Triveni Turbine Ltd Management Discussions.

Indian Economy

India has emerged as the fastest growing major economy in the world and is expected to be one of the top three economic powers of the world over the next 10-15 years. According to the International Monetary Fund (IMF), India has consolidated its position as the worlds fastest-growing major economy. Indias economy is forecast to grow 7.4% in FY 19 from 6.7% in FY 18 and accelerate further in FY 20 to 7.8%, lifted by strong private consumption as well as fading transitory effiects of the demonetisation and implementation of the national Goods and Services Tax.

Manufacturing Sector in India

Manufacturing has emerged as one of the high growth sectors in India. The ‘Make in India programme is aimed to place India on the world map as a manufacturing hub and give global recognition to the Indian manufacturing. India is expected to become one of the largest manufacturing countries in the world by the end of year 2020.

increase the share of the manufacturing sector in the gross domestic product (GDP) from 16% presently to 25% by 2022, by creating 100 million new jobs. The improvements in ease of doing business, continuing improvements in infrastructure and skilled workforce should support the spurt in manufacturing activities in coming years.

Power Industry Trends

2017 witnessed changing global energy landscape that has outgrown the traditional centres of demand and has turned its focus to emerging economies and the challenge of meeting the new demands of technology-conscious consumers. The only way to meet the growing demand for change is through innovation and economising the entire business model of energy production as well as its distribution. Digitisation of assets, changing energy mix from conventional sources to renewable sources, eco-friendly policies are key factors working towards an inclusive, environment-friendly energy producing space. Triveni Turbines provide solutions and services for both Industrial captive and renewable power generation applications globally. Its turbines are used in a wide range of applications such as Co-generation, Combined Heat & Power Generation, Waste to Energy, Captive Power Generation and Independent Power Generation.

Varied market trends a3 ect the business in di3 erent geographies and at di3 erent points of time. In the coming section some of the key trends are discussed to give a better view of our addressable market.

Steam Turbines Market in India

And the captive and energy intensive segments like Steel, Cement, or process co-generation sector like the sugar, paper and pulp, chemicals and other process industries.

With the expected increase in activities in industries like Steel, Pulp & Paper, Cement and Sugar sector, the demand for steam turbines should remain robust in the coming years.

Global Steam Turbines Market

Globally, the largest market by fuel type is in coal-fired plants and steam turbines market for this fuel type is estimated to grow faster than other fuel type plants such as nuclear, combined cycle and natural gas. The main reason is that many new coal plants are already under construction or planned for future specially in Asia-Pacific region. Steam turbines for Biomass application also holds a significant portion in Asia-Pacific as well as the LatAm & Africa region.

Renewable Power

Utility Installed Capacity in India (as on 31.03.2018)

Indias installed power capacity is at 344,002 MW as on March 31, 2018 which includes 20% of renewable power generation capacity. Out of the total renewable capacity of 69,022 MW, around 8,700 MW is from Bio Power and 138 MW from waste to energy. The Government has set a target to achieve renewable power capacity at 175 GW by 2022 which includes 10 GW from biomass power.

The bioenergy potential in the country has been estimated at 25 GW and the Government has been consistently promoting the Biomass Power and Bagasse co-generation programme. Various policy measures have been initiated by the Government including providing financial support to various schemes being implemented by the Ministry of New and Renewable Energy (MNRE), suitable amendments to the Electricity Act and Tari3 Policy for strong enforcement of Renewable Purchase Obligation (RPO) and for providing Renewable Generation Obligation (RGO); raising funds from bilateral and international donors as also the Green Climate Fund to achieve the target.

In the Middle East and Africa region, many countries are proactively pursuing renewables to reduce Green House Gases (GHG) through various support mechanisms, such as, renewable targets, renewable portfolio standards (RPS), feed in tari3s (FiTs)/auctions, net metering and tax exemptions/subsidies etc.

As per the industry estimates, globally, around 565 million tonnes of bagasse is produced annually which is used for meeting the energy requirements of the sugar mills and the additional bagasse can be used to generate additional power for sale to the grid. Bagasse based co-generation has been well established in many countries globally especially in the largest sugar-producing countries such as Brazil and India. Many sugarcane producing and the Philippines are already generating electricity from bagasse. It is estimated that the power generation potential from bagasse in co-generation process is around 135,029 GWh per year globally and 3,885 GWh per year in Eastern and Southern Africa. Eastern and Southern Africa has estimated potential to double the contribution of electricity produced from bagasse co-generation. Apart from the traditional Biomass power generation through bagasse co-generation, Waste to Energy (WtE) is a recent source of input for power generation. Residual waste is treated with various Waste to Energy (WtE) technologies for disposal of Municipal Solid Waste and energy generation. The global WtE market is expected to grow steadily till 2023, and it is estimated to be worth

2023. Europe is one of the largest market for WtE technologies.

waste legislation have been the key drivers for the growth of WtE technology in European market. Switzerland, Germany, Sweden, Austria and Netherlands lead installation capacity within Europe. The Asia-Pacific market is also expanding its WtE market rapidly and is estimated to grow at CAGR of 7.5% due to increasing waste generation, higher focus of the Government in China and India and higher technology penetration in Japan. Combined heat and power production (CHP) is operated to manage the supply of energy by optimising the costs of meeting the demand for electricity and heat. The CHP market is estimated to increase its installed capacity from 755.2 Gigawatts (GW) in 2016 to 971.9 GW by 2025, at a compound annual growth rate of 2.8%. The key market drivers are need for energy effciency, growing environmental concern, and increasing government incentives and policies to promote co-generation. Asia-Pacific (excluding China), South and Central America, and the Middle East and Africa are expected to be the major markets in the coming years.

