BSE: 517385 | NSE: SYMPHONY | ISIN: INE225D01027
Market Cap: [Rs.Cr.] 7,766.63 | Face Value: [Rs.] 2
Industry: Domestic Appliances
Your Board of Directors present 27th Annual Report along with consolidated andstandalone audited annual accounts for financial year ended June 30, 2014.
1] A) Highlights of Results ( hin Lac)
|Revenue from Operations & Other Income||46,637||32,512||54,650||39,473|
|Profit before Financial Charges,||13,678||9,385||13,990||9,558|
|Depreciation & Taxation|
|Less: Financial Charges||5||32||5||32|
|Less: Depreciation & Amortisation Expenses||115||131||382||394|
|Profit before Tax||13,558||9,222||13,603||9,131|
|Less: Income Tax||3,662||2,522||3,676||2,522|
|Less: Deferred Tax Liability||9||(4)||8||151|
|Less: Provision for tax of earlier years||-||436||(726)||436|
|Less: Loss from discontinuing operations||-||-||73||11|
|Profit after Taxation||9,887||6,268||10,572||6,011|
|Add: Balance as per last year Balance Sheet||12,908||10,300||13,573||11,222|
|Amount available for Appropriation||22,795||16,568||24,145||17,233|
|Transfer to General Reserve||-||1,000||-||1,000|
|Proposed Dividend & Dividend Tax||5,320||2,660||5,320||2,660|
|Balance carried to Balance Sheet||17,475||12,908||18,825||13,573|
B) Other Key Financials as on June 30, 2014 Consolidated Financial Results
Your Company with its subsidiaries have global presence and to view overallcomprehensive performance of the Company, the Company has consolidated its accounts withthe accounts of its subsidiaries in compliance with applicable accounting standard. Theconsolidated total revenue stood at RS54,650 lac which grew by 38% as compared to theconsolidated total revenue of previous year. The profit after tax touched to RS10,572 lacas compared to RS6,011 lac in the previous year recording an increase of 76%.
The highlights of the key financials are as under:-
(Rs in lac except per share data)
|Equity Share Capital||700||700|
|Book Value Per Equity Share||67||79|
|Earning Per Share (EPS)||28.27||30.23|
|Investments / Corporate Funds||19,474||19,474|
|Contribution to Exchequer||11,857||13,560|
The Board has recommended final dividend of RS1 1 (550%) per equity share having facevalue of RS2 each for the financial year ended on June 30, 2014, payable subject toapproval at ensuing annual general meeting. Your Board of Directors had declared maideninterim dividend of RS2 (100%) per equity share having face value of RS2 each. Thusaggregate dividend for the year ended on June 30, 2014 on approval at ensuing annualgeneral meeting would be RS13 (650%) per share as against RS6.50 (325%) for the previousyear.
The total payout including final dividend as above for the year 2013-14 (includingdividend distribution tax) would be RS5,320 lac (previous year RS2,660 lac) translatinginto a dividend payout of 50% (previous year 44%) on consolidated net profit.
Symphony believes in maintaining a fair balance between dividend distribution and cashretention. Symphony has been conscious of the need to sustain stability in its dividendpayout. Symphony has decided to have a dividend payout of atleast 50% of profits(including dividend distribution tax) subject to business contingency or unforeseen cashrequirements. Cash retention is required for future growth, probable acquisitions and tomeet any unforeseen contingency. The Company has also a recent practice of paying interimdividend.
3] Operations Review
Operating in policy log jam prevalent during the previous year and uncertain politicalenvironment resulted into absence of vibrant growth inducing policies placing nation'seconomic growth on the backburner. Regardless of adverse external environment coupled withrising cost, stubborn inflation and policy-jam, all business verticals of your Companyrecorded improved numbers. Your Company on standalone basis posted a gross turnover ofRS45,124 lac in 2013-14, a growth of 46% over RS30,836 lac in 2012-13.
