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Directors Report of Texmaco Rail & Engineering Ltd.

Mar 31, 2016

The Directors have pleasure in presenting the 6th Operational Annual Report of the Company along with the Audited Financial Statements of the Company for the year ended 31st March, 2016.

FINANCIAL RESULTS (Rs. in Lakhs)

2015-16 2014-15

Operating Profit (PBIDT) 4,430.36 3,707.72

Less: Interest (Net) 564.66 591.79

Gross Profit (PBDT) 3,865.70 3,115.93

Less: Depreciation 1,246.06 1,493.62

Profit before Taxation 2,619.64 1,622.31

Less: Provision for Taxation:

Current Tax 515.36 180.00

MAT Credit entitlement (144.44) (45.00)

Deferred Tax Liability/(Asset) 89.72 336.50

Income Tax for earlier years -- (222.74)

Profit after Taxation 2,159.00 1,373.55

Add: Balance brought forward from previous year 11,617.81 11,376.33

13.776.81 12,749.88

Appropriations

Proposed Dividend on Equity Shares (Incl.Tax) 632.73 632.07

General Reserve 500.00 500.00

Balance Carried Forward 12,644.08 11,617.81

13.776.81 12,749.88

During the year under review, the Company''s overall performance was substantially impacted due to general sluggishness in the market, release of inadequate orders by Railways and that too at un-remunerative prices affecting the top and bottom line of the Company.

The Gross Turnover for the year stood at Rs. 9171 million, net of the value of free-supply inputs (including steel and components) of over Rs. 1642 million, provided to the Company by the Indian Railways and other clients for some large value contracts.

The Gross Profit (PBDT) and Profit Before Tax (PBT) for the year were at Rs. 387 million and Rs. 262 million respectively. The Net Profit was Rs. 216 million, after providing a net tax liability of Rs. 46 million for the year has been created in the Statement of Profit and Loss in accordance with the Accounting Standards issued by the Institute of Chartered Accountants of India.

Dividend

In view of lower profits, the Directors recommend payment of a dividend of 25% for the year ended 31st March, 2016.

THE MANAGEMENT DISCUSSION AND ANALYSIS

Wagon building has been the mainstay of Texmaco for decades. However, the vicissitudes of wagon Industry fortunes from erratic procurement planning of the Indian Railways is rendering the Industry highly vulnerable. Railways were identified as the key sector for the largest investment to build a world class rail network entailing a 5-year outlay of USD 140 billion. Ironically, the Wagon Industry, which had to play a lead role in modernizing and expanding the wagon fleet to haul the expected traffic from accelerated GDP growth rate, is in doldrums.

In absence of timely measures, the available infrastructure built with substantial investment by the Wagon Industry is grossly underutilized. Unfortunately, to add to the woes, the failure to review the freight policy, given the drop in fuel price, is luring away the freight business to road in preference to Rail.

The correction in future policy direction is anxiously awaited for which the Industry has been making representations at various levels in the Ministry of Railways.

HEAVY ENGINEERING DIVISION

A. Rolling Stock Division

a. Freight Car

There was an unprecedented development in respect of the Indian Railway Tender for 8509 wagons against FY 2015-16 RSP (Rolling Stock Programme). The budgetary provision was for 16800 wagons, but the actual procurement was virtually half thereof. In the resultant scramble for orders, the prices quoted by the certain wagon builders were grossly un-remunerative and unworkable, indeed predatory. The Industry, already smarting under losses owing to unviable prices, was in for a rude shock at the cut-throat competition and further precipitated fall in prices by new entrants in the Industry. Ultimately, the tender for FY 2015-16 had to be short-closed due to non-acceptance by majority of the wagon builders (including your Company) of the price counter-offered by the Railways.

Under the circumstances, the only order which the Company received from the Indian Railways during FY 2015-16 was for 765 BOXNHL wagons under the option clause in respect of an earlier contract dt. 29th April, 2014 for FY 2013-14, which was at old prices with margins under severe pressure. This adversely impacted the working of the Rolling Stock Division for the year.

In the non-IR segment during the year, the Company received orders for 751 wagons, valued Rs. 2087 million (ex-works).

The Indian Railways floated the next tender in January 2016 for 14777 wagons against FY 2016-17 RSP, which will be procured during the current year.

The Company executed during the year orders for 2679 wagons altogether, including non-IR wagons, valued Rs. 6266 million. This was a unique year, during which 14 different types of wagons were manufactured, comprising IR 4 types and Non-IR 10 types. It required development and prototype manufacture of 8 new design wagons, which included special wagons for transport of High Pressure Liquid Ammonia, Defence Equipment, Steel Coils, Automobiles, and Milk in SS Tanks.

b. Coaching

Your Directors are pleased to report that the first rake of EMU Coaches which was is in commercial service on Eastern Railway since 3rd February, 2015, is running successfully. Further, your Company has received a developmental order for manufacture of Under Frames for AC-3 Tier Coaches from Rail Coach Factory, Raebareli, which is under production at Sodepur Works. The Company continues to expect further orders for Coaches from the Indian Railways.

c. Locomotive Components / Assemblies

Your Company has diversified into manufacture of Electric Locomotive Shells and Sub-Assemblies and has been supplying Complete Shell Assembly, Centre Sills, Head Stocks, Roof Structures, and Underframe Assemblies to Chittaranjan Locomotive Works (CLW). In continuation, the Company has secured an order for supply of 33 nos. complete Shell Assembly with Pneumatic Piping & Painting, besides orders for Central Underframes, Side Sills, Roof Structures & Bolsters. These are under regular production and deliveries are in progress.

The Company has also received a developmental order for manufacture of Underframe Assembly for Twin Cab Diesel Locomotive from Diesel Locomotive Works (DLW), Varanasi, which is under production at Agarpara Works.

The Indian Railways had invited two largest ever tenders for their twin prestigious Locomotive projects for 800 Electric Locomotives at Madhepura and 1000 Diesel Locomotives at Marhaura, valued at around Rs. 400000 million. These were opened on 31st August, 2015 & 1st September, 2015 respectively, and have been awarded to Alstom & GE on 30th November, 2015. The Company is well poised and equipped to support both Alstom & GE in these projects for the fabrication of the loco shell underframe and bogie frame.

The much awaited tender for 200 Electric Locomotives for the Western DFCC, under JICA credit for which there was only a single bid by a consortium led by Kawasaki, Japan, was opened on 30th June, 2015. The same is yet to be decided. The fabrication of locomotive shells and bogie frames for the indigenous supply thereof is proposed to be done by your Company.

The above projects will establish your Company as a premier supplier of Locomotive Assemblies and Sub-Assemblies in the coming years.

JOINT vENTURES

i. Touax Texmaco Railcar Leasing Private Limited

In the Rail Budget 2016, some very progressive moves have been initiated to promote leasing by introduction of new wagon types. The Budget has opened up leasing for general purpose wagons practically for most of the commodities excepting a few, such as coal for carriage by containers. It has also addressed the key demand of certain operators for entering into long term freight contracts which will be conducive to good business for cargo movement. Reconstruction of major auto hub near Chennai to promote movement of cars by rail and establishment of a Rail Tariff Authority to regulate freight are some of the other welcome features of the Budget.

The JV company has secured orders for about 300 wagons during the year of which 250 wagons have been delivered to various users on a medium to long term operating lease basis. This yields a revenue stream of around Rs. 110 million per annum. Though there has been a bit of downturn in the Country''s Exim Trade affecting the container train operations, the prospects of domestic trade are expected to brighten, particularly with new businesses emerging in the field of fly ash, auto, steel and cement industries. Further, the expected 7.6% growth in the economy will fuel the traditional logistics growth at an exciting rate.

To support further investment and growth, the JV company plans to borrow limits for which it is in negotiation with some of the leading Banks.

ii. Wabtec Texmaco Rail Private Limited

Wabtec Texmaco Rail Private Limited, a JV company between Texmaco Rail & Engineering Limited and Wabtec Corporation, USA, was incorporated in July, 2015, to cater to Indian Freight and Friction products market. The JV company commenced sales of its High Capacity Draft Gears and High Performance Brake Blocks in March, 2016, after obtaining requisite licences and registrations. The JV company is making rapid strides in gaining confidence of the Indian wagon industry for supply of Draft Gears and has won orders for its High Performance Composite Brake Blocks from Sri Lanka Railways & Bangladesh Railway. The JV company aims at becoming the market leader in its range of products comprising AAR approved Draft Gears, Bogie Mounted Brake Systems, Composite Brake Blocks, Friction Wedge, etc.

