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Wendt India Ltd.

BSE: 505412 Sector: Engineering
NSE: WENDT ISIN Code: INE274C01019
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P/E 52.88
Mkt Cap.(Rs cr) 1,488
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OPEN 7300.70
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VOLUME 16
52-Week high 9156.00
52-Week low 4250.00
P/E 52.88
Mkt Cap.(Rs cr) 1,488
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Wendt India Ltd. (WENDT) - Director Report

Company director report

(Including Management Discussion and Analysis)

TO THE MEMBERS OF WENDT (INDIA) LIMITED

Your Directors have the pleasure in presenting the 40 Annual Report ofWendt (India) Limited (hereinafter referred to as ‘the Company') together withthe Audited Financial Statements for the year ended 31 March 2022. The ManagementDiscussion & Analysis Report which is required to be furnished as per SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 (hereinafter referred to as“the Listing Regulations”) has been included in the Directors' Report toavoid duplication and overlap.

ECONOMIC OVERVIEW

The year 2021 brought hope for global economic growth following 2020corona virus caused downturn largely owing to the development and widespread deploymentof COVID-19 vaccines despite the emergence of new variants. High energy prices and supplychain pressures have spurred record high inflation.

India began 2021 with high hopes buoyed by vaccine optimism only to bebogged down by the disastrous Delta variant led second wave. Quick recovery backed by lessstringent lockdown conditions resulted in minimal impact as compared to the conditionsduring the first wave. The Reserve Bank of India maintained its accommodative stancethroughout the year along with record low interest rates in a bid to support the nascentrecovery. The resultant high liquidity coupled with supply chain issues and semi-conductorchip crunch led to soaring input costs and pinching inflation. Experts argue that therecovery which India witnessed was not broad based and was largely uneven hurting theconsumption of lower income households. The pace of activity across segments was unevenwith some exhibiting robust growth while some showing modest advances. The consumptionexpenditure and private investments remained timid. Sectors employing unorganised sectorworkers bore the burnt of the contagious virus the most.

In this context the Government took up number of structural reformslike Production Linked Incentive Schemes (PLI Schemes) across 13 sectors to boostmanufacturing - Make in India (Atma-nirbhar Bharat) and Make for World and stimulateoutput and investments. The rationalisation of customs duty is a step to promote domesticmanufacturing and helping India becoming stronger in the global value chain with higherexports. The initiatives like vehicle scrappage policy thrust on renewable andnon-conventional energy sources is expected to reduce the India's overreliance on fossilfuel. To promote 'Ease of Doing Business' initiatives like proposed digitisation ofland records digital payments single window clearance ensuring faster setup of newmanufacturing units faceless assessment and tax administration will boost manufacturingand help in making India a global manufacturing hub. Mirroring these initiatives duringthe previous financial year India became a major startup hub with number of start upsattracting investment.

The Government's initiative of manufacturing vaccines to combatCOVID-19 in India and vaccinating the entire Indian population in phases - a herculeantask was completed along with private support. Not only India vaccinated its ownpopulation but also exported vaccines worldwide to save other needy countries.

The growth of Foreign Direct Investments (FDIs) signals the confidenceof global investors in the Indian growth story as India remains the best performingEmerging Market Economy in the world. On the exports front India surpassed the exportstarget of $ 400 billion (Rs. 30530 crores) by clocking more than $ 419 billion (Rs. 31981crores) for the financial year. India signed New Economic Cooperation and Trade Agreementdeals with Australia and UAE which will open infinite opportunities in terms of duty-freeexports for textile handloom footwear etc. and boost employment opportunities. Furtherto boost infrastructure Government has announced National Infrastructure policy and assetmonetisation measures of non-core public sector assets leading to India attainingself-sufficiency in infrastructure development.

The direct tax collections rose 50% to record Rs. 13.81 trillion in FY2021-22 exceeding budget and revised estimates. GST collections have been above Rs. 1 lakhcrore every month since July 2021 showing strong recovery in industrial activities.

Employment prospects too picked up with the recovery on account ofreverse migration of labour during festive season. As economic recovery takes hold hiringreturns to pre-COVID levels across sectors.

Towards the end of the FY 2021-22 the uncertainties caused by theRussia -Ukraine war and the resultant economic impact including sanctions imposed onRussia leading to surge in global crude oil and gas price food grains like wheat andcorn and several other commodities cast a shadow on India's growth prospects and thecascading inflationary trend. This has led to downgrading of Indian GDP growth for FY2022-23 to 7.4% (FICCI) & threat of increased current account deficit. Besides theincrease in commodity price along with supply chain issues will be a testing time forIndian industry. Continuing inflationary pressures could dampen consumer sentiment andreduce consumption expenditure. In short FY 2022-23 will be a challenging year forbusinesses and the Government to continue the growth momentum.

INDUSTRY STRUCTURE & DEVELOPMENTS

The demand for Super Abrasive products is closely linked to the levelof industrial production. Super Abrasives are used to manufacture long-lasting expensiveitems like auto and aircraft parts demand for which is highly cyclical. Diamond and CubicBoron Nitride (CBN) Super Abrasive products are used extensively in aerospace industry andother industrial applications where price considerations are less significant as theyincur high initial costs. They are used in the machining of materials such as nickel castiron and cobalt-based superalloys where precision in machining operations is of primeimportance.

Increasing complexity of Super Abrasive technology in high performanceapplications and its high initial cost provide entry barriers for small-scale andmedium-scale companies to compete with the global market leaders. While industry leaderscan afford significant research operations most unorganised players do not have access tosubstantial R&D resources. This disparity can make it difficult for small andmedium-scale companies to compete in the market in terms of developing products that mayrequire advanced technologies.

The Company being a total Grinding Solution provider innovation is atthe core of the Company's products and processes. As such majority of our products arecustomised to fulfil customers' requirements.

Our comprehensive product range backed by state-of-the-art technologyvalued-added services and consistent performance by and large fulfil the needs andexpectations of our customers in diverse industrial segments.

The Company is a preferred supplier for many of the automobile autocomponent engineering aerospace defence ceramics customers for their Super AbrasiveTooling solutions Grinding & Honing Machines and Precision components. A majorcontribution to the Company's revenues comes from these industries.

Also the Company is committed to introducing new products andexploring new markets for Glass Wheels for Auto/Solar/Construction Application; Textileindustry for Knife grinding industry; High performance grinding wheels for the cuttingtool industry.

COMPANY PERFORMANCE OVERVIEW (STANDALONE) (Rs. in lakhs)

FY 2021-22 FY 2020-21 % change
Domestic Sales 11858 8637 37%
Export Sales 3954 3308 20%
Total Sales 15812 11945 32%
EBITDA (before exceptional item) 3803 1867 104%
Other Income 744 762 -2%
Profit Before Tax 3615 1653 119%
Profit After Tax 2710 1291 110%
Capital Employed 14414 12558 15%
Earnings per Share - Rs. 135.49 64.56 110%

During the FY 2021-22 the Company clocked its highest ever sales of Rs.15812 lakhs higher by 32 per cent over the previous year.

The Super Abrasive Business comprising Diamond/CBN GrindingWheels in various Bonding Systems Rotary Dressers Stationary Dressers Hones andSegmented products was impacted in earlier year due to widespread COVID-19 and therelated lockdowns and volatile economic situation both in India and the world. During theyear with the widespread vaccination leading to less stringent lockdown conditionsresulting in pent up demand the Company took initiatives like regaining lost businessnew products development horizontal deployment of successful applications and productsexploring new customers opportunities and markets leveraging all its products as acomplete package solution to serve customers better sourcing etc. to grow the SuperAbrasive Business.

These initiatives helped the Super Abrasive business achieve sales ofRs.11051 lakhs its highest ever growth of 37 % over the previous year.

The domestic Super Abrasives businessrecorded sales ofRs. 7702 lakhs growth of 34% over last year. The higher sales was demand from industrieslike auto auto ancillaries bearings ceramics cutting tools steel glass etc.

