Titagarh Wagons Ltd Management Discussions.

Overall Review

The overall performance of the Company during the financial year 2016-17 improved notably both at standalone and consolidated levels owing largely to part fruition of the focused efforts of the Company to change the product mix and also the products as part of diversification drive boosted by inorganic growth through acquisition of rolling stock manufacturing unit in Italy; and this was achieved despite the uncertainty and irregular procurement of Wagons by Indian Railways.

Rs In lacs

Standalone Consolidated
Particulars 2016-17 2015-16 2016-17 2015-16
Segment revenue (gross)
Wagons & coaches 29,341.56 29,738.79 165,829.60 94,402.12
Specialised Equipments & Bridges 7,171.51 1,938.40 7,171.52 1,938.40
Others 520.53 908.42 917.81 1,138.38
Net sales/ Income from operations 37,033.60 32,585.61 173,918.93 97,478.90
Segment Results
Wagons & coaches 2,023.09 655.86 7,151.42 2,533.85
Specialised Equipments & Bridges 1,398.55 159.89 1,392.75 159.89
Others 106.29 (1,955.11) (747.24) (3,327.97)
Total 3,527.93 (1,139.36) 7,796.93 (634.23)
Less / (Add)
Interest Expense 233.36 349.79 1,860.21 1,311.80
Interest Income (1,225.70) (1,932.15) (921.69) (2,491.32)
Depreciation and amortisation 139.42 145.66 139.42 145.66
Other corporate income (944.48) (668.30) (944.48) (668.29)
Other corporate expenses 2,693.92 2,355.92 2,693.82 2,348.73
Profit before taxes 2,631.41 (1,390.28) 4,969.65 (1,280.81)
Tax Expenses 703.04 (492.10) 2,226.59 671.41
Profit after taxes 1,928.37 (898.18) 2,743.06 (1,952.22)

Segment Review – Standalone

Revenue from operations on a standalone basis increased to H37,033.60 lacs from H32,585.61 lacs in the previous year, recording growth of 13.65%. Successful de-risking from dependence on railways business is manifested in significantly increased share of revenue from the non-railways segment, mainly from specialized equipments and bridges. The EBIDTA margins (before exceptional items) went up from 7.12% of revenue in the previous year to 11.41% during the year under review due to change in the product mix from railway segment to non-railway segment as stated above.

Revenues and EBIDTA – Consolidated

Revenue from operations grew on a consolidated basis to H173,918.93 lacs from H97,478.90 lacs in the previous financial year, i.e. increase of 78.42%. The total consolidated Group revenue comprised 27.26% from Indian operations and 72.74% from overseas operations. The increase in the European business was mainly due to increase in revenue achieved by Titagarh Firema Adler SPA, Italy (TFA), which had the first full year of operations since it was acquired by the Group by setting up a subsidiary on June 30, 2015. TFA’s top line during the FYE 31/03/2017 was INR 101,079.23 lacs (Euro 137.33 million). The consolidated EBIDTA margin (before exceptional items) at 7.31% of the consolidated revenue in the previous year marginally improved to 7.88% in the year under review.

Performance of segments

1. Wagons and Coaches (the segment consists of entire solution for the rolling stock requirements of customers, from freight wagons, to passenger coaches, metro trains, train electrical, bogies, couplers, crossings and all allied products.)

Standalone Performance

The Wagons and Coaches segment ended the year with almost the same level of turnover as compared to the previous year, however, the turnover from the freight wagons business included in the above segment saw a steep reduction in the volume by 19%. The decline in the freight business was compensated by increase in business from foundry castings by around 93% and scheduled progress in execution of order from Kolkata metro for refurbishment of the metro rakes.

Although turnover of the segment remained at the same level as the previous year, it recorded a change in the geographical mix wherein the export sales increased by 243%.

The Company has received some major export orders during the year ended March 31, 2017 for supply of freight wagons and reasonably expects to increase its order book over the period through increased synergy with its foreign subsidiary Titagarh Wagons AFR, which has the patented designs of specialized wagons and also a pool of highly talented design engineers conceptualizing and designing the new wagons for the global market.

Execution of some of the orders for export of wagons in addition to other freight wagons enabled the segment results to go up by 208% during the FYE 31/03/2017 at higher average realization as compared to previous year.


