TRIVENI TURBINE LIMITED
ANNUAL REPORT 2011-2012
Your Directors have pleasure in presenting the 17th Annual Report and
audited accounts for the Financial Year ended March 31, 2012
LISTING OF EQUITY SHARES
As informed in our previous year`s report, the Scheme of arrangement
(Scheme) between Triveni Engineering and Industries Ltd. (TEIL), Triveni
Turbine Ltd. (the Company) and their respective shareholders and creditors,
providing for the transfer and vesting of the Steam Turbine Business of
TEIL in the Company from Octoberl, 2010, was sanctioned by the Hon`ble
Allahabad High Court vide its order dated April 19, 2011, and became
effective upon its filing with the Registrar of Companies. In accordance
with the Scheme 329,880,150 equity shares of 71/- each fully paid up, of
your Company were listed and admitted for dealing on Bombay Stock Exchange
Ltd. and National Stock Exchange of India Ltd. from October 28, 2011.
FINANCIAL RESULTS (Rs. in Million)
Sales (net) 6,318.82 3,050.46
Operating Proft/(Loss) (EBITDA) 1,561.24 717.06
Finance cost 95.93 47.13
Depreciation & amortisation 115.93 58.77
Profit/(Loss) before tax (before 1,349.38 611.16
Extraordinary/Exceptional charges - 559.82
Profit/(Loss) before tax (PBT) 1,349.38 51.34
Tax expense 438.57 124.02
Profit/(Loss) after tax (PAT) 910.81 (72.68)
Earning per equity share of Rs.1 each (in Rs.)
- Before Extraordinary charge 2.75 2.27
- After Extraordinary charge 2.75 (0.34)
Surplus/(Loss) available 580.27 (330.53)
Equity dividend (including dividend 249.22 -
Preference dividend (including divi- 2.60 -
dend distribution tax)
Transfer to General Reserve 150.00 -
Surplus/(Loss) carried forward 178.45 (330.53)
During the year under review, the Company was able to wipe off all the
accumulated losses and build up reserves of Rs.328.45 million after payment
of dividends. It achieved one of the highest net margins in the industry at
14.4 % of profit after tax on sales.
The Board of Directors have recommended a dividend of Rs.0.80 per
preference share of Rs.10/- each on 2,800,000 - 8% Cumulative Redeemable
Preference Shares for the year 2011-12. The total dividend payout would be
Rs. 2.60 million (including dividend distribution tax).
The Board of Directors have also recommended a final dividend of Rs.0.20
per equity share of face value of Rs.1/- each (20%) for the year 2011-12 in
addition to two interim dividends aggregating to Rs.0.45 per equity share
(45%) paid in November 2011 and February 2012. The total equity dividend
payout would be Rs.249.22 million (including dividend distribution tax).
Product orders in hand of Rs.4.95 billion as on April 1, 2012, have been
enhanced with further orders of Rs.0.68 billion in April, 2012, all of
which will be executed in financial year 2012-13 without dilution in the
margins. The domestic market is a matter of concern but we expect position
to improve in the second half of financial year 2012-13. The growth in
exports and services is expected to continue, and we expect to build up a
sizeable pipeline for execution in financial year 2013-14. Our efforts in
Research and Development in the last two years have shown commendable
results through the introduction of new world class models in terms of
efficiency, robustness, and value to the customer. We intend to intensify
these efforts in the coming years which will enhance the Company`s
competitiveness on a global scale. The Company is conscious of safeguarding
its inventions through our R&D initiatives and during the year it has
registered a substantial number of patents and copyrights in India and
In terms of Section 212 of the Companies Act, 1956 read with the General
Circular No. 2/2011 dated February 8, 2011 issued by the Ministry of
Corporate Affairs (MCA), the Company is not required to attach the annual
accounts of its subsidiary, GE Triveni Limited (GETL), subject to
fulfillment of the conditions stipulated in the said circular. Accordingly,
these accounts and the related detailed information will be made available
to any shareholder of the Company/ subsidiary company seeking such
information. The annual accounts of the subsidiary company will also be
kept for inspection of shareholders at the Company`s Corporate Office and
that of its subsidiary company. However, as per the said circular issued by
MCA, financial data of the subsidiary has been furnished in the
consolidated financial statements forming part of the Annual Report.
Information relating to the subsidiary Company, as required under Section
212 of the Companies Act 1956, is provided in Annexure `C` of this Report.
Critical resources for Research and Development, Design and Project
Management were filled during the year. Implementation of the talent pool
scheme, skill building programme, and training at 12 man days per employee,
coupled with strong communication initiatives, have increased motivation
and engagement levels within the organisation. Our new Innovation and
Appreciation Policy is now in full force.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Accounting Standard 21 on Consolidated Financial
Statements, your Directors have pleasure in attaching the consolidated
financial statements of the Company which form a part of the Annual Report
A separate report on Corporate Governance is given in Annexure `D` along
with the Auditors` statement on its compliance in Annexure `E`
M/s J.C. Bhalla & Co., Chartered Accountants, Auditors of the Company shall
retire at the conclusion of the forthcoming Annual General Meeting and they
have consented to continue in office, if appointed. They have confirmed
their eligibility under the provisions of the Companies Act, 1956 for their
According to the Order dated January 24, 2012 of Cost Audit Branch of
Ministry of Corporate Affairs (MCA), read with Section 233 B of the
Companies Act, 1956, the audit of cost accounting records are required for
the Company in respect of its engineering operations (comprising of steam
turbine manufacturing). The Board of Directors of your Company, subject to
the approval of the Central Government, has appointed M/s J.H. &
Associates, Cost Accountants, Bengaluru to undertake such audit for the
financial year 2012-13.
