DIRECTORS' REPORT TO THE MEMBERS The Directors of the Company have the pleasure in presenting their 62nd Annual Report on the business and operations of the Company for the financial year ended 31st March, 2016 OPERATIONS DOMESTIC The operations of the Company were subdued due to the uncertain global and domestic environment. The Indian economy underwent a year of consolidation wherein the major challenge of non-performing loans was addressed by the Government along with a push to public investment which was hitherto lacking. The immediate fall out was a lack of private investment affecting demand for capital goods. However, during the second half of the year there was a noticeable uptick in new projects and the situation looks improved especially in the water and wastewater sectors. INTERNATIONAL The Company has been consolidating its domestic business in line with the market environment while expanding its global foot print. In line with its strategy, the Company acquired Gruppo Aturia, a mid-sized Italian group of Pump Companies with annual revenues of 50 million Euros . This acquisition has benefitted the Company with access to technology and markets in Europe and the MENA region. The performance of the International business was greatly affected by the losses at Mathers Foundry, UK due to the drastic fall in crude oil prices which lead to a fall in its order book and sales . The other businesses were also affected by the turmoil in global markets in the second half of the year. DIVIDEND After considering the performance of the year, cash flow, increased share capital and necessity to augment its working capital to sustain the growth of activities in the coming year, the Directors of the Company are pleased to recommend dividend of two rupees per share for the year ended 31st March, 2016. The Dividend, if approved at the forthcoming Annual General Meeting, will be paid to those shareholders whose names are registered at the close of the business on 5th August, 2016 or to their mandates subject however, to the provisions of Section 126 of the Companies Act, 2013. TRANSFER OF UNPAID AND UNCLAIMED DIVIDEND TO IEPF Pursuant to the provisions of Section 124(5) of the Companies Act, 2013, dividend which remains unpaid or unclaimed for a period of seven years from the date of its transfer to unpaid dividend account is required to be transferred by the Company to "Investor Education and Protection Fund" (IEPF) established by the Central Government under the provisions of Section 125 of the Companies Act, 2013. During the year no amount was due to transfer to IEPF. However, Dividend remaining unpaid/ unclaimed relating to financial year 2008-09 will be transferred to IEPF in the month of September, 2016. MANAGEMENT DISCUSSION AND ANALYSIS REPORT As required by Schedule V(B) under Regulation 34(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management discussion and analysis report for the year under review is appended below: A. BUSINESS The company is engaged in the business of fluid handling - from supply of pumps to turnkey project execution. It supplies a comprehensive range of pumps to the Industrial, municipal, irrigation and power sector. The company also has a strong project division which undertakes water management contracts in the above sectors. B BUSINESS ENVIRONMENT The domestic market in 2015-16 continued to face headwinds due to policy issues and this led to a slowdown in the infrastructure and capital goods sector. Further due to low spending by Government and subdued demand scenario during first half of the year, private sector investment was sluggish. With the improvement on both fronts consequent on major push for "make in India" by the Government, and emphasis laid by the Government to carry Swachh Bharat programme, planning on new projects has been initiated and we expect a robust environment for the Company in the near term in anticipation of major spending by Government in infrastructure and capital goods sectors. C. OPERATIONAL REVIEW DOMESTIC OPERATIONS The performance of the domestic business was affected by the prevailing low economic activity environment in the Country coupled with a freeze on new power sector investments due to various Government policies. The Company consolidated its domestic business by focusing on completing old projects and expanding market presence and product portfolio. The revenues for 2015-16 were lower by 10% at 218.35 Crores. However, the PBT was higher at 25.58 Crores due to operational efficiencies. The order booking has improved over the second half of the year and the Company looks much improved performance going forward. The Company is seeing demand traction uniformly across its three divisions with a major thrust in the Infrastructure division with large orders in the municipal and irrigation sectors. ENGINEERED PUMP DIVISION The Engineered Pump division is executing large pump turbines for Pranahita Chevalla Irrigation scheme in technical collaboration with Mitsubishi Heavy Industries , Japan. The pumps are being used to achieve part of the river linking scheme in Telengana. STANDARD PUMP DIVISION The Standard Pump division achieved good successes with supply of large submersible pumps to SCCL for mine dewatering and sea water CW pumps to Bangladesh . INFRASTRUCTURE DIVISION The Infrastructure division completed most old projects and got