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Havells India Ltd.

BSE: 517354 Sector: Engineering
BSE 00:00 | 20 Jun 535.70 -3.20






NSE 00:00 | 20 Jun 534.90 -4.45






OPEN 538.80
VOLUME 31470
52-Week high 592.70
52-Week low 441.30
P/E 47.58
Mkt Cap.(Rs cr) 33,508
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 538.80
CLOSE 538.90
VOLUME 31470
52-Week high 592.70
52-Week low 441.30
P/E 47.58
Mkt Cap.(Rs cr) 33,508
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Havells India Ltd. (HAVELLS) - Director Report

Company director report


The Members

Your Directors take pleasure in presenting their 34th Annual Report on thebusiness and operations of the Company and the accounts for the Financial Year ended 31stMarch 2017.


The Board's Report is prepared based on the Standalone Financial Statements of theCompany. The Company's financial performance for the year under review alongwith previousyear's figures are given hereunder: (Rs. in Crores)

Particulars Standalone Consolidated
2016-17 2015-16 2016-17 2015-16
Revenue from Operations 6585.96 5775.42 6612.96 8014.35
Other Income 134.28 69.35 138.18 86.64
Operating Profit before Finance Costs Depreciation Tax and 958.42 824.28 956.35 844.64
Extraordinary items
Less: Depreciation and amortisation expenses 119.63 104.91 120.51 134.40
Finance Cost 12.15 12.73 13.34 54.37
Profit before Tax and Exceptional Expenses 826.64 706.64 822.50 655.87
Share of profit/ (loss) of joint venture (net of tax) - - (4.77) 1.75
Add: Exceptional items (57.81) 202.39 (106.80) 862.10
Less: Tax 229.79 197.00 228.76 219.27
Net Profit for the Year from Continuing operations 539.04 712.03 482.17 1300.45
Net Profit for the Year from Discontinued Operations 11.94 -
Profit for the year 539.04 712.03 494.11 1300.45
Other Comprehensive Income (2.75) (3.58) (23.74) 15.21
Total comprehensive income for the year net of tax 536.29 708.45 470.37 1315.66
Profit for the year attributable to:
Equity holders of the parent company 539.04 712.03 494.53 1300.11
Non-controlling interest - - (0.42) 0.34
Total comprehensive income for the year attributable to:
Equity holders of the parent company 536.29 708.45 470.79 1315.32
Non-controlling interest - - (0.42) 0.34

Your Company achieved a healthy growth across product categories revenue grew by 14%highest since Financial Year 2012-13. Profit before Exceptional items and tax hasincreased from Rs. 706.64 crores to Rs. 826.64 crores during 2016-17 witnessing a growthof 17% on year to year basis.

During the year demonetization event caused severe anxiety and uncertainty in theindustry particularly with dealer fraternity. Havells in line with its philosophy haswell managed this disruption with reinforcement of channel confidence and regaining salesgrowth. Modest improvement in margins due to better product mix withdrawal of brandroyalty cost which was negated by additional schemes during demonetization.

The Company has decided to entirely exit its international operations includingtransfer of 20% stake in Feilo Malta Limited (erstwhile Havells Malta Limited) divestmentof 100% stake in Havells Sylvania (Thailand) Limited to INESA UK Limited and orderlytermination of Jiangsu Havells Sylvania Lighting Co. Ltd. a joint venture and

Havells Sylvania Brasil Illuminacao Ltda's operations. The entire cost net of gainsfrom sale of 20% stake sale in Feilo Exim Limited (erstwhile Havells Exim Limited) duringthe year is Rs. 57.81 crores. The Company is expected to receive approximately Rs. 204crores from the above planned exit.


The second half of the year was challenging for businesses across sectors due todemonetisation which weighed on the growth for initial few weeks. During this period yourCompany reached out to channel partners in an unprecedented manner to assure support andhelp them navigate during this period of uncertainty. This was in line with our commitmentto further reinforce our bonding with channel partners through inclusive communication. Weexpanded the credit limit and time limit for our distributors to help them tide over theliquidity crunch post demonetisation and cemented our reputation of being a dealerfriendly Company and also helped us register one of the best quarters.

During the year your Company entered into an agreement to acquire Lloyd consumerdurable business. The acquisition includes the Lloyd brand distribution network andmanpower of the consumer durable business of Lloyd Electric and Engineering Limited. Thisacquisition will help Havells participate in a high growth consumer durable segment withlow penetration levels increasing urbanization aspirational and expanding middle class.Lloyd is amongst the top 3 brands in air-conditioners' category and has expanded into TVsand Washing machines as well. We are enthused with Lloyd opportunities enabling us toserve our consumers in a far wider scope.

In the course of the year your Company also ventured into the environment friendly andfast growing business of solar products and projects aimed at both residential andindustrial segments. The new business division christened as ‘Havells Enviro' hasalready installed two major rooftop solar installations with a total capacity of 2.3MW atAlwar and Faridabad plants.

Your Company is a staunch believer of ‘Make in India' and has followed it sinceits inception. During the year we commenced production at our first plant outside NorthIndia in Guwahati Assam. With this addition Havells now has 12 state of the art plantsin the country across 7 locations. Keeping in mind our future growth opportunities andexpansion possibilities; we have acquired land in the industrial area of Ghilot inRajasthan and Tumkur in Karnataka

Our effort to take Havells "Deeper into Homes" continued withour foray into personal grooming segment early this year. We also introduced new andinnovative range of Ceiling Table Wall and Pedestal Fans for the domestic market duringthe year to delight our customers with incremental innovation. We launched ‘Futuro'India's 1st smart Bluetooth technology enabled smart fan which can be controlled by anyiOS or Android Smart phone; ‘Octet' an eight blade fan that is silent andgives superior air delivery; ‘Efficiencia'- Country's first BLDC (brush lessdirect current) fan that is 57 % more energy efficient than a conventional fan andconsumes only 32 Watt; ‘Enticer Art' a limited edition inlay design fan withunique in mould design' in plastic decorative parts which is first of its kind; ‘Urbane'an aesthetically designed and technically advanced under light fan equipped with LEDlights with colour changing technology. Most of these fans come with dust-phobic paintfinish which ensures less dust accumulation and ease of cleaning.