DIRECTORS` RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors
i. In the preparation of the Annual Accounts, applicable accounting
standards have been followed;
ii. Appropriate accounting policies have been selected and applied
consistently, and judgments and estimates that are reasonable and prudent
have been made so as to give a true and fair view of the statement of
affairs of the Company as on March 31, 2012 and of the profit of the
Company for the year ended March 31, 2012;
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
detecting fraud and other irregularities;
iv. The Annual Accounts have been prepared on a going concern basis.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS
The particulars required under Section 217 (1)(e) of the Companies Act,
1956, read with Companies (Disclosure of Particulars in the Report of the
Board of Directors), Rules, 1988 are provided in Annexure `A` to this
PARTICULARS OF EMPLOYEES
As required under the provision of sub-section (2A) of section 217 of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975 as amended, the particulars of employees are set out in the
Annexure `B` to the Directors` Report. However, as per provision of section
219(1) (b) (iv) of the Companies Act, 1956, the report and the accounts are
being sent to all the shareholders excluding the aforesaid information. Any
shareholder desirous of obtaining the same may write to the Company
Secretary at the registered/ corporate office of the Company whereupon the
relevant details would be sent.
In accordance with the provisions of the Companies Act, 1956 and the
Articles of Association of the Company, Mr K.N. Shenoy and Mr. Amal Ganguli
retire by rotation at the ensuing Annual General Meeting (AGM) of the
Company, and being eligible, offer themselves for reappointment. The Board
has recommended their re-appointment.
The Company has not accepted any public deposits under Section 58A of the
Companies Act, 1956 during the year.
Your Directors gratefully acknowledge the support given by our customers,
suppliers, shareholders, employees, the Central and Karnataka Government,
financial institutions, banks, and all other stakeholders, and we look
forward to their continued support and encouragement.
For and on behalf of the Board of Directors,
Place: Noida (U.P.) Dhruv M. Sawhney
Date : May 07, 2012 Chairman and Managing Director
ANNEXURE - A
(A) CONSERVATION OF ENERGY
(a) Energy Conservation Measures
* Installation of auto power factor correction unit in electrical
distribution system of new canteen building resulted in savings of 60,000
* Utilisation of condenser to recover water from exhaust steam by about 5
lac liters of water/ per annum
* Reduction in Cycle time for casing operation in CNC VTL machine and 5-
axis Vertical Machining Centre machine resulted in savings of 1920 KWH/year
and 2500 KWH/year respectively.
* Optimal use of smaller and larger capacity compressors in CNC Machine
Shop based on air demand has resulted in saving of about 15000 KWH in the
* Reduction in energy consumption by eliminating continuous running of chip
conveyor motor of Mazak machines has resulted into savings of 4100
(b) Additional Investment and proposals for Reducing Energy Consumption
* Installation of energy efficient Variable Frequency Drive for high energy
consuming L-70 lathe & 15 Ton Boiler blower motor
(c) Impact of Above Measures
These measures have helped to conserve electrical energy which would have
otherwise gone up further, owing to the commissioning of new machines.
Disclosure of particulars with respect to conservation of Energy (to the
I. Power and Fuel Consumption
Particulars 2011-12 2010-11*
Units (000`s KWH) 2255.47 1183.72
Total Amount (Rs. in million) 13.24 6.62
Rate (Rs./Unit) 5.87 5.59
b) Own Generation Through Diesel Generators
Units (000`s KWH) 163.29 86.55
Units Per Liter Of Diesel Oil 2.97 3.12
Cost/Unit (Rs.) 13.09 12.35
2. Furnace Oil
Quantity in (Kilo Ltrs.) 596.05 366.57
Total Amount (Rs. in million) 25.83 13.59
Rate (Rs./Ltr.) 43.32 37.07
Note: Since no standard product is manufactured by the Company, figures for
consumption per unit of production have not been given.
* Consequent to the scheme of demerger, the turbine business was vested in
the Company w.e.f. October 1, 2010, hence the data for the year 2010-11
represents the data relating to six months operations of the turbine
Disclosure of particulars with respect to technology absorption
(A) Research & Development (R & D)
1. Specific Areas in which R&D was carried out by the Company
a) 2 year run of higher steam parameter of extraction steam turbine for
sugar application is completed and feedbacks implemented.
b) Newly developed efficient HP reaction stages are incorporated in higher
c) Advanced design third generation LP blade family is now incorporated in
series of bigger turbines.
d) New design of Cost competitive series of models is completed and orders
are being executed.
e) Advanced aero IP stages are developed and incorporated in larger
Benefits as a result of the above R&D
a) Filling the gap in our range of turbines with improved efficiency and
reliability. Carbon foot-print of the machines has also been reduced.
b) Increasing the product range in power rating and higher parameters.
c) Field stabilisation of models in higher steam parameter segment.