Captive Power Generation

Global captive power generation market is expected to grow due to the increasing power demand in emerging markets of China, India, and Middle East and presence of cross subsidised charge to the per unit power generation cost. The largest market for captive power generation globally is Industrial sector which is likely to contribute to the growth of captive power generation market over the next few years. The key growth drivers for this market are increasing demand for metals, chemicals and cement due to rising activities such as construction, development of infrastructure, automotive and electronics industries etc. The installed captive power generation capacity in the country as on March 31, 2018 is 40,726 MW.

One of the largest markets for captive power generation is expected to remain Asia-Pacifi c on account of robust manufacturing base of aluminium, steel and copper in China and India. Middle East is also expected to be another key growth market for captive power generation due to expansion of petrochemical refi ning capacity.

Independent Power Producers (IPPs)

IPPs are private entities and one of the primary tier of the power sector, as their sole business is generating power for sale to the grid or specific customers. IPPs may be privately-held facilities, cooperatives or non-energy industrial concerns focussing on feeding excess energy into the system. A feed-in Tari3 or Power Purchase Agreement provides a long-term price guarantee for the majority of IPPs, particularly in the renewable energy industry.

Business Review

Domestic Market

The overall steam turbines market in India for under 30 MW size remained at the same level as the previous year and in line with that our domestic order booking has remained fl at during the year at 4.1 billion. The market condition has led to considerable competition, which in turn resulted in lower prices and declining margins. The Company continues to retain the market leadership with a market share of 64%. The enquiries from the domestic market increased during the current year by 7% over last year and these enquiries have been spread over larger end user segments such as Sugar, Cement, Steel, Paper and Pulp and other process industries.

International Market

With the International Market stabilising after a tumultuous FY 17, resulting from Brexit, political and economic turmoil in various economies across the globe, orders fi nalisations have significantly improved in the current year from most of the international markets. In FY 18, the total order booking from International market stood at

4.19 billion, a growth of 40% over previous year. The renewable based IPP segment contributed 65% of the total exports order booking while the process co-generation and sugar co-generation segments contributed 25% and 10% respectively. The key geographies which have recorded the orders are Europe including Turkey, SEA Markets, SAARC and parts of Africa, Central & South American countries etc. The mix of exports in total order booking has increased to 51% in FY 18 from 42% in FY 17.

Aftermarket Business

The Aftermarket team is responsible for nurturing relationship with the customers after the product is supplied and represents the Company to the customers to support the product throughout its life cycle. The team maintains close relations with customers to increase product efficiencies and minimise breakdown, not only for the products supplied by the Company but also for turbines of other makes. Being an OEM, the services provided by the Company are considered to be more reliable and credible. It is responsible for driving customer satisfaction by ensuring designed performance of turbines through service and spares support to the customers in a timely manner.

Aftermarket business has now been further fortifi ed with focus on modernisation, upgrades, refurbishing and effciency improvements solutions not only to its own turbines, but also to turbines of other makes. These enhancement packages guarantee adequate ROI for the end user, thus creating more value for them and strengthening their bond with the Company.

Reinforcing customer-centricity as the core of its business philosophy, the Company has strengthened its strategically located service offices across India to cater to the domestic market.

To provide service backup to the international customers, the Company has set up international offices, including wholly-owned subsidiaries and their branches/ offices , based on the concentration of customers and potential for additional business opportunities. Such international offices now encompass, Europe, West Asia, South East Asia and Africa. This is to extend the reach of the Company, bring it closer to the customers and earning their trust by providing quality and timely support. As in the domestic market, the Company is committed to provide excellent and timely service to international customers irrespective of their time zones.

During FY 18, the Company undertook some turnkey aftermarket projects from the international market and also refurbishments for other makes of turbines, which should provide referrals for future.

The Company is continually leveraging IOT (Internet of Things) and establishing itself in the digital domain by developing and offering remote monitoring and diagnostics solution for its turbines for continuous remote monitoring of the performance of the turbines and diagnose the causes of malfunction. It will help in taking timely remedial/preventative action and reduce the expensive downtime. This tool further enhances the Companys capability to give strong service delivery and to give live support to customers.

During FY 18, the Aftermarket segment has shown a growth of 12% over the previous year in terms of order booking while the sales growth stood at 8% over the previous year. The Company is ensuring that in coming years, the aftermarket segment will provide a larger share in its overall growth.

The aftermarket business has developed traction in export markets too with exports contributing over 30% of the order booking and revenue for FY 18.

