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Crompton Greaves Consumer Electrical Ltd.

BSE: 539876 Sector: Engineering
NSE: CROMPTON ISIN Code: INE299U01018
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VOLUME 23436
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OPEN 222.20
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VOLUME 23436
52-Week high 246.00
52-Week low 135.05
P/E 48.73
Mkt Cap.(Rs cr) 13,682
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Crompton Greaves Consumer Electrical Ltd. (CROMPTON) - Director Report

Company director report

Board Report

Dear Shareholders

Your Directors are pleased to present the Third Annual Report on the business andoperations of the Company and the accounts for the Financial Year ended 31stMarch 2017.

FINANCIALS:

The table below depicts the financial performance of your Company for the year ended 31stMarch 2017.

Rs. in crores

Particulars Year ended 31st March 2017 Year ended 31st March 2016*
Sales/lncome from operations 3975.90 1811.68
(Net of excise duty)
Total income 3995.40 1815.53
Profit before Exceptional 433.14 171.61
Items and Tax
Exceptional Items 2.52 13.93
Profit before Tax 430.62 157.68
Tax expenses (including 139.93 52.49
deferred Tax)
Profit after Tax 290.69 105.19

* The financials for 2015-16 reflect the business performance from 1stOctober 2015 (appointed date for demerger) to 31st March 2016.

OVERVIEW OF COMPANY'S FINANCIAL PERFORMANCE:

Revenue grew 10.8 % to ' 3975.90 crores. Operating Profit (PBIT before Corporateexpenses and Exceptional Items) at ' 592.97 crores was up by 21.9 % versus last year. Asmentioned in the MDA for comparison purposes we have considered the segment profitreported by Crompton Greaves Ltd. (Now known as CG Power & Industrial Solutions Ltd.)for the period 1st April 2015 to 30th September 2015.

Finance costs of ' 66.53 crores represent the interest cost on the Non ConvertibleDebentures of ' 650 crores and the interest paid on the term loan from 1stApril 2016 to 24th June 2016 (the date of the repayment of the loan).

Expenses of ? 2.52 crores incurred for the demerger have been classified as ExceptionalItem.

Profit Before Tax "PBT" was ? 430.62 crores and Profit After Tax"PAT" was ? 290.69 crores. PBT margin was 10.8 % and PAT margin was 7.3%.

DIVIDEND:

Your Directors are pleased to recommend a dividend of ? 1.50 per Ordinary (Eguity)Share of the face value of ? 2 each payable to those Shareholders whose names appear inthe Register of Members as on the Book Closure Date. The eguity dividend outgo inclusiveof tax on distributed profits would absorb a sum of f 113.15 crores.

The Company has approved a Dividend Distribution Policy and the same is available onthe website of the Company.

RESERVES:

Under the Companies Act 2013 there is no requirement to transfer any sum to GeneralReserve in relation to the payment of dividend. Accordingly the entire undistributedProfit after Tax is carried forward in the Profit and Loss Account.

NON CONVERTIBLE DEBENTURES:

During the year under review your Company issued Non Convertible Debentures (NCDs)aggregating to ' 650 crores on private placement basis. These debentures are listed onDebt Segment of National Stock Exchange of India Ltd. The proceeds of Non ConvertibleDebentures were used for repaying the Company's term loan.

TERM LOAN:

The Company repaid on 24th June 2016 the entire term loan outstanding of '608.26 crores by using the proceeds from the NCD issue. This resulted in reduction ininterest costs by approximately ' 8.50 crores p.a.

REGISTERED OFFICE:

Your Company shifted its registered office to "Tower 3 1st Floor EastWing Equinox Business Park LBS Marg Kurla (West) Mumbai - 400 070" with effectfrom 1st December 2016.

