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Wheels India Ltd.

BSE: 590073 | NSE: WHEELS |

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Series: EQ | ISIN: INE715A01015 | SECTOR: Auto Ancillaries

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Annual Report

For Year :
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Director’s Report

The Directors present their Fifty Seventh Annual report and the Audited Accounts of your Company for the year ended March 31, 2016.


Sales for the year under review were Rs, 1,981 crores compared to Rs. 1,944 crores in the last year showing an increase of 2% when compared with the previous year.

Financial Results

The financial results of your Company for the year under review are as below:

(Rs in Crores)



Gross profit before finance cost and depreciation



Finance Costs






Profit before tax for the year



Profit after tax for the year



Transfer to General Reserve



Dividend and transfer to General Reserve

The Board approved an Interim Dividend of Rs 3.50 per equity share (35%) in February 2016, which was paid to the shareholders in March 2016.

Your Directors are pleased to recommend a final dividend of Rs. 5.50 per equity share (55%) for the year ended 31st March, 2016. The final dividend recommended, if approved at the 57th Annual General Meeting, will be paid to all the shareholders whose name appears in the Register of members as on the book closure date. The total dividend for the financial year including the proposed final dividend will absorb Rs. 10.83 crores and dividend distribution tax of Rs 2.21 crores.

The Company proposes to transfer an amount of Rs 25 crores to the General Reserves. An amount of Rs. 11.58 crores is proposed to be retained in the Statement of Profit and Loss.

Management Discussion and Analysis

In 2015, the global economy was estimated to have grown at 3.1%. The year was characterized by low commodity prices and a resilient US economy tempering the effect of a slowdown in China. The Indian economy is estimated to have grown at 7.6% in 2015-16, compared to 7.2% in the previous year. The services sector continued to be the major driver for India''s GDP growth, with manufacturing and agricultural sectors remaining relatively flat. Inflation remained under control with declines in both the Consumer Price Index and the Wholesale Price Index. The country''s economic fundamentals strengthened with a narrowing current account deficit.

The India vehicle industry saw 28% growth in the medium and heavy commercial vehicle segment, following healthy growth in the previous year. The replacement of vehicles were in full swing with lower fuel prices, phased introduction of BS IV norms, resumption of mining activity, and an acceleration of road building activity in the latter part of the year. While the demand was essentially replacement demand there were segments that saw growth due to an upswing of economic activity in pockets of industry.

The demand for light commercial vehicles tends to lag the demand for medium and heavy commercial vehicles through business cycles. The latter part of the last financial year, saw the replacement cycle in this segment kick in, resulting in a 10% growth in the segment. The small commercial vehicle segment which has declined over the last few years, saw a bottoming out and demand there has marginally increased.

The passenger vehicle segment saw a 7% growth with the two leading manufacturers consolidating their market positions with new products. The year was characterized by the noticeable shift towards petrol vehicles as the cost differential between petrol and diesel narrowed, and as the Supreme Court banned sale of diesel vehicles in the NCR. The demand for steel wheels was further affected by alloy wheel fitment on passenger vehicles crossing 22%.

The tractor segment declined by 9% as we had another year of sub-optimal and erratic monsoons and weak commodity prices. There was significant agrarian distress that badly affected the rural economy. The low international commodity prices affected the tractor industry globally as production volumes dropped at all major customers.

The global earthmoving and mining equipment business declined governed by low commodity prices and low economic activity in key markets. The majority of your company''s production of wheels for this industry segment is for export markets. In India, while the prospects for both construction and mining equipment remain positive, the actual domestic production remained flat.

The demand for buses with air suspension system remained flat in the current year, due to limited central government fund allocation. We continue to service the spares for the growing fleet of vehicles fitted with our air suspension systems Your company started manufacturing of lift axle air suspension systems, and this segment grew in line with the growth in the heavier tonnage trucks.

The thermal power equipment market continued to struggle due to the financial stress in the sector. However, the wind equipment segment continued to grow and your Company continues to increase the number of different components and customers we service in this segment.

The year saw low commodity prices with a double digit reduction in steel cost over the year which reflected in lower wheel prices. The reduction in steel scrap rates was significantly more than the raw material cost reduction, adversely affecting the Company''s profitability.