SUBSIDIARY COMPANIES

i. Texmaco Hi-tech Private Limited

The Joint Venture (JV) with UGL Rail Services Ltd. (UGL), Australia, comprising a State-of-the-Art manufacturing facility, has become a wholly owned subsidiary of Texmaco Rail & Engineering Limited ("Texmaco") w.e.f 1st October, 2015, consequent on acquisition of the entire shareholding of UGL by Texmaco. As reported in the previous year, the business projected by UGL, Australia, did not materialize, and there was little prospect of improvement in the near future. In such a grim scenario, UGL expressed the desire to exit the joint venture, and the entire shareholding of UGL was accordingly taken over by Texmaco. The unit has been renamed as Texmaco Hi-tech Private Limited. Its operations are now being planned and managed by Texmaco, and there is a sustained effort to expand the customer base and the range of products. There is already a flow of orders from some global companies like GE Transportation, Harsco and renowned indigenous customers like IR, ZF, etc. It is hoped that the capacity available in the unit will be profitably utilized for high precision components, such as, bogies etc. for locomotives and coaches with substantial demand potential.

ii. Kalindee Rail Nirman (Engineers) Limited

Kalindee Rail Nirman (Engineers) Limited ("Kalindee") became a subsidiary of the Company with effect from 31st August, 2015, with majority of the Directors on the Board of Kalindee being the nominees of your Company. The merger scheme of Kalindee with Texmaco has been approved by the Hon''ble High Court, Calcutta vide its order dated 26th February, 2016. The approval of the Hon''ble High Court, Delhi, where the Kalindee''s Registered Office is located, is still awaited.

Kalindee with its proven credentials in the field of Signaling and Telecom supported a consortium comprising, Mitsui and Hitachi, Japan, along with Texmaco to bag the largest Signaling and Telecom contract in Western Dedicated Freight Corridor (DFC), and the work on the same would start during the current year.

Kalindee is currently focused on closing all the old legacy contracts and concentrating on the more challenging and lucrative new projects where the Company has begun participating aggressively.

Further, with a view to expand the customer base, there has been a shift in the Kalindee''s strategy during the year for diversifying increasingly into DFC and Metro Rail projects. This will help to de-risk the overall business configuration of Kalindee going forward.

With foray in high-tech projects, Kalindee has built a team of technical and experienced professionals who can effectively contribute in the Company''s goal of high growth with sustainability.

iii. Bright Power Projects (India) Private Limited

During the year, your Company acquired a majority stake (55%) in Bright Power Projects (India) Private Limited (''Bright Power''), a company pioneer in the domain of Rail infrastructure, specialising in the field of Overhead Electrification (''OHE'') of Railway systems. Bright Power has become a subsidiary of the Company w.e.f. 4th January, 2016. It offers a complete Package in the field of Design, Supply, Construction & Installation for Railway Electrification and installation of Transformers and Substations mainly for the Railways. Bright Power has been doing reasonably well in its field for the past 30 years. With the technical and commercial support of your Company, Bright Power has clocked improved performance in the year 2015-16 with a turnover of Rs. 1013 million and an EBIDTA of Rs. 150 million. This acquisition would further expand Texmaco''s footprints as a ''Total Rail Solution Provider'' Company.

B. Hydro Mechanical Eqpt.

The turnover of the Division during the year was Rs. 357 million. It was well below the expectations, primarily due to Force Majeure situations, affecting execution of the major contracts. In the case of a prestigious large value contract for Upper Tamakoshi HE Project in Nepal, there was a major disruption on account of a disastrous earthquake which hit global news. The situation was further aggravated by India-Nepal border blockade due to political agitation within Nepal. However, since early 2016, the blockade has been lifted enabling movement of WIP & Finished Inventory. The pace of job execution has gained momentum in other projects also. There have been improvement in realizations of outstanding dues as also settlement of some of the claims and closure of old contracts.

After completion of refurbishment / replacement of contract in two projects during the year, the Division has been successful in winning another tender for refurbishment in Farakka Barrage. Refurbishment / replacement and Health Study of old hydro / barrage equipments have opened up new business opportunities and the Division is receiving good response.

The Division has a comfortable workload to the tune of Rs. 3600 million in hand and is expected to display improved performance in future. Further, there is rich business potential in HM equipment & Penstock Liner which may materialize during the current year, as the Company is well entrenched after successfully meeting the PQ requirements in large value tenders funded by renowned national / international funding agencies for prestigious projects.

C. Bridge & other Steel Structures

The new Bridge & Structurals Division of the Company at its Panihati Works is now fully operational. Against the order of around 9000 MT of Bridge Structure for supply to Bangladesh and Srilanka, the Company completed fabrication of more than 4100 MT till March 2016 and has commenced the erection work of individual segments of 102 Mtr. span each on the Bhairab river having a span of almost 1 KM.

On completion of erection of this unique project in Bangladesh, the Company expects to establish its credentials in the field of fabrication and erection of critical bridges both for Dedicated Freight Corridor in India and for Bridges abroad.

STEEL FOUNDRY DIVISION

Despite the continuing depressed off-take of Indian Railway during 2015-16, in face of sluggish demand of Rolling Stock, the overall performance of your Foundry has improved compared to the previous year. The production and dispatch during the year were 17353 MT & 17433 MT against 12193 MT and 13184 MT during the previous year, an increase of 42% and 32% respectively. The turnover of the Foundry surged by about 35% and stood at Rs. 2163 million. The Foundry maintained its status as the leading supplier of Railway Castings, both in bogie & coupler, with a market share of around 31%.

On the export front, your Directors are pleased to inform that Railway castings developed for North American market have successfully passed both static & dynamic tests conducted at AAR laboratory in USA. With this significant achievement, the export of Railway castings to North American market has started since October, 2015, and the Foundry has executed record export orders worth Rs. 286 million compared to Rs. 153 million during the previous year. Besides, some more castings for different design of Railway bogie as well as some new parts for mining operations have been developed. This has opened a new market of Railway castings in South America along with expanded volume of mining castings all over the world.

Your Directors would further like to inform that the Foundry has developed castings as per RDSO design of 25T axle load bogie, which after successful field trial, will be the high axle load indigenous bogie for TOMORROW, to be run on Indian track. The Foundry is also in the process of developing Wabtec design new High capacity Draft Gear as a replacement of the Draft Gear being imported currently.

The Foundry has been continuously striving to improve its capability and product quality and as a step forward in this direction, it has installed an imported Core Shooter Equipment which is under commissioning.

With the diminishing demand of Railway casting coupled with surplus manufacturing capacity, the prices of Indian Railway castings have registered steep decline. Consequently, your Foundry is in the process of re-organizing to increase the export quantum from the present level of 13% to 30% of its capacity in next 15 / 18 months.

exports

During the year, the Company executed export orders worth Rs. 488 million comprising of Steel Castings, Rolling Stock and Hydro Mechanical Equipment to USA, Australia, Nepal and Africa.

The Company, during the year also exported Steel Bridge Girders to Bangladesh through AFCON-IRCON JV as an indirect export. The value of deemed export made by the Company during the year was Rs. 283 million. The Company is constantly endeavouring to develop new markets, especially in Middle East and Africa

R&D ACTIVITIES

A. Steel Foundry Division

R&D activities of Steel Foundry Division are focused on development of new products and improving the existing processes in order to upgrade the quality and reduce the cost of the product.

Some of the projects undertaken are:

Products Developed

(a) Bogie Castings for export

Railway Bogie Castings with improved properties for South American market for broad gauge (1676 mm) application have been successfully developed and approved by the concerned authority and are under despatch.

(b) Export Castings for Mining application

New design castings with very critical dimensions and special grade of wear resistant material were developed to impart higher impact toughness & hardness and thereby imparting higher service life for ground excavating equipment.

