Directors Report of Stone India Ltd.

Mar 31, 2016

DIRECTORS'' REPORT

Dear Shareholders,

The Directors have pleasure in presenting the 86th Annual Report along with the Audited Accounts of the Company for the year ended 31 March 2016. A summary of the Financial Results is given herein under :

FINANCIAL HIGHLIGHTS

Standalone Consolidated

(Rs. in lacs)

	For the Financial Year 2014-15	For the Financial Year 2015-16	For the Financial Year 2014-15	For the Financial Year 2015-16
Gross Turnover	9,322	10,896	9357	10,910
Profit before Interest, Depreciation & Taxation	147	782	137	624
Interest	478	442	478	442
Depreciation	260	248	264	250
Profit before Taxation	(591)	92	(605)	(68)
Provision for Taxation - Deferred Tax	(62)	116	(62)	116
Profit after Taxation	(529)	(24)	(543)	(47)
Balance brought forward from previous year	1076	547	987	444
Profit available for appropriation	547	523	444	396
APPROPRIATIONS:
Balance Carried to the Balance Sheet	547	523	444	396

Previous years figures have been rearranged and regrouped wherever felt necessary.

DIVIDEND

In view of incurring net loss in the relevant financial year, your Directors do not recommend a dividend for the year ended on 31st March, 2016.

RESERVES

In absence of profit, no amount was carried to Reserve. PERFORMANCE REVIEW

During the year under review, the gross turnover of the Company rose to Rs. 108.96 crores from Rs. 93.22 crores and the net loss decreased to Rs. 24 lakhs from Rs. 5.29 crores as of last year due to increase in turnover of Rs.15.74 crores and rigorous cost control.

Company''s Order booking decreased slightly to Rs. 107.16 crores in the year under review compared to earlier Order booking figure of Rs.124.70 crores in the year 2014-15.

In the new Product Category for Railway Sectors, Orders were booked for supply of 4.5 KW ERRUs, 25 KW ERRUS, Microprocessor Controlled Fault Diagnostic and Control Systems, Vigilance Control Devices, EP Brakes for EMU application and bulk orders for Air Spring Control Equipment.

In the year, the company launched business initiatives for Escalators and continued the business of Platform Screen Doors in Metro Project segment. The company participated in bidding for escalators in Delhi Metro, Kochi Metro, Luck now Metro in aforementioned product segment. The company was successful in acquiring prestigious contracts from Luck now Metro for Heavy Duty Escalators worth INR 20.61 Crore and from DMRC Greater Noida Project for Machine Room Less Elevators worth INR 16.87 Crores. During the year the company successfully acquired orders from Indian Railways for supply of Heavy Duty Escalators worth INR 17.22 Crores also. The company will participate in such biddings in future and shall try to maximize the order booking.

In the Bio Toilet segment, Company has installed total 3264 toilets till 31.03.16 all over India at Labour colonies, Village communities, village homes, urban slums, Construction Sites, Railway Platforms, Tea Gardens, Schools under CSR projects etc. Turnover for bio toilets division during the financial year 2015-16 stood at Rs 457.32 Lacs.

During the year, the company has been able to book bulk export Orders for supply of Slack Adjusters and Distributor Valves to Vietnam and Sudan.

FUTURE OUTLOOK

The Current year''s Railway Budget has proposed a plan outlay of Rs 1,21,000 crore which is higher by 20.9% over last year''s budget plan of Rs 1,00,011 crores. The Railways have decided to pursue high end technology to improve safety record, increase of punctuality, time table of freight trains as well as to run semi high speed trains. Life Insurance Corporation of India (LIC)has decided to invest Rs. 1.5 Lakh crores over the next 5 years with Indian Railways.

Further, it is expected that Railways will make the first phase of DFCC (Dedicated Freight Corridor Corporation) operational by 2019. Further the work for three more freight corridors will start which are from Delhi to Chennai, Kharagpur to Mumbai as well as Kharagpur to Vijaywada.

Work for two loco factories to manufacture High Horse Power Diesel and Electric Locos will also commence in the year 201617 at an investment of Rs.40,000 crores. In addition, Railways will introduce new generation 25 Tonne Axle Load Wagon in this financial year. In addition, Railways will also gradually replace the loco hauled passenger trains with EMU/DEMU in the near future.

It is expected that with such a massive focused investment plan of Indian Railways and with introduction of new technologies, your company will be in a position to explore the potential of the market with products like Bogie Mounted Brake Systems for Wagons, End of Train Telemetry (EOTT) For Wagons, EP Brakes, Parking Brakes, Air Dryers for EMUs/DEMUs as well the High Reach Pantographs and Computer Operated Brake System for Electric Locomotives. The company expects a major demand for High Reach Pantographs as well as for End of Train Telemetry in the coming years.

In order to reduce dependency on Indian Railways, company had already diversified activities to enter Metro Railway Market to introduce Escalators as well as Elevators. Escalator orders were also obtained from Indian Railways for 20 stations .It is expected that with the Railway Ministry''s intention to modernize 400 stations in near future there will be good demand of Escalators and Elevators in future in addition to the demand of similar equipment from metro projects.

The company continued its activity to pursue the business for the Bio Toilets in various static applications and introduced several innovative models and turnover of this group increased substantially in the last financial year.

CHANGE IN THE NATURE OF BUSINESS, IF ANY, AS PER RULE 8(5)(II) OF THE COMPANIES (ACCOUNTS) RULES

2014

Your Company has already ventured into the areas of Bio Toilets, Platform Screen Doors, Escalators & Elevators and Solar Inverters as a part of product diversification.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report for the year under review, as stipulated under the SEBI (LODR) Regulations, 2015, is presented in a separate section forming part of the Annual Report.

JOINT VENTURE

During the year under review, your Company has entered into a Joint Venture agreement with SHENYANG BRILLIANT ELEVATOR GROUP CO., LTD. (a company incorporated in Shenyang, China) on 15th December, 2015 to form a joint venture company for doing the business of elevators.

SUBSIDIARY

Presently, the Company has two (2) subsidiaries, namely, Stone Intermodal Private Limited and Stone Biotech Private Limited which are not material unlisted subsidiary. A statement in AOC-1 containing financial position of the subsidiaries is attached as "Annexure A".

The Company monitors performance of its subsidiary companies, inter alia, by the following means:-

i) The Audit Committee reviews financial statements of the subsidiary companies, along with investments made by them, on a quarterly basis.

ii) The Board of directors reviews the Board meeting minutes and statements of all significant transactions and arrangements, if any, of the subsidiary companies.

PUBLIC DEPOSITS

During the year under review, the Company has not invited deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

EMPLOYEE STOCK OPTION SCHEME

Your Company has not issued any share under the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, including any amendments, new enactment thereof or thereto during the year under review.

SHARE CAPITAL

The Company has issued 7,75,000 equity shares to M/s ISG Traders Ltd., a promoter group Company, in April, 2015 against conversion of equivalent number of warrants allotted to them on 17.10.2013 on preferential basis. Consequently, the paid up Equity Share Capital of your Company stands revised to Rs.960 Lacs as on 31-03-2016.

During the year, the Company has not issued any Unsecured Redeemable Non-Convertible Perpetual Debt Instruments in the nature of Debentures.

