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Directors Report of Texmaco Rail & Engineering Ltd.

Mar 31, 2023

Your Directors have the pleasure in presenting the 13th Operational Annual Report of the Company along with the Audited Financial Statements for the financial year ended 31st March 2023.

FINANCIAL HIGHLIGHTS

(Rs. in Lakhs)

2022-23

2021-22

Operating Profit (PBIDT)

13,481.87

13,526.29

Less: Interest (Net)

7,107.30

6,703.63

Gross Profit (PBDT)

6,374.57

6,822.66

Less: Depreciation

3,502.91

3,580.75

Profit before Taxation

2,871.66

3,241.91

Less: Tax Expenses

- Current Tax including tax related to earlier years

-

75.59

- MAT Credit entitlement

(46.08)

(32.00)

- Deferred Tax Liability/(Asset)

934.08

1,368.87

Profit after Taxation

1,983.66

1,829.45

Add: Balance brought forward from previous year

16,043.57

10,902.36

18,027.23

12,731.81

Appropriations

Dividend paid

321.87

250.34

General Reserve

200.00

200.00

Other Appropriations

16.31

(3,762.10)

Balance Carried Forward

17,489.05

16,043.57

Note: the above figures are extract of the Audited Financial Statements prepared for the Financial Year ended 31 March 2022 & 31 March 2023.

Dividend

Your Directors recommend payment of dividend of 15% i.e. INR 0.15 per equity share of face value of I NR 1 each for financial year ended 31st March 2023.

The Gross Turnover for the year stood at INR 26002.45 mn. The Gross Profit for the year i.e. Profit before Depreciation and Tax (PBDT) and Profit before Tax (PBT) were INR 637.46 mn and INR 287.17 mn respectively. The Net Profit was INR 198.37 mn, after providing net tax liability of INR 88.8 mn for the year as per the Profit and Loss Account drawn up in accordance with the Indian Accounting Standards as specified under the Companies Act, 2013 (''Act''). The Company has transferred INR 20 mn to Free Reserves during the year.

MANAGEMENT DISCUSSION AND ANALYSIS Overview of the Industry

The Global GDP in FY''23 was affected due to Russia-Ukraine war and resultant dislocations in supply chains, leading to

surging food and energy inflation. Therefore, the Central Banks raised interest rates sharply in response. As a result, the Global GDP is estimated to have grown at a more subdued 3.4% in 2022, versus 5.9% in the previous year.

The global rail transport market grew from $ 505.50 billion in 2022 to $ 538.50 billion in 2023 at a compound annual growth rate (CAGR) of 6.6%. The Russia - Ukraine war disrupted the chances of global economic recovery from the COVID-19 pandemic, at least in the short term.

However, despite these critical challenges, India emerged as the fastest growing major economy in the world. The second advance estimate of national income released by the Central Statistics Office (CSO) on 28th February 2023 expects real GDP growth in to be 7.0% and that of gross value added to be 6.6%. Indian Railway had registered highest ever Freight Loading & revenue jump and which was 27.75% compared to the previous fiscal and more than 77% jump in procurement of rolling stock .

Texmaco Business - An Overview

Your Company participated in largest wagon tender of Railway Board & received an order for manufacturing and supply of 20067 wagons amounting approx. INR 64500 mn, with deliveries spread over a period of 39 months. Further, for the non-railway customers, there was a good demand for wagons and the Company has received orders from this segment too. Your Company has been appreciated for the quality of wagons exported to Africa and has got a repeat order for 300 more wagons.

Your Company is extremely thankful to its customers for their continuous support and patronage extended during tough times.

The prices of commodity prices continued to have an upward trend & increased over 5% QoQ basis, affecting our profit margins. Along with the prices, the non-availability of critical

components especially wheelsets from RWF Bengaluru for NRC Orders, which affected the production during certain part of the year.

The Indian Railways are further expected to come up with another tender for ~40000 wagons. Out of these, certain portion of the tender would be conventional wagons and certain portion would be New Generation wagons. The tender is expected to be out in Q2 of the current FY and finalized within this FY. With the demand for wagons touching new highs, your Company is poised to strengthen its positioning in the sector by making a judicious split between its customers and the model mix to be produced while maintaining a healthy order book.

After few years of dim market scenario, the Steel Foundry Division of your Company is now booked with full capacity utilization of both the facilities (Belgharia and Urla) amounting to 3000 MT castings per month. Total order book is comprised of recently bagged major Indian Railway by the Company and the on-going export orders. Your Foundry has successfully added BRADKEN, Australia. An initial order of 75 MT is bagged which will eventually go up-to 400 MT per month. After the exorbitant increase in raw material prices during the year, now it has started with downward trend.

The Rail EPC Division of your Company specially Kalindee unit, continues to face challenges due to stressed working capital conditions. This has resulted in subdued performance during the year. The progress of execution activities in few of the projects are not at reasonable speed. The focus of the unit is to successfully complete commissioning activities in all major legacy projects.

The Bright Power unit of Rail EPC Division has decided to diversify the business considering reduction in railway electrification work and cut-throat competition in this field, and now has targeted Overseas Power transmission line, Power distribution and Power sub-station. The unit is now receiving orders for Overseas sub-station and domestic power distribution including an order in Rwanda for 7.87 million USD.

With the closure of big order book, the focus is now shifting more towards their successful execution while managing finances. The infrastructure development push under various government initiatives along with the proposed advancement in technology is also opening up various new business streams in the mobility and traction divisions, which your Company is now well equipped to garner. With streamlining of internal operations and processes, backed by a healthy order book, your Company looks forward to a strong business and operational performance in FY''24.

Enabling Investments & Collaborations & Innovations

Your Company has entered into an agreement with M/s. NYMWAG CS, a leading wagon manufacturing Company of Europe to establish a manufacturing facility for wagons & its

components or parts in a JV Company in the ratio of 50:50 in order to have more capacity of production and having more share of the Railway market.

Strategic Responses to Opportunities & Threats

Opportunities

Response

Technological advancement: The railway industry is embracing new technologies. Developing innovative products can provide a competitive edge.

The Company has entered / plans to enter into agreements to have access / develop technical know-how to produce better quality, new design, efficient products for local and international market.

Growing demand for Rail Transport: As governments and businesses seek more sustainable/environmental friendly transportation options and governments push to infrastructure development, the demand for efficient and ecofriendly rail transport is increasing. This provides a significant market to us.

The Company is taking continuous steps to increase its production capacity through efficiency, addition to capacity through capital expenditure & new joint ventures to meet the growing demand.

Urbanization: Urbanization is driving the need for efficient and reliable urban transit systems like solutions for urban rail systems, including metro and light rail, which have promising opportunities.

The Company is building up its capabilities to explore diversification in future to new segments like metro, passenger coaches & its components.

Threats

Response

Competition: The railway industry is highly competitive, with established players and new entrants vying for market share.

We need to differentiate our products to stand out based on superior quality, timely delivery, competitive pricing and after sales service. The Company is putting its efforts to improve quality, safety, productivity and cost of its products.

Economic Instability: Economic downturns can affect infrastructure projects and transportation budgets, leading to reduced demand.

The Company does not foresee any major impact of economic downturn on demand of its products as well as have sufficient order book / orders in pipeline equivalent to three years business volume.

Supply Chain Disruptions: Reliance on global supply chains for some inputs expose us to disruptions due to factors like geopolitical tensions, natural disasters, or pandemics, as observed with the COVID-19 pandemic

The Company is continuously focussing on developing a sound eco system of supply chain including backward integration & other avenues.

Changing Customer Preferences: Shifts in customer preferences towards other modes of transportation or technological solutions could impact the demand for traditional railway products.

The Company does not foresee change in Customers preference towards Road transport and is in the process to access and adopt new technologies to provide modern/ updated environment friendly solution.

Strategy for Sustainable Growth

Enhancing capacity of growth in all segments of business by continuous better performance and with strict focus on

expenditure and cost management and improved cashflow is the way forward along with customer delight. We realise we are unique by way of our capabilities and various associations and yet to bloom full potential and we will explore more new

markets and customers - domestic and globally to fulfill our plans to have better margins, profitability and significant stake globally.

Digitisation and embracing innovations to ensure better control over operations will be our priority and surely this will help us reaching out goal in much proven and faster way. Increased focus is on HR and people management including upskilling to align with the above goal.

Talent Management

The Company focuses on enriching the Human Capital for an overall comprehensive development of the workforce in alignment with the Company''s goals and objectives. Human Relations aids in the process of improving the organization''s effectiveness and employees'' well-being. It acts as a framework for enabling employees develop their individual and organizational knowledge and abilities. It is a set of systematic and planned activities designed to provide the employees with necessary skills to meet the corporate needs focusing on both macro and micro-levels.

The essence of Human Relations rests upon the key factors viz. environmental management, employee welfare, employee and community relations, standardized working conditions, social equity, gender balance, human rights, good governance, and anti-corruption measures. Human Relations in your Company contribute harmony in the work place and promote healthy work atmosphere. Through Human Relations, your Company has not merely become a ''place of work'' but has essentially evolved to ''a place to work''.

Human Relations has empowered the employees to work with professionalism bonded with integrity. The endeavour of HR continues towards improving the Quality of Life of the people and motivating them to deliver to their best. HR practices are motivated towards creating a healthy work environment powered by work ethics and professionalism. Moreover, one of the most significant arenas that HR aims at is the upkeep of Safety, Health and Environment.

The process of empowerment of employees includes Learning and Development, sharing of common goals and vision with the Management and real commitment to achieve the goals. HR focuses on acquisition of skills on international qualities of economic, political, and social development. In this diversity of Human Resources Management, your Company has adopted practices and policies enabling its

employees to face the challenges of industrialization and globalization of business. The HR policies and practices are made people-oriented. The thrust area of HR continues to be pivoted on the Self-Development and Career Growth of the employees. This is enabled by means of various Skill Development and Attitude Developmental programs.

Your Company following its Talent Management strategy, believes in nurturing its most significant asset, the Human Capital, towards building a performance-driven organization. Performance Framework helps establish clear goals & expectations from each role so that individual objectives be aligned with the corporate goals and organizational excellence be achieved. To drive the Performance Management System, Balanced Score Card has been introduced as a tool to define the KRAs and KPIs and ameliorate the performance gaps. Human Resource Development, being a continuous process, involves allocation and proper utilization of organizational resources and facilitates in contributing to Capability building towards bringing improvement in an individual''s as well as organization''s facility to produce, perform and deploy and creating a favourable environment for the organization.

SIGNIFICANT FINANCIAL RATIOS

As required under the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations, 2015 (''Listing Regulations''), the significant financial ratios are given below:

Particulars | 2022-23 2021-22 2020-21

Net Profit Margin* % 0.88 1.13 0.70

Operating Profit Margin* % 3.51 4.95 4.14

Debtors Turnover Times 3.31 2.75 2.69

Inventory Turnover Times 4.33 4.84 3.99

Debt Equity Ratio * Times 0.73 0.54 0.68

Current Ratio Times 1.59 1.83 1.56

Interest Coverage Ratio Times 1.30 1.48 1.15

Return on Net Worth@ % 1.49 1.38 1.04

''Decrease in profit margin is due to lower production during first half of the year on account of proto making, non-availability of components and lower margin on Railway order. The Company expects improvement in margin as there is significant increase in production and product mix with better margin.

‘There is increase in borrowings in FY''23 due to increase in volume. The Company expects to improve its debt equity ratio in FY''24.

@During FY''23, there is increase in Net Profit as compared to FY''22.

HEAVY ENGINEERING DIVISIONI. Freight Car and Components

Your Directors are pleased to inform that your Company has received its highest ever wagon(s) order from Indian Railways for 20067 wagons, valuing INR 64500 mn. In FY23, your Company was able to deliver 3073 wagons valued approximately at INR11040 mn.

As per the Budget FY''24, the Railways have planned the highest ever planned outlay of Rs. 2.4 lakh crore during FY''24. The Railways on domestic front continue to focus in increasing market share of freight business to 45% and have come out with "Mission 3000 MT" plan to be implemented by FY''27 much ahead of their initial plan of achieving it in FY''31. The Railways is also taking an initiative to improve the design of wagons, thereby inviting wagon manufacturers to come out with their own design to improve overall capacity of wagons and codal life of railway Assets, and to bring the latest technology for maintenance in their Railway Workshops. Your Company is working with some of the global players in the Railway sector to cater to the above demand from Indian Railways.