EMPLOYEE STOCK OPTIONS:

The Members of the Company approved grant of options to eligible employees of theCompany vide special resolution passed by the members through a Postal Ballot on 22ndOctober 2016 under the following plans:

1. Employee Stock Option Plan 2016 (ESOP 2016)

2. Performance Share Plan - 1 2016 (PSP 1)

3. Performance Share Plan - 2 2016 (PSP 2)

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

CHANGES IN PROMOTERS:

During the year under review Avantha Holdings Limited the erstwhile promoterstransferred its entire shareholding of 215442496 shares aggregating to 34.38% of thepaid up capital of the Company to Amalfiaco Ltd. "Amalfiaco" (Special PurposeVehicle managed by Advent International Corporation USA) and MacRitchie Investments PteLtd. "MacRitchie" (wholly owned subsidiary of Temasek Holdings (Pvt) Ltd).Amalfiaco was transferred 140037623 equity shares and MacRitchie was transferred75404873 equity shares of your Company.

MacRitchie is a person acting in concert with Amalfiaco and Nirsinia Ltd. MacRitchiehas entered into an Inter se Agreement dated 23rd April 2015 with Amalfiacoand Nirsinia ("Inter-Se Agreement"). Pursuant to the said Agreement MacRitchiedoes not have control rights and will not be exercising control over your Company.

The present promoters of your Company are Amalfiaco Ltd. and Nirsinia Ltd.

National Stock Exchange of India Ltd. and BSE Ltd. vide their letters dated 24thNovember 2016 and 28th November 2016 respectively have approved there-classification of Promoters.

HUMAN RESOURCES & EMPLOYEE RELATIONS:

All leadership team and most other key positions are now fully staffed. The strategy isto develop talent from within organisation with selective external hires. With a view topromote this strategy a series of initiatives were launched to establish robust careerdevelopment and leadership development processes. In line with the strategic businesspriorities key development interventions to enhance customer and consumer focus were alsoexecuted. This included training the front-end sales team towards active Go To Market(GTM) pursuit.

Based on the feedback from the Employee Engagement survey a series of interventionswere undertaken to enhance engagement levels in the area of rewards and recognitionemployee communication and performance management. A revamped performance-appraisalprocess was launched. The Crompton Employee Behaviour framework was also rolled out duringthe year to identify the competencies necessary to succeed.

The overall employee relations scenario remained stable and productive with keylong-term settlements getting concluded.

The Baroda Plant signed a settlement with the internal workers union for a period of 5years effective from 1st March 2017. This settlement has established abenchmark practice in the region cum Industry being a 5-year tenure whereas most of theother organisations are on 3 to 4 year settlement tenures. The settlement was signedwithin a week of the expiry of the existing settlement.

As of 31st March 2017 the employee strength was 1616.

DIRECTORATE & KEY MANAGERIAL PERSONNEL:

The appointment and remuneration of Directors is governed by the Nomination andRemuneration Policy of the Company which also contains the criteria for determiningqualifications positive attributes and independence of Directors. The detailed Nominationand Remuneration Policy is contained in the Corporate Governance section of the AnnualReport.

The Company's Board comprises eight members. The Chairman Mr. H. M. Nerurkar is anIndependent Director. Mr. Shantanu Khosla is the Managing Director.

Mr. D. Sundaram and Mr. P. M. Murty are Independent Directors. Ms. Shweta Jalan Mr.Sahil Dalal Mr. Ravi Narain and Mr. Promeet Ghosh are Non-Executive Directors.

On 16th August 2016 the Board was expanded and Ms. Shweta Jalan Mr. SahilDalal Mr. Ravi Narain and Mr. Promeet Ghosh were appointed as Additional Directors. Mr.H. M. Nerurkar was appointed as the Chairman of the Board on 25th October2016.

As per section 161 of the Companies Act 2013 Ms. Shweta Jalan Mr. Sahil Dalal Mr.Ravi Narain and Mr. Promeet Ghosh being Additional Directors hold office upto the date ofthe ensuing Annual General Meeting (AGM) and are eligible to be appointed as Directors ofthe Company. The Company has received notices in writing from members along with thedeposit of requisite amount under section 1 60 of the Act proposing their candidature. Theresolutions seeking their appointment have been included in the Notice of the AnnualGeneral Meeting together with their brief details as required under Regulation 36 of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and SecretarialStandards on General Meetings.

