Report of the Directors

Your Directors have pleasure in presenting the 5th Operational Annual Report of the Company along with the Audited Financial Statements of the Company for the year ended 31st March, 2015.

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

The Gross Turnover for the year stood at Rs. 5596 million, net of the value of free-supply inputs (including steel and components) of over Rs.2110 million, provided to the Company by Indian Railways and other clients for some large value contracts.

The Gross Profit for the year (PBDT) and Profit Before Tax (PBT) were at Rs.312 million and Rs. 162 million respectively. The Net Profit was Rs.137 million, after providing net tax liability of Rs.25 milloin for the year has been created in the Profit and Loss Account in accordance with the Accounting Standards issued by the Institute of Chartered Accountants of India.

Dividend

In view of lower profits, the Directors recommend payment of a dividend of 25% for the year ended 31st March' 2015.

THE MANAGEMENT DISCUSSION AND ANALYSIS

In the previous year's Report of the Directors, the Management had expressed its concern about the setback suffered owing to depleting orders bringing the production to a virtual halt in the last quarter Jan-March 2013. No orders were released for FY' 14 until the beginning of the next year FY'15 .

The acute paucity of orders continues to dog the Industry and, if anything, the situation has worsened in the current year 2015-16. Beside the quantum of orders, what is more worrisome is the precipitate fall in wagon prices owing to predatory pricing by new entrants in the field in their anxiety to get workload to maintain their operations .

In essence, the bane of the Industry is inadequate orders and the inequity of a regressive pricing formula for award of wagon orders, which has created serious imbalance in the entire procurement process to the detriment of the Railways themselves. In fact, the present system of tendering followed by the Railway Board would scarcely serve the much acclaimed pronouncement of the present Government to build a world class rail network with a proposed outlay of US$ 140 billion. Needless to say, Railways are the lifeline of the nation, and the policies relating to procurement of Rolling stock and building of supportive infrastructure with firm timelines for implementation need to be revisited and efficiently administered with speed and alacrity.

Heavy Engineering Division

A. Rolling Stock Division

a. Freight Car

For the year 2013-14, the company received an order for 2400 wagons (the highest in the Industry) in end April'14, based on performance criteria. Later, an additional quantity of 278 wagons were diverted by Indian Railways to the Company owing to the default of certain other wagon builders. The margins were, however, under severe pressure owing to unremunerative price at which the order was awarded in face of price war amongst the bidders in the Industry, who were starved of orders and saddled with huge idle capacity in the previous year.

Besides, the company secured non-IR orders for 1502 wagons, valued Rs.4887 million (ex-works), which included a prestigious order for 974 MBWT wagons (for transport of Battle Tanks), valued Rs.3428 million (ex-works) from the Ministry of Defence, Govt. of India.

During the year, the company executed orders for 2062 wagons altogether, valued Rs.3235.7 million made up of 77% IR and 23% non- IR orders. The performance could have been better but for the delayed availability of free issue materials from Railways.

The Wagon Industry, which has been smarting under severe losses owing to idling capacity and uneconomic prices as aforesaid, was hoping for some mitigation post Railway Budget for FY'16. However, to the utter disappointment of the Industry, the wagon Tender by the Railways for FY'16 is only for a reduced quantity of 8509 numbers against the budgeted quantity of 16800 wagons. To make it worse, the prices quoted by a new entrant (just approved by RDSO on 14th April'15) in respect thereof (opened on 20th April '15), registered a further steep reduction by more than 10% of the previous prices. The Industry has no more resilience to take the shock of further losses after highly adverse working during the last two years.

In the field of New Design Special wagons, the company successfully developed and executed an order for 3 rakes of Double-deck Car Carrying wagons from an esteemed group of multinationals. There has also been a repeat order for 3 more rakes with potential for further orders. The prototype development of an advanced model of this type of wagon to European design is progressing well, and the company expects to offer it to the market in the near future. The container movement is also picking up, and as your company has an excellent track record of supplying container rakes to most of the important CTOs, it expects substantial business in this segment. This apart, with Double Decker Container being developed in technical collaboration of UGL, Australia, there would be a good opportunity especially, to cater to DFC requirement. Besides, the company has identified other Commodity-specific special wagons with good market prospects, and the development work is progressing thereon.

