Salora International Ltd Management Discussions.

The Management Discussion and Analysis Report has been included in adherence to the spirit enunciated in the code of Corporate Governance, pursuant to requirement of Regulation 34 of SEBI (LODR) Regulations, 2015. The Management Discussion and Analysis presented in this Annual Report focuses on reviewing the performance of the Company.


India has the worlds third largest television industry.

With increasing innovation and technological improvements in the consumer electronics industry, the cost of Smart TVs is expected to see a downward trend in future as well. Factoring these, we can say that Smart TVs are well on their way to become one of the preferred mainstream products in India. As far as viewing experience are concerned, most of the Smart TVs whether 4K TVs or HDR, are available in large screens format only which magnifies the experience immensely. Hence, Smart TVs certainly offer better viewing experience bundled with their flagship technologies. However, the viewing experience is only got to do with the display technology and nothing much yet with the “Smart Features” of the TV. Growing penetration of internet services and expanding internet consumer base is expected to drive the market over the next few years. In addition, market leaders have been investing in Smart TV technology in order gain competitive advantage. The technology transition from internet TVs that provide convergent services is also expected to result in favourable market conditions. With BEE rating becoming mandatory for Flat Panel Display segment, it is expected to bring energy efficiency into focus for the television sets.

Smart TV could play an important part in the overall Smart city initiative of the Government of India. Being embedded in the government systems, it can be an important element of the Information & Communication Technologies. TVs equipped with technologically advanced and smart features can support the initiative, by enabling users to keep a watch on the streets for specious activities or to warn people who litter the streets. Smart TVs could also download important announcement / videos which could be circulated by the municipal and governing bodies of various regions.


The Company is a large conglomerate with diversified business interests. The culture of excellence leads to strong performance in all the spheres of its activity. The Company involves itself in the manufacturing and assembly of Smart LED TVs, CRT TVs, TV Components, Home Theaters, Mobile Phone, Mobile Batteries & Chargers, washing machine and distribution of large variety of IT and Telecom Products such as Laptops, Smart watches, trading of pricey smart phones etc.


Our business can be divided into following verticals:

> Television (TVS)

We manufacture LED TVs at Noida Plant Facility which has an installed capacity of significant number LED TVs. Keeping in line with emerging trends SALORA is also putting greater emphasis on development of LED TV business. Our capabilities in LED TV designing include panel designing, main electronic board designing, mechanical and acoustics. Company has also set up in-house Panel Assembly Facility.

The contribution of Smart TVs to overall sales has gone up to significantly over last few years and share is expected to move up. Smart TVs market in India registered robust growth in 2018-19 attributed to a sharp drop in the prices of the Smart TVs as well as rising penetration of Smart TV vendors. Rise in disposal income level and growing internet penetration in the country contributed to an increase in sales of Smart TVs. Huge investment by video streaming media companies Hotstar, Amazon Prime and Netflix let to an increase in demand for Smart TVs.

Demand for large screen TV is growing due to drop in prices and growth of streaming video content. Company has introduced 50 / 55 / 65 Inch televisions to meet this demand. Company will also introduce Trend Frameless Design LED Television in the near future.

> Washing Machine:

Growing disposable income and easy financing options have led to shortened replacement cycles whereas rising influence of modern lifestyle has perceived products such as utility items rather than luxury goods.

In the current scenario washing machines are no more a privilege. It has become an essential item in every house making the practice of washing clothes more intelligent, personalized and time saving. Also, the washing machines now-a-days are given an aesthetic touch that makes them look stylish trendy and user friendly. The dependence on technology has increased considerably during the years. Thought process of people in direction of having a better lifestyle is facilitating trade and commerce. Its demand has been increasing in India due to increasing availability of new innovative models in the market and increasing PPP of the Indian middle class families. To cater to this rising demand your Company has launched a range of Semi Automated Washing Machines.

