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Crompton Greaves Consumer Electrical Ltd.

BSE: 539876 | NSE: CROMPTON |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE299U01018 | SECTOR: Electricals

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Annual Report

For Year :
2019 2018 2017 2016

Director’s Report

Dear Members,

The Directors are pleased to present the Fifth Annual Report on the business and operations of the Company and the accounts for the Financial Year ended 31st March, 2019.

FINANCIALS

The table below depicts the standalone financial performance of your Company for the year ended 31st March, 2019.

(Rs. crore)

Particulars

Year ended 31st March, 2019

Year ended 31st March, 2018

Revenue from operations

4,478.91

4,105.12

Total income

4,527.17

4,135.87

Profit before Tax

561.56

485.44

Tax expense (including deferred Tax)

159.04

161.65

Profit after Tax

402.52

323.79

COMPARABLE REVENUE

With effect from 1st July, 2017, the country implemented a new tax regime wherein several taxes were subsumed into a single tax head which was known as Goods and Services Tax (GST). Under the prevailing revenue reporting requirements, the income from sales/operations got reduced with commensurate reduction in cost of purchases. In order to make the numbers comparable with the previous year, suitable adjustments have been made while commenting on sales growth numbers in this report.

OVERVIEW OF COMPANY’S FINANCIAL PERFORMANCE

Comparable revenue grew by 11.1% to Rs. 4,478.91 crore. Profit Before Tax (PBT) at Rs. 561.56 crore was up by 15.7 % versus last year.

Finance costs of Rs. 59.50 crore represents the interest cost on the Non-Convertible Debentures of Rs. 650 crore.

Based on an assessment order received during the year, the Company has written-back an amount of Rs. 28.45 crore in respect of an earlier assessment year, and the same is netted-off from the current tax expense for the year ended 31st March, 2019. Profit After Tax for the year under review was at Rs. 402.52 crore, growth of 24.3%.

INCREASE IN SHARE CAPITAL - Exercise of Stock Options

During the year under review, your Company has made following allotments pursuant to the exercise of options by eligible employees under the Crompton Employee Stock Option Scheme - 2016:

Date of Allotment

No. of Shares

17th May, 2018

25,575

19th December, 2018

99,151

19th February, 2019

45,376

16th March, 2019

30,713

Total

2,00,815

Accordingly, the total paid-up share capital of the Company as on the date of this Report is Rs. 1,25,39,71,840 divided into 62,69,85,920 equity shares of Rs. 2/- each.

The applicable disclosures as stipulated under SEBI (Share Based Employee Benefits) Regulations, 2014 are provided in Annexure 1 to this report.

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs. 2 per Ordinary (Equity) Share of the face value of Rs. 2 each, payable to those Shareholders whose names appear in the Register of Members as on the Book Closure Date. The dividend outgo, inclusive of tax on distributed profits would absorb a sum of Rs. 151.17 crore.

In terms of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”), the Company has adopted a Dividend Distribution Policy which is available on the Company’s website (https://www.crompton.co.in/media/Dividend-Distribution-Policy.pdf).

NON-CONVERTIBLE DEBENTURES

Your Company has Non-Convertible Debentures (NCDs) aggregating to Rs. 650 crore listed on National Stock Exchange of India Ltd.

Out of these NCDs, Series A amounting to Rs. 300 crore are due for redemption on 24th June, 2019.

CREATION OF DEBENTURE REDEMPTION RESERVE

Your Company has created a Debenture Redemption Reserve (DRR) of 25% of the total value for Series A NonConvertible Debentures (ISIN: INE299U07015) issued on Private Placement basis as required under Rule 18, sub-rule 7 of the Companies (Share Capital and Debentures) Rules, 2014.

Debenture Redemption Reserve stands at Rs. 75 crore on the outstanding amount of NCDs issued on Private Placement basis, due for redemption on 24th June, 2019.

RESERVES

Under the Companies Act, 2013, there is no requirement to transfer any sum to General Reserve in relation to the payment of dividend. Accordingly, the entire undistributed Profit after Tax is carried forward in the Statement of Profit and Loss.

REVISION IN CREDIT RATING

CRISIL has upgraded your Company’s long-term rating from AA/Positive to AA / Stable. The short-term rating at A1 remains the highest.

INDIAN CORPORATE GOVERNANCE SCORECARD

The Indian Corporate Governance Scorecard is a fair assessment of corporate governance practices at the corporate level. BSE Ltd. jointly with International Finance Corporation (IFC) and Institutional Investor Advisory Services (IIAS) with the financial support of the Government of Japan has developed this Scorecard based on the G20/ OECD Principles of Corporate Governance.

Your Company has featured for the second time in a row amongst the top 10 companies amongst S&P BSE 100 (BSE 100) companies evaluated on this Indian Corporate Governance Scorecard.

HUMAN RESOURCES & EMPLOYEE RELATIONS HR Philosophy and Approach

Capability development is one of the 5 pillars of your Company’s long-term business strategy. It is intended to drive the same through directing the Company’s focus on

(a) Selection and on-boarding of the right talent.

(b) Optimising their performance, and (c) Developing leadership at all levels.

Value-based Culture

Your Company has a very strong culture based on integrity, transparency and empathy. In order to drive consumer, employee and shareholder value, your Company consistently promotes skills of Personal Leadership, Courage, People Development, Innovation and Execution Excellence as the core five Crompton Behaviours. These behavioural patterns are demonstrated appropriately by leadership teams, multi-layer training, and reward and recognition programmes. Crompton’s behavioural patterns are a unique blend of all its people and processes ranging from talent acquisition, to performance management to career development.

Employee Performance & Engagement

Employee engagement is measured on real-time basis. The same is done through tracking engagement at each employee level through AI-enabled tools such as Amber and HyPhen. A variety of strong employee engagement programmes ranging from frequent one-on-one interaction between employee and manager and the leadership team is encouraged throughout the organisation. In addition, there are other two-way communication forums, and extensive reward and recognition schemes.