Manufacturing facility

The Company has two manufacturing facilities in Bengaluru. The older facility is in Peenya Industrial Area within Bengaluru city and is now dedicated for turbine assembly and refurbishment activities. This facility also houses the Companys state-of-the-art R&D centre, high speed balancing tunnel and fully equipped test beds for carrying out mechanical run test of turbines. The facility has capacity to produce around 150 turbines annually.

The Companys new facility in Sompura Industrial Area in the outskirts of Bengaluru is equipped with world-class machines such as CNC machines, a new state-of-the-art high speed balancing machine capable of balancing rotors up to 55 tonnes, 4 M diameter and 11 metre length and boiler with steam generating capacity of 42 ata 380 degree centigrade. With this, the Company is now able to cater to turbines up to 150 MW. The new manufacturing campus is green, eco-friendly, energy-effcient and equipped with best-in-class production facility built to modern aesthetic design.

With these two facilities, the Company is now in a position to provide faster deliveries of the widest range (from 1 MW to 100 MW) of high quality industrial turbines. The Company takes pride in participating in the Indian Governments "Make in India" campaign with designing, engineering, manufacturing and supplying cost effcient high quality steam turbines, while successfully competing with large MNCs. The products are shipped from these two facilities to global customers and comply with the best quality standards including those of API.

Technology and R&D

The DSIR-approved advanced in-house R&D centre of the Company is engaged in development of new efficient and cost effective models. Furthermore, continuous product upgradation results in high-power dense, cost-competitive, robust and efficient turbines to fulfil the requirements of the evolving global market. The Company continuously monitors global trends and updates its product programmes to keep the Company aligned to latest international standards with respect to products of global manufacturers.

The Company is associated with premier technology development institutions such as IISc, Bangalore & IIT, Bombay through various research programmes and therefore continues to be a preferred industrial partner for Indian Government-funded programmes of MNRE, DST and Ministry of Power. Prior to commercial use, extensive validation of the developed technology is done and the performance parameters in the field are monitored closely to evaluate satisfactory performance. The Company has well-defi ned processes for development, testing, field feedback and continuous advancement of technology through in-house processes and through association with global research and scientifi c institutions.

The Company continues to develop cost competitive models, with much reduced carbon footprints so as to provide power solutions needed by its diverse international and domestic customers. The application segments include waste to energy, combined cycle, process industries, renewables, captive and co-generation apart from others. In line with the industry trends, the Company has been diversifying into di3 erent types of steam turbines and other renewable energy products focusing on high efficiency cycles. Even as such products become a reality in the near future, the Company is constantly upgrading and improving its steam turbine designs for optimal performance to meet the increasing power solution requirements globally.

Intellectual Property Rights

Several innovations take place during the process of delivering new technologies and product variants to customers. Such innovations and technological upgradations in steam turbines result in valuable intellectual property to be generated in-house. As such, building and safeguarding the Intellectual Property (IP) portfolio assume paramount importance for the Company. In order to ensure that the generated Intellectual Property is adequately captured and protected, a dedicated team of specialists work closely with the Research & Development team from the planning and conceptualisation phase to the product manufacturing phase.

The Company has carried out an extensive IP strategy for creation and protection of long-term IP assets to secure and preserve the technological advantage. Refl ecting its global focus, the Company constantly undertakes patent and industrial design fi lings in di3 erent international jurisdictions, even though the IP portfolio is developed in India. The Company has, in recent times, fi led patent applications and design registrations in India, Europe, South East Asia, and in the

A substantial number of Intellectual Property Rights have already been awarded to the Company in various jurisdictions. 223 IPRs fi led granted and in market globally till March 2018.

Digitalisation Efforts

Participating wholeheartedly in the Government of Indias Digital Initiative and to align with the customers technological and commercial needs, the Company has embarked on Digital transformation in a planned manner. The Company has upgraded its ERP to latest version thereby bringing technology closer to business. All the functionalities are customised and integrated to lay strong and complimentary processes to manufacture and deliver quality product on time to our customers. Besides, the Company has recently gone live with updated Product Lifecycle Management software which enables Design and Engineering to function in an efficient, fast, transparent, secured platform and also provides a systematised control during the product lifecycle. Remote Monitoring & Diagnostic platform envisages capturing, analysing and diagnosing turbine related data from our installed base. This initiative has significantly increased satisfaction level of customers and has also helped to improve our own technological capabilities. The Company has also implemented Customer Relation Management (CRM) which is core to complex marketing needs and customer satisfaction. The Company is leveraging the ever changing IOT platform to meet its business needs. There is a tight alignment of business with technology.

Supply Chain

The Company continues to operate an effective and robust supply chain management system starting from procurement process to delivery system for sustaining competitive advantage. Successful Supply Chain policy includes inventory reduction, improved delivery service and shorter product development cycle. The emphasis is on Customer Satisfaction, cost control, including reducing rework time and rejections, quality, timely delivery, working capital management, consistency and transparency. The Company believes in the development and nurturing of "think outside of the box" and use di3erent mutually rewarding combinations to establish a long-term partnership in its supply value chain system, which ensures achievement of its objectives.

