Welspun Corp Limited
Your directors' have pleasure in presenting the 25th Annual Report of your Companyalong with the Audited Financial Statements for the financial year ended March 31 2020.
1. Financial Results
| || || || ||(Rs. in million) |
| || |
|Particulars || |
For the year ended
For the year ended
| ||31.03.2019 ||31.03.2020 ||31.03.2019 ||31.03.2020 |
|Total income ||42620.61 ||46552.34 ||90881.24 ||100726.47 |
|Profit before finance cost depreciation & tax ||572.58 ||6869.19 ||7077.33 ||12758.46 |
|Less : Finance costs ||1179.73 ||1113.71 ||1773.71 ||1440.15 |
|Profit / (Loss) before depreciation & tax ||(606.15) ||5755.48 ||5303.62 ||11318.31 |
|Less: Depreciation/Amortization ||1129.53 ||1234.04 ||2597.33 ||2332.90 |
|Add: Share of net loss of joint ventures accounted for using the equity method ||- ||- ||(885.32) ||2060.33 |
|Profit/(loss) before tax from continuing operations ||(1736.68) ||4521.44 ||1820.97 ||11045.74 |
|Less : Provision for tax || || || || |
|Current Tax ||134.45 ||1300.06 ||1216.01 ||3485.86 |
|Deferred Tax ||86.11 ||159.35 ||6.54 ||638.56 |
|Profit/(Loss) after taxes before Non-controlling interests from continuing operations ||(1957.14) ||3062.03 ||598.42 ||6921.32 |
|Profit/ (loss) before tax from discontinued operations ||(2196.24) ||(548.39) ||(2196.24) ||(548.39) |
|Tax expense from discontinued operations ||(1381.31) ||(167.76) ||(1381.31) ||(167.76) |
|Profit/ (loss) from discontinued operations ||(814.93) ||(380.63) ||(814.93) ||(380.63) |
|Less :Non-controlling interests ||- ||- ||(83.93) ||185.96 |
|Profit/(loss) after tax for the year (after Non-controlling interests) ||(2772.07) ||2681.40 ||(132.58) ||6354.73 |
|Add : balance brought forward from previous year ||9226.12 ||6299.43 ||18348.17 ||17255.75 |
|Re-measurements of post-employment benefit (net of tax) ||5.25 ||(50.53) ||(9.54) ||(63.88) |
|Dividend on equity shares ||(132.61) ||(2741.31) ||(132.61) ||(2741.31) |
|Tax on dividend ||(27.26) ||- ||(27.26) || |
|Premium on redemption of NCI's share ||- ||- ||(790.43) ||- |
|Transfer to Debenture Redemption Reserve ||- ||- ||- ||- |
|Transfer from FCTR on liquidation of subsidiary ||- ||- ||- ||(5.96) |
|Transfer to General reserve ||- ||(268.14) ||- ||(268.14) |
|Balance carried forward to the next year ||6299.43 ||5920.85 ||17255.75 ||20531.19 |
2. Highlights for the year
(a) Production highlights for the year under the Report are as under:
|Product || |
Standalone (in MT)
| ||FY 2018-19 ||FY 2019-20 ||FY 2018-19 ||FY 2019-20 |
|Pipes ||553208 ||712486 ||989047 ||1144395 |
|H. R. Plates & Coils ||379994 ||183685 ||379994 ||183685 |
The operations of the Company were impacted due to shutdown of all plants and officesfollowing lockdown imposed by the government authorities to contain spread of COVID-19pandemic. The Company resumed operations in a phased manner as per the directives from therespective government authorities. The Company made detailed assessments of therecoverability and carrying values of its assets comprising property plant and equipmentinventories receivables and other current assets as at the balance sheet date and on thebasis of evaluation concluded that no significant impact on its financial statement as at31st March 2020. However the impact assessment of COVID19 would be a continuing processgiven the uncertainties associated with its nature and duration.
(b) New Facilities in Madhya Pradesh: The
Company's new facilities near Bhopal in Madhya Pradesh for manufacturing of up to 175KMTA Spiral pipes with outer diameter of 24" to 140" for water segment pipescommenced commercial production of pipes during Q1 of 2019-20.
(c) Sale of the Plate & Coil Mill Division ("PCMD") and the 43 MW PowerPlant:
As mentioned in the previous Annual Report th e Company has compl eted the transactionfor divestment of 43 MW Power Division during the year under Report.
In respect of the Sale of the PCMD the Board wish to inform that both the parties tothe Business Transfer Agreement dated March 30 2019 (the "BTA") have reiteratedtheir commitment to consummate the transaction stipulated in the BTA. However consideringthe unprecedented situation they have mutually decided to consummate the transaction nolater than March 31 2021.
We are pleased to inform the members that your Company has already received Rs.250million as an advance for the aforesaid transaction. When completed this transaction isexpected to move the Company towards an asset-light model thus achieving improvement inits profitability ratios and return ratios. Further it would strengthen the balance sheetby providing significant liquidity to your Company and deleveraging the balance sheet.
(d) Closure of a subsidiary in the UAE:
The Company's step down subsidiary in the UAE i.e. Welspun Middle East DMCC which wasengaged in trading activities in steel & pipes and was not having significantoperations during last few years has been closed down. The Board is of the opinion thatthis closure will have no material impact on the Company.
