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Directors Report of Va Tech Wabag Ltd.

Mar 31, 2016

Dear Shareholders,

The Directors are pleased to present the 21st Annual Report of the Company, together with the Audited Financial Statements for the year ended March 31, 2016.

Financial summary

Your Company''s financial performance for the year ended March 31, 2016 is summarised below:

(Rs. in Lakhs)

Standalone Consolidated Particulars 2015-16 2014-15 2015-16 2014-15

Gross turnover 1,51,343 1,23,336 2,54,857 2,43,515

Profit before interest, tax & depreciation (EBITDA) 20,607 14,926 22,465 20,947

Net profit before tax 17,853 13,601 16,172 16,710

Provision for tax (6,110) (4,560) (6,890) (5,664)

Net profit after tax 11,743 9,041 9,282 11,046

Proposed dividend on equity shares (2,180) (2,176) (2,180) (2,176)

Tax on proposed dividend (456) (443) (456) (443)

Retained profit carried forward to the following year 46,008 36,901 49,730 43,302

Business environment

The global business environment during the year was subdued and witnessed slow growth across geographies. The oil price crisis in Middle East dominated throughout the year and had its effects spread across the world. The currency devaluation by China and the slowdown in this region witnessed tremendous volatility in the major currencies and commodities. Despite the global turmoil, Indian economy remained fairly stable but the growth momentum which was expected during the year did not happen on the back of slow decision making and lead up to various state elections held in May 2016.

Forecasting these developments to an extent, your Company had proactively spread its wings in the international emerging geographies where better visibility was seen in terms of new projects in the water treatment space. The focused approach of the business development and sales team helped your company in garnering good order intake in Malaysia, Bahrain, Sri Lanka, Nigeria and Saudi Arabia. Towards the end of the year, your company also bagged a big ticket tertiary treatment order in Chennai, India. The strategy of diversifying into targeted geographies for newer opportunities helped the Company secure its biggest ever order intake in a single financial year and thereby helped in navigating your Company safely amidst tough macro-economic conditions.

State of affairs

In the financial year 2015-16, your Company continued its growth momentum on key parameters. During the year, your company recorded order intake of Rs. 5,140 Crore which helped your Company to close the year with a strong order book of Rs. 7,308 Crore as on March 31, 2016. Your Company''s consolidated turnover stood at Rs. 2,549 Crore compared to previous year''s turnover of Rs. 2,435 Crore recording a growth of 5%. The standalone turnover stood at Rs. 1,513 Crore, an increase of 23%, compared to previous year''s turnover of Rs. 1,233 Crore. The consolidated EBITDA increased to Rs. 225 Crore in FY 2015-16 as against Rs. 209 Crore in the previous year registering a growth of 8% over previous year. On a standalone basis the EBITDA stood at Rs. 206 Crore in FY 2015-16 as against the previous year''s EBITDA of Rs. 149 Crore. The consolidated PAT stood at Rs. 92 Crore as against Rs. 110 Crore in the previous year. The increase in working capital due to the liquidity stress in the market impacted the Company''s bottom-line adversely. The consolidated EPS was atRs. 16.95 for the year ended March 31, 2016 as against Rs. 20.39 in the previous year.

Dividend

Your directors are pleased to recommend a final dividend of Rs.4/- per equity share on the face value ofRs. 2/-per equity share for the financial year ended March 31, 2016 amounting to Rs. 26.36 Crore (inclusive of tax Rs. 4.56 Crore). The dividend payout is subject to approval of members at the ensuing Annual General Meeting (AGM).

The dividend will be paid to members whose names appear in the Register of members as on July 15, 2016 in respect of shares held in dematerialised form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited as beneficial owners as on that date.

Management''s discussion and analysis

In terms of the provisions of Regulation 34 of the SEBI Listing Obligations And Disclosures Requirements Regulation (SEBI LODR) 2015, the Management''s discussion and analysis is set out in this Annual Report.

Key projects updates

PETRONAS RAPID ETP PROJECT, Malaysia

During the year, Malaysia''s National Oil and Gas company, Petroliam Nasional Berhad (PETRONAS), through its subsidiary under the PETRONAS Group, PRPC Utilities and Facilities Sdn. Bhd. (PRPC UF), signed a contract with VA Tech Wabag Limited and Muhibbah Engineering (M) Bhd for the ReFEED and Engineering, Procurement, Construction and Commissioning of the Effluent Treatment Plant (ETP) for PETRONAS'' Refinery and Petrochemicals Integrated Development (RAPID) Project in Pengerang, Johor. The project is being executed by Wabag-Muhibbah JV Sdn. Bhd., a JV company incorporated in Malaysia. The contract''s scope covers RAPID Complex''s effluent and waste water treatment to below the regulatory discharge limits with a state-of-the- art water treatment system. The project is progressing as per schedule. The ReFEED Engineering approval has been obtained while the detailed engineering, procurement and construction activities are progressing as planned.

AMAS STP PROJECT, Bahrain

The year 2015-16 saw your Company winning a large EPC order from the Kingdom of Bahrain, to Design and Build a Sewage Treatment Plant (STP) for Al Madina Al Shamaliya (AMAS), the new town being developed in Bahrain. The project is funded by Abu Dhabi Fund for Development (ADFD). WABAG is partnering with Belhasa Projects LLC, UAE for executing this project. AMAS is a mixed used new town on reclaimed land off the north coast of the Kingdom of Bahrain. With a total land area of approximately 750ha over 13 islands,

AMAS shall be developed for Housing, Recreational, and Business activities purpose which will provide approximately 15,000 dwelling units. The STP plant with tertiary treatment will cater to the entire irrigation water requirements of all the 13 islands. The client has approved the basic engineering; the civil work has commenced and the detailed engineering and procurement is at an advanced stage.

DANGOTE RWTP PROJECT, Nigeria

WABAG is designing and building a Raw Water Treatment plant for Dangote Fertilizer Ltd a Company forming part of the Dangote Group, one of Africa''s most diversified business groups. The greenfield, integrated fertiliser and refinery complex will be located near Lagos, Nigeria''s largest city, and will be the largest of its kind in Africa. 60 MLD of raw water from the lagoon will be processed using a combination of ultrafiltration/reverse osmosis. The scope of the contract includes design, engineering and supply of raw water treatment plant, as well as supervision of installation and commissioning. The project is progressing well and reached the final stages of engineering completion.

