texmaco rail engineering ltd Directors report

Dear Shareholders,

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

	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 gures are extract of the Audited Financial Statements prepared for the Financial Year ended 31st March 2022 & 31st March 2023.

Dividend

Your Directors recommend payment of dividend of 15% i.e. INR 0.15 per equity share of face value of INR 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 FY23 was affected due to Russia-Ukraine war and resultant dislocations in supply chains, leading to surging food and energy in ation. 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 O ce (CSO) on 28 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 scal 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 nalized 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 electri cation work and cut-throat competition in this eld, 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 FY24.

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 eco- friendly 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 cash flow 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, pro tability 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 Companys goals and objectives. Human Relations aids in the process of improving the organizations 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 de ne 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 individuals as well as organizations 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 FY23 due to increase in volume. The Company expects to improve its debt equity ratio in FY24.

@During FY23, there is increase in Net Profit as compared to FY22.

HEAVY ENGINEERING DIVISION

I. 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 FY24, the Railways have planned the highest ever planned outlay of Rs. 2.4 lakh crore during FY24. 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 FY27 much ahead of their initial plan of achieving it in FY31. 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 diversi ed 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 Companys 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 nd prototype in mid of 2 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 FY23.

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 oods 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 vendors 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 FY24.

STEEL FOUNDRY DIVISION

The Steel Foundry Division of your Company has achieved a remarkable growth of around 63% over the previous year i.e. FY22 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 ash 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 in ationary 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 elds 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 of your 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 eld of Rail, heavy industry and defence business and are working on determining suitable opportunities to commence its eld operations.

i. Belur Engineering Private Limited

ii. Texmaco Transtrak Private Limited

iii. 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 FY23 from INR 2,00,000 to INR 4,00,000.

vi. Belgharia Engineering Udyog Private Limited

vii. Texmaco Defence Systems Private Limited

JOINT VENTURES

i. 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 FY23 was INR 433 mn.

ii. Wabtec Texmaco Rail Private Limited

Wabtec Texmaco Rail Private Limited, the JV company, posted exceptional financial results for FY23. The total revenue earned during FY23 was more than doubled to INR 770 mn as compared to FY22. The Net Profit surged significantly to INR 111 mn compared to FY22. The JV company strengthened its position in the freight Draft Gear segment with customers 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 FY24. 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 FY24. 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 clients 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 Companys 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 certi cation 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 nal stage of development and are hopeful that we will complete the project on time.

b) New Process Development:

Several existing components have undergone modi cations in their method design, leading to significant enhancements in terms of durability and the quality of the surface nish. 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 tra c patterns and bandwidth consumed by different devices and applications to con gure tra c 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 organisations 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 Companys agenda with this scal 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 elds 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 tness, 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 FY23.

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 A airs (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

PERSONNEL

Meetings of the Board

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

• 20 May 2022	• 12 August 2022
• 20 October 2022	• 7 November 2022
• 11 February 2023	• 14 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-de ned 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 Companys 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 Personnel

Re-appointments:

During the year, the re-appointments of Mr Akshay Poddar as Non - Executive & Non - Independent Director, Mr I ndrajit 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 30^th 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. 6^th 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 31^st August 2022. Further, Mr A. K. Vijay, Executive Director & Chief Financial Officer (CFO) resigned from the position of CFO w.e.f. 1^st April 2023 and Mr Hemant Bhuwania was appointed as CFO w.e.f. 1^st 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. 30^th 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 3^rd 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 Directors 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 14^th 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 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

At the 24^th 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 24^th AGM until the conclusion of 29^th AGM of the Company.

Cost Auditors

Your Company has appointed Messrs DGM & Associates, Cost Accountants, for conducting the Cost Audit for FY23 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 12^th 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 FY24 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 FY23 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 / modi cation 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 FY23, 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 INFORMATION

Annual 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 FY23 were entered in the ordinary course of business and on arms 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 Companys 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) OF THE 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 a airs 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.

For and on behalf of the Board

Dated: 12th May 2023	S. K. Poddar
Place: Kolkata	Chairman