Annual Report - Whirlpool - 2009-2010

WHIRLPOOL OF INDIA LIMITED

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

The Directors' are pleased to present their 49th Annual Report and Audited
Accounts for the year ended 31st March 2010.



Financial Results
Rs. in lacs
Particulars For the year ended
March March
31, 2010 31, 2009
Sales/ Income from operations
(including excise duty & Discounts) 268,030 209,463
Other Income 2,338 1,115
Profit/ (Loss) before Interest,
Depreciation, Extraordinary
items & Tax 26,456 15,195
Interest (827) (1,732)
Depreciation (3,968) (3,901)
Profit/ (Loss) before Extraordinary
Items & Tax 21,661 9,563
Voluntary Retirement Compensation
(including amortization of previous year) (940) (9,43)
Profit/ (Loss) before tax 20,721 8,620
Provision for Tax (including
deferred tax and wealth tax) (6,219) (1,278)
Fringe Benefit Tax - (290)
Net Profit/ (Loss) for the year 14,502 7,052
Credit/ (Debit) Balance B/F
from previous year (82) (7,134)
Profit available for appropriation 14,420 (82)
Dividend on Preference Shares (7,224) -
Tax on Dividend (1,227) -
Surplus/ (Deficit) carried to Balance Sheet 5,969 (82)

Performance of the Company:

During the year ended March 31, 2010 the sales of the Company, was Rs.
2,680 Crores, up by 28%. Profit before tax and extra ordinary items was Rs.
216.61 Crores as compared to corresponding profit of Rs. 95.63 Crores in
the previous year. The performance of the Company during the year surpassed
all its previous milestones of turnover, profit, cash generation, working
capital and inventory management. This performance has been achieved by
focusing on new product launches, product mix, management, effective
working capital management and cost effective initiatives.

Dividend

Dividend on equity shares is not recommended for the year ended 31st March
2010 due to past accumulated losses and payment of dividend of previous
years on 10% Redeemable non convertible Cumulative preference shares of
Rs.10 each.

The Board of Directors declared the accumulated dividend as an interim
dividend on 15,23,42,500 10% Redeemable non convertible Cumulative
preference shares of Rs.10 each, for the financial years ended March 31,
2006, 2007 & 2008 @ Rs.1 Per share for each financial year. The Board has
recommended a final dividend on 15,23,42,500 10% Redeemable non convertible
Cumulative preference shares of Rs.10 each for the financial year ended
March 31, 2009 and March 31, 2010 @Rs.1 per share for each financial year.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT (MD&A)

As required under the listing agreement, MD&A is enclosed as Annexure A and
is a part of this Report.

Sales & Marketing

The Sales and Marketing approach in 2009-10 was adjusted to changes as they
occurred in the external environment. The year started on a cautious note
as the gloom of recession was still hovering over the country. The emphasis
during this period was on cash and profitability rather than growth, and
the focus was on selling a better mix, control on receivables and
inventory. Marketing investment during this period was prudent and in line
with market growth.

However, as we approached the end of the first quarter, it was evident that
the government's fiscal stimulus was having a positive impact on business
and consumer sentiment, signaling the revival of growth. Accordingly, your
company's marketing approach changed and we shifted gear from cautious
optimism to aggressive growth manifested by raising volume targets,
accelerating the pace of innovation and increasing brand visibility.

Key highlights of Sales & Marketing in 2009-10 were

* Resounding success of White Magic 1-2-3, a fully automatic top load
washing machine range launched in 6-7 kg capacity, which grew segment share
by 5 percentage points.

* Complete revamp of the Semi-Automatic Washing Machine range, including
the introduction of a plastic cabinet line-up.

* Launch of 35 new Split Air Conditioners marketed under the Mastermind
Chrome & Mastermind Aviator and 5 new Window Air Conditioners (Mastermind
Deluxe and Royale).

* Launch of 8 microwaves in Convection and Grill, marketed as Whirlpool
Magicook.

* Launch of a new, premium range of 24 Frost Free Refrigerators in
capacities from 300L

- 480L under Whirlpool Protton, including a unique fully automatic 3-door
format.