INDEBTEDNESS

Indebtedness of the Company including interest outstanding/accrued but not due for payment as on 31.03.2016.

(Rupees in Lakhs)

	Secured Loans excluding Deposits	Unsecured Loans	Deposits	Total Indebtedness
Indebtedness at the beginning of the financial year i) Principal Amount ii) Interest due but not paid iii) Interest accrued but not due	3011	Nil	Nil	3011
Total (i ii iii)	3011	Nil	Nil	3011
Change in Indebtedness during the financial year - Addition - Reduction	(116)	Nil	Nil	(116)
Net Change	(116)	Nil	Nil	(116)
Indebtedness at the end of the financial year i) Principal Amount ii) Interest due but not paid iii) Interest accrued but not due	2895	Nil	Nil	2895
Total (i ii iii)	2895	Nil	Nil	2895

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the requirements under Regulation 33 of the SEBI (LODR) Regulations, 2015, your Company prepared Consolidated Financial Statements in accordance with Accounting Standard for "Consolidated Financial Statements" issued by The Institute of Chartered Accountants of India. The Consolidated Financial Statements form part of the Annual Report.

CORPORATE GOVERNANCE

Your Company has consistently been complying with the Corporate Governance Code prescribed by SEBI and a detailed report on Corporate Governance together with a certificate of compliance from the Statutory Auditors, as required under Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms a part of this Annual Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a. that in the preparation of the annual financial statements for the year ended 31st March 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b. that such accounting policies as mentioned in Notes to the Financial Statements have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2016 and of the profit of the Company for the year ended on that date;

c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that the annual financial statements have been prepared on a going concern basis;

e. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;

f. that proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the financial year, Mr. Sukhendu Ray(DIN: 00009110), an Independent Director, resigned from the Board on 15-05

2015 due to poor health condition which was accepted by the Board on 28.05.2015.and Ms. Savita Laxmipathy Acharya (DIN: 07038198) was appointed as an Additional Director in the category of Non-Executive, Woman Independent Director, with effect from 19th May, 2015 by the Board which was subsequently confirmed by the shareholders of the Company in the Annual General Meeting held on 24-09-2015. All other directors continued to remain as Director throughout the year.

The Board recommends the re-appointment of Mr. Shrivardhan Goenka, who retires by rotation and being eligible, offers himself for re-election, as Director of the Company. Brief resume and other details of the Director seeking re-appointment at the ensuing Annual General Meeting are provided as Annexure to the Notice which forms part of this Annual Report.

The following persons were designated as Key Managerial Personnel during the financial year 2015-16:

1. Mr. Debashis Chakravarty, Managing Director and Chief Executive Officer,

2. Mr. Vikash Kamani, Chief Financial Officer, and

3. Mr. Abhijit Majumdar, Company Secretary and Legal Head.

MEETINGS

Minimum four pre-scheduled Board meetings are held annually. Additional Board meetings are convened by giving appropriate notice to address the Company''s specific needs of business exigencies or urgency of matters.

During the year, six Board Meetings and four Audit Committee Meetings were convened and held the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

AUDIT COMMITTEE

The composition and terms of reference of the Audit Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report. There has been no instance where the Board has not accepted the recommendations of the Audit Committee.

NOMINATION AND REMUNERATION COMMITTEE

The composition and terms of reference of the Nomination and Remuneration Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report.

STAKEHOLDERS'' RELATIONSHIP COMMITTEE

The composition and terms of reference of the Share transfer cum Stakeholders Relationship Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report.

SHARE ALLOTMENT COMMITTEE

The composition and terms of reference of the Share Allotment Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report.

AUDITORS

M/s Lodha & Co., Chartered Accountants, Kolkata, bearing Registration No. 301051E Who has been appointed as the Statutory Auditors of the Company for a period of three (3) years from the conclusion of the 84 th AGM (for FY 2014-15) till the conclusion of the 87th AGM (for FY 2016-17).The Board now recommends the ratification of the appointment of Lodha & Co. by the members at the Annual General Meeting for the Financial Year 2016-17.

STATUTORY AUDITORS'' OBSERVATIONS

The observations of the Statutory Auditors have been explained in the Notes forming part of the Financial Statements and these, interalia, include the following:-

Para (a) regarding rental demands from Kolkata Port trust, the matter is sub-judice and pending decision of Hon''ble Calcutta High Court, provision made in account has been considered adequate by the management as mentioned in note 6(b); Para

(b) as regard managerial remuneration, necessary application is pending for approval before MCA as explained in Note 26(a); Para (c) regarding advance/investment made in a subsidiary in respect of Rail Runner project undertaken by it, necessary implementation including obtaining approval etc. are under progress, this being infrastructure project having long gestation period the exposure has been considered good as mentioned in Note 13(a), 15(b) & 15(c); Para (d) regarding advances amounting to Rs.104.36 lacs pending investigation as stated in Note 19(b) of the Notes on Accounts, necessary administrative steps including suspension of an employee, so far identified, have been taken and further course of action for recovering the amount are in process. Para (e) regarding stocks lying at different locations under reconciliation with confirmation physical balances there against and pending this, provision of

Rs.397 lacs has been made which is considered adequate as mentioned in Note 16(c), certain debit/credit balances including capital advances as mentioned in note 15(a), certain overdue balance of trade receivable as mentioned in 17(b) and certain bank balances as explained in note 30; Para (f) regarding no ascertainment and accounting of depreciation as per Companies Act, 2013, as mentioned in Note 12(g), reassessment of life of fixed assets in process pending which depreciation has considered as per Schedule XIV of Companies Act, 1956. Para (g) regarding Micro, Small and Medium Enterprise related information, details has been sought from the parties but due to availability of inadequate information, the same could not be disclosed, Note 9(b);

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company has appointed M/s. MKB & Associates, Practicing Company Secretaries, to conduct the Secretarial Audit. The Secretarial Audit Report for the financial year ended 31st March, 2016 dated 4th August, 2016 is provided in the Annual Report in Form MR 3.

SECRETARIAL AUDITORS'' OBSERVATIONS

There is no qualification made by the Secretarial Auditor in their report.

REMUNERATION POLICY

The Board has, on the recommendation of the Nomination & Remuneration Committee, adopted the Remuneration Policy which inter alia includes policy for selection and appointment of Directors, Key Managerial Personnel, Senior Management Personnel and their remuneration. The Remuneration Policy is available on the Company''s website : stoneindia.co.in

BOARD EVALUATION

Your Company has adopted the comprehensive procedure on performance evaluation. Chairman of the Nomination and Remuneration Committee, who is an independent Director of the Board, conducted a one-to-one session with each Director to understand their points of view on the parameters for performance evaluation.

A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board''s functioning, such as, adequacy of the composition and quality of the Board and its Committees, execution and performance of specific duties, obligations, financial reporting process, monitoring activities, ethics and compliances etc.

Performance parameters for the Board, as a collective body, included parameters like, qualification and diversity of Board members, effective participation, availability, insight & observations, appropriateness, clarity of understanding, scenarios faced by the Company, existence, sufficiency and appropriateness of policy on dealing with potential conflicts of interest, involvement of Board members in strategic planning process, etc.