In terms of value, there was only a marginal sales growth in the year under review, due to the deflationary effect of lower commodity prices. There was a decent volume growth especially in the commercial vehicle segment, which more than offset the decline in other segments. The energy component business of your company also showed strong growth driven by growth in the windmill installations in the country.

In the commercial vehicle segment, the growth allowed your company to better utilize capacities, as we grew our wheel production in line with the small, medium and heavy commercial vehicle growth. In the light commercial vehicle segment, we were able to ramp up our production and increase our penetration in this segment. In the passenger car segment, with the increased aluminum wheel fitment, we saw a marginal decline in demand for your Company''s steel wheels. There was decline in the tractor market due to the stress in the agrarian economy.

In the construction and mining equipment segment, in spite of widening product portfolio, your Company''s sales followed the decline of these segments globally. This segment along with the decline in the agricultural tractor market overseas, resulted in your Company''s exports declining for the first time in this decade.

While low capacity utilization in the tractor and passenger car wheel market continue to affect profitability, there was a significant improvement on this front in the commercial vehicle wheel segment.

The year under review saw the company continue to exercise tight controls over major costs, through its structured cost review process. There was a continued focus on safety and quality at your Company''s manufacturing plants. In recognition of its performance, your Company received customer awards from Caterpillar, Daimler, Hyundai, TAFE, Mahindra & Mahindra, Toyota Kirloskar and General Motors.

In the coming year, the economic survey tabled in the Parliament projected GDP growth at only marginally higher than the last financial year, with a normal monsoon coupled with a gentle cyclical upswing in the economy. We expect the commercial vehicle market to continue to grow healthily, albeit at a lower rate than the last year due to a base effect. There is also expected to be some growth in road-building, resulting in domestic demand for both tippers and construction equipments. This will ensure that there is some growth in the construction wheel business of your Company, in the coming year, despite continued negative sentiment in this segment globally.

The expected normal monsoons should help fuel the agrarian economy towards the latter part of the coming year. This should help fuel some growth in agricultural tractors, after two successive years of decline. Your company also expects some growth in exports in the coming year, with a base effect in the off-highway segments, and growth projected in the forged aluminium truck wheel business. The air suspension business will grow largely due to the effect of full year volumes in the lift air suspension business. The prospects for the energy component business is expected to remain strong with increased windmill installations in the country, following a renewable energy friendly environment.

The challenges for your Company in addition to ramping up in a timely manner to meet the expected increase in commercial vehicle wheels, especially towards the end of the year, prior to the April 2017 BS IV deadline, is the expected steel price increases fuelled by changes in import policy. The government towards the end of the last financial year put in place a minimum import price and a safeguard duty on import of steel. The government policy towards protecting the steel industry is likely to continue in the coming year. While your Company will work on recovering these cost increases from customers, it will strain the working capital requirements in the coming year.

Fixed Deposits

As at 31st March, 2016, fixed deposits accepted by the Company from public and shareholders aggregated to

Rs 97.35 crores, which are within the limits prescribed under the Companies Act, 2013 (“2013 Act”) and the rules framed there under.

The provisions of the 2013 Act also mandate that any Company inviting/ accepting/ renewing deposits is required to obtain Credit Rating from a recognized credit rating agency. Your Company has obtained a credit rating for its fixed deposits from ICRA.

The details relating to deposits covered under Chapter V of the 2013 Act are given in Annexure I forming part of this Report.

particulars of Loans, Guarantees or Investments

The Company has not given any loans or guarantees covered under the provisions of Section 186 of the 2013 Act. The details of the investments made by Company are given in the notes to the financial statements.

Consolidated Financial Statements

In accordance with the provisions of Section 129(3) of the 2013 Act, the consolidated financial statements drawn up in accordance with the applicable Accounting Standards, form part of the Annual Report.

In accordance with the provisions of Section 136 of the 2013 Act, the audited financial statements, including the consolidated financial statements and related information of the Company and audited financial statements will be available on our website These documents will also be available for inspection during business hours at the registered office of the Company.