* Conducting two large scale dealer contact programmes in September 2009
and March 2010, through which 15,000 dealers were contacted in 130 towns on
each occasion.

* Conducting Road Shows for refrigerators - branded 'Kabhi Dekha Hai Aise
Magic' - in <1 lakh population towns in 8 states.

* Increasing efficiency in our Distributor channel by focusing on sub-
dealer billing numbers and frequency.

* Growing business in Modern Trade where our volume grew by approximately
60%.

* Launching new television campaigns for Purafresh Water Purifier,
WhiteMagic 123 Washing Machine, Whirlpool Protton, Mastermind Air
Conditioner and Diwali Festival Offer.

* Association with Kings XI Punjab during the 2010 IPL as Official Cooling
Partner and getting prominent players to endorse 4 different categories
through separate television commercials.

As is evident from the number of product launches, your company continued
product development and innovation even when growth had slowed down,
enabling a number of new products to be launched as the business
environment improved. Whirlpool's heritage of launching innovative products
with captivating design was maintained in the new launches of 2009-10,
introducing a number of industry first features, many of them using
Whirlpool's unique 6th Sense technology. Some of these are:

- WhiteMagic 1-2-3, India's first user friendly fully automatic washing
machine that requires the use of only 3 buttons to operate the machine.

- Protton 3D is India's first fully automatic 3-door refrigerator with Air
Booster System for systematic & odour free storage of frozen food, fresh
food & vegetables in three separate compartments. It is equipped with the
largest vegetable drawer (34L) in its segment with a Freshness Booster
System that ensures lasting freshness for more than a week.

- The new range of Mastermind split air conditioners have India's first
sliding panel that ensures greater air flow and protection of internal
controls from dust. Its advanced 6th sense MPFI system with a unique 4-in
4-out capillary design gives faster yet more energy efficient cooling. The
30 minutes fast forward cool system cools powerfully during the first 30
minutes and its Aroma Pure System is a scientific combination of filters
that remove dust and bacteria while emanating a refreshing fragrance.

Your company has recognized the importance of expanding distribution to
meet emerging demand in small towns in India. Our immediate focus is on 700
towns with a population of 100,000-500,000 which we believe will emerge as
major consumption centers in the years ahead. The Sales system is reviewing

our reach in these markets and we plan to add new distributors to expand
our distribution width in small towns. Meanwhile, the dealer contact
programme and branded road shows will be a regular feature in our calendar
of activities.

Energy regulations are becoming stringent. It is now mandatory to declare
energy usage in Air Conditioners and Frost Free refrigerators. Your company
was among the first to embrace energy standards even when it was voluntary
and it has endeavoured to market products with high energy efficiency. In
the period under review, the Frost Free range was upgraded with all
products having energy ratings of 4* or 5*. The new range of split air
conditioners are 3* and above, as is our DC range. Whirlpool is already a
preferred brand and has been made stronger in the past year. Visibility of
the brand was heightened through a number of low-cost initiatives that
encompassed mass media, internet and outdoor. A massive radio blitz was
mounted at the start of the summer in April 2009, followed by an
unprecedented cinema plan in June-July. The brand was present on Television
and Print throughout the year. Our brand logo was enlarged on our cartons
and painted on delivery trucks. Dealer Boards and branding of Housing
Societies added to the on-street visibility. Our communication was taken to
3900 screens inside important hospitality and personal care outlets,
fitness centers, hospitals and chemists in metros and select states.
Strategic alliances were forged with reputed brands and innovative
promotions run such as one year's free supply of Surf Excel with washing
machines and Reebok wrist watches with Whirlpool products during Diwali.
The brand entered the cricket arena first with on-ground advertising in
international one-day fixtures and subsequently as the official 'Cooling
Partner' of the Kings XI Punjab in the 2010 edition of IPL. Media interest
in the company has grown with Whirlpool being featured in electronic media
on more than 20 occasions, and leading business channels now routinely
invite Whirlpool on industry and business related subjects.

