DIRECTORS' REPORT TO THE SHAREHOLDERS The directors have pleasure in presenting the twelfth annual report and the audited accounts for the financial year ended 31st March 2016 PERFORMANCE During the year 2015-16, sales of medium and heavy commercial vehicles (M&HCV) grew by 31.9% over the previous year. The Company achieved total revenue from operations and other income of Rs.1,873 crores as against Rs.1,368 crores in the previous year, an increase of 36.9%. 4. CAPITAL EXPENDITURE Capital expenditure of Rs.89.78 crores was incurred during the year 2015-16 as against the plan of Rs.90 Crores and Capital Expenditure of Rs. 90 Crore is planned for the year 2016-17. 5. DIRECTORS Mr. Trevor Lucas (DIN: 01627818) resigned from the Board with effect from 29th October 2015. Mr. Shivaram Narayanaswami (DIN: 07327742) was appointed as a Director in the resulting casual vacancy, at the board meeting held on 9th November, 2015. Mr. Shivaram Narayanaswami, will hold this office upto the ensuing annual general meeting of the Company. A notice has been received from a member along with the prescribed deposit of Rs. 1 lakh proposing his appointment as a non-executive non independent director at the Twelfth annual general meeting of the Company. Mr. Sean Ernest Deason (DIN: 07334776) has been appointed as an Additional Director by the Board with effect from 9th November 2015. Mr. Sean Ernest Deason, will hold this office up to the ensuing annual general meeting of the Company. A notice has been received from a member along with the prescribed deposit of Rs. 1 lakh proposing his appointment as a non-executive non independent director at the Twelfth annual general meeting of the Company. Ms. Lisa Brown (DIN: 07053317) retires by rotation at the ensuing annual general meeting of the Company, being eligible, offers himself / herself for re-appointment. In compliance with Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulation), a brief resume and other required information about the directors who are being appointed / re-appointed are given in the notice convening the annual general meeting of the Company. Mr. D.E Udwadia (DIN: 00009755), has resigned from the Board with effect from 1st April 2016 on account of personal reasons. The Board hereby places its profound appreciation for the services rendered by him during his tenure as an Independent Director. 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 requisite declarations have been received. Dr. Lakshmi Venu (DIN: 02702020) has been appointed as an Independent Director by the Board for a term of 5 consecutive years with effect from 19th May 2016 up to 18th May 2021 subject to the approval of the shareholders. The board has recommended the appointment for the shareholder's approval at the ensuing annual general meeting of the Company. A notice has been received from a member along with the prescribed deposit of Rs. 1 lakh proposing her appointment as an independent director at the Twelfth Annual General Meeting of the Company. 6. AUDITORS Messrs S.R.Batliboi & Associates LLP, Chartered Accountants, Chennai 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 tenth annual general meeting until the conclusion of fifteenth annual general meeting, subject to ratification of shareholders at every annual general meeting of the Company. The Board recommends the ratification of 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 2015-16 and submitted their report, which is annexed to this report in Annexure - 6. The report does not contain any qualification. 8. COST AUDITOR Pursuant to Section 148 of the Companies Act, 2013, 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 2016-17 and has recommended his remuneration to the shareholders for ratification at the ensuing Annual General Meeting. 9. KEY MANAGERIAL PERSONNEL Mr. R S Rajagopal Sastry was appointed as the Chief Financial Officer w.e.f 31st August 2015 in place of Mr. T S Rajagopalan who had resigned and since superannuated. Mr. M C Gokul was appointed as the Company Secretary w.e.f 30th January 2016 in place of Mr. N Sivalai Senthilnathan who was re-designated as General Manager - Finance 10. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS As per the provisions of Section 186 of the Companies Act, 2013 the details of loans 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. 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 vigil mechanism through "WABCO Whistle Blower Policy" to deal with instance of fraud and mismanagement, if any and the whistle blower shall have direct access to the Chairman of the audit committee / chief ethics officer of the Company as the case may be to report any concerns or unethical activities. 13. STATUTORY STATEMENTS 13.1 Conservation of energy, technology absorption and foreign exchange earnings and outgo Information regarding conservation of energy, technology absorption, research & development expenses and foreign exchange earnings and outgo are given in Annexure 1 to this report, as per the requirements of Section 134(3)(m) of the Act, 2013. 