You are here » Home » Companies » Company Overview » Cimmco Ltd

Cimmco Ltd.

BSE: 505230 Sector: Engineering
BSE 00:00 | 26 Mar 31.90 -0.60






NSE 00:00 | 26 Mar 32.10 -0.45






OPEN 30.05
52-Week high 98.00
52-Week low 28.05
Mkt Cap.(Rs cr) 87
Buy Price 31.00
Buy Qty 1.00
Sell Price 33.00
Sell Qty 1.00
OPEN 30.05
CLOSE 32.50
52-Week high 98.00
52-Week low 28.05
Mkt Cap.(Rs cr) 87
Buy Price 31.00
Buy Qty 1.00
Sell Price 33.00
Sell Qty 1.00

Cimmco Ltd. (CIMMCO) - Director Report

Company director report

Your Directors present the 73rd Annual Report together with the audited accounts ofthe Company for the financial year ended March 312018. Financial Results

The performance of your Company during the financial year ended the 31st March 2018wasas follows.

(Rs. in lacs)

Particulars Year ended 31.03.2018 Year ended 31.03.2017
Turnover 13462.01 12795.63
EBIDTA (3806.38) (3422.05)
Less: Depreciation 615.79 647.41
Less: Finance Cost 1434.54 1179.22
(Loss) before Extra-ordinary Items&Tax (1756.05) (1595.42)
Add: Exceptional Items 614.12 449.91
(Loss) before Taxation (2370.17) (2045.33)
Tax Expenses including Deferred Tax 37.73 (131.83)
(Loss) after Taxation (2332.44) (1057.34)
(Loss) brought forward from previous year (11769.94) (12830.41)
(Loss) carried to Balance Sheet (14102.38) (11769.94)

Company's Performance and Outlook

Turnover of your Company for the financial year ended March 31 2018 though improvedmarginally EBITA declined by about 11% mainly due to higher input costs and theexceptional item amounting to Rs.614.12 lakhs towards impairment of Plant & Machineryand Intangible assets of the Tractor business acquired through merger ofa fellowsubsidiary added to the loss for theyear under review. Wagons procurement order fromIndian Railways (IR) the largest customer was received in the end of December 2017however the production could commence in the first quarter of the current financial yearafter completion ofcertain formalities.

Titagarh Agrico Private Limited a fellow subsidiary has since been merged with yourCompany pursuant to sanction of the Scheme of Amalgamation by the Hon'ble National CompanyLawTribunal (NCLT) w.e.f. April 012016and became effective from November 14 2017. Postthe said merger Tractors vertical has been added to your Company's business portfolio.

YourCompany continues to adhere to the policyofmore efficient utilization of resourcesand cost optimization particularly keeping the finance cost under sharp focus and alsopursuing the orders for other products which can be advantageously combined andmanufactured at the existing facilities.

With the contract for 1191 Wagons being procured by the Indian Railways (IR) underexecution order book of your Company is healthy and anticipation of further order from IRwho has announced its plan to procure 22000 Wagons as well as aggressive pursuit oforders from private sector during the current year the outlook for the current year isreasonably optimistic.

Management Discussion And Analysis Overall Review

The overall performance of the Company during the financial year ended March 312018was impacted by predominant dependence on theorders from Indian Railways.

Business Segment

Wagons & Engineering Products

a) Segment Review and Analysis:

Unit March 31 2018 March 31 2017 %Change
Sales No. 717 730 1.78
Segment Revenue Rs in lacs 13197.51 12221.71 7.98
Segment Results Rs in lacs 243.75 540.12 -54.81

The Wagons & Engineering Products segment recorded a marginal increase of 7.98% inturnover for FY 2017-18 as compared to the previous year basically due to increase in saleof wagons to the private customers. The saleof wagons to the Indian Railways (IR) saw ahuge decline of 26.85% as compared to previous year. The reduction was basically due todelay in release of order by IR which happened only by the end of December 2017 and theexecution ofwhich has commenced in the first quarter of FY 2018-19.

Although the revenue from operations declined due to reasons stated above the segmentsaw a sharp increase in the order book. The year under review ended with an order book ofRs. 400 crores an increase of 260% as compared to the order book as at31st March 2017.The above increase in the order book is attributed to overall improvement in the wagonprocurement from the Indian Railways (IR). Also the demand from the private sector showeda favourable movement with some large orders flowing from the private customers.