Your Company has entered into a 50:50 Joint Venture Agreement with M/s NYMWAG CS a.s. - AZC Group, one of the leading European conglomerates having diversified businesses for manufacturing Wagons and Wagon Components. To start with, the Joint Venture will manufacture wagons and its components for domestic market, with further scope to supply to European Markets, thereby ensuring an entry to coveted European markets.

Since in the beginning of the year till the Company received mammoth order from Indian Railways, the Company''s order book was mainly for private orders, which was not enough as per capacity and its production got seriously impacted. As a result, plants had to go idle for the want of availability of wheelsets. Moreover, import of wheelsets for wagons was not permitted earlier, which was later allowed on a later date considering the large requirement of wagons and the limitation of Rail Wheel Factory to meet such large demand of wheelsets against wagon orders from private parties. Your Company successfully completed the prototype in mid of 2nd Quarter, and started the series production thereafter. The second half of the year ended with a higher turnover and better profitability owing execution of series production for Indian Railway and bringing in operational efficiency.

Your Directors are pleased to inform that during the year, your Company also exported 100 Gondola Wagons to Liberia and were appreciated for the supply of quality wagons. The customer further awarded your Company with additional orders of 300 Wagons. Your Company continues to receive multiple enquires from various international customers.

II. Locomotives

We would like to vacate the area assigned to locomotive shell production after completion of existing order in favour of Freight car business to produce higher number of wagons considering subdued order under this business

III. Hydro Mechanical Equipment (HME), Bridge & other Steel Structures (BSD)

The HME/ BSD division has achieved a turnover of INR 1300 mn during FY''23.

Performance of the Division has shown significant improvement and we have been able to complete some long running projects during the year. The progress on 2000 MW Subansiri project which was held up for long due to local issues, site floods etc. is now on in full swing and likely to be completed by February 2024.

We have participated in Penstock tender in Nepal in JV with SS Fabricator of Nagpur and Penstock tender for Khandong HE Project of NEEPCO.

The performance of a BSD project was affected due to certain technical issues at our vendor''s end as raised by RITES for Mizoram Bridge Project which took long to resolve. This led to the delay in all downstream activities and the resultant delay in completion of project, now likely to be completed by 3rd quarter of FY''24.

STEEL FOUNDRY DIVISION

The Steel Foundry Division of your Company has achieved a remarkable growth of around 63% over the previous year i.e. FY''22 and have done the highest ever sales of INR 5400 mn during the year out of which INR 1400 mn of export & INR 4000 mn for domestic.

In order to meet the increased captive demand of Freight Car Division, it has been decided and action has already been taken to increase the overall capacity of the foundry both at Belgharia and Urla by installing balancing equipment. With these expansions, the overall production capacity of both the

foundries together will be around 4000 MT per month - 2500 MT at Belgharia& 1500 MT at Urla. Target for implementation of these expansions is by 3rd Quarter of FY'' 24 .

During the last year, your foundry division has developed and started exporting some critical industrial casting to new Australian customer at a better contribution margin.

Your foundry division has also developed some prestigious Railway castings for North American market such as coupler and articulated coupler which will enable to reduce one bogie between two automobile carrying wagons by sharing the load. This will create substantial export market.

Your foundry division after completing development work, has now started regular manufacturing of weldable CMS crossing. RDSO, after technical evaluation, has approved the product and the foundry division is ready to execute the flash butt welded CMS crossing order of around 2500 nos. received from Indian Railways.

Aiming on the bottom-line growth, cost reduction has been set as the major objective in current FY along with focussing on recycling of bulk material, reduction in energy consumption etc., Your foundry division has already initiated programs on sand reclamation system, alternative furnace refractories and upgraded graphite electrodes etc.

RAIL EPC DIVISION

Your Company has continued to contribute towards overall growth and development of Rail Infrastructure of the country as an important and reliable extended arm of Indian Railways.

During the year, Kalindee unit of Rail EPC Division clocked a gross revenue of INR 5403 mn as against gross revenue of INR 5742 mn during previous year, despite a volatile and high inflationary external environment. The unit laid emphasis on efficient and faster execution of contracts in hand and also concerted efforts on commercial closure of projects, which helped in restricting non-productive expenditures on prolongation of the Contracts. Now, intake of orders have been focused in our core area of strengths i.e. Signaling & Ballast less trackers with shorter execution cycle enabling faster rotation of working capital. We are happy to report that your Company has been successful in significantly reducing its overall Bank Guarantee obligations over the last couple of years.

Your Company takes pride in being the key contractor for laying ballast less track in East West Metro Corridor Project, Kolkata the line which would connect Howrah & Sealdah

Railway Station, and which would pass through under the bed of Hooghly River through a tunnel 32 meters below water level. Work under Hooghly River has already been completed and a trial run on the section was also successfully conducted in April 2023. The balance work is going on and is expected to be completed during the current year.

The unit is also facing increase in competition by way of aggressive bidding at unremunerated prices for conventional track projects by new EPC companies as well as existing players to boost order book.

Rail Electrification

During the year, Bright Power unit of Rail EPC Division clocked a gross revenue of INR 2024 mn as against gross revenue of INR 1918 mn during previous year. In continuation with the emphasis to have a strong foot hold in maintenance of rail electrification, Bright Power unit of Rail EPC Division has now expanded their foothold in 2800 Kms from 300 Kms from the previous years. The unit has just completed the work for rail electrification connectivity for Adani Godda-Thermal Plant and Pipava Port authorities. The unit has entered in rail connectivity projects in Coal fields and secured the first order for South Eastern Coal fields. The work of rail electrification infrastructure for NMDC is under completion stage. The unit is now diversifying into various other electrical projects under Central Government Scheme of feeder separation under which they have already secured orders amounting INR 2500 mn. The unit has also received orders from Rwanda, an African country for $7.87 mn and further expecting orders for another $25.00 mn. The unit is now planning to participate in bids for mining mineral evacuation, Rydel and Solar projects specially in African countries funded by World Bank and European Banks.

SUBSIDIARIES / ASSOCIATE/ JOINT VENTURES

The subsidiaries / associate / joint ventures continue to contribute to the growth in revenue and overall performance ofyour Company.

A Report on the performance and financial position of each of the subsidiaries, associate and joint ventures as included in the Consolidated Financial Statement of the Company is provided in Form AOC-1 and forms a part of this Annual Report.

The Consolidated Financial Statements of the Company, its subsidiaries, associate and joint ventures prepared in accordance with the Act, and applicable Indian Accounting

Standards and the Auditors'' Report thereon form a part of this Annual Report.

Following subsidiaries / associate companies were formed to identify emerging opportunities in the field of Rail, heavy industry and defence business and are working on determining suitable opportunities to commence its field operations.

i. Belur Engineering Private Limitedii. Texmaco Transtrak Private Limitediii. Texmaco Rail Electrification Limited

iv. Panihati Engineering Udyog Private Limited

v. Texmaco Rail Systems Private Limited

The Equity Share capital of Texmaco Rail Systems Private Limited has been increased during the FY''23 from INR 2,00,000 to I NR 4,00,000.

vi. Belgharia Engineering Udyog Private Limitedvii. Texmaco Defence Systems Private Limited JOINTVENTURESi. Touax Texmaco Railcar Leasing Private Limited

Touax Texmaco Railcar Leasing Private Limited (''JV'') received fresh orders of 10 new rakes in the financial year under review in addition to 17 nos. already in service. These are being manufactured at Texmaco & Jindal Rail. The order of the company has never looked so healthy with a brimming pipeline largely due to user-focused policies from IR and growing rail infrastructure projects like DFC and policies to promote private wagon ownership. Further order book prospects look encouraging considering enquiries of specialized wagons. However, we are faced with manufacturing capacity constraints as all wagon plants are loaded with the huge IR orders, acute shortage of wheel sets, and volatile interest rate scenario with six rate increases in the last one year from 7.20 to 8.15%. As commonly aware long-term leases are very sensitive to interest rate fluctuations as the leasing as a business thrives only on a stable interest rate regime. Hopefully, with the interest rate stability of recent, we shall be able to sign more leases. Especially, since we have signed on two more banks to our lending pool namely SBI and IDFC Bank.

The turnover of the JV company during the FY''23 was INR 433 mn.

ii. Wabtec Texmaco Rail Private Limited

Wabtec Texmaco Rail Private Limited, the JV company, posted exceptional financial results for FY''23. The total revenue earned during FY''23 was more than doubled to INR 770 mn as compared to FY''22. The Net Profit surged significantly to INR 111 mn compared to FY''22. The JV company strengthened its position in the freight Draft Gear segment with customer''s preference due to superior quality and on-time delivery. Revenue from exports doubled on higher volumes requirement from Wabtec, Mexico. The JV company is witnessing increased demand of its non-metallic liner Friction Wedges. The JV company is working to introduce a range of new freight components in India including the 4- port automatic brake pressure monitoring system, Bogie Mounted Brake Systems, and SAC-1 Articulated Coupler. All these products will be piloted / introduced / put on trials during current FY''24. The company has also been working on a project to manufacture C3W Distributor Valve for Wagon application and expects to commence commercial production during current FY''24. With new products in various stages of planning and execution, the company expects to achieve improved business growth in the coming years bolstered by Indian Railways'' plans to induct more than 25000 wagons annually over the next few years to increase the modal share of Indian Railways in the Indian freight market from existing 27% to 45% by ''2030.

R & D ACTIVITIES A. Freight Car Division

The design centre of Freight Car Division is fully equipped and capable to design next generation freight cars for domestic as well as international market with specifications conforming national /international standards. It is working closely with all stakeholders (Railways, Private operators, vendors ) to provide innovative solution for efficient wagons. The centre has completed design of few wagons this year and are working on different projects:

1) Completely in-house designed 30 tonnes axle Rotary Dump Gondola Ore Car for Liberia conforming to AAR standards has been performing well and client has awarded certificate of appreciation for quality with performance. This wagon was designed using CAD/CAE tools with virtual prototyping resulting in robust wagon meeting client''s requirements with excellent performance.

2) Development of new Taller Autocar with innovative solutions for carrying wide range of cars specially SUVs and other automobiles like two wheelers, three wheelers etc. The division is working closely with AFTOs to meet their customized requirements.

3) It is expected that Indian Railways will be floating tender for Advance Design Freight Wagons. The division is working collaboratively with partners and with inhouse capability to meet ambitious KPIs for this project.

B. Steel Foundry Division

The Company''s R&D Centre is officially registered and acknowledged by the Department of Scientific and Industrial Research (DSIR), Government of India. The centre is actively engaged in conducting research and innovation to enhance the development of various products and processes. Through its efforts, the Company has successfully introduced new products, extended the lifespan of existing products through process innovations, and designed lightweight and efficient models to facilitate faster and more efficient transportation of goods and specialized cargos. The metallurgical laboratory, an integral component of our R&D Centre, has already obtained and continuing its ISO/IEC 17025:2017 certification from the National Accreditation Board for Testing and Calibration Laboratories (NABL). The scope of accreditation has been targeted to expand to a broader range which will include Metallography and wet chemical analysis.

a) New Product Development:

(1) The division has developed articulated coupler for the North American market. The speciality of this product is that it will reduce the number of bogies required and, therefore, reduce the cost of freight cars.

(2) Three new designs of high tensile couplers have been developed for the North American market. These couplers have been tested and cleared for production by AAR .

(3) A new design of the End of Car Cushion casting has been developed in our foundry. This is the fourth consecutive EOCC yoke that the division have developed for the American market.

(4) Five different types of high-wear and impact-resistant castings for above-ground mining have been successfully developed. This product will be used in various parts of the world for surface mining operations.

(5) High tensile Knuckles and a special type of locomotive yoke casting are in the process of development. These castings are intended for the export market. We are in the final stage of development and are hopeful that we will complete the project on time.

b) New Process Development:

Several existing components have undergone modifications in their method design, leading to significant enhancements in terms of durability and the quality of the surface finish. This has resulted in notable cost savings.

Additionally, the R&D Division of the Company has taken up the following projects:

(1) Weight reduction of castings and yield improvement.

2) Root cause analysis of casting defects of High Wear resistance castings.

(3) Standardization weldable crossing manufacturing process.

IT SERVICES

IT department of your Company has continued its ongoing focus on the Digital Transformation Journey with a robust strategy in place to safeguard virtual territory and workspace of your Company. The department is also maintaining solutions to enhance the endpoint security by minimising the time to detect a cyber-attack and improved response time. The Company is managing its business operations through Oracle ERP Applications which has been successfully migrated to Oracle Cloud Infrastructure. The IT department effectively analyses network traffic patterns and bandwidth consumed by different devices and applications to configure traffic in order to balance the system by better understanding bandwidth consumption and performance.