Future plan of action
a) Introduction of reaction stages to turbines for efficiency improvement.
b) Cost reduction programme for all models.
c) Development of new small single stage turbines for distributed power
d) Development of turbines for geo-thermal application EXPENDITURE ON R&D
(Rs. in Million)
Particulars 2011-12 2010-11
a) Capital 6.93 3.72
b) Recurring 35.85 16.38
c) Total 42.78 20.10
d) Total R&D expenditure as
percentage of turnover 0.68% 0.66%
(B) Technology Absorption, Adaptation and Innovation
The details of R&D efforts, benefit derived and technology developed is
provided in (A) above. The Company has been Commercially exploiting the
technology in the past. The Company has not imported any technology in the
last five years.
(C) Foreign Exchange Earnings and Outgo (Rs. in Million)
1) Earnings in Foreign Exchange
Value of exports on F.O.B. basis 835.28
2) Foreign Exchange Outgo
(Includes raw materials, components, 348.49
spare parts, and other expenditure
in foreign currency)
MANAGEMENT DISCUSSION & ANALYSIS
In financial year 2011-12, India found itself in a conflict of managing
growth and inflation due to major challenges in the macro economy. The
Indian economy has grown by 6.5% in the year 2011-12, after having grown at
rate of 8.5% in the preceding year. The Industrial growth has slowed down
due to rising interest rates, tight liquidity, inability to raise equity
due to uncertain capital market, slowing down of foreign investments and
above all, the lack of policy actions and reforms by the Government. This
has adversely impacted the confidence of the industry and slowed
investments, mainly in infrastructure and capital goods sectors.
The global economic recovery is slowing and the global environment
continues to be a cause for concern and caution. The global economic
environment, which has been tenuous throughout the year, turned sharply
adverse in September 2011 owing to turmoil in the Eurozone, and questions
about the outlook of the U.S. economy.
Currently, India has the fifth largest electrical system in the world; with
installed electricity capacity of around 180 GW, of which 22 GW, i.e., 12.2
% is from Renewable Energy sources. The captive generating capacity
connected to grid is about 19.5 GW. There is a huge gap between demand and
supply with the all-India peak demand deficit of ~12%.
As per industry estimates the current and approved electricity capacity
addition projects in India are expected to add about 80 GW of installed
capacity in the 12th five year plan beginning April 2012 with planned
investment requirement of approx. $ 322 billion. This growth makes India
one of the fastest growing markets for electricity infrastructure
However, uncertainties in regulatory environment over coal linkages, land
acquisition, environmental clearance etc., have majorly impacted the new
investments and may also further delay the execution of projects which are
underway. Under these circumstances, for meeting the industrial power
demand, distributed power generation and captive power plants continue to
play a crucial role.
Since 2005, the energy and climate change agenda has taken centre stage in
domestic and international policy. In addition, the renewable energy
generation capacity has nearly tripled in the last five years. India`s vast
untapped renewable energy sources can pave the way for a secure, more
affordable and environmentally sustainable energy future for the country.
Assuming that the electricity power generation from renewable sources like
wind and solar power is going to be substantial; it would be essential to
add renewable power generation capacities through Municipal Solid Waste,
Biomass and Waste heat recovery as they have good control capability with
the change of power output. This will help in maintaining stable operations
in the electrical system and absorb the fluctuation of reactive and active
India is rich in biomass which has the potential of generating 16,881 MW
from agro-residues and plantations, 5000 - 7000 MW from bagasse co-
generation and approx. 2700 MW energy recovery from waste. Biomass power
generation in India is an industry that attracts investments of over Rs. 6
billion every year, generating more than 5000 million units of electricity
and yearly employment of more than 10 million man-days in the rural areas.
The Government has launched National Action Plan on Climate Change in June
2008 to promote the use of renewable energy for power generation. Taking
cue from this, Ministry of New & Renewable Energy (MNRE) has planned to
initiate "National Bioenergy Mission" in association with State
governments, Public & Private sectors and other stakeholders to promote
ecologically sustainable development of Bioenergy to address country`s
energy security challenge. MNRE is targeting for the deployment of 20,000
MW of biomass power by 2022.
Geothermal and Concentrated Solar Energy
Geothermal and Solar Energy resources can be used for a wide range of power
and heat applications. India`s installed geothermal energy capacity is
currently experimental and the commercial use is insignificant. India has
potential resources to harvest geothermal energy and has identified six
promising geothermal regions for the development of geothermal energy.
Similarly, though more advanced than Geothermal Energy development,
Concentrated Solar power generation has received a big boost by the launch
of the Jawaharlal Nehru National Solar Mission under the National Action
Plan on Climate Change. India is bestowed with solar irradiation ranging
from 4 to 7 kWh/ square meter/day across the country, with western and
southern regions having higher solar incidence. Under this initiative,
India plans to generate 1 GW of power by 2013. By 2020, 20 million square
meters will be covered by solar energy collectors to generate 20 GW grid
based solar power and 2 GW of off-grid solar power.
Combined Heat and Power (CHP)
This refers to the simultaneous generation of useful heat and power. In
combined heat and power, some or all of the waste heat released into the
atmosphere is captured, transformed into useful heat by deploying it in
process applications or indirectly in producing steam, hot water etc. An
optimal CHP system is designed to meet the thermal demand of the energy
user-whether at industrial, individual building or city-wide levels. By
using the heat output from the electricity production for heating or
industrial applications, CHP plants generally convert 70-75% of the fuel
source into useful energy.