A number of external recognitions were awarded to Whirlpool in 2009-2010:

1. It was voted as one of the top 25 Best Employers in India 2009 by
Hewitt.

2. The Indo-American Chamber of Commerce rated Whirlpool as the Best US
Company in India

3. Whirlpool was conferred the Frost & Sullivan 2009 Business Development
Strategy Leadership Award for Residential Point-of-Use Water Treatment
Systems in India.

4. WhiteMagic 1-2-3 Washing Machine was voted Product of the Year and
received an award for the Best Innovative Product' in the Washing Machine
category. (This is the second time that Whirlpool has been recognized with
the Best Innovative Product' by Product of the Year awarded in 2009 for
Frost Free Refrigerators with 6th sense.)

5. Whirlpool was voted The Most Trusted Brand by Reader's Digest in a
survey that included quantitative as well as qualitative rounds of consumer
research.

6. Whirlpool's Genius and WhiteMagic 1-2-3 won GOOD DESIGNr, the world's
most prestigious world design award. This award comes from The Chicago
Athenaeum: Museum of Architecture and Design and Metropolitan Arts Press
Ltd., which presents GOOD DESIGNr awards annually to the most innovative
and cutting-edge industrial, product and graphic designs produced around
the world.

Finally, Brand Whirlpool also contributed to society. It spread its festive
theme of 'Sab Ka Jashn, Sab ki Jeet' by partnering with an NGO, GiveIndia,
to participate in the Joy of Giving Week' (September 27 - October 3) and
contributed an amount generated from sales on September 24, 2009 to the
underprivileged in our country.

Exports

The Company's Export business has achieved a turnover of Rs 197 crores in
2009-10, which represents a 10% growth in turnover over 2008-09. This was
achieved in spite of the global recessionary conditions prevailing in most
parts of the world. In volume terms too the company recorded 11% growth
over last year implying no deterioration in price & mix. The reason behind
our success was due to our strategic focus on countries which are less
affected by the economic recession, primarily the Oceania region (Australia
+New Zealand) and our neighboring markets in the SAARC region. We are
pleased to highlight that our refrigerators manufactured in our State of
the art' Pune facility have achieved market leadership in the demanding
Australian market within 2 years of launch. Simultaneously, in the SAARC
markets, we were able to achieve healthy growth during the 2nd half of
FY10, with the help of a wider product range and revamped network
structure. Additionally we recently launched our Professional Series of
washing machines in Middle East & South East Asia markets. Moving forward,
this range is set to be launched in our global markets and should
contribute significantly to our export turnover. As we look ahead, we see
the first indications of demand revival in some of our key markets in
Middle East/Africa & Latin America. This revival combined with a revamped
new series of refrigerators is expected to accelerate exports business
growth in the coming years.

Consumer Services

Moving ahead on the journey of 'Best in Class' Services, Whirlpool has
expanded its 'Uncompromising Care Process' across the country which
measures the promptness & quality of Service rendered with verification
directly from the customer. The locus of control in deciding the quality of
service rests with the consumer, which in turn decides the performance &
remuneration of the Service Provider. This has been achieved by Improved
Infrastructure /people in Upcountry locations for better reach, penetration
& improved service delivery.

We continue to improve revenue generation through our touch point with the
Consumer. Innovation in our accessories & new categories continue to grow
profitability for the company. The unique combination of our Business
Model- Service Delivery & Revenue - is a source of sustainable competitive
advantage.

Human Resources

The year 2009-10 saw Whirlpool India make progress in our attempt to be an
Employer Of Choice' with Whirlpool being voted amongst the 'Top 25 Best
Companies to work for in 2010' by the Great Place to work Institute.

Given the challenging business environment that prevailed in the first two
quarters of 2009, the Human Resources Team focused on creating a connect
with employees. The target was to boost morale to encourage a spirit of
winning and dispel any uncertainties. Our focused approach towards Talent
continued and we concentrated on the embedment of a 5 point 'Extraordinary
Performance and Results system'. We also identified critical positions and
key Players. Differentiated compensation and growth opportunities were
provided to ensure retention of key talent and successors for all critical
positions.

In the light of the global economic meltdown Whirlpool India took several
proactive measures towards attaining cost leadership. An intensive Admin.
related Cost Reduction Drive was introduced across the Board, with a SMART
(Save Money and Reap Tomorrow) Campaign being launched. The program was
centered on building a cost culture and the campaign resulted in remarkable
savings.

