CIMMCO LIMITED
ANNUAL REPORT 2011-2012
DIRECTOR`S REPORT
Dear Shareholders,
Your Directors present the 67th Annual Report, together with the audited
accounts of the Company for the financial year ended March 31, 2012.
Financial Results:
The performance of the Company has been satisfactory during the financial
year ended the 31st March, 2012.
(Rs. in lacs)
Particulars Year ended Year ended
31.03.2012 31.03.2011
(12 Months) (9 Months)
Turnover 23,651.30 11,782.02
Profit/(Loss) before Extra-ordinary
Items & Tax 3,279.09 1,002.96
Less: Exceptional Items 2,475.99 635.95
Profit before Taxation 803.10 367.01
Add/(Less): Deferred Tax Credits/(Charge) (384.47) 726.70
Less: Wealth Tax & Fringe Benefit Tax - 1.22
Profit after Taxation 418.63 1,093.71
Loss brought forward from previous period 2,011.08 3,104.79
Loss carried to Balance Sheet 1,592.45 2,011.08
Reserves & Surplus 16,160.58 15,855.50
Earnings per Share (Rs.) 2.08 5.43
As the previous financial year comprised of nine months, performance for
the financial year ended the 31st March, 2012 is not comparable with that
of the preceding financial year. Adjustment of exceptional items against
the Profit before Tax has resulted in lower Profit after Taxation, despite
improvement in revenue and topline for the financial year under review.
Dividend:
In the absence of adequate profit available for appropriation and
accumulated loss being carried forward, your Directors do not recommend any
dividend for the year under review.
Review of Operations and Future Outlook:
During the year ended the 31st March, 2012 your Company successfully
executed the order for Wagons secured from the Indian Railways and produced
1299 and sold 1302 wagons from its plant at Bharatpur.
Facilities of your Company have been streamlined for operational efficiency
and are capable of manufacturing large volume of rolling stock. However,
order for the number of Wagons entitled to be allocated to the Company is
yet to be released by the Indian Railways (IR).The execution of first
tranche of the quantity ordered by IR as per its decision based on a change
in complete reversal of its stand in non-compliance with the Order passed
by the Hon`ble Board for Industrial & Financial Reconstruction (BIFR), has
been progressing as per schedule.
Your Company`s facilities at Bharatpur are also equipped to manufacture
various products viz. Cement/Mineral Plant Equipment, Hydro Mechanical
Equipment, Pressure Vessel Equipment and orders for the said verticals are
being aggressively pursued. Overall the outlook for current year is
cautiously optimistic.
Management Discussion and Analysis:
The Management Discussion and Analysis Report as stipulated under Clause 49
of the Listing Agreement with Stock Exchanges, forming part of Directors`
Report for the year under review, is given in a separate section of this
Annual Report.
Directors:
Shri J K Shukla and Dr. G B Rao, Directors retire by rotation and being
eligible, offer themselves for re-appointment at the ensuing AGM. Shri
Manoj Jha inducted as an Additional Director was appointed as Managing
Director w.e.f. the 24th March, 2012. Shri M J Z Mowla and Shri K S B
Sanyal appointed as Additional Directors by the Board w.e.f. 8th November,
2011 and 24th March, 2012 respectively, hold office upto the date of
ensuing Annual General Meeting and in accordance with Section 260 of the
Act are eligible for appointment. Notice(s) pursuant to Section 257
proposing the candidature of the Directors named herein above have been
received from the members of the Company proposing their appointment.
During the year under review, the term of Shri J P Gupta as Executive
Director ended on the 31st July, 2011 and he continued as a Non Executive
Director till the 5th December, 2011 before retiring at the last Annual
General Meeting held on the said date. Shri Jamil Ashraf, Shri Ravi Kumar,
Directors and Dr. Vinay Mohan, Director (Corporate Affairs) & Officiating
CFO resigned from the Board w.e.f. the 17th October, 2011, 5th December,
2011 and the 31st March, 2012 respectively. Shri Manoj Jha`s resignation
from the office of Director & Managing Director has been accepted w.e.f.
30.07.2012.