AL GHUBRAH DESALINATION PROJECT, Oman

During the year, the 191 MLD Al Ghubrah Desalination Project was completed and handed over to the client. The project was executed by International Water Treatment LLC (IWT) a SPV incorporated in Muscat, Oman, with the Company holding 32.5% stake and the other joint venture partners of the SPV being Cadagua SA, Spain (37.5%) and Galfar Engineering & Contracting SAOG, Oman (30%). The plant has an innovative design that provides it with a compact footprint and employs technology that includes a two-pass reverse osmosis system with pre-treatment using dissolved air flotation (DAF) and dual media filters. The Project suffered a time over-run which led to delay in the overall commissioning of the plant that has eroded the expected margins on the Project. As per terms of the contract the SPV is liable to pay liquidated damages (LD) to the client. The Company''s share of the liquidated damages would amount to 32.5% of the overall liquidated damages that could be levied. The SPV has initiated arbitration proceedings with the client on the extent of liquidated damages and the matter is sub judice. Although the Project suffered losses, the state-of-the-art Plant is a good reference for the Company which will enable it to win large projects in Desalination space.

APGENCO KAKATIYA and RAYALASEEMA THERMAL POWER PROJECT, India

Andhra Pradesh Power Gen. Co. Ltd. had placed orders for two 600 MW Thermal Power Plants - one at Warangal and another at Cuddapah. The orders were placed on a consortium in which WABAG was joint partner along with two more contractors.

WABAG was initially responsible for Water Systems Package. Due to financial issues on the part of the Consortium leader, WABAG had to take lead of the consortium from mid-2014 and took over the overall responsibility of completing the entire balance of plant for the 600 MW Power plant. For the first time, WABAG ventured into the construction of the full Balance of Plant package.

The first of the 600 MW Kakatiya Thermal Power projects was completed successfully and the Plant was inaugurated by the Chief Minister of Telengana in the Month of January 2016. The other 600 MW Rayalaseema Thermal Power plant is under construction and the plant is in progress as per schedule for completion.

Corporate governance

Your Company is committed to maintain the highest standards of corporate governance. We believe sound corporate governance is critical to enhance and retain investor trust. Our disclosures seek to attain the best practices in corporate governance as prevalent globally. We have implemented several best corporate governance practices in the Company to enhance long-term shareholder value and respect minority rights in all our business decisions. Our corporate governance report for FY 2015-16 forms part of this Annual Report. The requisite certificate from the auditors of the Company confirming compliance with the conditions of corporate governance as stipulated under SEBI LODR is annexed to the corporate governance report.

Directors & Key managerial personnel

Rajiv Mittal was appointed as the Managing Director & Group CEO for a period of 5 years effective October 1, 2015 by the members at the 20th AGM held on July 27, 2015. The members at the said AGM also appointed S Varadarajan as a Director of the Company liable to retire by rotation and Malay Mukherjee as an Independent Director for a period of 3 consecutive years for a term up to the conclusion of the 23rd AGM of the Company in the calendar year 2018. We thank the members for their support in confirming the above- mentioned appointments.

The board, on the recommendation of the Nomination and Remuneration Committee, appointed Parthasarathy Gopalan as the Chief Financial Officer (CFO) effective November 7,2015 in place of S Varadarajan who relinquished his post as the CFO of the Company. The board places on record its appreciation for the services rendered by S Varadarajan during his tenure as CFO with the Company. Further, based on the recommendation of the Nomination and Remuneration Committee, S Varadarajan was designated as the Director & Chief Growth Officer of the Company effective November 7, 2015.

As per the provisions of the Companies Act, 2013, S Varadarajan, retires by rotation at the ensuing annual general meeting and being eligible, seeks re-appointment. A brief profile of S Varadarajan is given in the notice dated May 26, 2016 convening the AGM of the Company. The board recommends his re-appointment.

Declaration by independent directors

The Company has received necessary declaration from each independent director under Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI LODR.

Board diversity

The Company recognises the importance of a diverse board for its success and believes that a diverse board will leverage inter alia differences in thought, knowledge, skills, regional and industry experience, cultural and geographical background which in the long run will enhance shareholder value. The Nomination and Remuneration Committee sets out the approach to diversity of the board of directors.

Board evaluation

Pursuant to the provisions of the Companies Act, 2013 and Regulation 19 of SEBI LODR, the board has carried out the annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination and Remuneration, Stakeholders Relationship, Corporate Social Responsibility, Monitoring & Overseas Investment Committee. A structured questionnaire was prepared after taking into consideration inputs received from the directors, covering various aspects of the board''s functioning such as adequacy of the composition of the board and its Committees, Board culture, execution and performance of specific duties, obligations and governance.

A separate exercise was carried out to eval uate the performance of individual directors including the Chairman of the board, who were evaluated on parameters such as participation and contribution by a director, commitment, including guidance provided to the senior management outside of board / committee meetings, effective deployment of knowledge and expertise, effective management of relationship with various stakeholders, independence of behavior and judgment etc. The performance evaluation of the Independent Directors was carried out by the entire board. The performance evaluation of the Chairman and Managing Director were carried out by the Independent Directors. The board also reviewed the performance of the Chief Financial Officer, Company Secretary and other senior managerial personnel. The evaluation process has been explained in the corporate governance report. The board approved the evaluation results as collated by the Nomination and Remuneration Committee.

Policy on directors appointment and remuneration

The Company''s current policy is to have an appropriate mix of Executive and Independent Directors to maintain the independence of the board and separate its functions of governance and management. As on March 31,2016 the board consists of 7 Directors, majority of them being independent directors. Besides the Chairman who is an independent director, the board comprises the managing director and an executive director both being promoters and 4 independent directors. The board periodically evaluates the need for change in its composition and size.

The policy of the Company on director''s appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters as required under sub-section (3) of Section 178 of the Companies Act, 2013 are formulated by the Nomination and Remuneration Committee and is outlined in the Nomination Evaluation & Remuneration policy of the Company.

Number of meetings of the board

The board met four times during the financial year, the details of which are given in the corporate governance report. The maximum interval between any two meetings did not exceed 120 days, as prescribed in the Companies Act, 2013.

Committees of the board

Currently, the board has six Committees: the Audit Committee, the Nomination and Remuneration Committee, the Corporate Social Responsibility Committee, the Stakeholders Relationship Committee, the Monitoring Committee and the Overseas Investment Committee. As required under section 177 (8) of the Companies Act, 2013, the composition of the Audit Committee is disclosed as under:

B D Narang, Chairman of the Committee, Jaithirth Rao, Malay Mukherjee and Sumit Chandwani.

A detailed note on the composition of the board and other committees is provided in the corporate governance report section of this annual report.

Induction & training of board members

On appointment, the concerned director is issued a letter of appointment setting out in detail, the terms of appointment, duties, responsibilities and expected time commitments. Each newly appointed/ designated independent director is taken through a formal induction program including the presentation from the managing director & group CEO on the Company''s operations, marketing, finance and other important functions. The company secretary briefs the director about their legal and regulatory responsibilities as a director. The induction for independent directors include interactive sessions with executive committee members, business and functional heads, visit to the plant site etc. The above initiatives help the director to understand the Company, its business and the regulatory framework in which the Company operates and equips him/ her to effectively fulfill his role as a director of the Company.

