Dear Shareholders,

It gives me immense pleasure to present our Integrated Annual Report for F.Y. 2022-23 on behalf of our Board of Directors.

We continue to uphold our rich legacy with dedication and diligence. Over the years, we have seen our business landscape evolve in step with changing consumer aspirations, new technological breakthroughs and business norms. However, in the midst of all these transformations, our core purpose remains the same to meet everyday consumer needs with innovative and sustainable solutions.

Our overarching purpose inspires us to pursue excellence and efficiency in every aspect of the business. Before we delve deep into the business performance and strategy aspects of the business, let us first discuss the macro-economic environment.

Macro-economic landscape

During F.Y. 2022-23, the geopolitical crisis sparked by the war in Ukraine disrupted the global supply chain and pushed up inflation. While stubborn inflation adversely impacted the global growth outlook, India’s economy was comparatively resilient on the back of prudent fiscal and monetary policies, proactive vaccination coverage and sustained capital expenditure of the government. Notwithstanding global headwinds, the country remains one of the fastest growing economies of the world.

Resilient business performance

We recorded a consolidated revenue of H6,869.61 Crore in F.Y. 2022-23, compared to H5,394.11 Crore in F.Y. 2021-22. Our EBITDA stood at H770.47 Crore , compared to H769.45 Crore in F.Y. 2021-22. Our PAT de-grew from H578.38 Crore in F.Y. 2021-22 to H476.40 Crore in F.Y. 2022-23.

The F.Y. 2022-23 began with considerable challenges, which we navigated with careful planning. The inflationary pressures and price volatility led to subdued consumer demand across segments and impacted the industry’s profitability. However, the strength of our business model and the strategies that were already in place enabled us to stay on course and perform better than most players.

Some of the actions that we took to manage the situation were as follows:

In addition, as commodity prices were rising, we had our suppliers pre-book commodities that enabled us to maintain adequate inventory levels.

During the fiscal year, our fans business continued to witness strong growth.

One major initiative was the transition of our fans business, also our largest business to the new BEE norms. I am pleased to inform you that we have transitioned with 100% readiness on the design and approvals and with minimal disruption. We have managed our production planning, inventory management and switchover very efficiently.

We also adopted a couple of significant interventions to improve the performance of our pumps segment. We revamped our significant portfolio of pumps with a refreshing brand architecture, based on consumer needs. Targeted pricing actions taken to tackle specific competition in select segments has helped to bring growth back to the business.

Our appliances business, despite an overall sluggish market, continued to grow aggressively during the year under review. We launched a differentiated range of built in kitchen appliances in top 10 cities starting June 2022. This business is progressing as expected.

In March 2023, we announced the proposed merger of Butterfly in to Crompton through a scheme of amalgamation & share swap ratio was derived by independent registered valuers on which-fairness opinion was given by respective Merchant Bankers.

The merger is an important strategic step in Crompton’s growth journey and will help unlock the full potential of the combined businesses. It will enable faster execution of our Go-To-Market strategy and bring sharper focus on product innovation. We are confident that our coming together will create significant value for all stakeholders. The merger is likely to unleash various revenue and cost synergies and help us achieve economies of scale by pooling the combined resources and providing an impetus to grow across all parts of India.

Both B2B and B2C divisions were considerably impacted in the lighting business during the year. While the lack of government orders impacted our B2B division’s performance, the B2C division’s performance was dented owing to the ongoing price volatility in the market. Going forward, we have taken the necessary steps to gain market share in these segments.

Five-dimensional growth strategy

At Crompton, we have created a purpose-driven brand that puts consumer aspirations at the centre of innovation. The result is enduring relationships with our consumers.

Through our powerful brand strategy and advertising campaigns, we have truly lived up to what our brand stands for. During the year under review, we continued making consistent efforts to reach closer to consumers through our wide-ranging activities across various touch points to further strengthen our brand awareness and recall.

We stepped up our media spending including television, print and digital. We ran multiple marketing and branding campaigns during the year which attracted significant attention from our consumers. The current fiscal year will be witnessing our highest expenditure on building a robust and vibrant brand architecture across our entire portfolio of offerings. We have also embarked on a retail transformation programme, which completely changes the ‘look and feel’ of Crompton products inside our key retail stores.

The Company’s innovative campaigns include #AbSabkeBudgetMein, a campaign educating consumers about energy-saving fans, awareness campaigns for fans and air coolers,and influencer collaborations for online discoverability. Crompton’s hyper-local marketing campaigns for its mixers range and 360-degree campaign for BLDC fans increased its presence in South India and grew its market share. The Company’s commitment to excellence has resulted in a robust brand image and widespread attention.

As you are aware, a time-honoured corporate brand like Crompton thrives on its overall portfolio excellence. We steadily expand and enrich our offerings to add more meaning and value to the lives of our consumers.