Execution of the order for Wagons released in December 2017 and announcement ofbulkprocurement by Indian Railway in near future together with resource optimisation beingcarried out by the Company make the outlook for current fiscal reasonably optimistic.

b) Industry Outlook: Wagons industry has witnessed irregular and decremental Wagonsprocurement orders by Indian Railways. However the recent announcement of the Governmentof India to initiate bulk procurement of 22000 Wagons and determination to expeditecompletion of dedicated freight corridors augurs well for the industry.

c) Opportunities: Rail is expected to be the preferred mode of movement of cargo beingan effective and more economical mode of carrying goods across the country. TheGovernment's plans to expand the railway network and the project of dedicated freightcorridors if implemented in right earnest Wagon industry offers substantial opportunitywhich can be seized particularly by the established units to fullest extent.

d) Challenges: Uncertainty in timely placement of wagons procurement orders by IndianRailways and availability of funds coupled with the stressed margins due to unhealthy

competition in the industry besides rising cost of inputs are major challenges forWagon Industry in India.The dependence on one customer i.e. Indian Railways is a seriousconcern in as much as any change in the Government policy stands to directly impact theindustry.


Consequent to amalgamation of Titagarh Agrico Private Limited with the Company theCompany's Board of Directors has identified tractors as a separate reportable segmentduring the year under review. Pending receipt ofcertain regulatory approvals the tractorproduction was kept on hold during the year. Efforts are being madeto obtain the aboveapprovals and upon receipt ofthe same the Company expects to resume/increase theproduction. As such the other details viz. industry overview outlook and performancereview ofthe Segment are not at present applicable.

Material Changes and commitments after the Balance Sheet date

No material changes and commitments have occurred from the date of close oftheFinancial Year to which the financial statement relate till the date ofthis report whichmight affect the financial position ofthe Company.


In view ofthe loss sustained the Directors do not recommend any dividend for the yearunder review.


Your Directors do not propose to transfer any amount to the General Reserve of theCompany.

Internal Financial Controls

Appropriate policies and procedures have been adopted by the Board to ensure effectivefinancial controls risk assessment and mitigation measures accuracy and completeness ofthe accounting records the prevention and detection of frauds and errors and orderly andefficient conduct ofthe company's business.

The internal financial controls (IFC) have been documented and adequacyofIFC have beenevaluated by an external firm ofexperts and certified by the Statutory Auditors. Asregards the Auditor's comment regarding weakness in IFC based on old receivables fromIndian Railway as explained in the Notes on Accounts the matter is subjudice andaccordingly considered and not requiring any further explanation at this stage. Based onthe aforesaid the Board has concluded that during theyear IFC were operating effectively.

Risks and Concerns/Mitigation Measures

The Company has laid down a risk management mechanism which is reviewed periodically. ARisk Management Policy to identify and assess the key risk areas monitor mitigationmeasures and report compliance has been adopted. Based on the review the following keyrisks have been identified.

Dependence on the Indian Railways

The Company is engaged in the business of manufacturing wagons which is entirelydependent upon the policies of Indian Railways and any change in the policies whetherpositive or negative directly impacts the business ofthe Company.

Increase in the cost of raw materials and other inputs

The major raw materials required by the Company include steel specialized componentsincluding bogies coupler sets air brakes etc. which are exposed to volatility in pricesand availability in required specifications.

Risk of performance guarantee product warranty and liquidated damages

The contracts involve performance guarantee based on contract value and warrantyperiods within which ifanydefect is detected in the products the Company may have toincur expenditure for correcting the defects or even replacing the products. Delay inscheduled delivery may attract liquidated damages in the range of 5-10%.

Subsidiary Companies

There is no subsidiary ofyour Company.

Extract ofAnnual Return

The details forming part of the extract of the annual return in the Form MGT-9 areannexed and marked as Annexure DR-1 and also available on the website of the Company at investors.php.

Number of Board Meetings

The Board of Directors met six (6) times during the financial year ended 31st March2018 as per the details provided in the Corporate Governance Report forming part oftheAnnual Report.

Loans Guarantees and Investments

Particulars of loans guarantees and investments made by the Company pursuant to theSection 186 ofthe Act are furnished under notes to financial statements.

Significant and material orders

There were no material/significant orders passed by any regulator tribunal impactingthe going concern status and the Company's operations in future.

Composition ofAudit Committee

The Board has constituted the Audit Committee comprising Shri J KShukla as theChairman Shri Anil Kumar Agarwal Shri KS BSanyal and Shri Nandan Bhattacharya as themembers and the details are provided in the Corporate Governance Report annexed hereto.

Related Party Transactions

All Related Party Transactions (RPTs) areentered in compliance with the applicableprovisions ofthe Companies Act 2013 and also in accordance with the policy on the subjectadopted by the Board. Audit Committee reviews and approves all the RPTs as stipulated bythe Listing Regulations and based thereon final approval ofthe Board is obtained. RPTs asapproved by the Board during the financial year 2018 are furnished in the form AOC-2annexed hereto and marked as Annexure DR-2.