New Processes developed / modified

i. Development of a Self Core System for Yoke Castings - This process reduces the cost of production significantly. It also improves the quality and service life of the product.

ii. An Informatics-based Approach to reduce the Grain Size of Hadfield Cast Steel-The Research Team in the Foundry has successfully developed and designed the process to get fine grain size resulting in better mechanical properties. This has been recognized and published in The Institution of Engineers (India) 2015 Journal.

iii. Development of a New Etchant for Austenitic Manganese Steel - A new process of etching the High Manganese Steel Castings has been developed. The work has been recognised and published in Advanced Research Journal, 2015.

iv. Reduction of weight of casting by applying the latest computer simulation programmes, modeling of the process and using accurate CNC make metallic tooling. This significantly reduces the time for prototype development and also increases the consistency over the dimensions.

B. Heavy Engineering Division

1. Rolling Stock

1. A new type of wagon "BDDAC", which is a double deck auto car carrying wagon, has been developed (with technical support from a renowned European firm) and the prototype manufacture is underway. Certain specially designed mechanism components for lifting and positioning the upper deck as ramp are under advance stage of manufacture. Sixty one (61) critical components for the same including imported Gear Box, Coupling, Spindle mechanism and a special Pressed Section (9.3M long) are already available. After trials, this wagon will prove its superiority over the existing type for faster loading and unloading of cars and the locking of cars in position.

ii. The Company has also designed and developed a Double Deck Container carrying flat wagon (Bogie Flat Container Wagon) with the technical support of M/s. UGL, Australia. After submission of design, RDSO have also conducted the fatigue analysis, and as mandated, the required modifications have been incorporated. The clearance for prototype manufacture has been obtained and the manufacture will start shortly.

2. Hydro-mechanical

The Hydro-mechanical Division has successfully designed and developed an arrangement through which the thrust of the radial gate is transferred to the side piers by incorporating plain spherical bearings of stainless steel instead of conventional and expensive self-lubricating bronze bushes between the trunnion and arm housing. The outer part of the spherical bearing is fixed to the bearing housing in the arm, and the inner part is fixed to the extended portion (cantilever) of the trunnion pin, which in turn is fitted to the specially designed load bearing structural frame. The frame fitted with adequate number of anchor bolts will be embedded in the concrete pier, thus enabling the load transfer.

The new design has been successfully implemented in 4 nos. Hydraulic Radial Gates for silt flushing, after approval by the project consultant, "JV Norconsultant AS-Lahmeyer International GmbH".

IT SERVICES

With installation of Oracle R12 System, the entire business operations including Procurement, Inventory, Production, Sales and Finance are integrated in ERP Application with successful completion of ERP phase-2 project. The department is now working to sort out the integration gaps and streamline the business process through adopting best practices of ERP to upgrade effectiveness to it''s application.

The internet bandwidth is further increased to ensure improved online connectivity with growing users. To combat cyber threat necessary measures have been introduced for arranging a secured environment.

HUMAN RELATIONS

The Human Relations contribute to the harmony in work place and promote healthy industrial relations. Through Human Relations, your Company has become not only a ''place of work'' but essentially a ''Place to work''.

Your Company believes that proactive & innovative Teamwork plays a pivotal role in attaining the corporate objectives of delivering quality products on time.

Human Resource remains one of the key assets of the Company. Accordingly, various initiatives and policies have been taken to ensure a balance between business needs and individual aspirations. There is a focus on ensuring best practices in people policies to improve the Quality of Life of ''the people'' through enriching their knowledge base. There are programmes round the year for Learning and Development to manage skill redundancy.

The Company relies on empowerment of the employees to work with professional camaraderie bonded with ability to deliver to the optimum level.

OPPORTUNITIES & THREATS

The last couple of years have been quite challenging for Texmaco. The traditional comfort of assured wagon orders from the Indian Railways on yearly basis has ebbed. The margins are under pressure due to intense competition and surplus capacity in the Wagon Industry. The hope of better days for the wagon industry with the formation of the new government has been elusive so far.

International developments like uncontrolled terrorist activities in the neighborhood and the West and middle-East Asia, have their inevitable fallout on the business environment. Mercifully, the damage appears to be contained and will have limited impact on business.

Challenging times inevitably throw up new opportunities. In-spite of hiccups, the Indian economy is expected to grow at a faster rate for the next few years. Inflation is moderate; fiscal deficit is under control (thanks to worldwide slump in crude), and there is a professed commitment of the GOI to usher in more reforms. Globally, there is a general sense of optimism in the future of the Indian economy. Major initiatives like "Make in India" and the drive on Infrastructural Development have already started rolling, and it is for the corporates to seize the emerging opportunities. Notably, the GOI plans in respect of the DFC and metros have huge business potential for Texmaco and its subsidiaries.

The professionalism and legitimacy exhibited by your Company''s management and the infrastructural / technological superiority vis-a-vis peers has led multinationals to seek the Company''s support in their multibillion dollar projects awarded by the Indian Railways. While it may take time to reap the financial benefits of such partnership, the resulting total transformation in the work culture and the image worldwide will put the Company in a different league altogether.

corporate social responsibility

The Company is actively engaged in social well-being and upliftment by pursuing various CSR initiatives in the fields of Education, Health, Environment and Women Empowerment.

To make a significant difference in this regard, through Texmaco Neighbourhood Welfare Society, the Company has added another important milestone by setting up a Health Hub which includes "Texmaco Arogyam Physio Centre", surrounded by green environs at the Texmaco Estate premises. The mission is to alleviate pain, restore health and build physical fitness with the aid of a team of skilled and experienced Physiotherapists. The Centre is well-equipped with the requisite technologically advanced equipment and supported by a modern Gym in cheerful and pleasant ambiance. The Yoga Centre adds to the attraction of the Hub.

Your Company lays special emphasis on extending support for higher education and employability enhancement program for the underprivileged sections of the society. There is also a drive to promote Sports amongst youth in the local area.

The corporate philosophy is of working together for common good, and your Company''s employees are encouraged to volunteer their time and resource to experience the joy of giving back to the society.

The Company is in the process of tie-up with various associations / organisations / trust for pursuing the CSR activities. The process of identifying meaningful activities is time consuming and the Company could not spend a part of the prescribed amount in the financial year 2015-16.

GREEN INITIATIVES

Your Company has started a sustainability initiative with the aim of going green and minimizing the impact on environment. Your Company has already started sending Annual Report, Notices, etc. through e-mails to the Shareholders, whose e-mail IDs are registered with their Depository Participants. In case a Shareholder wishes to receive a printed copy, he / she may please send a request to the Company, which will send a printed copy of the annual report to the Shareholder. Members are requested to support this initiative by registering / updating their email addresses for receiving Annual Report, Notices, etc. through e-mail.

particulars of employees

The number of employees as at 31st March, 2016 was 1467. In terms of the provisions of Section 197(12) of the Companies Act, 2013 (''Act'') read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules is enclosed as Annexure B.

Disclosures 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 are enclosed as Annexure C.

conservation of energy, technology absorption

AND FOREIGN EXCHANGE EARNINGS AND OUTGO

As required under Section 134(3)(m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014, information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo is enclosed as Annexure D.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

Meetings of the Board

During the year under review, six Board Meetings were held on 22nd May, 2015, 22nd July, 2015, 28th September, 2015, 7th November, 2015, 6th February, 2016 and 31st March, 2016.

Change in Directors and Key Managerial Personnel

During the year, Mr. A. K. Vijay, had resigned as Company Secretary and Compliance Officer of the Company and Mr. Ravi Varma was appointed in his place w.e.f. 22nd June, 2015.

Messrs. Akshay Poddar and Sandeep Fuller, retire by rotation and being eligible, offer themselves for re-appointment at the ensuing Annual General Meeting. The Board has recommended their re-appointment.

Board Evaluation

The Company has formulated a Policy, for performance evaluation of Independent Directors, Board, Committees and other Directors by fixing certain criteria which was approved by the Nomination and Remuneration Committee and adopted by the Board. The criteria for the evaluation include their functioning as Members of Board or Committees of the Directors. A structured questionnaire, evolved through discussions within the Board, has been used for this purpose. Further on the basis of recommendations of the Nomination and Remuneration Committee and the performance review by the Independent Directors, a process of evaluation was followed by the Board for its own performance and that of its Committees and individual Directors.

