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EQUITY - MARKET SCREENER

Texmaco Rail & Engineering Ltd
Industry :  Engineering
BSE Code
ISIN Demat
Book Value()
533326
INE621L01012
40.9996966
NSE Symbol
P/E(TTM)
Mar.Cap( Cr.)
TEXRAIL
27.2
1313.23
EPS(TTM)
Face Value()
Div & Yield %
1.5
1
0.19
 

As on: Jan 22, 2022 08:53 PM

Dear Shareholders,

Your Directors have pleasure in presenting the 10th Operational Annual Report of the Company along with the Audited Financial Statements of the Company for the year ended 31st March. 2020.

FINANCIAL HIGHLIGHTS

2019-20 2018-19
Operating Profit (PBIDT)* 15,341.92 16,615.97
Less: Interest (Net) 6,630.21 4,899.25
Gross Profit (PBDT)* 8,711.71 11,716.72
Less: Depreciation 3,590.85 2,895.96
Profit before Taxation and Exceptional Items 5,120.86 8,820.76
Less: Exceptional Items 14,991.97 -
Profit before Taxation (9,871.11) 8,820.76
Less: Tax Expenses
Current Tax including tax related to earlier years 636.22 1,920.65
MAT Credit entitlement (258.00) (1,794.45)
Deferred Tax Liability/(Asset) (3,665.30) 1,166.58
Profit after Taxation (6,584.03) 7,527.98
Add: Balance brought forward from previous year 17,633.65 11,414.07
11,049.62 18,942.05
Appropriations
Dividend paid (Incl.Tax) 949.85 662.14
General Reserve - 500.00
Other Appropriations (17.60) 146.26
Balance Carried Forward 10,117.37 17,633.65

 

* before Exceptional Items

During the year, your Company has acquired a Foundry at Urla - Raipur, which has increased its total installed capacity to 42,000 MT per annum. The results for the FY'20 are accordingly after incorporating the financials of this Unit from 1st April 2020.

Dividend

Your Directors have pleasure to recommend payment of a dividend of 10% i.e. INR 0.10 per Equity Share of face value of INR 1 each for the year ended 31st March. 2020 inspite of the Company incurring loss for the current year on account of provision in respect of certain legacy contracts of Rail EPC Division which were under execution for long and its pending obligations completed during the year.

The Gross Turnover for the year stood at INR 20202.75 mn. The Gross Profit for the year i.e. Profit before Depreciation and Tax (PBDT) and Profit before Tax (PBT) and Exceptional Items were INR 871.17 mn and INR 512.09 mn, respectively. The Net Profit was INR (658.40) mn, after providing exceptional items and net tax liability of INR 1499.20 mn and (328.71) mn respectively 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.

MANAGEMENT DISCUSSION AND ANALYSIS

The performance of Rolling Stock Division of your Company for the year was severely impacted due to poor availability of wheel sets and certain other critical components from approved vendors for execution of both Indian Railways and non-Indian Railway Wagon orders.

Though the Ministry of Railways, Govt. of India finally granted the permission for import of wheel sets for private parties, its availability in short term was challenged and thereafter eruption of COVID-19 from January 2020 onwards further crippled its availability.

Nonetheless, the requirements for the wagons in line with the various schemes announced by Railways including General Purpose Wagon Investment Scheme (‘GPWIS'), permitting private investment in general purpose wagons, etc., resulted in growth of demand of such wagons by end-users. Your Company continues to be benefitted with a resilient position in the wagon segment and closed the year with a healthy order book position.

The Rail EPC Division of your Company was sluggish in its performance due to rising cost and tremendous pressure on working capital due to delay in payments / approvals by customers. The pressure of completing the inherited legacy contracts also took its toll. The Company on a prudent accounting policy made a provision of INR 1499 mn in respect of certain old contracts outstanding being doubtful of realisation. The focus of Indian Railways is on bringing about a transformation by investing heavily in infrastructure, including track infrastructure & systems, and it augurs well for Rail EPC business of your Company. The ambitious plan of Indian Railways to secure the required infrastructure for complete electrification of the rational railway network will further strengthen this business segment. The Rail EPC business of your Company is fully geared to seize the emerging opportunities from the focussed key areas of Indian Railways viz. expansion of metro network, dedicated freight corridor, doubling of tracks, electrification, etc.

The Steel Foundry Division of your Company has maintained its steady performance, both on domestic & export fronts. With the aided capacity of the Urla unit-Raipur, new products for domestic markets specially in hand moulding segment have been successfully developed by the Foundry and well received by the Customers including critical castings for defense sector.