Suppliers Code of Conduct, Annual/monthly plan, new product design, international best practices and improvement in value engineering are shared with the supply chain partners to enable them to align their businesses with the Companys vision and requirements. With a growing focus on exports, the supply chain partners capabilities to meet international standards of production and supplies and competitive price have been enhanced in a planned and structured manner to meet competition and customers expectations. This has been possible through regular interaction with suppliers/vendors/ contractors, backed by regular exchange of information, training, planned reduction of cost, reduction of rejections, building up of sustainable trust and confidence and various other business development parameters generally followed in good business practices.

There is a strong realisation and acceptance of ‘Zero Defect and ‘Do it right the first time, every time concepts by the supply chain partners and, to ensure strict adherence to these concepts, supplier upgradation programmes are regularly conducted and suppliers are evaluated using structured parameters and tools. The existing supplier partners are periodically re-assessed through a third party agency in order to ensure that the prescribed quality standards are maintained and technology is upgraded in line with the evolving requirements. For new suppliers, a well-defined qualification process is in place along with EHS requirements. All the supplier partners are governed by a strict code of conduct and non-disclosure agreements.

The Company has successfully controlled the input costs by means of value engineering in design and materials, development of cost-effiective supplier partners and sourcing of raw materials and components from some of the most cost-effiective suppliers in India and around the globe. The Companys supply chain always strives to be a value creator through implementation of strategic initiatives year on year. In similar manner, TTL has an effective logistic system for safe and timely deliveries of its products, in India and in the International markets at a competitive cost.

Quality Assurance

The Company is AS9100D / ISO 9001:2015 certified, with a sound quality management system integrated throughout the organisation. The Company has implemented a process-based management structure, where the processes are continuously evolved and owned by process owners and focussed on customer.

The Company ensures that its network of suppliers and dedicated sub-contractors also comply with these standards through supplier qualification, QAPs, check lists and Standard Operating Procedures (SOPs) to maintain comprehensive quality control of turbine and its auxiliary systems.

Products are designed, manufactured and commissioned in accordance with the International quality norms, such as API/Shell, ASME, AGMA, NEMA and IEC, among others. Systems are developed to address country-specific product requirements. These systems have helped the Company to meet the stringent requirements of export customers, such as CE/PED and GOST certification.

The Company has adopted the ‘Zero Defect concept with respect to quality, which is supported by tools and techniques like visual management system, root cause analysis, followed by CAPA, DWM, DMAIC, Kaizen, SQIP (Supplier Quality Improvement Programme), SQDCM, Quality Circles, and a rigorous automated Customer Complaint Resolution System on continuous basis. "Kaizen" movement was started in the Company in 2010 to inculcate a culture of continuous innovation and improvements throughout the organisation, involving people at all levels. The movement continues to provide significant benefits in productivity, quality, cost and EHS. The Company regularly participates in All India Kaizen events organised by CII-TPM Club of India, and has bagged several awards.

Human Resources

In order to sustain in this dynamic business environment, and remain competitive in the global market, the Company is continuously building the capabilities of its personnel. Our People Strategy is influenced by the dynamic industry landscape and is geared to deliver transformation and growth in the current and emerging business context. We believe in building a culture that nurtures talent, drives strong performance & enables customer-centricity. The Company emphasise on Career Growth with the focus to build talent from within and also build a scalable talent supply chain model with our Young Engineers Program (YEP). In the face of rapidly changing client expectations, the Company is investing in programmes that equip people with futuristic skills and competencies. We continue to focus on building a robust talent pipeline year-on-year by inducting fresh Graduate and Post Graduate Engineers through a structured selection and training programmes. The performance management system is designed to achieve employee development through performance di3erentiation, transparency, and effective evaluation with a structured process of formally and objectively evaluating performance against defined goals & objectives. We continue to drive a high-performance culture. The Company believes in influencing all aspects of an employees life – including physical, mental and emotional well-being. We continue to enhance safety & security at the workplace by prescribing policies & procedures, creating awareness and imparting trainings. We have institutionalised key policies like Prevention of Sexual Harassment policy.

The Learning Centre continues to be the nodal point for employees and customers, undertaking training on a continuous basis, about the Companys product and operation and maintenance of steam turbines. In FY 18, Officers from Manufacturing underwent certification training on Special Process in Non-Destructive Testing and Welding Techniques for further Product Quality Improvement.

The Company continued with the advanced training programme for its Customer Care Engineers on ‘Service Excellence, with emphasis on building Technical, Functional, Behavioural and Customer Relationship Management skills. The "Supplier Quality Improvement Programme (SQIP)", as part of "Continuous Improvement" training programme for suppliers also continued in FY 18.

Computer Based Product Training Lab (CBT), a unique platform developed by the Learning Centre is a comprehensive self-learning aide on turbine product and its auxiliaries. This platform is upgraded on a continuous basis to cover the technological upgradations. This also includes innovative processes being introduced/adopted.