Appointment of Directors and Remuneration Policy

The Nomination and Remuneration Committee has approved the criteria to determine the appropriate characteristics, skills and experience for the Board as a whole and its individual members with the objective of having a Board with diverse backgrounds and experience in business, government, education and public service.

Based on the recommendations of the Nomination and Remuneration Committee, the Board has approved the Remuneration Policy for Directors, KMP and other employees of the Company.

The policy ensures equity, fairness and consistency in rewarding the employees on the basis of performance against set objectives. A copy of the policy is enclosed as Annexure E.

Declaration by Independent Directors

All Independent Directors of your Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

AUDIT COMMITTEE AND AUDITORS

Composition of Audit Committee

The composition of the Audit Committee is provided in the Report on Corporate Governance as attached to the Directors'' Report.

Statutory Auditors

At the 16th Annual General Meeting held in the year 2014, M/s. K. N. Gutgutia & Co., Chartered Accountants, Statutory Auditors of the Company were re-appointed by the shareholders to hold office as such from the conclusion of 16th Annual General Meeting held in the year 2014 until the conclusion of 19th Annual General Meeting of the Company, subject to ratification of their appointment at every Annual General Meeting. Under Section 139 of the Companies Act, 2013, the Company is required to place the matter relating to Statutory Auditor''s appointment for ratification by members at every Annual General Meeting.

Based on the recommendations by the Audit Committee, the Board of Directors of the Company recommends the ratification of their appointment.

Cost Auditors

Your Company has appointed Messrs. DGM & Associates, Cost Accountants, for conducting the Cost Audit for FY 2016-17 in terms of the provisions of the Companies Act, 2013 and Companies (Cost Records and Audit) Rules, 2014 issued by the Ministry of Corporate Affairs.

Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Company has appointed M/s. S. R. Associates & Co., Company Secretaries, as Secretarial Auditor, to conduct the Secretarial Audit of the Company for the FY 2015-16.

The Report of the Secretarial Audit Report is enclosed as Annexure F.

Whistle Blower Policy

The details on the establishment of Whistle Blower Policy are provided in the Report on Corporate Governance as attached to the Directors'' Report.

INTERNAL FINANCIAL CONTROLS AND RISK MANAGEMENT

The Company has a proper and adequate system of internal controls. This ensures that all transactions are authorised, recorded and reported correctly, and assets are safeguarded and protected against loss from unauthorized use or disposition. In addition there are operational controls and fraud risk controls, covering the entire spectrum of internal financial controls. The system is commensurate with the size and the nature of operations of the Company.

The Audit Committee regularly reviews the internal control system to ensure that it remains effective and aligned with the business requirements. The Board of Directors on the recommendation of the Audit Committee has approved the Risk Management Policy for the Company in accordance with the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Risk Policy document has in its scope, the establishment of a process for risk assessment, identification of risks both internal and external, and a detailed process for evaluation and treatment of risks.

The Audit Committee also evaluates the Risk Management System. The objectives of the Audit Committee pertaining to Risk Management is to monitor and review the Risk Management plan for the Company including identification therein of elements of risks, if any, and such other related functions.

DISCLOSURES

(a) There has been no change in the nature of business of the Company during the year under review.

(b) There are no significant and material orders passed by the Regulators/ Courts that would impact the going concern status of the Company and its future operations.

(c) There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of Financial year and the date of this Report.

(d) Share Capital & ESOP

During the year, your Company has allotted 2,19,750 Equity Shares of Rs. 1 each to eligible Employees pursuant to exercise of Options under Texmaco Employee Stock Option Scheme 2014; such shares rank pari passu with the existing shares of your Company. Consequently, the paid-up capital of the Company has increased to Rs. 21,02,83,723 as at 31st March, 2016 from Rs. 21,00,63,973 as at 31st March, 2015. Disclosures with respect to Stock Options, as required under Regulation 14 of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 are available in the Notes to the Financial Statements and can also be accessed on the Company''s website www.texmaco.in

(e) Deposits

During the year, the Company has not accepted any Deposits under the Companies Act, 2013.

(f) Disclosures under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. No complaints pertaining to sexual harassment were received during FY 2015-16.

OTHER INFORMATION

Corporate Governance

A separate report on Corporate Governance pursuant to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached as a separate Annexure and forms a part of this Report.

Particulars of Loans, Guarantees and Investments

The details of Loans, Corporate Guarantees and Investments made during the year under the provisions of section 186 of the Companies Act, 2013 have been disclosed in the Note nos. 2.17, 2.26 and 2.12 respectively to the Financial Statement of the Company.

Extract of Annual Return

The extract of Annual Return in Form no. MGT 9 as on the financial year ended 31st March, 2016 is enclosed as Annexure G.

Related Party Transactions

All related party transactions during the financial year were entered in the ordinary course of business and on arm''s length basis. All related party transactions are approved by the Audit Committee and Board of Directors. There were no materially significant related party transactions made by the Company with the promoters, directors, key managerial personnel which may have a potential conflict of interest with the Company at large and as such disclosure in Form AOC-2 is not required.

The Company has also formulated a policy on dealing with

Related Party transactions and the same is disclosed on the Company''s website. The web link for accessing such policy is http://texmacQ.in/wetfiles/texmaco/file/RELATED%20PARTY%20 TRANSACTI0N%20P0UCy.PDF

DIRECTORS'' RESPONSIBILITY STATEMENT U/S 134(5) OF THE COMPANIES ACT, 2013

Your Directors state:

(a) That in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) That such accounting policies are applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

(c) That proper and sufficient care had been taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) That the annual accounts of the Company have been prepared on a going concern basis;

(e) That the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(f) That 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.





For and on behalf of the Board

Place: Kolkata S. K. Poddar

Dated:30th May, 2016 Chairman


Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting the 4th Operational Annual Report of the Company along with the Audited Accounts of the Company for the year ended 31st March, 2014.

Financial Results Rupees in Lakhs 2012-14 2012-13

Operating Profit (PBIDT) 3,517.23 14,813.99

Less: Interest (Net) 467.51 398.14

Gross Profit (PBDT) 3,049.72 14,415.85

Less: Depreciation 1,173.78 939.18

Profit before Taxation 1,875.94 13,476.67

Less: Provision for Taxation:

Current Tax 355.00 4,012.00

MAT Credit entitlement (355.00) -

Deferred Tax Liability/(Asset) 174.57 37.76

Income Tax for earlier years 4.15 -

Profit after Taxation 1,697.22 9,426.91

Add: Balance brought forward from previous year 10,711.52 9,214.23

12,408.74 18,641.14

Appropriations

Proposed Dividend on Equity Shares (Incl.Tax) 532.41 2,129.62

General Reserve 500.00 5,800.00

Balance Carried Forward 12,408.74 10,711.52

12,408.74 18,641.14

During the year under review, the Company''s overall performance was substantially impacted due to unprecedented delay in release of wagon orders by Indian Railways for FY''14, and the Company suffered idle capacity for the entire year.

The Gross Turnover for the year stood at Rs. 5152 million, net of the value of free-supply inputs including steel and components of over Rs.160 million, provided to the Company by Indian Railways and other clients for some large value contracts.

The Gross Profit for the year (PBDT) and Profit Before Tax (PBT) were at Rs.305 million and Rs. 188 million respectively. The Net Profit was Rs.170 million, after providing net tax liability of Rs.18 million for the year in accordance with the Accounting Standards issued by the Institute of Chartered Accountants of India.

Dividend

In view of lower profits, the Directors recommend payment of a dividend of 25% for the year ended 31st March, 2014.

The Management Discussion and Analysis

In keeping with the demand projections of Indian Railways to wheel the national economy, your Company has endeavored to stay a step ahead to maintain its leadership in being the largest supplier of freight cars to Indian Railways. Accordingly, the Company has built world-class nfrastructure for its production capacity going upto 10,000 freight cars a year.

Unfortunately, however, the persistent problem (bete noire) of the Wagon Industry in India is erratic planning and placement of orders by the Railways, throwing the working of the Industry in disarray and saddling it with huge infructuous cost of idle capacity. Your Company has done its best in changing the gears in sync with Railway''s procurement programme.

During the immediate past year 2012-13, the Company had a robust order book, including the Railways'' order for 3915 wagons, which was the maximum quantity ordered by Indian Railways on any wagon builder. Besides, the Management was buoyed up with the Railways'' highest ever planned outlay of Rs.601 billion during 2012-13. The budgeted expenditure for procurement of rolling stock was about 32% more over the previous year, which was expected to result in procurement of larger number of wagons.

