Dear Shareholders,
Your Directors present the 74th Annual Report, together with the audited
accounts of the Company for the financial year ended March 31, 2019.
Financial Results
The performance of your Company during the financial year ended the 31st March, 2019
was as follows.
(Rs. in lacs)
Particulars |
Year ended 31.03.2019 |
Year ended 31.03.2018 |
Turnover |
25,718.56 |
13,462.01 |
EBIDTA |
2652.70 |
294.29 |
Less: Depreciation |
374.22 |
615.79 |
Less: Finance Cost |
2,174.50 |
1,434.54 |
Profit/(Loss) before Extra- ordinary Items & Tax |
103.98 |
(1,756.05) |
Less/Add: Exceptional Items |
- |
614.12 |
Profit/(Loss) before Taxation |
103.98 |
(2,370.17) |
Add/Less: Deferred Tax Credit |
2,677.04 |
38.35 |
Profit/(Loss) after Taxation |
2,781.02 |
(2331.82) |
Remeasurement Gains/(Losses) (net of tax) |
6.24 |
(0.62) |
Profit brought forward from previous year |
5,404.95 |
7737.39 |
Add: Change in Accounting Policy |
72.49 |
- |
Balance carried to Balance Sheet |
8,264.70 |
5,404.95 |
Company's Performance and outlook
EBIDTA for the financial year ended March 31, 2019 increased by about 9 times mainly
due to improvement in sales realization from higher sales.
During the year under review, the Company executed about 72% of the order for 1191
Wagons placed by the Indian Railways (IR) and the supply of the remaining quantity is
expected to be completed as per schedule. Your Company has a reasonably healthy order book
and the efforts are focused on ensuring more efficient supply chain and optimum
utilization of resources and cost control for bringing about improvement in all key areas
of operational performance.
The demand for Wagons from Indian Railway as well as private sector customers is
expected to improve in the current financial year and overall the outlook for the
financial year ending on March 31, 2020 is reasonably encouraging.
Post applicability of Goods and Service Tax (GST) w.e.f July 1, 2017, revenue from
operations is disclosed net of GST. However, revenue for the period April 1, 2017 to June
30, 2017 is inclusive of excise duty, accordingly, revenue from operations and total
expenses for year ended March 31, 2019 are not comparable with the corresponding year and
period presented in the financial statement.
Your Directors had at their meeting held on May 30, 2019 approved a draft Scheme of
Amalgamation for merger of your Company with Titagarh Wagons Limited, Holding Company (the
Scheme) to leverage the synergistic advantages, rationalization, operational and cost
optimization etc. subject to necessary approvals including from the Stock Exchanges and
the Hon'ble National Company Law Tribunal. However, the Board at its meeting held on
August 14, 2019 decided to review the Scheme and decided to proceed with filing the same
with the Stock Exchanges/Authorities concerned. As per the Scheme, the shareholders of the
Company on a Record Date to be determined, shall be entitled to 13 (Thirteen) Equity
Shares of Rs.2/- each fully paid for every 24 (Twenty Four) Equity Shares of Rs.10/- each
fully paid up and held by them in the Company.
Dividend
Your Company had issued 8% Non-Convertible Non-Cumulative Redeemable Preference in 2014
aggregating Rs. 4000 Lakhs subscribed to by the promoters/promoter group entity to be
redeemed in June/July, 2019, however the requisite Capital Redemption Reserve could not be
created due to inadequacy profits available for appropriation. Pursuant to consent of the
preference shareholders and your approval on March 28, 2019, the terms of issue of
Preference Shares have been varied to extend the date of redemption by another five year
from the due date(s) of redemption and from 8% Non-Cumulative to 11% Cumulative.
The Directors recommend dividend of Rs.1.10 per share for the year under review to the
preference shareholders of the Company for the period March 28 to March 31, 2019. The
preference shareholders have consented to waiver of the dividend @8% for the period prior
to the date from which the aforesaid variation in the terms was approved i.e. till March
27, 2019.
With a view to conserving resources, the Directors do not recommend any dividend on
equity shares.
Reserves
Your Directors do not propose to transfer any amount to the General Reserve of the
Company.
MANAGEMENT DISCUSSION AND ANALYSIS
OVERALL REVIEW
The overall performance of the Company during the financial year ended March 31, 2019
improved substantially owing to the orders for Wagons received from both the private
sector customers and Indian Railway.