To further strengthen Information technology, your Company has considered the next step in our Digital Transformation Strategy by implementing Oracle Fusion application. This will overhaul entire business operations along with Analytics program to create dashboards providing insights for multiple KPIs addressing business performance in Finance, Manufacturing, Supply Chain Management, Inventory Management and Sales Performance. This enhancement will propel insightful and rapid decision making.

HUMAN RELATIONS

With the business set to evolve and journey to an increasingly fast-paced future, our people strategy is geared and structured to nurture and sustain the staggering growth and demand for skilled and engaged talent.

Our employees and workers occupy prime position in the organisation''s hierarchy of stakeholders, and therefore continuous attention is given to retention, engagement, and development of talent at all levels.

We operate mindful of all regulatory requirements while employing and are an equal opportunity employer.

Ensuring that an individual is making progress in their career journey and realizing their aspiration is a key driver of our people practice.

To achieve this, we run focused initiatives across the three pillars of human resources which are: attracting talent, retaining talent and fostering an enabling working environment.

Major initiatives in human resources have always been an integral part of your Company''s agenda with this fiscal being no different. Developing a high performing organisation, bespoke learning initiatives, robust performance management process, engagement activities to foster belongings and diverse talent hiring have been some key of many efforts.

We are committed to further drive multiple initiatives across all three pillars, particularly in the areas of driving high performance culture and fostering an engaging and collaborative working environment.

CORPORATE SOCIAL RESPONSIBILITY

Your Company believes in community service and human welfare. With this view, the Company has actively engaged in social upliftment of the neighbouring residents through various CSR drives in the fields of Education, Health, Environment and Women Empowerment.

To make a significant difference in the society and improve the overall quality of life, Texmaco Neighbourhood Welfare Society, the philanthropic arm of the Company, is running its Health and Wellness Hub at the Texmaco Estate premises that includes services like Physiotherapy, Yoga, Gym and Alternative Medicine. The mission behind this initiative is to alleviate pain, restore health and build physical fitness, with the aid of skilled and experienced experts. The Health Hub is

well-equipped with the requisite technologically advanced equipment, supported by a modern Gym in cheerful and pleasant surroundings. The Yoga Centre adds to the charm of the Hub. The facility caters to patients from the neighbourhood apart from the employees and their family members.

The Company continues providing financial assistance for Health and Education to the unprivileged community of the society.

All such humble initiatives distinguish the Company in the professional league and put it on a sustained business responsibility.

The Company acknowledges the importance of environment, social, and governance (ESG) issues and intends to engage with Stakeholders & experts in this domain to embrace this function as an integral part of the Company to become future ready.

The Company has in place a policy on Corporate Social Responsibility. During the year, there has been no change in the policy. The weblink for accessing such policy is https://www.texmaco.in/wp-content/uploads/2023 /01/CSR POLICY TEXRAIL.pdf.

The Company has spent in excess of the prescribed threshold under the Act on the CSR activities for FY''23.

The Annual Report on CSR activities is enclosed as Annexure A and forms a part of this Report.

GREEN INITIATIVE

Your Company remains committed towards its endeavour to minimize its carbon foot prints and continues to embrace a sustainability initiative with the aim of going green and minimising the repercussion on the environment. Your Company had already adopted the green initiative by dispatching the Annual Report, Notices, other communications, etc., through e-mail to its Shareholders, whose e-mail address are registered with relevant Depository Participants / RTA / Company. Shareholders are requested to support this initiative by registering / updating their e-mail address for receiving Annual Report, Notices, other communications, etc. through e-mail. The Ministry of Corporate Affairs (''MCA'') and the Securities and Exchange Board of India had issued relaxations from sending printed copy of Annual Report, Notice of the Annual General Meeting (''AGM''), etc. to the Shareholders for the AGM to be held in the year 2023.

With objective of supporting the Green Initiative and in view of the above-mentioned relaxations, your Company is dispatching the Annual Report & Notice of the AGM along with other documents required to be annexed thereto to the Shareholders through e-mail at their registered e-mail address. Such documents are also available on the website of the Company at www.texmaco.in.

Further, those Shareholders who have not yet registered their e-mail address are requested to follow the procedure as mentioned in the Note to the Notice calling AGM to receive the Annual Report & the Notice of the AGM and other documents relating thereto through electronic mode and to enable their participation in the AGM.

PARTICULARS OF EMPLOYEES

The number of employees as at 31st March 2023 was 2022. In terms of the provisions of Section 197(12) of the Act, read with Rules 5(2) & 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 and forms part of this Report.

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 and forms part of this Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Disclosures relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo as required under Section 134(3)(m) of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014, are enclosed as Annexure D and forms a part of this Report.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNELMeetings of the Board

During the year under review, 6 (Six) Board Meetings were held on the following dates:

. 20th May 2022

. 12th August 2022

. 20th October 2022

• 7th November 2022

. 11th February 2023

. 14th March 2023

Criteria for 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 of eminent Qualified Professionals, entrepreneurs with diverse backgrounds and experience in business, governance, education and public service. The criteria include the matrix of skills / expertise / competencies as specified by the Board for identifying individuals to serve as a Director on the Board.

Your Company has in place a well-defined Remuneration Policy for Directors, Key Managerial Personnel and other employees of the Company. The Nomination and Remuneration Committee periodically reviews the policy to ensure that it is aligned with the requirements under the applicable laws. During the year, there has been no change in the Policy.

The policy ensures equity, fairness and consistency in rewarding the employees on the basis of performance against set of objectives. The policy is available on the Company''s website. The weblink for accessing such policy is: https://www.texmaco.in/wp-content/uploads/2023/01/ REMUNERATION POLICY TexRail.pdf.

Change in Directors and Key Managerial PersonnelRe-appointments:

During the year, the re-appointments of Mr Akshay Poddar as Non - Executive & Non - Independent Director, Mr Indrajit Mookerjee as Executive Director & Vice Chairman and Mr A. K. Vijay as Executive Director of the Company, were approved at the Annual General Meeting (''AGM'') of the Company held on 30th September 2022.

Appointments and Resignations:

The Board of Directors (''Board'') on the recommendation of the Nomination and Remuneration Committee, had appointed Mr. Amitabha Guha, as Independent Director of the Company w.e.f. 6th May 2022. The appointment was approved by the Shareholders by way of Postal Ballot.

During the year, Mr A. K. Gupta, Managing Director resigned w.e.f. close of business on 31st August 2022. Further, Mr A. K. Vijay, Executive Director & Chief Financial Officer (''CFO'') resigned from the position of CFO w.e.f. 1st April 2023 and Mr Hemant Bhuwania was appointed as CFO w.e.f. 1st April 2023. Accordingly, Mr Vijay continues to act as Executive Director of the Company.

Further, Mr Ravi Varma, Company Secretary & Compliance Officer resigned and Mr K. K. Rajgaria was appointed as Company Secretary & Compliance Officer w.e.f. 30th April 2023.

Retire by rotation:

Mr D.H. Kela, Executive Director retires by rotation and being eligible, has offered himself for re-appointment at the ensuing AGM of the Company.

Proposed Re-appointment:

The present tenure of Mr Utsav Parekh will expire on 3rd September 2023 and in view of his experience, expertise and valuable contribution, the Board on the recommendation of the Nomination and Remuneration Committee has approved his re-appointment for a period of 5 (five) years, subject to the approval of the Shareholders.

The above recommendation of the Board is being placed for the approval of the shareholders by way of postal ballot.

Board Evaluation

Your Company has in place a Policy for performance evaluation of the Board, Committees of the Board and individual Directors, by fixing certain criteria, duly approved by the Nomination and Remuneration Committee and adopted by the Board. The criteria for the evaluation includes their functioning as Members of the Board or Committees of the Board, execution and performance of specific duties, etc.

A structured questionnaire, which cover various aspects of the Board functioning such as Director''s strength and contribution, specific duties, obligations, etc. evolved through discussions within the Board, has been used for this purpose. Further, on the basis of performance review by Independent Directors at their meeting held on 14th March 2023 and recommendations of the Nomination and Remuneration Committee, a process of evaluation was followed by the Board for its own performance and that of its Committees and individual Directors. Furthermore, the evaluation of the Independent Directors was performed by the Board. The evaluation criteria comprised assessing the various parameters including oversight and effectiveness of the Board, performance of the Directors, expertise /skills / competencies as possessed by the Directors in the context of the business of your Company, contribution to the strategic planning, etc.

Further, the Board ensured that the evaluation of Directors was carried out without the participation of the Director who was subject to evaluation.

Declaration by Independent Directors

All Independent Directors of your Company have given the declaration that they meet the criteria of independence as laid down under the Act and Listing Regulations.

The Board of Directors of your Company took on record the declaration submitted by the Independent Directors after undertaking due assessment of their independence from the Management. The Independent Directors of your Company have also confirmed their registration with the Independent Directors'' databank maintained by the Indian Institute of Corporate Affairs. The Independent Directors will undertake the proficiency test, as may be required, under the Companies (Appointment and Qualification of Directors) Rules, 2014.

The Board is of the opinion that all the Independent Directors possess the requisite integrity, expertise and experience (including proficiency) to fulfil their duties to act as such.

AUDIT COMMITTEE AND AUDITORSComposition of Audit Committee

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

Statutory Auditors

At the 24th AGM held in the year 2022, Messrs L. B. Jha & Co., Chartered Accountants, Statutory Auditors of the Company, were appointed by the Shareholders to hold the office as such from the conclusion of 24th AGM until the conclusion of 29th AGM of the Company.

Cost Auditors

Your Company has appointed Messrs DGM & Associates, Cost Accountants, for conducting the Cost Audit for FY''23 in terms of the provisions of the Act and the Companies (Cost Records and Audit) Rules, 2014.

The Board on the recommendation of the Audit Committee, at its Meeting held on 12th May 2023 has approved the re-appointment of Messrs DGM & Associates, Cost Accountants (Firm Registration No. 000038), as the Cost Auditors to conduct the Audit of the Cost Records of the Company for the FY''24 at a remuneration of INR 2,50,000 (Rupees Two Lakh Fifty Thousand) plus applicable taxes and out-of-pocket expenses as incurred from time to time. The proposal for the ratification of the remuneration payable to Messrs DGM & Associates is being placed at the ensuing AGM for the approval of Shareholders.

In terms of the provisions of Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014, your

Company is required to maintain cost records and accordingly, such accounts and records are made and maintained.

Secretarial Auditor

Your Company has appointed Messrs S. R. & Associates, Practicing Company Secretaries, to conduct the Secretarial Audit of the Company for FY''23 in terms of the provisions of the Act & the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and the Listing Regulations.

The Secretarial Audit Report in Form MR-3 is enclosed as Annexure E and forms a part of this Report.

Whistle-Blower Policy

The details on the Whistle Blower Policy are provided in the Report on Corporate Governance as attached to this Report.

INTERNAL FINANCIAL CONTROLS AND RISK MANAGEMENT

The Company has a proper and adequate system of internal controls, appropriate to the nature and size of the businesses. The designated system ensures that all transactions are authorised, recorded and reported correctly and assets are safeguarded and protected against loss from unauthorised use or disposition. In addition, there are operational 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 periodically reviews the internal control system to ensure that it remains effective and aligned with the business requirements of your Company.

The objectives pertaining to Risk Management are to monitor and review the Risk management Plan of the Company including identification therein of elements of risks, if any, and such other related functions. The Company has in place a Risk Management Policy along with a comprehensive framework in order to mitigate the risk causing losses which might be incurred due to non-systematic attendance of certain issues. The Risk Management Policy which has been adopted by the Company has in its scope, the establishment of a process for risk assessment, identification of risks both internal & external, cyber security risk and a detailed process for evaluation and mitigation of risks and is reviewed periodically by the Audit Committee to ensure its effectiveness.

Your Company is having a Risk Management Committee (''RMC'') duly constituted by the Board of Directors of the Company. The composition of the RMC is provided in the Report on Corporate Governance which forms a part of this Report.

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 / Tribunals 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) The Reports of the Auditors do not contain any qualification / modification and hence no explanation is required.

(e) Slump Sale

During the year the Board of Directors at its Meeting held on 14th March 2023, had given its approval to transfer, assign, restructure or convey the whole or substantially the whole of Rail EPC business comprising of Kalindee Rail and Bright Power units i.e. two business undertakings of the Company, by way of slump sale as defined under Section 2(42C) of the Income-tax Act, 1961 as a ''going concern'', to two separate wholly owned subsidiaries of the Company.

