To the shareholders
The directors have pleasure in presenting the fourteenth annual report and the auditedfinancial statements for the financial year ended 31st March 2018.
1. FINANCIAL HIGHLIGHTS
$ in lakhs
|Details ||Year ended 31.03.2018 ||Year ended 31.03.2017 |
|Revenue from Operations ||260941.67 ||226057.16 |
|Other Operating income ||5095.92 ||3615.07 |
|Total revenue from operations ||266037.59 ||229672.23 |
|Profit before interest depreciation and tax ||44513.85 ||36254.52 |
|Finance costs ||161.74 ||46.44 |
|Depreciation ||6173.69 ||6162.93 |
|Profit before tax ||38178.42 ||30045.15 |
|Provision for taxation (including deferred tax and tax relating to earlier years) ||10895.79 ||8697.38 |
|Profit after tax ||27282.63 ||21347.77 |
|Other Comprehensive Income / (Loss) for the year net of tax ||(73.52) ||(352.93) |
|Total Comprehensive Income for the year net of Tax ||27209.11 ||20994.84 |
The board of directors has recommended a dividend of ($ 8/- per share) for the yearended 31st March 2018 absorbing a sum of $ 1517.41/- lakhs (excludingdividend tax) for approval of the shareholders at the ensuing annual general meeting.
During the year 2017-18 sales of medium and heavy commercial vehicles (M&HCV) grewby 11% over the previous year. The Company achieved total revenue from operations andother income of $ 2660.38 crores as against $ 2296.72 crores in the previous year anincrease of 15.8%.
4. CAPITAL EXPENDITURE
Capital expenditure of $ 103.07 crores was incurred during the year 2017-18 as againstthe plan of $ 101.95 Crores and Capital Expenditure of $ 110 Crore is planned for the year2018-19.
Ms. Lisa J Brown (DIN 07053317) retires by rotation at the ensuing annual generalmeeting of the Company being eligible offers herself for re-appointment.
In compliance with Regulation 36(3) of the Securities Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 (Listing Regulation) a briefresume and other required information about the director who is being re-appointed isgiven in the notice convening the Annual General Meeting of the Company.
The independent directors continue to fulfill the criteria of independence as definedunder Section 149(6) of the Companies Act 2013 ("the Act") and Regulation 16(b)of the Listing Regulation and have furnished the requisite declarations in this regard.
Messrs S.R. Batliboi & Associates LLP Chartered Accountants Chennai (FirmRegistration No.101049W) were appointed as Statutory Auditors at the Annual GeneralMeeting held on 22nd July 2014 for a period of 5 (five) years from conclusionof 10th annual general meeting upto the conclusion of the 15thAnnual General Meeting subject to ratification by members at every annual generalmeeting. Section 40 of the Companies Amendment Act 2017 notified on 7th May2018 has omitted the first provisio to Section 139(1) of the Companies Act 2013 wherebythe requirement of ratification by members at every annual general meeting has been doneaway with. Hence Messrs S. R. Batliboi & Associates LLP Chartered AccountantsChennai being eligible would continue as Statutory Auditors till their term upto the 15thAnnual General Meeting.
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 2017-18 andsubmitted their report which is annexed to this report. The report does not contain anyqualification.
8. COST AUDITOR
Mr. A N Raman was appointed as the cost auditor for the year 2017-18. Pursuant toSection 148 of the Act the Board of Directors of the Company upon recommendation made bythe audit committee has appointed Mr. A N Raman Cost Accountant as Cost Auditor of theCompany for the financial year 2018-19 and has recommended his remuneration to theshareholders at the ensuing Annual General Meeting.
9. KEY MANAGERIAL PERSONNEL
Mr. P Kaniappan - Managing Director
Mr. R S Rajagopal Sastry - Chief Financial Officer
Mr. M C Gokul - Company Secretary
10. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The Company has not provided any Loans or Guarantees to any person or other bodycorporate under Section 186 of the Act and the details of investments made are given inthe 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 Boardas per the requirements in this regard specified in the guidance note issued by theSecurities Exchange Board of India and the provisions of the Companies Act 2013. Theexercise was carried out through a structured evaluation process covering various aspectsof the functioning of the Board and Committees such as their composition experience &competencies performance of specific duties & obligations governance issues etc.Separate exercise was carried out to evaluate the performance of each individual directorincluding the Board Chairman who were evaluated on parameters such as attendancecontribution at the meetings independent judgment and other relevant aspects as laid downunder the Guidance note issued by SEBI in this regard.
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 a vigil mechanism through "WABCO Whistle BlowerPolicy" to enable employees and directors to report genuine concerns dealing withinstances of fraud and mismanagement if any. The mechanism provides for adequatesafeguards against victimization of the whistle blower and also provides for direct accessto the Chairman of the audit committee in appropriate or exceptional cases or to the chiefethics officer of the Company as the case may be to report any concerns or unethicalactivities.
13. BUSINESS RESPONSIBILITY
The Company is one among the top 500 listed companies as per the market cap as on 31stMarch 2018 and hence as per the Listing regulation requires a Business ResponsibilityReport forms part of the annual report. In this regard the Company has developed aBusiness Responsibility policy which is approved by the Board. As per this policy Mr. PKaniappan Managing Director is responsible for the implementation of the BusinessResponsibility initiatives. The initiatives of the Company in this regard for the year2017-18 are provided in the Business Responsibility Report.