During the year under review, your Company continued to develop its nationwide presenceby expanding network of its distributors, dealers in more and more towns throughout thecountry with suitable warehousing facilities in all strategic places in different regionsof the country. Your Company continues to strengthen its operating structure of itsmarketing function to pierce into the immense latent regions within the country.Correspondingly, your Company is also intensifying 'After Sales Service', through servicefranchisees with 'nation wide Customer Care Number' to touch to core locations of thenation offering well-timed and resourceful after sales service.
Persistent innovative steps by your Company enabled it to offer extensive range of aircoolers having varieties of features. Presently, your Company has 23 models of air coolersto outfit the necessities of variety of customers in different provinces of the nation.
To stimulate encouraging prospects, your Company initiated aggressive advertisement andpromotional campaigns over print, electronic media and digital with expanded manpower.Your Company is optimistic to tap the enormous opportunity of rural and urban markets.
Air coolers - Domestic Operations During the year under review, your Companystrengthened its leadership position in air cooler industry by consistent growth both interms of sales volume and sales revenue.
Symphony continued its focus on new product development, strategic planning inter-aliaconsisting of superior quality, penetration in new markets, enlarging market network,prompt and efficient 'after sales service', promotion of brand image, which added momentumto its growth journey. Well planned and effective marketing strategies have made 'Symphonycooler' a much preferred choice in competitive environment. During the year 'BTL' (belowthe line) activities were successfully introduced by your Company as measure of brandpromotion.
Your Company is constantly evaluating options to enhance its capacity at presentlocations and also by tying up with new original equipment manufacturers at strategiclocations in order to keep pace with growing demand. Numerous Research & Developmentinitiatives are undertaken by your Company for improved and new models with added featuresto meet individual choice of the customers at large. Symphony in the year 2013-14,launched 8 new models of 'air coolers with advanced features. To cater diverse needs forair coolers, your Company along with its subsidiaries offers entire range of air coolingsolutions effectively for all classes of customers, manufactured either in house or outsourced.
During the year, your Company penetrated into new markets of North Eastern states ofIndia with robust focus on evolving present markets with more branches and warehousingfacilities. Your Company's focus on quality products with power saving technology has beenvital strengths. The very allure of the Indian air cooler market is leading to steepcompetition among the prominent companies which have been encountered by your Company bytactical advertising and promotional drive to prevail upon the consumers by offeringgreater value for every rupee spent.
Your Company also predicts substantial potential in the country for the air coolersmeant for central air cooling solutions, manufactured by its step down subsidiary company,Impco S. de R.L. de C.V., Mexico as its products are fairly well received in the domesticmarket.
Your Company is confident to continue its growth journey with extensive market networkas well as enlargement of dealer network reinforced by competent strong marketing team ofprofessionals in India and abroad.
Again Symphony sustained its position at number one in modern trade business withamazing growth compared to last year and demonstrated to be a prominent air cooler brandin air cooler trade. The Company became more aggressive in top line products sales atstores, B2B business, e-commerce business, TV shopping business and regional retail salesbusiness.
The modern trade channel continued to be a growth engine to the Company's business asit energies growth by healthier shopping experience and greater visibility in the markets.Your Company continued to widen its modern trade market network to penetrate with betterspace. Your Company now enjoys substantial portion of the sales through organised retailchain in the country. Your Company believes that the Modern trade is rising at a fasterclip and is enthusiastic to exploit its potentiality.
Central Air Cooling Solutions
Central Air Cooling Solutions business of the Company though still in nascent stage hadbeen able to strengthen its operations. The focus was to have adequate representation andtherefore the required manpower structure has been employed. Subsequently, the aim is tocreate a base of dealer network across the country. The dealer network is increased bymore than 75% indicating the confidence now the business drives amongst the trade.