The world, including India, has suffered a significant setback with the onslaught of COVID-19 pandemic and this pandemic has resulted in business in all segments undergoing a sea change. Presently there is an atmosphere of uncertainty in the country and customers are going a bit slow in crystallising their future demands. This is bound to affect to some extent the business scenario in the segment of your Company operates. Fortunately, the demand in the long run is robust due to commitment of the Govt. of India to revitalise the Rail segment and ease the roads from the freight movement. Nevertheless, with every challenge there lies an opportunity and it is expected that post COVID-19 there will be a surge of pent up demand and economy will rebound robustly specially in the areas of upgrading of infrastructure, rail & metro network, etc. The move to privatise the passenger trains will open new windows of opportunities in this field.

SIGNIFICANT FINANCIAL RATIOS

As required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the significant financial ratios are given below:

Particulars 2019-20 2018-19 2017-18
Operating Profit Margin* % 5.62 6.77 2.05
Debtors Turnover Times 2.84 2.27 1.68
Stock Turnover Times 3.41 4.13 3.84
Debt Equity Ratio Times 0.73 0.51 0.48
Current Ratio Times 1.42 1.47 1.56
Interest Coverage Ratio* Times 1.65 2.50 1.53
Net Profit Margin % (3.54) 4.01 1.13
Return on Net Worth % (6.41) 6.60 1.25

 

* before exceptional items

The operating margins were impacted due to Slump in Global Economy.

The Net Profit and Return on Net worth were impacted, as during the year Rail EPC Division - Kalindee has completed/ brought close to completion number of legacy contracts. As a result of such progress, a broad review of impairment of Assets including receivables and costs to completion has been carried out and amounts outstanding against the respective heads have been evaluated. On the basis of such review, the Management has decided to make certain provisions for impairment.

Increase in Debtors Turnover Ratio is on account of lower realisation at the end of year due to lock down. Also there were delays in realisation from customers for Project Work.

The increase in Debt Equity Ratio is mainly on account of additional working capital facility.

The decrease in Interest Coverage Ratio is mainly on account of additional working capital borrowed during the year.

HEAVY ENGINEERING DIVISION

I. Rolling Stock Division

a. Freight Car & Coachings

The year begun with a moderately healthy order book position for the Division. Unfortunately, the year turned challenging for the Division owing to bottlenecks arising out of non-availability of certain critical bought out components viz. wheel sets, etc. In fact, inadequate supply of wheel sets from RWF, the only source for procurement of wheel sets in India for both Railways and non-IR customers under ‘Make in India' initiative of Govt. of India, adversely affected the wagon production of your Company. Wheel sets' requirement of Indian Railways not being fully catered, RWF was not in a position to meet the requirement against non-IR contracts affecting your Company's production during the year for private wagons e.g. Auto car, Container Wagon, etc.

Your Company vigorously pursued with Indian Railways for giving permission to import wheel sets to tide over the non-availability of wheel sets particularly for non-IR customers. Pursuant to the continuous follow up, finally in end August 2019, Railway Board gave the permission to import wheel sets for a limited period. Accordingly, your Company had placed order for wheel sets on overseas suppliers at China in September 2019, delivery of which was to take place from January 2020 onwards. With the outbreak of pandemic COVID-19, the 1st and 2nd consignment of wheel sets got delayed and with the spread of the pandemic, manufacture of further wheel sets was severely affected leaving your Company with no other option but to depend only on the uncertainties of the supplies of RWF for the entire production requirement.

During the year, Railway Board did not place order against the tender floated during FY'19. The only order Railway Board could release on your Company during the current year was 529 units of BTPN wagon (under 30% option clause against earlier order placed in 2018). Also due to sluggishness of the market, requirement of new wagons was low.

During the year, Railway Board announced ‘Liberalized Special Freight Train Operator' (LSFTO) scheme superseding the earlier ‘Special Freight Train Operator' (SFTO) scheme and the ‘Liberalized Wagon Investment Scheme' (LWIS). Under the LSFTO scheme, transportation by public/ private sectors have been permitted for specific commodities like bulk fertilizers, bulk cement, automobiles, fly ash, bulk chemical, petrochemical, liquid ammonia, bulk alumina, LPG, edible oil, etc. requiring Special Purpose Wagons. Since the eligibility to procure various types of wagons under LSFTO scheme includes units engaged in Transport & Logistics, Port & Land Terminal Operations, Container Train Operators, Manufacturers, Wagon Leasing, Warehousing, etc., it is expected that requirement for the Special Purpose wagons would come up substantially in the near future. Container traffic is again picking up and consequent rising demand for container wagons is envisaged.

With further liberalisation of the existing GPWIS scheme, opportunities are available to the customers for procurement of conventional Indian Railways wagons to augment their transportation requirement of various commodities.