In the switchgear segment your Company achieved consistent competitive profitableand responsible growth along with significant margin improvement. In an attempt to givetop quality products to consumers at the Point of Market Entry i.e. for low cost housingand rural customers your Company ventured into a new category this year with theintroduction of Reo Armour. This product offers fool proof solution at an affordable priceagainst electrical hazard and has carved a new segment for existing channel partners.

Your Directors are also pleased to inform you that your Company has launched newproducts in fiexible cables segment in line with the continuing growth of the Cable andWire businesses as demonstrated in the past few years. This move supports your Company'scommitment to invest and grow in the high growth potential Cable and Wire businesses.

LED category delivered competitive growth largely driven by shift from conventionallighting to energy efficient LED and Lifestyle focused lighting. Today over 75% of thelighting revenues come from LED. During the year we bagged projects from EESL andGovernment of Delhi worth over Rs 500 cr. During the year we launched innovative LED lampsTryca that gives 3 colours in one fixture and Quadra that has 4 different wattage andcolour settings in one lamp with a click of a switch. Aimed at a big replacement marketfor CFL your Company launched ‘Horizon' a LED lamp that could simply replaceexisting CFLs without wasting light. Coping with the high demand for LED lamps andfixtures your Company also enhanced its manufacturing capability from 5 lakhs lamps to 15lakhs lamps.

Continuing with the legacy of strengthening our brand year after year we have embarkedon landmark journey this year. New Brand positioning for all three key brands in theportfolio viz. Havells – Making A Difference Crabtree – What A Life andStandard – Young Energy were unveiled this year. We also launched campaigns forinnovative and premium products like Adonia Water Heater and Personal Grooming categorywhich makes them stand apart from competition. The Havells brand revived its Cricket ledmedia strategy with presence in major tournaments including IPL.

At the retail front we focused majorly on increasing visibility at the shop floorexpanding our base of Havells Galaxy and SIS outlets and deployment of innovative retailfixtures & display elements in the market.

In the recent years digital has emerged as the fastest growing medium and Havells hasleveraged it effectively to communicate with consumers and dealers. Along with this weestablished highly engaging social media presence for all 3 brands along with impactfulmarketing Campaigns. A robust Online Reputation Management System to address grievance andsocial listening has been introduced.

IT has been one of the core differentiators for Havells. In the fiscal 16-17 weequipped our employees and dealers with tools that helped them become more efficient andproductive. We launched Sales force Automation and

Office 365 for our employees that added business intelligence and helped them accessinformation on the go. For our Partners we introduced Distribution Management Systemincluding host of other tools to help them grow and further expand their business. Weoffered connected products for our consumers giving them an enriching experience. It willalso enable us to proactively track and resolve their concerns.


During the year your Company was adjudged as the best CSR activity Company in theNeemrana region. About 200 industries in Neemrana were reviewed on various aspects.

1. Mid-day meal was presented Commendation Card by Sh. Hem Singh Bhadana Food andSupply Minister of Rajasthan.

2. The Government of Rajasthan also conferred the CSR Excellence Award – 2017 for‘Clean Water and Sanitation'. The award was presented by Shri Rajpal Singh ShekhawatHon'ble Minister of Industries Government of Rajasthan along with Shri Ajitabh SharmaCommissioner Industries & Secretary CSR Government of Rajasthan and Shri RajeevSwarup Addl. Chief Secretary Micro Small & Medium Enterprises (MSME) Government ofRajasthan.


During the Financial Year 2016-17 the Company sold its remaining 20% stake in FeiloExim Limited (erstwhile known as Havells Exim Limited) to Shanghai Feilo Investment Ltd (asubsidiary of Shanghai Feilo Acoustics Co. Limited) at an agreed consideration of Euro2.60 million (equivalent to Rs. 18.95 crores).

As on 31st March 2017 your Company had 11 (Eleven) Subsidiary Companieswhereby 3 (Three) entities are registered in India and remaining 8 (Eight) are registeredoutside India. 5 (Five) of these are direct subsidiaries and rest 6 (Six) are step-downsubsidiaries. The consolidated profit and loss account for the period ended 31stMarch 2017 includes the profit and loss account for these 11 (Eleven) subsidiaries andthe Joint Venture Company for the complete Financial Year ended 31st March2017.

The 5 (Five) Direct Subsidiaries are –

1. Havells Holdings Limited based at Isle of Man. This entity is an SPV formed for thepurpose of holding investments and mobilizing funds for the 6 (Six) step-down subsidiariesof the Company

2. Havells Guangzhou International Limited based at China.

3. Promptec Renewable Energy Solutions Private Limited based at Bangalore. This entityis engaged in marketing and manufacturing of LED products including street lightingoffice lighting and Solar lighting.

4. Standard Electrical Limited based at Delhi.

5. Havells Global Limited based at Delhi.

The Board of Directors of the Company has by Resolution passed in its Meeting held on11th May 2017 given consent for not attaching the Balance Sheets of thesubsidiaries concerned.

The consolidated financial statements of the Company including all subsidiaries dulyaudited by the statutory auditors are presented in the Annual Report. The consolidatedfinancial statements have been prepared in strict compliance with applicable AccountingStandards and where applicable Listing Agreement and the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 as prescribed by the Securities and ExchangeBoard of India.

A report on performance and financial position of each of the subsidiaries associatesand joint venture Companies included in the consolidated financial statement is presentedin a separate section in this Annual Report. Please refer (AOC-1) annexed to the financialstatements in the Annual Report.

The annual accounts of the subsidiary companies and the related detailed informationshall be made available to Shareholders of the Company and its subsidiary companies uponrequest and it shall also be made available on the website of the Company The annual accounts of the subsidiary companies shall also be kept forinspection by any Shareholder in the head office of the Company and the respective officesof its subsidiary companies.