During the fiscal, we made considerable efforts towards achieving portfolio excellence. In addition to our acquisition of Butterfly Gandhimathi Appliances Ltd. (BGAL), we have independently ventured into the large kitchen appliances sub-segments, which has resulted in bringing into the market more premium offerings. Besides, as the demand for innovative and unique offering at competitive price point is expected to rise significantly, we are driving premiumisation across all our segments.

On the technology front, we are working on four major areas: Energy efficiency across product lines; smart and connected products such as water heaters and coolers; health and wellness products such as the anti-bacterial lamps; and materia substitution to enhance performance, while lowering costs.

The Company’s specialised teams in design, development, project management, and product testing focus on delivering superior products that comply with government regulations.

They work on 12-18 month roadmaps, prioritising consumer features and performance, and continuously upgrade their skills with engineering tools and software.

The Crompton Experience and Innovation Centre, the Company’s largest R&D centre, offers cutting edge technology, advanced IoT energy efficiency capabilities, and smart testing technologies. This centre allows Crompton to provide sustainable solutions to meet every day needs and cater to evolving customer aspirations with best-in-class technologies.

The Crompton Experience and Innovation Centre, the Company’s largest R&D centre, offers cutting edge technology, advanced IoT energy efficiency capabilities, and smart testing technologies. This centre allows Crompton to provide sustainable solutions to meet every day needs and cater to evolving customer aspirations with best-in-class technologies.

Over the years, we have had several market share gains across product categories, largely owing to our Go-To- Market initiative. It has enabled us to strengthen our distribution network and improve the availability of our products at retail touchpoints. In order to further achieve channel excellence, we are stepping up our investments in our ‘Go- To-Market’ programme.

Crompton is continually making investments in its go-to-market programme to achieve channel excellence. We have been tapping alternate channels such as the rural market, E-commerce and Modern Retail, which have exhibited strong double-digit growth.

We also continued with our efforts to bolster our operational efficiencies. Our Unnati programme continued to drive us on the path of cost leadership.

I am pleased that during the reporting year, the project ‘Unnati’ helped us register annualised cost savings worth Rs 248 crore. Through our Udaan programme, we are eliminating waste across processes and delivering Crompton products to the market with optimal Total Delivered Cost, Quality, and Service Levels. Under our project Delight, we upgraded and launched nearly 12 processes across the value chain including revised NPD framework, Vendor Quality Manuals, Layered Process Compliance systems, Manufacturing Quality Audit systems, and governance in the Digital Way.

The Company’s investment in technology and digitalisation have enabled it to digitise product development process, streamline inventory management, and improve customer relationships. The Product Development Module (PDM) serves as the one source of data and project management tool for all new product development plans, ensuring transparency, efficiency and adherence to quality standards.

Crompton leverages e-commerce platforms and digital tools to increase online visibility and provide relevant and accurate information to customers. The CRM system captures customer feedback, informs product development and marketing strategies, while the use of WhatsApp bots and technician mobile applications result in faster compliant resolution and higher customer satisfaction.

To strengthen organisational excellence, we stepped up our investments in training and capability building across India. We fortified our diversity and inclusion(D&I) journey with the establishment of a specialised council focused on diversity and inclusivity. Besides, our commitment to environmental sustainability remained firm, as we made considerable progress in energy management, waste management, water conservation and emissions reduction, enabling us to operate responsibly.

Flipkart’s Silver Jury Award and been ranked among ‘Dun & Bradstreet’ India’s top 500 Companies and Institutional Investor Advisory Services’ Next Leaders category. In terms of safety, Crompton received the Gomanth Sarvoch Suraskha Puraskar Award, the National Safety Award and the CGCEL Baroda plant won a Bronze Award in Safety Convention. With our salient efforts in D&I, Crompton has been recognised as best organisation for women by The Economic Times.

Way forward

The growing urban population and aspirational demand from rural India continue to drive the demand of our products. Our consumers are becoming more technology savvy, which is catalysing the demand for technologically advanced consumer electrical products in India. The macro drivers for the Consumer Electricals sector like rising urban and rural electrification, an increase in housing development and construction activities will provide us more opportunities to grow.

With consumers preferring branded and premium products, we believe, as industry leaders we are well equipped to cater to the evolving demand of our consumers. We will continue to undertake appropriate marketing and product initiatives, while focusing on capability building for the long term.

Challenges have only made us stronger and more resilient . As we continue to raise the bar of our performance each day, we strive to make lives of our consumers better and happier through innovation and responsible business practices.

On behalf of every member of the Board, I thank our team for their continued dedication and commitment. I also thank you, our shareholders, for your continued support and confidence in the Company as we strive to achieve a better and more sustainable future.

Sincerely,

Hemant Nerurkar

Chairman