Your Company has made some major breakthroughs in terms of entry into prestigiousclientele covering various customer segments like auto industry, packaging, places ofworship, FMCG, paint industry, logistics, sugar mills, hospitals, distilleries, railways,commercial applications etc. There were repeat orders from some customers which establishtheir trust in the Company and its products.
Your Company has made inroads with approvals from some key opinion makers like HVACconsultants and big HVAC contractors.
During the year under review, your Company witnessed many business developmentalactivities like advertisement in leading HVAC journals, newspapers, participation inselected exhibitions with excellent response. An innovative digital campaign was alsoinitiated which was successful.
Air coolers - Overseas Business
Revenues from overseas business during the year under review crossed all previous peaksand touched to RS5,663 lac as against RS3,533 lac in 2012-13, an overall rise of 60%.Presently, your Company continues to export in about 60 countries and with vastopportunities yet to be accomplished.
In the year 2013-14, exports of your Company to European countries grew handsomely.However, external challenging conditions prevalent due to political turmoil andinstability in key operational countries of Middle East and North African
Region led to demand contraction coupled with inflationary trend. Although, thebusiness of your Company continued to sustain and the operating margins of exportsimproved fairly during the year reflecting the strength of the products and its brand inthe overseas markets. External conditions are expected return to normalcy and your Companyforesees to grow further
The Company continued its focus on strategic and select markets. Your Company has alsoorganised warehouse facilities in Europe to boost presence in European countries. YourCompany also continues its focus on exports primarily to MENA region, Latin America etc.Your Company continues to have numerous international quality certifications like GS, CE,SASO, NOM, KUCAS, etc. which contribute access to other countries as well.
SEZ Unit at Sachin, Surat in Gujarat
In the year 2013-14, the SEZ unit of the Company situated at Sachin, Surat, surpassedproduction of more than one lac air coolers of different models. This is the highest everproduction in a single year since its inception. The SEZ unit enjoys number of benefits,both direct and indirect, including 100% exemption of export profits.
4] Overseas Operations - Impco S. de R. L. de C.V, Mexico
Impco S. de R. L. de C.V, (IMPCO), Mexico, step down subsidiary of the Companymanufactures and markets a variety of coolers. For the period under review, Impco hasshown improved efficiency and registered encouraging results. At Impco, improvement is anon-going exercise to exploit its large manufacturing capacity. Impco has adopted '5-S'system to enhance its operational processes and efficacy.
As a measure of tax reforms undertaken by Mexican government, IETU tax has beenabolished w.e.f. January 01, 2014, consequently, the deferred tax liability amounting toRS727 lac, created in the books of accounts of Impco is no longer required and the samehas been written back.
Impco serves markets in Mexico and USA and enjoys excellent business tie ups with manyprominent modern retails chains like Wal-mart, Sears, Home Depot, Lowes, Famsa, andCostco. This complements the presence of your Company in the global arena.
In June 2014, the Perry Johnson Registrars, Inc, had conducted second ISO 9001:2008surveillance audit at IMPCO, Mexico and Mr. Enrique Sepulveda, from the external agencyinformed that IMPCO's processes were in compliance with the Quality Management Systems.
5] Awards & Recognitions
Your Company's products and performance continues to be recognised and appreciatedacross the country and the globe as well. During the year, your Company has beenrecognised and bestowed with followings awards:
(i) 'Best Presented Annual Report in the Manufacturing Sector' by the South AsianFederation of Accountants for your Company's Annual Report of 2011-12 for itsTransparency, Accountability and Governance.
(ii) 'Quality Mark 2014' award for Best Quality Organisation in the Home Appliancescategory by the Quality Mark Trust.
6] Management Discussion and Analysis Report
Pursuant to clause 49 of listing agreement, management discussion and analysis reportfor the year is annexed to this annual report.