Unfortunately, there were increasing signs of economic slowdown as the nation entered 2013, and the year 2012-13, which was having record performance, suddenly suffered a setback towards the close owing to depleting orders, bringing the production to a virtual halt in the last quarter Jan-March 2013.

No wagon orders were released for FY''14. For the year under review it was an endless wait, and the orders were ultimately released only after expiry of the year in April 2014. The entire Industry has been plunged in a state of despair. In view of such vulnerability owing to excessive dependence on IR wagon orders, your Company has taken steps to diversify and expand its product portfolio in the Railway sector. The new Coach Shop set up at Sodepur is equipped to manufacture Electric and Diesel Multiple Units, as well as, Coaches for the Railways. Further, it has also taken up the production of Loco Shells and Loco Components. Besides, your Company has acquired Kalindee Rail Nirman (Engineers) Limited, a company which does EPC contracts for Railways and Metros. It specializes in track work, railway signaling, telecom and metro track work. Texmaco is thus poised to be the end-to-end solution provider for Railways and Metros.

The Hydro Mechanical Division is promising great prospects with the procurement activities being recommenced for the large Hydro Power Projects which were dormant for last few years.

Steel Foundry Division of the Company is facing challenges in the domestic market and rising up to the occasion has made effective penetration in the export markets for long term benefits.

In the aforesaid situation, the performance during FY''14, as detailed hereunder, has to be judged in proper perspective.

Heavy Engineering Division

Rolling Stock

The wagon orders for the year under review were placed by ndian Railways on the Industry as late as on 29th April, 2014, after expiry of the year. The redeeming feature, however, was that your Company received the highest order for 2400 wagons in the Industry.

The workload from Indian Railways available to the Company during the entire year 2013-14 was a meagre quantity of 161 wagons, (which was diverted to it by the Railway Board owing to the default of certain other wagon builders).

This was an unprecedented situation faced by the Company, rendering its massive capacity idle and thousands of workmen jobless. Numerous representations by the Company at all levels were of no avail, which was, indeed, inexplicable despite a budgetary approval of the Parliament for procurement of 11728 wagons (excluding PSUs and Railway Workshops), during FY''14.

Unfortunately, the demand from the private sector too was sluggish owing to general economic downturn. However, your Company managed its operations, albeit at a low level, by executing orders for 671 wagons, comprising of Special Purpose Commodity-specific Wagons for private customers and exports. The aggregate turnover in the Wagon Division was Rs.3326.68 million, made up of an all-time low 19% from IR orders, 57% non-IR and 24% exports.

The Company is continuing to engage in expanding the product-mix and has made a significant breakthrough in securing an order for 3 rakes of BCACBM wagons (Car Carrying wagons) from an esteemed Group, with prospect of substantial demand potential for transport of various models of passenger cars in India. An advanced model of the Bogie Double Deck Automobile Car Carrying Wagon (BDDAC) to a European design is also under prototype development for premium segment customers.

Besides, the Company is well-placed in respect of a large value Tender of the Ministry of Defence, Govt, of India, which is expected to be finalised shortly.

The Company has also been working on a new design Double Stack Container Flat Wagon (BFCTA/B) to Australian Design, which is under approval by RDSO for prototype manufacture, and it is expected to command a large market on successful trial.

The Company has intensified its efforts to explore further export opportunities, and is encouraged by the response of a number of high-powered delegations visiting its Works from various countries. They have been impressed with the Company''s excellent infrastructure and evinced keen interest in doing business with the Company.

EMU Coaches

Your Directorsare pleased to report that the newState-of-the-Art Coach manufacturing facility at the Company''s Sodepur Works has been commissioned, and the prototype rake of EMU Coaches is in advanced stage of completion. The first unit of 3 coaches is already complete in all respects and is undergoing testing. The manufacture of the balance 2 units comprising of 6 coaches is also progressing, and the full rake is expected to be completed by August 2014. Under a Technical Assistance Agreement with

M/s. Kawasaki Heavy Industries (KHI), Japan, the Company is receiving valuable support in the domain of manufacturing technology, processes and quality assurance.

Electric Locomotive Components/Assemblies

Your Company has diversified into manufacture of Electric Locomotive Shells and Sub-Assemblies, and secured orders for supply of Centre Sills, Head Stocks, Underframe Assemblies, and Complete Shell Assembly. It expects to further consolidate its position as a major supplier of Locomotive Assemblies and Sub-assemblies in the coming years.

KHI is a strong contender to secure the contract for Electric Locomotives for Dedicated Freight Corridor (DFC), and the experience gained in manufacture of electric locomotive assemblies will enable your Company to effectively partner with KHI in their indigenization efforts.

Joint Venture with UGL Rail Services Ltd., Australia

Texmaco UGL Rail Pvt. Ltd. executed its first prestigious order for 50 nos. Bogies, valued at Rs. 56.3 million for Kazakhstan Railways successfully at the start of its operations. The Company has received further orders for Bogies and Cabs, valued at Rs. 287 million, including a major order for 135 nos. Bogies from Queensland Railways, Australia, which is under execution. The JV has been certified by GE Transportation as a global sourcing vendor which is expected to bring in steady future business.

Meanwhile, with a viewto expandingthe domestic market base, the registration processes with various establishments of Indian Railways have been completed alongside ISO 9001:2008, 14001:2004 & BS OHSAS 18001:2007 accreditation.

The Company has recently participated in the International Railway Equipment Exhibition (IREE), and the hi-tech products displayed at the Company''s stall evinced a lot of interest in the Industry. It has been followed by developmental orders for LHB Bogies from Indian Railways and non rail products from the Wind Energy & Construction Equipment in the private sector. The prospects for FY''15 and onwards show promising growth in the Railways, Infrastructure and Process industries.

The long term fund requirement of the JV has been met from the issue of Cumulative Redeemable Preference Shares of Rs. 600 million in April 2014 in the ratio of 1:1 to both the parent companies.

Joint Venture with Touax Rail, France

The prospect of financing business is linked with macroeconomic scenario, which has unfortunately been rather depressing for the past couple of years, at home and also globally. This forced the companies in the core sector to either abandon or defer their capital expenditure plans for the time being. Hence, the leasing business did not take off, and the Management hopes for pick-up in activity in the coming years.

Strategic Investment in Kalindee Rail Nirman (Engineers) Limited

The Company identified an opportunity for making a strategic investment in Kalindee Rail Nirman (Engineers) Limited (Kalindee), engaged in the business of providing engineering & construction services to infrastructure sectors, especially in the field of Rail / Metro signalling, telecommunication, track and information system. Kalindee has considerable synergies with the business of your Company and would serve to substantially augment the overall working prospects of both the companies.

Accordingly, your Company as a strategic investor subscribed to the preferential allotment made by Kalindee for 41,10,400 Equity Shares (24.90%) on 13th July, 2013. To thwart the threat of an open offer launched by M/s. Jupiter Metal Pvt. Ltd. on 10th July, 2013 to take control of Kalindee in the guise of entry as a strategic investor, your Company entered into a Share Purchase Agreement (''SPA'') on 20th July, 2013 with the promoters of Kalindee for acquiring their entire stake of 19,37,060 Equity Shares of Kalindee i.e. approx. 11.74% of the enhanced Paid up Share Capital of Kalindee. Having thus acquired the aforesaid 24.90%, and agreed to acquire 11.74% of the Promoter''s stake making a total of 36.64%, the acquisition / intent to acquire Equity Shares exceeded the trigger limit for an Open Offer under Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. Your Company, therefore, accordingly made an Open Offer to the Shareholders of Kalindee on 20th July, 2013 for 49,52,280 Equity Shares being 30% of the fully enhanced Equity Capital of Kalindee.

Your Company successfully completed the process of open offer on 3rd December, 2013. The public Shareholders tendered 12.42% of the Equity Shares in the Open Offer against 30% open offer proposed by the Company. Post allotment of shares under preferential issue, SPA with promoters and acquisition of shares under the open offer to the public, the Equity Share holding of your Company in Kalindee is now 49.07% including Equity Shares to be transferred under a SPA with erstwhile promoters.