two large orders from J&K ERA for drainage pumping projects in Srinagar and PHED, Rajasthan for water supply scheme in Bhiwadi . It has also started work on the Pranahita Chevalla Lift Irrigation projects in Telengana which are now on fast track. INDIAN SUBSIDIARY MODY INDUSTRIES The business performance was affected by the slowdown and revenues dropped by 10%. However, a strong order book should allow it to bounce back in 2016-17. New product development is proceeding well. CLYDE INDIA The operations of the Company continues to be affected by the slow- down in power and capital goods sector. Steps are being taken to overcome the situation. INTERNATIONAL OPERATIONS The acquisition of Gruppo Aturia was an important milestone for WPIL as it allows access to new technologies such as API Pumps, magnetic drive Pumps , FM/UL fire systems and canned motor Pump . Similarly, it opens new markets across Europe and MENA region. The acquisition was successfully completed and with full credit to the Aturia and Rutschi team the transition was smooth. Large number of strategic initiatives are already under implementation. UK business of the Company started the year well however, lost traction due to the drastic fall in crude prices. The main business of the Company is supply of high integrity components to the Oil &Gas, nuclear industry and its order book fell rapidly. The management went through a restructuring to reduce costs and is looking for a recovery in its market sector. However, the management is also exploring other options to be better prepared in case the glut continues. Other businesses of the Company performed in line. Its Australian entity, Sterling saw a decent year and is looking at opportunities in the Irrigation and Municipal Sectors next year to grow . South African APE Pumps and M&P SA saw a dip in their revenues due to the drastic devaluation of the Rand, however maintained margins with a focus on aftermarket business. Thai joint venture of the Company had a good year and is optimistic about growth with a good order book. The outlook for the current year is more robust with the addition of the Gruppo Aturia business. D. FUTURE OUTLOOK After a disappointing period of two years, the domestic outlook is looking promising and the Company starts the year with a good order book. Various initiatives by the Government to enhance water supply and sewage schemes coverage should provide growth going forward. The International business is now strong with the acquisition of Gruppo Aturia and an increasing number of opportunities augurs well for the future. E. OPPORTUNITIES AND THREATS, RISKS AND CONCERNS The business of water and pumps is growing rapidly with the pace of urbanization and depletion of fresh water supplies. WPIL with its expanded presence and product offering is well placed to benefit from this growth. The biggest concern is the present speed of change and the impact of global events. It is more intense and with minimal response time. It is tougher to respond to evolving times. F. INTERNAL CONTROL SYSTEM The Company has in place adequate system of internal control through the process of Operational Internal Audit and the same is monitored by the Internal Audit conducted by external professional audit firm, which independently reviews and strengthens the control measures. Internal Audit of all operational units was carried out during the year under report as per the scope approved by the Audit Committee of Directors. The internal audit teams regularly briefs the management and the Audit Committee on their findings and also recommend the steps to be taken with regard to deviations, if any. Internal Audit Reports are regularly submitted for perusal of Senior Management to initiate appropriate action as required. G. HUMAN RESOURCES AND INDUSTRIAL RELATIONS The People process is at the heart of Company's successful story. The Company lays significant importance for all round developments of its Human Resources with special emphasis to train the employees at all levels to enhance their effectiveness in their contribution to the overall performance of the Company through skill up-gradation, knowledge improvement and attitudinal change. These enable the employees at all levels to cope with the competitive environment through which the Company is passing at present and to achieve the desired corporate objective. The industrial relations climate in the Company continued to remain harmonious and cordial. The Company has a vibrant atmosphere and able to face challenges of economic downturn with fortitude. Various welfare measures and recreational activities are also being continued side-by side of production to maintain such relations. The Company had 434 employees on the roll at the end of the year under review as against 434 last year. CORPORATE GOVERNANCE The Company has always followed the principles of good Corporate Governance through attaining a highest level of transparency, professionalism, accountability and integrity in its functioning and conduct of business with due respect to laws and regulations of the land. Necessary measures have been adopted to comply with the requirements of the Listing Agreements with Stock Exchanges wherein the Company's shares are listed and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A separate report on Corporate Governance adopted by the Company, which is