MANAGEMENT DISCUSSION AND ANALYSIS The Management Discussion and Analysis (MD&A) should be read in conjunction with the Audited Consolidated Financial Statements of Welspun Corp Limited ("Welspun" or the 'Company"), and the notes thereto for the year ended 31 March 2015. This MD&A covers Welspun's financial position and operations for the year ended 31 March 2015. Amounts are stated in Indian Rupees unless otherwise indicated. Abbreviations and acronyms used in this MD&A are identified in the Glossary of Terms in Welspun's Annual Report of FY 2014-15. The numbers used in the analysis are on a consolidated basis, the corresponding number for the brvious year have been regrouped and reclassified wherever necessary. Forward-Looking Statements This report contains forward-looking statements, which may be identified by their use of words like 'plans', 'expects', 'will', 'anticipates', 'believes', 'intends', 'projects', 'estimates' or other words of similar meaning. All statements that address expectations or projections about the future, including but not limited to statements about the Company's strategy for growth, product development, market position, expenditures, and financial results, are forward-looking statements. Forward-looking statements are based on certain assumptions and expectations of future events. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events Company Overview Welspun Corp Ltd (WCL) is the leading manufacturer of large diameter pipes globally offering a one stop solution for all line pipe related requirements with its wide product range of high grade line pipes, meeting stringent specifications and modern state-of-the-art global manufacturing facilities in India, USA and Saudi Arabia for Longitudinal (LSAW), Spiral (HSAW) and HFERW / HFIW (ERW).WCL also has a Plate and Coil Mill facility in India which enhances its backward integration and also its ability to meet pipe as well as other customer requirements across markets. Welspun's list of clients coming from amongst the Fortune 100 companies includes some of the biggest names from the Oil and Gas sector viz Shell, Saudi Aramco, TOTAL, Chevron, Exxon Mobile, British Gas, Kinder Morgan, TransCanada, Enbridge, Petrobras to name a few. The Company is a brferred vendor to over 50 major oil and gas companies enhancing its ability to participate and bid inkey projects globally. Global Economic Overview The global economy continues the struggle to gain momentum as many high-income countries continue to grapple with legacies of the global financial crisis and emerging economies remain less dynamic than in the past. Global economic growth @ 2.6% in 2014 was lower than initially expected, and only marginally higherthan 2013 growth @2.5 %. Beneath these headline numbers, increasingly divergent trends were at work in many economies. As labor markets heal and monetary policy remains very accommodative, economic activity in the United States has gathered momentum whereas, due to continuing legacies of the lingering financial crisis intertwined with structural bottlenecks, economic recovery in the Euro Area and Japan have been sputtering. Due global factors and slump in commodity markets, China'srole as a driver of the global growth engine has been significantly reduced although the impact of the slowdown has been calibrated. Indian economic growth picked up in 2014, inflation markedly declined, and the external position remains comfortable largely helped by the lower commodity and energy prices. Stability in the political environment has improved the outlook for the Indian market and the intent to strengthen the economy through higher infrastructure spending, increased fiscal devolution to states, and financial and monetary policy reform besides other major reforms in the oil & gas space will, once translated into policy action, have a perceptible change in the investor sentiment and business outlook. Foreign Exchange During last financial year, across the emerging and developed markets, the global trend of currencies, weakening against the USD saw very few exceptions, notable being the Chinese Yuan which marginally apbrciated. In major developed market currencies, the significant debrciation of the Euro and JPY benefitted pipe suppliers from these regions In other emerging market currencies, major debrciation of the Turkish Lira, Brazilian Real and Russian Rouble significantly enhanced the competitive edge of suppliers from these markets.In this scenario, the INR was fairly benign across the year with a marginal debrciation @ 4% thus increasing the competitive brssures on Indian supplies. Global Energy Demand Energy is vital to virtually every aspect of modern life. Around the clock, around the globe, people rely on energy to get to work, brpare meals, pursue business endeavors, communicate with friends and much more. Energy comes in many forms - from gasoline to natural gas to electricity -each with properties well-suited for particular applications. From 2010 to 2040, transportation energy needs in OECD32 countries are projected to fall about 10 percent, while in the rest of the world these needs are expected to double. China and India will together account for about half of the global increase The Global energy demand is set to grow by ~37% by 2040. This Demand growth will exclusively from the rapidly growing non-OECD economies with demand reaching around 70 Mb/d by 2035 – 56% higher than in 2013. The OECD demand has peaked in 2005 and is expected to fall further (-6 Mb/d) to around 40 Mb/d in 2035, the