Washing Machine models of Salora as follows:

1. Model No. SWMS6501SR which is having size of 6.50 K.G

2. Model No. SWMS6801BU which is having size of 6.80 K.G

3. Model No. SWMS7801SR which is having size of 7.80 K.G

4. Model No. SWMS7801SR which is having size of 8.50 K.G

Company also plans to launch Automatic Washing Machine in the near future.

> Refrigerator

The Indian refrigerators market is categorized into two product types i.e. direct cool refrigerators and frost free refrigerators. frost free refrigerators do not manual defrosting is needed. The frost free refrigerator market of India is gaining massive popularity and momentum over traditional refrigerator models. direct cool refrigerators dominate in the Indian market whereas frost free refrigerators are becoming popular among urban households.

Energy star rating, Rising household income, improving living standards, rapid urbanization, increasing number of nuclear families, large untapped market, environmental changes, warranties, discounts, incentives, easy cleaning facilities are major growth drivers for the refrigerator industry. The efforts of players to offer affordable and eco-friendly variants and strategies to penetrate into smaller towns are acting as a driving force for the industry. New lifestyle where food is kept for longer after cooking is also driving up demand for refrigerators. Penetration of electricity and affordable housing offer the space and possibility of buying a fridge to those who would not be able to use one earlier. The major players are cutting their prices and launching the new models with advanced features and new designs. The utility and need of refrigerator is felt 365 days in a year, and hence has become an indispensable item of every household. Moreover, due to the hot and humid weather conditions in the country, the necessity of the product has increased manifolds. Due to increase in utility and need of refrigerator Salora plans to expand its presence in Consumer Durables by launching refrigerator also.

Your Company has launched a range of direct Cool Refrigerators. Your Company will expand the range of Refrigerators in the near future.

> Mobile Phones

Due to intense competition company has reduce focus on mobile phones. Although We have been doing the manufacturing of mobile phones in the past and positive efforts are being taken to strengthen our foot step in this dynamic business segment. We manufacture feature phones and smart phones (2G, 3G, 4G/LTE, VoLTE and CDMA).

Company considers SALORA ARYA as to be the entry segment smart phones in this business segment. On pricing page company claims it to be in reach of ever middle class and lower income group spread in rural areas.

Mobile phone manufacturing requires controlled environment and testing mobile devices requires special equipment and methodology for which the company has updated and upgraded assembly line. Our strategy in the mobile phones vertical is deepening of relationships with existing key customers, migration towards PCB level assembly as a first step and backward integration for mobile phone chargers.

> AUDIO (Speakers and Music System segment):

During the year the company has launched wide range of music system, speakers systems, towers speakers and public announcement systems. The initial market trend of sales number has shown a good performance of towers speakers and music systems of the company. Your company is planning to aggressively to enhance its speaker production capacity as company, consider that there is lot of scope for doing business in this segment.

Upgraded production facilities are being planned along with new products like PA speakers, Car Speakers etc, portable music systems etc.

Such a focus on innovations, combined with a commitment to quality and service excellence, keeps your Company poised to perform beyond expectations in the hyper-competitive consumer durables sector. After sale service network, spread across the length and breadth of the country, further strengthens your Companys status as a dominant competitor in the sector.

> Wind Power Generation (Wind Energy):

Wind power generation has the lowest impact on the environment as compared to the other methods of power generation and this is in tandem with our philosophy of being in tune with nature hence we ventured in power generation with Wind Energy. The Company has five (5) wind turbines 1.25 MW Capacity (6.25 MW total) at Dhule Maharashtra operated and maintained by Suzlon Energy Ltd. The business revenue from this segment is remained settled and the performance is remained satisfactory.

> Trading:

Company has entered into trading business of FMCG products. Market response is good and hopefully it will be a boost for sale and revenue of the company


Opportunities: Consumer Electronics Sector

• With rise in income level of the customers and availability of easy finance, the discretionary spending has become important. As a result, the durable goods which were earlier considered to be luxury are now being considered as a necessity.

