Welspun Corp Ltd Directors Report.


The Members,

Welspun Corp Limited

Your directors have pleasure in presenting the 25th Annual Report of your Company along with the Audited Financial Statements for the financial year ended March 31, 2020.

1. Financial Results

(Rs. in million)




For the year ended

For the year ended

31.03.2019 31.03.2020 31.03.2019 31.03.2020
Total income 42,620.61 46,552.34 90,881.24 100,726.47
Profit before finance cost, depreciation & tax 572.58 6,869.19 7,077.33 12,758.46
Less : Finance costs 1,179.73 1,113.71 1,773.71 1,440.15
Profit / (Loss) before depreciation & tax (606.15) 5,755.48 5,303.62 11,318.31
Less: Depreciation/Amortization 1,129.53 1,234.04 2,597.33 2,332.90
Add: Share of net loss of joint ventures accounted for using the equity method - - (885.32) 2,060.33
Profit/(loss) before tax from continuing operations (1,736.68) 4,521.44 1,820.97 11,045.74
Less : Provision for tax
Current Tax 134.45 1300.06 1,216.01 3,485.86
Deferred Tax 86.11 159.35 6.54 638.56
Profit/(Loss) after taxes before Non-controlling interests from continuing operations (1,957.14) 3,062.03 598.42 6,921.32
Profit/ (loss) before tax from discontinued operations (2,196.24) (548.39) (2,196.24) (548.39)
Tax expense from discontinued operations (1,381.31) (167.76) (1,381.31) (167.76)
Profit/ (loss) from discontinued operations (814.93) (380.63) (814.93) (380.63)
Less :Non-controlling interests - - (83.93) 185.96
Profit/(loss) after tax for the year (after Non-controlling interests) (2,772.07) 2,681.40 (132.58) 6,354.73
Add : balance brought forward from previous year 9,226.12 6,299.43 18,348.17 17,255.75
Re-measurements of post-employment benefit (net of tax) 5.25 (50.53) (9.54) (63.88)
Dividend on equity shares (132.61) (2,741.31) (132.61) (2,741.31)
Tax on dividend (27.26) - (27.26)
Premium on redemption of NCIs share - - (790.43) -
Transfer to Debenture Redemption Reserve - - - -
Transfer from FCTR on liquidation of subsidiary - - - (5.96)
Transfer to General reserve - (268.14) - (268.14)
Balance carried forward to the next year 6,299.43 5,920.85 17,255.75 20,531.19

2. Highlights for the year

(a) Production highlights for the year under the Report are as under:


Standalone (in MT)

Consolidated^ MT)

FY 2018-19 FY 2019-20 FY 2018-19 FY 2019-20
Pipes 553,208 712,486 989,047 1,144,395
H. R. Plates & Coils 379,994 183,685 379,994 183,685

The operations of the Company were impacted, due to shutdown of all plants and offices following lockdown imposed by the government authorities to contain spread of COVID-19 pandemic. The Company resumed operations in a phased manner as per the directives from the respective government authorities. The Company made detailed assessments of the recoverability and carrying values of its assets comprising property, plant and equipment, inventories, receivables and other current assets as at the balance sheet date and on the basis of evaluation, concluded that no significant impact on its financial statement as at 31st March, 2020. However, the impact assessment of COVID19 would be a continuing process given the uncertainties associated with its nature and duration.

(b) New Facilities in Madhya Pradesh: The

Companys new facilities near Bhopal in Madhya Pradesh for manufacturing of up to 175 KMTA Spiral pipes with outer diameter of 24" to 140" for water segment pipes commenced commercial production of pipes during Q1 of 2019-20.

(c) Sale of the Plate & Coil Mill Division ("PCMD") and the 43 MW Power Plant:

As mentioned in the previous Annual Report, th e Company has compl eted the transaction for divestment of 43 MW Power Division during the year under Report.

In respect of the Sale of the PCMD, the Board wish to inform that both the parties to the Business Transfer Agreement dated March 30, 2019 (the "BTA") have reiterated their commitment to consummate the transaction stipulated in the BTA. However, considering the unprecedented situation, they have mutually decided to consummate the transaction no later than March 31, 2021.

We are pleased to inform the members that your Company has already received Rs.250 million as an advance for the aforesaid transaction. When completed, this transaction is expected to move the Company towards an asset-light model, thus achieving improvement in its profitability ratios and return ratios. Further, it would strengthen the balance sheet by providing significant liquidity to your Company and deleveraging the balance sheet.

(d) Closure of a subsidiary in the UAE:

The Companys step down subsidiary in the UAE i.e. Welspun Middle East DMCC, which was engaged in trading activities in steel & pipes and was not having significant operations during last few years has been closed down. The Board is of the opinion that this closure will have no material impact on the Company.