Your Company has a 50:50 joint venture in People's Republic of China with ShanghaiYaming Lighting Co. Ltd. under the name of Jiangsu Havells Sylvania Lighting Co. Ltd.(JV).

This Joint Venture Company was created with an objective to produce energy efficientlighting lamps and fixtures by using advanced technology knowhow and scientificmanagement techniques and sell it to Havells and its other affiliates. Both the partnershave made full investment in JV (USD 5.3 mn by each partner) as required by Joint Venturecontract for its registered capital.

In Financial Year 2016-17 JV achieved sales of US$ 16.2 mn against US$ 18.9 mnin 2015-16 and loss for the year was 3.4% as against net profit of 2.9% in 2015-16.

The Company along with its JV partner Shanghai Yaming Lighting Co. Ltd. has decided toterminate the Joint Venture and liquidate its business. It is expected that liquidationwould realize € 2.3 million for 50% stake held by Havells. The liquidation processcould require upto 9 months for execution.


During Financial Year 2016-17 the Company sold its remaining 20% stake in Feilo EximLimited (erstwhile known as Havells Exim Limited) an associate of the Company toShanghai Feilo Investment Ltd (a subsidiary of Shanghai Feilo Acoustics Co. Limited). Thefollowing entity ceased to be the associate of the Company:

- Feilo Exim Limited (Erstwhile known as Havells Exim Limited)

During the financial year ended 31st March 2017 the Company incorporated 2(Two) wholly-owned subsidiary companies in India and 1 (One) abroad namely

- Standard Electrical Limited

- Havells Global Limited

- Havells Guangzhou International Limited


Your Directors do not propose to transfer any amount to the general reserve and retainRs. 2430.87 crores in the profit and loss account.


Your Directors are pleased to recommend a final Dividend @ Rs. 3.50/- per equity sharefor the year 2016-17. The proposed dividend subject to approval of Shareholders in theensuing Annual General Meeting of the Company would result in appropriation of Rs. 263.22crores (including Corporate Dividend Tax of Rs. 44.52 crores). The dividend would bepayable to all those Shareholders whose names appear in the Register of Members as on theBook Closure Date.

The Register of Members and Share Transfer books shall remain closed from 23rdJune 2017 Friday to 30th June 2017 Friday (both days inclusive).


No material changes and commitments affecting the financial position of the Companyoccurred between the end of the Financial Year to which this financial statements relateand the date of this Report. (I) However in terms of the Employee Stock Purchase Schemesof the Company which are administered by Havells Employees Welfare Trust 300690 EquityShares of Rs. 1/- each were approved for grant on 11th May 2017 to theeligible employees which if exercised shall result in an equivalent no. of EquityShares of Rs. 1/- to be allotted to the eligible employees under the respective schemes. Asummary is given below:

No. of Shares Granted
Havells Employees Stock 140313
Purchase Plan 2014
Havells Employees Stock 150000
Purchase Scheme 2015
Havells Employees Stock 10377
Purchase Scheme 2016

(II) By 8th May 2017 the Company obtained requisite approvals from all therelevant authorities and concluded the transaction with regard to the purchase of consumerdurables business of Lloyd Electric and Engineering Limited alongwith related brand(s).


There was no change in the nature of business of the Company during the Financial Yearended 31st March 2017.


During the year Shri Avinash Parkash Gandhi (DIN: 00161107) an IndependentDirector ceased to be a Director of the Company effective 18th October 2016.The Board of Directors place on record its appreciation towards Shri Gandhi'scontributions during his tenure as an Independent Director of the Company.

The Board upon the recommendations of the Nomination and Remuneration Committee atits Meeting held on 18th October 2016 appointed Shri Vellayan Subbiah (DIN:01138759) as an Additional (Independent) Director. He holds office upto the date of thisAnnual General Meeting.

The Company has received a Notice from one of the Members in writing under theprovisions of section 160 of the Companies Act 2013 along with a deposit of

Rs. 100000/- proposing the candidature of Shri Vellayan Subbiah for the office ofDirector. The Company has received consent in writing from Shri Vellayan to act asDirector in Form DIR-2 and intimation in Form DIR-8 to the effect that he is notdisqualified u/s 164(2) to act as Director.

The Company has also received declaration from him that he meets the criteria ofindependence as prescribed u/s 149(6) of the Companies Act 2013. In the opinion of theBoard he fulfills the condition for appointment as Independent Director on the Board.

Shri Subbiah is eligible to be appointed as a Director of the Company and hisappointment requires the approval of Members at the ensuing Annual General Meeting.

Pursuant to the provisions of Section 152 of the Companies Act 2013 Shri Rajesh KumarGupta (DIN: 00002842) Whole-time Director (Finance) and Group CFO and Shri T. V. MohandasPai (DIN: 00042167) Non-Executive Non-Independent Director are due to retire by rotationat the ensuing Annual General Meeting and being eligible offer themselves forre-appointment.

The details of Directors being recommended for reappointment as required under the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 are contained in theaccompanying Notice convening the ensuing Annual General Meeting of the Company.

Appropriate Resolution(s) seeking your approval to the appointment/ re-appointment ofDirectors are also included in the Notice.


During the Financial Year 2016-2017 the Board of Directors of the Company met 6 (Six)times on 11th May 2016 23rd July 2016 3rd October2016 18th October 2016 17th January 2017 and 18thFebruary 2017.

Pursuant to the requirements of Schedule IV to the Companies Act 2013 and the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 a separate Meeting ofthe Independent Directors of the Company was also held on 11th May 2017without the presence of Non-Independent Directors and Members of the Management to reviewthe performance of Non-Independent Directors and the Board as a whole the performance ofthe Chairperson of the Company and also to assess the quality quantity and timeliness offlow of information between the Company Management and the Board.