Independent Directors have conducted its meeting without the participation of other Non-Independent Directors and members of management and reviewed the performance of Board, its Committee, Chairman and individual Directors. On the basis of the review by the Independent Directors, they hold unanimous opinion that the Non-Independent Directors, including the Chairman to the Board, had abundant knowledge in their respective field and are experts in their areas.

DECLARATION OF INDEPENDENT DIRECTORS UNDER SECTION 149(6) OF THE COMPANIES ACT,2013

The Company has received declarations pursuant to section 149(7) of the Companies Act,2013 from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under erstwhile clause 49 of the Listing Agreement executed with Stock Exchanges.

CORPORATE SOCIAL RESPONSIBILITY

The provisions of section 135 of the Companies Act, 2013 read with rules made there under, with regard to the Corporate Social Responsibility (CSR) Committee is not applicable to your Company at present.

INTERNAL FINANCIAL CONTROLS

Your Company has an adequate system of internal control procedures which is commensurate with the size and nature of business. Detailed procedural manuals are in place to ensure that all the assets are safeguarded, protected against loss and all transactions are authorized, recorded and reported correctly. The internal control systems of the Company are monitored and evaluated by internal auditors, M/s Singhi & Co., Chartered Accountants and their audit reports are periodically reviewed by the Audit Committee of the Board of Directors. The Audit Committee regularly reviews the audit findings and actions taken thereon, as well as the adequacy and effectiveness of the internal systems and controls.

Your 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. In this regard, your Board confirms the following:

i. Systems have been laid to ensure that all transactions are executed in accordance with management''s general

and specific authorization. There are well-laid manuals for such general or specific authorization.

ii. Systems and procedures exist to ensure that all transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements and to maintain accountability for aspects.

iii. Access to assets is permitted only in accordance with management''s general and specific authorization. No assets of the Company are allowed to be used for personal purposes except in accordance with terms of employment or except as specifically permitted.

The existing assets of the Company are verified/ checked at reasonable intervals and appropriate action is taken with respect to the differences, if any.

VIGIL MECHANISM

The Company has a vigil mechanism named Breach of Integrity and Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The details of the said Policy is explained in the website of the Company at www.stoneindia.co.in.

FRAUD REPORTING

During the year under review, no incidence of fraud has occurred in the Company. Neither the Audit Committee of the Board nor the Board of the Company had received any report involving any fraud from the Statutory Auditors of the Company. As such, there is nothing to report by the Board, as required under Section 134 (3) (ca) of the Companies Act, 2013.

RISK POLICY

The Company has a Risk Management Committee and in the course of evolving a Risk Management Policy in due course as per the provisions of the Act and revised Corporate Governance norms issued by SEBI.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All contracts/arrangements /transactions entered into by the Company during the financial year ended 31-03-2016 with related parties were on an arm''s length basis and were in the ordinary course of business. During the year, the Company had not entered into any contract/arrangement/transaction with related parties which could be considered material, and therefore, Shareholders'' approval was not required to be obtained, in accordance with the Policy of the Company on related party transactions. Thus, provisions of Sections 134(3)(h) and 188(1) of the Companies Act, 2013 and Rule 8(2) of the

Companies (Accounts) Rules, 2014 are not applicable to the Company and therefore, Form No. AOC-2 has not been attached.

In compliance with the requirements laid down in the erstwhile listing agreement, all related party transactions were placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee had been obtained for the transactions which were of foreseeable and repetitive nature. All transactions entered into with the related parties are presented to the Audit Committee by way of a statement giving details of all transactions. This procedure is continued to be followed under the relevant provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Policy on materiality of Related Party Transactions and dealing with Related Parties as approved by the Board has been uploaded on the Company''s website at URL: stoneindia.co.in.

EXTRACT OF ANNUAL RETURN

An extract of the Annual Return in form MGT 9 as on the Financial Year ended on 31.03.2016 as required under Section 134(3) of the Companies Act, 2013, read with Section 92(3) of the said Act and Rule 12(1) of the Companies (Management and Administration) Rules, 2014 are set out in "Annexure-B" forming part of this Report.

PARTICULARS OF LOANS / GUARANTEE/ADVANCES/ INVESTMENTS OUTSTANDING DURING THE FINANCIAL YEAR

Your Company has neither advanced any loan nor made any investments or had given any guarantees and/or provided any securities to anybody, whether directly or indirectly, within the meaning of Section 185 of the Companies Act, 2013. Hence, there are no details worth providing.

MANAGERIAL REMUNERATION

The information required pursuant to Section 197 read with Rule, 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of managerial remuneration, is provided in the "Annexure- C" forming part of this report

PARTICULARS OF EMPLOYEES- AS PER CHAPTER XIII -RULE 5(2) & RULE 5(3)

The information required pursuant to Section 197 read with Rule, 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of top ten employees of the Company in terms of remuneration drawn will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees'' particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.

DETAILS OF PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES IMPOSED ON THE COMPANY:

NIL.

TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Section 205A(5) and 205C of the Companies Act, 1956, all amounts which remained unpaid or unclaimed for a period of seven years have been transferred by the Company, from to time to time on due dates, to the Investor Education and Protection Fund (IEPF).

ENVIRONMENT

The Company is committed to the protection of environment and is not involved in any type of activity hazardous to environment. It strictly adheres to the provisions of environmental laws. There is no trade effluent generated by the Company, which may cause pollution. Our Company is both an ISO 9001(2008) and 14001(2004) certified company.

CAPITAL EXPENDITURE

During the year under review, the Company incurred Rs 54.24 Lacs towards capital expenditure, most part of which was incurred on the new projects and on the addition to Company''s fixed assets.

DISCLOSURE AS REQUIRED UNDER SECTION 22 OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT,

2013

The Company has in place an Anti Sexual Harassment Policy in line with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 to prohibit, prevent or deter any acts of sexual harassment at workplace and to provide the procedure for the redressal of complaints pertaining to sexual harassment, thereby providing a safe and healthy work environment.

The following is the summary of the complaints received and disposed off during the financial year: 2015-2016:

a) No. of complaints received: NIL

b) No. of complaints disposed off: NIL

PARTICULARS AS PER SECTION 134 (m) OF THE COMPANIES ACT, 2013.

ENERGY CONSERVATION

Your Company has introduced certain Energy saving measures and re-engineering methods in terms of utilization of factory and office spaces. The practice to monitor and control the consumption of various sources of energy comprising power, oil and fuel in a bid to reduce energy cost despite increase in production and power tariffs is in place.

The benefits derived out of research & development and technology absorption by the Company is attached as “Annexure-D".

FOREIGN EXCHANGE EARNING AND OUTGO

Your Company earned Rs.440.40 lacs foreign exchange during 2015-16 as against Rs.516.11 lacs during 2014-15. Foreign exchange outgo during the year amounted to Rs.166.54 lacs (including import of components and spare parts) against Rs.178.68 lacs during the previous year.

APPRECIATION

Your Directors would like to record their appreciation of the hard work and commitment of the Company''s employees and warmly acknowledge the unstinting support extended by its bankers, alliance partners and other stakeholders in contributing to the results.

For and on behalf of the Board G. P. GOENKA

Kolkata Chairman

Date : 12th August, 2016 DIN: 00030302

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Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting their 84 th Annual Report on the business and operations of your Company for the financial year ended on 31st March, 2014.

