Welspun India Limited
Your Directors have pleasure in presenting the 35 Annual Report of yourCompany along with the Audited Financial Statements for the financial year ended March 312020.
1. Financial Highlights
| ||Consolidated ||Standalone |
|Particulars || || || || |
| ||FY 19 - 20 ||FY 18 - 19 ||FY 19 - 20 ||FY 18 - 19 |
|Revenue from Operations ||67411 ||65266 ||53236 ||53953 |
|Other Income ||951 ||818 ||431 ||830 |
|Total Revenue ||68362 ||66084 ||53667 ||54783 |
|EBITDA ||13098 ||11467 ||10523 ||8779 |
|EBITDA Margin (%) ||19 ||17 ||20 ||16 |
|Finance Cost ||1777 ||1593 ||948 ||925 |
|Depreciation and amortization ||4811 ||4358 ||3881 ||4015 |
|Pro t before exceptional items and tax ||6510 ||5516 ||5694 ||3839 |
|Exceptional items ||(434) ||2647 ||(432) ||2080 |
|Pro t before tax ||6944 ||2869 ||6126 ||1758 |
|Tax Expense ||1700 ||608 ||1377 ||341 |
|Pro t for the year ||5244 ||2262 ||4749 ||1418 |
|Earnings per share (Basic & Diluted) ||5.05 ||2.09 ||4.73 ||1.41 |
2. Performance and Outlook
During the year under review your Company's total revenue onstandalone basis decreased to Rs. 53667 million a minor decrease of 2.04% and onconsolidated basis it increased to Rs. 68362 million a growth of 3.45% over the previousyear. The EBITDA on standalone basis was Rs. 10523 million i.e. 19.87% higher than lastyear and on consolidated basis was Rs. 13098 million i.e. 14.22% higher than last year.EBITDA margin was higer due favourable exchange rate and currency hedging strategy. Pro tbefore exceptional items and tax was Rs. 5694 million i.e. 48.34% higher than last yearon standalone basis and it was Rs. 6510 million i.e. 18.01% higher than last year onconsolidated basis. Exceptional item aggregating to Rs. 432 million for the year endedMarch 31 2020 represents gains due to reversal of excess provision related to provenanceissue. Pro t after tax (PAT) is Rs. 4749 million i.e. 235% higher than lastyear on standalone basis and Rs. 5244 million i.e. 131.84% higher than last year onconsolidated basis. You may refer to Management Discussion & Analysis'(MDA) Section of this Report for further details of your Company'sperformance.
3. Dividend i. Dividend Distribution Policy:
The Board of Directors approved Dividend Distribution Policy of theCompany as required under Regulation 43A of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (SEBI Regulations 2015). The Board willendeavor to achieve distribution of 25% of PAT for a financial year on standalone basiswith equity shareholders (including by way of dividend and Dividend Distribution Taxthereon). The Policy is attached as Annexure 1 to this Report and it is also available onyour Company's website and the web link thereto is as given below.https://www.welspunindia.com/uploads/investor_data/1)%20WIL-Dividend%20Distribution%20Policy.pdf
ii. Dividend for Financial Year 2019-20:
During the year the Board declared interim dividend of Rs. 1 perequity share for the Financial Year (FY) 2019-20 which resulted into cash outflow of Rs. 1211.30 million (including DDT) i.e. 19.77% of standalone PAT.
A snapshot of the dividend track record of your Company for previousfinancial years is given below.
( in million)
|Financial Year ||Total Dividend (%) ||Cash Out flow (including DDT) |
|2018-19 ||30% ||363 |
|2017-18 ||65% ||787 |
|2016-17 ||65% ||786 |
During the year Welspun Advanced Materials (India) Limitedincorporated in India with an objective to explore undertaking advanced textile projecton a greater scale with focused management.