Pursuant to Section 134(3)(c) of the Companies Act 2013 the Directors to the best oftheir knowledge hereby state and confirm that:

a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the Financial Year and ofthe profit of the Company for that period;

c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

d) the directors had prepared the annual accounts on a going concern basis;

e) the internal financial controls to be followed by the Company were laid down andsuch internal financial controls were adequate and were operating effectively; and

f) the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.


All the Independent Directors have submitted their disclosures to the Board that theyfulfill all the requirements as stipulated in Section 149(6) of the Companies Act 2013 soas to qualify themselves to be appointed as Independent Directors under the provisions ofthe Companies Act 2013 and the relevant rules.


In adherence of section 178(1) of the Companies Act 2013 the Board of Directors ofthe Company in its Meeting held on 22nd December 2014 approved a policy onDirectors' appointment and remuneration including criteria for determining qualificationspositive attributes independence of a director and other matters provided u/s 178(3)based on the recommendations of the Nomination and Remuneration Committee. The broadparameters covered under the Policy are – Company Philosophy Guiding PrinciplesNomination of Directors Remuneration of Directors Nomination and Remuneration of the KeyManagerial Personnel (Other than Managing/ Whole-time Directors) Key-Executives andSenior Management and the Remuneration of Other Employees.

The Company's Policy relating to appointment of Directors payment of Managerialremuneration Directors' qualifications positive attributes independence of Directorsand other related matters as provided under Section 178(3) of the Companies Act 2013 isfurnished in ANNEXURE – 1 and forms part of this Report.


Meeting the requirements of the statute and considering Board Performance Evaluation asan important step for a Board to transit to a higher level of performance the Nominationand Remuneration Committee has laid down a comprehensive framework for carrying out theevaluations prescribed in the Companies Act 2013 and the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.

The framework was developed to give all Board Members an opportunity to evaluate anddiscuss the Board's performance openly from multiple perspectives and enhance governancepractices within the Board. The framework describes the evaluation coverage and theprocess thereof.

Performance Evaluation of the Board and Committees

In respect of the Financial Year ended 31st March 2017 the Board conductedits self-evaluation that of its Committees and all of its individual Members. Some of theparameters which were taken into account while conducting Board evaluation were : BoardComposition in terms of its size diversity; Board processes in terms of communication;Disclosure of information such that each Board Meeting includes an opportunity forlearning about the organization's activities through various presentations made to theBoard on corporate functions business verticals etc.; Accessibility of the Product Heads/Factory Heads to the Board wherever required for informed decision-making.

The evaluation of each of the Board Committees were done on parameters such as whetherkey items discussed in the Committee are suitably highlighted to the Board whetherCommittee effectively performs support functions to the Board in fulfilling itsresponsibilities etc.

Performance Evaluation of Non-Independent Directors

The performance evaluation of the Chairman and the Non-Independent Directors werecarried out by the Independent Directors considering aspects such as Effectiveness asChairman in developing and articulating the strategic vision of the Company;Demonstration of ethical leadership displaying and promoting throughout the Company abehaviour consistent with the culture and values of the organisation; Contribution todiscussion and debate through thoughtful and clearly stated observations and opinions;Creation of a performance culture that drives value creation without exposing the Companyto excessive risk.

Performance Evaluation of Independent Directors

The performance evaluation of the Independent Directors was carried out by the entireBoard other than the Independent Director concerned taking into account parameters suchas – refrain from any action that may lead to loss of independence; refrain fromdisclosing confidential information including commercial secrets technologiesunpublished price sensitive information sales promotions plans etc. support to CMD andExecutive Directors in instilling appropriate culture values and behaviour in theboardroom and beyond well informed about the Company and the external environment inwhich it operates moderate and arbitrate in the interest of the Company as a whole insituations of confiict between Management and Shareholders' interest etc.

Evaluation Outcome

It was assessed that the Board as a whole together with each of its Committees wasworking effectively in performance of its key functions- Providing strategic guidance tothe Company reviewing and guiding business plans and major plans of action ensuringeffective monitoring of the Management and overseeing Risk Management Function.

The Board is kept well informed at all times through regular communication and meetsonce per quarter and more often during times of rapid growth or if Company needs meritadditional oversight and guidance. Comprehensive agendas are sent to all the Board Memberswell in advance to help them prepare and keep the Meetings productive. The Company makesconsistent efforts to acquaint the Board with the overall business performance coveringall Business verticals by way of presenting specific performance of each Plant (based onpredefined factory rating parameters) Product Category and Corporate Function from timeto time.

The performance of the Chairman was evaluated satisfactory in the effective andefficient discharge of his role and responsibilities for the day to day Management of thebusiness in line with the strategy and long term objectives.

The Executive Directors and Non-Executive Directors provided entrepreneurial leadershipof the Company within a framework of prudent and effective controls with a balanced focuson policy formulation and development of operational procedures.

It was acknowledged that the Management afforded sufficient insight to the Board inkeeping it up-to-date with key business developments which was essential for each of theindividual Directors to maintain and enhance their effectiveness.


The extract of the Annual Return in Form No. MGT – 9 forms part of the Board'sReport and is annexed herewith as ANNEXURE- 2.



In terms of the transitional provisions applicable to Statutory Auditors under theCompanies Act 2013 M/s S. R. Batliboi & Co. LLP Chartered Accountant (RegistrationNo. 301003E/ E300005) and M/s V. R. Bansal & Associates (Registration No. 016534N)were appointed as the statutory auditors of the Company for a period of 5 (Five) years and1 (One) year respectively in the last Annual General Meeting (AGM) of the Company held on13th July 2016.

Accordingly M/s V. R. Bansal & Associates shall be holding office as StatutoryAuditors only till the conclusion of the ensuing AGM of the Company.

Further as per provisions of Section 139(1) of the Act the appointment of S. R.Batliboi is subject to ratification by Members at every AGM. The certificate ofeligibility under applicable provisions of the Companies Act 2013 and corresponding Rulesframed thereunder was furnished by them last year towards appointment of a 5 (Five) yearterm.

