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WABCO India Ltd.

BSE: 533023 | NSE: WABCOINDIA |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE342J01019 | SECTOR: Auto Ancillaries

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Annual Report

For Year :
2019 2018 2017 2016 2015 2014 2013 2012 2011

Director’s Report

Directors’ report to the shareholders

The directors have pleasure in presenting the Fifteenth annual report and the audited financial statements for the financial year ended 31st March 2019.

1. FINANCIAL HIGHLIGHTS

Rs. in lakhs

Details

Year ended 31.03.2019

Year ended 31.03.2018

Revenue from Operations

2,85,413.56

2,61,384.81

Other Operating income

7,247.53

4,652.78

Total revenue from operations

2,92,661.09

2,66,037.59

Profit before interest, depreciation and tax

48,235.10

44,513.85

Finance costs

Nil

161.74

Depreciation

7,143.69

6,173.69

Profit before tax

41,091.41

38,178.42

Provision for taxation (including deferred tax and tax relating to earlier years)

12,874.48

10,895.79

Profit after tax

28,216.93

27,282.63

Other Comprehensive Income / (Loss) for the year net of tax

(197.96)

(73.52)

Total Comprehensive Income for the year Net of Tax

28,018.97

27,209.11

2. DIVIDEND

The board of directors has recommended a dividend of (Rs.9/- per share) for the year ended 31st March 2019 absorbing a sum of Rs.1,707.08/- Lakhs (excluding dividend tax) for approval of the shareholders at the ensuing annual general meeting.

3. PERFORMANCE

During the year 2018-19, sales of medium and heavy commercial vehicles (M & HCV) grew by 11.4% over the previous year. The Company achieved total income of Rs.2927 crores as against Rs.2660 crores in the previous year, an increase of 10%.

4. AGREEMENT FOR ACQUISITION OF WABCO HOLDINGS Inc.

On 28th March 2019, WABCO Holdings Inc., US the ultimate parent company of WABCO India Ltd., had announced to the New York stock exchange through a press release that it has entered into a definitive merger agreement with ZF Friedrichshafen AG (“ZF”), a privately held global leader in driveline and chassis technologies.

Under the agreement, ZF will acquire all outstanding shares of WABCO Holdings Inc., US for Rs. 136.50 per share in an all-cash transaction for an equity value of over Rs. 7 billion.

The transaction, once consummated, will bring together two global technology leaders with highly complementary and innovative technology offerings to address future serving OEMs and fleets in the automotive and commercial vehicle industry, combining WABCO’s capabilities in commercial vehicle safety and efficiency, including technologies involved in vehicle dynamics control, active air suspension systems, and fleet management systems with ZF’s leading position in driveline and chassis technologies for cars and commercial vehicles. The transaction, which has been unanimously approved by the Board of Directors of WABCO Holdings Inc., US, is expected to close in early 2020 subject to approval by the shareholders, customary closing conditions, and regulatory approvals.

The said transaction, will result in the indirect acquisition by ZF of WABCO Asia Private Limited, an indirect subsidiary of WABCO Holdings Inc., US and holds 75% of the voting share capital of WABCO India Ltd. Accordingly, upon the completion of the said transaction, ZF will be entitled through WABCO Asia Private Limited to

(a) indirectly exercise 75% of the voting share capital

(b) indirectly exercise control over WABCO India Limited.

Hence, under Regulations 3(1), 4 and 5(1) of the SEBI (SAST) Regulations, a public announcement of an open offer for the acquisition of up to 47,41,900 fully paid-up equity shares of face value of Rs. 5/each of WABCO India Limited, representing 25% of the total voting equity capital of WABCO India Limited, comprising fully of public shareholders was given by ZF Friedrichshafen AG on 2nd April 2019 at Rs. 6,318/- per share. This public announcement excluded the promoters / promoter group of WABCO India Limited.

5. CAPITAL EXPENDITURE

Capital expenditure of Rs. 117.84 crores was incurred during the year 2018-19 as against the plan of Rs. 125.50 Crores and Capital Expenditure of Rs. 119.7 Crores is planned for the year 2019-20.