FINANCIAL HIGHLIGHTS

(Rs. in Lacs)

For the For the Financial Year Financial Year 2013-14 2012-13

Gross Turnover 11,159.66 10,729.58

Profit before Interest, 397.82 355.22 Depreciation & Taxation

Interest 506.69 520.58

Depreciation 267.99 276.31

Profit before Taxation (376.86) (441.68)

Provision for Taxation - Deferred Tax (127.14) (137.63)

Profit after Taxation (249.72) (304.05)

Balance brought forward from 1,325.27 1,629.32 previous year

Profit available for appropriation 1,075.55 1,325.27 APPROPRIATIONS:

Balance carried to the Balance Sheet 1,075.55 1,325.27

Previous years figures have been rearranged and regrouped wherever necessary.

OPERATIONS

The economy continues to be in tailspin with a second successive year of sub- 5% growth during 2013-14. Persistent inflation, high Fiscal, Trade and Current Account deficits have severely curbed the growth potential. The cutback in investments and piling up of stalled projects also contributed to the dismal performance. Consequently, there is de-growth of 0.7% in the manufacturing sector. The weak Indian economy adversely impinged on the activities of your Company and the persisting cash crunch of the Indian Railways was a further detrimental factor.

Even under these circumstances, the performance of the Company for the year under review improved slightly over the previous year. With an increase in turnover by Rs.430.08 lakhs, the post tax loss reduced by Rs.54.33 lakhs. However, the slow rate of improvement is due to high costs which could not be recovered through pricing action in the context of the current competitive climate plus enhanced provisions for bad debts and inventories.

In an attempt of product diversification, your Company has signed an agreement with Shenyang Brilliant Elevator Company Limited, China to enter into Escalator & Elevator business in India in targeted markets viz. Metros and government projects. Your Company, in consortium with NRT Co. Limited, South Korea, has already bagged an order valuing Rs.83 Crores for fitment of Platform Screen Door in 6 stations in line 2 from Delhi Metro Rail Corporation Limited.

DIVIDEND

Considering the present financial condition of the Company and the Capital investment to be made for the expansion programme in near future your Directors do not recommend a dividend for the year ended on 31st March, 2014.

ENERGY CONSERVATION

Your Company has introduced certain Energy saving measures and re-engineering methods in terms of utilization of factory and office spaces. The practice to monitor and control the consumption of various sources of energy comprising power, oil and fuel in a bid to reduce energy cost despite increase in production and power tariffs is in place.

FOREIGN EXCHANGE EARNING AND OUTGO

Your Company earned Rs.222.53 lacs foreign exchange during 2013-14 as against Rs.259.83lacs during 2012-13. Foreign exchange outgo during the year amounted to Rs.254.41 lacs (including import of components and spare parts) against Rs.301.98 lacs during the previous year.

PERSONNEL

Industrial Relations with employees at various levels remained harmonious and cordial. Your Company as a part of its Human Resources Development activity continued to train employees at all levels to enhance their effectiveness in contributing towards the overall goal of your Company through knowledge improvement and skill up-gradation.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Shrivardhan Goenka retire by rotation and being eligible, offers himself for re-appointment. Further, in terms of the provisions Section 149 of the Companies Act, 2013 read with the General Circular No. 14/2014 issued by the Ministry of Corporate Affairs on 9th June, 2014, your Company needs to appoint the existing Independent Directors under the said Act. Accordingly, the resolutions regarding appointment of Mr. Sukhendu Ray, Mr. Indrajit Sen, Mr. Ashwani Kumar Goswami and Mr. Aniket Agarwal as Independent Directors are included in the notice convening the Annual General Meeting.

All the Directors have filed requisite forms and declarations as required under the Companies (Appointment and Qualification of Directors) Rules,2014 read with Section 164 of the Companies Act, 2013. The brief resume/details relating to Directors who are to be appointed/re-appointed are furnished in the Notice of the ensuing Annual General Meeting.

E-VOTING

In terms of Section 108 of the Companies Act, 2013 read with Rule 20 of Companies (Management and Administration) Rules, 2014 and SEBI''s Circular No. CIR/CFD/POLICY CELL/2/2014 dated 17/04/2014, voting through electronic means has become mandatory for your Company. Accordingly, the Company has made necessary arrangement with Central Depository Services Limited by which the shareholders will be entitled to exercise his/her right to vote by electronic means. A detailed instruction is this connection is being dispatched to the shareholders separately.

RESEARCH & DEVELOPMENT (R&D) ACTIVITIES

The Company remains strongly focused on development of products and enhancing quality standards. Innovative creative ideas in hi-tech engineering areas continue to be key objectives of the Company.

R&D has designed and developed Solar Micro Inverter for application in Solar Power System which is expected to be launched commercially in the later half of the year.

The R&D centre of your company is recognized by the Ministry of Science & Technology as an approved R&D Centre and entitled for certain direct & indirect Tax benefits.

RAILRUNNER PROJECT

Stone India, through its subsidiary, signed a collaboration

agreement in the year 2009 with RailRunner Inc., USA, to design, manufacture and operate a rail-cum-road bi-modal door-to-door cargo transport system in India. This unique, innovative solution is first of its kind in India. This patented container carrying bi-modal seamless transportation system is designed to ship the entire container-chassis between rail and road with no intermediate handling. This technology offers the efficiency of rail and flexibility of road in one package and will eliminate major capital investment in expensive cranes or large terminal facilities and also aids just-in-time door-to-door delivery to customers. Currently, the project is under prototype construction, on completion of which trial trains will start operating.

BIO TOILET

Another major initiative taken by your Company is to revolutionize hygiene and sanitation in the country, which is the crying need of the hour, as India loses more than 6% of its GDP due to spread of diseases from Open Defecation. Your Company has designed and developed Biological Toilets which convert human waste into non toxic non contaminating water through multi strain aerobic bacteria culture in a multi chamber bio digester tank. The path breaking technology has been supported and validated by the Ministry of Science and Technology.

OTHER INFORMATION

In accordance with the provisions of Section 217 of the Companies Act, 1956 ("the Act") read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are set out in the annexure to the Directors'' Report. As per the provisions of Section 219(1)(b)(iv) of the Act, the Directors Report is being sent to the shareholders of the Company excluding such particulars of employees under section 217(2A) of the Act. The Annexure is available for inspection by the Members at the Registered Office of the Company during business hours on any working day upto the date of the ensuing Annual General Meeting. Any member interested in obtaining a copy of the said annexure may write to the Company Secretary at the Registered Office of the Company.

Form No. B pursuant to Section 217(1)(e) of the Companies Act, 1956 read with The Companies (Disclosures of Particulars in the Report of the Board of Directors) Rules, 1988 so far as is applicable to the Company is annexed and forms a part of this Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

In terms of the requirements of Section 217(2AA) of the Companies Act, 1956, your Directors confirm that;

(i) in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates 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 or loss of the Company for that period;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, except defalcation of Company''s funds, as stated in Note 17(b) of the Accounts, which are under investigation and recovery;

(iv) the Directors have prepared the Annual Accounts on a going concern basis; and

(v) the Managing Director & CEO and the Sr. Vice President & CFO, both have furnished the necessary certification to the Board on these financial statements as required under the Clause 49 of the Listing Agreement(s) with the Stock Exchanges where the equity shares of the Company are listed.