With the initiative of the present Government, the progress on DFC is gathering momentum. Your company, in association with Kalindee Rail Nirman (Engineers) Ltd., is now well poised to secure business in the field of Rail Infrastructure, such as, Track Laying, Signaling, Rail Telecom etc. The demand for high capacity heavy haulage wagons is in the offing for which your Company is well geared up.

b. EMU Coaches

Your Directors are pleased to report that the first rake of EMU Coaches was successfully commissioned during the year and is in commercial service on Eastern Railway since 3rd Feb' 2015. It was manufactured at the new State-of-the-Art coach manufacturing facility at the company's Sodepur Works.

With the successful completion of the development order, your company is qualified to get further orders from Indian Railways.

c. Electric Locomotive Components / Assemblies

As mentioned in the last report, your Company has diversified into manufacture of Electric Locomotive Shells and Sub-Assemblies, and secured orders for supply of Centre Sills, Head Stocks, Roof Structures, Underframe Assemblies and Complete Shell Assembly. The delivery of these components to the Railways has commenced. The facilities set up for their manufacture have generated a lot of interest among leading multinationals. Your company hopes to establish its position as a premier supplier of Locomotive Assemblies and Sub-Assemblies in the coming years.

d. Fabricated Bogie Frames

Your Company has also diversified into manufacture of Fabricated Bogie Frames and secured developmental orders for supply of Fiat Bogie Frames (Unmachined) & Bogie Frames for DMU Coaches. It expects to further consolidate its position as a supplier of Bogie Frames for ICF & RCF in the coming years.

e. Mining & Tunneling Locomotives

Your Company has been appointed as the exclusive agent of M/s. Clayton Equipment Ltd. UK, for marketing of their Mining & Tunneling Locomotives in India. Clayton Equipment Ltd., UK is a world renowned company engaged in the manufacture and supply of mining and tunneling locomotives.

Joint Ventures

Texmaco UGL Rail Private Limited

The Joint Venture (JV) with UGL Rail Services Ltd., Australia, with State-of-the-Art manufacturing facility, was set up primarily to cater to the huge requirement of locomotive, wagon and coach components for the Australian market through UGL. Investments in the JV were made accordingly in line with business potential projected by UGL. However, due to changing market dynamics in Australia, in the first year of operation itself, UGL's business projection collapsed by more than 80% and, the situation continued to be dismal in the second year of operation as well. This resulted in substantial idling of capacities, and the revenue could be achieved only to the tune of Rs. 207.9 million compared to Rs.149.1 million in the first year

In this backdrop, the JV had to take initiatives to develop its own customer base and take steps for getting registered, qualified and audited for acceptance of trial orders. It has been done successfully with respect to some global companies like GE Transportation, Alstom, Harsco, ZF, etc. It has also been successful in getting trial orders from Indian Railways for Coach Bogie Frames. The product portfolio has thus become more broad-based, and currently the JV is targeting long duration projects which require Hi- precision, Hi-tech manufacturing capability.

Touax Texmaco Railcar Leasing Private Limited

Recovering from a period of sluggish economic activity and poor investment sentiment, the company signed its first leasing contract this year with a leading logistics company. The lean period that the transportation industry in general and the Railways in particular had been going through is a matter of past. The company expects to sign few more leases in the immediate future.

With the new administrative dispensation in the Ministry of Railways, there are progressive moves initiated to promote leasing, introduction of new wagon types and greater private participation in the development of Railway infrastructure. All this augurs well for the leasing industry and the company looks forward to a fulfilling year.

Wabtec Texmaco Rail Private Limited

Wabtec Corporation, headquartered in Wilmerding, Pennsylvania, USA, has joined hands with Texmaco Rail & Engineering Ltd. to form a joint venture company in India under the name and style of 'Wabtec Texmaco Rail Pvt. Ltd'.

Wabtec is a global provider of value-added, technology based products and services for Rail and other Industrial markets.

Wabtec Texmaco Rail would offer Wabtec's globally competitive Freight and Friction products to Indian Railways. The Company, with its technologically advanced products (including High Capacity Draft Gears & Bogie Mounted Brake Systems under the Freight segment and Composition material lined Friction Wedges & High performance Brake Blocks under the Friction segment), would help Indian Railways attain higher levels of safety, productivity and efficiency. Leveraging Texmaco's market leadership in Indian Railways, Wabtec Texmaco Rail is poised to become a market leader in its range of products in the very near future.