A statement containing the salient features of the financial statements of the Associate Company is provided in Form AOC1, vide Annexure II of this report. During the year under review Sundaram Hydraulics Limited ceased to be an Associate of your Company


Under Article 94(3) of the Company, Mr S Ram (DIN00018309) retires by rotation and being eligible, offers himself for re-election. Brief resume of the Director proposed to be appointed along with additional information pursuant to SEBI (Listing Obligations & Disclosure Requirements Regulations) 2015 (“SEBI LODR”) is given in the Corporate Governance Report.

All Independent Directors have given declaration that they meet the criteria of independence as laid down under Section 149(6) of the 2013 Act.

Board Evaluation

Pursuant to the provisions of Section 134(3)(p), Section 149(8) and Schedule IV of the 2013 Act, SEBI LODR Annual Performance Evaluation of the Board, the Directors as well as Committees of the Board have been carried out.

The Performance Evaluation of the Independent Directors was carried out by the entire Board and the Performance Evaluation of the Chairman and Non Independent Directors was carried out by the Independent Directors. The criteria and manner in which the evaluation has been carried out are provided in Annexure I forming part of this Report.

Remuneration policy

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Company''s policy on appointment and remuneration including criteria for determining qualifications, positive attributes and independence are provided in the Corporate Governance Report forming part of this Report. The policy is given as Annexure III forming part of this Report

Corporate Social Responsibility

As part of its initiatives under Corporate Social Responsibility (CSR), the Company has undertaken various projects in accordance with Schedule VII of the 2013 Act.

The Board of Directors of your Company constituted the CSR Committee to help the Company to frame, monitor and execute the CSR activities. The Board of your Company has further approved the CSR Policy of the Company to provide guidelines for CSR activities of the Company. The Committee defines the parameters and observes them for effective discharge of the social responsibility of your Company.

Your Company has fulfilled its obligation towards CSR by spending a sum of Rs 83.77 lakhs during the year. The constitution of the CSR Committee and the report as required under the 2013 Act, are provided in Annexure IV, forming part of this Report.

Risk Management, Internal Financial Control Systems and Audit

Your Company has implemented a mechanism for risk management and has formulated a Risk Management Policy. The Policy provides for identification of risks and mitigation measures. The Audit committee is informed on the risk assessment and minimization mechanism adopted by the Company.

As part of the compliance initiatives your Company has started the process of implementing IT based Governance, Risk and Compliance (GRC) software across its multiple locations. The Project has multiple phases covering risks & compliance across manufacturing, finance, logistics and IT processes. The benefits of implementing GRC is multi fold and management has clear insights on the various practices and improvements in different divisions of business

Your Company maintains an adequate and effective Internal Control System commensurate with its size. The Internal Control System provides a reasonable assurance to the effect that the transactions are executed with the authorizations and are recorded in all material respects to permit preparation of financial statements in conformity with established accounting principles and that the assets are secured and safeguarded against any misuse or loss . The internal control system is supplemented through an extensive internal audit programme and periodic review by the Management and Audit Committee. The Company has in place adequate internal financial controls and during the year, such controls were tested and no reportable material weakness was observed.

Vigil Mechanism / Whistle Blower policy

In accordance with the requirements of the 2013 Act, your Company has established a Vigil Mechanism/ Whistle Blower Policy for Directors and Employees to report genuine concerns. The said Policy meets the requirement of the Vigil Mechanism framework under the 2013 Act, and the members can view the details of the policy on

Director''s Responsibility Statement

The Directors acknowledges their responsibility of ensuring compliance with the provisions of Section 134(3)(c) of the 2013 Act. To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the 2013 Act :

a. that in the preparation of the annual financial statements the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b. that such accounting policies as mentioned in the financial statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2016 and of the profit of the Company for the year ended on that date;

c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the 2013 Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that the annual financial statements have been prepared on a going concern basis;

e. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

f. that proper systems are in place so as to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

Related party Transactions

The Company has formulated a policy on related party transactions and the same is uploaded on the Company''s website

All Related Party transactions that were entered into by the Company during the financial year 2015-16, were in compliance of Section 188 of the 2013 Act and the Rules framed there under . There are no “Material” contracts or arrangement or transactions at arm''s length basis and hence disclosure in form AOC-2 is not required.