given in Annexure-B, forms part of this report. A certificate from the Auditors of the Company regarding the compliance of the conditions of Corporate Governance is attached to this report. DIRECTORS' RESPONSIBILITY STATEMENT In terms of the requirements of Section 134 (5) of the Companies Act, 2013, the Directors confirm that; (i) in the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departure; (ii) 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 at the end of the financial year and of the profit or loss of the Company for that period; (iii) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance of the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) the Directors had prepared the Annual Accounts on going concern basis; (v) 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 (vi) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively. Both, the Managing Director and Executive Director have furnished the necessary certification to the Board on these financial statements as required under Part B of Schedule II under Regulation 17(8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. DIRECTORS In accordance with the provisions of Section 152 of the Companies Act, 2013, Mr.V.N.Agarwal and Mrs Ritu Agarwal retire by rotation and being eligible, offer themselves for re-appointment. The brief resume of the Directors seeking appointment/re-appointment in the forthcoming Annual General Meeting in pursuance of Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed to the Annual General Meeting Notice. The Company has received declarations from all Independent Directors confirming that they meet the criteria of independence as prescribed in subsection (6) of Section 149 and the 16(1) (b) of the SEBI ( Listing Obligations and Disclosure Requirements) Regulations, 2015. POLICY FOR DIRECTORS' APPOINTMENT The Company recognizes that an enlightened Board could effectively create a culture of leadership to provide long term vision, improve the quality of governance and invite the confidence of stakeholders. In order to ensure that Board of Directors can discharge their duties and responsibilities effectively, the Company aims to have an optimum combination of experience and commitment. The Company also believes the importance of Independent Directors in achieving the effectiveness of the Board. A diverges Board enables efficient functioning through differences in perspective and skill and also fosters differentiated thought process at the back of varied industrial and management expertise, gender, knowledge and geographical background. The policy of the Company for appointment of Directors and criteria for determining the qualifications, positive attitude and independence of a Director can be accessed to its website at www.wpil.co.in under Investor Service. POLICY FOR REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES' The Company recognises the fact that there is a need to align the business objective with the specific and measurable individual objectives and targets. The Company has therefore formulated the remuneration policy for its Directors, Key Managerial Personnel and other employees keeping in view of the following objectives. 1) Ensure that the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company successfully. 2) Relationship of remuneration to performance is clear and meets appropriate performance benchmarks and 3) Remuneration to Directors, Key Managerial Personnel and Senior Management involve a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals. Details of above policy of the Company can be accessed to its website at www.wpil.co.in under Investor Service. AUDITORS Messers. V.Singhi & Associates, Chartered Accountants (Firm Registration No. 311017E retire as Statutory Auditors at the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Audit Committee of Directors recommended the re-appointment of Messers. V.Singhi & Associates, Chartered Accountants as Statutory Auditors to hold office from the conclusion of the ensuing Annual General Meeting till the conclusion of next Annual General Meeting. Messers. V.Singhi & Associates, Chartered Accountants confirmed their eligibility and willingness to continue to act as Statutory Auditors of the Company for the financial year 2016-17, if re-appointed. COMPANIIES (ACCOUNTS) RULES, 2014 Information under section 134(3)(m) of the Companies Act,2013, read with Rule 8 of the Companies(Accounts) Rules, 2014, relating to Conservation of Energy, Technology Absorption and Foreign Exchange earnings and outgo so far as is applicable to the Company are furnished in Annexure-A which forms a part of this Report. CODE OF CONDUCT The Company has formulated Code of Conduct in compliance to the requirements of Regulation 17(5) of the SEBI ( Listing Obligations and Disclosure Requirements) Regulations, 2015. This code of conduct applies to Board Members and Senior Management Personnel of your Company. Confirmations towards adherence to the code during the financial year 2015-16 have been obtained from all Board Members and Senior Management Personnel in terms of the requirements of Regulation 26(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. and a declaration relating to compliance to this code during the year under review by all Board Members and Senior Management Personnel has been given by the Managing Director of the Company in terms of Schedule V(D) under regulation 34(3) of the SEBI ( Listing Obligations and Disclosure Requirements) Regulations, 2015 which accompanies this report. DEMATERIALIZATION OF SHARES The Company's shares are under transfer-cum-demat option. Shares of the Company can only be traded in dematerialized form. You have the option to hold the Company's shares in demat form through National Securities Depository Limited (NSDL) or Central Depository Services (India) Limited (CDSL). 