Sector 1: Manufacturing Company 2: Crompton Greaves Consumer Electrical General Over Crompton Greaves Consumer Electrical is the leading consumer compan brand legacy. As of February 2016, it has two business segments ~ Lig! Durables. The company markets its products under the “Crompton” brand name in India and select export markets. It has four manufacturing locations Goa, Vadodara, Ahmednagar, and Baddi. The company remains focused on three key objectives — growing sales faster than the market, operating profit growth at least in line with sales growth, and converting all profits to cash. It has a strong focus on launching innovative, meaningful products, enhancing brand awareness through promotional activities, and implementing robust go-to-market strategies. Increasing urbanization, the Government's efforts to revive infrastructure and housing development, rural electrification and rising disposable incomes, and better brand awareness will provide sufficient impetus to the industry's growth. The company continues to aspire to become one of the leading brands in Electronic Consumer Durables and Lighting. in India with a 75+ years old and Electrical Consumer Shareholding pattern of the company 10.67% 17.42% @ Promoter @r eo 37.59% J @ Public 34.33% Source: Money ControlShareholding Pattern - Top Holders Quarter Ending 31060-2020 PromotersHolding —FilHolding Dil Holding _Public(Nor-nstitutiona) Mutual Fund Schemes Name AMALFIACO LIMITED. MACRITCHIE INVESTMENTS PTE LTD NIRSINIA LIMITED. Seletar Investments PteLtd. ‘Al Cool Midco 1 Limited ‘AlCool Midco 2 Limited Source: Money Control Promoter = Fil. = DIl_——Pubblic MM Holding®%) ‘Ml Pledges as % of promoter shares(%) = 64.06 65.58 65.58 65.58 %Holding 11.42% ZRPeses 65.59 50 26.2 26.19 26.19 26.19 : | ill | a ° EE Dec 2019 Mar 2020 Jun 2020 Sep 2020 Source: Money Control Dec 2020Promoter holding declined to 17.42% in December 2020. Total pledge stands at 65.59% of promoter holdings. FIV/FPI have increased holdings from 29.32% to 34.33% in Dec 2020 qtr. Mutual Funds have increased holdings from 24.75% to 27.69% in Dec 2020 qtr. ‘© A minor 10.67% stake is available with the public and others. ‘© The majority of promoter holding is with Amalfiaco and Macritchie Ltd, Amalfiaco is a private company limited by shares. It was incorporated on 26 Tanuary 2015 under the laws of Cyprus © The principal activity of Amalfiaco is to carry on the business of an investment company and undertake all kinds of investment business. MIPL is a private company limited by shares. It was incorporated on 30 May 2003 under the laws of Singapore. It's an investment holding company. Management of the company Mr. H. M. Nerurkar, Chairman and Independent Director: He has vast experience over 35 years in Tata Steel across various positions. He joined Tata Steel in the year 1972 and rose to the level of Managing Director, as in-charge of India and South East Asia operations. He is currently the Chairman of TRL Krosaki Refractories Limited (formerly Tata Refractories Limited - a JV between Tata Steel and Krosaki Harima Corporation, Japan) and NCC Ltd (formerly Nagarjuna Construction Company Limited) and an Independent Director of several other listed entities. Mr. Shantanu Khosla, Managing Director: Mr. Khosla holds a bachelor’s degree in Mechanical Engineering from the Indian Institute of Technology, Bombay, and an MBA from the Indian Institute of Management, Calcutta, Before joining CGCEL, he served as the Managing Director and Chief Executive Officer (CEO) of Procter & Gamble from July 2002 to June 2015. Mr. D, Sundaram, Independent Direetor: Currently, he is the Vice-Chairman and Managing Director of TVS Capital Funds. Before that, he was associated with Hindustan Unilever for more than 34 years, wherein he held various positions before becoming the Vice-Chairman in 2008. Mr. P. M. Murty, Independent Director: He has more than 42 years of experience working with Asian Paints Limited (APL), wherein he held various senior positions, including that of Managing Director from 2009 to 2012, and is the winner of the prestigious CEO of the Year" award by Business Standard (2009- 10) Ms. Smita Anand, Independent Director: She has over thirty years of experience, of which over two decades were in leading global management consulting and human resources firms. She served as the Managing Director at Leadership Consulting India and Asia's head at Kom Ferry’s Board/CEO. Mr. Mathew Job, CEO: Before joining CGCEL, he served as the Managing Director of Racold (Ariston) Thermo Limited till September 2015. Before that, he was the Vice President and Managing Director ofGrohe India Private Limited from November 2009 to January 2012 and held various key roles with Philips Electronics India Limited from June 1994 to October 2009 