(e) Buyback of Equity Shares:
During the year under Report the Company completed buyback of Rs.4356714 fullypaid-up equity shares of Rs. 5 each at an offer price of Rs.135 per equity share throughtender offer route of the stock exchanges resulting in cash out-flow aggregating toRs.588.16 Million (excluding incidental expenses). One of the promoters' viz. IntechMetals SA tendered 2000000 equity shares in the buyback. Post the buyback thepromoters' shareholding increased from 48.98% to 49.03%.
(f) Reclassification of Co-Promoter as Public Shareholder:
The Company has received stock exchanges approval for Reclassification of Intech MetalsS.A. from Promoter to Pubic category w.e.f. June 25 2020.
3. Reserves Dividend & Dividend Policy.
During the year under Report the Board declared an Interim Dividend @200% for the yearended March 31 2020 i.e. Re. 10 per equity share of Rs.5/- each fully paid-up out of theaccumulated profits. The Dividend was paid on February 18 2020 to all the eligiblemembers as on Record Date of February 13 2020.
The Board is pleased to recommend a dividend @ 10% for the year ended March 31 2020i.e. Re. 0.5 per equity share of Rs.5/- each fully paid-up out of the net profits. Inrespect of the dividend declared for the previous financial years Rs.4.97 millionremained unclaimed as on March 31 2020. During the year under Report the Company hastransferred dividend of Rs.415201 remaining unclaimed for the financial year 201112 tothe Investor Education and Protection Fund. Detail of unclaimed dividend is available onthe website of the Company at "www.welspuncorp.com".
The Company has appointed Mr. Pradeep Joshi Company Secretary as the Nodal Officer forthe purpose of co-ordination with Investor Education and Protection Fund Authority.Details of the Nodal Officer are available on the website of the Company atwww.welspuncorp.com.
The Board proposes to transfer Rs.268.14 million to General Reserves.
In terms of the Regulation 43A of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Board of Directors approved and adopted DividendDistribution Policy of the Company setting out the parameters and circumstances that willbe taken into account by the Board in determining the distribution of dividend to theshareholders and/ or retaining the profits earned by the Company. The Policy is annexed tothis Report as Annexure - 1 and is also available on your Company's website at"http://www.welspuncorp.com" under the tab "Who We Are --> PolicesDisclosures Notices".
4. Internal Controls
Your Company has adequate internal control system which is commensurate with the sizescale and complexity of its operations. Your Company has a process in place tocontinuously monitor existing controls and identify gaps and implement new and / orimproved controls wherever the effect of such gaps would have a material impact on yourCompany's operation. The controls were tested during the year under Report and noreportable material weaknesses either in their design or operations were observed. Inother observations appropriate corrective actions were taken as advised by the AuditCommittee.
5. Subsidiary/Joint Ventures/Associate Companies and their performance
A report on the performance and financial position of each of the subsidiaries andjoint venture companies included in the consolidated financial statement is presented inForm AOC-1 annexed to this Report as Annexure - 2.
Financial statements of the subsidiaries and joint venture are hosted on the website ofthe Company at "http://www.welspuncorp.com" under the tab "InvestorRelations --> Subsidiary Accounts".
The Company has not accepted any deposit within the meaning of the Chapter V to theCompanies Act 2013. Further no amount on account of principal or interest on deposit wasoutstanding as at the end of the year under report.
7. Details of utilization of funds raised through preferential allotment or qualifiedinstitutions placement as specified under Regulation 32 (7A)
During the year under Report no funds were raised through preferential allotment orqualified institutional placement.
i) Statutory Auditors:
Your Company's Auditors M/s. Price Waterhouse Chartered Accountants LLP who have giventheir consent and confirmation of qualification for reappointment as the StatutoryAuditors have been re-appointed for second term ending upto the conclusion of the 29thAnnual General Meeting at a remuneration of Rs.13.35 million p.a. plus travelling andout-ofpocket expenses.
Total fees for all services paid by the Company and its subsidiaries on a consolidatedbasis to the statutory auditor and all entities in the network firm/network entity ofwhich the statutory auditor is a part during the financial year under Report is Rs.26.26million.
ii) Cost Auditors:
M/s. Kiran J. Mehta & Co Cost Accountants (Firm Registration No. 000025) areproposed to be appointed as the Cost Auditors under Section 148 of the Companies Act 2013for the Financial Year 2020-21. The members are requested to approve their remuneration bypassing an ordinary resolution pursuant to Rule 14 of the Companies (Audit and Auditors)Rules 2015.
iii) Secretarial Auditors:
The Board of Directors have appointed M/s. Mihen Halani & Associates PracticingCompany Secretary as the Secretarial Auditor of your Company for the Financial Year2020-21.
9. Auditor's Report
(a) Statutory Auditors' Report:
The Auditor's observations read with Notes to Accounts are self-explanatory andtherefore do not call for any comment.
No frauds or instances of mismanagement were reported by the Statutory Auditor underSection 143(12) of the Companies Act 2013.
(b) Cost Audit Report:
As required under the Companies
(Accounts) Rules 2014 the cost accounting records as specified by the CentralGovernment under Section 148(1) of the Companies Act 2013 were made and maintained bythe Company.
The Company had appointed M/s. Kiran J. Mehta & Co. Cost Accountants as the CostAuditors of the Company for auditing cost accounting records for the financial year2019-20. The Cost Audit Report for the year 2018-19 was e-filed on August 26 2019. TheCost Audit for the financial year 2019-20 is in progress and the report will be e-filed tothe Ministry of Corporate Affairs Government of India in due course.