The above recommendation of the Board is being placed for the approval of the shareholders by way of postal ballot.

(f) Share Capital

During the year, there was no change in the share capital of the Company. The Paid up share capital of the Company as at 31st March 2023 was '' 32,18,69,895.

(g) Deposits

During the FY''23, the Company has not accepted any Deposit under the provisions of the Act.

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

Your Company has in place an Internal Complaints Committee (''ICC''), formed in accordance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules framed thereunder to promote safe & healthy working environment and to redress complaints received regarding sexual harassment. The ICC meets at regular intervals.

Further, your Company has a Policy on prevention of Sexual Harassment in accordance with the said Act and Rules.

During the year, no complaint was received by the ICC.

(i) Disclosure with respect to compliance of Secretarial Standards

The Company has duly complied with the necessary requirements of the Secretarial Standards relating to Board Meetings and General Meetings, as issued by the Institute of Company Secretaries of India.

OTHER INFORMATIONAnnual Return

The copy of the Annual Return in the prescribed format is available on the website of the Company. The weblink for accessing Annual Return is: https://www.texmaco.in/wp-content/uploads/2023/08/Annual Return 22-23.pdf.

Dividend Distribution Policy

Your Company has in place a Dividend Distribution Policy in line with the requirements of the Listing Regulations. During the year, there has been no change in the Policy.

The web link for accessing such policy is: https://www. texmaco.in/wp-content/uploads/2023/01/Dividend Distribution Policy.pdf .

Corporate Governance

Report on Corporate Governance pursuant to the Listing Regulations is enclosed as Annexure F and forms a part of this Report.

Business Responsibility & Sustainability Report

Business Responsibility & Sustainability Report pursuant to the Listing Regulations is enclosed as Annexure G and forms a part of this Report.

Particulars of Loans, Guarantees and Investments

The details of Loans, Corporate Guarantees and Investments made during the financial year under the provisions of Section 186 of the Act have been disclosed in the financial statements of the Company.

Related Party Transactions

All related party transactions took place during the FY''23 were entered in the ordinary course of business and on arm''s length basis.

An omnibus approval from the Audit Committee for the financial year is obtained for the transactions which are repetitive in nature. All related party transactions are reported to and approved by the Audit Committee / Board. The details of such transactions were also placed before the Audit Committee and the Board for their review, on a quarterly basis. During the year, there was no material related party transaction entered into by the Company and as such disclosure in Form AOC-2 is not required.

The Company has in place 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: https:// www.texmaco.in/wp-content/uploads/2023/01/ RPTP.pdf

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

Your Directors state that:

(a) in the preparation of the Annual Financial Statements for the financial year ended 31st March 2023, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) relevant 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) proper and sufficient care had 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) the Annual Financial Statements of the Company have been prepared on a going concern basis;

(e) they 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) they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.


Mar 31, 2018

REPORT OF THE BOARD OF DIRECTORS

Dear Shareholders,

The Directors have pleasure in presenting the 8th Operational Annual Report of the Company along with the Audited Financial Statements for the year ended 31st March 2018.

FINANCIAL HIGHLIGHTS

(Rs, in lakhs)

2017-18

2016-17

Operating Profit (PBIDT)

5,806.98

8,038.88

Less: Interest (Net)

2,485.92

2,221.52

Gross Profit (PBDT)

3,321.06

5,817.36

Less: Depreciation

1,869.65

1,615.90

Profit before Taxation

1,451.41

4,201.46

Less: Tax Expenses

Current Tax including tax related to earlier years

503.87

1,169.73

MAT Credit entitlement

(398.00)

(541.00)

Deferred Tax

337.83

215.43

Profit after Taxation

1,007.71

3,357.30

Add: Balance brought forward from previous year

13,500.71

11,276.14

14,508.42

14,633.44

Appropriations

Dividend paid (Ind.tax)

660.77

632.73

General Reserve

100.00

500.00

Balance Carried Forward

13,747.65

13,500.71

Dividend

Your Directors have recommended payment of a dividend of 25% for the year ended 31st March 2018.

The Gross Turnover for the year stood at INR 9627.52 mn. The Cross Profit for the year (PBDT) and Profit Before Tax (PBT) were INR 332.10 mn and INR 145.14 mn respectively. The Net Profit was INR 100.77 mn, after providing net tax liability of INR 44.37 mn for the year as per the statement of Profit and Loss Account drawn up in accordance with the Indian Accounting Standards.

MANAGEMENT DISCUSSION AND ANALYSIS

The performance of the Company during the year was below expectation due to lack of orders from the Indian Railways(IR) for wagons. Correspondingly, its Steel Foundry Division was also affected for the greater part of the year as it had to run on a restricted production level. The performance of the Rail EPC division has shown improvement and will pick up further momentum in the current financial year.

With the release of wagon orders towards the end from IR, the current year starts on a positive note. The fresh tender for 22258 wagons from the Railways for 2 years requirement will further improve the outlook. There is a robust requirement from the Rail EPC segment and strong business opportunities are emerging in the field of Steel Castings, especially for exports and Rail EPC Division. With a strong order book, the current financial year holds a lot in promise.

The Company is now established as a ''Total Rail Solution Provider'' with reduced dependence on a particular product line. With the prime focus of the Government of India on up gradation, modernisation and development of Rail Sector, emerging opportunities in Rail Sector in neighbouring countries, especially Middle East Asia and Africa, good business opportunities are developing in all areas of operation of the Company. The Company is also continuously focusing on backward and forward integration by timely entering into critical techno-commercial tie-ups to add value to its operation.

During the year, GST was implemented effective from 1 st July 2017, followed by second round of tax slab reductions in November. The implementation of GST had resulted in initial market hiccups and given the backdrop of this historic transition that our country experienced, the performance for your Company during the year remained challenging.

While your Company welcomed the move and smoothly transitioned to the new tax regime, the performance during the 2nd & 3rd Quarters of the year was impacted as the site activities related to unpreparedness of the small contractors / traders resulted in sudden drop in execution rate of EPC Projects /contracts.

HEAVY ENGINEERING DIVISION

I. Rolling Stock Division

a. Freight Car & Coaching’s

During the greater part of the year, the division was hard pressed for orders. It was only towards the later part of the year that the IR finalised the tender for 9493 wagons, opened on 6th September 2017. Your Company bagged an order for 1764 wagons, valued about INR 4210 mn, the highest amongst the competing firms. With this tender, a paradigm shift in IR Procurement Policy for wagons was introduced whereby the IR has dispensed with the supply of free issue items (steel, wheel sets and bearings), which will now be in suppliers'' scope. The wagon industry, starving for long with low off take by IR, continued to quote un-remunerative prices to get a larger pie of the meagre tender quantity and thus the margins continued to remain under pressure.

The execution of this order, released on 28th December 2017, will commence from the first Quarter of the current financial year.

A silver lining for the Industry, however, is the fact that IR have finally conceded to the wagon industry''s long pending demand of releasing bulk orders at a time, enabling firms to plan the procurement of material and execution of the orders in a coordinated manner. For the years 2018-19 and 2019-20, IR has already announced their procurement plan of 22258 wagons to be supplied in two years. Due to availability of bulk quantity of order for the industry, it is hoped that there will be some semblance of working at a workable price.

On the private wagon order front, the first half of the year had been rather lukewarm. Flowerer, during the second half of the year, your Company bagged sizeable orders including orders for rakes of car carrying wagons, container flat wagons, cement wagons and alumina powder carrying wagons.

Further, the private market is evincing a lot of interest towards specialized wagons such as car carrying wagons. Many transporters, moving cars through road, are now obtaining AFTO license from IR to enable them to move the cars from the manufacturers premises to consumers by Rail, which is both safe and cost effective. Being the pioneer, your Company stands to benefit from the emerging demand from this sector.

Your Company bagged an order from COFMOW (IR) for retro-fitment of Centre Buffer Couplers in 600 Nos. of ICF designed coaches (valued INR 830 mn). flow ever, with the new guidelines of IR for retro-fitment of coaches, future prospects in the field are not exciting and the availability of coaches in economic numbers will remain a challenge.

On the export front, the division has an order book of INR 445 mn which will be executed within the current financial year.

b. Locomotive Components/ Assemblies

Your Company has successfully diversified into manufacture of Electric Locomotive Shells and Sub-Assemblies and is now a leading supplier of Complete Shell Assemblies and other Loco Shell and under carriage components to various Locomotive plants in India. These are now under regular production with strong growth in volumes every year. The value of manufactured Locos / Sub-Assemblies in FY''18 was INR 473.50 mn as against INR 201.80 mn in FY''17.

i.e. an increase of 135 %. The growth trend is expected to be maintained during the current financial year.

As reported earlier, your Company has received an order from Aistom for manufacture of E-Loco car body sheiis for 480 Duai Locomotives to be manufactured at Madhepura, for INR 5000 mn to be executed over a period of 7 years. The Company is well poised and equipped to supplement Alstom in this prestigious project for the fabrication of new generation locomotives for heavy haulage, high speed movement of freight on DFC and other routes of IR. The first car body shell has been delivered to Alstom in May 2018. This has established your Company as a premier supplier of Assemblies and Sub-Assemblies for modern locomotives in the forthcoming years.

II. Hydro-mechanical Eqpt.

Hydro-mechanical Equipment Division of the Company, which in past had suffered due to natural calamities and political agitation at the project sites, has shown significant improvement during FY''18. The division has achieved a turnover of INR 478 mn compared to previous year’s turnover of INR 241 mn. The division expects to achieve still better performance during the current financial year with picking up of the activities at existing sites and commencement of projects at new sites.

III. Bridge & other Steel Structures

The execution during the year had been at low key due to the process involved in proving credentials and tender finalisation. The Bridge Division, under the backdrop of successful commissioning of Bhairab Bridge at Bangladesh, has now built up a reasonable order book with some prestigious projects. During the year, on the strength of strong credential earned, the division has already built up an order book of INR 600 mn and many other orders are under active consideration.

STEEL FOUNDRY DIVISION

The continued fall in IR''s demand for Rolling Stock during FY''18 affected the overall performance of the Foundry division due to its operating at reduced capacity because of lack of orders. The production and dispatch during the year were 12147 MT & 10879 MT against 16444 MT & 17204 MT in FY''17. The turnover of the Foundry stood at INR 1352 mn. On the export front, your Directors are pleased to inform that the Foundry achieved the highest ever export turnover of INR 771 mn compared to INR 450 mn in the preceding year, which is around 57% of Foundry''s total turnover. During the year, the division has successfully developed hi-tech premium bogie castings for North America and new design meter gauge bogie for Thailand market. With this achievement, the Foundry is now equipped with 5 designs of export potential bogies which are being used by almost all wagon builders in North America, South America, Canada, etc.

Your Directors are further pleased to inform that the American export demand is looking buoyant and during the last three months (January-March) Foundry''s the average export had been INR 91.9 mn per month as compared to average of INR 54.8 mn in the earlier months. In addition, for the first time, we have developed 2 new Railway components for the American market (Yoke & Center Plate) which have substantial demand. The initial supplies have already commenced. This will further help in the improvement of export business and your Directors are confident that Foundry''s export during the current financial year will be far better than the previous year.

Your Directors take this opportunity to share the most prestigious credential the Foundry has earned. Based on last three years successful supplies of quality castings of critical specifications for mining industry with zero defect, Sandvik, has upgraded the status of the Foundry as their Tier One supplier and decided to increase the volume substantially from the present 80T per month by transferring business from other international suppliers.

We are further pleased to announce that the Foundry has been selected for "STAR PERFORMER AWARD" by Engineering Export Promotion Council of India for doing highest export of steel casting in Eastern Region.

RAIL EPC DIVISION

Post-merger of Kalindee, the Rail EPC Division has been focusing on closing of old contracts and fast pacing of the new contracts. During FY''18, three major projects have been completed and handed over to the IR. Three more projects are reaching towards substantial completion. All the commissioning were carried out strictly within the timelines allocated by the IR and to their satisfaction.

The signalling and Telecommunication work on Western Dedicated Freight Corridor is proceeding at a fast pace and one section is expected to be commissioned by mid of the current financial year. With the said commissioning, this division would complete this section to the existing international standards.

The division has aiso focused on Metros and is in the process of bidding for Track and AFC packages for Nagpur, Mumbai, Pune and Bangalore, the upcoming Metro expansion. Being the largest provider of ballast-less track in the Country, it is expected that the order book from this front shall be sizeable.