Associate Company

Kalindee Rail Nirman (Engineers) Limited

The company, with a view to expanding its footprint in the emerging Rail Sector, made a strategic acquisition by acquiring 49.07% Equity (including Shares to be transferred under a Share Purchase Agreement) in the well-established Rail Infrastructure Company, Kalindee.

The Board of Directors of the Company looking to the synergy of business of Kalindee with the Company, has approved the Scheme of Merger of Kalindee into the Company. In terms of the provisions of the Act, the Company filed necessary application before the Hon'ble High Court, Calcutta, for approval of the Scheme of Merger. Similar application was filed by Kalindee before the Hon'ble High Court, Delhi, for approval of the said Scheme.

The Hon'ble High Court, Calcutta, has vide its order dated 14th May 2015, asked the Company to convene a Meeting of the Shareholders of the Company for their necessary approval of the Scheme. This will enable the Company to target large value contracts with the combined strength of Texmaco and Kalindee for various Rail Solution Projects of the Railways, public & private organizations and others.

B. Hydro Mechanical Eqpt. and Steel Structures

The performance of the Division significantly improved during the year. The turnover increased to Rs. 550 million as compared to Rs.300 million in the previous FY. The activity has gained momentum in the current year, and the Division is expected to further improve its performance with a comfortable work load of Rs.3560 million in hand.

There are encouraging business opportunities emerging from intensified participation of the company in domestic and international bids, many of which have become active since the beginning of the current year after lying dormant for some time. The company has bagged a contract worth Rs.500 million in Himachal Pradesh and hopes to finalise Rs.1000 million worth of contracts in the near future. It has also pre-qualified to participate in large value prestigious Hydro Project tenders of NHPC in Sikkim, Arunachal Pradesh, Himachal Pradesh, and of DGPC in Bhutan.

After successful completion of a couple of refurbishment contracts, the Division is well entrenched into refurbishment / upgradation work of old hydro projects.

It has emerged the winner against rehabilitation tender for Chhukha Hydel Project, (the oldest power project of Bhutan).

C. Bridge & other Steel Structures

Your company has reorganised and upgraded the facilities available at its Panihati works, and has started a new Bridge & Structural Division, which has taken off handsomely with export orders for around 9000 MT of fabrication/erection work for Bridge Girders worth Rs. 998 million for major bridges in Bangladesh and Sri Lanka.

With the emphasis of the present government on expansion, upgradation and modernisation of the Railway Infrastructure, including expediting the Dedicated Freight Corridor (DFC), there is a huge potential in the Bridge Structural segment, and your company hopes to establish itself soon as a premium player in this field.

Steel Foundry Division

The production and despatch during the year were 12193 MT and 13184 MT against 8006 MT and 9947 MT, a surge of 52% and 33% respectively over the previous year. The turnover improved by about 15% and stood at Rs. 1591 million. The Foundry maintained its status of the leading supplier of Railway Castings with a market share of 30% in bogies and 31% in couplers.

The mismatch in demand and production capacity in the Industry had led to unhealthy competition and depressed the price realisation. In consequence, the bottom line of the Foundry was impaired.

On the export front, while there was a setback owing to non-execution of orders from Ukraine due to ongoing political unrest, the exports to other developed nations registered improvement and stood at Rs.153 million.

During the year, your Foundry developed a number of new OEM Parts with exotic specifications to be used in Swedish & Canadian mining industry, and an educational order has also been received  for these products. The world renowned Dellner of Sweden has also placed an initial order with the Foundry for couplers which will be fitted & used in Metro train in Hong Kong Railways.

The Foundry has successfully passed Re-certification Audit valid up to 2017, conducted by independent auditors of Association of American Rail Road (AAR). The Bogie Castings developed for North American market are undergoing Static and Dynamic tests at AAR laboratory in USA. Upon successful completion of tests which is expected shortly, the supplies of Railway Castings to North American market will commence and add significantly to the working results from second half of the current year.