BUSINESS SEGMENTS
Wagons & Engineering Products
a) Segment Review and Analysis:
|
Unit |
March 31, 2019 |
March 31, 2018 |
% Change |
Sales |
No. |
860 |
717 |
19.95% |
Segment Revenue |
Rs in lacs |
25,691.35 |
13,197.51 |
94.67% |
Segment Results |
Rs in lacs |
2,707.66 |
243.75 |
1010.83% |
The Wagons & Engineering Products segment recorded a commendable increase of 94.67%
in turnover for FY 2018-19 as compared to the previous year basically due to increase in
sale of wagons to the private customers and sale of Locomotive. The sale of wagons to the
Indian Railways (IR) saw an increase of 12.92% as compared to previous year.
The segment saw a substantial increase in the order book. The year under review ended
with an order book of Rs. 475 crores, an increase of 20% as compared to the order book as
at 31st March 2018. The above increase in the order book is attributed to overall
improvement in the wagon procurement from the Indian Railways (IR). Further, the demand
from the private sector showed a favourable movement with some orders flowing from the
private customers.
b) Industry Outlook: Wagons industry had during the past few years prior to the
previous financial year witnessed irregular and decremental Wagons procurement orders by
Indian Railways. However, the placement by the Government of India for procurement of bulk
quantity of 22000 Wagons and commitment to expedite completion of dedicated freight
corridors augurs well for the industry.
c) Opportunities: Rail is expected to be the preferred mode of movement of cargo being
an effective and more economical mode of carrying goods across the country. The
Government's plans to expand the railway network and the project of dedicated freight
corridors if implemented in right earnest, Wagon industry offers substantial opportunity
which can be seized particularly by the established units to fullest extent.
d) Challenges: Uncertainty in timely placement of wagons procurement orders by Indian
Railways, availability of large working capital and challenging supply chain management
coupled with the stressed margins due to unhealthy competition in the industry besides
rising cost of inputs are major challenges for Wagons Industry in India. The dependence on
one customer i.e. Indian Railways is a serious concern in as much as any change in the
Government policy stands to directly impact the industry.
The comparison of various key financial ratios of the performance of the Company
vis--vis the previous year is given hereunder:
Sl. No. |
PARTICULARS |
March 31, 2019 |
March 31, 2018 |
Change % |
|
PROFIT AND LOSS RATIOS |
|
|
|
1. |
EBIDTA % (including other income) |
9.7% |
2.2% |
340.91% |
2. |
Return on Equity % |
0.5% |
-14.7% |
103.40% |
3. |
Return on Net Worth % |
0.5% |
-14.7% |
103.40% |
4. |
Return on Capital Employed % |
0.5% |
-14.7% |
103.40% |
5. |
Return on Fixed Asset % |
0.4% |
-9.0% |
104.44% |
6. |
Debt Service Coverage Ratio |
1.22 |
0.21 |
494.70% |
7. |
Interest Coverage ratio |
1.22 |
0.21 |
494.70% |
|
BALANCE SHEET RATIOS |
|
|
|
1. |
Current Ratio |
1.10 |
0.99 |
24.80% |
2. |
Debt Equity Ratio |
0.80 |
0.68 |
23.70% |
3. |
Inventory Turnover (No. of days) |
139.12 |
111.53 |
21.80% |
4. |
Debtors Turnover (No. of days) |
49.33 |
46.79 |
3.60% |
5. |
Sales / Capital (times) |
1.33 |
0.85 |
70.30% |
6. |
Sales / Fixed Assets (times) |
1.01 |
0.52 |
100.00% |
7. |
Debt / Tangible Net Worth |
0.80 |
0.68 |
23.70% |
Notes on significant changes on the aforesaid Profit and Loss ratios where change is
> 25% (S. No. 1 to 7): The ratios have improved on account of better profitability of
the Company during the financial year 2018-19.
Notes on significant changes on the aforesaid Balance Sheet ratios where change is >
25% (S. No. 5 and 6): The ratios have improved due to increase in Sales during the
financial year 2018-19.
Material Changes and commitments after the Balance Sheet date
No material changes and commitments have occurred from the date of close of the
Financial Year to which the financial statement relates, till the date of this report,
which might affect the financial position of the Company.
Internal Financial Controls
Appropriate policies and procedures have been adopted by the Board to ensure effective
financial controls, accuracy and completeness of the accounting records risk assessment
and mitigation measures, the prevention and detection of frauds and errors and orderly and
efficient conduct of the company's business. The internal financial controls (IFC) have
been documented and adequacy of IFC has been evaluated by an external firm of experts and
certified by the Statutory Auditors.
