious honour of the Officer of the Order
 of the British Empire by Her Majesty, The Queen of England. He is on
 the Board of your Company since 2001 and is also a member of the Audit
 Committee and Remuneration Committee.
 
 Mr. Sanjiv Verma is an Engineering Graduate from Indian Institute of
 Technology (IIT). He has over 27 years of experience working in various
 leadership positions. His last assignment was as General Manager India
 and SEA, & Managing Director Baxter India. Currently he is a Director
 of J. V. D. Health Pvt. Ltd. He is Founder Trustee of Chronic Health
 Care Foundation of India. His key strengths are Strategic thinking and
 influencing skills for business growth and profitability, Business
 Leadership skills, Analytical capabilities, People Management in a
 multicultural, multinational environment. He is on your Board since
 2009 and is also a member of the Audit Committee and Remuneration
 Committee.
 
 The current tenure of Mr. Arvind Uppal as Chairman and Managing
 Director expired on 31st March 2013 and has been re- appointed by the
 Board of Directors with effect from 1st April 2013 for a period of
 three years subject to approval of shareholders in the ensuing Annual
 General Meeting. Mr. Arvind Uppal was appointed as a Managing Director
 for a period of three years with effect from February 16, 2005 which
 was renewed further for three years by the shareholders in its Annual
 General Meeting held on 18th September 2008 and 19th July 2010
 respectively. He was appointed as Chairman of your Company with effect
 from 27th January 2010. Mr. Arvind Uppal is a B.Tech from IIT Delhi and
 is a post graduate in Management from the Faculty of Management
 Studies, Delhi. He has over 25 years of experience in Business
 Development, International Marketing and General Management.  Prior to
 joining Whirlpool he was with Nestle in India and overseas. He is a
 Director in two other Indian companies, i.e. Tuscan Ventures Private
 Limited, Akzo Nobel India Limited.
 
 AUDITORS
 
 Members are requested to appoint Auditors for the current year on a
 remuneration to be fixed by the Board as per the Notice for the Annual
 General Meeting. M/s S. R. Batliboi & Co. LLP, the present Auditors of
 the Company. M/s S. R. Batliboi & Co. LLP have furnished a certificate
 of their eligibility for reappointment under Section 224 (1B) of the
 Companies Act, 1956. The Board recommends their reappointment as
 Auditors for the Financial Year 2013-14.
 
 The Board has taken note of the observations and remarks made by the
 Auditors in their Report on Statutory payments.
 
 The observation made by auditors on slight delay in payment of
 statutory dues is self explanatory. The Company has taken effective
 steps to streamline the statutory payments.
 
 FIXED DEPOSITS
 
 As at 31st March 2013, no Fixed Deposits was held by the Company.
 
 LISTING OF SHARES
 
 Company''s equity shares are listed at Bombay Stock Exchange Ltd. and
 National Stock Exchange Ltd.
 
 AUDIT COMMITTEE
 
 The Audit Committee held four (4) meetings during the year. The Members
 of the Audit Committee are:-
 
 Mr. Anand Bhatia, Chairman - Independent Director
 
 Mr. Simon J. Scarff, Member - Independent Director
 
 Mr. Sanjiv Verma, Member - Independent Director
 
 Mr. Anil Berera, Member - Executive Director
 
 Mr. Anand Bhatia, Chairman of the Committee has adequate financial and
 accounting knowledge.
 
 The Chief Financial Officer, Internal Auditor and the Statutory
 Auditors of the Company are permanent invitees to the meetings of the
 Audit Committee. It is a practice of the Committee to extend an
 invitation to the Managing Director and Cost Auditor to attend the
 meeting as and when required.
 
 Mr. Ravi Sabharwal, Company Secretary, is Secretary of the Audit
 Committee.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT 
 
 The Directors confirm that:
 
 (i) In the preparation of the annual accounts, the applicable
 accounting standards have been followed, along with proper explanation
 relating to material departures;
 
 (ii) 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 period;
 
 (iii) The directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956 for safeguarding the assets of
 the company and for preventing and detecting fraud and other
 irregularities;
 
 (iv) The directors have prepared the annual accounts on a going concern
 basis.
 
 TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
 
 In terms of the provisions of Section 205C of the Companies Act, 1956,
 during the financial year there was no unclaimed amount required to be
 transferred to the Investor Education and Protection Fund established
 by Central Government.
 
 CORPORATE GOVERNANCE
 
 A Certificate from the Statutory Auditors regarding compliance of the
 conditions of Corporate Governance as per the requirement of Clause 49
 of the Listing Agreement with the Stock Exchanges is enclosed as part
 of Corporate Governance Report.
 
 The Board of Directors support the concept of Corporate Governance and
 having regard to transparency, accountability and rationale behind the
 decisions have made proper disclosures separately under the heading
 Corporate Governance.
 
 INSURANCE
 
 The Directors confirm that Fixed Assets and Stocks of the Company are
 adequately insured against fire and allied risk.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
 EARNINGS & OUTGO
 
 In accordance with the requirements of 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, statement showing
 particulars with respect to Conservation of Energy, Technology
 Absorption and Foreign Exchange Earnings and Outgo are annexed hereto
 (Annexure B) and form part of this report.
 
 PERSONNEL
 
 As required by the provisions of Section 217 (2-A) of the Companies
 Act, 1956 read with Companies (Particulars of Employees) Rules, 1975,
 as amended, the names and other particulars of employees are set out in
 the Annexure C to this Report. However, as per the provisions of
 Section 219 (1) (b) (iv) of the Companies Act, 1956, the Directors''
 Report is being sent to all members of the Company excluding the
 aforesaid information. Any member interested in obtaining such
 particulars may write to the Company Secretary either at the registered
 office or Corporate Office of the Company.
 
 ACKNOWLEDGEMENT
 
 The Company''s growth has been achieved by continued support from all
 its stakeholders. The Company''s partners- different stakeholders,
 Customers, Suppliers, Employees, Investors, Community Members, Banks &
 Financial Institutions have been instrumental in the Company''s success.
 Your Directors wish to place on record their sincere thanks to these
 partners. The Directors'' would also like to express their appreciation
 to various agencies of Central & State Government for their continued
 support.
 
                      For and on behalf of the Board of Directors
 
 Place : Gurgaon      Anil Berera             Arvind Uppal
 
 Date: May 14, 2013  [Whole Time Director]   [Chairman & Managing 
                                              Director]
 
                      DIN 00306485            DIN 00104992
Source : Dion Global Solutions Limited
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