Periodic presentations are also made at the board and committee meetings on business and performance updates of the Company, global business environment, business strategy and risks involved.

Director''s responsibility statement

Pursuant to the requirement under Section 134 (3) (c) of the Companies Act, 2013, your directors confirm that:

- in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

- they have 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;

- they have taken proper and sufficient care towards the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- they have prepared the annual accounts on a going concern basis;

- they have laid down internal financial controls which were adequate and are operating effectively; and

- they have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

Remuneration policy

The Company''s remuneration policy is driven by the success and performance of the individual employee and the Company. Through its compensation programme, your Company endeavors to attract, retain, develop and motivate a high performance workforce. The Company follows a compensation mix of fixed pay benefits and performance based variable pay. Individual performance pay is determined by business performance and the performance of the individuals are measured through quarterly & annual appraisal process.

The primary objective of the remuneration policy is to formulate the criteria for determining qualifications, competencies, positive attributes and independence for the appointment of a director and recommend to the board policies relating to the remuneration of the directors, KMPs and other employees. This includes reviewing and approving corporate goals and objectives relevant to the compensation of the executive directors, evaluating executive directors'' performance in the light of those goals and objectives, and either as a committee or together with the other independent directors (as directed by the board), determine and approve the executive directors'' compensation level based on this evaluation and making recommendations to the board with respect to key managerial personnel''s (KMPs) compensation, performance incentives and equity based plans that are subject to the board''s approval.

The purpose of the policy is also to assess the effectiveness of the board as a whole, committees of the board and individual directors on regular basis through the Nomination and Remuneration Committee of the board. The policy also addresses board diversity and outlines remuneration principles for directors, KMP''s and other employees based on various evaluation criteria determined by the Nomination and Remuneration Committee including measuring their performance and achievement against the Company''s goals.

Employees'' stock option scheme

Nomination and Remuneration Committee of the Board of directors of the Company, inter alia administers and monitors the Company''s employees'' stock option scheme (ESOP Scheme) in accordance with the applicable SEBI Regulations. During the year ended March 31, 2016, a total of 2,11,911 shares were allotted to eligible employees under the Company''s prevailing ESOP scheme. During the year ended March 31, 2016 there has been no material change in the Company''s existing ESOS and the scheme is in compliance with the applicable Regulations. The details of the scheme as required under SEBI Regulations is available on the Company''s website www. wabag.com.

The applicable disclosures as stipulated under the SEBI Regulations as on March 31, 2016 is enclosed herewith as Annexure I to the Board''s report. The Company has received a certificate from the statutory auditors that the scheme has been implemented in accordance with the SEBI Regulations and the resolutions passed by the shareholders. The certificate would be placed at the AGM for inspection by the members.

Particulars of employees

The ratio of remuneration of each director to the median of employees'' remuneration as per Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and a statement containing the names of every employee employed throughout the financial year and in receipt of remuneration ofRs. 60 Lakhs or more, or employed for part of the year and in receipt of Rs. 5 Lakhs or more a month, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed herewith as Annexure II to the Board''s report.

Equal opportunity

The Company has always provided a congenial atmosphere for work to all employees that is free from discrimination of any kind. It has provided equal opportunities of employment to all without regard to the nationality, religion, caste, color, language, marital status and sex. The Company has also framed a policy on ''Prevention of Sexual Harassment'' (POSH) at the workplace. We follow a gender-neutral approach in handling complaints of sexual harassment and we are compliant with the law of the land wherever we operate. We have also constituted an Internal Complaints Committee to consider and address sexual harassment complaints. The details of issues raised and resolved regarding sexual harassment of women at the workplace is available in the human resources section which forms part of this annual report.

Auditors

Statutory auditors

At the AGM held on July 27, 2015, Walker Chandiok & Co. LLP, Chartered Accountants, were appointed as statutory auditors of the Company to hold office till the conclusion of AGM to be held in the calendar year 2018. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every AGM. Accordingly, the appointment of Walker Chandiok & Co. LLP, Chartered Accountants, as statutory auditors of the Company, is placed for ratification by the shareholders.

The auditors'' report for FY 2015-16 does not contain any qualification, reservation or adverse remark. The auditors'' report is enclosed with the financial statements in this annual report.

Cost auditor

Section 148 of the Companies Act, 2013 pertaining to audit of cost records is applicable to the Company. Based on the recommendation of the Audit Committee, the board has appointed S Chandrasekaran, Practicing Cost Accountant (Membership No.4784) to audit the cost accounts of the Company for the financial year ended March 31, 2016 and ending March 31, 2017 on a remuneration of Rs. 5 Lakhs per year. As per the provisions of Section 148 of the Companies Act, 2013, the remuneration payable to the cost auditor is required to be ratified by the members. Accordingly, the remuneration payable to S Chandrasekaran, Practicing Cost Accountant, cost auditors of the Company is placed for ratification by the shareholders.

Secretarial auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules thereunder, M.Damodaran (Membership No. 5837) of M.Damodaran & Associates, Practicing Company Secretaries was appointed to conduct the secretarial audit of the Company for the FY 2015-16. The secretarial audit Report for FY 2015-16 is enclosed herewith as Annexure III to the Board''s report. The secretarial audit Report does not contain any qualification, reservation or adverse remark.

The board has appointed M. Damodaran of M. Damodaran & Associates, Practicing Company Secretaries, as secretarial auditor of the Company for the FY 2016-17.

ODI in Subsidiaries, joint ventures and associate companies WABAG, over the years has expanded its global reach through Overseas Direct Investments (ODI), either through subsidiaries, joint venture or associate companies. As of March 2016, the aggregate financial investments in such ODIs amount to Rs. 1,192.20 Crore. Out of such overseas investments, a very substantial component of investment comprises of guarantees or non-funded exposure for various projects, which as of March 2016 amounted to Rs. 1,149.18 Crore (96.40% of total financial exposure). The funded exposure of the Company in ODI for the same period consists of equity Rs. 29.50 Crore (2.47% of total financial exposure) and loans Rs. 13.52 Crore (1.13% of total financial exposure).

The Company has immensely benefited from these ODI, as its standalone revenue from overseas operations as of March 2016 amounted to Rs. 538 Crore, while consolidated overseas revenue less inter-segment revenue amounted to Rs. 1,039 Crore out of its consolidated revenue ofRs. 2,542 Crore. In all, during the financial year 2015-16, the aggregate revenue from ODI is Rs.1,577 Crore (i.e. Rs. 538 crore Rs. 1,039 crore), which accounted for about 62 % of the consolidated revenue of Rs. 2,542 crore, considering its relative meager financial exposure to ODI as stated above.

The consolidated financial statements of the Company and all its subsidiaries which form part of the annual report have been prepared in accordance with Section 129(3) of the Companies Act, 2013 and regulation 33 of SEBILODR. Further, a statement containing the salient features of the financial statement of our subsidiaries, joint ventures and associates in the prescribed format AOC-1 is enclosed herewith as Annexure IV to the Board''s report. The statement also provides the details of performance and financial position of each of the subsidiaries, joint ventures and associates.

