Cimmco Ltd Management Discussions.


The overall performance of the Company during the financial year ended March 31, 2019 improved substantially owing to the orders for Wagons received from both the private sector customers and Indian Railway.


Wagons & Engineering Products

a) Segment Review and Analysis:

Unit March 31, 2019 March 31, 2018 % Change
Sales No. 860 717 19.95%
Segment Revenue Rs in lacs 25,691.35 13,197.51 94.67%
Segment Results Rs in lacs 2,707.66 243.75 1010.83%

The Wagons & Engineering Products segment recorded a commendable increase of 94.67% in turnover for FY 2018-19 as compared to the previous year basically due to increase in sale of wagons to the private customers and sale of Locomotive. The sale of wagons to the Indian Railways (IR) saw an increase of 12.92% as compared to previous year.

The segment saw a substantial increase in the order book. The year under review ended with an order book of Rs. 475 crores, an increase of 20% as compared to the order book as at 31st March 2018. The above increase in the order book is attributed to overall improvement in the wagon procurement from the Indian Railways (IR). Further, the demand from the private sector showed a favourable movement with some orders flowing from the private customers.

b) Industry Outlook: Wagons industry had during the past few years prior to the previous financial year witnessed irregular and decremental Wagons procurement orders by Indian Railways. However, the placement by the Government of India for procurement of bulk quantity of 22000 Wagons and commitment to expedite completion of dedicated freight corridors augurs well for the industry.

c) Opportunities: Rail is expected to be the preferred mode of movement of cargo being an effective and more economical mode of carrying goods across the country. The Governments plans to expand the railway network and the project of dedicated freight corridors if implemented in right earnest, Wagon industry offers substantial opportunity which can be seized particularly by the established units to fullest extent.

d) Challenges: Uncertainty in timely placement of wagons procurement orders by Indian Railways, availability of large working capital and challenging supply chain management coupled with the stressed margins due to unhealthy competition in the industry besides rising cost of inputs are major challenges for Wagons Industry in India. The dependence on one customer i.e. Indian Railways is a serious concern in as much as any change in the Government policy stands to directly impact the industry.

The comparison of various key financial ratios of the performance of the Company vis--vis the previous year is given hereunder:

Sl. No. PARTICULARS March 31, 2019 March 31, 2018 Change %
1. EBIDTA % (including other income) 9.7% 2.2% 340.91%
2. Return on Equity % 0.5% -14.7% 103.40%
3. Return on Net Worth % 0.5% -14.7% 103.40%
4. Return on Capital Employed % 0.5% -14.7% 103.40%
5. Return on Fixed Asset % 0.4% -9.0% 104.44%
6. Debt Service Coverage Ratio 1.22 0.21 494.70%
7. Interest Coverage ratio 1.22 0.21 494.70%
1. Current Ratio 1.10 0.99 24.80%
2. Debt Equity Ratio 0.80 0.68 23.70%
3. Inventory Turnover (No. of days) 139.12 111.53 21.80%
4. Debtors Turnover (No. of days) 49.33 46.79 3.60%
5. Sales / Capital (times) 1.33 0.85 70.30%
6. Sales / Fixed Assets (times) 1.01 0.52 100.00%
7. Debt / Tangible Net Worth 0.80 0.68 23.70%

Notes on significant changes on the aforesaid Profit and Loss ratios where change is > 25% (S. No. 1 to 7): The ratios have improved on account of better profitability of the Company during the financial year 2018-19.

Notes on significant changes on the aforesaid Balance Sheet ratios where change is > 25% (S. No. 5 and 6): The ratios have improved due to increase in Sales during the financial year 2018-19.

Material Changes and commitments after the Balance Sheet date

No material changes and commitments have occurred from the date of close of the Financial Year to which the financial statement relates, till the date of this report, which might affect the financial position of the Company.