Certain reforms in the transport sector and the opening of Dedicated Freight Corridor (DFC) coupled with the Government's determined approach on Dedicated Freight Corridor projects to create additional freight capacity by inducting some specially designed wagons like Double Stack Container Wagons, Auto car with higher MMD, Steel Coil carrying Wagons, etc. to meet increasing demand, would certainly do good to your Company to improve its order book position.

To facilitate rail transportation of 2-wheelers, your Company has developed side loading option on the existing Auto car wagon which is first in the Industry and could be a game changer for transportation of 2-wheelers through rail, as India presently produces 2 crore 2-wheelers annually, most of which are transported by road.

From the environment point of view, Government has given a lot of importance for proper evacuation of fly ash. Consequently, RDSO has conducted certain trials at the Works of your Company followed by further trials at NTPC-Rihand where the convenient use of BTAP wagon for bulk transportation of fly ash with pneumatic side unloading at 2 bar pressure was demonstrated providing unique advantage compared to any wagon for bulk transportation of fly ash. Orders received from NTPC and Birla Corporation for BTAP wagon for bulk transportation of fly ash are currently under execution. Besides freight movement, passenger traffic is the key focus of Indian Railways. Saddled with higher population of outdated passenger coaches, Indian Railways is in advanced stage of evaluating these coaches for replacement, which would pave the way of further business opportunities for your Company. Having created the facility of manufacturing Passenger Coaches, Loco Shells, your Company feels confident in participating in the initiatives of Indian Railways for acquisition of new passenger coaches.

b. Locomotive Components / Assemblies

As advised earlier, your Company is now well established as a supplier of Electric Loco Shell Assemblies and other Loco Shell components to the various locomotive plants of Indian Railways. With the planned total switch-over to Electric Traction by Indian Railways within the next two years, the strong demand for Electric Loco Shells by the Production Units (CLW & DLW) of the Railways, from private parties, is expected to be sustained in future also.

Your Company steadily stepped up the production of complete Electric Loco Shells from 40 Shells in FY'18 to 65 Shells in FY'19. The Division was able to sustain the production in FY'20 also with a production of 64 shells. The turnover of the Electric Loco shells and Assemblies in FY'20 has been INR 844.5 mn as against INR 784.2 mn in FY'19, a growth of 13% compared to the previous FY. While the demand of Electric Loco Shells from Indian Railways is expected to be sustained in the coming years, the business has attracted a number of new players in the field. Nevertheless, with aggressive marketing efforts we hope to protect our share in the business.

II. Hydro Mechanical Equipment

The turnover of the Division for the FY'20 stands at INR 676.1 mn against previous year's turnover of INR 550.7 mn. The despatches of certain finished inventories were affected towards the end of March. 2020 due to imposition of complete lockdown in view of COVID-19 outbreak.

Although there have been some setbacks in few sites progress due to unprecedented snowfall on two lengthy durations, but in general the projects are progressing well and some are expected to be commissioned during the current year. TamaKoshi, Nepal project is also heading towards commissioning with successful completion in milestone of reservoir impounding. Installation work at Subansiri, the largest Hydro power project is also gearing up.

Efforts are afoot to effect despatches and accelerate installation work at sites as soon as the present COVID-19 restrictions are eased thereby boosting the performance of the Division.

III. Bridge & other Steel Structures

The FY'20 was basically utilised to consolidate the functioning of the Bridge Division of your Company by way of organising more orders as well as modernisation of fabrication facilities. During FY'20, your Company has installed CNC plasma cutting machine, CNC drilling machine, Automatic H - beam welding machine, Girders straightening machine, plate straightening machine, automatic bevelling machine and augmented fabrication facilities by way of construction of New sheds. To enhance the production capacity, the Company has organised large-scale modernisation of the fabrication facilities.

During the year, the Division has achieved a turnover of INR 300 mn against the last year's turnover of INR 178 mn. The Division had bagged a major order of INR 980 mn from NFRLY against very stiff competition and Reverse auctioning. The work consists of fabrication & erection of steel bridge girders in section between Aizawl and Bhairabi. Your Company has also participated in number of other major bridge contacts in NFRLY. Your Company expects to be favoured with orders against few more major bridge tenders in the coming years which are on way. Presently the Division is also executing two nos. contracts of Bridge girders fabrication as well as construction of Railway bridge including foundation & sub-structures at Bangladesh. The division would put all out efforts to double its turnover in FY'21 considering order book of emerging work opportunities.

IV. Texmaco Hi-tech

The turnover of the division during FY'20 was INR 147 mn. The turnover was affected due to lowering of demand for components of CBS shells for the year due to anticipated design change by the customer viz. Alstom, coupled with deferred requirements of CBS Primary parts.