(e) Buyback of Equity Shares:

During the year under Report, the Company completed buyback of Rs.4,356,714 fully paid-up equity shares of Rs. 5 each at an offer price of Rs.135 per equity share, through tender offer route of the stock exchanges, resulting in cash out-flow aggregating to Rs.588.16 Million (excluding incidental expenses). One of the promoters viz. Intech Metals SA tendered 2,000,000 equity shares in the buyback. Post the buyback, the promoters shareholding increased from 48.98% to 49.03%.

(f) Reclassification of Co-Promoter as Public Shareholder:

The Company has received stock exchanges approval for Reclassification of Intech Metals S.A. from Promoter to Pubic category w.e.f. June 25, 2020.

3. Reserves, Dividend & Dividend Policy.

During the year under Report, the Board declared an Interim Dividend @200% for the year ended March 31, 2020 i.e. Re. 10 per equity share of Rs.5/- each fully paid-up out of the accumulated profits. The Dividend was paid on February 18, 2020 to all the eligible members as on Record Date of February 13, 2020.

The Board is pleased to recommend a dividend @ 10% for the year ended March 31, 2020 i.e. Re. 0.5 per equity share of Rs.5/- each fully paid-up out of the net profits. In respect of the dividend declared for the previous financial years, Rs.4.97 million remained unclaimed as on March 31, 2020. During the year under Report, the Company has transferred dividend of Rs.415,201 remaining unclaimed for the financial year 201112 to the Investor Education and Protection Fund. Detail of unclaimed dividend is available on the website of the Company at "www.welspuncorp.com".

The Company has appointed Mr. Pradeep Joshi, Company Secretary as the Nodal Officer for the purpose of co-ordination with Investor Education and Protection Fund Authority. Details of the Nodal Officer are available on the website of the Company at www.welspuncorp.com.

The Board proposes to transfer Rs.268.14 million to General Reserves.

In terms of the Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors approved and adopted Dividend Distribution Policy of the Company setting out the parameters and circumstances that will be taken into account by the Board in determining the distribution of dividend to the shareholders and/ or retaining the profits earned by the Company. The Policy is annexed to this Report as Annexure - 1 and is also available on your Companys website at "http://www.welspuncorp.com" under the tab "Who We Are --> Polices, Disclosures, Notices".

4. Internal Controls

Your Company has adequate internal control system, which is commensurate with the size, scale and complexity of its operations. Your Company has a process in place to continuously monitor existing controls and identify gaps and implement new and / or improved controls wherever the effect of such gaps would have a material impact on your Companys operation. The controls were tested during the year under Report and no reportable material weaknesses either in their design or operations were observed. In other observations, appropriate corrective actions were taken as advised by the Audit Committee.

5. Subsidiary/Joint Ventures/Associate Companies and their performance

A report on the performance and financial position of each of the subsidiaries and joint venture companies included in the consolidated financial statement is presented in Form AOC-1 annexed to this Report as Annexure - 2.

Financial statements of the subsidiaries and joint venture are hosted on the website of the Company at "http://www.welspuncorp.com" under the tab "Investor Relations --> Subsidiary Accounts".

6. Deposits

The Company has not accepted any deposit within the meaning of the Chapter V to the Companies Act, 2013. Further, no amount on account of principal or interest on deposit was outstanding as at the end of the year under report.

7. Details of utilization of funds raised through preferential allotment or qualified institutions placement as specified under Regulation 32 (7A)

During the year under Report, no funds were raised through preferential allotment or qualified institutional placement.

8. Auditors

i) Statutory Auditors:

Your Companys Auditors M/s. Price Waterhouse Chartered Accountants LLP, who have given their consent and confirmation of qualification for reappointment as the Statutory Auditors have been re-appointed for second term ending upto the conclusion of the 29th Annual General Meeting at a remuneration of Rs.13.35 million p.a. plus travelling and out-ofpocket expenses.

Total fees for all services paid by the Company and its subsidiaries, on a consolidated basis, to the statutory auditor and all entities in the network firm/network entity of which the statutory auditor is a part during the financial year under Report is Rs.26.26 million.

ii) Cost Auditors:

M/s. Kiran J. Mehta & Co, Cost Accountants (Firm Registration No. 000025), are proposed to be appointed as the Cost Auditors under Section 148 of the Companies Act, 2013 for the Financial Year 2020-21. The members are requested to approve their remuneration by passing an ordinary resolution pursuant to Rule 14 of the Companies (Audit and Auditors) Rules, 2015.

iii) Secretarial Auditors:

The Board of Directors have appointed M/s. Mihen Halani & Associates, Practicing Company Secretary, as the Secretarial Auditor of your Company for the Financial Year 2020-21.

9. Auditors Report

(a) Statutory Auditors Report:

The Auditors observations read with Notes to Accounts are self-explanatory and therefore do not call for any comment.

No frauds or instances of mismanagement were reported by the Statutory Auditor under Section 143(12) of the Companies Act, 2013.

(b) Cost Audit Report:

As required under the Companies

(Accounts) Rules, 2014, the cost accounting records, as specified by the Central Government under Section 148(1) of the Companies Act, 2013, were made and maintained by the Company.