On 22 April 2017, the Company launched a special wagon keeping in view the special freight train operation (SFTO) scheme. Railway Minister, Sri Suresh Prabhu inaugurated the first SFTO carrying steel coils. The rake was manufactured by the Company at its Uttarpara unit in West Bengal.

The Metro & Electric Division is a recent addition to the wagons and coaches segment of the Company. In July 2015, the Company acquired the business of Firema Trasporti SpA, Italy, by setting up Titagarh Firema Adler SpA (TFA). Firema, with over 100 years of experience in the Industry in Italy, has a portfolio of rolling stock products and a range of illustrious projects. Titagarh Group through TFA would initially cater primarily to the Metro industry in South Asia, providing integrated solutions, including car bodies, bogies, light railway vehicles, metro trains, electric and diesel locomotives, coaches, tramways, electric and electronic equipment etc. The Group is poised to expand its client base internationally to include Malaysia, Indonesia, Sri Lanka, Bangladesh, and nationally to Mumbai, Bhopal, Indore and Vijaywada and other places.

2. Specialised Equipments & Bridges (consists of bailey / other modular bridges, nuclear biological shelters and other defence related products) The revenue from this segment saw a commendable increase of 270% during the year and the segment results were up by 775% over the corresponding numbers in the previous year. The increase is mainly due to higher volume from the contract for manufacturing of new equipments awarded by the Ministry of Defence.

The segment is in the process of completing the designs for EMI/EMP Protected Shelters. Commercial Orders for the same are expected thereafter.

The company has leveraged its joint venture1 with Matiere SAS France, to bid for tenders for the construction of Unibridges as well as explore entry into more joint ventures for different models of bridges.

3. Shipbuilding

The shipbuilding segment though clubbed with the other miscellaneous segment pending revenue, profit and other thresholds as required under IND AS 108 on Operating Segments, for disclosure as a separate business segment, is a separate vertical and with the receipt of new prestigious orders would become a separate reportable segment from the next financial year. Existing facilities being sufficient and in proximity to Hooghly river combined with the available captive engineering competence, this vertical was commissioned with marginal capital expenditure only.


On 7th December 2016, Titagarh Wagons factory received the capacity assessment certificate from the Ministry of Defence (Navy) wherein the Shipyard has been cleared for undertaking construction of non-weapon platforms upto 120 metres in length and all types of Yardcraft.

Received the maiden order for construction of 4 ships, two each from Indian Navy and National Institute of Ocean Technology (under the Ministry of Earth and Sciences) at a total order value of approx H170 crores. The said orders are to be executed over a period of next 18 to 36 months.

Industry overview of Business Segments

Wagons and Coaches

India has the world’s fourth largest railway network comprising 119,630 kilometres of total track and 92,081 kilometres of running track over a route of 66,687 kilometres (by the end of FY16). The Indian Railways have a fleet of more than 2.51 lac wagons, 70,241 coaches and 11,112 locomotives. Over 2015-16, the Indian Railways carried 22.2 million passengers and 3.03 million tonnes of freight per day, and earned a gross revenue of H1,68,379.60 crore, a 33% increase from 2012-13 revenue levels of H1,26,180.43 crore. During the FY07-16 period, revenues have increased at a CAGR of 6.4%. The traffic carried by the Indian Railways can be split into two segments: passenger and freight. In the last eight years, revenues from the passenger segment have expanded at a CAGR of 6.9% resulting in total revenue earnings of ~$6.9 billion. $16.9 billion was generated as earnings from commodity freight traffic during FY16. (Source: www.indianrailways.gov.in)

Growth drivers

Passenger traffic is expected to increase from 8,152 million (FY16) to 15.18 billion by FY20 The Central Government’s decision to allow 100%-FDI in the railway sector Construction of the Eastern and the Western Dedicated Freight Corridors will lead freight volumes to more than double to 2,165 million tonnes by FY 2020 Increasing carrying capacity, cost effectiveness and improved quality of service will escalate railway’s share of freight movement from 35% to 50% by 2020 The Ministry of the Railways decision to construct six high-capacity, high-speed dedicated freight corridors along the Golden Quadrilateral and its diagonals.