(c) Secretarial Audit Report:Secretarial Audit Report given by M/s. M Siroya andCompany Company Secretaries is annexed with the Report as Annexure 3. The Report readwith the annexure thereto is selfexplanatory and therefore do not call for any furthercomments.
10. Share Capital & Listing
A) The Company does not have any equity shares with differential rights and hencedisclosures as per Rule 4(4) of the Companies (Share Capital and Debentures) Rules 2014are not required. Further the Company has not issued any sweat equity and hence nodisclosure is required under Rule 8 (13) of Companies (Share Capital and Debentures)Rules 2014.
The Company granted stock options during the previous financial year. Disclosure asrequired under Regulation 14 of the SEBI (Share Based Employee Benefits) Regulations 2014and Rule 12(9) of the Companies (Share Capital and Debentures) Rules 2014 are as under:
|(I) A description of each ESOS that existed at any time durin each ESOS including g the year including the general terms and conditions of |
|(a) Name of the ESOP Plan ||Welspun Employee Stock Option Plan |
|(b) Date of shareholders' approval ||September 30 2005 |
|(c) Total number of options approved under ESOS ||5614752 |
|(d) Vesting requirements ||Vesting: 30% on end of one year from the date of grant; 35% on end of second year from the date of grant and 35% on end of third year from the date of grant. |
|(e) Exercise price or pricing formula ||At the discount up to 25% to the latest available closing market price of the equity shares of the Company rounded off to the nearest higher rupee prior to the date of grant. |
|(f) Maximum term of options granted ||3 years |
|(g) Source of shares (primary secondary or combination) ||Primary |
|(h) Variation in terms of options ||No modifications were made to the schemes during the year. |
| || |
|(II) Method used to account for ESOS - Intrinsic or fair value. ||The Company has recognized compensation cost using fair value method of accounting. The Company has recognized stock option compensation cost of Rs. 49.33 million in the statement of profit and loss for the financial year 2019-20. |
| || |
|(III) Where the company opts for expensing of the options using the intrinsic value of the options the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used the fair value of the options shall be disclosed. The impact of this difference on profits and on EPS of the company shall also be disclosed. ||The Company accounted for employee compensation cost on the basis of fair value of the options. |
| || |
|(IV) Option movement during the year || |
|Number of options outstanding at the beginning of the period ||2350000 |
|Options granted ||Nil |
|Options vested ||705000 |
|Options exercised ||15000 |
|The total number of shares arising as a result of exercise of option ||15000 |
|Options forfeited / lapsed ||None |
|The exercise price ||'100/ - |
|Money realized by exercise of options ||'1500000 |
|Loan repaid by the Trust during the year from exercise price received ||Not applicable |
|Number of options outstanding at the end of the year ||2335000 |
|Number of options exercisable at the end of the year ||690000 |
|Employee wise details of options granted to: || |
| Key managerial personnel ||Granted during the financial year 2018-19: Mr. Vipul Mathur MD & CEO - 1500000 |
| Any other employee who receives a grant of options in any one year of option amounting to five percent or more of options granted during that year ||Granted during the financial year 2018-19: Mr. Lal Hotwani - Head- Corporate Accounts & Taxation : 150000 |
| || Mr. Godfrey John- BuH - E MENA India & APAC : 150000 |
| || Mr. T.S.Kathayat- President - Quality & Technical Services: 150000 |
| || Mr. Piyush Thakor- Vice President - India Mfg Head: 150000 |
| || Mr. Chintan Thaker- Head - Corporate Affairs and Strategic Planning Cell: 150000 |
| Identified employees who were granted option during any one year equal to or exceeding one percent of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant. ||Nil |
|Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of option calculated in accordance with Accounting Standard (AS) 20 "Earnings Per Share". ||Rs.0.15 |
| || |
|Where the company has calculated the employee compensation cost using the intrinsic value of the stock options the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used the fair value of the options shall be disclosed. The impact of this difference on profits and on EPS of the company shall also be disclosed. ||The Company accounted for employee compensation cost on the basis of fair value of the options. |
|Weighted-average exercise prices and weighted-average fair values of options shall be disclosed separately for options whose exercise price either equals or exceeds or is less than the market price of the stock ||Weighted-average exercise prices - Rs.100 |
| ||weighted-average fair value - Rs.52.01 |
|A description of the method and significant assumptions used during the year to estimate the fair values of options including the following weighted-average information: || |
|(i) risk-free interest rate ||7.49% to 7.85% |
|(ii) expected life ||1.43 years |
|(iii) expected volatility ||50.00% |
|(iv) expected dividends ||0.55% |
|(v) the price of the underlying share in market at the time ||'126.10 |
|of option grant. || |
(V) Disclosure of Shares held in suspense account under Clause F of Schedule V to theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015
Outstanding Balance in the suspense account lying at the beginning of the year
Number of shareholders who approached issuer for transfer of shares from suspense account during the year
Transferred/Credited during the year
|No of shareholders ||No of Shares ||No of shareholders ||No of Shares ||No of shareholders ||No of Shares ||No of shareholders ||No of Shares |
|43 ||14910 ||3 ||420 ||3 ||420 ||40 ||14490 |
The voting rights on these shares shall remain frozen till the rightful owner of suchshares claims the shares.