Internal Financial Controls

Appropriate policies and procedures have been adopted by the Board to ensure effective financial controls, accuracy and completeness of the accounting records risk assessment and mitigation measures, the prevention and detection of frauds and errors and orderly and efficient conduct of the companys business. The internal financial controls (IFC) have been documented and adequacy of IFC has been evaluated by an external firm of experts and certified by the Statutory Auditors.

The Audit Committee periodically reviews the internal control system to ensure that it remains effective and aligned with the business requirements.

Based on the aforesaid, the Board has concluded that during the year IFC were operating effectively.

Risks and Concerns/Mitigation Measures

The Company has laid down a risk management mechanism which is reviewed periodically. A Risk Management Policy to identify and assess the key risk areas, monitor mitigation measures and report compliance has been adopted. Based on the review, the following key risks have been identified:

Dependence on the Indian Railways

The Company is engaged in the business of manufacturing wagons which is entirely dependent upon the policies of Indian Railways and any change in the policies whether positive or negative directly impacts the business of the Company.

Increase in the cost of raw materials and other inputs

The major raw materials required by the Company include steel, specialized components including bogies, coupler sets, air brakes etc. which are exposed to volatility in prices and availability in required specifications.

Risk of performance guarantee, product warranty and liquidated damages

The contracts involve performance guarantee based on contract value and warranty periods within which if any defect is detected in the products, the Company may have to incur expenditure for correcting the defects or even replacing the products. Delay in scheduled delivery may attract liquidated damages in the range of 5-10%.

Subsidiary Companies / Joint Venture / Associate Company

The Company does not have any Subsidiary or Joint Venture or Associate Company.

Extract of Annual Return

The details forming part of the extract of the annual return in the Form MGT-9 are annexed as Annexure DR-1 and also available on the website of the Company at

Number of Board Meetings

The Board of Directors met six (6) times during the financial year ended 31st March, 2019 as per the details provided in the Corporate Governance Report forming part of the Annual Report.

Loans, Guarantees and Investments

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

Significant and material orders

There were no material/significant orders passed by any regulator, tribunal impacting the going concern status and the Companys operations in future.

Composition of Audit Committee

The Board has constituted the Audit Committee comprising Shri J K Shukla as the Chairman, Shri Anil Kumar Agarwal, Shri K S B Sanyal and Shri MJZ Mowla as the members and the details are provided in the Corporate Governance Report annexed hereto. Shri MJZ Mowla was inducted as a member on 14/08/2019. Shri Nandan Bhattacharya ceased to be a member upon sad demise on 9th June, 2019. During the year under review, all recommendations of the Audit Committee were accepted by the Board.

Pursuant to various requirements of the Act and the Listing Regulations, the Board of Directors has also constituted Nomination & Remuneration Committee and the Stakeholders Relationship Committee. The details of composition, terms of reference, etc., pertaining to these committees are mentioned in the Corporate Governance Report.

Related Party Transactions

All Related Party Transactions (RPTs) are entered in compliance with the applicable provisions of the Companies Act, 2013 and also in accordance with the policy on the subject adopted by the Board. All such contracts or arrangements were on arms length basis and in the ordinary course of business. Audit Committee reviews and approves all the RPTs as stipulated by the Listing Regulations and based thereon final approval of the Board is obtained. All the RPTs as approved by the Board during the financial year 2019 are furnished in the form AOC-2 annexed hereto and marked as Annexure DR-2.

Changes in share Capital

There was no change in the share capital of the Company during the year under review.

Corporate Governance Report

The Company has complied with the corporate governance requirements under the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A separate section on corporate governance under Listing Regulations along with a certificate from a Company Secretary in practice confirming the compliance, is annexed to and forms part of the Annual Report.

Management Discussion and Analysis Report

The Management Discussion and Analysis Report is annexed to and forms part of the Annual Report in compliance of the Regulation 34 of SEBI (LODR) Regulations, 2015.

Internal Control System

The Company has system of internal controls and necessary checks and balances which are being strengthened so as to ensure

a. that its assets are safeguarded

b. that transactions are authorised, recorded and reported properly; and

c. that the accounting records are properly maintained and its financial statements are reliable.

