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Updated:24 May, 2019, 15:56 PM IST

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Updated:24 May, 2019, 16:01 PM IST

DIRECTORS REPORT

TO

THE MEMBERS

Your Directors have pleasure in presenting their 33rd Annual Report on the business and operations of the Company and the accounts for the Financial Year ended March 31, 2016.

Havells, on a standalone basis achieved 4% growth in its net sales to Rs. 5,437 crores in 2015–16 as against Rs. 5,239 crores in 2014–15 with improvement in growth visible in second half at 8.6%. The sale growth in value terms was impacted by drop in commodity prices during the year 2015–16 offsetting higher volume growth in cable business.

The financial year 2015–16 embarked upon visible improvement in operating profit margins due to focused cost efficiency measures, price discipline and low commodity prices. Havells sustained its investment in brand and manpower to prepare for next growth phase. The operating profit before finance costs, depreciation and tax grew by 8.8% to Rs. 817 crores in financial year 2015–16 as compared to Rs. 751 crores in financial year 2014–15.

Profit after tax was Rs. 715 crores in year 2015–16 as compared to Rs. 465 crores of preceding year. Profit after tax includes exceptional item of Rs. 202 crores due to profit on stake sale of Sylvania, during financial year 2015–16. Increase in other income is due to interest earned on fund received from redemption/ sale of investment.

Each business segment shows growth over last year. Higher volume growth in cable division offset by drop in commodity prices. In lighting and fixture division new technology lighting i.e. LED grew by 100% during financial year 2015–16 as compared to financial year 2014–15 and comprised 51% of the total lighting segment. Havells has been able to capture the transition in lighting market from conventional lighting to LED by introducing leading products. Although drop in conventional lighting slowed down overall growth in lighting and fixture division.

2. BRIEF DESCRIPTION OF THE COMPANY’S WORKING DURING THE YEAR/ STATE OF COMPANY’S AFFAIRS

Towards the end of the calendar year 2015, your Company, divested 80% stake in Sylvania to Shanghai Feilo Acoustics Co Ltd. The divestment is optimal for each stakeholder. Havells post divestment would realign its focus on domestic markets and growth. Havells continues to invest in the future technology, products and people. During the year we launched smarter products that not only helped us connect better with the gen–next but also adhere to our core philosophy of providing energy efficient products. The Company launched some award winning products in the switchgear, LED and also marked its entry into air cooler and air purifiers thus strengthening its consumer durable business.

In the switchgear segment the Company launched award winning Euro II series of switchgear including super premium distribution boards. The new range has been designed, developed and manufactured entirely in the country. The Company strengthened its range of LED products like colour changing LED’s, ambient dual colour LED’s, Solar LED street lights to name a few. As we get ready for our next phase of growth, we intend to make our conventional products smarter using technologies such as ‘Internet of Things’. In the fiscal 15–16, we equipped our dealers with new technologies so that they are ready to take full advantage of upcoming products and solutions from the Company. We launched ‘M–Connect’ a mobile application for dealers helping them conduct business even on the go. In a short span of time this has not only added to the convenience but has become a great tool to enhance their productivity. The Company offered similar application with augment reality features to customers to enhance their experience with Havells products and make an informed choice.

Advertising has been one of the core differentiators for Havells. The Company came up with some of the most memorable yet relevant campaigns that helped it connect with the audience effectively. The brand Standard took the young bollywood actress, Alia Bhat as its brand ambassador positioning itself as a youthful and energetic brand. During the year the Company came up with some award winning campaigns for fans, domestic cables, Crabtree switches, LED and Standard fans. The Company spent Rs. 179 crores in advertising and brand initiatives during the year.

SUBSIDIARY COMPANIES, JOINT VENTURE AND CONSOLIDATED FINANCIAL STATEMENTS

During financial year 2015–16, the Company divested its international operations. Havells Holdings Limited, wholly owned subsidiary of the Company, completed 80% stake sale in its subsidiary Havells Malta Limited (excluding its subsidiaries based in United States, Brazil, Chile and Thailand) to INESA UK Limited, an affiliate of Shanghai Feilo Acoustics Co. Limited, a China based listed company at an agreed consideration of Euro 138.40 million (equivalent to Rs. 1,011.05 crores). Also the Company had sold its 80% stake in Havells Exim Limited, Hong Kong, a wholly owned subsidiary, to Shanghai Feilo Investment Ltd (a subsidiary of Shanghai Feilo Acoustics Co. Limited), at an agreed consideration of Euro 10.40 million (equivalent to Rs. 75.89 crores). The combined equity value for 100% stake for both the companies were Euro 186 million.