The Company had appointed M/s. Kiran J. Mehta & Co., Cost Accountants as the Cost Auditors of the Company for auditing cost accounting records for the financial year 2019-20. The Cost Audit Report for the year 2018-19 was e-filed on August 26, 2019. The Cost Audit for the financial year 2019-20 is in progress and the report will be e-filed to the Ministry of Corporate Affairs, Government of India, in due course.

(c) Secretarial Audit Report:Secretarial Audit Report given by M/s. M Siroya and Company, Company Secretaries is annexed with the Report as Annexure 3. The Report, read with the annexure thereto, is selfexplanatory and therefore, do not call for any further comments.

10. Share Capital & Listing

A) The Company does not have any equity shares with differential rights and hence disclosures as per Rule 4(4) of the Companies (Share Capital and Debentures) Rules, 2014 are not required. Further, the Company has not issued any sweat equity and hence no disclosure is required under Rule 8 (13) of Companies (Share Capital and Debentures) Rules, 2014.

The Company granted stock options during the previous financial year. Disclosure as required under Regulation 14 of the SEBI (Share Based Employee Benefits) Regulations, 2014 and Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014 are as under:

(I) A description of each ESOS that existed at any time durin each ESOS, including g the year, including the general terms and conditions of
(a) Name of the ESOP Plan Welspun Employee Stock Option Plan
(b) Date of shareholders approval September 30, 2005
(c) Total number of options approved under ESOS 5,614,752
(d) Vesting requirements Vesting: 30% on end of one year from the date of grant; 35% on end of second year from the date of grant and 35% on end of third year from the date of grant.
(e) Exercise price or pricing formula At the discount up to 25% to the latest available closing market price of the equity shares of the Company rounded off to the nearest higher rupee, prior to the date of grant.
(f) Maximum term of options granted 3 years
(g) Source of shares (primary, secondary or combination) Primary
(h) Variation in terms of options No modifications were made to the schemes during the year.
(II) Method used to account for ESOS - Intrinsic or fair value. The Company has recognized compensation cost using fair value method of accounting. The Company has recognized stock option compensation cost of Rs. 49.33 million in the statement of profit and loss for the financial year 2019-20.
(III) Where the company opts for expensing of the options using the intrinsic value of the options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used the fair value of the options shall be disclosed. The impact of this difference on profits and on EPS of the company shall also be disclosed. The Company accounted for employee compensation cost on the basis of fair value of the options.
(IV) Option movement during the year
Number of options outstanding at the beginning of the period 2,350,000
Options granted Nil
Options vested 705,000
Options exercised 15,000
The total number of shares arising as a result of exercise of option 15,000
Options forfeited / lapsed None
The exercise price 100/ -
Money realized by exercise of options 1,500,000
Loan repaid by the Trust during the year from exercise price received Not applicable
Number of options outstanding at the end of the year 2,335,000
Number of options exercisable at the end of the year 690,000
Employee wise details of options granted to:
• Key managerial personnel Granted during the financial year 2018-19: Mr. Vipul Mathur, MD & CEO - 1,500,000
• Any other employee who receives a grant of options in any one year of option amounting to five percent or more of options granted during that year Granted during the financial year 2018-19: • Mr. Lal Hotwani - Head- Corporate Accounts & Taxation : 150,000
• Mr. Godfrey John- BuH - E, MENA, India & APAC : 150,000
• Mr. T.S.Kathayat- President - Quality & Technical Services: 150,000
• Mr. Piyush Thakor- Vice President - India Mfg Head: 150,000
• Mr. Chintan Thaker- Head - Corporate Affairs and Strategic Planning Cell: 150,000
• Identified employees who were granted option, during any one year, equal to or exceeding one percent of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant. Nil
Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of option calculated in accordance with Accounting Standard (AS) 20 "Earnings Per Share". Rs.0.15
Where the company has calculated the employee compensation cost using the intrinsic value of the stock options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used the fair value of the options, shall be disclosed. The impact of this difference on profits and on EPS of the company shall also be disclosed. The Company accounted for employee compensation cost on the basis of fair value of the options.
Weighted-average exercise prices and weighted-average fair values of options shall be disclosed separately for options whose exercise price either equals or exceeds or is less than the market price of the stock Weighted-average exercise prices - Rs.100
weighted-average fair value - Rs.52.01
A description of the method and significant assumptions used during the year to estimate the fair values of options, including the following weighted-average information:
(i) risk-free interest rate 7.49% to 7.85%
(ii) expected life 1.43 years
(iii) expected volatility 50.00%
(iv) expected dividends 0.55%
(v) the price of the underlying share in market at the time 126.10
of option grant.

(V) Disclosure of Shares held in suspense account under Clause F of Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

Outstanding Balance in the suspense account lying at the beginning of the year

Number of shareholders who approached issuer for transfer of shares from suspense account during the year

Transferred/Credited during the year

Balance outstanding

No of shareholders No of Shares No of shareholders No of Shares No of shareholders No of Shares No of shareholders No of Shares
43 14,910 3 420 3 420 40 14,490

The voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares.