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

Vigil Mechanism

A fraud free and corruption free environment as part of work culture of the Company cannot be over emphasized and with that objective a Vigil Mechanism policy has been adopted by the Board and is uploaded on the web site of the Company at No complaint of this nature was received by the Audit Committee during the year.

Internal Complaints Committee

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

Directors and Key Managerial Personnel


Shri Anil Kumar Agarwal was redesignated from Whole-time Director to Managing Director & CEO by the Board in its meeting held on November 10, 2018. The Board has recommended to the members to pass the necessary resolution at the ensuing 74th Annual General Meeting for the redesignation of Shri Anil Kumar Agarwal as Managing Director & CEO.

Demise of a Director

Your Directors are saddened to report that Shri Nandan Bhattacharya, Independent Director on the Board of your Company since February 28, 2015 breathed his last on June 9, 2019. The loss caused by his sad demise is irreparable and it is prayed that the almighty would extend the strength to his family members to bear the same.

Retirement by rotation

Shri Anil Kumar Agarwal, Managing Director & CEO (DIN: 01501767) retires by rotation pursuant to the provisions of Section 152 of the Act and is eligible for re-appointment.


Shri J K Shukla, Shri G B Rao, Shri K S B Sanyal and Shri M J Z Mowla were re-appointed as Independent Directors of the Company w.e.f. 1st April, 2019 for a term of five years upto 31st March, 2024 pursuant to the decision of Nomination & Remuneration Committee and the Board at its meeting held on 10th August, 2018 followed by approval of the shareholders obtained at the 73rd Annual General Meeting held on 29th September, 2018.


Shri Ram Narayan Tiwari ceased to be a Director and Key Managerial Personnel of the Company w.e.f. 25th February, 2019 upon termination of his Service Agreement.

The composition of the Board of the Company after the resignation of Shri R.N. Tiwari and sad demise of Shri Nandan Bhattacharya on June 9, 2019, is in compliance with the applicable requirements of the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015.

Evaluation of the Boards performance, Committee and Individual Directors

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

Declaration by Independent Directors

Declarations pursuant to the Sections 164 and 149(6) of the Act and Listing Regulations and affirmation of compliance with the Code of Conduct as well as the Code for Regulation of Insider Trading adopted by the Board, by all the Independent Directors of the Company have been made.

Separate Meeting of Independent Directors

Details of the separate meeting of Independent Directors held in terms of Schedule IV of the Act and Regulation 25(3) of the Listing Regulations are given in the Corporate Governance Report.

Remuneration Policy and remuneration

A policy approved by the Nomination and Remuneration Committee and the Board is followed by the Company on remuneration of Directors and Senior Management Employees, as per the details provided in the Corporate Governance Report.

Particulars of Remuneration of Directors/KMP/Employees

The disclosure stipulated by Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed.

Disclosure pertaining to Remuneration and other details as required under Section 197 (12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed and marked as Annexure DR-3.

Directors Responsibility Statement u/s 134(5) of the Companies Act, 2013

The Directors state that:

• Appropriate Accounting Standards as are applicable to the Annual Statement of Accounts for the financial year ended March 31, 2019 have been followed in preparation of the said accounts and there were no material departures therefrom requiring any explanation;

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

• Proper and sufficient care has been taken for maintaining adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

• The Annual Accounts have been prepared on a going concern basis; and

• The Directors have laid down Internal Financial Controls (IFC) to be followed by the Company and that such IFC are adequate and operating effectively.

• The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Statutory Auditors

Price Waterhouse & Co, Chartered Accountants, LLP, Statutory Auditors of the Company were appointed at the 72nd Annual General Meeting (AGM) to hold office for a period of five years until the conclusion of 77th AGM.

