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WABCO India Ltd.

BSE: 533023 Sector: Auto
NSE: WABCOINDIA ISIN Code: INE342J01019
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VOLUME 57
52-Week high 6403.00
52-Week low 4760.00
P/E 59.43
Mkt Cap.(Rs cr) 11,518
Buy Price 6060.00
Buy Qty 10.00
Sell Price 6092.45
Sell Qty 1.00
OPEN 6076.00
CLOSE 6091.10
VOLUME 57
52-Week high 6403.00
52-Week low 4760.00
P/E 59.43
Mkt Cap.(Rs cr) 11,518
Buy Price 6060.00
Buy Qty 10.00
Sell Price 6092.45
Sell Qty 1.00

WABCO India Ltd. (WABCOINDIA) - Director Report

Company director report

The directors have pleasure in presenting the twelfth annual report and the auditedaccounts for the financial year ended 31st March 2016.

1. FINANCIAL HIGHLIGHTS

Rs. in lakhs

Details Year ended 31.03.2016 Year ended 31.03.2015
Sales (net) 183827.08 134796.34
Other Operating income 3460.96 2029.89
Total revenue from operations 187288.04 136826.23
Gross profit before interest and depreciation 32754.96 22365.32
Finance costs 15.20 36.09
Depreciation 5623.69 4666.37
Profit before tax 27116.07 17662.86
Provision for taxation (including deferred tax and tax relating to earlier years) 6654.46 5596.82
Profit after tax 20461.61 12066.04
Surplus brought forward from previous year 60567.72 49648.51
Total 81029.33 61714.56
Appropriations:
Proposed dividend 1138.06 948.38
Dividend tax payable 231.68 198.45
Transfer to general reserve
Surplus in profit & loss account 79659.59 60567.72
81029.33 61714.55

2. DIVIDEND

The board of directors has recommended a dividend of (Rs.6/-per share) for the yearended 31st March 2016 absorbing a sum of Rs. 1138.06/- lakhs for approval ofthe shareholders at the ensuing annual general meeting.

3. PERFORMANCE

During the year 2015-16 sales of medium and heavy commercial vehicles (M&HCV) grewby 31.9% over the previous year. The Company achieved total revenue from operations andother income of Rs.1873 crores as against Rs.1368 crores in the previous year anincrease of 36.9%.

4. CAPITAL EXPENDITURE

Capital expenditure of Rs.89.78 crores was incurred during the year 2015-16 as againstthe plan of Rs.90 Crores and Capital Expenditure of Rs. 90 Crore is planned for the year2016-17.

5. DIRECTORS

Mr. Trevor Lucas (DIN: 01627818) resigned from the Board with effect from 29thOctober 2015. Mr. Shivaram Narayanaswami (DIN: 07327742) was appointed as a Director inthe resulting casual vacancy at the board meeting held on 9th November 2015. Mr.Shivaram Narayanaswami will hold this office upto the ensuing annual general meeting ofthe Company. A notice has been received from a member along with the prescribed deposit ofRs. 1 lakh proposing his appointment as a non-executive non independent director at theTwelfth annual general meeting of the Company.

Mr. Sean Ernest Deason (DIN: 07334776) has been appointed as an Additional Director bythe Board with effect from 9th November 2015. Mr. Sean Ernest Deason will holdthis office up to the ensuing annual general meeting of the Company. A notice has beenreceived from a member along with the prescribed deposit of Rs. 1 lakh proposing hisappointment as a non-executive non independent director at the Twelfth annual generalmeeting of the Company.

Ms. Lisa Brown (DIN: 07053317) retires by rotation at the ensuing annual generalmeeting of the Company being eligible offers himself / herself for re-appointment.

In compliance with Regulation 36(3) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (Listing Regulation) a brief resume and other requiredinformation about the directors who are being appointed / re-appointed are given in thenotice convening the annual general meeting of the Company.

Mr. D.E Udwadia (DIN: 00009755) has resigned from the Board with effect from 1stApril 2016 on account of personal reasons. The Board hereby places its profoundappreciation for the services rendered by him during his tenure as an IndependentDirector. The independent directors continue to fulfill the criteria of independence asdefined under Section 149(6) of the Companies Act 2013 ("the Act") andRegulation 16(b) of the Listing Regulation requisite declarations have been received.