lowest since 1986. Today China is the largest contributor to world demand growth: growing by 7 Mb/d to 18 Mb/d in 2035, surpassing US demand (which falls by 2 Mb/d to 17 Mb/d). On the other hand India is the second largest contributor, growing by more than 4 Mb/d, followed by the Middle East with 4 Mb/d. This growth in demand by sector is as transport sector accounts for about 55% of total liquids demand. T contributes 64% of the total demand increment to 2035, but growth slows post 2020, due to efficiency improvements and a modest displacement by natural gas and electricity. The largest increments of non-OPEC supply come from the US (6 Mb/d), Brazil (3 Mb/d), and Canada (3 Mb/d), which offset declines in mature provinces such as the North Sea. OPEC supply growth comes primarily from Natural Gas Liquids (3 Mb/d) and crude oil in Iraq (2 Mb/d). Fossil fuels are projected to provide the majority of the world's energy needs, meeting two-thirds of the increase in energy demand out of 2035; however, the mix will shift. Renewables and unconventional fossil fuels will take a larger share, along with gas, which is set to be the fastest-growing fossil fuel, as well as the cleanest, meeting as much of the increase in demand as coal and oil combined. The Oil Scenario Global oil consumption is projected to reach 111.1 Mb/d by 2040. Demand increases by just over 21 mb/d over the period 2013-2040, reaching 111.1 mb/d by 2040. OECD consumption is projected to fall to 38.2. Mb/d in 2040, the lowest since 1985. US demand falls 24 Mb/d to 20.6 Mb/d from 2013 to 2040. Non-OECD consumption will reach 67 Mb/d by 2040 with demand in China growing to 18.8 Mb/d in 2040. India and the Middle East are the next largest contributors. Although China provides the largest increment to liquids demand over the outlook period, its growth volumes slow relative to those observed over the last 10 years The Gas Scenario Gas has a 21% share in the global primary energy mix, behind oil and coal. The United States, Russia, China and Iran are the world's largest consumers of gas. The largest producers are Russia, the United States, Canada, Qatar and Iran. It is important to note that Chinese gas consumption almost doubled over 2007-12, and rose 9% in 2013, to reach nearly 120 bcm, while US gas production increased by more than one-quarter over the same period to reach 688 bcm. The medium-term outlook remains optimistic for the future of natural gas, with demand reaching 3 980 bcm by 2019. Non-OECD regions continue to drive natural gas demand: they will provide 85% of the additional consumption. China alone rebrsents 30% of this demand, followed by the Middle East with 22%. In contrast, consumption in FSU/non-OECD Europe remains stable. OECD countries are unlikely to provide similar additional volumes due to the maturity of most markets, slower economic growth, and competition with renewable energies and/or coal across the three regions. Still, the OECD Americas region will contribute to around 50 bcm, approximately 10% of the incremental consumption over 2013-19. The global outlook for gas appears to be bright over the coming decades, as demand increases by 50% to 169 trillion cubic feet in 2035. New sources of gas, both conventional and unconventional, are expected bring greater diversity to global supply. Changes in the list of major LNG suppliers will result in creation of new linkages between regional gas markets, notably between those of North America and the Asia-Pacific, narrowing to a degree the wide regional gas price differentials that exist today. Natural Gas Scenario The global demand for Natural Gas is projected to rise by 65% from 2010 to 2040, the largest volume in any energy source. Natural gas production is projected to grow in almost all regions. Natural gas is the world's fastest-growing fossil fuel, with consumption expected to increase from 113.0 trillion cubic feet in 2010 to 185.0 trillion cubic feet in 2040. Growth in consumption occurs in every region and is most concentrated in non-OECD countries, where demand increases more than twice as fast as in OECD countries (Figure 40). Non-OECD producers account for more than 70 percent of the total growth in world natural gas production from 2010 to 2040. Growth in natural gas consumption is particularly strong in non-OECD countries, where economic growth leads to increased demand over the projection period. Consumption in non-OECD countries grows by an average of 2.2 percent per year through 2040, more than twice as fast as the 1.0-percent annual growth rate for natural gas demand in the OECD countries. As a result, non-OECD countries account for 72 percent of the total world increment in natural gas consumption, as the non-OECD share of world natural gas use increases from 51 percent in 2010 to 59 percent in 2040 The U.S. total natural gas consumption grows from 25.6 trillion cubic feet (Tcf) in 2012 to 31.6 Tcf in 2040 Natural gas use increases in all of the end-use sectors except residential (Figure below). Natural gas use for residential space heating declines as a result of population shifts to warmer regions of the country and improvements in appliance efficiency. EIA projects that U.S. total natural gas consumption will average 75.7 Bcf/d in 2015 and 76.2 Bcf/d in 2016, compared with an estimated 73.5 Bcf/d in 2014. Growth is largely driven by demand in the industrial and electric power sectors, while residential and commercial consumption are projected to decline in 2015 and 2016. EIA projects natural gas consumption in the power sector