After taking control of 49.07% equity, the Management of Kalindee was taken over by Texmaco as Promoter in December 2013. Immediately thereafter, with the induction of a strong team of highly qualified and experienced professiona managers in Kalindee, there was a significant turnaround in Q4 of FY''14 after a rather dismal performance in the preceding 3 quarters ended December 2013.

The Management with an objective to harness the synergy of identical business portfolio between Texmaco and Kalindee, and convert the Company as a Total Rail Solution provider, has proposed to merge Kalindee into and with the Company as per the Scheme of Arrangement and subject to requisite approvals of Shareholders, SEBI, Stock Exchanges, Hon''ble High Courts at Calcutta and Delhi, etc. This will enable the Company to target large value contracts with the combined strength of Texmaco and Kalindee for various Rail Solution requirements of the Railways, Export and other Public & Private Sectors.

Hydro-mechanical Eqpt. and Steel Structures

The total income of the Division during the year was approx. Rs. 300 million, which was way below the target owing to setbacks in the execution of ongoing projects, especially due to political agitation in Assam. However, during the Q4 of the year, the social turbulence ebbed out which helped movement of WIP and finished inventory. There was substantial recovery of long outstanding dues. In the current year, the pace of job execution on certain major projects has picked up, and the Division is expected to fare better with comfortable work load of Rs.3450 million in hand.

The Division has forayed into refurbishment/replacement work opportunities in old Hydro Projects and Barrage Equipments after successful execution of rehabilitation work at Farakka Barrage and Rampur HEP of SJVNL. Enquiries from quite a few other projects for Equipment Health Study and Refurbishment have been responded, and positive outcome is expected.

Hopefully, the acknowledged business potential in Hydro-mechanical Equipment and Penstock Liner would start materialising in the current year. The Company is well-placed in large value tenders for World Bank funded prestigious projects, and is making further bid in major Hydro Projects after successfully meeting the PQ requirements.

Steel Foundry Division

After maintaining a steady run over the past six years, the Foundry''s performance suffered considerable setback during the year owing to non-release of orders by Indian Railways on the Wagon Industry. The production and despatch during the year were 8006 MT and 9947 MT, against 17856 MT and 15733 MT respectively in the corresponding year. However, in spite of the steep decline, the Company was able to retain a leading market share in the Industry of 25% in Bogies and 34% in Couplers with a turnover of Rs. 1400 million.

The Foundry''s export performance continued to be impressive, and the despatches were maintained at Rs.214 million, almost at the same level as that of previous year. The Foundry has developed new products, which will enhance the Division''s exports in the current year. The Division had a robust order-book of over Rs. 350 million at the close of the year.

Your Foundry has received the Conformity Certificate for specified Side Frames and Bolsters for Wagons from the designated Certification Authority for Railway Transport on the basis of Certification Protocol from Testing Centre, Ukraine Scientific and Research Institution on Wagon Production. The Company is now ready to export Railway Castings to these countries.

The major modernisation of the old Foundry with nstallation of the 2nd High Pressure Moulding Line from Kunkel Wagner, Germany, has been completed and it is ready for commissioning.

Exports

During the year, the Company executed export orders worth Rs.1295 million comprising of export of Meter Gauge Tank Wagons to Bangladesh & Africa, Hydro Mechanical Equipment to Nepal and Industrial & Railway Castings to Australia and North America. The Company is actively pursuing export of Wagon Components and Steel Castings to CIS countries and have obtained some of the critical certifications required for eligibility to export to CIS countries.

The present export order book of the Company stands at Rs.1301 million.

R&D Activities

The R&D activities of the Company are getting a new impetus by pooling of the Management expertise drawn from various Divisions and organizing a more frequent and closer nteraction amongst the senior professionals at the macro level, thereby coming out of the narrow confines of their respective domains. The experience of cross-fertilization of ideas on a broader platform has been very rewarding, and R&D is happily progressing on the basis of a shared ownership. The whole team is geared led by an intrapreneur for a common objective viz. cost effectiveness and quality improvement to help export promotion and import substitution.

Some of the programmes undertaken by the Company during the year, which have met with appreciable success or are still under implementation, are enumerated below:

In Steel Foundry Division, the notable developments were:

i. Bogie Castings for use in ultra-low temperature application, such as around - 40°C. These castings successfully stood Variable Load Dynamic Fatigue Testing in a foreign lab, and have been approved for export.

i. Slackless Draw Bar has been developed as an import substitute component for use in Container Carrying cars, and approved for use on Indian Rail network.

iii. High Resistant Wear Components were developed for mining application and are being currently exported regularly to the advanced countries.

iv. The work is under way for achieving higher grain size (5 to 7) in the Hadfield Castings to improve mechanical properties and secure higher service life. The effort so far has already met with partial success, and further R&D work is continuing.

The Rolling Stock Division has to its credit successful designing and development of the following Double Deck Wagons with high volumetric load carrying capacity :

i. Double Deck Car Carrying Wagon with technical support from a renowned European company. The designs have been approved by RDSO, and the prototype is under development.

i. The Double Stack Bogie Container Wagon with technica support from UGL, Australia. The designs are pendingfina approval of RDSO for prototype development.

The Hydro-mechanical Division too has made its mark in successfully developing an economical design of Lining Application for Dam Radial Gate Weir Channels using high abrasion resistant materials with high surface hardness in substitution of abrasion resistant stainless steel. This will be used for carrying heavy silt laden water for a prestigious foreign Project. The above materials conform to ISO Specification and require very special welding techniques which have been developed and perfected in house.

IT Services

The IT Services Department has been engaged in progressive development of a responsive and efficient IT networking and application to meet the business requirement of different Divisions. All the Factory Establishments, Administrative Centers, and Corporate Office downtown, are integrated through VPN on-line redundant connectivity with increased bandwidth. After initial start with ERPsystem Oracle ''Hi'', there has been a migration to more advanced system Oracle R12 during FY''12, which has got stabilised in the Procurement, Stores and Finance functions. Various critical reports required by the respective functional Heads of Departments for MIS and Operational Control have been designed and deployed in the R12 system.

The phase-2 implementation for extension of R12 ERP system to the Manufacturing & Sales operations has been nitiated during last quarter of FY''14 with the assistance of the Implementation Agency KPMG, and it is expected to be in effective use for optimised production planning and control by the 3rd quarter of FY''15.

Human Relations

The Company aims to align HR practices with business goals, motivate the team members for improved performance both in terms of quality and productivity and build a healthy competitive working environment.

Development of employees'' competency and their career planning continue to be HR''s core policy and thrust area.

Various programmes & workshops are being conducted which include Personality Grooming, Communication Skills, Health & Safety, House Keeping, Energy Management, Productivity Improvement, Total Quality Management and 5S Kaizen initiatives. These programmes are organized to bridging the skill gaps and increasing employee''s motivation and participation level. The Company imparts regular structured training & learning programmes at the entry and other levels to its workforce.

The Company continues to maintain cordial and harmonious ndustrial relations over the decades. The management enjoys full co-operation, understanding and trust of the workmen and their unions in implementing its growth-oriented programmes and promoting latest technology for achieving Cost effectiveness, On-time delivery & Quality.

Opportunity & Threats

The saying goes: "there is a silver lining in every cloud". The electioneering campaign and tempo during the general election of 2014 was phenomenal. It gave vent to the frustration and aspirations of the masses and a new band of youths, joining for the first time over 800 million voters, to elect the largest democracy in the world. We have now a strong and stable Government at the centre, which is expected to usher a new slew of reforms and policy decisions where the economics will not be overtaken by politics under compulsions of coalition.

The stalled projects, which have contributed to prolonged economic downturn, are likely to be kick-started with speedy clearances. Projects worth Rs.6.2 trillion were shelved last year due to bureaucratic gridlock, according to the Centre for Monitoring Indian Economy, a think-tank. This is the highest in the past 18 years.

The GDP which has been hovering around as low as 4.4 to 4.7% (except 5.2% in Q2 of FY''14) should hopefully resume its upward journey to a high of 9% over the next few years. The manufacturing sector, which contracted 0.7% in FY''14 compared with 1.1% growth in the previous year, will happily be the focus area for the new Government, as gathered from knowledgeable quarters. The whole nation is agog with expectation of a remarkable upside to growth with the new Government in power. The budget for the current fiscal year 2014-15 will flash the signals for which the whole world is waiting.