The developmental work of Platform and Cab Structures for GE Diesel Locomotives during the year progressed well. Pending the approvals and deferred CBS requirements due to the outbreak of COVID-19 and uncertainty caused by it, the performance of the Division for the first two quarters of FY'21 is likely to be adversely affected.

STEEL FOUNDRY DIVISION

During the year, the turnover of the foundry stood at INR 3481 mn against that of INR 2656 mn in the previous year, i.e. presenting a healthy growth. The total production & despatch were 23960 MT & 21898 MT respectively against 18567 MT & 18638 MT from the previous year, an increase of 29 % & 18 % respectively.

However, the reduced domestic demand of bogies & couplers because of sluggish supply of wagons owing to insufficient supply of Railway wheel sets to wagon builders by the Indian Railways had adversely affected the wagon industry and correspondingly the performance of the Division. It was only in second half of FY'20 that due to the Indian Railways allowing imports of wheel sets for private wagons resulting in increased demand of bogies to some extent, the Division witnessed a reasonable growth in its performance. On the export front, the demand remained steady and around 30 to 35% of turnover of the Division was derived from export.

During the year, the Division has started production & dispatch of CMS crossing, a new track product, on regular basis. Your Company do expect surge in the demand of CMS crossing and is gearing up the capacity accordingly. The Division has built-up a healthy order book position of CMS crossing and is progressively increasing the despatches to meet the increased demand.

The Urla unit at Raipur had already commenced regular production from May 2019 onwards under the Company's management. The Urla plant is manufacturing hand moulded heavy castings and is also approved to manufacture Defence castings for ship building etc. apart from the regular Railway castings.

The whole world is facing an unprecedented crisis with the widespread of COVID-19 pandemic and global economies are nose-diving even in this difficult time. The Company is ensuring that its export to North American market is maintained unaffected.

In the given situation, your Company do anticipate that the demand for Indian wagon castings may go down initially during FY'21. However, with the focus of the Indian Railways on boosting its infrastructure segment and privatisation of various services, the demand for Railway castings will see growth in the second half of the year and will support the Division to ensure steady performance.

RAIL EPC DIVISION

Your Company's Rail EPC Division faced challenges due to adverse market & stressed working capital conditions during FY'20. This has resulted in subdued performance during the year. Execution activities in major projects though have been maintained at reasonable speed. The focus of the Division during the year was to successfully complete commissioning activities in all major legacy projects like Sitapur-Mailani Gauge Conversion, MMTS Hyderabad, Kota-Bina, Jhansi-Bhimsen, etc.

The Division has commenced execution activities in Bengaluru Metro Track package which is the single largest ballast-less track contract awarded in the country.

There have been relentless efforts on closing and realizing the dues from old contracts which have started yielding good results. Focus on efficient execution coupled with speedy realisation of old receivables will help the Division in improving the working capital cycle and put it in a healthy growth trajectory. The Division is presently exploring to acquire new signalling & telecommunication contracts involving technological innovation, which will certainly strengthen qualitative performance of the Division. The Division had made a significant provision during the year ended 31st March. 2020 amounting INR 1499.20 mn on account of impairment of assets in respect of certain legacy contracts. This has led to decline in profitability of the Division.

Rail Electrification

During the year, Bright Power, a pioneer in the field of Overhead Electrification of Railways, has achieved a turnover of INR 2741 mn and has successfully commissioned 423 TKM Railway Electrification works against the targeted 368 TKM. The Division has also carried out successfully the work in Metro sector like refurbishment of sub-station at Kolkata metro and electrification of new metro line at Pune Metro priority section in record time. The Division, as reported earlier, has extended its reach into the new area of OHE and Sub-Station maintenance and subsequent to the order for maintenance of OHE and Sub-station between Bengaluru and Mysore section for a period of 2 years from South Western Railway, it diversified into the maintenance activities of railway electrical assets between Mysore-Bidadi section in Karnataka. The boost to the electrification work being carried out by Indian Railways and unwavering approach on upgradation of Railway network, will overlay new vistas for the growth of the business of the Division.

SUBSIDIARY COMPANIES

A Report on the performance and financial position of each of the subsidiaries, associate and joint ventures included in the Consolidated Financial Statement and their contribution to the overall performance of the Company, is provided in Form No. AOC-1 as required under the Companies Act, 2013.