The Performance Management process aims at achieving high-degree of objectivity and transparency and provides continuous feedback to the employees to improve productivity. Continuous feedback Performance Management System is being rolled out at some Business Units to communicate what is required from employees and give them feedback on how well they are achieving their job goals.

Employee Welfare and Policies

Your Company has always been conscious to promote allround employee welfare. Environment, Health and Safety (EHS) guidelines are deployed to promote workplace health and safety and create a healthy environment. On regular basis, the policies are benchmarked with market standards and are upgraded as and when necessary.

Building Talent

Your Company believes in developing and building a longterm talent pipeline, to ensure that suitable internal candidates are available to assume open positions when vacancies are created through retirement, promotion, or resignations. An on-going partnership is pursued with various management, financial and technical education institutes for systematically injecting fresh talent. There is significant usage of AI & Neuroscience including TalView, Knack, Hogan, Korn Ferry, etc. in selecting the right profile candidates.

Talent Management

Your Company has a well-established process for identification and retention of key talent. A multi-layered retention mechanism is in place ranging from career and skill development programmes to financial retention programmes based on equity compensation and long-term cash retention. A robust process to identify and develop successors for critical positions is a regular practice. The development process consists of multi-rater feedback and scientific assessment tools followed by personalised development plans and coaching.

Employee and Leadership Development

In line with your Company’s long-term business strategy, there are robust employee development programmes which aim to achieve the right balance between structured interventions (in the form of classroom, and web-based training programmes) and on-the-job and experiential learning through career movements, special assignments and projects. It is intended to build best-in-class capability in the area of Go-to-Market, Operational Excellence and Quality, Brand and Portfolio Management and Innovation.

Employee Relations & Compliance

Your Company enjoys a highly cordial and productive relationship with the employees’ representative bodies. A long-standing practice of participative management on various topics related to productivity and employment conditions with the employees’ union is observed. Both in letter and spirit, the management abides to various prevalent labour legislations in order to regulate relationship between employees and your Company.

Digitalising HR Practices

In the area of Human resources, like elsewhere, there is strong focus on innovation to continuously enhance employee experience. Cutting-edge tools are being deployed to sharpen employee experience. These actions range from implementing Best-in-Class Tools such as Success Factor to AI, Neuroscience, Gamification, etc.

DIRECTORATE & KEY MANAGERIAL PERSONNEL

The appointment and remuneration of Directors is governed by the Policy devised by the Nomination and Remuneration Committee of your Company. The detailed Nomination and Remuneration Policy is contained in the Corporate Governance Section of the Annual Report.

Your Company’s Board comprises eight members. The Chairman, Mr. H. M. Nerurkar is an Independent Director.

Mr. Shantanu Khosla is the Managing Director. Mr. D. Sundaram, Mr. P M. Murty and Ms. Smita Anand are other Independent Directors. Ms. Shweta Jalan, Mr. Sahil Dalal and Mr. Promeet Ghosh are Non-Executive NonIndependent Directors.

Ms. Smita Anand was appointed as an additional NonExecutive Independent Director on 10th December, 2018 and is proposed to be appointed as Non-Executive Independent Director of the Company at the ensuing Annual General Meeting (AGM). Her details as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are contained in the accompanying Notice convening the ensuing AGM of your Company. Appropriate resolution seeking your approval to her appointment as Independent Director is included in the Notice.

Mr. Sahil Dalal, Director, is liable to retire by rotation and being eligible for re-appointment at the ensuing AGM of your Company has offered himself for re-appointment. His details as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are contained in the accompanying Notice convening the ensuing AGM of your Company. Appropriate resolution seeking your approval to his re-appointment as Director is included in the Notice.

Mr. Shantanu Khosla, Managing Director, Mr. Mathew Job, Chief Executive Officer, Mr. Sandeep Batra, Chief Financial Officer and Ms. Pragya Kaul, Company Secretary are Key Managerial Personnel of the Company in accordance with the provisions of Section 2(51) and Section 203 of the Companies Act, 2013 read with the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 (including any statutory modification(s) or re-enactment(s) thereof for the time being in force).

Your Board of Directors met six (06) times during the financial year 2018-19. The details of the meetings and the attendance of the Directors are mentioned in the Corporate Governance Report.

The Board has established Committees as a matter of good corporate governance practices and as per the requirements of the Companies Act, 2013. The Committees are Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders’ Relationship & Share Transfer Committee, Risk Management Committee, Allotment Committee for allotment of shares arising out of Stock Options and Strategic Investment Committee. The composition, terms of reference, number of meetings held and business transacted by the Committees is given in the Corporate Governance Report.

BOARD EVALUATION

In terms of requirements of the Companies Act, 2013 read with the Rules issued thereunder and SEBI (Listing Obligations and Disclosure Requirements) 2015, the Board carried out the annual performance evaluation of the Board of Directors as a whole, Committees of the Board and individual Directors.

The Board Evaluation cycle was completed by your Company internally led by the Independent Chairman of the Company along with the Chairman of the Nomination and Remuneration Committee (“NRC”).

The parameters for performance evaluation of the Board include composition of the Board, process of appointment to the Board of Directors, common understanding of the roles and responsibilities of the Board members, timelines for circulating board papers, content and the quality of information provided to the Board, attention to the Company’s long-term strategic issues, evaluating strategic risks, overseeing and guiding acquisitions etc.

Some of the performance indicators for the Committees include understanding the terms of reference, effectiveness of discussions at the Committee meetings, information provided to the Committee to discharge its duties and performance of the Committee vis-a-vis its responsibilities.

Performance of individual Directors was evaluated based on parameters such as attendance at the meeting (s), contribution to Board deliberations, engagement with colleagues on the Board, ability to guide the Company in key matters, knowledge and understanding of relevant areas and responsibility towards stakeholders. All the Directors were subject to self evaluation and peer evaluation.