97.88% of the total Ordinary Share Capital of the Company was held in dematerialized form with NSDL and CDSL as on 31st March, 2016. FINANCIAL STATEMENTS The Consolidated Financial Statements of the Company along with those of its Subsidiaries and Joint Venture Companies have been prepared as per Accounting Standards AS-21 and AS-27. The Company publishes the Audited Consolidated Financial Statements in the Annual Report. As such, Annual Report 2015-2016 does not contain financial statements of the subsidiaries in terms of General Circular No. 2/2011 dated 8th February, 2011, issued by the Ministry of Corporate Affairs. COST AUDIT The Company had appointed M/s. D.Radhakrishnan & Co., Cost Accountants as the Cost Auditors of the Company for the financial year 2015-16 under Section 148 of the Companies Act, 2013 to conduct Cost Audit relating Cost Records maintained by the Company in respect of other machinery. As required under Rule 14 of the Companies (Audit and Auditors) Rules, 2014 for the purpose of subsection (3) of Section 148 of the Companies Act, 2013, the remuneration payable to the Cost Auditor for the year under review as recommended by Audit Committee and considered and approved by Board will be placed before the members for ratification at the ensuing Annual General Meeting. EXTRACTS OF ANNUAL RETURN As provided under Section 92(3) of the Companies Act,2013, extracts of the Annual Return prepared in form MGT-9 pursuant to Rule 12 of the Companies (Management and Administration Rules), 2014 are furnished in Annexure-D which form a part of this report. NUMBER OF BOARD MEETINGS HELD : The Board of Directors duly met four times during the Financial Year from 1st April to 31st March, 2016. The dates on which the Meetings were held are 6th June, 2015, 10th August, 2015, 5th November, 2015, and 29th January, 2016. SECRETARIAL AUDIT According to the provisions of Section 204 of the Companies Act, 2013, read with Rule 9 of the Companies (Appointment of and Remuneration of Managerial Personnel) Rules, 2014, the Secretarial Audit Report submitted by Company Secretary in whole time practice is enclosed in Annexure- C which forms a part of this report. PARTICULARS OF LOANS,GUARANTEES OR INVESTMENTS Details of Loans, Guarantees or Investments covered under the provisions of Section 186 of the Companies Act, 2013 are attached in Annexure- E which forms a part of this report. RELATED PARTY TRANSACTIONS All contracts/arrangements/transactions entered by the Company during the financial year with Related Parties that were on arm's length basis and in the ordinary course of business. During the year, the Company had not entered into any contracts/ arrangements/transactions with related parties which could be considered material in accordance with the policy of the Company on materiality on related party transactions. The Board of Directors of the Company has, on the recommendation of Audit Committee, adopted a policy to regulate transactions between Company and related parties, in compliance of applicable provisions of the Companies Act, 2013, the Rules there under and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Policy on materiality of Related Party Transactions and dealing with Related Party Transactions as approved by the Board may be accessed to Company's website www.wpil.co.in The transactions with Related Parties have been disclosed in Note 26 (i) to the financial Statements. CORPORATE SOCIAL RESPONSIBILITY (CSR) In terms of Section 135 and Schedule VII of the Companies Act, 2013, the Board of Directors of the Company has constituted a CSR Committee. The Committee comprises of three Directors, one of whom is Independent. CSR Committee of the Board has formulated a CSR policy of the Company and recommended same to the Board. The Board has approved the CSR activities to be undertaken by the Company as recommended by the CSR Committee which is enclosed in Annexure-F. The CSR Policy as approved by the Board may be accessed to Company's website www.wpil.co.in VIGIL MECHANISM In pursuant to the provisions of Section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism of Directors and Employees to report genuine concerns has been established. The Whistle Blower Policy (Vigil Mechanism) may be accessed to Company's website www.wpil.co.in RISK MANAGEMENT The Risk Management Committee consists of Mr. P. Agarwal (Chairman), Mr. S.N.Roy and Mr. K .K. Ganeriwala. The Committee has been entrusted with the task for rendering assistance to the Board in (a) assessing and approving the Company's wide risk management framework; (b) Overseeing that all risks that the organization faces comprising Strategic, financial, Credit, Market, Liquidity, Investment, Property, legal, Regulatory Reputational and other risks of the Company have been identified and assessed and there is adequate Risk Management Infrastructure in place capable of