14. STATUTORY STATEMENTS
14.1 Conservation of energy Research & Development Expenses and foreign exchangeearnings and outgo
Information regarding conservation of energy Research & Development expenses andforeign exchange earnings and outgo is given in Annexure 1 to this report as per therequirements of Section 134(3)(m) of the Act 2013.
14.2 Corporate Social Responsibility
The Company focuses on CSR Activities as specified in scheduled VII of the CompaniesAct 2013 and the Companies CSR Policies. As required under Section 134(3)(o) of the Actdetails about policy developed and implemented by the Company on Corporate SocialResponsibility initiatives taken during the year ended 31st March 2018 aregiven in Annexure 2 to this report.
14.3 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 2018 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. the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively; 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.
15. DISCLOSURES UNDER COMPANIES ACT 2013
15.1 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.
15.2 Number of Board Meetings
The Board of Directors met four times during the year 2017-18. The details of the Boardmeetings and the attendance of the Directors are provided in the Corporate GovernanceReport.
15.3 Committees of Board of Directors
Details of memberships and attendance of various committee meetings are given inCorporate Governance Report.
15.4 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 2018 and transactions proposed to be entered into during the year ending 31stMarch 2019 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.
16.1 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
Corporate Social Responsibility Policy
Related Party Transaction Policy
Nomination and Remuneration Policy
Whistle Blower Policy
Code of Practices and Procedures for Fair Disclosure of Unpublished PriceSensitive Information
Policy on Criteria for Determining Materiality of Events
16.2 Policy on director appointment and remuneration
Company's policy on directors' appointment and remuneration including criteriadetermining for qualification positive attributes independence of a director and othermatters provided under Section 178(3) of the Act is provided in the Corporate GovernanceReport.
17. PARTICULARS OF DISCLOSURES AS REQUIRED UNDER SECTION 197 OF THE COMPANIES ACT 2013
17.1 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 ||25.66:1 |
|Mr. M. Lakshmi Narayan Independent Director ||2.22:1 |
|Mr. Narayan Seshadri Independent Director ||2.16:1 |
|Dr. Lakshmi Venu Independent Director ||2.00:1 |
Directors other than those mentioned above have not drawn any remuneration for thefinancial year 2017-18.
17.2 The percentage increase in remuneration of each Director Managing Director ChiefFinancial Officer Company Secretary in the financial year:
|Mr. M. Lakshminarayan Chairman ||14.29% |
|Mr. Narayan K Seshadri Director ||12.86% |
|Dr. Lakshmi Venu* ||35.42% |
|Mr. P. Kaniappan Managing Director ||29.74% |
|Mr. R.S Rajagopal Sastry || |
|Chief Financial Officer ||23.34% |
|Mr. M.C Gokul Company Secretary ||23.75% |
* In office for part of the year 2016-17 and hence the commission was paid prorata.
17.3 The percentage increase in the median remuneration of employees in the financialyear: 6.29%
17.4 The number of permanent employees on the rolls of company as on 31stMarch 2018: 1673
17.5 Average percentage increase already made in the salaries of employees other thanthe managerial personnel in the last financial year: 14.5% Percentage increase in themanagerial remuneration in the last financial year was 27.9%. There are no exceptionalcircumstances for increase in the managerial remuneration.
With respect to the Managerial Personnel variable component is paid in the form ofincentive as per the remuneration policy of the Company and based on the financial andnon-financial parameters based on their individual performance and the performance of theCompany.
17.6 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 also paid a profit related commission but not exceeding 1% ofthe 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 performance based incentive as per the Remuneration Policy of the Company andbased on the financial and non-financial parameters.
17.7 The remuneration of directors and employees are as per the remuneration policy ofthe company.
17.8 Particulars of Employees
The statement of particulars of employees as per Section 197 of the Companies Act2013 read with Companies (Appointment & Remuneration of Managerial Personnel) Rules2014 for the year ended 31st March 2018 is given in annexure 5 and formspart of this Report.
18. CORPORATE GOVERNANCE
The Company has complied with the provisions of the Listing Regulations 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 Regulations pertaining to CEO / CFOcertification for the financial year ended 31st March 2018. Further applicableSecretarial Standard have been complied with.
The management discussion and analysis report as required by the Listing Regulationand various disclosures required under the Act is also attached and forms part of thisreport.
19. 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.
The Company also issues appointment letters to the Independent Directors which alsoincorporates their role duties and responsibilities. Further regulatory updates onregulatory changes are also periodically placed before the Board.
The directors thank the vehicle manufacturers distributors vendors and bankers fortheir continued support and assistance. The directors greatfully acknowledge the supportrendered by WABCO Europe BVBA Belgium. The directors wish to place on record theirappreciation of the excellent work done by employees of the Company at all levels duringthe year. The directors specially thank the shareholders for the confidence reposed bythem in the Company.
| ||For and on behalf of the board |
|Chennai ||M. LAKSHMINARAYAN |
|28th May 2018 ||Chairman |