The performance of the Independent Directors was evaluated taking into account the above factors as well as independent decision-making and non-conflict of interest. Further, the evaluation process was based on the affirmation received from the Independent Directors that they met the independence criteria as required under the Companies Act, 2013 and Listing Regulations, 2015.

The Board Evaluation discussion was focussed around how to make the Board more effective as a collective body in the context of the business and the external environment in which the Company functions. From time to time during the year, the Board was apprised of relevant business issues and related opportunities and risks. The Board discussed various aspects of its functioning and that of its Committees such as structure, composition, meetings, functions and interaction with management and what needs to be done to further augment the effectiveness of the Board’s functioning. Additionally, during the evaluation discussion, the Board also focussed on the contribution being made by the Board as a whole, through its Committees and discussions on a one-on-one basis with the Chairman.

The overall assessment of the Board was that it was functioning as a cohesive body including the Committees of the Board. They were functioning well with periodic reporting by the Committees to the Board on the work done and progress made during the reporting period. The Board also noted that the actions identified in the past questionnaire-based evaluations had been acted upon.

Subsequent to the evaluation done in the financial year 2018-19, some action areas have been identified for the Board to engage itself with. These include review of your Company’s goals, strategy, capability gaps, competitive landscape, technological developments, SWOT analysis, etc. and also a thorough review of key issues facing the Company. All these will be suitably dealt with by the Board.

FAMILIARISATION PROGRAMME

Your Company has in place a structured induction and familiarisation programme for its Directors. Upon appointment, Directors receive a Letter of Appointment setting out in detail, the terms of appointment, duties, responsibilities, obligations, Code of Conduct for Prevention of Insider Trading and Code of Conduct applicable to Directors and Senior Management Personnel. They are also updated on all business-related issues and new initiatives.

Regular presentations and updates on relevant statutory changes encompassing important laws are made and circulated to the Directors.

The Directors appointed as members on the Corporate Social Responsibility Committee (“CSR”) are also involved and briefed about CSR initiatives of the Company. Senior executives of the Company make presentations to the members of the Board on the performance of the Company and strategic initiatives.

Brief details of the familiarisation programme are uploaded and can be accessed on the Company’s website at https:// www.crompton.co.in/media/Familiarisation-Programme- for-FY-2018-19.pdf.

SUBSIDIARY COMPANIES, ASSOCIATES & JOINT VENTURES

Your Company has two wholly-owned subsidiaries which are as follows:

1. Pinnacles Lighting Project Private Limited (CIN: U74999MH2018PTC318891) was incorporated on 31st December, 2018 to execute, design, manufacture, test, supply, O&M of LED Street Lights & Poles and other related works for implementation of Greenfield Street Lighting Project for 19 Urban Local Bodies (ULBs) in Odisha. This contract received from Government of Odisha, Housing & Urban Development Department is on Public-Private Partnership (PPP) basis.

2. Nexustar Lighting Project Private Limited (CIN: U74999MH2019PTC318955) was incorporated on 2nd January, 2019 to execute, design, manufacture, test, supply, O&M of LED Street Lights & Poles and other related works for implementation of Greenfield Street Lighting Project for 36 Urban Local Bodies (ULBs) in Odisha. This contract received from Government of Odisha, Housing & Urban Development Department is on Public-Private Partnership (PPP) basis.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of financial statements of subsidiaries in Form AOC-1 is attached herewith as Annexure 2. The separate audited financial statements in respect of each of the subsidiary companies shall be kept open for inspection at the Registered Office of your Company during working hours for a period of 21 days before the date of the Annual General Meeting. The separate audited financial statements in respect of each of the subsidiary companies are also available on the website of your Company at https://www.crompton.co.in/accounts-of-subsidiary-companies/.

RELATED PARTY TRANSACTIONS

In accordance with the requirements of the Companies Act, 2013 and Listing Regulations, 2015, your Company has a Policy on Related-Party Transactions which can be accessed through weblink https://www.crompton.co.in/media/Policy-on-RPT-CGCEL.pdf.

All related party transactions are placed before the Audit Committee for review and approval. Prior omnibus approval of the Audit Committee and the Board is obtained for the transactions which are of a foreseen and repetitive nature. A statement giving details of all related-party transactions is placed before the Audit Committee for their noting/approval on a quarterly basis.

There were no material transactions with related parties (i.e. transactions exceeding 10% of the annual consolidated turnover entered into during the year as per the last audited financial statements). Accordingly, the disclosure of transactions entered into with related parties pursuant to the provisions of Section 188(1) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts), Rules 2014 in Form AOC-2 is not applicable.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

There were no Loans and Guarantees made by the Company under Section 186 of the Companies Act, 2013. The details of investments made by the Company under Section 186 of the Companies Act, 2013 form part of this Annual Report.

RISK MANAGEMENT

Your Company recognises that risk is an integral part of business and is committed to managing the risks in a proactive and efficient manner. Your Company periodically assesses risks, in the internal and external environment and incorporates risk mitigation plans in its strategy and business/operational plans. Every risk is carefully looked into, as in some of the cases post-analysis it may lead to a new business opportunity.

Your Company has a well-defined risk management framework in place. The risk management framework works at various levels from top to bottom across the enterprise. These levels form the strategic defence cover of the Company’s risk management.

Your Company’s Risk Management Committee monitors and reviews the risk mitigation plan.

Appropriate steps are being taken by your Company to mitigate and reduce the impact of these risks to the operations of the Company. The key business risks facing the Company and steps taken to mitigate the same are as detailed below:

Key Business Risks

Risk trend 2018-19

How these risks are mitigated / next steps

“Go-to-Market” - The ability to manage business continuity while establishing the new distribution model. Your Company is looking at IT enablement and realigning roles and rewards to a new way of working.

Decrease in Risk profile

- The pilot project for Go-to-Market was completed during the year with learnings documented.

- Your Company is in the process of digitalising its dealer experience through implementation of a dedicated dealer portal. The portal is aimed to improve customer satisfaction resulting in ease of doing business.

