2007-2008 - Cgglobal.com

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DIRECTORS’ REPORT To, The Members, Your Directors are pleased to present their Seventy First Annual Report on the business and operations of the Company and the accounts for the Financial Year ended 31 March 2008. Creation of the Avantha Group During the year, the Company joined together with other companies led by Mr Gautam Thapar, to create a new Brand Identity - the Avantha Group. The US$ 3 billion Avantha Group has business interests in diverse areas including pulp and paper, horticulture & food processing, farm forestry, chemicals, infrastructure, power transmission and distribution equipment and information technology. Steered by Mr Gautam Thapar and supported by strong professional management teams worldwide, Avantha demonstrates strong leadership globally and has emerged as a focused Organisation, leveraging its knowledge, leadership and operations, for the Group’s continuous endeavours to increase value for all its stakeholders. This initiative aims at identifying commonalities and articulating the elements that provide synergy across Group companies. This event is a significant milestone for the companies led by Mr Gautam Thapar, collaborating for higher ambitions, by leveraging mutual strengths. The name Avantha has Indo-European origins. In Sanskrit the word “avni” means “the earth” and “tha” comes from “sthapna” which means “to establish”. Together they represent stability and a strong foundation. In French, “avancer” means “to advance”, which represents forward movement and growth. The name Avantha represents the strong foundation that the Group gives the individual companies for advancement, growth and diversification. The Group Brand will be an umbrella brand – over and above the Company’s brand. Your Company will therefore retain its name and logo. The Group identity will positively impact the Company’s positioning in the eyes of our stakeholders and also influence, as well as, articulate the overarching Culture and Values that will be the bonding force amongst the several Group companies. Operations The manufacturing sector has been averaging 9% growth during 2004 – 2007. India’s manufacturing base, which is the fourth-largest amongst emerging economies, is among the fastest growing, and has witnessed greater investments as a proportion of Gross Domestic Product than any country, except China. Indian manufacturers, with the tremendous expertise gained in the domestic market, are 32 ANNUAL REPORT 2007–2008 CROMPTON GREAVES LIMITED
progressively spreading their wings to reach out to Global markets. Indian Corporates have been actively taking aggressive steps through both Acquisitions and Greenfield investments abroad. All these initiatives are boosting “Brand India” in the Global arena. During the first half of 2007-08, the cumulative expansion of industrial output was approx. 9.70%. Manufacturing output expanded by 10.40% during the same period and the rate of expansion of electricity generation was at 7.20%. Since August 2007, the World financial markets and US as well as European lenders have been adversely affected as the subprime mortgage phenomenon unraveled. Considerable pressure continues on the prices of oil, food and other raw materials, which indicates that inflation management in 2008-09 will be a greater challenge. The variations in related Global prices, which exhibit volatility based on changes in the exchange rate, are an important force which has, and will continue to impinge on the competitiveness of Indian manufacturing and its future profitability. In anticipation, your Company has already intensified its marketing efforts to address this potential economic slowdown. The efforts center around building greater customer contact, strengthening of networks, new products commercialisation and improved value propositions from existing products. The Company has also shortened several dimensions of its marketing processes through introduction of an order allocation process between different geographies, direct order placement and greater e-enablement of processes for dealer business. The Company has also forged necessary alliances to strengthen its entry into new market segments. The various market centric initiatives undertaken, coupled with focus on a Product- Solutions domain has enabled the Company to achieve a turnover of Rs. 42225.98 million, during the year under review, as compared with Rs. 36599.76 million during the previous year 2006-07, a rise of 15%. The synergy generated through the Pauwels, Ganz and Microsol acquisitions, resulted in the consolidated turnover of the Company increasing from Rs. 59340.39 million to Rs. 71813.78 million, an increase of 21%. The rising crude oil, steel, copper and aluminum prices exerted considerable pressure on profitability. However, by expansion of its dedicated vendor base and strategic purchase contracts, the Company has been able to retain its edge in terms of costs. E-sourcing has helped the Company to develop and implement an effective Company-wide, collaborative purchasing process, thus significantly lowering costs by co-ordinating and leveraging common purchases across the Company. Further, better capacity utilisation, value engineering, improved execution, better order selection and control over operating expenses, offset the adverse impact of material cost increases to a large extent. With CG’s progressive Global footprint, the need to strive for “One World Quality” is becoming increasingly imminent, and, this will require changing our attitudes to a much higher quality mind-set, to consistently deliver Quality as expected by our Global customers. Our efforts in this direction will realise its results through adoption of best-in-class standards at all locations worldwide. Better design platforms are being initiated in all our major business areas to facilitate faster designs, with greater operational and energy efficiency and, which also consume reduced material content. This will yield the twin objectives of satisfying customer expectations, whilst at the same time improving the Company’s profitability. The thrust on Six Sigma and the Crompton Greaves Productivity System (CGPS), continues with increased vigour, in driving the Company’s initiatives towards Quality, as perceived by the Customer and further increasing productivity from all its plants worldwide. All these above efforts resulted in the Company recording a noteworthy profit before tax of Rs. 4856.52 million, an increase of 58% as compared with last year. The consolidated profit before tax increased from Rs. 4359.56 million to Rs. 6152.39 million. A 3750KW/6P LARGE SLIPRING ROTOR UNDER PROCESS, AT HT MOTORS DIVISION, MANDIDEEP DIRECTORS’ REPORT 33
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Page 3 and 4: RETURNS PERCENT 23 PERCENT 25.90 RO
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PRODUCTS & SERVICES 140 ANNUAL REPO
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HT Motors: GANZ HT Slip Ring Motor
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ESTABLISHMENTS REGISTERED OFFICE CG
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WESTERN REGION Regional Head Office
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HOLDING PAUWELS INTERNATIONAL N.V.
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2007-2008 - Cgglobal.com

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