The Company dedicated a total of 5,141 plus Training Man-days during FY 18. It launched multiple programmes to upskill/reskill employees in technical as well as behavioural competences. Employees build their capabilities through classroom trainings, e-learning modules, expert and peer learning outbound trainings, on-job learnings & mentoring.

Environment, Health & Safety

The Company has commissioned a modern new plant (Phase 1) at Sompura, near Bengaluru. The Company has strictly adhered to applicable EHS norms throughout the duration of construction, erection and commissioning of the civil work thereby achieving 1.7 million safe man-hours.

This objective was achieved through training, coaching and providing greater accountability to supervisors, along with broader employee engagement through peer-to-peer feedback and by changing "at-risk behaviour" to "safe behaviour" and by fostering a more collaborative working environment and providing necessary safety equipment. EHS practice in Peenya facility continues during the year in the same spirit. The Companys safety practices have contributed to zero reportable accidents during the previous six years.

Occupational Health and Safety

Certification renewal audit of both the manufacturing plants have been carried out in line with OHSAS 18001:2007 standards. Both the units have been recommended for continuation of certification with Zero Non Conformances for Occupational Health and Safety Management systems valid through March 2020.

Environmental Management System and Compliance Audits

The Companys Environmental Management System (EMS) is a comprehensive approach to environmental management and continual improvement that measures the performance against regulatory and management standards. Certification renewal audit of both the manufacturing have been carried out in line with ISO 14001:2015 standards. Both the units have been recommended for continuation of certification with Zero Non Conformances for the upgraded Environmental Management System standards. The certification is valid through March 2020. Ambient air monitoring study for particulates and gases, ambient noise monitoring study and drinking water analysis are being conducted on a regular basis as per norms specified by the Karnataka State Pollution Control Board and the results have been within regulatory limits.

Business Outlook

The recent acceleration in world gross product growth stems predominantly from firmer growth in several developed economies, although East and South Asia remain the worlds most dynamic regions. Cyclical improvements in Argentina, Brazil, Nigeria and the Russian Federation, economies emerging from recession, also explain roughly a third of the rise in the rate of global growth between 2016 and 2017. After witnessing a slowdown across major international markets in FY 17, the Company has been able to secure orders from Europe, South Africa, LATAM and South East Asia and together with the domestic market, it has had a record order booking in FY 18. With the expected increase in activities in industries like Steel, Pulp & Paper, Cement and Sugar sector, the demand for steam turbines should remain robust in the coming years. With a robust enquiry pipeline, increasing global presence and strategic marketing activities, the Company is expecting to carry the momentum in FY 19, both in domestic and international businesses.


During the year, the foreign subsidiaries/step-subsidiaries along with their branches have firmly established their presence in their respective regions and are actively promoting the products and brand of the Company. The subsidiary in Dubai has played an important role in API sector in the Middle East besides Oil & Gas sectors in Middle East

possible to secure some orders for the Company in a sluggish market in Europe. These offices, being close to customers and capable to provide specialised services, are gaining confidence of the customers and are promoting the brand strongly, which is essential and helps the Companys strategy to achieve market penetration on sustainable basis. These offices are well equipped with trained sales and service personnel with local talents as well as from India.

During the year, the Dubai subsidiary has set up a new subsidiary in South Africa. It is heartening to note that the new subsidiary in South Africa is gaining traction in the first year of operation itself with strong order intake and good enquiry base. The Company expects that the foreign subsidiaries will further augment business growth in the coming years.

STIFY>GE Triveni Limited (GETL)

GE Triveni Limited, joint venture Company with Baker Hughes GE (BHGE), is engaged in the design, supply and service of advanced technology steam turbine generator sets with generating capacity in the range above 30-100 MW. GETL offers products, manufactured to international standards of quality and reliability, with best-in-class effciencies. The flange to flange turbine is manufactured competitively at TTLs world-class manufacturing facilities located at Bengaluru, and the complete project is executed by GETL in accordance with GEs manufacturing, quality and supply chain procedures and processes, which include certification of suppliers, adherence to environment and health concerns and other ethical standards.

After two years of successive growth in sales and profits, the financial results are not so encouraging in the year under review due to delayed o3take by certain customers and other technical reasons. GETL booked one international order during the year. The enquiry pipeline is encouraging from international market and GETL expects to perform well in order booking despite sti3 competition in this segment. The Indian market continue to remain sluggish, as in the previous year, and is likely to take some more time to show any positive outlook.

GETL registered a loss on account of provisioning for a turbine supplied in FY 17 and due to delay in despatches of turbines on account of customer deferment. The JV partners are having constant dialogues in order to improve the enquiry generation and order finalisation in the JV despite the market condition being tough and the Company feel that with this renewed sales efforts, the performance should improve in the coming years.

On assessment of the present market scenario and roadmap of technology developments in fray, the Company strongly believes that GETL will continue to remain financially stable with good business prospects in near future.

Corporate Social Responsibility (CSR)

At Triveni Turbines, we believe that the foundation of a robust business is the collective growth of its people and society. The Company is committed to create an environment that contributes to the well-being of communities and the conservation of nature.