6. DIRECTORS

Mr. M Lakshminarayan and Mr. Narayan K Seshadri were appointed as Independent Directors at the Annual General Meeting held on 22nd July 2014 for a term of five consecutive years from 1st April 2014 upto 31st March 2019. They are eligible to be re-appointed for another term of 5 consecutive years. On recommendation of the Nomination &Remuneration Committee, the Board had after satisfying their independence criterion at their meeting held on 29th January 2019 have reappointed Mr. M Lakshminarayan for a term of five consecutive years from 1st April 2019 upto 31st March 2024 and Mr. Narayan K Seshadri for a term of one year from 1st April 2019 upto 31st March 2020 subject to the approval of shareholders at the ensuing Annual General Meeting.

Dr. Christian Brenneke and Mr. Philippe Colpron have been appointed as Additional Directors in terms of Section 161 of Companies act 2013 at the Board Meeting held on 29th of January 2019, who will hold office upto the ensuing Annual General Meeting. They being eligible and willing to be re-appointed as directors at the ensuing Annual General Meeting have offered themselves for re-appointment.

Mr. Jorge Solis and Mr. Shivram Narayanaswami have resigned from the Board with effect from 29th January 2019 due to their other commitments. Your Board of Directors places on record their appreciation for services rendered by Mr. Jorge Solis and Mr. Shivram Narayanaswami during their tenure as Directors of the Company.

Mr. Sean Ernest Deason retires by rotation at the ensuing Annual General Meeting of the Company, being eligible and willing offers himself for re-appointment.

Mr. P Kaniappan was appointed as the Managing Director at the Annual General Meeting held on 22nd July 2014 for a term of five years with effect from 17th June 2014 upto 16th June 2019. Based on the recommendation of the Nomination & Remuneration Committee, the Board had on 7th May 2019 reappointed Mr. P Kaniappan as the Managing Director for a term of five years from 17th June 2019 upto 16th June 2024 subject to the approval of shareholders at the ensuing Annual General Meeting.

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 re-appointed 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.

7. AUDITORS

M/s. S R Batliboi & Associates LLP, Chartered Accountants were appointed as Statutory Auditors of the Company by the shareholders for a term of five years from the 10th Annual General Meeting upto the conclusion of the 15th Annual General Meeting in terms of Section 139 of the Companies Act, 2013. M/s. S R Batliboi & Associates LLP would retire at the conclusion of the forthcoming 15th Annual General Meeting and they do not seek reappointment. Your Board of Directors places on record their appreciation for the services rendered by M/s. S R Batliboi & Associates LLP, Chartered Accountants as the Statutory Auditors of the Company.

In view of the mandatory requirement, your directors have recommended appointment of M/s B S R & Co., Chartered Accountants, 5th Floor, LodhaExelus, Apollo Mills Compound, N.M. Joshi Marg, Mahalakshmi, Mumbai - 400011 holding Firm Registration No 101248W / W-100022 as Statutory Auditors of the Company at the Board Meeting held on 25th May 2019, for a period of 5 (five) consecutive years from conclusion of 15th annual general meeting upto the conclusion of the 20th Annual General Meeting, subject to approval of the shareholders at the ensuing Annual General Meeting.

8. 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 2018-19 and submitted their report, which is annexed to this report. The report does not contain any qualification.

The Board confirms compliance with the Secretarial Standards notified by the Institute of Company Secretaries of India, New Delhi.

9. COST AUDITOR

Mr. A.N. Raman was appointed as the cost auditor for the year 2018-19. Pursuant to Section 148 of the Act, the Board of Directors of the Company upon recommendation made by the audit committee has appointed M/s A N Raman & Associates, Cost Accountants, as Cost Auditor of the Company for the financial year 2019-20 and has recommended the remuneration to the shareholders for approval at the ensuing Annual General Meeting.

10. KEY MANAGERIAL PERSONNEL

Mr. P Kaniappan - Managing Director

Mr. R S Rajagopal Sastry - Chief Financial Officer

Mr. M C Gokul - Company Secretary

11. 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.

12. ANNUAL 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 Chairman who were evaluated on parameters such as attendance, contribution at the meetings, independent judgment and other relevant aspects as laid down under the Guidance note issued by SEBI in this regard.