13.2 Corporate Social Responsibility The Company focuses on CSR activities as specified in Schedule VII of the Companies Act, 2013 and the Company's CSR policy. As required under Section 134(3)(o) of the Companies Act, 2013, details about policy developed and implemented by the Company on Corporate Social Responsibility initiatives taken during the year ended 31st March, 2016 are given in Annexure 2 to this report. 13.3 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, 2016 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. DISCLOSURES UNDER COMPANIES ACT, 2013 14.1 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. 14.2 Number of Board Meetings The Board of Directors met four times during the year 2015-16. The details of the Board meetings and the attendance of the Directors are provided in the Corporate Governance Report. 14.3 Committees of Board of Directors Details of memberships and attendance of various committee meetings are given in Corporate Governance Report. 14.4 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 2016 and transactions proposed to be entered into during the year ending 31st March 2017 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. POLICIES 15.1 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 Code of Business conduct and Ethics by the Board members and Senior Management. Policy on Criteria for Determining Materiality of Events 15.2 Policy on director appointment and remuneration Company's policy on directors' appointment and remuneration including criteria determining for 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. PARTICULARS OF DISCLOSURES AS REQUIRED UNDER SECTION 197 OF THE COMPANIES ACT, 2013 16.1 The percentage increase in the median remuneration of employees in the financial year: 16.07% 16.2 The number of permanent employees on the rolls of company as on 31st March 2016: 1515 16.3 The explanation on the relationship between average increase in remuneration and company performance: The Company's total revenue grew by 36.9% against which the average increase in remuneration is 11.63%; and this increase is aligned with the Remuneration Policy of the Company. 16.4 Comparison of the remuneration of the Key Managerial Personnel against the performance of the company: During the Financial year 2015-16, the Company's total revenue grew by 36.9% and the percentage of increase in remuneration of 165 The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year: Nil 16.6 Variations in the market capitalization of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase or decrease in the market quotations of the shares of the Company in comparison to the rate at which the company came out with the last public offer / demerger: 16.7 No employee is in receipt of remuneration over and above the managerial remuneration received by executive director of the Company. 16.8 Average percentage increase already made in the salaries of employees other than the managerial personnel in the last financial year: 12% Percentage increase in the managerial remuneration in the last financial year was 2.2%. Mr. R S Rajagopal Sastry was appointed as the Chief Financial Officer in place of Mr. T S Rajagopalan and Mr. M C Gokul was appointed as the Company Secretary in place of Mr. N Sivalai Senthilnathan during the financial year 2015-16. There are no exceptional circumstances for increase in the managerial remuneration. 16.9 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 are 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. 16.10 The remuneration of directors and employees are as per the remuneration policy of the Company. 16.11 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, 2016, is given in annexure 5 and forms part of this Report. 17. CORPORATE GOVERNANCE The Company has complied with the provisions of the Listing Regulation 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 Regulation pertaining to CEO / CFO certification for the financial year ended 31st March 2016. The management discussion and analysis report, as required by the Listing Regulation and various disclosures required under the Companies Act, 2013 is also attached and forms part of this report. 18. 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. Further, regulatory updates are periodically placed before the Board. The Company also issues appointment letter to the Independent Directors which also incorporates their role, duties and responsibilities. 19. ACKNOWLEDGEMENT 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 hereby place on record their profound appreciation for the valuable services rendered by Mr. D E Udwadia during this tenure as director. 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 M. Lakshminarayan Chairman PLACE : Chennai DATE : 19th May, 2016 |