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Eveready Industries India Ltd.

BSE: 531508 Sector: Consumer
NSE: EVEREADY ISIN Code: INE128A01029
BSE 11:15 | 11 Aug 364.80 -3.25
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370.00

HIGH

379.00

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363.15

NSE 11:04 | 11 Aug 367.85 -4.85
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OPEN

376.55

HIGH

379.70

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OPEN 370.00
PREVIOUS CLOSE 368.05
VOLUME 7635
52-Week high 413.30
52-Week low 255.45
P/E 69.49
Mkt Cap.(Rs cr) 2,651
Buy Price 364.85
Buy Qty 16.00
Sell Price 365.60
Sell Qty 34.00
OPEN 370.00
CLOSE 368.05
VOLUME 7635
52-Week high 413.30
52-Week low 255.45
P/E 69.49
Mkt Cap.(Rs cr) 2,651
Buy Price 364.85
Buy Qty 16.00
Sell Price 365.60
Sell Qty 34.00

Eveready Industries India Ltd. (EVEREADY) - Director Report

Company director report

For the financial year ended March 31 2022

Your Directors are pleased to present the Annual Report together withthe Audited Financial Statements of your Company for the financial year ended March 312022.

FINANCIAL RESULTS

The Financial Results of the Company are summarized below:

Rs. Crores

Particulars 2021-22 2020-21
Revenue from Operations 1196.46 1236.94
Other Income from Operations 10.29 12.05
Total Revenue from Operations 1206.75 1248.99
Total Expenditure adjusted for increase/ decrease of stocks 1086.47 1024.27
Profit from Operations before Other Income Depreciation Finance Costs and Tax 120.28 224.72
Other Income 4.69 4.18
Profit from Operations before Depreciation Finance Costs and Tax 124.97 228.90
Depreciation 27.47 27.23
Interest and Exchange Fluctuation 48.03 52.03
Profit before Exceptional items and Tax 49.47 149.64
Exceptional items - 629.70
Profit/(Loss) before Tax 49.47 (480.06)
Provision for Tax 1.99 (170.93)
Profit/(Loss) after Tax 47.48 (309.13)
Balance carried forward to Balance Sheet (31.98) (77.97)

Turnover for the year was lower by 3% over the previous financial year.Profit from Operations before Depreciation Interest and Taxation (OPBDIT) excluding OtherIncome was lower by 46% at Rs. 120.28 Crores (previous year - Rs. 224.72 Crores). WithDepreciation of Rs. 27.47 Crores (previous year - Rs. 27.23 Crores) Interest / ExchangeFluctuation charge of Rs. 48.03 Crores (previous year - Rs. 52.03 Crores) and a charge forExceptional Items of Rs. Nil (previous year - Rs. 629.70 Crores) Profit after Taxationstood at Rs. 47.48 Crores for the year as against a Loss of Rs. 309.13 Crores in theprevious year. Net accumulated losses stood at Rs. 31.98 Crores.

DIVIDEND

Your Directors do not recommend any dividend for the year under reviewdue to unavailability of profits.

TRANSFER TO RESERVES

There was no transfer to General Reserves during the year under review.

OPERATIONAL REVIEW & STATE OF THE COMPANY'S AFFAIRS Batteries& Flashlights

The battery category witnessed a decline in imports of poor qualityproducts from China post implementation of BIS standards. However there were heightenedimports in the Alkaline variant which grew at a 7-year CAGR of 16%. While this had amarginal impact on the demand for carbon zinc batteries overall consumption demandremained muted. The category also witnessed significant shift between various types ofbatteries. As a result the category volume and value both registered de-growth during theyear. The market share position of the major players remained largely unaltered during theyear under review with your Company's share being estimated at 50%.

The flashlight market remained disturbed by proliferation of cheapimported flashlights of poor quality mainly in the rechargeable type by the unorganizedmarket players which impacted organized players like your Company. Furthermore demand wasmuted due to high inflation which resulted in lower volumes and turnover in comparison tothe previous year.

Your Company's share of the organized flashlight market wasmaintained at higher than 60%. However this has to be seen in the perspective of largeunorganized market which is estimated to be equivalent to the size of the organizedmarket.

The segments had EBIDTA of Rs. 140.16 Crores and Rs. 26.43 Croresrespectively which was inferior to that of the previous year. While there were volume dipsarising out of low demand as aforesaid steep rise in input costs could not be fullypassed on to the market resulting in lower profitability. The battery category was alsoaffected by the adverse impact of a depreciating rupee. The manufacturing operations inthese product categories continued to focus on total quality management safety energyconservation and cost control. This helped your Company in achieving efficiency in themanufacturing function.