Operational excellence - The ability to improve and sustain quality and drive down costs at the same time.

Same as last year

- Your Company has initiated vendor rationalisation, emphasis on in-house manufacturing and scorecard evaluation of vendors has been put in place.

- Your Company has set up the Centralised Commodity teams during the year to have a consolidated view on capability and capacity for the entire Company-wide procurement function as against the earlier decentralised process.

- Your Company has put in place a quality and process improvement programme across the Company, including strategic vendors, during the year with progress being tracked at regular Management reviews.

- Through multiple interventions undertaken during the year, your Company initiated product lifecycle management by strengthening demand planning process (including filling competency gaps), thereby improving forecast accuracy and deliver on time in full.

Branding/Innovation - The ability to continue to “outsmart” competition.

Same as last year

- Your Company has put in place a Centralised Marketing structure during the year, thereby strengthening its consumer insight process and filling up competency gaps in the concerned function.

- Your Company is strengthening NPD process through a three Gate approval process viz. Gate 1: Establishing of the project; Gate 2: Commitment to the project; Gate 3: Launch agreement for the project.

Ability to succeed in the new business model (ESCO), in lighting, where the customer does not pay for the fixtures but instead asks the supplier to share the gains from the savings generated. Correct estimation and assessment of the contractual risks and obligations in such models becomes very important.

Decrease in risk profile

- Your Company has decided not to pursue ESCO projects.

- However, your Company is standardising the process for assessing the tenders/business opportunities through-

a) Defining Process framework & Go-No-Go parameters along with Authority Matrix;

b) Digitalising Lead to Order process.

Organisation Excellence - Ability to attract and retain the right talent may lead to your Company’s inability to achieve organisation’s goals.

Same as last year

- Your Company has put in place Succession Planning framework mapping career development and progression opportunities for suitable employees and thereby ensuring talent retention.

Regulatory Environment

Same as last year

- Your Company is working with various Industry Associations around regulatory changes like E-waste, improving energy efficiency of products, and similar initiatives, as these could prove to be disruptive for the industry. This will help ensure that the changeover is smooth and in the interest of all stakeholders.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial disclosures.

Your Company has in place a robust internal audit framework. This monitors the efficacy of internal controls with the objective of providing to the Audit Committee and the Board of Directors, an independent and reasonable assurance on the adequacy and effectiveness of the organisation’s risk management, control and governance processes. The framework is commensurate with the nature of the business, size, scale and complexity of its operations.

The Risk Management Committee (“RMC”) identifies, evaluates and mitigates operations, strategic and external risks. RMC has the overall responsibility for monitoring and recovering the Risk Management Plan and associated practices of the Company. Details of the composition of the RMC have been disclosed as part of the Corporate Governance Report.

Internal Auditors periodically audit the adequacy and effectiveness of the internal controls laid down by the management and suggest improvements. The audit plan is approved by the Audit Committee, which regularly reviews the compliance to this plan.

Findings along with management response are shared with the Audit Committee. Status of action plans are also shared with the Audit Committee. The Audit Committee also reviews the steps taken by the management to ensure that there are adequate internal financial controls in design and operation.

Ongoing monitoring is performed as an integral part of the day-to-day supervision, review and measurement of the internal audit functions.

Your Company has deployed controls through its policies and procedures. These policies and procedures are periodically revisited to ensure that they remain updated to changes in the environment. There is a well laid out process for making amendments to processes in the Company and implications of changes are well visualised and planned. All stakeholders are consulted so that implementation is smooth.

Your Company continues to invest in IT tools to automate controls to the extent possible so as to minimise errors and lapses. Controls with respect to authorisation in underlying IT systems are reviewed periodically to ensure that users have access to only those transactions that apply to their specific roles.

Various functions run periodic reports which are focussed on identifying exceptions through data analysis as part of their routine monitoring activities. Corrective actions, if any, are taken promptly by the respective functions.

Your Company has an IT tool which helps to track statutory compliances as close as possible to the actual due date. Any deviations are highlighted for prompt corrective action. Functional owners take responsibility for initiating preventive action.

This web-based compliance management system not only helps adhere to the regulatory requirements but also develops a culture of self-regulation and accountability within the organisation. In the present times when governance is looked upon as a critical aspect of sustainability, the compliance management system plays a significant role in ensuring good corporate governance.

The Certificate provided by Managing Director and Chief Financial Officer in the Certification Section of the Annual Report discusses the adequacy of the internal control systems and procedures.

RESEARCH AND DEVELOPMENT (R&D)

Your Company has a strong focus on in-house research and development and promotes a culture for innovation. The Company’s team focusses on continuous and sustainable product innovations, working across the product lifecycle aspects, including design, development and manufacturing phases.

Continuing the spirit of innovation to create new consumer delights, based on core insights, this year, your Company launched an array of products in fans:

- Air 360 - To solve the consumer issue of not experiencing air in the corner of the rooms, your Company launched ceiling fans which give air circulation in 50%* more space and delivers the best air release in the metal fan category in industry.

(Results as per internal lab tests. Actual performance may vary as per manufacturing tolerances.)

- Vsense™ range of ceiling fans - Many parts of India face low voltage problem and when voltage drops down, the speed of the ceiling fans drops considerably. To solve this problem, Vsense™ fan uses its smart controls to increase the motor speed and gives higher RPM at low voltages.

- AirBuddy - During consumer research, it was observed that the person working in the kitchen does not feel comfortable while cooking as the existing air circulation solutions do not work effectively during cooking. Air Buddy range of fans with their sleek and modular design fit perfectly into any kitchen. They provide personalised soft air flow to ensure a comfortable cooking experiance without disturbing the gas flame.

- Aura new range of fans - Your Company came up with industry’s first 5-year warranty for new range of products by providing Duratech™ technology which includes core engineering enhancements to meet long-lasting performance needs. These products carry new fluidic design parameters and are built into the designer series of fans like 2D and 3D motifs.