During the year 2019-20 the Company has entered into joint venturewith Sense Organics Import & Trading GmbH Germany (SOIT) and has acquired51% of the share capital at par of Pure Sense Organics Myanmar Limited(PSOML) a Company incorporated under the Myanmar Companies Act 2018 onJanuary 24 2018 as a part of the Company's sustainable sourcing strategy. TheCompany has so far invested US$ 102100 in share capital of PSOML with combination ofequity and preference shares. PSOML being subsidiary of the Company it is a related partyof the Company. SOIT is not related to the Company.
A report on the performance and financial position of each of thesubsidiary companies of your Company is included in the consolidated financial statementpresented in Form AOC-1 attached as Annexure 2 to this Report. Your Company's policyon Material Subsidiary as approved by the Board is hosted on your Company's websiteand the web link thereto is as given below.
5. Auditors and Auditors' Report i. Statutory Auditors:
Your Company's Auditors S R B C & CO LLP who were appointedup to the conclusion of the 37th Annual General Meeting have given their consent tocontinue to act as the Statutory Auditors of your Company for the remaining tenure.Members have at the 33rd Annual General Meeting ratified the appointment of the Auditorsfor the remaining tenure i.e. upto the 37th Annual General Meeting. The Auditors areholding a valid certificate issued by the Peer Review Board of the Institute of CharteredAccountants of India.
The Auditors' observation read with Notes to Accounts areself-explanatory and therefore do not call for any comment.
ii. Cost Auditors:
As per Section 148 and other applicable provisions if any of the Actread with Companies (Audit and Auditors) Rules 2014 the Board of Directors of yourCompany has reappointed M/s. Kiran J. Mehta & Co. Cost Accountants as the CostAuditors of your Company for FY 2020-21 on the recommendations made by the AuditCommittee.
Members are requested to ratify their remuneration by passing anordinary resolution in the forthcoming Annual General Meeting.
As required under the Companies (Accounts) Rules 2014 the costaccounting records as specified by the Central Government under Section 148(1) of theCompanies Act 2013 are made and maintained by the Company.
iii. Secretarial Auditor:
The Secretarial Audit Report for FY 2019-20 is attached herewith asAnnexure - 3 to this Report.
Pursuant to the provisions of Section 204 of the Act read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 your Companyhas appointed Mr. Uday Sohoni Practicing Company Secretary as the Secretarial Auditor ofyour Company for the FY 2019-20.
6. Disclosure of Shares held in suspense account
|Aggregate number of shareholders and the outstanding shares 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
Number of shareholders to whom shares were transferred from suspense account during the year
Aggregate number of shareholders and the outstanding shares in the suspense account lying at the end of the year
|No of No of holders Shares ||No of No of holders Shares ||No of holders ||No of Shares ||No of holders ||No of Shares || |
|1486 335020 ||6 450 ||6 ||450 ||1480 ||334570 ||450 shares transferred to IEPF- 4 on 07.02.2020. During the year multiple folio of 647 no. of holders were consolidated. |
7. Listing with the Stock Exchanges
Your Company's equity shares are listed on The National StockExchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE). Annual listingfees for the FY 2019-20 have been paid to NSE and BSE.
i. Credit Rating:
During the year CARE Ratings Limited (CARE') has rea rmedyour Company's long term credit rating of AA' and short term credit ratingof A1+'. India Ratings & Research a Fitch Group company has rea rmed yourCompany's long-term issuer rating of IND AA-/Stable' and short-term creditrating of IND A1+'.
Your Company has not accepted any deposit within the meaning of ChapterV of the Act. Further no amount on account of principal or interest on deposit wasoutstanding as at the end of the financial year under Report.