Lighting & Electrical Products

Your Company has diversified to the marketing of electrical &lighting products for quite some time now. These products found excellent fit to itsbrands – Eveready and PowerCell which are synonymous with portable energy andlighting. There was also synergy in these products with the existing distribution networkof your Company. At the point of entry to this diversification initiative the leadingproducts were Compact Fluorescent Lamps (CFL) and General Lighting Service (GLS). Howeversince a few years back the category experienced an almost complete shift towards theLight Emitting Diode (LED) bulbs which added a significant technology edge in comparisonto the traditional CFL and GLS bulbs.

Your Company became part of this technology change which significantlyenhanced the product basket being offered by it. After gaining reasonable success with LEDbulbs the Company is trying to address a growth path in LED based Luminaires – bothin the consumer and professional lighting space. Initial feedbacks are encouraging and itshould be able to chart growth in this category too.

While your Company's distribution in general trade and modernretail provides a good platform to this category expansion has been done to tap theexclusive electrical trade. Net sales from this category for the current year stood at Rs.239.88 Crores and registered an EBIDTA loss of Rs. 3.89 Crores. It is expected that thiscategory will provide significant turnover growth in the years to come.

Prospects

Battery volume was lower during the year as rising inflation led tomuted demand. Furthermore demand generated from battery operated gadgets and equipmentlike TV remotes AC remotes thermal scanners and oximeters moderated from a high demandin the previous year. The flashlight category was impacted by the continued proliferationof unorganized market products and cheap imports. Therefore the categories did notregister turnover growth during the year. The Lighting and Electrical segments wasmarginally impacted by supply constraints and disruptions due to lockdown restrictionsduring the earlier part of the year. All of this led to a lower turnover which alongwithsharp increase in input costs and weakening of the rupee resulted in lower profitability.

In the medium to long term it is expected that battery demand willreturn to normalcy as economic conditions shows sign of improvement. Strategy on marketingand distribution would be augmented to supplement such demand. This alongwith expectationof a near-normal monsoon in the forthcoming season should add fillip to the demand. TheCompany is confident that it will be able to capture growth in this market riding on itsobvious strengths of premium quality offering brand and distribution. In respect offlashlights the Company will continue its effort to bring this category under the purviewof BIS standards to arrest the adverse impacts of cheap imports. Efforts to scale uprechargeable flashlight offerings at attractive price points shall also be pursued. TheCompany has initiated efforts to communicate with the consumer to maintain brand salienceand would continue to do so. While the situation arising out of the steep inflation maycause short term disruptions in demand the overall demand is likely to remain strong. TheGovernment's initiatives to make India self-reliant would also augur well for thedomestic industry. As a consequence both batteries and flashlights should show reasonablegrowth in FY 2022-23. The outlook on battery and flashlight categories thus remainspositive.

Prospects are promising in the Lighting & Electrical productscategory. This business has become a key focus area and an avenue for growth. As mentionedearlier the market has now almost entirely shifted from CFL to LED bulbs and Luminaires.LED bulbs and LED based Luminaires with higher margins now constitute more than 80% of thecategory turnover and these will be the growth drivers for the category and the overallbusiness of the Company. This range of new generation lights have been very well acceptedby the market and will enhance the Company's efforts towards a fruitfuldiversification. The outlook is thus upbeat - with potential for both growth andprofitability.

FINANCE

Tight control was kept over the finances of your Company throughjudicious working capital management and operational efficiencies. Your Company remainsfocused to reduce its borrowings which stood at Rs. 370.66 Crores at the end of the year.Your Company met its financial commitments in servicing debt and repayment thereof in atimely manner. Capital expenditure program was fully met.

MATERIAL CHANGES AND COMMITMENTS

There has been no material change and commitment affecting thefinancial performance of the Company which occurred between the end of the financial yearof the Company to which the financial statements relate and the date of this Report.

SUBSIDIARIES ASSOCIATES & CONSOLIDATED FINANCIAL STATEMENTS

Your Company's subsidiary at Hong Kong Everspark Hong KongPrivate Limited registered a turnover of Rs. 5.10 Crores during the current year (Rs. 5.03Crores during FY 2020-21). It incurred a profit of Rs. 0.03 Crore during the year. Anothersubsidiary Greendale India Limited did not register any revenue from turnover during thecurrent year (Nil during FY 2020-21). It registered a profit of Rs. 0.34 Crore during theyear.

Your Company's associate Preferred Consumer Products PrivateLimited registered a turnover of Rs. 23.92 Crores during the current year (Rs. 5.30Crores during FY 2020-21). It incurred a loss of Rs. 18.07 Crores during the year.However your Company's share of loss amounted to Rs. 1.37 Crores during the year.