Waste - to - Energy
The economic case for burning waste to generate energy becomes stronger as
the size of waste accumulations expands and presents an environmental and
management challenge. According to the estimates, the waste generated in
India is over 50 million tonnes annually.
The waste-to-energy industry is expected to benefit from the emerging
opportunities in regions such as India, China, Europe and the US. Asia-
Pacific region is expected to surpass Western Europe and emerge as the
largest market in terms of waste-to-energy investments.
Captive Power Generation
The industrial sector is the largest consumer of electrical energy in India
with many industrial establishments also owning Captive Power Plants (CPP).
The CPPs also supply the surplus power generated to the grid. CPPs are
developed to cater to the industrial demand where (a) the electricity
supplied by the utilities is short in supply or (b) the grid supply is poor
in quality & reliability and (c) the tariffs are high inter-alia due to
heavy cross subsidisation. It is estimated that 30% of the total energy
requirement of the Indian industry is currently met through in-house power
plants. The opportunities emerged after the enforcement of the Electricity
Act-2003 in the form of de-licensing of generation, implementation of open
access and setting up of common trading platform, has made the captive
power plants an attractive option for industries to meet their in-house
requirement and to maximise their profits from sale of surplus power.
Across industries, there is significant variation in captive capacity
utilisation. Metals, Heavy engineering, Chemicals, Petroleum, Paper, and
Cement industries account for 70 per cent of the total captive capacity and
85 per cent of the generation. Captive plants over the years have evolved
from the plants owned by single promoters to group captive serving as a
medium for maximising the benefit by selling its surplus power. Selling the
surplus power through the power exchanges, claiming the incentives under
Clean Development Mechanism (CDM) depending upon the technology used,
earning energy efficiency certificates, Renewable Energy Certificates are
other benefits associated with CPPs. Moreover, industrial and commercial
growth would continue to impact the overall peak demand, which creates an
opportunity for the merchant and captive power producers.
Captive plants can contribute to greater economic gains. India`s concern of
electricity shortages could partly be addressed by better coordination of
such industrial power surpluses. The captive plants, whether grid-connected
or stand-alone, could contribute towards greater availability of power in
the system by increasing consumption from captive generation and drawing
less from the grid. Captive power plants have been growing at a fairly
aggressive pace in India.
Financial year 2011-12 has been a challenging year for Triveni Turbine
Limited (TTL), in terms of maintaining revenues and healthy margins due to
intense competition and decline in the overall domestic market demand. In
the sub 30 MW range, from an average annual demand of approx. 1700 MW
during 2007-11 and as against 1425 MW in financial year 2010-11, the demand
declined to about 800 MW in financial year 2011-12. Metal & Sugar Co-
generation (SCG) segment recorded a major drop of over 50% while the
decline in the industries in the Process Co-Generation (PCG) segment such
as Food/Paper/Pharma sector was over 30%. Independent Power Producers (IPP)
was the only segment which could sustain its demand in comparison to the
previous year. Comparison of market demand for various segments in
financial year 2010-11, financial year 2011-12 and the annual average for
financial years 2007-11 is depicted.
Even in this sluggish market environment, the Company could achieve
reasonable order-intake with 54% market share. The Company has an
outstanding order book, excluding the slow moving orders, of Rs. 4.95
billion as on March 31, 2012. This order book is executable in financial
The Company has a dominant share in SCG/IPP/PCG segment and looks forward
to gain prominent market share in Metal segment also. Despite the slowdown
in domestic market in terms of order booking, the overall enquiry base for
financial year 2011-12 has been similar to that of financial year 2010-11.
Financial year 2011-12 witnessed major order booking in the domestic market
from the metal processing industry with an extended scope of supply.
With the order finalisation in the domestic market turning slow due to
macro economic factors such as liquidity, higher financing cost etc., the
Company, during the year under review, went aggressive in expanding its
footprint in the international market. Its foray into newer markets
resulted in expanding its year-on-year order booking by 39%. The Company
received break-through orders from municipal solid waste to power and waste
heat recovery based power generating facilities in Europe. The Company
consolidated its presence with orders from Sugar based waste heat recovery
power plant, palm oil segment etc. The exports turnover grew by 32.2% over
the previous year and is currently at 13.9% of the total sales.
AFTER MARKET SERVICES
The Company operates in the full band of aftermarket services, which
include Erection & Commissioning, Spare parts, Refurbishment and Operation
and Maintenance. The Company could maintain a reasonable growth even in
this difficult market conditions. In the services business, customers
become more cost conscious in difficult business situations and hence,
prefer cost effective solutions to the fresh capital expenditure plans. The
Company was able to maintain its market share in spares and there has been
significant improvements in the business of refurbishment. A number of new
categories of jobs have been completed with successful foray in the Utility
range. During the year, the Company refurbished large sized utility
turbines enabling prequalification in this segment, thereby creating good
business prospects for the future. The overall business of aftermarket grew
by 7.8 % over the previous year and is currently at 16.8% of the total
TTL`s state of the art manufacturing facility is fully equipped to
manufacture industrial steam turbines. It is equipped with an array of 4
axis and 5 axis Vertical Machining Centres and Horizontal Machining Centres
for blades, Mill-turn centre for rotors, CNC gantry and CNC VTL for casing
machining to high accuracies. It has fully equipped assembly-cum-test beds
for assembling the turbines from start to finish and recording the test
results on a wireless Data Acquisition and Display System. The facility
also boasts of High Speed Vacuum Balancing Machine for balancing rotors,
CNC Coordinate Measurement Machine, DG Sets for 100% power back up, EOT
cranes etc. The manufacturing facility is located in green employee
friendly surroundings. The manufacturing facility is certified for both ISO
9001 QMS & ISO 14001 EMS standards and is always ready to cater to diverse
customer needs in turbine business.