All Related Party transactions were placed before the Audit Committee for their prior approval in accordance with the requirements of the SEBI LODR. The transactions entered into pursuant to such approval are placed periodically before the Audit Committee for its review.

There are no materially significant related party transactions made by the Company with Promoters, Directors and Key Managerial Personnel which may have a potential conflict with the interest of the Company at large.

Meetings of the Board

The Board meets at regular intervals to discuss and decide on Company / business policy and strategy apart from other businesses. The Board / Committee Meetings are pre-scheduled and a tentative annual calendar of the Board and Committee Meetings are circulated to the Directors in advance to facilitate them to plan their schedule and to ensure meaningful participation in the meetings.

Resolution passed by Circulation: In case of special and urgent business need, the approval of the Board/ Committee is taken by passing resolutions through circulation, as permitted by law, which are confirmed in the subsequent meeting. The details of the meetings of the Board as well as the Committees are disclosed in the Corporate Governance Report, forming part of this Report.

Significant and Material Orders Passed by the Regulators or Courts

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations. There are no material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this report.

Employees and details of Remuneration

In accordance with the provisions of the first proviso to section 136(1) of the Act, the Directors'' Report is being sent to all the shareholders of the Company excluding the statement prescribed under Rule 5 (2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The said statement is available for inspection by the members at Registered Office during office hours till the date of Annual General Meeting.

The information required pursuant to Section 197 of the 2013 Act read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, is provided in Annexure V forming part of this report.

Disclosure under the Sexual Harassment of Women at Workplace (prevention, prohibition and Redressal) Act, 2013

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year under review, there were no cases filed pursuant to the above Act.

Corporate Governance

In pursuance to SEBI LODR, Corporate Governance Report is given in Annexure VI and forms part of this Report.


M/s. Sundaram & Srinivasan, Chartered Accountants, Chennai retire at the conclusion of the Fifty Seventh Annual General Meeting and are eligible for reappointment. The Company has received necessary certificate from the Auditors under Sections 139 and 141 of the 2013 Act, to the effect that they satisfy the conditions under the 2013 Act and the rules made there under for the above appointment. The Directors recommend their re-appointment.

As required under the SEBI LODR, the Statutory Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

Cost Audit

Pursuant to Section 148 of the Companies Act 2013 read with the Companies (Cost Audit and Record) Rules 2014, the cost records and the accounts maintained by the Company are required to be audited. Your Company has appointed M/s. Geeyes and Co, Cost and Management Accountants to audit the cost records and the accounts maintained by the Company for the financial year ended 31.3.2016. The report of the said Cost Auditor will be filed with the Central Government in accordance with the rules framed there under.

Secretarial Audit

Pursuant to the provisions of Section 204 of the 2013 Act and the rules framed there under, the Company appointed M/s. S Dhanapal & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is given in Annexure VII and forms part of this Report.

Comments on Auditors'' report

There are no qualifications, reservations or adverse remarks or disclaimers made by the Statutory Auditors and Company Secretary in Practice in their reports respectively. The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company in the year under review.


Having embarked on a journey to transform the safety culture and practices of the Company in consultation with DuPont, the year saw a consolidation of the good work practices and ethics towards safety culture.

Employees have been encouraged to practice safety in all their activities in and out of company premises. Continuous safety training is conducted at all levels and special emphasis is given to implementation of safety work standards. Company also rewards best safety performers, from different groups of employees regularly. By all these, a significant change in the mind set of employees towards better safe work environment is cultivated

Extract of Annual Return

The details forming part of the extract of the Annual Return in Annexure VIII forms part of this Report


Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and outgo as required under Section 134(3)(m) of the 2013 Act, read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are enclosed as Annexure IX and forms part of this report. The Directors wish to thank United Bank of India, State Bank of India, Standard Chartered Bank, HDFC Bank, other Banks and financial institutions for their continued support.

Your Company continues to have the full co-operation of all its employees. The Directors would like to place on record their appreciation of the efforts of the employees in controlling costs and improving the profitability of the Company.

On behalf of the Board of Directors Chennai

S Ram

May 25, 2016 Chairman

DIN 00018309

Director’s Report