to grow by 8.1% in 2015 and by 1.9% in 2016. Industrial sector consumption increases by 6.6% and 2.1% in 2015 and 2016, respectively, as new industrial projects come online, particularly in the fertilizer and chemicals sectors, and industrial consumers take advantage of low natural gas prices. Liquefied natural gas (LNG) accounts for a growing share of world natural gas trade. The LNG market is poised for a growth spurt with a slew of new projects adding 22 Bcf/d by 2020. LNG supply grows 7.8% p.a. between 201320. Overall, LNG supply grows by 48 Bcf/d by 2035, with Australia (16 Bcf/d) and the US (14 Bcf/d) each contributing around a third of that increase. African LNG supply, led by East Africa, increases by 12 Bcf/d. As a result, Qatar, which has the largest market share today, is overtaken by Australia (24% share of the market by 2035), Africa (21%), and the US (18%). Asia is the largest destination for LNG, with its share in global LNG demand remaining above 70%. By 2035, China becomes the second largest LNG importer (12 Bcf/d), just behind Japan (13 Bcf/d). Shale Gas Unconventional sources such as shale are an important source of oil and natural gas not only in the United States but also in other parts of the world like Canada, Europe, Asia and Australia. US shale gas production is expected to grow rapidly over the Outlook (4.5% p.a.), although growth rates moderate gradually. OECD shale gas grows much faster at 5% p.a., adding 52 Bcf/d and accounting for around a third of the increase in global gas supply to 2035. Shale gas production is dominated by North America, which currently accounts for nearly all of shale gas supply and continues to account for around three-quarters in 2035.However, growth in shale gas outside North America accelerates and by the 2030s overtakes North American growth (in volume terms). China is the most promising country outside North America, accounting for 13% of the increase in global shale gas. By the end of the Outlook, China and North America account for around 85% of global shale gas production In the United States, one of the keys to increasing natural gas production has been advances in the application of horizontal drilling and hydraulic fracturing technologies, which have made it possible to develop the country's vast shale gas resources and have contributed to a near doubling of estimates for total U.S. technically recoverable natural gas resources over the past decade. EIA's own assessment of resources within the United States indicates technically recoverable resources of 345 billion barrels of world shale oil resources and 7,299 trillion cubic feet of world shale gas resources. As per the study in US Energy Information Administration (IEO 2013), shale gas accounts for 50 percent of U.S. natural gas production in 2040 Global Steel Pipe Industry World’s transmission pipeline network for crude oil, natural gas and other products have grown significantly in the last 20 years. The length of all transmission pipelines has increased by 67% over this period (a CAGR of 2.5%). Natural gas pipelines have increased 80% (a CAGR of 3%); crude oil pipelines 63% (a CAGR of 2.5%) and other pipelines by 35% (a CAGR of 1.5%). The Offshore pipelines, although still a small component of the total (11.6% of total length in 2013 vs 8.0% in 1993), have grown significantly in last 20 years. This Increase has arisen partly through the discovery of oil and gas in deeper waters and also the ability of the steel sector to supply linepipe steels that are able to meet more demanding requirements and also the ability of the energy and pipe laying sectors. In total, almost 2.2 million kilometers of transmission linepipe is brsent worldwide, half of which is in two countries - USA and Russia. A further 8 countries (Canada, China, Ukraine, Argentina, UK, Iran, Mexico, and India) take the cumulative total to 70% of the world network by length. Large Diameter Steel pipes market, though encountering overcapacity conditions at brsent, is expected to witness steady growth in the upcoming years driven by the implementation of new pipeline projects across the globe. The global pipeline demand as per Simdex for projects over the next 4 years is estimated at about 911 projects resulting in an opportunity for supplies of more than US$ 422 billion across geographies as brsented in the table below: The Replacement Demand - the potential upside Replacement of aging infrastructure offers huge potential for the pipe manufacturers. The need to replace old pipelines is particular high in the US and Russia, where pipeline networks were mostly installed during the 60s and 70s. With the average lifespan of oil and gas transportation pipes ranging between 25 and 30 years, opportunities in the replacement market are huge, particularly for HSAW pipes. In the US spills, breaks and other accidents from all gas, oil and hazardous liquids pipelines have caused a total damage of more than US$ 5.5 billion during the past 12 years. A recent news article (Source: politico.com) suggests that the US brsident, Mr. Barack Obama has proposed a $3.5 billion pipeline overhaul. This amount would be used to replace aging natural gas pipelines in the US. The US government has also released a report addressing the dangers to both public safety and the climate from pipelines that leak or rupture. The proposed amount of US$3.5 bn would replace only a small portion of the aging pipelines and a full overhaul would cost US$ 270 bn. Domestic Pipe Demand Today, India has a network of 9,785 km of crude pipelhaving