CROMPTON Chairmans Speech

Dear Shareholders,


Greetings from Crompton!


The last year was the first completed year of operations, post demerger, for Crompton. Your Company was listed on 13th May, 2016. A new board, comprising of many eminent personalities in relevant domains, has been constituted to guide the Company forward. In the year under consideration, your company grew its topline by 11% and comparable operating earnings at, a faster rate of, 26%.


The year under review has been good for Indian economy as a whole, despite the temporary setback of ‘demonetisation’ in the second half of the year, which did impact most sectors. Lower crude oil prices and good farm output have kept inflation under control. This has been augmented by a relatively strong rupee, on back of high FDI and portfolio inflows. Higher rural demand, with a good monsoon, and improved consumer sentiment on back of improving macro conditions augur well for the future. The transition to GST in the coming year will further boost business sentiment and operating environment. However, such a major change could result in temporary business disruption during migration.


While domestic private investment has remained weak due to debt overhang, the government has stepped up investment in infrastructure projects related to electrification and connectivity, leading to road, rail and ports development. While construction sector growth is subdued, government push for affordable housing can help bridge the gap in the interim. Multiple smart city projects have been initiated, which will help improve city infrastructure as well as create pockets for wider replication.


These programs create new and unique opportunities for our sector, especially in the emerging trends of energy efficiency and connected products. Energy efficiency in particular has emerged as an important theme in the sector with sharp penetration of LED lighting. This was led by a higher consumer demand for energy efficient products and government enablement on supply side by EESL programs. This trend will extend over a wider portfolio of Crompton’s products, as the technology and enabling environment develops.


With the current and impending changes in mind, your Company has identified five levers to take the Company to its aspired position. These are Brand Excellence, Portfolio Excellence, Go-to-market Excellence, Operational Excellence and Organisational Excellence. Some of the actions taken during the year under review were:


- Crompton ran an innovative and sustained brand campaign, achieving the targeted outcome in brand awareness improvement. This was first such campaign in the recent history of Crompton and is a seed for sustaining long term growth.


- Many innovative products were developed to improve value proposition to the consumer. These include making fan usage and maintenance convenient with first-of-their-kind temperature-sensing and anti-dust fans, best price proposition while maintaining highest Lumens per Watt output among the peers, value added features in Battens and an industry pioneering mini air-cooler.


- The Company ran a ‘Go-to-market’ program to enhance shopper experience by improving product availability and visibility. A pilot program with focused approach was run in Lighting segment in South India. This resulted in significant gains in top-line as well as positive feedback from the customers. In coming year, the management looks to replicate this success across all geographies and in other product lines.


- Operational improvement focused on realising higher efficiencies in operations, strengthening the supply chain and supporting IT system for better customer service.


- The Company has instituted programs for higher employee engagement and development thus striving to keep raising the performance standard. This will help generate value on process and market side and is an investment for sustained growth of the Company.


I am proud of the progress the Company has made in its commitments made to you last year. The five strategic levers will continue to be the guiding path in continuous striving for delivering better returns to all the stakeholders.


Yours sincerely,


H. M. Nerurkar Chairman

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