The consolidated profit and loss account for the period ended 31st March, 2016 includes profit and loss account for all of these sold out subsidiaries and their further subsidiaries for the nine months ended 31st December, 2015.

As on 31st March, 2016, your Company has 8 (Eight) subsidiary companies, 2 (Two) being direct subsidiaries and the rest 6 (Six) step–down subsidiaries, all except 1 (One) of which are registered outside India. The consolidated profit and loss account for the period ended 31st March, 2016 includes the profit and loss account for these 8 (Eight) subsidiaries and the joint venture company for the complete financial year ended 31st March, 2016. The 2 (Two) Direct subsidiaries are –

1. Havells Holdings Limited based at Isle of Man. This entity is an SPV formed for the purpose of holding investments and mobilizing funds for the 6 (Six) step–down subsidiaries of the Company

2. Promptec Renewable Energy Solutions Pvt. Ltd. based at Bangalore. This entity is engaged in marketing and manufacturing of LED products including street lighting, office lighting and Solar lighting.

The Board of Directors of the Company has, by Resolution passed in its Meeting held on 11th May, 2016, given consent for not attaching the Balance Sheets of the subsidiaries concerned.

The consolidated financial statements of the Company including all subsidiaries duly audited by the statutory auditors are presented in the Annual Report. The consolidated financial statements have been prepared in strict compliance with applicable Accounting Standards and, where applicable, Listing Agreement and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as prescribed by the Securities and Exchange Board of India.

A report on performance and financial position of each of the subsidiaries, associates and joint venture companies included in the consolidated financial statement is presented in a separate section in this Annual Report. Please refer (AOC–1) annexed to the financial statements in the Annual Report.

The annual accounts of the subsidiary companies and the related detailed information shall be made available to Shareholders of the Company and its subsidiary companies upon request and it shall also be made available on the website of the Company i.e. www. havells.com. The annual accounts of the subsidiary companies shall also be kept for inspection by any shareholder in the head office of the Company and the respective offices of its subsidiary companies.

JOINT VENTURE

Your Company has a 50:50 joint venture in People’s Republic of China with Shanghai Yaming Lighting Co. Ltd. under the name of Jiangsu Havells Sylvania Lighting Co. Ltd. (JV). This Joint Venture Company is created with an objective to use advanced technology, know–how and scientific management techniques for production of lighting lamps and fixtures and to sell it to Havells and its other affiliates. Both the partners have made full investment in JV (USD 5.3 mn by each partner) as required by Joint Venture contract for its registered capital.

In Financial Year 2015–16, JV achieved sales of US$ 18.9 mn against US$ 19.9 mn in 2014–15 and the net profit for the year was 2.9% as against 4% in 2014–15.

3. NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR

Consequent to the divestment of 80% stake in Havells Malta Limited by Havells Holdings Limited, a whollyowned subsidiary of the Company and divestment of 80% stake in Havells Exim Limited, a wholly–owned subsidiary of the Company, the following entities ceased to be subsidiaries of the Company After the divestment, Havells Malta Limited and Havells Exim Limited became Associate Companies of the Company.

During the financial year ended 31st March, 2016,

1. Promptec Renewable Energy Solutions Pvt. Ltd. became a subsidiary of the Company, with a majority stake of 51% held by the Company in it. Promptec is a Bangalore based company engaged in marketing and manufacturing of LED products including street lighting, office lighting and solar lighting.

2. Havells International Limited was incorporated in Malta during the financial year 2015–16 as a wholly owned subsidiary of Havells Holdings Limited. This entity was incorporated to hold the shares of subsidiaries carved out from the Sylvania divestment in January, 2016. It holds the shares of Havells Sylvania (Thailand) Limited, Thai Lighting Assets Co Ltd and Havells Sylvania Brasil Illuminacao Ltda.

4. RESERVES

Your Company proposes to carry Rs. 71.55 crores to the general reserve and retain Rs. 1,811.28 crores in the profit and loss account.