Ms. Sonia N. Das resigned from the Board w.e.f. 16th August 2016. The Boardplaces on record their appreciation of the valuable advice and guidance given by Ms. SoniaN. Das while she was a Director of the Company.

As per section 152(6) of the Companies Act 2013 (the "Act") two-thirds ofthe total number of Directors of a public company shall be persons whose period of officeis liable to determination by retirement by rotation. One-third of such of the Directorsfor the time being liable to retire by rotation shall retire from office at every AnnualGeneral Meeting. The Directors who retire by rotation at every Annual General Meetingshall be those who have been longest in office since their last appointment. For thepurpose of this provision the total number of Directors shall exclude IndependentDirectors and Additional Directors. Therefore Mr. Shantanu Khosla Managing Directorbeing longest in office shall retire by rotation at the ensuing Annual General Meeting ofthe Company and being eligible has offered himself for reappointment.

All Independent Directors have submitted declarations that they continue to meet thecriteria of Independence as laid down under section 149(6) of the Companies Act 2013 readwith the rules thereof.

Mr. Sandeep Batra resigned as Company Secretary and Compliance Officer on 18thMay 2016 and continues to be the Chief Financial Officer. Ms. Pragya Kaul was appointedas Company Secretary and Compliance Officer with effect from 19th May 2016.

The Board of Directors met eight (08) times during the year 2016-17. The details of themeetings and the attendance of the Directors are mentioned in the Corporate GovernanceReport.

The Board has established Committees as a matter of good corporate governance practiceand as per the requirements of the Companies Act 2013. The Committees are AuditCommittee Nomination and Remuneration Committee Corporate Social ResponsibilityCommittee and Stakeholders' Relationship & Share Transfer Committee. The compositionterms of reference number of meetings held and business transacted by the Committees isgiven in the Corporate Governance Report.

BOARD EVALUATION:

The Board of Directors of the Company has carried out the annual evaluation of its ownperformance as well as the evaluation of the working of its Committees and individual

Directors. This exercise was carried out through structured questionnaires preparedseparately for Board Committee and Individual Directors. Individual and peer assessmentof Directors was done based on parameters such as knowledge contribution level ofengagement communication/ relationship with Board and Senior Management. Theseassessments were received by the Chairman of the Nomination and Remuneration Committee ofthe Company for providing individual feedback. The questionnaire for Board evaluation wasprepared taking into consideration various aspects of the Board functioning such asadequacy of the composition of the Board reporting process risk management systemsexternal relationships ethics and governance framework. Committee performance's wereevaluated on the basis of its composition effectiveness in carrying out its mandaterelevance of its recommendations and allocation of adequate time to fulfill its mandate.

The report of performance evaluation so arrived at was then noted and discussed by theNomination and Remuneration Committee and Board Members at their Meetings held on 26thMay 2017.

The performance evaluation of the Non-Independent Directors Chairman and the Board asa whole were carried out by the Independent Directors in their Meeting held on 28thDecember 2016.

The Board acknowledged certain key improvement areas emerging through this exercise andaction plans to address these are in progress. The Directors have expressed theirsatisfaction with the evaluation process and its result.

FAMILIARISATION PROGRAMME:

The Company has put in place an induction and familiarisation programme for all itsDirectors including the Independent Directors.

The familiarisation programme for Independent Directors is in accordance with theprovisions of Regulation 46(2) (i) of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 and is uploaded on the websiteof the Company.

SUBSIDIARY COMPANIES ASSOCIATES & JOINT VENTURES:

Your Company has no subsidiaries associates and joint ventures.

RELATED PARTY TRANSACTIONS:

All contracts or arrangements or transactions with related parties were at arms' lengthbasis. There were no material contracts or arrangements or transactions with relatedparties therefore Form AOC-2 does not form part of this report.

Policy on Materiality of and dealing with Related Party Transaction of the Company isavailable on the website of the Company and can be accessed at the web link:www.crompton.co.in .

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:

There were no Loans Guarantees and Investments made by the Company under section 186of the Companies Act 2013.

