Panasonic Energy India Company Ltd Management Discussions

PANASONIC ENERGY INDIA COMPNAY LIMITED ANNUAL REPORT 2011-2012 MANAGEMENT DISCUSSION AND ANALYSIS A. Business Overview Zinc carbon batteries This year the dry cell industry showed a negligible growth of just around 1% as compared to the previous year. In order to sustain in stagnant and price sensitive market, your Company continued to focus on improved outlet penetration and brand building activities. During the year, your Company has carried out various brand building activities like organized dealer Meets, DISHA activity, dealer boards, wall paintings etc. to create its brand awareness in high potential area. Your Company would continue its efforts towards improving its outlet coverage and it would be focusing its resources to reach to the desired levels of outlet coverage. The benefits of these efforts would accrue to the Company in the coming years. Alkaline Batteries During the year your Company had improved its presence in alkaline range of batteries. However your Company intends to further improve its presence in this sector. Flashlights Keeping in view your Company s commitment towards the environment, during the year it has introduced new models of eco friendly torches along with its existing range of torches. Your Company intends to focus in this area as it s a growing segment and has immense potential. CFL lamps During the year your Company has also started trading of CFL lamps of Anchor make, being manufactured by Panasonic Group Company. The revenues that were generated from this during the year are still in its primitive stage. However your Company intends to focus on increasing its revenues from this product by utilizing its existing sales network. B. Industry Structure and Development As mentioned earlier, during the year, Industry was more or less stagnant. The growth rate was at a negligible rate of just around 1%. R20 segment continued to de-grow due to change in consumer usage pattern. During the year the rate of de-growth had been around 13% as compared to previous year. R6 segment showed some positive trend and it registered a growth at around 4% as compared to previous year. R03 segment also showed a positive trend and it registered a growth at around 14% as compared to previous year. However the concern for R03 segment is that economy product market grew at a higher rate than the premium product market. The whole Indian dry battery market seems to be moving towards economy range of batteries. C. Opportunities and Threats Opportunities The low per capita consumption of batteries in India indicates inherent potential of the battery market to grow. The changed usage pattern of the gadgets also provides potential for R6, R03 and Alkaline products. Threats There is import of huge quantity of low performance cheap Chinese AAA batteries which poses a big threat to the organized sector of the Industry. D. Risks & concerns The possibility of increase in input costs is a matter of concern as this would directly impact the profit margins of your Company. The devaluation of rupee to dollar is also a matter of major concern for your Company. In the coming years the usage pattern of appliances would be a determining factor for the growth of the dry battery industry. Changing consumer behavior towards dry battery operated appliances would also play a crucial role. E. Outlook Penetration of increased battery operated appliances should improve the dry battery consumption. The concept of compactness with portable energy need, should help more battery appliances to emerge. F. Internal Control System Your Company maintains an adequate and effective internal control system commensurate with its size and complexity. We believe that these internal control systems provide, among other things a reasonable assurance that the transactions are executed with management authorizations and they are recorded in material respects to permit preparation of the financial statements in conformity with established accounting principles and that the assets of the Company are adequately safeguarded against any significant misuse or loss. The Internal audit is done by an independent firm of Chartered Accountants. Internal audit and other controls are reviewed periodically by the Audit Committee and have been found to be adequate. G. Developments in human resources and industrial relations Directors wish to place on record their appreciation to all its employees for their sustained efforts and valuable contribution. The total employee strength of the Company as on 31st March, 2012 stood at 837. None of the employees of the Company draw a remuneration of Rs. 5 lacs or more (where appointed for a part of the year) or Rs. 60 lacs or more (where appointed for the whole year). Hence no information is provided pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975. H. Research & Development In line with the vision of our foreign collaborators to make our products eco friendly, during the year under review your Company continued manufacturing full range of eco friendly dry batteries. You would appreciate the fact that yours is the only manufacturing Company with complete range of eco friendly batteries. Over and above these activities, efforts have also been made to successfully to reduce hazardous elements from raw materials in line with RoHS guidelines. As a part of continual improvement process of products and processes various activities were undertaken. These were done by using important and effective Q. C. techniques like small improvement in process through Q. C. Circle and Kaizen activities. These activities were implemented through the involvement of grass root level employees. This had resulted in increasing the confidence level of employees for quality improvement and reduction of rejection during manufacturing process. During the year, your Company has introduced new models of LED torches which are not only high quality products but are (eco friendly too. Your Company is always making efforts in ensuring optimal energy utilization and thereby reducing CO)2 emission, to re-use effluent water after treatment for plantation of tree and recycling of most of the waste generated during manufacturing activities. I. Exports Continuous efforts are being made to boost exports, particularly in the areas of machinery spare parts and battery components. During the current financial year the Company has earned foreign exchange to the tune of Rs.159 lacs (previous year Rs. 125 lacs). Pricing continues to be the key factor. The Company intends to further improve its exports.