5. DIVIDEND INTERIM (SPECIAL) DIVIDEND

Post the divestments carried out in January, 2016, as a balancing act of rewarding shareholders and preserving resources for further growth of the Company, both organically and inorganically, an Interim (Special) Dividend at the rate of Rs. 3/– per Equity Share of the face value of Rs. 1/– each was declared for the year 2015–16, resulting in an outflow of Rs. 225.53 crores (including Corporate Dividend Tax of Rs. 38.15 crores). The dividend amount was disbursed to all the Shareholders whose names were appearing in the Register of Members as on the Record date i.e. 11th February, 2016, fixed for the aforesaid purpose.

FINAL DIVIDEND

In addition to the Interim (Special) Dividend declared during the year, your Directors are pleased to recommend a Final Dividend @ Rs. 3/– per equity share for the year 2015–16. The proposed dividend, subject to approval of Shareholders in the ensuing Annual General Meeting of the Company, would result in appropriation of Rs. 225.53 crores (including Corporate Dividend Tax of Rs. 38.15 crores). The dividend would be payable to all Shareholders whose names appear in the Register of Members as on the Book Closure Date.

The Register of Members and Share Transfer books shall remain closed from 1st July, 2016, Friday, to 8th July, 2016, Friday (both days inclusive).

6. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this financial statements relate and the date of this Report. However, in terms of the “Part B – Havells Employees Stock Purchase Plan 2014” of the Havells Employees Long Term Incentive Plan 2014, which is administered by Havells Employees Welfare Trust, 1,17,562 Equity Shares of Rs. 1/– each, were approved for grant on 11th May, 2016 to the eligible employees, which, if exercised, shall result in an equivalent no. of Equity Shares of Rs. 1/– to be allotted to Eligible Employees of the Company under the Plan.

Further, pursuant to Havells Employees Stock Purchase Scheme 2015, which was instituted during the year, 1,50,000 Equity Shares of Rs. 1/– each, were approved for grant to the Eligible Employees which, if exercised, shall result in an equivalent no. of Equity shares of Rs. 1/– to be alloted to Eligible Employees of the Company under the scheme.

Further, the Board of Directors upon the recommendation of the Nomination and Remuneration Committee approved the Havells Employees Stock Purchase Scheme 2016 framed in accordance with SEBI (Share Based Employee Benefits) Regulations, 2014. The Board recommends the same for Shareholders approval at the forthcoming Annual General Meeting. The details of the Scheme are contained in the Explanatory Statement to the Notice of AGM.

7. CHANGE IN THE NATURE OF BUSINESS, IF ANY

There was no change in the nature of business of the Company during the financial year ended 31st March, 2016.

8. DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL INCLUDING THOSE WHO WERE APPOINTED OR HAVE RESIGNED DURING THE YEAR

Pursuant to the provisions of Section 152 of the Companies Act, 2013, Shri Surjit Kumar Gupta, Non– Executive Director and Shri Anil Rai Gupta, Chairman and Managing Director, are due to retire by rotation at the ensuing Annual General Meeting, and being eligible, offers themselves for re–appointment.

The details of Directors being recommended for re–appointment as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are contained in the accompanying Notice convening the ensuing Annual General Meeting of the Company.

Further, Shri A. P. Gandhi, Shri V. K. Chopra, Shri S. B. Mathur, Shri S. K. Tuteja and Dr. Adarsh Kishore, whose first term as Independent Directors of the Company shall be expiring on 31st March, 2017 are proposed to be re–appointed as Independent Directors for a second term of 3 (Three) years w.e.f. 1st April, 2017.

Due notices under section 160 of the Companies Act, 2013 have been received from Members of the Company proposing the appointment of Shri A. P. Gandhi, Shri V. K. Chopra, Shri S. B. Mathur, Shri S. K. Tuteja and Dr. Adarsh Kishore as Independent Directors of the Company at this Annual General Meeting. Appropriate Resolution(s) seeking your approval to the appointment/ re–appointment of Directors are also included in the Notice.

9. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

During the financial year 2015–2016, the Board of Directors of the Company, met 9 (Nine) times on 20th April, 2015, 11th May, 2015, 25th July, 2015, 23rd September, 2015, 9th November, 2015, 10th December, 2015, 27th January, 2016, 3rd February, 2016 and 21st March, 2016.