As required by the provisions of the Companies Act 2013 their appointment should beratified by Members each year at the AGM. S.R. Batliboi & Co. LLP has confirmed thatratification of their appointment if made at the ensuing AGM shall be in accordance withthe conditions specified in the Act. Accordingly requisite Resolution forms part of theNotice convening the Annual General Meeting.


The observations of Statutory Auditors in their reports on standalone and consolidatedfinancials are self-explanatory and therefore do not call for any further comments.


As per Section 148 of the Companies Act 2013 the Company is required to have theaudit of its cost records conducted by a Cost Accountant in practice.

Pursuant to the provisions of Section 141 read with Section 148 of the Companies Act2013 and Rules made thereunder M/s Sanjay Gupta & Associates Cost Accountants (FirmRegn. No. 000212) were appointed as the cost auditors of the Company for the year ending31st March 2017.

The due date for filing the Cost Audit Report of the Company for the Financial Yearended 31st March 2016 was 10th July 2016 and the same was filed inXBRL mode by the Cost Auditor on 11th June 2016.

The Board in its Meeting held on 11th May 2017 appointed M/s Sanjay Gupta& Associates Cost Accountants as the cost auditors of the Company for the financialyear 2017-18.


Pursuant to the provisions of Section 204 of the Companies Act 2013 read withcorresponding Rules framed thereunder M/s MZ & Associates were appointed as theSecretarial Auditors of the Company to carry out the Secretarial Audit for the year ending31st March 2017.


A Secretarial Audit Report given by the Secretarial Auditors in Form No. MR-3 isannexed with this Report as ANNEXURE – 3. There are no qualificationsreservations or adverse remarks made by Secretarial Auditors in their Report. The Board inits Meeting held on 11th May 2017 appointed M/s MZ & Associates as theSecretarial Auditors of the Company for the financial year 2017-18.


During the Financial Year ended 31st March 2017 no Loan u/s 186 of theCompanies Act 2013 was made by the Company. The particulars of investments made andguarantees given by the Company under Section 186 are furnished in ANNEXURE – 4and form part of this Report.


The particulars of every contract and arrangement entered into by the Company withrelated parties referred to in sub-section (1) of section 188 of the Companies Act 2013including certain arm's length transactions under third proviso thereto are disclosed inForm No. AOC-2 in ANNEXURE – 5 and form part of this Report.


The Company is a regular payer of taxes and other duties to the Government. During theyear under review your Company paid Rs. 247.10 crores towards Income Tax (includingCorporate Dividend Tax) as compared to Rs. 221.71 crores paid during the last FinancialYear. The Company also paid Excise Duty of Rs. 450.70 crores Custom Duty Sales Tax &Service Tax of Rs. 665.60 crores totaling Rs. 1116.30 crores during Financial Year2016-17 as compared to

Rs. 944.94 crores paid during last Financial Year.


The Shareholders vide their Special Resolution dated 9th June 2014 passedby way of Postal Ballot have approved inviting/ accepting/ renewing deposits in terms ofthe provisions of Companies Act 2013 making the Company eligible for the same. Howeverthe Company has not accepted any deposits during the year under review.


Your Company over the years has embarked on the journey of social change throughinclusive growth. The CSR initiatives undertaken not only move hand in hand with the onesenvisioned by the Government but are also part of United Nations Sustainable DevelopmentGoals. These initiatives are steadily contributing to the overall growth of children andin effect the society and the nation at large.

In the year 2005 the Company started its flagship CSR program of serving mid-day mealto school children in Alwar district of Rajasthan. A humble beginning that started withserving 1500 children across 5 schools has today grown to serving over 58000 studentsacross 688 schools daily in the district.

Inculcating good hygiene habits and enhancing the lives of students has been anotherimportant pillar for your Company. In this regard the Company has built over 2000 toiletsin government schools of Alwar district Rajasthan. Further the Company has invested inbehavioral change sensitization workshops not only for the children but also for theschool teachers who can further educate parents and the public at large about theimportance of cleanliness and hygiene. These measures would go a long way in securing acleaner future and your Company's contribution towards "Swachh Bharat".

Your Company believes in Sustainable CSR that can help improve lives of students aroundthe country. Keeping this in mind the Haridwar plant initiated a noble idea almost 2 yearsback where they made benches out of wood that came as part of packaging with aluminumsheets. As on date the plant has donated over 470 benches and around 500 note books out ofscrap paper and donated them to government primary school at Haridwar.

Environment is another major area where the Company is working steadfast. In FinancialYear 2016-17 your Company has planted 10000 trees in Baddi in Himachal Pradesh and Alwar& Neemrana in Rajasthan. Your Company would take care of them for next few years untilthey can grow on their own. The Company has also undertaken the task of managing few parksin Baddi that could help maintain greenery save environment and help people appreciatenature's bounty.

Further the Board of Directors have also adopted the CSR Policy of the Company asapproved by the Corporate Social Responsibility Committee which is also available on thewebsite of the Company at The disclosures as per Rule 9 of Companies(Corporate Social Responsibility Policy) Rules 2014 are annexed herewith as ANNEXURE– 6 to this Report in the prescribed format.


As at 31st March 2017 the Audit Committee of the Board of Directors of theCompany comprised of 3 (Three) Members namely Shri Sunil Behari Mathur Shri Vijay KumarChopra and Shri Surjit Kumar Gupta majority of them being Independent Directors exceptShri Surjit Kumar Gupta who is a Non-Independent Non-Executive Director. Shri SunilBehari Mathur an Independent Director was the Chairperson of the Audit Committee. It maybe noted that on 4th April 2017 Shri Sunil Behari Mathur stepped down fromthe Audit Committee and in his place the Board by way of Resolution passed by circulationon 13th April 2017 inducted Shri Surender Kumar Tuteja an IndependentDirector as the Member of Audit Committee and also appointed him as the Chairperson ofthe Audit Committee.

The Board accepted the recommendations of the Audit Committee whenever made by theCommittee during the year.