(VI)Listing with the stock exchanges

The Companys equity shares are listed on the BSE Limited (BSE) and The National Stock Exchange of India Limited (NSE). The Secured, Redeemable, Non-Convertible Debentures are listed on the BSE Limited. The unsecured Commercial Papers outstanding as at March 31, 2020 were listed on the National Stock Exchange of India.

The Company has redeemed its Commercial Papers of Rs. 150 Crores and Rs. 100 Crores on its maturity date of June 3, 2020 and June 30, 2020 respectively.

Further, the Company has repaid the total principal amount payable for the debenture of Rs. 250 Crores before the due date.

Applicable annual listing fees for the year

2019-20 have been paid to both the BSE and the NSE as per the invoices received by the Company.

11. Extract of the Annual Return

An extract of the annual return in Form MGT-9 of the Companies (Management and Administration) Rules, 2014 is attached to this Report as Annexure - 4 and is also placed on the website of the Company and can be accessed at http://www.welspuncorp.com.

12. Conservation of energy, technology absorption and foreign exchange earnings and outgo

01. Conservation of energy:

Initiatives taken for conservation of energy, its impact are as under:

Sr. No. Description of Energy Efficiency Improvement Measure Energy Savings [kWh/Annum] Savings [ Rs. In million/Annum]
At Plat e & Coil Mill, Anjar
1 Reduction Power in Mat-Lab Packaged AC by Reducing Heat Loss. 62,853 0.47
2 Primary Descaling Process Optimization. 77,928 0.58
3 Compressed Air Pressure Reduced by 0.3 bar (7.3 to & 7 Bar) 6,959 0.05
4 Reduce Power Consumption in Width Gauge Chiller by Installing 3TR Chiller in Place of 12 TR. 1,469 0.011
Total 149,209 1.11
At Pipe Mill, Anjar
5 Energy saving through replacement of LED lights in SPIRAL-3 Plant 42,152 0.31
6 Energy saving through replacement of LED lights in SPIRAL-2 Plant 108,743 0.8
7 Energy Saving- Installation of 4 no AC drive for ROT conveyor motor at 28,675 0.21
8 Energy saving through replacement of LED lights in ERW 2,592 0.02
9 Energy saving in cooling tower by provide 40 HP pump in place of 75 HP in night hours at ERW 57,408 0.42
10 Energy saving through replacement of LED lights in Coating-1 Plants 30,252 0.22
11 Energy saving through replacement of LED lights in L-SAW Plant 227,466 1.68
12 Energy saving by Installation of motion detector with 36 W tube light in toilets in L-SAW Coating plant 1,633 0.01
13 Energy saving through replacement of LED lights in L-SAW Coating Plant 14,904 0.11
14 Energy saving by PLC program Modified to Auto turn off The Motor if not in operation in L-SAW Coating plant 6,864 0.05
Total 520,689 3.83
At Mar dya Plant
15 Hydrualic power pack motors to be auto shut off if not in function. 12,012 0.091
At Dahej Plant
16 Installation of 30 Nos of 165 W LED High bay fixtures at "LSAW Shed Lights" in place of 400 W HPMV Fixtures. Energy saving of 10,000 KWH by replacing of LED lights in DG room. 42,322 2.96
Total 42,322 2.96

02. Technology absorption and Research & Development

A. Innovation:

• Development of new Automatic Enquiry Management System.

• Innovation on Tailor-Made Automatic Pipe Measurement System for Critical Offshore Pipeline.

• Integrated SAP based BIBO management review mechanism on digital platform.

• Successfully Manufactured & Supplied Long Radius (>10D) Hot pulled Induction Bends by using unique alloy design for TMCP Mother Plates - LSAW Pipes.

• Digitalization of Inspection & Testing by integrating with SAP Data to reduce the paper consumption.

• Unique Bar Code System for Pipe Traceability as per the Customer requirements.

B. Research & Development carried out by the Company.

• Conducted a Successful PreQualification Process of Heavy Wall Thick LSAW (JCOE Process) Pipes by using TMCP Plates for Extreme Sour Service Applications for Offshore Pipe Lines as per customer requirements jointly with Steel Suppliers.

• Development of Domestic Steel Mills for

the Supply of API 5L X70M PSL2 Hot Rolled Coils & Plates for Oil & Gas Pipe Lines.

• Successfully Manufactured & Supplied Large Pipe Diameter for Strain & Stress Based Design Pipes in API X80M PSL2/CSA L550 by using TMCP Plates.

• The Companys technical experts are actively involved in various Joint Industrial Projects (JIPs) to resolve technical issues for Oil & Gas Pipe Lines Globally with Customers & Others- HAZ Softening Material Development;

- Optimization of Local Brittle Zone (LBZ);

- Standardization of SENT Test Method for Sour Service Environments;

- Enhanced Girth Weld Performance for Newly Constructed Grades X70M Pipelines in US.

