Powering our way forward
I sincerely hope that you and your loved ones are safe and healthy. The year gone byhas been full of hardships in the wake of the pandemic but we continued to support ourteams and engage with our customers to protect our business model and the interests of allour investors shareholders and all other stakeholders.
FY 2020-21 saw one of the world's worst humanitarian crisis inflicted by the pandemic.The Indian economy also faced a severe headwind and the GDP contracted by 7.30% during theyear. The drop was largely due to a sharp 15.70% decline during the first half of the yearthough there was a decent recovery during the second half.
Apart from the agriculture sector most of the other sectors witnessed steep declineduring April to September 2020. Increased uncertainty loss of incomes curtailment ofspending led to contraction of demand. Supply chains were also disrupted due to lockdownsand other restrictions. The fiscal stimulus of the Government of India and monetarypolicies of the RBI provided the much-needed liquidity in the system to ramp up economicactivities. Rural demand remained resilient following good monsoon and various supportmeasures undertaken to combat the pandemic. However it would take a while before theeconomy can regain its momentum. Unfortunately the second surge of the pandemic postApril 2021 has adversely impacted the healthcare infrastructure and economic activitieswere also jeopardised.
Intrinsic part of millions of homes
Our business was also impacted owing to the pandemic but our brand continues to bepreferred in India enabling us to retain our market share. We continue to leverage ourwide and deep distribution network with an expanding range of product offerings inlighting and electrical segments.
Year under review
Our revenue from operations also grew marginally by 3.20% to Rs 1236.94 Crores in FY2020-21 as compared to Rs 1198.15 Crores in FY 2019-20. I am delighted to report thehighest ever operating profit in the history of our operation amidst one of the mostoperationally challenging years the world has ever faced. Our Profit Before ExceptionalItem and Tax more than doubled to Rs 149.64 Crores as compared to Rs 68.48 Crores theprevious year on the back of our persistent emphasis on increasing operating efficiencies.
Our Profit After Tax was negative to the tune of Rs 309.13 Crores against a profit ofRs 179.57 Crores in the last fiscal on account of exceptional adjustments worth Rs 629.70Crores as detailed in the financial statements later in this Report. These adjustmentsare non-cash items and have no impact on the operations of the Company. During the yearour cash flow from operations (after exceptional items) grew by 80% to Rs 223.49 Croresfrom Rs 124.13 Crores last year.
Our robust margins were on the back of an optimal turnover mix and focus on maintainingstrong revenue share of the more profitable segments. This coupled with lower overheadsdue to restricted operational environment distribution cost and promotional spendsfurther enabled a sustained enhanced margin. We expect to continue maintaining our marginsat this current level going forward leveraging on a strong product mix and converging ourresources on increasing efficiencies.
Further we will also be focusing on reducing our debt levels and taking all necessarysteps to make our balance sheet debt free. In concurrence with this we have alreadyrefinanced our high-cost debts at lower rates strategically enabling us to lower ourinterest burden and stress on our balance sheet.
Improving efficiencies in batteries
The vertical saw a 10% increase in turnover at Rs 800.90 Crores primarily due to agrowth of 6% in volume. Robust demand growth coupled with continued restriction on Chineseimport dumps post the BIS standard implementation aided the progress. Our EBIDTA was Rs207.40 Crores and we reached another milestone in batteries recording the highest everEBIDTA margin at 25.90% compared to previous year's 21.10%. This feat was achieved on theback of continued favourable commodity prices fiscal benefits from the manufacturing unitat Assam overall cost conservation and lower overheads abating impact of unfavourablecurrency movement.
Robust performance in flashlights
Our flashlight segment which had seen some pressure in the previous year bounced backstrongly recording an 8% to record a revenue ofRs 179.10 Crores. This was despite not onlyan unprecedented health and economic crisis leading to muted demand but also increasingcompetition from the unorganised and replica market. We are persistently launching new andinnovative models to counteract and reduce counterfeiting of our products. On the marginsfront also the vertical showed encouraging progress with EBIDTA ofRs 39.10 Crores and anEBIDTA margin of 21.80% as compared to 15.70% in the previous year.
Looking brighter for lighting and electricals
The pandemic-led restrictions severely impacted the vertical with revenues de-growingby 7% to Rs 221.10 Crores during FY 2020-21. In spite of reduced economies of scale thevertical registered an EBIDTA of Rs 9.20 Crores as compared to the EBIDTA loss of Rs 18.83Crores recorded last year becoming EBIDTA positive for the first time. The business hasstarted creating a name for itself in the market and we believe that we too will be ableto create a mark for ourselves similar to that of in the battery and flashlight business.As a natural extension of our core offering we continue to add new products to ourportfolio to the segment providing an extensive and comprehensive range of products to ourcustomers. We remain confident about the growth prospects of the segment buoyed by strongdemographic and macro-economic factors.
Growing prominence in small home appliances
Leveraging our brand expertise and strong distribution network we entered into thesmall home appliances vertical a few years back. We faced some headwinds in the segmentwith turnover dropping to Rs 51.80 Crores againstRs 61.50 Crores in the previous year.This was largely due to curbed non-essential purchases in key products and supplyconstraints caused by the pandemic. Currently in the gestation period the vertical isstill in the red registering negative EBIDTA of Rs 15.10 Crores. As we consolidate ourposition in the market expanding our product line and creating an omnipresentdistribution network we see the vertical becoming a strong driver of our growth in thefuture.
Our team strength
Our employees are our core strength and growth partners it is due to their resolve andcommitment that we have been able to announce such a stellar result despite being in themiddle of a pandemic and would like to acknowledge their tireless efforts. We aregratified to have a team filled with experience expertise and rich knowledge base whoechoes our passion for excellence. We continuously strive to offer an inclusive diverseand conducive work environment and nurture our team members with training and upskillingopportunities.
Strengthening our fundamentals
During the year India Ratings and Research upgraded our Long-Term Credit Ratings to'IND BBB-' from 'IND BB+' with a positive outlook. Over the next two-three years weendeavour to become a zero-debt company from the current level of Rs 418.12 Crores backedby our robust operating cash flow.
We will continue to focus on improving our operational efficiencies. We will alsosimultaneously be concentrating on expanding our distribution network and restructuring itin line with the change in consumer behaviour to seize the growth opportunities in themarket.
On behalf of the Board I would like to take this opportunity to thank all ourinvestors shareholders teams and customers for their continued trust confidence andsupport.
|Amritanshu Khaitan |
|Managing Director |