The directors have pleasure in presenting the thirteenth annual report and the audited financial statements for the financial year ended 31st March 2017.
1. FINANCIAL HIGHLIGHTS
Rs. in lakhs
Year ended 31.03.2017
Year ended 31.03.2016
Revenue from Operations
Other Operating Income
Total revenue from operations
Gross profit before interest and depreciation
Profit before tax
Provision for taxation (including deferred tax and tax relating to earlier years)
Profit after tax
Other Comprehensive Income / (Loss) for the year net of tax
Total Comprehensive Income for the year net of tax
The board of directors has recommended a dividend of (Rs.7 per share) for the year ended 31st March 2017 absorbing a sum of Rs.1,327.73 /- lakhs (excluding dividend tax) for approval of the shareholders at the ensuing annual general meeting.
During the year 2016-17, sales of medium and heavy commercial vehicles (M & HCV) grew by 0.42% over the previous year. The Company achieved total revenue from operations and other income of Rs.2,296.72 crores as against Rs.2,039.66 crores in the previous year, an increase of 12.6%.
4. CAPITAL EXPENDITURE
Capital expenditure of Rs.73.91 crores was incurred during the year 2016-17 as against the plan of Rs.90 Crores and Capital Expenditure of Rs. 90 Crore is planned for the year 2017-18.
Dr. Lakshmi Venu (DIN: 02702020) has been appointed as an Independent Director by the Board with effect from 19th May 2016 which was approved by the shareholders at the annual general meeting dated 29th July 2016.
Mr. Jorge Solis retires by rotation at the ensuing annual general meeting of the Company, being eligible, offers himself for reappointment.
In compliance with Regulation 36(3) of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulation), a brief resume and other required information about the directors who are being reappointed are given in the notice convening the annual general meeting of the Company.
The independent directors continue to fulfill the criteria of independence as defined under Section 149(6) of the Companies Act, 2013 (“the Act”) and Regulation 16(b) of the Listing Regulation and have furnished the requisite declarations in this regard.
Messrs S. R. Batliboi & Associates LLP, Chartered Accountants, Chennai (Firm Registration No. 101049W) were appointed as Statutory Auditors at the Annual General Meeting held on 22nd July 2014 for a period of 5 (five) years from conclusion of 10th annual general meeting upto the conclusion of the 15th Annual General Meeting, subject to ratification by members at every annual general meeting. The Board recommends the ratification to enable their continuation as Auditors. The Company has received a confirmation from the Statutory Auditors to the effect that they would be eligible for such continuation.
7. SECRETARIAL AUDITOR
M/s. S Krishnamurthy & Co., Company Secretaries have carried out Secretarial Audit under the provisions of Section 204 of the Act, for the financial year 2016-17 and submitted their report, which is annexed to this report. The report does not contain any qualification.
8. COST AUDITOR
Pursuant to Section 148 of the Act, the Board of Directors of the Company upon recommendation made by the audit committee has appointed Mr. A.N Raman, Cost Accountant, as Cost Auditor of the Company for the financial year 2017-18 and has recommended his remuneration to the shareholders at the ensuing Annual General Meeting.
9. KEY MANAGERIAL PERSONNEL
Mr. P Kaniappan - Managing Director
Mr. R S Rajagopal Sastry - Chief Financial Officer
Mr. M C Gokul - Company Secretary
10. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The Company has not provided any Loans or Guarantees to any person or other body corporate under Section 186 of the Act and the details of investments made are given in the notes to the Financial Statements.
11. EVALUATION OF THE BOARD’S PERFORMANCE
During the year, the Board adopted a formal mechanism for evaluating its performance and as well as that of its Committees and directors, including the Chairman of the Board as per the requirements in this regard specified in the guidance note issued by the Securities Exchange Board of India and the provisions of the Companies Act, 2013. The exercise was carried out through a structured evaluation process covering various aspects of the functioning of the Board and Committees such as their composition, experience & competencies, performance of specific duties & obligations, governance issues etc. Separate exercise was carried out to evaluate the performance of each individual director including the Board Chairman who were evaluated on parameters such as attendance, contribution at the meetings, independent judgment and other relevant aspects.
