<dhhead>Directors Report</dhhead>
Dear Shareholders,
Your Directors have great pleasure to report you at the end of another
challenging year, and presenting the 51 annual report together with the audited financial
statements for the year ended March 31, 2023.
| 1. Financial Result Summary |
|
(INR in Lakhs) |
| Particulars |
As at March 31, 2023 |
As at March 31, 2022 |
| SalesTurnover |
25,329.23 |
24,151.56 |
| Pro t/(Loss) before tax |
(1,412.09) |
1,250.66 |
| Less: |
|
|
| Current tax |
(5.89) |
347.87 |
| Deferred tax |
(342.56) |
(36.13) |
| Pro t/(Loss) after tax |
(1,063.64) |
938.91 |
| Add: Pro t brought forward from previous year |
2,008.24 |
1,669.33 |
| Net available surplus for appropriation |
|
|
|
944.60 |
2,608.24 |
| Appropriations |
|
|
| Dividend paid during the year |
562.50 |
600.00 |
| Surplus carried to Balance Sheet |
382.10 |
2,008.24 |
|
944.60 |
2,608.24 |
2. Transfer to Reserve
The Company does not propose to transfer any amount to the general
reserve out of the amount available for appropriation.
3. Dividend
Keeping in view the loss of the Company, your Directors have decided to
not declare any dividend for FY 2022-23.
4. Operational Review & State of Company’s A airs
The financial year 2022-23 witnessed a growth in value, during the year
the actual volume of products sold remained under pressure. The increase in raw material
prices and change in consumer spending behavior led to reinvention of strategies by
organization to retain, acquire and increase value proposition for consumers, the battery
industry promises further transformation and growth in the future.
In the above situation during the year, your Company registered net
sales amount of INR 25,329.23 lakhs as against INR 24,151.56 lakhs of the previous year.
The Company had a loss of INR (1,412.09) lakhs as against profit before
tax INR 1,250.66 lakhs in the last year.
Dry Batteries
There was not much of a difference noticed in the usage pattern and the
market continued to be focusing more on the standard priced batteries in the AA and AAA
segment due to the acute competition amongst various players to secure volumes.
Board’s Report
Prospects
The prospect for Zinc Carbon dry batteries demand seems to be very
encouraging during the coming years, one of the reasons being the growing usage of
batteries in portable devices as well as the robust Indian economy and government policies
promoting MAKE IN INDIA, which is likely to generate more business opportunities.
Secondly, it is foreseen that many other industries such as electronic, TV, AC and set-top
manufacturing companies shall rely more on local make batteries vs. the imported batteries
in lien of the thrust on BIS and battery waste management rules by Government of India.
5. Change in Nature of Business
As reported last year, there is no material change in the business.
6. Product Pro le
The Company, witnessed a marginal increase in market share over last
year through various initiatives and its expansion into various other product range to
leverage its overall sales quantity and turnover, viz. Rechargeable batteries under the
brand name of eneloop, premium range of ‘EVOLTA’ Alkaline batteries, Lithium
coins, continues to grab fresh opportunities for advanced high drain new product
introductions in the years to come.
7. Management Discussion and Analysis Business Overview
India, one of the fastest growing major economy in the world and
consisting of a major young population base is likely to drive the consumption and demand
of batteries for more than a decade.
The dry batteries demand is likely to nd new segments which shall
require Zinc Carbon, Alkaline, Lithium coins, Rechargeable batteries and your Company has
the best resources to penetrate in the Indian markets evolving need with the
collaboration of Panasonic Holdings Corporation, Japan.
With a constantly expanding distribution network to meet the
ever-increasing demand, the dry cell batteries are available in all kinds of local stores,
malls and airline.
Zinc Carbon batteries
Zinc Carbon batteries share of organized manufacturers is estimated to
have remained same with some minor fluctuations.
The market size of D size batteries was more or less same as last year.
Maintaining its trend in financial year 2022-23 also, AA size continues to dominate the
volume share and AAA size continues to be the focus product for growth.
Alkaline batteries
Battery industry in India is dominated by Zinc Carbon batteries, unlike
in other parts of the world which is dominated by Alkaline battery market. Alkaline is a
category which is continuously showing an uptrend and indicates good future growth.
Alkaline batteries contribute 6% to 7% approximately of the total
battery demand in India. However, its contribution in terms of profit is considerably
good. Considering this, your Company is aggressively concentrating its activities towards
improvement of sales in this category by targeting new segments. Since the launch of
EVOLTA premium Alkaline batteries last year your company is focusing to satisfy the need
of customers for a reliable, anti-leak, longer lasting batteries for their devices through
its distribution amongst all trade channels.