Budgetary support

For the first time in India, the previously separate Railway Budget was merged with the Union Budget thereby bringing the railways to the centre stage of Government’s fiscal policy. This would facilitate multi-modal transport planning between railways, highways and inland waterways. The functional autonomy of Railways will, however, continue. The four main focus areas for the railways are: passenger safety, capital and development works, cleanliness and financial and accounting reforms. A rail safety fund – Rashtriya Rail Sankraksha Kosh will be created with a corpus of H1 lac crore over the next five years. 3,500 kilometres of new railway lines will be commissioned in 2017-18 as against 2,800 kilometres in 2016-17. For 2017-18, H1.31 lac crore was allocated to under capital expenditure – the highest such sum ever.

Highlights over the past two years

Indian Railways generated an investment of H15,000 crore through PPP (public-private-partnership) projects during FY15-16 – the highest till date As much as 2,828 kilometres of broad gauge lines were commissioned in FY16-17– the highest till date

Over 2015-16, H24,000 crore was awarded for setting up dedicated freight corridors Capital investment in the railways sector increased to H93,795 crore in FY16 Cumulative FDI inflows (April 2014 and September 2016) stood at $216.77 million The Indian Railways is set to manufacture semi-high-speed (160 kilometres per hour) trains with 16 fully air-conditioned coaches at half of the import cost at the Integral Coach Factory

Government policy on rail network operations and procurement of Wagons and Coaches including emphasis on obtaining supply from its own units, withdrawal of incentive schemes to the private sector freight operators, unhealthy competition are some of the major challenges.


The Government has set aside a sum of H8,56,020 crore to carry out medium-term structural reforms as well as infrastructure development such as electrification and expansion of the existing network, improving safety, increasing its fleet of rolling stock, providing for high speed rail and freight corridors and providing better passenger amenities. The Government of India has decided to create a H30,000 crore Rail India Development Fund (with assistance from World Bank). This will support commercially viable investment in the railway sector in India over the next seven years. Indian Railways is all set to introduce the Spanish-made Talgo trains (running up to a speed of 180-km per hour) that can operate using India’s existing infrastructure. The Central Government plans to connect all capital cities in North Eastern Indian with broad gauge lines by 2020. More than 100 stations are to be modernised as per international standards. The Indian Railways aims to be the engine for India’s economic growth and development by aiming to earn gross revenues worth $44.5 billion by FY20.

Metro railways

Metro trains are rail-based mass rapid transit systems that operate on a privileged right-of-way – either underground or elevated over street level, separated from all other modes of transport in an urban area. Currently, there are eight operational metro systems in India. As of September 2016, India had 324 km of operational metro lines in the cities of Delhi and NCR, Gurgaon, Kolkata, Chennai, Bengaluru, Jaipur and Mumbai. A further 520-km-long lines are under construction and a further 553-km are under consideration. There has been a rapid increase in the expansion of urban mass transportation systems across India thanks to continued support from the Central and State Governments and multi-lateral development agencies.

Governmental initiatives

100% FDI under the automatic route has been permitted H17,810 crore was allocated under the 2017-18 Union


The Ministry of Urban Development plans to invest more than $20 billion in the metro rail network

Metro rail policy

A proposal for a new Metro Rail Policy was announced in February 2017 with a renewed focus on innovative models of implementation and financing, as well as standardisation and indigenisation of hardware and software. Key factors include: Provision for private initiatives or PPP in metro railways State Governments going for the PPP model will get 20% support in the form of viability gap funding As in rail, road and irrigation sectors, metro corporations can now issue tax-free bonds to raise funding The private metro rail administration will be allowed to take up property development and commercial activities to cover costs Eligibility criteria for cities relaxed by reducing the population threshold from 20 lac to 10 lac

Growth drivers

Metro rail system enables large-scale, rapid and low-cost movement of people while causing very little pollution as compared to conventional modes of transport Only 35-40% in India’s metropolitan cities have a metro rail network Metro rails can also serve in old, congested and thickly populated areas where traffic is a major challenge

Making available the land for laying tracks, very large project expenditure, infrastructural issues are some of the major threats in Metro Coaches segment.


Given rising urbanisation and increasing population levels in India, implementation of metro rail systems will become imperative as mass rapid transit systems are the best way to decongest traffic. The implementation of the 2016 Metro Rail Policy also augurs positively for the sector.