Dr. Lakshmi Venu (DIN: 02702020) has been appointed as an Independent Director by theBoard for a term of 5 consecutive years with effect from 19th May 2016 upto 18thMay 2021 subject to the approval of the shareholders. The board has recommended theappointment for the shareholder's approval at the ensuing annual general meeting of theCompany. A notice has been received from a member along with the prescribed deposit of Rs.1 lakh proposing her appointment as an independent director at the Twelfth Annual GeneralMeeting of the Company.

6. AUDITORS

Messrs S.R.Batliboi & Associates LLP Chartered Accountants Chennai were appointedas Statutory Auditors at the Annual General Meeting held on 22nd July 2014 fora period of 5 (five) years from conclusion of tenth annual general meeting until theconclusion of fifteenth annual general meeting subject to ratification of shareholders atevery annual general meeting of the Company. The Board recommends the ratification oftheir continuation as Auditors. The Company has received a confirmation from the StatutoryAuditors to the effect that they would be eligible for such continuation.

7. SECRETARIAL AUDITOR

M/s. S Krishnamurthy & Co. Company Secretaries have carried out Secretarial Auditunder the provisions of Section 204 of the Act for the financial year 2015-16 andsubmitted their report which is annexed to this report in Annexure - 6. The report doesnot contain any qualification.

8. COST AUDITOR

Pursuant to Section 148 of the Companies Act 2013 the Board of Directors of theCompany upon recommendation made by the audit committee has appointed Mr.A.N Raman CostAccountant as Cost Auditor of the Company for the financial year 2016-17 and hasrecommended his remuneration to the shareholders for ratification at the ensuing AnnualGeneral Meeting.

9. KEY MANAGERIAL PERSONNEL

Mr. R S Rajagopal Sastry was appointed as the Chief Financial Officer w.e.f 31stAugust 2015 in place of Mr. T S Rajagopalan who had resigned and since superannuated. Mr.M C Gokul was appointed as the Company Secretary w.e.f 30th January 2016 inplace of Mr. N Sivalai Senthilnathan who was re-designated as General Manager - Finance

10. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

As per the provisions of Section 186 of the Companies Act 2013 the details of loansand the details of investments made are given in the notes to the Financial Statements.

11. EVALUATION OF THE BOARD'S PERFORMANCE

During the year the Board adopted a formal mechanism for evaluating its performanceand as well as that of its Committees and directors including the Chairman of the Board.The exercise was carried out through a structured evaluation process covering variousaspects of the functioning of the Board and Committees such as their compositionexperience & competencies performance of specific duties & obligationsgovernance issues etc. Separate exercise was carried out to evaluate the performance ofeach individual director including the Board Chairman who were evaluated on parameterssuch as attendance contribution at the meetings independent judgment and other relevantaspects. The Board was satisfied with the evaluation results which reflected the overallengagement of the Board Committees and the directors with the Company.

12. VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has established vigil mechanism through "WABCO Whistle BlowerPolicy" to deal with instance of fraud and mismanagement if any and the whistleblower shall have direct access to the Chairman of the audit committee / chief ethicsofficer of the Company as the case may be to report any concerns or unethical activities.

13. STATUTORY STATEMENTS

13.1 Conservation of energy technology absorption and foreign exchange earnings andoutgo

Information regarding conservation of energy technology absorption research &development expenses and foreign exchange earnings and outgo are given in Annexure 1 tothis report as per the requirements of Section 134(3)(m) of the Act 2013.

13.2 Corporate Social Responsibility

The Company focuses on CSR activities as specified in Schedule VII of the CompaniesAct 2013 and the Company's CSR policy. As required under Section 134(3)(o) of theCompanies Act 2013 details about policy developed and implemented by the Company onCorporate Social Responsibility initiatives taken during the year ended 31st March2016 are given in Annexure 2 to this report.

13.3 Directors' Responsibility Statement

Pursuant to Section 134(3)(c) of the Act it is hereby confirmed that;

a. in the preparation of the annual accounts the applicable accounting standards havebeen followed and there are no material departures.

b. the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2016 and ofthe profit of the Company for the year ended on that date;

c. that directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

d. the directors had prepared the annual accounts on a going concern basis; e. thedirectors had laid down internal financial controls to be followed by the Company and thatsuch internal financial controls are adequate and were operating effectively; and

f. the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

14. DISCLOSURES UNDER COMPANIES ACT 2013 14.1 Extract of the Annual Return

Details of extracts of the annual return as per Form MGT - 9 is enclosed in Annexure 3to the Directors report.

