Cimmco Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Dec 2018

Auditor and Management Disclosures and Notes for the quarterly results dated 31 Dec 2018

1. Operating segments based on the Company's products have been identified by the management as Wagon & Engineering Products and Tractors.

2. Exceptional items for the year ended March 31, 2018 represents impairment loss on plant and machine^ and intangible assets relating to Tractors segment.

3. Post applicability of Goods and Service Tax (GST) w.e.f July 1, 2017, revenue from operations is disclosed net of GST. However, revenue for the period April 1, 2017 to June 30, 2017 is inclusive of excise duty Accordingly, revenue from operations and total expenses for nine months ended December 31, 2018 are not comparable with the corresponding period presented in the results.

4. Effective April 1, 2018, the Company has adopted IND AS 115 ''Revenue from Contracts with Customers" using the modified retrospective approach which is applied to contracts that were not completed as of April 1, 2018. The comparatives for the quarter and nine months ended December 31, 2017 and year ended March 31, 2018 have not been restated and accordingly the results for the quarter and nine months ended December 31, 2018 are not comparable with the above periods reported. As a result of adoption of the new standard, an amount of Rs 72.49 lacs (net of tax), has been adjusted against retained earnings as on April 1, 2018. Further, the change in the timing of revenue recognition for certain contracts has following impact on the above results:

5. The Auditors in their audit report for the year ended March 31, 2018 had commented upon the recoverability of claims of Rs. 854.81 lacs (net of expected credit loss of Rs. 3,097.53 lacs) receivable from Indian Railways against which the arbitration award has been upheld against the Company and the Company has filed an appeal in the Hon'ble Delhi High Court against the said arbitration award which is pending adjudication. The Auditors in their limited review report for the quarters June 30, 2018 .September 30, 2018 and December 31, 2018 have also commented on the above. The management is hopeful to recover these claims in full.

6. The promoter of the Company was allotted 72,00,000 equity shares pursuant to the Scheme of Amalgamation sanctioned by the Hon'ble National Company Law Tribunal resulting in minimum public shareholding (MPS) being 18.47%. Though the aforesaid allotment took place on December 02, 2017 but the shares were credited into the demat account of promoter after listing & trading approvals of the Stock Exchanges, on May 25, 2018 only. The promoter has since made two Offers for Sale (OFS) of the requisite equity shares to achieve the MPS of 25% as per Section 19A(2) of Securities Contracts (Regulation) Rules, 1957. However, due to low demand the OFS were under subscribed, and the shareholding of public as at December 31, 2018 was 20.512%. As advsied by the lawyers, the Company has submitted application to the SEBI and Stock Exchanges on December 06, 2018 seeking extention of time till September 30, 2019 to comply with the MPS requirement and waiver of penalty.

7. The above financial results for the quarter and nine months ended December 31, 2018 have been reviewed by the Audit Committee and approved by the Board of Directors at their respective meetings held on February 4, 2019. The Auditors of the Company have carried out a Limited Review of the above financial results for the quarter ended December 31, 2018 in terms of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Anil Kumar Agarwal
Managing Director and CEO