RISK MANAGEMENT:

A Risk Management policy has been developed and implemented by the Company foridentification of risk elements which in the opinion of the Board may threaten theexistence of the Company. The key elements of the Company's risk management framework havebeen captured in the risk management policy which details the process for identifyingescalating prioritizing mitigating and monitoring key risk events and action plans. Theassessment of the risks covers business risks operational risks physical risksregulatory risks fraud risks people risk information risk and IPR risk. There areappropriate assurance and monitoring mechanisms in place to monitor the effectiveness ofthe risk management framework including the mitigation plans identified by the Managementfor key risks identified through the risk management exercise.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has a well placed proper and adequate Internal Financial Control"IFC" system which ensures that all assets are safeguarded and protected andthat the transactions are authorised recorded and reported correctly. The Company's IFCsystem also comprises due compliances with Company's policies and standard operatingprocedures supplemented by internal audit checks from Grant Thornton the internalauditors of the Company. During the year the internal auditors have been engaged forproviding assistance in reviewing and testing the IFC framework.

To ensure effective Internal Financial Controls the Company has laid down the followingmeasures:

• All operations are executed through Standard Operating Procedures (SOPs) in allfunctional activities for which key manuals have been put in place. The manuals areupdated and validated periodically.

• Approval of all transactions is ensured through a preapproved Rules of Procedure(ROP) Schedule. ROP is reviewed periodically by the management and compliance of ROP isregularly checked and monitored by the auditors.

• The Company follows a robust internal audit process:

- Management/Strategic/Proprietary audits are conducted on regular basis throughout theyear as per agreed audit plan.

- The Audit Reports for the above audits are compiled and submitted to Audit Committeefor review and necessary action.

• The Company's Books of Accounts are maintained in SAP and transactions areexecuted through SAP (ERP) setups to ensure correctness/ effectiveness of alltransactions integrity and reliability of reporting.

• The Company has a robust mechanism of building budgets at an integrated cross-functional level. The budgets are reviewed on a monthly basis so as to analyze theperformance and take corrective action wherever required.

• The Company has in place a well-defined Whistle Blower Policy/ Vigil Mechanism.

• Compliance of secretarial functions is ensured by way of secretarial audit.

RESEARCH AND DEVELOPMENT:

Your Company has come out with India's first Anti dust ceiling fan with a specialcoating which helps to drastically reduce the deposition of dust on the fan. Since itslaunch in October 2016 this product has gained encouraging acceptance from consumers andchannel partners.

Research and Development efforts in Pumps were focused on developing energy efficientpumps for a variety of applications to enhance ease and convenience of use and conservewater. Some of the products introduced in the year were:

• Pressure pump booster "IP" series with an intelligent controller"Intellipress" to offer trouble free and noiseless performance while efficientlydelivering constant high pressure water.

• High pressure washing pump "CPW" series with pressure up to 110 barsfor high pressure applications like cleaning of car bike floor building facade etc.This pump requires significantly less water as compared to alternate pumps.

• An automatic compact noiseless and light weight inline circulating pump("CIL") series for localized pressure boosting applications for shower washingmachine geyser solar water heater applications.

Research and Development efforts in Lighting were concentrated towards developinginnovative products in LED consumer lighting using state of art design tools andtechniques covering thermal optical and electronics aspects. Some of the new productswere:

• Colour changing LED lamps and battens which enable multiple light options as perthe preference of the consumer.

• Dimmable battens

• High performance aesthetic and energy efficient products with higher lumen instreetlight floodlight and highbay series.

R&D efforts helped your Company in winning major orders for various prestigiousprojects like Delhi Metro Bengaluru International Airport Chennai Municipal Corporationand Tirumala Tirupati Devasathanam.

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

As required by the Companies Act 2013 read with the Companies (Accounts) Rules 2014the relevant data pertaining to conservation of energy technology absorption and foreignexchange earnings and outgo is given in the prescribed format as Annexure 2 to thisReport.