As a part of foray in the international market, the division had bid for packages in Bangladesh and Israel and has already got one order from Bangladesh Railways for INR 4500 mn. More orders are expected in the current financial year.

With various high-tech and high-value projects which are being targeted by the division, efforts are on to improve the delivery mechanism including extensive use of mechanization. This will help the division to complete projects timely in a cost-effective manner.

SUBSIDIARY COMPANIES

i. Bright Power Projects (India) Private Limited

During the year, Bright Power, pioneer in the field of Overhead Electrification of railway system, has achieved a turnover of INR 2165.90 mn with an EBITDA of INR 306 mn and has successfully commissioned some critical and complicated work along with commissioning of 240 TKM Railway Electrification works. The commissioned section includes about 200 KMS continuous OH Electrification in Haryana & Punjab and priority section of Nagpur Metro.

Bright Power has been breaking new grounds with booking of orders from Metro Rail and Power Grid Corporation apart from its core Railways Rail Overhead Electrification work. With the Government''s thrust on expeditiously electrifying Rail network, the business prospects for Bright Power is promising.

ii. Texmaco Hi-tech Private Limited

The working for the year continued to be quite challenging due to the need to develop new products and customers. The EBIDTA of Texmaco Hi-Tech for the current financial year was 18.62 mn.

It has received developmental order for fabricated Bogie, Platform, etc., from GE for Marhaura Locomotive Project, from Alstom Transport for Sydney Metro Project apart from other small orders from discerning customers. Texmaco Hi-tech has been successful in development of new products and establish its proto-types and is slowly on its revival path.

Texmaco Hi-tech is confident that the capacity available will be efficiently utilised for manufacture of high precision products / components, such as, bogies, cab structures, booms, primary parts, etc., for locomotives, coaches and material handling equipment, where there is a reasonable demand potential.

iii. Texmaco Transtrak Private Limited

During the year, your Company has incorporated a subsidiary namely Texmaco Transtrak Private Limited. The EBIDTA of Texmaco Transtrak for the current financial year was (0.06) mn. Texmaco Transtrak has signed an arrangement with CAF, Spain to be the technology provider for electronic interlocking and Train Protection and Warning Systems which are expected to be introduced in a big way in the Railways in the coming years. Presently, the Company has made application for its facility and product approval.

iv. Texmaco Defence Systems Private Limited

With a legacy, vision and commitment to serve the Nation, bequeathed by the founding father of the Birla Empire Late G. D. Birla and his son, the founder of Texmaco, Late Dr. K. K. Birla, our Group Chairman Mr S. K. Poddar, with his passion to take up challenges, has undertaken a strategic group initiative of setting up Texmaco Defence Systems Private Limited, as a subsidiary of the Company, focussed on "Make-in-lndia" projects in the Defence & Homeland Security segments. Texmaco Defence intends to initiate indigenous production of equipments required by the Armed & Paramilitary Forces and bring in the state-of-the-art technologies for current & future requirements, thereby getting substantial work orders for your Company.

v. Texrail SA (Pty) Limited

Your Company has incorporated a new subsidiary Company in Johannesburg, South Africa to expand its footprint especially in Rail EPC export business, to develop South African market and introduce the Company''s products and range of services in Pan African countries.

JOINT VENTURES

i. Touax Texaco Railcar Leasing Private Limited

The leasing business for wagons is now picking up and with the slew of measures taken up by IR to improve rail share of business in transportation, the prospects for the JV company look good. To promote procurement of wagons by the leasing group of some industries, IR has removed some of the entry barriers with reference to specific policies like AFTO and SFTO, reducing the licence fees, past experience stipulations, minimum fleet size and so on. The freight rebate scheme introduced last year has been very successful with many large rail customers embracing the scheme. About 6 million tons of cargo move under this scheme. The introduction of GST is a positive welcome for the leasing industry. Further, opening up of hitherto cargo reserved for carriage by the Indian Railways to conventional wagon is likely to have a positive impact on the wagon leasing business. The turnover of Touax Texmaco for the current financialyear was 1 27.10 mn.

The JV company has turned out a modest profit as population of wagons has gradually built up to more than 500.

ii. Wabtec Texmaco Rail Private Limited

Wabtec Texmaco Rail Private Limited, Texmaco''s JV company with Wabtec Corporation, USA, started its operation in the year 201 6, had achieved a turnover of INR 1 618.50 mn for the year. Few new products are being added in the product range in the current financial year. The JV company has been maintaining its leadership position for the products it has introduced in the market. The JV company''s new facility is under construction on Texmaco property at Belgharia, Kolkata and the JV company plans to commission the new facility in the 2nd Quarter of the current financial year. It will strengthen the position of the JV company in the Indian and neighbouring countries markets and will significantly contribute to the overall performance of the Company.

EXPORTS

The Company''s HME division bagged an order for INR 400 mn and the Rolling Stock division bagged an order for INR 300 mn from neighbouring countries. Your Company is further targeting some new tenders in the current financial year which are likely to be floated shortly.

Apart from India, other countries mainly from South East Asia, Middle East Asia and Pan African countries, are investing heavily in Rail Infrastructure, upgrading the existing infrastructure and other railway projects, and there is potential of business opportunities for your Company. The Company accordingly, has established an office in South Africa to identify and develop the markets.

The efforts of the Company in the field of Rail EPC are fructified. The Company has participated in large export enquiries in the field of Rail EPC which presently are under evaluation.

The Foundry has further developed its export business and its products through existing customers are now being supplied to other geographical locations with better acceptability. The Foundry expects to reach a level of 70% of its products to be exported.

R & D ACTIVITIES

The R & D Centre of your Company is a registered and recognised Centre under the Department of Scientific and Industrial Research (DSIR), Govt, of India. It is engaged in carrying out research and innovation for the development of various products & processes. It has helped the Company to develop new products, improve product life through process innovations, develop light & efficient designs for higher and faster transportation of goods & specialised cargos. This has enabled your Company in saving precious energy and resources and improving cost effectiveness.

A. Steel Foundry Division

a) New Product Development:

1) 4 new designs of centre plate castings have been developed for North American market by unique metallurgical and process improvement. This has enabled your Company to expand its export footprint in the USA.

2) 22 new components with improved wear resistance have been developed for ground excavating applications.

b) New Process Development:

1) The induction hardening process has been developed for critical application in certain fast wearing casting parts.

2) A unique heat treatment process has been developed for components engaged in Ground Excavating Applications to improve their toughness and wear resistance.

The R & D Division has also undertaken the following projects:

1) Development of a computational model to predict mechanical properties of various steel grades from their chemical composition and heat treatment histories through artificial neural networks. This would help to develop new grades and would also eliminate costly trials.

2) Investigation of the effect of austenizing temperature, soaking time, grain size and tempering temperature on the impact toughness of AAR M201 Gr-E steels. The results from this study have been utilised to fine-tune the heat treatment process for AAR M201 Gr-E steels to receive uniform mechanical properties.

3) Development of a modified heat treatment cycle for WD 70-BD grades to achieve cost and energy savings.

c) The R & D department of Steel Foundry Division has further undertaken in collaboration with reputed institutes, development of new generation of castings, processes to assist in improving the quality and life cycle of the products.

B. Heavy Engineering Division

1. Rolling Stock

The Rolling Stock Division has developed the Prototype of Double Deck Wagon ''A'' Car for which its designs have been approved by RDSO.

The Double Deck Car Carrying Wagon had been designed with technical support from renowned European company and the proto type ''A'' Car has been successfully made with sophisticated lifting mechanism features.

The external drive system to rotate the shaft for the lifting mechanism has been imported from Germany to enable smooth movement of upper deck loaded with cars for testing purposes.

The Proto type for the ''B'' Car is delayed as the manufacturing Bay is occupied with the execution of BCACBM orders.

Further improvement in the design is being considered in respect of ''B'' Car.

2. Hydro-mechanical Eqpt.

Flydro-mechanical Division has indigenously developed a new design for expansion joints with dismantling flanges to be mounted in the free spanning penstock section having very heavy sections up to 90mm thickness. The design is suitable for earthquake prone horizontal penstocks and is subjected to extreme conditions of hydro-dynamic loading. Further, adequate sealing arrangement designs have been introduced to ensure leak-proneness under considerable design head.

IT SERVICES

The IT department, on an on-going basis, keeps upgrading its systems and measures to protect the IT network of the organisation from external threats and ensure a secure environment to prevent data loss. All the manufacturing units, corporate and administrative offices are integrated through secured online connectivity with high bandwidth. All divisions of your Company are maintaining ERP applications to track regular business operations of the organization, maintained by the in-house team of your Company.

HUMAN RELATIONS

Fluman Relations aids in improving the organization''s effectiveness and employees'' well-being. It acts as a framework for enabling employees to develop their individual and organizational knowledge and abilities. It is a set of systematic and planned activities designed to provide the employees with necessary skills to meet the corporate needs focusing on both micro and macro levels.

Fluman Resource Development, being a continuous process, involves allocation and proper utilization of organizational resources and facilitates in contributing to the quality of work-life and creating a favourable environment for the organization.

OPPORTUNITIES & THREATS

In the new economic era ushered under the present Government, infrastructure development is the cornerstone of the master planning by Niti Aayog under the chairmanship of the Prime Minister, Shri Narendra Modi. Fortunately for your Company, the pride of place in the new scheme of things has gone to Rail Sector, where Texmaco has emerged as a Total Rail Solution provider, equipped with latest technologies sourced from world-over. The economists too are seeing Rail Sector as a Polestar on the industrial horizon which will transform the national economy.

Starting with Dedicated Freight Corridor (DFC), which is nearing completion by March 2020, there is so much more on the way with the Golden Quadrilateral Rail on the planning board. It will keep the industry engaged for years to come at a brisk pace. Your Company, hitherto recognised as a leading wagon builder, is already gaining recognition in the critical segments of track laying, signalling and telecommunication, overhead electrification (OFIE), rail bridges, etc. The ambitious plan of the Government has also triggered the demand for modern hi-tech wagons and heavy haulage locomotives, where your Company has already established a strong presence. Besides, Rail Safety is a critical area in which the Government has committed a huge outlay, and the Company is reaching out to actively participate in related rail services thru'' its collaboration with top multinationals.

With such unprecedented opportunities thrown up in the wake of massive ongoing expansion plans of Railways, the major challenge to your Company is to beef up its own resources in terms of organisation, financial wherewithal and supply chain management, etc. The Company''s top brass management is fully seized of it and is committed to deliver. In this hugely inspiring backdrop, it is no less important that the Government of India must have a stable policy for sustained engagement of the private sector, and it should eschew any flip-flop policy which tends to dampen the long term plans of the private sector.

CORPORATE SOCIAL RESPONSIBILITY

''Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development with improving the quality of life of the local community and society at large''. Your Company has taken initiatives in the areas of Health, Education, Skill Development, Women Empowerment, Environment, etc., to contribute to a better society and a greener environment.

It has been your Company''s motto to infuse enthusiasm in its employees for coming together to make the earth greener.

Around the sprawling factory premises of your

Company, the Management has made a massive investment in greening the environment. Trees, bushes & hedges all over, lush green parks & lawns, royal palms, fountains, waterfalls, water bodies, etc., have made the environment eco-friendly and relaxing, which indeed helps maintain a green earth. Early this year, your Company has took a CSR initiative to build a Butterfly Park in the backyard of the Steel Foundry. The project was undertaken in consultation with NEWS (Nature Environment and Wildlife Society), a nature conservation NGO, based in Kolkata. The Parkwasinaugurated on 24th June 2017 by Ms Jyotsna Poddar, the first lady of the Adventz Group.

Yet another initiative is taken to set up a Vocational Training Institute in your Company''s campus in collaboration with The George Telegraph Training Institute (GTTI), partnered with The National Skill Development Corporation (NSDC). The Centre is being created with a humble objective to make the youth employable, especially those coming from financially backward class and / or who could not continue their education by imparting them vocational training in various disciplines. Skill development is an increasingly important factor in adapting societies to changing economic and environmental conditions. It will bring innovation, enhance productivity, stimulate economic competitiveness and underpin inclusive approaches to development. Vocational Skill Development meets the skill requirement of the industry at large. The Annual Report on CSR activities is enclosed as Annexure A.

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 / the Company. In case a Shareholder wishes to receive a printed copy, he /she may send a request to the Company, after which a printed copy of the Annual Report will be sent. Shareholders are requested to support this initiative by registering/ updating their e-mail IDs for receiving Annual Report, Notices, etc., through e-mail.