DEMATERIALISATION OF SHARES

Your Company''s shares are under transfer-cum-demat option. Shares of your Company can be traded only in dematerialized form. Shareholders have the option to hold the Company''s shares in dematerialized form through the National Securities Depository Limited (NSDL) or Central Depository Services (India) Limited (CDSL). 93.28% of the total equity share capital of your Company was held in dematerialized form with NSDL and CDSL as on 31st March, 2014.

During the year, your Company has issued on preferencial basis 20,00,000 warrants with a right to convert the warrants into equity shares to ISG Traders Limited, a promoter group Company, at a premium of Rs. 7.50 per warrant on 17.10.2013. Out of the above, 575000 warrants have been converted into equity shares on 31-03-2014.

CORPORATE GOVERNANCE

Your Company has always practiced sound Corporate Governance and takes necessary measures to comply with the requirements of the Listing Agreements with the Stock Exchanges with which your Company''s shares are listed. A separate report, as per clause 49 of the Listing Agreement, on Corporate Governance adopted by the Company forms part of this report.

A certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance as also the Management Discussion and Analysis Report stipulated under Clause 49 of the Listing Agreement are attached to this report.

MANAGEMENT DISCUSSION & ANALYSIS REPORT.

Management Discussion & Analysis Report, as stipulated under Clause 49 of the Listing Agreement with Stock Exchanges, for the year under review is presented in a separate section forming part of this Report.

CODE OF CONDUCT

Your Company has formulated Code of Conduct in compliance with the requirements of the revised Clause 49 of the Listing Agreements with Stock Exchanges which has been posted in the Website of your Company. This Code of Conduct and Ethics applies to the Board members and Senior Management personnel of your Company. Confirmation towards adherence to the Code during the Financial Year 2013-14 has been obtained from all Board Members and Senior Management personnel in terms of the requirements of Clause 49 of the Listing Agreement and a declaration relating to compliance to this Code during the year under review by all Board Members and Senior Management Personnel has been given by the Managing Director of the Company which accompanies this report.

AUDITORS

Messrs Lodha & Co, Chartered Accountants, retire as Statutory Auditors of the Company at the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Audit Committee of the Board of Directors and the Board of Directors of the Company have recommended the re- appointment of Messrs Lodha & Co., Chartered Accountants, having Registration no. 301051E allotted by The Institute of Chartered Accountants of India as Statutory Auditors of your Company to hold office from the conclusion of the ensuing Annual General Meeting till the conclusion of 87th Annual General Meeting thereafter. Messrs Lodha & Co. confirmed their eligibility and willingness to act as Auditors of the Company, if re-appointed.

AUDITORS'' REPORT

The observations of the Auditors have been explained in the Notes forming part of the Financial Statements and these interalia include the following:-

Para (a) regarding rental demands from Kolkata Port trust, the matter is sub-judice and pending decision of Hon''ble Calcutta High Court, provision made in account has been considered adequate by the management as mentioned in note 6A (b); Para (b) as regard managerial remuneration, necessary application is pending for approval before MCA as explained in Note 23(a & b); Para (c) regarding stocks lying at different locations under reconciliation with confirmation / physical balances there against, and pending this, provision of Rs.250 lacs has been made which is considered adequate as mentioned in Note 14(c); Para (d) regarding advance/ investment made in a subsidiary in respect of Rail Runner project undertaken by it, necessary implementation including obtaining approval etc. are under progress, this being infrastructure project having long gestation period the exposure has been considered good as mentioned in Note 13(b); Para (e) regarding confirmation and reconciliation of various debit and credit balances, steps are being taken to obtain these and reconcile the same to carry out the adjustment, if any, required on a continuous basis; Para (f) regarding Micro, Small and Medium Enterprise related information, details has been sought from the parties and the same is being complied; Para (g) regarding defalcation of Company''s fund as stated in Note 17(b) of the Notes on Accounts, necessary administrative steps including suspension of an employee, so far identified, have been taken and further course of action for recovering the amount are in process.

PUBLIC DEPOSIT

Your Company has not accepted any Public Deposit.

SUBSIDIARY COMPANIES

The statement pursuant to Section 212 of the Companies Act, 1956 containing details of Subsidiary Companies forms part of the report.

In accordance with the General Exemption granted by the Ministry of Corporate Affairs vide its Circular No.2/2011 dated 8 th February, 2011, the Balance Sheet, Profit & Loss Account and other documents of the Subsidiary Companies are not being attached with the Balance Sheet of the Company. Your Company agreed to comply with the conditions prescribed in the Circular. The Company will make available the Annual Accounts of the Subsidiary Companies and the related detailed information to any member of the Company who may be interested in obtaining these. The Annual Accounts of the Subsidiary Companies will also be kept open for inspection at the Registered Office of the Company on all working days (except Saturdays) between 11.00 AM and 1.00 PM prior to the date of the Annual General Meeting.

In compliance with the requirements of the aforesaid Circular, a Statement showing relevant details of the Subsidiary Companies for the year ended 31st March, 2014 has been included in the Consolidated Financial Statements of the Company which forms part of this Annual Report.

As required under the Listing Agreement, the Consolidated Financial Statements of the Company together with its Subsidiary Companies prepared in accordance with Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India are attached.

SOCIAL RESPONSIBILITY

Your Company always promotes all round development of a pollution free environment. Safety and Environment performance has been integral to the business operations of your Company and continues to receive attention throughout the year.

FORWARD-LOOKING STATEMENTS

This Annual Report and particularly those which relate to the Management Discussion and Analysis Reports contain statements which, to the extent they are not statements of historical or present fact, constitute "forward-looking statements". From time to time, oral or written forward- looking statements may also be included in other materials released to the public. These forward-looking statements are intended to provide management''s current expectations or plans for future operating and financial performance, based on assumptions currently believed to be valid. Forward- looking statements can be identified by the use of words such as "anticipate", "believe", "emerge", "estimate", "enjoy", "eventually", "expect", "guidance", "intend", "near future", "plans", "prospects", "project", "strategy", "target", "will", "would" and other words of similar meaning as they may relate to the Company and/or its business in connection with a discussion of future operating or financial performance. All forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. The growth of the industry and business of the Company depend upon Government policies, global economic scenario etc., and any adverse/ favorable situation may change the outlook. Readers are therefore cautioned that such statements speak only of the situation as of date and hence actual performances or achievements could differ from those expressed or implied in such forward-looking statements. Your Company undertakes no responsibility to publicly or otherwise update or revise any such forward-looking statement at any time.

ACKNOWLEDGEMENT

Your Directors take this opportunity to express their whole- hearted appreciation for the unstinted support and co- operation received from the Banks, Financial Institutions, Government, Indian Railways, Foreign Collaborators, Customers, Shareholders and other stake holders during the year under review. Your Directors also wish to place on record their appreciation for the services rendered by the employees at all levels in the Company and for their valuable contribution and look forward to their continued cooperation in the years ahead.

For and on behalf of the Board Date : 14th August, 2014 G. P. GOENKA Place : Kolkata Chairman

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Mar 31, 2012

The Directors have pleasure in presenting their 82nd Annual Report on the business and operations of your Company for the financial year ended on 31st March, 2012.