ENVIRONMENT HEALTH & SAFETY (EHS):

Your Company won the Frost and Sullivan's Project Evaluation & Recognition Program(PERP) award for Operational Excellence Leadership category in the Manufacturing sectorfor its Baroda Factory. Baroda Factory also won National Energy Conservation Award - 2016in the category of Tubular Fluorescent Lamps.

Your Company has revised its EHS policy to reaffirm its commitment to environmentsafety & health of all employees and stakeholders and to minimize adverseenvironmental impact from its activities.

The EHS Policy inter alia covers and ensures safety of public employees plant andequipment ensures compliance and imparts training on safety and sustainability.

Each plant has displayed and communicated the EHS Policy to all its stakeholders. Toeliminate/minimise unsafe acts awareness amongst employees is being enhanced by impartingEHS related training. Work permit system SOP and detailed work instructions are used toreduce operational risks. A focused safety initiative "Kavach" is being deployedacross the Company.

At each plant location annual events are organised and commemorated like Road SafetyWeek National Safety Day/ Week and Safety Audits/Inspections. Safety culture is being

demonstrated through "Safety Crusade" and "Waste to Wealth"programs in all manufacturing plants. Occupational health check-up of your Company'semployees associates and health-friendly sustainable activities are promoted as per theguidelines.

At Baroda factory the utilisation of STP-ETP treated water increased by 10% comparedto 2015-16 resulting in reduction of fresh water intake by 3%. The centralised STP watersystem also helped to reduce 300 KWH of power usage every month. Hazardous wastegeneration reduced by 37% over last year at Baroda.

Rain water harvesting was done at Ahmednagar plant for effective utilization of watercollected from the office terrace and factory roofs. This water after due filtering isused for replenishment of underground tanks with the overflow being used to rechargenearby bore wells. 4 soak pits were dug up at different locations in the factory premisesto recharge the ground water levels. Approximately 20 lakh litres of rain water harvestingwas done under this project.

A fire hydrant system was installed at Unit 2 Baddi as a part of emergency preparednessfor fire fighting.

CORPORATE SOCIAL RESPONSIBILITY (CSR):

Your Company's commitment towards CSR initiatives endeavours to embrace responsibilityfor its corporate actions and achieve fruitful impact of its business actions not only onits stakeholders but also the society at large.

2016-17 was the first full year of the operations of the Company post demerger. Duringthe year the Company carried out a detailed assessment of the areas where the CSRactivities should be focused so as to maximise societal good. Based on interactions with awide cross section of stakeholders - internal and external - the Company has identifiedthe following as the focus areas for its CSR activity(ies):-

a. Promoting education and vocational skills;

b. Projects for conservation of water.

Due to the time taken to finalise the priority areas the Company was able to spend onCSR an amount of ' 0.10 crores which is 0.04% of PAT. In the current year the Companyendeavours to increase the spending on CSR and be in line with the norms in this area.

Your Company's CSR Policy statement and annual report on the CSR activities undertakenduring the financial year ended 31st March 2017 in accordance with section135 of the Companies Act 2013 and Companies (Corporate Social Responsibility Policy)Rules 2014 is annexed to this report as Annexure 3.

GREEN INITIATIVES:

Electronic copies of the Annual Report and Notice of the 3rd Annual GeneralMeeting will be sent to all members whose email addresses are registered with theCompany/Depository Participant(s). For members who have not registered their emailaddresses physical copies of the Notice and Annual Report will be sent in the permittedmode. [Members requiring physical copies can send a request to the Company]. The physicalcopies of the aforesaid documents will also be available at the Company's RegisteredOffice for inspection during normal business hours on all working days excludingSaturdays.

MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY:

There are no material changes and commitments affecting the financial position of yourCompany which have occurred between the end of the financial year of the Company i.e. 31stMarch 2017 and the date of the Board Report.

COST AUDITORS:

Based on the recommendation of the Audit Committee the Board had appointed AshwinSolanki & Associates as Cost Auditors for 2016-17 and 2017-18.

As required under the Act the necessary resolution seeking member's ratification forthe remuneration payable to the Cost Auditors is included in the notice convening the 3rdAnnual General Meeting.