Suppliers are key to our business performance and they are treated as our
extended business partners. The Company establishes long term business
relationship by entering into Partnership Agreements with critical
suppliers. Well defined quality and delivery parameters along with
transparent pricing mechanism helps to further business dealings with the
supply chain partners. The Company follows a global procurement policy to
continually optimise the cost and mitigate purchase price risks. Product
standardisation by Value Engineering to reduce cost / lead time of product
realisation is followed. Sharing of knowledge and experience with suppliers
is an ongoing process. The Company is able to offer better deliveries than
its peers due to strong supply chain relationship. The key to this
performance has been seamless communication of its manufacturing plans,
expected order flows and volumes to the critical suppliers of long lead
items. The Company could mitigate the increase in input cost of castings,
forgings as well as piping materials by prior planning its procurement
through long term contracts.
Whilst the industry expects a rise in input cost on castings commensurate
with increase in the scrap prices and due to significant contraction in
capacity due to the power shortage in some parts of India, the Company has
put risk mitigation measures in place by developing alternative cost
effective sources and building lower costs through value engineering.
The strength in the Company`s products lies in the fact that they comply to
various product standards such as API, ASME, AGMA, NEMA, IEC etc. The
Company has a network of approved suppliers and dedicated sub contractors
complying with stringent quality norms through QAPs to maintain
comprehensive quality control of turbine and its auxiliary systems. TTL
ensures CE/PED Mark Quality Certification to its product as per European
The Company also deploys new tools and techniques like Visual Management
system (SQDCM), DMAIC methodology, Kaizen, QIP, Small Group Activities,
Daily Work Management, CCRS and Root Cause Analysis in order to provide its
customers reliable and high performing turbine solutions.
In 2010, TTL introduced the "Kaizen" movement in order to create and bring
culture of continuous innovation & improvements throughout the
organisation. The results are immediate, significant and satisfying in
productivity improvement, quality, cost and safety improvements by
eliminating waste and improving processes. TTL team bagged second place in
"National Level Kaizen Competition" under operator category.
TTL has progressed significantly in its journey towards Business Excellence
in 2011. The Company has been awarded with 2nd level recognition
"Commendation Certificate for Significant Achievement" by CII-EXIM bank
Award for Business Excellence. This award is based on Excellence Model of
European Foundation of Quality Management (EFQM) and the award process is
administrated by CII in India.
Continuous product development is one of the key requirements for the
business to maintain its competitiveness. During the year, the Company
developed 12 new product variants to serve the application requirements of
the customers as well as for continual efficiency improvement. One of the
objectives was to keep track of new technologies and tune it with the new
age auxiliary equipment, thereby adding value to our customers, through
reduction in initial capital as well as the operating expenses of the
project. The key development highlights are the design of air cooled
condensing turbines, new blade designs for high volumetric flow, high
efficiency blade path using advanced reaction stages, high back pressure
designs for Oil and Gas etc. The Company also developed around 8 new basic
models during the year.
INTELLECTUAL PROPERTY RIGHTS
Steam Turbine is highly technology oriented business, hence, the protection
of Intellectual Property (IP) is one of the critical requirements in the
long term sustainability of the business. The Company ensures involvement
of IP team right from product conceptualisation stage to the final design
stage. Stage gate processes are being implemented and complete technology
scanning of all the R&D Projects is being done by IP team. A comprehensive
security system has been put in place to safeguard valuable IPRs developed
by the Company. Various regulatory requirements have been completed with
respect to design registrations in India and Europe - consequently, 11
design registrations in India and 7 European Community Designs have been
granted and stand valid to the credit of the Company. In the U.S., 3 Design
Patents have been filed and the Company is in the process of filing patents
in South East Asian countries as well. The Company also intends to file
Patents Co-operation Treaty (PCT) applications which will be binding for
all the member countries to this treaty.
As our business focuses on customised engineered-to-order mechanical
equipment, skilled manpower is one of the key success factors. The Company
has strengthened its critical functions of R&D, Engineering & Projects
department in a challenging year for talent acquisition. This support has
provided required vigour across the organisation in meeting the set goals.
The Company implemented Appreciation-Recognition-Celebration policy during
the year with a view to develop personal bonding with its employees.
Appropriate measures and enablers were implemented to retain good talent in
the critical departments and it has yielded the desired results in
maintaining trained human resource towards building a world class
organisation. The overall attrition in the Company has been generally the
lowest compared to the engineering industry. With a view to penetrate
overseas markets comprehensively and effectively, the Company has started
recruiting local experts and professionals to begin with in South East
Asia, wherein the Company intends to have major presence.