Defence sector overview

Global defence spending rose by 1% to $1.57 trillion in 2016 (after adjusting for currency fluctuations) against a 0.6% rise in 2015. India surpassed Russia and Saudi Arabia to have the fourth biggest defence budget – spending $50.67 billion (an 8.5% increase over the previous year) against Russia’s $48.5 billion. The United States remained the largest military spender with a defence budget of $622 billion (a 40% share of the year’s global defence spend).

Governmental initiatives

FDI limit in defense projects has been increased to 49% from 26% in most cases, and 100% where advanced technology is being transferred to India.

Lock-in period of three years on equity transfer has been removed for FDI in defense The ‘Buy Indian IDDM’ (indigenously designed, developed and manufactured) has been introduced to encourage indigenous design, development and manufacture of defense equipment.

The Central Government has implemented a Defense Offset Policy that counterbalances the nation’s huge defense imports.

India’s defence budget, 2017-18

India’s Defence budget was increased to Rs 2.74 lac crore for 2017-18, a rise of 6% from the 2016-17 allocation of H2.58 lac crore. This budget includes H86,448 crore allocated solely towards capital outlay for the modernisation of the military. Although procurement spending in India has been constrained over the last three years due to increased personnel costs, there will be a renewed focus from 2017 onwards on the modernisation of India’s military. Increase in military spending will be driven by a $250 billion investment towards the modernisation of its firepower procurement programme. The Central Government aims to raise domestic arms procurement from 40% to 70% of the total within five years, thereby also cementing India’s status as the world’s largest arms importer. The Central Government has already signed deals to buy new submarines, howitzers, fighter jets and helmets.

Growth drivers

Changing geo-political scenarios on India’s borders and internal security requirements may necessitate continual augmentation of its defense and homeland-security equipment.

India’s current Defence-based requirements are mainly met through imports. The opening up of the Defence sector for private sector participation will allow foreign original equipment manufacturers (OEMs) to enter into strategic partnerships with domestic companies. A recommendation was made by a key Defence ministry panel that Indian military spending should be at least 2.5% of the GDP. This year, the defense budget forms a scarce 1.62% share of the GDP. The Make in India campaign was launched in 2014. Its objective in the realm of defense was boosting manufacturing, promoting self-reliance, indigenisation, achieving economies of scale, developing capabilities for export, transfer of technology and domestic research and development.

Contractual offset obligations worth approximately $4.53 billion are likely to materialise over the next five or six years.

Highlights over the last three years

The Ministry of Commerce has granted 333 industrial licenses to private firms for Defence manufacturing as per the Department of Industrial Policy and Promotion Over the last three years (FY15-FY17), 147 contracts worth >Rs 2.96 lac have been signed and 134 proposals worth

>H4.45 lac crore have been approved (100 of them fell under the ‘Buy and Make’ in India category).

Indian defence industry is faced with inter alia policy and structural challenges, slow pace of indigenisation, modernisation, R&D/technologies, pricing, processing time involved for procurement tenders, long period required for contract execution etc. challenges.


India’s Defence sector has already picked up some best practices such as putting a structured procurement process in place and implementing an offset policy. In 2010, India’s Defence spending was pegged at $38.17 billion. This is expected to almost double to $64.07 billion in 2020. India is all set to become the third largest military spender in the world by 2018, third only to the United States and China. (Source: Financial Times).

Shipbuilding sector overview

As of April 2016, the global shipbuilding order book was estimated to be ~280 million deadweight tonnages. China, South Korea and Japan accounted for more than 90% of this global order book. The Indian shipbuilding industry accounted for a mere 0.45%. The Indian shipbuilding industry comprises companies that build ships and other underwater equipment for the naval defense, shipping and fishing sectors. There are 28 major shipyards in India currently –two under the Ministry of Shipping, four under the Ministry of Defense, two under State Governments and the remaining 20 in the private sector. As on 31st December 2015, India had a fleet strength of 1,246 vessels.

Importance of the shipbuilding industry

The shipbuilding industry has a similar impact on the Indian economy as the infrastructure sector due to higher multiplier effect on investment and turnover (11.6 and 4.2 respectively) and high employment potential due to multiplier effect of 6.4 The shipbuilding industry is strategically important due to its role in national defense, energy security and for developing heavy engineering.