The Cost Audit report in respect of financial year 2016-17 will be filed within the duedate.

SECRETARIAL AUDITORS:

Your Company has appointed Mehta and Mehta Practicing Company Secretaries to undertakethe Secretarial Audit of the Company. The Report of the Secretarial Audit for 201617 isannexed here with as Annexure 4 to the Report.

MATERIAL ORDERS OF REGULATORS/COURTS/TRIBUNALS:

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

SHARE REGISTRAR & TRANSFER AGENT:

Karvy Computershare Pvt. Ltd. ("Karvy") a SEBI registered Registrar &Transfer Agent ("RTA") has been appointed as the Company's RTA for shares andNCD's. The contact details of Karvy are mentioned in the Report on Corporate Governance.

PUBLIC DEPOSITS:

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

PARTICULARS OF EMPLOYEES:

The Company had seven employees who were in receipt of remuneration of not less than '10200000 if employed for the full year or not less than ' 850000 per month ifemployed for any part of the year.

Disclosures with respect to the remuneration of Directors KMPs and employees as persection 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 5to this Report. Your Directors affirm that the remuneration is as per the remunerationpolicy of the Company.

Details of employee remuneration as required under provisions of section 197(12) of theCompanies Act 2013 read with Rule 5(2) & 5(3) of Companies (Appointment andRemuneration of Managerial Personnel) Rules 201 4 are available at the Registered Officeof the Company during working hours 21 days before the Annual General Meeting and shallbe made available to members on request.

BUSINESS RESPONSIBILITY REPORT:

A Business Responsibility Report as per Regulation 34 of the Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015detailing the various initiatives taken by your Company on the environmental social andgovernance 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 therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. An Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this Policy. The Policy is gender neutral.

During the year under review one complaint with allegations of sexual harassment wasreported which was investigated by the committee (including an external member) as definedunder the Policy and appropriate action was taken in the said case.

VIGIL MECHANISM:

Your Company has formulated a Vigil Mechanism and Whistle Blower Policy with a view toproviding a mechanism for employees to report violations and assure them of the processthat will be followed to address the reported violation. The Policy also lays down theprocedures to be followed by Senior Management for tracking of complaints givingfeedback conducting investigations and taking disciplinary actions. It also providesassurances and guidelines on confidentiality of the reporting process and protection fromreprisal to complainants. No personnel have been denied access to the Audit Committee.

Whistleblower Policy of the Company is available on the website of the Company and canbe accessed at the web link: www.crompton.co.in .

AUDITORS:

The Company's Statutory Auditors M/s. Sharp & Tannan who were appointed at the 2ndAnnual General Meeting of the Company for a term of 5 (five) years hold office up to theconclusion of the Seventh Annual General Meeting subject to the ratification by theMembers at every Annual General Meeting. At the ensuing Annual General Meeting theirappointment is proposed to be ratified by the shareholders.

Your Company has received written consent and certificate of eligibility in accordancewith Sections 139 141 and other applicable provisions of the Companies Act 2013 andRules issued thereunder (including any statutory modification(s) or re-enactment(s) forthe time being in force) from M/s. Sharp & Tannan.

During the year no frauds have been reported by the auditors under sub-section (12) ofSection 143 of the Companies Act 2013 either to Audit Committee of the Company or to theCentral Government.

LISTING:

The equity shares of your Company were listed on BSE Ltd. and National Stock Exchangeof India Ltd. on 13th May 2016. The Non Convertible Debentures of the Companywere listed on the Debt Segment of National Stock Exchange of India Ltd on 30thJune 2016. The Company has paid the Listing fees for both the Stock Exchanges for theF.Y. 2017-18.

EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in Form MGT 9 is annexedherewith as Annexure 6.