In the financial year 2022-23, your Company registered more than double
digit growth in the consumer channel markets in terms of revenue. Your Company also
envisages a sizeable business in the forthcoming year in this segment and also holds good
volume of con rmed orders for supplies in FY 2023-24.
Rechargeable batteries
Rechargeable battery market contributes around 1% to total battery
demand. This segment is dominated by imported low priced rechargeable batteries.
Your Company has successfully marked its presence in marketing and
sales of high quality ‘eneloop’ brand of rechargeable batteries and chargers.
Dealers and consumers appreciate the quality and superiority of our
rechargeable batteries. Your Company maintained its dominance and market share in this
category.
Lithium coin batteries
The Lithium coin batteries usage in various applications is on growth
in India. Your Company has the maximum range in this segment to serve the consumer needs
and registered a significant revenue growth of about 139% over last year.
Industry Structure and Development
The Company foresees positive growth in the AAA segment as a result of
the gadgets using AAA batteries, replacing usage of AA batteries. A steady shift towards
alkalization of Indian market is also likely to benefit in the years to come. The Company
also witnessed growing trend of other categories of rechargeable, cylindrical and lithium
coin batteries.
Marketing and Distribution
The Company has also taken many steps to enhance its customer reach and
widen its distribution and coverage. In the modern trade as well as E- commerce segment
also, your Company has initiated activities to expand its presence in the market.
Your Company has been continuously making efforts not only to
strengthen its distribution network but also concentrating on improving the productivity
of every member of its sales team through various training and educational programs.
Your Company will also continue its efforts to promote the brand
"Panasonic" and its products through various channels of advertising and
publicity for enhancing consumer awareness and its advantages over competition.
Opportunities and threats
Opportunities
Presently, per capita consumption of batteries in India continues to
remain low as compared with other developed countries. Batteries are the cheapest source
of portable power and its consumption is always expected to grow as it is a product of
recurring use. Changing usage patterns, arrival of new appliances, shift towards
miniaturization of appliances, growing income levels and increase in nuclear families
promises growth especially in AA/AAA size of batteries.
Threats
The increasing cost of raw material, uctuating exchange rate and
increasing logistic cost is affecting the overall pro tability of the company. The
industry in India is highly competitive with many local and international players vying
for the market share. The competition results in price war and can impact profit margin
for the business. There is limited standardization and regulation in the industry, leading
to concerns about quality and safety. And due to the price sensitive Indian market, sub
standard product is still having the significant market share.
Smartphones are rapidly emerging as control units for connecting
appliances so in long run we can face some challenges but remote controls still form a
major part of such appliances, thereby supporting market growth.
Risks and Concerns
During FY 2022-23, the purchase prices of major materials remained
upward vs. FY 2021-22. Due to the record surge in international freight forwarding cost,
shortage of containers, crude oil price increase, regional con ict, high market demand
from other Asian countries and devaluation of the currency against the USD along with the
increase in labor cost, the material landed cost had increased substantially. The average
purchase prices of EMD, Zinc, ACB, Metal jackets, PVC, Corrugation packaging, Zinc
chloride etc. stayed higher in FY 2022-23 by around 110% to 180 %, which not only impacted
the direct materials cost but also severely disrupted estimates on pro ts.
Outlook
The industry has a promising business outlook and great potential for
growth, considering the increasing use of battery powered devices. With the support of
government policy, India becoming the hotspot for the manufacturing of toys, electronic
devices and medical equipment are the key factors for the rapid growth of the market.
Further, alkaline batteries are expected to strengthen their dominance
in the primary battery market and continue to witness the fastest growth, primarily due to
the increasing demand for primary batteries.
Indias purchasing parity per capita income has more than doubled in
the last decade and declining cost of consumer electronics and growing population have led
to growth of the consumer electronics market in the country, which in turn, is driving the
battery industry. Also rising income levels, increasing urbanization, changing lifestyle
and enhanced need for convenience is expected to boost battery-run gadgets demand.
The battery industry has a promising future but it needs to adapt to
changing market trends and environment regulation.
Internal Financial Controls
The Company has an internal financial control system commensurate with
the size and scale of its operations. These controls are adequate and operating
effectively so as to ensure orderly and efficient conduct of business operations.
The internal sta monitors and evaluates the adequacy of internal
control system in the Company, its compliances with operating systems, accounting
procedures and policies at all locations of the Company. Based on the reports, the Company
undertakes corrective actions, thereby strengthening the controls. Significant
observations and corrective actions thereon are presented to the Audit Committee for its
review.