(VI)Listing with the stock exchanges
The Company's equity shares are listed on the BSE Limited (BSE) and The National StockExchange of India Limited (NSE). The Secured Redeemable Non-Convertible Debentures arelisted on the BSE Limited. The unsecured Commercial Papers outstanding as at March 312020 were listed on the National Stock Exchange of India.
The Company has redeemed its Commercial Papers of Rs. 150 Crores and Rs. 100 Crores onits maturity date of June 3 2020 and June 30 2020 respectively.
Further the Company has repaid the total principal amount payable for the debenture ofRs. 250 Crores before the due date.
Applicable annual listing fees for the year
2019-20 have been paid to both the BSE and the NSE as per the invoices received by theCompany.
11. Extract of the Annual Return
An extract of the annual return in Form MGT-9 of the Companies (Management andAdministration) Rules 2014 is attached to this Report as Annexure - 4 and is also placedon the website of the Company and can be accessed at http://www.welspuncorp.com.
12. Conservation of energy technology absorption and foreign exchange earnings andoutgo
01. Conservation of energy:
Initiatives taken for conservation of energy its impact are as under:
| || || || |
|Sr. No. ||Description of Energy Efficiency Improvement Measure ||Energy Savings [kWh/Annum] ||Savings [ Rs. In million/Annum] |
|At Plat ||e & Coil Mill Anjar || || |
|1 ||Reduction Power in Mat-Lab Packaged AC by Reducing Heat Loss. ||62853 ||0.47 |
|2 ||Primary Descaling Process Optimization. ||77928 ||0.58 |
|3 ||Compressed Air Pressure Reduced by 0.3 bar (7.3 to & 7 Bar) ||6959 ||0.05 |
|4 ||Reduce Power Consumption in Width Gauge Chiller by Installing 3TR Chiller in Place of 12 TR. ||1469 ||0.011 |
| ||Total ||149209 ||1.11 |
|At Pipe ||Mill Anjar || || |
|5 ||Energy saving through replacement of LED lights in SPIRAL-3 Plant ||42152 ||0.31 |
|6 ||Energy saving through replacement of LED lights in SPIRAL-2 Plant ||108743 ||0.8 |
|7 ||Energy Saving- Installation of 4 no AC drive for ROT conveyor motor at ||28675 ||0.21 |
| ||ERW || || |
|8 ||Energy saving through replacement of LED lights in ERW ||2592 ||0.02 |
|9 ||Energy saving in cooling tower by provide 40 HP pump in place of 75 HP in night hours at ERW ||57408 ||0.42 |
|10 ||Energy saving through replacement of LED lights in Coating-1 Plants ||30252 ||0.22 |
|11 ||Energy saving through replacement of LED lights in L-SAW Plant ||227466 ||1.68 |
|12 ||Energy saving by Installation of motion detector with 36 W tube light in toilets in L-SAW Coating plant ||1633 ||0.01 |
|13 ||Energy saving through replacement of LED lights in L-SAW Coating Plant ||14904 ||0.11 |
|14 ||Energy saving by PLC program Modified to Auto turn off The Motor if not in operation in L-SAW Coating plant ||6864 ||0.05 |
| ||Total ||520689 ||3.83 |
|At Mar dya Plant || || || |
|15 ||Hydrualic power pack motors to be auto shut off if not in function. ||12012 ||0.091 |
| || || || |
|At Dahej Plant || || || |
|16 ||Installation of 30 Nos of 165 W LED High bay fixtures at "LSAW Shed Lights" in place of 400 W HPMV Fixtures. Energy saving of 10000 KWH by replacing of LED lights in DG room. ||42322 ||2.96 |
| ||Total ||42322 ||2.96 |
02. Technology absorption and Research & Development
Development of new Automatic Enquiry Management System.
Innovation on Tailor-Made Automatic Pipe Measurement System for CriticalOffshore Pipeline.
Integrated SAP based BIBO management review mechanism on digital platform.
Successfully Manufactured & Supplied Long Radius (>10D) Hot pulledInduction Bends by using unique alloy design for TMCP Mother Plates - LSAW Pipes.
Digitalization of Inspection & Testing by integrating with SAP Data toreduce the paper consumption.
Unique Bar Code System for Pipe Traceability as per the Customer requirements.
B. Research & Development carried out by the Company.
Conducted a Successful PreQualification Process of Heavy Wall Thick LSAW (JCOEProcess) Pipes by using TMCP Plates for Extreme Sour Service Applications for OffshorePipe Lines as per customer requirements jointly with Steel Suppliers.
Development of Domestic Steel Mills for
the Supply of API 5L X70M PSL2 Hot Rolled Coils & Plates for Oil & Gas PipeLines.
Successfully Manufactured & Supplied Large Pipe Diameter for Strain &Stress Based Design Pipes in API X80M PSL2/CSA L550 by using TMCP Plates.
The Company's technical experts are actively involved in various JointIndustrial Projects (JIPs) to resolve technical issues for Oil & Gas Pipe LinesGlobally with Customers & Others- HAZ Softening Material Development;
- Optimization of Local Brittle Zone (LBZ);
- Standardization of SENT Test Method for Sour Service Environments;
- Enhanced Girth Weld Performance for Newly Constructed Grades X70M Pipelines in US.
The Company has funded and actively working with Pipe Line Research CouncilInternational (PRCI) for following New Developmental Projects for Oil & Gas Pipelines-
- Composite Repairs for Dent and Metal Loss Defects - State of the Art and Full ScaleInstrumented Tests;
- Guidance on the Use Specification and Anomaly Assessment of Modern Line Pipes;
- Full Thickness Weld Tensile Round Robin;
- Evaluation of Semi-Automatic FCAW-S Welding Process and Implications to PipelineGirth Weld Integrity.