a capacity of 139.25 mmtpa India, at brsent has a network of about ~15,300 kms of natural gas transmission pipelines with a capacity of around 400 MMSCMD. This pipeline network is expected to expand to around 28,000 ms with a total capacity of around 721 MMSCMD in next 5-6 years. This includes most of the National Gas Grid that would connect all major demand and supply centre in India. The capacity of pipeline network in India is further planned to reach 815 MMSCMD in 2029-30. In addition to the trunk lines, regional gas pipelines similar to the intra-state network of Gujarat, are recommended for highly industrialized states. It is expected that going forward the Southern and Northern part of India would catch-up with the Western part in terms of pipeline infrastructure while Eastern and North Eastern part of the country would lag behind and would require policy boost for industrial development to attract more investments. The total demand from CGD sector is expected to grow from 15.3 MMSCMD in 2012-13 to 85.6 MMSCMD in 2029-30 at a CAGR of 10.7%. WELSPUN'S FY15 HIGHLIGHTS Highest Ever Pipe Sales and Production volume Global operations and brsence in the major markets has enabled the Company achieve an all time high pipe sales and production volume of over 1.1 million tons in FY15.The Company crossed the milestone 1 million tonne production and sales volumes for the third successive year, a record across the global pipe industry. Order book scales up in a challenging business environment to Rs. 72 billion (1029 K MT). The order book at the beginning of FY16 at 1029 K MT is valued at Rs. 72 Billion. Despite the challenging business environment during the year, the company have been able to book new orders of over 1 million MT. Quality of the new orders has seen perceptible improvement and this is also due to the Company's ability to deliver locally in major markets and its proximity to large customers. Outlook for the Indian market has also improved and this should help the Company to further build on this order book during the next financial year. US Facilities The 175 K MT p.a. capacity HFIW mill which was commissioned in FY14 has been stabilized and its operations streamlined. This mill, which is best in class and has state of the art facilities, has obtained approvals from various domestic and global majors and is expected to deliver improved performance in the next year. The 350 K MT p.a Spiral Mill underwent a major revamp including an unbrcedented campaign to improve productivity, enhance efficiency, reduce costs and reset the mill capabilities to the emerging market requirements in North America. While this did have an impact on the financial performance for FY15, The company has been able to reach out to many large customers which, hitherto, were not accessible to it. The company has also been able to start FY16 with a record order book and promising outlook. India Facilities Anjar: The LSAW Mill serviced global customers across a range of mid and large sized orders. The Spiral Mills were largely engaged in the domestic market especially in the water/ irrigation segment. This facility was awarded "FICCI Quality Systems Excellence Award for Manufacturing 2014" - Certificate of Silver (Third) Prize in Large Size Category Plate and Coil Mill Division operations were revived during the second half of the last financial year and significant efforts were invested in streamlining mill capacity and capability which enabled the mill deliver on performance standards very early in the campaign. The output was largely used for captive pipe production and this also enhanced customer service levels and improved supply chain security for the pipe mill customers. Dahej: The LSAW Mill completed deliveries on one of the brstigious contracts from an Oil & Gas major during the last financial year. The Dahej Unit received the brstigious "NACE INTERNATIONAL CORROSION AWARENESS AWARD 2014" (Category for Excellent Material Research and Corrosion Testing facilities) Mandya: Post the API certification in the last financial year, this mill survived difficult market conditions during most of the year which also affected its volumes and performance. With outlook in the Indian market, especially in the water segment improving, this mill is expected to have higher volumes and improved performance. During the last financial year, the Company built on its versatile mill capability and brsence across many segments of the domestic market by scaling its production and sales volumes to a record high thereby delivering a significantly improved financial performance. Later in the year, the company undertook a campaign to streamline its technical processes, including quality and compliance parameters, also using the services of internal and external experts. The Company also revamped its local management, especially at senior levels, to enable the business address market challenges within the Kingdom and across the Middle East and also brpare the business for the greater opportunities ahead in the region. Multi Locational Line Pipe Manufacturing Facilities Complemented With Coating Capability The Company's multi-locational pipe capacity remains at 2.425 million MTPA, which includes LSAW capacity of 0.70 million MTPA, 1.35 million MTPA of HSAW and ERW/HFIW capacity of 0.375 million MTPA. The company has coating facilities in all the three countries besides the Plate and Coil Mill capacity in India, details as below: Global Customer Base and Reach The Company has major O&G players as clients across