PARTICULARS OF EMPLOYEES

The number of employees as at 31st March 2018 was 1811. In terms of the provisions of Section 197(1 2) 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

Disclosures relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as required under Section 134(3)(m) of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014, are enclosed as Annexure D.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

Meetings of the Board

During the year under review, five (5) Board Meetings were held on 22 nd May 2017,24 th July 2017,18 th September 2017 (adjourned), 1 6th October 2017 and 8th February 2018.

Changes in Directors and Key Managerial Personnel

At the 19th Annual General Meeting held on 1 6th September 2017, Ms Mridula Jhunjhunwala, was re-appointed as an Independent Director w.e.f. 20th March 2018 for a period of three (3) years.

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

The Board of Directors at its Meeting held on 15 th May 2018, based on the recommendation of the Nomination and Remuneration Committee had appointed Mr Girish Chandra Agrawal as the Additional Director and designated him as the Executive Director, and re-designated Mr Sandeep Fuller, Executive Director as the Managing Director of the Company w.e.f. 1 5th May 2018.

The terms and conditions of their appointment are enumerated in the Notice calling the Annual General Meeting for the approval of the Shareholders. The Board has recommended their appointments.

Board Evaluation

The Company has formulated a Policy for performance evaluation of Independent Directors, Board Committees and other Directors, by fixing certain criteria, duly 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, ski [is and experience for the Board as a whole and its individual members with the objective of having a Board of eminent Qualified Professionals, entrepreneurs with diverse backgrounds and experience in business, governance, education and public service.

Your Company has a well-defined Remuneration Policy for Directors, KMP and other employees of the Company. The Nomination and Remuneration Committee periodically reviews the policy to ensure that it is aligned with the requirements under the applicable laws. During the year, there has been no change in the policy.

The policy ensures equity, fairness and consistency in rewarding the employees on the basis of performance against set of objectives. The Policy is available on our website at the link http://texmaco.in/webfiles/texmaco/file/Remuneration-Policv. pdf.

Declaration by Independent Directors

All Independent Directors of your Company have given declarations that they meet the criteria of independence as laid down under the Companies Act, 2013 and 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 Report of the Board of Directors.

Statutory Auditors

At the 19th Annual General Meeting (AGM'') held in the year 2017, M/s L. B. Jha & Co., Chartered Accountants, Statutory Auditors of the Company were appointed by the Shareholders to hold the office as such from the conclusion of 19th AGM until the conclusion of 24th AGM of the Company, subject to ratification of their appointment at every AGM. The Ministry of Corporate Affairs vide its notification dated 7th May 2018 has omitted the requirement of Shareholders'' ratification at every AGM and accordingly, the Auditors will continue to hold the office as such till the conclusion of the 24th AGM of the Company.

Cost Auditors

Your Company has appointed M/s DGM & Associates, Cost Accountants, for conducting the Cost Audit for FY''19 in terms of the provisions of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014.

Secretarial Auditor

Your Company has appointed M/s S. R. Associates & Co., Company Secretaries, for conducting the Secretarial Audit for FY''18 in terms of the provisions of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.

The Secretarial Audit Report is enclosed as Annexure E.

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 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 periodically reviews the internal control system to ensure that it remains effective and aligned with the business requirements.

The Risk Management Policy adopted by the Company 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 and is reviewed periodically by the Audit Committee. The objectives pertaining to Risk Management is to monitor and review the risk management plan of 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 has been 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 has been 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) Merger

The Board of Directors of the Company looking to the synergy of the business of Bright Power Projects (India) Private Limited (''Bright Power''), an Overhead Rail Electrification company with the Company''s Rail EPC division and synergy of business of Texmaco Hi-tech Private Limited (''Texmaco Hi-tech'') with the Company''s Heavy Engineering

Division and to consolidate its business for optimal utilization of resources, has approved the Scheme of Amalgamation (''Scheme'') of Bright Power and Texmaco Hi-tech into the Company, effective date being 1st April 2017. In terms of the provision of the Companies Act, 2013, the Company has filed necessary applications before the National Company Law Tribunal, for the approval of the Scheme. Similar applications were also filed by Bright Power and Texmaco Hi-tech.

The merger procedure is expected to be completed within the current financial year.

(e) Share Capital

During the year, your Company has allotted 4,13,450 Equity Shares of INR 1 each to eligible Employees pursuant to exercise of Options under Texmaco Employee Stock Option Scheme 2014.

(f) Deposits

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

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

Your Company has an Internal Complaints Committee (ICC) to redress complaints received regarding sexual harassment which meets at regular intervals. No complaints pertaining to sexual harassment were received during FY''18.

(h) Whistle Blower Policy

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

(i) Disclosure with respect to compliance of Secretarial Standards

The Company has complied with the applicable provisions of the Secretarial Standards relating to the Board Meeting sand the General Meetings as issued by the Institute of Company Secretaries of India.

OTHER INFORMATION

Extract of Annual Return

The extract of Annual Return in Form MGT 9 as on the financial year ended 31st March 2018 is enclosed as a separate Annexure F and forms a part of this Report.

Dividend Distribution Policy

The Dividend Distribution Policy of the Company is attached as a separate Annexure G and forms a part of this Report.

Corporate Governance

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

Business Responsibility Report

A report on Business Responsibility pursuant to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached as a separate Annexure I 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. 1.04, 1.14,1.35, 1.03 and 1.10 respectively to the Financial Statements of the Company.

Related Party Transactions

All related party transactions are reported to and approved by the Audit Committee and the Board of Directors. Prior omnibus approval is obtained on annual basis for transactions which are of repetitive in nature and are foreseen. All related party transactions during the financial year were entered in the ordinary course of business and on arm''s length basis. 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.

Your 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://texmaco.in/ texmaco/file/RELATED%20PARTY%20TRANSACTION%20POLICYPDF.

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

Your Directors state that:

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

(b) the accounting policies as adopted 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) 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) the annual accounts of the Company have been prepared on a going concern basis;

(e) 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) 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

S. K. Poddar

Place: Kolkata Chairman

Dated:15th May 2018 DIN: 00008654


Mar 31, 2017

The Directors have pleasure in presenting the 7th Operational Annual Report of the Company along with the Audited Financial Statements of the Company for the year ended 31st March 2017.

FINANCIAL RESULTS (RS, in Lakhs)

2016-17

2015-16

Operating Profit (PBIDT)

8,038.88

7,533.12

Less: Interest (Net)

2,221.52

2,664.11

Gross Profit (PBDT)

5,817.36

4,869.01

Less: Depreciation

1,615.90

1,454.74

Profit before Taxation

4,201.46

3,414.27

Less: Provision for Taxation

Current Tax

1,085.00

515.36

MAT Credit entitlement

(541.00)

(144.44)

Deferred Tax Liability/(Asset)

215.43

322.89

Income Tax for earlier years

84.73

-

Profit after Taxation

3,357.30

2,720.46

Add: Balance brought forward from previous year

1 1,276.14

9,687.75

14,633.44

12,408.21

Appropriations

Proposed Dividend on Equity Shares (Incl.Tax)

632.73

632.73

General Reserve

500.00

500.00

Balance Carried Forward

1,35,00.71

11,276.14

14,633.44

12,408.21

During the year, Kalindee Rail Nirman (Engineers) Limited (Kalindee), a subsidiary of the Company, merged with the Company in terms of the Scheme of Amalgamation duly approved by the Shareholders and the Hon''ble High Courts of Calcutta and Delhi vide their orders dated 26th February 2016 and 19th December 2016 respectively, effective date being 1st April 2014. The results are accordingly after incorporating the financial results of Kalindee for 2014-15, 2015-16 and 2016-17. The financial reporting includes a new segment i.e. Rail EPC.

The Ministry of Corporate Affairs (MCA) notified the Companies (Indian Accounting Standard) Rules 2015 enabling implementation of Ind AS. Pursuant to this notification, your Company and its subsidiaries, associates and joint ventures have adopted Ind AS with effect from 1st April 2016. Accordingly, the standalone and consolidated financial statements for the year ended 31st March 2017, and 31st March 2016 including transition date balance sheet as at 1st April 2015 have been prepared in accordance with Ind AS. The effect of transition to Ind AS has been given in detail in Financial Statement section.

During the year under review, your Company''s overall performance was impacted due to general sluggishness in the economy and inadequate order at un-remunerative prices released by the Railways.

The Gross Turnover for the year stood at INR 12,841.37 mn, net of the value of free-supply inputs (including steel and components) of over INR 1,326.62 mn, provided to your Company by the Indian Railways and other clients for some large value contracts.

The Gross Profit for the year (PBDT) and Profit Before Tax (PBT) were INR 581.74 mn and INR 420.15 mn respectively. The Net Profit was INR 335.73 mn, after providing net tax liability of INR 84.41 mn for the year, created in the Profit and Loss Account in accordance with the Accounting Standards issued by the Institute of Chartered Accountants of India.

Dividend

Your Directors recommend payment of a dividend of 25% for the year ended 31st March 2017.

THE MANAGEMENT DISCUSSION AND ANALYSIS

Your Company, post-merger of Kalindee and majority acquisition of Bright Power Projects (India) Pvt. Ltd. has emerged as a strong ''Total Rail Solution'' Company and had been successful in insulating its working of the Company from the extreme vagaries of erratic wagon procurement policy of the Indian Railways.

Fortunately, the Railways is now fully focused on improvement of its vast but ageing infrastructure and has committed to invest more than INR 80,00,000 mn capital expenditure to ramp up the infrastructure which presently is highly congested as around 16% network is handling more than 60% of the entire traffic with capacity utilization of 150 to 160%. Railways’ plan to de-congesting the route by heavily investing in doubling and tripling the tracks and its speedy electrification along and push for completion of DFC Projects shall augur well for the Rail EPC, Rolling Stock and other Heavy Engineering Divisions of your Company. The Railway has also planned to retrofit and refurbish its 40,000 old coaches which has opened up newer business opportunities for your Company. The expansion of metro network all over India is emerging news for its Rail EPC business. The infrastructure created by your Company over the years shall start bringing the fruit with large opportunities being thrown open in Rail Sector.

HEAVY ENGINEERING DIVISION

A. Rolling Stock

a. Freight Car

The planned wagon procurement by Indian Railways for FY 2016-17, for which tender for 12,277 wagons was floated, was looked upon to provide succor to the order starved wagon industry. Though your Company has emerged as the lowest bidder for certain wagons in the tender for 12,277 wagons, and the Railways chose to re-tender a part quantity of 2500 of wagon where the Company was L1, it managed to get order for a meagre quantity of 1338 wagons, with price though marginally better than theprevious order, is still uneconomical. Railways however, failed to maintain continuity of free steel supply resulting in low production during the year. Against the re-tendered quantity, the Company did not fetch any order as the other parties quoted a lower price.

During the year, your Company had executed a total order for 2092 wagons, valued at INR 5,166 mn, including Non-IR Wagons. This included the Prestigious Defense Wagon Order which was executed partly in 2015-16 and the balance in 2016-17, within the scheduled delivery time. The Company had also developed a proto type of milk tank wagon which is of complicated design.

During the year under review, your Company bagged another prestigious order valued INR 436 mn (ex-works) for LPG Tank wagon from a leading Oil Marketing company.

On the Export front, your Company bagged orders worth INR 445 mn from Africa and South East Asia.

The feasibility of Loading and Unloading of Fly Ash in BTAP Wagon was examined during the year, followed by a successful field trial jointly with NTPC and the Cement Industry. This is likely to open up markets for movement of Fly Ash through Railways.

Feasibility of transporting LCVs and HCVs in Car Carrying Wagon (converted) was demonstrated to our Valued Customers licensed under AFTO, Reputed Truck Manufacturers and RDSO. Work on further modifications in the design is underway to enhance the reliability.

The Modified Coil Carrying Wagon developed by your Company has been cleared by RDSO for commercial use and enquiries for the same have started coming from logistic companies and steel manufacturers.

The development of proto type of RDSO''s New Design of Parcel Van for IR is nearing completion.

b. Coaching

Your Directors are pleased to report that the development order received from a Railway Coach Factory, for manufacture of Under Frames for AC-3 Tier Coaches has been completed successfully. The Coach factory had since erected the coaches on it and successfully rolled them out. This development is in line with the Railways policy to outsource major sub-assemblies and will be providing a new area of manufacture to your Company for which it is geared up.

c. Locomotive Components / Assemblies

Your Company has diversified into manufacture of Electric Locomotive Shells and Sub-Assemblies and is successfully supplying Complete Shell Assemblies and other Loco Shell and under carriage components to Locomotive plants in India. These are now under regular production.