• Internet subscribers in India have increased significantly in last few years and it is expected to grow further. This could be a driving factor for innovation in the Smart TVs and other consumer durables.

• Increase in awareness about smart TV is a significant factor which could be driving the growth in sales of Smart TVs in India.

• Rise in working age population is expected to stimulate demand.

• Growing number of High Networth Individuals and women in workforce is boosting demand for high end consumer electronics and home appliances.

• Rapid urbanization is helping in the growth of consumer electronics and home appliances industry. There has been a paradigm shift to the Indian population in terms of rural-urban divide. The aspiration of higher income, higher standards of living have drawn more and more people from villages to settle in town and cities. This transition has led to an increase in the demand of goods.

• The growing use of credit and debit card and easy availability of credit has resulted in the increase in spending inter-alia including on purchases of consumer electronics and home appliances thereby fuelling the demand in the durable sector.

• The growth of mediums such as e-commerce and m-commerce has provided retailers to stay in touch with consumers via various mediums and thus increase on their sales by constant promotion of products. Further, the incentives such as cashback, discounts, freebies offered through e-commerce has huge positive impact on sales of consumer electronics and home appliances and the demand is further expected to boost over the years.

• The rapid growth of population, affordable housing, opportunities in semi-urban and urban areas have led to growth of nuclear families. This has pushed the demand for consumer electronics and home appliances.

• The growing number of dual income families (both husband and wife earning) has given greater purchasing power and willingness to spend to them which has pushed familys focus towards luxury / semi-luxury products resulting into higher demand for consumer electronics and home appliances.

• With the development of the communication channel and the rise of information, Communication and Technology Industry, a rise in media across the world is seen. Number of people with internet access has increased drastically and it has thus created a new opportunity for companies to position / market their products in a better way using improved and more efficient marketing channels. Social media too is playing vital role in shaping the position of the product.

• Continuous R&D and Innovation, has resulted in development of different products and services and this can be driver for improved sales and growth for the company.

• Recent and upcoming products in the Indian market reiterate the emphasis of product innovation and development to lead the way in future. The companies are increasing their focus on product design and ensuring that consumers get varied features to crease a differentiation in the market and create an impact.

Threats: Consumer Electronics Sector

• Due to the high marketing spends of multinational companies (MNCs) and new brands entering in India, the Company faces the threat of a preference developing among consumers for foreign brands. The Company intend to mitigate this threat via appropriate corporate marketing communication stressing the high pedigree of the company and its commitment to innovation and quality.

• Due to the plethora of distributor brands and domestic brands that specialize in import and rebranding, the consumer has a large number of brands to choose from at the low cost end of the price spectrum. Price sensitivity may lead many consumers to overcome their risk aversion. This threat will have to be countered with appropriate marketing communication about the difference in quality of the companys products vis-avis such competitors and through highlighting the service reputation of the Company.

• The rise of modern trade retail chains of various hues leads to the risk of concentration of the companys sales to a few large customers. This is a threat to the margins of the Company. It can be countered by enhancing the pull factors that drive sales through brand building measures at the corporate level.


Risk relating to Consumer Electronics Business

• International manufacturers are now partnering with e-retailers to promote sales and increase penetration in the Indian market.

• Rising input prices such as the selling, general & administrative expenses along with the cost of goods sold is difficult to control and thus a reduction in profit margin is seen. Despite the fact that the consumer products companies in most cases are able to pass on the cost to the consumers but the same is not likely seen during the downturn when a lag effect of few quarters is seen when the earnings of the companies gets pressurized.

• These days setting up a manufacturing facility or expanding the product line is very capital intensive.


Internal control is all of the policies and procedures management uses to achieve the following goals.

• Promote efficient and effective operations - Internal controls provide and environment in which managers and staff can maximize the efficiency and effectiveness of their operations.

• Safeguard assets - well designed internal controls protect assets from accidental loss or loss from fraud.

• Ensure the reliability and integrity of financial information - internal controls ensure that management has accurate, timely and complete information, including accounting records, in order to plan, monitor and report business operations.