The Audit Committee periodically reviews the internal control system to ensure that it
remains effective and aligned with the business requirements.
Based on the aforesaid, the Board has concluded that during the year IFC were operating
effectively.
Risks and Concerns/Mitigation Measures
The Company has laid down a risk management mechanism which is reviewed periodically. A
Risk Management Policy to identify and assess the key risk areas, monitor mitigation
measures and report compliance has been adopted. Based on the review, the following key
risks have been identified:
Dependence on the Indian Railways
The Company is engaged in the business of manufacturing wagons which is entirely
dependent upon the policies of Indian Railways and any change in the policies whether
positive or negative directly impacts the business of the Company.
Increase in the cost of raw materials and other inputs
The major raw materials required by the Company include steel, specialized components
including bogies, coupler sets, air brakes etc. which are exposed to volatility in prices
and availability in required specifications.
Risk of performance guarantee, product warranty and liquidated damages
The contracts involve performance guarantee based on contract value and warranty
periods within which if any defect is detected in the products, the Company may have to
incur expenditure for correcting the defects or even replacing the products. Delay in
scheduled delivery may attract liquidated damages in the range of 5-10%.
Subsidiary Companies / Joint Venture / Associate Company
The Company does not have any Subsidiary or Joint Venture or Associate Company.
Extract of Annual Return
The details forming part of the extract of the annual return in the Form MGT-9 are
annexed as Annexure DR-1 and also available on the website of the Company at
www.cimmco.in.
Number of Board Meetings
The Board of Directors met six (6) times during the financial year ended 31st March,
2019 as per the details provided in the Corporate Governance Report forming part of the
Annual Report.
Loans, Guarantees and Investments
Particulars of loans, guarantees and investments made by the Company pursuant to the
Section 186 of the Act are furnished under notes to financial statements of the Company.
Significant and material orders
There were no material/significant orders passed by any regulator, tribunal impacting
the going concern status and the Company's operations in future.
Composition of Audit Committee
The Board has constituted the Audit Committee comprising Shri J K Shukla as the
Chairman, Shri Anil Kumar Agarwal, Shri K S B Sanyal and Shri MJZ Mowla as the members and
the details are provided in the Corporate Governance Report annexed hereto. Shri MJZ Mowla
was inducted as a member on 14/08/2019. Shri Nandan Bhattacharya ceased to be a member
upon sad demise on 9th June, 2019. During the year under review, all
recommendations of the Audit Committee were accepted by the Board.
Pursuant to various requirements of the Act and the Listing Regulations, the Board of
Directors has also constituted Nomination & Remuneration Committee and the
Stakeholders Relationship Committee. The details of composition, terms of reference, etc.,
pertaining to these committees are mentioned in the Corporate Governance Report.
Related Party Transactions
All Related Party Transactions (RPTs) are entered in compliance with the applicable
provisions of the Companies Act, 2013 and also in accordance with the policy on the
subject adopted by the Board. All such contracts or arrangements were on arm's length
basis and in the ordinary course of business. Audit Committee reviews and approves all the
RPTs as stipulated by the Listing Regulations and based thereon final approval of the
Board is obtained. All the RPTs as approved by the Board during the financial year 2019
are furnished in the form AOC-2 annexed hereto and marked as Annexure DR-2.
Changes in share Capital
There was no change in the share capital of the Company during the year under review.
Corporate Governance Report
The Company has complied with the corporate governance requirements under the Act and
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A separate
section on corporate governance under Listing Regulations along with a certificate from a
Company Secretary in practice confirming the compliance, is annexed to and forms part of
the Annual Report.
Management Discussion and Analysis Report
The Management Discussion and Analysis Report is annexed to and forms part of the
Annual Report in compliance of the Regulation 34 of SEBI (LODR) Regulations, 2015.
Internal Control System
The Company has system of internal controls and necessary checks and balances which are
being strengthened so as to ensure
a. that its assets are safeguarded
b. that transactions are authorised, recorded and reported properly; and
c. that the accounting records are properly maintained and its financial statements are
reliable.
The Company has appointed external firm of Chartered Accountants to conduct internal
audit whose periodic reports are reviewed by the Audit Committee and management for
bringing about desired improvement wherever necessary.
Vigil Mechanism
A fraud free and corruption free environment as part of work culture of the Company
cannot be over emphasized and with that objective a Vigil Mechanism policy has been
adopted by the Board and is uploaded on the web site of the Company at www.cimmco.in. No
complaint of this nature was received by the Audit Committee during the year.