Directors` Responsibility Statement:
Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956,
your Directors confirm that:-
(a) In preparation of the annual accounts for the financial year ended
March 31, 2012 the applicable accounting standards have been followed and
proper explanations relating to material departures, if any, have been
provided;
(b) The accounting policies selected and applied are consistent and the
judgments and estimates made are reasonable and prudent so as to give a
true and fair view of the state of affairs of the Company at the end of the
financial year, and of the Profit of the Company for that period;
(c) Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting frauds and other irregularities;
(d) The annual accounts have been prepared on a going concern basis.
Auditors:
Statutory Auditors:-
The Statutory Auditors of the Company, M/s. S. R. Batliboi & Co., Chartered
Accountants, retire at the conclusion of the forthcoming Annual General
Meeting and are eligible for re-appointment. The Audit Committee and Board
recommend the reappointment of M/s. S. R. Batliboi & Co., Chartered
Accountants as Statutory Auditors of your Company. They have intimated
their willingness to continue and submitted the certificate pursuant to
Section 224(1B) of the Companies Act, 1956 about their eligibility for
reappointment.
Cost Auditors:-
Pursuant to the provisions of Sections 224, 226 & 233B of the Companies
Act, 1956 and read with the Order No F. No 52/26/CAB/2010 dated 24.01.2012
issued by Cost Audit Branch, Ministry of Company Affairs, Government of
India for Cost Audit of the products manufactured by the Company classified
under industry head Engineering Machinery, M/s Sinha Chaudhuri &
Associates, Cost Accountants, were appointed as Cost Auditors of the
Company for the Financial Year ended 31th March, 2013.
Auditors` Report:
Notes 13.2A and 32 when read together with the relevant notes on accounts
and accounting policies are self explanatory. The observation of Statutory
Auditors regarding no internal audit having been carried out has been
addressed by the management and the outgoing Internal Auditors have
completed their report. M/s. L B Jha & Co., Chartered Accountants have been
appointed as Internal Auditors of the Company to strengthen and streamline
the internal audit system.
Public Deposits:
During the year under review, no public deposits were accepted by the
Company.
Promoter Group:
In accordance with the SEBI (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997, details of Promoters, Promoter Group and its
constituents are disclosed in a statement annexed to this Report. None of
the Promoters have pledged any Shares held by them in the Company.
Corporate Governance:
A separate section on Corporate Governance as prescribed under Clause 49 of
the Listing Agreement along with the Certificate obtained from a Practicing
Company Secretary regarding compliance with conditions of Corporate
Governance is included in the Annual Report.
Listing with Stock Exchanges:
The equity shares of the Company are listed at The National Stock Exchange
of India Limited (NSE), The Bombay Stock Exchange Limited (BSE), The Delhi
Stock Exchange Limited (DSE), The Calcutta Stock Exchange Limited (CSE) and
The Madhya Pradesh Stock Exchange Limited (MPSE) and Listing fees for the
financial year ending the 31st March, 2013 have also been duly paid.
Disclosures:
1. Under Section 217(2A) of the Companies Act, 1956 read with the Companies
(Particulars of Employees) Amendment Rules, 2011, as amended:-
Particulars of employee(s) drawing remuneration to the extent applicable as
per the aforesaid Section are disclosed in the Annexure A to this Report.
2. Under Section 217(1)(e) of the Companies Act, 1956 read with the
Companies (Disclosure of Particulars in the Report of Board of Directors)
Rules, 1988, as amended:
The disclosure required under the aforesaid provision has been attached
separately and marked as Annexure B to this Directors` Report and forms
part of this Report.
Corporate Social Responsibility:
Your Company`s endeavors to contribute suitably to the society by being
involved in a series of community welfare programmes, directly or through
philanthropic organizations would continue. 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 healthy and grow healthily.
Acknowledgments:
Your Directors wish to place on record their appreciation for the
cooperation and support of the secured lenders viz. ICICI Bank, Syndicate
Bank and Governments of Rajasthan, Madhya Pradesh and Delhi, local
administration/other Government Departments; for contribution of the
employees/ex-employees of the Company and all other stakeholders.