addressing those risks in time and effectively. The Company manages monitors and reports on principal risks and uncertainties that can impact its ability to achieve its strategic objectives. Organizational structures, processes, standards, code of conduct and behaviors all taken together constitute the management system of the Company that governs as to how Company conducts its business and manages risks associated with it. The Company has introduced several improvements to integrated Enterprises Risk Management, internal control management and assurance framework and processes to drive a common integrated view of risks, optimal risk mitigation responses and efficient management of internal control supplemented by Internal Audit and assurance activities. The integration is enabled by all three being fully aligned across group wide Risk Management, Internal Control and Internal Audit methodologies and processes. Going forward, the criticality of Risk Management an organization faces, the Company is constantly striving for developing a strong culture for Risk Management and awareness within the organization across all verticals. INTERNAL FINANCIAL CONTROL The Company has in place adequate Internal Financial Controls with reference to financial statements. During the year such controls were tested and no reportable material weakness in the design and operation has been noticed. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES Disclosure pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013, read with Rules 5 (1) of the Companies (Appointment and Managerial personnel) Rules,2014 are provided in Annexure - G. Disclosure pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rules 5 (2) and 5(3) of the Companies (Appointment and Managerial Personnel) Rules, 2014 are not furnished since there was no employee during the year who was in receipt of remuneration in excess of the limit set out in the said Rules. BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013, and as prescribed by the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors has carried out an annual evaluation of its own performance, Board Committee and Individual Directors of the Company. The Board evaluated its performance after considering the inputs received from all Directors based on the Criteria comprising composition and structure of the Board with diverse background and experience, flexible and effective board procedures, inflow of the right amount and quality of timely information and functioning etc. The Board evaluated performance of its Committee after considering the inputs received from all Committee Members based on the Criteria involving composition of the Committee with diverse experience and skill, effectiveness of the Committee etc. The Board and the Nomination and Remuneration Committee reviewed the performance of the Individual Directors on the basis of the criteria such as, contribution of the Individual Directors to the Board and Committee Meetings like preparedness on the issue to be discussed, meaningful and constructive contribution, inputs in meetings, updated on skill, knowledge, familiarity with Company and its business etc. Similarly, Board evaluated the performance on the Chairman based on the criteria of effective leadership, constructive relationships and communications within the Board, addressing of the issue and concerns raised by the Members of the Board etc. The Independent Directors at their separate meeting evaluated the performance of Board as a whole, performance of the Chairman and performance of Non-Independent Directors after taking into accounts the views of Executive Directors and Non-Executive Directors. The same was discussed in the Board Meeting held following the meeting of the Independent Directors, at which the performance of the Board, its committees and Individual Directors was also discussed. INVESTOR SERVICE In compliance to the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has dedicated a separate page for Investors Service in its Website www.wpil.co.in. This page contains particulars for the information of Investors as prescribed under Regulation 46 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Company keeps on updating these particulars as and when necessary. CAUTIONARY STATEMENT Statement in the management discussion and analysis and Directors' Report describing the Company's strength, projections and estimates are forward-looking statements and progressive within the meaning of applicable laws and regulations. Actual results may vary from those expressed and implied, depending upon the economic conditions, Government Policies and other incidental factors. Readers are cautioned to repose undue reliance on the forward looking statements. ACKNOWLEDGEMENT The Directors take this opportunity to express their whole-hearted appreciation for the unstinted support and cooperation received from the Central Government, various State Governments and Government undertakings, Banks, Financial Institutions, Customers and Shareholders during the year under review. The Directors also wish to place on record their appreciation for the service rendered by the employees at all levels in the Company and for their valuable contributions towards the performance of the Company. P. AGARWAL Managing Director K. K. GANERIWALA Executive Director Place : kolkata Date • 26th May, 2016 |