AFFLUENCE

“I can't change the direction of the wind, but I can adjust my sails to always reach my destination”, said Jimmy Dean and this is characteristic of EFL Group.   A year that held 'change' as the mantra for the corporates and the nation at large, a year which experienced digitisation of businesses and a way to connect with consumers driven by none other than the Government of India, 'demonetization' was the word that swayed the fortunes of corporations and the sentiments of the consuming class. While the year saw the changing political landscape in India, the approach to development, the new growth opportunities thanks to SMART Cities, Digital India and our role as a nation in the emerging world order led to our turn to transform.   EFL has its presence across the country in various products/segments such as water purifiers, vacuum cleaners, air purifiers and home security solutions with the brands such as Aquaguard, AquaSure, EuroClean, Aeroguard and EuroVigil. EFL has its presence in European.   The complexion of the business within EFL is changing and moving towards the retail sale and digital through the web from a direct selling business. This evolution from Direct Sales to Retail Sale and Sale on a digital platform over the last few years has been brought with successfully and by retaining or even improving our own addressable market share. In the last three-four years competition in the water purifier space has increased and a number of players of international repute have entered the market. EFL has taken an aggressive target of regaining and retaining the market share of electric water purifiers. This entails a significant investment in the market in the form of advertisement and sales promotion which resulted in regaining a 12% market share in the financial year 2015-16 taking EFL market share to 67% and retaining the same in the financial year 2016-17.   During the year, EFL had set key priorities in terms of (a) Project Everest: Leading the water purification market to dominate with 67% share, (b) Enhance focus on Air, Cleaning & Security to build a 2nd category, (c) Build digital capability for a greater connect with employees and customers, (d) Measure & Build Customer loyalty and leverage the brand value of EFL and brands and (e) Diversity of people and businesses to build a future proof EFL. And in each one of them, as a team dedicated to building a 'tandarust' – healthy organisation, EFL rose to the occasion.   While the demonetisation, though a highly well-intentioned move for the medium to long run, created an impact in the market with the last 4 month offtake reducing by 20-30% vis-à-vis the corresponding year for EFL as well as competing brands, however, EFL was able to retain the 67% (value) share of the domestic electric water purification market in-spite of the drop in sales. The year also witnessed the business composition change where the Retail Channel (Consumer Division) and Partner Channels (Franchise Direct Operators & Franchise Business Partners in Direct Sales) grew while the one time core business of Customer Response Centre (CRC business of Direct Sales) de-grew marginally vis-à-vis last year, this was mainly due to unbudgeted increase in wage bill.   On the second priority, the first 'Made in India for the world' Air Purifier Aeroguard 4S was launched. The category grew to over 42% of the domestic market and EFL plans focusing on this growing segment in the years ahead. In cleaning the indomitable 79% share of the market remained untouched with a refreshed product portfolio.   The focus on digitisation resulted in fruits with over 350,000 validated leads and Rs.1000 Millions turnover from digital platform resulted in a quantum growth over previous year. Unlike the e-com wave of discounts EFL held the price and strategic partnership with 'Google' helped EFL dominate in the space with over 70% Share of Voice in the categories EFL has been present in. Additionally mobility both in Sales & Service began to show early benefits.   The Employee diversity ratio moved from 7% to 12% with Direct Sales leading the way with 16% Lady Eurochamps. EFL was also able to improve the retention in performers by 10% over the previous year.   One of the significant achievements by the EFL team was the improvement in the NPS (Net Promoter Score) – measured across 5 touchpoints in the relationship of a customer with EFL. Across all the five touch points the team registered more than 25% improvement over the previous financial year with post sales service team topping the charts in both mandatory service as well as complaint management.   Consolidation of manufacturing facilities has improved productivity at factories.   The social initiative of Eureka Forbes, Jal Daan resulted in an unprecedented 32,00,000 pledges and massive interactions on the Social Media thereby over 22 plants benefiting over 20,00,000 individuals who otherwise lacked access to safe drinking water. The result, one amongst, 6 Honourees' in the World and the 1st Indian, Mr. Suresh L. Goklaney of Eureka Forbes was honoured with the 'Rotary Responsible Business Award 2016' by Rotary International on Rotary Day at the United Nations (UN), November 12, 2016.   The institutional business, Forbes Pro, to transition from products to services with integration of sales and service. Key Account Management System and a digital push would enable growth in this business.   On the international front, opening of business to business segment, new channels i.e. Retail, e-tail and party plans together with opening of 10 new markets, re-organisation of operations, cost-optimisation drive, elimination of non value adding services, focus on core business and a new category of mattresses had been the thrust during year gone by.   A positive growth of 4% over the previous year and retaining the profitability therefore in a tormentors year was a respectable performance by EFL. EFL plans to introduce newer technologies that would give an edge for EFL in the market place to improve the business.   As in the past, current year too, your Company has received various awards and recognitions, some of which are –   ·         “Great Places to Work” Rank 44 with TRUST INDEX© Score 83 ·         Forbes Lux featured in DSN Global Top 100 (50): The Top Direct Sales Companies in the World – Rank 41. ·         Campaign “Jal Daan” won the silver at the DMA Asia Echo effectiveness awards in Not-for-Profit category. ·         Won bronze for the Best use of search for Dr. Aquaguard at the Campaign India Digital Crest Awards, 2016 ·         Eureka Forbes website was nominated for Abby Awards ·         Jal Daan Campaign won Gold in the Best Cause, Chairity Campaign, Dragons of Asia Awards ·         Frost & Sullivan Award 2016: India Purifier Market (Water and Air) – Product Line Strategy Leadership Award ·         Mr. S L Goklaney, Executive Vice Chairman was conferred with the “Rotary Responsible Business Award 2016” by Rotary International and was felicitated on Rotary Day at United Nations(UN) ·         Mr. S L Goklaney was awarded with Social Crusader by IAA Olive Crown Awards  Your Directors are confident that, barring unforeseen circumstances, in the ensuing year your Company shall maintain the growth momentum

