2007-2008 - Cgglobal.com

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CHAIRMAN’S LETTER Over the past few years, Crompton Greaves has been executing various initiatives and leveraging its acquisitions to consistently deliver superior corporate performance. These have all come into play in 2007-08 with your Company achieving its best ever results in 71 years of its existence. Let me share with you some of the key consolidated financial numbers. $ Net sales and income from services increased by over 21% to reach Rs.68.3 billion. This translates to a top-line of US$ 1.7 billion. $ Each of the businesses has done very well. Power Systems saw gross sales increasing by 21% to Rs.48.2 billion in 2007-08, or US$ 1.2 billion. Industrial Systems grew by 23% to Rs.11 billion, or US$ 275 million; and Consumer Products increased revenues by 17% to Rs.11.7 billion, or US$ 291 million. The Management of your Company and I, believe that top-line growth must be accompanied by significant increase in profits. I am happy to inform you that Crompton Greaves’ profits have grown considerably in 2007-08, with a sizeable increase in profitability. Here are some consolidated numbers for 2007-08: $ Operating EBIDTA grew by 54% to Rs.7.4 billion or US$ 185 million. Consequently, the ratio of operating EBIDTA to net sales increased by 230 basis points — from 8.6% in 2006-07 to 10.9% in 2007-08. $ Profits after tax (PAT), net of minority interests and share of associate companies grew by 44% to Rs.4.1 billion, or US$ 101 million. $ Earnings per share (EPS) on a fully diluted basis increased from Rs.7.69 in 2006-07 to Rs.11.10 in 2007-08. Cash EPS stood at Rs.14.60. 4 ANNUAL REPORT 2007–2008 CROMPTON GREAVES LIMITED
$ Return on net worth (RONW) rose by 210 basis points to 33%. $ Return on capital employed (ROCE) increased by 590 basis points to 31.8% in 2007-08. These are excellent results and exemplify how Crompton Greaves has been consistently growing shareholder value over the last eight years. Given the execution excellence of your Company’s Management, I am sure that we will see more such results in the years ahead. Up to 2007-08, Crompton Greaves’ focus was to substantially increase operational efficiencies and reduce unit costs across all the businesses — especially its two major overseas acquisitions, Pauwels and Ganz. While Management will never take its eyes off achieving greater productivity growth and higher ROCE, you will now see a subtle change in strategic emphasis. With capital efficiency, inventory turns and cost minimisation firmly embedded in the DNA of Crompton Greaves, your Company will focus more on achieving even higher growth. We expect this to occur both inorganically as well as through strategic acquisitions. Microsol has been one such acquisition, which your Company purchased in May 2007. With a substantial presence in Europe, Microsol provides automated solutions for medium and high voltage substations. With Microsol, we can now become a full solutions provider. Going forward, I expect to see more such strategic, technology based acquisitions — of small, medium and large enterprises in the rest of the world as well as India. As we acquire more global entities, we will have to master the art of managing these across diverse geographies, markets and work cultures. Part of this involves putting in place uniform processes and reporting systems — and doing so by adopting best practices across all entities. This is being done. The task of managing a truly global MNC, however, is more than having common processes and reporting systems. It involves creating global managers — who can be as efficient and comfortable in running a business out of Mandideep, near Bhopal, as in Winnipeg in Canada, Bogor in Indonesia, Mechelen in Belgium or Tapioszele in Hungary. As a part of the Avantha Group, your Company has begun taking significant steps in creating such a best-in-class global managerial cadre. At the group level, we will be choosing 50 such people across different businesses, training them for global leadership and posting them to international assignments, to expedite managerial cross-fertilisation. Our aim is to have a team of 200 cross-functional global managers across the Avantha Group to lead key tasks in India and elsewhere. A year and a half ago, few would have believed that the global economy would be where it is today. As I write this letter, the US may well get into a recession. In any event, US GDP growth for 2008 is not expected to be greater than 1.2%. The UK too is slowing down, with a growth forecast of 1.5% to 1.8% for 2008. So too is the Euro zone, which is expected to With capital efficiency, inventory turns and cost minimisation firmly embedded in the DNA of Crompton Greaves, your Company will focus more on achieving even higher growth. We expect this to occur both inorganically as well as through strategic acquisitions CHAIRMAN’S LETTER 5
Page 1 and 2: CROMPTON GREAVES LIMITED ANNUAL REP
Page 3: RETURNS PERCENT 23 PERCENT 25.90 RO
Page 7 and 8: CORPORATE INFORMATION Board of Dire
Page 9 and 10: Power Systems CONSOLIDATED PERFORMA
Page 11 and 12: CG Power’s Indian operations show
Page 13 and 14: Szolnok facility becomes a strategi
Page 15 and 16: Industrial Systems The Company’s
Page 17 and 18: CHART F Gross Sales of Consumer Pro
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Page 21 and 22: During 2007-08, Crompton Greaves re
Page 23 and 24: Research and Development (R&D) R&D
Page 25 and 26: Financial Performance We first high
Page 27 and 28: CONSOLIDATED PERFORMANCE The consol
Page 29 and 30: Risk Identification and Mitigation
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INVESTOR SERVICES DEPARTMENT In add
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Managing Director’s and Chief Fin
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AUDITORS’ REPORT TO THE SHAREHOLD
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CROMPTON GREAVES STANDALONE FINANCI
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ANNEXURE TO THE AUDITORS’ REPORT
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BALANCE SHEETAS AT 31ST MARCH, 2008
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CASH FLOW STATEMENTFOR THE YEAR END
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SCHEDULES FORMING PART OF ACCOUNTS
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STATEMENT UNDER SECTION 212 OF THE
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STATEMENT UNDER SECTION 212 OF THE
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INFORMATION IN RESPECT OF SUBSIDIAR
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CROMPTON GREAVES CONSOLIDATED FINAN
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CONSOLIDATED BALANCE SHEET AS AT 31
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CONSOLIDATED CASH FLOW STATEMENTFOR
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STANDALONE BALANCE SHEET AS AT 31ST
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STANDALONE BALANCE SHEET AS AT 31ST
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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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