During the year, WABAG MUHIBBAH JV SDN, BHD was incorporated in MALAYSIA as a subsidiary to carry out the RAPID Project. WABAG BELHASA JV WLL was incorporated in BAHRAIN as a subsidiary to carry out AMAS Project. VA TECH WABAG EGYPT LIMITED, EGYPT ceases to be a step down subsidiary of the Company since the Company was liquidated in the month of February 2016. Your Company had 21 subsidiaries as on March 31, 2016. BEIJING VA TECH WABAG WATER TREATMENT TECHNOLOGY CO. LTD ceases to be a step down subsidiary of the Company since the Company was liquidated in the month of April 2016. There has been no change in the nature of business of the subsidiaries during the year. During the year, the board of directors reviewed the affairs of the subsidiary Companies. Details of major subsidiaries of the Company and their business operations during the year under review are covered in the management''s discussion and analysis report.

In accordance with Section 136 of the Companies Act, 2013 the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries are available on our Company''s website www. wabag.comThese documents will also be available for inspection during business hours at our registered office in Chennai, India.

Corporate social responsibility

As per the provisions of the Companies Act, 2013 all Companies having a net worth of Rs. 500 Crore or more, or turnover of Rs. 1,000 Crore or more or a net profit of Rs. 5 Crore or more during any financial year are required to constitute a Corporate Social Responsibility (CSR) Committee of the board of directors comprising three or more directors, atleast one of whom should be an independent director. All such Companies are required to spend atleast 2% of the average net profits of their three immediately preceding financial years on CSR- related activities. Accordingly, the Company was required to spend Rs. 2.50 Crore towards CSR activities during the year. The Company spent Rs. 96.54 Lakhs during the FY 2015-16 towards various CSR initiatives. Further a capital commitment of Rs. 97 Lakhs was made in the month of March 2016 towards CSR program implementation on watershed development in partnership with NABARD. The implementing agency is National Agro Foundation, founded by late C Subramanian. Since the roll out of CSR program effective April 2014, the Company has been making a slow and steady progress. The CSR Committee has laid emphasis on outcome & impact than merely on expenditure being met during the year. Secondly, the Committee took extra time & caution in selecting the right

NGO''s as well as focused on projects in our area of expertise that is, water and waste water.

During FY 2015-16, we completed three projects - (1) Augmentation of water resources; (2) Sewage treatment plant for Cancer Institute, Adyar, Chennai and (3) Drinking water filtration solution and sanitation for the Govt. High School, Kodungaiyur, Chennai. One of the project identified i.e. Capacity Building for wetlands management could not be completed on account of apprehension by the intended participants and largely due to Chennai floods. This project is being implemented by an external agency - Care Earth Trust which has sought extension of time till September 2016.

Your Company''s CSR Committee comprises Revathi Kasturi (Chairperson), Rajiv Mittal and S Varadarajan. The Committee is responsible for formulating and monitoring the CSR policy of the Company.

The annual report on our CSR activities is enclosed herewith as Annexure V to the Board''s report.

Deposits

Your Company has not accepted any deposit and as such no amount of principal and interest were outstanding as of the Balance Sheet date.

Particulars of loans, guarantees or investments

Details of loans, guarantees and investments covered under the provisions of section 186 of the Companies Act, 2013 form part of the notes to the financial statements.

Internal financial control and its adequacy

The board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business including adherence to the Company''s policies, safeguarding of its assets, prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures.

Risk management policy

Details on the Company''s risk management framework, risk identification, risk evaluation, mitigation measures and monitoring mechanism forms part of the management''s discussion and analysis section of this annual report.

Particulars of contracts or arrangements made with related parties

Particulars of contracts or arrangements with related parties referred to in Section 188 (1) of the Companies Act 2013, in the prescribed Form AOC - 2, is enclosed herewith as Annexure VI to the Board''s report.

Significant and material orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future.

Extract of annual return

In accordance with section 134(3) (a) of the Companies Act, 2013, an extract of the annual return in the prescribed format is enclosed herewith as Annexure VII to the Board''s report.

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

The particulars as prescribed under Section 134(3) (m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, is enclosed herewith as Annexure VIII to the Board''s report.

Sustainability initiatives

Your Company is in the space of providing solutions in the realm of water and waste water treatment. Sustainability runs through the Company in all its operations and functions. Your Company continuously focuses on solutions which have low carbon footprint and that are sustainable. Globally, your Company is actively involved in providing solutions that are eco-friendly and renewable in nature. Your Company''s contribution towards sustainability is continuous in nature as is reflected throughout this report and forms an integral part of our business.

Acknowledgments

We place on record our appreciation for the committed services from every member of the WABAG family globally. We thank our customers, vendors, investors, banks, various financial institutions, government/regulatory authorities and members for their continued assistance and cooperation received during the year.

For and on behalf of the Board of Directors

Bucharest, Romania B D Narang Rajiv Mittal

May 26,2016 Chairman Managing Director & Group CEO


Mar 31, 2013

Dear Shareholder''s

The Directors are pleased to present the 18th Annual Report and the audited accounts for the financial year ended 31 March, 2013

Financial Results

The financial performance of the Company, for the year ended 31 March, 2013 is summarised below:

(Rs. In lakhs)

Standalone Consolidated

2012-13 2011-12 2012-13 2011-12

Gross Turnover 1,05,717 1,00,347 1,61,885 1,44,352

Profit Before Interest and Depreciation (EBITDA) 13,884 11,542 15,486 13,003

Profit Before Taxation 13,327 11,002 13,519 11,105

Provision for Tax 4,316 3,490 4,559 3,792

Profit After Taxation (PAT) 9,011 7,512 9,034 7,375

Proposed Dividend (including Dividend Tax) (2,174) (1,844) (2,174) (1,844)

Transfer to General Reserve (901) (751) (901) (751)

Profit / (Loss) Brought Forward 19,187 14,270 21,567 16,794

Retained Profit Carried Forward to the following 25,123 19,187 27,526 21,567 year

Dividend

Based on the Company''s performance, your Directors are pleased to recommend a dividend of Rs. 7 per Equity Share (350%) of the face value of Rs. 2 per Equity Share for the financial year 2012-13. The dividend, on approval of the members at the forthcoming Annual General Meeting, will be paid to members whose names appear in the register of members of the Company as on 12 July, 2013; in respect of shares held in dematerialised form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as on that date. The equity dividend outgo for the financial year 2012-13, inclusive of tax on distributed profits will absorb a sum of Rs. 21.74 crores.