DIRECTORS' RESPONSIBILITY STATEMENT:

Your Directors would like to assure the Members that the Financial Statements for theyear under review conform in their entirety to the requirements of the Companies Act2013. Your Directors confirm that:

• the Annual Accounts have been prepared in conformity with the applicableAccounting Standards

• the Accounting Policies selected and applied on a consistent basis give a trueand fair view of the affairs of the Company and of the profit for 2016-17

• sufficient care has been taken that adequate accounting records have beenmaintained for safeguarding the assets of the Company; and for prevention and detection offraud and other irregularities

• the Annual Accounts have been prepared on a going concern basis

• the internal financial controls laid down in the Company were adequate andoperating effectively

• the systems devised to ensure compliance with the provisions of all applicablelaws were adequate and operating effectively

ACKNOWLEDGEMENTS:

Your Directors wish to convey their gratitude and appreciation to all of the Company'semployees at all its locations for their tremendous personal efforts as well as theircollective dedication and contribution to the Company's performance.

The Directors would also like to thank the employee unions shareholders customersdealers suppliers bankers government and all other business associates consultants andall the stakeholders for their continued support extended to the Company and theManagement.

On behalf of the Board of Directors For Crompton Greaves Consumer Electricals Ltd.

H. M. Nerurkar
Chairman
DIN: 00265887
Place: Mumbai
Date: 26th May 2017

ANNEXURE1

DISCLOSURES IN COMPLIANCE WITH REGULATION 14 OF SECURITIES AND EXCHANGE BOARD OF INDIA(SHARE BASED EMPLOYEE BENEFITS) REGULATIONS 2014 AND RULE 12 OF COMPANIES (SHARE CAPITALAND DEBENTURES) RULES 2014 ARE SET OUT BELOW:

Details of ESOP Crompton Stock Option Plan 2016 (ESOP 2016) Crompton Performance Share Plan 1 2016 (PSP 1) Crompton Performance Share Plan 2 2016 (PSP 2)
1. Description of each ESOP that existed at any time during the year including the general terms and conditions of each ESOP including:
a. Date of shareholder's approval 22nd October 2016 22nd October 2016 22nd October 2016
b. Options granted during the year 3000000 10968057 3133731
c. Pricing formula Exercise Price per option is ' 186.60 (Being the closing market price on the day prior to the date on which the Nomination and Remuneration Committee approved the grant). Exercise Price per Option is ' 92.83. Exercise Price per Option is ' 185.66.
d. Options vested as on 31.03.2017 Nil Nil Nil
e. Options exercised and allotted during the year Nil Nil Nil
f. The total number of equity shares arising as a result of exercise of options NA NA NA
g. Options lapsed/forfeited / expired during the year Nil Nil Nil
h. Variation of terms of options during the year Nil Nil Nil
i. Money realised during the financial year 2016-2017 by exercise of options (nominal value) Nil Nil Nil
j. Total number of options outstanding at the end of the year 3000000 10968057 3133731
2. Details of options granted to Employee:
a. Senior Managerial Personnel Mr. K. Aher-150000 options Mr. S. Khosla- 4700596 Mr. S. Khosla- 3133731
Mr. S. Abraham-150000 options options options
Mr. P. G. Bhat-150000 options Mr. M. Job- 4700596
Mr. B. Chakraborty-150000 options
options Mr. S. Batra-1566865
Mr. S. Mohanty-150000 options options
Mr. R. Naik-150000 options
Mr. R. Sriram -150000 options
Mr. S. Mishra-150000 options
3. Any other employee receiving a grant in any one year of option amounting to 5% or more of option granted during that year Nil Nil Nil

 

4. Identified employees who were granted option during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant Nil Mr. S. Khosla has been gra and PSP 2 scheme in exce capital. nted options under PSP1 ss of 1% of the issued
5. Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of option calculated in accordance with Accounting Standard (AS 20 'Earning Per Share') ' 4.63
6. Method used to account ESOPs Intrinsic value method
7. Difference if any between the employees compensation cost calculated using the intrinsic value of stock options and the employee compensation cost recognised if the fair value of the options had been used and the impact of this difference on profits and EPS of the Company Impact on Profit: ' 111834672 Difference in EPS: ' 0.18
8. Vesting Schedule/Requirements and maximum term of options granted Options granted under ESOP 2016 would vest not earlier than one year and not later than five years from the date of grant of such Options. Options granted under PSP -1 2016 would vest not earlier than one year and not later than ten years from the date of grant of such Options. Options granted under PSP -2 2016 would vest not earlier than one year and not later than ten years from the date of grant of such Options.