A Statement in Form AOC -1 containing the salient features of the saidCompanies is attached to the Financial Statements in a separate section and forms part ofthis Report. The separate audited accounts of the said Companies would be available on thewebsite of the Company. The Annual Report includes the audited Consolidated FinancialStatements prepared in compliance with the Companies Act 2013 and the applicableAccounting Standards of the subsidiaries and associate. The Consolidated FinancialStatements shall be laid before the ensuing 87th Annual General Meeting of theCompany along with the laying of the Standalone Financial Statements of the Company.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO

The information on Conservation of Energy Technology Absorption andForeign Exchange Earnings and Outgo as stipulated under Section 134(3)(m) of theCompanies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 forms partof this Report as Annexure 1.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The CSR Policy formulated by your Company is available on the websiteof the Company (https://www.evereadyindia.com/wp-content/uploads/2022/03/csr-policy-14.pdf). The Annual Report on CSR Activities to be included in the Reportcontaining a brief outline of the CSR Policy the composition of the CSR Committee andrequisite particulars inclusive of the initiatives taken as well as the expenditure onCSR activities forms a part of this Report as Annexure 2.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134 of the Companies Act2013 the Directors state that: 1. in the preparation of the annual accounts for thefinancial year ended March 31 2022 the applicable accounting standards had been followedwith no material departures; 2. the Directors had selected such accounting policies andapplied them consistently and made judgments and estimates that are reasonable and prudentso as to give a true and fair view of the state of affairs of the Company at the end ofthe financial year and of the profit of the Company for that period; 3. the Directors hadtaken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act 2013 for safeguarding the assets ofthe Company and for preventing and detecting fraud and other irregularities; 4. theDirectors had prepared the annual accounts on a going concern basis; 5. the Directors hadlaid down internal financial controls to be followed by the Company and that such internalfinancial controls are adequate and were operating effectively; and 6. the Directors haddevised proper systems to ensure compliance with the provisions of all applicable laws andthat such systems were adequate and operating effectively.

DIRECTORS

Mr. Sourav Bhagat and Mr. Sunil Sikka have been appointed asIndependent Directors for a period of five consecutive years effective January 28 2021and April 21 2021 respectively at the 86th Annual General Meeting of theCompany. Mr. Utsav Parekh and Mr. Girish Mehta have been appointed as Non-ExecutiveDirectors effective January 28 2021 and April 21 2021 respectively at the 86thAnnual General Meeting of the Company.

Mr. Suvamoy Saha was appointed as a Joint Managing Director effectiveAugust 10 2021 at the 86th Annual General Meeting of the Company.Subsequently he was appointed as Managing Director effective March 8 2022 subject tothe approval of the Members. A Notice of Postal Ballot dated March 25 2022 was sent tothe Members whose emails were registered with the Company/RTA/Depository Participants viaelectronic mode only seeking approval of the Members for the said appointment throughremote e-Voting during the period from Friday April 1 2022 to Saturday April 30 2022.Mr. Aditya Khaitan and Mr. Amritanshu Khaitan resigned from the Board of Directors of theCompany as Non-Executive Director and Chairman and as Managing Director of the Companyrespectively effective March 3 2022 in view of the expression of interest from theBurman group by way of an open offer to the public shareholders of the Company andproposed acquisition and control to enable the Company to benefit from new leadership anddirection. The Board records its deepest appreciation of the valuable services rendered byMr. Aditya Khaitan and Mr. Amritanshu Khaitan during their respective tenures on theBoard.

Mr. Utsav Parekh will retire by rotation at the forthcoming AnnualGeneral Meeting and is eligible for re-appointment.

On a Reference Application made by the Central Government to theCompany Law Board (CLB) under Section 408 of the Companies Act 1956 the CLB by an orderdated December 20 2004 directed the Central Government to appoint three Directors on theCompany's Board for three years. As the CLB's order suffers from various legalinfirmities the Company based on legal advice has challenged this order of the CLBbefore the Hon'ble High Court at Calcutta which has by an interim order stayed theoperation of the CLB's order. The stay is continuing.

DECLARATIONS BY INDEPENDENT DIRECTORS

Necessary declarations from all the Independent Directors of theCompany confirming that they meet the criteria of independence as prescribed have beenreceived.

KEY MANAGERIAL PERSONNEL OF THE COMPANY

As at March 31 2022 the Key Managerial Personnel of the Companycomprise of Mr. Suvamoy Saha Managing Director Mr. Bibhu Ranjan Saha and Mr. IndranilRoy Chowdhury Joint CFOs and Mrs. Tehnaz Punwani Company Secretary in terms of Section203 of the Act.