Development in the Human Resource and Industrial Relation
The Board wish to place on record its appreciation to all its employees
for their sustained efforts and valuable contribution. Your Company is very much concerned
for the employees so as to provide them with safe and accident free environment with a
motto "Safety First" at the work place. The total employee strength of the
Company as on March 31, 2023 stood at 718.
Details of significant changes in key financial ratios
| Sr. No |
Ratio analysis |
2022-23 |
2021-22 |
| 1 |
*Debtors Turnover |
2.84 times |
3.42 times |
| 2 |
Inventory Turnover |
6.22 times |
7.43 times |
| 3 |
Interest Coverage Ratio |
- |
- |
| 4 |
Current Ratio |
2.51 times |
3.49 times |
| 5 |
Debt Equity Ratio |
- |
- |
| 6 |
*Operating Pro t Margin(%) |
- 4.11% |
3.81% |
| 7 |
*Net Pro t Margin (%) |
- 4.21% |
3.89% |
| 8 |
*Return on Net Worth |
- 10.65% |
8.74% |
Notes
* Debtors turnover has affected due to credit sales to Electronic
Corporation of India Limited.
* Current Ratio has affected due to one-time cost towards VRS Expenses,
Transfer benefits, Consolidation Cost which result in reduction of Cash & Bank
Balance.
* Operating profit margin, Net profit margin & Return on net worth
has gone down due to Material Cost, VRS Cost & Consolidation Cost.
Research & Development
We at, Panasonic Energy India Co. Ltd, aim for better quality of human
life and preservation of our planet. Recognizing that our Company is a member of society,
we are contributing to a healthier and more prosperous community by way of manufacturing
and selling complete range of eco-friendly batteries through elimination of hazardous
substances i.e. Lead(Pb), Mercury(Hg) and Cadmium(Cd) etc. contributing in reduction of CO
emission through energy conservation means. Implementing 3R
2
concept "Reduce, Re-use and Re-cycle" will not only bring
positive impact on environment but on betterment of living beings on the earth also. Our
main business objective is customer first & we always strive to deliver best quality
& environmental friendly batteries that offer consistent performance by putting our
best efforts through Research & Development and Empowered with Japanese technology.
8. Material changes and Commitments
There is no such material change and commitment, affecting the
financial position of the Company which have occurred between the end of the financial
year ended on March 31, 2023 and the date of the report. Though during the year ending
March 31, 2023, the Board of Directors in their meeting held on September 20, 2022 had
decided to consolidate the operation of the Company by shifting manufacturing operations
from Vadodara, Gujarat plant to its existing plant at Pithampur, Madhya Pradesh, to build
an efficient supply chain module, improve productivity and to enhance competitiveness.
During the fourth quarter,the Management has completed the process of dismantling of
machinery at Vadodara and installed the same at its Pithampur plant. The Company had
announced a Voluntary Retirement Scheme (VRS) to eligible employees based in Vadodara
whereby employees were given option of either opting for transfer to Pithampur or opting
for VRS. Basis on application received from employees’ company has paid VRS benefits
of INR 795.09 lakhs (including INR 107.5 lakhs of quarter ended March 31, 2023).
9. Corporate Governance
As per requirement of SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 (hereinafter referred as "Listing Regulations")
a separate section on corporate governance practices followed by the Company, together
with a certificate from the Company Secretary in Practice confirming compliances, forms an
integral part of this Report.
10. Annual Return
A copy of Annual Return as required under the Companies Act, 2013 has
been placed on the Companys website viz. https://www.panasonicenergyindia.in
11. Board Meetings
Schedules of Board and Committee meetings are prepared and circulated
in advance to the Directors. During the year, six Board Meetings and four Audit Committee
Meetings were convened and held. The details of which are given in the Corporate
Governance Report. The intervening gap between the meetings was within the period
prescribed under the Companies Act, 2013.
12. Directors Responsibility Statement
To the best of their knowledge and belief and according to the
information and explanations obtained by them, your Directors make the following
statements in terms of Section 134(3)(c) of the Companies Act, 2013;
(a) that in the preparation of the annual accounts for the year ended
March 31, 2023 the applicable accounting standards have been followed along with proper
explanation relating to material departures, if any;
(b) that the Directors had selected such accounting policies and
applied them consistently and made judgments and estimates that are reasonable and prudent
so as to give a true and fair view of the state of a airs of the Company as at March 31,
2023 and of the profit and loss of the Company for the year ended on March 31, 2023;
(c) that the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the provisions of the
Companies Act, 2013 for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities;
(d) that the Directors had prepared the annual accounts on a going
concern basis;
(e) that the Directors had laid down internal financial controls to be
followed by the Company and that such internal financial controls are adequate and were
operating effectively; and
(f) that the Directors had devised proper systems to ensure compliance
with the provisions of all applicable laws and that such systems were adequate and
operating effectively.