Internal Complaints Committee
As per the requirement of Section 4 of The Sexual Harassment of Women At Workplace
(Prevention, Prohibition and Redressal) Act, 2013 an Internal Complaints Committee has
been formed by the Company, the details of which are given in the Corporate Governance
Report. No complaint has been lodged with the Committee during the year.
Directors and Key Managerial Personnel
Redesignation
Shri Anil Kumar Agarwal was redesignated from Whole-time Director to Managing Director
& CEO by the Board in its meeting held on November 10, 2018. The Board has recommended
to the members to pass the necessary resolution at the ensuing 74th Annual
General Meeting for the redesignation of Shri Anil Kumar Agarwal as Managing Director
& CEO.
Demise of a Director
Your Directors are saddened to report that Shri Nandan Bhattacharya, Independent
Director on the Board of your Company since February 28, 2015 breathed his last on June 9,
2019. The loss caused by his sad demise is irreparable and it is prayed that the almighty
would extend the strength to his family members to bear the same.
Retirement by rotation
Shri Anil Kumar Agarwal, Managing Director & CEO (DIN: 01501767) retires by
rotation pursuant to the provisions of Section 152 of the Act and is eligible for
re-appointment.
Re-Appointment
Shri J K Shukla, Shri G B Rao, Shri K S B Sanyal and Shri M J Z Mowla were re-appointed
as Independent Directors of the Company w.e.f. 1st April, 2019 for a term of
five years upto 31st March, 2024 pursuant to the decision of Nomination &
Remuneration Committee and the Board at its meeting held on 10th August, 2018
followed by approval of the shareholders obtained at the 73rd Annual General
Meeting held on 29th September, 2018.
Cessation
Shri Ram Narayan Tiwari ceased to be a Director and Key Managerial Personnel of the
Company w.e.f. 25th February, 2019 upon termination of his Service Agreement.
The composition of the Board of the Company after the resignation of Shri R.N. Tiwari
and sad demise of Shri Nandan Bhattacharya on June 9, 2019, is in compliance with the
applicable requirements of the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015.
Evaluation of the Board's performance, Committee and Individual Directors
In compliance with the Act and Regulation 17 of SEBI (Listing Obligations and
Disclosure Requirements), Regulations, 2015, the performance evaluation of the Board,
Committees and Individual Directors was carried out during the year under review as per
the details given in Corporate Governance Report.
Declaration by Independent Directors
Declarations pursuant to the Sections 164 and 149(6) of the Act and Listing Regulations
and affirmation of compliance with the Code of Conduct as well as the Code for Regulation
of Insider Trading adopted by the Board, by all the Independent Directors of the Company
have been made.
Separate Meeting of Independent Directors
Details of the separate meeting of Independent Directors held in terms of Schedule IV
of the Act and Regulation 25(3) of the Listing Regulations are given in the Corporate
Governance Report.
Remuneration Policy and remuneration
A policy approved by the Nomination and Remuneration Committee and the Board is
followed by the Company on remuneration of Directors and Senior Management Employees, as
per the details provided in the Corporate Governance Report.
Particulars of Remuneration of Directors/KMP/Employees
The disclosure stipulated by Section 197(12) of the Companies Act, 2013 read with Rules
5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 is annexed.
Disclosure pertaining to Remuneration and other details as required under Section 197
(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 is annexed and marked as Annexure DR-3.
Directors' Responsibility Statement u/s 134(5) of the Companies Act, 2013
The Directors state that:
Appropriate Accounting Standards as are applicable to the Annual Statement of
Accounts for the financial year ended March 31, 2019 have been followed in preparation of
the said accounts and there were no material departures therefrom requiring any
explanation;
The Directors have selected and followed the accounting policies as described in
the Notes on Accounts and applied them consistently and made judgments and estimates that
are reasonable and prudent so as to give true and fair view of the state of affairs of the
Company at the end of financial year and of the profit of the Company for that period;
Proper and sufficient care has been taken for maintaining adequate accounting
records in accordance with the provisions of the Act for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities;
The Annual Accounts have been prepared on a going concern basis; and
The Directors have laid down Internal Financial Controls (IFC) to be followed by
the Company and that such IFC are adequate and operating effectively.
The Directors had devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems were adequate and operating
effectively.
Statutory Auditors
Price Waterhouse & Co, Chartered Accountants, LLP, Statutory Auditors of the
Company were appointed at the 72nd Annual General Meeting (AGM) to hold office
for a period of five years until the conclusion of 77th AGM.