C. Technology Upgradation
Adoption of new NDT Technology-Combination of Time of Flight Diffraction (TOFD)& Phased Array Ultrasonic Testing (PAUT) for LSAW Pipes.
Installation of new Pipe ID Cleaning system to reduce weld defects and manualoperation.
Installation of new State-of-art Plate Ultrasonic System with the coverage of100% Plate surface area high testing speed better sensitivity & accuracy supplied byGE technology Germany.
Introduction of new online edge milling system for HSAW pipes to Control WeldBead Height and Weld Profile to optimize the consumption of Coating Materials.
To improve the product Quality we installed an Intermediate Weld Seam UT forinstant feedback to Welding engineers for taking immediate necessary corrective &preventive action to reduce the Weld Seam Repair.
Adoption of New Digital Radiography Technology instead of Film RadiographyTechnique.
D. Process & System Improvement
Capability enhancement of CTOD & CVN testing facilities for critical lowtemperature applications.
Enhancement of Hot Induction Bending Facility to produce High Wall Thick &Dia in API X80M PSL2/CSA L550.
Development of Liquid Epoxy Coating for long radius Hot Pulled Induction Bendsin API X80M PSL2 LSAW Pipes as per CSA.
Unique fixtures mechanism is developed to test All Weld Longitudinal TensileTesting Specimen with smaller length.
E. Key Initiatives for Future
Installation of Automatic Cleaning System for removing scale dust & foreignparticles from inside surface of pipe before welding to minimize manual intervention &to achieve clean weld groove before welding.
Installation of explicit Effluent Treatment Plant for Coating facility.
Modification in Continuous Tack Welding Machine for Auto Offset Control tominimize manual intervention & Weld Seam Defects.
Upgradation & Capacity Enhancement of Corrosion testing facility forcritical Sour Service Pipeline Projects.
Joint Pre-Qualification Program of HSAW pipes for sour service applications withpotential Key International Customers.
Integration of Steel Supplier data with our SAP system for productidentification & traceability.
01. Expenditure on R&D
(a) Capital : Nil
(b) Recurring : Rs.86.31 million
(c) Total : Rs.86.31 million
(d) Total R&D expenditure as a percentage of revenue from operations : 0.21%
Total Foreign exchange:
Used - 26029.12 million
Earned- 13722.01 million
13. Corporate Social Responsibility (CSR)
Disclosures as required under Rule 9 of the Compan ies (Corporate Socia lResponsibility Policy) Rules 2014 are annexed to this Report as Annexure 5.
14. Directors and Key Managerial Personnel
A) Changes in Directors and Key Managerial Personnel
Since the last report following changes took place in the Board of Directorsand Key Managerial Personnel:-
Mr. S. Krishnan-Executive Director and CEO (PCMD) ceased to be a director witheffect from close of business hours on July 31 2019 due to resignation.
Mr. Dhruv Kaji ceased to be a director August 8 2019 due to resignation.
The first term of 5 years' of appointment of Mr. Atul Desai ended on September30 2019.
Mr. Utsav Baijal Nominee of Insight Solutions Limited ceased to be a directorwith effect from November 6 2019 due to resignation.
Mr. Kaushik Subramaniam Nominee of Insight Solutions Limited ceased to be adirector with effect from November 6 2019 due to resignation.
Ms. Amita Misra was appointed an independent director with effect from October22 2019.
In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of the Company Mr. Balkrishan Goenka and Mr. Vipul Mathur are retiring byrotation at the forthcoming Annual General Meeting and being eligible they have beenrecommended for re-appointment by the Board.
Details about the directors being (re)-appointed are given in the Notice of theforthcoming Annual General Meeting which is being sent to the members along with theAnnual Report.
B) Independent Directors
The independent directors have individually declared to the Board that they meet thecriteria of independence as provided under Section 149(6) of the Companies Act 2013 atthe time of their respective appointment and there is no change in the circumstances as onthe date of this Report which may affect their status as an independent director.
Your Board confirms that in their opinion the independent directors fulfill theconditions of the independence as prescribed under the SEBI (LODR) 2015 and they areindependent of the management. Further in the opinion of the Board the independentdirectors appointed during the year under Report possess requisite expertise experienceand integrity. All the independent directors on the Board of the Company are registeredwith the Indian Institute of Corporate Affairs Manesar
Gurgaon as notified by the Central Government under Section 150(1) of the CompaniesAct 2013 and as applicable shall undergo online proficiency self-assessment test withinthe time prescribed by the IICA.
C) Formal Annual Evaluation
The performance evaluation of the Directors was conducted by the entire Board(excluding the Director being evaluated) on the basis of a structured questionnaire whichwas prepared after taking into consideration inputs received from the Directors coveringvarious aspects of the Board's functioning viz. adequacy of the composition of the Boardand its Committees time spent by each of the directors; accomplishment of specificresponsibilities and expertise; conflict of interest; integrity of the Director; activeparticipation and contribution during discussions and governance.
For the financial year 2019-20 the annual performance evaluation was carried out bythe Independent Directors Nomination and Remuneration Committee and the Board whichincluded evaluation of the Board Independent Directors Non-independent DirectorsExecutive Directors Chairman Committees of the Board Quantity Quality and Timelinessof Information to the Board. All the results were satisfactory.