14.2 Number of Board Meetings

The Board of Directors met four times during the year 2015-16. The details of the Boardmeetings and the attendance of the Directors are provided in the Corporate GovernanceReport.

14.3 Committees of Board of Directors

Details of memberships and attendance of various committee meetings are given inCorporate Governance Report.

14.4 Related Party Transactions

All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. There are no relatedparty transactions made by the company with promotors Directors Key Managerial Personnelor other designed persons which may have a potential conflict with the interest of thecompany at large.

Certain related party transactions entered into during the year ended 31stMarch 2016 and transactions proposed to be entered into during the year ending 31stMarch 2017 between the Company and WABCO Europe BVBA which is fellow subsidiary of theCompany are material in nature and require the approval of members by ordinary resolutionas per the Listing regulation. An ordinary resolution seeking shareholders' approval isincluded in the notice to shareholders.

All transactions with related parties are placed before the audit committee and priorapproval of the audit committee is obtained. The Company has developed a Related PartyTransactions Policy for the purpose of identification and monitoring of such transactions.Details of material Related Party Transactions entered by the Company as required underSection 134(3)(h) of the Act and the Listing regulation are given in annexure 4 to thisreport.

15. POLICIES

15.1 The following policies approved by the Board of Directors of the Company wereuploaded and are available in the Company's website at the web link:http://www.wabco-auto.com/en/investor_relations/ wabco_india_investor_relations CorporateSocial Responsibility Policy Related Party Transaction Policy Nomination and RemunerationPolicy Whistle Blower Policy Code of Practices and Procedures for Fair Disclosure ofUnpublished Price Sensitive Information Code of Business conduct and Ethics by the Boardmembers and Senior Management.

Policy on Criteria for Determining Materiality of Events

15.2 Policy on director appointment and remuneration Company's policy on directors'appointment and remuneration including criteria determining for qualification positiveattributes independence of a director and other matters provided under Section 178(3) ofthe Act is provided in the Corporate Governance Report.

16. PARTICULARS OF DISCLOSURES AS REQUIRED UNDER

SECTION 197 OF THE COMPANIES ACT 2013

16.1 The ratio of the remuneration of each director to the median employee'sremuneration for the financial year and such other details as prescribed are as givenbelow:

Name Ratio
Mr. P. Kaniappan Managing Director 24.17:1
Mr. M. Lakshminarayan - Independent Director 2.22:1
Mr. D E Udwadia Independent Director 2.25:1
Mr. Narayan K. Seshadri Independent Director 2.25:1

Directors other than those mentioned above have not drawn any remuneration for thefinancial year 2015-16.

16.2 The percentage increase in remuneration of each Director Managing Director ChiefFinancial Officer Company Secretary in the financial year:

Mr. M Lakshminarayan Chairman # 0.00%
Mr. D E Udwadia Director # 0.00%
Mr. Narayan K Seshadri Director # 0.00%
Mr. P Kaniappan Managing Director 9.8%
Mr. T S Rajagopalan Chief Financial Officer * N.A
Mr. R S Rajagopal SastryChief Financial Officer * N.A
Mr. N Sivalai Senthilnathan Company Secretary * N.A
Mr. M.C GokulCompany Secretary * N.A

* In office for part of the year 2015-16 and hence percentage increase cannot becalculated.

# Excluding sitting fee.

16.3 The percentage increase in the median remuneration of employees in the financialyear: 16.07% 16.4 The number of permanent employees on the rolls of company as on 31stMarch 2016: 1515

16.5 The explanation on the relationship between average increase in remuneration andcompany performance: The Company's total revenue grew by 36.9% against which the averageincrease in remuneration is 11.63%; and this increase is aligned with the RemunerationPolicy of the Company.

16.6 Comparison of the remuneration of the Key Managerial Personnel against theperformance of the company:

During the Financial year 2015-16 the Company's total revenue grew by 36.9% and thepercentage of increase in remuneration of the Key Managerial Personal is given below: -

Mr. P Kaniappan Managing Director 9.8%
Mr. T S Rajagopalan Chief Financial Officer * N.A
Mr. R S Rajagopal Sastry Chief Financial Officer * N.A
Mr. N Sivalai Senthilnathan Company Secretary * N.A
Mr. M C Gokul Company Secretary * N.A

* In office for part of the year 2015-16 and hence percentage increase cannot becalculated.