The export Super Abrasives sales during the year was Rs. 3349 lakhshigher by 44% over the previous financial year. The higher exports was due to increasedsales in focus countries like USA UK Germany Korea Taiwan Russia etc. This wasachieved despite international travel restrictions whereby visiting and meeting customersin focus countries continued to be a challenge. The Company continued its efforts inconnecting with customers through virtual platforms.

The Non-Super Abrasive Business comprising Machines accessoriesand components clocked sales of Rs. 4761 lakhs the highest ever growth of 22% over theprevious year.

In the machine product category sales were Rs. 2454 lakhs growth of8% over previous year. Last year witnessed supply chain issues leading to global shortageof semi-conductor chips and other related parts which goes into manufacturing of machines.The timely execution and delivery of machines to various customers was ensured by betterplanning and bulk ordering of parts for the entire year including working closely withcritical vendors and developing alternate vendors.

During the year the Company had sold higher volume of machines. Someof the new machines developed include CUMI Jeevan portable oxygen concentrator whichprovided a lifeline during COVID-19. The Company successfully developed and establishedmodels/variants of machines viz. Profile Testing machine WHS 100V Single Pass Honing WSP350 Angle Wheel Head Machine AWH CNC Wheel

Dressing machine OPRA 400 Surface Grinder WHS 500H- 2 metre lengthlong bed besides the existing range of High Precision Tungsten Carbide Ring GrindingMachine: Delta 150/250 PDM 400. These machines have been well received by the customersprojecting a good performance. Machine sales in the export market achieved good growth andacceptance by the customers.

Like the previous year the Machine Tool Division team successfullyconducted online commissioning of some of the machines like OPERA 400 Delta 150 WDM 8Vetc. These commissioning were done at customer place as travelling was not possible due torestrictions imposed to prevent the spread of COVID.

The Precision Components product category clocked sales of Rs. 2307lakhs higher by 43% over the previous year. The key initiatives included business in shoeCAM roller for off-road vehicles CB18 project distance piece besides regular business ofcomponents for the pump vanes etc. Despite the automobile slowdown the Company managed togrow its component business due to de-risking strategy and looking at alternateopportunities wherever possible.

The Company continues its focus on exploring new business opportunitiesin aerospace compressor & hydraulic parts special inserts Carbide industrydeploying its core competencies - Expertise Experience and Knowledge on GrindingMachines & Super Abrasive Tools for producing related precision components.

Focus on Process Efficiency

The Company continues to focus on improving operational efficiency aswell as optimal utilisation of various resources in manufacturing and production areas.The QRM (Quick Response Management) Initiative -POLCA which started as a pilot in theprevious year was extended to one more product during this year. The project envisagesreorganising the machine layout in the shop floor thereby reducing lead-time/ waiting timebetween workstations and improvement in shop floor inventory and other resources. Thisinitiative is beneficial in addressing some of the key areas like planning and schedulingproduction reliability materials availability and product delivery. The success of pilotproject has laid the way to extend the QRM initiative to other manufacturing lines also.This needs to be extended not only in manufacturing process but also in support functions.The Company ensures maintaining minimum inventory levels while safeguarding on-callsupplies and on-time delivery to customers.

Optimum usage/sweating of assets based on Value Stream Mapping byusing common pool of resources (Machine) for similar operation across all cells remainsthe Company's priority.

Supply Chain efficiency is one of the Company's key focus area. TheCompany is committed to reducing product lead time and improving operational efficiency byreducing work in progress.

On the raw material front the Company continuously developsalternative reliable and competitive sources/suppliers for critical raw materialsincluding Diamond/CBN machine castings systems electrical chemicals etc.

FUTURE PROSPECTS AND OUTLOOK

In the auto ancillary segment rising middle class income and hugeyouth population in India is expected to be the key demand driver. India could be a leaderin shared mobility by 2030 providing opportunities for Electric Vehicle (EV) andautonomous vehicles. The EV industry is expected to create 5 crores jobs by 2030 (IndianBrand Equity Foundation (IBEF)). Further initiatives like the PLI schemes for automobileand auto components vehicle scrappage policy flexi fuels etc. are expected to providegrowth opportunities to the automobile sector. Indian automotive industry (includingcomponent manufacturing) is expected to reach Rs.16.16-18.18 trillion (USD 251.4-282.8billion) by 2026 (IBEF).

With regards to the steel industry India's finished steel consumptionis anticipated to increase to 230 MT by 2030-31 from 93.43 MT in 2020-21. As of October2021 India was the world's second largest producer of crude steel with an output of 9.8MT. In FY 2022-23 crude steel production in India is estimated to increase by 18% toreach 120 million tonnes driven by rising demand from customers. The growth in the Indiansteel sector has been driven by domestic availability of raw materials such as iron oreand cost-effective labour (IBEF).

Due to Government's continued thrust on infrastructure development thedemand for Indian steel is expected to increase further.

Indian Abrasive market was valued at USD 363.26 million in 2021 and isexpected to project a robust growth with a CAGR of 6.61%. Initiatives like 'Smart CitiesMission' and 'Housing for All' along with rising demand for electronics and automobilesare driving the growth of Indian Abrasive market.

Global Super Abrasive market size is estimated to grow to USD 4.8billion by 2025. Major factors responsible for the growth of global super abrasives marketinclude growing awareness regarding adoption of high-end technologies and their benefitscoupled with the continuing growth of the automotive industry. In addition to this theproduct is widely popular due to its long lifecycle high scale hardness and superlativeperformance which is anticipated to spur the global super abrasives market growth.However some of the factors that might act as major impediments to the growth of superabrasives market across the globe in the years to come are high cost of production alongwith product price volatility due to the fluctuating raw material costs.

The expected growth of above sectors provides good opportunities forthe Company's products viz. Super Abrasives Machines and the Precision Components infuture.

The Company's growth lies in constantly monitoring changes in theexternal environment and adapting to the customer needs that are emerging. Accordinglymega trends and underlying new opportunities that unfolds are being tracked continuously.

The growing usage of Super Abrasive products for various medicalapplications such as Surgical Instruments

Hypodermic Needles Dental implants Knee Hip and Shoulder jointscreate new opportunities for the Company to explore through technical collaboration andnew products development. Also growing Consumer Electronic Segment with manufacturingfacilities in India is expected to provide a wide array of opportunities for consumptionof Super Abrasives in the coming years. The Company is exploring necessary tie-ups andcollaboration to venture into these growing sectors.

To bridge the gap between optimising existing technologies &investing in advancements the Company's in-house R&D efforts are aimed atstrengthening the existing technology complemented by new methods of manufacturing.

Adoption and deployment of appropriate technologies for indigenous bonddevelopment streamlining processes has been the key focus areas for Company's growthprospect and the Company will continue to do so.

The Company made progress on adoption of additive manufacturingtechnology which is estimated as a descriptive technology for most of the machine grindingtechnology by partnering with leading manufacturer of 3D printing from Europe.

The Company is also exploring locating near to customers or market toserve them better. Pilot project will be established during next year for Western regionin the Precision products category.

SUBSIDIARY COMPANIES

Wendt Grinding Technologies Limited Thailand

The Company's wholly owned subsidiary Wendt Grinding TechnologiesLimited Thailand achieved sales of Thai Baht 1010 lakhs (Rs. 2298 lakhs) which is 32 %higher than the last year. This is despite unprecedented challenges and industry slowdownon account of increase in COVID-19 infection EV impetus political uncertainties risingcosts and all odds. The subsidiary continues to demonstrate its strong resolve andbusiness acumen challenging the unfavourable conditions and churning out good results on aconsistent basis.

The Profit Before Tax was Thai Baht 175 lakhs (Rs. 382 lakhs) and theProfit After Tax has been Thai Baht 140 lakhs (Rs. 302 lakhs) 32% higher over previousyear.

With increase in number of COVID cases employee safety was given toppriority with 100% timely vaccination drive including the booster dose. During thischallenging year the subsidiary resorted to strict cost control robust receivablemanagement and clear business focus in terms of increasing product and customer basket andstrengthening the export business. These initiatives helped in de-risking the business bycompensating for the decline in existing products. Focus on providing value addedservices enhancing product basket new customer additions and entering new geographiesyielded desirable results.