The Learning Centre of the Company is the fulcrum for all the technical
training needs of its engineers. During the year, the emphasis was on
imparting technical training to TTL engineers and workmen, on the product.
The Learning Centre had conducted training for around 12 man days per
employee. Graduate Engineer Trainees & Diploma Engineering Trainees were
imparted with complete training from basic engineering concepts, product
inputs and field exposure. Training programme on the product was imparted
to engineers from customer-end and to suppliers for improving their
efficiency and operation and maintenance.
Learning centre in co-ordination with supply chain called upon domestic &
international Suppliers of Balance of Plant (BOP) equipment to train
engineers of TTL on updates of technologies and its benefits. Computer
Based Product Training (CBT) was developed by Learning Centre and this
platform is used by all the engineers (Fresh and lateral entry) to update
them on TTL product range and features. As a continuous improvement, up-
gradation of the learning module is under progress. Learning Centre is in
the process of building the repository of knowledge management on the
existing product range and on the new developments in tandem with R&D and
engineering. It is on track to build a technical library and create a
platform of learning to all the engineers / technical fraternity. This is
congruous to the Company`s goal to serve its customer better and to make
technology and service as a differentiator.
GE TRIVENI LIMITED (GETL)
The joint venture with General Electric, established in financial year
2010-11, is progressing well on technology transfer, marketing and project
execution plan. Financial year 2011-12 was a challenging year for GETL with
respect to declining market, both domestically and internationally. It
could make its presence felt by attracting enquires in large numbers both
in India & world market. Initial marketing efforts by TTL in the domestic
market have yielded in getting the first order for GETL product range. With
the experience, marketing thrust and field reference, further booking of
orders is expected. The entire manufacturing of GETL products will be
undertaken at the manufacturing facility of TTL.
Despite the uncertain economic scenario, worldwide power generation sector
is bracing for a long term growth, driven by the presence of strong demand
drivers including increasing population and improving consumer lifestyles,
rapid industrialisation in emerging economies, particularly China and
India. Clean energy, environmental constraints, rising cost of fuel and
energy policies will play a significant role in changing the dynamics of
the thermal power industry and determining technology mix.
Asia-Pacific represents the largest regional market. The region forecasts
to record the fastest growth in electricity generation because of
increasing efforts to enhance the electrification rates. Efforts of major
markets in Latin America to diversify their fuel sources, which rely
heavily on hydropower, are expected to increase preference for thermal
power generation and other renewable sources of energy. The installed
capacity for thermal energy in the Asia-Pacific region for 2011 is
estimated at 1372.5 GW. The installed capacity is expected to grow at a
CAGR of 6.8% for the period 2012 - 2020, with the total installed capacity
expected to be around 1969.3 GW in 2020. In the recent years, the financial
crisis lowered investor confidence and significantly raised the cost of
capital. The underdeveloped and developing economies face the challenge of
power evacuation in tandem with generation. Hence within the domain of
Thermal Power Generation, the discrete Renewable energy based power
generation will contribute significantly in remote areas through
distributed and decentralised power generation.
Increasing consciousness about offsetting the environmental impact of
fossil fuels has prompted the European Commission to plan for collective
energy policies and promote energy efficiency directives. Stable energy
prices make it a right energy investment decisions, and a sound strategy to
rebuild a co-generation base. Co-generation is all set for a revival in
Europe between 2014 and 2018. Most countries across Europe are expected to
increase their co-generation capacity, mainly in the combined cycle form.
Under the combined heat and power (CHP) directive, Germany, Italy and Spain
have made considerable strides in building a policy framework to support
co-generation, while Germany has set itself a target to double co-
generation capacity by 2020. In 2011, the EU identified co-generation as
the energy application that can make the single-largest contribution to
achieving the region`s greenhouse gas reductions, giving a huge thrust to
the market. The effective implementation of CHP policies and a focus on
creating favourable conditions for co-generation development are likely to
drive the market in Europe.
Exports will be a major growth driver for the business in the coming years.
Currently the Company has presence in 30 countries, with focus on South
East Asia markets of Indonesia, Malaysia and Thailand, Korea, Europe. The
Company will be developing new geographies like South America, Middle East
and Africa in near future. Going international entails serving new market
segments like Geothermal, Solar Thermal Power and a broader ambit of
The Company is geared up with appropriate product and service offerings for
most of the power generation technologies being deployed. The strategy has
been to leverage the huge installed base of the conventional renewable
energy primarily in the Sugar Bagasse power generation in India and
developing new models for the specific applications dominant in focused
geographies. During the last two years, the Company has focused and
successfully developed the European markets for waste heat recovery and
district heating segments. This will provide the requisite testimony for
the Company for further business. The Company will explore deeper into the
developed markets for its products and services and will explore
opportunities in various new segments. The Company will have an aggressive
approach in market development creating local set up to go closer to the
customer and serve them better, going forward. Initiating steps to create a
global sales organisation has been a key activity in financial year 2011-
With the government thrust being shifted to revive the growth, the investor
confidence and capex cycle may pick up momentum by second half of the
financial year 2012-13. As a natural hedge, the Company will focus more on
the international markets and will be aggressive in the service business.