• The Company has funded and actively working with Pipe Line Research Council International (PRCI) for following New Developmental Projects for Oil & Gas Pipelines -

- Composite Repairs for Dent and Metal Loss Defects - State of the Art and Full Scale Instrumented Tests;

- Guidance on the Use, Specification, and Anomaly Assessment of Modern Line Pipes;

- Full Thickness Weld Tensile Round Robin;

- Evaluation of Semi-Automatic FCAW-S Welding Process and Implications to Pipeline Girth Weld Integrity.

C. Technology Upgradation

• Adoption of new NDT Technology-Combination of Time of Flight Diffraction (TOFD) & Phased Array Ultrasonic Testing (PAUT) for LSAW Pipes.

• Installation of new Pipe ID Cleaning system to reduce weld defects and manual operation.

• Installation of new State-of-art Plate Ultrasonic System with the coverage of 100% Plate surface area, high testing speed, better sensitivity & accuracy supplied by GE technology, Germany.

• Introduction of new online edge milling system for HSAW pipes to Control Weld Bead Height and Weld Profile to optimize the consumption of Coating Materials.

• To improve the product Quality, we installed an Intermediate Weld Seam UT for instant feedback to Welding engineers for taking immediate necessary corrective & preventive action to reduce the Weld Seam Repair.

• Adoption of New Digital Radiography Technology instead of Film Radiography Technique.

D. Process & System Improvement

• Capability enhancement of CTOD & CVN testing facilities for critical low temperature applications.

• Enhancement of Hot Induction Bending Facility to produce High Wall Thick & Dia in API X80M PSL2/CSA L550.

• Development of Liquid Epoxy Coating for long radius Hot Pulled Induction Bends in API X80M PSL2 LSAW Pipes as per CSA.

• Unique fixtures mechanism is developed to test All Weld Longitudinal Tensile Testing Specimen with smaller length.

E. Key Initiatives for Future

• Installation of Automatic Cleaning System for removing scale, dust & foreign particles from inside surface of pipe before welding to minimize manual intervention & to achieve clean weld groove before welding.

• Installation of explicit Effluent Treatment Plant for Coating facility.

• Modification in Continuous Tack Welding Machine for Auto Offset Control to minimize manual intervention & Weld Seam Defects.

• Upgradation & Capacity Enhancement of Corrosion testing facility for critical Sour Service Pipeline Projects.

• Joint Pre-Qualification Program of HSAW pipes for sour service applications with potential Key International Customers.

• Integration of Steel Supplier data with our SAP system for product identification & traceability.

01. Expenditure on R&D

(a) Capital : Nil

(b) Recurring : Rs.86.31 million

(c) Total : Rs.86.31 million

(d) Total R&D expenditure as a percentage of revenue from operations : 0.21%

Total Foreign exchange:

Used - 26,029.12 million,

Earned- 13,722.01 million

13. Corporate Social Responsibility (CSR)

Disclosures as required under Rule 9 of the Compan ies (Corporate Socia l Responsibility Policy) Rules, 2014 are annexed to this Report as Annexure 5.

14. Directors and Key Managerial Personnel

A) Changes in Directors and Key Managerial Personnel

• Since the last report, following changes took place in the Board of Directors and Key Managerial Personnel:-

• Mr. S. Krishnan-Executive Director and CEO (PCMD) ceased to be a director with effect from close of business hours on July 31, 2019 due to resignation.

• Mr. Dhruv Kaji ceased to be a director August 8, 2019 due to resignation.

• The first term of 5 years of appointment of Mr. Atul Desai ended on September 30, 2019.

• Mr. Utsav Baijal, Nominee of Insight Solutions Limited ceased to be a director with effect from November 6, 2019 due to resignation.

• Mr. Kaushik Subramaniam, Nominee of Insight Solutions Limited ceased to be a director with effect from November 6, 2019 due to resignation.

• Ms. Amita Misra was appointed an independent director with effect from October 22, 2019.

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Balkrishan Goenka and Mr. Vipul Mathur are retiring by rotation at the forthcoming Annual General Meeting and being eligible, they have been recommended for re-appointment by the Board.

Details about the directors being (re)-appointed are given in the Notice of the forthcoming Annual General Meeting which is being sent to the members along with the Annual Report.

B) Independent Directors

The independent directors have individually declared to the Board that they meet the criteria of independence as provided under Section 149(6) of the Companies Act, 2013 at the time of their respective appointment and there is no change in the circumstances as on the date of this Report which may affect their status as an independent director.

Your Board confirms that in their opinion the independent directors fulfill the conditions of the independence as prescribed under the SEBI (LODR), 2015 and they are independent of the management. Further, in the opinion of the Board the independent directors appointed during the year under Report, possess requisite expertise, experience and integrity. All the independent directors on the Board of the Company are registered with the Indian Institute of Corporate Affairs, Manesar,

Gurgaon as notified by the Central Government under Section 150(1) of the Companies Act, 2013 and as applicable shall undergo online proficiency self-assessment test within the time prescribed by the IICA.