7] Corporate Governance
Your Company has inculcated a strong culture of values, ethics and integrity and hasalways upheld an integrated way of thinking via obligation of action. The Company strivesto be a sustainable and trusted organisation as it believes that sustained governance isthe corner stone in building and upholding interactions with all its stake holders. TheCompany's relationship with its investors is a key component of Corporate Governance. Anongoing interaction with investors and communicating information about the Company in aconsistent and credible way aids to establish a transparent relationship. It meticulouslypursues a policy of 100% compliance with all statutory requirements and has a robustsystem to review them.
Your Directors consider in upholding the highest standards of accountability and keenlyparticipate in overseeing risk and strategic management. The Board fully supports andendorses Corporate Governance practices in accordance with the provisions of Clause 49 ofthe listing agreement and the report on Corporate Governance and Management Discussion andAnalysis, as required under clause 49 of the Listing Agreement is annexed.
The Chairman and Managing Director, Executive Director and Chief Financial Officer havecertified to the Board regarding the financial statements and other matters as required inclause 49 of the Listing Agreement and the said certificate is contained in the AnnualReport. A certificate from the auditors of the Company regarding compliance of conditionsof Corporate Governance as stipulated under Clause 49 of the Listing Agreement is alsoannexed. All the Board members and senior management personnel have affirmed compliancewith the Code of Conduct.
The Board has implemented a Code of Business Conduct and an "Ethics Code"aimed at members and senior management to inculcate business ethics in the Company intheir dealings with employees and business associates.
Your Company continues to have two subsidiary companies and two step down subsidiarycompanies. Sylvan Holdings Pte. Ltd., Singapore, (Sylvan) and Symphony Air Coolers Inc.USA are two subsidiaries. Sylvan has a subsidiary company in a Mexico i.e. Impco S. de R.L. de C.V (IMPCO). Impco, in turn, has a subsidiary company in the USA, namely SymphonyUSA Inc., which markets a variety of coolers. Symphony Air Coolers Inc. USA is underprocess of its closure and its business is taken care of by Symphony USA Inc. There is nomaterial change in the nature of business of subsidiaries.
Pursuant to provision of section 212(8) of the Companies Act, 1956, Ministry ofCorporate Affairs vide its circular dated February 8, 2011 has granted general exemptionfrom attaching the Balance Sheet, Profit & Loss Account and other documents of thesubsidiary Companies with the Balance sheet of the Company. The Company will makeavailable the Annual Accounts of the subsidiary companies and the related detailedinformation to any member of the Company, who may be interested in obtaining the same. Theannual accounts of the subsidiary companies will also be kept open for inspection at theRegistered Office of the Company. The Consolidated Financial Statements presented by theCompany include the financial results of its subsidiary companies.
9] Consolidated Financial Statements
In accordance with the Accounting Standard AS-21 on Consolidated Financial Statementsand Clause 32 of the Listing Agreement with the Stock Exchanges, the audited ConsolidatedFinancial Statements are provided in the Annual Report 2013-14 for its subsidiaryCompanies, i.e. Sylvan
Holdings Pte. Ltd., Singapore, Symphony Air Coolers Inc., USA, Impco S. de R. L. deC.V, Mexico and Symphony USA Inc., USA.
10] Directors Responsibility Statement
Pursuant to sub-section (2AA) of Section 217 of the Companies Act, 1956, the directorsof the Company hereby state and confirm that:
i. in preparation of the Annual Accounts for financial year 2013-14, applicableaccounting standards have been followed and there has been no material departures;
ii. they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitof the Company for that period;
iii. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act, 1956 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
iv. they have prepared the annual accounts on a going concern basis
M/s. Shah & Dalal, Chartered Accountants, Ahmedabad, hold office as Auditor of theCompany until the conclusion of the ensuing Annual General Meeting and the Boardrecommends their re-appointment till the conclusion of next Annual General Meeting.
The Company has received a consent letter along with certificates from Auditor underprovisions of the Companies Act, 2013 to the effect that their reappointment, if made,would be within the prescribed limits and are not disqualified for re-appointment.