The Company has significant capability for the refurbishment business
considering its collective turbine engineering experience, supported by
state-of-the-art High Speed Dynamic Balancing facility, R&D capability,
reverse engineering tools and competence. Servicing is another growth
driver for the Company. The Company will leverage its strength of huge
knowledge base on steam turbines and high speed turbo-machinery acquired
over a period of time to get more business on refurbishment.
Overall, the outlook on the business seems promising for financial year
2012-13 and the Company expects reasonable growth prospects by penetrating
deeper in the existing markets and exploring new markets and geographies.
CORPORATE SOCIAL RESPONSIBILITY
The Company is committed to create an environment that contributes to
communities and the conservation of nature, provide quality education to
the underprivileged sections of society and encourage employees to
participate in the various social initiatives of the Company. Deriving the
inspiration from its basic philosophy of a responsible corporate citizen,
the Company pursued projects in the areas of education and health.
Under its education initiative, the Company aims at providing educational
aides for student development, and other necessary support for the students
of under privileged community. The Company facilitates this objective by
working closely and assisting organisations which are into community
welfare, by providing direct support like assets, resources, educational
aides to students or indirectly through financial assistance.
Following these principles of the CSR activities, the Company had
contributed towards education expenses of 83 differently abled students.
The Company donated to Aruna Chetana and Dharithree-Ajitha Chetana which
covered the honorarium to staff, conveyance, nutritious drink to the
children, equipments for special teaching aids therapy etc.
The Company donated furniture to Prerana Resource Centre, a hostel for 120
physically challenged girls.
The Company had donated to Akshaya Patra for A Mid-Day Meal Scheme. This
takes care of the cost of mid-day meal for underprivileged students during
the year studying in government schools.
The Company distributed school bags, note books and other accessories to
all the students (from Pre-Nursery to 7th Standard) of the Government Model
Primary School, Peenya. TTL provided financial assistance to Maria Seva
Sangha, an NGO which takes care of the basic needs of poor and aged people.
The Company hired an experienced trainer from M/s. People-Pro to train
around 200 secondary school students at Government Model Primary School,
Peenya on traits like communication, personal hygiene and personality
development. 30 employees volunteered in the Big Buddy Initiative. These
employees visited the School every week to help students excel in academics
and helping them in development of their soft skills.
The Company also provided a colour printer to the Government Model Primary
School, Peenya. TTL organised a Blood Donation Camp in the Company campus
wherein around 200 units of blood was donated. On the World Environment
Day, around 500 saplings were distributed to the employees for planting
them around their residences.
Financial year 2011-12 is the first full year of turbine operations of the
Company post the demerger. The summarised results for financial year 2011-
12 and financial year 2010-11 are provided here. The performance results
for the financial year 2011-12 are not comparable with the financial year
2010-11 as the previous year`s figures include turbine operations for six
(Rs. in million)
Description 2011-12 2010-11 Annuallsed
Net Turnover 6318.8 3050.5 3.6
EBITDA 1561.2 717.1 8.9
Depreciation & Amortisation 115.9 58.8 -1.4
Finance Cost 95.9 47.1 1.8
Profit Before Exceptional/ 1349.4 611.2 10.4
Non recurring items & Tax
Extraordinary Charge - 559.8
Profit Before Tax 1349.4 51.4
Tax 438.6 124.0
Profit After Tax 910.8 -72.6
The Company`s strategy to focus on exports to achieve geographical
diversification of its products has paid dividends -the exports at Rs.
880.5 million were 13.9 % of the total revenues as against 10.9 % in April
- March 2011. This strategy will provide effective insulation from the
slow-down of the domestic market due to macro economic factors. Likewise,
the revenues from after-market operations at Rs. 1058.6 million account
for 16.8 % of the total revenues as against 16.0 % in April - March 2011.
Despite the challenging market conditions, the Company has been able to
preserve the margins due to cost optimisation and higher proportion of
high-margin exports and after-market spares and service. The extraordinary
charge in the previous year relates to writing-off of the goodwill
recognised pursuant to the Scheme of Arrangement (the Scheme).
Due to profitable operations, the Company has been able to absorb
accumulated losses of Rs. 330.53 million carried forward from the last
year which were mainly on account of the extraordinary charge as aforesaid.
Raw Material And Manufacturing Expenses (Rs. in million)
Description 2011-12 2010-11 Annuallsed
Raw material (net of increase/ 3827.6 1883.0 1.6
decrease in WIP and finished
Percentage to sales 60.6% 61.7%
Manufacturing expenses 155.3 87.9 -11.7
Percentage to sales 2.5% 2.9%
* includes turbine operations for a period of six months from October 1,
2010 till March 31, 2011.
The material cost as a percentage to sales is lower by 110 basis points
after offsetting inflationary trends due to higher proportion of high-
margin turbine exports and after-market revenues.
The manufacturing expenses mainly comprise of tools consumed and power &
fuel cost, which were kept under control, despite increase in fuel prices,
due to rationalsation of production process.
Personnel Cost, Administration Expenses And Depreciation
(Rs. in million)
Description 2011-12 2010-11 Annuallsed
Personnel cost 461.0 195.4 18.0
Percentage to sales 7.3% 6.4%
Administration 283.5 138.4 2.4
Percentage to sales 4.5% 4.5%
Depreciation & Amortisation 115.9 58.8 -1.4
Percentage to sales 1.8% 1.9%
* includes turbine operations for a period of six months from October 1,
2010 till March 31, 2011.