The Management has to rise to the occasion to seize the emerging opportunities and garner the resources to put the Company on a fast track.

The Company is in capital goods manufacturing sector which is highly susceptible and exposed to the vagaries of growth pattern of the country economy. The major chunk of its business is Indian Railways dependent and any indecisiveness in its policy implementation will have an adverse bearing on the fortunes of the Company.

Corporate Social Responsibility

ndian democracy, the largest in the world, has to contend with critical social concerns unknown to the Western affluent democracies. As a political creed, democracy is contentious and a complex institution. It speaks volumes for the fathers of the Indian Constitution that Indian democracy has taken firm roots in the nation''s social milieu. The free & fair conduct of the general elections involving 800 million electors has emerged as a model for the world.

In the success of Indian democracy as a great institution of the civilized order, we cannot, however, gloss over the serious economic imbalance in the society, which looms large as a threat to the stability of the system. The corporate India has a major role to play in this regard for upliftment of the deprived sections of the community. There is increasing recognition for ''inclusive growth'' in welfare programmes, and for the first time the Corporate Social Responsibility (CSR) Obligations have been introduced under the Companies Act, 2013. The Act seeks to make CSR spending mandatory for companies as per the prescribed criteria.

The concept of corporate citizenship has already been gaining ground with concern and understanding to integrate social, environmental, ethical human rights into the business operations. The organisation is conscious and significantly contributing to the improvement of the quality of life of the community at large, as well as, the workforce and their families.

As highlighted in the previous Annual Reports, Texmaco Management has committed liberally to the development of social infrastructure with amenities which are the envy of most urban dwellers. The people in the neighbouring localities are partners in the Company''s progress and prosperity through job opportunities, training and special assistance for health and education. The Company has taken special initiatives to promote local talents in performing arts, especially in the field of music and dancing.

The Company has received ISO: 14001:2004 Certification, and is ardently striving to maintain green and pollution-free environment in and around the Works and the residential estate, going beyond the call of legal and regulatory requirements.

Corporate Governance

A separate report on Corporate Governance pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges is attached as a separate Annexure and forms a part of this Report.

Directors'' Responsibility Statement u/s 217(2AA) of the Companies Act, 1956

Your Directors state:

(i) that in the preparation of the annual accounts, applicable accounting standards were followed, along with proper explanations relating to material departures, and the Notes in the Auditors'' Report in this regard are self-explanatory;

(ii) that such accounting policies were selected and applied consistently and judgements and estimates made that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year, and of the profit of the Company for that period;

(Hi)that proper and sufficient care was taken to maintain of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company, and for preventing and detecting fraud and other irregularities;

(iv) that the annual accounts were prepared on a ''goingconcern'' basis.

The SEBI''s guidelines regarding Corporate Governance have been implemented by the Company.

Green Initiatives

Your Company has started a sustainability initiative with the aim of going green and minimizing the impact on environment. Your Company has already started sending Annual Report, Notices etc. through e-mailstothe Shareholders, whose e-mail IDs are registered with their Depository Participants. In case a Shareholder wishes to receive a printed copy, he/she may please send a request to the Company, which will send a printed copy of the annual report to the Shareholder. Members are requested to support this initiative by registering / updating their email addresses for receiving Annual Report, Notices etc. through e-mail.

Particulars of Employees

The number of employees as at 31st March, 2014 was 1534. A statement containing the required particulars of employees as stipulated under Section 217(2A) of the Companies Act, 1956 and Companies (Particulars of Employees) Rules, 1975, is enclosed - Annexure (A).

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

As required under Section 217(l)(e) of the Companies Act, 1956, read with Rule 2 of the Companies (Disclosures of Particulars in the Report of Board of Directors) Rules, 1988, information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo is enclosed - Annexure (B).

Directors

Shri Sandeep Fuller was appointed as Additional Director w.e.f 1st February, 2014 and has been designated as an Executive Director. A notice has been received from a Member under Section 160 of the Companies Act, 2013 for appointment of Shri Fuller as an Executive Director, who has filed his consent to act as Director of your Company, if appointed.

Shri Akshay Poddar, Director, retires by rotation and being eligible, offer himself for re-appointment at the ensuing Annual General Meeting.

The Board has recommended his re-appointment.

Cost Auditors

Your Company has appointed Cost Auditors M/s. DGM & Associates, Cost Accountants, for conducting the Cost Audit for FY''15 in terms of the provisions of the Companies Act, 2013 and Companies (cost records and audit) Rules, 2014 issued by the Ministry of Corporate Affairs.

Auditors

The Auditors, M/s. K. N.Gutgutia& Co., Chartered Accountants, retire and are eligible for re-appointment.

For and on behalf of the Board

Place: Kolkata S. K. Poddar Dated: 21st May, 2014 Executive Chairman


Mar 31, 2013

The Directors have pleasure in presenting the 3rd Operational Annual Report of the Company along with the Audited Accounts of the Company for the year ended 31st March, 2013.

Financial Results

Rupees in Lakhs

2012-13 2011-12

Operating Profit (PBIDT) 14,813.99 15,050.50

Less: Interest (Net) 398.14 506.98

Gross Profit (PBDT) 14,415.85 14,543.52

Less: Depreciation 939.18 917.80

Profit before Taxation 13,476.67 13,625.72

Less: Provision for Taxation:

Current Tax 4,012.00 3,940.00

Deferred Tax Liability/(Asset) 37.76 380.00

Profit after Taxation 9,426.91 9,305.72

Add: Balance brought forward from previous year 9,214.23 7,024.07

18.641.14 16,329.79

Appropriations

Proposed Dividend on Equity Shares (Incl.Tax) 2,129.62 2,115.56

General Reserve 5,800.00 5,000.00

Balance Carried Forward 10,711.52 9,214.23

18.641.14 16,329.79

During the year under review, the Company managed to achieve steady performance despite difficult business environment and decelerating economic growth. The Management is anxious about the delay in release of regular annual wagon orders by Indian Railways, which is essential to maintain production momentum.

The Gross Turnover for the year stood at Rs. 1036 crore, net of the value of free-supply inputs including steel and components of over Rs. 338 crore, provided to the Company by Indian Railways and other clients for some large value contracts.

The Gross Profit for the year (PBDT) and Profit Before Tax (PBT) were at Rs.144.16 crore and Rs. 134.77 crore respectively. The Net Profit was Rs.94.27 crore, after providing for a tax liability of Rs.40.12 crore. The Deferred Tax Liability of Rs.0.38 crore for the year has been created in the Profit and Loss Account in accordance with the Accounting Standard 22 "Accounting for taxes on Income", issued by the Institute of Chartered Accountants of India.

Dividend

The Directors are pleased to recommend payment of a dividend of 100% for the year ended March 31, 2013 having regard to the performance of the Company.

Corporate Social Responsibility

Your Company earnestly believes in the pro-active role and responsibility of the business to improve the quality of lives of the people. That is what really matters in a Welfare State. The corporate world has to work with the Government to promote ''Inclusive Growth'' to strengthen the democratic framework afflicted with wide economic disparities in the social strata. The economic growth has to be shared with all sections of society to maintain a proper balance.

The Company undertakes welfare programmes from time to time, and makes sure that the help reaches directly to the needy, especially in the area of health and education. It has promoted computer literacy through distribution of computers for the benefit of the family members of the employees. Beside grants and scholarships for prosecuting the studies, special rewards have been announced for academic excellence. This has earned your Company tremendous goodwill in the neighbouring localities.

Further, for easy mobility of the employees to go about their vocation and daily living, the Company also went about distribution of two-wheelers under a liberal scheme. Several initiatives have been taken to support deprived women and make them independent through proper training and self employment in alliance with different NGOs.

In keeping with the commitment of the Company in the area of environment, ISO 14001:2004 Certification was received during the year after complying with a number of legal and regulatory requirements.

Corporate Governance

A separate report on Corporate Governance pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges is attached as a separate Annexure and forms a part of this Report.