the globe and is serving them with manufacturing facilities in India, US and Saudi Arabia and marketing operations in India, Dubai and Houston. WCL's local brsence in the major markets and ability to quickly respond to customer requirements across many markets has made your company a supplier of choice for most customers. Redemption of balance FCCB's of USD 75 million out of total of USD 150 mn During FY15, the Company redeemed its entire outstanding FCCBs involving a payout of USD 79 million thus successfully extinguishing the 2009 issuance of USD 150 million FCCBs. This redemption was entirely from internal accruals, without any refinancing, to align with the overall objective of ensuring a stronger Balance Sheet. Ranked 50th in the ET list of best CSR companies in India WCL has been ranked 50th in the recent ET list of best CSR companies in India taking initiatives towards the development of Social Environment at all its plants and providing a better working environment to its employees across all locations. Competitive Strengths: The main competitive strengths of the Company include: • Multi locational facilities, with strong product portfolio alongwith coating capability, in the major markets enabling the company to be closer to most customers; • Technological leadership, supported by best in class quality processes and systems, enabling the company to be the partner of choice for global customers. • Long and excellent track record in delivering some of the landmark global projects • Global client base amongst the major oil and gas companies, • Strong supplier relationshipsglobally enabling access to quality materials in line with specifications • Human capital with a global outlook and diverse knowledge and skills; • Strong order book • Strong balance sheet Outlook is cautiously positive despite a challenging business environment The outlook for the pipe business is cautiously positive on the back of strong order book and the pipeline of bids and projects. Business environment remains challenging with low gas prices and high volatility in oil markets. While the short term impact is evidenced in some cuts and delays in existing project capexes and related spends, it has also led to a delay effect in launching new projects. The sharp drop in US rig count will have an impact on some key segments of the North American market. However, steel prices have declined in the recent past and low commodity prices will drive demand for pipelines as the most brferred medium and cost efficient means of transporting oil and gas over other means such as rail and road as companies try to reduce costs. Mexico is moving towards a natural gas driven economy with strong pipe demand outlook for the foreseeable future. There are clear indications of brference to local players and the technical requirements will need participation by global majors. Geopolitical constraints causing a significant delay to a major cross country pipeline across North America has dampened sentiment for similar large projects. Similar geopolitical developments in the European market leading to cancellation of a major project have impacted pipe mills in Europe and Asia. However, discussions on alternate pipelines in the European and Asian markets will provide an interesting opportunity for global pipe mills. The Middle East continues to be a region with high potential. However, the 30% cut in Capex announced by Saudi Aramco and increased local competition makes the Saudi outlook challenging. In the African region, Mozambique offers potential upside. The universal trend of global currencies debrciating v/s the US $ has encompassed developed market currencies (Euro, JPY, Canadian $) and developing market currencies (Turkish Lira, Russian Rouble, Chinese Yuan, Brazilian Real) and the relatively lesser debrciation of the INR has aggravated the competitive intensity in the global markets. India could turn out to be a high growth area in the near term. Recent announcement of 15,000 kms Oil and Gas pipeline projects and several state water projects in India is a positive for the industry.In the Asia-Pacific region, potential demand from Thailand, Malaysia and Indonesia could boost the regional demand. Vietnam and Myanmar are new markets with large potential oil and gas reserves. The Company is well poised to address these opportunities suitably blending its global reach and local capabilities. Risks and Concerns The key risks for the Company are: • Economic Risks: The macroeconomic outlook continues to be challenging in India as well as in the other key markets where the Company operates. Economic slowdown may affect the order book position of the Company in the interim period affecting capacity utilization, sales and profitability of the Company. The Company has commenced the year with a strong order book position and is capable to withstand this risk based on its past records • Interest Rate Risk: Interest expenses are part of the finance costs therefore any major upward fluctuations in the Interest rates leads to increase in the cost of debt of the Company. The interest rate risks are mitigated to an extent through fixed interest rates on some borrowings. • Legal Risks related to tax structure: The Company is liable to pay Tax on profits, sales tax, excise duty, service tax etc. Any changes in tax legislation could lead to an increase in tax payments and, as a result, to a lowering of financial results. Volatile crude oil and gas prices: Volatility in the price of crude oil and very low gas prices create uncertainty for