CSR Objectives

The Company wishes to be perceived as a ‘Company with conscience, and to actively and continually contribute to the social and economic development of the communities for the benefit of the deprived, underprivileged and di3erently able persons. Its approach will be based on merits only, without any regard to religion, caste or creed.

CSR Focus Areas

Keeping the corporate philosophy in mind, the following focus areas have been identified by the CSR Committee to meet the Companys CSR objectives: Healthcare Education Technology & Innovation Environment Women Empowerment

Highlights of the CSR Initiatives undertaken during FY 18

1) Healthcare

Triveni Turbines Preventive Health Programme (Triveni Turbines PHP) for Females

The Company identified a project as part of its CSR plan which focussed on preventing diseases, such as osteoporosis, breast cancer, cancer of the cervix & ovary, anaemia of various types and promoting healthcare

project, the Company provided free investigations and medical advice/ consultation to more than 1,200 women. The programme increased the awareness level of women towards health issues and the need for timely prevention.

Protecting the Girl Child from Cervical Cancer

The Company provided vaccination to girls, especially of the lower socio-economic strata, in the age group 9-14 years to protect them from Cervical Cancer. Nearly 1,32,000 women in India su3er from Cervical Cancer and nearly 74,000 of these die each year but this can be easily prevented through vaccination given at an appropriate age. The programme was successful as apart from vaccination, it helped in creating awareness among the parents and girls about the potential threat and need for prevention.

Protecting the Infant Child from Rotavirus Diarrhoea

TTL identified a project under healthcare which focussed on preventing Rotaviral diarrhoea among infants. India accounts for nearly 23% of all Rotaviral diarrhoea deaths in the world. Rotavirus infection is highly contagious, most vulnerable being children less than 5 years of age. Vaccination against this disease has to be completed before 34 – 35 weeks of age. During the year, the project was implemented and free vaccination was given to 195 new-borns and infants up to the age of 8 months to protect them from rotaviral infection.

New Born Screening Programme

800 new born babies, especially from economically weaker section of the society, were screened under New Born Screening (NBS) Programme for Thyroid profile, CAH, G6PD, Hearing test. In India, two major disorders are being detected through New Born Screening. Congenital Hypothyroidism (CH) is being found in 2 out of 1000 babies in India. Next to that, G6PD deficiency is more common among the population of India. They constitute 8.6% of Indias total population. NBS is done to find out if a baby has a higher risk for having a disorder for which early treatment or management can prevent intellectual disability, physical disability or even death. By treating these conditions, damages like mental retardation, thyroid issues, autism and sudden death can be reversed.

2) Education & Women Empowerment

Support to Nursing School As part of CSR projects relating to promotion of education and women empowerment, the Company provided financial support to the Nursing School of a hospital to improve teaching standards, provide scholarships to good performers and deserving students, and subsidise fees to students from economically weaker section of the society.

Other Educational Initiatives

The Company has sponsored education and training programmes for di3erently-abled students and provided financial support for development of the infrastructure of these schools. The Company also provided financial support to Government Model Primary School in Peenya and Sompura, located near factories, towards running pre nursery school which provides primary education to under privileged children in this area. A total of more than 500 students benefited from these initiatives.

3) Environment Sustainability

Water tool Applications for Sustainable Solutions, Enhanced capacities, and Renewal (WASSER)

Water continues to rise as a priority for India and Indian business in a scenario where there is an increased variability in water availability and the resource quality is deteriorating. To facilitate appropriate decision making amongst diverse stakeholders on water, it is important to integrate data, tools and water networks into a comprehensive, simple to use system that can readily be used by industry, Government and diverse stakeholders such as farmers, utilities and community at large; enhance awareness, disseminate knowledge amongst various stakeholders on Tool to enhance improve water security of an area. It is in this context that the project WASSER was undertaken in association with an implementation agency with an intent to develop state-of-the-art tools and world-class techniques meeting international standards to raise awareness, build capacities of diverse stakeholders on usage of innovative methods and enable appropriate decision-making for water resource planning in India.

Skill Development Intervention for Industry towards Environmental

Sustainability for Operating Renewable Energy Plants

The Company conducted skill development programmes focussing on environment sustainability for operating renewable energy/biomass/ co-generation power plants as part of its CSR initiative under environment sustainability. The goal of the programme was to enable the industry to achieve operational excellence by reducing carbon footprint and create an eco-system of environmentally sustainable

organisations that contribute as much to the environment as they do to the economic progress of the country.

4) Technology & Innovation

The Company encourages and support technological developments undertaken by various reputed technological institutes of National importance which are directed towards protection of environment and natural resources. During the year, the Company has provided financial support to the following two technological projects:

Support to IIT Bombay

The Company supported eminent national institute, IIT Bombay, in the development of a small-scale low-grade energy recovery system. Low-grade waste heat is generally lost and not recovered for any useful applications. In a rural setting, such low-grade energy recovery systems can be employed for recovery of waste heat. This would not only enable recovery of energy otherwise wasted away, but also help in providing energy solutions to villages where electricity reach is low. The Company sponsored IIT Bombay on this project and IIT Bombay has performed extensive system analysis and a low footprint energy recovery system was developed.