16.7 The ratio of the remuneration of the highest paid director to that of theemployees who are not directors but receive remuneration in excess of the highest paiddirector during the year: Nil

16.8 Variations in the market capitalization of the Company price earnings ratio as atthe closing date of the current financial year and previous financial year and percentageincrease or decrease in the market quotations of the shares of the Company in comparisonto the rate at which the company came out with the last public offer / demerger:

Date Issued Capital No. of shares Closing Market Price EPS (In Rs.) PE Ratio Market Capitalisation
(Rs. per share) (Rs. in Crores)
(A) Price on demerger 18967584 142.10 36.82 3.86 270
(B) 31.3.2015 18967584 5688.90 63.61 89.85 10790
(C) 31.3.2016 18967584 6249.25 107.88 57.93 11853
(D) Increase (B) to (C) Amount (Rs) 560.35 44.27 (31.92) 1063
(From last year) % 9.85% 70% NA 10%
(E) Increase (A) to (C) Amount (Rs) 6107.15 71.06 54.07 11584
(From demerger) % 4300% 293% 1501% 4298%

16.9 No employee is in receipt of remuneration over and above the managerialremuneration received by executive director of the Company.

16.10 Average percentage increase already made in the salaries of employees other thanthe managerial personnel in the last financial year: 12% Percentage increase in themanagerial remuneration in the last financial year was 2.2%. Mr. R S Rajagopal Sastry wasappointed as the Chief Financial Officer in place of Mr. T S Rajagopalan and Mr. M C Gokulwas appointed as the Company Secretary in place of Mr. N Sivalai Senthilnathan during thefinancial year 2015-16. There are no exceptional circumstances for increase in themanagerial remuneration.

16.11 The key parameters for any variable component of remuneration availed by thedirectors: Independent directors have been paid sitting fees for attending meetings of theBoard and Committees and are also paid a profit related commission but not exceeding 1%of the net profit of the Company for the financial year. No sitting fee and commission ispaid to non-executive and non-independent Directors of the Company. However with respectto Mr. P. Kaniappan Managing Director of the Company variable component is paid in theform of incentive as per the Remuneration Policy of the Company and based on thefinancial and non-financial parameters.

16.12 The remuneration of directors and employees are as per the remuneration policy ofthe Company.

16.13 Particulars of Employees

The statement of particulars of employees as per 197 of the Companies Act 2013 readwith Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 forthe year ended 31st March 2016 is given in annexure 5 and forms part of thisReport.

17. CORPORATE GOVERNANCE

The Company has complied with the provisions of the Listing Regulation concerningcorporate governance and a report to this effect is attached as required by UnderSchedule V of the Listing Regulation. The certificate issued by the auditors of theCompany regarding compliance with the corporate governance requirements is also annexed tothis report. The Managing Director (CEO) and the Chief Financial Officer (CFO) of theCompany have certified to the board on financial statements and other matters inaccordance with Regulation 17(8) of the Listing Regulation pertaining to CEO / CFOcertification for the financial year ended 31st March 2016.

The management discussion and analysis report as required by the Listing Regulationand various disclosures required under the Companies Act 2013 is also attached and formspart of this report.

18. FAMILIARIZATION PROGRAMME FOR INDEPENDENT

DIRECTORS

The Company has a structured familiarization program for Independent Directors of theCompany which also extends to other Non-Executive Directors to ensure that Directors arefamiliarized with their function role rights responsibilities and the nature of thecompany Business viz. automotive component industry and WABCO global business model etc.

The Board of Directors has complete access to the information within the Company.Presentations are regularly made to the Board of Directors and all Committees of the Boardon various matters where Directors get an opportunity to interact with Senior Management.Presentations inter alia cover the Company's strategy business model operationsmarkets organization structure product offerings finance risk management frameworkquarterly and annual results human resources technology quality and such other areas asmay arise from time to time. Further regulatory updates are periodically placed beforethe Board.

The Company also issues appointment letter to the Independent Directors which alsoincorporates their role duties and responsibilities.

19. ACKNOWLEDGEMENT

The directors thank the vehicle manufacturers distributors vendors and bankers fortheir continued support and assistance. The directors gratefully acknowledge the supportrendered by WABCO Europe BVBA Belgium. The directors hereby place on record theirprofound appreciation for the valuable services rendered by Mr. D E Udwadia during thistenure as director.

The directors wish to place on record their appreciation of the excellent work done byemployees of the Company at all levels during the year. The directors specially thank theshareholders for the confidence reposed by them in the Company.

For and on behalf of the board
Chennai M. Lakshminarayan
19th May 2016 Chairman