Further, a separate Meeting of the Independent Directors of the Company was also held on 21st March, 2016, whereat the prescribed items enumerated under Schedule IV to the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, were discussed.

10. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Companies Act, 2013, the Directors to the best of their knowledge hereby state and confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;

c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) the directors had prepared the annual accounts on a going concern basis;

e) the internal financial controls to be followed by the company were laid down and such internal financial controls were adequate and were operating effectively; and

f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

11. DECLARATION BY INDEPENDENT DIRECTOR(S) AND RE–APPOINTMENT, IF ANY

All the Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules.

12. NOMINATION AND REMUNERATION POLICY OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

In adherence of section 178(1) of the Companies Act, 2013, the Board of Directors of the Company in its Meeting held on 22nd December, 2014, approved a policy on directors’ appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided u/s 178(3), based on the recommendations of the Nomination and Remuneration Committee. The broad parameters covered under the Policy are – Company Philosophy, Guiding Principles, Nomination of Directors, Remuneration of Directors, Nomination and Remuneration of the Key Managerial Personnel (Other than Managing/ Whole–time Directors), Key–Executives and Senior Management and the Remuneration of Other Employees.

The Company’s Policy relating to appointment of Directors, payment of Managerial remuneration, Directors’ qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 is furnished in ANNEXURE – 1 and forms part of this Report.

13. FORMAL ANNUAL EVALUATION

In line with the statutory requirements enshrined under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board carried out a performance evaluation of itself, its Committees, the Chairman and each of the other Directors. As in previous year, this was carried out on the basis of framework approved by the Nomination and Remuneration Committee.

The Committee had unanimously consented for an ‘in–house’ review built on suggestive parameters. Based on the suggestive parameters approved by the Nomination and Remuneration Committee, the following evaluations were carried out:

– Review of Board as a whole by all the Members of the Board

– Review of all Board Committees by all the Members of the Board

– Review of Individual Directors by rest of the Board Members except the Director being evaluated At the conclusion of the evaluation exercise, the Members of the Board assessed that the Board as a whole together with each of its Committees was working effectively in performance of its key functions.

The peer review concluded on the note that each of the individual directors was performing efficiently and effectively contributing to a well performing Board and shared a common vision to turning organization goals into reality.

14. EXTRACT OF THE ANNUAL RETURN

The extract of the Annual Return in Form No. MGT – 9 forms part of the Board’s Report and is annexed herewith as ANNEXURE – 2.

15. AUDITORS

1. STATUTORY AUDITORS

The Statutory Auditors, M/s V. R. Bansal & Associates, Chartered Accountants, (Registration No. 016534N) and M/s S. R. Batliboi & Co. LLP (Registration No. 301003E/ E300005) hold office till the conclusion of the ensuing Annual General Meeting. The Company has received their written consent and a certificate that they satisfy the criteria provided under Section 141 of the Companies Act, 2013 and that the appointment, if made, shall be in accordance with the applicable provisions of the Act and rules framed there under.

The Audit Committee and the Board of Directors recommends the re–appointment of M/s V. R. Bansal & Associates, Chartered Accountants as the Statutory Auditors of the Company in relation to the financial year 2016–17 till the conclusion of the next Annual General Meeting.

The Audit Committee and the Board of Directors recommends the re–appointment of M/s S. R. Batliboi & Co. LLP as the Statutory Auditors of the Company till the conclusion of the Annual General Meeting of the Company to be held in the calendar year 2021.

The re–appointments proposed are within the time frame for transition under the third proviso to sub–section (2) of Section 139 of the Companies Act, 2013.

STATUTORY AUDITORS’ REPORT

The observations of Statutory Auditors in their reports on standalone and consolidated financials are self–explanatory and therefore do not call for any further comments.

2. COST AUDITORS

Pursuant to the provisions of Section 141 read with Section 148 of the Companies Act, 2013 and Rules made thereunder, M/s Sanjay Gupta & Associates, Cost Accountants (Firm Regn. No. 000212) were appointed as the cost auditors of the Company for the year ending 31st March, 2016.

In terms of the Cost Audit Order notified by the Ministry of Corporate Affairs dated 31st December, 2014, the Company is covered under the purview of Cost Audit w.e.f. the financial year 2015–16.

3. SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with corresponding Rules framed thereunder, M/s MZ & Associates were appointed as the Secretarial Auditors of the Company to carry out the secretarial audit for the year ending 31st March, 2016.

SECRETARIAL AUDIT REPORT

A Secretarial Audit Report given by the Secretarial Auditors in Form No. MR–3 is annexed with this Report as ANNEXURE – 3. There are no qualifications, reservations or adverse remarks made by Secretarial Auditors in their Report.

16. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

During the financial year ended 31st March, 2016, no Loan u/s 186 of the Companies Act, 2013 was made by the Company.

The particulars of investments and guarantees made/ given by the Company, under Section 186 is furnished in ANNEXURE – 4 and forms part of this Report

17. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

The particulars of every contract and arrangement entered into by the Company with related parties referred to in sub–section (1) of section 188 of the Companies Act, 2013 including certain arm’s length transactions under third proviso thereto are disclosed in Form No. AOC–2 in ANNEXURE – 5 and form part of this Report.

18. CONTRIBUTION TO EXCHEQUER

The Company is a regular payer of taxes and other duties to the Government. During the year under review your Company paid Rs. 222.71 crores towards Income Tax as compared to Rs. 150.99 crores paid during the last financial year. The Company also paid Excise Duty of Rs. 397.10 crores, Custom Duty, Sales Tax & Service Tax of Rs. 547.84 crores, totaling Rs. 944.94 crores during financial year 2015–16 as compared to Rs. 842.64 crores paid during last financial year.

19. DETAILS RELATING TO DEPOSITS COVERED UNDER CHAPTER V OF THE ACT

The Shareholders vide their Special Resolution dated 9th June, 2014, passed by way of Postal Ballot, have approved inviting/ accepting/ renewing deposits, in terms of the provisions of Companies Act, 2013 making the Company eligible for the same. However, the Company has not accepted any deposits during the year under review.

20. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company has been actively contributing to the overall growth of the society through various CSR initiatives undertaken either by itself or through QRG Foundation, a trust instituted by the group. The flagship program of providing mid–day meal to school children in Alwar district started from 1,500 students during the year 2005. It has now expanded its wings to 57,000 students every day in 672 schools in financial year 2015–16. Inculcating good hygiene habits and enhance the lives of the students and future citizens has been another important pillar for your Company. In this regard it has taken a step forward to include sanitation under Swachh Bharat Abhiyaan. The Company in the current fiscal has built 800 environment friendly bio toilets in 108 schools in the Alwar district of Rajasthan.

Your Company believes in Sustainable CSR that can help improve lives of students around the country. One such noble idea was implemented at its plant in Haridwar where the plant manufactured benches made out of waste wood used in the packaging of aluminium blades of its fans. Instead of selling the wood to scrap dealer the plant created furniture for school children and donated them to the government primary school in Haridwar.

Environment is another major area where your Company plans to contribute its bit. This year your Company planted 1,000 trees in Baddi, Himachal Pradesh and would take care of them for another few years until they can grow on their own. Your company also has undertaken the task of managing few parks in the Baddi area that could help maintain greenery, save environment and are appealing to eye.

Further, the Board of Directors of your Company has also adopted the CSR Policy of the Company as approved by the Corporate Social Responsibility Committee which is also available on the website of the Company at www.havells.com.

The disclosures as per Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 are annexed herewith as ANNEXURE – 6 to this Report in the prescribed format.

21. AUDIT COMMITTEE

The Audit Committee of the Board of Directors of the Company, comprises 4 (Four) Members, namely Shri S. B. Mathur, Shri V. K. Chopra, Shri A. P. Gandhi and Shri Surjit Kumar Gupta, majority of them being Independent Directors except Shri Surjit Kumar Gupta, who is a Non–Independent Non–Executive Director. Shri S. B. Mathur, an Independent Director, is the Chairperson of the Audit Committee.

The Board accepted the recommendations of the Audit Committee whenever made by the Committee during the year.

22. RISK MANAGEMENT POLICY

Havells understands controlling risks through a formal programme is necessary for the well–being of the Company. To this end, the Board has formed an Enterprises Risk Management Committee to identify the risks impacting the business and formulate strategies/ policies aimed at risk mitigation as part of risk management. Further, a core Committee comprising senior management, has also been formed to identify and assess key risks and formulate strategies for mitigation of risks identified in consultation with process owners.