D) Committees of the Board of Directors
Information on the Audit Committee the Nomination and Remuneration Committee theStakeholders' Relationship Share Transfer and Investor Grievance Committee the RiskManagement Committee and meetings of those committees held during the year under Report isgiven in the "Corporate Governance Report" annexed to the Annual Report asAnnexure 7.
15. Particulars of outstanding loans guarantees and investments under Section 186 areas under:
| || || ||(Rs. in million) |
|Name of the Entity / beneficiary ||Investment ||Corporate Guarantee ||Loans |
|Welspun Pipes Inc. ||0.44 ||7566.50 || |
|Welspun Tradings Limited ||50.22 ||6147.10 || |
|Welspun Captive Power Generation Limited* ||604.94 || || |
|Welspun Mauritius Holdings Limited* ||293.75 || || |
|Welspun Wasco Coatings Private Limited (provision made) ||254.65 ||54.25 ||247.01 |
|Standard Chartered Bank ADR* ||12.35 || || |
|Bonds* ||577.98 || || |
|Welspun Middle East Pipes Company LLC || ||14390.70 || |
|Welspun Middle East Pipe Coating Company LLC || || || |
* Investment carried at fair value through profit and loss.
The corporate guarantees were given to secure credit facilities availed by thesubsidiaries/joint ventures of your Company to guarantee export obligations of thesubsidiaries/joint ventures to the custom authorities and to guarantee performance of thesubsidiaries of the Company.
16. Particulars of contracts or arrangements with related parties
All related party transactions that were entered into during the year under Report wereon an arm's length basis and were in the ordinary course of business. There were nomaterially significant related party transactions undertaken by the Company withPromoters Directors Key Managerial Personnel or other designated persons which mighthave a potential conflict with the interest of the Company at large.
The Company's policy on Related Party Transactions as approved by the Board is uploadedon the Company's website "http://www.welspuncorp.com" under the tab "Who WeAre --> Polices Disclosures Notices".
Save and except as disclosed in the financial statements none of the Directors or KeyManagerial Personnel had any pecuniary relationships or transactions vis-a-vis theCompany.
Disclosures as required under the Companies Act 2013 are given in Form AOC-2 annexedas Annexure 6 to this Report.
17. Managerial Remuneration
a. Details of the ratio of the remuneration of each director to the median employee'sremuneration and other details as required pursuant to Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014.
i) The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year:
|Director's name ||For the period ||Ratio with reference to median remuneration of the employees |
|Mr. Vipul Mathur ||01.04.2019 to 31.03.2020 ||160.2 |
|Mr. S. Krishnan# ||01.04.2019 to 31.07.2019 ||29.8* |
* Ceased to be Executive Director & CEO (PCMD) with effect from close of businesshours on July 31 2019.
ii) The percentage increase in remuneration of each director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year endedMarch 31 2020 : Managing Director & CEO: 10% CFO : 24% and CS : 12%.
iii) The percentage increase in the median remuneration of employees in the financialyear: 6.90%.
iv) The number of permanent employees on the rolls of the Company: 2692.
v) 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 over 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 in case of listedcompanies and in case of unlisted companies the variations in the net worth of theCompany as at the close of the current financial year and previous financial year : Themarket cap of the Company decreased from Rs.36123.80 million to Rs.16187.88 millionafter taking in to consideration the buyback of equity shares and allotment under ESOPScheme during the financial year. The P/ E ratio changed from negative 13.03 times to 6.10times. The share price increased by 334.35% in comparison to the rate at which the Companycame out with the public issue in February 1997 (after taking in to consideration thereorganization of share capital done in March 2005 but without considering othercorporate actions not resulting in to any material change in the share capital).
vi) Average percentage increase /(decrease) already made in the salaries of employeesother than the managerial personnel in the last financial year and its comparison with thepercentage increase/ (decrease) in the managerial remuneration and justification thereofand point out if there are any exceptional circumstances for increase in the managerialremuneration: Aggregate remuneration of employees excluding KMP decreased by 3.8%. Changein the remuneration of the KMP increased by 13%. The reason for exceptional percentageincrease in the remuneration of KMP was due to payment of variable pay to the CFO andconsideration of the remuneration of the CFO for the entire financial year under reviewwhereas it was considered only for a part of the previous financial year. Further theremuneration of the Executive Director & CEO (PCMD) was considered only for a part ofthe financial year under review.
vii) The key parameters for any variable component of remuneration availed by thedirectors:
1) Total Production (as per Business Plan approved by the Board)
2) Revenue (as per Business Plan approved by the Board)
3) Profit Before Tax (as per Business Plan approved by the Board)
4) Operating Cash Flow (as per Business Plan approved by the Board)
viii) Affirmation that the remuneration is as per the remuneration policy of theCompany: YES Employees increment in remuneration is based on the individual performanceand the Company performance for the Financial Year.