The Consolidated Financial Statements of the Company, its subsidiaries, associate and joint ventures prepared in accordance with the Companies Act, 2013 and applicable Indian Accounting Standards along with all relevant documents and the Auditors' Report form part of this Annual Report.

i. Belur Engineering Private Limited

Belur Engineering was incorporated as a wholly owned subsidiary of the Company in the FY'17 to supplement your Company's business streams through forward & backward integrations. Presently, Belur Engineering has leased out its parcel of land located at Sodepur, NortRs. 24 Parganas – West Bengal to your Company for carrying out its execution of project works.

ii. Texmaco Rail Electrification Limited

During the FY'20, your Company has incorporated a wholly owned subsidiary ‘Texmaco Rail Electrification Limited' on 26th February 2020. This has been formed to explore business potential in the niche field of Rail Electrification.

iii. Texrail SA (Pty) Limited

Texrail SA is exploring opportunities in new Standard Gauge Railway Lines in East Africa and Democratic Republic of Congo and Mozambique. During the FY'20, Texrail SA has entered into a couple of MoUs for exploring setting up JVs for Rail EPC projects.

iv. Texmaco Transtrak Private Limited

Post signing of an arrangement with CAF, Spain, the technology provider for electronic interlocking and Train Protection and Warning Systems, the Company has taken up the approval process with RDSO. Details of the system are under discussions with RDSO while a prototype has undergone environment test in India. The approval process has been delayed pending RDSO inspection which is likely to take place once normalcy is restored post COVID-19.

v. Tex maco Rail Systems Private Limited

During FY'20, the name of Tex maco Signalling Systems Private Limited was changed to ‘Tex maco Rail Systems Private Limited' w.e.f. 11th June 2019. The company has ceased to be a wholly owned subsidiary of your Company w.e.f. 22nd July 2019 post allotment of shares to other investors and continues as a subsidiary thereafter. Tex maco Rail Systems is identifying the evolving areas in the field of signalling equipment to strengthen your Company's Rail EPC business for signalling.

ASSOCIATE

Tex maco Defence Systems Private Limited

During the FY'20, Tex maco Defence Systems Private Limited (‘Tex maco Defence') has ceased to be the subsidiary of your Company effective 30th March. 2020. Your Company continues to hold 41% of shareholding in Tex maco Defence. Tex maco Defence is in the process of identifying a host of low hanging fruits in the Defence segment by entering into strategic arrangement with OEM suppliers of certain Defence equipment.

During the FY'20, Tex maco Defence has signed few MoUs for exploring the opportunities in the Indian market. Tex maco Defence has exclusive arrangements with some companies and it is in the process of discussions with certain global names and companies from CIS Nations. Tex maco Defence is confident that with the ‘Make in India' initiative propagated by the Government of India, the opportunities for it in the defence segment will open up.

JOINT VENTURES

i. Touax Tex maco Railcar Leasing Private Limited

The FY'20 continues to witness a positive trend for the leasing business for wagons. The old rigid supply chains, of various large industrial consumers of break-bulk raw material are now loosening, to accept other alternatives. Mainly presented in the form of various bulk wagon types, now freely available, which hitherto reserved only for the IR, and more so always in short supply. This has led to the demand for wagon types both conventional and commodity specific, which are now available for private ownership and leasing. The JV company expects more third party logistic operators to enter the bulk market under the new GPWIS scheme which will further drive up volumes. The Indian Railways continues in its effort to drive more cargo back to rail from road with more trade friendly measures ranging from freight rationalisation and easing of freight policies. However, the recent economic downturn has not been the most conducive to a sizeable increase in the current order book, on short term basis.

This of course, is expected to change in the coming months of the current year. The JV company has now 12 rakes in operation and confirmed orders for 6 more rakes. The JV company is hopeful of signing good size of orders in the near future.

ii. Wabtec Texmaco Rail Private Limited

Wabtec Texmaco Rail Private Limited, the JV company has achieved a sales turnover of INR 440.1 mn during the FY'20. The JV company has received RDSO approval for manufacturing and supply of indigenous upgraded high capacity Draft Gears as per RDSO specification. Manufacturing and supply of these Draft Gears had since started from the 2nd quarter of the FY'20. The JV company has also won majority of the tenders floated by various zones of Indian Railways for Draft Gears. Receiver Assemblies, export of which account for a major share of the JV company's business showed an upward trend from the 3rd quarter of the FY'20. Indigenous manufacturing of the Wheel Chocks also commenced during the current year which resulted in increased profitability. The market for other business products e.g. Friction Wedges, Brake Blocks for non-IR customers, etc. remained steady during FY'20. Efforts are being made for introduction of new products like Hydrojacks for removal and fitment of Draft Gears, Coil Guards for steel coil carrying wagons, Bridge Plates for Automobile carrying wagons, etc. The JV company expects to further grow and improve upon its results during FY'21.

EXPORTS

The Company is actively pursuing the opportunities in field of exports.

The Steel Foundry Division of your Company sustained to excel in export totalling to INR 1124 mn i.e. approx 35% of its turnover. The execution of the projects in the neigh bouring countries by the HME Division of your Company has picked up during the year. The Rail EPC Division of your Company is well poised to seize the opportunities in the export field. The Company is also exploring new products to expand its reach in the international markets.