Exports

During the year, the Company executed export orders worth Rs.410 million, comprising of Hydro Mechanical Equipment to Nepal and Steel Castings to USA and Australia. The Company's products are accredited with CIS countries. Unfortunately, due to political unrest and setback in Ukraine, the export to that country did not materialise.

The company has received an order for Rs. 20 million for export of wagon components to certain African countries. In Hydro Mechanical Equipment Division, the company, based on its satisfactory performance in Upper Tamakoshi Project in Nepal, is set to receive substantial additional orders during the year.

R & D Activities

The R&D activities of the Company are focused on development of New Hi-tech products for export and domestic markets. The programmes undertaken to upgrade the technology and processes are:

A. Steel Foundry Division

(a) Export Bogie Castings

Alloy Steel Bogie Castings for High Axle Load ( 27.5T) have been developed and sample castings sent to a foreign laboratory for static and dynamic Fatigue testing and quality approval, the results of which are awaited.

(b) Indigenous Bogie Castings

i. High Axle Load Bogie castings for Indian Railways (25T) have been developed. The castings are in the process of testing by RDSO for Fatigue Analysis and Quality.

ii. High Capacity Draft Gear Castings (Import Substitution) have been developed and tested, which will be commercially exploited.

iii. High Wear Resistance Railway Crossing Castings with Refined Grain Structure have been developed. The company expects to exploit this product soon.

iv. Three New Grade High Wear Resistance Components were developed for mining industry with export potential. These are now under testing and the products will be sent to mines for field trial.

B. Heavy Engineering

1. Rolling Stock

The company has successfully designed and developed following two types of Double Deck Wagons, which will result in faster loading and unloading and higher carrying capacity:

i. Bogie Double Deck Autocar Carrying (BDDAC) wagon has been designed with technical support from a renowned European Company, and the prototype is getting ready.

ii. Bogie Flat Container (BFCT) double stack wagon for the Dedicated Freight Corridor which has been designed with the technical support from UGL, Australia, and is in the final stage of approval by RDSO including the detailed Fatigue Analysis. The approval for design and the permission for prototype manufacturing are expected shortly.

2. Hydro mechanical Division

The Division has developed a new design for Bifurcation Pipes with crescent girder construction. The design has been done for pipes with diameter ranging from 1.47m to 3.6m, duly validated by Finite Element Analysis (FEA) and also approved by European Consultants. The Bifurcation Pipes, to be installed as inlet pieces for 6 nos. turbines of hydro power generation, are subjected to extreme conditions of loading. The materials were carefully selected and appropriate fabrication procedures established including the necessary testing before installation.

IT Services

To keep pace with the latest development in Information Technology for business application, the IT Department is adopting practical solutions to facilitate efficient and smooth functioning of manufacturing operations. The network of all the business units is now integrated with increased internet bandwidth to establish improved online connectivity. To bring security in business information, fire-proof Safe has been introduced for backup data.

The phase-2 implementation for extension of R12 ERP system to the Manufacturing & Sales operations was initiated during last quarter of FY 13-14 with the assistance of the Implementation Agency, KPMG. It has been successfully accomplished and is in use since 4th quarter of FY '15. Presently, the entire business operations like Procurement, Inventory, Production, Sales and Finance are encompassed in Oracle ERP Application R12 version with the successful completion of ERP phase-2 project.

Human Relations

Your company believes that employees are the capital and its job is to grow that capital.

The Company continues its practices with business goals, motivate the team members for improved performance both in terms of quality and productivity. It has the aspirations for more global and competitive future where managing costs, productivity and talent is going to be HR challenge.

The company organised various programmes which include Attitudinal Development, Communication Skills improvement, Health & Safety awareness, better House Keeping, effective Energy Management, Production Process Improvement, Total Quality Management, and others. Several in-house programmes and Package programmes have been conducted for disseminating knowledge from vast cross section of the industries to benefit from their expertise practices. Training is also imparted for workmen of all disciplines.

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

Opportunity & Threat

After a dismal FY'14, a new dawn appeared on the horizon with the Rail Sector under focus in the novel scheme of priorities set by the government under Prime Minister Shri Narendra Modi. The Rail Budget for FY'15 signalled a major shift from the drift in policy planning which was responsible for underperformance of Railways, yielding ground to other modes of transport. There was a clear acknowledgement of the need for 'Good Economics over Bad Politics' and to accord Railways the pride of place to match progressively with rest of the world. The Rail Budget of the new government in July'14 was a visionary statement to put Railways on fast track. It was a welcome turn of events creating new excitement in the Rail Sector.