Pursuant to Section 40 of the Companies (Amendment Act), 2017 notified w.e.f. the 7th
May, 2018 the Company has dispensed with the requirement of ratification of appointment of
Price Waterhouse & Co, Chartered Accountants LLP as the Statutory Auditors of the
Company pursuant to the resolution passed by the members at its 73rd Annual
General Meeting held on 29th September, 2018.
As regards the qualified opinion expressed by the Statutory Auditors, the Minimum
Public Shareholding (MPS) has been achieved on June 7, 2019 upon the conclusion of the
third Offer for Sale (OFS) made by the Promoter and the said qualified opinion stands
addressed. The Note No. 45 to the Financial Statements has dealt with the matter in detail
and MPS having been achieved, no further clarification is required from your Directors.
Change in Accounting Policy
Rs. 72.49 (Net of Tax) has been credited to Retained Earnings during the year under
review on account of adjustment arising out of implementation of IND AS 115.
Cost Auditors
M.R. Vyas & Associates., Cost Accountants have been appointed as Cost Auditors to
conduct cost audit of the accounts maintained by the Company in respect of the products
manufactured by the Company, for the Financial Year 2019-20 subject to ratification of
their remuneration by the shareholders in accordance with the provisions of Section 148 of
the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014. The Cost
Audit Report for the previous financial year ended 31st March, 2019 has been filed as
stipulated by the applicable provisions of law.
Secretarial Auditor
Pursuant to the provisions of the Companies Act, 2013 and the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014, secretarial Audit has been
conducted by Sumantra Sinha & Associates, Practicing Company Secretaries appointed by
the Board and their report is annexed hereto and marked as Annexure DR-4.
Deposits
The Company did not accept any deposits during the financial year ended March 31, 2019
in terms of the Companies (Acceptance of Deposits) Rules, 2014.
Personnel Human Resources
A. Empowering the employees
The Company considers its organizational structure to be evolving consistently over
time while continuing with its efforts to follow good HR practices. Adequate efforts of
the staff and management personnel are directed on imparting continuous training to
improve the management practices.
B. Industrial Relations
Industrial relations at all sites of the Company remained cordial.
C. No. of Employees: Manpower employed as at March 31, 2019 was 136.
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
A statement pursuant to Section 134(3) (m) of the Act read with Rule 8 of the Companies
(Accounts) Rules, 2014 on conservation of energy, technology absorption, foreign exchange
earnings and outgo is annexed to and marked as
Annexure DR-5.
Listing with Stock Exchanges
The equity shares of the Company are listed at The National Stock Exchange of India
Limited (NSE), BSE Limited and Listing fees for the financial year ending the 31st March,
2020 have been duly paid. Whereas the Delhi Stock Exchange Limited (DSE), and the Madhya
Pradesh Stock Exchange Limited (MPSE) have been de-recognised, the Company has made an
application for voluntary delisting from The Calcutta Stock Exchange Limited (CSE) which
is under process.
Discussion on Financial Performance with respect to Operational Performance
To mitigate the risk factors referred to hereinabove impacting the operations, better
manufacturing processes, improved productivity and focus on optimization of resource
deployment are undertaken for a reasonable performance, viewed in the backdrop of the
trends witnessed in the industries in which the Company operates.
Corporate Social Responsibility
Your Company continues its endeavours to voluntarily contribute suitably to the society
by being involved in a series of Community Welfare Programs, directly or through
philanthropic organizations. Bharatpur plant is located close to the Bharatpur Bird
Sanctuary amidst vast green area and all care is taken to preserve the environment to
allow the nature's expanse to remain green and grow healthily.
Compliance with Secretarial Standards
The Company is in compliance with the applicable Secretarial Standards issued by the
Institute of Company Secretaries of India and approved by the Central Government under
Section 118(10) of the Act.
Forward Looking Statement
The statements in this report describing the Company's policy, strategy, projections,
estimation and expectations may appear forward looking statements within the meaning of
applicable securities laws or regulations. These statements are based on certain
assumptions and expectations of future events and the actual results could materially
differ from those expressly mentioned in this Report or implied for various factors
including those mentioned in the paragraph "Risks and Concerns" herein above and
subsequent developments, information or events.
Acknowledgements
Your Directors wish to place on record their appreciation for the cooperation and
support of the Banks and local and central Governments and administration/other Government
Departments; and appreciation for the contribution of other stakeholders and employees.
|
For and on behalf of the Board |
|
J P Chowdhary |
|
Chairman |
Kolkata, the 14th day of August, 2019 |
DIN: 00313685 |
|