On behalf of the Board
Place: Kolkata J. P. Chowdhary
Date : July 30, 2012 Executive Chairman
ANNEXURE TO THE DIRECTORS` REPORT:
As required under Regulation 3 of the Securities and Exchange Board of
India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997,
the following entities constitute "Group" for the purpose of the aforesaid
Regulations:
Promoter and Promoter Group shareholding as at 31st March, 2012
Name of shareholders Number of % of total
shares held paid up equity
Promoter
Cimco Equity Holdings Pvt. Ltd. 1,52,81,496 75.84
Promoter Group
Mr. Gaurav Kajaria 14,000 0.07
Mrs. Vinita Bajoria 13,424 0.07
Mrs. Sumita Kandoi 4,000 0.02
Total Promoter/Promoter Group Holding 1,53,12,920 76.00*
*The Promoter Holding reduced by 7,92,575 equity shares due to invocation
of pledge thereon on 04.04.2012 and stood at 72.07% of the total paid up
capital of the Company.
The following entities although not holding any equity shares in the
Company are Promoter Group entities as disclosed in the disclosures/
distribution pattern submitted to the Stock Exchanges:
Listed:
(1) Titagarh Wagons Limited
(2) Continental Valves Limited
(3) Apex Traders & Exporters Limited
Unlisted:
(1) Greysham and Co. Private Limited
(2) Titagarh Capital Private Limited
(Formerly Flourish Securities and Finance Private Limited)
(3) Titagarh Freight Car Private Limited
(4) Titagarh Singapore Pte. Limited
(5) Titagarh Wagons AFR
(6) Titagarh Capital Management Services Private Limited
(7) Tecalemit Industries Limited
(8) Navyug Business Private Limited
(9) Simplex Developments Private Limited
(10) Traco International Investment Private Limited
(11) Singhal Contractors and Builders Private Limited
(12) Shivalik Mercantile Private Limited
(13) Titagarh Logistics Infrastructures Private Limited
(14) Titagarh Marine Limited
(15) Bhatpara Papers Limited
(16) Titagarh Papers Limited
(17) West Bengal Pulpwood Development Corporation Limited
(18) Sourenee Leaves Private Limited
(19) Corporated Shipyard Private Limited
(20) Times Marine Enterprises Private Limited
Individuals:
(1) Shri Jagdish Prasad Chowdhary
(2) Shri Umesh Chowdhary
(3) Smt. Savitri Devi Chowdhary
(4) Smt. Rashmi Chowdhary
(5) Smt. Bimla Kajaria
(6) Smt. Panna Devi Kajaria
(7) Shri Pawan Kumar Kajaria
(8) Shri Sanjay Kumar Bajoria
(9) Shri Saket Kandoi
(10) Shri Subhash Kandoi
(11) Shri Aditya Kumar Saraogi
(12) Shri Sushil Kumar Saraogi
Non-Incorporated Promoter Group entities:
(1) J P Chowdhary and Others (HUF)
(2) Prithish FamilyTrust
(3) Sree Kashi Nath Bhagwati Devi Chowdhary Charitable Trust
(4) Umesh Chowdhary (HUF)
ANNEXURE - A
Particulars required under the Companies (Particulars of Employees)
Amendment Rules, 2011:
Particulars
Name of the Employee Shri Manoj Jha
Designation Managing Director
Remuneration Received (Rs.)# Rs. 1,09,678
Nature of employment Contractual
Nature of duties of employee Managing the day to day
affairs of the Company
Qualifications B. Tech. (Production Engineering)
Experience (Years) 28
Date of commencement of employment 24-03-2012
Age (Years) 52
Last employment held Hindustan Motors Ltd.
Number and% of equity shares held NIL
in the Company
# Employed for the part of the year. In addition to the above remuneration,
Shri Manoj Jha, being Corporate Group Adviser w.e.f. 23.3.2012, was paid
Rs. 34,839 as Retainership fees by a Group Company.
ANNEXURE - B
Particulars required under the Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988.
A. CONSERVATION OF ENERGY:
a) Energy conservation measures taken:
1. Use of transparent sheets in sheds to utilize sunlight for illumination
and thus reducing electrical energy input for illumination.
2. Installation of power saver compressor units replacing old and
inefficient compressors.