During the year we agreed two Long Term Settlements in our Pondicherry and
Pune Plants. We also continued our focus on Lean Manufacturing with MOST
Implementation and TPM and a cost leadership drive in Manufacturing.

To increase the Connect with employees at all levels, the Employee
Engagement Initiative took off with Great Spirit. Focus Group Discussions
were conducted across India and Employee Centric Action plans were drawn
out and are being implemented. The leadership team then took ownership to
drive four big leadership actions which impacted employee engagement in the
organization. This year the HR team organized several family connect
initiatives with the employee families through family days and Whirlpool of
India Limited Celebrating Success during employee reward and recognition
programs.

Key Organizational capability building initiatives such as Organisational
Leadership Development Programme' (OLDP) for Directors, Emerging
Leadership Development Programme' (ELDP) for first time Managers and
Project Breakthrough' for Branch Managers were launched to gear up the
organization towards an exponential growth agenda. To encourage a self and
virtual learning culture, a Whirlpool University and Harvard course were
launched on the online platform. Additionally a hassle free online
processes was introduced for streamlining several People Processes much to
the benefit of all employees. These included Investment declaration, Form
16, Tax Filling, Policy Manual and My Product Scheme.

With the intention to grow fast, and manage profitability, the year 2009-10
has indeed been demanding on the people front and all of the above
mentioned Human Resource initiatives have ensured that employees are highly
engaged and driven to deliver their best.

Finance and Accounts

During the year under review, the Company has shown strong business
performance on all fronts. The Company focused on all the key financial
parameters, viz. revenue, cost, working capital and cash flow. On the cost
side, the Company continued with its P3B initiative to optimize the cost
footprint including initiatives in 'Design to Value' i.e. the product being
redesigned to drive cost efficiencies and enhance margins. During the year
the Company became a debt free Company. The Company also achieved its
target of highest ever cash generation during the year. The company
continues to have a strong focus on cash generation through improvement in
inventory and receivables management.

Directors

Your Directors intrinsically believe in the philosophy of Corporate
Governance and are committed to it for the effective functioning of the
Board.

In accordance with the provisions of the Companies Act, 1956 and the
Article 115 of the Articles of Association of the Company Mr. Anand Bhatia
and Mr. Arvind Uppal retire by rotation and being eligible offer themselves
for reappointment.

Mr. Anand Bhatia, Independent non Executive Director of the Company is an
Economics graduate from Cambridge University (U.K). He has over 30 years of
working experience at senior level with Unilever plc. worldwide. Currently
he is a director in (1) EID Parry (India) Ltd. (2) HGS Pvt. Ltd. (3) Sowar
Pvt. Ltd. He is on your Board since 2001 and is also the Chairman of the
Audit Committee, Remuneration Committee and Shareholders Grievance
Committee.

Mr. Arvind Uppal was appointed as Managing Director of the Company w.e.f.
February 16, 2005. Mr. Arvind Uppal is a B.Tech from IIT Delhi and is a
post graduate in Management from the Faculty of Management Studies, Delhi.
He has over 22 years of experience in business development, International
marketing and General management. Prior to joining Whirlpool he was with
Nestle in India and overseas. He was appointed as Chairman of your Company
w.e.f. 27th January 2010. He is a director in Tuscan Ventures Private
Limited. Currently he is Chairman & Managing Director of Whirlpool of India
Ltd.

During the year Mr. Vikas Singhal resigned from Board w.e.f. 31st March
2010. Mr. Syed Shahzad Akhtar has been appointed as an Additional Director
in the capacity of Whole time Director of the Company w.e.f. 17th May,
2010. Mr. Shahzad joined the Company in January 2009 as head of Sales and
was subsequently promoted as VP and General Manager India operations. He is
an engineering graduate from the University Of Cambridge and an MBA from
INSEAD, France. He has vast experience of over 20 years in the field of
general management and marketing, a large part of which has been with
Unilever. During his tenure with Unilever he gained extensive international
experience and held positions of increasing responsibility, the last being
as the Global Vice President for Unilever's Fabric Cleaning business based
out of the UK. He is not a Director in any other Company.