FINANCIAL HIGHLIGHTS

(Rs. in Lacs)

For the For the Financial Year Financial Year 2011-12 2010-11

Gross Turnover 10,838.15 10,044.75

Profit before Interest, Depreciation & Taxation 1,067.47 1,149.53

Interest 462.25 360.91

Depreciation 199.28 173.25

Profit before Taxation 405.94 615.37

Provision for Taxation - Current Tax 86.47 141.36

Provision for Taxation - Deferred Tax 85.66 13.11

MAT Credit entitlement (86.47) -

Income Tax for earlier years - 5.00

Profit after Taxation 320.28 455.90

Balance brought forward from previous year 1309.04 853.14

Profit available for appropriation 1629.32 1,309.04

APPROPRIATIONS:

Balance Carried to the Balance Sheet 1629.32 1,309.04

* Previous years figures have been rearranged and regrouped wherever necessary.

OPERATIONS

Some of the key highlights of your Company's performance during the year under review are:

- The Gross Turnover Rs. 10,838.15 lacs as against Rs. 10,044.75 lacs in the last year.

- Profit before Taxation Rs. 405.94 lacs as against Rs. 615.37 lacs in the last year.

- Profit after Taxation Rs. 320.28 lacs as against Rs. 455.90 lacs in the last year.

Indian economy decelerated aggravated by severe Euro Zone crisis as well as by declining exchange rates. Despite achieving a comparatively modest growth of 6.5%, down from 8.6% for the year before, the economic scene nevertheless is presently dismal and the predictions of the Government and various economic forums for anticipated growth failed to meet the expectations. This adversely impacted on the operations of your Company which could not achieve its performance targets on account of stringent financial constraints of the Indian Railways. However, your Company continued to remain firmly focused on development of new products and on its R&D programmes. Your Directors are happy to report that Stone Bio-Tech Private Limited, a subsidiary of your Company has commenced commercial production of Bio toilets.

ISO CERTIFICATION

During the year under review your Company became a ISO 14001 accredited Company.

DIVIDEND

Considering the Capital investment to be made for the expansion programme in near future and to conserve resources your Directors do not recommend a dividend for the year ended on 31st March, 2012.

ENERGY CONSERVATION

Your Company has introduced certain Energy saving measures and re-engineering method in terms of utilization of factory and office spaces. Further, your Company continues to monitor and control the consumption of various sources of energy comprising power, oil, fuel, gas in a bid to reduce energy cost despite increase in production and power tariffs.

FOREIGN EXCHANGE EARNING AND OUTGO

Your Company earned Rs.57.41 lacs foreign exchange during 2011-12 as against Rs.72.68 lacs during 2010-11. Foreign exchange outgo during the year amounted to Rs.394.06 lacs (including import of components and spare parts) against Rs.432.51 lacs during the previous year.

PERSONNEL

Industrial Relations with employees at various levels remained harmonious and cordial. Your Company as a part of its Human Resources Development activity continued to train employees at all levels to enhance their effectiveness in contributing towards the overall goal of your Company through knowledge improvement and skill up-gradation. Yoga and stress management programmes are regularly conducted at office premises for the benefits of employees at all level.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Ashwani Kumar Goswami and Mr. Aniket Agarwal retire by rotation and being eligible, offer themselves for re-appointment.

Further, with a view to strengthening the Board, Mr. Shrivardhan Goenka was re-appointed as Wholetime Director on revised terms and conditions with effect from 01.08.2012 to 31.07.2015 and Mr. Amitava Mondal was also re-appointed as Managing Director & CEO on revised terms and conditions with effect from 01.10.2012 to 30.09.2015, subject to the necessary approvals of the members and the Central Government, as may be necessary.

All the Directors have filed requisite forms and declarations as required under the Companies (Disqualification of Directors under Section 274(1)(g) of the Companies Act, 1956) Rules, 2003. The brief resume/details relating to Directors who are to be appointed/re-appointed are furnished in the Notice of the ensuing Annual General Meeting.

RESEARCH & DEVELOPMENT (R&D) ACTIVITIES

Sustained focus on development of products and enhancing quality standards are the key objectives of your Company's own Research and Development Unit. Continuous thrust is on to innovate creative ideas in hi-tech engineering areas which can lead to improved performance of the Company and in consequence deliver substantial benefits to its customers and stakeholders.

As a mark of progressive development process, your Company has been awarded "Technology Development and Demonstration Program" (TDDP) grant from the Department of Scientific and Industrial Research (DSIR) under the Ministry of Science and Technology, Govt. of India for 'Design and Development of Biological Toilet Systems'.

OTHER INFORMATION

In accordance with the provisions of Section 217 of the Companies Acts, 1956 ("the Act") read with the Companies (Particulars of Employees) Rules 1975, the names and other particulars of employees are set out on the annexure to the Directors' Report. As per the provisions of Section 219(1)(b)(iv) of the Act, the Directors Report is being sent to the shareholders of the Company excluding such particulars of employees under section 217(2A) of the Act. The Annexure is available for inspection by the Members at the Registered Office of the Company during business hours on any working day upto the date of the ensuing Annual General Meeting. Any member interested in obtaining a copy of the said annexure may write to the Company Secretary at the Registered Office of the Company.

Form No. B pursuant to Section 217(1)(e) of the Companies Act, 1956 read with The Companies (Disclosures of Particulars in the Report of the Board of Directors) Rules 1988 so far as is applicable to the Company is annexed and forms a part of this Report.

In terms of amended provision of Clause 5 of the Listing Agreement with the Stock Exchanges, the second and third reminder has been sent to the respective eligible shareholders by our Registrars.

DIRECTORS' RESPONSIBILITY STATEMENT

In terms of the requirements of Section 217(2AA) of the Companies Act, 1956, your Directors confirm that;

(i) in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates 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 or loss of the Company for that period;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the Directors have prepared the Annual Accounts on a going concern basis; and

(v) the Managing Director & CEO and the Sr. Vice President & CFO, both have furnished the necessary certification to the Board on these financial statements as required under the revised Clause 49 of the Listing Agreement(s) with the Stock Exchanges where the equity shares of the Company are listed.

DEMATERIALISATION OF SHARES

Your Company's shares are under transfer-cum-demat option. Shares of your Company can be traded only in dematerialized form. You have the option to hold the Company's shares in demat form through the National Securities Depository Limited (NSDL) or Central Depository Services (India) Limited (CDSL). 93.17% of the total equity share capital of your Company was held in dematerialized form with NSDL and CDSL as on 31st March, 2012.

CORPORATE GOVERNANCE

Your Company has always practiced sound Corporate Governance and takes necessary measures to comply with the requirements of the Listing Agreements with the Stock Exchanges wherein your Company's shares are listed. A separate report on Corporate Governance adopted by the Company forms part of this report.

A certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance as also the Management Discussion and Analysis Report stipulated under Clause 49 of the Listing Agreement are attached to this report.

CODE OF CONDUCT

Your Company has formulated Code of Conduct in compliance with the requirements of the revised Clause 49 of the Listing Agreements with Stock Exchanges which has been posted in the Website of your Company. This Code of Conduct and Ethics applies to the Board members and Senior Management personnel of your Company. Confirmation towards adherence to the Code during the Financial Year 2011-12 has been obtained from all Board Members and Senior Management personnel in terms of the requirements of Clause 49 of the Listing Agreement and a declaration relating to compliance to this Code during the year under review by all Board Members and Senior Management Personnel has been given by the Managing Director of the Company which accompanies this report.