All these products have attractive design and packaging. Resources have been invested to create industry popular colours and craftsmanship with the best-in-class finish and choice of appropriate materials.

Research and Development led to development of much improved energy-efficient pumps for a variety of applications to enhance ease and convenience of use and conserve water. Some of the products introduced during the year were:

- Monobloc (2HP) and open well (3 to 7.5 HP) pumps with wide voltage design, which perform effectively in wide fluctuations of supply voltage in rural areas. This variety is useful to farmers as there are no frequent repairs required and there is lesser downtime.

- Many parts of the country have high TDS (Salty) and more sand content in borewell water where normal materials of construction do not sustain. Hence, 4WSS series of pumps with stainless steel impeller and diffuser for better reliability as well as efficiency were developed by your Company.

- Solar pumping systems with MNRE certifications were developed in AC (5, 7.5, 10 HP) as well as BLDC (5 HP) motors and further development is in process. These Solar pumps deliver minimum 10 to 15% more discharge than MNRE guidelines.

Your Company has launched ANTI-BAC lamps which use Anti-bacterial technology. This bulb kills up to 85% bacteria and other microbes including fungi and molds. This is an in-house innovation with Envirosafe Technology and is recognised by the Indian Medical Association (IMA) to provide a safe and healthy environment.

Lyor, the first in India 5-star bulb has a unique shape which gives homogeneous diffused lighting. The elegantly-curved surface of the diffuser and housing imparts a distinct character to the product. This has the highest efficacy of 120 lumen/watt.

A new range of innovatively and aesthetically designed office lighting and downlighter series have been launched to cater to the requirements of office spaces.

R&D efforts also helped the Company in providing the best in industry solutions for customers in various projects of national significance and in bagging major orders in EESL, Reliance Infra Phase I, Odisha Green Field, Dholera Smart City, NFR, DRDA, to name a few.

The entire Storage and Instant Water Heater range has been revamped with the highest number of launches in the industry this season. Your Company launched 5 models in storage and 2 models in Instant heaters. The new products are designed to deliver superior performance, aesthetics, energy-efficiency and best-in-class features.

In Air Coolers, a unique model “Optimus” which stands out in performance as compared to its peers was launched. It has features like Auto Drainage, easy cleaning, humidity control, thicker honey comb and highest air delivery in its class. This summer, new range of plastic window and tower coolers were also introduced.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

As required by the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, the relevant data pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo is given in the prescribed format as Annexure 3 to this Report.

ENVIRONMENT, HEALTH & SAFETY (EHS)

Your Company is greatly conscious of its responsibilities towards Health, Safety and Environment Management and is in the process to fortify its current resources. A Policy on Occupational Health, Safety and Environment is already in place. During the year, your Company complied and excelled with EMS 14001 and OHSAS 18001 standards and is moving towards upgradation with ISO 45001. Single IMS (Integrated Management System) is in place which is the foundation of the overall health, safety and environment framework at your Company. Internal, Cross audits and External EHS and OHSAS audits were carried out to check the level of compliance and any deviations from laid down policies and procedures tracked and reviewed through this audit system. As part of Plan Do Check Act (PDCA), this process ensured closure through Corrective Action and Preventive Action (CAPA) within a reasonable time frame.

A comprehensive EHS manual titled “KAVACH 2.0” comprising the policies, procedures and work instructions has been prepared. Deployment of “KAVACH 2.0” has been ensured across the organisation through rigorous trainings.

To ensure focussed delivery on EHS activities, each plant carried out Aspect Impact and HIRA (Hazard Identification and Risk Assessment) study for various activities and identified Controllable/Uncontrollable and Normal / Abnormal / Emergency scenarios in each operation.

A comprehensive EHS performance scorecard has been deployed and is monitored on monthly basis. Regular cross functional quarterly EHS meets are conducted at various manufacturing units with the agenda to conserve natural resources, reduce electricity consumption, industrial effluents, water conservation, air emissions, waste generation and disposal. EHS improvement plans, scorecard discussions and benchmarking practices are deployed at all plants. Suggestions to improve the existing scenario are implemented within the stipulated timeframe.

A brief on EHS programmes of the Company is as under:

Environment - a green pursuit

In addition to the focus on conserving finite resources together with reducing harmful emissions, sustainable management at all stages of the value chain and throughout the entire life cycle of the products is now an essential part of your Company’s philosophy.

Your Company is committed to achieve its target by implementing best technology and management programmes through a combination of energy and water conservation, minimised air emissions, rainwater harvesting and solid waste recycling. All units are complying with zero liquid discharge system, minimum usage of petroleum products by modifying boilers into bio-fuel boilers along with drastic reduction in air emissions.

In other environmental focus areas, your Company has greatly reduced raw water consumption, generation of effluents, solid-waste, hazardous waste and reduction in Green House Gases (GHG) emissions. This has helped to reduce the overall impact on the natural resources and environment. Beside this, all the manufacturing units have complied and are being monitored online for all EHS-related legal-statutory requirements laid by the Government from time to time.

During the year, substantial investment was made to meet the new governmental regulations. The drive to achieve the best Environmental pollution control measures on 3R’s (Reduce, Reuse & Recycle) was further strengthened.

Groundwater is one of the major sources of water for your Company. Therefore, we remain committed to significantly conserving it by installing water-efficient technology together with effluent treatment system like Reverse Osmosis (RO) plants to reutilise treated water into the system.

- Recharged 100 lakh litres - Rainwater Harvesting Systems installed at Vadodara, Ahmednagar and Goa Plants.

- Saved electricity of 3,60,000 kWh yearly and reduced noise pollution - New Technology Compressor installed at Ahmednagar, Pumps Plant.

- RO waste water re-used at Baddi Lighting Plant - 68 KL water re-used.

- Installation of transparent sheets on the roof of Vadodara and Goa plants - reduced the usage of artificial light and thus save energy.