REMUNERATION POLICY

The Remuneration Policy is available on the website of the Company(https:// www.evereadyindia.com/wp-content/themes/eveready/pdf/remuneration-policy.pdf).This policy for selection and appointment of Directors Senior Management and theirremuneration includes the criteria for determining qualifications positive attributesindependence of a Director and other matters as required.

BOARD EVALUATION

The Nomination & Remuneration Committee of the Board of Directorshad laid down the criteria for evaluation of the performance of the Board as a whole theDirectors individually as well as the evaluation of the working of the Audit Nomination& Remuneration Stakeholders Relationship Corporate Social Responsibility and RiskManagement Committees of the Board. Annual Performance Evaluations as required have beencarried out. The statement indicating the manner in which formal annual evaluation of theDirectors (including Independent Directors) the Board and Board level Committees is givenin the Corporate Governance Report which forms a part of this Annual Report.

MEETINGS

The Board meets regularly to discuss and decide on various matters asrequired. Due to business exigencies certain decisions are taken by the Board throughcirculation from time to time. During the year six (6) Board Meetings were convened andheld. Additionally several committee meetings as well as Independent Directors'meeting(s) were also held. The details of the Meetings are given in the CorporateGovernance Report which forms a part of this Report. The intervening gap between theMeetings was within the period prescribed under the Companies Act 2013.

COMMITTEES OF THE BOARD

The details with respect to the compositions powers roles and termsof reference etc. of relevant Committees of the Board of Directors are also given in theCorporate Governance Report which forms a part of this Annual Report. All recommendationsmade by the Audit Committee during the year were accepted by the Board.

EMPLOYEE RELATIONS

One of your Company's key strengths is its people. Relations withemployees remained cordial and satisfactory. Your Board would like to place on record itsappreciation of employees for their contributions to the business. Your Company believesin a system of Human Resource Management which rewards merit based performance and playingan active role in improving employee skills. Actions during the year under review weresupportive of this policy. The details of the ratio of the remuneration of each Directorto the median employee's remuneration and other particulars and details of employeesin terms of Section 197(12) read with Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 forms a part of this Report as Annexure3. The details of the employee's remuneration as required under the said section andRule 5(2) & 5(3) of the said Rules forms a part of this Report and are available atthe Registered Office of the Company during working hours before the Annual GeneralMeeting and shall be made available to any Member on request. Such details are alsoavailable on your Company's website. None of the employees listed in the saidAnnexure is related to any Director of the Company in terms of the definition ofRelatives as provided in the Act.

STATUTORY AUDITORS

M/s. Singhi & Co. Chartered Accountants (Firm's RegistrationNo. 302049E) have been appointed to hold office as Auditors of the Company for a periodof 5 continuous years from the conclusion of the 84th Annual General Meetingtill the conclusion of the 89th Annual General Meeting of the Company.

COST AUDITORS

Pursuant to Section 148 of the Companies Act 2013 (the Act) read withthe Companies (Cost Records and Audit) Amendment Rules 2014 your Directors haveappointed M/s. Mani & Co. Cost Accountants Registration No. 00004 Ashoka 111Southern Avenue Kolkata 700 029 (being eligible for the appointment) to audit the costaccounts of the Company for the financial year ending March 31 2023. The remunerationpayable to the Cost Auditors for the said year is being placed for ratification by theMembers at the forthcoming Annual General Meeting. The Company maintains necessary costrecords as specified under Section 148(1) of the Act in respect of the specified products.

SECRETARIAL AUDITOR

Pursuant to Section 204 of the Companies Act 2013 and theCompanies(Appointment and Remuneration of Managerial Personnel) Rules 2014 theSecretarial Audit of the Company for the financial year 2021-22 was conducted by M/s MKB& Associates a firm of Company Secretaries in Practice. The Secretarial Audit Reportforms a part of this Report as Annexure 4.

AUDITORS' REPORT

There are no Audit Qualifications/Reservations/Adverse Remarks in theStatutory Auditors Report and in the Secretarial Audit Report as annexed elsewhere in thisAnnual Report. However the Auditors have drawn attention of the Members on the penaltyimposed by Competition Commission of India (CCI) the matter of which is covered elsewherein the Report and also in the Notes on accounts.