Mr. Syed Shahzad Akhtar vacates the office of Director at this AGM. The
Board considers that it would be in the interest of the Company to appoint
Mr. Syed Shahzad Akhtar as a Whole Time Director of the Company.
Shareholders' approval is sought as a special resolution for the
appointment and approval of remuneration for Mr. Akhtar.

Auditors

Members are requested to appoint Auditors for the current year on a
remuneration to be fixed by the Board as per Item No. 4 of the Notice for
the AGM. M/s S. R. Batliboi & Co., the present Auditors of the Company
have, under Section 224 (1B) of the Companies Act, 1956 furnished a
certificate of their eligibility for reappointment. The Board recommends
their reappointment as Auditors for the Financial Year 2010-11.

The Board has taken note of the observations and remarks made by the
Auditors in their Report on Statutory payments.

The observation made by auditors on slight delay in payment of statutory
dues is self explanatory. The Company has taken effective steps to
streamline the statutory payments.

Fixed Deposits

As at 31st March 2010, the amount of Fixed Deposits held by the Company was
Rs. 15.27 Lacs. There were no overdue Deposits except Unclaimed Deposits
amounting to Rs.2.29 Lacs.

Listing of Shares

Company's equity shares are listed at Bombay Stock Exchange Ltd. and your
Company's equity shares got additional listing on National Stock Exchange
of India Ltd. w.e.f. 6th April 2010.

b
Audit Committee The Audit Committee held four (4) meetings during the year.
The Members of the Audit Committee are:

Mr. Anand Bhatia, Chairman - Independent Director
Mr. Simon J. Scarff, Member - Independent Director
Mr. Sanjiv Verma, Member - Independent Director
Mr. Robert L. Mink, Member - Non Executive Director

Mr. Anand Bhatia, Chairman of the Committee has adequate financial and
accounting knowledge.

The Chief Financial Officer, Internal Auditor and the Statutory Auditors of
the Company are permanent invitees to the meetings of the Audit Committee.
It is a practice of the Committee to extend an invitation to the Managing
Director and Cost Auditor to attend the meeting as and when required.

Mr. Ravi Sabharwal, Company Secretary, is Secretary of the Audit Committee.

Directors' Responsibility Statement

The Directors confirm that:

(i) In the preparation of the annual accounts, the applicable accounting
standards have been followed, along with proper explanation relating to
material departures;

(ii) The directors have 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 or loss of the
company for that period;

(iii) The directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of the
company and for preventing and detecting fraud and other irregularities;

(iv) The directors have prepared the annual accounts on a going concern
basis.

Transfer to Investor Education and Protection Fund

In terms of the provisions of Section 205C of the Companies Act, 1956,
during the financial year there was no unclaimed amount required to be
transferred to the Investor Education and Protection Fund established by
Central Government.

Corporate Governance

A Certificate from the Statutory Auditors regarding compliance of the
conditions of Corporate Governance as per the requirement of Clause 49 of
the Listing Agreement with the Stock Exchanges is enclosed as part of
Corporate Governance Report.

The Board of Directors support the concept of Corporate Governance and
having regard to transparency, accountability and rationale behind the
decisions have made proper disclosures separately under the heading
'Corporate Governance'.

Insurance

The Directors confirm that Fixed Assets and Stocks of the Company are
adequately insured against fire and allied risk on a replacement cost
basis.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings &
Outgo

In accordance with the requirements of Section 217(1)(e) of the Companies
Act, 1956 read with the Companies (Disclosure of particulars in the report
of the Board of Directors) Rules, 1988, statement showing particulars with
respect to Conservation of Energy, Technology Absorption and Foreign
Exchange Earnings and Outgo are annexed hereto (Annexure B) and form part
of this report.

Personnel

As required by the provisions of Section 217 (2-A) of the Companies Act,
1956 read with Companies (Particulars of Employees) Rules, 1975, as
amended, the names and other particulars of employees are set out in the
Annexure C to this Report. However, as per the provisions of Section 219
(1) (b) (iv) of the Companies Act, 1956, the Directors' Report is being
sent to all members of the Company excluding the aforesaid information. Any
member interested in obtaining such particulars may write to the Company
Secretary either at the registered office or Corporate Office of the
Company.