9. Board of Directors
Your Company's Board comprises of mix of Executive andNon-Executive Directors with considerable experience and expertise across a range of eldssuch as finance accounts legal marketing brand building general management andstrategy. Except the nominee appointed by IDBI Bank and the independent directors allother directors are liable to retire by rotation as per the provisions of the Act. It iscon rmed that except for Balkrishan Goenka and Ms. Dipali Goenka who are husband andwife there is no relationship between the directors inter-se. The details of theDirectors their meetings held during the year and the extracts of the Nomination andRemuneration Policy has been given in the Corporate Governance Report which forms part ofthis Report.
i. Changes in Directors and Key Managerial Personnel:
During the year there was no change in Board of Directors.
In accordance with the provisions of Section 152 of the Act and theArticles of Association of your Company Balkrishan Goenka (holding Director Identi cationNumber 00270175) is retiring by rotation at the forthcoming Annual General Meeting andbeing eligible has been recommended for his reappointment.
Details about director being appointed or re-appointed are given in theNotice of the forthcoming Annual General Meeting.
ii. Declaration by an Independent Director(s):
Your Company has received declarations from all the IndependentDirectors as per the provisions of Section 149(7) of the Act confirming that they meet thecriteria of independence as prescribed under the provisions of Section 149(6) of the Actand that there is no change in the circumstances as on the date of this Report which mayaffect their respective status as an Independent Director.
Your Board con rms that in its opinion the independent directorsfulfill the conditions prescribed under the SEBI Regulations 2015 and they areindependent of the management. All the independent directors on the Board of the Companyare registered with the Indian Institute of Corporate A airs (IICA) ManesarGurgaon as notified by the Central Government under Section 150(1) of the Companies Act2013. Ms. Anisha Motwani successfully qualified Online Pro ciency Self AssessmentTest for Independent Directors' Databank in May 2020.
iii. Directors' Evaluation:
In compliance with the Act and SEBI Regulations 2015 the Board ofDirectors as per the process recommended by the Nomination and Remuneration Committeehas evaluated the effectiveness of the Board its Committees and Directors. The evaluationprocess invited graded responses to a structured questionnaire which was largely in linewith the SEBI Guidance Note on Board Evaluation for each aspect of the evaluation. Allthe results were satisfactory.
iv. Familiarization program for Independent Director(s):
The familiarization program aims to provide the Independent Directorswith the scenario within the textile industry the socio-economic environment in which theCompany operates the business model the operational and financial performance of theCompany significant development so as to enable them to take well-informed decisions intimely manner. The familiarization programme also seeks to update the Directors on theroles responsibilities rights and duties under the Act and other statutes.
The policy on Company's familiarization programme for IndependentDirectors is hosted on your Company's website and a web link thereto is as given below:
v. Committees of the Board of Directors:
Information on the Audit Committee the Nomination and RemunerationCommittee the Stakeholders' Relationship Share Transfer and Investor GrievanceCommittee the Corporate Social Responsibility Committee Risk Management Committee andmeetings of those committees held during the year is given in the Corporate GovernanceReport forming part of this Report.
vi. During the year the Board did not appoint any independentdirector.
10.Loans Guarantees and Investments:
Information of amounts of investments made loans given guaranteesgiven and security provided by your
Company as on March 31 2020 is as given under
|Particulars ||Amount |
|Investments ||13501.47 |
|Loans / Receivables ||95.00 |
|Guarantees ||15462.65 |
|Security ||- |
|Total ||29059.12 |
Corporate guarantees of GBP 4.25 million and GBP 8.51 million wereissued to Bank of Baroda UK and Barclay's Bank respectively by the Company tosecure repayment of working capital facilities availed by CHT Holdings Limited asubsidiary of your Company.
Similarly the Company has issued guarantee of Rs. 5 billion in favourof consortium of Bankers led by State Bank of India (the Consortium) to securerepayment of working capital facilities extended by the Consortium to Welspun GlobalBrands Limited (WGBL) a subsidiary of your Company. Additionally the Companyhas issued guarantee of Rs. 615 million in favour of Citibank N.A. to secure repayment ofworking capital facilities.