• Ensure compliance - Internal controls help to ensure that company is in compliance with the many federal, state and local laws and regulations affecting the operations of our business.

• Accomplishment of goals and objectives - Internal controls system provide a mechanism for management to monitor the achievement of operational goals and objectives.

Internal control Activities and Best Practices

Internal control activities are the policies and procedures as well as the daily activities that occur within an internal control system. A good internal control system should include the control activities listed below. These activities generally fit into two types of activities.

1. Preventive: Preventive control activities aim to deter the instance of errors or fraud. Preventive activities include thorough documentation and authorization practices. Preventive control activities prevent undesirable “activities” from happening, thus require well thought out processes and risk identification.

2. Detective: Detective control activities identify undesirable “occurrences” after the fact. The most obvious detective control activity is reconciliation.

The Company has in place proper and adequate statutory and internal audit and control system in accordance with the nature of business and size and complexity of business. Internal control system comprises of policies and procedures which are designed to ensure compliance with achievement of business goals, compliance with inland laws. All assets and resources are used efficiently and adequately. All financial transactions are recorded as per governing inland laws.

The Companys Statutory Auditors and Internal Auditors carried out periodical audit at all business places based on audit plan that test the internal policy and procedure designed by Company. Significant observations are reviewed by management and audit committee.

Salora has a proper and adequate system of internal control with tools of monitoring through use of a strong customized oracle based ERP system “Salora Integrated Management System (SIMS)”. Your Company has a vigilant Audit Committee headed by a non-executive independent director, inter-alia, to oversee your Companys financial reporting process, disclosure of financial information, reviewing the performance of statutory and internal auditors with management, adequacy of internal audit function and internal control systems, related party transactions, investigations relating to suspected fraud or failure of internal audit control, systems etc. The Company has adopted the code of ethics & business conduct which lays down the principles / standards that should govern the action of the Company and its employees. The Company is committed to adhere to the highest standards of ethical and moral conduct of the business.

The Company has an internal control system which provides for -

• Accurate recording and custody of assets;

• Compliance with applicable statutes, policies, procedures, SEBI (LODR) requirements, management guidelines and circulars;

• Transaction being accurately recorded; cross verified and promptly reported;

• Efficient use and safeguarding of resources;

• Adherence to applicable accounting standards and policies; and

• Information technology system which include controls for facilitating the above.

The scope of internal audit extends to all functions and locations of the Company.


The medium to long term, the view is positive, giving the rise in affordability level (combination of increasing disposable incomes and the trend of reducing prices), and the existing low household penetration base for consumer durables. The grown prospects for individual items would, however, depend on specific demand drivers. The Company has adopted the best and the most sophisticated technology to suit Indian needs. The Company has successfully forayed into market either directly or indirectly.

The Company focuses on Indigenous Strategy, Improved Technology, Innovative products, inspired thinking and insightful marketing. Company focuses on customer and his needs and is committed to delight and deliver beyond what is expected.

The aim of the Company is to serve consumers domestically by creating technologically path breaking products through constant innovation. The Company as a part of reducing manufacturing cost of products has explored the possibility of manufacturing of various components at the in-house facility.


The Human Resource function of your Company plays a critical role in realizing business objectives by leading organizational change and effectively mobilizing talent to sustain the organizations competitive age.

The Company believes in building performance driven organization characterized by performance, pride and happiness. The Company conducts employee engagement surveys to identify the areas to improve upon for building a motivated and productive workforce.

Industrial relations remained cordial during the year under review.


Statements in this report describe the Companys objectives, projections, estimates, expectations and predictions, may be forward looking statements within the meaning of applicable securities, laws and regulations. Actual results could differ materially from those expressed or implied. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent development, information or events or otherwise. These statements dont guarantee future performance and are subject to known and unknown risks, uncertainties and other factors such as change in the government regulations, tax laws, economic conditions and other incidental factors.