The Board of Directors has also adopted a formal Risk Management policy for the Company, whereby, risks are broadly categorized into Strategic, Operational, Compliance and Financial & Reporting Risks, outlining the parameters of identification, assessment, monitoring and mitigation of various risks

23. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Risk Management and Governance Department of the Company have assured the existence of various risk–based controls in the Company and also tested the key controls towards assurance for compliance for the present fiscal.

Further, the testing of such controls was also carried out independently by the Statutory Auditors of the Company as mandated under the provisions of the Companies Act, 2013.

In the opinion of the Board, the existing internal control framework is adequate and commensurate to the size and nature of the business of the Company.

24. DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES

Prior to the statutory mandate, the Company has had in place a composite Policy “Idea & Satark”, whereby “Idea” seeks to promote a culture of innovative thinking and creativity in all aspects of business – technical, non–technical, commercial, administrative, processes, cost saving etc. that may benefit the Company; and “Satark” (alert/ vigilant) functions as a Whistle Blowing mechanism, empowering any person associated with the organization to bring to the attention of the management any irregularity that he/ she may notice.

Under the Policy, “Satark”

– is a forum available to the employees and any person associated with the organization, allowing him/ her to blow the whistle/ highlight any fraud, irregularity, wrongdoing etc.

– ensures confidentiality of the whistle–blower subject to the rights of the person against whom the grievance is made

– provides whistle–blower access to the Chairman of the Audit Committee

25. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE

There was no significant and material order passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future.

26. EMPLOYEE RELATIONS

Havells has always maintained that human capital is one of the critical factors towards achieving success. Therefore, the Company’s comprehensive Human resource strategy takes into cognizance the key aspects of people development such as employee engagement, talent management, performance management capability development and progressive industrial relations. The endeavour is to build and strengthen organizational capabilities thereby enabling the Organization to sustain attractive growth in a dynamic business environment.

We have established a Leadership Competency Framework that drives our leadership culture. We plan to utilize this framework in our core HR processes of Performance Management, Talent Development though development centers and 360O Feedback.

The Company has established “Training Model” that focusses on improving capabilities in Sales and Operations and will be a key driver towards enhancing our operating efficiencies.

At Havells, we ensure that there is full adherence to the code of ethics and fair business practices. Havells is an equal opportunities employer and employees are evaluated solely on the basis of their qualifications and performance. We provide equal opportunity in all aspects of employment, including recruitment, training, work conditions, career progression, etc. that reconfirms our commitment that equal employment opportunity is a component of our growth and competitiveness. Further, Havells is committed to maintaining a workplace where each employee’s privacy and personal dignity is respected and protected from offensive or threatening behaviour including violence.

At Havells, the Human Resource function is a business partner that focusses on improving the way of life, work culture, employee engagement, productivity, effectiveness and efficiency. The Company believes in developing an engaged, efficient and committed employee base that is aware and empowered. Employees are involved in inculcating business efficiencies through policies like “Idea” thereby making them partners in the wealth created at Havells. “Nirbhaya”

In accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 to provide for the effective enforcement of the basic human right of gender equality and guarantee against sexual harassment and abuse, more particularly against sexual harassment at work places, your Company has in place a “Nirbhaya Policy”, duly approved by the Board of Directors.

An Internal Complaints Committee has been constituted under the above policy which provides a forum to all female personnel to lodge complaints (if any) therewith for redressal. The Committee submits an Annual Report to the Audit Committee of the Board of Directors of your Company on the complaints received and action taken by it during the financial year.

During the year, no complaint was lodged with the Internal Complaints Committee (ICC) formed under Nirbhaya Policy.

In order to fulfill the desired utility of the Committee and make the Nirbhaya Policy meaningful, the Committee meets at specified intervals to take note of useful tools, mobile applications, media excerpts etc. that enhance security of female employees.

The same are circulated within the organization to encourage general awareness. In its endeavour to ensure the spirit of law, during the financial year 2015– 16, the ICC undertook several interactive sessions at the head office and various other plant locations. The interactions were primarily aimed at understanding as to how comfortable female employees are working in the organisation especially from safety point of view and how forthcoming would they be, in raising their voice if they are put in an undesirable situation.