The subsidiary will continue to focus on core business &value-added service and increased customer/product base along with measures to ensureOPEX safety and cash flow to achieve sustainable & profitable growth.

During the year the subsidiary successfully received strongrecommendation and revalidated “ISO9001-2015” audit from “TUVNORD”.

WENDT MIDDLE EAST FZE SHARJAH

Wendt Middle East FZE (`WME') Sharjah the other whollyowned subsidiary of the Company had applied for voluntary de-registration during lastyear and there were no operations. The subsidiary clocked loss of AED 1.42 lakhs (Rs. 29lakhs).

During the year WME has completed de-registration related proceduresand has repaid the share capital to the Company. Clearance from the Hamriyah Free ZoneAuthority (HFZA) is awaited after which WME will be formally liquidated/ de-registered.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company (incorporating theoperations of the Company and its two wholly owned overseas subsidiaries) for thefinancial year 2021-22 are prepared in compliance with the applicable provisions of theCompanies Act Accounting Standards as prescribed by Regulation 33 of the Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015. The Consolidated Financial Statements have been prepared based on the auditedfinancial statements of the Company its subsidiaries as approved by their respectiveBoard of Directors.

Pursuant to provisions of Section 136 of the Act the FinancialStatements of the Company including the Consolidated Financial Statements along with therelevant documents and the Auditors' Report thereon forms part of this Annual Report. Astatement of summarised financials of all subsidiaries of the Company in Form AOC-1 alsoforms part of this Annual Report. The audited annual accounts and related information ofthe subsidiaries is available on our website www.wendtindia.com.

The key financial information on the consolidated operations are asfollows: -

KEY CONSOLIDATED FINANCIAL SUMMARY (Rs. in lakhs)

FY 2021-22 FY 2020-21 % change
Sales 17724 13567 31%
EBITDA 4167 2200 89%
Other Income 543 492 10%
Profit Before Tax 3691 1700 117%
Profit After Tax 2707 1277 112%
Earnings per share - Rs. 135.34 63.83

DIVIDEND

Considering the past dividend pay-out ratio and the current year'soperating profit the Board has recommended a final dividend of Rs.45/- per equity shareof Rs.10/- each for the year ended 31 March 2022. Besides in January 2022 an interimdividend at the rate of Rs.20/- per equity share of Rs.10/- each was declared and paid inFebruary 2022. This aggregates to a total dividend of Rs.65/- per equity share of Rs.10/-each for the financial year.

The Company has adopted the Dividend Distribution Policy as approved bythe Board in line with the Listing Regulations and the same is available on the Company'swebsite www.wendtindia.com. The dividend paid as well as being recommended for the yearended 31 March 2022 is in line with this policy.

TRANSFER TO RESERVES

The Company transferred Rs.271 lakhs to the General Reserve. An amountof Rs.7738 lakhs is retained in the Statement of Profit & Loss.

APPROPRIATIONS (Rs. in lakhs)

Available for appropriation
Profit After Tax 2710
Add: Other Comprehensive Income (54)
Add: Balance brought forward from previous year 6153
Total 8809
Recommended appropriations
Transfer to General Reserve (271)
Dividend
-Final (Dividend paid for 2020-21 @ Rs. 20/- per share of face value of Rs.10/- each) (400)
Dividend tax
-Interim (Dividend paid for 2021-22 @ Rs.20/- per share of face value of Rs.10/- each ) (400)
Balance carried forward 7738

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company's Corporate Social Responsibility pursuits have always beenbased on the foundation of ethical behaviour in all its business transactions andcontributions for economic development of not only the workforce and their families butalso extending to the local communities and society at large. The Company being a part ofthe Murugappa Group has been upholding this tradition by allocating a part of its profitsfor fulfilling its social responsibilities. The Group's philosophy is to serve thecommunities in which it operates through the services of service-oriented philanthropicinstitutions with education and healthcare being the core focus areas.

The Company believes that social responsibility is not just a corporateobligation that has to be carried out but an opportunity to make a difference. TheCompany's Corporate Social Responsibility programmes are aimed at inclusive growth andsustainable development of the community.

The Company's Skill Development Program was set up in 2012 incollaboration with Carborundum Universal Limited. The major focus was to provide highquality vocational and technical training to less privileged youth from weaker sections ofthe society by uplifting their lives and equipping them with employable skill sets. Thistraining programme is designed based on the coaching methodology defined by Government ofIndia Ministry of Skill Development and Entrepreneurship. This builds up a skill bank oftechnically competent and industry ready work force benefitting the less privilegedsections of the society.

This 3 year training programme is based on National Council ofVocational Training syllabus. This training is imparted with stipend to the enrolledstudents and free boarding facilities ensuring that they earn while they learn. Not onlydoes this initiative help in imparting formal education but also helps them in honingthem to become a valuable citizen while helping them in seeking gainful employment uponsuccessful completion of the course.

During the year a grant was made to Hosur Industrial Association(`HIA') towards building a Skill Development Centre thus enabling the Companysupport the infrastructure for skill development in the area in which it operates. HosurIndustrial Association was set up in the year 1981 with an aim to protect and promote theinterests of industrial establishments located in and around Hosur. Considering theincreasing unemployment due to lack of requisite skill and to bridge the gap between theskill requirement versus the actual skills available a Skill Development Centre is beingbuilt by HIA in Hosur to promote education in the field of technical trades as well ascommercial education like ERP use of computers etc. Hosur Industrial Association isregistered with the Ministry of Corporate Affairs for the purpose ofundertaking/implementing CSR activities on behalf of the Company.

The Company also gives importance to green environment and treeplantation in the nearby communities by distributing and planting free saplings everyyear. Employees are encouraged to participate in activities like blood donation campscreating awareness on road safety nominating employees with RTO as traffic wardens 5Scampaigns towards cleaner environment imparting special education to the school childrento name a few.

The Company in line with the amendments in Companies Act 2013formulated an annual action plan which was approved by the Board of Directors inpursuance of the CSR Policy of the Company based on which spending on CSR activities werecompleted. The Company during the FY 2021-22 spent Rs. 32.125 lakhs towards CSRactivities and no amounts remain unspent at the end of the year.

In accordance with requirements of the Companies Act 2013 the Companyhas a CSR policy incorporating the requirements therein which is also available onCompany's website at the following link www.wendtindia.com

The Annual Report on CSR activities in the prescribed format is annexedto this Report as Annexure C.

TRANSFER TO THE INVESTOR EDUCATION & PROTECTION FUND (IEPF)

In terms of Section 124 (5) of the Companies Act 2013 an amount ofRs. 430440 lakhs being unclaimed dividend during the year pertaining to the finaldividend for the FY 2013-14 (Rs. 251550) and the interim dividend for the FY 2014-15(Rs. 178890) was transferred to IEPF after sending due reminders to the shareholders.

FIXED DEPOSITS

The Company has not accepted deposits from the public falling withinthe ambit of Section 73 of the Companies Act 2013 and the rules framed thereunder and noamount of principal or interest was outstanding as on the balance sheet date.

LOANS AND INVESTMENTS

Particulars of Loans Guarantees and Investments covered under Section186 of the Companies Act 2013 are given below. There were no loans or guarantees grantedduring the year.

(Rs. in lakhs)

Description As on 31.03.2021 Movement (net of deletions) As on 31.03.2022
Loans given by the Company - - -
Corporate Guarantee given by the Company - - -
Investments made by the Company 430.55 (153.16)* 277.39

 

*During the year WME Sharjah completed the de-registrationformalities with the HFZA and repaid the share capital. Clearance from HFZA is awaitedafter which Company will be de-registered.

