Chairman's Message

Shinichi Iizuka,
Chairman,
Hitachi Home & Life Solutions (India) Ltd.

My warm greetings to all the shareholders of Hitachi Home & Life Solutions (India) Limited, I am pleased to present yet another year of good performance by your Company.

Your company has made an Operating Profit (Profit before Depreciation, Interest and Tax) of Rs. 703.08 Mn. And contributed to the consolidated accounts of Hitachi Group.

Indian room Air conditioning industry experienced a growth of about 25% over the last year in sales volume. Extended summer, low penetration rate and increasing disposable income assisted in industry growth. Your Company has also shown good performances and grew by 46% in sales volume of room Air conditioners. Overall in value term you Company grew by 36%.

This year also saw increasing preference of the Split Air conditioners above window Air conditioners amongst the Room Air conditioners segment. Your Company being the pioneer of technological innovations introduced “Direct Efficient Technology” in its range of Split Air conditioners which makes Hitachi Air conditioners sensible & intelligent. During this year Company has launched a wide range of Split Air conditioners. “i-TEC”, “Ace Followme” and “kaze”.

“Kaze”, a new range of Split Air conditioner was launched for Tier ll & lll markets. India is progressing fast. The future growth will come from smaller towns and the customers in those markets are aspiring for the advanced, high quality & premium products. The customers in smaller towns have enough disposable income and want to upgrade their lifestyle. Keepling all this in mind your Company has launched “Kaze”. This will help Company to gain market share in Room Air conditioners segment in near future.

The Ductable category of Air conditioners has shown downturn. However from second half of the year it started picking up. The telecom segment has shown a linear trend. Your Company however maintained its leadership position with about 32% market share in this segment.

In case of refrigerator business category your Company introduced a range of stylish & premium refrigerators in 2-Door and Big French (4-Door) models. This should support your Company to increase growth rate in coming year in this category.

Continual endeavor for qualitative functional processes helped the Company in growth and margin. We continued to strengthen our brand equities through innovation, quality products and appropriate business promotion steps. This will support to deliver consistent and profitable growth in future also.

This year your Company has taken new initiatives which should contribute towards a higher market share and increased customer satisfaction. They are defined below as “Steps For Future Growth”.

• 1. Your Company had planned capacity enhancement during the global economic slowdown and with the commitment to Indian market your Company has inaugurated new Air conditioner manufacturing facility. The new facility is adjoining the old plant, was built in a record time of 7 ½ months. The new facility would manufacture Room & Commercial Air conditioners including large Air conditioners, Chillers and Telecom Air conditioners. It was inaugurated in August 2009 and Commercial production started in October 2009.
• 2. Launch of “Kaze”, as described above is a stepping stone towards increase in reach which in turn would help to gain higher market share. It was launched through press conferences in 30 towns across country. This model launched for Tier ll & lll towns at competitive price point to increase the acceptability of Hitachi product while strengthening the position in market.
• 3. Your Company has started own service centers, called “Hitachi Customer Satisfaction” (HCS), to improve the service quality and better customer satisfaction. In the first phase, it has started in the major towns. Your Company has started 18 centers in 11 towns till March-2010. These will be increased to 30 in the first phase. In addition to this your Company has its own call centre managed by trained professionals to help the customers. These endeavors will further strengthen HHLI’s brand image and customer satisfaction.

We believe in Hitachi’s founding spirit of harmony, sincerely, and pioneering spirit. The “reliable technologies” that Hitachi creates to contribute to society are not born only from inventions on the front lines of research and development. They are also created by market-driven innovation activities. These innovation activities are essential in every Company and every division throughout the Company.

In conclusion, I would like to reiterate that we will continue to focus on being competitive and profitable to attain sustainable growth.

I convey my gratitude to the members of the Board of Directors for their persistent guidance and support.

I also express deep appreciation of the support that we have always received from our stakeholders and for their faith and confidence. As ever, I seek your whole-hearted support and encouragement in this exciting journey.