INTERNAL FINANCIAL CONTROL SYSTEMS & THEIR ADEQUACY

The Company has an Internal Control System commensurate with the sizescale and complexity of its operations. The internal financial controls are adequate andare operating effectively so as to ensure orderly and efficient conduct of the businessoperations. The Statutory Auditors have also given an unmodified opinion on the internalfinancial controls on financial reporting in their Report.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Details of Loans Guarantees and Investments covered under theprovisions of Section 186 of the Companies Act 2013 are given in the notes to theFinancial Statements and forms a part of this Report.

PARTICULARS OF CONTRACTS/ARRANGEMENTS/ TRANSACTIONS WITH RELATEDPARTIES

Related party transactions entered into during the year under reviewwere on arm's length basis in the ordinary course of business for the operationaland administrative benefits of the Company. There were no contracts/arrangements/transactions with related parties which could be considered as material andwhich may have a potential conflict with the interest of the Company at large.Accordingly no contracts/arrangements/transactions are being reported in Form AOC-2.Details on related party disclosures are further given in the Corporate Governance Reportwhich forms a part of this Report.

RISK MANAGEMENT

Your Directors have approved various Risk Management Policies. Allmaterial risks faced by the Company are identified and assessed by the Risk ManagementSteering Committee. For each of the risks identified corresponding controls are assessedand policies and procedures are put in place for monitoring mitigating and reporting therisks on a periodic basis.

VIGIL MECHANISM

Your Directors have adopted a Vigil Mechanism/Whistle Blower Policy.The Policy has been posted on the website of the Company. None of the Company'spersonnel have been denied access to the Audit Committee.

ANNUAL RETURN

The Annual Return in the prescribed format in accordance with theCompanies Act 2013 forms apart of this Report and is available on the website of theCompany (https://www.evereadyindia.com/wp-content/themes/eveready/pdf/annual-return21-22.pdf).

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

The Competition Commission of India ("CCI") issued an Orderdated April 19 2019 imposing penalty on certain zinc carbon dry cell batterymanufacturersconcerning contravention of the Competition Act 2002 (The Act). The penaltyimposed on your Company was Rs. 171.55 Crores. Your Company filed an appeal and stayapplication before the National Company Law Appellate Tribunal New Delhi (NCLAT) againstthe CCI's said Order. The NCLAT vide its order dated May 09 2019 has stayed thepenalty with the direction of depositing 10% of the penalty amount within 15 days with theRegistrar of the NCLAT which has been duly deposited by your Company. Based on legaladvice received by your Company it is believed that given the factual background and thejudicial precedents there are reasonable grounds on the basis of which the NCLAT willallow the appeal and accordingly the Company is hopeful on adjudication upon the quantumof penalty imposed or remand to the CCI for de novo consideration. However at this stageit is not possible for your Company to quantify or make a reliable estimate of the quantumof penalty that may be finally imposed on your Company. It may be noted that a certainamount of penalty will be levied on the Company as it had also earlier filed anapplication under the Lesser Penalty Regulations under the Act. In terms of the aforesaidlegal advice your Company has been advised that the matter should be recognized as acontingent liability as defined under Ind-AS 37 and there should be no adjustment requiredin the financial statements of the Company in accordance with Ind-AS 10. Accordinglypending the final disposal of the appeal the amount has been disclosed as contingentliability in the accounts for the year under review.

Other than the aforesaid there have been no significant and materialorders passed by the Regulators Courts or Tribunals which impact the going concern statusand Company's operations in future.

OTHER DISCLOSURES

During the year under review :

a. There were Nil cases filed pursuant to the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013. The InternalComplaints Committee constituted in terms of the said Act continues to be in place.

b. Your Company has not accepted any deposit from the public fallingwithin the ambit of Section 73 of the Companies Act 2013 and the Companies(Acceptance ofDeposits) Rules 2014.

c. There was no change in the share capital or the nature of businessof the Company.

e. There is no application or proceeding pending under the Insolvency& Bankruptcy Code 2016 against the Company.

f. The Company is in compliance with the applicable SecretarialStandards issued by the Institute of Company Secretaries of India.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT AND REPORT ON CORPORATEGOVERNANCE

A Management Discussion and Analysis Report and a Report on CorporateGovernance are presented in separate sections forming a part of the Annual Report.

BUSINESS RESPONSIBILITY REPORT/ DIVIDEND DISTRIBUTION POLICY

In terms of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 as amended the Business Responsibility Report is presented in aseparate section forming a part of the Annual Report. The Dividend Distribution Policy isavailable on the website of the Company(https://www.evereadyindia.com/wp-content/themes/eveready/pdf/dividend-distribution-policy.pdf).

For and on behalf of the Board of Directors
S. Saha A. Dhar
Kolkata Managing Director Director
April 25 2022 (DIN: 00112375) (DIN: 03197285)

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