As per a Ministry of Defence press release, at present all major warships and submarines under construction are being built at Indian shipyards (both DPSUs as well as Private Shipyards) (Source: www.pib.nic.in)

Governmental initiatives

As per the tenets laid down under the Shipbuilding and Ship Repair Policy, 2015, infrastructure status has been given to shipyards. With this inclusion, shipyards will be able to avail flexible long-term loans with relaxed ECB norms and issue infrastructure bonds to meet working capital requirements. The Central Government has introduced a H4000 crore-Shipbuilding Financial Assistance Policy for a period of 10 years (starting April 1st 2016) to encourage domestic shipbuilding. Financial assistance will be grated to Indian shipyards equivalent to 20% of the lower of ‘contract price’ or the ‘fair price’ beginning 1 April, 2016. This rate of 20% will be scaled down by three percentage points every three years, starting with 20% during the first three years, 17% for the next three and so on.

All governmental departments or agencies shall undertake bulk tendering for their vessel-related requirements with deliveries starting from 2016-17, with a right of first refusal for Indian shipyards. From 2025 onwards, only procurement of Indian-built vessels will be permitted. Finally, to promote ease of doing business, the Government of India has simplified tax compliance procedures for shipyards while procuring duty-free goods for shipbuilding and repair.

Growth drivers

India’s Maritime Agenda 2010-20 targets to increase India’s share of the global shipbuilding Industry to 5% India has a coastline of 7,517-km with potentially navigable waterways of up to 14,500-km

The Indian Navy is on a modernisation drive and looks to introduce various new naval vessels in the coming years India’s maritime industry supports 90% of India’s trade by volume

Although the global shipping industry has been beset with slowdown due to declining demand and overcapacity, the demand for various vessels and barges etc. from the Government establishment/Indian Navy offsets the challenges.


The revival of the shipbuilding sector is a key part of the Central Government’s Make in India initiative. New orders should trickle in FY17 onwards on the basis of the 10-year policy package. The Central Government is targeting to increase India’s share of the global shipbuilding industry from current levels of 0.45% to 5% by 2020.

Discussion on Financial Performance with respect to Operational Performance

Continuing focus of the management is consistently on undertaking better manufacturing processes, improved productivity and optimization of resource for improvement in performance aimed at achieving results better than the trend witnessed in the industries in which the Company operates. Viewed in this backdrop, the Company’s performance for the year under review is considered to be reasonably satisfactory.

Overall outlook for the current year

Wagons procurement order by IR for the current year is yet to be announced and uncertainty in this area has become a norm. The efforts of the Company to develop other verticals for mitigating dependence on a single product resulted in award of two prestigious orders by Indian Navy and National Institute of Ocean Technology under the Ministry of Earth Sciences for naval barges and coastal research vessels respectively, execution of which has already commenced with the Steel Cutting Ceremony held in the august presence of the senior officials of the respective customers at Titagarh plant in Barrackpore on May 9, 2017

The Company is in a unique position of being equipped with the technology for manufacture of Metro Coaches and is geared to seize the opportunity presented by this segment which is manifested in it being technically qualified in a tender floated in Maharashtra, though the contract was awarded to a foreign entity. However, the Company would continue to pursue orders for supply of Metro Coaches in collaboration with the Company’s recently set up subsidiary- Titagarh Firema Adler SpA in Italy.

Apart from being the first mover in manufacture of Rail Coaches and having successfully executed the repeat orders for EMU/ MEMU to Indian Railways, the other vertical the Company has identified with great potential for growth is- Defence. Pursuant to issue of Industrial License by the Government of India (GOI) to the Company, the participation in the tenders of the Defence establishment of India has been continuing and orders expected from this business should propel the Company’s performance to greater heights in future.

A joint venture company: Matiere Titagarh Bridges Private Limited has been set up in India in January, 2017 with equal stake in its equity of Matiere and the Company as per the joint venture agreement signed with Matiere SAS, France (Matiere) for manufacture of metallic bridges. The infrastructure being a key driver for Indian economy, the Directors believe the Bridges space is going to play an important role in the Company’s portfolio.

Overall the Board is reasonably confident of significantly improved performance during the current financial year.