Current Investments: Investments in Mutual Funds as on 31.03.2022 wasRs. 5948 Lakhs

KEY RATIOS

Sl. no. Ratios In terms of 31.03.2022 31.03.2021
1. Performance Ratios
a. Operating Profit / Net Sales (%) 19 9
b. EBIDTA / Net Sales (%) 28 21
c. PBIT / Net Sales (%) 22 14
d. Net Profit / Net Sales (%) 17 11
e. ROCE (%) 24 13
f. ROE (%) 20 11
g. Fixed Asset Turnover Ratio Times 2.94 2.17
2. Activity Ratios
a. Inventory Turnover Ratio Days 56 74
b. Receivable Turnover Ratio Days 76 86
3. Liquidity Ratio
a. Current Ratio Times 1.66 1.77

The significant change in operating profit EBITDA Net Profit and PBITto net sales is mainly on account of rigorous operational efficiency measures includingvariable and fixed cost reduction initiatives undertaken in the previous year. This hasalso resulted in favorable change in ROCE and ROE for the year ended 31 March 2022.

QUALITY

The Company follows a quality assurance system with stringent testsbuilt into every stage of production ensuring the quality of its products. The qualityconsciousness inbuilt in the Company's DNA backed by a thorough understanding of customerapplication needs and “one to one” customer support has made the Company asynonym for quality and reliability.

The Company has certifications of ISO 9001 and TS 16949 reinforcing itscommitment to ensure Quality Management Standards are met. During the year the Companyalso received TUV Nord EN9100:2018 certificate enabling the manufacture of precisiongrinding honing and CNC machined components for aerospace applications.

TS 16949 pertains to manufacturing of precision components. In order tocomply with the safety norms and requirements of overseas customers the Company hassuccessfully renewed EN 13236 Standards during the year. Quality being the uncompromiseddifferentiator the Company aims to ensure that product quality is built by deploying andembracing effective quality control management process robustness quality assurance anddiscipline at every stage of material flow.

During the year the Company has strengthened its Quality Assurance bypiloting 'Green Channel Suppliers & vendors' which will eliminate incoming inspectionthereby reducing production lead time & faster customer delivery. Also the Companycontinued planned supplier audits and assessing supplier gaps if any thereby improvingincoming materials quality performance.

SAFETY HEALTH AND ENVIRONMENT (SHE)

Safety remains the key area of focus for the Company. Behaviour basedtraining both in person as well as virtually were conducted to promote a culture of safeworking. The Company recognises the need and is committed to provide Safe Healthy andSocially Accountable Work Culture in the Organisation. The Company has complied with therequirements of internationally recognised Social Accountability Standard SA 8000:2014 andperiodically reviews its policy to cater to the changing requirements. The SeniorManagement takes responsibility for maintaining these standards through deployment ofrelevant processes and guidelines in line with OHSAS 18001 and ISO 14001 standards.

All personnel on a periodical basis receive effective health and safetytraining including on-site training job specific training etc. During the year theCompany has provided trainings for creating awareness about the significance of safetyamongst employees and visitors including by way of setting up of safety training kiosk.

Quarterly mock drills for fire safety annual health check-up foremployees special medical attention for employees working in special process &sensitive areas use of Personal Protection Equipment (PPEs) zero discharge of ETP/STPand hazardous waste handling are some of the initiatives which the Company undertookduring this year.

The COVID-19 pandemic spread to India actions were taken to enhanceemployee awareness health and safety with also ensuring business continuity.

The Company continues following the COVID-19 protocols and safetymeasures in terms of social distancing including restricted movement of manpower use ofhand sanitisers and face mask at workplace. The Company is a 100% Vaccinated Company withall employees and their families completing both doses of vaccines. The Company organisedseveral vaccination camps in tie-up with Kauvery Hospitals and HIA within its premises foremployees their family members as well as for its suppliers and vendors. It has alsoextended the COVID-19 safety protocols to its suppliers and outsourcing partners. This hasenabled the Company to continue uninterrupted production.

RECOGNITIONS AND AWARDS

The Company encourages its employees to participate in customer auditsgroup competitions various national and international events & competitions. Duringthe year the Company received many awards and accolades from well recognisedorganisations establishments and certifying bodies for various distinctive achievements.Needless to mention that these recognitions and accolades enhance the passion and optimismamong the employees and acts as key motivator for the Company as a whole. Some of the keyrecognitions received during the year are as follows:

l QCFI -CCQC 2021 Competition

10 teams participated in CCQC Competition during November 2021. 9 teamswon Gold Award and 1 team bagged Silver Award.

NHRD - Hosur Chapter HIA & JDISH OSH Excellence Award

Employees participated and shared the Best OHS Practices of Wendt.Participants were recognised and certified during the valedictory function conducted on 25March 2022 at HIA-Hosur that was headed by Director of Industrial Safety and Health (FAC)& Joint Director of Industrial Safety and Health Hosur.

l Cufest 2021 Awards

Employees participated in Group-level Quality competitions 'VirtualCUFEST 2021' (Quality festival of CUMI) and won awards for Sustainability QuizSuggestions SCM Excellence and Sales Excellence.

l CFO of the Year Engineering 2021 Award

Mr. Mukesh Kumar Hamirwasia CFO was awarded by Inflection Ventures asCFO of the Year Engineering 2021.

OPPORTUNITIES & THREATS

OPPORTUNITIES

Disruptive technologies like Electric Automobiles the recent emergingtrend in the automotive industry although a threat to the IC engine providesopportunities in this segment in particular in parts suitable for EV vehicles.

Nano Cubic Boron Nitride abrasives are likely to augment applicabilityof Super Abrasives in many medical and electronic industry applications. The Company isexploring venturing into EV medical and electronics segments by collaboration andtechnology tie-ups with global partners to grow further.

The industries in the Auto Aerospace and Electronics manufacturingspace demand high-performance applications. Improvements in the design of diamond wheelsused to finish ceramics can be key to cost-effective manufacturing. Metal-bond speciallydesign wheels for longer wheel life can lead to shorter process cycle times while alsoensuring longer life thereby reducing the overall grinding cost. The Company achievingthe aerospace certification is a step in looking at growing this segment in future.

The Company would continue to leverage upon its vast experience andtechnical expertise deep understanding of customer requirements comprehensive productrange superior technology and the resultant competitive edge emerging out of itscomplementary business verticals namely Super Abrasives and Non- Super Abrasivescomprising of Machine Tools and Precision Components products category.

Further the Government's focus on projects like 'Make In India' or'Atma Nirbhar Bharat' are expected to give a boost to the Company's products beingimport substitute thus helping in conservation of precious foreign exchange during thesedifficult times.

THREATS

Industry leaders across globe with high brand value afford significantresearch operations. Investment in R&D activities by these major players to innovatethe existing products and to develop new technologies to sustain competition in the marketis very high. On the other hand we have many unorganised regional proprietary runentities that are smaller in size with limited offering addressing customer requirementsin a specific region.

In order to counter both the extremes the Company strives to evolve aunique approach to improve its market presence and market share. To address the pricecompetitive market the Company has launched fast moving and Standard Super Abrasives andother tooling products in STAR brand and has been aggressively conducting promotionalactivities in the vicinity of high potential customers. For addressing the highperformance quality conscious segment the Company is working with foreign researchinstitutes and is on lookout for product specific niche manufacturers for acquiringstate-of-the-art technology.

Enterprise Value Addition (EVA) (Rs. in lakhs)

Particulars 2021-22 2020-21 2019-20 2018-19 2017-18
Generation of Gross Value added 7494 5451 5251 5800 5272
Breakup on Application of Value added
Payment to Employees 3110 2928 3136 2892 2588
Payment to Shareholders (on payment basis) 800 700 300 600 500
Payment to Government 921 375 404 740 692
Payment to Directors 29 24 22 21 16
Towards replacement and expansion 2634 1424 1389 1547 1476
Total 7494 5451 5251 5800 5272

l Gross Value Added is Revenue less Expenditure (excludingdepreciation expenditure on employee & directors service).

l Payment to Government is current tax + dividend distribution tax.

l Replacement and expansion is retained earnings +depreciation +deferred tax.

l The Company has been constantly investing towards replacement andexpansion expenditure to ensure fulfilment of market demand.