Your Company also has developmental orders in hand for manufacture of Under frame Assembly for Twin Cab Goods Diesel Locomotive and Under frame Assembly for Twin Cab Passenger Diesel Locomotive. Both the Under frames are presently under development.

Your Company has received an order from Alstom for manufacture of E-Loco car body shells for 480 Dual Locomotives to be manufactured at Madhepura, spread over a period of 7 years, with a total order value of approx INR 5000 mn.

The Company is well poised and equipped to support Alstom in this prestigious project for the fabrication of new generation locomotives for heavy haulage, high speed movement of freight on DFC and other routes of Indian Railways.

This will establish your Company as a premier supplier of Assemblies and Sub-Assemblies for modern locomotives in the forthcoming years.

B. Hydro Mechanical Eqpt.

The execution of contracts under Hydro Mechanical Division of your Company has suffered adversely due to continued political agitation in north east India and prevailing conditions due to after effect of earthquake in certain sites in Nepal.

Fortunately, these bottlenecks are getting eased and progress at sites is now picking up and will go into full swing during the current financial year. With a strong order book of more than INR 3800 mn and a number of new projects announced by the Government in the Hydro Power segment, where your Company has the strong credentials, the future for the division looks promising.

C. Bridges & other Steel Structures

Your Company, during the year, had completed fabrication and erection of a major bridge (9 x 102.4 meters span) weighing 7800T, at Bhairab in Bangladesh. This is the longest Railway Bridge ever constructed in Bangladesh since partition of the Country at the end of the British Rule in 1947. During this year, your Company had also executed an order for the Bridge girders for Titas Bridge in Bangladesh.

Presently the division is executing an order for Sri Lanka.

The division, post execution of the above orders, has earned valuable credentials in the field of construction and erection of Steel Bridges for Railways and, being eligible, has also participated in certain large value tenders in India and abroad.

STEEL FOUNDRY DIVISION

In spite of the decline in off-take of Wagons in 2016-17 owing to lack of Railway demand for Rolling Stock, the overall performance of the Foundry division has been satisfactory. The production and dispatch during the year were 16444 MT & 17207 MT against 17353 MT and 17433 MT respectively in the previous year. The turnover of the Foundry stood at INR 2037 mn. The Foundry continues to retain 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 the Foundry had achieved the highest ever export turnover of INR 450 mn compared to INR 286 mn during the previous year. After successful development and stabilization of one type of bogie castings for North American market, the Foundry has now developed another type of bogie castings for the North American market which was successfully tested and passed at AAR laboratory in USA. With the achievement of this milestone, the Foundry is now exporting both types of castings of bogies to North America. Apart from these designs, the Foundry has also developed bogie casting for South America which has also successfully completed AAR testing. Presently a new design bogie casting developed by the Foundry for South East Asian market has been shipped for testing to AAR in USA. Thus, the Foundry has gained credentials for development of multiple designs of bogies for export markets and widened its base to generate more business.

Your Directors are also glad to inform that the Foundry has further developed 35 new products for use in mining industry globally. The field trial results of the products are satisfactory and the Foundry is geared up to grow in the field of export of industrial castings for mining applications.

During the year, the Foundry has also received an approval from RDSO for manufacture and supply of all 4 types of Cast Manganese Steel Crossings to the Indian Railways. Orders for these Crossings received from Zonal Railways are being executed regularly.

RAIL EPC DIVISION

Kalindee Rail Nirman (Engineers) Limited (Kalindee) was merged with the Company by the orders of the Hon''ble High Courts at Calcutta and Delhi dated 26th February 2016 and 19th December 2016 respectively, the effective date being 1st April 2014. Post approval of the Hon''ble High Courts at Calcutta and Delhi and the filing of necessary forms with the Registrar of Companies, Kalindee now stands fully merged with the Company. It is now known as Rail EPC Division of the Company with the trade name of ''Kalindee Rail Nirman'' and is actively engaged in Rail EPC contracts of national and international importance, including the projects of Dedicated Freight Corridor.

The Division is focusing on the upcoming metro projects in Ahmadabad, Nagpur and Mumbai and also exploring opportunities in neighboring countries as well as in the Middle East and African countries. The Division is served by a high-tech State of Art ERP programme run on SAP backbone linked with all work sites online.

It has forayed into high-tech projects, both in Rail EPC and Metro, and has built up a team of experienced professionals to navigate the unit into a new era of growth and opportunities with the added technical and financial strength of the combined entity.

SUBSIDIARY COMPANIES

i. Bright Power Projects (India) Pvt. Ltd

During the year, Bright Power, a pioneer in the field of overhead Electrification of Railway system, had achieved a turnover of INR 1,775 mn with an EBITDA of INR 215 mn. Bright Power has now expanded with projects of Rail Electrification in 14 States.

Bright Power has received its maiden order for substations and Electrification in Metro Segment from Nagpur Metro. This will establish your Company''s presence in Metros too.

The Government is giving a major push to Rail Electrification and setting up Metros in urban locations since the last two years. The requirement of Electrification works had doubled year on year. This will help Bright Power in acquiring higher volumes in coming years. Bright Power is well poised in Rail EPC contract and their contribution to the consolidated profit is relatively significant.

ii. Texmaco Hi-tech Private Limited

The working for this year continued to be quite challenging due to the need to develop newer markets and products, post exit of the JV partner UGL, Australia. The plant was set up especially to meet the export demand of Australia, which due to changed market scenarios, dried up.

Texmaco Hi-tech, since, through the process of consolidation has been successful in developing newer markets and products both for domestic and export, and is well on a revival path.

The orders have now started flowing from global companies like GE Transportation & Alstom Transportation and renowned indigenous customers including the Indian Railways.

It is hoped that the capacity available in the unit will be gainfully utilised for high precision components, such as, bogies, cab structures, booms, etc., for locomotives, coaches and material handling equipment with substantial demand potential from the year 2018-19, when execution of bulk orders after completion of product development cycle will start.

Texmaco Hi-tech during the year has not contributed to the overall performance of the Company.

iii. Belur Engineering Private Limited

During the year, the Company has incorporated a wholly owned subsidiary namely Belur Engineering Private Limited, primarily to supplement the Heavy Engineering business of the Company. Belur Engineering has acquired approximately 5 acres of industrial land at Sodepur to assist your Company in expanding its footprint in the new segments of Heavy Engineering i.e., Bridges and Heavy Engineering Structures.

Belur Engineering was incorporated on 20th February 2017 and hence, no significant contribution was made to the overall performance of the Company.

JOINT VENTURES

i. Touax Texmaco Railcar Leasing Private Limited

Railway is working hard on regaining its market share of freight traffic and with a major freight rebate scheme being introduced for large shippers, a positive development is expected. The establishment of the Rail Development Authority for rationalization of passenger tariff and cargo freight rates is also expected to have a large impact. Freight and Haulage charges are expected to be rationalized to reflect actual market conditions and not political subsidization. The Railway Board has a target to set up an additional 55 PFT (Private Freight Terminals) this year. Adding positively to these measures will be the introduction of GST, with which the easing up of logistics operations by eliminating multiple check points will have a positive bearing on the Wagon leasing business of JV Company.

Besides the macro-economic thrust as described above, the micro-economic factors are already turning positive compared to those of the previous years. There is already an increase in the export-import volumes at all the major ports. All hitherto stabled rakes are back into circulation with statistics indicating that no private wagons are idle and whatever IR stock is idling, it is due to the operational imbalances and not for want of traffic. Hence, there is a renewed interest from the industry for introduction of fresh rolling stock.

The JV company has turned profitable and has reported a modest profit during the year. The JV company has also tied up with leading banks for financing the leasing activity.

The JV company is gradually strengthening its position in the market and in few years will also become a significant contributor to the overall performance of the Company.

ii. Wabtec Texmaco Rail Private Limited

Wabtec Texmaco Rail Private Limited, Texmaco''s JV Company with Wabtec Corporation, USA, completed its first full year of operations in December 2016. The JV company sales in financial year 2016-17, mainly comprising of Draft Gears and Composition Brake Blocks, were approx. INR 470 mn. The JV company won orders for Draft Gears from all major Wagon manufacturers during the year and enjoyed about 65% market share by selling around 9,500 units. The JV company supplied Composition Brake Blocks to Sri Lanka Railways and Bangladesh Railway during the year and initiated actions for approval & subsequent supply of Composition Brake Blocks to the Indian Railways. The JV company has successfully tested its prototype Bogie Mounted Brake System (BMBS) during the year and has planned field trials of its BMBS units with the Indian Railways by September 2017. The JV company new facility is under construction on Texmaco Southern land, Belgharia, and the JV plans to relocate to the new facility by March 2018.

The JV company is gradually strengthening its position in the market and in few years will also become a significant contributor to the overall performance of the Company.

EXPORTS

During the year, your Company has shown a significant improvement in its overall export performance which stood at INR 502 mn compared to INR 488 mn in previous financial year. The Company made further breakthrough in North American market by developing newer types of castings for American Rail Road.

Your Company further bagged orders for 50 wagons from South Asian countries.

The Company has successfully executed a major contract for supply of Railway Bridge to Bangladesh through IRCON-AFCON.

In Rail EPC front, the execution of Bangladesh contract is nearing completion and the Company is well poised to secure new businesses in neighboring countries for Rail EPC. The execution of Hydro Mechanical orders in Nepal suffered during the year due to natural calamity. However, the execution picked up towards the end of the year and major execution of the order is executed in the current year.

R & D ACTIVITIES A. Steel Foundry Division

The R & D Centre of the Company is a registered and recognized Centre under the Ministry of Scientific Research & Cultural Affairs and is engaged in carrying out new research work for the development of its various products & processes. It has helped the Company to develop new products, improve products life through process innovations, develop light & efficient designs for higher and faster transportation of goods & specialized cargos. This has enabled your Company in saving precious energy and resources and improving cost effectiveness.

a) New Product Development:

(1) 6 coil bogie castings for North American market by developing unique metallurgical and process improvement enabling the Company to develop export market to USA. The developed castings have passed the stringent static and dynamic fatigue testing to which it was subjected to at AAR Lab.

(2) Bogie Castings for Thailand Railways.

(3) Yokes for the North American market. Our product has been tested and approved by Cardwell.

(4) Indigenous Development of High Capacity Draft Gears for the Indian Railways against importation.

(5) High Axle Load Low Weight 25 Ton Bogie Castings have been developed for the Indian Railways.

b) New Process Development:

(1) Two new grades SS-2500 & SS-5000 with improved wear resistance properties for ground excavating application.

(2) A new etchant to identify the grain boundaries in a tempered martensitic microstructure.

Apart from the above, the Steel Foundry Division has also undertaken the following projects.

(1) Development of process on tempering time on the weld repaired castings of grade B to ensure improved strength.

(2) Root cause analysis and process innovation to eliminate cold lap in Blue Tooth Pointer castings.

(3) Root cause analysis and process innovation to eliminate the match plate failures.

(4) Analysis of temperature distribution in normalizing furnace and its impact on microstructure and lug fracture of components and developing new process to improve the microstructure characteristics of castings.

(5) Analysis of abnormal failures in operations across several grades and components.

(6) Undertaken Research analysis on feasibility of reclaiming No-Bake sand through thermal treatment for re-use in the Foundry.

The findings from these projects has helped to develop new manufacturing processes to improve product quality.

c) The R & D department of Steel Foundry Division has also initiated collaborative projects with reputed academic institutions like the Indian Institute of Engineering Science & Technology (IIEST), National Institute of Foundry & Forge Technology (NIFFT) and Amity University with the aim of developing new products & processes and improving the quality and life cycle of the products.

The results of one such collaborative project "Effect of astonishing temperature, soaking time and tempering temperature on Charpy Impact Toughness of Gr-E steels" with NIFFT, Ranchi, has been accepted for presentation at 19th International Conference on Material Strength and Metallurgical Engineering (ICMSME) to be held at London on 18-19th December 2017.

B. Heavy Engineering Division

1. Rolling Stock

A new design double deck Auto Car Carrying Wagon ''BDDAC'', with substantially superior capabilities over the existing product, is being developed under the Technical guidance & support of a renowned European firm. The development required a number of new concepts which has been tried out successfully. The wagon will now undergo an extensive field trial under the aegis of RDSO, a Research wing of Railways prior to its final acceptance for use in Indian Railways network.

Your Company has also undertaken development of a new design Double Deck Container Carrying Flat Wagon (Bogie Flat Container Wagon) with technical support of a renowned international company.