R & D ACTIVITIES

A. Rolling Stock Division

a) The R &D has developed new designs of Container Carrier Wagons and Fuel Tank Wagons for Sri Lankan Railways. These wagons have been developed as per international standards using modern design simulations tools for optimum payload design and have been successfully manufactured and commissioned.

b) For BCACBM wagon, Side Loading option for two-wheeler has been developed. This will facilitate transportation of two-wheeler through rail.

B. Steel Foundry Division

The R & D Centre of your Company is registered and recognised by 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 while improving cost effectiveness. The metallurgical lab of our company, an integral part of the R & D Centre, has already received ISO/IEC 17025 certification from NABL (National Accreditation Board for Testing and Calibration Laboratories).

a) New Product Development:

1) A new design of high capacity (125T) bogie castings, four new designs of yoke castings, two new types of follower and two new types of draft gear housing 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) A new grade of low alloy steel has been developed for ground excavating application through unique metallurgical process improvement, characterized by high hardness as well as high impact toughness.

3) Bogie casting and brake beam developed for Thailand Railways.

4) New design of Draft Gear Housing developed for Indian Railways.

b) New Process Development:

1) A new process of NDT inspection has been introduced, resulting in substantial cost savings

2) Single slag practice during steel making has been implemented to increase productivity and increase cost savings.

Apart from the above, the R & D Division of your Company has also undertaken the following projects:

1) Development of a computational model to simulate the mould filling operation and the resultant turbulent flow for different components.

2) Correlation of micro-structures of different low alloy steels with their chemical composition, heat treatment process parameters and resultant mechanical properties to identify optimum heat treatment cycles for various steel grades. This would help to identify and eliminate deviations during heat treatment.

3) Correlation of parameters of moulding, core making, steel making, pouring and heat treatment operations of different components with the casting physical properties to identify defect types and their locations, probable root cause of their occurrence and corrective / preventive actions for their minimization/ elimination. These studies have helped in improvement of existing products and processes.

4) The R & D department has further undertaken in collaborative projects with reputed institutes such as Birla Institute of Technology (BITS – Pilani) to assist in improving the quality and life cycle of the products.

IT SERVICES

Our corporate and administrative offices are well connected with the manufacturing units through strong internet bandwidth. In house dedicated IT team of the organisation is maintaining ERP applications for business operations and digitization across it's all operating units. To protect confidential information, secure Corporate Overview Statutory Reports, Financial Statements environment to prevent data loss and IT infrastructure from external cyber threats, the organisation continuously keeps upgrading its security system.

HUMAN RELATIONS

Human Relations focusses on internal resources for competitive advantage. It regards people as the most important asset of the organisation. Human Resource Management aims to enhance organisational performance by playing a proactive role in developing relationship with employees of the Company. HR emphasises on the quantitative, calculative, and strategic aspects of managing the human resource in a systematic way. It promotes leadership skills amongst the people in the organisation which boosts the morale of the employees and motivates them to demonstrate quality work for the inclusive growth.

HR functionally acts towards the continuous process of skill development by eliminating any disconnect between demand & supply of skilled manpower, building the training framework, skill upgradation, building of new skills, and innovative thinking for both fresher & experienced workforce of the Company. HR supports in creating a non-discretionary healthy work environment whereby the human capital is encouraged to fulfil commitment towards achieving the objectives of the Company.

OPPORTUNITIES & THREATS

The Government's focus and measures taken for modernisation under various segments of Railway infrastructure and services – coaches and passenger services, electric locomotives, electrification, signaling etc., will continue to strengthen the presence of the Rail EPC and Rolling Stock Divisions of the Company. Growing pace of electrification including track renewals, bridge works, and doubling of tracks remain advantageous to your Company. Indian Railways' plan to build 7 high-speed rail corridors to provide faster rail connectivity across the country, is also a positive for the business of your Company.

The comprehensive plan of Indian Railways to introduce Modern Technology based rolling stock with reduced maintenance and focus on indigenisation of rolling-stock in recent years, will boost the continued presence of the company as leading wagon manufacturer. The Private sector companies in the field are being encouraged to participate in new rail projects. Freight traffic is set to increase significantly due to rising investments and private sector participation.

The Government's determined approach on Dedicated Freight Corridor projects to create additional freight capacity to meet increasing demand certainly adds flavour to the business of your Company.

Due to the sluggishness in the global economy due to COVID-19 outbreak & its spread with plunging growth rate across the world in view of the uncertainty over the potential macroeconomic condition, the ultimate outcome of the massive impact of COVID-19 is not quantifiable. The overall environment is challenging, however there is silver lining as the business has started picking up and your Company is confident of overcoming any substantial impact with improved efficiency in operations.