3. Indian Accounting Standards

The Ministry of Corporate Affairs (MCA), vide its notification in the official gazette dated February, 16, 2015, notified the Indian Accounting Standards (IND AS) applicable to certain classes of Companies. IND AS has replaced the existing Indian GAAP prescribed under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. For Titagarh Group, IND AS is applicable from April 1, 2016, with a transition date of April 1, 2015. The reconciliation and the effect of the transition from IGAAP to IND AS have been provided in the notes to standalone and consolidated financial statements.

4. Dividend

The Board of Directors at its meeting held on 19th May, 2017 has recommended dividend of Forty percent i.e. Re 0.80 per share on 11,54,45,620 equity shares of H2/- each fully paid up for the Financial Year ended 31st March, 2017 subject to declaration by shareholders at the ensuing Annual General Meeting.

5. Employee Stock Options Scheme/Change in Share Capital

Pursuant to approval of the shareholders, Nomination and Remuneration Committee (also functioning as Compensation Committee) at its meeting held on March 4, 2015 in accordance with the TWL Employees Stock Options Scheme, 2014 (ESOS) granted to the eligible employees 5,00,000 options to be converted into equivalent number of equity shares of H2/- each fully paid as per the ESOS.

Options resulting 27,500 Equity shares and 33750 equity shares allotted on August 22, 2016 and May 19, 2017 respectively to the eligible employees upon exercise by them in conformity with ESOS led to increase in the paid up equity share capital to H23,08,23,740/- as at 31st March, 2017 and H23,08,91,240/- as at May 19, 2017 consisting of

11,54,45,620 equity shares of H2/- each fully paid up. The equity shares so allotted rank pari-passu with the existing equity shares of the Company.

Further, in accordance with the order of the Hon’ble High Court of Calcutta sanctioning the Scheme of Amalgamation of the Company’s four wholly owned subsidiaries with the Company which became effective from July 13, 2016, Authorised Share Capital of the Company was increased to H228.10 crore divided into 88,05,00,000 equity shares of H2 each and 52,00,00,000 preference shares of H10 each.

The disclosures as required under Regulation 14 of the SEBI (Share Based Employee Benefits) Regulations, 2014 have been placed on the corporate website of the Company www. titagarh.in.

6. 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 statements relate, till the date of this report, which might affect the financial position of the Company.

7. Investor Education Protection Fund (IEPF)

As stipulated by the applicable provisions of the Companies Act, 2013 read with IEPF (Accounting, Audit, Transfer & Refund) Rules, 2016 (‘the Rules’) all unpaid or unclaimed dividend required to be transferred by the Company to the IEPF has been transferred and underlying shares shall also be transferred to the demat account to be created by IEPF Authority according to the Rules, details whereof are provided on the Company’s website: www.titagarh.in.

8. Transfer to Reserves

The Directors do not propose to transfer any amount to the general reserves.

9. Risk Management, Risks and Concerns

A Risk Management Policy to identify and assess the key risk areas, monitor mitigation measures and report compliance has been adopted. Based on a review, major elements of risks have been identified and are being monitored for effective and timely mitigation.

Risk management is an integral part of the Company’s risk management policy adopted by the Board with periodic review by the Audit Committee and the Board. Prudence and conservative dealing with risks is at the core of risk management strategy being followed by the Company. The risks, both internal and external which the Company is exposed to include macro-economic, regulatory, strategic, financial, operational, value chain, human resources etc. and each of them is taken into consideration for development and maintaining a robust mechanism for mitigation which is evolving with time and developments within which the Company operates.

10. Subsidiary Companies and Joint Venture

A report containing the details required under Section 134 of the Companies Act, 2013 (‘the Act’) read with Rule 8(1) of the Companies (Accounts) Rules, 2014 in respect of performance and financial position for the financial year ended March 31, 2017, of subsidiaries: Cimmco Limited ("Cimmco"), Titagarh Agrico Private Limited (TAPL) (to be merged with Cimmco), Titagarh Capital Private Limited, Titagarh Wagons AFR, France, Titagarh Singapore Pte. Ltd., Singapore; and Titagarh Firema Adler SpA and Joint Venture Company: Matiere Titagarh Bridges Private Limited included in the Consolidated Financial Report (CFS) in the Form AOC-1 is annexed to this Report and marked as Annexure DR-1. The CFS is attached to this Annual Report.

