Panasonic Energy India Company Ltd Share Price 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.