27. DETAILS PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT, 2013

Details pursuant to section 197(12) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report and are annexed herewith as ANNEXURE – 7.

28. EMPLOYEES STOCK OPTION PLANS

The Company has in place 2 (Two) employee benefit plans, namely, Havells Long Term Incentive Plan 2014 (LTIP 2014) and the Havells Stock Purchase Scheme 2015 (ESPS 2015). Besides, with the intent of rewarding its senior management based on their performance and achievement of KRAs, the Board upon the recommendation of Nomination and Remuneration Committee has also approved the “Havells Employees Stock Purchase Scheme 2016” and recommends the same for Shareholders approval in the forthcoming AGM, details whereof are included in the Notice of AGM.

All the existing and proposed employee benefit schemes are/ shall be administered by Havells Employees Welfare Trust under the supervision of the Nomination and Remuneration Committee. Promoters, Independent Directors, Directors directly or indirectly holding 10% or above of the equity share capital of the company, Employees not residing in India or Non–Resident Indians (NRIs) are not eligible for the grant of options/ issue of shares under any of the Schemes.

The Company has received a certificate dated 22nd April, 2016 from the Auditors of the Company that the Schemes have been implemented in accordance with the applicable SEBI Guidelines and the Resolutions passed by the shareholders dated 9th June, 2014 and 4th December, 2015 in respect of LTIP 2014 and ESPS 2015 respectively.

The Certificates would be placed at the Annual General Meeting for inspection by Members.

There has been no material change in any of the subsisting Schemes. Disclosures pursuant to SEBI (Share Based Employee Benefits) Regulations, 2014, in respect of LTIP 2014 and ESPS 2015, as at 31st March, 2016, are available on the website of the Company at http://www.havells.com/content/havells/en/investorrelation/ disclosure.html.

29. CREDIT RATINGS

CARE Ratings

Credit Analysis & Research Limited (CARE) is a full service rating company that offers a wide range of rating and grading services across sectors. CARE’s Credit rating is an opinion on the relative ability and willingness of an issuer to make timely payments on specific debt or related obligations over the life of the instrument. CARE rates rupee denominated debt of Indian companies and Indian subsidiaries of multinational companies.

During the year, CARE has revised the rating assigned to the long–term facilities of your Company from CARE AA+ [Double A Plus] to CARE AAA [Triple A]. This rating is applicable to facilities having a tenure of more than one year. Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations.

CARE has also reaffirmed the CARE A1+ [A One Plus] rating assigned to the short–term facilities of your Company. This rating is applicable to facilities having a tenure upto one year. Instruments with this rating are considered to have very strong degree of safety regarding timely payment of financial obligations.

ICRA Ratings

During the year, ICRA assigned a long–term rating of [ICRA] AA+ (ICRA double A plus) and a short–term rating of [ICRA] A1+ (ICRA A one plus) to the Line of Credit of the Company. The outlook on the long–term rating is stable.

30. CERTIFICATIONS

The Company has acquired a number of international certifications, like BASEC, KEMA, TÜV Rheinland and CB, for its various products to expand its reach in international arena.

31. CORPORATE GOVERNANCE

Your Company upholds the standards of governance and is compliant with the Corporate Governance provisions as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 in both letter and spirit. The Company’s core values of honesty and transparency have since its inception been followed in every line of decision making. Setting the tone at the top, your Directors cumulatively at the Board level, advocate good governance standards at Havells. Havells has been built on a strong foundation of good corporate governance which is now a standard for all operations across your Company.

Parameters of Statutory compliances evidencing the standards expected from a listed entity have been duly observed and a Report on Corporate Governance as well as the Certificate from Statutory Auditors confirming compliance with the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the Annual Report.

Further, the Management Discussion and Analysis Report and CEO / CFO Certificate as prescribed under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are also presented in separate sections forming part of the Annual Report.

32. ENVIRONMENT, HEALTH AND SAFETY

Your Company is continuously working towards laying a strong foundation and creating a sustainable future for our organization, our people and the society as a whole. Here, Environment Health and Safety (EHS) management is a key pillar of our sustainable growth agenda. We are committed to lead and excel in all aspects of environmental stewardship, safety, health and social responsibility, always striving to provide safe and healthy work environment to our employees and efficient, safe and environmentally responsible products to our customers.

