It is with pleasure that I present the Annual Report of your Companyfor the financial year ended 31st March 2022.
The most significant event of the year was the acquisition atthe end of FY 2021-22 of the shareholding of the promoters of Butterfly GandhimathiAppliances Ltd (BGMAL) by Crompton Greaves Consumer Electricals Ltd (CGCEL) a leader inConsumer Electrical Appliances Lighting and Pumps.
CGCEL has said "The Butterfly acquisition will add scale andextend the Core Product Portfolio' of Crompton's current range of kitchenproducts and accelerate its long-term strategic goal of becoming a leading player in thesmall domestic appliances segment. The acquisition is in alignment with Crompton'slong-term vision of becoming a leading pan-India Kitchen Appliances player.Butterfly's proven channel and brand presence will form the base for a completekitchen play through a most extensive distribution network and a wider range ofcompetitive and innovative products."
I fully expect that the combined entity will successfully realise thatambition.
The year 2021-22 provided many challenges. The second wave of thepandemic and the resultant lock-down disrupted operations and dampened market sentiment.The Russia- Ukraine war led to supply chain imbalances and a surge in prices of fuels rawmaterials and commodities. The IMF estimates that global GDP growth which was at 6.1percent in 2021 will drop to 3.6 percent in 2022 and remain at that level in 2023. ForIndia RBI has projected GDP growth at 8.9 percent for FY 2021-22 and 7.2 percent for FY2022-23.
At Butterfly we are excited about the immense possibilities forgrowth in the fast evolving kitchen appliances space and have mapped out strategicplan to mine the opportunities in the domestic market.
However key economic indications point to the revival of the Indianeconomy; a rebound on the back of supportive Government policies - the Make inIndia' and productivity incentivisation schemes for industries the ambitiousGati Shakthi program with large outlays in transportation infrastructure and ruraldevelopment projects and the focus on a self-reliant or Atmanirbhar Bharat'.All of this augur well for the growth of the Kitchen Appliances industry in the country.
Sectoral Performance - India.
During the year the Kitchen Appliances industry like all otherbusinesses in India was affected by the lock-down restrictions the subdued consumersentiment the challenges of supply chain disruptions and surging raw material costs. Yetthe industry is upbeat about the large potential for growth and the investments reflectthe positive sentiment.
Industry Growth Drivers
The Kitchen Appliances industry is estimated to grow strongly due torapid urbanization increase in nuclear families and a growing middle class with highdisposable incomes and aspirational living standards. In addition the healthconsciousness with preference for home cooked food and work from-home trends are seen asmajor demand drivers. An increased shift in consumer preference for sustainability andenergy efficient connected products embedded with advanced AI technologies is markingthe next stage of market growth for the Kitchen Appliances industry.
Despite the difficult business environment the Company recorded arobust growth in revenue during the fiscal year by introducing new products across keycategories (Mixie Cooker and Gas Stoves). This has become possible with Company'sstrong R&D foundation and technology that helped launch a range of innovative andconsumer centric products in each of the product segments: Kitchen Appliances Cooker /Cookware and others which includes both the electric and non- electric verticals.
In line with our growth strategies we invested in automation andcapacity expansion at our manufacturing plants at Pudupakkam Mambakkam andUrapakkam during the year.
Strategic market storming initiatives with product differentiation andsegmentation were deployed to enhance sales and market penetration. Dealer supportinitiatives helped to deepen channel partnerships streamline inventories and promotesales.
The Butterfly brand consolidated its leadership in its served segmentsenlarging its geographical footprint and customer touchpoints with a pan Indiaomni-channel presence in e-commercemodern trade and rural segments. The Company deepenedits on-line engagement with multi-channel direct-to-consumer programmes earning the highestranking by e-commerce majors in turn-around-time customer responsiveness and for thefastest new product launches.
Our Total Income stood at Rs 1005.30 crores a growth of 15.6 percenton sales of Rs 869.64 crores in FY 2020-21. Profit After Tax was Rs 16.13 crores areduction from Rs 36.16 crores in the previous fiscal. The decline in profit levelswas mainly due to the reduction in channel offtake during the ownership transitionimpacting revenue the lag between the steep increase in commodity prices andpricing action denting Gross Margins and the additional provisions made based onManagement assessment including provisions for old and ageing inventory.
The new management team has communicated with all the stakeholders forassuring business continuity during the transition and after. I would like to assure youthat business is back to normal levels in terms of offtake across all channels andgeographies. This we believe will also result in operating leverage which coupled withgross margin recovery will deliver operating margins at least in line with historicaltrends.
In addition plans for effectively integrating BGMAL with CromptonGreaves Consumer Electricals are planned in detail. These efforts on all fronts namelybusiness (revenues & costs) processes and systems and organisational capability havebeen progressing well.
I would like to reiterate that the growth and structural profitabilityof BGMAL continues to be robust and recovery in revenue growth and margins is on expectedlines based on current trends.
At BGMAL we are excited about the immense possibilities for growth inthe fast evolving kitchen appliances space and have mapped out strategic plans to mine theopportunities in the domestic market.
At BGMAL we believe our people are our greatest asset. In line withthis we continue to invest in skill and capability building programmes and digitalacceleration training to prepare an empowered and future-ready people force. As part ofour people welfare measures the health and safety of employees was accorded the highestpriority with stringent safety protocols and hygiene standards including Covid-centricsupportive measures.
Building an organisation like BGMAL is no mean achievement. Iwish to record my deepest admiration and appreciation for Mr. V. M. Lakshminarayananformer Chairman and his team for building BGMAL as a strong organisation and Butterfly asa trusted brand reputed for its quality and durability. That legacy will be built on inthe years to come.
I wish to thank the Board Members for their guidance and unstintingsupport during the acquisition and after. The Board has been strengthened with theaddition of new Directors. Each of them come with deep experience and domain expertisewhich I am sure will contribute to BGMAL's growth and governance.
I wish to record my gratitude to our consumers channel partnersvendors and our shareholders for their continued support and trust reposed in us.
P M Murty