The Board was satisfied with the evaluation results, which reflected the overall engagement of the Board, Committees and the directors with the Company.

13. 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.

14. BUSINESS RESPONSIBILITY

The Company is one among the top 500 listed companies as per the market cap as on 31st March 2019 and hence as per the Listing regulation a Business Responsibility Report forms part of the annual report. 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 2018-19 are provided in the Business Responsibility Report.

15. STATUTORY STATEMENTS

15.1 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.

15.2 Corporate Social Responsibility

The Company focuses on CSR Activities as specified in scheduled VII of the Companies Act, 2013 and the Companies CSR Policy. As required under Section 134(3)(o) of the Act, details about the policy developed and implemented by the Company on Corporate Social Responsibility initiatives taken during the year ended 31st March, 2019 are given in Annexure 2 to this report.

15.3 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, 2019 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.

16. DISCLOSURES UNDER COMPANIES ACT, 2013

16.1 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.

16.2 Number of Board Meetings

The Board of Directors met five times during the year 2018-19. The details of the Board meetings and the attendance of the Directors are provided in the Corporate Governance Report.

16.3 Committees of Board of Directors

Details of memberships and attendance of various committee meetings are given in Corporate Governance Report.

16.4 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 2019 and transactions proposed to be entered into during the year ending 31st March 2020 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.

The Company pays royalty to M/s WABCO Europe BVBA a fellow subsidiary and related party at the rate of 4% per annum on the net sales (Total sales (less) intercompany sales (less) intercompany purchases) effective 1st January 2016 for the intellectual property, knowhow and processes supplied by WABCO Europe BVBA. M/s WABCO Europe BVBA charges Royalty to all its associated entities in line with the global practices and transfer pricing norms.

All transactions with related parties are placed before the audit committee and prior approval of the audit committee is obtained. The Company has in place 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.

17. POLICIES

17.1 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

17.2 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.

18. PARTICULARS OF DISCLOSURES AS REQUIRED UNDER SECTION 197 OF THE COMPANIES ACT, 2013

18.1 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:

Name

Ratio

Mr. P. Kaniappan, Managing Director

29.27:1

Mr. M. Lakshmi Narayan, Independent Director

2.28:1

Mr. Narayan Seshadri, Independent Director

2.06:1

Dr. Lakshmi Venu, Independent Director

2.16:1

Directors other than those mentioned above have not drawn any remuneration for the financial year 2018-19.

18.2 The percentage increase in remuneration of each Director, Managing Director, Chief Financial Officer, Company Secretary, in the financial year:

Mr. M. Lakshminarayan, Chairman

15.28%

Mr. Narayan K Seshadri, Director

14.63%

Dr. Lakshmi Venu

15.38%

Mr. P. Kaniappan, Managing Director

15.02%

Mr. R.S Rajagopal Sastry, Chief Financial Officer

21.61%

Mr. M.C Gokul, Company Secretary

11.52%

18.3 The percentage increase in the median remuneration of employees in the financial year: 12%

18.4 The number of permanent employees on the rolls of company as on 31st March 2019 : 1778

18.5 Average percentage increase already made in the salaries of employees other than the managerial personnel in the last financial year: 7.1%

Percentage increase in the managerial remuneration in the last financial year was 16.1%. There are no exceptional circumstances for increase in the managerial remuneration. With respect to the Managerial Personnel, 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 based on their individual performance and the performance of the Company.

18.6 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, 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.

18.7 The remuneration of directors and employees are as per the remuneration policy of the company.

18.8 Particulars of Employees

The statement of particulars of employees as per Section 197 of the Companies Act, 2013, read with Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014, for the year ended 31st March, 2019, is given in annexure 5 and forms part of this Report.

19. 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 2019. Further, applicable Secretarial Standard have been complied with.

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.

20. 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, updates on regulatory changes are also periodically placed before the Board. The details of familiarisation have been hosted in the web site of the Company under the web link http://wabco-auto.com/investor-relations/wabco-india-investor-relations

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. 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

P KANIAPPAN NARAYAN K SESHADRI

Managing Director Director

Chennai 25th May 2019

Director’s Report