Havells has established a robust Enterprise Risk Management Framework based on theinternationally accepted COSO Model driven by The ERM Council comprising of the leadershipteam which reports to the Enterprises Risk Management Committee of the Board.

The Council regularly meets to identify and assess not only the status of existingrisks and progress of their risk mitigation activities but also proactively draws outstrategies for any prospective Strategic Operational Compliance or Financial Reportingrisks in consultation with the various stakeholders. The Management has also recentlyimplemented SAP GRC software to further embed a culture of risk management across theorganization by leveraging in best in class technology.


The Risk Management and Governance Department of the Company has implemented a strongInternal

Financial Controls (IFC) Framework as per the ICAI regulations and guidelines. Risk andControl Matrices (RCMs) have been developed for all the business processes and keycontrols have been tested for their efficiency and effectiveness during the fiscal year.

Moreover the testing of key controls was also carried out independently by theStatutory Auditors of the Company as mandated under the provisions of the Companies Act2013. In the opinion of the Board the existing internal financial controls framework isadequate and commensurate to the size and nature of the business of the Company.


Prior to the statutory mandate the Company has had in place a composite Policy"Idea & Satark" whereby "Idea" seeks to promote a culture ofinnovative thinking and creativity in all aspects of business – technicalnon-technical commercial administrative processes cost saving etc. that may benefitthe Company; and "Satark" (alert/ vigilant) functions as a Whistle Blowingmechanism empowering any person associated with the organization to bring to theattention of the Management any irregularity that he/ she may notice.

It may be noted that the Board of Directors in its Meeting held on 11thMay 2017 bifurcated the aforesaid composite Policy into two separate policies as"Idea Policy" and "Satark Policy".

Under the "Satark" Policy a forum is available to the employees and anyperson associated with the organization allowing him/ her to bring to Management andDirectors any fraud irregularity wrongdoing etc. The forum ensures confidentiality ofthe Whistle-blower subject to the rights of the person against whom the grievance is made.This forum provides the whistle-blower access to the Chairman of the Audit Committee.


There was no significant and material order passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future.


At Havells we consider our employees as the most valuable resource and ensurestrategic alignment of Human Resource practices to business priorities and objectives. Ourconstant endeavour is to invest in people and people processes to improve human capitalfor the organization and service delivery to our customers. Attracting developing andretaining the right talent will continue to be a key strategic imperative and theorganization continues its undivided attention towards that. We would like to take thisopportunity to express appreciation for the hard work and commitment of the employees ofthe Company and look forward to their continued contribution.

Havells strives to provide a conducive and competitive work environment to help theemployees excel and create new benchmarks of productivity efficiency and customerdelight. At Havells the Human Resource agenda continues to remain focused on reinforcingthe key thrust areas i.e. being the employer of choice building an inclusive culture anda strong talent pipeline and building capabilities in the organization. To maintain itscompetitive edge in a highly dynamic industry we recognize the importance of having awork force which is consumer-focused performance-driven and future-capable. In keepingwith this a number of policies and initiatives have been drawn up like regular employeeengagement surveys focusing on objective performance management system with key resultareas and performance indicators. These initiatives ensure a healthy balance betweenbusiness needs and individual aspirations.

At Havells we ensure that there is full adherence to the code of ethics and fairbusiness practices. Havells is an equal opportunities employer and employees are evaluatedsolely on the basis of their qualifications andperformance.Weprovideequalopportunityinallaspects of employment including recruitmenttraining work conditions career progression etc. that reconfirms our commitment thatequal employment opportunity is a component of our growth and competitiveness. FurtherHavells is committed to maintaining a workplace where each employee's privacy and personaldignity is respected and protected from offensive or threatening behaviour includingviolence.


The Company in its endeavour for zero tolerance towards sexual harassment at theworkplace has in accordance with The Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 adopted the "Nirbhaya Policy". An InternalComplaints Committee has been constituted under the policy which provides a forum to allfemale personnel to lodge complaints (if any) therewith for redressal. The Committeesubmits an Annual Report to the Audit Committee of the Board of Directors of your Companyon the complaints received and action taken by it during the Financial Year.

During the year no complaint was lodged with the Internal Complaints Committee (ICC)formed under Nirbhaya Policy. In order to fulfill the desired utility of the Committee andmake the Nirbhaya Policy meaningful the Committee meets at specified intervals to takenote of useful tools mobile applications media excerpts etc. that enhance security offemale employees.

The same are circulated within the organization to encourage general awareness. In itsendeavour to ensure the spirit of law during the Financial Year 2016-17 the ICCcontinued to undertake interactive sessions from time to time. The interactions wereprimarily aimed at understanding as to how comfortable female employees are working in theorganisation especially from safety point of view and how forthcoming would they be inraising their voice if they are put in an undesirable situation.


Details pursuant to section 197(12) of the Companies Act 2013 read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 form part of thisReport and are annexed herewith as



The Company has in place 3 (Three) employee benefit schemes namely Havells EmployeesLong Term Incentive Plan 2014 (LTIP 2014) Havells Employees Stock Purchase Scheme 2015(ESPS 2015) and Havells Employees Stock Purchase Scheme 2016 (ESPS 2016).

All these benefit schemes are administered by Havells Employees Welfare Trust under thesupervision of the Nomination and Remuneration Committee. Promoters IndependentDirectors Directors directly or indirectly holding 10% or above of the equity sharecapital of the Company Employees not residing in India or NonResident Indians (NRIs) arenot eligible for the grant of options/ issue of shares under any of the Schemes. TheCompany has received a certificate dated 21st April 2017 from the Auditors ofthe Company that the Schemes have been implemented in accordance with the applicable SEBIGuidelines and the Resolutions passed by the shareholders dated June 9 2014 December 42015 and July 13 2016 in respect of LTIP 2014 ESPS 2015 and ESPS 2016 respectively.

The Certificates would be placed at the Annual General Meeting for inspection byMembers. There has been no material change in any of the subsisting Schemes. Disclosurespursuant to SEBI (Share Based Employee Benefits) Regulations 2014 in respect of LTIP2014 ESPS 2015 and ESPS 2016 as at 31st March 2017 are available on thewebsite of the Company at http://www.