Acknowledgement

The Company's growth has been achieved by continued support from all its
stakeholders. The Company's partners- different stakeholders, Customers,
Suppliers, Employees, Investors, Community Members, Banks & Financial
Institutions have been instrumental in the Company's success. Your
Directors wish to place on record their sincere thanks to these partners.
The Directors' would also like to express their appreciation to various
agencies of Central & State Government for their continued support.

For and on behalf of the Board of Directors

Place : Gurgaon Syed Sahhzad Akhtar Arvind Uppal
Dated : May 17, 2010 [Executive Director] [Managing Director]
DIN 03052558 DIN 00104992

Annexure A

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Industry Structure and Developments

Market growth was modest in the first quarter of the financial year 2009-
2010 but picked up as the year progressed. The General Elections saw the
ruling alliance return to power, signaling political stability at the
centre. Strong GDP growth in the face of a contracting global economy
infused confidence in business; the fiscal stimulus provided relief from
inflationary pressures; and implementation of the 6th Pay Commission
stimulated consumer purchase. All these combined to change the consumer
sentiment from apprehension during the last two quarters of 2008-2009 to
positive as the new financial year progressed. The home appliance industry
in particular was among the first to witness revival of growth.

Overall, the home appliance industry, comprising Refrigerators, Washing
Machines, Microwaves and Air Conditioners, grew by 15-20%. Our estimate of
category growth is 15-20% for Refrigerators and Microwaves and 20-25% for
Washing Machines and Air Conditioners. Some developments that can be seen
in the appliance industry are:

* There is distinct preference for high-end products. For example fully
automatic washing machines and split air conditioners are growing faster
than the category average.

* There is higher demand for large capacity products driven by changing
lifestyles, e.g. weekly vs. daily shopping and infrequent heavy-load
washing vs. daily light-load washing. This is fuelling demand for large
capacity refrigerators and washing machines respectively.

* Energy consciousness is increasing and is becoming an important purchase
criterion, especially in Air Conditioners.

* Consumers are paying greater attention to design and aesthetics while
choosing a brand.

* Health and wellness trends have resulted in demand for health-related
features in home appliances. For instance, Water Purification products are
increasingly being seen as a necessity.

* Barriers to owning a washing machine (availability of laundry, 'dhobi',
and domestic help) are coming down. This segment has seen high growth over
the recent past.

* Emergence of modular kitchens has given birth to a new genre of
appliances called Built-In appliances where the products (Ovens,
Dishwashers, Hoods, etc.) integrate with the cabinetry of the kitchen.

* Trade expectations have changed. The emergence of 'modern trade' has
thrown up the necessity for Trade Marketing and Key Account Management
practices as well as improving customer management practices.

Outlook And Opportunities

Penetration of home appliances is still very low and the long term growth
opportunity for this industry is very attractive. Out of every 100
consumers living in urban India, only 33 own a refrigerator and 13 a
washing machine and these numbers are miniscule in rural areas. Penetration
of air conditioners, microwaves and electrical water purifiers is even
lower. Hence, the industry can be expected to see sustained growth in all
categories for many years to come and the government focus on
infrastructure development - electricity in particular -will accelerate
demand.

Growth is expected at both ends of the market. Growth of entry level
products will be stimulated by first time buyers while the sophisticated
products will be fuelled by the replacement market, new housing and modular
kitchens. Within the home appliance industry, categories/ segments that are
expected to grow ahead of the industry average are washing machines,
microwaves and air conditioners.

Outlook on Threats, Risks and Concerns

Demand is likely to be robust in the next financial year. However,
competitive activity is also likely to rise and a number of existing
competitors have announced investments in new plants and expansion into new
categories and brands. New players are also entering the country, lured by
the attractiveness of the market. These will impose pressure on market
share and advertising and promotion budgets will need to be increased to
maintain brand saliency. Distribution expansion and efficiency will also be
a key driver to stay ahead of competition. Cost pressures will continue to
be a concern: on one hand, the increase in demand drives inflation of
material costs and on the other, regulations on energy and sustainability
will add cost to our products.