CORPORATE SOCIAL RESPONSIBILITY

As a corporate citizen, Texmaco stands firm in its commitment to the social obligations for the up liftment of the society. With this urge, the Company always endeavours towards taking CSR initiatives in various areas viz. Health, Education, Environment, Women Empowerment, etc.

The Company continues to extend philanthropic services to the society. During the year, the Company through the social and community welfare arm has provided financial support towards health and education (including educational sponsorships) to a large section of deserving localites belonging to the unprivileged rung of the social ladder.

With the aid of your Company, a self-sustaining Health Hub, ‘Arogyam' has been set up amidst the ecological balanced premises of the Company's estate, promoting health and well-being amongst the neighbour hood. During the year, the Alternative Therapy Centre which includes the services of Traditional Chinese Techniques (Acupuncture, Electro-acupuncture, Moxibustion, Fire & Plastic Cupping, Tui Na) and Homeopathy, has become a significant part of Arogyam Health Hub, besides a well-equipped Physiotherapy centre equipped with competent doctors and a state-of-the-art modern Gymnasium & Yoga centre. Arogyam has celebrated its 4th anniversary on 29th February 2020 at the K. K. Birla Kala Kendra, an auditorium set up for recreational activities of the employees & family members. The programme was enlightened with the august presence of Padma Shri Dr. Raman Kapur, eminent Acupuncturist from Sir Ganga Ram Hospital, Delhi, who addressed the houseful audience with his educative presentation on benefits of acupuncture therapy.

In the field of Education, Texmaco George Telegraph - Centre of Excellence which was set up in collaboration with the renowned The George Telegraph Training Institute to run vocational courses approved by The National Skill Development Corporation, has made a mark by establishing its presence as a recognised vocational training centre. It helps in assisting its students for employment by providing suitable training programmes and igniting amongst them the spark of entrepreneurship. The Company since the outbreak of the pandemic COVID-19 has undertaken the drive towards campaigning for general awareness for protection of the community against the deadly virus. Your Company believes in fulfilling its CSR objectives and is constantly exploring new activities to extend its benefit to the large section of the society. Despite best efforts, the Company has been unable to execute its ambitious plan towards CSR spend.

Your Company shall endeavour to undertake the CSR projects and activities for the substantial well-being of the people in the community. The Annual Report on CSR activities in enclosed as Annexure A.

GREEN INITIATIVE

Your Company continues to embrace a sustainability initiative with the aim of going green and minimising the impact on environment. Your Company had already adopted the green initiative by sending Annual Report, Notices, other communication, etc. through e-mail to the 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 communication, etc. through e-mail. This year amidst COVID-19 outbreak, the Ministry of Corporate Affairs has 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 2020.

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

Further those Shareholders who have not yet registered their e-mail addresses are requested to follow the procedure as mentioned in the explanatory note to the Notice calling AGM to receive copy of the Annual Report & the Notice of the AGM and to enable their participation in the AGM.

PARTICULARS OF EMPLOYEES

The number of employees as at 31st March. 2020 was 2674. 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

Disclosures relating to 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, are enclosed as Annexure D.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

Meetings of the Board

During the year under review, 5 (five) Board Meetings were held on 25th April 2019, 13th May 2019, 8th August 2019, 23rd October 2019 and 31st January 2020.

Change in Directors and Key Managerial Personnel

Mr Akshay Poddar retires by rotation and being eligible, offers himself for re-appointment at the ensuing Annual General Meeting (‘AGM') of the Company.

The Board of Directors at its Meeting held on 8th August 2019 had recommended the appointment of Mr Indrajit Mookerjee as an Independent Director. The re-appointments of Messrs A. C. Chakrabortti, D. R. Kaarthikeyan, Sunil Mitra and Indrajit Mookerjee as Independent Directors of the Company were approved at the last AGM held on 9th September 2019.

During the year, Mr V. K. Sharma ceased to hold office as Independent Director of the Company from 29th June 2019 upon completion of his tenure as approved by the Shareholders. Messrs Sandeep Fuller, Managing Director and G. C. Agrawal, Executive Director had resigned from the services of the Company with effect from close of business on 31st March. 2020.

Mr Ravi Varma, Company Secretary & Compliance Officer, who resigned effective 22nd June 2019, was re-appointed as General Manager (Corporate Affairs) & Company Secretary cum Compliance Officer with effect from 14th December 2019.