Corporate Governance Rating

Havells has in its endeavour to reinforce and test its commitment for CorporateGovernance opted during the reported financial to go for a Corporate Governance Ratingfrom CARE. CARE has assigned CARE CGR 2+ [Two Plus] Rating to the CorporateGovernance practices of the Company. The Corporate Governance Rating reflects thecompany's transparent ownership structure qualified and experienced Board of Directorssatisfactory functioning of various committees of the Board presence of prudent riskmanagement policies and elaborate internal audit function. Furthermore the rating derivescomfort from elaborate communications and disclosures to shareholders effective financialmanagement and the Company's compliance with statutory and regulatory requirements.

Solar Energy Grading

During the year the Company also launched solar solutions including Solar powergenerating systems Home lighting kits Solar Pumps Solar street lights etc. CARE hasassigned a ‘SP1A' grading to the Company upon its request for assigning SolarEnergy Grading (Solar Integrator (PV)) under the Ministry of New and Renewable Energy(MNRE) scheme for accreditation of Channel Partners. The Solar Energy Grading indicates‘Highest' performance capability and ‘Highest' financial strength of the gradedentity.

CARE has yet again assigned an AAA [Triple A] rating to the long-term facilitiesof your Company during the current financial year. This rating is applicable to facilitieshaving a tenure of more than one year. Instruments with this rating are considered to havethe highest degree of safety regarding timely servicing of financial obligations.

CARE has also reaffirmed the CARE A1+ [A One Plus] rating assigned to theshort-term facilities of your Company. This rating is applicable to facilities having atenure upto one year. Instruments with this rating are considered to have very strongdegree of safety regarding timely payment of financial obligations.

CARE has also assigned a credit rating of CARE A1+ [A One Plus] to theCommercial Paper programme of the Company for a limit of Rs. 150 crores (Rupees One FiftyCrores Only).

ICRA Ratings

During the year ICRA has reaffirmed the long-term rating at [ICRA] AA+(pronounced as ICRA double A plus) and short-term rating at [ICRA] A1+ (pronounced as ICRAA one plus) for the Line of Credit of Havells India Limited.


The Company has acquired a number of international certifications like BASEC KEMATV Rheinland and CB for its various products to expand its reach in internationalarena.

The team has also initiated New market specific certification process for TIS (ThailandIndustrial Standards) for RCBO CB certification for Fans SABS Approval- AB Cable –South Africa King Saud University Approval – Panel Wire – KSA (WIP Stage) G-Mark: Certification : Middle East (EWA range) CE for consumer lighting


Your Company upholds the standards of governance and is compliant with the CorporateGovernance provisions as stipulated under SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 in both letter and spirit. The Company's core values ofhonesty and transparency have since its inception been followed in every line of decisionmaking. Setting the tone at the top your Directors cumulatively at the Board leveladvocate good governance standards at Havells. Havells has been built on a strongfoundation of good corporate governance which is now a standard for all operations acrossyour Company.

Parameters of Statutory compliances evidencing the standards expected from a listedentity have been duly observed and a Report on Corporate Governance as well as theCertificate from Statutory Auditors confirming compliance with the requirements of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 forms part of theAnnual Report.

Further the Management Discussion and Analysis Report and CEO / CFO Certificate asprescribed under SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015are also presented in separate sections forming part of the Annual Report.


Your Company is driven by principles of sustainability incorporating environmentemployees and society aspects in all our activities. We are focused on employeewell-being developing safe and efficient products minimizing environmental impact of ouroperations and products and minimizing the impact of our operations on society.Environmental Health and Safety (EHS) aspects of our operations are taken seriously andEHS management system are implemented at most of our manufacturing plants. Our managementsystems are based on Integrated Management system encompassing components of IS O 9001ISO 14001 and ISO 18001 to ensure aspects of environment health and safety are addressedin an integrated manner. In addition 6 out of 12 plants have implemented Energy ManagementSystem as per ISO 50001. These management systems are audited by third-party certificationagencies.

Employees' well-being and safety is of paramount importance to us. Creating a safe andhealthy work environment is the most material issue in our operations. We are committed toour objective of ‘zero accidents' and the focus is to continuously improve our healthand safety performance. Our operations are comparatively safe and do not use significantamount of hazardous materials. All our employees are provided with relevant personalprotective equipment according to the nature of work handled. They are also impartedrelevant training on safety and handling of hazardous materials. We have a stringentmechanism to analyze incidents and accidents to identify corrective and preventiveactions. Health assessment and periodic rotation of employees exposed to dust fumes andhazardous materials is done to eliminate any long terms impacts.

Your Company understands that products it manufactures and sell have a significantimpact on the society and the environment. We are constantly working towards minimizingthe impact of our products throughout its life cycle starting from use of material andenergy during manufacturing process to consumer safety and disposal after use. The productlife cycle approach is integrated with our product development and as a result more than70% of our product range is energy efficient saving significant amount of energy duringuse. We have made significant improvement in reducing the hazardous materials andimproving recyclability of materials used.

At our plants resource conservation and energy efficiency is an important area in ouroperations. Your Company has integrated renewable energy by implementing captive solarpower plants at our units in Faridabad and Alwar reducing our dependence on gridelectricity and reducing our Green House gas emissions. Use of Bio gas bio fuels andcleaner fuels like PNG is an integral part of our plant operations. Your Company has madesignificant progress on water conservation and rain water harvesting initiatives. SGS aglobal certification agency audited our initiative and certified us as a ‘WaterPositive' company i.e. our contribution to ground water recharge exceeds out waterconsumption. This achievement also makes us one of the very few companies in India toachieve this status.


During the year the Company undertook several initiatives to help the business achieveits strategic goals. With the objective of First Mover and enhancing in-house R&Dcapabilities the Company is investing in world class infrastructure and test laboratoriesat all plant locations. The Company has strong focus on in-house research &development and promotes culture for innovation. Company's CRI (Centre for Research andInnovation) team focusses on continuous and sustainable product innovations workingacross the product lifecycle aspects including design development manufacturing and usephases.