C) Formal Annual Evaluation

The performance evaluation of the Directors was conducted by the entire Board (excluding the Director being evaluated) on the basis of a structured questionnaire which was prepared after taking into consideration inputs received from the Directors covering various aspects of the Boards functioning viz. adequacy of the composition of the Board and its Committees, time spent by each of the directors; accomplishment of specific responsibilities and expertise; conflict of interest; integrity of the Director; active participation and contribution during discussions and governance.

For the financial year 2019-20, the annual performance evaluation was carried out by the Independent Directors, Nomination and Remuneration Committee and the Board, which included evaluation of the Board, Independent Directors, Non-independent Directors, Executive Directors, Chairman, Committees of the Board, Quantity, Quality and Timeliness of Information to the Board. All the results were satisfactory.

D) Committees of the Board of Directors

Information on the Audit Committee, the Nomination and Remuneration Committee, the Stakeholders Relationship, Share Transfer and Investor Grievance Committee, the Risk Management Committee and meetings of those committees held during the year under Report is given in the "Corporate Governance Report" annexed to the Annual Report as Annexure 7.

15. Particulars of outstanding loans, guarantees and investments under Section 186 are as under:

(Rs. in million)
Name of the Entity / beneficiary Investment Corporate Guarantee Loans
Welspun Pipes Inc. 0.44 7,566.50
Welspun Tradings Limited 50.22 6,147.10
Welspun Captive Power Generation Limited* 604.94
Welspun Mauritius Holdings Limited* 293.75
Welspun Wasco Coatings Private Limited (provision made) 254.65 54.25 247.01
Standard Chartered Bank ADR* 12.35
Bonds* 577.98
Welspun Middle East Pipes Company LLC 14,390.70
Welspun Middle East Pipe Coating Company LLC

* Investment carried at fair value through profit and loss.

The corporate guarantees were given to secure credit facilities availed by the subsidiaries/joint ventures of your Company, to guarantee export obligations of the subsidiaries/joint ventures to the custom authorities and to guarantee performance of the subsidiaries of the Company.

16. Particulars of contracts or arrangements with related parties

All related party transactions that were entered into during the year under Report were on an arms length basis and were in the ordinary course of business. There were no materially significant related party transactions undertaken by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which might have a potential conflict with the interest of the Company at large.

The Companys policy on Related Party Transactions as approved by the Board is uploaded on the Companys website "http://www.welspuncorp.com" under the tab "Who We Are --> Polices, Disclosures, Notices".

Save and except as disclosed in the financial statements, none of the Directors or Key Managerial Personnel had any pecuniary relationships or transactions vis-a-vis the Company.

Disclosures as required under the Companies Act, 2013 are given in Form AOC-2 annexed as Annexure 6 to this Report.

17. Managerial Remuneration

a. Details of the ratio of the remuneration of each director to the median employees remuneration and other details as required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

i) The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:

Directors name For the period Ratio with reference to median remuneration of the employees
Mr. Vipul Mathur 01.04.2019 to 31.03.2020 160.2
Mr. S. Krishnan# 01.04.2019 to 31.07.2019 29.8*

* Ceased to be Executive Director & CEO (PCMD) with effect from close of business hours on July 31, 2019.

ii) The percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year ended March 31, 2020 : Managing Director & CEO: 10%, CFO : 24% and CS : 12%.

iii) The percentage increase in the median remuneration of employees in the financial year: 6.90%.

iv) The number of permanent employees on the rolls of the Company: 2,692.

v) 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 over 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 in case of listed companies, and in case of unlisted companies, the variations in the net worth of the Company as at the close of the current financial year and previous financial year : The market cap of the Company decreased from Rs.36,123.80 million to Rs.16,187.88 million after taking in to consideration the buyback of equity shares and allotment under ESOP Scheme during the financial year. The P/ E ratio changed from negative 13.03 times to 6.10 times. The share price increased by 334.35% in comparison to the rate at which the Company came out with the public issue in February, 1997 (after taking in to consideration the reorganization of share capital done in March, 2005 but without considering other corporate actions not resulting in to any material change in the share capital).

vi) Average percentage increase /(decrease) already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentage increase/ (decrease) in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: Aggregate remuneration of employees excluding KMP decreased by 3.8%. Change in the remuneration of the KMP increased by 13%. The reason for exceptional percentage increase in the remuneration of KMP was due to payment of variable pay to the CFO and consideration of the remuneration of the CFO for the entire financial year under review, whereas, it was considered only for a part of the previous financial year. Further, the remuneration of the Executive Director & CEO (PCMD) was considered only for a part of the financial year under review.

vii) The key parameters for any variable component of remuneration availed by the directors:

1) Total Production (as per Business Plan approved by the Board)

2) Revenue (as per Business Plan approved by the Board)

3) Profit Before Tax (as per Business Plan approved by the Board)

4) Operating Cash Flow (as per Business Plan approved by the Board)

viii) Affirmation that the remuneration is as per the remuneration policy of the Company: YES, Employees increment in remuneration is based on the individual performance and the Company performance for the Financial Year.