2. Hydro-mechanical Eqpt.

The Hydro-mechanical division has, after extensive research, developed for the first time a new design for Penstock bifurcation, having crescent girder construction with varied contours for heavy sections of thickness up to 150mm. The design has been accomplished with a detailed Finite Element Analysis (FEA) study which was thereafter, approved by the European consultants. These Penstock bifurcations are to be installed at the inlet of turbines of hydro power plants and are subjected to extreme conditions of hydro-dynamic loading. The criticality starts from selection of raw materials to the complex process of manufacturing and testing. Appropriate processes for fabrication were established including necessary Non-Destructive & Hydraulic Testing.

IT SERVICES

The IT department has implemented progressive measures through advance firewall to protect the IT network of the organization from external threats and dedicated to maintain a secured environment to prevent data loss. All the manufacturing units, corporate and administrative offices are integrated through secured online connectivity with high bandwidth.

All divisions of the Company are maintaining ERP applications to track regular business operations of the organization, like Procurement, Inventory, Production, Sales and Finance, with its own in-house team.

HUMAN RELATIONS

Human Relations (HR) aims on improving the Company''s bottom line through its knowledge of how human capital affects organizational success. It participates in corporate decision-making, underlining current staffing assessments and projections for future workforce needs, based on business demand, and engaging in promoting awareness on Health, Safety and Environment.

The pragmatic policies on Human Relations / Employee relations has helped the organization to achieve high performance and building up the morale and satisfaction levels throughout the workforce by creating bond, harmony and unity with a sense of brotherhood all across the organization.

The Human Resource Development has been the priority of the organization and constant efforts through re-skilling, up-skilling & multi-skilling are being made through structured programmes of skill building to make the workforce future ready and have a competitive edge. The management has also initiated training and development programmes for young aspiring leaders to take up greater challenges.

OPPORTUNITIES & THREATS

The traditional comfort of assured wagon orders from the Indian Railways continues to elude this year also. The margins have been under pressure and may continue as such in short term due to excess capacity in the wagon industry and poor demand from the Railways.

With the recent successes in certain state elections, the Central Government is expected to kick start a number of economic reforms including the GST, which would invariably lead to an economic resurgence, thereby leading to improved logistics need which shall also have a positive impact on the requirement of wagons, a major product for the Company.

In order to de-risk the business, Kalindee has been merged into your Company and the Rail EPC front is showing a lot of promise. This is due to the fact that the Government, in keeping with its objective of upgrading Railway infrastructure, has a large expansion of Rail infrastructure in the pipeline.

Kalindee has managed to get some prestigious orders in this field and is in contention for certain major projects, local and abroad.

The overseas market, especially the neighboring countries, is also seeing an upsurge in Railway Infrastructure projects.

Your Company is now working with some major multinationals for large Indian Railways orders of Locomotives which shall in due course transform the total work culture and outlook of the Company.

With the Governments'' focus on robust Railway infrastructure, the demand for wagons shall also pick up in near future.

CORPORATE SOCIAL RESPONSIBILITY

Your Company is committed towards betterment of the socially and economically deprived and it continues to take initiatives and meaningful actions in the areas of Education, Health, Environment and Women Empowerment.

Your Company is actively engaged in providing community service to the local people and promote their quality of life through several welfare activities by the Texmaco Neighborhood Welfare Society (TNWS). The Company has contributed in setting up a Wellness Hub that includes "Texmaco Arogyam Physio Centre", a State-of-the-Art Gym, and "Yoga Fitness Centre", surrounded by green environs at its premises, managed by TNWS. With a view towards Conservation of Environment, the Company has taken up another drive of upgrading the existing ECO Park and planted around 1000 trees. To promote Sports amongst youth in the local area, a playground has been developed with Floodlights. All these initiatives towards a sustained social responsibility distinguish the Company from others in the business sector.

The Company places utmost importance to CSR activities and have initiated a series of CSR programmes especially on healthcare, education and general well-being of society at large. It however, could not spend the requisite amount as prescribed under Section 135 of the Companies Act, 2013 towards CSR activities as the projects undertaken by the Company were in the process of being stabilized. The Company had spent INR 23.62 lakhs out of INR 29.74 lakhs towards CSR expenditure. The Annual Report on CSR activities is enclosed as Annexure A.

GREEN INITIATIVES

Your Company has started a sustainability initiative with the aim of going green and minimising 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 Shareholder wishes to receive a printed copy, they may please send a request to the Company, after which a printed copy of the Annual Report will be sent. Members are requested to support this initiative by registering / updating their e-mail IDs for receiving Annual Report, Notices, etc., through e-mail.

PARTICULARS OF EMPLOYEES

The number of employees as at 31st March 2017 was 1919. 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 provided as Annexure B.

The disclosures pertaining to the 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

Information as required under Section 134(3)(m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014, 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 30th May 2016, 25th July 2016, 3rd September 2016, 27th October 2016, 30th January 2017 and 14th February 2017.

Change in Directors and Key Managerial Personnel

During the year, Mr V. K. Sharma, Executive Director (Retd.), RBI, was appointed as an Additional Independent Director w.e.f. 29th June 2016 and his appointment was approved as Independent Director of the Company by the Shareholders at the Annual General Meeting held on 26th September 2016. Mr A. K. Vijay, retires by rotation and being eligible, offers himself for re-appointment at the ensuing Annual General Meeting. The Board has recommended his 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 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 of eminent qualified professionals, entrepreneurs with diverse backgrounds and experience in business, governance, education and public service.

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

The policy ensures equity, fairness and consistency in rewarding the employees on the basis of performance against set of 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

Messrs K. N. Gutgutia & Co., Chartered Accountants, the present Statutory Auditors of the Company, who have been distinguished Auditors for few decades, are retiring in compliance with the Section 139 of the Companies Act, 2013 at the conclusion of the forthcoming Annual General Meeting. The Company acknowledges the valuable services rendered by Messrs K. N. Gutgutia & Co.

The Board of Directors of the Company on due consideration is proposing to appoint Messrs L. B. Jha & Co., Chartered Accountants, a reputed practicing firm as Statutory Auditors for a period of 5 years from the conclusion of the forthcoming Annual General Meeting.

Messrs L. B. Jha & Co., has consented the proposed appointment and confirmed that their appointment, if made, would be within the limits mentioned under Section 141(3)(g) of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014. The Audit Committee and the Board of Directors recommend the appointment of Messrs L. B. Jha & Co., Chartered Accountants as Statutory Auditors of the Company.

Cost Auditors

Your Company has appointed Messrs DGM & Associates, Cost Accountants, for conducting the Cost Audit for FY''18 in terms of the provisions of the Companies Act, 2013 and the 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 Messrs S. R. & Associates, Company Secretaries, as Secretarial Auditor, to conduct the Secretarial Audit of the Company for the FY''2016-17.

The Secretarial Audit Report is enclosed as Annexure F.

Whistle Blower Policy

The details on the 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 authorized, recorded and reported correctly, and assets are safeguarded and protected against loss from unauthorized use or disposition. In addition, there are operational 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 Risk Management Policy adopted by the Company 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 and is reviewed periodically by the Audit Committee. The objectives pertaining to Risk Management is to monitor and review the risk management plan of 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 2,18,875 Equity Shares of H1 each to eligible Employees pursuant to exercise of Options under the Texmaco Employee Stock Option Scheme 2014.

The Company, pursuant to the Scheme of Amalgamation between the Company and Kalindee Rail Nirman (Engineers) Limited (''Kalindee'') and their respective shareholders and creditors (''Scheme''), has allotted 89,12,395 Equity Shares of Hi/- each to the Equity Shareholders of Kalindee i.e. 106 Equity Shares of H1/- each of the Company against every 100 Equity Shares of the Kalindee of H10/- each held by them in Kalindee as on Record Date i.e. 10th February 2017, post approval of the Scheme by the Hon''ble High Courts at Calcutta and Delhi. Such shares rank pari passu with the existing shares of your Company. Consequent to the above allotments, the paid up capital of the Company has increased to 21,94,14,993 Equity Shares of H1/- each, as on 31st March 2017.

Disclosures with respect to the Stock Options, as required under Regulation 14 of the SEBI (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 which meets at regular intervals. No complaints pertaining to sexual harassment were received during FY 2016-17.

OTHER INFORMATION

Extract of Annual Return

The extract of Annual Return in Form no. MGT 9 as on the financial year ended 31st March 2017 is enclosed as Annexure G.

Dividend Distribution Policy

The Dividend Distribution Policy of the Company is attached as a separate Annexure H forming a part of this Report.

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 reported to and 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://texmaco.in/webfiles/texmaco/file/RELATED%20 PARTY%20TRANSACTION%2QPOLICY.PDF.

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. 1.04, 1.14, 1.36, 1.03 and 1.09 respectively to the Financial Statements of the Company.

Corporate Governance

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

Business Responsibility Report

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

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 the Companies Act, 2013 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: 22nd May 2017 Chairman


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, 2012

The Directors have pleasure in presenting the 2nd Operational Annual Report of the company along with the Audited Accounts of the Company for the year ended 31st March, 2012. Financial Results Rs. in Lakhs

2011-2012 2010-2011

Operating Profit (PBIDT) 15,050.50 18,338.92

Less: Interest (Net) 506.98 (85.79)

Gross Profit (PBDT) 14,543.52 18,424.71

Less: Depreciation 917.80 858.50

Profit before Taxation 13,625.72 17,566.21

Less: Provision for Taxation:

Current Tax 3,940.00 5,590.00

Deferred Tax Liability/(Asset) 380.00 (171.39)

Profit after Taxation 9,305.72 12,147.60

Add: Balance brought forward from previous year 7,024.07 (10.80)

16,329.79 12,136.80 Appropriations

Proposed Dividend on Equity Shares (Incl.Tax) 2,115.56 2,112.73

General Reserve 5,000.00 3,000.00

Balance Carried Forward 9,214.23 7,024.07

16,329.79 12,136.80

During the year under review, the Company has turned out reasonable results, despite significant curtailment in Indian Railway wagon orders owing to non-release of any orders against 2010-11 RSP, and the delayed release of the orders for 2011-12, almost at the fag end of the year in mid January 2012.

The Gross Turnover stood at Rs.945.15 crore, net of the value of free-supply inputs including steel and components of over Rs. 334 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 lower at Rs. 145.44 crore and Rs. 136.26 crore respectively. The Net Profit was Rs. 93.06 crore, after providing for a tax liability of Rs. 39.40 crore. The Deferred Tax Liability of Rs. 3.80 crore for the year has been created in the Statement of Profit and Loss 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 31st March, 2012 having regard to the performance of the Company.

Corporate Social Responsibility

At TEXRAIL, Corporate Social Responsibility (CSR) means continuous improvement in the quality of life of the workmen / staff associated with the Company and the people living in its neighbourhood. Education, health care, hygiene and environment management are areas of priority.

The Company has residential estate inhabiting more than 500 families with provision of all the amenities e.g. clubs, swimming pool, parks, playgrounds, gym, air conditioned auditorium, etc. for social, recreational and educational activities for the benefit of its workmen / staff and residents.

The Company is committed to its mission to serve the poorer sections of the society through better education and training to promote self employment. Texmaco Neighbourhood Welfare Society Trust provides financial assistance to the poor & needy for their health, education, social needs etc.

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 Shareholders' / Investors' Grievance and Share Transfer 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.

In order to conserve paper and minimize the impact in our environment, your Company is publishing only the Statutory disclosures in the print version of the Annual Report, prepared in compliance with the Section 219 of the Companies Act, 1956 and Clause 32 of the Listing Agreement. However full Annual Report is available on our website www.texmaco.in.

Particulars of Employees

The number of employees as at 31st March, 2012 was 1740. 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 B.

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 C.

Directors

After a distinguished service to the Texmaco Rail & Engineering Limited / Texmaco Limited for more than two decades, Late B. P. Bajoria after a brief illness left for his heavenly abode on 20th February, 2012. Your Directors would like to record its appreciation for the valuable guidance rendered by him to the Company during his tenure as a Director.

Shri Akshay Poddar, Shri D. R. Kaarthikeyan and Shri Hemant Kanoria were appointed as Additional Directors. Shri Poddar and Shri Kaarthikeyan w.e.f. 2nd September, 2011 and Shri Kanoria w.e.f. 21st October, 2011.

Your Director, Shri A. C. Chakrabortti, retire by rotation and being eligible, offer himself for re-appointment at the ensuing Annual General Meeting.

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: 25th May, 2012 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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