SWOT of Company Strengths © Diverse product portfolio. ‘© Strong retail presence at more than 150000 retail outlets. * Strong brand presence. ‘* High-quality products and robust distribution channel. Efficient in managing Assets w generate Profits - ROA improving since last wo yeu. ‘Company with Low Debt Annual Net Profits are improving for the last two years. Book Value per share Improving for last two years. FIL/ FPI or Institutions are increasing their snareholding, Weakness ‘* Companies with growing costs YoY for long term projects ‘* Inefficient use of shareholder funds - ROE declining in the last 2 years. ‘© Degrowth in Revenue and Profit ‘© Decline in Quarterly Net Profit with falling Profit Margin (YoY) * Promoter decreasing their shareholding. ‘* Declining Net Cash Flow: Companies not able to generate net cash. ‘* Companies with High Promoter Pledge ‘* Although the company is operating in many nations globally, its operations & businesses are concentrated in Asia Pacific region which exposes it to regivnal & Geo-political risks. © High working capital ‘© Perceived as fan brand, ‘* Limited presence beyond tier Il cities. Opportunities ‘* Given the demographic shifts resulting from changes in age profile and household income, economic conditions, infrastructure development etc. will result into increasing demand and enhanced institutional capabilities ‘* Expansion to the developing nations Threat ‘© The company with negative growth and promoters decreasing shareholding QoQ. ‘© Stocks with high PE (PE > 40)© Material and Currency Headwind: Significant increase in metal prices (Copper, Aluminum and Steel) and strengthening of Dollar could enhanee the overall product cost and put pressure on margins. ‘* Slowdown in the Indian economy due to current global developments and uncertainties could adversely impact growth in the short-term. Possible impact could also spill over to channel partners and back-end supply chain partners. Disruption in supply chain and change in consumer spend behavior pose particular risk to business. © Duc to government regulations, restrictions, and economic failure, the manufacturing industry's slow growth may affect the performance and operations of Crompton & Greaves. ‘© The electronics & manufacturing industry is highly competitive in which local and multinational companies are competing to eat each other’s market share. It competes with companies like Philips, Havells, 3M, and Schneider Electric in one or more business segments. ‘© The short technological life eyele and rapidly changing technologies threaten companies ‘operating in the electronics & manufacturing industry. Companies are ending up killing their offering much before competition kills it. Competitive Analysis NAME. PIE (X) P/B(X) ROE % | ROA % | REV CAGR [3YR|_ | OPM CG Consumer 55.07 17.62 33.80 18.03 5.26 13.96 Whirlpool India 106,12 13.22 19.12 11.24 14,94 11.22 Polycab India 22.33 4.69 19.78 12.73 16.78 12.08 Dixon Tech 149.26 29.73 22.25 7.09 21.23 4.35 V-Guard Ind. 76.89 10.09 18.79 12.86 6.33 10.08 Bajaj Elec. 185.10 6.32 0.68 0.20 5.36 3.62 Symphony Ltd 84.02 11.10 28.38 17.04 12.59 22.23 The company has achieved ROA, ROCE, and OPM above the industry average. However, the compound annual growth rate is well below the industry average. Infact in the table, it is the lowest. The stock as well can be classified as moderate to highly overvalued. Conelusion and way forward for the company The company will continue to implement its five-pillar strategy, leveraging big data to create a leaner and stronger Crompton, They have invested heavily in information technology to control costs and improve performance. Through backward inweyration in fans, they have added in-house capacity and capability. Consumers’ journey and data analytics guide them to understand the direction to take. The company strives for innovative products to surpass consumer expectations, and campaigns are structured to build awareness and recall of our brand. The focus is on product differentiation, enhancing value and performance enhancement, be it m the affordable category or the premium category. Ihe company 1s focusing on achieving this through digital solutions and the use of new, improved materials and components.Cera ere eee) ano) eae) reed Growth Strategy. Source: Annual Report References Money Control Crompton Greaves Consumer Electrical Annual Report finpedia.co hitps:/www.sebi.gov.in/sebi_data/commondocs/cromptondps_p.pdf https://economictimes.indiatimes.com/crompton-greaves-consumer-electricals- Idistacks/companyid 61335 cms https://trendlyne.com/equity/swot-buy-or-sell/840/MARICO/marico-Itd/threats/ https://www.marketing9 |.com/swot-analysis-crompton-greaves! hitps://www indiainfoline.com/company/crompton-greaves-consumer-electrical- nagement-discussivn