b. Details of the top ten employees in terms of remuneration drawn and the name of every other employee as required pursuant to Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is as under:

Name Standard Designation DOB Age (years) Joining Date Remuneration Previous Company Qualification Nature of Employment % Of Equity Shares held in the Company Relative of any Director/ Manager of the Company
Vipul Mathur Managing Director 21-Mar-70 50 02-Feb-01 53,756,831 Man Industries (India) Ltd MBA Permanent Negligible No
S. Krishnan* Executive Director & CEO (PCMD) 17-J ul-62 57 03-Jun-13 10,000,000 UPL Limited M. Com/ LLB-Part I/ A.C.A/ A.C.S/ A.I.C.W.A Permanent Negligible No
L.T. Hotwani# Director 05-May-53 67 01-Jan-00 2,42,14,846 Gammon India Ltd B.Com Permanent No
Godfrey John# Director 30-Aug-65 54 11-Jun-12 22,863,936 Ferro Tech India Pvt. Ltd. MBA Permanent


Percy Kershasp Birdy President 22-Jan-68 52 11-Jun-18 15,037,568 Allanasons Group Chartered Accountant Permanent


Tribhuwan Singh Kathayat President 10-Jan-71 49 20-Jun-96 12,709,691 Jindal Organisation BSC/DME/MBA Permanent


Bhavesh KariaA Senior Vice President 18-Feb-74 46 24-Oct-16 8,483,144 Bumi Flow B.Sc in Production engineering/ Post Diploma in Materials Management/Diploma in Production Engineering Permanent
Suresh Chander Darak President 02-Jan-68 52 02-Jan-08 10,696,660 Reliance Industries Ltd. B. Com/DITM Permanent Nil No
Navin Agarwal Senior Vice President 01-Jan-72 48 02-Jun-08 10,455,909 Mahindra & Mahindra Ltd. PGDBM Finance/B.Com (Hons) Permanent Nil No
Anil Maiiikarjun Nimbargi Senior Vice President 13-Oct-65 54 09-Sep-09 10,428,943 Is pat Industries B.Sc. Permanent
AtuL Trivedi Senior Vice President 03-Jan-74 46 14-May-07 1,01,18,319 Tata Consultancy Chartered Accountant Permanent No
Paras Jain President 25-Jul-58 62 16-Jan-06 97,49,810 Moral Overseas Ltd. M.Com, Chartered Accountant Permanent No
Manish PathakA President 20-Jan-68 52 26-Jun-08 7,398,692 Man Industries (India) Ltd BE Mech Permanent
Gaurav Merchant Vice President 11-Sep-73 46 15-Jan-14 8,797,546 Essar Steel Limited B. Com/MBA Permanent


Rupak Ghosh Senior Vice President 17-Oct-69 50 29-Oct-07 8,496,813 Blue Star Limited ICWA/ CA Permanent


Nitin Agarwal Vice President 06-Feb-83 37 20-Apr-07 8,347,377 Welspun Tubular LLC MBA/PGDM Permanent


Piyush Thakor Senior Vice President 03-Apr-76 44 01-Feb-18 8,288,934 Zenith Birla India Ltd Diploma-Mechanical Engineering Permanent


San jay Batra Senior Vice President 20-Aug-68 51 26-Dec-00 8,015,143 Maharashtra Seamless Ltd Diploma Permanent

* employed for a part of the year up to the close of the business hours on July 31, 2019.

~ employed for a part of the year with effect from July 1, 2019.

# Not on the board of the Company.

c. Managing Director of the Company was not in receipt of any commission from the Company and at the same time, remuneration or commission from the Companys Subsidiary Company.

d. Particulars of remuneration to the executive directors including the details of remuneration paid/payable to the executive directors for the financial year 2019-20 are as under:

Name of the Director Salary & Allowance Perquisites Commission Service Contract/ Tenure Performance linked incentives Notice






1 Mr. Vipul Mathur Rs. 55 million* Nil Nil 5 years Nil 1 month Nil Refer note below Nil
2 Mr. S. Krishnan@ Rs. 30 million* Nil Nil 5 Years Nil 1 month Nil Nil Nil

^ In addition to salary & allowance, entitled for other benefits as per the Companys policy

@ Ceased to be a director with effect from close of business hours on July 31, 2019.

Note: 1,500,000 Employee Stock Options granted during FY2018-19 at an exercise price of t100 per option and can be exercised as per the vesting schedule given under the Welspun Employee Stock Option Plan which is 30%, 35% and 35% each year, from the end of 1st year from the grant date.

Mr. Balkrishan Goenka, Non-Executive Chairman was paid Commission of Rs. 19.73 million i.e. @1% of the Net Profits in terms of the approval granted by the members of the Company at the Annual General Meeting held on August 12, 2019.

No remuneration or perquisite was paid to, and no service contract was entered into with, or stock options granted to any non-executive director, but the sitting fees were paid/payable to the following directors for attending meetings of Board/Committees of the Board and General Meetings and Letter of Appointment were issued to the independent directors.