Havells is coming up with state of the art Lab Facility with initial investment ofapproximately Rs. 4 Crores at Noida.

During the year the R&D activities continued to focus on developing intelligenteco-friendly and energy efficient products as well as extending the range of existingproducts catering to Low cost products to niche premium segment.

There is an increasing focus on improving the co-relation between virtual (CAE) andmanufacturing so as to reduce the number of trials in the development cycle.

As a result Company has many firsts to its name in the FMEG sector such as being thefirst Company to offer 5-star energy efficient fans in India the green CFL of thecountry. Now the Company has also forayed into FMCG sector with acquisition of Lloyd. TheCompany has Filed 79 IPRs to fuel growth journey in Financial Year 2016-17 for itsinnovations throughout the year. With an eye on the future technology trends manyadvanced engineering study projects are being undertaken to further build on the Company'sengineering capabilities.



Pursuant to the provisions of Section 124(5) of the Companies Act 2013 yourCompany has transferred Rs. 361985 and Rs. 254090 during the year to the InvestorEducation and Protection Fund. These amounts were lying unclaimed/ unpaid with the Companyfor a period of 7 (S even) years after declaration of Dividend for the Financial Yearended 2008-09 and declaration of Interim Dividend for the Financial Year ended 2009-10respectively.


In pursuance of the provisions of Section 124(6) of the Companies Act 2013 and theIEPF (Accounting Audit Transfer and Refund) Rules 2016 notified on 7thSeptember 2016 in addition to the transfer of amounts of unclaimed/ unpaid dividend for2008-09 and 2009-10 (Interim) the underlying shares are also due for transfer to the IEPFAuthority in case the dividend of further 7 (Seven) continuous years i.e. from 2009-10onward and from 2009-10 (Interim) onward is also unclaimed in those cases.

This was in pursuance of the recent enforcement of section 124(6) of the Companies Act2013 and the Investor Education and Protection Fund Authority (Accounting Audit Transferand Refund) Rules 2016fi which requires every Company to mandatorily transfer to IEPFthe underlying shares in respect of which unpaid/ unclaimed dividend has been transferredto IEPF and for which the dividend has still remained unpaid or unclaimed for aconsecutive period of next 7 (Seven) years.

Individual reminders have been sent to concerned Shareholders advising them to encashtheir dividend and the complete List of such Shareholders whose Shares are due fortransfer to the IEPF is also placed in the Unclaimed Dividend Section of the InvestorSection on the website of the Company at http://

In terms of IEPF (Accounting Audit Transfer and Refund) Amendment Rules 2017 whichbecame effective from 28th February 2017 the last date of transfer of sharesdue on commencement of IEPF Rules is extended to 31st May 2017. Accordinglythe Company is in the process of taking steps to complete the transfer of shares into thedemat account of the IEPF Authority.


During the year 2014 the Company's Equity Shares having nominal value of Rs. 5/- eachwere sub-divided into 5 Equity Shares of the nominal value of Rs. 1/- each and the newShares were credited into demat accounts of Shareholders (who held their shares indematerialised form) and physical Share Certificates were despatched to those Shareholders(who held their shares in physical form) as per their entitlement on the record datedecided for that purpose at their address registered in the Company's records.

However out of those despatched in physical form a few had returned undelivered.Thereafter Company made various attempt(s) at the addresses available with the Company toensure that the rightful owners receive their share certificates. With the exception of afew others still remained undelivered and have been lying with the Company since.

Accordingly in terms of Regulation 39(4) read with Schedule VI to the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 which provides the manner ofdealing with such shares that remain unclaimed with the Company the Company during theyear ended 31st March 2017 sent 3 (Three) Reminders to the concernedShareholders whose Share Certificates were lying unclaimed with it and is in the processof transfer of these shares into the Unclaimed Suspense Account.


The equity shares of the Company are listed on the National Stock Exchange of IndiaLimited (NSE) and BSE Limited (BSE). The listing fee for the year 2017-18 has already beenpaid to the credit of both the Stock Exchanges.


The information pertaining to conservation of energy technology absorption foreignexchange earnings and outgo as required under Section 134(3)(m) of the Companies Act 2013read with Rule 8(3) of the Companies (Accounts) Rules 2014 is furnished in ANNEXURE- 8and forms part of this Report.


Havells is privileged to be among the top 500 listed companies in the country. Thisbrings us within the ambit of Business Responsibility Report (BRR) as required byregulation 34 of the SEBI Listing Regulations 2015. The BRR aims at describing theinitiatives taken by the company in discharging its responsibilities from anenvironmental social and governance perspective. SEBI exempts companies which have beensubmitting

Sustainability Reports to overseas regulatory agencies/ stakeholders based oninternationally accepted reporting frameworks from preparing a separate BRR and furnishthe same report alongwith details of the framework under which Sustainability Report isprepared.

The Company has been annually publishing its Sustainability Report as per G4 guidelinesof the Global Reporting Initiative. Our Sustainability Report has been assessed andassured by KPMG. In this Annual Report we are presenting the requisite mapping ofprinciples between the Sustainability Report and the Business Responsibility Report asprescribed by SEBI. Our comprehensive Sustainability Report is available on the website ofthe Company


The Board places on record its appreciation for the continued co-operation and supportextended to the Company by its customers which enables the Company to make every effort inunderstanding their unique needs and deliver maximum customer Satisfaction. We place onrecord our appreciation of the contribution made by the employees at all levels whosehard work co-operation and support helped us face all challenges and deliver results.

We acknowledge the support of our vendors the regulators the esteemed league ofbankers financial institutions rating agencies government agencies stock exchanges anddepositories auditors legal advisors consultants business associates and otherstakeholders.

For and on behalf of
Board of Directors of Havells India Limited
Anil Rai Gupta
Noida May 11 2017 Chairman and Managing Director