welspun india ltd share price Directors report


To

The Members,

Welspun India Limited

Your Directors have pleasure in presenting the 38th Annual Report of your Company along with the Audited Financial Statements for the financial year ended March 31, 2023.

1. Financial highlights:

H in Crore

Consolidated

Standalone

Particulars

FY 2022-23 FY 2021-22 FY 2022-23 FY 2021-22

Revenue from Operations (Net)

8,093.76 9,311.47 5,654.62 6,703.47
Other Income 121.34 65.84 140.90 86.06
Total Revenue 8,215.10 9,377.31 5,795.52 6,789.53

EBITDA

873.88 1,424.56 537.90 976.80
EBITDA Margins (%) 10.64% 15.19% 09.28% 14.38%
Finance Cost 129.88 131.25 61.15 81.33
Depreciation and amortization 442.14 420.47 250.32 276.09

Profit before exceptional items and tax and share of net profit of Associates

301.86 872.84 - -
Share of net profit of Associates 0.05 0.13 - -

Profit before tax

301.91 872.97 226.43 619.38
Tax Expense 99.40 266.26 74.75 227.25

Profit after taxation

202.51 606.71 151.68 392.13

Earnings per share (Basic & Diluted)

2.02 6.06 1.54 3.95

(Nominal value per share Re. 1)

2. Performance and Outlook:

Your Companys total revenue has seen drop of 13% on consolidated basis and 16% on standalone basis due to factors such as higher inflation in global market, higher interest rates, higher inventory with global retailers and increased Commodity prices. Your Companys EBITDA has slid down by 39% on consolidated level and 45% on standalone basis. This has resulted in decrease in EBITDA margin of 27% on consolidated basis and 35% on standalone basis. Profit before Tax has decreased by 65% on consolidated basis and 63% on standalone basis. Profit After Tax has reduced by 67% on consolidated basis and 61% on standalone basis.

3. Dividend: i. Dividend Distribution Policy:

The Board of Directors approved Dividend Distribution Policy of the Company, as required under Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Regulations 2015"). The Dividend Distribution Policy provides that the Board will endeavor to achieve distribution of 25% of Profit for a financial year, on consolidated basis, with equity shareholders. The Policy is attached as Annexure – 1 to this Report and it is also available on your Companys website and the web link thereto is as given below. www.welspunindia.com under the tab Investors -> Policies ii. Dividend for Financial Year 2022-23:

The Board has recommended dividend of Re. 0.10 per equity share for the Financial Year ("FY") 2022-23 amounting to H 9.88 Crore (subject to shareholders approval and number of shares which may be tendered in Buyback). The Board has approved Buyback of 1,62,50,000 equity shares constituting 1.64% of total equity shares at H 120 per share. Outflow on acccount of Buyback is expected to be H 195.00 Crore (excluding tax and other Buyback related expenses). Combined cash outflow of H 204.8 Crore amounts to 101.13% of consolidated PAT.

A snapshot of the dividend track record of your Company for previous financial years is given below.

H in Crore

Financial Year

Total Dividend (%) Cash Outflow
2022-23 10% 9.88
2021-22 15% 14.82
2020-21 15% 15.07

4. Subsidiaries:

During the year FY2022-23, the Company transferred its entire shareholding in Welspun Innovative Products Limited and Easygo Textiles Private Limited to related parties for consideration which was at arms length.

A report on the performance and financial position of each of the subsidiary companies of your Company is included in the consolidated financial statement presented in Form AOC-1 attached as Annexure – 2 to this Report. Your Companys policy on Material Subsidiary as approved by the Board is hosted on your Companys website and the web link thereto is as given below. www.welspunindia.com under the tab Investors -> Polices

5. Auditors and Auditors Report:

Appointments of Statutory Auditor, Cost Auditor, Secretarial Auditor and Internal Auditor are recommended by the Audit Committee and approved by the Board. Statutory Auditor and Internal Auditor meet the Audit Committee in absence of any member of the management twice a year. i. Statutory Auditor:

Members of the Company appointed S R B C & CO LLP as statutory auditors for its 2nd term of five years commencing from expiry of 37th Annual General Meeting held on September 12, 2022 and end on conclusion of 42nd Annual General Meeting that may be held in the year 2027. The Auditors are holding a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

The Auditors observation read with Notes to Accounts for FY 2022-23 are self-explanatory and therefore do not call for any comment. 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 H 3.11 Crore. ii. Cost Auditor:

As per Section 148 and other applicable provisions, if any, of the Act read with Companies (Audit and Auditors) Rules, 2014, the Board of Directors of your Company has reappointed M/s. Kiran J. Mehta & Co., Cost Accountants as the Cost Auditors of your Company for FY 2023-24 on the recommendations made by the Audit Committee.