Pursuant to approval of the respective Board of Directors of Cimmco and TAPL, a scheme of amalgamation (the Scheme) has been filed before the Honourable National Company Law Tribunal (NCLT) and pursuant to its order, received the approval of the shareholders and creditors in May, 2017 while the other formalities for obtaining sanction of the NCLT are being met.

Pursuant to the order dated May 17, 2016 of the Hon’ble High Court of Calcutta becoming effective on and from July 13, 2016, the following wholly owned subsidiaries: Cimco Equity Holdings Private Limited (CEHPL), Titagarh Marine Limited, Corporated Shipyard Private Limited and Times Marine Enterprises Private Limited have been amalgamated with the Company. Consequently Cimmco Limited, a subsidiary of CEHPL has become direct subsidiary of the Company w.e.f. July 13, 2016.

11. Extract of Annual Return

The details forming part of the extract of the annual return in the Form MGT-9 are annexed and marked as Annexure


12. Number of Board Meetings

The Board of Directors met Eight (8) times during the financial year 2016-17 as per the details provided in the Corporate Governance Report forming part of Annual Report.

13. Loans, Guarantee 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. The Company has been informed that the said loan, guarantee and security are proposed to be utilised by each recipient for its general business/corporate purposes.

14. Significant and Material orders

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

15. Composition of Audit Committee

The Audit Committee constituted by the Board has Shri D N Davar as Chairman and Shri Sunirmal Talukdar and Shri Manoj Mohanka as the members. Further details are provided in the Corporate Governance Report.

During the year all recommendations made by the Audit Committee were accepted by the Board.

16. Related Party Transactions

All Related Party Transactions (RPTs) are entered into by the Company pursuant to compliance with the applicable laws and also in accordance with the policy adopted by the Board. Audit Committee reviews and approves all the RPTs as stipulated by the SEBI (LODR) Regulations, 2015 and based thereon final approval of the Board is obtained. The particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Act and as mentioned in form AOC-2 of the Rules prescribed in the Companies (Accounts) Rules, 2014 under the Act are annexed hereto and marked as Annexure DR-3.

17. Corporate Governance Report

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

18. Management Discussion and Analysis (MDA)

In compliance with the Regulation 34 of the LODR, MDA forms part of this Report. The contents of MDA with respect to Industry view/macro data are sourced from the information available in public domain.

19. Internal Control System

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

20. Vigil Mechanism

A fraud and corruption free environment as part of work culture of the Company is the objective and with that in view a Vigil Mechanism Policy has been adopted by the Board which is uploaded on the web site of the Company at www. titagarh.in. No complaint of this nature has been received by the Audit Committee during the year under review.

21. 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. One complaint lodged with the Committee during the financial year 2016-17 was duly disposed of/resolved satisfactorily.

22. Directors and Key Managerial Personnel

Shri Sudev Chandra Das, Independent Director, resigned from the Board of Directors with effect from 27th October, 2016.

Pursuant to the recommendation of the Nomination and Remuneration Committee (NRC), the Audit Committee and subject to the approval of the members, the Board in its meeting held on 14th December, 2016 had accorded its approval to the reappointment of Shri J P Chowdhary as the Executive Chairman of the Company for a further period of 5 (five) years w.e.f. 8th January, 2017 and the change in minimum remuneration of Shri Umesh Chowdhary, Vice

Chairman & Managing Director, w.e.f. 1st January, 2017 in the event of inadequacy of profits or loss during the remaining period of his term ending on 30th September, 2020.

Shri Sudipta Mukherjee, Wholetime Director retires by rotation at the ensuing AGM pursuant to the provisions of Section 152 of the Act and is eligible for re-appointment.

The information prescribed by SEBI (LODR) Regulations, 2015 in respect of the above named Directors is given in the Notice of Twentieth Annual General Meeting.

During the year under review, there was no change in the Key Managerial Personnel of the Company.

23. Evaluation of the Board’s performance, Committee and Individual Directors

In compliance with the Act and SEBI (LODR) Regulations, 2015, the performance evaluation of the Board, Committees and Individual Directors was carried out during the FY 2016-17 as per the details set out in Corporate Governance Report.