The lack of a well developed supply base of components and materials
necessitates imports and thus there is consequential risk arising from
currency fluctuations.

Segment wise Performance, Internal Controls and Financial Performance

The company operates in only one segment of White Goods. Domestic sales in
value terms grew by 30% and overall sales grew by 28%.

Internal Control Systems and Adequacy

The Company has in place adequate internal control systems and procedures
commensurate with the size and nature of business. These procedures are
designed to ensure that:

* all assets and resources are acquired economically, used efficiently and
are adequately protected;

* significant financial, managerial and operating information is accurate,
reliable and is provided timely; and

* all internal policies and statutory guidelines are complied with.

The composition and competencies of the audit team and effectiveness of
internal controls is continuously reviewed by the Audit Committee.

The scope of internal audit extends to all functions and locations of the
company. The Company has also complied with the revised clause 49 of the
listing agreement.

Financial Performance

The financial performance of the Company has been given separately in the
Directors' Report.

Annexure B

INFORMATION AS PER SECTION 217(1)(e) READ WITH COMPANIES (DISCLOSURE OF
PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 AND
FORMING PART OF THE DIRECTORS' REPORT FOR THE YEAR ENDED 31ST MARCH 2010.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS
AND OUTGO:

In accordance with the requirements of Section 217(1) (e) of the Companies
Act, 1956, read with the Companies (Disclosure of Particulars in the Report
of the Board of Directors) Rules, 1988, statement showing particulars with
respect to Conservation of Energy, Technology Absorption and Foreign
Exchange Earnings and Outgo is as under:

A. CONSERVATION OF ENERGY

(a) Energy conservation measures taken:

Faridabad Plant:

i) Upgradation of generator - resulting in lower fuel consumption.

ii) Use of Day light increases through use of transparent roof sheets.

iii) Heating load in thermoforming operation reduced by 20%.

Pune Plant:

i) Reduction of Air Conditioner load by 15Ton in Admin. Block by reducing
the ceiling height and modifying the false ceiling.

ii) Plant Lighting lamps brought down by 8ft height to improve the lighting
and avoid installation of new lights in the plant.

iii) Installed natural roof ventilators to cover 30% of the plant area for
exhaust & disconnecting 30% of Electrical Exhaust fans.

iv) A detail Energy Audit by Competent agency was initiated in the month of
Jan 2010 for capturing opportunities in energy saving to the tune of 8% of
the total consumption.

v) Pune Facility was awarded with DSK ENERGY AWARD 2009' by Institute of
Engineers, Pune Chapter for sustained Energy Saving drive.

vi) By initiatives like Air leakages arresting drive, localized air
pressure setting, Air pipe line modifications saved 6% energy cost.

vii) Maytag thermo heating controlled by zone temperature monitoring.

Puducherry Plant:

i) Dishing Machine power pack auto switch off if not in use for more than 5
minutes.

ii) Press Hydraulic auto cut off if not in use for more than 5 minutes.

iii) Assembly Area Fan & light cut off auto during lunch time.

iv) Dining Hall Fan & Light auto cut off after lunch hours.

b) Additional investments and proposals being implemented for reduction of
energy consumption:

Faridabad Plant:

i) Optimization of chilling and Heating Loads.

ii) Reduction of fuel consumption by operating oven at low temperature.

Pune Plant:

i) Installation of Natural Ventilators in the plant for Exhaust in balance
areas.

ii) Refrigeration type Air Dryers for compressed air system.

iii) Hot water generation centralization for process heating.

iv) Chiller water line centralization.

Puducherry Plant:

i) Load sharing for assembly area & lab area.

ii) Energy Saving Unit to be installed.

iii) Solar Lamp at factory street lights.

iv) Common outdoor unit for Mezzanine floor AC.

c) Impact of (a) and (b) on the cost of production:

Faridabad plant : Rs. 3.00 per Refrigerator
Pune plant : Rs. 4.50 per Refrigerator
Puducherry Plant : Rs. 0.67 per Machine

B) TECHNOLOGY ABSORPTION RESEARCH & DEVELOPMENT

a) Specific areas in which R&D is carried out by the Company:

Faridabad Plant:

i) Energy efficient refrigerators model range enhanced in direct cool
products category.

ii) Consumer relevant features like glass shelves & new door finishes
introduced as part of new model offerings. Innovative fast forward ice
feature extended to higher capacity product range.

iii) State of the art, contemporary CAD and simulation packages used to
make a robust design with compressed design cycle time.