3. Welding machines with power savers (inverter base) installed to save
power.
b) Additional investments and proposals, if any, being implemented for
reduction of consumption of energy:
1. Usage of CFL/Energy Efficient lighting system for shop floor
illumination.
2. Energy saving units being installed in lighting circuit to reduce
consumption.
3. Replacement of rewound and inefficient drives.
c) Impact of measures at (a) and (b) above for reduction of energy
consumption and consequent impact on cost of production of goods:
The measures taken as above will result in saving of non renewable sources
of power and energy which are scarce and expensive in the country and thus
will result in lowering of the cost of production as well as saving the non
renewable sources of energy. d) Total energy consumption and energy
consumption per unit of production:
a) 2011-12 2010-11
i) Electricity Purchased
Units (Kwh) 2013207 1382508
Total Amount (Rs. in lacs) 113.59 73.12
Rate/Unit (Rs. in lacs) 5.64 5.29
ii. Furnace Oil/LDO/LVFO
Quantity (K Litres) 75516.00 31522.00
Total cost (Rs. in lacs) 31.82 12.32
Average rate (Rs.) 42.13 39.42
b. Consumption per unit of production
Products Standards 2011-12 2010-11
(if any)
No. of Wagons produced 1299 575
Electricity (Kwh) per
Wagon manufactured 1549.81 2404.36
HSD Oil (Ltrs) 58.13 54.35
B. TECHNOLOGY ABSORPTION
1. Efforts made in technology absorption
Research & Development (R & D)
1. Specific areas in which R & D carried out by the Company:
The Company is in the process of completing in house design for special
type of wagons as a part of its R & D activities.
2. Benefits derived as a result of the above R & D:
The benefits from the above are expected to be significant, however, the
same can only be ascertained in tangible terms in future.
3. Future plan of action:
The Company is focused on value addition in the manufacture and marketing
of wagons. The research and development in other fields will be carried out
in due course.
4. Expenditure on R & D: (Rs./lacs)
2011-12
Capital Nil
Recurring Nil
Total Nil
Total R & D expenditure as a
percentage of total turnover N.A.
Technology absorption, adaptation and innovation
1. Efforts, in brief, made towards technology absorption, adaptation and
innovation:
The Company is in the process of innovative solutions for optimum processes
used for manufacture of wagons.
2. Benefits derived as a result of the above efforts:
The benefits from the above are expected to be significant, however, the
same can only be ascertained in future.
3. Information on imported technology:
i) Technology imported : Nil
ii) Year of import : N.A.
iii) Has technology been fully absorbed? : N.A.
iv) If not fully absorbed, areas where
this has not taken place, reasons
therefore and future plan of action : N.A.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
a) Activities relating to exports, initiatives taken to increase exports,
development of new export markets and export plans:
The Company at present has no order for exports. However the Company is
fully equipped to seize the export opportunities, if any coming its way.
b) Total foreign exchange used and earned:
Foreign exchange used - Rs. 86.45 lacs and earned is NIL.
For and on behalf of the Board
Place: Kolkata J. P. Chowdhary
Date : July 30, 2012 Executive Chairman
MANAGEMENT DISCUSSION AND ANALYSIS
OVERALL REVIEW:
The overall performance of the Company during the financial year ended the
31st March, 2012 has been satisfactory. Order for Wagons secured from
Indian Railway during the year under the review was executed successfully.
However, adjustment of exceptional items resulted in lower Profit After Tax
despite significant gross revenues generated.
BUSINESS SEGMENTS:
Wagons:-
a) Industry Outlook: The Railway Budget announced in February 2012 declared
the intention to align the annual plan investment in five focus areas of
track, bridges, signaling, rolling stock and station/terminal development.
With this focus on capacity augmentation and modernization, the overall
industry outlook in the medium term appears to be encouraging.
b) Opportunities: The Railway Budget envisages private investment schemes
for Wagon Leasing, Private Freight terminals, Container train operations
etc. being made more attractive to PPP partners.