RISK & CONCERN

The Company has constituted a Risk Management Committee aligned withthe requirements of the Companies Act 2013 and Listing Regulations. The details of theCommittee and its terms of reference are set out in the Corporate Governance Reportforming part of this Report.

The Company has a robust business risk management process to identifyevaluate and mitigate risks impacting business including those which may threaten theexistence of the Company. The Company determines the categories of risk from strategicoperational environmental legal social cyber risks extended enterprise and financialwhich the organisation may be exposed to and could impact its ability to conduct itsbusiness operations without disruption to provide customer satisfaction and achievesustained success.

The Risk Management also forms an integral part of the Company'sBusiness Plan. The Company has developed a structured risk management policy encompassingthe risk management objectives principles process responsibility for implementationmaintenance of risk registers review of risk movements risk reporting framework etc.

After the risk is identified Risk Prioritisation involves assigningscore based on impact (potential outcome) & likelihood (probability of occurrence).The risks are also assessed for velocity (how fast a risk can impact an organisation) toassess the need for crisis plan.

The risk response of the Company is of the following types:

l Avoidance i.e. not to start or continue with an activity which givesrise to a risk

l Sharing the risk i.e. Sharing with another party the burden of lossor the benefit of gain from a risk.

l Mitigating risk an action that reduces the impact or likelihood of arisk. l Retention where no worthwhile controls actions are feasible and the risk iswithin the organisation's risk tolerance.

Some of the risks associated with the business and the relatedmitigation plans are given below. However the risks given below are not exhaustive andassessment of risk is based on management perception.

Raw Material commodity price increase

 

Why is it considered as a Risk?

l non availability due to pandemic global supply chain issues and global unrest.

l scarcity of raw material.

l logistics issues.

Mitigation Plan/Counter measure to address

l Identifying alternate source of raw material.

l Premium price for faster delivery.

l Better forecasting and advance ordering in bulk.

User Industry concentration Risk

 

Why is it considered as a Risk?

l Disruption in the overall automotive market landscape due to transition of theautomobile industry towards hybrids and electric vehicles.

l Effect on customer relationship with change in ownership.

l Disruptive innovation & process changes.

l Newer technology like Integrated Starter Generator and Belt-Driven Starter Generatorthat are likely to replace alternator and generator in the automobile.

Mitigation Plan/Counter measure to address

l Identifying alternate Industry base Segments based on Mega Trends- AerospaceBearings Razor Blade Glass Power (Solar Nuclear Wind and Gas).

l Widening the customer base/new industry segment & new geographies therebyde-risking the business.

l Pursuing product innovation and new application development as per government norms.

l Building relationship and engagement with the customer by adopting new initiativesconducting Technical Seminar - both online and on-site participation in internationalexhibitions CRM & Knowledge Management application.

l Working with renowned research universities and technical consultants to develop newproducts.

l Focus on Digital Marketing to acquire new customers and pursue new applications.

Competition Risk

 

Why is it considered as a Risk?

l Loss in share of business for standard and low precision productsdue to presence of many unorganised regional players often adopting measures like pricingstrategy free samples longer credit period etc.

l Disruption in global competition by Chinese low-cost products. lMajor companies acquiring local dealers/manufacturers and entering into partnerships withmajor end users for continuous supply of products.

l Organised player spending on Research and Development and coming upwith new products.

 

Mitigation Plan/Counter measure to address

l Launching High Performance standard products with competitive price and brandingproducts by conducting seminar at Tier 1 & Tier 2 cities Mela at dealer locations andparticipating in various exhibitions.

l Measures like New product development lost business regain gain from competitionhorizontal deployment of successful applications.

l Association with external agency for developing new products for differentapplications.

l Offering products against import substitute by focusing on cost delivery qualityand technical support.

l Automation and Robotisation to address lower manufacturing cost and enhancecompetitiveness.

Technology Risk

 

Why is it considered as a Risk?

l Elimination of Machining Process (Turning Milling Grinding Honing).

l High investment on Technology by key global players.

l Access to advanced technologies.

Mitigation Plan/Counter measure to address

l Enhance in-house R&D efforts (DSIR approved R&D) to strengthen existingtechnology complemented by new methods of manufacturing.

l Association with external Research laboratories/Technical institutes for technologyupgradation.

l Collaboration with external consultants for product and process innovations.

l Initiated overseas partnership for Additive Manufacturing.

HR & Legal Risk

 

Why is it considered as a Risk?

l Employee disengagement risk owing COVID-19 Pandemic.

l Attrition of skilled/trained manpower by competition leading to disruption ofoperations or knowledge gap.

l Millennial work force - no long-term interest.

l Delay in recruitment of talents as per business needs.

l Succession planning for key roles.

Mitigation Plan/Counter measure to address

l Facilitate to enhance technical and behavioural capabilities through e-learning modesand Webinars.

l Continuous counselling on health safety and mental well-being besides extendingnecessary support to employees and their family members on matters relating to COVID-19.

l Improve leadership readiness to manage the growth initiatives by identifying internaland external incumbent for next set of leadership positions through the InternalDevelopment Programs (IDP).

l Focus on acquiring high skilled talents from best-in-class domains/organisations.

l Design & implement career road map through structured development plan for careerenhancement based on roles and job descriptions.

l Mentoring and Coaching programme for employees for enhancing engagement level.

l JD mapping and identifying training needs to fill gaps for employee developmentensuring right person on right job.

Online Data & Information Security Risk-Cyber Security

 

Why is it considered as a Risk?

l Disruption of technology service providers (in Work from Home conditions).

l Data breach loss or exposure increase due to a remote/mobile workforce.

l Security breaches compliance bugs due to unauthorised access and potential attacks.

Mitigation Plan/Counter measure to address

l The Company has a backup process available for data restoration. The Company hasidentified alternate service providers in case of switch over.

l Implemented SIEM (Security Information and Event Management) for identifyingmonitoring recording and analysing security events or incidents in a real-time ITenvironment.

l Continuous review of the Disaster Recovery Strategy & Business Continuity Policyfor Technical Controls.

l Data Center access limited to authorised personnel.

l Crisis Management Group in Place.

l Strengthening network security.

l Enhancing Information Security policies & procedures.

l Vulnerability assessment and penetration testing for information system conductedperiodically.

l Updating patches monthly and monitoring for issues antivirus update for entireenvironment including standalone IT assets.

INDIAN ACCOUNTING STANDARDS (IND AS) - IFRS CONVERGED STANDARDS

The Company had adopted Ind AS with effect from 1 April 2016 pursuantto the Companies (Indian Accounting Standard) Rules 2015 notified by the Ministry ofCorporate Affairs on 16 February 2015.

INTERNAL CONTROL SYSTEM & ADEQUACY

The Company has an Internal Control system commensurate with the sizescale and complexity of its operations. The controls have been designed and categorisedbased on the nature type and the risk rating so as to effectively ensure the reliabilityof operations with adequate checks and balances.

The Company's internal control system covers the following aspects:

l Safeguarding the assets of the Company.

l Financial proprietary of business transactions.

l Compliance with prevalent statues regulations policies and procedures.

l Control over capital and revenue expenditure with reference to approved budgets.

The Internal Audit function is delegated to an external CharteredAccountants' firm which evaluates the effectiveness and adequacy of internal controlscompliance with operating systems policies and procedures of the Company and recommendsimprovements. The scope of the Internal Audit is annually determined by the AuditCommittee considering inputs from the Statutory Auditors and the Management Team.Significant audit observations and the corrective/ preventive actions taken by the processowners is presented to the Audit Committee. Periodic review of the adherence to the agreedaction plan is carried out. The Audit Committee of the Board periodically reviews auditplans observations and recommendations of the internal and external auditors withreference to the significant risk areas and adequacy of internal controls and keeps theBoard of Directors informed of its observations if any from time to time.

During the year there were no changes in internal control overfinancial reporting that have materially affected or are likely to have any financialreporting lapse.

