TO THE SHAREHOLDERS
The directors have pleasure in presenting the 16th annual report and the auditedfinancial statements for the financial year ended 31st March 2020.
1. FINANCIAL HIGHLIGHTS
Rs in lakhs
|Details ||Year ended ||Year ended |
| ||31.03.2020 ||31.03.2019 |
|Revenue from Operations ||192956.15 ||285413.56 |
|Other Income ||6388.05 ||7247.53 |
|Total Income ||199344.20 ||292661.09 |
|Profit before interest depreciation and tax ||31536.73 ||48235.10 |
|Finance costs ||191.94 || |
|Depreciation ||9011.08 ||7143.69 |
|Profit before tax ||22333.71 ||41091.41 |
|Provision for taxation (including deferred tax and tax relating to earlier years) ||6452.34 ||12874.48 |
|Profit after tax ||15881.37 ||28216.93 |
|Other Comprehensive Income / (Loss) for the year net of tax ||(79.66) ||(197.96) |
|Total Comprehensive Income for the year Net of Tax ||15801.71 ||28018.97 |
The Board of Directors of the Company at its meeting held on 19th March 2020 declaredan interim dividend of Rs 10 per share (200%) for the year 2019-20 absorbing a sum of Rs18.97 crores. The same was paid to all the shareholders who had registered their bankaccount details on 30th March 2020. In respect of other shareholders dividned warrantswere sent to them. The dividend distribution tax of Rs 3.90 crores on the said dividendwas also paid by the Company. The Board does not recommend any further dividend for theyear. The Company has not transferred any amount to the general reserves during the year.
During the year 2019-20 the Company achieved total income of Rs 1993 crores asagainst Rs 2927 crores in the previous year.
The profit before tax was Rs 223 crores as against Rs 411 crores in the previous yearand the Profit after tax was Rs 159 crores as against Rs 282 crores in the previous year.There has been no change in the business of the Company during the financial year ended31st March 2020.
4. AGREEMENT FOR ACQUISITION OF WABCO HOLDINGS INC. US
On 28th March 2019 WABCO Holdings Inc. US the ultimate parent company of WABCO IndiaLtd. had announced to the New York stock exchange through a press release that it hasentered into a definitive merger agreement with ZF Friedrichshafen AG ("ZF") aprivately held global leader in driveline and chassis technologies.
Under the agreement ZF will acquire all outstanding shares of WABCO Holdings Inc. USfor Rs 136.50 per share in an all-cash transaction for an equity value of over Rs 7billion. The acquisition price represents a 13 percent premium to the closing stock priceof Rs 120.75 on February 26 2019 the date prior to media reports and WABCO'sconfirmation that ZF had approached the company. The transaction also represents a premiumof approximately 18 percent and 23 percent to the undisturbed Volume Weighted AveragePrice (VWAP) for the 30 and 90 days ended February 26 2019 respectively.
The transaction once consummated will bring together two global technology leaderswith highly complementary and innovative technology offerings to address future servingOEMs and fleets in the automotive and commercial vehicle industry combining WABCO'scapabilities in commercial vehicle safety and efficiency including technologies involvedin vehicle dynamics control active air suspension systems and fleet management systemswith ZF's leading position in driveline and chassis technologies for cars and commercialvehicles.
The said transaction will result in the indirect acquisition by ZF of WABCO AsiaPrivate Limited an indirect subsidiary of WABCO Holdings LLP US and holds 75% of thevoting share capital of WABCO India Ltd. Accordingly upon the completion of the saidtransaction ZF will be entitled to through WABCO Asia
(a) indirectly exercise 75% of the voting share capital
(b) indirectly exercise control over WABCO India Limited.
Hence under Regulations 3(1) 4 and 5(1) of the SEBI (SAST) Regulations a publicannouncement of an open offer for the acquisition of up to 4741900 fully paid-up equityshares of face value of Rs 5/-each of WABCO India Limited representing 25% of the totalvoting equity capital of WABCO India Limited comprising fully of public shareholders wasgiven by ZF Friedrichshafen AG on 2nd April 2019 at Rs 6318/- per share. This publicannouncement excluded the promoters / promoter group of WABCO India Limited.
In this regard WABCO Holdings Inc. and ZF Friedrichshafen AG had on 16th May 2020announced that all required regulatory approvals have now been received and WABCO and ZFexpect to close the merger on May 29 2020 subject to the satisfaction of all otherclosing conditions.
5. CAPITAL EXPENDITURE
Capital expenditure of Rs 101.5 Crores was incurred during the year 2019-20 as againstthe plan of Rs 119.7 Crores and Capital Expenditure of Rs 104.8 Crores is planned for theyear 2020-21.