The Board was satisfied with the evaluation results, which reflected the overall engagement of the Board, Committees and the directors with the Company.
12. VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has established a vigil mechanism through “WABCO Whistle Blower Policy” to enable employees and directors to report genuine concerns dealing with instances of fraud and mismanagement, if any. The mechanism provides for adequate safeguards against victimization of the whistle blower and also provides for direct access to the Chairman of the audit committee in appropriate or exceptional cases or chief ethics officer of the Company as the case may be to report any concerns or unethical activities.
13. BUSINESS RESPONSIBILITY
The Company is one among the top 500 listed companies as per the market cap as on 31st March 2016 and hence as per the Listing regulation the Business Responsibility Report forms part of the annual report commencing from this year. In this regard, the Company has developed a Business Responsibility policy which is approved by the Board. As per this policy Mr. P Kaniappan, Managing Director is responsible for the implementation of the Business Responsibility initiatives. The initiatives of the Company in this regard for the year 2016-17 are provided in the Business responsibility report.
14. STATUTORY STATEMENTS
14.1 Conservation of energy Research & Development Expenses and foreign exchange earnings and outgo
Information regarding conservation of energy, Research & Development expenses and foreign exchange earnings and outgo is given in Annexure 1 to this report, as per the requirements of Section 134(3)(m) of the Act, 2013.
14.2 Corporate Social Responsibility
The Company focuses on CSR activities as specified in Schedule VII of the Companies Act, 2013 and the Companies CSR policy. As required under Section 134(3)(o) of the Act, details about policy developed and implemented by the Company on Corporate Social Responsibility initiatives taken during the year ended 31st March, 2017 are given in Annexure 2 to this report
14.3 Directors’ Responsibility Statement
Pursuant to Section 134(3)(c) of the Act, it is hereby confirmed that;
a. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures.
b. the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2017 and of the profit of the Company for the year ended on that date;
c. that directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d. the directors had prepared the annual accounts on a going concern basis;
e. the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and
f. the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
15. DISCLOSURES UNDER COMPANIES ACT, 2013
15.1 Extract of the Annual Return
Details of extracts of the annual return as per Form MGT - 9 is enclosed in Annexure 3 to the Directors’ Report.
15.2 Number of Board Meetings
The Board of Directors met five times during the year 2016-17. The details of the Board meetings and the attendance of the Directors are provided in the Corporate Governance Report.
15.3 Committees of Board of Directors
Details of memberships and attendance of various committee meetings are given in Corporate Governance Report.
15.4 Related Party Transactions
All related party transactions that were entered into during the financial year were on an arm’s length basis and were in the ordinary course of business. There are no related party transactions made by the company with promotors, Directors, Key Managerial Personnel or other designed persons which may have a potential conflict with the interest of the Company at large.
Certain related party transactions entered into during the year ended 31st March 2017 and transactions proposed to be entered into during the year ending 31st March 2018 between the Company and WABCO Europe BVBA, which is fellow subsidiary of the company, are material in nature and require the approval of members by ordinary resolution as per the Listing regulation. An ordinary resolution seeking shareholders’ approval is included in the notice to shareholders.
All transactions with related parties are placed before the audit committee and prior approval of the audit committee is obtained. The Company has developed a Related Party Transactions Policy for the purpose of identification and monitoring of such transactions. Details of material Related Party Transactions entered by the company as required under Section 134(3)(h) of the Act and the Listing regulation are given in annexure 4 to this report.
16.1 The following policies approved by the Board of Directors of the Company were uploaded and are available in the Company’s website at the web link: http://www.wabco-auto.com/en/investor_relations/ wabco_india_investor_relations
Corporate Social Responsibility Policy
Related Party Transaction Policy
Nomination and Remuneration Policy
Whistle Blower Policy
Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information Policy on Criteria for Determining Materiality of Events Dividend Policy
16.2 Policy on director appointment and remuneration Company’s policy on directors’ appointment and remuneration including criteria for determining qualification, positive attributes, independence of a director and other matters provided under Section 178(3) of the Act is provided in the Corporate Governance Report.