INTERNAL FINANCIAL CONTROLS (IFC)

As per Section 134 of the Companies Act 2013 the term InternalFinancial Control (IFC) means the policies and the procedures adopted by the Company forensuring:

a) orderly and efficient conduct of its business including adherence to accountingpolicies

b) safeguarding of its assets

c) prevention and detection of frauds and errors

d) accuracy and completeness of accounting records and

e) timely preparation of reliable financial information.

The key components of IFC followed by the Company are:

1. Entity Level Controls (ELC) that the management relies on toestablish appropriate Code of Conduct Enforcement and Delegation of Authority Hiring andRetention practices Whistle Blower mechanism and other policies and procedures.

2. Process Level Controls (PLC) to ensure processes are stablepredictable and consistently operating at targeted level of performance classified intoManual or Automated Controls. They are also classified as Preventive or Detective.

3. General IT Controls to ensure appropriate functioning of ITapplications and systems built by Company to enable accurate and timely processing offinancial data are - User Access rights Management and Logical Access Change Managementcontrols; password policies and practices Patch management and License management; backupand recovery of data.

The adequacy of IFC is ensured by:

l Documentation of risks and controls associated with major processes.

l Validation classification of existing Controls to mitigate risks.

l Improving the effectiveness of controls through data analytics.

l Performing testing of controls by Independent Internal Audit firm.

l Implementation of sustainable solutions to Audit observations.

The IFC Audit is conducted annually by an independent firm ofAccountants by testing of controls to ensure that all controls are operational effectiveadequate and identifying improvements to controls wherever necessary which is reviewed bythe Audit Committee.

FINANCIAL REVIEW

Liquidity and Cash Equivalents

The Company continued to have healthy cash generation during the yearbeing prudent in capital expenditure and efficient working capital management therebymaintaining its debt free status. The Company holds sufficient cash and cash equivalentsto meet its futuristic strategic growth initiatives by following prudent investmentpolicy. The Company's cash surplus position helps to eliminate short and medium-termliquidity risks.

The Company follows a robust Cash Management Policy whereby it:

a. Uses cash to provide sufficient working capital to address businessobjectives of the Company and to add value to all stakeholders by continued enhancement.

b. Conserves sufficient cash as reserves that will aid the Company inventuring into meaningful business opportunities that unfold in future.

c. Prudently invests surplus funds that the business generates inliquid investments including AAA rated debt schemes of mutual funds as per the Boardapproved policy. This ensures availability safety and liquidity of Company's funds whileallowing reasonable yield as per the prevailing market rates. The surplus funds aregenerated through stringent control on working capital.

As on 31 March 2022 the Company's investment in debt mutual funds wasRs. 5948 lakhs in securities holding papers with high credit rating.

Costs

The year witnessed commodity price increase along with supply chaindisruption. The Company managed its cost by negotiating annual price with criticalsuppliers and buying in bulk based on annual demand projection. To combat supply chaindisruption the Company continues developing alternate suppliers as a part of itsde-risking strategy. Also Company continues looking at indigenisation of some of thesupplies. Initiatives like Vendor Managed Inventory (VMI) has ensured continuity ofsupplies of critical items including rationalisation of costs. Focus on Cost Optimisationhas yielded savings in all the business segments - Super Abrasives Machines and PrecisionComponents. The rigorous variable and fixed cost reduction initiatives undertaken in theprevious year has resulted in good improvement in the bottom line.

FINANCIAL POSITION

Share Capital

The paid-up equity share capital as on 31 March 2022 was Rs. 200 lakhs.During the year under review the Company has not issued shares with differential votingrights nor granted stock options nor sweat equity.

Shareholders' Funds

The shareholders' fund as on 31 March 2022 was Rs.14414 lakhsagainst Rs.12558 lakhs of previous year. Accordingly the book value of the share standsat Rs.721 /- as compared to Rs.628/- during the previous year.

Loan Funds

The Company is debt free as it does not have any long-term borrowing.It continues to utilise its cash credit limit with the banks to bridge the short-term fundrequirement and for meeting the temporary mismatches in its cash flow. During the yearthe Company availed Export Packing Credit (EPC) of Rs.100 lakhs under MSME scheme.

During the current year as well the working capital limits of theCompany continued to be rated by ICRA as AA- (pronounced ICRA double A minus)assigned to Rs. 2 Crore Long-term Fund facilities of the Company which signifies lowcredit risk and stable. The short-term rating assigned to Rs. 19 crore Non-Fund Basedworking capital limit also continued to be reaffirmed as A1+ (pronounced ICRA A oneplus).

ASSETS

Capital Expenditure

The Company follows the policy of being prudent in its capex spend.During the current year the capital expenditure was Rs. 608 lakhs. The major capex spentwas on addition of new plant & machinery towards capability building in fast growingproducts and new products capacity enhancements which are critical for the future growthof the Company. As in the past the Company follows the policy of funding all the capexthrough internal accruals.

Inventories and Sundry Debtors

The Company follows rigorous Working Capital Management based on awell-organised process of continuous monitoring and control on Receivables Inventoriesand other parameters. The overall inventory levels as on 31 March 2022 is Rs. 2568 lakhswhich is higher than previous year by Rs. 321 lakhs increase by 14%.

Receivables (Gross) as on 31 March 2022 were at Rs. 3312 lakhs againstRs. 3321 lakhs during the previous year. The Company closely monitors the DSO (Days SalesOutstanding) through aggressive receivable management system including close follow upsand credit lock through the SAP system. This ensures that receivables are kept undercontrol and payments are received in time. The Company has reduced the receivable averagecredit days to 76 days from 86 days in the previous year.

FOREIGN EXCHANGE HEDGING

Being a net exporter the Company continues to practice natural hedgingof foreign exchange earnings and outflow and does not take forward covers. The net forexgain during the year has been Rs.82 lakhs (Previous Year Rs.40 lakhs).

HUMAN RESOURCE

Wendt being an engineering -knowledge-based company employees are itsmost precious assets. The Company has a strong and diverse workforce where every employeeis involved as “partners” in the progress. The intangible asset comprises allthe competencies of the people within the organisation in terms of education experiencepotential and capacity. The Company encourages & motivates diversity amongst employeesand encourages them to take active part in activities such as Cross Functional Teams(CFTs) Kaizens Small Group Activities (SGAs) and Suggestions.

Safety at the workplace remains the top priority with focused andhighest attention from the Board. Periodic training and awareness sessions continue to beconducted for identification and elimination of unsafe working conditions.

During the year the Company organised several rounds of COVID-19vaccination drives for its employees and their families in its premises. This has ensuredthe Company to achieve 100% vaccination status as on date.

The Company continues to focus on identifying and drawing a structuredtraining plan based on the competency levels future needs and focusses on recruiting highskilled talents from best-in-class domains/organisations to fulfil the growth plans. TheCompany gives equal importance to physical wellness of not only its employees but alsotheir family members by conducting annual heath check up every year. For High PotentialIndividuals the Company encourages them to undergo Mentoring and Personality DevelopmentPrograms to prepare them for leadership roles and bigger business challenges in future.

Cordial relations continue to be maintained with the employees'cordial and the work atmosphere remained congenial throughout the year. The manpowerstrength of employees (excluding casuals and trainees) of the Company as on 31 March 2022was 388 (previous year - 412).

During the year the Company undertook organisation restructuring inline with future business goals by creating bonded and coated products under SuperAbrasives segment from the erstwhile cell concept. This would ensure optimum utilisationof resources man material and machines in the respective product line. The Product andApplication Engineering has been created as a new role to help in quicker development andestablishing the products at the customers' end. Production Planning Control (PPC)has been created to ensure better planning scheduling of material and machines based onavailable orders ensuring faster delivery to the customers.

The Company started an organisation wide job description and competencymapping exercise for all roles to identify the right fit for the right job. This willensure in identifying the right positions based on job descriptions and finding gaps wheretraining and development needs to be provided. This will ensure Company is adequatelystaffed for its future growth.