Members are requested to ratify their remuneration by passing an ordinary resolution in the forthcoming Annual General Meeting. 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 are made and maintained by the Company. iii. Secretarial Auditor:

The Secretarial Audit Report for FY 2022-23 is attached herewith as Annexure - 3 to this Report. As per Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, the Secretarial Audit Report for FY 2022-23 of Welspun Global Brands Limited and Welspun Captive Power Generation Limited, material unlisted subsidiaries company are also attached under Annexure – 3.

Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed MNB & Co. LLP, Company Secretaries, as the Secretarial Auditor of your Company for the FY 2023-24.

6. Disclosure of Shares held in suspense account:

Aggregate number of shareholders and the outstanding shares 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

Number of shareholders to whom shares were transferred from suspense account during the year

Aggregate number of shareholders and the outstanding shares in the suspense account lying at the end of the year

Remarks

 

No of Holders

No of Shares No of Holders No of Shares No of Holders No of Shares No of Holders No of Shares

817

332,150 2 770 11 1930 806 330,220 1930 shares and 11 Records transferred to IEPF on 15.03.2023

7. Listing with the Stock Exchanges:

Your Companys equity shares are listed on National Stock Exchange of India Limited (NSE) and BSE Limited (BSE). Annual listing fees for the FY 2023-24 have been paid to NSE and BSE. There are no unsecured Commercial Papers outstanding as at March 31, 2023.

8. Finance: i. Credit Rating:

During the year, CARE Ratings Limited (‘CARE) has reaffirmed your Companys long term credit rating as ‘AA and short term credit rating as ‘A1+. India Ratings & Research, a Fitch Group company, has reaffirmed your Companys long-term issuer rating as ‘IND AA/Stable and reaffirmed short-term credit rating as ‘IND A1+.

ii. Deposits:

Your Company has not accepted any deposit within the meaning of Chapter V of the Act. Further, no amount on account of principal or interest on deposit was outstanding as at the end of the financial year under Report.

9. Board of Directors:

During the year, the Board of Directors has made changes in the composition of the Board of Directors of the Company. Mr. Altaf Jiwani, holding Director Identification Number 05166241, Chief Operating Officer of the Company has been appointed as Wholetime Director and Occupier of the Companys manufacturing facilities at Vapi, District Valsad, Gujarat State and Anjar, District Kutch, Gujarat State with effect from April 01, 2023. Further the Board has elevated, subject to approval of the members, Mr. Rajesh Mandawewala, holding Director Identification Number 00007179, as Executive Vice Chairman and Ms. Dipali Goenka, CEO of the Company, holding Director Identification Number 00007199 as Managing Director & CEO with effect from April 01, 2023.

Your Companys Board comprises mix of executive and non-executive directors with considerable experience and expertise across a range of fields such as finance, accounts, marketing, brand building, general management and strategy. Except the independent directors, all other directors are liable to retire by rotation as per the provisions of the Act. It is confirmed that, except for Mr. Balkrishan Goenka and Ms. Dipali Goenka who are husband and wife, there is no relationship between the directors inter-se. The details of the directors, their meetings held during the year and the extracts of the Nomination and Remuneration Policy has been given in the Corporate Governance Report, which forms part of this Report. i. Changes in Directors and Key Managerial Personnel:

During the year, there was no change in Board of Directors and Key Managerial Personnel except as given below: (i) Resignation of Mr. Arun Todarwal as Independent Director (holding Director Identification Number 00020916), with effect from July 01, 2022;

(ii) Appointment of Mr. K H Viswanathan (holding Director Identification Number 00391263) as an Independent Director with effect from July 01, 2022; (iii) Appointment of Mr. Altaf Jiwani (holding Director Identification Number 05166241) as Wholetime Director with effect from April 01, 2023; (iv) Elevation of Mr. Rajesh Mandawewala, holding Director Identification Number 00007179, as Executive Vice Chairman with effect from April 01, 2023; and (v) Elevation of Ms. Dipali Goenka, holding Director Identification Number 00007199, as Managing Director & CEO with effect from April 01, 2023.

In accordance with the provisions of Section 152 of the Act and the Articles of Association of your Company, Mr. Balkrishan Goenka (holding Director Identification Number DIN 00270175) is retiring by rotation at the forthcoming Annual General Meeting and being eligible, has been recommended for his re-appointment.

Details about director being appointed or re-appointed are given in the Notice of the forthcoming Annual General Meeting. ii. Declaration by an Independent Director(s):

Your Company has received declarations from all the independent directors as per the provisions of Section 149(7) of the Act confirming that they meet the criteria of independence as prescribed under the provisions of Section 149(6) of the Act and that there is no change in the circumstances as on the date of this Report which may affect their respective status as an independent director.