17. PARTICULARS OF DISCLOSURES AS REQUIRED UNDER SECTION 197 OF THE COMPANIES ACT, 2013
17.1 The ratio of the remuneration of each director to the median employee’s remuneration for the financial year and such other details as prescribed are as given below:
Mr. P. Kaniappan, Managing Director
Mr. M. Lakshmi Narayan, Independent Director
Mr. Narayan Seshadri, Independent Director
Dr. Lakshmi Venu, Independent Director
Directors other than those mentioned above have not drawn any remuneration for the financial year 2016-17.
17.2 The percentage increase in remuneration of each Director, Managing Director, Chief Financial Officer, Company Secretary, in the financial year:
Mr. M. Lakshminarayan, Chairman
Mr. Narayan K Seshadri, Director
Dr. Lakshmi Venu*
Mr. P. Kaniappan, Managing Director
Mr. R.S Rajagopal Sastry, Chief Financial Officer
Mr. M.C Gokul, Company Secretary
* In office for part of the year 2016-17 and hence percentage increase cannot be calculated.
17.3 The percentage increase in the median remuneration of employees in the financial year: 10.93%
17.4 The number of permanent employees on the rolls of Company as on 31st March 2017 : 1573
17.5 Average percentage increase already made in the salaries of employees other than the managerial personnel in the last financial year: 9.3%
Percentage increase in the managerial remuneration in the last financial year was 10.65%. Mr. R S Rajagopal Sastry was appointed as the Chief Financial Officer and Mr. M C Gokul was appointed as the Company Secretary during the financial year 2015-16. There are no exceptional circumstances for increase in the managerial remuneration.
17.6 The key parameters for any variable component of remuneration availed by the directors: Independent directors have been paid sitting fees for attending meetings of the
Board and Committees and also paid a profit related commission, but not exceeding 1% of the net profit of the Company for the financial year. No sitting fee and commission is paid to non-executive and non-independent Directors of the Company. However, with respect to Mr. P. Kaniappan, Managing Director of the Company variable component is paid in the form of incentive, as per the Remuneration Policy of the Company and based on the financial and non-financial parameters.
17.7 The remuneration of directors and employees are as per the remuneration policy of the company.
17.8 Particulars of Employees
The statement of particulars of employees as per 197 of the Companies Act, 2013, read with Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014, for the year ended 31st March, 2017, is given in annexure 5 and forms part of this Report.
18. CORPORATE GOVERNANCE
The Company has complied with the provisions of the Listing Regulations concerning corporate governance and a report to this effect is attached, as required by Under Schedule V of the Listing Regulation. The certificate issued by the auditors of the Company regarding compliance with the corporate governance requirements is also annexed to this report. The Managing Director, (CEO) and the Chief Financial Officer (CFO) of the Company have certified to the board on financial statements and other matters in accordance with Regulation 17(8) of the Listing Regulations pertaining to CEO / CFO certification for the financial year ended 31st March 2017.
The management discussion and analysis report, as required by the Listing Regulation and various disclosures required under the Act is also attached and forms part of this report.
19. FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS
The Company has a structured familiarization program for independent Directors of the Company which also extends to other Non-Executive Directors to ensure that Directors are familiarized with their function, role, rights, responsibilities and the nature of the company Business viz., automotive component industry and WABCO global business model, etc.
The Board of Directors has complete access to the information within the Company. Presentations are regularly made to the Board of Directors and all Committees of the Board on various matters, where Directors get an opportunity to interact with Senior Management. Presentations, inter alia, cover the Company’s strategy, business model, operations, markets, organization structure, product offerings, finance, risk management framework, quarterly and annual results, human resources, technology, quality and such other areas as may arise from time to time.
The Company also issues appointment letters to the Independent Directors which also incorporates their role, duties and responsibilities. Further, regulatory updates on regulatory changes are also periodically placed before the Board.
The directors thank the vehicle manufacturers, distributors, vendors and bankers for their continued support and assistance. The directors gratefully acknowledge the support rendered by WABCO Europe BVBA, Belgium. The directors wish to place on record their appreciation of the excellent work done by employees of the Company at all levels during the year. The directors specially thank the shareholders for the confidence reposed by them in the Company.
For and on behalf of the board
Chennai M. LAKSHMINARAYAN
30th May 2017 Chairman