Business Performance

In the financial year 2012-13, your Company continued to report profitable growth. Your Company has a healthy order book of Rs. 4,284 crores as on 31 March 2013, supported by highest ever order intake in a financial year of Rs. 2,155 crores during the year. The standalone turnover stood at Rs. 1,057 crores compared to previous year''s Rs. 1,003 crores, recording a marginal growth of 5%. The consolidated turnover stood at Rs. 1,619 crores compared to previous year''s Rs. 1,444 crores, recording a growth of 12% over last year. The EBITDA for the year on a standalone basis stood at Rs. 139 crores registering a growth of 20% as against previous year''s Rs. 115 crores. The consolidated EBITDA increased from Rs. 130 crores of previous year to Rs. 155 crores for the current year. Your Company recorded healthy growth in both consolidated and standalone PAT% as compared to last year. The consolidated PAT recorded a 22% growth over the previous year while the standalone PAT recorded a 20% increase over the previous year. EPS growth recorded a 22% increase for the year ended 31 March, 2013. Your Company will continue to focus on both organic and inorganic growth models through strategic acquisitions that will pave way for its entry into various new geographies and access to latest technologies.

Sustainability

Sustainability is an integral part of our business and cannot be an independent function. Keeping this in view, we provide sustainable solutions to our customers in terms of projects with the objective of converting bio-gas waste into energy in running the STPs on self-sustaining basis, recycling and reuse of water for industrial business, converting salt water into sweet water thus providing a sustainable, reliable and viable alternative water source.

Sustainability is a business opportunity to WABAG in terms of making a real difference both to our people in terms of access to clean drinking water and to our planet by keeping the carbon footprint under check.

At WABAG, the sustainability initiatives go hand in hand with our projects execution which in turn benefit our customers too.

Stock Options

In order to attract, retain, reward and motivate employees to contribute and participate in the Company''s growth and profitability, your Company implemented two stock option schemes viz., the ESOP Scheme 2006 and the ESOP Scheme 2010 (''the Schemes'') in accordance with the Securities and Exchange Board of India (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (''the SEBI Guidelines''). The schemes are administered in accordance with the directions of the Remuneration Committee of the Board.

The applicable disclosures as stipulated under the SEBI Guidelines as at 31 March, 2013 are provided in Annexure I to this Report.

The Company has received a certificate from its Auditors that the Scheme has been implemented in accordance with the SEBI Guidelines and the resolution passed by the shareholders. The Certificate would be placed at the Annual General Meeting for inspection by the members.

Management discussion and analysis report

Management discussion and analysis report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

Subsidiaries

Your Company had eighteen subsidiaries at the beginning of the year. One new subsidiary was set up during the year at Spain: During the year, Va Tech WABAG (Gulf) Contracting L.L.C., Dubai and Engenharia Hidraulica De Macau Ltd., Macau ceased to be subsidiaries of the Company.

The total number of subsidiaries as on 31 March, 2013 is seventeen. There has been no change in the nature of business or of the subsidiaries.

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the balance sheets, profit and loss accounts and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. However, the financial information of the subsidiary companies is disclosed in the Annual Report in compliance with the said Circular. The Company will make available the annual accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the registered office of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary companies. Details of major subsidiaries of the Company are covered in the Management''s discussion and analysis report forming part of the Annual Report.

Directors

Mr. Bhagwan Dass Narang and Mr. Jaithirth Rao, Directors retire by rotation at the ensuing Annual General Meeting. Being eligible Mr. Bhagwan Dass Narang and Mr. Jaithirth Rao offer themselves for reappointment. Members'' attention is drawn to the corresponding resolution in the Notice dated 23 May, 2013 convening the Annual General Meeting.

As stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, brief resumes of Mr. Bhagwan Dass Narang and Mr. Jaithirth Rao are provided in the report on Corporate Governance, which forms part of this Annual Report. Your Directors recommend their reappointment at the ensuing Annual General Meeting.

Director''s Responsibility Statement

"Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect to Directors'' Responsibility Statement. It is hereby confirmed that:

(i) in the preparation of the annual accounts for the year ended 31 March, 2013, the applicable accounting standards read with requirements set out under Schedule VI to the Companies Act, 1956, have been followed and there are no material departures from the same;

(ii) the Directors have 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 as at 31 March, 2013 and of the profit of the Company for the year ended on the date;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the Directors have prepared the annual accounts of the Company on a ''going concern'' basis.

Auditors

M/s. Walker, Chandiok & Co, Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

The Company has received letter from the Auditors to the effect that their reappointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and that they are not disqualified for reappointment within the meaning of Section 226 of the said Act.

The Notes on Financial Statements referred to in the Auditors'' Report are self-explanatory and do not call for any further comments.

Public Deposits

Your Company has not accepted any public deposits and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

Your Company continuously strives to conserve energy, adopt environment- friendly practices and employ technology for efficient operations. The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are provided in the Annexure II to this Report.

Corporate Social Responsibility (CSR)

In keeping with the Company''s CSR philosophy to identify CSR projects close to its project sites and implement projects within the framework of its expertise, this year also your Company repeated the Innovative Learning Project for Nemmeli Govt. Higher Secondary School. The school is in proximity to your Company''s Sea Water Desalination Plant at Nemmeli. Your Company also arranged field trips to the school students to create awareness on environment with focus on ''waste to energy'' concept and practice. Further, your Company offered free ETP solution to the Cancer Institute as part of CSR besides a few other initiatives on philanthropy.

Particulars of Employees

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the annexure to the Directors'' Report. Having regard to the provisions of Section 219(1) (b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any members interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

Corporate Governance Report

Your Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. The Company has also implemented several best Corporate Governance practices as prevalent globally.

The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

The requisite Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49 is attached to this Report.

Acknowledgements

Your Directors would like to express their appreciation for the assistance and co- operation received from various financial institutions, banks, governmental authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by every member of the WABAG family globally.

For and on behalf of the Board of Directors

Rajiv Mittal Sumit Chandwani

23 May, 2013 Managing Director Director


Mar 31, 2012

The Directors are pleased to present the 17th Annual Report and the audited accounts for the financial year ended March 31, 2012

Financial Results

The financial performance of the Company, for the year ended March 31, 2012 is summarized below:

(Rs. in Lakhs)

Standalone Consolidated

2011-12 2010-11 2011-12 2010-11

Gross Turnover 1,00,347 73,346 1,44,352 1,24,182

Profit before Interest & Depn. (EBITDA) 11,542 8,931 13,004 12,103

Profit Before Taxation 11,002 8,379 11,105 9,627

Provision for Tax 3,490 2,853 3,792 3,161

Profit After Taxation (PAT) 7,512 5,526 7,375 5,257

Proposed Dividend (including dividend tax) (1,844) (1,232) (1,844) (1,232)

Transfer to General Reserve (751) (553) (751) (553)

Profit / (Loss) brought forward 14,270 10,529 16,794 13,321

Retained Profit carried forward to the following year 19,187 14,270 21,567 16,794

Dividend

Based on the Company's Performance, your Directors are pleased to recommend a dividend of Rs. 6 per Equity Share (300%) of the face value of Rs. 2 per Equity Share for the financial year 2011-12. The dividend, if approved by the members at the forthcoming Annual General Meeting, will be paid to members whose names appear in the register of members of the Company as on July 13, 2012; in respect of shares held in dematerialized form, it will be paid to members whose names are furnished by National Security Depository Limited and Central Depository Services (India) Limited, as beneficial owners as on that date. The equity dividend outgo for the financial year 2011-12, inclusive of tax on distributed profits will absorb a sum of Rs.18.44 crores.