b. Details of the top ten employees in terms of remuneration drawn and the name ofevery other employee as required pursuant to Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is as under:
|Name ||Standard Designation ||DOB ||Age (years) ||Joining Date ||Remuneration ||Previous Company ||Qualification ||Nature of Employment ||% Of Equity Shares held in the Company ||Relative of any Director/ Manager of the Company |
|Vipul Mathur ||Managing Director ||21-Mar-70 ||50 ||02-Feb-01 ||53756831 ||Man Industries (India) Ltd ||MBA ||Permanent ||Negligible ||No |
|S. Krishnan* ||Executive Director & CEO (PCMD) ||17-J ul-62 ||57 ||03-Jun-13 ||10000000 ||UPL Limited ||M. Com/ LLB-Part I/ A.C.A/ A.C.S/ A.I.C.W.A ||Permanent ||Negligible ||No |
|L.T. Hotwani# ||Director ||05-May-53 ||67 ||01-Jan-00 ||24214846 ||Gammon India Ltd ||B.Com ||Permanent || ||No |
|Godfrey John# ||Director ||30-Aug-65 ||54 ||11-Jun-12 ||22863936 ||Ferro Tech India Pvt. Ltd. ||MBA ||Permanent || |
|Percy Kershasp Birdy ||President ||22-Jan-68 ||52 ||11-Jun-18 ||15037568 ||Allanasons Group ||Chartered Accountant ||Permanent || |
|Tribhuwan Singh Kathayat ||President ||10-Jan-71 ||49 ||20-Jun-96 ||12709691 ||Jindal Organisation ||BSC/DME/MBA ||Permanent || |
|Bhavesh KariaA ||Senior Vice President ||18-Feb-74 ||46 ||24-Oct-16 ||8483144 ||Bumi Flow ||B.Sc in Production engineering/ Post Diploma in Materials Management/Diploma in Production Engineering ||Permanent || || |
|Suresh Chander Darak ||President ||02-Jan-68 ||52 ||02-Jan-08 ||10696660 ||Reliance Industries Ltd. ||B. Com/DITM ||Permanent ||Nil ||No |
|Navin Agarwal ||Senior Vice President ||01-Jan-72 ||48 ||02-Jun-08 ||10455909 ||Mahindra & Mahindra Ltd. ||PGDBM Finance/B.Com (Hons) ||Permanent ||Nil ||No |
|Anil Maiiikarjun Nimbargi ||Senior Vice President ||13-Oct-65 ||54 ||09-Sep-09 ||10428943 ||Is pat Industries ||B.Sc. ||Permanent || || |
|AtuL Trivedi ||Senior Vice President ||03-Jan-74 ||46 ||14-May-07 ||10118319 ||Tata Consultancy ||Chartered Accountant ||Permanent || ||No |
|Paras Jain ||President ||25-Jul-58 ||62 ||16-Jan-06 ||9749810 ||Moral Overseas Ltd. ||M.Com Chartered Accountant ||Permanent || ||No |
|Manish PathakA ||President ||20-Jan-68 ||52 ||26-Jun-08 ||7398692 ||Man Industries (India) Ltd ||BE Mech ||Permanent || || |
|Gaurav Merchant ||Vice President ||11-Sep-73 ||46 ||15-Jan-14 ||8797546 ||Essar Steel Limited ||B. Com/MBA ||Permanent || |
|Rupak Ghosh ||Senior Vice President ||17-Oct-69 ||50 ||29-Oct-07 ||8496813 ||Blue Star Limited ||ICWA/ CA ||Permanent || |
|Nitin Agarwal ||Vice President ||06-Feb-83 ||37 ||20-Apr-07 ||8347377 ||Welspun Tubular LLC ||MBA/PGDM ||Permanent || |
|Piyush Thakor ||Senior Vice President ||03-Apr-76 ||44 ||01-Feb-18 ||8288934 ||Zenith Birla India Ltd ||Diploma-Mechanical Engineering ||Permanent || |
|San jay Batra ||Senior Vice President ||20-Aug-68 ||51 ||26-Dec-00 ||8015143 ||Maharashtra Seamless Ltd ||Diploma ||Permanent || || |
* employed for a part of the year up to the close of the business hours on July 312019.
~ employed for a part of the year with effect from July 1 2019.
# Not on the board of the Company.
c. Managing Director of the Company was not in receipt of any commission from theCompany and at the same time remuneration or commission from the Company's SubsidiaryCompany.
d. Particulars of remuneration to the executive directors including the details ofremuneration paid/payable to the executive directors for the financial year 2019-20 are asunder:
| ||Name of the Director ||Salary & Allowance ||Perquisites ||Commission ||Service Contract/ Tenure ||Performance linked incentives ||Notice |
|1 ||Mr. Vipul Mathur ||Rs. 55 million* ||Nil ||Nil ||5 years ||Nil ||1 month ||Nil ||Refer note below ||Nil |
|2 ||Mr. S. Krishnan@ ||Rs. 30 million* ||Nil ||Nil ||5 Years ||Nil ||1 month ||Nil ||Nil ||Nil |
^ In addition to salary & allowance entitled for other benefits as per theCompany's policy
@ Ceased to be a director with effect from close of business hours on July31 2019.
Note: 1500000 Employee Stock Options granted during FY2018-19 at an exercise price oft100 per option and can be exercised as per the vesting schedule given under the WelspunEmployee Stock Option Plan which is 30% 35% and 35% each year from the end of 1st yearfrom the grant date.
Mr. Balkrishan Goenka Non-Executive Chairman was paid Commission of Rs. 19.73 millioni.e. @1% of the Net Profits in terms of the approval granted by the members of the Companyat the Annual General Meeting held on August 12 2019.