Support to IISc.

The Company is supporting advanced research institute, IISc., Bangalore for the development of alternative energy recovery system for social applications. This alternative energy recovery system is being developed for tapping waste heat and improving effciency in overall energy generation. The system can be used as a hybrid model along with solar power systems and as well as agricultural waste heat in rural areas. Further, it can also be utilised for electricity generation using recovered low-grade waste heat from industries.

Financial Review

The financial results of the Company for the financial year 2017-18 compared with the previous year are summarised hereunder:

(Rs in Million)


FY 18

FY 17

Change %

Revenue from operations (gross)




Revenue from operations (net)




Other Income











Depreciation & Amortisation








PBIT Margin



Finance Cost








PBT Margin







PAT Margin



Other Comprehensive Income




(net of Tax)
Total Comprehensive Income




The aforesaid summarised financial results are based on the financial statements which have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under the Companies Act, 2013 ("the Act") and other relevant provisions of the Act.

The lower profitability and margin for the year are due to lower foreign exchange gains due to technical reasons (and as detailed under Other Income), higher marketing penetration and efforts in the international market and its associated costs and costs associated with new manufacturing facilities. All these costs will help in securing additional business which will be met through recently developed state-of-the-art manufacturing facilities, including for higher range of turbines.

Revenue from Operations

After implementation of Goods and Services Tax ("GST") with effect from July 1, 2017, Revenue from operations is stated net of GST. Revenue from operations for the year ended March 31, 2017 includes excise duty of 209.6 million for the full year whereas revenue from operations for the year ended March 31, 2018, includes excise duty of

22.2 million for the first three months only, i.e. till implementation of GST Act. Revenue from operations for the current financial year is thus not comparable with the previous year. Revenues from operations, if considered without excise duty, will be marginally higher by 1.1% over the previous year as against a reported decline of 1.4%.

The growth in Revenues is largely a function of order booking achieved during the previous year and represents subdued business sentiments in the capital goods market, domestically as well as internationally. The business conditions domestically were disrupted by major economic events, such as, Demonetisation which was announced in November 2016 and also during run-up to the new indirect tax regime, GST, from July 2017. However, the order booking has improved considerably in the current year with increase of 18% over the previous year. The domestic market segment, which remained largely flat till third quarter of the year, has shown early signs of revival due to improved business sentiments and tapering of the impact of demonetisation and GST.

In view of lead time of around 8-10 months for turbines from order-to-sale, the order booking in the previous year forms the basis of sales during a financial year apart from the possibility of billing orders secured in the first quarter of the financial year and shorter conversion period of 5-6 months for the aftermarket business. In consonance with the order booking, Revenues from domestic sales were 17.2% higher at 4,140.5 million whereas the Revenues from exports were 13.9% lower at 3,268.7 million. The healthy order booking position during the current financial year, especially in the export segments, together with 12% higher order book at year end augurs well for future. The strengthening of aftermarket organisation and aggressive marketing strategy has driven growth of its Revenues by 13.6% over the previous year. The orders in hand at year end of the aftermarket business, especially exports is healthy.

Other Income

Other Income during the year was lower by 69.2% at 88.0 million as against 285.7 million in the previous year. The decline is mainly due to decline in foreign exchange gains by 161.5 million. Consequent to the adoption of Ind-AS in the previous year, all MTM gains on outstanding derivatives had to be accounted for in the previous year, which otherwise would have been booked in the current financial year, thereby leading to higher booking of foreign exchange gains in the previous year and lower booking of foreign exchange gains in the current year. Further, the Company has adopted Hedge Accounting from April 1, 2017 which has enabled booking of MTM gains/losses on derivatives along with recognising export sales. The purpose of adopting hedge accounting is to minimise fluctuations on the financial results due to periodic MTM gains/losses. Hedge Accounting is applied on derivatives which are used to hedge foreign currency risk of the Company.


Raw Material consumption

(Rs in Million)


FY 18

FY 17

Change %

Raw material consumption and change in inventories




Percentage of sales



The effciency of raw material consumption is generally measured as a percentage of sales subject to changes in the product mix. Material cost during the current financial year is at 51.9% of Sales, which is at the same level as in the previous year, indicating that material cost has been well optimised during the year. The Company dynamically strives to optimise material cost through value engineering processes and various supply chain initiatives. The manufacturing process, including that of supply chain partners, is continually improved upon to reduce/ reuse of wastes and rejections. However, the product mix can also impact the above percentage.

Personnel Cost, Other Expenses and Depreciation

(Rs in Million)


FY 18

FY 17

Change %

Personnel Cost




% to Total Sales



Other Expenses




% to Total Sales



Depreciation &




% to Total Sales



Employee Cost

During the year, as a part of HR initiatives, the Company has strengthened its organisation structure and recruited talents at senior and middle level management for augmenting its business. The increase in employee cost is due to the combined effect of additional manpower resources and annual salary increase.