Business Performance

In the financial year 2011-12, your Company continued its strong growth momentum. For the first time in the Company's history, your Company's Standalone turnover crossed Rs. 1000 crores, an increase of 36.81% over last year's turnover. The consolidated turnover stood at Rs. 1443.5 Crores compared to previous year's Rs. 1241.8 Crores, recording a growth of 16.24% over last year. The EBITDA for the year on a Standalone basis stood at Rs. 115.4 Crores registering a growth of 29.24% as against previous year's Rs. 89.3 Crores. The Consolidated EBITDA increased 7.44% from Rs. 121 Crores of previous year to Rs. 130 Crores for the Current year. Your Company recorded a healthy growth in both Consolidated and Standalone PAT% as compared to Last Year. The Consolidated PAT recorded a 40% growth over the previous year while the Standalone PAT recorded a 36% increase over the previous year. Your Company has an order back log of over Rs. 3700 Crores as on March 31, 2012. EPS growth recorded a 31% increase for the year ended March 31, 2012. The Company continues the "Asset Light" business model and forayed into two new BOOT projects during the year. Your Company is restructuring its strategic business units to align them to the respective business lines and generate higher revenue. Your Company will continue to focus on both organic and inorganic growth model through strategic acquisitions that will pave way for entry into various new business segments across geographies and utilize internal accruals to meet short-term working capital requirements.

Sustainability

Sustainability governs the business operations. Your Company focuses on low carbon emission and sustains the use of water and energy in its plant construction to benefit the customers. Your Company has implemented various innovative sustainable initiatives in business operations. This not only facilitates business gains but also facilitates environmental benefits through recycling and reuse of water; converting waste gas into electricity to run treatment plants on a self-sustainable basis and converting waste water into direct potable use.

Awards and recognitions

Your Company was conferred with the Export Excellence award from EEPC India for its contribution to engineering exports during 2009-10. The coveted award was presented by the Governor of Tamil Nadu on December 06, 2011. Your Company received the National Award for Excellence in Water Management for the year 2011 by Confederation of Indian Industry (CII) for the valuable contribution made in efficient water management. Your Company also bagged the KPMG - Infrastructure Today Award for the Aurangabad Water Supply Project on December 09, 2011, which was adjudged as the PPP project of the year.

Sub-division of shares

With a view to improve the liquidity of your Company's shares in the stock markets and make it more affordable for small retail investors, the face value of each equity share of your Company was sub-divided from Rs. 5 to Rs. 2 per equity share with effect from August 18, 2011.

Stock Options

In order to attract, retain, reward and motivate employees to contribute and participate in the Company's growth and profitability, your Company implemented two stock option schemes viz., the ESOP Scheme 2006 and the ESOP Scheme 2010 ("the Schemes") in accordance with the Securities and Exchange Board of India (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 ('the SEBI Guidelines'). The schemes are administered in accordance with the directions of the Remuneration Committee of the Board. The applicable disclosures as stipulated under the SEBI Guidelines as at March 31, 2012 are provided in Annexure I to this Report.

The Company has received a certificate from its Auditors that the Schemes have been implemented in accordance with the SEBI Guidelines and the resolution passed by the shareholders. The Certificate would be placed at the Annual General Meeting for inspection by members.

Management Discussion and Analysis Report

Management's Discussion and Analysis Report for the year under review is presented in a separate section forming part of the Annual Report.

Subsidiaries

Your Company had Fifteen Subsidiaries at the beginning of the year. Three new subsidiaries were set up during the year viz.,

1. VA Tech Wabag (Philippines), Inc.

2. VA Tech Wabag Muscat LLC.

3. Ujams Wastewater Treatment Company (Pty) Ltd.

The total number of Subsidiaries as on March 31, 2012 is eighteen. The Company has commenced the liquidation process for its subsidiary in Dubai. There has been no material change in the nature of the business of the Subsidiaries.

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Profit & Loss Account and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. However, the financial information of the subsidiary companies is disclosed in the Annual Report in compliance with the said circular. The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the Registered Office of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company includes the financial results of its subsidiary companies. Details of major subsidiaries of the Company are covered in the Management's Discussion and Analysis Report forming part of the Annual Report.

Directors

Dr. Guenter Heisler and Mr. Sumit Chandwani, Directors retire by rotation at the ensuing Annual General Meeting. Being eligible Mr. Sumit Chandwani offers himself for re-appointment. Dr. Guenter Heisler has conveyed his decision, not to seek re- appointment. The Board wishes to place on record its appreciation for the valuable guidance extended and the contribution made by him during his association with the Company. Members' attention is drawn to the corresponding resolution and the explanatory statement thereto, in the Notice dated May 24, 2012 convening the Annual General Meeting.

Ms. Revathi Kasturi was appointed as an Additional Director of the Company on February 09, 2012 by the Board of Directors. As per the provisions of Section 260 of the Companies Act, 1956 Ms. Revathi Kasturi holds office up to the date of the forthcoming Annual General Meeting of the Company and is eligible for appointment as Director. The Company has received notice under section 257 of the Companies Act, 1956 from a member in respect of her appointment as a Director of the Company. Resolution seeking approval of the members for the appointment of Ms. Revathi Kasturi as a Director of the Company have been incorporated in the notice of the forthcoming Annual General Meeting.

As stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, brief resumes of Ms. Revathi Kasturi and Mr. Sumit Chandwani are provided in the report on Corporate Governance, which forms part of this Annual Report. Your Directors recommend their appointment / re-appointment at the ensuing Annual General Meeting.

Director's Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect to Directors' Responsibility Statement. It is hereby confirmed that:

i) in the preparation of the annual accounts for the year ended March 31, 2012, the applicable accounting standards read with requirements set out under Schedule VI to the Companies Act, 1956, have been followed and there are no material departures from the same;

ii) the Directors have 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 as at March 31, 2012 and of the profit of the Company for the year ended on the date;

iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv) the Directors have prepared the annual accounts of the Company on a going concern' basis.

Auditors

M/s. Walker, Chandiok & Co, Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re- appointment. The Company has received letter from the Auditors to the effect that their re-appointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and that they are not disqualified for re- appointment within the meaning of Section 226 of the said Act. The Notes on Financial Statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments.