13. Contracts and Arrangements with Related Parties
All transactions entered with related parties for the year under review
were in the ordinary course of business and on arms length basis. Further, there are no
material related party transactions during the year and thus a disclosure in Form AOC-2 in
terms of Section 134 of the Act is not required.
All related party transactions are placed before the Audit Committee
for approval. Omnibus approval was obtained on a yearly basis for transactions which are
of repetitive nature. The policy on related party transactions as approved by the Board of
Directors has been uploaded on the website of the Company viz.
https://www.panasonicenergyindia.in
1 4. Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and Outgo
The details of conservation of energy, technology absorption, foreign
exchange earnings and outgo are annexed herewith. (Ref. "Annexure A")
15. Risk Management
The Company has framed a risk management policy containing the elements
of various risks and implementation strategy to mitigate those risks. The risk management
framework is reviewed periodically by the Board.
16. Corporate Social Responsibility
During the year under review as part of its initiatives under Corporate
Social Responsibility (CSR), the Company has expanded its activities and participated in
the projects in the areas of health, medical and cleanliness undertaken by NGO and
Municipal Corporation. These projects are in accordance with Schedule VII of the Companies
Act, 2013.
During the year, under Companys obligation towards its CSR Policy, the
Company had distributed INR 25.14 lakhs to two outside implementing agencies operating in
the area of health, medical and cleanliness (Swachh Bharat Mission).
The Annual Report on CSR activities is annexed herewith. (Ref.
"Annexure B")
17. Disclosure under the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013
The Company has in place a policy on prevention of sexual
harassment in line with the requirements of the Sexual Harassment of Women at the
Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Internal Complaints Committee (ICC) has been set up to redress
complaints received regarding sexual harassment. All employees (permanent, contractual,
temporary, trainees) are covered under this policy.
During the year, no complaint was received by the Company and hence, no
complaints are outstanding as on March 31, 2023 for redressal.
18. Annual Evaluation by the Board
The Board has carried out an annual evaluation of its own performance,
Committees of the Board and individual Directors pursuant to the provisions of the
Companies Act, 2013 and Listing Regulations. The Board of Directors expressed their
satisfaction with the evaluation process.
19. Vigil Mechanism / Whistle Blower Policy
The Company has established a vigil mechanism for Directors and
employees and the same has been communicated to the Directors and employees of the
Company. The vigil mechanism policy / whistle blower policy is also posted on the
website of the Company.
20. Directors and Key Managerial Personnel
Mr. Akinori Isomura had been appointed as Chairman & Managing
Director of the Company for a period of two years effective from January 01, 2022. The
appointment of Mr. Isomura has already been approved by members by way of postal ballot
and by the Central Government as per requirement of Schedule V.
The Company had received declarations from all Independent Directors
that they meet the criteria of independence as laid down under Section 149(6) of the
Companies Act, 2013 and requirements of Listing Regulations.
Mr. Hideyuki Okunaga will retire by rotation and being eligible, offers
himself for re-appointment.
As required by Regulation 36(3) of Listing Regulations, the relevant
details in respect of the Directors proposed to be appointed / re-appointed are set out in
the Corporate Governance Report forming part of the Boards Report. The Board recommends
all the resolutions placed before the members relating to appointment / re-appointment of
Directors for their approval.
Mr. Anjan Shah, had resigned from the position of CFO and Key
Managerial Personnel w.e.f. December 29, 2022. Mrs. Susheela Maheswari, Company Secretary
and Key Managerial Personnel had resigned w.e.f. March 31, 2023.
Mr. Sanjay Jain, CFO and Key Managerial Personnel had been appointed
w.e.f. February 03, 2023. Mr. Sraban Kumar Karan, Company Secretary and Key Managerial
Personnel had been appointed w.e.f. March 22, 2023
21. Committees of the Board
The Board of Directors have the following Committees:
1. Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholders Relationship Committee
The details of the Committees along with their composition, number of
meetings held and attendance at the meetings are provided in the Corporate Governance
Report.