Pune Plant:

i) Worked on Technical solutions for higher Energy efficient No Frost
Products as per migration path.

ii) Launched Protton Series, 3 door Top Mount ref with separate vegetable
drawer for ease of use, freshness and energy savings.

iii) State of the art, contemporary CAD and simulation packages used to
make a robust design with compressed design cycle time.

iv) Use of Test to fail and Reliability engineering techniques during
developmental testing for estimating and improving the reliability of the
products (Reliability = Performance over life of product), through state of
art and internationally accepted lab facilities.

Puducherry Plant:

i) Styling refresh made on SATT 6.5 kg segment.

ii) Heater model introduction in 1-2-3 range.

iii) CFM ranges introduced in 1-2-3 line up.

iv) Sport washer SKU expanded through CFM.

Benefits/ achievements derived as a result of the above R&D.

Faridabad Plant:

i) Lower running cost to the consumer due to increased energy efficiency.

ii) Premium value of the product through glass shelves introduction &
maintaining cooling.

iii) Perceived and experienced quality improvement.

Pune Plant:

i) Increased product performance, ease of use.

ii) Better space management options for the consumer.

iii) Perceived and experienced quality improvement.

iv) Wider product ranges with the introduction of Protton Series.

Puducherry Plant

i) In-built heater in 6.5 kg. Washer capacity segment.

ii) Huge variety of color option for the taste of customer.

b) Future Plan of Action:

Faridabad & Pune Plant

i) Focus on premium product offerings.

ii) Continued focus to make more energy efficient products.

iii) Aesthetics refreshing and better space management offering.

iv) Higher focus on export markets.

v) Continued focus on innovative solutions which are relevant to consumers.

vi) Continued strong focus on total cost productivity and process
improvements.

vii) Use of reliability and statistical techniques during development of
new products, to ensure reliability of product.

Puducherry Plant:

i) Nano concept washer is under conceptualization stage to address mass
market.

ii) Higher capacity Twin tub plastic body development is under progress.

Expenditure on R & D

Particulars (Rs. in lacs)

a) Capital 42.79
b) Recurring 1,236.98
c) Total 1,279.77
d) Total R & D expenses
as % of total turnover 0.48%

C) TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:

a) Efforts made towards technology absorption, adaptation and innovation
are directed towards:

Faridabad & Pune Plant:

i) R-600A introduction in Refrigerator appliances as refrigerant in the
cooling system.

ii) Airflow optimization & adoption of higher energy efficiency compressors
in refrigerators for better cooling performance and minimum energy
consumption.

Puducherry Plant:

i) Mechanical driven pump in Semiautomatic models implemented.

ii) Water fill time reduction by alternate in Inlet valve.

iii) Multiple Water / Load levels introduction.

iv) Touch sense controls in glass. Benefits derived as a result of the
above efforts:

Faridabad & Pune Plant:

i) Improved energy efficiency of the product, which will save the energy
bill for the consumer.

ii) Competitive advantage, through better performance and efficiency.

iii) Reduce carbon foot print due to reduced emission of Green House Gas
emissions, which is in-line with Kyoto Protocol.

Puducherry Plant:

i) Resource optimization through multiple Water/Load level options.

ii) Time saving through alternate inlet valve.

iii) Development of energy efficient Washer.

D) FOREIGN EXCHANGE EARNINGS AND OUTGO

FOR THE YEAR ENDED MARCH 31, 2010

(Rs. in lacs)
Foreign Exchange Earnings:

i) FOB value of sales & income 24,433.42
from services

Foreign Exchange Outgo-
(i) CIF value of imports- Raw materials, 45,656.42
Components, tools, spare
parts and capital goods

(ii) Others 4,687.96