Your Company’s primary focus in this regard is on product innovation, developing safe and efficient products which are environmentally friendly, i.e. energy–efficient, safer to use, using non–toxic / ecofriendly raw–materials, having long use life and those can be safely disposed and dismantled at the end of their use life. Further, we are actively working towards improving the EHS systems and practices within our operations. From environment aspect, our efforts are directed towards resource conservation and efficiency within our operations. We have initiated an energy conservation drive within our plants with the objective of monitoring our energy consumption at micro–level, benchmarking our performance and implementing solutions for continuous improvements. One of our plants now complies with the ISO 50001 Energy Management Standard, with others also preparing for the same. On similar note our plants are also working towards better materials, water and waste management, including implementation of initiatives such as integrated management system (i.e. ISO 9001, ISO 14001 and OHSAS 18001), rainwater harvesting, and zero water discharge.

Similarly, we remain focused on our occupational health and safety performance with an eye on our overall objective of “zero accidents” operations. Relevant health, safety and fire trainings are provided to all employees, with special trainings organized for employees working with or around hazardous materials and processes. We offer our employees, a working environment with high level of health and safety protection. Our safety management is a combination of preventive and remedial approaches. Apart from focusing on process related safety procedures, the salient features of our safety management include managing risks against fires, disaster management and effective health management of the employees that reduce the inherent risk and build capacities of the workforce.

Further, we continue to use the “Idea policy” to encourage employees to share their ideas and contributions in making your Company an accident free and sustainable business unit. This process is important for us as we strongly believe that those on the shop floor who actually execute a task are the best to judge the parameters involved for safety and welfare. Overall, we believe we have worked hard to put in place management systems, controls, objectives and targets, strategies and training that uphold and honour national and international codes and standards on health, safety and environment.

33. RESEARCH AND DEVELOPMENT

With the objective of enhancing in–house R&D capability, the Company is investing in world class infrastructure and test laboratories at all plant locations. The company has strong focus on in–house research & development and promotes culture for innovation. Company’s CRI (Centre for Research and Innovation) team focusses on continuous and sustainable product innovations, working across the product lifecycle aspects including design, development, manufacturing and use phases.

During the year, the R&D activities continued to focus on developing intelligent, eco–friendly and energy efficient products, as well as, extending the range of existing products.

There is an increasing focus on improving the co–relation between virtual (CAE – Computer Aided Engineering) and as manufactured so as to reduce the number of iterations in the development cycle As a result Company has many products to its name in the FMEG sector, such as being the first Company to offer 5–star energy efficient fans in India, the green CFL of the country. The Company has 185+IPRs registered including 18+ patents for its innovations throughout the years. With an eye on the future technology trends, many advanced engineering study projects are being undertaken to further build on the Company’s engineering capabilities.

34. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Section 205C of the Companies Act, 1956, your Company has transferred Rs. 4,49,588/– during the year to the Investor Education and Protection Fund. This amount was lying unclaimed/ unpaid with the Company for a period of seven years after declaration of Dividend for the financial year ended 2007–08.

35. LISTING OF SHARES

The shares of the Company are listed on the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE).

Subsequent to the notification of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) during the year, the Company has entered into “Uniform Listing Agreement” with both the Stock Exchanges where its securities are listed, namely, National Stock Exchange of India Limited and BSE Limited in order to carry out a novation of the erstwhile Listing Agreement. The listing fee for the year 2016–17 has already been paid to the credit of both the Stock Exchanges.

36. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in ANNEXURE – 8 and forms part of this Report.

37. ACKNOWLEDGEMENTS

The Board places on record its appreciation for the continued co–operation and support extended to the Company by customers, vendors, regulators, banks, financial institutions, rating agencies, stock exchanges and depositories, auditors, legal advisors, consultants, business associates and all the employees with whose help, cooperation and hard work the Company is able to achieve the results. The Board deeply acknowledges the trust and confidence placed by the consumers of the Company and all its shareholders.

For and on behalf of

Board of Directors of Havells India Limited

Anil Rai Gupta

Chairman and Managing Director

Place : Noida,

date : May 11, 2016

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