22. Statutory Auditors
In accordance with the provisions of the Companies Act, 2013, the
shareholders had appointed M/s.
th
BSR & Associates LLP, Chartered Accountants, as Statutory Auditors
of the Company, at the 45 Annual General Meeting held on August 10, 2017, for first term
of a period of ve years i.e. up to the
th
conclusion of 50 Annual General Meeting. th
The first term of appointment of the Statutory Auditors had ended at
the conclusion of 50 AGM. The Board had re-appointed M/s. BSR and Co., Chartered
Accountants (a member entity of BSR & A liates) for a further period of ve consecutive
years as Statutory Auditors of the Company from the
conclusion of the 50 AGM till the conclusion of the 55 AGM to be held
for the Financial Year 2026-
27. Members of the Company in their 50 AGM on July 28, 2022, had
approved the appointment of M/s. BSR & Co., Chartered Accountants, Ahmedabad (a member
entity of BSR & A liates) having ICAI Firm Registration No. 128510W as Statutory
Auditors of the Company for the second term till the
conclusion of the 55 AGM.
M/s. BSR & Co., Chartered Accountants, having ICAI Firm
Registration No. 128510W as Statutory Auditors of the Company has given their report on
Financial Statements for the Financial Year 2022- 23. The same will be adopted by the
Members in the ensuing Annual General Meeting. There is no qualification or adverse remark
in Auditors report.
23. Cost Auditor and Cost Audit Report
As per Section 148 of the Act read with the Companies (Cost Records and
Audit) Rules, 2014, the Company is required to prepare, maintain as well as have the audit
of its cost records conducted by a Cost Accountant and accordingly, it has made and
maintained such cost accounts and records. On the recommendation of the Audit Committee,
M/s. Diwanji & Co., Cost and Management Accountants (Firm Registration No.: 000339),
have been re-appointed as the Cost Auditor for the financial year 2023-24. In terms of the
provisions of Section 148(3) of the Companies Act, 2013, read with the Companies (Audit
and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors has to be
ratified by the Members of the Company. Accordingly, the Board seeks rati cation at the
ensuing Annual General Meeting for the remuneration payable to the Cost Auditors for the
financial year 2023-24.
24. Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the
Board has appointed M/s. J. J. Gandhi & Co., Practicing Company Secretaries, having
officeat F46, India Bulls Mega Mall, Jetalpur, Vadodara - 390 007 to undertake the
Secretarial Audit of the Company for the financial year 2023-24. There is no qualification
or adverse remark in their report. The Report of the Secretarial Auditor is annexed
herewith. (Ref. "Annexure C")
25. Reporting of Fraud
During the year under review, Auditors have not reported any instances
of fraud under section 143(12) of the Companies Act, 2013.
26. Subsidiaries, Joint Ventures and Associates
Your Company does not have any subsidiary / subsidiaries, joint
ventures and associates within the meaning of the Companies Act, 2013. Your Company is
subsidiary of Panasonic Holdings Corporation.
27. Deposits
The Company has not accepted any xed deposits from public and
accordingly, no amount was outstanding as on the date of the Balance Sheet.
28. Particulars of Loans, Guarantees or Investments made under Section
186 of the Companies Act, 2013
There are no loans, guarantees or investments covered under the
provisions of Section 186 of the Companies Act, 2013.
29. Transfer to Investor Education and Protection Fund (IEPF)
As per Section 124(6) of the Act read with the IEPF Rules as amended,
all the shares in respect of which dividend has remained unpaid / unclaimed for seven
consecutive years or more have been transferred to an IEPF Account.
During the year, the Company has transferred 10,507 number of shares to
the IEPF Authority Account.
30. Disclosure under Rule 5 of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014
Disclosures required under Section 197 of the Companies Act, 2013 read
with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014 have been annexed herewith. (Ref. "Annexure D")
31. Nomination & Remuneration Policy
The remuneration paid to the Directors, Key Managerial Personnel and
Senior Management Personnel are in accordance with the Nomination and Remuneration policy.
As per the said Policy, the Nomination & Remuneration Committee (NRC) has formulated
criteria for determining quali cations, positive attributes and independence of directors
and other matters in terms of provisions of section 178(3) of the Act. The above policy
has been posted on the website of the Company viz. https://www.panasonicenergyindia.in
32. Compliance with all the applicable laws of Secretarial Standards
During the year, the Company has complied with all the applicable
Secretarial Standards.
33. Significant and Material Orders passed by the Regulators or Courts
No significant and material order has been passed by the regulator,
court, tribunal, statutory and quasi-judicial body impacting the going concern status of
the Company and its future operations.
34. Acknowledgment
Your Directors wish to place on record their appreciation of the
contribution made by employees at all levels to the continued growth and prosperity of
your Company. Your Directors also wish to place on record their appreciation to the
shareholders, dealers, distributors, consumers and banks for their continued support.
|
For and on behalf of the Board |
|
Akinori Isomura |
| Pithampur |
Chairman & Managing Director |
| May 30, 2023 |
DIN: 09382377 |
+91-9892691696