Public Deposits

Your Company has not accepted any public deposits and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo Your Company continuously strives to conserve energy, adopt environment-friendly practices and employ technology for efficient operations. The particulars as prescribed under section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are provided in the Annexure II to this Report.

Corporate Social Responsibility (CSR)

Your Company uses CSR as an integral business process in order to support sustainable development and constantly endeavors to be a good corporate citizen. The CSR activities are presently carried out in the areas of education, health and environment at the Company's various project locations. During the financial year, your Company has executed 'Under Privileged Learning Innovations for Transformation' (UPLIFT) project, a unique educational project for the students of a school in the vicinity of the Corporate Office. The project focuses on scientific learning skills training programme for underprivileged students. Your Company strongly believes in serving the cause of students' community through this project.

Particulars of Employees

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the annexure to the Directors' Report. Having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any members interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

Corporate Governance Report

Your Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. The Company has also implemented several best Corporate Governance practices as prevalent globally. The Report on Corporate Governance forms part of the Annual Report. The requisite Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, is attached to this Report.

Acknowledgements

Your Directors would like to express their appreciation for the assistance and co-operation received from the Financial Institutions, Banks, Government authorities, Customers, Vendors and Members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by every member of the Wabag family globally.

For and on behalf of the Board of Directors

Rajiv Mittal Sumit Chandwani

Date: May 24, 2012 Managing Director Director


Mar 31, 2011

The Directors are pleased to present their Sixteenth Report together with the audited accounts of your Company for the year ended 31st March, 2011.

Financial Highlights (Rs. in thousands)

Description 2010-11 2009-10

Gross Turnover 7,321,734 7,009,679

Profit before Interest & Depn. (EBITDA) 896,717 860,420

Profit Before Taxation 837,908 680,406

Provision for Tax 285,322 270,611

Profit After Taxation 552,586 409,795

Proposed Dividend (123,183) --

Transfer to General Reserve (55,259) --

Profit / (Loss) brought forward 1,052,902 643,107

Retained Profit carried forward to the following year 1,427,046 1,052,902

Dividend

Your Directors are pleased to recommend a dividend of Rs. 10/- per Equity Share (200%) of the face value of Rs. 5/- each for the financial year 2010-11. The dividend, if approved at the ensuing Annual General Meeting, will be paid to Shareholders whose names appear on the register of members of the Company as on 1st July, 2011. The equity dividend outgo for the financial year 2010-11, inclusive of tax on distributed profits would absorb a sum of Rs. 12.32 Crores.

Operations and Business Performance

Your Company has achieved a Gross turnover of Rs. 732.17 Crores in the year 2010-11 as against Rs. 700.97 Crores for the previous financial year registering an incremental increase of Rs. 31.20 Crores, thereby recording a growth rate of 4.5% over previous year. All the SBUs (Strategic Business Unit) except IBG (International Business Group) recorded good growth against last year in terms of turnover. MBG (Municipal Business Group) registered 14% growth, IWG (Industrial Water Group) registered 44% growth and OBG (Operations Business Group) registered 21% growth against last year. IBGs turnover growth was mainly affected due to delay in Order booking on the Dambula project which however has been received and taken to order book as of 31st March, 2011. Your company carries an order backlog of Rs. 2,465 Crores to execute in the following financial years.

Your company has achieved Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of Rs. 89.67 Crores for 2010-11 against Rs. 86.04 Crores for the previous financial year registering a growth of 4.2% and Profit After Tax (PAT) of Rs. 55.26 Crores as against 40.98 Crores registering a growth of 35%. The significant growth in PAT was achieved on account of lower interest costs due to better negotiations and control, higher interest income due to judicial investment strategy and lower depreciation. The board has recommended a 200% dividend which is Rs. 10/- per equity share of the face value of Rs. 5 each.

Your Company has a "Asset Light" model. During the year, the company has ventured into Built Own Operate Transfer (BOOT) space through partnerships. The Companys Management is of the view that increased focus on O&M (Operations & Maintenance) service business and support from low cost economies coupled with Multi Domestic Units formation, would show significant improvements in the results of the Company. Alliance with Sumitomo, Japan and Zawawi Group, Oman would pay rich dividends in the years to come. The company will utilize cash for strategic acquisition/inorganic growth model to make inroads into various business segments and across different geographies.

Awards & Recognitions

The Company received the prestigious GWI Global Water Award for the year 2010 recognizing our contribution made in the international water arena. The coveted award was presented by Mr. Kofi Annan, former Secretary General of the United Nations in Berlin on 18th April at the Global Water Summit 2011.

Your Company was adjudged as the Best Exit Company for Private Equity of the year 2010 in an online survey conducted by the Asian Venture Capital Journal, Hong Kong. The Company was also adjudged as the Best Water Company for the year 2010 under Water and Waste Water Segment by Frost & Sullivan.

Sustainability

The ISO 14001:2004 & OHSAS 18001:2007 certification to your Company demonstrates our commitment to the society at large, by excelling in our environmental performance and protecting the safety and well being of our employees. This is carried out by promoting healthier and safer working practices besides focusing on the sustainability. It is pertinent to note that 380 WABAGites were trained on HSE awareness, systems & procedures, risk assessment methodology, operational control procedures and emergency preparedness.

Initial Public Offer

To further augment the capital base for future growth plans, your Company made an Initial Public Offering of 36,07,581 equity shares of the face value of Rs. 5 each during the year. This Issue, which constitutes approximately 34.37% of the fully diluted post issue paid up share capital of your Company, comprised a fresh issue of 9,54,198 equity shares of Rs. 5 each and an offer for sale of 26,53,383 shares.

The Issue which was priced at Rs. 1,310 per share, received an overwhelming response and was oversubscribed by over 30 times. The shares were listed on National Stock Exchange of India Limited and Bombay Stock Exchange Limited on 13th October, 2010. The listing of shares has enhanced your Companys brand name and visibility in the marketplace.

Sub Division of Shares

In order to improve the liquidity of your companys equity shares in the stock markets and to make it more affordable for the small retail investors, your Directors at their meeting held on 26th May, 2011, have recommended sub-division (stock-split) of each equity share of the company from the present face value of Rs. 5/- into face value of Rs. 2/- each subject to the approval of the shareholders.

Corporate Governance Report

Your Company has always been devoted to adopting and adhering to the best Corporate Governance practices recognized globally. The Company understands and respects its fiduciary role and responsibility towards stakeholders and the society at large and strives hard to serve their interests, resulting in creation of value and wealth for all stakeholders.

A report on Corporate Governance along with a certificate from the statutory auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the listing agreement forms part of the Annual Report.

Management Discussion and Analysis Report

A detailed analysis of the Companys operational and financial performance, Domestic and International Projects undertaken, various initiatives taken by the Company in key functional areas such as Human Resources and Information Technology is separately discussed in the Management Discussion and Analysis Report, which forms part of this Annual Report. This report also discusses in detail, initiatives taken by the Company in the area of Research and Development.

