MANAGEMENT DISCUSSION AND ANALYSIS REPORT
1. ANALYSIS OF CURRENT YEAR RESULTS
1.1 Revenue
Revenue for the year 2008 was Rs.508.56 Crs. as against-Rs. 430.33 Crs. which is due to
improved realization, channel mix and by optimizing investments in the brand building
arena.
1.1.1 Break up of Revenues by Business Segments'
Detergents & Cleansers business accounted for 64% of total turnover, while Body
Care business clocked 23% of turnover and the balance 13% was from 'others' comprising
Toothpaste, HairCare and Zeolite.
1.2 Profit Margin
Profit Before Tax and Extraordinary items for the year stands at Rs.4.19 Crs. as
compared to Rs.14.52-Crs.
1.3 Costs & Expenses
1.3.1 Cost of Sales
The increase in cost of sales is" mainly due to high input price for all the
segments during 2nd and 3rd quarter of the year as a consequence of
unprecedented increase in the price of crude oil and vegetable of. Consumer price for the
products were taken-up in line with competition, however entire increase in input cost
could not be passed to the consumers.
1.3.2 Personnel Costs
The increase in the Personnel costs is mainly due to additional provisions made towards
retiral benefits (viz. Leave Salary etc) in line with revised'AS-15.
1.3.3 Freight and handling cost
the cost increase is on account of higher sales coupled with upward revision in the
transportation cost due fuel costs increase.
1.3.4 Interest
Interest cost have shown an increase due to the higher borrowings and the firming of
the interest rates during the year. Efforts are being made to optimize the interest costs
1.4 Tax Expenses
In view of carry forward Income tax loss no provision for income tax has been made. Tax
Expenses represents Minimum alternative Tax.
2. Financial Status
2.1 Net Worth
Net .worth of the Company has increased by Rs.3.72 Crs. during the year.
2.2 Debts
Average debt continued to show an increasing trend due to the high working capital
requirements.
2.3 Fixed Assets & Capital Expenditure
The Gross Fixed Assets has marginally increased due to the selective investments in
plant & machinery for upgradations in addition to computer hardware updations.
2.4 Current Assets
2.4.1 Inventory
Inventory of Raw materials shows significant increase due to strategic buying of
certain key materials and overall increase in the price. Finished Goods recorded increase
which is commensurate with the increase in the sales.
2.4.2 Sundry Debtors
The increase in the level of sundry debtors is attributed to higher receivables.-
2.4.3 Net Current Assets The increase in the net current assets to Rs.265.74 Crs. is on
account of enhanced business.
3. INTERNATIONAL OPERATIONS
Export Turnover has registered a substantial growth from Rs.5.48 Crs in 2007 to Rs.
10.98 Crs. in 2008.
4. MANAGEMENT RESPONSIBILITY STATEMENT
The Financial Statements prepared are in conformity with the Indian Accounting
Standards and Generally Accepted Accounting Principles (GAAP) in India. The above
statement fully meet the requirements of Companies Act, 1956.
The Management of Henkel India Ltd. accepts responsibility for the integrity and
objectivity of these financial statements, as well as for estimates and judgment, relating
to matters, not concluded by the year end. The • management believes that the
financial statements reflect fairly the form and substance of transactions and reasonably
present the Company's financial condition and results of operations.
To ensure the above, the Company has installed internal control system across the
organisation which is reviewed, evaluated and updated on a regular basis. Periodic
Internal Audits have been conducted to ensure that the Company's established systems,
policies and procedures have been followed.
M/s CNGSN & Associates, Chartered Accountants, Chennai have audited the Financial
Statements enclosed. M/s Henkel AG & Co. KGaA has laid out procedures to ensure that
the powers vested in the executive management are used with care and responsibility.
The Audit Gommittee periodically meets the Chief Financial Officer, the Internal
Auditors and the Statutory Auditors , . to review, the manner in which they are performing
their responsibilities and to discuss audit programme and progress therein, internal
controls and financial reporting issues. To ensure complete independence, Statutory
Auditors, Internal Auditors / representatives of Internal Audit Department have full and
free access to the members of the Audit Committee to discuss any matter of substance
The Company has adequate internal control procedures commensurate with its size and
nature of business. The internal control manual defines detailed procedures and
guidelines, authorisation and approval procedures'. Audit Committee meets on a regular
basis where the Internal Audit Reports are tabled and detailed discussion take place for
implementing corrective actions and recommendation of the Audit Report.