Looking to the huge void and severe resource constraint, the task is indeed daunting. Given the new found will, however, there has been considerable enthusiasm for Foreign Direct Investment (FDI) and funding by domestic and global Institutions and multilateral agencies. Long term packages are on anvil to accelerate the programme for Rail network expansion and high speed connectivity to enable the country to move in the double digit growth trajectory.

Notwithstanding the clear roadmap, the implementation at the ground level gets mired in democratic framework and has hiccups in critical areas, especially land acquisition. The government, however, is pursuing resolutely to go fast forward in phased implementation of the celebrated schemes, such as Dedicated Freight Corridor (DFC).

Beside garnering ways and means, the regulatory framework in the Ministry of Railways has to be radically changed and administrative machinery geared to harness the local entrepreneurship and create a congenial business environment of partnership in building a world class domestic industry. It is unfortunately wanting, but the comfort is that the problems have been acknowledged and are being addressed with a sense of urgency.

Corporate Social Responsibility

Your company firmly believes in the commitment to all our stakeholders and local communities for ensuring sustainable development.

The fundamentals of CSR rest on the fact that not only Public policy but even corporates should be responsible enough to address social issues. CSR has been present in this country since long and it has gone through many phases in India like Philanthropy to Trusteeship etc. but now CSR has been integrated with sustainable business strategy. The ability to make a significant difference in the society and improve the overall quality of life has clearly been proven by the corporates. All corporations will continue to try and bring about a change in the current social situation in India in order to have an effective and lasting solution to the social woes.

Texmaco's journey over several decades has been enthralling chronicle of pioneering initiatives in engineering operations in infrastructure development for the nation and community development. Texmaco follows a practice of responsible industrialization with minimal impact on environment and socio­economic empowerment of the community.

The company has been engaged in CSR activities prior to CSR found its place in corporate glossary. The concept of corporate citizenship has already been gaining ground with concern and understanding to integrate social, environmental, ethical human rights into the business operations. The organisation is conscious and significantly contributing to the improvement of the quality of life of the community at large, as well as, the workforce and their families. Texmaco Management has committed liberally to the development of social infrastructure with amenities which are the envy of most urban dwellers. The management has been spearheading sustainability strategy to achieve a fine balance of economic, environmental and social imperatives, while taking care of expectation of both internal and external stakeholders. The people in the neighbouring localities are partners in the company's progress and prosperity through job opportunities, training and special assistance for health and education. The company has taken special initiatives to promote local talents in performing arts, especially in the field of music and dancing.

The Company is ardently striving to maintain green and pollution-free environment in and around the Works and the residential estate, going beyond the call of legal and regulatory requirements. We take utmost care in the selection of community interventions we initiate. The Company's prime endeavor is to remain focused on creating long-term wealth creation for all local community members irrespective of their gender, ethnic and religious backgrounds. Being a conglomerate with diverse business interests, across various segments of economy, we are in a position to integrate our services, let that be communication, financial services, entertainment and others. We explore to amalgamate potential benefits one segment of the business may offer to the others so that a holistic solution addressing the needs and concerns of local community is found.

Pursuant to the provisions of Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, a Corporate Social Responsibility Committee has been constituted by the Board of Directors of the Company. The composition of the Corporate Social Responsibility Committee is provided in the Report on Corporate Governance as attached to the Directors' Report.

This being the first year of structured implementation for CSR activities, the Company is in the process of tie-up with various associations/ organisations / trust for pursuing the CSR activities as envisaged under the CSR policy of the Company. The process of identifying meaningful activities is time consuming and the Company could not spend a part of the prescribed amount in the financial year 2014-15.

As required under Section 135 of the Companies Act, 2013, read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the report on CSR is enclosed as Annexure A.

Green Initiatives

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

Particulars of Employees

The number of employees as at 31st March, 2015 was 1444. In terms of the provisions of Section 197(12) of the 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 are provided as Annexure B.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are enclosed as Annexure C.