On the recommendation of the Nomination & Remuneration Committee Mr. MaheshChhabria has been appointed as an Independent Director by the Board with effect from 16thMay 2020 for a term of 5 consecutive years subject to the approval of shareholders at theensuing Annual General Meeting.
Mr. Narayan K Seshadri ceased to be an Independent Director on the conclusion of hissecond term on 31st March 2020.
Mr. Sean Deason resigned from the Board with effect from 19th March 2020 due to hisother commitments.
Ms. Lisa Brown retires by rotation at the ensuing annual general meeting of theCompany. She has not offered herself for re-appointment.
The Board wishes to place on record its appreciation for the valuable guidance andservices rendered by Mr. Narayan Seshadri and Mr. Sean Deason during their tenure asDirectors.
The composition of the Board taking into account the above changes is in compliancewith the Companies Act 2013 ("the Act") and the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 ("Listing regulations") - threeindependent directors three non-executive non-independent directors and an executivedirector as on date.
The independent directors continue to fulfill the criteria of independence as definedunder Section 149(6) of the Act and Regulation 16(b) of Listing regulations and havefurnished the requisite declarations in this regard and the Board confirms that they areindependent of the management.
M/s. B S R & Co. LLP Chartered Accountants holding firm Registration No 101248W /W-100022 have been appointed as statutory auditors of the Company by the shareholders fora term of five consecutive years from the 15th Annual General Meeting upto the conclusionof the 20th Annual General Meeting as per the Section 139 of the Companies Act 2013.
The Consolidated remuneration paid to Auditors / affiliated firms / entities for Auditand services rendered in other capacities is provided in the notes to the financialstatements.
The Auditors' report for the financial year 2019-20 does not contain any qualificationreservation or adverse remark ordisclaimer and the same is attached with the annualfinancial statements.
8. 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 2019-20 andsubmitted their report which is annexed to this report. The report does not contain anyqualification reservation or adverse remark or disclaimer.
The Board confirms compliance with the Secretarial Standards notified by the Instituteof Company Secretaries of India New Delhi.
9. COST AUDITOR
Pursuant to Section 148 of the Act the Board of Directors of the Company uponrecommendation made by the audit committee has re-appointed M/s A. N Raman &Associates Cost Accountants as Cost Auditor of the Company for the financial year ending31st March 2021 and has recommended his remuneration to the shareholders for theirratification at the ensuing Annual General Meeting.
10. KEY MANAGERIAL PERSONNEL
Mr. P Kaniappan - Managing Director
Mr. R S Rajagopal Sastry - Chief Financial Officer
Mr. M C Gokul - Company Secretary
11. 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.
12. ANNUAL 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 (SEBI) and the provisions of the Companies Act 2013.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 Chairman who were evaluated on parameters such asattendance contribution at the meetings independent judgment and other relevant aspectsas laid down under the Guidance note issued by SEBI in this regard. The Board wassatisfied with the evaluation results which reflected the overall engagement of theBoard Committees and the directors with the Company.
13. 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 chief ethicsofficer of the Company as the case may be to report any concerns or unethical activities.
14. BUSINESS RESPONSIBILITY
The Company is one among the top 1000 listed companies as per the market cap as on 31stMarch 2020 and hence as per the Listing regulations the Business Responsibility Reportforms part of the annual report. In this regard the Company has developed a BusinessResponsibility policy which is approved by the Board. As per this policy Mr. P KaniappanManaging Director is responsible for the implementation of the Business Responsibilityinitiatives. The initiatives of the Company in this regard for the year 2019-20 areprovided in the Business responsibility report.
15. STATUTORY STATEMENTS
15.1 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. Towards the Company's continualcommitment of utilizing renewable energy the Company had commissioned a 400 KW roof topsolar plant during the year 2018-19. This has resulted in increasing the overall renewablepower share from zero to 5% of the total consumption during the year 2019-20.
During 2019-20 the Company had incurred a capital expenditure of Rs 45 lakhs towards atotal of 60 energy reduction projects implemented during the year in air conditionerscompressed air systems and other projects which yielded energy savings of 8.59 Lakh unitsand cost savings of Rs 68.75 Lakhs per annum. Further these initiatives have alsoresulted in carbon footprint reduction of about 400 Ton in Co2 emissions per annum.
15.2 Corporate Social Responsibility
As required under Section 134(3)(o) of the Act details about policy developed andimplemented by the Company on Corporate Social Responsibility initiatives taken during theyear ended 31st March 2020 are given in Annexure 2 to this report
15.3 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 2020 and of the profitof 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.
16. DISCLOSURES UNDER COMPANIES ACT 2013
16.1 Extract of the Annual Return
Details of extracts of the annual return as per Form MGT - 9 is enclosed in Annexure 3to this report.