The Company has a policy on prevention of sexual harassment atworkplace in line with the requirement of the Sexual Harassment of Women at the Workplace(Prevention Prohibition & Redressal) Act 2013. The Company has constituted anInternal Complaints Committee as required under Sexual Harassment of Women at theWorkplace (Prevention Prohibition & Redressal) Act 2013. No complaints were receivedduring the year under review.

Some of the other initiatives introduced are sales incentive scheme forsales team based on sales and order booking achieved senior management team meetingindividual employees in groups for better connect and identifying development needsopportunity for traffic warden services for our employees communications in locallanguage for attracting more employees enhanced induction process for new joinersperiodic feedback to each individual from functional heads to ensure function isprogressing towards business goals career guidance advice with experts to employeechildren online experts sessions on financial wellness and health issues to theemployees PACE (Platform for Accelerated Career Experience) through CUMI providingemployees to work on different projects of their choice for developing cross functionalcapability and improve engagement levels Catalyst voluntary mentoring program with CUMIwhere employees directly sign up for dialogues with mentors for people development.

RELATED PARTY TRANSACTIONS

The Company as per the requirements of the Companies Act 2013 andRegulation 23 of the Listing Regulations has a Policy for dealing with Related Parties.Further in line with the amendments made in Listing Regulations pertaining to relatedparty transactions which are effective on prospective basis i.e. w.e.f. 1 April 2022onwards the policy on dealing with related party transactions was amended to adapt to thechanges.

In line with the stated policy all Related Party transactions areplaced before the Audit Committee for review and approval. Prior approval of the Committeeis taken for the estimated value of transactions which are foreseen and repetitive innature. Omnibus approval in respect of transactions which are not routine or which cannotbe foreseen or envisaged are also obtained as permitted under the applicable laws. Thelist of related parties is reviewed and periodically updated as per the prevailingregulatory conditions.

The details of transactions proposed to be entered with Related Partiesare placed before the Audit Committee for approval on an annual basis before thecommencement of the financial year. Thereafter a statement containing the nature andvalue of the transactions entered by the Company with Related Parties is presented forquarterly review by the Committee. Further revised estimates or changes if any to theproposed transactions for the remaining period are also placed for approval of theCommittee on a quarterly basis. Besides the Related Party transactions entered during theyear are also reviewed by the Board on an annual basis.

All transactions with Related Parties entered during the financial yearwere in the ordinary course of business and on an arm's length basis and hence notrequiring particulars to be entered in the Form AOC-2. Further all transactions enteredinto with Related Parties during the year even at arm's length basis in the ordinarycourse did not exceed the thresholds prescribed under the Companies (Meetings of Board andits Powers) Rules 2014 or Listing Regulations or the Company's Policy in this regard andhence no disclosure was required to be made in Form AOC-2. Accordingly there are nocontracts or arrangements entered with Related Parties during the year to be disclosedunder Sections 188(1) and 134(h) of the Companies Act 2013 in Form AOC- 2. The Form AOC-2in the prescribed format is annexed to this report as Annexure-B.

There are no materially significant Related Party transactions made bythe Company with its Promoters Directors Key Managerial Personnel or their relativesthat may have a potential conflict with the interest of the Company at large.

The Policy on Related Party Transactions as approved by the Board isuploaded on the Company's website www.wendtindia.com. None of the Directors and KMPs hadany pecuniary relationship or transaction with the Company other than those relating toremuneration in their capacity as Directors/Executives and corporate action entitlementsin their capacity as shareholders of the Company.

BUSINESS RESPONSIBILITY REPORTING (BRR)

The Company's ethical and responsible behaviour complements itscorporate culture. Being a public listed company the Company recognises that itsaccountability is not limited only to its shareholders from a financial perspective butalso to the larger society in which it operates. During the year 2019-20 consequent tothe mandatory reporting of its business responsibility initiatives under the ListingRegulations the Company had formulated a consolidated policy on Business Responsibilitywhich lays down the broad principles guiding the Company in delivering its variousresponsibilities to its stakeholders. The policy is intended to ensure that the Companyadopts responsible business practices in the interest of the social set up and theenvironment so that it contributes beyond financial and operational performance.

A copy of the Policy is available at www.wendtindia.com and theBusiness Responsibility Report for the year ended 31 March 2022 in terms of Regulation 34of the Listing Regulations is annexed to this Report as Annexure E.

GOVERNANCE

BOARD OF DIRECTORS

As on 31 March 2022 the Board of the Company comprised six Directorsof which majority (four) are independent.

Ms. Hima Srinivas who was appointed as an Independent Director heldoffice for the first term of five years until 23 April 2022. The Nomination andRemuneration Committee and the Board of the Company at their meetings held on 22 April2022 recommended her appointment as an Independent Director for a second term of fiveyears from 24 April 2022. In the opinion of the Board Ms. Hima Srinivas satisfies theindependence criteria prescribed in the Act and Rules made thereunder for appointment asan Independent Director of the Company and that she is independent of the Management.Notice in this regard under Section 160 has been received from a Member. Her detailedprofile is provided in the notice convening the meeting.

Mr. M Lakshminarayan was appointed as an Independent Director of theCompany on 20 March 2018 for a period of five years with the approval of the shareholdersof the Company vide an ordinary resolution passed at the 36 Annual General Meeting held on24 July 2018. Since Mr. M Lakshminarayan has completed 75 years during the financial yeara special resolution under Regulation 17(1A) of SEBI (Listing Obligations and DisclosureRequirements)

Regulations 2015 was obtained from the shareholders through postalballot exercise on 30 December 2021 for his continuation till the end of his present termi.e. 19 March 2023 and for re-appointing him for another term after completion of thecurrent tenure until 30 November 2023.

During the FY 2021-22 at the 39 AGM of the Company the shareholdersapproved the appointment of Mr. Bhagya Chandra Rao as an Independent Director effective 22January 2021.

Mr. Rajesh Khanna retires by rotation at the forthcoming Annual GeneralMeeting and has expressed his desire to retire from the Board of the Company as aNon-Executive Director.

The Company has received declarations from all its IndependentDirectors confirming that they meet the criteria of independence prescribed both under theCompanies Act 2013 and the Listing Regulations. In the opinion of the Board all theDirectors appointed/re-appointed during the year are persons with integrity expertise andpossess relevant experience in their respective fields.

All the Independent Directors of the Company have registered theirnames in the Independent Directors Databank and had completed proficiency assessment/areexempted as required under the Companies Act 2013 and the Rules referred therein.

During the year the Board at its meeting held on 23 July 2021 basedon the recommendation of the Nomination and Remuneration Committee appointed Mr. Arjun RajP as the Company Secretary with effect from 1 August 2021 in place of Ms. Janani T A whohad resigned as Company secretary with effect from 1 August 2021.

KEY MANAGERIAL PERSONNEL (KMP)

Mr. C Srikanth Chief Executive Officer Mr. Mukesh Kumar HamirwasiaChief Financial Officer and Mr. Arjun Raj P Company Secretary are the Key ManagerialPersonnel of the Company as per Section 203 of the Companies Act 2013.

BOARD MEETINGS

A calendar of Board Meetings is prepared and circulated in advance tothe Directors.

During the year six (6) Board Meetings were convened and held inaccordance with the provisions of the Act. The date(s) of the Board Meetings attendanceof the directors are given in the Corporate Governance Report forming an integral part ofthis report.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act 2013 and the ListingRegulations the Board carried out an annual evaluation of its own performance theDirectors individually as well as the evaluation of the working of its various Committeesas per the evaluation framework adopted by the Board on the recommendation of theNomination and Remuneration Committee. Structured assessment forms were used in theoverall Board evaluation comprising various aspects of the Board's functioning in terms ofstructure its meetings strategy governance and other dynamics of its functioningbesides the financial reporting process internal controls and risk management. Theevaluation of the Committees was based on their terms of reference fixed by the Boardbesides the dynamics of their functioning in terms of meeting frequency effectiveness ofcontribution etc.

Separate questionnaires were used to evaluate the performance ofindividual Directors on parameters such as their level of engagement and contributionobjective judgement etc.