The Company has issued guarantees of Rs. 8.15 billion in favour of thelenders of Welspun Flooring Limited (WFL) a wholly owned subsidiary of yourCompany to secure repayment of facilities extended by those lenders to WFL. Additionallythe Company has issued guarantee of Rs. 500 million in favour of HDFC Bank to secureworking capital facilities availed by WFL.
Disclosures pursuant to the Regulation 34(3) read with Para A ofSchedule V of SEBI Regulations 2015 is given at Note No. 38 of the audited financialstatements.
11. Particulars of contracts or arrangements with related parties:
All related party transactions that were entered into during the yearunder report were on an arm's length basis and were in the ordinary course ofbusiness to serve mutual needs and mutual interest. Except for contracts with WGBL andWCPGL subsidiaries of your Company there were no materially significant related partytransactions made by your Company. The Audit Committee has given its omnibus approvalwhich is valid for one financial year. Your Company's policy on Related PartyTransactions as approved by the Board is hosted on your Company's website and a weblink thereto is as given below:
Disclosures as required under the Act are given in Form AOC-2 asAnnexure 4 to this Report.
The details of the related party transactions as required under IND-AS24 are set out in Note 31(ii) to the Standalone financial statements forming part of thisReport.
12. Details of Remuneration to Directors and Key Managerial Personnel:i. Details as required pursuant to Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are given below: (a) the ratio of theremuneration of each Executive Director and Key Managerial Personnel to the medianremuneration of the employees of your Company for FY 2019-20 is as given below:
|Name and Designation ||Remuneration ||The percentage increase in remuneration ||The ratio of the remuneration to the median remuneration of the employees (No. of times) |
| ||( Rs. million) || || |
|Rajesh Mandawewala ||78.43 ||143% ||472 |
|Managing Director || || || |
|Ms. Dipali Goenka ||88.17 ||154% ||531 |
|CEO and Joint Managing || || || |
|Director || || || |
|Altaf Jiwani ||32.75 ||15% ||197 |
|Chief Financial Officer || || || |
|Shashikant Thorat ||4.98 ||13% ||30 |
|Company Secretary || || || |
(b) The percentage increase in the median remuneration of employees inFY 2019-20 was 5.74%.
(c) Your Company had 21798 permanent employees on its payrolls as onMarch 31 2020.
(d) Average percentage increase in the salaries of employees other thanthe managerial personnel in FY 2019-20 was 19%. The managerial remuneration increased by104.48% as a result of increase in Commission payable to Managing Directors and CEO &Joint Managing Director.
The key parameters for any variable component of remuneration availedby the directors are as per the Nomination and Remuneration Policy. We a rm that theremuneration is as per the Nomination and Remuneration Policy of your Company.
ii. Details of the employees of your Company as required pursuantto Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 are given below:
Name Designation Age DOJ Current CTC ( Rs. million) Quali cationPrevious Company Nature of Employment % of Equity Shares held in the Company Relativeof any Director/ Manager of the Company.