Changes in Share Capital

Pursuant to amalgamation of Titagarh Agrico Private Limited with the Company w.e.f.14th November 2017 the authorised share capital ofthe Company was increased from Rs. 75crores to Rs. 111 crores and the paid up capital of the Company was increased from Rs.201485260 to Rs. 273485260 divided into 27348526 shares of Rs. 10 each due toallotment of 7200000 shares to Titagarh Wagons Limited. Consequent upon such allotmentthe total shareholding ofthe promoters has increased to 81.41% from 74.93%. As stipulatedby BSE and NSE and permitted by the SEBI the shareholding of promoters'will be reducedbelow the limit prescribed by the applicable Regulations of the SEBI.

Corporate Governance Report

The Company has complied with the corporate governance requirements under the Act andSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. A separatesection on corporate governance under Listing Regulations along with a certificate from aCompany Secretary in practice confirming the compliance is annexed to and forms partofthe Annual Report.

Management Discussion and Analysis Report

The Management Discussion and Analysis Report forms part ofthe Directors' Report incompliance ofthe Regulation 34 ofSEBI (LODR) Regulations 2015.

Internal Control System

The Company has system of internal controls and necessary checks and balances which arebeing 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 arereliable.

The Company has appointed external firm of Chartered Accountants to conduct internalaudit whose periodic reports are reviewed by the Audit Committee and management forbringing about desired improvement wherever necessary.

Vigil Mechanism

A fraud free and corruption free environment as part of work culture ofthe Companycannot be over emphasized and with that objective

a Vigil Mechanism policy has been adopted by the Board and is uploaded on the web siteof the Company at . No complaint of this nature was received by the AuditCommittee during the year.

Internal Complaints Committee

As per the requirement of Section 4 ofThe Sexual Harassment of Women At Workplace(Prevention Prohibition and Redressal) Act 2013 an Internal Complaints Committee hasbeen formed by the Company the details of which are given in the Corporate GovernanceReport. No complaint has been lodged with the Committee during the year.

Directors and Key Mangerial Personnel Retirement by rotation

Smt. Vinita Bajoria Non-Executive Director retires by rotation pursuant to theprovisions of Section 152 of the Act and is eligible for reappointment.


The term ofShri J KShukla Shi G B RaoShri KSB Sanyal and Shri M J Z Mowla asIndependent Directors will end on 31st March 2019. Pursuant to the decision of Nomination& Remuneration Committee the Board at its meeting held on 10th August 2018 hasrecommended for approval of the shareholders the reappointment of the aforesaid directorsfor fiveyears upto 31st March 2024.

Shri Vineet Mohta was appointed as Chief Financial Officer of the Company w.e.f. 14thFebruary 2018 in placeofShri Lokesh Agarwal who resigned w.e.f. the said date.

Evaluation of the Board's performance. Committee and Individual Directors

In compliance with the Act and Regulation 17 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the performance evaluation of the BoardCommittees and Individual Directors was carried out during the year under review as perthe details given in Corporate Governance Report.

Declaration by Independent Directors

Declarations pursuant to the Sections 164 and 149(6) of the Act and Listing Regulationsand affirmation of compliance with theCode of Conduct as well as the Code for Regulationof InsiderTrading adopted by the Board by all the Independent Directors of the Companyhave been made.

Remuneration Policyand remuneration

A policy approved by the Nomination and Remuneration Committee and the Board isfollowed by the Company on remuneration of Directors and Senior Management Employees asper the details provided in the Corporate Governance Report.

Particulars of Remuneration of Directors/KMP/Employees

Thedisclosurestipulated by Section 197(12) ofthe CompaniesAct

2013 read with Rules 5(2) and 5(3) oftheCompanies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed. Disclosure pertaining to Remuneration andother details as required under Section 197 (12) ofthe Act read with Rule 5(1)oftheCompanies (Appointment and Remuneration of Managerial Personnel) Rules

2014 is annexed and marked as Annexure DR-3.

Directors' Responsibility Statement

The Directors state that:

• Appropriate Accounting Standards as are applicable to the Annual Statement ofAccounts for the financial year ended March 312018 have been followed in preparationofthe said accounts and there were no material departures therefrom requiring anyexplanation;

• The Directors have selected and followed the accounting policies as described inthe Notes on Accounts and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give true and fair view of the state of affairs oftheCompany at the end of financial year and of the profit and loss statement of the Companyfor that period;

• Proper and sufficient care has been taken for maintaining adequate accountingrecords in accordance with the provisions ofthe Act for safeguarding the assets oftheCompany 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 bytheCompany and thatsuch IFC areadequate and operating effectively.