24. Declaration by Independent Directors

Declarations pursuant to the Sections 164 and 149(6) of the Act and SEBI (LODR) Regulations, 2015 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.

25. Remuneration Policy and remuneration

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

26. Directors’ Responsibility Statement

The Directors state that:

Appropriate Accounting Standards as are applicable to the Annual Statement of Accounts for the financial year ended March 31, 2017 had been followed in preparation of the said accounts and there were no material departures therefrom requiring any explanation; The directors had 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; The directors had taken proper and sufficient care for the maintenance of 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 directors had prepared the Annual Accounts on a going concern basis; and The directors had 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.

27. Statutory Auditors

S R Batliboi & Co. LLP, Chartered Accountants, Statutory Auditors of the Company appointed at the Seventeenth AGM until the conclusion of the ensuing Twentieth AGM complete their term on rotation basis and the Board has pursuant to the recommendation of Audit Committee, decided to place the appointment of Price Waterhouse & Co Chartered Accountants LLP, Chartered Accountants, at the ensuing AGM for a term of five years.

28. Consolidated Financial Statements

In accordance with IND-AS 24 issued by the Institute of Chartered Accountants of India, consolidated financial accounts prepared on the basis of financial statements received from subsidiary companies as approved by their respective Boards, form part of this Report & Accounts.

As regards the qualified opinion expressed by Statutory Auditors in their Report, the Note No. 7(a) in the Notes on Accounts is self-explanatory, requiring no specific response from the Directors at this stage, however the recoverable amount aggregating H854.81 lacs is subject to ongoing legal proceedings which are being closely monitored and expedited to the extent within the Company’s control.

29. Cost Auditors

M R Vyas & Associates, Cost Accountants have been reappointed 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 2017-18 subject to ratification of their remuneration by the shareholders in accordance with the provisions of Section 148 of the Act and the Companies (Cost Records and Audit) Rules, 2014. The Cost Audit Report for the financial year ended 31st March, 2017 would be filed as stipulated by the applicable provisions of law.

30. Secretarial Auditor

Secretarial Audit has been conducted by Vanita Sawant & Associates, Practicing Company Secretaries appointed by the Board and their report is annexed hereto and marked as Annexure DR-4. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

31. Deposits

The Company did not accept any deposits covered under Chapter V of the Companies Act, 2013 during the financial year ended March 31, 2017.

32. Particulars of Remuneration of Directors/KMP/ Employees

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 (the Rules) is annexed and marked as Annexure DR-5. The information pursuant to Rules 5(2) and 5(3) of the Rules not annexed to this Report, is readily available for inspection by the members at the Company’s Registered Office between 10.30 A.M. to 1 P.M. on all working days upto the date of ensuing AGM. Should any member be interested in obtaining a copy including through email (corp@titagarh.in), may write to the Company Secretary at the Company’s Registered office.

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, 2017 was 506.

33. 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-6.

34. Corporate Social Responsibility

A report on Corporate Social Responsibility (CSR) activities undertaken during the financial year ended March 31, 2017 pursuant to the provisions of Section 135 of the Act and rules made thereunder is annexed to this Board’s Report and marked as Annexure DR-7.

Apart from the above, the Company makes, inter alia, donations to the charitable institutions directly and through philanthropic organisations engaged in providing medical, education and other reliefs to the economically weaker sections of the society. Industrial Training Institute (the "ITI") set up on the Company’s land at Titagarh plant situate in Barrackpore, North 24 Parganas under Private Public Partnership (PPP) is yet another area. The ITI with access to the requisite infrastructure provided by the Company imparts hands-on training to the local people. More than 500 students in various batches have passed and significant number of them are engaged in various jobs in the industry. The ITI has been recognised by the State Government as one of the best in the country and it caters to the requirement of skilled workmen by industrial units.

35. Listing

The Company’s Equity Shares are listed at the BSE Limited (BSE) and The National Stock Exchange of India Limited (NSE). The listing fees for the financial year ending on March 31, 2018 have been duly paid.

36. Forward Looking Statement

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

37. Acknowledgement

The Directors place on record their appreciation of the cooperation and support extended by the Government, Banks/Financial Institutions and all other business partners.

For and on behalf of the Board
Kolkata J P Chowdhary
May 19, 2017 Executive Chairman