This initiative augurs well for the private demand for Wagons, besides
expected increase in demand from the Indian Railways.
c) Challenges: Uncertainty as to timely availability of raw materials &
components and rising costs are major challenges for Wagon 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.
d) Segment Review and Analysis:
Unit March 31, 2012 March 31, 2011
Production of Wagons No. 1299 575
Sales No. 1302 572
Average Realisation Rs. Lacs/No. 16.14 18.46
Comparative data are not given since the previous financial year was of
nine months ended 31st March, 2011 whereas the financial year under review
comprises twelve months ended 31st March, 2012.
Review of operations: Performance of the Wagons segment has been
satisfactory and the Company`s facilities have been streamlined at
Bharatpur plant to cater to the requirement of customers.
e) Company Outlook:The Company has received orders for 353 BCNHL and 347
BOXNHL Wagons from the Railway Board, which are currently under execution
as per schedule. The Company is aggressively pursuing orders from private
customers besides the Railway Board. This augurs well for the current
financial year.
The Company is also pursuing orders for the following verticals:
Heavy Earth moving and Mining Machinery:
Due to uncertainty in the economy there has been some reduction in the
demand in this sector. However compared to the other industries, the demand
for construction equipments still remains good.
As the Company is in the expansion/growth stage, there is an opportunity
for these products viz. Mechanical Cranes, Hydraulic Excavators, RT Cranes
etc.
Industrial Fabrication:
Cement/mineral plant equipment, Hydro- mechanical equipment and Pressure
vessel equipment offer great potential which the Company plans to tap,
having had past experience in this vertical. The Company has received
orders under these verticals which are being executed.
RISKS AND CONCERNS
The major risk factors applicable to the Company are:
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 impact the business of
the Company.
Increase in the cost of raw materials and other inputs:
(i) 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.
(ii) Steel based raw materials being the principal inputs in manufacturing
wagons and heavy engineering equipment, cost of finished goods totally
depends on the prices of steel prevalent in both National and International
markets which are highly volatile and cyclical in nature.
However, the risk is mitigated to some extent as the most of the contracts
have price variation clause.
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.
Risks associated with Organic growth of business:-
Growth and expansion of the business of the Company involves financial,
managerial & other risks. The Company has engaged the services of
professional firm to identify and submit a report on risk mitigation.
INTERNAL CONTROL SYSTEM AND ADEQUACY:
The Company has an adequate system of internal controls for imposing
necessary checks to ensure that (i) its assets are safeguarded, (ii) the
transactions are authorised, recorded and reported properly; and (iii) the
accounting records are properly maintained and its financial statements are
reliable.
For ensuring the correctness of the internal checks and control, the
Company has appointed a firm of Chartered Accountants to conduct internal
audit for strengthening the checks and balances.
Discussion on Financial Performance with respect to Operational
Performance:
Not with standing the factors referred to herein above impacting the
operations, securing of order for wagons, streamlined operations which were
restarted after suspension for eight years better manufacturing processes,
focus on improved productivity, optimization of resource deployment
resulted in satisfactory performance.
Human Resources & Industrial Relations:
The Company recognizes that employees represent its greatest assets and
potential. It is only through motivated, creative and business-minded
employees the Company can regain and sustain its position in the Industry.
After revival of the Company, focus is laid on building up the team at
different verticals for realizing the optimum potential of the Company. As
on March 31, 2012, the Company had 158 employees in its roll.
Industrial relations at the factory site of the Company and otherwise
remained cordial.
Cautionary Statement:
Statements made in the Management Discussion & Analysis Report which seeks
to describe the Company`s objective, projections, estimates, expectations
or predictions may be considered to be "forward-looking statements" within
the meaning of applicable securities laws and/or regulations, based on
beliefs of the management of your Company. Such statements reflect the
Company`s current views with respect to the future events and are subject
to risks and uncertainties.
Many factors could cause the actual result to be materially different from
those projected in this report, including amongst others, changes in the
general economic and business conditions affecting demand/supply and price
conditions in the segment in which the Company operates, change in business
strategy, interest rates, inflation, deflation, foreign exchange rates,
competition in the industry, changes in governmental regulations, tax laws
and other Statues and other incidental factors.
The Company does not undertake any obligation to publicly update any
forward-looking statements, whether as a result of new information, future
events or otherwise.
For and on behalf of the Board
Place: Kolkata J. P. Chowdhary
Date : July 30, 2012 Executive Chairman |