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

As required under Section 134(3)(m) of the Companies Act,

2013, read with Rule 8 of the Companies (Accounts) Rules,

2014, information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo is enclosed as Annexure D.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

Meetings of the Board:

During the year under review, seven Board meetings were held

on 15th April, 2014, 21st May, 2014, 16th June, 2014, 21st July, 2014, 27th October, 2014, 30th December, 2014 and 3rd February, 2015.

Change in Directors and Key Managerial Personnel

Mr. A. K. Vijay and Ms. Mridula Jhunjhunwala were appointed as Additional Directors w.e.f. 1st January, 2015 and 20th March, 2015 respectively. Mr. A. K. Vijay has also been designated as an Executive Director. Notices have been received from Members under Section 160 of the Companies Act, 2013 for their appointment at the ensuing Annual General Meeting.

Mr. D. H. Kela, Director, retires by rotation and being eligible, offer himself for re-appointment at the ensuing Annual General Meeting.

The Board has recommended his re-appointment.

Board Evaluation

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

Appointment of Directors and Remuneration Policy

The Nomination & Remuneration Committee has approved the criteria to determine the appropriate characteristics, skills and experience for the Board as a whole and its individual members with the objective of having a Board with diverse backgrounds and experience in business, government, education and public service. To bring diversity, your Company has appointed Ms. Mridula Jhunjhunwala, a woman Director and a Practicing Professional on the Board during the year.

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

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

Declaration by Independent Directors

All Independent Directors of your Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

AUDIT COMMITTEE AND AUDITORS

Composition of Audit Committee

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

Statutory Auditors

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

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

Cost Auditors

Your Company has appointed Messrs. DGM & Associates, Cost Accountants, for conducting the Cost Audit for FY'16 in terms of the provisions of the Companies Act, 2013 and Companies (Cost Records and Audit) Rules, 2014 issued by the Ministry of Corporate Affairs.

Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Company has appointed M/s S. R. Associates & Co., Company Secretaries, as Secretarial Auditor, to conduct the Secretarial Audit of the Company for the FY'15.

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

Whistle Blower Policy

The details on the establishment of Whistle Blower Policy are

provided in the Report on Corporate Governance as attached to the Directors' Report.

INTERNAL FINANCIAL CONTROLS AND RISK MANAGEMENT

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

The Audit Committee regularly reviews the internal control system to ensure that it remains effective and aligned with the business requirements.

The Board of Directors on the recommendation of the Audit Committee has approved the Risk Management Policy for the Company in accordance with the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The Risk Policy document has in its scope, the establishment of a process for risk assessment, identification of risks both internal and external, and a detailed process for evaluation and treatment of risks.

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

DISCLOSURES

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

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

(c) There are no material changes and commitments affecting the financial position of the Company which have occurred

between the end of Financial year and the date of this Report.

(d) Share Capital

During the year, your Company has raised Capital by issuing 2,80,37,383 Equity Shares through Qualified Institutional Placements (QIP) which received an overwhelming response from the Qualified Institutional Buyer, raising Rs. 300 Crores at a Premium of Rs.106 per share, i.e., Equity Shares of face value of Re. 1/- each was issued at Rs. 107/- each.

The paid-up capital of the Company has increased to Rs. 21,00,63,973 as at 31st March, 2015 from Rs.18,20,26,590 as at March 31, 2014, post raising of funds by way of QIP.

(e) Deposits

During the year, the Company has not accepted any Deposits under the Companies Act, 2013. The deposits which have been accepted earlier from its employees under the Companies Act, 1956 has been repaid during the year.

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

An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. No complaints pertaining to sexual harassment were received during FY 2014-15.

OTHER INFORMATION

Corporate Governance

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

Particulars of Loans, Guarantees and Investments

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

Extract of Annual Return

The extract of Annual Return in Form no. MGT 9 as on the financial year ended 31st March, 2015 is enclosed as Annexure G.

Related Party Transactions

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

The Company has also formulated a policy on dealing with Related Party transactions and the same is disclosed on the Company's website. The web link for accessing such policy is <http://texmaco.in/texmaco/file/RELATED%20PARTY%20> TRANSACTION%20POLICY.PDF.

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

Your Directors state:

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

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

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

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

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

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

For and on behalf of the Board

S. K. Poddar

Chairman

Place: Kolkata

Dated: 22nd May, 2015