- Green belt area in Bethora, Goa plant increased by plantation of 60 trees and 5,000 sq. ft. area added in Ahmednagar for Green belt development.

- Food waste composter installed for canteen waste and garden waste to utilise as fertiliser for garden at Ahmednagar, Pumps Plant.

- Solar panels of 5kW installed at Bethora, Goa plant -electricity generation will be 6,000 kWh/year.

- Treated STP recycled water used for flushing reduced use of fresh water from 26,897 KL (2017-18) to 15,846 KL (2018-19) saving 11051 KL (58%). 100% STP and ETP treated water used for gardening in all plants.

- New STP of capacity 730 KLD installed at Kundaim, Goa plant for recycling of waste water.

All units of your Company are complying with CPCB/MoEF (Ministry of Environment and Forests) guidelines specially on waste water treatment. Trade and Domestic effluents have been segregated completely through independent treatment system.

Authorisation of E-waste received from CPCB, FTL and CFL Products are RoHS compliant. Further, two of the three FTL lines have been converted from Liquid Dozing into Pill Dozing in order to reduce the risk of Mercury (Hg) exposure in the environment at Vadodara Plant.

Ahmednagar is switching to use eco-friendly water-based paint instead of existing 2 pack PU paint. This is being done to reduce hazardous waste thereby creating a positive impact on the environment.

Safety:

Safety is accorded overriding priority by your Company. The business has ensured to achieve and maintain globally approved Fire-Safety Standards. All units are in the process to install best fire/smoke detection technology to get timely information in case of any fire incident. To mitigate such incidents, all units are 100% equipped 24x7 with dedicated and trained firefighting team members.

EHS team identified all available fire hazards by conducting third-party Fire-Safety audits / HAZOP study / Risk Assessment studies and made effective action plans to close all findings. Your Company is committed to building a safety culture by Implementing Behavior-Based Safety through trainings and workshops, recording workplace hazards, conducting scheduled Fire-Safety Audits (in-house), adopting on-line Work Permit System (WPS) and Daily Tool-box talks etc.

Regular interaction is maintained through Safety committee meetings with all associates. Fire-safety Drills, Safety Week celebration and continuous Safety training to all employees begins with adequate induction. Internal and cross plant safety audits are conducted too. All actions and recommendations are being recorded and evaluated by respective EHS leaders. This monitoring has a major role in reducing workplace hazards/incidents and making Crompton, a Zero-accident organisation.

Your organisation has identified scenario-based emergency preparedness plans to counter specific emergency situations. On regular basis, mock tests and drills are planned and executed to ensure Emergency Response Team members are quick to respond to any situation.

Safety standards are monitored through focus on appropriate safety control, elimination of unsafe activities, providing better replacement methods and installation of foolproof engineering solutions (Poka-Yoke).

Key Safety programmes implemented during the year include:

- Conducted cross plant safety audits based on IS:14489-1998 at all plant locations and ensured closure of all improvement plans as per timelines.

- Structural Stability & Fire audits were conducted by BVQI experts for all plants and 15 branch offices.

- 100% new joinees have been covered with behavioural based and technical safety training at all plant locations. Refresher safety trainings were conducted for all ERT and new Safety Committee members.

- New Safety PPE’s were introduced, viz. breathing apparatus, automatic fire nozzles, mobile scaffolding tower with stairway for working safely at heights, storage of flammable chemicals cans, fire safe cabinets for lab storage and similar equipment.

- Installed fire alarm and detection systems at all plant locations.

- Safety signs, visual displays highlighting safety messages have been standardised and displayed at all appropriate places.

- Poka-Yoke (Mistake-Proofing) were installed at various equipments and machines to ensure human safety and to eliminate risks in hazard prone areas.

- LOTO (Lock-Out Tag-Out) concept deployed across all plants.

- Periodic mock drill and fire drills were conducted at all plants to ensure readiness and responsiveness of the system and employees.

- Provided anti-fatigue mats to employees, where work involves standing for long hours at respective work locations.

- Structural audit, ergonomic study and ventilation survey was conducted.

- Provided rack guards and corner guards to prevent harm to individuals and avoid structural damage.

- Permanent roof stress lifeline installed on main buildings to prevent fall hazard.

- Mobile scaffolding is available for working at heights inside the plant to prevent fall hazards.

- Visual Machine guards are installed on all moving machine under TPM drive.

Health:

An individual’s health and well-being is shaped by several factors: social, economic and environmental. A range of workplace (e.g. physical environment, culture) and nonworkplace issues (e.g. lifestyle choices, living conditions) can impact the health of an employee. Towards this end, structured initiatives have been introduced in stages.

Key health programmes as detailed below were rolled out during the year to promote a healthy lifestyle among employees. This led to enhanced motivation:

- Health education awareness trainings and motivational speeches were organised on mindful behaviour and emotional intelligence. (Initiated daily warm-up exercises at start of every shift).

- Revisited employee health insurance coverage for appropriate preventive screenings.

- Executed medical surveillance plans and periodic medical checkups.

- Ergonomics study through expert medical practitioners to identify short-term and long-term health injuries.

CORPORATE SOCIAL RESPONSIBILITY (CSR) FRAMEWORK & VISION

MAKING A DIFFERENCE ...

Drawn up on the basic principles of ‘Responsible Business’ and ‘Shared Value’, your Company’s CSR strategy aims to provide youth with employable vocational and life management skills and contribute to water neutrality by participating in water conservation initiatives.

Aptly named, UJJVAL DEEP, the CSR programme framework is both in line with the Company’s long-term commitment to build positive value for the communities as well as address major developmental priorities as identified by the Companies Act, 2013:

In line with this framework, our 4 thrust areas are:

- Vocational and skills training.

- Projects addressing environmental issues such as water and waste management.

- Projects impacting lives of people who live in the vicinity of our manufacturing / processing facilities.

- Active employees volunteering through Corporate Social Responsibility programmes.

Through 2018-19, the CSR activities were carried out with the following implementation partners.