oil & gas producers regarding the viability of new exploration. This in turn could create uncertain future demand for line pipes in the oil & gas segment. Competition: Increased competition in all the segments from other players may have an impact on the business and profitability.While the potential demand for new oil and gas pipelines remains high in most of the Company's markets, there has been considerable delays in decisions in many projects on account of factors such as policy uncertainty, environmental concerns etc. This has led to fewer than expected projects coming to the market, resulting in high level of competition. The Company has a strong order book and hence the Company's focus will be on profitability rather than winning orders at any cost. Currency Risks: The Company'sforeign currency exposures are largely denominated in US Dollars. Volatility in the rupee exchange rate against major currencies, including the US dollar will have an adverse impact. Though the Company has implemented a well-defined hedging policy, foreign exchange fluctuations could affect reported results. Human Resources Welspun Corp Ltd (WCL) has evolved an HR strategy (Acquire, Develop, Engage) to institutionalize people policies and practices so as to support business create and brserve values for all its Shareholders & Stakeholders, globally. The HR strategy is supported by a HR operating model which encourages effective HR delivery at unit level across locations, thereby empowering the local management team and HR communities. HR Business partnering concept has been introduced to ensure HR works closely with the business managers. Subject Matters Experts (SMEs) have been introduced at the corporate HR within WCL to ensure consistency in people practices across location keeping to the core the 'Local Content' of such practices. The company has been able to demonstrate a structured and systematic way of working to sustain an excellence driven organization model introduced 18 months ago in consultation with Hay Group. All our businesses units and corporate functions have Heads in positions fully responsible for the sustainable growth of our business. For the year 2014-15, there has been tremendous focus on talent acquisition and their development and engagement at work place. The company started its journey on HR transformation agenda with following initiatives around the elements of our HR strategy: Acquire Company has introduced Predictive Index Psychometric profiling for hiring upto middle level. We have introduced HOGAN profiling for all recruitment at VP level and above. To ensure effective hiring and reduced lead time, recruitment process outsourcing model (RPO) with Randstad was introduced. Develop To help people development agenda, the company has provided a platform to more than 80 middle to senior level people to take 360 degree feedback following by one-to-one coaching assistance to formulate their Individual Development Plan (IDP). We worked with Centre for Creative Leadership (CCL), Singapore The focus of the IDPs has been around development concept of 70-2010 model where people learn mostly on the job (70%), supported by learning from peers and bosses (20%) and classroom training (10). To align compensation of people with the market, company has commissioned Compensation & Benefits Benchmarking Survey for its locations, which will aid to the upcoming Annual Salary Review process. For the first time, performance linked incentive scheme was introduced as Annual Incentive Mechanism (AIM) which is linked with individual performance rating and company achieving EBITDA and OCF target set in the beginning of the year. Job Evaluation and Banding project to streamline jobs in the company and promote consistency in hiring, promotions, transfers and other talent management decisions across all locations. Performance management system is now available online leveraging our ERP system - SAP. Engage Employee Engagement through celebrations of key festivals and events practice sessions for Sports Tournament, nominations in Mumbai Marathon and monthly newsletters. In the Units family days and other engagement activities have also been very well received. Industrial Relations in the company have been good with few challenges in our Mandya plant. Company has taken measures to encourage acceptable behaviors of its staff. Our company is focused on creating a sustaining organization and hence the focus in the coming year will be on developing talents and succession planning for business critical positions. Internal Control and Adequacy Management of the Company ensures that the internal control system is adequate and commensurate with the size and scale of the Company's operationsand designed to provide reasonable assurance that assets are safeguarded and transactions are rightly executed and recorded in accordance with management authorization and accounting policies. The existing policies are subject to periodic reviews to align with the changing business needs, improve governance and to enhance compliance with evolving regulation. All the records are adequately maintained for brparation of financial statements and other financial information. Apart from internal controls, the Company also audits the efficiency and security of its operations, its information technologies and data, in accordance with the global standards. The Audit Committee of the Company met fifteen times during this year to review internal audit reports as well as the internal control systems and financial disclosures. |