The Board of Directors on the recommendation of the Nomination and Remuneration Committee, has approved the re-designation of Mr Indrajit Mookerjee as the Managing Director of the Company for a period of 3 (three) years w.e.f. 2nd April 2020 and the appointment of Mr U. V. Kamath as the Executive Director of the Company for a period of 3 (three) years w.e.f. 1st August 2020, subject to the approval of the Shareholders.

The tenure of Mr S. K. Poddar, the Executive Director and the Chairman expires on 24th September 2020 and in view of his visionary leadership, the Board of Directors on the recommendation of the Nomination and Remuneration Committee has approved his re-appointment, subject to the approval of the Shareholders.

The above recommendations of the Board of Directors are being placed at the ensuing AGM for the approval of the Shareholders.

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 Board or Committees of the Board, execution and performance of specific duties, etc.

A structured questionnaire, 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 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 of Directors. The evaluation criteria comprised of 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 of Directors ensured that the evaluation of Directors was carried out without the participation of the Director who was subjected to evaluation.

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 includes 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 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 under review, 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 web link for accessing such policy is: https://www.texmaco.in/webfiles/doc/Investors_Information/ REMUNERATION_POLICY_TexRail.pdf

Declaration by Independent Directors

All Independent Directors of your Company have given declaration 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.

The Board of Directors of your Company took on record the declarations 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 requirement to undertake the online proficiency test as stipulated under the Companies (Appointment and Qualification of Directors) Rules, 2014 has a time period of one year from the date of registration and accordingly, the Independent Directors will undertake such proficiency test, as may be required. The Board is of the opinion that all the Independent Directors possess the requisite integrity, expertise and experience to fulfil their duties to act as such.

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 this Report.

Statutory Auditors

Messrs. L B Jha & Co., Chartered Accountants, who had been appointed as the Statutory Auditors at the 19th Annual General Meeting (AGM) in the year 2017 for a period of five (5) years hold office until the conclusion of the 24th AGM of the Company to be held in the year 2022.

Cost Auditors

Your Company has appointed Messrs. DGM & Associates, Cost Accountants, for conducting the Cost Audit for FY'20 in terms of the provisions of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014.

The Board of Directors of your Company on there commendation of the Audit Committee, at its Meeting held on 17th June 2020 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'21 at a remuneration of INR 1,85,000 (Indian Rupees One Lakh Eighty Five Thousand) plus applicable taxes and out-of-pocket expenses as incurred from time to time. The approval for the ratification of the remuneration payable to Messrs. DGM & Associates is being placed for the approval of Shareholders at the ensuing Annual General Meeting. In terms of the Section 148 of the Companies Act, 2013 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 maintained.

Secretarial Auditor

Your Company has appointed Messrs. S. R. & Associates, Company Secretaries, for conducting the Secretarial Audit for FY'20 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 in Form No. MR-3 is enclosed as

Annexure E.

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. 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 implemented a Risk Management Policy in order to mitigate the 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 treatment of risks and is reviewed periodically by the Audit Committee to ensure its effectiveness.

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

(e) Share Capital

During the year, your Company has allotted 24,600 Equity Shares of face value of INR 1 each to eligible Employees pursuant to exercise of Options under Texmaco Employee Stock Option Scheme, 2014 and 47,85,300 Equity Shares of face value of INR 1 each pursuant to the Scheme of Amalgamation for merger of Texmaco Hi-tech Private Limited, Bright Power Projects (lndia) Private Limited into and with the Company. Further, your Company has not granted any Stock Options as on the date of this Report under Texmaco Employee Stock Option Scheme, 2018.

(f) Deposits

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

(g) Disclosures under The 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. Your Company has in place a Policy on prevention of Sexual Harassment in accordance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules framed there under to promote safe & healthy work environment. During the year, no complaint was received by the ICC.

(h) Disclosure with respect to compliance of Secretarial Standards

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

OTHER INFORMATION

Extract of Annual Return

The extract of Annual Return in Form No. MGT 9 for the FY'20 is enclosed as Annexure F and forms a part of this Report.

Dividend Distribution Policy

Your Company has in place a dividend distribution policy in line with the requirements of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The said policy is enclosed as Annexure G and forms a part of this Report.

Corporate Governance

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

Business Responsibility Report

Business Responsibility Report pursuant to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is enclosed as 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 Financial Statement of the Company.

Related Party Transactions

All related party transactions during the FY'20 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 of Directors. The details of such transactions were also placed before the Audit Committee and Board of Directors 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 also formulated a policy on dealing with related party transactions and the same is disclosed on the Company'sebsite.Thenkforaccessingsuchpolicyishttps://www.texmaco.in/webfiles/doc/Investors_Information/ RELATED%20PARTY%20TRANSACTION%20POLICY.PDF

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

Your Directors state that:

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

(b) 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) 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) 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
17th June 2020 S. K. Poddar
Kolkata Chairman