The Chairman was also evaluated based on the key aspects of his role.The performance evaluation of the Independent Directors was carried out by the entireBoard. The performance evaluation of the Chairman the Board as whole and theNon-Independent Directors was carried out by the Independent Directors at their separatemeeting held during the year.

POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS

Pursuant to Section 178(3) of the Companies Act 2013 the Nominationand Remuneration Committee of the Board has formulated the criteria for Board nominationsas well as the policy on remuneration for Directors and employees of the Company. Thecriteria for Board nominations lays down the qualification norms in terms of personaltraits experience background and standards for independence besides the positiveattributes required for a person to be inducted into the Board of the Company. Criteriafor induction into Senior Management positions have also been laid down. The Remunerationpolicy provides the framework for remunerating the members of the Board Key ManagerialPersonnel and other employees of the Company. This Policy is guided by the principles andobjectives enumerated in Section 178(4) of the Companies Act 2013 and reflects theremuneration philosophy and principles of the Murugappa Group to ensure reasonableness andsufficiency of remuneration to attract retain and motivate competent resources a clearrelationship of remuneration to performance and a balance between rewarding short andlong-term performance of the Company. The policy lays down broad guidelines for payment ofremuneration to Executive and Non-Executive Directors within the limits approved by theshareholders. Further details are available in the Corporate Governance Report. The BoardNomination criteria and the Remuneration policy are available on the website of theCompany at www.wendtindia.com.

COMPOSITION OF AUDIT COMMITTEE

The Audit Committee of the Board comprises five members out of whichfour are independent. Mr. Shrinivas G. Shirgurkar is the Chairman and other members areMr. M Lakshminarayan Ms. Hima Srinivas Mr. Bhagya Chandra Rao and Mr. N Ananthaseshan.During the year five Audit Committee meetings were held the details of which areprovided in the Corporate Governance Report.

COST AUDIT

Pursuant to Section 148 of the Companies Act 2013 read with Companies(Cost Records and Audit) Rules 2014 and amendments thereof the Company does not fallunder the category of companies required to mandatorily undertake Cost Audit. However theCompany maintains cost accounting records in respect of products of the Company.

PARTICULARS OF EMPLOYEES

The information on employees and other details required to be disclosedunder Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is annexed to and forms part of this Report as Annexure D.

STATUTORY AUDITORS AND AUDITORS' REPORT

In line with the requirements of the Companies Act 2013 the Companywith the approval of the shareholders at the Annual General Meeting held on 24 July 2017had appointed M/s. Price Waterhouse Chartered Accountants LLP (Reg. No. FRN012754N/N500016) (PWC) as the Statutory Auditors of the Company to hold office from theconclusion of 35 Annual General Meeting until the conclusion of the 40 Annual GeneralMeeting.

Considering that the tenure of PWC is concluding at the 40 AGM theCompany is required to appoint a Statutory Auditor in place of PWC the retiring Auditor.Pursuant to Section 139 of the Companies Act 2013 PWC is eligible to be re-appointed asStatutory Auditors for a second term of five consecutive years. The Board of Directors attheir meeting held on 22 April 2022 based on the recommendation of the Audit Committeehave recommended the re-appointment of PWC to hold office for a term of five years fromthe conclusion of the 40 Annual General Meeting until the conclusion of the 45 AnnualGeneral Meeting of the Company.

As required under Regulation 33 of the Listing Regulations theAuditors have confirmed that they hold a valid certificate issued by the Peer Review Boardof the Institute of Chartered Accountants of India.

The Report given by PWC on the Financial Statements of the Company forthe year ended 31 March 2022 is provided in the financial section of the Annual Report.

There are no qualifications reservations adverse remarks ordisclaimers given by the Auditors in their report. During the year under review theAuditors have not reported any matter under Section 143(12) of the Companies Act 2013 andhence there are no details to be disclosed under Section 134(3)(ca) of the Act.

SECRETARIAL AUDIT

M/s. R Sridharan and Associates Practicing Company SecretariesChennai were appointed as the Secretarial Auditor to undertake the Secretarial Audit ofthe Company for the FY 2021-22. The report of the Secretarial Auditor for year ended 31March 2022 is annexed to and forms part of this Report. There are no qualificationsreservations adverse remarks or disclaimers given by the Secretarial Auditor in theReport.

In terms of Regulation 24A of the Listing Regulations there is nomaterial unlisted subsidiary incorporated in India. Material unlisted subsidiary for thepurpose of this Regulation is a subsidiary whose income/net worth exceeds 10 per cent ofthe consolidated income/net worth respectively of the Company and its subsidiaries in theimmediately preceding accounting year. Hence the requirement prescribed under Regulation24A of the Listing Regulations is not applicable to the Company in so far as materialsubsidiary is concerned.

SECRETARIAL STANDARDS

The Company is in compliance with the Secretarial Standard on Meetingsof the Board of Directors (SS-1) and Secretarial Standard on General Meetings (SS-2).

CORPORATE GOVERNANCE

In terms of Regulation 34(3) read with Schedule V of the ListingRegulations a separate section on Corporate Governance including the certificate from aPractising Company Secretary confirming compliance is annexed to and forms an integralpart of this Report.

CEO/CFO CERTIFICATE

Mr. C. Srikanth Chief Executive Officer and Mr. Mukesh KumarHamirwasia Chief Financial Officer have submitted a certificate to the Board on theintegrity of the financial statements and other matters as required under Regulation 17(8)of the Listing Regulations.

VIGIL MECHANISM UNDER WHISTLE BLOWER POLICY

The Company has a well-established whistle blower policy as part ofvigil mechanism for Directors and employees to report concerns about unethical behaviouractual or suspected fraud or violation of the Company's Code of conduct or ethics policy.This mechanism also provides for adequate safeguards against victimisation ofDirector(s)/employee(s) who avail of the mechanism and also provides for direct access tothe Chairman of the Audit Committee in exceptional cases. The Whistle blower policy isavailable on the Company's website at www.wendtindia.com. It is affirmed that during theyear no employee was denied access to the Audit Committee.

ANNUAL RETURN

The Annual Return in Form MGT 7 is available at www.wendtindia.com.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) of the Companies Act2013 the Board to the best of its knowledge and belief and according to the informationand explanations obtained by it confirm that:

in the preparation of the annual accounts for the year ended 31 March 2022 theapplicable accounting standards have been followed and there have been no materialdepartures from the same.

l they have selected appropriate accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the

l Company as at the end of the financial year and of the profits of the Company forthat period.

l proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.

l the annual accounts have been prepared on a going concern basis.

l proper internal financial controls have been laid down to be followed by the Companyand that such internal financial controls are adequate and were operating effectively.

l proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS & OUTGO

The information on energy conservation technology absorptionexpenditure incurred on Research & Development and forex earnings/outgo as requiredunder Section 134(3)(m) of the Companies Act 2013 read with Rule 8 of the Companies(Accounts) Rules 2014 is annexed to and forms part of this Report as Annexure A.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant and material orders passed by the regulatorsor courts or tribunals impacting the going concern status of the Company and its futureoperations.

OTHER CONFIRMATIONS

No application under the Insolvency and Bankruptcy Code 2016 (IBC) wasmade on the Company during the year.

Further no proceeding under the IBC was initiated or is pending as at31 March 2022.

There was no instance of one-time settlement with any Bank or FinancialInstitution.

ACKNOWLEDGMENTS

The Board gratefully acknowledges the co-operation received fromvarious stakeholders of the Company viz. customers suppliers partners banksgovernment and other statutory authorities auditors business associates andshareholders. The Directors extend their gratitude to all the regulatory agencies likeSEBI Registrar of Companies stock exchanges and other Central and State Governmentauthorities/agencies vendors and subcontracting partners for their support. The Boardalso acknowledges the unstinted co-operation commitment and dedication made by all theemployees of the Company in the previous financial year. The Directors also wish to placeon record their gratitude to the members of the Company for their unrelenting

On behalf of the Board
For Wendt (India) Limited
Place: Hosur Shrinivas G Shirgurkar
Date: April 22 2022 Chairman

.