• The Directors had devised proper systems to ensure compliance with theprovisions ofall applicable laws and that such systems were adequate and operatingeffectively.

Statutory Auditors

Price Waterhouse & Co Chartered Accountants LLP Statutory Auditors ofthe Companywere appointed at the 72nd Annual General Meeting (AGM) to hold officefor a periodoffiveyears until theconclusion of 77th AGM.

Pursuant to Section 40 ofthe Companies (Ammendment) Act 2017 notified w.e.f. 7th May2018 the Company has proposed to dispense away with the requirement of ratification ofappointment of Price Waterhouse & Co. Chartered Accountants LLP as the StatutoryAuditors ofthe Company.

As regards qualified opinion expressed by the Auditors the matter of receivables ispending adjudication before the Hon'ble High Court Delhi and the next hearing isscheduled shortly. The Company being convinced of the merits of the case is hopeful ofrecovering the amount.

The Note No. 41 is self explanatory regarding the compliance of matters opted in theAuditor's Report and the effect of amalgamation of Titagarh Agrico Private Limited hasbeen given with Appointed Date being 01.04.2016 pursuant to the order dated 16th October2017 of the Hon'ble High Court Calcutta considering the scheme of amalgamation.

Cost Auditors

M.R. Vyas & Associates Cost Accountants have been appointed as Cost Auditors toconduct cost audit of the accounts maintained by the Company in respect ofthe productsmanufactured by the Company for the Financial Year 2018-19 subject to ratification oftheir remuneration by the shareholders in accordance with the provisions ofSection 148oftheCompanies Act 2013and theCompanies (Cost Records and Audit) Rules 2014.The CostAudit Report for the previous financial yearended 31st March 2017has been filedasstipulated by the applicable provisions of law.The Company maintains the accounts andcost records as specified by the Central Government under the provisions of Section148(1)ofthe Act.

Secretarial Auditor

Secretarial Audit has been conducted by Sumantra Sinha & Associates PracticingCompany Secretaries appointed by the Board and their report is annexed hereto and markedas Annexure DR-4.


The Company did not accept any deposits during the financial year ended March 31 2018in 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 overtime while continuing with its efforts to follow good HR practices. Adequate efforts ofthestaff and management personnel are directed on imparting continuous training to improvethe management practices.

B. Industrial Relations

Industrial relations at all sites ofthe Company remained cordial.

C. No.of Employees:

Manpower employed as at March 312018was 155.

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 ofthe Companies(Accounts) Rules 2014 on conservation of energy technology absorption foreign exchangeearnings and outgo is annexed to and marked as Annexure DR-5.

Listing with Stock Exchanges

The equity shares ofthe Company are listed at The National Stock Exchange of IndiaLimited (NSE) BSE Limited and Listing fees for the

financial year ending the 31st March 2019 have been duly paid. Whereas the Delhi StockExchange Limited (DSE) and the Madhya Pradesh Stock Exchange Limited (MPSE) have beende-recognised the Company has made an application for voluntary delisting fromTheCalcutta 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 bettermanufacturing processes improved productivity and focus on optimization of resourcedeployment are undertaken for a reasonable performance viewed in the backdropofthetrendswitnessed in the industries in which the Company operates.

Corporate Social Responsibility

Your Company continues its endeavours to contribute suitably to the society by beinginvolved in a series of Community Welfare Programs directly or through philanthropicorganizations. Bharatpur plant is located close to the Bharatpur Bird Sanctuary amidstvast green area and all care is taken to preserve the environment to allow the nature'sexpanse to remain green and grow healthily. Compliancewith Secretarial Standards

The Company is in compliance with the applicable Secretarial Standards issued by theInstitute of Company Secretaries of India and approved by the Central Government underSection 118(10)of the Act.

Forward Looking Statement

The statements in this report describing the Company's policy strategy projectionsestimation and expectations may appear forward looking statements within the meaning ofapplicable securities laws or regulations. These statements are based on certainassumptions and expectations of future events and the actual results could materiallydiffer from those expressly mentioned in this Report or implied for various factorsincluding those mentioned in the paragraph "Risks and Concerns" herein above andsubsequent developments information or events.


Your Directors wish to place on record their appreciation for the cooperation andsupport ofthe Banks and Governments of Rajasthan Madhya Pradesh and Delhi localadministration (West Bengal)/other Government Departments; for contribution oftheemployees ofthe Company and all other stakeholders.

On behalfofthe Board Kolkata J.P. Chowdhary


Executive Chairman