There is no significant increase in the head count. The increase in
personnel cost as a percentage of net turnover is due to annual increments
The administration expenses as a percentage of turnover is almost at the
level as that of the previous year. This has been in line with the
Company`s overall cost control plan.
Depreciation and Amortisation
The depreciation of fixed assets and amortisation of intangible assets take
into account the capital additions during the year.
In accordance with the sanctioned Scheme of Arrangement, the Board of
Directors of the Company during the year had issued and allotted 2,800,000
- 8% Cumulative Preference Shares of Rs. 10/- each fully paid up to
Triveni Engineering and Industries Ltd. (TEIL) and 257,880,150 Equity
Shares of each fully paid up to the Equity Shareholders of TEIL.
Consequently, the Share Capital Suspense Accounts as appearing on March 31,
2011 have been regularised.
Reserves and Surplus
As against accumulated losses of Rs. 330.5 million as on March 31, 2011,
there is a surplus of Rs. 178.5 million after meeting dividend payments of
Rs. 251.8 million (including dividend distribution tax) and after
transferring an amount of Rs. 150 million to the General Reserve.
The total loans aggregate to Rs. 363.2 million as on March 31, 2012 as
against Rs. 875.5 million as on March 31, 2011. The break-up of the loans
is as follows.
(Rs. in million)
Description March 31, 2012 March 31, 2011
Term loans 353.8 581.5
Cash Credit 4.5 35.2
Vehicle loans 4.9 0.0
- Buyers credit 0.0 90.0
- TEIL 168.8
Total 363.2 875.5
-Long term borrowings 167.0 462.2
-Short term borrowings 4.5 125.2
-Other current Liabilities 191.7 288.1
During the year, term loans of Rs. 227.7 million have been repaid and the
instalments due for repayment in financial year 2012-13 aggregate to Rs.
191.7 million. The prepayment of loans will be considered in financial year
2012-13 subject to economics of the applicable prepayment premium.
During the year, the Company has subscribed to the equity share capital of
its subsidiary, GE Triveni Ltd., to the extent of Rs. 45 million and the
non-current trade investments correspondingly increased to Rs. 55 million.
Current investments of Rs. 100 million represent surplus funds parked in
the liquid mutual funds.
The Company`s business normally operates with negative or minimal working
capital. The negative working capital at the year-end stands at Rs. 374
million. Cash & cash equivalents of Rs.118.1 million represent fixed
deposits of Rs.100 million with banks having maturities less than 3
BUSINESS RISKS AND MITIGATION
The Company`s business relating to steam turbines falls under capital goods
industry which is closely linked with the country`s economic activities.
Further, domestic sales form a considerable part of its total sales. Apart
from the economic growth, the Company is subject to various other business
risks. Each of the major risks and the risk mitigation followed by the
Company are described here under:
The slowdown in the economy of the country directly impacts the demand of
the capital goods / infrastructure requirements, which in turn impacts the
growth of the Company. While this risk is beyond the direct control of the
Company, under such difficult conditions, the Company endeavours to
mitigate the risks by focusing on high-margin after-market revenues, value
engineering and exploring other growing markets to preserve its turnover
and profitability. The Company has been focusing on new export markets to
enlarge its geographical reach. The strategy results in having multiple
streams of revenue to reduce dependence on any one market/sector.
Rising Interest Rates
The rising inflation and cost of capital increase the business risk of the
project developer, thereby reducing the demand for the capital goods.
However, the Company deals in and supplies its turbines in sub 30MW where
the project cost is not high and most of these projects have low pay-back
period. Under challenging times, the customers in fact opt to implement the
project at the earliest to achieve cost optimisation and profitability
The Company operates in engineered-to-order capital goods industry, wherein
product efficiency and critical product features play an important role in
determining the overall life cycle costs. The Company mitigates the
technology risk by vigilantly studying and forecasting the trend of the
customer preference and accordingly, plans its R&D activities. The Company
has a vibrant R&D department which undertakes product development and
improvements within the shortest possible lead time and at optimal costs.
The Company`s emphasis to subject its engineers continually to technical
training in its in-house learning centre paves the way for building
pipeline of talent in this discipline. Further, the Company also has strong
tie-ups for R&D with international design houses and local research
institutions. The Company has an impressive track record of developing new
models and higher range of turbines which have been well received in the
The Company faces competition from the steam turbine manufacturers of
international repute in the domestic and international market. This may
compel the Company to quote aggressively impacting its margins. With a view
to mitigate these risks, the Company endeavours to provide a value
proposition to the customer offering products meeting the benchmark
efficiencies at competitive prices and shorter delivery period without
compromising on its margins. Further, the products are backed by impeccable
service. The products of the Company command enormous goodwill and numerous
repeat orders are testament to the quality of its products and the
confidence reposed by the customers.
Availability of Capital
The non-availability and high cost of capital may affect the growth plans
of the Company. The business model of the Company is technology intensive
and not capital intensive with a well developed supply chain. Further, the
business operates with minimal, and most of the times with negative working
capital. The Company is almost debt free and the free cash flow generation
is substantial which is considered adequate to meet its capital expenditure
even after distribution of dividend to the shareholders. The Company, even
in its initial period of turbine operations, has investment grade external
rating which will help it to raise funds at remunerative rates, if