Directors'' Responsibility Statement U/S 217(2AA) of the Companies Act, 1956

Your Directors state:

(i) That in the preparation of the annual accounts, applicable accounting standards were followed, along with proper explanations relating to material departures, and the Notes in the Auditors'' Report in this regard are self-explanatory;

(ii) That such accounting policies were selected and applied consistently and judgements and estimates made that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year, and of the profit of the Company for that period;

(iii) That proper and sufficient care was taken to maintain of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company, and for preventing and detecting fraud and other irregularities;

(iv) That the annual accounts were prepared on a ''going concern'' basis.

The SEBI''s guidelines regarding Corporate Governance have been implemented by the Company. An Audit Committee of the Board and Investors'' / Shareholders'' Grievances Committee have been constituted and are functioning in keeping with the given guidelines.

Green Initiatives

Your Company has started a sustainability initiative with the aim of going green and minimizing the impact on environment. The Company has issued a notice dated 20th December, 2011 in respect of the same to the Shareholders to opt for paperless compliances i.e. receipt of Annual Reports and Notices etc. through e-mails. Your Company has started sending Annual Report, Notices etc. through e-mails to the Shareholders, whose e-mail IDs are registered with their Depository Participants. In case a Shareholder wishes to receive a printed copy, he / she may please send a request to the Company, which will send a printed copy of the annual report to the Shareholder. Members are requested to support this initiative by registering / updating their email addresses for receiving Annual Report, Notices etc. through e-mail.

Particulars of Employees

The number of employees as at 31st March, 2013 was 1665. A statement containing the required particulars of employees as stipulated under Section 217(2A) of the Companies (Particulars of Employees) Rules, 1975, is enclosed - Annexure A.

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

As required under Section 217(1)(e) of the Companies Act, 1956, read with Rule 2 of the Companies (Disclosures of Particulars in the Report of the Board of Directors) Rules, 1988, information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo is enclosed - Annexure B.

Directors

Shri Sunil Mitra was appointed as an Additional Director w.e.f 5th November, 2012. Notice has been received from a Member of your Company under Section 257 of the Companies Act, 1956 for the appointment of Shri Mitra as Non-Executive and Independent Director, who has filed his consent to act as Director of your Company, if appointed.

Your Directors, Shri Sampath Dhasarathy and Shri Akshay Poddar, retire by rotation and being eligible, offer themselves for re-appointment at the ensuing Annual General Meeting.

The Board has recommended their re-appointment.

Auditors

The Auditors, M/s. K.N. Gutgutia & Co., Chartered Accountants, retire and are eligible for re-appointment.

For and on behalf of the Board Place: Kolkata S. K. Poddar

Dated: 30th May, 2013 Chairman


Mar 31, 2011

Report of the Directors

The Directors have pleasure in presenting the First operational Annual Report of Texmaco Rail & Engineering Ltd. (TEXRAIL) post demerger of the Heavy Engineering and Steel Foundry businesses of Texmaco Limited, effective date being 1st April, 2010 along with the Audited Accounts of the Company for the year ended 31st March, 2011.

Financial Results Rs. in Lacs

2010-2011 2009-2010

Operating Profit (PBIDT) 18,338.91 (9.25)

Less: Interest (Net) (85.80) -

Gross Profit (PBDT) 18,424.71 (9.25)

Less.- Depreciation 858.50 -

Profit before Taxation 17,566.21 (9.25)

Less: Provision for Taxation:

Current Tax 5,590.00 -

Deferred Tax LiabilityAAsset) (171.39) -

Income Tax for earlier year

Profit after Taxation 12,147.60 (9.25)

Less ¦. Exceptional items

VRS (Eng. Divn.) - -

Net Profit / Loss 12,147.60 (9.25)

Add: Balance brought forward from previous year (10.80) (1.55)

12,136.80 (10.80)

Appropriations

Proposed Dividend on Equity Shares (Incl.Tax) 2,112.73 -

General Reserve 3,000.00 -

Balance Carried Forward 7,024.07 (10.80)

12,136.80 (10.80)

The previous year's figures are not comparable as demerged businesses of Heavy Engineering and Steel Foundry were part of Texmaco Limited until previous year

Dividend

The Directors are pleased to recommend payment of a dividend of 100% for the year ended 31st March, 2011 having regard to the performance of the Company.

During the year under review, the Company has turned out encouraging results, despite abnormal delay in release of wagon orders for 2009-10 by the Railway Board.

The Gross Turnover stood at Rs. 1117.50 crore, net of the value of free-supply inputs including steel and components of over Rs. 467 crore provided to the Company by Indian Railways and other clients for some large value contracts.

Gross Turnover

The figures up to 2009-10 represent figures of Texmaco Ltd. and are given for comparison purposes.

The Gross Profit for the year (PBDT) and profit before tax (PBT) were significantly higher at Rs. 184.25 crore and Rs. 175.66 crore respectively. The Net Profit was Rs. 121.48 crore, after providing for a tax liability of Rs. 55.90 crore. The Deferred Tax Asset of Rs. 1.71 crore for the year has been created in the Profit and Loss Account in accordance with the Accounting Standard 22 "Accounting for taxes on Income", issued by the Institute of Chartered Accountants of India.

The figures up to 2009-10 represent figures of Texmaco Ltd. and are given for comparison purposes.

The previous year's figures for the corresponding businesses which were then part of Texmaco Limited and have since been demerged to the Company, are given hereunder for comparison purpose:

SI. Particulars Amount (Rs.in crore) No. 2009-10 2010-11

1 Turnover 1113.19 1117.50

1 Gross Profit (PBDT) 138.67 184.25

2 Profit before tax (PBT) 130.08 175.66

3 Net Profit 84.16 121.48

4 Tax liability 45.92 54.09

Corporate Social Responsibility

The Management reiterates its commitment to CSR as enshrined in its last Annual Report :

"CSR is not merely a statement of intent for TEXRAIL. It is an Article of Faith, a belief that the world would be a better place to live with strong human bonding. As a part of the corporate philosophy, Education, Health, Environment and Safety continue to be areas of priority for the Company".

The Company continues its mission to contribute to the society through specific programs. Going beyond reliefs and grants, the motto is to empower people, help them take charge of their lives by providing them better education, training, upgrading skills to realise their potential and aspirations.

Corporate Governance

A separate report on Corporate Governance pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges is attached as a separate Annexure and forms a part of this Report.

Directors' Responsibility Statement

U/S 217C2AA) of the Company's Act, 1956

Your Directors state:

(i) That in the preparation of the annual accounts, applicable accounting standards were followed, along with proper explanations relating to material departures, and the Notes in the Auditors' Report in this regard are self-explanatory;

(ii) That such accounting policies were selected and applied consistently and judgements and estimates made that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year, and of the profit of the Company for that period;

(iii) That proper and sufficient care was taken to maintain of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company, and for preventing and detecting fraud and other irregularities;

(iv) That the annual accounts were prepared on a 'going concern1 basis.

The SEBI's guidelines regarding Corporate Governance have been implemented by the Company. An Audit Committee of the Board and Shareholders' / Investors' Grievance and Share Transfer Committee have been constituted and are functioning in keeping with the given guidelines.

Group

Pursuant to an intimation from the promoters, the names of the promoters and entities comprising "Group" as defined under the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969 are disclosed as Annexure B in the Annual Report for the purpose of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997.

Particulars of Employees

The number of employees as at 31st March, 11 was 1832. A statement containing the required particulars of employees as stipulated under Section 217(2A) of the Companies (Particulars of Employees) Rules, 1975, is enclosed - Annexure CO.

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

As required under Section 217(l)(e) of the Companies Act, 1956, read with Rule 2 of the Companies (Disclosures of

Particulars in the Report of the Board of Directors) Rules, 1988, information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo is enclosed - Annexure CD').

Directors

Your Director, Shri Manish Gupta was elected to the West Bengal Legislative Assembly in the General Election held in April/May 2011 and was appointed as a Cabinet Minister in the newly formed West Bengal Government. Consequent to his election as a Member of Legislative Assembly, Shri Manish Gupta tendered his resignation. The Directors place on record their deep appreciation of the valuable advice and guidance received from him during his tenure as Director of the Company.

Auditors

The Auditors, M/s. K.N. Gutgutia & Co, retire and are eligible for re-appointment.

For and on behalf of the Board

Kolkata S.K. Poddar

Dated: 23rd May, 2011 Chairman

 
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