Altaf Jiwani Chief Financial Officer 52 02.02.2015 32.75 B.TECHMMS RPG Group Permanent 0 No; Amarsinh Dhanwade Vice President 43 20.08.201818.01 MBA PGDM L'Oreal Permanent 0 No; Amit Mittal Senior Vice PresidentGlobal Sourcing 44 18.02.2019 12.60 MBA Indo Count Industries Limited Permanent 0No; Ashok Kumar Joshi Executive Director* & Business Head Operations 59 02.07.201326.71 B.TECH Donear Industries Limited Permanent 0 No; Cherian Thomas PresidentAdvanced Textiles 49 02.12.2019 16.00 B.E. (Mechanical) MBA Frigoglass Permanent 0No; Chintan Thaker Senior Vice President Corporate A airs and Strategic Planning Cell43 01.04.2003 10.92 B.Sc. MBA (Marketing) Gujarat Infra Limited Permanent 0 No;Dinesh Jain President Finance & Accounts 62 12.06.2004 10.88 FCA BhilwaraSpinners Limited Permanent 0.05 No (Retired w.e.f. April 30 2020); Dipali Goenka CEO& Joint Managing Director 51 01.04.2013 26.88 B.A. (Psychology)N.A. Contractual0.07 Yes; Laxmi Narain Kaushik Director* & Business Head Operations 53 16.07.201814.99 M.Tech. Spentex Industries Limited Permanent 0 No (Resigned w.e.f. November 222019); Milind Hardikar Executive Director* Advanced Textile 59 24.04.2012 22.50 BE(Mech) MMS Arvind Limited Permanent 0 No; Rahul Shandilya President Group IT 4908.04.2019 17.50 B.E. PGDM Mahindra Group Permanent 0 No; Rajesh MandawewalaManaging Director 58 01.12.1985 17.14 CA N.A. Contractual 0 No; Rajesh PadmanbhanDirector*-HCGA 58 01.02.2016 39.42 MBA
(Finance/HR) Vedanta Group Permanent 0 No (Resigned w.e.f. April20 2020); Sanjay Kanungo Senior Vice President Vapi Operations 52 23.01.2017 10.70B.E. (Mechanical) Trident Limited Permanent 0 No.
iii. Ms. Dipali Goenka CEO & Joint Managing Director who isreceiving remuneration and commission from your Company receives Rs. 26.88 million asremuneration (including variable pay) and commission of 2% of profits also from WGBL asubsidiary of your Company.
iv. Details of managerial remuneration and payments to otherdirectors are given in the Corporate Governance Report forming part of this Report.
13. Extract of the Annual Return
An extract of the annual return in Form MGT-9 of the Companies(Management and Administration) Rules 2014 is annexed as Annexure -5 to this Report andis also available on website of the Company at weblink given below:
14. Business Responsibility Report (BRR)
SEBI vide Noti cation No. SEBI/LAD-NRO/GN/2015-16/27 dated December22 2015 had mandated top 500 listed entities based on market capitalization to includeBRR in the annual report. Since the Company is one of the top 500 listed entities it ispleased to present its 4th BRR for the FY 2019-20 as per SEBI Circular No.CIR/CFD/CMD/10/2015 dated November 04 2015 which is a part of this Annual Report.
15. Conservation of energy technology absorption and foreign exchangeearnings and outgo
The information on conservation of energy technology absorptionand foreign exchange earnings and outgo required to be disclosed pursuant to Section134(3)(m) of the Act read with Companies (Accounts) Rules 2014 is attached as Annexure 6to this Report.
16. Corporate Social Responsibility (CSR)
The key philosophy of all CSR initiatives of the Company isenshrined in the three E's which have become guiding principles of the CSRinitiatives Education Empowerment (of Women) and Environment & Health.
The CSR Policy of your Company as approved by the Board of Directorsis hosted on your Company's website and a web link thereto is as given as:https://www.welspunindia.com/uploads/investor_data/CSR%20Policy(signed)-07.04.2016.pdf
The initiatives undertaken by your Company during FY 2019-20 in CSRhave been detailed in this Report. Disclosures as required under Rule 9 of the Companies(Corporate Social Responsibility) Rules 2014 are given in Annexure 7 to this Report.
17. Internal Controls
Your Company has adequate internal control system which iscommensurate with the size scale and complexity of its operations. Your Company hasdesigned and implemented a process driven framework for Internal Financial Controls(IFC) within the meaning of the explanation of Section 134(5) of the Act SEBI
Regulations 2015 and other relevant statutes applicable to yourCompany.
Your Company has well-documented Standard Operating Procedures (SOPs)for various processes which are periodically reviewed for changes warranted by businessneeds. The Internal Auditors continuously monitor the efficiency of the internal controls/ compliance with the SOPs with the objective of providing to the Audit Committee and theBoard of Directors an independent objective and reasonable assurance of the adequacy andeffectiveness of the organisation's risk management control and governanceprocesses.