12] Cost Auditors
Pursuant to Cost Audit Branch Order dated November 6, 2012, issued by Ministry ofCorporate Affairs, M/s. Dalwadi & Associates, Cost Accountants, were appointed as CostAuditor for the financial year ended on June 30,2014 with approval of Central Government.
The cost compliance report for financial year 2012-13 was filed by the Company onDecember 24, 2013 within prescribed time limit. Further the cost audit report for thefinancial year ended June 30, 2014 will be filed within prescribed time period.
13] Corporate Social Responsibility:
Section 135 of the Companies Act, 2013 concerning Corporate Social Responsibilitytogether with Rules thereunder and revised Schedule VII were notified on 27 February 2014to come into effect from 01 April 2014.
Symphony welcomes the initiative taken by the MCA with an objective to embraceresponsibility for the corporates actions and to motivate a positive effect through itsactivities on promoting education, environmental sustainability, rural development,communities and all other members of the public domain who may also be consideredstakeholders.
Your Company, being covered under the provisions of the said Section, has constituted aCommittee of Directors, titled "Corporate Social Responsibility Committee"comprising of the following 3 Directors as its members:
Mr. Achal Bakeri, Chairperson
Mr. Nrupesh Shah, Member
Mr. Himanshu Shah, Member (Independent Director)
The role of the Committee is to formulate and monitor the CSR Policy of the Company.The
Committee has formulated a CSR Policy, which has been approved by the board.
Since the said section has been enacted w.e.f. April 01, 2014, prescribed details asrequired under the said Section shall be presented to the members in the annual report forthe year 2014-15.
14] Secretarial Audit Report
As a step towards good corporate governance practice, the Board of Directors of yourCompany appointed Mr. Ashwin Shah, practicing Company Secretary, to conduct SecretarialAudit. The Secretarial Audit Report for the accounting year ended June 30, 2014 isprovided in the Annual Report.
The Secretarial Audit Report confirms that the Company has complied with all theapplicable provisions of the Companies Act, 1956, Companies Act, 2013, Depositories Act,1996, Listing Agreements with the Stock Exchanges, Securities Contracts (Regulation) Act,1956 and various Regulations and Guidelines of SEBI as applicable to the Company,including the Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations, 1992.
The Board of Directors at their meeting held on August 20, 2014 appointed Mr. SatyenKothan and Ms. Jonaki Bakeri as Additional Directors and they shall hold office till theensuing Annual General Meeting of the Company.
As per the provisions of section 149 and other applicable provisions of the CompaniesAct, 2013 and rules made thereunder and also as per Listing Agreement, the Board hasappointed Mr. Satyen Kothari, Mr. Himanshu Shah and Mr. Dipak Palkar as non-executiveindependent directors for a period of consecutive five years and they shall not be liableto retire by rotation. The Board has appointed Ms. Jonaki Bakeri as a non-executivedirector liable to retire by rotation.
Mr. Nrupesh Shah, Director of the Company retires by rotation at the ensuing annualgeneral meeting and being eligible, has offered himself for reappointment.
Brief profile of aforesaid directors, as required under clause 49 of the ListingAgreement, is annexed to the notice convening the 27th Annual General Meeting, which formspart of this Annual Report. Your directors recommend appointment of all above Directors.
16] Fixed Deposit
The Company has not accepted any public deposit during the year under review and nounclaimed deposits or interest was outstanding as of June 30, 2014.
The insurable interests of the Company including factory building, plant &machinery, stocks, vehicles, and other insurable interests like loss of profits, directors& officers' liability etc. are adequately covered.
In line with the requirements of Listing Agreement with the Stock Exchanges and theAccounting Standards of the Institute of Chartered Accountants of India, your Company hasmade additional disclosures in Notes on Accounts for the year under review in respect ofrelated party transaction, calculation of EPS and deferred tax liability.
19] Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo
As required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies(Disclosure of Particulars in Report of Board of Directors) Rules, 1988, details relatingto Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgoare given in Annexure attached hereto and forming part of the Directors' Report.
20] Particulars of Employees
In terms of the provisions of section 217 (2A) of the Companies Act, 1956, read withthe Companies (Particulars of Employees) Rules, 1975 as amended, names and otherparticulars of employees are set out in annexure to the Directors' Report. Having regardto the provisions of section 219(1)(b) (iv) of the said Act, the Annual Report excludingthe aforesaid information is being sent to all the members of the Company and othersentitled thereto. Any member interested in obtaining such particulars may write to theCompany Secretary at the registered office of the Company.
Your Directors wish to express their appreciation of the committed services byemployees at all levels. Your Directors also wish to place on records their deep sense ofappreciation for the valued support & co-operation by OEMs, distributors, dealers,service franchisees, suppliers, C&FAs, bankers and all other stakeholders of theCompany and look forward to their continued association with the Company. The Company willmake every effort to meet the aspirations of its Shareholders.
For and on behalf of the Board
|Place : Ahmedabad||Chairman and|
|Date : August 20, 2014||Managing Director|
Annexure to Directors' Report
Information as required under section 217(1) (e) of the Companies Act, 1956 read withthe Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988and forming part of the Directors' Report for the financial year ended on June 30, 2014.
1] Conservation Of Energy
Energy Conservation Measures Taken:
- Constant endeavour made to replace metallic components by global speciality plastics.
- Completely changed the electrical distribution system viz. L TPanels, cable routing etc.
- Replacement of ballasts (chokes) by more efficient one.
- Reduction of inwards and online inspection by bringing manufacturing procedures understatistical quality control [SQC].
- Avoidance of night shifts due to increased productivity during day shifts.
- Design of new moulding tools for higher productivity and thereby reduced processingpower requirement per piece.
- Redesigning the product and packaging dimensions to allow optimum quantity oftransportation per truck or container. This leads to lower fuel consumption per piece.
- Designing of Motor (Most critical part of coolers) to consume minimum power. PowerSaver Technology.
- Use of Dura pump technology which automatically senses its non usage and cuts off thepower supply to save power as well as the component.
- Lead free PCB developed, for saving the environment and thus energy.
- Development of smaller and more efficient pumps
2] Technology Absorption:
Efforts made in technology absorption Form B is Annexed
3] Foreign Exchange Earnings and Outgo:
(A) Activities relating to exports, initiatives taken to increase exports, developmentof new export markets for products and services and export plans.
The Company has made continuous efforts to maintain its export activities and looksforward to expand its presence in overseas markets.
(B) Foreign Exchange Earnings and Outgo Details of outgo and earnings in foreigncurrencies are given under Note 41(ii) to 43 to standalone financial statements.
Form for disclosure of particulars with respect to technology absorption.
1] Research & Development (R & D):
- Constant R & D efforts directed towards product improvement, new productdevelopment, enhancement of features of existing products, cost reduction, automation,OEMs, development, environmental friendly products, import substitute and energy efficientproducts.
- In house development of aesthetically designed full plastic body air coolers/storage.
- In house testing of all types of plastic materials for their development, credibilityand usability.
- Intelligent Electronic components with user friendly features.
- Revolutionary water distribution technology.
- Special Plastic alloy developed for the fan blades which has drastically reduced itsbreakage.
- LCD display technology in coolers.
- Introduction of Power PCB to work even in fluctuating voltage in various parts of thecountry
- Introduction of systematic Symphony Design Process for designing more efficientproducts
- Training to Design & Development team in Advanced Computer Aided Design CADapplication.
- Procurement of latest CAD hardware and software.
- Development, Installation and Implementation of comprehensive computerised ManagementInformation System (MIS) on Web enabled software.
- Computerisation of entire factory operation from Production Planning to despatch.
- Computerisation and connectivity of all CFA through ERP software.
- Establishment of inten