AUDITORS

Messrs Lodha & Co, Chartered Accountants retire as Statutory Auditors of the Company at the conclusion of the ensuing Annual General Meeting and are eligible for re- appointment. The Audit Committee of Board of Directors and the Board of Directors of the Company have recommended the re-appointment of Messrs Lodha & Co., Chartered Accountants, having Registration no. 301051E allotted by The Institute of Chartered Accountants of India as Statutory Auditors of your Company to hold office from the conclusion of the ensuing Annual General Meeting till the conclusion of next Annual General Meeting. Messrs Lodha & Co. confirmed their eligibility and willingness to continue to act as Auditors of the Company for the Financial Year 2012-13, if re-appointed.

AUDITORS' REPORT

The Board of your Company has noted the observations of the Auditors in their report. These have been dealt with adequately at the appropriate places in the notes to these accounts and therefore, do not call for further comments.

COST AUDITORS

Pursuant to the Industry wise General Order issued by the Central Government, M/s. Datta, Ghosh, Bhattacharya & Associates, Cost Accountants having Registration no. 0089 issued by the Institute of Cost Accountants of India have been appointed as Cost Auditors of the Company to conduct Cost Audit for the Financial Year 2012-13.

PUBLIC DEPOSITS

Your Company has not accepted any Public Deposits.

SUBSIDIARY COMPANIES

The statement pursuant to Section 212 of the Companies Act, 1956 containing details of Subsidiary Companies forms part of the report.

In accordance with the General Exemption granted by the Ministry of Corporate Affairs vide its Circular No.2/2011 dated 8 th February, 2011, the Balance Sheet, Profit & Loss Account and other documents of the Subsidiary Companies are not being attached with the Balance Sheet of the Company. Your Company agreed to comply with the conditions prescribed in the Circular. The Company will make available the Annual Accounts of the Subsidiary Companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The Annual Accounts of the Subsidiary Companies will also be kept open for inspection at the Registered Office of the Company on all working days (except Saturdays) between 11.00 AM and 1.00 PM prior to the date of the Annual General Meeting.

In compliance with the requirements of the aforesaid Circular, a Statement showing relevant details of the Subsidiary Companies for the year ended 31st March, 2012 have been included in the Consolidated Financial Statements of the Company which forms part of this Annual Report.

As required under the Listing Agreement, the Consolidated Financial Statements of the Company together with its Subsidiary Companies prepared in accordance with Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India are attached.

SOCIAL RESPONSIBILITY

Your Company always promotes all round development of a pollution free environment. Safety and Environment performance has been integral to the business operations of your Company and continues to receive attention throughout the year.

FORWARD-LOOKING STATEMENTS

This Annual Report and particularly those which relate to the Management Discussion and Analysis Reports contain statements which, to the extent they are not statements of historical or present fact, constitute "forward-looking statements". From time to time, oral or written forward- looking statements may also be included in other materials released to the public. These forward-looking statements are intended to provide management's current expectations or plans for future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as "anticipate", "believe", "emerge", "estimate", "enjoy", "eventually", "expect", "guidance", "intend", "near future", "plans", "prospects", "project", "strategy", "target", "will", "would" and other words of similar meaning as they may relate to the Company and/or its business in connection with a discussion of future operating or financial performance. All forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. The growth of the industry and business of the Company depend upon Government policies, global economic scenario etc., and any adverse/ favourable situation may change the outlook. Readers are therefore cautioned that such statements speak only of the situation as of date and hence actual performances or achievements could differ from those expressed or implied in such forward-looking statements. Your Company undertakes no responsibility to publicly or otherwise update or revise any such forward-looking statement at any time.

ACKNOWLEDGEMENT

Your Directors take this opportunity to express their whole- hearted appreciation for the unstinted support and co- operation received from the Banks, Financial Institutions, Government, Indian Railways, Foreign Collaborators, Customers, Shareholders and other stake holders during the year under review. Your Directors also wish to place on record their appreciation for the services rendered by the employees at all levels in the Company and for their valuable contribution and look forward to their continued cooperation in the years ahead.

For and on behalf of the Board

Date : 10th Augus, 2012 G P GOENKA

Place: Kolkata Chiarman

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Mar 31, 2010

The Directors have pleasure in presenting their 80th Annual Report on the business and operations of your Company for the financial year ended 31st March, 2010.

FINANCIAL HIGHLIGHTS

(Rs. in Lacs)

2009-10 2008-09

Gross Turnover 10140.91 9036.53

Profit before Interest, Depreciation,

Taxation & Exceptional items 1093.75 (347.53)

Interest 360.81 278.75

Depreciation 171.77 113.45

Profit before Taxation and Exceptional items 561.17 (739.73)

Prior Period Items - (17.40)

Profit before Taxation after Exceptional items 561.17 (757.13)

Provision for Taxation -Current Tax 100.34 -

Provision for Taxation -Deferred Tax 21.82 86.23

Fringe Benefit Tax - 14.83

Income Tax for Earlier Year (1.68) 2.23

Profit after Taxation 440.69 (860.42)

Balance brought forward from previous year 412.45 1272.87

Profit available for appropriation 853.14 412.45

APPROPRIATIONS

Balance Carried to the Balance Sheet 853.14 412.45

OPERATIONS

Fiscal 2009-10 witnessed a gradual recovery in the Indian economy after witnessing a negative growth and slowdown in the last fiscal. The cyclical upturn was hit by some inflation but managed to sustain the growth by increasing the sales and production . After the unprecedented global economic downfall the world GDP dropped by 0.5%(IMF) in 2009. However the revival has been better than expected, moderate in many developed economies but strong in most emerging economies.

For the year 2010-11, IMF has predicted an increase of about 4.2% in world GDP. Economies that are off to a strong start are likely to remain on the lead, as growth in others is likely to be held back due to the lasting damage to financial sectors and household balance sheets. In most of the countries ,Government initiatives and support have been key to kick start the recovery.

As per RBI real GDP growth for 2009-10 was at 7.5%, however the projection of real GDP growth for 2010-11 is placed at 8% with an upside bias. Consumption had all along remained strong in India. Further, the Budget significantly raises the allocation to key infrastructures sectors including railways.

Although the Global economy recovered slowly the Indian scenario was different and allover there was an upswing in the manufacturing and Engineering industry. Your company keeping pace with this trend has improved upon its operations and crossed the last year turnover clocking 101cr compared to 90cr of last year. This was

possible by improving the order intake , improving the price for some of the product, by introduction of new products and overall improvement in the operations. The net sales increased by 18.5% and there was a net profit of 440.69 lacs compared to a loss of 860.42 lacs.

The factory at Nalagarh ,Himachal Pradesh has already started commercial production of Distributor Valve and Panel Mounted Brake System. The approval for other products are expected soon. The expansion plan is in progress at site for new products which will add to our production capacity.

We are in the process of continuous improvement of your company by introducing new products keeping pace with the Railways and the competitors with our Endeavour in Research and Development in house. We are constantly upgrading our Technology by independent research and by incorporating Technology from our collaborators. The details of some such new products introduced or likely to be introduced are given below.