Stock Options

In order to attract, retain, reward and motivate the employees to contribute and participate in the growth and profitability of the Company, your Company has formulated two stock option schemes viz., the ESOP Scheme 2006 and the ESOP Scheme 2010. The schemes are administered and implemented in accordance with the directions of the Remuneration Committee of the Board. Under the ESOP Scheme 2006, no options were granted during the year; 252,976 options were exercised by the employees post vesting. Under ESOP Scheme 2010 - 436,929 options were granted on 20th August, 2010 to the eligible employees and no options were exercisable, during the year.

Details required to be provided under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are attached hereto as Annexure I and forms part of this Report.

Directors

In terms of Article 108 and 110 of the Company, Mr. Bhagwan Dass Narang and Mr. Jaithirth Rao will retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment in terms of the provisions of Article 109 of the Articles of Association of the Company.

Mr. Sumit Chandwani, Nominee Director of ICICI Venture Funds Management Company Ltd. resigned as a Nominee Director on 31st May, 2011. The Board of Directors on the same day appointed Mr. Sumit Chandwani as an Additional Director on the Board with effect from 1st June, 2011. Mr. Sumit Chandwani holds office up to the date of the ensuing Annual General Meeting.

As stipulated in terms of Clause 49 of the listing agreement with the stock exchanges, brief resumes of Mr. Bhagwan Dass Narang, Mr. Jaithirth Rao and Mr. Sumit Chandwani are provided in the report on Corporate Governance, which forms part of this Annual Report. Your Directors recommend their appointment/re-appointment at the ensuing Annual General Meeting.

Directors Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, your Directors, based on the representations received from the Operating Management, and after due enquiry, confirm that

i) in the preparation of the annual accounts, the applicable accounting standards have been followed and no material departures have been made from the same;

ii) they have, in the selection of the accounting policies, consulted the Statutory Auditors and these have been applied consistently and reasonable and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2011 and of the profit of the Company for the year ended on that date;

iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities:

iv) the Annual Accounts have been prepared on a going concern basis.

Subsidiaries

As on 31st March, 2011, your Company had fifteen subsidiary companies:

i) VA TECH WABAG (Singapore) Pte Ltd

ii) VA TECH WABAG (Gulf) Contracting LLC, Dubai

iii) Beijing VA TECH WABAG Water Treatment Technology Co. Ltd.

iv) Engenharia Hidraulica de Macau, Limitada, Macao

v) VA TECH WABAG Algeria S.A.R.L., Algeria

vi) VA TECH WABAG Brno spol. s.r.o., Czech Republic

vii) VA TECH WABAG Deutschland GmbH, Germany

viii) VA TECH WABAG GmbH, Austria

ix) VA TECH WABAG (Hong Kong) Limited

x) VA TECH WABAG Tunisia S.A.R.L, Tunisia

xi) WABAG Wassertechnik AG, Switzerland

xii) WABAG Water Services (Macao) Limited, Macao

xiii) WABAG Water Services SRL, Romania

xiv) VA TECH WABAG Tecknolojisi Ve Ticaret Limited, Turkey

xv) VA TECH WABAG Egypt Limited, Egypt

More details on the operations of the companys overseas subsidiaries are provided in the Management Discussion and Analysis Report.

As required under the provisions of Section 212 of the Companies Act, 1956, the statement containing details of Companys subsidiaries is attached and forms part of this Annual Report.

In terms of general exemption provided by the Central Government vide General Circular No.2/2011 dated 8th February, 2011, read together with General Circular No.3/2011 dated 21th February, 2011, issued by the Ministry of Corporate Affairs, copies of Balance Sheet, Profit and Loss Account, Directors Report and Auditors Report of the subsidiary companies have not been attached with the Balance Sheet of the Company. The Board of Directors at their meeting held on 26th May, 2011 has consented for not attaching the balance sheet of the subsidiaries to the Annual Accounts of the Company. The Companys accounts are presented in compliance with the conditions set out in the said circular. The documents pertaining to the Companys subsidiaries shall be provided on request to any member, desiring to have a copy, on receipt of request by the Company Secretary, at the Registered Office of the Company.

Auditors

M/s. Walker, Chandiok & Co, Chartered Accountants, retire as Statutory Auditors of the Com pany and has given their consent for re-appointment. The shareholders will be required to elect Auditors for the current year and fix their remuneration. As required under the provisions of Section 224(1 B) of the Companies Act, 1956, the Company has obtained a written certificate from the above Auditors proposed to be re-appointed to the effect that their re-appointment, if made, would be in conformity with the limits specified in the said section. The observations of the Auditors, together with the Notes to Accounts referred to in the Auditors Report, are self-explanatory and do not call for any further explanations from the Directors.

Public Deposits

Your Company has not accepted any deposits from the public or its employees during the year under review.

Loans and advances

Your company has not made any loans or advances to its subsidiaries, which is required to be disclosed in the annual accounts of the company pursuant to clause 32 of the listing agreement.

Internal Control System

The Company has a well placed, proper and adequate internal control system, which ensures that all assets are safeguarded and protected and that the transactions are authorised recorded and reported correctly. The Internal Auditors of the Company independently evaluate the adequacy of internal controls and concurrently audit the majority of the transactions in value terms. Independence of the audit and compliance is ensured by direct reporting of Internal Auditors to the Audit Committee of the Board.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

Your Company continuously strives to conserve energy, adopt environment friendly practices and employ technology for more efficient operations. The particulars relating to the energy conservation, technology absorption and foreign exchange earnings and outgo as required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in the Annexure II and forms part of this Report.

Corporate Social Responsibility (CSR)

Your Company as a responsible organisation seeks to meaningfully contribute to the socio-economic well being and development of the communities and the ecosystem that it interacts with in carrying out its business. The CSR activities are presently carried out in the areas of education, health and environment at the Companys various project locations.

Particulars of Employees

The Company had 2 employees who were in receipt of remuneration of not less than Rs. 60,00,000 during the year ended 31st March, 2011 or not less than Rs. 5,00,000 per month during any part of the said year. However, as per the provisions of section 219(1)(b)(iv) of the Companies Act, 1956, the Directors Report and Accounts are being sent to all the Shareholders of the Company excluding the Statement of particulars of employees. Any Shareholder interested in obtaining a copy of the Statement may write to the Company Secretary at the Registered Office of the Company.

Acknowledgements

Your Directors take this opportunity to thank the Companys customers, shareholders, suppliers, bankers, financial institutions and the Central and State Governments for their unstinted support. The Directors would also like to place on record their appreciation to employees at all levels for their hard work, dedication and commitment.

For and on behalf of the Board

Place: Chennai Rajiv Mittal Sumit Chandwani

Date: 31st May, 2011 Managing Director Director

 
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