16.2 Number of Board Meetings
The Board of Directors met six times during the year 2019-20. The details of the Boardmeetings and the attendance of the Directors are provided in the Corporate GovernanceReport.
16.3 Committees of Board of Directors
Details of memberships and attendance of various committee meetings are given inCorporate Governance Report. The Board has accepted / considered all recommendations madeby the Committees to the Board during the financial year
16.4 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 promoters 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 31st March 2020and transactions proposed to be entered into during the year ending 31st March 2021between the Company and WABCO Europe BVBA a fellow subsidiary of the company arematerial in nature and require the approval of members by ordinary resolution as per theListing regulation. An ordinary resolution seeking shareholders' approval is included inthe notice to shareholders.
The Company pays royalty to M/s WABCO Europe BVBA a fellow subsidiary and relatedparty at the rate of 4% per annum on the net sales (Total sales (less) inter-company sales(less) inter-company purchases) effective 1st January 2016 for the intellectual propertyknowhow and processes supplied by WABCO Europe BVBA. M/s WABCO Europe BVBA charges Royaltyto all its associated entities in linewith the global practices and transfer pricingnorms. During the year ended 31st March 2020 royalty of Rs 44.22 crores was paid to M/sWABCO Europe BVBA which amounts to 1.5% of the total turnover for the financial year2018-19.
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.
17.1 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
17.2 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.
18. PARTICULARS OF DISCLOSURES AS REQUIRED UNDER SECTION 197 OF THE COMPANIES ACT 2013
18.1 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 ||58.09:1 |
|Mr. M. Lakshmi Narayan - Independent Director ||2.29:1 |
|Mr. Narayan Seshadri Independent Director ||2.11:1 |
|Dr. Lakshmi Venu Independent Director ||1.95:1 |
Directors other than those mentioned above have not drawn any remuneration for thefinancial year 2019-20.
18.2 The percentage increase in remuneration of each Director Managing Director ChiefFinancial Officer Company Secretary in the financial year:
|Mr. M. Lakshminarayan Chairman ||3.61% |
|Mr. Narayan K Seshadri Director ||(3.80%) |
|Dr. Lakshmi Venu Director ||(2.67%) |
|Mr. P. Kaniappan Managing Director ||23.09% |
|Mr. R.S Rajagopal Sastry Chief Financial Officer ||10.70% |
|Mr. M.C Gokul Company Secretary ||33.08% |
18.3 The percentage increase in the median remuneration of employees in the financialyear: 3.17%
18.4 The number of permanent employees on the rolls of company as on 31st March 2020:1839
18.5 Average percentage increase already made in the salaries of employees other thanthe managerial personnel in the last financial year: 10.6%
Percentage increase in the managerial remuneration in the last financial year was20.67%. There are no exceptional circumstances for increase in the managerialremuneration. With respect to the Managerial Personnel variable component is paid in theform of incentive as per the remuneration policy of the Company and based on thefinancial and non-financial parameters based on their individual performance and theperformance of the Company.
18.6 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 variable component is paid in the form ofincentive as per the Remuneration Policy of the Company and based on the financial andnon-financial parameters.
18.7 The remuneration of directors and employees are as per the remuneration policy ofthe Company.
18.8 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 2020 is given in Annexure 5 and forms part of thisReport.
19. 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 2020. Further applicableSecretarial Standards 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.
20. 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 details offamiliarisation programme have been hosted in the web site of the Company under theweblink http://wabco-auto.com/investor-relations/wabco-india-investorrelations
21. OTHER PARTICULARS
The Company has not accepted any deposits from the public within the meaning ofSections 76 of the Companies Act 2013 for the year ended 31st March 2020.
The Company has considered the possible effects that may result from theCOVID-19 pandemic on the carrying value of property plant and equipment inventoriesrevenue & receivables and other assets. In developing the assumptions relating to thepossible future uncertainties in the global economic conditions because of this pandemicthe Company as at the date of approval of these financial statements has used internaland external sources of information and concluded that no adjustments are required to thefinancial results. The Company will continue to monitor the developing scenario or anymaterial changes.
There are no significant and material orders passed by regulators or courts ortribunals which would impact the going concern status of the Company and its futureoperations.
The Company does not have any subsidiary associate or joint venture. There wasno Company which has become or ceased to be Company's subsidiary Joint venture orassociate Company during the financial year 2019-20.
The Company has not raised any funds during the year.
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. The directors wish to place on record their appreciation ofthe excellent work done by employees of the Company at all levels during the year. Thedirectors specially thank the shareholders for the confidence reposed by them in theCompany.
| ||For and on behalf of the board |
|Chennai ||M. LAKSHMINARAYAN |
|22nd May 2020 ||Chairman |