As mentioned in our earlier report we have started manufacture of Air Springs and supplying to Railway. The business of Air Springs is expected to grow substantially in the coming years as Indian Railways have decided to turnout all EMU as well as Main Line Coaches duly assembled with AIR Springs to improve passenger comfort. The enhancement of sales of Air Spring will further contribute to increase the turnover and contribution to your company.

Your Company established a Railway Electronic Division to undertake design and development of Different Electronic equipments required for railway in order to improve the performance and safety of railway wagon and coaches and also to improve the control and information system..As a part of this we have already come up with new products which are being tested and approved by RDSO.

As mentioned above we have received the first development orders for FDCS from Railways Chittaranjan Locomotive Works which will ensure better safety features.

Your company has achieved a major break through in Bio Toilet and controlled discharge Toilets and already some of our Toilets has been fitted in some Trains for Trial runs. The products are running successfully for the last one year. We have also got orders for Controlled Discharge Toilet to be supplied to Railways.

Electronic Brake System for Diesel Locomotive is being pursued. For Electric Locomotive we have been recommended for the placement of the first developmental order by Railways

DIVIDEND

Considering the Capital investment to be made for the expansion in near future your directors do not recommend a dividend for the year ended 31st March 2009.

ENERGY CONSERVATION

Your Company has introduced certain Energy saving measures and re-engineering method in terms of utilization of factory and office spaces. Further, your Company continues to monitor and control the consumption of various sources of energy comprising power, oil, fuel, gas in a bid to reduce energy cost despite increase in production and power tariffs.

FOREIGN EXCHANGE EARNING AND OUTGO

Your Company earned Rs. 49 Lacs foreign exchange during 2009- 10 as against Rs. 30 Lacs during 2008-09. However, foreign exchange outgo during the year amounted to Rs 595 lacs (including import of components and spare parts) against Rs. 430 lacs during previous year.

PERSONNEL

Industrial Relations with all employees at the various levels continued to remain harmonious and cordial. Your Company as a part of its Human Resources Development activity continued to train employees at all levels to enhance their effectiveness in contributing towards the overall goal of your Company through knowledge improvement and skill up-gradation.

The Long Term Settlement expired and the renewal process is in progress. The industry relation within the factory and with the two recognized factory unions continued to be cordial resulting in improved productivity during the financial year.

DIRECTORS

In accordance with the provisions of the Companies Act 1956 and the Articles of Association of the Company, Mr. S.Ray and Mr. A.Agarwal retire by rotation and, being eligible, offer themselves for re-appointment.

OTHER INFORMATION

In accordance with the provisions of Section 217 of the Companies Acts, 1956 (“the Act”) read with the Companies (Particulars of Employees) Rules 1975, the names and other particulars of employees are set out on the annexure to the Directors’ Report. As per the provisions of Section 219(1)(b)(iv) of the Act, the Directors Report is being sent to the shareholders of the Company excluding such particulars of employees under section 217(2A) of the Act. Any shareholder interested in obtaining a copy of the said annexure may write to the secretarial department at the Registered Office of the Company.

Form No. B pursuant to Section 217(1)(e) of the Companies Act, 1956 read with The Companies (Disclosures of Particulars in the Report of the Board of Directors) Rules 1988 so far as is applicable to the Company is annexed and forms a part of this Report.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the requirements of Section 217(2AA) of the Companies Act, 1956, your Directors confirm that;

(i) in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates 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 or loss of the company for that period;

(iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(iv) The Directors have prepared the Annual Accounts on a going concern basis; and

(v) The Managing Director and the Sr.Vice President &CFO, both have furnished the necessary certification to the Board on these financial statements as required under the revised Clause 49 of the Listing Agreement(s) with the stock exchanges where the equity shares of the company are listed.

DEMATERIALISATION OF SHARES

Your Companys shares are under transfer-cum-demat option. Shares of your Company can be traded only in dematerialized form. You have the option to hold the Companys shares in demat form through the National Securities Depository Limited (NSDL) or Central Depository Services (India) Limited (CDSL). 91.89% of the total equity share capital of your Company was held in dematerialized form with NSDL and CDSL as on 31st March 2010.

CORPORATE GOVERNANCE

Necessary measures have been adopted to comply with the requirements of the Listing Agreements with stock exchanges wherein your Companys shares are listed. A separate report on Corporate Governance adopted by the Company forms part of this report.

A certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance as also the Management Discussion and Analysis Report stipulated under Clause 49 of the Listing Agreement is attached to this report.

CODE OF CONDUCT

Your Company has formulated Code of Conduct in compliance to the requirements of revised Clause 49 of the Listing Agreements with Stock Exchanges which has been posted in the Website of your Company. This Code of Conduct and Ethics applies to the Board members and Senior Management personnel of your Company. Confirmation towards adherence to the Code during the Financial Year 2009-10 has been obtained from all Board Members and Senior Management personnel in terms of the requirements of Clause 49 of the Listing Agreement and a declaration relating to compliance to this Code during the year under review by all Board Members and Senior Management Personnel has been given by the Managing Director of the Company which accompanies this report.

AUDITORS

Messrs Lodha & Co, Chartered Accountants retire as Statutory Auditors at the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Audit Committee of Board of Directors recommended the re-appointment of Messrs Lodha & Co., Chartered Accountants as Statutory Auditors to hold office from the conclusion of the ensuing Annual General Meeting till the conclusion of next Annual General Meeting. Messrs Lodha & Co. confirmed their eligibility and willingness to continue to act as Auditors of the company for the Financial Year 2010-11, if re- appointed.

AUDITORS’ REPORT

The Board has noted the observations of the Auditors in their report. These have been dealt with adequately at the appropriate places in the notes to these accounts and call for no further comments.

PUBLIC DEPOSITS

Your Company has not accepted any Public Deposits.

SUBSIDIARY COMPANY

Stone Intermodal Private Limited incorporated on 15th October 2008, became a Wholly Owned Subsidiary of the Company with effect from 1st March 2009. The technical Collaboration agreement has been executed with Rail Runner Inc. USA and the initial concept of the project has been approved by RDSO.

FORWARD-LOOKING STATEMENTS

This Annual Report contains statements which, to the extent they are not statements of historical or present fact, constitute "forward- looking statements". From time to time, oral or written forward- looking statements may also be included in other materials released to the public. These forward-looking statements are intended to provide managements current expectations or plans for future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as "anticipate", "believe", "emerge", "estimate", "enjoy", "eventually", "expect", "guidance", "intend", "near future", "plans", "prospects", "project", "strategy", "target", "will", "would" and other words of similar meaning as they may relate to the Company and/or its business in connection with a discussion of future operating or financial performance. All forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. Readers are therefore cautioned that such statements speak only of the situation as of their dates and hence actual performances or achievements could differ from those expressed or implied in such forward-looking statements. Your Company undertakes no responsibility to publicly or otherwise update or revise any such forward-looking statement at any time.

ACKNOWLEDGEMENT

Your Directors take this opportunity to express their whole- hearted appreciation for the unstinted support and co-operation received from the banks, financial institutions, customers and shareholders during the year under review. Your Directors also wish to place on record their appreciation for the services rendered by the employees at all levels in the Company and for their valuable contribution.

For and on behalf of the Board

Date : 16th April, 2010 G. P. GOENKA

Kolkata Chairman