- Skill Training, with:

- Asmacs Skill Development Ltd. (ASMACS)

- PanIIT Alumni Reach for India (PARFI)

- Kherwadi Social Welfare Association (Yuva Parivartan)

- Water Conservation Projects, with:

- Akash Ganga Trust

- Varshasookt

- Pandit Jagat Ram Memorial Force Trust (Force)

- Vanarai

- Anugami Lokrajya Mahabhiyan (Anulom) and Maharashtra Government

SKILL DEVELOPMENT INITIATIVES

The Skill Development centres are in the states of Himachal Pradesh, Gujarat, Maharashtra, Tamil Nadu, Odisha, Jharkhand and Assam.

During the course of training, candidates were exposed to a stringent curriculum in which they were trained on current industry practices, plumbing and techniques in pipe fitment and fire-fighting systems. Candidates were also trained in aspects of safety, measurement, pipe fitting, familiarisation with tools and fittings and discipline. Besides this, the major focus is on technical training in electrical appliances.

Programme 1:

Residential Multiskill Training - Implementation Partner -ASMACS

Your Company has sponsored residential skill training for 900 youth in Baddi - Himachal Pradesh, Ahmednagar -Maharashtra, Guwahati - Assam, Coimbatore - Tamil Nadu, Vadodara - Gujarat for training in Electrical & Plumbing trades.

30 training batches were run across all the locations and 80% of the youth were placed in reputed Companies.

Programme 2:

Skills Training - Implementation partner - PARFI

The programme focusses largely on youth from underprivileged and tribal communities. 117 candidates were trained in the trades of Fire Protection Installation and Plumbing in three Gurukuls - Bundu, Sambalpur and Jamshedpur. 83% of the candidates were successfully placed on an average at all the locations.

Programme 3:

Home Appliance Repair Programme - Implementation Partner - Yuva Parivartan

This programme is focussed on skilling youth through Yuva Livelihood Development Centres across Maharashtra. Training is imparted in repair of Home Appliances.

In addition, the students also participate in the Soch Ka Parivartan (Attitude Transformation) module. This is designed to help students, who come from different and often, tough backgrounds, deal with harsh problems, build their selfesteem and confidence and also help them develop a positive attitude.

108 Students have been enrolled within this programme.

WATER CONSERVATION INITIATIVES

Water is a valuable and increasingly scarce resource.

Awareness on water-related problems, results in commitment among the community and thus helps to promote better management of water resources.

Hence, your Company has focused its intervention on three major areas:

1. Rainwater Harvesting (RWH) system at Institutional Level

2. Rainwater Harvesting (RWH) system at Community Level

3. Awareness and Training sessions to get the best results in water conservation

Rainwater Harvesting

Rainwater harvesting projects were supported at the following locations: Lady Siwaswamy Ayyar Girls Higher Secondary School, Chennai, PS. Higher Secondary School, Chennai, OdaiKuppam, Fishermen’s Hamlet, Chennai, Christian Medical College, Vellore and three schools under Thane Municipal Corporation.

Water Management and Awareness

Your Company collaborated with Force Trust to spread awareness on Water Management in areas of Delhi and Himachal Pradesh regions. Under this programme, community members were educated on the key RWH solutions and Government regulations. Training of Plumbers was undertaken and schools were mobilised to conduct campaigns in Rain Water harvesting in the area.

Total number of sessions conducted were 19, impacting 2,302 beneficiaries across institutions and communities.

Watershed Development with Vanarai

To reduce the impact of natural calamities like drought and to make the village water secure, your Company supported a watershed development initiative in Jalna, Maharashtra. This is aimed at increasing the groundwater level and stabilise the water table.

Increased employment options within agriculture and allied activities by impacting 608 landholdings and their families in the region.

Gaalmukt Dharan Gaalyukt Shivar Scheme with Maharashtra Government

Contributions were made to this scheme with an aim to conserve water by removing silt from the water bodies in the drought prone areas of Ahmednagar, Maharashtra. This will lead to the cleaning of 66 water bodies. Thus 9,99,400 cubic meters of total silt will be distributed to farmers increasing their agricultural productivity.

OTHER INITIATIVES

Support to CM Fund - Floods in Kerala:

On 8th August, 2018, Kerala was hit by one of the worst floods in recent times due to unusually high rainfall during the monsoon season. It was the worst flood in Kerala in nearly a century. Over 483 people died, and more than 14 went missing. Your Company quickly rose to the occasion to extend its support in this terrible tragedy and donated an amount of ‘1 crore to the Kerala Chief Minister’s Distress Relief Fund. Of this, roughly one third was voluntarily contributed by the employees and the balance was donated by the Company.

Way Forward:

In 2019-20, your Company aims at three initiatives to enhance its CSR activities.

1. Scale:

Your Company aims at deepening the impact within the Skill development area and increase the number of beneficiaries to be trained.

In the area of water conservation, it is planned to widen the approach by supporting more projects, impacting as many landholdings as possible.

2. Effective monitoring and impact analysis:

The objective is to ensure transparency in fund utilisation and impact. A robust framework will be designed for planning and monitoring the activities.

3. Project completion and consolidation:

The third key focus area for the next year is to consolidate the ongoing projects and to aim at maximising the outreach of the beneficiaries within each programme.

Your Company’s CSR Policy statement and annual report on the CSR activities undertaken during the financial year ended 31st March, 2019, in accordance with Section 135 of the Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014 are annexed to this report as Annexure 4.

GREEN INITIATIVES

Electronic copies of the Annual Report and Notice of the 5th Annual General Meeting (AGM) will be sent to all members whose email addresses are registered with the Company/ Depository Participant(s). For members who have not registered their email addresses, physical copies of the Notice and Annual Report will be sent in the permitted mode. [Members requiring physical copies can send a request to the Company]. Physical copies of the aforesaid documents will also be available at your Company’s Registered Office for inspection during normal business hours on all working days, excluding Saturdays till the date of AGM.

MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments affecting the financial position of your Company which have occurred between the end of the financial year of the Company i.e. 31st March, 2019 and the date of the Board Report.

MATERIAL ORDERS OF REGULATORS/COURTS/ TRIBUNALS

No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company’s operations in future.

SHARE REGISTRAR & TRANSFER AGENT (R&T)

Pursuant to the Order of the Hyderabad Bench of the National Company Law Tribunal (NCLT Order), the operations of Karvy Computershare Private Limited, the Registrar & Share Transfer Agent of your Company have been transferred to Karvy Fintech Private Limited (Karvy Fintech) with effect from 17th November, 2018.

M/s. Karvy Fintech Pvt. Ltd. is the R&T Agent of the Company. Their contact details are mentioned in the Report on Corporate Governance.

PUBLIC DEPOSITS

No public deposits have been accepted by your Company during the year under review.

AUDITORS

(a) Statutory Auditors:

M/s. Sharp & Tannan, were appointed as Statutory Auditors of your Company at the 2nd Annual General Meeting held on 11th August, 2016 for a term of five consecutive years. The Auditors has issued an unmodified opinion on audited financial statements of the Company for the year ended 31st March, 2019. The Report given by the Auditors on the financial statements of the Company is part of the Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report.

(b) Cost Auditors:

Your Company is required to maintain cost records as specified under Section 148(1) of the Companies Act, 2013 and accordingly such accounts and records are made and maintained in the prescribed manner.

M/s. Ashwin Solanki & Associates, Cost Accountants carried out the cost audit during the year. The Board of Directors have appointed M/s. Ashwin Solanki & Associates, Cost Accountants as Cost Auditors for the financial year 2019-20.

The remuneration proposed to be paid to the cost auditors for 2019-20 is subject to ratification by members at the ensuing Annual General Meeting.

(c) Secretarial Auditors:

M/s. Mehta and Mehta, Practicing Company Secretaries carried out the secretarial audit during the year. The Board of Directors have appointed M/s. Mehta and Mehta, Secretarial Auditors for the financial year 2019-20. The Secretarial Audit report is annexed herewith as Annexure 5 to the Report.

(d) Internal Auditors:

M/s. Grant Thornton India LLP conducted the internal audit of your Company for the financial year 2018-19.

M/s. Grant Thornton India LLP have been appointed as Internal Auditors of your Company for the financial year 2019- 20 to review various operations of the Company.

PARTICULARS OF EMPLOYEES

There are 11 employees who were in receipt of remuneration of not less than Rs. 1,02,00,000/- if employed for the full year or not less than Rs. 8,50,000/- per month if employed for any part of the year.

Disclosures with respect to the remuneration of Directors, KMPs and employees as per Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure 6 to this Report. Your Directors affirm that the remuneration is as per the remuneration policy of the Company.

Details of employee remuneration as required under provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are available for inspection at the Registered Office of your Company during working hours. Any member interested in obtaining such information may write to the Company Secretary at the Registered Office of the Company.

BUSINESS RESPONSIBILITY REPORT

A Business Responsibility Report as per Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, detailing the various initiatives taken by your Company on the environmental, social and governance front, forms an integral part of this report.

COMPLAINTS RELATING TO SEXUAL HARASSMENT

Your Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this Policy. The Policy is gender neutral.

During the year under review, one complaint was received which has been investigated and resolved after taking an appropriate action.

VIGIL MECHANISM

Your Company has formulated a Vigil Mechanism and Whistle Blower Policy with a view to provide a mechanism for employees to report violations. It also assures them of the process that will be observed to address the reported violation. The Policy also lays down the procedures to be followed for tracking of complaints, giving feedback, conducting investigations and taking disciplinary actions. It also provides assurances and guidelines on confidentiality of the reporting process and protection from reprisal to complainants. No personnel have been denied access to the Audit Committee.

The Policy also provides a mechanism to encourage and protect genuine Whistle blowing among the Vendors.

Any incident that is reported is investigated and suitable action is taken in line with the Policy.

The Whistle Blower Policy of your Company is posted on the website of the Company and can be accessed at the web link: https://www.crompton.co.in/media/Vigil-Mechanism-and-Whistleblower-Policy.pdf

LISTING

The equity shares of your Company are listed on BSE Ltd. and National Stock Exchange of India Ltd. The Non-Convertible Debentures (NCDs) of the Company are listed on the Debt Segment of National Stock Exchange of India Ltd.

Your Company has paid the Listing fees for both the Stock Exchanges for the 2018-19 and 2019-20 for Equity shares and to National Stock Exchange of India Ltd. for NCDs.

ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure 7.

SECRETARIAL STANDARDS

Your Directors state that applicable Secretarial Standards, i.e., SS-1 and SS-2, relating to ‘Meetings of the Board of Directors’ and ‘General Meetings’, respectively, have been duly followed by the Company.

DIRECTORS’ RESPONSIBILITY STATEMENT

Your 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, 2013 and guidelines issued by SEBI. Your 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 2018-19;

- 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;

- the internal financial controls laid down by the Company were adequate and operating effectively; and

- the systems devised to ensure compliance with the provisions of all applicable laws were adequate and operating effectively.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following matters as there were no transactions on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise;

2. The Company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees;

3. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries;

4. No fraud has been reported by the Auditors to the Audit Committee or the Board.

ACKNOWLEDGEMENTS

Your Directors wish to convey their gratitude and appreciation to all the employees of the Company posted at all its locations for their tremendous personal efforts as well as collective dedication and contribution to the Company’s performance.

Your Directors would also like to thank the employee unions, shareholders, customers, dealers, suppliers, bankers, Government and all other business associates, consultants and all the stakeholders for their continued support extended to the Company and the Management.

For and on behalf of the Board of Directors

For Crompton Greaves Consumer Electricals Limited

H. M. Nerurkar

Place : Mumbai Chairman

Date : 21st May, 2019 DIN: 00265887

Director’s Report