On behalf of the Board of Directors For Crompton Greaves Consumer Electricals Ltd.

H. M. Nerurkar
Chairman
DIN: 00265887
Place: Mumbai
Date: 26th May 2017

ANNEXURE 2

Pursuant to Clause (m) of sub-section 3 of section 134 of the Companies Act 2013 andRule 8(3) of the Companies (Accounts) Rules 2014.

A. CONSERVATION OF ENERGY:

(a) ENERGY CONSERVATION MEASURES TAKEN

As a manufacturer and seller of electrical goods your Company has a specialresponsibility towards energy conservation. This is reflected in our product developmentefforts and process upgrades. The Fans unit has been the winner of the National EnergyConservation Award continuously for last three years. This year too the Company has beenawarded the Top Rank Award which is a special award given to those who have been rankedfirst continuously for three years.

Some of the activities carried out in the area of energy conservation were:

1. Reduction in per person power consumption by 5% by improvement in manufacturingprocess and water consumption by 1 0% at Baroda facility by using recycled water forgardening plugging leaks and using closed circuit radiator system for cooling instead ofconventional cooling towers.

2. Saving of 3000 KWH by introducing an energy efficient compressor with variablefrequency drive for laser marking machine.

3. Reduction of natural gas consumption from 16200 M3/Day to 15000 M3/Daydue to efficient thermal processes in lamp manufacturing.

4. Reduction of power consumption by 40% in CFL manufacturing process by redesigninglamp pumping process.

5. Replacement of all CFL bulbs in Bethora Kundiam and Baddi plants with energyefficient LED bulbs.

6. Use of Solar power in canteen building in Bethora plant to reduce power consumption.

(b) CAPITAL INVESTMENT ON ENERGY CONSERVATION EQUIPMENT:

NIL

B. TECHNOLOGY ABSORPTION:

The technology focus for the Company has been on process improvement for betterquality lower cost new product development and import substitution. Some of theinitiatives were:

1 . Anti dust ceiling fan with a special coating was developed which helps todrastically reduce the deposition of dust on the fan.

2. Research in pump hydraulics using software for design and CFD (Computational FluidDynamics) simulations helped in developing 5 Star rated products with high energyefficiency over conventionally designed products.

3. In-house CFD analysis capability has been developed in pumps which enables topredict fluid flow and heat transfer. This has reduced the design cycle by eliminatingmultiple prototype testing.

4. Anti rust Cathode Electro Deposition (CED) coating implemented in many of thesubmersible pumps which helps in keeping the pump rust free for longer time with increasedreliability of the product. The Company has plans to introduce this feature in many moreproducts.

5. "Controlite" a product for office conference rooms was enhanced by addingBlue Tooth Low Energy ("BLE") connectivity. This allows the customer to operateand select lighting modes through mobile phones.

6. The office lighting product was improved by providing in-built occupancy sensorthus removing the need for an external sensor unit. This saves cost space and reducesinstallation complexity.

7. New product series in luminaires were introduced with high performance thermaloptics and electronics.

8. introduced new solid mercury (Hg) pill dosing technology to reduce the mercurycontent in fluorescent tubelights in line with "Restriction of HazardousSubstances" norms.

9. introduced T-8 glass LED tubelight with state of art technology which saves morethan 50% energy and the life of this lamp is nearly 5 times of the conventional tubelight.

C. IMPORTED TECHNOLOGY:

Nil

D. EXPENDITURE ON R&D:

R & D expenditure for the year was ' 7.41 crores

E. FOREIGN EXCHANGE EARNING AND OUTGO:

Foreign exchange earned : ' 65.97 crores
Foreign exchange used : ' 226.53 crores

On behalf of the Board of Directors For Crompton Greaves Consumer Electricals Ltd.

H. M. Nerurkar
Chairman
DiN: 00265887
Place: Mumbai
Date: 26th May 2017

ANNEXURE 3