Too slow for too long. Thats the big picture for the global economy.
Global economic activity remained largely subdued during FY 2015-16. While advancedeconomies witnessed a modest and largely uneven recovery emerging markets and developingeconomies faced significant headwinds.
Indias GDP grew by 7.6% in FY 2015-16 making it one of the worlds fastestgrowing large economies. The pro-reform policy initiatives of the Government low interestrates decline in fiscal deficit and moderate inflation have enabled the Indian economy tostay on an attractive growth trajectory. However Indias rural economy witnessed aslowdown owing to unseasonal rainfall and drought across 10 states resulting in depressedrural spending affecting consumer demand.
The Government is implementing sweeping reforms in the agricultural manufacturing andservices sectors while putting emphasis on infrastructure creation and encouragingentrepreneurship. India is a large and growing consumer economy; both urban as well asrural markets offer a humongous growth potential. Rising aspirations growing disposableincome digital conveniences and supportive government policies have helped create anoverall macro environment of positivity.
Operating in such a scenario we are focusing on five key imperatives: (a) offer awinning consumer experience; (b) get digitally connected with customers and stakeholders;(c) implement a go-to-market model; (d) consistently expand product basket and (e) elevatecapabilities of our people.
PERIOD UNDER REVIEW
FY 2015-16 was a busy year for us at Eveready. We concentrated on our core businesses(portable energy and flashlight) expanded our portfolio of LED-based lighting solutionsand forayed into a new product segment (home appliances). During the year our net salestouched Rs. 1322.52 crores (Rs. 1277.76 crores in FY 2014-15); our operating profitsstood at Rs. 120.49 crores in FY 2015-16 Rs. (123.68 crores in FY 2014-15); our PAT was atRs. 50.65 crores in FY 2015-16 vis--vis Rs. 49.03 crores in FY 2014-15.
Our core business of battery remained marginally subdued due to dumping of cheapChinese batteries. Hence the Association of Indian Dry Cell Manufacturers have applied tothe Government to impose an anti-dumping duty for this segment. The Government is at anadvanced stage of reviewing the application. Implementation of the anti-dumping duty willsignificantly benefit the dry cell battery industry.
During the year under review we encountered adverse cost pressure owing to the recentcurrency depreciation. Therefore we were compelled to raise prices for batteries acrossrange. Despite challenges we were able to sustain our market leadership with over 50%market share.
We are coming up with a new manufacturing plant in Goalpara Assam spanning across 17acres approximately. This facility is expected to come on stream by March 2017. Thisproject will provide tax reliefs applicable to the area.
Our flashlight volumes declined owing to stress on the rural sector and proliferationof cheap flashlights. Although our diversification into LED based flashlights helpedsustain this temporary challenge Eveready continues to be the leader in this organisedsegment as well.
Our lighting and electrical segment witnessed significant growth driven by theenhanced scale and scope of our LED-based lighting products. With a thrust on innovationwe created an extensive LED bulb range with best-in-class quality. Our cutting-edgetechnology has enabled us to offer the brightest and one of the most energy-efficient LEDlights in the industry. We also enhanced our range of luminaires and other light productsto make the basket more comprehensive. Eveready is vying for 5-10% of the LED marketshare. During FY 2015-16 we bagged our first LED order from the Government ofIndia worth Rs. 48.31 crores.
Our packet tea segment continues to strengthen our FMCG offerings. We focused onextending our reach across high-growth markets through an enhanced distribution drive andbespoke branding initiatives across focused growth markets.
During the year we forayed into the small home appliances segment and are expecting toachieve around 5% of the market share over the next five years. We are positioningourselves in the value for money and premium brand segments with the rolloutof a wide range of small appliances. We are currently leveraging synergies of our existingpan-India distribution network in batteries and flashlights and adding new applianceselling outlets to this vertical. Besides we are strengthening our presence in all modernformat stores and e-commerce platforms.
We believe that growing scale innovating consistently enhancing quality standardsand growing market reach will keep us ahead of the curve. During FY 2016-17 we will focuson the following areas:
Consolidate our market leadership across battery and flashlight segment
Expand our distribution channels by creating a new electrical network
Increase market presence in LED segment
Set up an exclusive network for appliances business across 50 towns to expandreach
Enhance Return on investment (ROI) through strategic asset light outsourcingmodel for manufacturing of LED product and home appliances
I am happy to note that the consistent efforts of our highly motivated team has helpedus maintain our leadership over the years. We expect our teams support and input inthe future as well. In our journey towards sustainable value creation I on behalf of theentire leadership team seek the encouragement and cooperation of all our stakeholders.