Other Expenses

It comprises of manufacturing expenses, administrative expenses and selling expenses. The operations of the second manufacturing plant has commenced during the year leading to higher manufacturing expenses and further, increased level of business travelling and marketing efforts, which are aligned with the business strategy of stronger market penetration, especially in overseas market, has led to increased marketing expenses. Increase in these costs is already yielding higher business, as can be seen from higher order booking in domestic and international market.

Depreciation and Amortisation

The second manufacturing plant at Sompura was commissioned and capitalised towards the close of the previous year and consequently, the increase represents incremental depreciation of the capitalised facilities.

Balance Sheet

Major items, including where significant changes have taken place during the year, are being explained hereunder:

Non-Current Assets

Property, Plant and Equipment (PPE), Capital Work-in-Progress & Intangible Assets

PPE and Capital work-in-progress are the main components of Non-current assets. There was no significant addition to PPE during the year. However, capital work-in-progress increased from 103.0 million to 385.1 million on account of expansion of Sompura manufacturing facilities.

Current Assets


Total inventory at the year end was 1,807.1 million, as against

1,458.7 million in the previous year, an increase by 348.4 million. Higher inventories are commensurate with the increased orders in hand and have been procured/built up to meet higher production requirements.

Trade Receivables

Current trade receivables are at 2,058.1 million as on March 31, 2018 as against 1,489.4 million as on March 31, 2017, an increase by 568.7 million. Increase in current trade receivable is on account record sales made in the last quarter of the year and some of the sales under Letter of Credit could not be collected by the year end. Non-current trade receivables, however remains in the same level as previous year, that is 12.4 million as against 12.6 million in previous year. These are contractually not due for collection in the next 12 months.

Other Current Assets

Other current assets have increased by 197.8 million from 392.3 million to 590.1 million. The major component of increase is GST recoverable, representing unutilised input credit on bought out material for exports, which could not be utilised as the final export products are not subject to GST. The Company has taken steps to secure refund of such unutilised input credit. During the year, the Company received a refund of disputed VAT of

219.3 million consequent to a Court Order in favour of the Company.

Current Liabilities

Current liabilities mainly consist of trade payable for goods and services and advances from customers. Trade payable has increased to

1,447.7 million as on March 31, 2018 from 921.6 million as on March 31, 2017 on account of higher purchase of raw material in the last quarter of the year to meet the increased production requirements, which are due for payment subsequent to the year. Advances from Customers forms the other major component and it has increased by 26.4% to 1,023.7 million commensurate with increased order booking.

Consolidated Financial Statements

Consolidated financial statements have been prepared consolidating the results of a wholly-owned foreign subsidiary, Triveni Turbines

Turbines DMCC (TTDMCC), Dubai and its wholly-owned subsidiary in South Africa called Triveni Turbines Africa (Pty) Ltd (TTAPL), which was incorporated during the year. The Consolidation is made by adding line by line items complying relevant provisions of Ind AS. In addition, the Company has a domestic subsidiary company namely GE Triveni Ltd. (GETL) which, in accordance with Ind AS, been considered as a Joint Venture and accordingly accounted by using equity method for preparation of consolidated financial statements.

Headline figures for consolidated financial statements duly compared with standalone are provided hereunder:

(Rs in Million)

Financial Statements



1 Revenue from operations (gross)



2 Profit before tax



3 Share of income of joint venture



4 Profit after tax



5 Total Comprehensive Income



Risk Management & Internal Financial Controls

The Companys Risk Management and Mitigation framework is aligned with ISO 31000. The framework is reviewed from time to time to ensure its effectiveness in line with the changing business dynamics. The framework identifies all the possible risks that the Company might be exposed to, including their categorisation based on their severity, for regular monitoring and reporting. The policy identifies risk ownership, accountability and mitigation procedures. It is the endeavour of the Company to strengthen the control environment on a dynamic basis with a view to lower the overall risk profile.

The Risk Management Policy lays down guiding principles, policies, a risk organisation structure and MIS, incorporating the requirements of Corporate Governance as well as some of the industry best practices in order to manage risks. Pursuant to the risk management policy, the Company presents an enterprise-wise approach to ensure that key aspects of risks that have an enterprise-wide impact are considered and contained in its conduct of business. This policy document also serves as a guideline for respective components of risks which have a common resonance across the Company.

The Companys business relates to manufacture and sale of steam turbines which falls under the capital goods industry segment and is closely linked with the countrys economic activities, domestic and global, as well as the sectors wherein the Companys products are used. Even though several factors relating to the industry are not within the control of the Company, it strives to mitigate the externalities in the best possible manner by ensuring diversified streams of revenues and avoiding over dependence on any sector/s or geographies.

Further, the Company is responsible for designing and implementation of sound Internal Financial Controls over Financial Reporting. The Company has laid down such procedure and periodically assess its operational effectiveness by conducting reviews of all Risk Control Matrix. This Control System provides reasonable assurance that the conduct of the business is operating in an orderly and effcient manner including adherence to Companys policies, safeguarding assets and prevention and detection of frauds and errors, if any, the accuracy and completeness of accounting records and timely preparation of financial information.