No remuneration or perquisite was paid to and no service contract was entered intowith or stock options granted to any non-executive director but the sitting fees werepaid/payable to the following directors for attending meetings of Board/Committees of theBoard and General Meetings and Letter of Appointment were issued to the independentdirectors.
| ||Name of the Director ||(Rs.) |
|1 ||Ms. Amita Misra ||227000 |
|2 ||Mr. Atul Desai ||150000 |
|3 ||Mr. Desh Raj Dogra ||956000 |
|4 ||Mr. Dhruv Kaji ||77000 |
|5 ||Mr. Kaushik Subramaniam ||150000 |
|6 ||Mr. K.H. Viswanathan ||1182000 |
|7 ||Mr. Rajkumar Jain ||1131000 |
|8 ||Mrs. Revathy Ashok ||327000 |
|9 ||Mr. Utsav Baijal ||132000 |
The above mentioned sitting fee paid/payable to the non-executive directors was withinthe limits prescribed under the Companies Act 2013 for payment of sitting fees. Henceprior approval of the members as stipulated under Regulation 17(6) of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 was not required.
18. Shareholding of the Directors of the Company as on March 31 2020
For detail of shareholding of the directors refer to the "Corporate GovernanceReport" annexed to this Report.
Except as mentioned in the "Corporate Governance Report" none of the otherdirectors hold any shares or convertible securities in the Company.
19. Corporate Governance Certificate
The Compliance certificate obtained from M/s. M. Siroya and Company Practicing CompanySecretary regarding compliance of conditions of corporate governance as stipulated underChapter IV read with relevant Schedule to the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is annexed with this Report.
20. Risk management policy
With its fast and continuous expansion in different areas of businesses across theglobe the Company is exposed to plethora of risks which may adversely impact growth andprofitability. The Company recognizes that risk management is of concern to all levels ofthe businesses and requires a structured risk management policy and process involving allpersonnel. With this objective the Company had formulated structured Risk ManagementPolicy thereby to effectively address such risks such as strategic business regulatoryand operational risks. The Policy envisages identification of risks by each businesssegment and location together with the impact that these may have on the businessobjectives. It also provides a mechanism for categorization of risks into Low Medium andHigh according to the severity of risks. The risks identified are reviewed by a committeeof the Managing Director & CEO of the Company and the relevant senior executives andthe appropriate actions for mitigation of risks are advised; the risk profile is updatedon the basis of change in the business environment. The Risk Management Committeeperiodically reviews the risk management process risks and mitigation plans and provideappropriate advise in the improvement areas if any identified during the review.
For the key business risks identified by the Company please refer to the ManagementDiscussion and Analysis annexed to this Report.
21. Familiarization program for Independent Directors
The details of familiarization program (for independent directors) are disclosed on theCompany's website and a web link thereto is "http://www.welspuncorp.com" underthe tab "Who We Are --> Polices Disclosures Notices".
22. Code of Conduct
The Company has a Code of Conduct for the Board members and Senior ManagementPersonnel. A copy of the Code has been put for information of all the members of the Boardand management personnel on the Company's website "http://www.welspuncorp.com"under the tab "Who We Are --> Polices Disclosures Notices".
All the members of the Board and the Senior
Management Personnel have affirmed compliance of the same.
A declaration signed by the Managing Director & CEO of the Company is given below:
"I hereby confirm that the Company has obtained from all the members of the Boardand the Senior Management Personnel affirmation that they have complied with the Code ofConduct for the financial year 2019-20."
Managing Director & CEO
23. Miscellaneous Disclosures
During the year under Report there was no change in the general nature of business ofyour Company.
Except as mentioned in this Report no material change or commitment has occurred whichwould have affected the financial position of your Company between the end of thefinancial year of your Company to which the financial statements relate and the date ofthe Report.
No significant and material order was passed by the regulators or courts or tribunalswhich would have impacted the going concern status and your Company's operations infuture.
Your Company has not made any provision of money for the purchase of or subscriptionfor shares in your Company to be held by or for the benefit of the employees of yourCompany and hence the disclosure as required under Rule 16(4) of the Companies (ShareCapital and Debentures) Rules 2014 is not required.
The Board of Directors affirms that the Directors have devised proper systems to ensurecompliance with the provisions of all applicable Secretarial Standards issued by theInstitute of Companies Secretaries of India and that such systems are adequate andoperating effectively. The Company has complied with the applicable Secretarial Standards.
The company has complied with provisions relating to the constitution of InternalComplaints Committee under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act
2013. The ICC comprises of internal as well external members.
Disclosure of number of complaints filed disposed of and pending in relation to theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013as on the end of the financial year under Report are as under:
number of complaints filed during the financial year - Nil
number of complaints disposed of during the financial year - Not applicable
number of complaints pending as on end of the financial year - Nil
24. Directors' Responsibility Statement
Pursuant to Section 134(3)(c) & 134(5) of the Companies Act 2013 your directorshereby confirm that:
a. in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to 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 at the end of the financial year and ofthe profit and loss of the Company for that period;
c. the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act
2013 for safeguarding the assets of the Company and for preventing and detecting fraudand other irregularities;
d. the directors had prepared the annual accounts on a going concern basis;
e. being a listed company the directors had laid down internal financial controls tobe followed by the Company and that such internal financial controls are adequate and wereoperating 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.
Your directors acknowledge and place on record its sincere gratitude to the GovernmentAuthorities Financial Institutions Banks Customers Suppliers Shareholders Employeesand other business associates of the Company who through their continued support andco-operation have helped as a partner in your company's progress and achievement of itsobjectives.
For and on behalf of the Board of Directors
Managing Director & CEO
Chairman DIN: 00270175
Date: July 28 2020