  (i)           Steps taken or impact on conservation of energy;   The Company has always been conscious of the need for conservation of energy and has been sensitive in making progress towards this end. Energy conservation measures have been implemented by the manufacturing operations of the Company’s wholly owned subsidiary, Aquamall Water Solutions Ltd. (AWSL). AWSL do not need substantial energy inputs. However, AWSL has always been considering innovative ways of reducing the consumption and conserving energy in day-to-day operations through conscious efforts. These methods include utilization of natural light through enabling architecture of manufacturing buildings, recycle and re-use of water to the extent practical, and during the winter season, a geo-thermal air circulation system helps minimize or even eliminate the use of electric heaters.   AWSL’s, Dehradun plant is the recipient of Gold LEED (USA) certification, testifying its superior energy-efficient and environmentally sustainable operations in India.  The impact of the above initiatives on the cost of production of goods by AWSL is marginal but awareness amongst the people and impact on AWSL’s efforts to conserve energy has been significant.   (ii)         Steps taken for utilising alternate sources of energy;   During the year under review, AWSL has put a lot of emphasis in making its operations as much eco-friendly as possible.  Towards this end, AWSL has obtained Green Company: GC Mark for Dehradun Plant.   AWSL’s unit at Dehradun is a ‘Green facility’. The unit has been built to be ‘environment friendly’ by limiting the requirement of energy. The unit employs natural light harvesting, geo thermal air ventilation system, turbo ventilators and solar based outdoor lighting systems.   (iii)       Capital investment on energy equipments;   During the year under review, AWSL also engaged in structured Value Engineering measures to partly offset the impact of rising material costs and also to bring value addition to the products. The measures met with a good degree of success, particularly when viewed in conjunction the depreciation of the Indian rupee against the US dollar.

  (i)                 Efforts made towards technology absorption; Research and Development (R & D) The company has carried out extensive Research and Developmental activities in the field of Water purification for drinking and other consumptive uses.   During this year, the company has introduced several new products.   The R&D team of the Company has developed 6 new technologies and introduced 4 new innovative features in the product development during the year under review. These devices and technologies are designed to address the specific needs in the market. These products are one of their kinds. The introduction of innovative features like Biotron, Mineral Cartridge, HCCB Cartridge had helped to differentiate the Dr. Aquaguard & Aquaguard.   During the year under review, there are 5 Patents filed & 3 Design registrations done.   International Certifications: To cater the international market requirements, the Waterguard Classic & Premium had been CE certified  and  approved by the Hungarian Public Health Institute.   To cater the GCC market, the Forbes Enhance RO and Forbes Enhance RO + UV also certified for CB marking, which is very essential for Middle East market.   For the first time, Company had developed an air purifier to meet the International market requirements with optional humidification feature. This product also having a patented Duotron technology.   (ii)        Benefits derived like product improvement, cost reduction, product development;   During the financial year, Dr. Aquaguard Magna brand is introduced for direct Sales with 3 (three) variants. Introduced 2 (two) patented technology (Biotron and Mineral Cartridge) to differentiate the Dr. Aquaguard product to support the healthy with healthily water concept.   New Wet dry Vacuum Cleaner is launched for domestic market and international market. New under the sink direct flow RO+UV product with digital display designed for European market is launched in Hungary successfully.     The R&D Team developed two models Geneus 2 and Aeroguard 4S with IOT haze platform features with mobile app operation.   Air purifier for Indian and International Market: Aeroguard 4S designed and developed for European market is introduced and manufactured from AWSL. This product with multiple patent technologies like Duotron and auto room humidification is the first time in this category. Aeroguard 4S is also recommended for Indian market.   To capture the air purification market, 4 variants of  Dr. Aeroguard –SCPR 100, SCPR 200, SCPR 700 and SCPR 1100 launched successfully.       (iii)             Imported technology; The Company has not imported any technology during the last five years and has fully absorbed the indigenous technology for the models currently produced. However, the Company believes that the ‘best in class’ technologies appropriate for the market segments where the Company currently operates or has a future interest in reaching will be sourced regardless of where they originate from.   The Company believes that delivering the ‘right product to the right consumer at the right price’ is the ultimate objective to achieve.   The Company through AWSL its wholly owned subsidiary monitors the process and technology upgradation taking place in advance countries and to offer similar products through in-house R & D as well as through progressive manufacturing activities.   (i)                 Expenditure on Research and Development: a.       Capital                                                             Rs.  0.12 Cr b.      Recurring                                                        Rs.  6.31 Cr c.       Total                                                                Rs. 6.43 Cr d.      Total R&D expenditure as a percentage of total turnover   0.4%

  (i)                             Activities relating to exports; initiatives taken to increase exports; development of new export markets for products and services; and export plans; The Company has initiated the process of developing new international markets to increase its export business which at present is less than 1% of its turnover.   (ii)                           Total Foreign Exchange used and earnedEarnings in foreign exchange during the year under review were Rs. 6 Crores and the outgo of Rs. 117 Crores

      Pursuant to Section 134(3)(c) of the Companies Act, 2013, the Directors, based on representations received from the Operating Management, confirm that –   in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; 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 and loss of the Company for that period; 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 regularities; the directors had prepared the annual accounts on a going concern basis; and 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.