Pursuant to Section 40 of the Companies (Amendment Act), 2017 notified w.e.f. the 7th May, 2018 the Company has dispensed with the requirement of ratification of appointment of Price Waterhouse & Co, Chartered Accountants LLP as the Statutory Auditors of the Company pursuant to the resolution passed by the members at its 73rd Annual General Meeting held on 29th September, 2018.

As regards the qualified opinion expressed by the Statutory Auditors, the Minimum Public Shareholding (MPS) has been achieved on June 7, 2019 upon the conclusion of the third Offer for Sale (OFS) made by the Promoter and the said qualified opinion stands addressed. The Note No. 45 to the Financial Statements has dealt with the matter in detail and MPS having been achieved, no further clarification is required from your Directors.

Change in Accounting Policy

Rs. 72.49 (Net of Tax) has been credited to Retained Earnings during the year under review on account of adjustment arising out of implementation of IND AS 115.

Cost Auditors

M.R. Vyas & Associates., Cost Accountants have been appointed as Cost Auditors to conduct cost audit of the accounts maintained by the Company in respect of the products manufactured by the Company, for the Financial Year 2019-20 subject to ratification of their remuneration by the shareholders in accordance with the provisions of Section 148 of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014. The Cost Audit Report for the previous financial year ended 31st March, 2019 has been filed as stipulated by the applicable provisions of law.

Secretarial Auditor

Pursuant to the provisions of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, secretarial Audit has been conducted by Sumantra Sinha & Associates, Practicing Company Secretaries appointed by the Board and their report is annexed hereto and marked as Annexure DR-4.


The Company did not accept any deposits during the financial year ended March 31, 2019 in terms of the Companies (Acceptance of Deposits) Rules, 2014.

Personnel Human Resources

A. Empowering the employees

The Company considers its organizational structure to be evolving consistently over time while continuing with its efforts to follow good HR practices. Adequate efforts of the staff and management personnel are directed on imparting continuous training to improve the management practices.

B. Industrial Relations

Industrial relations at all sites of the Company remained cordial.

C. No. of Employees: Manpower employed as at March 31, 2019 was 136.

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

A statement pursuant to Section 134(3) (m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 on conservation of energy, technology absorption, foreign exchange earnings and outgo is annexed to and marked as

Annexure DR-5.

Listing with Stock Exchanges

The equity shares of the Company are listed at The National Stock Exchange of India Limited (NSE), BSE Limited and Listing fees for the financial year ending the 31st March, 2020 have been duly paid. Whereas the Delhi Stock Exchange Limited (DSE), and the Madhya Pradesh Stock Exchange Limited (MPSE) have been de-recognised, the Company has made an application for voluntary delisting from The Calcutta Stock Exchange Limited (CSE) which is under process.

Discussion on Financial Performance with respect to Operational Performance

To mitigate the risk factors referred to hereinabove impacting the operations, better manufacturing processes, improved productivity and focus on optimization of resource deployment are undertaken for a reasonable performance, viewed in the backdrop of the trends witnessed in the industries in which the Company operates.

Corporate Social Responsibility

Your Company continues its endeavours to voluntarily contribute suitably to the society by being involved in a series of Community Welfare Programs, directly or through philanthropic organizations. Bharatpur plant is located close to the Bharatpur Bird Sanctuary amidst vast green area and all care is taken to preserve the environment to allow the natures expanse to remain green and grow healthily.

Compliance with Secretarial Standards

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

Forward Looking Statement

The statements in this report describing the Companys policy, strategy, projections, estimation and expectations may appear forward looking statements within the meaning of applicable securities laws or regulations. These statements are based on certain assumptions and expectations of future events and the actual results could materially differ from those expressly mentioned in this Report or implied for various factors including those mentioned in the paragraph "Risks and Concerns" herein above and subsequent developments, information or events.


Your Directors wish to place on record their appreciation for the cooperation and support of the Banks and local and central Governments and administration/other Government Departments; and appreciation for the contribution of other stakeholders and employees.

For and on behalf of the Board
J P Chowdhary
Kolkata, the 14th day of August, 2019 DIN: 00313685