Your Board confirms that in its opinion the independent directors fulfill the conditions prescribed under the SEBI (LODR), 2015 and they are independent of the management. All the independent directors on the Board of the Company are registered with the Indian Institute of Corporate Affairs ("IICA"), Manesar, Gurgaon as notified by the Central Government under Section 150(1) of the Companies Act, 2013.

Test of independence based on criteria given in SEC (USA) Rule 4200

Key Independence Criteria

K. H. Viswanathan Arvind Singhal Pradeep Poddar Anisha Motwani

The director must not have been employed by the Company in an executive capacity within the last five years.

v v v v
The director must not accept or have a "Family Member who

accepts any payments from the company or any parent or subsidiary of the company in excess of $60,000 during the current fiscal year", other than those permitted by SEC Rule 4200 Definitions, including i) payments arising solely from investments in the Companys securities; or ii) payments under non-discretionary charitable contribution matching programs. Payments that do not meet these two criteria are disallowed.

v v v v

The director must not be a "Family Member of an individual who is, or during the past three years was employed by the Company or by any parent or subsidiary of the Company as an executive officer".

v v v v

The director must not be (and must not be affiliated with a company that is) an adviser or consultant to the Company or a member of the Companys senior management.

v v v v

The director must not be affiliated with a significant customer or supplier of the Company.

v v v v

The director must have no personal services contract(s) with the Company or a member of the Companys senior management.

v v v v

The director must not be affiliated with a not-for-profit entity that receives significant contributions from the Company.

v v v v

The director must not have been a partner or employee of the Companys outside auditor during the past three years.

v v v v

The director must not have any other conflict of interest that the board itself determines to mean they cannot be considered independent.

v v v v

iii. Directors Evaluation:

Background:

Nomination and Remuneration Committee has laid down the criteria for evaluation of performance of the Board, its committees and the directors.

In compliance with Sections 134, 178 of, and Paras II, V and VIII of Schedule IV to, the Act and Regulation 17 of Para A of Part D of Schedule II to SEBI Regulations 2015, the Board of Directors, as per the process recommended by the Nomination and Remuneration Committee, has evaluated the effectiveness of the Board, its Committees and Directors. The evaluation process invited graded responses to a structured questionnaire, which was largely in line with the SEBI Guidance Note on Board Evaluation, for each aspect of the evaluation. All the results were satisfactory.

Mode of evaluation:

Board assessment is conducted through a structured questionnaire. Each question requires response on a scale of 0 to 3 with 3 being the best. The Company has developed an in-house digital platform to facilitate confidential responses to a structured questionnaire. All the directors participated in the evaluation process.

Further, meeting of independent directors was conducted to review the performance of the Board as a whole and that of non-independent directors.

Results:

The evaluation results were discussed at the meeting of Board of Directors, Committees and the Independent Directors Meeting. The Directors were satisfied with the overall corporate governance standards, Board performance and effectiveness.

Key parameters

Board of Directors • Board structure and composition
• Board meeting practices (agenda, frequency, duration)
• Functions of the Board (Strategic direction etc.)
• Quantity, quality & timeliness of information
• Board culture and effectiveness
• Functioning of Board Committees
• Director induction and development programs
Board Committee • Composition, roles & responsibilities and effectiveness of the committee
• Meeting structure and information flow
• Contributions to Board decisions
Independent • Independence from company (no conflict of interest)
directors • Independent views and judgement
• Objective contribution to the Board deliberations
Chairperson • Promote effective decision-making
• Encourage high quality of constructive debate
• Open-minded and listening to the members
• Effectively dealing with dissent and work constructively towards consensus
• Shareholders interest supreme while taking decisions
Executive • Relevant expertise and commitment
Directors • Performance vis-?-vis business budget, peers
• Dealing with challenges
• Developing leaders

 

Board of Directors

Parameters with high evaluation scores:

Key focus areas:

• Well informed decision-making process and considers interest of all stakeholders.

• Balancing Boards time between strategic and operational matters. [Action plan: Additional time with focus on strategic matters is allocated in Board Calendar.]

• In-depth understanding about key performance drivers, risks and opportunities.

• Strong oversight on quality of financial reporting process & internal financial controls.

• Induction and continuous training for Directors [Action plan: Induction toolkit for new directors has been reassessed.]

• Constructive Board culture.

• Regular monitoring of actions taken on key decisions.

Board Committees

Parameters with high evaluation scores:

Key focus areas:

• Size, composition and diversity of each Committee.

• Further sharpen risk management process. [Action: A robus framework for Risk Management has been designed.

• Strong oversight on financial reporting process, internal financial controls, compliance with related party transaction regulations and reporting to Board on key control gaps.

Roles and responsibilities for risk management activities has been identified at various levels]

• Performance monitoring of subsidiaries.

• Effective in advising senior executives.