For the year ended March 31 2020 the Board is of the opinion thatyour Company has sound IFC commensurate with the nature of its business operations;wherein adequate controls are in place and operating effectively and no material weaknessexists. Your Company has a process in place to continuously monitor existing controls andidentify gaps and implement new and / or improved controls wherever the effect of suchgaps would have a material effect on your Company's operation.
18. Risk Management
Your Company is exposed to risks across all levels and functions ofthe organisation. The Board has approved Enterprise Risk Management Policy (ERMP) toeffectively address nancial operational business compliance and strategic risk. Astructured enterprise risk management program has been formulated and implemented. Referto the MDA Section in this Report for risks and threats applicable to your Company.
19. Corporate Governance
The Company is committed to maintain the highest standards ofcorporate governance requirements as set out by SEBI. The Report on Corporate Governanceas stipulated under SEBI Regulations 2015 forms an integral part of this Report. Therequisite Compliance Certificate is obtained from Uday Sohoni Practicing CompanySecretary regarding compliance of conditions of Corporate Governance as stipulated underPart E of Schedule V of SEBI Regulations 2015 is annexed to the Corporate GovernanceReport.
20. Management Discussion and Analysis Report
The MDA Report on the operation of the Company as required underthe SEBI Regulations 2015 is provided in a separate section and forms part of thisReport.
21. Vigil Mechanism
Your Company is committed to highest standards of ethical moraland legal business conduct. Accordingly the Board of Directors has formulated WhistleBlower Policy and Vigil Mechanism for its directors and employees and any director oremployee may make protected disclosures to the Chairman of the Audit Committee. Nopersonnel have been denied access to the Audit Committee.
22. Directors' Responsibility Statement
Pursuant to Sections 134(3)[c] & 134(5) of the Act yourDirectors hereby con rm that:
a. in the preparation of the annual accounts for the financial yearended March 31 2020 the applicable accounting standards have been followed along withproper explanation relating to material departures;
b. the directors have selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of a airs of the Company at the end of thefinancial year and of the profit and loss of the Company for the FY 2019-20;
c. the directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
d. the directors have prepared the annual accounts on a going concernbasis;
e. the directors have laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively; and
f. the directors have devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate andoperating effectively.
During the year there was no change in the general nature ofbusiness of your Company. No material change or commitment has occurred which would haveaffected the financial position of your Company between the end of the financial year towhich the financial statements relate and the date of the report. No significant andmaterial order was passed by the regulators or courts or tribunals which would haveimpacted the going concern status and your Company's operations in future. No amountwas required to be transferred to General Reserve. No share with differential rights wasissued by your Company nor did your Company issue any equity share as sweat equity share.There were no stock options outstanding during the FY 2019-20. The Company has compliedwith provisions relating to the constitution of Internal Complaints Committee under theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.Further based on the Policy on Prevention Prohibition and Redressal of Sexual Harassmentof women at workplace the Internal Complaints Committee for each location of your Companyinformed that 4 cases of sexual harassments were reported during the year under review andall 4 have been resolved. Your Company has not made any provision of money for thepurchase of or subscription for shares of your Company or its holding company to beheld by or for the benefit of the employees of your Company and hence the disclosure asrequired under Rule 16(4) of Companies (Share Capital and Debentures) Rules 2014 is notrequired. No fraud took place in the Company during the year and hence no such reportingwas made to the Audit Committee and the Board under Section 143(12) of the Companies Act2013 read with Rule 13 of the Companies (Audit and Auditors) Rules 2014 .
Your Directors thank the government authorities financialinstitutions banks customers suppliers members employees and other businessassociates of your Company who through their continued support and co-operation havehelped as partners in your Company's progress and achievement of its objectives.
| ||For and on behalf of the Board of Directors |
| ||Balkrishan Goenka |
|June 29 2020 ||Chairman |
|Mumbai ||DIN 00270175 |