Name of the Director (Rs.)
1 Ms. Amita Misra 227,000
2 Mr. Atul Desai 150,000
3 Mr. Desh Raj Dogra 956,000
4 Mr. Dhruv Kaji 77,000
5 Mr. Kaushik Subramaniam 150,000
6 Mr. K.H. Viswanathan 1,182,000
7 Mr. Rajkumar Jain 1,131,000
8 Mrs. Revathy Ashok 327,000
9 Mr. Utsav Baijal 132,000

The above mentioned sitting fee paid/payable to the non-executive directors was within the limits prescribed under the Companies Act, 2013 for payment of sitting fees. Hence prior approval of the members as stipulated under Regulation 17(6) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 was not required.

18. Shareholding of the Directors of the Company as on March 31, 2020

For detail of shareholding of the directors, refer to the "Corporate Governance Report" annexed to this Report.

Except as mentioned in the "Corporate Governance Report", none of the other directors hold any shares or convertible securities in the Company.

19. Corporate Governance Certificate

The Compliance certificate obtained from M/s. M. Siroya and Company, Practicing Company Secretary regarding compliance of conditions of corporate governance as stipulated under Chapter IV read with relevant Schedule to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed with this Report.

20. Risk management policy

With its fast and continuous expansion in different areas of businesses across the globe, the Company is exposed to plethora of risks which may adversely impact growth and profitability. The Company recognizes that risk management is of concern to all levels of the businesses and requires a structured risk management policy and process involving all personnel. With this objective, the Company had formulated structured Risk Management Policy thereby to effectively address such risks such as, strategic, business, regulatory and operational risks. The Policy envisages identification of risks by each business segment and location, together with the impact that these may have on the business objectives. It also provides a mechanism for categorization of risks into Low, Medium and High according to the severity of risks. The risks identified are reviewed by a committee of the Managing Director & CEO of the Company and the relevant senior executives and the appropriate actions for mitigation of risks are advised; the risk profile is updated on the basis of change in the business environment. The Risk Management Committee, periodically reviews the risk management process, risks and mitigation plans and provide appropriate advise in the improvement areas, if any, identified during the review.

For the key business risks identified by the Company, please refer to the Management Discussion and Analysis annexed to this Report.

21. Familiarization program for Independent Directors

The details of familiarization program (for independent directors) are disclosed on the Companys website and a web link thereto is "http://www.welspuncorp.com" under the tab "Who We Are --> Polices, Disclosures, Notices".

22. Code of Conduct

The Company has a Code of Conduct for the Board members and Senior Management Personnel. A copy of the Code has been put for information of all the members of the Board and management personnel on the Companys website "http://www.welspuncorp.com" under the tab "Who We Are --> Polices, Disclosures, Notices".

All the members of the Board and the Senior

Management Personnel have affirmed compliance of the same.

A declaration signed by the Managing Director & CEO of the Company is given below:

"I hereby confirm that the Company has obtained from all the members of the Board and the Senior Management Personnel, affirmation that they have complied with the Code of Conduct for the financial year 2019-20."


Vipul Mathur

Managing Director & CEO


23. Miscellaneous Disclosures

During the year under Report, there was no change in the general nature of business of your Company.

Except as mentioned in this Report, no material change or commitment has occurred which would have affected the financial position of your Company between the end of the financial year of your Company to which the financial statements relate and the date of the Report.

No significant and material order was passed by the regulators or courts or tribunals which would have impacted the going concern status and your Companys operations in future.

Your Company has not made any provision of money for the purchase of, or subscription for, shares in your Company, to be held by or for the benefit of the employees of your Company and hence the disclosure as required under Rule 16(4) of the Companies (Share Capital and Debentures) Rules, 2014 is not required.

The Board of Directors affirms that the Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Companies Secretaries of India and that such systems are adequate and operating effectively. The Company has complied with the applicable Secretarial Standards.

The company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act,

2013. The ICC comprises of internal as well external members.

Disclosure of number of complaints filed, disposed of and pending in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 as on the end of the financial year under Report are as under:

• number of complaints filed during the financial year - Nil

• number of complaints disposed of during the financial year - Not applicable

• number of complaints pending as on end of the financial year - Nil

24. Directors Responsibility Statement

Pursuant to Section 134(3)(c) & 134(5) of the Companies Act, 2013, your directors hereby confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to 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 at the end of the financial year and of the profit and loss of the Company for that period;

c. the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act,

2013 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. being a listed company, 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.


Your directors acknowledge and place on record its sincere gratitude to the Government Authorities, Financial Institutions, Banks, Customers, Suppliers, Shareholders, Employees and other business associates of the Company, who through their continued support and co-operation, have helped as a partner in your companys progress and achievement of its objectives.

For and on behalf of the Board of Directors

Vipul Mathur

Managing Director & CEO


Balkrishan Goenka

Chairman DIN: 00270175

Date: July 28, 2020

Place: Mumbai